In an ongoing series exploring the effects of China’s Belt and Road Initiative on the cities involved, our next stop is the East African city-state of Djibouti: a strategic choke point at the entrance to the Red Sea whose future remains uncertain… even with the support of China.
China’s Belt and Road Initiative has been described as a modern-day silk road. Encompassing a series of massive infrastructural and investment projects across parts of Europe, Africa and Asia, it follows several routes from mainland and coastal China, across the sea and over land, through the Central Asian republics and several southeast Asian port cities and reaching as far as Djibouti and Mombasa in East Africa, Duisburg in Germany and Venice in Italy. As part of an ongoing series exploring the effects this huge project is having on the cities involved, our first stop was the Chinese city of Xi’an, next up Djibouti City.
[tttgallery id=”588″]
The city state of Djibouti is one of the principal East African beneficiaries of the Belt and Road Initiative. Located on the Bab el-Mandeb strait – the strategically vital entrance to the Red Sea, where ships travelling from East Asia can quickly proceed through the Suez Canal, over the Mediterranean and onto the Atlantic Ocean – it also has the advantage of providing the main channel through which neighbouring (landlocked) Ethiopia trades with the world.
Improving the access to Djibouti’s much larger neighbour
As such, China has already funded a major railway link connecting Djibouti City to the Ethiopian capital of Addis Ababa, which opened last year and has cut journey times down from days to hours. Financed and built by China, using Chinese technology and operated according to Chinese standards, this railway is specifically geared towards improving the super power’s access to Djibouti’s much larger neighbour, whose rapidly growing economy offers, among other things: cheap labour, tariff-free trade with the US market (through the African Growth and Opportunity Act) and an important source of soybeans.
Economic “choke point”
China’s current and future plans also involve funding construction of the Djibouti International Free Trade Zone (DIFTZ). Free trade zones are special economic areas, usually based around major ports, which allow for goods to be landed, stored, handled and manufactured under specific customs regulations and generally without customs duty. Representing an essential feature of a global economy that relies heavily on the frictionless movement of goods, free trade zones are absolutely vital in the kind of economic “choke point” that the Bab el-Mandeb Strait represents.
Djibouti as the New Dubai?
The DIFTZ will become Africa’s largest free trade zone when it’s completed, spanning 4,800 hectares and offering dedicated logistics, retail, business support and processing facilities and reportedly bringing an estimated 350,000 new jobs over the next ten years. It will also host the Djibouti Business District, set to be completed in 2021, which a slick rendering shows jutting out towards the sea, with cruise ships docked on the waterfront and buildings grouped around a series of concentric treelined boulevards. It’s all somewhat reminiscent of nearby cities of the Arabian peninsula, indeed, some have gone as far as to call Djibouti the New Dubai.
[tttgallery id=”589″ template=”content-slider”]
Unique strategic position
As with every city affected by China’s New Silk Road, things appear to be changing pretty fast. But for Djibouti, this is just the most recent episode in a long history of development brought about by its unique strategic position. While buildings from its long era as a French colony still fill the city, more recently, it has had the dubious honour of being the country with the most foreign military bases (US, China, France, Saudi Arabia and Japan all have bases stationed in the country). Meanwhile, its economic development in the past few decades has been driven by the decades long war between Ethiopia and Eritrea, during which it offered Ethiopia a vital link to international markets.
Eritrea is soon to open two new free trade zones of its own
But here’s the kicker, this war was finally officially concluded last year. Now that its whole stretch of coast is fully accessible to the Ethiopian economy, Eritrea is soon to open two new free trade zones of its own, in the Red Sea ports of Massawa and Assab, a move which could cost Djibouti a 75% loss in Ethiopian trade and port tax revenue according to one report.
Meanwhile, to add insult to injury, according to a recent article in the South China Morning Post, the aforementioned Addis Ababa-Djibouti railway has already had to restructure its debt because of underuse caused by power shortages, leading some Chinese reports to question whether the Belt and Road Initiative has fully accounted for the risk involved in these ambitious infrastructural projects in developing countries.
