Beijing and troubled nations: Signals of a shift

Beijing and troubled nations: Signals of a shift

By Geoff Dyer
Financial Times, January 20 2011

As the 2008 Olympics approached, China underwent a crash course in the politics of overseas investments when human rights groups accused  Beijing of holding a “Genocide Games” on the grounds that its oil investments in Sudan were sustaining a scorched earth campaign in Darfur. For the Chinese leadership, however, its Sudanese headache is only just beginning.

In Beijing just as in Khartoum and elsewhere in east Africa, the outcome is being anxiously awaited from a referendum held this month in southern Sudan on whether to separate from the rest of the country. If the poll confirms enough support for separation, the south could become the world’s newest country as early as July.

Even after relatively conciliatory words from Khartoum, distrust of the regime runs deep in the south. Some fear the separation could even reignite a civil war that once claimed 2m lives. For China, the potential break-up is one of the biggest diplomatic tests yet for Beijing’s ambitious push into overseas natural resources. About 80 per cent of Sudanese oil is in the south, but the port used to ship it abroad is in the north, fed by a pipeline. As the biggest foreign investor in Sudan, China finds itself caught in the middle of the country’s visceral internal divide.

Beijing prides itself on a foreign policy of non-interference, a pledge to do business with whatever government is in power in a country without being drawn into domestic political issues. But Sudan’s looming division could thrust China into the unfamiliar role of powerbroker in a distant land.

“This could be the first real test of our non-intervention strategy,” says Jin Canrong, an international relations professor at Renmin University in Beijing. According to Daniel Large, an expert on China’s relations in Africa at the School of Oriental and African Studies in London, China could find itself caught “between advancing armies” if the situation deteriorates.

For all its rarity, the Sudan referendum is an example of what China will increasingly face as its overseas investments expand – the diplomatic burdens of being an aspiring superpower. Chinese strategists insist that their country will not be drawn by the temptations of empire and has no desire to become a powerful outside force in African politics.

Yet, realists would argue, it is interests rather than ideas that end up shaping the foreign policy of great powers. China’s expansion into energy, resources and infrastructure across the globe is likely to take it into new entanglements where neutrality becomes ever harder to sustain and Beijing is forced to take sides and influence events.

Technical setbacks and a tricky transition

If senior southern officials have their way, China’s transition from oil producer in Sudan to oil producer in a new South Sudan is likely to be tricky, writes Katrina Manson.

The governor of oil-producing Unity state, near the north-south border, says he wants to open up three blocks to new tenders. The state-owned China National Petroleum Corporation has a 40 per cent share in the blocks, which straddle the border, through the Greater Nile Petroleum Operating Company consortium in which Malaysia’s Petronas Carigali Overseas and India’s ONGC Videsh also have stakes.

The Chinese, says Taban Deng, the governor, have not developed the concession effectively. “The bulk of oil is lost down there,” he says, sitting under a mango tree outside his home in the state capital. “I don’t think we are going to maintain such an operation.” He also says the Chinese have polluted the area, and failed to employ local people.

At GNPOC’s Unity oilfield, technicians say only 93 of 125 wells are running, pumping out 31,000 barrels a day. They blame technical setbacks. The air is filled with smoke, and fumes from a lake of thick, black crude. A muezzin calls employees to prayer – almost all from the mainly Muslim north. Since the few in skilled jobs resigned recently, the camp is depleted of workers from the south, which is dominated by strong Christian networks. “Maybe they think the area here is not safe for them,” says Elamin Etahir, field foreman.

A 2005 peace agreement ending decades of civil war requires revenues from southern oil to be shared between north and south – but the production and transport of oil is so intertwined it is not clear how to determine what is from where. “They will need to change all the metering to know how much comes from the south,” says Yasir Shyam, Unity field operations manager.

In Juba, the proposed capital of an independent south, Chinese diplomats believe only they have the technical know-how to produce the oil. “Mr Taban is quite a friend of ours – maybe he is complaining a bit,” says Zhang Jun, China’s consul for economic affairs in the city. In any event, say Chinese diplomats, it is unclear how much weight local state officials would have compared with the emergent national government.

China itself is unhappy with operating conditions. Its workers have been kidnapped; at least two contractors have not been paid; and this week three of its citizens have been arrested in Juba. “Our people are risking their lives,” said Mr Zhang. “This is far from a society running by law.”

Charles Freeman, a China expert and former US diplomat, remarked last year that China’s statements about the modesty of its international ambitions echoed isolationist sentiments that were common in the US a century ago. “The United States did not then seek to dominate or control the international state system, nor did it pursue military solutions far from its shores,” he said. “In time and in reaction to events, however, America came to do both.”

China has been instrumental in building Sudan’s oil sector. In 1996 China National Petroleum Corporation, the parent company of Petro­China, acquired a 40 per cent stake in the country’s most lucrative oil concession. China also helped build a refinery, export terminals and the pipeline that transports much of the country’s oil up to Port Sudan on the north-east coast. Chinese companies now control about 40 per cent of Sudan’s oil sector. About 60 per cent of the country’s oil is sold to Chinese customers, making Sudan one of its six biggest oil suppliers.

At the time of the 2005 peace deal that brought to an end five decades of on-off civil war, Beijing hoped this would be a prelude to greater economic and political integration between the two regions. Chinese investment accelerated. However, the agreement also called for a referendum to be held and it become increasingly clear that the south, where Christian and traditional beliefs predominate, would vote for secession from the largely Muslim north.

China is usually strongly opposed to the break-up of multi-ethnic countries, for fear that it could encourage similar demands from its own ethnic groups, most notably in Tibet and the heavily Muslim Uighur population in Xinjiang, or encourage an independence push by Taiwan. For instance, China refused to recognise Kosovo, which declared independence from Serbia in 2007.

