May 12, 2018

The Invisible Silk Road – Enter the digital dragon

https://www.eias.org/eu-asia-at-a-glance/the-invisible-silk-road-enter-the-digital-dragon-may-2018/

This article was published as an ‘EU-Asia at a Glance’ policy paper at the website of European Institute for Asian Studies (EIAS)

***

This piece opens the Digital Silk Road series, which will investigate high-tech and IT projects launched by China to implement the DSR.

Discussions around the Belt and Road Initiative (BRI) tend to focus on its tangible aspects; primarily related to physical infrastructure including roads, rail and power plants. However, in addition to the two tangible “Silk Roads” – the Silk Road Economic Belt (land route) and the 21st-Century Maritime Silk Road (sea route), a third “Silk Road” was also proclaimed in 2015. The “Information Silk Road”, since rebranded as the Digital Silk Road (DSR), aims to “improve international communications connectivity” and foster the internationalisation of China’s rapidly growing tech companies.

A decade ago, very few would have believed that China could develop such an advanced digital sector in such a short period of time. Yet, in 2016, China’s digital economy amounted to 30.3 percent of country’s GDP according to the China Academy of Information and Communications Technology.

By 2017, Chinese e-commerce constituted 42% of global market and tech giants including Alibaba and Tencent had seen skyrocketing valuations in line with their US peers. As well as receiving implicit state backing, Chinese tech firms have seen exceptional growth due to the size of the domestic market, unparalleled access to data as well as societal embrace of new innovations. This contrasts with developed markets where societal inertia can hinder the adoption of new technologies (e.g. mobile payments still remain a small proportion of total transactions while credit card, cheque, and cash still exist).

Consequently, Chinese firms are able to spearhead innovation and implementation in a number of areas within the digital sector, such as bike-sharing, digital wallets (with mobile payments 11 times higher than that in US), digital IDs, and a proposed social credit system that assesses a user’s trustworthiness based on their previous transactions.

In contrast to Western tech companies whose data-usage practices have been increasingly scrutinised, Chinese tech companies enjoy significant political support. Government sponsored tech-zones and innovation hubs are being established across China as part of the government’s agenda to develop key technologies including: 5G, artificial intelligence, industrial internet, big data, and cloud computing technologies. For instance, efforts to build China’s “big data valley” are being made in Guiyang, the capital of Guizhou province.

This economic and political momentum enjoyed by China’s IT sector is contributing to the development of the Digital Silk Road. As these technologies mature in the domestic market, Chinese tech firms are increasingly looking outwards. In particular, efforts are being made to link technological solutions to existing Belt and Road investments and facilitate even better connectivity and logistics. We provide three examples below:

1.    E-commerce and customs automation

One of the biggest challenges facing the land routes that make up the Belt and Road Initiative are delays, often induced by lengthy customs procedures, security checks and having to change trains to meet differing rail gauge standards. Professor Richard Griffiths, author of “Revitalising the Silk Road” estimates that up to 80% of the journey time from China to Europe by rail is made up by delays. Reducing this red tape can result in rapid improvements, for example, in 2012, a customs union between Belarus, Kazakhstan, and Russia cut the journey time from China to Europe by around 5 days.

Automation of customs procedures through DSR IT projects could greatly decrease the time a European or Chinese customer has to wait for goods. Such solutions are already being piloted in Malaysia, which together with China’s Alibaba launched a Digital Free Trade Zone. This electronic world trade platform aims to assist small and medium-sized companies to find trading partners, managing cargo authorization and smoothly navigate the customs process.

2.    Telecommunications infrastructure

DSR projects also include the construction of IT infrastructure in developing countries. China’s state-owned enterprises such as China Telecom, China Unicom and China Mobile are already developing overland cable linksbetween Europe and Asia. Similarly, Huawei has been active in the African telecommunications infrastructure space for many years now. In one recent deal, the World Bank funded Chinese private giant ZTE with $23 million to construct a fiber optic network in Afghanistan. In a recent visit to Tashkorgan, a remote area in Western China inhabited by mostly Tajik and Kyrgyz tribes, we were impressed to see that the whole town had been electrified and fitted with telecoms infrastructure. These efforts enable people previously disconnected from online trading platforms to access and participate in them.

3.   Sustainable infrastructure

Finally, the DSR can also play a constructive role in ensuring infrastructure development remains sustainable. Smart infrastructure uses sensors and advanced monitoring systems to ensure optimization of resources. For example, smart grids permit a better matching of supply and demand such that fewer fossil fuels are burnt. A body named the “Digital Belt and Road” has also been set up to help pioneer the use of technological solutions to resolve environmental challenges along the Belt and Road. The $32 million programme involves experts from 19 countries and 7 international organizations, and sets out to tackle such challenges as water security, natural disaster risks, climate change, and natural heritage protection.

 

In summary, the DSR offers opportunities to make the Belt and Road Initiative as a whole more efficient and more sustainable. Yet, it will undoubtedly come with its concerns as foreign participants become wary of the data practices adopted by Chinese firms. In recent weeks, the world has been captivated by the extraction of personal data for political usage by Cambridge Analytica. The usage of data in this manner has shocked many millions of people; however, in the case of China’s IT giantssuch as Wechat (Tencent), the links with the Chinese government and its data sharing policies are openly confirmed. Hence, we should expect the DSR to become a focus lens of debates surrounding the BRI as it simultaneously offers the greatest opportunities and causes the largest doubts

May 11, 2018

European companies struggle to find opportunities in China’s Belt and Road Initiative

https://www.businesseurope.eu/publications/businesseurope-headlines-no-2018-17

_“Despite the opportunities associated with a $1 trillion initiative to improve connectivity across the Eurasian landmass, European companies have scarcely been able to get involved in implementing BRI projects”,_ *Maurice Fermont, Adviser on Trade Policy at BusinessEurope*, said at a conference on Constructing China’s Belt and Road Initiative in Southeast Europe, organised in Berlin. He highlighted that there are opportunities in sectors such as construction, logistics, engineering, and services as well as for legal, consulting, banking and insurance services. But until now European companies have not been able to engage fully. *“This is mainly due to a chronic lack of information about projects and how to get involved in them, but also due to the way in which China has employed economic diplomacy, government guarantees, subsidies, Exim financing, and non-transparent tenders as a way to push projects through and allocate contracts to its own companies”,* Fermont explained. According to research by the Center for Strategic and International Studies, he added, 89% of companies in Chinese-funded projects are Chinese, while 7.6% are local companies and only 3.4% are non-local, non-Chinese companies. _“Companies require more transparency about the projects and how to get involved, and a fair public procurement process, especially in European markets”_, he stated.

Contact: Maurice Fermont

May 10, 2018

Americans are Dying for China in Afghanistan

by Lawrence Sellin
May 10, 2018 at 5:00 am

https://www.gatestoneinstitute.org/12256/afghanistan-china-us

While US policy-makers are trying desperately to stabilize Afghanistan, a shift is being orchestrated by China.

The Chinese evidently see their role in Afghanistan as the "good cop" versus the U.S. role as "bad cop." Like Pakistan, China seems to view the Taliban as the political opposition, not as a terrorist organization, and has offered itself as an intermediary to negotiate the departure of the U.S. and, thereby, be in a position to reap the economic and geopolitical benefits of Afghanistan as a client state of the China-Pakistan alliance.