The volatile and capricious nature of the global market
This says a lot about the exceptionally volatile and capricious nature of the global market in which all this urban development is supposed to be happening. Just as Djibouti could be the New Dubai, so too could it end up lumbered with a couple of massive white elephants in the form of an unused railway and an empty business district. Either way, ordinary East African cities are likely to lose out as their national governments are forced to compete in a race to the bottom to attract global trade.
Read the article about our first stop: the ancient yet thoroughly modern Chinese city of Xi’an.
In an ongoing series exploring the effects of China’s Belt and Road Initiative on the cities involved, our next stop is Venice, the original end point of the medieval Silk Road, with ambitious plans for modern expansion as part of the New Silk Road.
[tttgallery id=”697″]
In March this year Italy became the first major Western power to endorse China’s Belt and Road Initiative. In doing so the country smoothed the way for some major transformations in its trade infrastructure, particularly in the historic port cities of Trieste, Genoa and, above all, Venice.
Echoes of Marco Polo’s travels along the medieval Silk Road are too tempting to ignore. Back then, in 1271 to be precise, the teenage Venetian sailed with his father and uncle to Acre, rode camels to the Persian port of Hormuz and continued on to the Shangdu summer palace of Yuan Chinese emperor Kublai Khan (the grandson of Genghis Khan), eventually spending several years as an advisor to the emperor. Upon his arrival back in Europe, the young merchant recounted his story to the romance writer Rustichello of Pisa, while both of them were imprisoned in Genoa (which was at war with Venice by the time Polo returned). The so-called Book of Marvels that emerged from this encounter became a bestseller and inadvertently reinvigorated European interest in trading with the Far East (Christopher Columbus was said to have carried a copy of the book on his voyage to what he thought was the eastern edge of China but actually turned out to be the Americas).
Expansion and Preservation
Venice has changed a lot since Polo’s time. After enjoying several more centuries as one of Europe’s preeminent maritime powers, it experienced a steady decline following the shift in European trade from the Near East to the New World, to which Venice had relatively less access compared to the Western European powers. By the early 20th Century, it became clear that the lagoon could no longer support trade on the scale suitable for maintaining competition with other Mediterranean ports. An extension was therefore built on the nearby mainland in Marghera which re-established the wider Venice region’s important position in Mediterranean maritime trade, while preserving historic Venice so that it could become one of world’s most popular tourist destinations.
[tttgallery id=”698″]
This same spirit of expansion and preservation has fuelled a new proposal to build an offshore port eight nautical miles off the mainland. The Venice Offshore-Onshore Port System (VOOPS), as it is called, is intended to provide Venice with a maritime port in deep waters outside the lagoon, thereby allowing the Port of Venice to handle the largest cargo ships that carry over 20,000 TEUs without causing disruption to the area around historic Venice. In the process, it will also link the Venice with the nearby ports of Chioggia, Porto Levante, Ravenna, as well as the inland ports of Mantua and Padua, the Greek port of Piraeus (also receiving the Belt and Road treatment), and markets across the central European mainland.
“Made in Italy”
The ultimate prize, however, is stronger links with Chinese and East Asian markets hungry for goods “Made in Italy”: Ferraris and Lamborghinis, Italian wine, food, fashion, art, interior design and all the many Italian products that remain synonymous with quality and luxury. Integration will also bring more Chinese tourists to Venice, a big destination for a population still inspired by the story of Marco Polo.
The problem is VOOPS was approved under the previous President of the Venice Port Authority Paolo Costa, who left the role in 2017. His replacement Pino Musolino has been considerably less enthusiastic about the plan, describing it as “pharaonic” in scope, totally out of proportion to the projected traffic passing through the upper Adriatic. While the project has not been outright rejected, its future is very much uncertain.
Populist Indecision
This indecision repeats itself on the national stage. Last year, elections delivered success for two populist parties, the Five Star Movement, who became the largest party, and the newly rebranded Lega (previously the northern Italian-focused Lega Nord), who led the largest coalition. After long negotiations, the two parties went into coalition together, with their two leaders, Luigi di Maio and Matteo Salvini each becoming deputy prime ministers under the premiership of compromise candidate and Independent politician Giuseppe Conte.
