China’s ‘Marshall Plan’ for the Arab world

China’s ‘Marshall Plan’ for the Arab world

President Xi Jinping of China last week pledged $20 billion in loans to Arab countries and over $100 million in financial aid to countries in most need, including Lebanon, Jordan, Palestine, Syria and Yemen. China and Arab countries will also set up a consortium of banks to manage a dedicated $3 billion fund.

Labelled by President Xi “oil and gas plus,” due to the loans’ focus on the revival of industries and cooperation on oil, gas, nuclear and renewable sources of energy, the measures seek to foster regional development as a stabilizing and pacifying force. The president also said China aimed to form a strategic partnership with the Arab League to become “the keeper of peace and stability in the Middle East.”

These measures, part of China’s signature foreign policy enterprise, the Belt and Road Initiative, have been touted as a recognition by China’s leadership that its hands-off approach to the Middle East’s political and security problems is untenable. However, China’s concern with regional security and the gradual abandonment of its traditional regional stance of non-interference, in favor of a more engaged if still cautious approach, have been building up for several years.

The Arab Policy Paper of 2016 is perhaps China’s most formal recognition that its infrastructure, economic and development goals for the region are intertwined with political and security considerations. As the first document outlining China’s strategy toward the Arab world, it states that ensuring China’s key goals in the region requires more engagement, restating a “political will of commitment to peace and stability in the Middle East.”

Examples of this changing role abound. In 2016, the Chinese government hosted representatives of both the Assad regime and the Syrian opposition. A small contingent of Chinese troops is in Syria to train and advise the Syrian army, and China has expressed willingness to play a role in the stabilization of Syria.

After Saudi Arabia and most GCC countries recalled their ambassadors from Tehran following the mob attack on the Saudi embassy there in January 2016, China’s Deputy Foreign Minister Zhang Ming visited both Saudi Arabia and Iran to call for restraint. This visit happened just before Xi Jinping’s historic visit to Saudi Arabia, Iran and Egypt.

In July 2017, on the 90th anniversary of the People’s Liberation Army, China opened its first overseas military base, in Djibouti. Strategically located at the door of the Red Sea leading to the Suez Canal, the base has been devised to support the Chinese navy’s participation in humanitarian and counter-piracy missions.

In 2016, China became the largest investor in the Arab world, with 32 percent (almost $30 billion) in foreign direct investment. The US, the third largest foreign direct investor in Arab countries, accounted for $6.9 billion.

Dr. Manuel Almeida

Nevertheless, economic and trade ties have naturally been selected by China as the main tool to advance its interests in the region. In 2016, China became the largest investor in the Arab world, with 32 percent (almost $30 billion) in foreign direct investment. The US, the third largest foreign direct investor in Arab countries, accounted for $6.9 billion.

The Gulf in particular is an important piece of China’s Belt and Road Initiative, which has two main components. The New Silk Road Economic Belt, which aims to connect — in terms of trade, finance and infrastructure — China to Europe through land, and the Maritime Silk Road, with the goal of connecting China all the way to the Mediterranean via the Indian Ocean, the Gulf, Red Sea and Suez Canal. 

China is estimated to have spent over $35 billion on the Belt and Road Initiative in the past five years, mainly on transport infrastructure such as railways and ports, and energy pipelines and grids.

All will not be smooth sailing for China and the Arab recipients of its aid and investment, where high levels of corruption and weak institutional capacity are a challenge. There are also concerns about the potential strategic and political consequences of recipient countries defaulting on the debt. Political instability, conflict and insecurity will continue to pose major challenges for China’s intentions.

President Xi’s announcement coincides with the 70th anniversary of the Marshall Plan. From 1948 to 1952, billions of dollars of economic assistance from the US supported Western and Southern Europe’s post-war rebuilding. While its economic impact may be exaggerated (it averaged less than 2.5 percent of the recipients’ GDP), its political and geostrategic significance is unquestionable; it was a critical soft-power tool for US policy and values, including democracy, free trade and international institutions, and simultaneously for the pushback against the spread of communism. It defined what has been called the American Century. 

Less often noted is that President Harry S. Truman eventually extended the plan’s geographical reach to Asian countries including China. Today it is China that is at the forefront of grand geostrategic and economic designs. Although underpinned by a different set of values and goals and with Eurasia at its core, the Chinese initiative is likely to prove at least as momentous as that of US Secretary of State George Marshall seven decades ago.

• Dr. Manuel Almeida is a political analyst and consultant focusing on the Middle East. He is the former editor of the English online edition of Asharq Al-Awsat newspaper and holds a Ph.D. in International Relations from the London School of Economics and Political Science. Twitter: @_ManuelAlmeida

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