The BRI and the Chinese development strategy for the future The Chinese Belt & Road Initiative (BRI) is probably the most important investment project worldwide since the Marshall Plan that followed World War 2 in terms of number of countries involved in the project and amount of financial resources devoted to the initiative.

Based on official statements and documents by Chinese officials and agencies, the project aims to implement the following:

1. An inland Silk Road economic belt connecting West China with Europe via Central Asia, Russia and Northeast Europe, as well as with the Indian Ocean through Pakistan. A network of railway lines, highways and pipelines will form the inland economic belt.

2. A maritime Silk Road to connect the South-eastern coastline of China to the Mediterranean Sea through the South China Sea, the Indian Ocean and the Suez Canal.

The project involves investments in port areas and inland logistic and industrial facilities along these maritime routes. The BRI was officially launched by President Xi Jinping in a speech at Nazarbayev University in Astana (Kazakhstan) in September 2013. It originally involved 65 countries11 in Asia, Europe and Africa and will be wholly completed by 2049. According to some estimates, China will spend around $1,000 billion in the next ten years to implement the initiative. The financial resources required would total around $8,000 billion over the entire investment period12. The GDP in these 65 countries considered as a whole represents around 1/3 of the entire world’s GDP and over 60% of the world’s population. Furthermore, since its launch many other countries have expressed interest in the project, by joining the Asian Infrastructure Investment Bank (AIIB)13 or planning and developing transport infrastructures in cooperation with China. In fact, 48 other countries – besides the 65 countries officially involved in the BRI since its launch – have been identified so far. They are likely to become active participants in the project. As of September 2017 China had already signed cooperation agreements with 74 countries14.

The project will probably extend to other areas of the world, involving countries in Oceania and South America as well. Table 7 is a list of European and MENA countries involved in the BRI (in bold type, the countries with shores on the Mediterranean Basin). 43 European countries and 19 countries of the MENA region are involved in the BRI or have shown interest in the project. Among these, there are 22 countries with shores on the Mediterranean Basin, 13 of them are European countries and 9 of them fall within the MENA region.

The growing presence of China in the Mediterranean: economic cooperation and investments The attractiveness of Chinese investments has grown among European countries since the outbreak of the Euro crisis in 2011; over the last decade increasing Chinese investments have taken place in several Mediterranean countries. Take the example of Greece, a country heavily hit by the financial crisis, where the acquisition of the Port of Piraeus by the Chinese shipping company Cosco in 2011 was a major relief for the public budget.

Intense competition between Mediterranean countries for attracting Chinese investments has emerged in recent years. In response to the Chinese maritime strategy of investing in several port infrastructures in the Mediterranean Basin, the Med countries on both the northern and the southern shore of the Basin are promoting themselves as a priority gate for inland countries and territories. The increase of ship size of the main container carriers has had a significant impact on global maritime routes. In fact, not all Mediterranean ports are equipped to accommodate 19k to

21k TEUs ships and few of them can offer the required level of logistic efficiency and connection. Moreover, in the view of Chinese authorities the presence of industrial zones, logistic facilities and tax-free areas serving port infrastructures can play a very important role in boosting the efficiency of the maritime industry and thus they are considered as positive factors by investors. On the south- eastern shore of the Mediterranean, Turkey has received significant funds to improve its infrastructures.

The city of Kars, close to the border with Armenia, is the terminal of the BTK 32 www.srm- (Baku-Tbilisi-Kars), a railway line linking Azerbaijan to Turkey through Georgia. This 838 km long line will shorten the usual route between China and Europe by 7,000 km. Near the Bosporus Strait there are other big infrastructure projects linked to the BRI: the rail tunnel of Mammary and the third bridge over the strait – the Tavuz Sultan Selim Bridge . The Turkish coastline is also a staging post to the Maritime Silk Road. North Africa, thanks to its strategic position between the Middle East and Europe, plays an important role within the BRI project.

The five countries of the area have different strategies concerning economic partnership and alliances within the African continent. While Egypt, Libya and – from last April – Tunisia are part of the COMESA (Common Market for Eastern and Southern Africa), Morocco joined the CEDEAO (Economic Community of West African States) in 2018 and Tunisia gained the status of observer member of this organization in November 2017. Algeria, on the other hand, joined the CEMAC (Central African Economic and Monetary Community) a choice consistent with the new Trans- Sahara Highway connecting Lagos in Central Africa to Algiers. The highway may serve as a strategic infrastructure to connect the southern shore of the Mediterranean to Central Africa.

