China's second coming in Libya

 

Junbo Asian Times Aug 31 2011 China's second coming in Libya
By Jian Junbo

Greater China Aug 31, 2011

http://www.atimes.com/atimes/China/MH31Ad01.html

LONDON - With Libyan rebels taking over Tripoli and authoritarian leader Muammar Gaddafi on the run, the rebellion aided by North Atlantic Treaty Organization-led air strikes to overthrow the Gaddafi regime will come to the end soon. Now reconstruction is an urgent practical issue on the agenda for the Libyan people and international society.

China, an active player in Libya's economic affairs, had to evacuate some 35,000 Chinese nationals - workers, managers, engineers, traders and tourists - leaving dozens of projects unattended after civil war broke out in February. It has made it plain that it is ready to return "to play an active role in future reconstruction", as Foreign Ministry spokesman Ma Chaoxu put it on August 24, under the United Nations' lead.

All this shows that the world's second-largest economy may be willing to take a bigger role in international affairs and that in the particular case of Libya, Beijing hopes to recover and expand economic interests.

According to China's Ministry of Commerce, before the civil war started, 75 Chinese enterprises including 13 large state-owned enterprises were involved in 50 large projects in Libya worth at least US$18.8 billion and covering property, railways, crude oil services and telecommunications.

China urged Libya to protect its investments after an official at a rebel-run oil facility warned that Chinese and Russian oil companies could lose out after Gaddafi's ouster. If acted on, the warning from Abdeljalil Mayouf, an information manager at AGOCO, would be a headache for China, the world's second-biggest oil consumer, which last year obtained 3% of its imported crude from Libya, Reuters said in a report.

"We hope that after a return to stability, Libya will continue to protect the interests and rights of Chinese investors and we hope to continue investment and economic cooperation with Libya," Wen Zhongliang, deputy head of the Chinese Ministry of Commerce's trade department, said in response to questions about the threat. "China's investment in Libya, especially its oil investment, is one aspect of mutual economic cooperation between China and Libya," Wen said at a press conference in Beijing.

China, as well as Russia, Brazil India and South Africa, did not support North Atlantic Treaty Organization (NATO) air strikes aimed at defeating Gaddafi nor did they provide military aid to the rebels. Criticizing NATO for intervening in Libya's internal affairs, Beijing has also kept a deaf ear to the rebels' appeals to be recognized as the legitimate authority in Libya.

Even if, as some predicts, NATO air strikes against Gaddafi loyalists translate to a bigger reconstruction role, Libya cannot afford to overlook China. French President Nicolas Sarkozy proclaimed an international conference on Libya's reconstruction would be held in Paris on September 1, to which China, as well as Russia and Brazil, have been invited. France led the NATO action.

Xie Yajing, commercial counselor of the Commerce Ministry's department of west Asian and African affairs, said on August 30 that Chinese companies had vast opportunities to cash in on post-war reconstruction of Libya, but should wait until after the political situation became stable and clear.

"It is true that some Chinese companies are considering exploring opportunities or resuming their business in Libya, but the time is far from ripe, as there are still short-term risks," she was reported as saying by China Daily.

The end game to the Libyan revolt is unfolding. Gaddafi's wife, daughter and two of his sons were reported to have fled Libya for neighboring Algeria as the hunt for the ousted dictator continued. Pockets of resistance remained from forces loyal to Gaddafi, with fighting still particularly intense around the coastal city of Sirte, his home town.

Restoring contracts

According to the Ministry of Commerce, China does not have direct investments in Libya, only contract projects. The ministry said on August 24 it was conducting research into the possibility of restoring Chinese projects.

China has yet to officially recognize the Transitional National Council (TNC) as Libya's legitimate government. Still, Foreign Minister Yang Jiechi on August 23 called on UN chief Ban Ki-moon to work with regional organizations such as the African Union and the Arab League to restore order.

In post-Gaddafi Libya, many observers think China inevitably will lose its economic interests as enterprises of Western countries that participated in the air strikes would monopolize reconstruction contracts.

But such view is unrealistic.

