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Tag: China

Looking for a common strategy

  • March 2019
  • Otto Ilveskero

Looking for a common strategy

 

EU struggles with a united vision on China ahead of bilateral summit

 

Source: Wikimedia Commons

 

The EU is struggling to maintain a united front towards China ahead of the 21st bilateral EU–China summit on 9 April. After the Commission labelled China a “systemic rival” for the first time, France has stepped up the calls for a common EU strategy and an alignment of vision towards China.

 

But while President Macron staged a “mini-summit” with Angela Merkel, Jean-Claude Juncker to Paris and China’s Xi Jinping on Tuesday (26 April), the Italian government was busy signing a bilateral investment deal as a part of the global power’s controversial Belt and Road Initiative (BRI). The EU’s slow departure from its usual soft stance towards Beijing is a welcomed step despite having so far gained limited attention beyond the Franco-German axis. Alongside Italy, 12 other EU members have signed a memorandum of understanding with China on BRI.

 

China’s growing interest in Europe comes with risks attached

 

Chinese foreign direct investment (FDI) in Europe has risen rapidly over the past decade. Last year Chinese companies completed FDI transactions worth over eight times the 2010 numbers (from €2.1 billion to €17.3 billion). During the record year of 2016, Chinese firms completed investments worth €37.2 billion in the EU. This year, China’s trade conflict with the United States has already prompted growing Chinese interests towards Europe, as highlighted by Xi’s European tour. China’s recent €2.5 billion memorandum of understanding with Italy, which marks the first time a G7 economy has signed up to the BRI, could grow to €20 billion in value in the future. These investments to the struggling Italian economy cover ports, satellites, agriculture, and media, among other sectors. In addition, China has also set aside a provisional €15 billion in the train tunnel development plan between Helsinki and Tallinn earlier this year. Chinese technology company Huawei’s investments and sponsorships in Europe worth billions of euros are also well-documented.

 

But dealing with state-owned companies that use Chinese governmental subsidies to their advantage will inevitably come with potential risk factors. Estonia’s Prime Minister Jüri Ratas, for instance, has called for a security review of the FinEst Bay Area project. Moreover, during his recent visit to Central Europe and Brussels, US Secretary of State Mike Pompeo sounded alarm on EU member states conducting business with Huawei on the company’s 5G technology in particular, which the US administration has identified as a security risk. Washington has suspected the Chinese government could use Huawei technology for spying, although it has so far not provided public evidence to support the claim. Like Germany earlier this month, the European Commission resisted the calls to issue a blanket ban on Huawei in its new Cybersecurity Recommendation published on Tuesday 26 March. Instead, the European agenda-setter decided to ask the national capitals to run risk assessments on 5G network technology and to collaborate on common EU-wide measures before auctioning spectrum bands. Many member states – notably France, Italy, and the UK, are yet to update their 5G security requirements.

 

China’s ‘debtbook diplomacy’ and strategic investments in Europe

 

China’s strategic investments around Europe may in the long-term constitute an unsustainable burden on weaker European economies. This so-called ‘debtbook diplomacy’ allows China to use economic leverage to politically coerce vulnerable countries to achieve its strategic aims. For example, the EU has raised concerns over China’s investments in Central and Eastern Europe as a part of its 16+1 Initiative. Similarly, due to concerns over the autonomy and sovereignty of Italy, the EU’s budget commissioner Günther Oettinger recently called for the EU to veto the member state’s participation in Chinese infrastructure projects. “[I]nfrastructure of strategic importance like power networks, rapid rail lines or harbours are no longer in European but in Chinese hands”, the commissioner added.

 

Equally important to China are the strategic investments made over the past decade which have led to its state-owned enterprises controlling around 10% of European cargo port capacity – most recently signing deals to manage Italy’s largest port in Genoa as well as the port of Trieste. On a continent where 70% of all goods crossing its borders travel by sea, this is certainly not insignificant. In addition, as a result of its carefully planned ‘science diplomacy’ and investments through the ‘Polar Silk Road’, China has been able to carve a foothold in strategically valuable locations in the Arctic. This has provided China with the opportunity to better observe air traffic and monitor naval activity in Europe’s High North, as well as tighten its grip on the global rare earth materials market. There is always a possibility these acquisitions will be used for non-civilian purposes later on.