Control of Afghanistan will allow China to complete transportation corridors, power grids and oil and gas pipelines throughout Central and South Asia. China can then begin to exploit Afghanistan's estimated $3 trillion in untapped mineral resources, in addition to Balochistan's $1 trillion in gold, copper, oil, precious stones, coal, chromite and natural gas.

On April 22, an ISIS terrorist at a voter-registration office in Afghanistan's capital city of Kabul blew himself up, killing at least 60 innocent people and wounding an additional 100. The following day, the United States condemned the suicide bombing, while repeating America's policy of counterinsurgency and nation-building in Afghanistan.

"This attack on this polling station reaffirms our commitment to our Afghan partners and reaffirms on why we have to focus on rooting out violent extremism," Pentagon spokesman US Army Col. Robert Manning said. "When citizens can't go and register and exercise their democratic right to vote, that's a problem. They certainly deserve it, and that's why we are going to stay there to make sure we can work with our Afghan partners to afford them that right."

In her daily news briefing with reporters, White House Press Secretary Sarah Sanders Huckabee made a similar statement about the US administration "continuing to move forward" with its current strategy in South Asia.

Yet, while US policy-makers are trying desperately to stabilize Afghanistan, a shift is being orchestrated by China, which stands to gain from what Afghani author Mushtaq Rahim recently referred to as Beijing's "economic development agenda."

China, he writes, "has been looking at Afghan affairs with a 'wait and see' approach and has gone into hibernation most of the time in debates regarding future of Afghanistan.

"While one can argue that the size and extent of the Chinese economy may not need Afghanistan for its growth and expansion agenda...A fractured or failed Afghanistan will pose significant security threats for China... challenging a major part of Belt and Road Initiative (BRI) i.e. China Pakistan Economic Corridor (CPEC)...

"A stable and strong Afghanistan can be a good regional contributor to the Chinese connectivity and economic integration agenda. Based on an assessment, Afghanistan owns one trillion USD in untapped mineral resources. These resources include a healthy amount of Lithium and Copper reserves which should be enticing for Beijing-based economists as Chinese industry is in great need of the mentioned chemical elements. In addition, Afghanistan has signed a Memorandum of Understanding (MoU) with China to join the CPEC.

"China can be a very acceptable option for Kabul and Taliban at the same time to offer guarantees in the case of potential breakthrough in the formal peace process. In addition, it should also further expand its military support for Afghan security forces... China will have to increase its political engagement at local, regional and global levels in support of a strong Afghanistan in order to help the entire region survive challenges posed by the non-state actors who are exploring the use of Afghanistan as their operational bases."

The Chinese evidently see their role in Afghanistan as the "good cop" versus the U.S. role as "bad cop." Like Pakistan, China seems to view the Taliban as the political opposition, not as a terrorist organization, and has offered itself as an intermediary to negotiate the departure of the U.S. and, thereby, be in a position to reap the economic and geopolitical benefits of Afghanistan as a client state of the China-Pakistan alliance.

In other words, Americans are doing the work that the Chinese will not do, but from which the Chinese can eventually benefit the most.

China's strategy is evidently to connect Asia through land-based and maritime economic zones. CPEC is an infrastructure project, the backbone of which is a transportation network connecting China to the Pakistani seaports of Gwadar in the Balochistan Province and Karachi in the Sindh province, both located on the Arabian Sea.

Control of Afghanistan via its proxy, Pakistan, will allow China to complete transportation corridors, power grids and oil and gas pipelines throughout Central and South Asia. China can then begin to exploit Afghanistan's estimated $3 trillion in untapped mineral resources, in addition to Balochistan's $1 trillion in gold, copper, oil, precious stones, coal, chromite and natural gas.

The Afghanistan War could end "in a whimper" with a political settlement, the main purpose of which would be to provide a graceful exit that politely delays the announcement of a Taliban/Pakistan victory and a defeat for the US and NATO, all choreographed by China, which could then set up shop as the dominant regional power.

The US will have difficulty winning a war in a landlocked country where China's ally, Pakistan, controls the supply of troops and regulates the operational tempo through its support of the Taliban and the Haqqani network. The US appears to be hoping to stabilize a region, thousands of miles away, containing an endless supply of Islamic extremists fomented and facilitated by Iran, Pakistan and Saudi Arabia. Instead, or at the same time, the US should be learning to leverage instability and preparing to counter Chinese hegemony.

As China attempts to expand, opportunities arise to exploit geopolitical vulnerabilities and to thwart Chinese efforts for regional domination, including traditional nation state conflicts, the Sunni-Shia divide and ethnic nationalism, as well as other means.

An American withdrawal from Afghanistan would not constitute a defeat unless the US is forced into a strategic retreat due to its lack of a plan in place to address the changing regional situation, much of which is dictated by China.

Lawrence Sellin, Ph.D. is a retired US Army Reserve colonel, an IT command and control subject matter expert, trained in Arabic and Kurdish, and a veteran of Afghanistan, northern Iraq and a humanitarian mission to West Africa. lawrence.sellin@gmail.com.    

Don’t Be Alarmed But China’s Naval Footprint In Pakistan Appears To Be Only Growing

http://dailycaller.com/2018/05/09/china-naval-footprint-in-pakistan-growing/

LAWRENCE SELLIN

Retired Colonel, U.S. Army Reserve

5:07 PM 05/09/2018

A January 1, 2018 article revealed a plan — later confirmed in two separate reports, here and here — for the construction of a Chinese naval base on the Jiwani peninsula in Pakistan, near Gwadar, a sea port critical to the success of the China-Pakistan Economic Corridor (CPEC).

Although initially scheduled to begin in July, work on the Jiwani base was accelerated after the plan appeared in the media. That is consistent with the overall increase in a Chinese military activities in Pakistan, but particularly in regard to its naval presence.

According to sources, the decision to advance the schedule for the Jiwani base was likely made in a series of late February meetings held in Gwadar between Chinese and Pakistani civilian and military officials, some who flew into the city from Karachi and Islamabad.

As a result of the media scrutiny, the Chinese allegedly insisted that military-related work in Pakistan be either publicly denied or described as Pakistani military projects, not Chinese. In addition, the accelerated plan for the Chinese base in Jiwani required a more rapid relocation of the local populace for which the Chinese promised land seizure compensation. As part of the agreement, the Chinese were reportedly offered five thousand acres in an area known as Mouza Zanab Dun, west of Gwadar.

One of the February meetings, primarily between members of Chinese and Pakistani intelligence personnel, discussed the security surrounding a March visit by a Chinese nuclear submarine to the Pakistani naval base at Ormara, considered a prelude to a potential establishment of a joint base of operations.

In 2017, Pakistan opened a new naval air base in Turbat, a city approximately 100 miles northeast of Gwadar. The base is meant to provide air surveillance and defense cover for the maritime areas between Gwadar and the Ormara naval base and is considered of strategic importance to CPEC.

Since 2017, Chinese officials have visited the base and inspected an area about 50 miles southwest of Turbat adjacent to the M8 highway (map coordinates 25°47’05.8″ N 62°38’47.5 E). There is a large parcel of fenced land with watchtowers, purchased by the Pakistani Navy over a decade ago, where the Chinese had previously done pre-construction soil analysis. The site is believed to be designated for the housing of personnel.

Chinese and Pakistanis have been discussing projects on the island of Astola, which is located about twenty miles off the coast between the Pasni and Ormara naval bases. According to sources, the Chinese reportedly made at least two visits to Astola and by mid-April a Chinese company was doing construction on the island.

