The Middle East, the geographical crossroads between three continents: Asia, Africa and Europe, inadvertently becomes critical to China’s Belt and Road Initiative. As a gateway to these regions, the Middle East would be a missed opportunity if not engaged with. Apart from that, the area has access to three strategic water bodies: the Mediterranean, Red Sea and the Persian Gulf. As of now, 136 countries have signed development MOUs with China. In the Middle East and North Africa (MENA) region, China integrates the framework of “1+2+3 elements”: energy cooperation, infrastructure building, and nuclear power industry.
The cooperation between China’s BRI and the MENA region is a mutual one. Since the Middle East is rich in oil and gas, China became one of its biggest importers. At the same time, BRI is contributing towards significant infrastructure development projects in the Middle East. The total value of these projects is approximately a whopping $3.5 trillion, including the Dubai Al-Maktoum Airport, Qatar Integrated Rail Project, King Abdulaziz International Airport and many other highways and bridges. Moreover, these will significantly contribute towards increasing the bilateral trade volumes.
BRI Transport development in MENA
Kuwait was one of the first nations to sign up to the BRI with the intention to diversify its economies and find investment opportunities. The Chinese explored this occasion by launching the Mubarak Al Kabeer Port project in 2019 through a joint MOU, which is at the moment put on hold due to the pandemic. BRI has also invested in housing projects in Kuwait. In Oman, the critical BRI project has been the Port of Duqm and Special Economic Zone, which will eventually host the Sino-Oman industrial city. Chinese investments have also entered heavy industries in the country.
Although China hopes to integrate the BRI with Qatar’s 2030 National Vision, so far, only Chinese engineering companies have worked on the country’s Mega Reservoirs, Hamad Port, and other such projects. In Saudi Arabia, the Chinese investment has been there long before the BRI, for example, with constructing the Mecca Light Railway Project. There have also been important Sino-Saudi joint ventures in oil and gas. Finally, in 2017, Crown Prince Mohammed bin Salman signed a $28 billion MOU under the BRI in the field of energy development.
Furthermore, the Persian Gulf, in general, is not just relevant to the sea freight industry, but also to the Maritime Silk Road. It’s a gateway for the MENA countries and even the CIS region. Its strategic location makes it highly lucrative but also fraught with complexities. In this month’s case study with Astron Shipping, we take a deep dive into the nuances of accessing the Persian Gulf and the CIS region.
Where does Dubai stand in BRI?
To find the answer to this question, one must look at the latest developments of BRI in the United Arab Emirates (UAE). In October 2020, UAE announced a deeper and comprehensive strategy with BRI, with Dubai serving as the key financial centre. As an economy, UAE has diversified by expanding its logistics, supply chain, finance, and tourism sectors apart from the well-established heavy industries. Dubai hosts more than 6,000 Chinese companies investing or conducting business in the city. Many of China’s most prominent financial entities have their headquarters in Dubai. So far in Dubai, the interest in BRI has remained well within the limits of finance and energy. China has significantly invested in green energy by setting up a solar park and a clean coal plant.
Simultaneously, in UAE, the Khalifa port is critical to the BRI connectivity, and in 2016 China’s Cosco Shipping Ports was given a 35-year concession to operate and expand its container terminal. China has also significantly contributed to the Khalifa Industrial Zone. Now a total of $77.86 billion worth of developments are underway in UAE. Since UAE and especially Dubai have a robust logistics system, investments in that area are not yet discussed. However, UAE is critical to the Maritime Silk Road, and its growing capabilities offer the BRI the opportunity to explore the field of logistics and supply chain in the country.