But as the likelihood of southern Sudanese secession has loomed, Beijing became aware that it faced hostility from an independent government in the south that would see China as the principal backer of its enemy. Many in southern Sudan view Beijing’s investments during the 1990s, at a time when the civil war was raging, as an implicit intervention on the side of Khartoum.

“If they want to protect their assets, the only way is to develop a very strong relationship with the government of southern Sudan, respect the outcome of the referendum and then we will be doing business,” Anne Itto, deputy head of the Sudan People’s Liberation Movement, the south’s leading political group, said last year.

In order to defend its interests and keep the oil flowing, China adopted a more nuanced role. It backed the deployment of United Nations peacekeepers in the face of Khartoum’s hostility and opened a consulate in Juba, the putative capital of an independent south. The last two years have brought a series of visits by Chinese officials to Juba and by leaders from southern Sudan to Beijing, including Salva Kiir, the SPLM head, who has been to the Chinese capital twice. PetroChina is building a computer laboratory at the University of Juba that will bear the company’s name.

China also intervened when reports surfaced that the Khartoum government might try to delay the referendum. Liu Guijin, special envoy for Africa, called for the vote to go ahead on time and for international help to make sure the process was credible.

In the west, the non-interference policy is seen at times as an excuse for Beijing to support unsavoury regimes. But for China, it is central to the claim that it operates differently in Africa from other great powers and in a way that avoids exploitation.

It is a strong selling point with governments – and provides a useful restraint on more adventurous parts of the Chinese party-state. “We know that it cannot be implemented in every case, but it is so useful that China will not publicly abandon it for a long time,” says one scholar at a think-tank in Beijing.

Yet Sudan is by no means the only country where China has had to become involved in domestic politics.

On a superficial level, China’s relations with Burma are a textbook example of its business-first foreign policy: Chinese companies have gained preferential access to sections of that country’s abundant resources, in return for a respite from international sanctions. A Chinese company is helping to build a hydropower dam in the north of Burma, while construction has recently started on a 1,200 mile, $2.5bn pipeline that will bring oil to China from a port on the Bay of Bengal.

Below the surface, however, China is being pulled further into Burma’s internal affairs, especially the conflict between the government in Naypyidaw and the ethnic groups that make up as much as 40 per cent of the population. Last year, as many as 30,000 refugees crossed the border into China as fighting broke out between the army and a militia in the Kokang border region of north-east Burma.

The pipeline will cross several regions dominated by ethnic groups, putting it at risk of sabotage. The Myitsone dam project is in Kachin state, one of the regions where the writ of the central government is weakest and ethnic tensions highest. Last March, several bombs exploded around the project and there were reports that several died in the blasts, including Chinese workers.

Given the strong links between different ethnic groups on either side of the China-Burma border, local officials in that region of China have played some role in mediating conflict in the past. However, the recent instability and the new investments have led Beijing to become more directly involved in Burma’s ethnic issues.

Diplomats in Beijing say leaders of the Kachin Independence Organisation visited the Chinese capital several times last year. According to a recent report by the International Crisis Group, which has done extensive interviews on both sides of the border, a Kachin leader commented: “China has to be part of the solution to Myanmar’s ethnic problem if it wants to guarantee the safety of the pipeline.” The ICG adds that Beijing has “subsequently invested considerable diplomatic resources to facilitate negotiations between the military government and the ethnic groups”.

Pakistan, where China has trumpeted heavy investments, has also provided signs that Beijing is beginning to hedge some of its strong support for the government. There have been several kidnappings of Chinese in Pakistan, including when a group of Chinese women were abducted in 2007, leading to the siege of the Red Mosque in Lahore.

Andrew Small, a China expert at the German Marshall Fund, says Beijing appears to have grown less confident that the civilian government is able to protect Chinese interests in the country: as a result, it has begun a process of outreach to religious groups in Pakistani society. Over the past three years, there have been a number of visits by leaders of religious political parties to Beijing. Last year the atheist Chinese Communist party signed a memorandum of understanding with Jamaat-e-Islami, Pakistan’s oldest religious party.

“The Chinese are dealing with groups that in the past they would have been uncomfortable dealing with,” he says. “But there is a feeling that these parties have better outreach to some of the more extreme groups than the government has.”

Yet it is Sudan where China is facing the sternest diplomatic test. Peaceful acceptance of the referendum outcome expected next month is only the first step. A Yes to the vote would mean both sides face tough negotiations over not only the precise position of the border but sharing oil revenues and debts – all of which could involve China in some form.

With little infrastructure in the south to speak of, the new government would also need help in the process of nation-building.

Beijing will also face the delicate issue of a proposed pipeline running from the oilfields to the Kenyan coast, which some in the south and in Kenya are pushing. China would not want to be excluded from such a project if the plans became more concrete. But it would be likely to stoke resentment in the north, which would fear being cut out of the oil wealth.

In theory, the referendum could provide an opportunity for the US and China to collaborate in order to prevent renewed civil war or the creation of a terminally weak state in the south. Washington brokered the peace deal and has close links with the SPLM. Working together with the UN and the African Union, they both have leverage to help influence a peaceful and workable separation.

But if the situation deteriorates, Sudan could also create new tensions between China and the US. American activists have been warning that if the government in the north creates problems in the wake of the referendum, the US should block oil exports from Port Sudan to punish Khartoum – shipments likely to be destined for China. One way or another, the ramifications of this month’s vote will spread well beyond Sudan.

Additional reporting by Barney Jopson