“The strong do what they can, and the weak suffer as they may,” says the 2500-year-old storytelling of the Peloponnese War.
This applies to how the Chinese have treated Sri Lanka and Pakistan who have been caught in projects which have left them in significant financial debt to China.
These states are risking become vassals with limited sovereignty when Chinese interests is at stake.
In April, the director of the International Monetary Fund (IMF), Christine Lagarde, China warned against overpowering partner countries with debt and the American think tank Center for Global Development has recently appointed eight partner countries in this high-risk group – including the nuclear power of Pakistan.
The relatively minor case of airport extensions in Greenland worth a value of 3.6 billion. kr. is unfolding in this context.
Some votes in the airport debate – including the Greenlandic self-government – have focused mainly on the economic aspect of Chinese investment. Understanding here is that in the Greenlandic context large investments from a state-owned Chinese company are based on a market logic.
It’s only about profit from this perspective.
Denmark has opposed the prospect of a Chinese winning offer.
According to the Danish government, the investments may have foreign and security policy consequences and therefore do not fall under the Self- Government Act, and therefore it is not Greenland’s own decision.
Whether it has not yet entered into an agreement with Denmark means that the Chinese contracting company China Communications Construction Company, which is prequalified for the offer, has been put out of play shows the final treatment in the County Council this fall.
Possible sanctions from China to be chosen from will – due to the significant involvement of the Danish government – risk also affecting Denmark, stressing how difficult it is for small states to create a balance in relations with China.
Lars Løkke Rasmussen has also anticipated any Chinese prosecution when, at the presentation of the possible co-financing agreement, he stated: “In relation to China, I would just like to say that we have no problem with a Chinese commitment.”
Economic and political logic
Two different logics are governing the question of how Chinese infrastructure investments should be interpreted: an economic and a political one.
In Greenland’s case, the desire for autonomy makes it imperative for the self-government to create a sustainable economy and the choice has fallen on major infrastructure investments. The Greenland Autonomous Economic Council with chairman Torben M. Andersen pointed out in a report last year that the airport project is not private economically profitable. This means that extensions themselves cannot cover interest and repayments, but require capital injections from the Self-Government.
There is a great risk of running into a fragile Greenlandic economy.
It is therefore understandable that Greenland is looking more at price and profit in the assessment of bids than at the sender’s address. Greenlandic politicians have also proved incomprehensible that Denmark can do business with China, but when Greenland wishes to do the same, it is a problematic decision that is in Copenhagen instead of Nuuk.
In May, in the Sermitsiaq newspaper, Kim Kielsen asked: “What is it that Denmark is so scared of? Again: We follow laws and regulations in our efforts to make Greenland’s infrastructure modern and modern. ”
Economic logic therefore dominates the Greenlandic argument, but according to the Defense Intelligence Service, China’s interest in Greenland’s natural resources and arctic transport routes is so high that short-term profitability is not critical for Chinese politicians.
Profit viger, while China instead seeks long-term resource security. The access is called in English “economic statecraft”.
The essence is that China uses financial means to promote foreign policy goals. The process is as old as it is effective: whip and carrot, but most often in reverse order. Marxism’s analysis, which forms the basis of the Communist Chinese regime, is based on this understanding of an economic base that is a prerequisite for political superiors – in other words, money and ownership, which determines the political agenda.
This thinking thus stands in stark contrast to the liberal economic logic, where cash and contracts are considered as isolated from deeper political power.
Political logic, on the other hand, captures this aspect: Politics is basically about power, and as American scientist in international politics, Hans Morgenthau, has formulated it, political power, unlike military power, is about a psychological relationship that is performed by orders, threats or persuasion.
That kind of relationship will easily occur between Greenland and China.
Greenland is highly dependent on Denmark’s block subsidies and has only 56,000 inhabitants (a little less than Kolding) and a gross domestic product of approximately 17.5 billion. It gives a grave imbalance in the relationship with the giant China, and it is a logic that also applies to a number of other states that are wise to understand large Chinese investments through political logic focusing on power and access to resources.
The question is, therefore, how China specifically embodies this power relations.
The Chinese Belt and Road Initiative is the epitome of this strategy with expensive infrastructure projects in about 70 countries, financed by loans that prove difficult to pay back.