In December 2017, it was reported that high-level Chinese delegations had visited Sonmiani, just north of Karachi, and purchased large tracts of land in the area. Sonmiani is the location of Pakistan’s space center and the newly-established Weapon Testing Range, built with the support of China and, which an official statement claimed “is equipped with real-time tracking and measuring equipment to qualify the indigenously developed and procured weapon systems.”

That may refer to a Chinese-made system described by the South China Morning Post as a “highly sophisticated, large-scale optical tracking and measurement system” that could speed up the Pakistan’s missile development including those with multiple nuclear warheads. The report would only say that the Pakistani military recently deployed the Chinese system “at a firing range.”

Sources now indicate that the Chinese are building some type of large underground structure in Sonmiani. It is not yet clear, but it may be something similar to the tunnel storage and maintenance facility at the Chinese nuclear submarine base in Yulin Bay on the southern coast of Hainan Island.

In parallel with military activities, Pakistani intelligence, as instructed by the Chinese, has increased security operations in the Gwadar area against Baloch freedom fighters and Islamic extremist groups, who are no longer under Pakistani government control. Those additional security efforts have included border meetings with the Iranians, in which, according to sources, the Chinese have also participated in order to maintain stability in the area around the proposed Chinese naval base on the Jiwani peninsula. It appears to be part of an ongoing effort for Iran-Pakistan rapprochement encouraged by China.

China’s Belt and Road Initiative, CPEC in particular, is a soft power strategy with an underlying hard power military component. It is similar to what Imperial Japan attempted in the 1930s with its Greater East Asia Co-Prosperity Sphere. Through military expansion on Pakistan’s southern coast, China intends to isolate India and dominate the vital sea lanes connecting the Suez Canal and the Persian Gulf with its control of the South China Sea.

The United States needs to counter China’s ambitions with a program of strategic disruption through power projection, financial leverage and exploiting the vulnerabilities or geopolitical fissures inevitably created by expansionism, including nation-state disputes, the Sunni-Shia divide and ethnic nationalism.

Lawrence Sellin, Ph.D. is a retired US Army Reserve colonel, an IT command and control subject matter expert, trained in Arabic and Kurdish, and a veteran of Afghanistan, northern Iraq and a humanitarian mission to West Africa. He receives email at lawrence.sellin@gmail.com.

May 09, 2018

Jharkhand HC DIRECTS ACTION AGAINST GARHWA SP Mohammad Arshi


Daily Pioneer

Thursday, 10 May 2018 | Mukesh Ranjan | Ranchi | in Ranchi

Dissatisfied with the report submitted by the State Government in the Garhwa assault case, the Jharkhand High Court directed it to initiate departmental inquiry against the SP Mohammad Arshi and submit a report within four months along with the action taken report against him.

However, a division bench comprising Justice H C Mishra and Justice BB Mangalmurty, calling the ongoing lawyers’ strike of Dhanbad Bar Association as illegal, refused to interfere in the arrest of lawyer there and said that the law will take its own course.

Garhwa lawyer Ashish Dubey was allegedly beaten up by the police for shooting video of police personnel  trying to take out the vehicle of Garhwa SP from heavy traffic jam and was later taken into custody but was later released after pressure mounted by the Advocate’s Association.

“Looking at the statement of the witnesses, it appears that the Garhwa SP was very much present at the place of occurrence. If the incident took place in his presence, the lawyer must have been assaulted at his command and if he did not order for it, his junior officials are not under his control,” observed the Court.

The two independent witnesses – Devashish Kumar Chandravashi and Nanhu Ram-stated that the incident took place in presence of the Garhwa SP Mohammad Arshi. “He was stuck in jam while the policemen on another vehicle came down and started thrashing one person who was taking video footage of those policemen at around 9: 30 am on April 30, 2018, stated the report.  

Earlier, while hearing the PIL filed by advocate Rajiv Kumar, the Court reacted strongly over the demand made for getting the matter investigated by National Investigating Agency (NIA) and asked him not to make illogical arguments and also not make allegations against the SP that were not found simply because he belonged to a particular community. It also asked Kumar to prove the link between Zakat Foundation and the District Legal Services Authority (DLSA) Officer Mohammad Nayeem Ansari, as alleged by the advocate.

The report submitted by the State Government said that action has been taken against the erring police personnel by suspending three constables while suspension of the Officer-in-Charge of Ranka Police Station Laxmikant Pandey was under process and a notice has also been issued for initiating department inquiry against him.

“The Court observed that the statement of independent witnesses could also have been included in the report and the statements recorded by three officials of the District Collectorate, clearly indicate that they were not present at the place of occurrence,” said Kumar.

When Dhanbad Bar Association president Radheshyam Goswami referred the matter of advocate Ashwini Kumar and alleged that the Judicial Commissioner had been trying to patch up the matter, the Court again reacted strongly and said that he had been making false submission.

More than 3,000 lawyers in Dhanbad went on an indefinite strike from Wednesday against the arresting of Kumar who allegedly held a minor girl hostage and sexually assaulted her at his home around midnight on April 28 by using gas cutter to open the door when he didn’t open the door.

“Unlike police, our officers are under our control and if you are saying that the Judicial Commissioner had been trying to patch up the matter, you are making false submission as I have directed him not to interfere in the matter and he will not dare to go beyond my directions,” observed the Court. If the strike still continues, it must be said that it is illegal, it added.

The Court also refused to hear the case and said that let the law will take its own course. It, however, granted liberty to the Association to file a separate petition in this regard