Whereas di Maio has been relatively positive about the Belt and Road Initiative, Salvini is much less enthusiastic, refusing to meet the Chinese President Xi Jinping when he visited earlier this year. Since the election, Salvini’s star has risen and the M5S popularity has plummeted, which means that it will likely be some time before Italy’s endorsement of the Belt and Road Initiative brings concrete results in Venice.
In an ongoing series exploring the effects of China’s Belt and Road Initiative on the cities involved, our next stop is the port of Rotterdam in The Netherlands, which must deal with increasing competition from land and sea as a result of China’s rise.
After a third of its buildings were destroyed during the 1940 Nazi blitzkrieg invasion of The Netherlands, the Port of Rotterdam rose phoenix-like from the rubble to become the world’s busiest port by 1962.
Benefitting from its position at the entry point of Western Europe, a region that was (and, of course, continues to be) home to several of the world’s wealthiest countries, Rotterdam held this position for a remarkable stretch of over four decades, until it was finally overtaken in 2004, first by Singapore and then by the Chinese Port of Shanghai. Since then, it has fallen out of the top ten largest ports in the world and now lies eleventh behind eight Chinese ports, as well as the ports of Dubai and Singapore.
[tttgallery id=”659″]
This probably says as much about recent changes in China as it does about the fortunes of Rotterdam and Europe more broadly: China, a country with a population twice that of the whole of Europe, has merely begun to close the gap.
Even so, the trend is suggestive of a general direction of travel that’s worth exploring.
A big port with little to gain
As previous articles in this series have shown, China’s Belt and Road Initiative has largely targeted cities which will can be easily integrated into China’s trade routes and can directly benefit from the investment and technical and logistical expertise that China offers. As a port which was already developed, and already supported by a prosperous national economy, Rotterdam has relatively less to gain from Chinese support.
That said, the railway-based “Belt” half of the Belt and Road Initiative is likely to have at least some indirect impact on Rotterdam’s role in transnational trade.
From centre to periphery
Rail’s main advantage is that it offers a middle ground: less expensive (though slower) than air freight and faster (though more expensive) than ship freight. Whereas the journey from China to Rotterdam takes a ship well over a month to complete, and on average around 55 days, the same trip can now be completed within two weeks by rail. This middle ground is also achieved with markedly less carbon emissions, something which will become increasingly important in the century to come.
The trouble this poses for Rotterdam is that it lies on the very periphery of China’s budding transcontinental rail network, something which is underlined by the fact that other European nations had already conducted rail trade with China for several years before the first freight train from China arrived in Rotterdam on July 23 2015.
What’s more, the frequency of trains to Rotterdam remains considerably lower than it is for other European cities east of Rotterdam. As an article in the Dutch newspaper AD explains, while the number of trains that travel between China and Europe is now 24 each week, many of these don’t go beyond Germany, mostly ending up in Duisburg in Germany and other cities in Central and Eastern Europe.
This suggests that, as the rail network continues to develop, Rotterdam could become a progressively less essential source of international trade for other countries in the European heartland.
Panic in the press
This is certainly the fear expressed in the Dutch press, which has become increasingly panicked about China’s infrastructural development in recent years, seeing it as a direct threat to the country’s economy, and a general threat to the West’s global pre-eminence.
Surveying the facts on the ground, however, it’s hard not to conclude that Rotterdam will actually probably be fine. It’s a relatively wealthy city in a very wealthy country, whose diverse and highly developed economy is more than capable of riding the wave of change brought about by China’s global infrastructural development, taking advantage of new and improved connections with the European heartland and beyond.
The decline of Western global pre-eminence is very real, but really only significant because of how long it took to happen. So long as policymakers and port management swallow their pride and make the best of the new situation, nothing will change for countries that once stood out because the rest of the world had been held back by centuries of Western imperialism.
China’s Belt and Road Initiative has been described as a modern-day silk road. Encompassing a series of massive infrastructural and investment projects across parts of Europe, Africa and Asia, it follows several routes from mainland and coastal China, across the sea and over land, through the Central Asian republics and several southeast Asian port cities and reaching as far as Djibouti and Mombasa in East Africa, Duisburg in Germany and Venice in Italy. As part of an ongoing series exploring the effects this huge project is having on the cities involved, our last stop was Athens, next stop, Tehran.
