China’s One Belt, One Road reshapes Mideast

Already underway, Beijing’s drive to integrate the Middle East in an economically rational Eurasian order will have profound effects on Israel’s relations with its neighbors.

January 24, 2017 21:46
‘CHINA HAS already invested well over $250 billion infrastructure projects in Central Asia, much of

‘CHINA HAS already invested well over $250 billion infrastructure projects in Central Asia, much of which is designed to create overland connectivity with Europe.’. (photo credit: REUTERS)

Although most eyes in the Middle East are now fixed on Washington and how incoming US President Donald Trump will affect the region, the future map of the Middle East is currently being shaped 11,000 km. away from the American capital – in Beijing. Chinese Premier Xi Jinping’s One Belt, One Road initiative to create a massive new trade corridor by both land and sea between China and Europe means China will be playing an outsized role in remaking relations in Middle East.

Already underway, Beijing’s drive to integrate the Middle East in an economically rational Eurasian order will have profound effects on Israel’s relations with its neighbors.

As Europe struggled in 2016 with the Syrian refugee crisis, a less heralded development was occurring in the same Eastern Mediterranean waters that will shape the future of the Middle East. Although it attracted scant international media attention, China’s state-controlled China Ocean Shipping Company (COSCO) acquired ownership of Greece’s largest seaport in August 2016. The Pireaus seaport, on Greece’s Mediterranean coast, is on target to become one of the main European outlet points for China’s One Belt, One Road (OBOR), a China-to-Europe commercial transportation corridor consisting of a cluster of Chinese-built overland rail and road routes extending westward and southward from Central Asia known as the Silk Road Economic Belt (the “one belt”) and a series of Chinese- built port installations extending westward across the Indian Ocean called the 21st Maritime Silk Road (the “one road”).

Culminating a process China initiated in 2009 when it heavily invested in the renovation and management of Piraeus to transform it into one of the world’s state-of-the-art container ports, Beijing now owns and operates one of the European Union’s major seaports as a hub for Chinese goods to enter European markets. Having registered a 14.4% surge in traffic in 2016, Piraeus is emerging as Europe’s fastest-growing and most dynamic port. With China’s securing Pireaus as its western maritime outlet for the OBOR, Israel and its neighbors, from Egypt to Iran, are now situated in the middle of Beijing’s ambitious project to create a combined land-sea commercial superhighway extending from Southeast Asia to southeastern Europe. In short, Chinese economic interests in creating and preserving the reliable and cost-efficient flow of commerce across the region will become a dominant organizing principle in the international relations in the Middle East.

China has already invested well over $250 billion infrastructure projects in Central Asia, many of which are designed to create overland connectivity with Europe. To create a highspeed overland route that does not have to pass through Russian territory, China is building a high-speed railway across the length of Turkey that will reduce travel time by half.

This “middle route” would currently involve a ferry transshipment across the Caspian Sea to Azerbaijan. However, in its drive to ensure resiliency and the reliability of commercial flows by maintaining multiple supply lines, Beijing is experimenting with a variety of combined land-sea routes.

China has also spent billions constructing deep-sea ports in Myanmar and Pakistan, which through planned railway and highway links across these countries to the Chinese border will give China’s land-locked Yunan and Xinjiang provinces, respectively, access to the Indian Ocean and ultimately the Suez Canal.

It is in this context that one can understand Beijing’s enthusiasm for the proposed “Red-Med” railway that China hopes to construct across Israel.

Provided the construction of a sufficiently large container facility in the vicinity of Eilat, China could transship cargo to Piraeus via the Red-Med railway, creating a complement to the overcrowded Suez Canal.

In February 2016, the first direct cargo train from China arrived in Tehran. The journey from China’s eastern coast via Central Asian rail lines took only 12 days. The historic shipment came on the heels of Xi Jinping’s January 2016 visit to Tehran in which China’s president and his Iranian counterpart agreed to a 10-year program to raise Chinese-Iranian bilateral trade to $600 billion. While Chinese goods could also potentially travel to Europe from Iran via Turkey, there is a commercial logic for China to have a third southern overland route for commercial traffic to the Mediterranean coast and Israel’s ports could serve as the transshipment outlet for this route.

Simply put, the Israel-Palestinian conflict and the Sunni-Shi’ite conflict promoted by Saudi Arabia and Iran in Iraq, Syria, Lebanon and Yemen do not serve China’s vision for a stable integrated commercial order across Eurasia. As the OBOR consolidated, the actors in Middle East conflicts will be increasingly incentivized to yield to the emerging framework of commercial connectivity and soften antagonisms that serve as obstacles to the flow of trade.

Egypt’s 2016 moves toward rapprochement with Iran by distancing itself from Riyadh’s proxy wars against Tehran in Yemen and Syria provide an indication of how traditional antagonisms and alignments the Middle East may become malleable in the new geopolitical context of Russian and Chinese engagement in the region. Moscow’s weapons sales to Cairo and its involvement is developing Egypt’s new natural gas discoveries constitute contributing factors to Egypt’s shift. While Moscow has again emerged as an important arms supplier to Egypt, Beijing is becoming Cairo’s banker. The construction of Egypt’s new capital city is being bankrolled and actually carried out by China. In October 2016, a second Chinese company joined the project to bring total investment in Egypt’s new capital to $35b. In December 2016, China also agreed to three-year currency-swap deal with Egypt for the equivalent of about $2.6b. The agreement was critical for the cashstarved nation which boldly allowed its currency to float in November. Beijing’s consent to the currency swap has enabled Cairo to bolster its supply of crucial foreign reserves.

China recently renamed its OBOR project “the Belt and Road Initiative” to sound more innocuous. Nonetheless, China’s decade-and-a-half drive to redraw the map of commercial connectivity across the Eurasian landmass is starting to show the first signs of far-reaching effects in the Middle East. China’s Piraeus port faces the same waters where the ancient Greeks defeated the armada of the Persian Empire in the historic Battle of Salamis in 480 BCE. In the same location where the defeat of reigning Asian superpower of the day set into motion the integration of the Middle East into the Hellenistic world, today’s rising Asian superpower is once again rewriting the relations between Asia and the greater Middle East, perhaps leading to a new integration into an emerging Eurasian commercial order.

Now, as then, the implications for Israel are likely to be profound.

The author is a fellow in the Middle East and Asia Units at the Truman Research Institute for the Advancement of Peace at the Hebrew University of Jerusalem.

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