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What Direction for China’s Belt and Road in the Arab World?

Shanghai played host to the second China-Arab Reform and Development Forum on April 15th and 16th where China’s Assistant Foreign Minister, Chen Xiaodong, met with several Arab leaders, including Lebanon’s former president, Michel Suleiman, and former Egyptian foreign minister, Nail Fahmy, alongside various Chinese and Arab government officials.

The focus of the Shanghai meeting and its 140 participants was on the Belt and Road Initiative. How it could help Chinese and Arab development objectives converge and how it might improve Sino-Arab relations more generally. To that end, the presence of academics and business people sought to provide some intellectual heft along with exploring ways to push the Belt and Road Initiative forward.

The Shanghai meeting took place less than a year after the most recent China-Arab States Cooperation Forum in Beijing last July. There, President Xi Jinping pledged $20 billion in loans to support related projects in the Arab world. This week’s meeting comes a month before Beijing accommodates the Second Belt and Road Forum for International Cooperation. Forty foreign leaders are expected to attend. From the Middle East, Egypt’s President Abdel Fattah el-Sisi and Djibouti’s President Ismaïl Omar Guelleh, are expected to attend, along with the UAE’s prime minister, Mohammed bin Rashid Al Maktoum.

Thus far, China has signed the Belt and Road cooperation documents with 17 Arab countries and has strategic partnerships in place with 12 countries. These figures offer an encouraging view of China and the Arab world and the role that the Belt and Road Initiative has had, especially given the fact that it was only three years ago that China published its Arab Policy Paper. That paper proposed to widen and deepen China’s involvement in the region, extending cooperation beyond the energy sector and thereby diversifying the range of contacts and activities.

For Arab governments, China’s growing interest in the region is welcome news. Many are under pressure to satisfy their populations, many of whom took to the streets in protest back in 2011 as a result of sluggish growth and a lack of sufficient employment and income. Some may fear that if they don’t succeed, the demonstrations may return and lead to their removal, as has recently occurred in Algeria and Sudan.

To some extent, the Arab world’s late arrival to the Belt and Road bonanza may help. Arab governments will have the advantage of being able to have watched and learned from the experience and performance of other, earlier Belt and Road adopters elsewhere in Asia. That could mean that they are able to take precautions and be less exposed to the challenges faced by other countries, including a higher cost in financing, weaker levels of transparency and the risk of indebtedness. Among the most notable have been in Sri Lanka and Djibouti, where China’s operations of the ports have led to problems for the host governments. At the same time, there’s some indication that the Chinese leadership is not unaware of these issues and wants to put Belt and Road financing on a par with other multilateral lending. If done, this should help improve standards.

How China works with its Arab partners is most likely to be through an individual relationship with each government which reflects the weakness of Arab regionalism. The principal regional body, the Arab League, struggles to operate collectively, mainly because its member states prioritize national sovereignty and non-interference in the affairs of others. Only rarely has it intervened: in 1979-89 when it excluded Egypt for signing a peace treaty with Israel and in 2011 when Syria was removed for repressing its population (although this is currently undergoing a change).

But even if China deals with partner governments on an individual basis, there is no guarantee that the Belt and Road’s arrival in the Arab world will be met with success. Not all countries in the region will all gain equally. Just as the bulk of current Belt and Road funds is concentrated in a few countries (including Indonesia, Russia, Nigeria, Pakistan, and Bangladesh), so will it be the case in the Middle East. Arab Gulf countries which have important links to China will arguably be among the first to benefit in the development of transport infrastructure; Egypt is also earmarked for significant funding.

Other countries will be less likely to be featured. The most obvious cases will be countries like Libya and Yemen, which are in the middle of conflicts. But Syria is also a case where the violence appears to be winding down and the prospects for Chinese investment and development are welcomed by Damascus. But it isn’t clear that the $100 million Beijing has so far pledged to Syria and other Arabs caught up in conflict will be enough. One estimate from the World Bank suggested that Syria’s reconstruction could cost up to $240 billion.

In addition, there are several non-Arab countries are also in China’s sights. Both Iran and Israel have already gained from previous Chinese attention and investment. This includes Israel’s contracts with Chinese firms in 2015 to refurbish the ports at Ashdod and Haifa – and which has recently gained critical attention from the US, which bases part of the naval fleet in the region there. It fears that its security may be compromised through Chinese surveillance.

Iran’s participation is similarly seen as problematic, this time by its Arab rivals in the Gulf, Saudi Arabia, and the UAE. These two countries are also leading a diplomatic and economic boycott of Qatar, which they accuse of supporting terrorist groups and Iran.

So far, China may have avoided becoming involved in regional tensions and rivalries by working with its partner governments on an individual basis. And while neither the Arab League nor its member states are likely to pressure Beijing to adopt a more hands-on approach to the region, it may well end up doing so, whether it wants to or not. Simply put, the more that China invests in individual countries and on projects of mutual interest, the more committed it will become by default and the costlier it will be to back out. Consequently, China’s aim for a light touch in the Arab world may end up committing it to weightier propositions.