International relations are never governed by so-called "international friendship" but by "real interests". Many factors are in favor of China taking a share in the cake of Libya's reconstruction.

As in the case of Sudan, China takes a hedging policy toward Libya. While China has largely remained indifferent in the Libya crisis, it doesn't mean Beijing has shut its eyes and ears to what was happening or pretended that the crisis had nothing to do with China. When the result of the civil war was unpredictable, Beijing kept open to the warring Tripoli regime and rebels.

Beijing did not denounce the legitimacy of Gaddafi's regime and at the time invited its foreign minister to visit China. Yet at the same time, it also sent an envoy to contact the rebels. Zhang Zhiliang, the Chinese ambassador to Qatar, met the leader of the NTC in Doha in June. And on June 6, Li Lianhe, a Chinese diplomat to Egypt, inspected the humanitarian situation and the legacy of Chinese-funded institutions in Benghazi, and also met the NTC's chairman, Mustafa Mohammed Abdul Jalil and other leaders.

This was followed the same month with a visit by Mahmoud Jibolile, the president of the NTC's executive board, to China to talk with Chinese leaders. Then in July, Chen Xiaodong, the director of the Chinese Foreign Ministry's Africa department, visited Benghazi for discussions with NTC leaders.

Beijing also reportedly sent humanitarian aid to the rebels via the China Red Cross. Undoubtedly, such a hedging policy at least makes it possible for Beijing to keep relations with Libya after regime change.

There is sure to be a cacophony of voices among opposition groups, said Yin Gang, an expert on the Arab world at the Chinese Academy of Social Sciences in Beijing, as quoted by Reuters. Yin doubted whether remarks by a middle-ranking official of the rebel camp - that China would lose out in the reconstruction of Libya - represented the official position of the post-Gaddafi regime.

"This was one individual's opinion. I can say in four words: They would not dare; they would not dare change any contracts," said Yin. Chinese companies have relatively few investments in Libya, where Western companies were favored even under Gaddafi in recent years, he said.

China's top three state oil firms CNPC, SINOPEC Group and CNOOC all had engineering projects in Libya, but no oil production, according to Reuters, which added that China shipped in roughly 150,000 barrels per day of crude oil from Libya last year through UNIPEC, the trading arm of Asia's top refiner Sinopec Corp that holds the long-term supply contract. That amounted to about one tenth of Libya's crude exports.

Greater opportunities

Leaders of the new regime may be wiser to realize that Libya's reconstruction cannot be accomplished by Western countries alone. Since it relies on oil exports for revenue, Libya for its reconstruction cannot depend on engagement by just a few powers but needs instead to diversify its export markets.

The economy otherwise would be in danger of being unduly outside control. It is typical that a county dependent on resources exports, particularly to Western markets and their enterprises' investments, and therefore makes itself vulnerable to neo-colonialism.

Moreover, most Chinese economic activities in pre-war Libya were related to civilian projects. According to Commerce Ministry official Zhong Manying, until the civil war, Chinese projects in Libya were mainly in housing development, railway construction, oil services and communications.

That means China's engagement in Libya has mainly been in areas of infrastructure, in which China's cheap labor and comprehensive experiences make it more competent to be involved than Western countries. If Libya opens its infrastructure projects to international competition through fair tendering, China should have greater opportunities to win.

The rules of engagement in the "big power" game may also be favorable to China. Reconstruction of Libya now becomes an international affair in which all big powers are preparing to play a role.

It may not be a coincidence that Sarkozy paid a "sudden" brief visit to Beijing on August 25. He reportedly discussed the debt crisis in the euro region with his Chinese counterpart Hu Jintao. Behind the diplomatic vocabulary, this meant he has asked China to help stabilize the crisis in Europe. It is suspected that in exchange, he may have promised a role for China in Libya's reconstruction.

Taking part in Libya's reconstruction could mark the first step for China to play a more active role in international affairs. Hopefully, a rising China can take this good chance to demonstrate that it can be a "responsible player".

Dr Jian Junbo, an assistant professor of the Institute of International Studies at Fudan University, Shanghai, China, is currently an academic visitor at London School of Economics and Political Science, United Kingdom.

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