 

EU needs a coherent common China strategy

 

The EU is in need of an updated common China strategy. (This applies equally to NATO, as pointed out here by Carnegie Endowment’s Erik Brattberg.) Although the nature of rhetoric has shifted since the EU’s 2016 Elements for a new EU strategy on China, the continent remains divided on its attitudes towards Beijing. For example, the southern member states have been critical of Brussels and the northern member states’ complaints about the scale of Chinese investment, given that many of them were pushed to sell prime asset during the height of the eurozone crisis. The combined impact of slow economic growth and the EU’s failure to maintain economic solidarity has also resulted in a situation where member states such as Italy are considering selling debt to China. This has understandably raised concerns in Brussels regarding the possibility for China to establish political leverage over Rome.

 

Calling for China to deliver on World Trade Organization (WTO) reforms regarding subsidies and technology transfers is not enough, when the EU cannot do it as one voice. Effective implementation of common screening regulation for FDI is one thing, but the EU must also improve its own practices on strategic investment to support many areas that now feel the need to turn to China due to lack of investment. Increasing EU investment on infrastructure and industry is important also from the perspective of sustainable development.

 

This is, however, not to say that the EU should become adversarial towards China or ban Chinese investments as a security risk altogether. It is to support what the Commission has already stated: ‘Neither the EU nor any of its Member States can effectively achieve their aims with China without full unity.’ It is highly important that member states ensure their bilateral relations with China comply with EU law and policies, while the EU aims to deliver a more balanced and reciprocal overall trade relationship with Beijing. A united EU can expect to wield some leverage in trade negotiations as China’s largest trading partner, but this should not be overestimated. China is adept at pitting Europeans against each other (not to say Europeans would not be good at it on their own). Thus, without a common strategy, the EU simply cannot push for the reciprocity in economic ties and advances in human rights it so desires.

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Europe’s High North

  • March 2019
  • Otto Ilveskero

Europe’s High North

 

The EU must update its strategy as global interest in the Arctic region grows

 

Source: Wikimedia Commons

 

As Western Europe basks in the sun with the temperatures reaching unprecedented levels in February, it is good to remember that this just is not normal. Last four years have been the warmest ever recorded in global average temperatures. In fact, the 20 warmest years on record have all occurred over the past 22 years according to the UN-affiliated World Meteorological Organization. Global warming has had a particularly devastating effect on the Arctic, which has lost 95% of its oldest ice cover, and destabilised the northern polar jet stream. In turn, a weaker, wavier jet stream allows warmer air to move unusually north in some regions and colder air to travel further south in others, which has been linked with both the recent heatwave in Western Europe and polar vortex in Canada and Midwestern United States.

 

At this rate, summers in the Arctic could be ice-free by 2040. The polar region is warming twice as quickly as the rest of the globe and this will have significant implications for the environment, global ecosystems, and lives of the around 4 million people who live in the area. Receding ice will also open up sea routes for commercial opportunities and military use. As a result, the geopolitical status and strategic importance of the Arctic will only grow in the near future, demanding answers to critical questions about security and diplomacy. With three Arctic states as its members (Denmark, Finland, and Sweden) and seven other member states having been granted observer status in the Arctic Council, the EU has a significant interest in the stability of the region.

 

The EU’s Arctic policy lacks a security angle

 

The EU’s policy in the High North has so far mainly focused on matters such as environmental concerns, scientific research, and the regulation of fisheries. A premium is also put on regional and local cooperation with the Arctic states and indigenous peoples. For an aspiring global leader in climate action and a strong defender of multilateral regulatory frameworks, this emphasis is of course hardly surprising. A fit for purpose European Arctic strategy, however, needs to be more comprehensive in scope and take into account the growing global interest in the region, which is not purely scientific or environmental.

 

Security matters were actually omitted altogether from the EU’s latest Arctic policy update, released in 2016. This was the case despite an earlier 2008 document taking into account territorial disputes in the region regarding Russia, for example. To be fair, the EU’s Global Strategy on Foreign and Security Policy does include the Arctic as one of the strategic regions, but even then that specific section is only one paragraph in length. ‘The EU has a strategic interest in the Arctic remaining a low-tension area’, it says, before repeating the key tenets of the aforementioned 2016 policy emphasising the need to tackle climate change and support innovation in the region. The Council, however, highlighted on its June 2016 Conclusions that ‘reinforcing the EU’s engagement in the Arctic’ is an important factor of its foreign and security policy and called for an ‘ambitious cross-spectrum and well-coordinated’ strategy to engage with regional and global actors in the area.