All North African countries are directly involved in the Belt & Road Initiative, even if only Egypt has been part of the project since its launch back in 2013. Their geographic position on the southern shore of the Mediterranean in an asset for investors in ports and logistic facilities in the framework of the maritime silk road. Following the “string of pearl” strategy for the maritime silk road, Chinese investors have planned to take control of a series of port infrastructures along the maritime route from southeast China to the Mediterranean through the Indian Ocean and Suez.

Complementarities between the Chinese strategy underlying the BRI project and North African countries are rather evident:

• Following the strengthening of commercial ties between China and Europe – which is among the main purposes of the BRI – the economies of the southern Mediterranean can play an active role within the supply and value chains that will be created.

• One of the priorities for Chinese authorities is to secure the energy needs of the country in  the  coming  years,  considering  the  expected  sharp  increase  of  China’s  energy    consumption. As it will be pointed out further on in this chapter, China focuses its energy strategy on the Middle East, and specifically on Persian Gulf countries, while investments in North Africa are mainly directed to the RES project.

 • North African countries greatly need improved infrastructures to fuel their economic development and solve the strong imbalances between coastal areas and inland regions: this is a strategic issue for countries like Tunisia and Egypt where the lack of financial resources can open the way for Chinese investors; China, for its part, can use its overcapacity in the domestic building sector for infrastructure projects in Northern Africa.

Its geographic position Marocco– between Europe and West Africa, the Mediterranean Basin and the Atlantic Ocean – is strategic. The port of Tangier Med can serve as a regional hub for both Western Europe and Western Africa. The trade agreements Morocco has signed with 55 countries, in particular with European countries and the US, represent another strong point of the Kingdom of which China can take advantage. Morocco is also the greatest investor in West Africa and the city of Casablanca has become the most important financial hub of the whole continent. As regards transport infrastructures, the port system of Tangier Med – which includes a free zone and a series of industrial parks and logistic facilities – can boast maritime connections with more than 170 ports and 70 countries worldwide.

Economic cooperation between China and Morocco has recently improved: in May 2016 a strategic partnership was signed with 15 agreements between the two countries; on 17th November 2017

Morocco officially joined the BRI project. Following the II China-Africa Investment Forum that took

place in Marrakesh in November 2017, Morocco and China signed a cooperation agreement for two  economic  projects:  “Tangier  Tech  City”  –  aimed  at building  an  environmentally  friendly industrial city in the area of Tangier Med – and an electric transport system to be realized in Morocco by Chinese company “BYD Auto industry”.

Egypt is the biggest country in North Africa with a population of almost 100 million inhabitants, a figure higher than the rest of North African countries combined. The country lies in an enviable geographic position between the Mediterranean Basin, the Red Sea and the Middle East and, above all, it controls the Suez Canal, a strategic chokepoint between the Indian Ocean and the Mediterranean Sea. In the framework of the Egyptian strategic view “Vision 2030”, the Government proceeded in the direction of improving the business climate of the Country through a series of legislative interventions: in November 2016 Egypt decided to allow its currency (the Egyptian Pound) to float freely on the currency market; in June 2017 the new law of investment came into force; last April the Government announced plans to cut fuel and electricity subsides respectively by 19% and 48%.

All these measures aim to attract foreign investors for infrastructural projects in the country. Chinese company China Harbor Engineering Company Ltd will cooperate with Egyptian companies in the construction of new logistic and industrial areas along the Suez Canal. On the occasion of the visit of President Xi Jingping to Egypt in January 2016 the two countries signed 21 partnership agreements with a total value of $15 billion. The Chinese company “China State Construction Engineering Corporation” will cooperate to the construction of the new administrative capital 45 km east of Cairo, a project valued at $45 billion.

In summary, following the Suez Canal enlargement, Egypt plans to take on the role of industrial and logistic platform for Chinese investments in the framework of the Belt & Road. A short list of Chinese investment in some MENA countries (excluding Morocco and Egypt) can be seen in the figure below.