RWR Advisory: Belt and Road at a Glance

Belt and Road at a Glance
 

Top Developments

China Continues to Grow Zimbabwe Ties
The Xi administration has made a concerted effort to foster relations withZimbabwe since Emmerson Mnangagwa came to power. This has continued over the past two weeks. On April 27, Export-Import Bank of China extended a $144 million line of credit to Zimbabwe’s capital city of Harare for improvements to outdated water infrastructure. The financing arrangement was followed by a memorandum of udnerstanding (MoU) with Huajian Group for the construction of a multi-million dollar industrial park in Bulawayo, the second-largest city in Zimbabwe. The plan aims for the industrial park to employ 10,000 people. Chinese-sponsored industrial zones have been leveraged to boost political relations elsewhere in Africa, such as China Nonferrous Metals Company’s backing of the Zambia-China Cooperation Zone.Beijing’s Grip Over Sri Lanka Continues to Tighten 
In Sri Lanka, where China Merchant Port Holdings (CMPH) has already translated the country’s debt to China into a 99-year lease on the strategically important Hambantota Port, the Board of Investments approved on May 5 the construction of a $500 million LNG plant. The plant will be located by the port, where CMPH is seeking yet more land to develop an accompanying industrial zone.Chinese Companies Win Iraq Oil Development Rights
On April 26, Geo-Jade Petroleum and United Energy Group were awarded rights to develop oil and gas fields in the Huwaiza and Naft Khana Blocks in what observers have described as a flawed auction process that was rushed for political reasons, scheduled so results would come in advance of parliamentary elections. There was only one bid from a major international oil company – Italy’s Eni. Another reason for low participation in the bid, floated by Director-General of Iraq’s Petroleum Contracts and Licensing Directorate Abdul Mahdy al-Ameedi, was the risk profile of blocks that sitting former battlefields, were hard to access, and, in one case, lacking sufficient data.Chinese Bridge-Building Contracts, Anti-U.S. Sentiment from Manila
According to an announcement on April 30, two major Chinese contractors will build bridges in the Philippines, linking the cities of Manila, Makati, and Mandaluyong. With a collective value of approximately $101 million, China Communications Construction Company has been chosen as the highway consultant, while China Road and Bridge Corporation will implement the projects. The bridge deal is just the latest economic component of strengthening bilateral relations between Manila and Beijing under President Duterte, which has been accompanied by virulent anti-U.S. sentiment. On May 7, he criticized Washington’ performance as an ally, contrasting it, he said, with Beijing’s positive engagement: “China said, ‘We will protect you. We will not allow the Philippines to be destroyed. We are just here and you can call for our help anytime."China to Build $2 Billion Power Plant in Bangladesh
On May 7, reports emerged that Bangladesh Power Development Board (BPDB) and China Huadian Group agreed to form a joint venture that will build a large coal plant with a power generation capacity of 1,320MW. According to a senior BPBD official, the plant will be built on Moheshkhali Island in Cox’s Bazar District, 260 miles from the capital of Dhaka. The plant has an estimated cost of $2 billion and is intended to help Bangladesh meet its goal of providing electricity to all its citizens by 2021.China-CEE 16+1 Conferences Takes Place
The China-Central and Eastern Europe 16+1 grouping hosted two conferences in recent weeks. On April 24, the 2nd Silk Road Tourism Conference was held in Dubrovnik, Croatia with participants from China, Croatia, Montenegro,Macedonia, and Bulgaria. Attendees signed a strategic cooperation agreement on promoting economic and trade ties between China and Central and Eastern Europe. Potential projects proposed include a Silk Road Cultural Industry Fund and Silk Road Alliance of Transnational Financial Leasing. Meanwhile, the 2nd China-CEEC Spokespersons’ Dialogue took place in Budapest, Hungary on April 27. These events come as a number of reports suggest some disappointment across the grouping, with the failure of the 16+1 construct to bring significant opportunity to their economies.Belarus Sees Spike in Chinese Attention, Investment
While some European countries are expressing dissatisfaction in their relations with China, Belarus is seeing a sudden burst of engagement. On April 26, a delegation from China’s Ministry of Transport met with Belarus’s Ministry of Transport and Communications to discuss developing international road transport. A preliminary intergovernmental agreement was drafted, which will be submitted for joint approval. Landlocked Belarus is seeking to reduce container cargo transportation costs and become a major railway and vehicle transit point for the Belt and Road. Furthermore, on April 29, a Chinese media delegation representing China Radio International, Xinhua News, CCTV, China Daily, and various regional media outlets arrived in Belarus for a press tour promoting Belarusian goods and tourism services.Germany Approves Chinese Takeover of Aerospace Supplier
On April 26, Germany approved the takeover of German aerospace supplier COTESA by newly-created Chinese materials industry fund, Changzhou QFAT Composite Material. The fund’s anchor investor is  Beijing-based Advanced Technology and Materials (AT&M), a company with ties to Iran’s missile industry. COTESA is a supplier for Boeing and Airbus, and manufactures key components for U.S. Army’s CH-47F Chinook heavy-lift helicopter. This is the first Chinese takeover approved since July 2017, when Germany tightened regulations on non-EU acquisitions of companies in strategic sectors (including aerospace and defense). The approval calls into question what risk considerations were taken into account.AVIC to Build Mozambique Airport 
Prominent state-owned PLA contractor Aviation Industry Corporation of China (AVIC) will plan and oversee the construction of a new airport in Xai-Xai, Mozambique in a contract worth $7.8 million. AVIC presented the contract as a “great breakthrough” in the implementation of the Belt and Road and construction of an Aviation Silk Road, “demonstrating AVIC’s prowess in airport planning.” The overall project is expected to cost $75 million. China originally pledged to grant $15 million to the project in October 2017, but upgraded its commitment to $45.3 million in December 2017. Mozambican authorities initially launched a tender for the airport in January 2016.Cameroon Opens Chinese-Built Table Tennis Center
Before the emergence of the Belt and Road Initiative, constructing stadiums in the developing world was an important part of Chinese soft power. Recent warmth in bilateral relations between Cameroon and China – a mining ban aside – show a reversion to this strategy. On April 25, a Chinese-built table tennis center was inaugurated in the capital of Yaounde. China also built a multipurpose stadium in Yaounde in 2009.

Data from IntelTrak, April 24 - May 8

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What They're Saying

NELSON CHAMISA, PRESIDENTIAL CANDIDATE
ZIMBABWE'S MDC ALLIANCE
Addressing workers at a May Day event in Dzivarasekwa

"We will kick out the Chinese companies. We want genuine deals that benefit the people...I have seen the deals that [President Mnangagwa] has entered into with China and others, they are busy asset-stripping the resources of the country. I have said beginning September when I assume office, I will call the Chinese and tell them the deals they signed are unacceptable and they should return to their country."

IBRAHIMA DIONG, FORMER DIRECTOR-GENERAL
SENEGAL'S MINISTRY OF INTERNATIONAL COOPERATION
Interview with CNBC on China-funded development

"China knows what it wants from Africa. But, most African countries don’t have a strategy vis-a-vis China. Most of the African countries should have at least a China desk — or a China ministry."

CHAN THONG WEI, MALAYSIAN ENTREPRENEUR
Speaking on local entrepreneurs subcontracted by Chinese companies to develop the Malaysia-China Kuantan Industrial Park (MCKIP)

"All their steel is from China. Scaffolds and building materials are from China. Workers come from China. Some local hardware vendors get to supply small items like screws – and even that is hard. We quote any price and they’ll say it’s too high."

NAJIB RAZAK, MALAYSIAN PRIME MINISTER
Addressing Chinese-Malaysian supporters in Sabah

"Why should we turn a very very strong relationship to something which will be very, very negative for us? If you sour the relationship with the Chinese government and China, the implication is very, very, very serious."

EAR SOPHAL, CAMBODIAN-AMERICAN ECONOMIST
Interview with Voice of America (VOA) Cambodia

"It’s a win-win-win-win for China. Excess Chinese capital is invested in Cambodia. No tender or tendered to Chinese (likely state) firms only. These overwhelmingly employ Chinese male construction workers, which is win number three. If things go wrong, there can be a debt/equity swap."


By the Numbers

Data from RWR's IntelTrak tool

Data from RWR's IntelTrak tool

Domestic Developments

Public Engagement

April 26: Renmin University of China signed a cooperation agreement with HNA Group to establish the HNA Education Fund, which will support the new Belt and Road School at RUC’s Suzhou branch campus. The Belt and Road School will offer Master of Laws degrees to students from Belt and Road countries through Renmin University’s School of International Studies and Chongyang Institute for Financial Studies. Students will be able to choose from concentrations in Chinese politics, economy, law, and culture. RUC already offers a “Belt and Road scholarship” available to graduate students from countries on the official Belt and Road country list.May 8: Xi’an International Medical Center began planning the Belt and Road International Medical Center project, with involvement from the Chinese Academy of Sciences, Provincial Health Planning Commission, Xidian University of Electronic Science and Technology, Xi’an International Medical Investment, and the Municipal Party Committee. The $2 billion medical center will integrate medical services and scientific research with specialized hospital facilities and a five-story medical technology building on site. Xi’an International Medical Center has awarded the construction contract to China Construction Third Engineering Bureau.