 

To achieve the EU’s objective of maintaining low tensions, all efforts to avoid a “scramble for the Arctic” are absolutely integral. The melting region is expected to compose the largest unexplored area of oil and natural gas remaining in the world, which is certainly of interest to many global players. Estimated 90 billion barrels of oil and 47,2 trillion cubic metres of natural gas resources remain buried under the seabed, according to the U.S. Geographical Survey. In addition to the resource question, control over shipping lanes will be another hot topic. For instance, the Northern Sea Route would cut the time it takes to ship goods from St Petersburg to Vladivostok by 14 days. Similarly, it would shorten the journey cargo ships carrying goods between China and Europe currently take through the Suez Canal by up to 40%. As such, overlapping territorial claims, military assertiveness, and infrastructure investment (with ulterior motives) from Arctic and non-Arctic states alike have increased accordingly and will continue to do so in the future.

 

Russian & China: The growing influence of assertive powers

 

The fears of escalating competition for the Arctic were greatly fuelled already back in August 2007, when Russian explorers (with the help of a nuclear-powered icebreaker and two submarines) placed a Russian flag on the seabed below the North Pole. The stunt gained even more attention when Foreign Minister Sergei Lavrov connected it with his country’s ambition to claim nearly half of the Arctic Ocean. The only non-NATO state with a coastline on the Arctic Ocean had previously submitted this claim in 2001 under the procedures set by the United Nations Convention on the Law of the Sea (UNCLOS) – only for the demands to be rejected due to lack of geological evidence. More recently, emboldened Russia has asserted itself in the region with constant military drills, reopened bases, and strengthened air defence as per the Kremlin’s 2008 arctic strategy and 2017 naval doctrine. Anticipating competition from China, Japan, and the Arctic NATO states, Russia seems set to militarising the Arctic. Russia’s dwindling economy is, however, going to have an impact on its grand ambitions.

 

The Arctic is also at the centre of China’s poetically named Polar Silk Road, which forms a part of the multi-billion-dollar Belt and Way Initiative. Lacking military capacity to effectively project power in the Arctic, China relies on carefully planned ‘science diplomacy’ and investments on strategic infrastructure to gain a foothold in the north. This has already resulted in China gaining observer status in the Arctic Council in 2013 and rapidly growing its mining rights in Greenland, for example. The former exemplifies China’s increasing willingness to assert its presence in global governance through a vast variety of multilateral fora, while the latter has tightened China’s grip of the global rare earth materials market, allowing the country to exert price control. Moreover, investment in ports on the Arctic Ocean provides China with the possibility to monitor naval activity, while Chinese-owned airports in the Arctic could allow the owners to observe air traffic. Thus, the EU must keep in mind the real possibility of China using its infrastructure, mining, and space observation investments for non-civilian purposes.

 

The EU must reassess its role in the northern neighbourhood

 

The West as a whole has been poorly prepared for the growing geopolitical importance of the Arctic. NATO, for instance, has consistently failed to include the region in its Strategic Concept and North Atlantic discussions in a meaningful way (even though both Denmark and Norway’s national Arctic policies do mention NATO’s presence as a security factor). The defence alliance did, however, conduct its largest Arctic drill in decades last October, so perhaps the focus is slowly shifting at last. Meanwhile, the EU’s climate action focus has also lost an ally in the West. Reversing President Obama’s 2016 Arctic offshore drilling ban, the Trump administration has foolishly hopped on board the environmentally catastrophic Arctic energy extraction rush by selling 19 Alaskan offshore sites between this year and 2024. This shift places even larger importance on the EU’s efforts on raising climate awareness and supporting Arctic communities.

 

The EU needs to reassess its own role in the Arctic. The EU does not have a coastline in the Arctic and will not be a leading force in the region, but it can still have an impact in the way security concerns are addressed and diplomacy is conducted regarding the area. Thus, the bloc must attempt to participate more actively in the meetings of the Barents Regional Council and the Arctic Council, as well as encourage dialogue through the Arctic Security Forces Roundtable and the Northern Chiefs of Defence forum, in order to establish stronger ties with the main actors in the region. Europe must also better recognise the risks posed by overlapping territorial claims and support the UNCLOS procedures to impartially evaluate each competing demand. In addition, given the advantage of Chinese government-subsidised companies in acquiring strategic assets within the EU and the EEA, the Commission’s investment plans should be more visible and provide better support to infrastructure and research projects in Lapland, Iceland, and Greenland to ensure sustainable development.

 

So far, the EU’s efforts have been crucial in promoting sustainability and supporting science in the Arctic, but in order to raise Europe’s profile in the High North, the EU must take the growing global interest and strategic importance of the region more visibly into account in its strategy.

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