September 2021

We start this issue of the ChinaMed Observer with the new developments in the Shanghai Cooperation Organization (SCO). On September 17,during the SCO Summit in Dushanbe, Tajikistan, Iran’s permanent membership in the organization was finalized. Many Iranian politicians and experts have voiced enthusiastic opinions of this event, confident that joining such a regional organization would increase Iran’s prestige in the regional and international scene. However, Ruhollah Suri, an expert on regional issues, offered a more cautious view. [1] According to him, the impact of the SCO’s sphere of influence and the benefits Iran could gain from it should not be exaggerated for a number of reasons. First of all, the competition among its member states, for example between Russia and China, and India and Pakistan, and their “sometimes-contradictory approach to the United States” undermines the organization’s potential for expanding regional economic partnership and cooperation. This seems to be also true for what concerns security issues and the fight against terrorism and extremism, as highlighted by member states’ different views of the Taliban’s takeover in Afghanistan. Moreover, Suri points out that the organization’s main partners, Russia and China, also have opposing views of what the SCO should be. While Russia sees this organization “as a security arrangement against US hegemony, China is increasingly trying to use it as a tool for its expansionist economic programs.” Therefore, although Suri agrees that joining such a regional alliance fits perfectly into Iran’s policy of “looking at East,” he also argues that Tehran should put more effort into de-escalating tensions with the West and striking a balance in its international relations.

In this sense, gaining full access to the Belt and Road Initiative (BRI)seems to remain the best option for Iran to revive its economy and improve its international image.[2]However, Iran’s potential, in terms of natural resources, manpower, geopolitical position, and independence in the international system, would not be enough to prompt China to engage more deeply with Tehran. During a seminar organized by the Tehran Chamber of Commerce, three experts in international affairs, Fereydoun Vardinejad, Feryal Mostowfi, and Arash Raʾisinejad, argued that Iran must implement some serious reforms in its financial and economic apparatus, such as reforming the banking system, fighting money laundering, reforming laws and regulations to facilitate bilateral and multilateral trade," and increasing its knowledge of the international arena in order to fully participate in the BRI and attract foreign investments.  

Still, Iran’s permanent membership in the SCO raised some concerns among its regional competitors. In this context, Bandar al-Dowshi, writing for the Dubai-based al-Arabiya TV, [3]believes that Iran is trying to strengthen its partnership with China and Russia also at the military level through this organization. According to al-Dowshi, such a scenario could be detrimental for the United States and their allies in the region, unless Washington reconsiders its military position in the Middle East and its centrality for the American strategy to contain China.

In any case, the Middle East and the African continent continue to be important targets for Chinese international engagement. Against this background, the al-Jazeera Center for Studies published a thorough analysis of Sino-African relation that investigates whether China’s commitment in various African countries could be considered as “an end in itself,” meaning aimed at Africa’s development, or whether it serves to achieve deeper strategic interests.[4]As reported by the author of the study, Mustafa Jali, although China is the continent’s major economic partner (in 2020 the volume between China and the African countries “amounted to USD 187 billion, imports amounted to USD 72.7billion, and exports amounted to USD 114.2 billion”), Chinese economic interests in Africa “are relatively small,” as the continent accounts for only 4.2%and 6.2% of China's global exports and imports, respectively. However, Jali argues that Beijing considers its engagement in the African countries relevant on a geopolitical and geoeconomic level. On one hand, generally the African countries do not pose a direct threat to Chinese national interests. Therefore, Beijing seeks to strengthen its diplomatic ties in the continent in order to win allies that would support it in international fora, increase its soft power in the region by presenting itself as an alternative to the West, and isolate Taiwan. On the other hand, at the geoeconomic level Africa represents a great opportunity for China to diversify and secure its energy supplies. Moreover, Africa’s underdeveloped manufacturing sector constitutes a safe, alternative market for Chinese imports and exports and construction projects. At the same time, the “resources-for-infrastructure” deals offer to African countries the opportunity to expand their infrastructures and attract foreign investments, while Beijing can secure long-term resources supplies. Nevertheless, the study suggests that the African perception of China is slowly deteriorating, as its massive and increasing presence in the continent is sometimes perceived as similar to that of past colonial powers.

Against this background, the Lebanese newspaper al-Nashra presented the completion of the Grand Ethiopian Renaissance Dam (GERD) through treasury bonds and Chinese financing as a model that Beirut could follow to solve its energy and water problems.[5]The newspaper argues that Lebanon could take advantage of China’s increased “diplomatic presence on the international scene,” and “Beijing's efforts to reproduce the role the European Union played during the Cold War by providing alternative sources of financing and the technical expertise needed for ambitious development projects […], in contrast to the loans of Western financial institutions that often come with political conditions regarding economic liberalization”.

It is important to note that Lebanese media, especially those politically close to Hezbollah, have recently been calling for a wider cooperation with China. However, as highlighted by Tamara Berro, a researcher of China-Arab relations at the Lebanese University writing for al-Mayadeen, Lebanese politicians seems reluctant to engage with the People’s Republic of China, despite many Chinese private and state-owned companies have shown their willingness to invest in the country.[6]According to Berro, as Beirut has always been traditionally within the Western sphere of influence, many fear that cooperation with China “will expose Lebanon or Lebanese officials to American sanctions, or may harm their personal interests.” Moreover, that could strengthen Iran’s, and by consequence Hezbollah’s, influence in the country.

How to approach China is also a key issue in Israeli media. Writing for Haaretz, Asaf Orion expressed concerns about the fact that the “Chinese issue” was not brought up during any of Prime Minister Bennet’s meetings at the White House in August. Reflecting the view of many in Israel, especially those close to the security and defense establishment, Orion suggested that China should be treated as a national security threat, though it is important for Tel Aviv to maintain its trade relation and technological competition with Beijing.[7]

Meanwhile, in Iraq there are less concerns about the possible downsides of cooperating with China. The Adviser to the Iraqi Prime Minister for Economic Affairs, Mazhar Muhammad Salih once again confirmed that the “oil-for-reconstruction agreement”, signed in 2019with China, is fully effective.[8]As part of this, Salih also affirmed that the Iraqi government is currently discussing with the Chinese side about the projects that will be financed with more than one trillion dinars (almost USD 7 billions).

Similarly, the Turkish newspaper A Haber pointed out that Sino-Turkish relations seems to be developing, as both sides are interested in keeping them “at the level of a comprehensive strategic partnership.”[9]As an example, the newspaper highlighted Huawei’s contribution to the development of digital education and technology-based digital economy in Turkey. Moreover, Dunya Gazetesi reported that many Chinese companies have started to ship to Turkey “semi-finished or near-finished products.”[10]They are completed in Turkey and labelled as “Made in Turkey” before being sent to European markets. Fuat Pamukçu, Vice President of DFDS Mediterranean Business Unit, argues that these measures serve to reduce the shipping time and freight costs from China and could be a great opportunity for Turkey to become“ the leading supply base of the West.”

Finally, the issue of the port of the Piraeus continues to be a contentious one in Greece. On one hand, Vassilis Korkidis, President of the Piraeus Chamber of Commerce and Industry, stated that the dispute between Cosco and the Piraeus Port Authority (PPA) has been resolved through amendments that would give political and financial benefits to both parties. Yet, he also admitted that the PPA “should have stayed under state supervision” to maximize Greek national interests. [11] In fact, many local organizations are still protesting the recent agreement between the PPA and Cosco, especially because the Municipality of Piraeus does not have a representative in the PPA Board for the first time. Others claim that the agreement will harm local companies and port workers.[12]