Multilateral Institutions

May 2: Asian Infrastructure Investment Bank (AIIB) announced that the applications of Papua New Guinea and Kenya to join the bank had beenapproved by the Board of Governors. The two countries will remain prospective members until they complete certain requirements, including depositing the first capital installment with AIIB.

Regional Developments

East Asia and the Pacific

April 26: Alibaba Australia launched a pilot of its new supply chain initiative, the Food Trust Framework, in Auckland, New Zealand. The initiative will use blockchain technology and QR codes to authenticate and record products sold on Alibaba’s Tmall e-commerce marketplace. Alibaba has partnered with Australian health group Blackmores, Australian Post, New Zealand’s dairy co-operative Fonterra, and New Zealand Post on the pilot.May 7: Beixin Building Materials, a subsidiary of China National Building Materials Group, signed an MoU with Australia YMCI Pty Ltd, Country Garden Australia, and Jinshi Real Estate Development Group on establishing strategic partnerships and cooperating in Australia’s prefabricated construction industry.

Southeast Asia

April 25: Cambodia's government inaugurated the state-owned University of Kracheh in the city of Kratie, which will offer courses in agro-industry, fisheries, foreign languages, and information technology. The university wasconstructed using a $10 million grant from the Chinese government, and $2 million from the Kratie Foundation for Higher Education.April 27: Two subsidiaries of China Communications Construction Company (CCCC), CCCC Highway Consultants and China Road and Bridge Corporation (CRBC) won a $101 million contract from the Philippines to build the Binondo-Intramuros bridge in Manila and the Estrella-Pantaleon bridge connecting Makati and Mandaluyong. CCCC Highway Consultants will be responsible for project design and supervision, while CRBC will carry out construction.April 29: Philippine president Rodrigo Duterte announced that the country’s temporary deployment ban on Filipino workers to Kuwait had become permanent amid a diplomatic row over the abusive treatment of Filipino domestic helpers in the Gulf state. Duterte said that he planned to use about $96 million in Chinese education grants to instead fund the repatriation of all workers seeking to return to the Philippines. Duterte also suggested that returning workers turn to China for overseas employment as teachers.April 30: China Communications Construction Company (CCCC) signed a framework agreement with Myanmar’s New Yangon Development Company, which is backed by the Yangon provincial government. The two sides will work together to conduct studies on the development and operation of Yangon’s New City project. The first phase of the project would include theconstruction of five village townships, two bridges, industrial estate, power plants, transmission facilities, and wastewater treatment plants.May 8: The second phase of China’s Mekong River Brightness Journey launchedat the Toun Fa Chinese School in Phnom Penh and will target Cambodianstudents in Phnom Penh and Sihanoukville. Brightness Journey is a Chinese initiative under the Lancang Mekong Cooperation mechanism supported by the Overseas Chinese Love Project, tasked to provide eye screening and treatment in Cambodia, Laos, and Myanmar.

South Asia

April 26: China State Construction Engineering Corporation launchedconstruction of a $105 million mixed development project in Colombo, funded by Sri Lanka’s Odel Properties One. The environmentally-friendly complex, known as Odel Mega Mall, will house villa-style apartments, sports facilities, retail storefronts, and open public spaces.April 27: China Harbour Engineering Corporation signed an agreement withSri Lankan property developer Blue Mountain to build Achilleion, a new luxury complex in Colombo. The private residential complex will feature a sky bridge, 24-hour medical center, and access to a rooftop helipad.April 28: Alibaba Group’s Ant Financial signed a strategic partnership agreement to acquire 10% of bKash, a mobile financial service established byBangladesh Bank, with the possibility of acquiring an additional 10%. The two companies plan to co-develop a local mobile payment platform with money transfer functionalities, similar to Ant Financial’s Alipay.April 28: China Development Bank issued a $1 billion foreign commercial loan to Pakistan’s Ministry of Finance to bolster the country’s foreign exchange reserves. Pakistan recently also contracted a $1 billion foreign commercial loan from Industrial and Commercial Bank of China (ICBC), disbursed in two separate tranches.April 29: A Nepali government delegation led by the Ministry of Physical Infrastructure and Transport arrived in China to discuss the proposed cross-border railway. The railway would extend to Nepal’s capital city of Kathmandu through Kerung.May 5: Sri Lanka’s Board of Investment approved the construction of a $500 million liquefied natural gas (LNG) plant by China Machinery Engineering Corporation near Hambantota Port. The port is controlled by China Merchants Port Holdings, and there are plans to acquire land nearby for the development of an industrial zone.May 8: Nepal’s government announced a call for global tenders to develop the 1,200MW Budhi Gandaki hydropower project. The project had originally been awarded to China Gezhouba Group without tendering under Nepal’s preceding administration before the current administration cancelled the deal and replaced China Gezhouba with the Nepal Electricity Authority.May 8: Alibaba Group acquired Pakistani e-commerce company Daraz Group from Rocket Internet for an undisclosed amount. Following the sale, Daraz will continue to operate online marketplaces in Pakistan, Bangladesh,MyanmarSri Lanka, and Nepal under its original brand name. Daraz willintegrate Alibaba’s mobile payment and logistics platforms to drive regional growth, as Alibaba looks to invest in local warehouses and transportation to establish its Pakistani supply chain.

Middle East and North Africa

April 25: Dubai Mall announced that Chinese mainland visitors will be able to use Ant Financial Services’ Alipay digital payment system at all of its retail, dining, and entertainment attractions. Alipay launched in the UAE earlier this year through luxury retail group Al Tayer Insignia, which counts Harvey Nichols, Bloomingdales, and Coach among the global brands in its Dubai portfolio.April 26: Two Chinese companies were awarded rights to develop oil and gas fields in Iraq, following a rushed auction process. Geo-Jade Petroleum won exploration rights to the Naft Khana block in Diyala and Huwaiza block in southern Mayssan. United Energy Group (UEG) won exploration rights to the Sindbad block in Basra. The companies will sign initial contracts on May 10, pending government approval.April 28: The Jordan Atomic Energy Commission stated that it is in talks with China National Nuclear Corporation (CNNC) to build a 220MW high temperature gas-cooled reactor (HTR) in Jordan, possibly in Aqaba. The $1 billion project would most likely be funded by regional investors and Jordanian banks. CNNC is reportedly in the lead among UKU.S.Russian, andSouth Korean suppliers interested in the project because of its experience in HTR reactor construction.April 28: China and India agreed to implement joint development projects inAfghanistan, including a railway line between Afghanistan, Tajikistan,KyrgyzstanIran, and China.May 8: China signed a contract with the Dubai Expo 2020 Bureau (Ex20), confirming its participation at Expo 2020 in the UAE. Construction on the Chinese pavilion, which plans to showcase Belt and Road Initiative technologies, will begin in the coming months.