In May last year President Trump pulled the US out of the Joint Comprehensive Plan of Action, the agreement better known as the “Iran Nuclear Deal”. Established between Iran and the US towards the end of his predecessor President Obama’s administration, the deal was meant to reverse decades of hostility between the two nations and bind Iran to reducing its nuclear capability, while committing the US to lifting a sanctions regime which has had extremely damaging effects on Iran’s economic development over the years. With Trump’s reversal, Iran returned to its role as a pariah state in the eyes of the world’s pre-eminent superpower.
[tttgallery id=”635″]
It is in this context that China is seeking to position Iran as one of the essential nodes in its Belt and Road Initiative. Which begs the question, will America’s new relationship with Iran get in the way of China’s plans?
It’s a question that gets us closer to the heart of what this whole Belt and Road project is really about. In essence, it represents a threat to the current world order and a roadmap for a 21st Century dominated not by the US but by China. But this isn’t the place to explore these big geopolitical maneuverings. Instead, we’re here to understand how they affect things at the urban scale of Tehran.
Bringing in a host of international rail investment
The effects of the Belt and Road Initiative will be most dramatically felt in the rail infrastructure of both Tehran and Iran more broadly. Most importantly, China is building a 3,200km railway stretching from its mainland, passing through Kazakhstan, Uzbekistan and Turkmenistan, and ending up in Tehran. As part of this, China has initiated a project worth $1.5bn to electrify the railway line that runs from Tehran to the nearby city of Mashhad, and which also passes through Shahrud, where the Iranian Space Agency is located.
Much of this development also brings in companies from several other international players. Ferrovie, Italy’s state rail company, has signed a $1.37 billion deal to build a high-speed railway between the nearby cities of Qom and Arak. Russian company Transmashholding and French company Alstom are supplying rolling stock and carriages. Meanwhile, Japan has signed a deal to provide $10bn in funding for various railway ventures, including two railways linking north and south Tehran.
However, new US sanctions on Iran are set to affect all of these countries later this year (along with China and also Greece, Turkey, South Korea and India). As well as posing a serious obstacle to the aforementioned development, the sanctions will also prevent Iran from selling oil to these countries, which will in turn limit the state’s ability to supply its citizens with certain basic necessities.
The effect of sanctions was already felt on 25 May last year, when a series of spontaneous demonstrations sprang up in Tehran, with shopkeepers closing their stalls and protestors filling the historic Grand Bazaar, in response to out-of-control inflation that had seen the value of Iran’s rial drop to 90,000 to the dollar.
Though these protests weren’t a direct result of the sanctions – Iran had already experienced protests throughout the country earlier in the year, the biggest since the Green Movement of 2009 –it seems likely that further sanctions will lead to more protests, since they will help to exacerbate several pre-existing problems in the city.
A majority in Tehran are barely managing
As the most populous city in western Asia, with a population of fourteen million if you count the wider metropolitan region, Tehran has its fair share of complex urban problems. In addition to financial difficulties, the city also hosts some of the world’s highest levels of congestion and air pollution. Meanwhile, citizens face a major cost of living crisis and suffer under an atrocious planning regime: the legacy of an inadequately implemented 1960s masterplan developed by “godfather of the shopping mall” Victor Gruen (for more on this check out Oliver Wainwright’s recent article on Iran for The Guardian).
All this adds up to a situation which is barely manageable for the majority of citizens.
Citing a survey conducted by Iran Urban Economics Scientific Association on Iran’s English language papers the Financial Tribune claims that 70% of Tehran’s population “have exceeded the optimum level”, by which they mean the city can only provide just over two million of its residents with decent living conditions.
In light of this, and the forthcoming sanctions escalation, it feels like the Belt and Road Initiative is doomed to make only a dent in the mounting problems faced by Tehran’s citizenry.
That is, unless China willfully flouts the American line. Watch this space.
In an ongoing series exploring the effects of China’s Belt and Road Initiative on the cities involved, our next stop is the port of Piraeus in Athens, Greece, which has become the fastest growing port in the world despite a deep economic crisis in the rest of the country.
