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Sunday, September 4, 2011

China scores fatal own goals in competition for post-Qaddafi Libya



Chinese workers evacuated from Libya arrive at Beijing’s Capital Airport (Source: AAP)

By James M. Dorsey

China has scored two near fatal own goals in the race for influence and lucrative contracts in oil-rich post-Qaddafi Libya.

A document disclosed this weekend testifies to China preparing to supply as late as July weapons in violation of United Nations sanctions to Libyan leader Moammar Qaddafi’s forces who were locked into battle with NATO-backed rebel forces. Adding fuel to the fire, the head of Libya's rebel Transition National Council (TNC), Mustafa Abdel Jalil, has accused China of blocking the release of his country’s frozen assets.

The disclosure and accusation puts China at a disadvantage as it competes with Russia, India, South Africa and Brazil in repairing strained relations with Libya’s new rulers. The five nations, members of the UN Security Council, refrained from supporting a resolution in March that authorized the imposition of a no-fly zone in Libya and formed the basis for NATO support for the anti-Qaddafi rebels. The five nations have repeatedly denounced NATO bombings of Qaddafi targets over the past six months.

In contrast to China, Russia scrambled in the past week to turn the page with the rebels and protect billions of dollars in arms, energy and infrastructure deals concluded when Mr. Qaddafi was still in power. Russia sent a high-level envoy to Thursday’s Friends of Libya conference in Paris where NATO members and Qatar pledged support for the rebels and moved to unfreeze Libyan assets. Russia also recognized the TNC as Libya’s legal authority, signalling that it no longer was seeking to negotiate a compromise solution rejected by the rebels with the ousted and now fugitive Libyan leader. To stress that it means business, Russia has also invited the rebels to meet in Moscow to discuss Russian support for post-Qaddafi Libya.

The Russian moves contrast starkly with China’s position, which increasingly appears in Libyan eyes to be duplicitous and tarnishes its image across the Middle East and North Africa whose populations are closely watching events as they unfold in Libya and share the aspirations of those who succeeded in ousting the third autocratic leader this year.

China in recent months refused to recognize the TNC and has yet to do so, but sought to upgrade its relations with the rebels in a bid to hedge its bets. That effort has been cast in a far more unfavourable light by the four-page Libyan document disclosed by Canadian newspaper The Globe and Mail that shows that state-controlled Chinese arms manufacturers were prepared to sell weapons and ammunition worth at least $200-million to the Mr. Qaddafi in late July. TNC officials said the documents explained the origin of brand new weapons captured on the battlefield by the rebels from Qaddafi forces.

The document reports on meetings in Beijing starting July 16 between Qaddafi security officials and representatives of three state-controlled weapons manufacturers - China North Industries Corp. (Norinco); the China National Precision Machinery Import & Export Corp. (CPMIC); and China XinXing Import & Export Corp. The Chinese companies offered their entire stockpiles for sale, and promised to manufacture more supplies if necessary. “The companies suggest that they make the contracts with either Algeria or South Africa, because those countries previously worked with China,” the memo says. Algeria last week gave refuge to one of Mr. Qaddafi’s wives as well as two of his sons and a daughter.

The Chinese dilemma resulting from the disclosure of its support of Mr. Qaddafi and its failure to seek to repair relations with the TNC in a way that demonstrates that it is breaking with past policy towards Libya is certain to have been noticed in Syria and Yemen where mass anti-government protests have succeeded in making the ousting of their embattled leaders a question of when rather than if. It also is likely to revive debate about China’s role in autocratic countries in the Middle East and Africa where Beijing has been securing access to resources while turning a blind eye to the nature of the regimes they are getting into bed with.

The stakes for both Russia and China in the Middle East and North Africa are high despite an apparent consensus among Asian analysts that China’s commercial interests in Libya are relatively small. Neither country can ignore a geo-strategic region that is home to some of the world’s most important oil and gas reserves which have given it not only political but also financial clout as well as key ports and whose populations sympathize with restive Muslim populations across the globe.

In the competition between Russia and China, Libya’s significance goes beyond its borders. Russia unlike China has as an energy producer a vested interest in high oil prices and in maintaining market share. By contrast, China, as a major importer, prefers lower prices.

In a bid to keep the door open to the rebels and retain a bargaining chip, China agreed last week to the release of $15 billion of the in total $170 billion in Libyan assets frozen by the international community. In response, TNC head Jalil acknowledged that China while not voting for the no-fly zone had refrained from exercising its right of veto in the Security Council.

Chinese Vice Foreign Minister Zhai Jun, speaking after a meeting in Paris last week with the TNC’s number two, Mahmud Jibril, said that “China is ready to grant reconstruction aid to Libya... and hopes that the TNC will take into account China's concerns, respect its commitments and guarantee the interests of Chinese business interests in Libya."

China’s trade ministry estimated that China has 50 large-scale projects in Libya worth some $18.8 billion. China evacuated an estimated 36,000 Chinese workers from the country at the beginning of the conflict.

A senior Libyan oil official cautioned last month that China alongside Russia and Brazil may be at a disadvantage to NATO countries in the competition for post-Qaddafi reconstruction contracts. TNC officials have said that they would honour Qaddafi-era contracts with a caveat: provided they are not found to have involved corrupt practices. Few contracts were concluded in Mr. Qaddafi’s Libya without his family or associates having had material benefit.

Libya is but the most immediate battleground on which the world’s major powers compete for influence in a key region where political reform and escape from the yoke of autocratic rule is going to be the dominant theme for years to come and will dramatically redraft its political landscape. If the United States and Europe have a strategic advantage in Libya, Russia unlike China is working hard and furious to narrow the gap.

The battlefield is likely to shift in the not too distant future to Syria. Both Russia and China oppose US and European sanctions against the embattled regime of President Bashar al Assad, calling on both sides to refrain from violence and enter into a dialogue. But if Libya is anything to go by, Russia is quicker on its feet to read the writing on the wall. China’s failure to do so will be at its own peril.

James M. Dorsey is a senior fellow at Nanyang Technological University's S. Rajaratnam School of International Studies in Singapore and the author of the blog, The Turbulent World of Middle East Soccer.


2 comments:

  1. I think the comments by Mustafa Abdel Jalil highlight the limited diplomatic experience of the TNC hierarchy. I believe that ultimately money will talk louder than relationships, existing contracts will be honored and Chinese, Russian, Brazilian and Indian companies will compete for business on equal footing with Britain, France and their NATO cohorts.

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  2. Thanks for the comment. Time will tell. Keep in mind that Libya is a relatively wealthy nation, has a culture in which relationships matter and that not voting for a UN resolution is one thing, supplying arms a very different matter.

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