Sub-Saharan Africa

April 25: Cameroon’s table tennis center, built by Chinese contractors with funding from the Chinese government, was completed and inaugurated. The center is located in Cameroon’s capital of Yaounde, near the multifunctional stadium built by China in 2009.April 26: The Chinese government donated 135,500 bags of rice to Nigeria, meant for internally displaced persons (IDPs). The donation is valued at about $6 million.April 27: Export-Import Bank of China extended a $144 million line of credit toZimbabwe’s capital city of Harare for improvements to outdated water infrastructure. The first $72 million tranche was disbursed to refurbish the Morton Jaffrey water treatment plant.April 27: People’s Bank of China and the Central Bank of Nigeria signed a $2.5 billion currency swap agreement to improve local currency liquidity to Chinese and Nigerian businesses. The agreement will make it easier for Chinese manufacturers to purchase raw materials from Nigeria with Naira from Chinese banks, and for Nigerian manufacturers to purchase simple machinery from China with RMB from Nigerian banks. First Bank of Nigeria, Stanbic IBTC, Standard Chartered Bank, and Zenith Bank have been appointedthe settlement banks for businesses and importers from both countries.April 28: A delegation led by Huajian Group signed an MoU with Zimbabwe’sgovernment on developing the Bulawayo Special Economic Zone, which would focus on leather and clothing for domestic and export markets.April 28: Aviation Industry Corporation of China won an $8 million contract to design and manage the construction of Mozambique’s Xai-Xai airport project. The new airport will include flight and terminal areas, a 5-km airport approach road, and auxiliary facilities. Total project investment is estimated at $75 million. The Chinese government has previously pledged to finance $60 million of the project.April 28: A joint venture led by China National Electric Engineering Company, and which includes the U.S.’s General Motors Company, South Africa’s Transnet, and the Netherlands’ APM Terminals, signed an agreement withNigeria’s Ministry of Communications to repair and restore the East-West railway. The joint venture will also supply locomotives and carriages.May 4: Medical experts from the China Center for Disease Control and Prevention, the Chinese Military Medical Team, and the 19th Chinese Medical Team spoke on public health, disease control, and traditional Chinese medicine as part of the Public Benefit Academic Lecture Series hosted by the Confucius Institute at the University of Sierra Leone.

Russia and Eurasia

April 24: A partnership between CITIC Bank Corporation and China National Tobacco Corporation subsidiary China Shuangwei Investment completed theacquisition of a majority share in Kazakhstan’s Altyn Bank. CITIC will hold 50.1% of the shares, and China Shuangwei Investment will hold 9.9%.May 7: Beijing Kaisheng, a subsidiary of China National Building Materials Group, signed a contract with Russian mine management company Vozrozhdenie to design and construct a cement production line in Perm, Russia.

Europe

April 24: The 2nd Silk Road Tourism Conference was held in Dubrovnik,Croatia with participants from China, Croatia, MontenegroMacedonia, andBulgaria. The conference was co-organized by the Chinese Southeast European Business Association and the Silk Road Chamber of International Commerce, which signed a strategic cooperation agreement on promoting economic and trade cooperation between China and Central and Eastern Europe. Potential projects proposed include a Silk Road Cultural Industry Fund and Silk Road Alliance of Transnational Financial Leasing.April 24: A delegation from the China Cultural Center in Latvia visited the University of Latvia’s Academic Library to discuss signing bilateral agreements between the National Library of China, Chinese Academy of Sciences, Beijing Foreign Studies University, and the Academic Library to strengthen political dialogue.April 25: Germany’s Federal Ministry for Economic Affairs and Energyapproved the takeover of German aerospace supplier COTESA GmbH by newly-created Chinese materials industry fund Changzhou QFAT Composite Material, following a months-long investigation due to the sensitive core technologies involved. Changzhou QFAT initially signed a contract in September 2017 to acquire a majority stake in COTESA for an unspecified amount (estimated at between €100-200 million). The fund’s anchor investor is Advanced Technology and Materials (AT&M), which aims to support COTESA’s expansion in China.April 26: A delegation from China’s Ministry of Transport met with Belarus’sMinistry of Transport and Communications to discuss developing international road transport. A preliminary intergovernmental agreement was drafted and will be submitted for approval. Landlocked Belarus is seekingto reduce container cargo transportation costs and become a major railway and vehicle transit point for the Belt and Road.April 27: The 2nd China-CEEC Spokespersons’ Dialogue took place in Budapest,Hungary. Government representatives from CEEC countries reaffirmed their commitment to China-CEEC 16+1 cooperation. Hungary’s Ministry of Foreign Affairs and Trade spoke at the event, calling to strengthen cooperation with China’s Belt and Road Initiative.April 29: A Chinese media delegation of representatives from China Radio International, Xinhua News, CCTV, China Daily, and various regional media outlets arrived in Belarus for a press tour promoting Belarusian goods and tourism services. The delegation visited Belarusian dairy company Savushkin Product and confectionery factory Kommunarka.April 30: China’s WuXi Biologics announced plans to invest $392 million tobuild a biologics facility in Dundalk, Ireland. The facility will have multiple single-use bioreactors for commercial biomanufacturing, and is expected to be the world’s largest single-use bioreactor facility.May 8: The Jinan-Belgium aerial cargo route officially opened, operatingbetween Jinan International Airport and Liège Airport in Belgium. The first flight carried household commodities, garments, and textiles from Shandong, Jiangsu, and Zhejiang.

North America

April 24: Chinese online travel service provider Ctrip.com International completed a strategic investment in U.S.-based aerospace company Boom Supersonic. The proceeds will be used to develop Boom’s Mach-2.2 airliner. The two companies plan to work together to bring supersonic flight to Chinese customers and build Boom’s relationships with Chinese airlines.April 26: Beijing-based Zhisland International, an international social network for Chinese and overseas business elites that claims Alibaba’s Jack Ma and Lenovo’s Liu Chuanzhi as members, has launched applications for membership in its Canadian chapter. Zhisland International intends for the new chapter to facilitate higher levels of Chinese investment in Canadian projects and initiatives. The chapter is chaired by former Canadian Minister of International Trade, Stockwell Day.

Latin American and the Caribbean

April 26: China transferred management of two photovoltaic (PV) parks, in Pinar del Rio and Yaguaramas, to Cuba’s Ministry of Energy and Mines. The parks have the combined capacity to generate 21MW, and were financed by China’s Ministry of Commerce as part of a bilateral cooperation agreement on renewable energy

Collateral Damage: President Trump’s Decision on Iran and Its Impact on Europe

Emil Dall
Commentary, 9 May 2018
RUSI.ORG

President Trump’s decision to withdraw the US from the Iran nuclear agreement, and reimpose sanctions against Iran, will matter most in Europe.

US President Donald Trump’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) – as the 2015 nuclear agreement with Iran is officially known – will result in the reimposition of all the US sanctions that were imposed on Iran before and up to the signing of the deal, and which were lifted after the conclusion of the JCPOA. While European states – particularly the UK, France and Germany which are signatories and parties to the deal – reaffirmed their commitment to continue implementing the agreement without Washington’s participation, President Trump’s decision will hit European governments and their businesses hardest. In the months ahead, the future of the JCPOA will not be determined by Trump in Washington or Iranian President Hassan Rouhani in Tehran; rather, the survival of the agreement will depend on what Europe does next.

US (Secondary) Sanctions Reinstated

When the JCPOA was agreed in July 2015, the US did not lift its primary trade embargo on Iran, which has been in place and has expanded continually since 1979; US persons and companies have generally not been allowed to transact with Iranian counterparts for decades. However, the US agreed to issue time-limited waivers to cease the implementation of secondary sanctions that were meant to prevent non-US companies from conducting business with Iran. 

By no longer issuing such waivers, President Trump will regain the authority to impose sanctions against non-US companies that transact with Iran. A so-called ‘wind down period’ announced by the US Treasury yesterday will now begin to provide businesses with the opportunity to cease their activities with Iran: after 90 days, sanctions relating to the purchase and sale of metals and Iran’s automotive sector will be reimposed in full, while other sanctions including restrictions on Iran’s shipping and petroleum industry, financial institutions and the provision of insurance to Iran are to be reinstated in 180 days. By 4 November, it is expected that all US sanctions that were previously lifted as part of the JCPOA will be fully reinstated. 