The strategy will restore China’s position as the Middle of the Middle in a new world order, where the United States and Europe will lose both influence and allies, but most importantly, China must be recognized as an equal partner, while small states increasingly have to choose a side in the superpower game.
String of Pearls
Former German Foreign Minister Sigmar Gabriel, at the International Security Conference in Munich last year, characterized China as the only state with a truly global geostrategic strategy through their infrastructure projects, which, at the same time, according to Gabriel, attempts to weaken the EU through a stick and carrot policy.
Access is not, however, reserved for European countries.
The US Defense Minister, James Mattis, in June, he compared the Chinese behavior with the historical Ming dynasty, now available with “more muscles”, to lesser states in the region into a tributary relationship with Beijing.
The imperial ambition will in this sense means the establishment of vassal state-like conditions where states over time restrict their sovereignty in both domestic and foreign policy to support China’s new order vision.
Defense Minister Claus Hjort Frederiksen’s visit to the Pentagon in May also resulted in a direct warning from Mattis against the prequalified Chinese entrepreneur: Choosing China Communications Construction Company, there will be a risk of Chinese military presence in Greenland, said the message.
An unacceptable situation for NATO and in direct conflict with the American Monroe doctrine, which originally drew a line in the territorial sand against the presence of European colonial powers in the American sphere of interest, and which now – officially or not – will push hard back against increased Chinese influence.
Mattis’ analysis underscores the political logic of Chinese investment and finds it is expensive to get money in relations with China, as political interest rates are easy.
The uncertainty about the profitability of the airport project makes it likely that Greenland will at some point be forced to renegotiate the terms. If the offer is won by China, the Chinese will thus have a direct and decisive influence on the ability of the Greenland Government to finance security and service to its citizens.
A situation that strongly challenges Greenland’s ability to act on its own. It can end up like Sri Lanka with its more than 21 million inhabitants and a GDP of over 560 billion. Witness: Two large, Chinese-funded infrastructure projects in the Hambantota region have left the empire as the type of piece in the global power game that Greenland must avoid.
A major port as well as an airport in the middle of the jungle was established as prestigious projects in the presidential Rajapaks constituency, which ruled the country from 2005-2015.
But without any meaningful economic logic in the investments, there was a port without ships and an airport without airplanes. As a result, the loans could not be repaid.
The airport is not yet sold, but companies from the two Asian giants China and India are potential buyers while 70 per cent. of the port has been sold to the state-owned China Merchants Ports Holdings, which now operates it on a 99-year lease.
The conclusion is that China has actually taken over the strategically important port.
Sri Lanka has assured China’s regional competitor India that the port will not be used for military purposes. A promise that is hollow in the light of the fact that, in a meeting with President Obama, in 2015, Chinese President Xi publicly rejected China’s artificially listed islands in the South China Sea, would be militarized – a construction work reportedly contributed by China Communications Construction Company to.
The islands are now highly militarized and constitute the first line of defense in China’s “Anti Access / Area Denial” strategy, which is about cutting off military opponents access to mainland China.
This is a strategy aimed directly at the United States.
The Sri Lankan Hambantota port, which currently does not provide any economic role, is tho part of China’s new maritime Silkevej, which will increase trade through Asia to Africa and Europe.
However, the port may, with Defense Minister Mattis’ warning about China in Greenland, mean just as much as a Chinese naval base. The US Defense Ministry Pentagon characterizes the Chinese maritime strategy as “string of pearls” where investments and alliances secure access and resources in a number of countries in and around the Indian Ocean.
There is a risk that, in the long term, Greenland may also become a pearl on the Chinese string as a key point in the future as a formal part of the Chinese Arctic strategy from January this year.
The concern was also the background – though not officially – that Denmark in 2016 suddenly canceled the sale of the Greenlandic naval station Greenland when there was Chinese interest in buying the contaminated area.
A possible pearl did not get on the imperial string, but it will not be the last Chinese attempt. Debt is an elementary instrument in China’s economic state-of-the-art art, and Greenland is a sought after goal.
Small states in particular trouble
China’s first military base on foreign territory was completed in 2017 in the small African country of Djibouti, strategically located on Adenbugt road to the Red Sea and Suez Canal.
