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The Impact of the Coronavirus on the Chinese Belt and Road Initiative in the Middle East

In the Middle East, US partners are already being confronted with difficult choices, whether as recipients of Chinese technologies or as developers thereof, particularly as the Chinese and Americans increasingly come to view their global competition as a zero-sum game. It may be reasonable to suspect that this dynamic may extend to BRI related projects beyond the Middle East, contributing to the atmosphere of an intensifying global rivalry, write Ori Sela and Brandon Friedman from Tel Aviv University.

China’s flagship initiative, the “One Belt, One Road,” now often referred to as BRI (“Belt and Road Initiative”), has been under way, formally, since 2013. Its scope spans Eurasia, the Middle East, Africa, and, depending on the narrative, even further across the globe. One of the more significant aspects of the BRI is China’s involvement with infrastructure projects in BRI-related countries. Such infrastructure includes ports and terminals, energy, railways and much more. The coronavirus pandemic, while unlikely to significantly alter the general pattern of China’s approach to infrastructure investment and development, may lead to setbacks and adjustments in some of the BRI countries. 

Furthermore, from China’s perspective, the BRI initiative has aimed to extend potential markets for its own manufacturing, to enhance connectivity, and to generate more international participation in Chinese economic institutions (Asian Infrastructure Investment Bank, AIIB, in particular) making BRI investments, particularly in infrastructure. The coronavirus pandemic challenges the basic assumptions behind these goals, raising important questions about whether the BRI will be able to advance China’s economic and geostrategic interests. Most notably, the coronavirus pandemic has considerably sharpened the adversarial dimension of Sino-American relations , which will certainly have an effect on how some of the US’s traditional partners manage their relations with China, particularly with respect to China’s drive to introduce new global digital standards and communications infrastructure. 

China’s engagement in the Middle East has grown exponentially since the 2008 global financial crisis.  China’s annual foreign investment and construction contracts in the Arab Middle East and North Africa have increased from approximately $2 billion in 2005 to more than $25 billion in 2018.  In addition to its commercial and financial deals, China has also invested considerable political capital in expanding and diversifying its relationships with Egypt, Saudi Arabia, and the United Arab Emirates (UAE), in particular. 

President Xi paid the Emirates an historic three-day state visit in July 2018, underscoring the importance of both the UAE and the region to China’s interests.   Approximately 60 percent of all Chinese exports (valued at more than $70 billion) transit to the Middle East through the UAE.  Saudi King Salman’s visit to China in March 2017 won President Xi’s official endorsement of the Saudi Vision 2030 development program.  A spirit of cooperation has evolved based on a mutual effort to marry the aims of China’s Belt and Road Initiative to the Saudi effort to diversify its economy.   In 2016, China made its political and strategic engagement in the Middle East explicit during President Xi Jinping’s speech at the Arab League headquarters in Cairo on January 21. It outlined China’s vision for the Middle East’s potential, and Xi concluded his remarks by expressing his full confidence in the government and people of Egypt and his hope that Egypt would become “a pillar of stability” and model for development in the region.

Each of these countries also enjoys important and long-standing security relations with the United States.  Egypt receives approximately $1.4 billion in annual military aid from the United States. The United Arab Emirates’ military has participated in almost every major US military operation in the Middle East during the past three decades. Al Dhafra Air Base is one of the most critical for US operations in the region, and Jebel Ali, near Dubai, is the US Navy’s most visited foreign port in the world.   The Saudis have concluded $76 billion in arms purchase agreements with the US, and that’s just from 2009 to 2017.    Further, until a recent withdrawal the US had deployed US soldiers and Patriot missile batteries around the Kingdom’s oil infrastructure to provide additional security in the aftermath of the September 2019 cruise missile attacks on Abqaiq and Khurais. 

If there is an area where rising Sino-American tension may force difficult choices in these countries, it is China’s continued effort to introduce new global digital and communications infrastructure and standards. In the wake of the coronavirus, China’s transportation and energy infrastructure projects may be scaled back or delayed. The coronavirus has affected the volume of global consumption and demand, and China and its partners will want to reassess how the crisis is reshaping pre-pandemic patterns of global trade and travel. Added to these strains, is the question of the extent to which BRI countries would continue to jointly invest in projects that span beyond their immediate frontiers, and, taking the recent China-India tensions into consideration, and the fact that India had become a major AIIB investor, financial shortcomings might also negatively affect pre-pandemic plans. Sino-American tensions, along with pressure on US partners to limit their participation in Chinese projects and investments, might be a prominent factor in reducing China’s opportunities in the region and beyond. For example, in Israel, a bid for a $2 billion water desalination plant (“Sorek 2”) by a Chinese company (Hutchison Water) was turned down in favor of a local company (IDE). This decision came less than two weeks after a brief visit to Israel by US Secretary of State Mike Pompeo, during which, according to local media, he pressured Israel on this issue. Thus, while for more than a decade Chinese companies have won many such bids for infrastructure projects in Israel (worth billions of dollars), Israel’s relationship with the US may force it to reduce Chinese companies’ participation in sensitive infrastructure in the immediate future.

In the wake of the coronavirus crisis, the global demand for digital and communications technology is only likely to grow, even if the pandemic’s effects linger for the short to medium term. Investments in digital and communications infrastructure are generally more cost effective and manageable than large scale transportation or energy infrastructure projects, and China appears determined to push forward with introducing its 5G telecommunications technology; replacing or constructing undersea fibreoptic cables;  and, promoting Beidou, China’s global navigation satellite system, which is nearly complete,  and already has more satellites than the US GPS standard. In the West, China’s efforts to create a “digital Silk Road” are increasingly perceived as “hidden dangers” that would enable the “future exploitation of international data for political effect.”   In the Middle East, US partners are already being confronted with difficult choices, whether as recipients of Chinese technologies or as developers thereof, particularly as the Chinese and Americans increasingly come to view their global competition as a zero-sum game. It may be reasonable to suspect that this dynamic may extend to BRI related projects beyond the Middle East, contributing to the atmosphere of an intensifying global rivalry.   




Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.