For European businesses, this carries potentially grave consequences: while their own governments remain committed to the JCPOA and will not sanction them for engaging with Iran in these areas, the US government will now be able to do so. Many European businesses will be motivated primarily to comply with US sanctions requirements for fear of losing access to US markets or receiving heavy fines from US sanctions enforcement agencies. Banks in particular have vivid memories of billion-dollar fines for transgressing US sanctions in the past, and if banks are not willing to engage with Iran, transactions or conducting business with other sectors of the economy will not be possible. 

While the direction of re-activated sanctions is up to President Trump himself, there will likely be impetus within the US Congress to push the administration to pursue harsh enforcement. In fact, as a former negotiator of the JCPOA has pointed out, Congress will likely ‘revert to its previous posture of endorsing virtually any Iran-related sanctions’ and seek to expand the scope of existing regimes. 

Reaction from Europe

In return for restricting its nuclear programme, Iran anticipated its own return to the global economic stage and, in particular, a re-start of its trading relationship with Europe. Since the JCPOA was concluded, the value of trade between the EU and Iran has grown from $9.2 billion in 2015 to $25 billion in 2017

If those economic benefits are no longer forthcoming, Iran could reconsider the cost-benefit analysis of staying in the deal. On Tuesday, Iranian Foreign Minister Mohammad Javad Zarif stated that Iran would ‘examine whether remaining JCPOA participants can ensure its full benefits for Iran’, and in the months ahead European officials will seek to convince Iran that those benefits still exist. However, Tehran will want guarantees that Europe is willing to protect its businesses against US secondary sanctions, and will continue implementation of the agreement as before, which may be easier said than done. 

Throughout the lifetime of the JCPOA, European companies have been wary of engaging with Iran due to the risk of the US leaving the agreement. While some landmark agreements have been concluded – most notably with European energy giants Royal Dutch Shell and Total, the automobile industry and Airbus – many of these agreements required lengthy approval processes and involved top-level diplomats on both sides of the Atlantic to come into fruition. Meanwhile, other deals have been slower to materialise, and larger financial institutions have so far refused to re-enter the Iranian market. Many also have concerns about the poor state of the Iranian financial system, and concerns about money laundering and poor corporate governance in Iran. Therefore, irrespective of sanctions, ‘no credible financial institution would choose to deal with a country with such a record’. There has also been a high degree of uncertainty over the financial dealings of Iran’s Islamic Revolutionary Guard Corps, which were subjected to additional sanctions by the Trump administration last October; that too deterred European engagement. 

If European leaders want to secure the continued implementation of the JCPOA without the US, they therefore not only need to protect businesses against possible US enforcement action, but must also overcome the lingering doubts that European businesses have about re-engaging with Iran. 

The US withdrawal from the JCPOA also carries consequences beyond the implementation of sanctions commitments, for it also adds to the growing rift between Brussels and Washington on sanctions policy. US sanctions against Iran were successful in bringing Tehran to the negotiating table because they had support from European allies; as a recent RUSI study concluded, a coordinated sanctions agenda between the US and Europe will generate additional pressure against target states. However, when such alignment is lacking, it will be difficult to achieve this policy aim. 

President Trump’s decision may therefore only succeed in throttling trade with Iran, rather than eliminating it. And, conversely, the Europeans may only succeed in merely shielding the JCPOA from immediate collapse, rather than actually saving the deal in the long run.

BANNER

An Accounting of China's Deployments to the Spratly Islands


An Accounting of China's Deployments to the Spratly Islands

Satellite imagery from April 28 reveals the first confirmed deployment of a military aircraft, a Shaanxi Y-8, on China’s base at Subi Reef in the Spratly Islands. The Y-8 was designed as a military transport aircraft, but some variants are used for maritime patrol or signals intelligence. This should be particularly concerning to the Philippines, which has about 100 civilians and a small military garrison on Thitu Island just 12 nautical miles away.
With this deployment, military aircraft have now verifiably landed on all three of China’s airstrips in the Spratly Islands. The first was a “naval patrol aircraft,” possibly a Y-8 or similar plane, which landed at Fiery Cross Reef in April 2016 to evacuate three personnel who had fallen ill. Last month, the Philippine Daily Inquirer published an aerial photo dated January 6 showing two Xian Y-7 military transport aircraft on Mischief Reef. That landing was especially galling for the Philippines because an arbitral tribunal in 2016 ruled that Mischief Reef is a piece of the Philippine continental shelf.

In addition to patrol and transport planes, China has recently deployed other military platforms to the “Big Three” outposts at Fiery Cross, Mischief, and Subi Reefs. On April 9, the Wall Street Journal published satellite imagery commissioned by the U.S. government that showed military jamming equipment mounted on three trucks on Mischief Reef in March. The article cited a U.S. official who said the jamming systems were deployed to Fiery Cross Reef as well. AMTI has confirmed the systems were visible in satellite imagery of Mischief from at least mid-February, and were still present as of May 6, although placed under covers.

Then on May 2, CNBC, citing U.S. intelligence sources, reported that China had deployed YJ-12B anti-ship cruise missiles and HQ-9B surface-to-air missile systems on each of the reefs as part of military exercises in early April. China constructed missile shelters on the islands in early 2017, but the April deployment was the first confirmed placement of such platforms on the islands. It is unclear whether those missile platforms are still on the islands or were removed following the exercises (they would be difficult to confirm via imagery if kept inside shelters or other buildings).

Most of China’s recent deployments in the Big Three followed a pattern set earlier at Woody Island, its largest outpost and administrative seat in the Paracel Islands. From harbor dredging and runway improvements to hangar and radar construction, upgrades at Woody Island have served as a blueprint for things to come on China’s Spratly holdings to the south. Unsurprisingly, China deployed HQ-9s and anti-ship cruise missiles (YJ-62s) to Woody in 2016. Satellite imagery also captured five Y-8 aircraft on the island in November 2017.

With similar platforms now seen on the Big Three, it is reasonable to look at other recent Woody Island deployments as signs of things to come at Fiery Cross, Mischief, and Subi Reefs. China has repeatedly deployed J-10 and J-11 fighter jets to Woody Island. In late October 2017, the Chinese military released images and video of J-11Bs on Woody for exercises. And satellite imagery confirmed earlier deployments of J-11s to the island in April 2016 and March 2017. Considering that China has built identical hangars for combat aircraft at Woody and on each of the Big Three, it is likely that J-10s or J-11s will soon find their way south to the Spratly Islands.

Satellite imagery from April 2016 also captured what are believed to be Harbin Z-8 transport helicopters and a Harbin BZK-005 drone deployed to Woody Island. The BZK-005 is a high altitude, long endurance surveillance drone that is well suited to maritime patrol. Similar deployments to the Spratlys would not be surprising.

The current and expected deployments of air and missile platforms in the Paracels and Spratlys are steadily expanding Chinese power projection capabilities from its outposts.