China’s Belt and Road Initiative has been described as a modern-day silk road. Encompassing a series of massive infrastructural and investment projects across parts of Europe, Africa and Asia, it follows several routes from mainland and coastal China, across the sea and over land, through the Central Asian republics and several southeast Asian port cities and reaching as far as Djibouti and Mombasa in East Africa, Duisburg in Germany and Venice in Italy. As part of an ongoing series exploring the effects this huge project is having on the cities involved, our last stop was the East African city of Djibouti, next stop Athens and the adjoining port city of Piraeus.
[tttgallery id=”611″]
Fastest growing port in the world
In 2015, China was one of several countries to cash-in on the fire sale of public infrastructure that followed the third of three bailouts of the Greek economy by the European Union and the International Monetary Fund. The following year, the state-owned shipping company COSCO (the largest shipping company in China and the second biggest in the world) acquired a majority (51%) share in the Greek port of Piraeus. Since then, the amount of goods passing through the port has more than tripled, making it the fastest growing port in the world, the largest in the Mediterranean and the third largest in Europe, after recently displacing Hamburg.
Located inside the wider Athens urban area, Piraeus presents a useful urban manifestation of the competitive tensions between the Chinese Belt and Road Initiative and the European Union, two major transnational projects that are governed by markedly different economic policies.
Indeed, the conditions which allowed the Chinese Belt and Road Initiative to extend so decisively into the Mediterranean cannot be separated from the recent fate of the European project: in particular the latter’s hugely damaging commitment to austerity and the effect that its structural flaws have had on the nations on its periphery, most notably Greece, but also Portugal, Spain and Ireland (the so-called PIGS).
Widespread urban unrest
China’s involvement in Piraeus first gathered pace at the very beginning of the Greek Debt Crisis, when it leased two of the port’s three terminals for a thirty-year period, at a cost of €100m a year. The first rumblings of instability emerged shortly after the conclusion of this deal, with stark warnings about the Greek economy leading to a major crisis of confidence and the first bailout in 2010, along with tax increases and cuts to public expenditure which led to widespread urban unrest.
Economic and political turmoil
After five years of economic and political turmoil, by which time half of the country’s young people were unemployed and net migration had reached into the hundreds of thousands, the Greek people elected a new government led by Syriza, a coalition of the radical left who were promising to halt the catastrophic debt restructuring policies being forced upon the Greek economy as part of a third bailout. And yet, after six months of negotiations, the EU and IMF would not budge. Then followed a hastily organised referendum, asking if the Greek people accepted the terms of the bailout, which, despite returning a decisive “OXI” (No) vote, the Syriza government decided to ignore, instead embarking on a humiliating U-turn in which they accepted it under worse conditions.
Greece was forced to commit to privatising €50bn worth of public infrastructure
Even after its first bailout package, Greece was forced to commit to privatising €50bn worth of public infrastructure. Yet serious efforts to privatise only really started to happen after this third bailout. Since 2015, the government has sold fourteen of its airports to the majority publicly-owned German company Fraport and has sold its formerly public rail operator to the Italian state-owned rail company Ferrovie. As well as Piraeus, it has also sold the port of Thessaloniki to the German-led fund South Europe Gateway Thessaloniki.
Despite these privatisations, or rather because of them, Greece’s debt burden is not much less than it was at the beginning of the crisis. When measuring this debt burden against GDP, the picture is even worse, with the ratio going from 127% to 179% between 2009 and 2017. With the average salary for workers declining from €1285 a month in 2012 to €929 in 2018 and total hourly labour costs also currently about half the eurozone average, it is difficult to see how the country will claw its way out of its huge debt burden without economic stimulus and debt relief. However, this does not seem likely any time soon.
All this brings us back to the main story about Chinese and European economic policy. In response to the global financial crisis, China channelled a massive Keynesian stimulus into upgrading its infrastructure (something we explored in the first article in this series on Xi’an). This in turn sparked demand for resources internationally which spurred on the establishment of the Belt and Road Initiative.
