Belt and Road Initiative (BRI), previously called ‘One Belt, One Road’, is the brainchild of Chinese President Xi Jinping, is one of the ambitious and largest running megaproject- spread across 60 countries around the world and is directed to showcase China as a centre hub for economic and infrastructural development. In part, the BRI aspires to attach China to Eurasia through both maritime and overland routes.
On the other hand, The Gulf Co-operation Council (GCC) states, although does not make up a core region for the BRI, nevertheless, some of the GCC’s current objectives in areas like economic diversification, investment ventures, market entrée, and regional security align perfectly with the BRI concept. While, some major BRI states are GCC allies, others are basically strategic contenders or even challengers, such as Iran. However, recent outreach of China to Gulf through BRI, have developed intense and multifaceted associations in topical years between GCC and Beijing.
Chinese Vision
Unquestionably, the BRI has proliferated as a fundamental column of Chinese foreign policy since its inauguration in 2014. Beijing envisions to be transformed as an epicenter of global trade corridor while conserving its welfare in the provinces through which the initiative passes, facilitating the states with higher stakes in sustaining positive bilateral relations with Beijing.
The gulf is considered as one of the most influential financial hubs in the world and China is expanding its foothold over there in an exponential pace through the BRI in context and Xi’s assertive financial reformation plans reinforcing better integration of Chinese economy with its global counterpart. Recently, Chinese banks and financial institutions have manifolded their financial transactions, presences, in the Gulf, encircling UAE- Gulf’s most vital financial center. Chinese banks have doubled the balance sheets since the inception of BRI, in 2014 which in 2017, further enhanced to $33.4bn- one fourth of total assets of the Dubai International Financial Centre (DIFC)- according to its annual report.
Development in China has proceeded at a lightning speed over the past three decades. To further boost its sharply rising GDP growth (9%), Beijing requires energy in ever-rising amounts. China’s energy consumption has 14-folded from 1985(351bn Kw) to 2016 (5.92trn Kw). Consumption of raw petroleum products, like diesel almost quadrupled between 2008 and 2016. Therefore, Beijing has become world’s largest importer oil and third largest importer of liquefied natural gas (LNG). Irrespective of ballooning its strategic petroleum reserve, China’s own forecasts suggest total energy demand will peak between 2030- 2040. And here comes the importance of enhancing strategic co-operation through the BRI with the Gulf- the richest energy deposit belt of the world.
Besides being a political project, economic motivations are nevertheless insignificant for the BRI– indeed, the political and economic ambitions are entwined – with ease of access to energy resources. By 2020, China is expected to be reliant on oil and gas for 67% of its energy requirement; therefore preserving valuable corridors for acquiring those resources has become a key aspect of the BRI.
The BRI is not exclusively envisioned about restricting the energy to China itself, rather funneling the flow among other participating countries, thus facilitating Chinese state-linked oil companies to launch investments overseas. Control over the energy flow is obviously a hidden but inevitable intention of China to reshape the global economic map by dint of BRI.
The Gulf Interests
The burgeoning pursuit of oil and gas from diverse sources has fetched China into the inner circle of Arabian Peninsula’s sheikdoms, which eventually have become China’s top suppliers. In turn, the GCC has strongly cuddled and profited through Chinese trade and investment in this century. With the BRI being intended to manifold the trade, the GCC foresees much better opportunities to strengthen their own economy with the lucrative energy business, therefore the key players of GCC portrays a positive outlook of China’s global economic and political ascendancy.
Saudi Arabia has gradually climbed top as the main supplier of fossil fuel to China. Riyadh admired the BRI concept as an ‘assiduous effort’ of Beijing and complimented this agenda to Saudi’s ‘Vision-2030’ to be a strategic key player of the regional development of gulf. Riyadh and Beijing, in fact, partnered on the construction of BRI and to facilitate Chinese investment influx, Saudi recently granted the Industrial and Commercial Bank of China’s (ICBC) to open its first branch in Riyadh in 2015. It underscores how Saudi is luring Chinese investment to fulfill its own vision.
The most potential linchpin of the BRI invasion in gulf is the UAE. Cementing deeper ties with Abu Dhabi, China progressively have become the top trade partner in Dubai whilst second largest in entire Emirates that estimates roughly $2.3 billion. UAE has granted overall responsibility of Infrastructural development of Jebal Ali port to Beijing which in turn tenders China to access a critical nucleus for international trade. Dubai, being the economic heart of UAE is one of the stable and trustworthy epicenters for business that connects both Africa and Europe. Ease of access to this hub not only is critical for the grand success of BRI, rather it influxes much needed FDI to UAE that’s essential for its economic development.
The geographical position of Oman, with easy access to the Indian Ocean is of enormous strategic significance to Beijing to successfully implement BRI’s maritime network. Oman once ruled into the region with its vast maritime trade routes through the Indian Ocean, and now while Beijing is trying to revive them, Muscat, overwhelmingly embraced the initiative. Beijing is also interested to bolster the relation due to the cohesion and solidarity of the Sultanate that security is a key requirement for BRI’s success.
Key Challenges
Despite the huge potential of mutual benefit the only sting for the Arab Gulf states’ is Iran and to some extent Qatar. The strategic geographical position of Iran that links Europe and Gulf with East Asia, its integral participation in the BRI overland route and accelerating bilateral ties with Beijing might be an headache for the GCC as they long pursue a rival relation with Tehran. It’s quite likely that Iran will achieve major gains from the BRI, nor the GCC. To access significant gains through the BRI, the GCC have to rely on Beijing’s overall progressive economic diplomacy in the Middle East and its determination to neutralize the United States’ chase of its geo-economic interests in the Gulf. Iran plays a key role in OBOR as an integral country in China’s Eurasian overland route.
Thus, the GCC’s apprehension about BRI, if triumphant, could wane Saudi Arabia’s key strategic position in Middle East geopolitics by propelling Iran’s prosperity with premeditated welfare and deepening its trade strongholds. Therefore to access the vantage point of BRI’s critical success across GCC, Beijing have to attenuate the raising concerns of the GCC members. It might have to showcase separate more lucrative plan for the Sultanate states to drag them closer and enjoy the grand strategic success of the BRI in Gulf.
Image Credit: aboutenergy.com