Tracking Surface Ships

The Big Three host both air and naval bases, and they support an ever-growing People’s Liberation Army Navy (PLAN), China Coast Guard (CCG), and fishing fleet presence across the southern portion of the South China Sea. Satellite images show that PLAN destroyers, frigates, and other combat ships and CCG patrol vessels regularly visit the artificial islands, along with many auxiliary and logistics vessels. Admittedly, relying on satellite imagery, which captures only those ships that happen to be in port (as opposed to out on patrol) at a specific moment in time, provides a limited picture of naval and coast guard deployments. But the ubiquity of PLAN and CCG ships in images of Fiery Cross, Mischief, and Subi Reefs since the start of 2017 suggests how robust the PLAN and CCG presence at the island bases has become.

AMTI has identified as many PLAN and CCG vessels as possible in imagery taken since January 2017, and has selected representative images of each vessel class, below. For instance, several varieties of the PLAN Type 053 frigate were seen at the Big Three, including what appear to be Type 053H1, Type 053H1G, and Type 053H3 frigates.

The Type 051B Luhai-class destroyer comprises just one ship— the DDG 167 Shenzhen. When it was built in the 1990s, the Shenzhen was the largest surface combatant in the PLAN, though it has been followed by several newer models of destroyer. The PLAN recently overhauled the Shenzhen’s outdated weapons systems to bring it more in line with modern combat needs.

Imagery shows Type 056 Jiangdao-class corvettes visiting the islands, including a shot in June 2017 where two corvettes were tied up at the same dock on Mischief Reef.

Several different Type 072 landing ships, as well as a Type 073A landing ship, have been seen at the Big Three. The larger Type 072 landing ships are capable of transporting and landing tanks, heavy vehicles, and air-cushioned hovercraft in amphibious operations. The medium-sized Type 073A carries smaller tanks or troops for similar operations.

Two AGI signals intelligence gathering ships, a Hai Yang and a Type 815G, were seen in the harbors of the Spratly outposts. The type 815G appears to be the 852 Haiwangxing, which was spotted in 2017 monitoring the U.S.-Australian Talisman Sabre joint exercise.

In addition to several of the same types of ships AMTI has reported on patrol in the Luconia Shoals off the coast of Malaysia, China Coast Guard ships seen at the outposts include several former PLAN Jianghu-class 053H1 frigates, redubbed Jianghu-1 WFF ships.

Lastly, alongside the combatant and law enforcement vessels, an array of support ships, including tankers, tugboats, and replenishment vessels, as well as a Type 639 oceanographic surveillance ship have been seen.

 

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The Center for Strategic and International Studies (CSIS) is a bipartisan, nonprofit organization founded in 1962 and headquartered in Washington, D.C. It seeks to advance global security and prosperity by providing strategic insights and policy solutions to decisionmakers

After Trump’s Iran decision: Time for Europe to step up

http://www.ecfr.eu/article/commentary_after_trump_iran_decision_time_for_europe_to_step_up



Commentary

Ellie Geranmayeh 
@EllieGeranmayeh
09th May, 2018

United States Department of State (Public Domain)

Six steps for the EU and its member states to save the nuclear agreement with Iran 

Despite months of E3-US negotiations to avert an unnecessary crisis over the Iran nuclear deal, President Trump has declared a hard exit from the nuclear agreement. The decision demonstrates that the US has decided that confrontation with Iran is both necessary and inevitable, regardless of what European allies think. The US administration looks set to increase tensions with Tehran and promote an implosion of Iran’s economy in ways that significantly increase risks of greater military escalation in the Middle East. Moreover, in the coming weeks, United States looks set to lead an economic and political assault on European interests.  

The E3 should now acknowledge that its negotiating tactic of accommodation and comprise with Trump has failed. If Europe is to have any influence forthcoming US policy on Iran, European governments should quickly shift tack, unifying behind a more assertive diplomatic strategy aimed at deterring the worst-case scenario of renewed Iranian nuclear program and more instability and violence in a region close to its borders. 

European governments are clearly tempted to think that the delays in implementation of sanctions mean they still have time to persuade the US president to reverse course. But the US president has acted on his promise to fully withdraw from the deal. He is now supported in that view by key advisors who have long advocated a forceful stand against Iran, not just on the nuclear deal but also in terms of encouraging regime change in Iran. It should now be abundantly clear that the current US administration cannot be a partner in salvaging the deal.

In this context the EU and its member states should now prioritize the following action points:

European leaders should use the forthcoming May 17 European Council meeting in Sofia to publicly and unanimously condemn the U.S. decision  to withdraw from a multilateral global security arrangement and place the responsibility for any instability that results on the Trump administration.European leaders should reject further negotiation between the E3 and the US administration on a “broader framework” on Iran policy, including the prospect of further EU sanctions targeting Iran, until and unless the Trump administration makes significant adjustments to minimise the enforcement of US secondary sanctions targeting European companies doing business with Iran.European governments should prioritise measures aimed at maintaining Iranian adherence to the deal. The E3/EU should meet with Iranian counterparts at foreign ministerial level to agree on contingency plans. European governments should make a case to the Iranian government and public as to why the deal can be sustained and continue to serve Iran’s interest. This should emphasise the immediate economic benefits of continued oil exports (which Europe must vow to maintain as an priority). In this effort to entice Iran, Europe should cooperate with Russia and China, the other parties to the nuclear deal.Europe’s approach should include the formulation of clear legal conditions for strategic sectors of trade with Iran aimed at protecting key European commercial deals seen as barometers of nuclear deal’s success and its ongoing survival (namely in the energy domain, aviation and automotive industries). The E3/EU should prioritise securing exemptions and waivers from enforcement of US secondary sanctions for European energy companies and related financial services to allow continued oil imports from and payments to Iran. Towards this end, EU member states should begin consultations regarding counter-measures against the United States. This should include political and legal threats that the EU will consider reviving the EU Blocking Regulation and even impose new penalties against assets of US companies based in Europe to allow for “claw-back” of unfair and illegal fines imposed on European companies doing business with Iran. European leaders should press this issue very hard with the Trump administration, making clear that this is a critical issue for the transatlantic relationship, as well as ongoing cooperation on regional issues in the Middle East.European governments should also look to find bridging solutions to maintain banking connections with Iran even if at far reduced levels, including by temporarily connecting respective central banks in EU member states to the Central Bank of Iran and creating emergency exp0rt credit lines. The EU EAS should accelerate coordination among leading member states, their export credit agencies and state-owned banks to devise novel banking mechanisms allowing a degree of risk-sharing between governments and the financial sector on business with Iran. This effort should aim to facilitate a pan-European approach towards creating special purpose vehicles to finance sector-specific trade and investment with Iran. The EU EEAS should also advance existing proposals for the European Investment Bank to become a lending bank for long-term and medium-sized investments inside Iran.It will now be more critical than ever for Europeans to maintain a dialogue with Iran on regional and ballistic missile issues, given that the US exit from the nuclear deal is already feeding wider regional escalation. This is particularly true given that the Trump administration is likely to work with its key regional allies to accompany the nuclear agreement withdrawal with a wider push against Iran. Germany, France, the UK and Italy should accelerate and formalise recently launched regional talks with Iran, including efforts to advance de-escalation possibilities between Iran and Israel in Syria where the situation is becoming increasingly febrile.

In the end, Europe may not be capable of salvaging the nuclear deal. But if the Europeans want to promote non-proliferation in the region and reduce regional instability, they need to demonstrate to the Americans, the Iranians and others that they are willing to try. Allowing the collapse of the nuclear deal without a proper fight will have immediate and disastrous consequences in the Middle East, while also significantly reducing European relevance on global security. Europe faces a critical and historic choice and must demonstrate its political will to advance its security interests through robust diplomacy