Hard to rehabilitate themselves
Meanwhile, the European Union has done the opposite, especially in the countries hardest hit by the crisis, shifting the financial burden onto citizens and taxpayers rather than the banks which cause the crisis in the first place. In the process, it has starved these countries of demand, making it even harder for them to rehabilitate themselves.
In this context, it’s difficult not to be positive about the contrasting fortunes of the Chinese-run port when compared to Greece’s overall economy. No doubt the newly employed workers in the port of Piraeus will be tempted to see things that way.
In an ongoing series exploring the effects of China’s Belt and Road Initiative on the cities involved, our first stop is the ancient yet thoroughly modern Chinese city of Xi’an.
China’s Belt and Road Initiative has been described as a modern-day silk road. Encompassing a series of massive infrastructural and investment projects spread across parts of Europe, Africa and Asia, it follows several routes from mainland and coastal China, across the sea and over land, through the Central Asian republics and several southeast Asian port cities and reaching as far as Djibouti and Mombasa in East Africa, Duisburg in Germany and Venice in Italy. As part of an ongoing series exploring the effects this huge project is having on the cities involved, our first stop is the Chinese city of Xi’an.
[tttgallery id=”568″]
Xi’an is a good place to start discussing the Belt and Road initiative. Not only was it where the original silk road began but its transformation in recent years also captures some of the difficulties presented by such a massive initiative.
While the city had been a key crossroad between China, the Middle East and Europe for millenia and was the first capital of a unified China, its recent history was one of relative stagnation. Being situated squarely inland, it missed out on the country’s early moves toward economic liberalisation, which primarily benefited coastal cities that were better connected to international markets.
From stagnation to departure
The big turning point came several years before the official announcement of the Belt and Road Initiative. In 2008, the Xi’an International Trade and Logistics Park became China’s largest inland port. Then, shortly after that, in 2009, Zhao Leji — then secretary of the Shaanxi province of which Xi’an is the capital and now one of the seven members of the China’s most senior governing body — secured party approval to turn the city into an “international metropolis”.
This designation ensured significant funding for massive infrastructural expansion: encompassing rail, bus and air travel. In 2012, excavation began on a large subway network. That same year, the city’s airport was significantly expanded and the Xi’an North Railway Station was opened. Serviced by the Longhai railway, the train station quickly became one of Asia’s largest rail terminals, now serving 82 million passengers each year.
Huge influx of foreign visitors
All this lends itself well to another central aspect of the Chinese government’s plans for Xi’an: promoting tourist trade. China is set to be the world’s most visited country by 2030 and Xi’an’s rich cultural heritage means it is well placed to capitalise on this new growth area. Along with the famous Terracotta Army contained within the 2nd Century BC mausoleum built for China’s first emperor Qin Shi Huang, Xi’an hosts a 14th Century great mosque set within a thronging Muslim quarter, a 7th Century Buddhist Pagoda and a fully intact city wall, some of which also dates back to the 7th Century. With the active support of the government and such a plethora of attractions, there’s sure to be a huge influx of foreign visitors to the city in the coming years.
This shift to tourism and infrastructural integration is suggestive of the way many Chinese cities have been changing in the 21st Century: less emphasis on foreign trade, greater logistical and infrastructural integration and a focus on both mass consumption and mass production. For cities like Xi’an, the future will be fast and it will be cosmopolitan.
As people become better connected and more exposed to foreign experiences, all while consuming ever more resources, the question is whether it will be possible for the government both to contain and sustain the forces brought about by this more connected and fast-moving urban reality.
World’s largest air purifier
On this note, Xi’an already has some of the worst pollution in the country, due mainly to the fact the city’s winter heating is derived from coal. To combat this, the city has built what is believed to be the world’s largest air purifier, standing at 100-meter-tall. The tower — which relies on solar updraft and filters to clean the air — has already managed to significantly improve air quality in the city, with smog ratings having been reduced to moderate levels even on severely polluted days.
Tellingly, this already sizable tower is in fact a prototype for a much larger version, projected to reach 500-meter-tall and capable of purifying most of the air within a small city. As ever grander technological solutions emerge to handle the ever growing output of all this economic acceleration, it’s fair to wonder whether China can continue to keep a handle on all the forces set in train by the Belt and Road Initiative.