To great American surprise and annoyance, the Chinese naval base was opened and located only 10 km from the US Camp Lemonnier, where the United States only permanent base in Africa is central to US operations in Yemen and Somalia.
A most inconvenient situation for the United States.
Another small state, Tajikistan, had China as China’s largest investor in 2011, and in the same year a long-standing territorial dispute with China was resolved that China was transferred to an area of approximately 1,000 km2, which provides strategically important access to Afghanistan.
Today, China owns over half of the country’s external debt.
The dependence on Chinese will ensure that the land-based Silkevej over Central Asia is in good shape.
But Greenland, as the northernmost territory of the rich community, has military strategic value because of the island’s geographical location close to the United States. For example, during the Cold War, the American Thule base played a central role. Researchers Anders Henriksen and Jon Rahbek-Clemmensen speak in this connection about a Greenlandic map that can be played to gain benefits in the transatlantic relationship with the Americans.
In the Arctic, climate change has meant that difficult access routes have so far become available, which – coupled with the West’s tense relationship with Russia and Greenland’s unexplored natural resources – suggests that the value of the Greenlandic map rises in the future.
However, this value will fall drastically for the West if Chinese interests become part of the political process and thereby affect future strategic choices.
A rare inquiry debate on defense and military alliances in the Greenlandic county last year found wide political support for an independent Greenlandic membership of NATO. However, the lack of Greenlandic experience in security and foreign policy is likely to lead to insignificant considerations of the importance in that regard with a pure economic relationship with China.
Greenland must think and act strategically, as it is clear that there is a sharp limit to what Chinese presence and influence the United States is willing to accept in a NATO allied Greenland.
It is difficult for a small state to see the strong Chinese dragon directly – even for Denmark.
The pending Tibet case on police violations of protestors’ constitutional freedom and freedom of assembly during President Hu Jintao’s visit to Copenhagen in 2012 is one of several clear examples that Denmark’s ability to sovereignly decide on its own territory is challenged.
In 2009 Denmark also had to negotiate the stormy verbal note on Denmark’s view of Tibet’s status in place with China after Lars Løkke Rasmussen had visited Tibetan ex-Dalai Lama. The verbal note, despite several inquiries, has never been translated from English to Danish by the Ministry of Foreign Affairs, as it is feared that the Danish wording will not be accepted in Beijing.
In February of this year, Radio24syv was able to tell how the Chinese Falun Gong-based dance group Shen Yun has been trying to leap into the Royal Theater over a 10-year period, while the Chinese Embassy in Copenhagen has actively pressured the theater to prevent the group from appearing.
In March, Søren Espersen (DF) told Berlingske how China “speaks and talks and threatens people. They push small countries like Denmark, and I do not want to find myself in it anymore. […] If we refuse to correct, we will know what happens. Then we just have to go back to that time when Denmark’s business was boycotted by China because Lars Løkke Rasmussen had received the Dalai Lama at Marienborg. It only happens automatically. Then they forget a container in a port or do not make new licenses to Danish companies. ”
China is willing to take action behind both words and threats and Norway had to see a six-year diplomatic and economic gap in effective relations after the Nobel Peace Prize in 2010 was given to the Chinese dissident Liu Xiaobo.
Normal relations were re- established in 2016 in an agreement where Norway, among other things, promised to do its best to avoid damaging relations with China in the future. Even rich, experienced Scandinavian states soon come to heal when the Chinese act.
Bilateral negotiations are China’s preferred approach with a special preference for indebted small states. Therefore, they have also stayed out of the Paris Club of the world’s largest creditors, working together to deal with debt-debated state loans. Membership requires transparent loan terms and multilateral co-ordination, which would highlight China’s ambition to swap small towns’ bad investments and high interest rates for Chinese influence.
In the light of the EU’s screening mechanism
At the initiative of France’s President Macron, the European Commission is working until the end of 2018 to establish a framework for the screening of foreign direct investment (FDI) in the strategic sectors of the EU States.
The initiative is intended to prevent investments that “may endanger the security or public order of the Union or its Member States” as formulated in the proposal for a regulation. Focus is on strategic sectors such as security of supply and critical infrastructure such as technology companies.
Danish EU parliamentarians have already expressed the hope that an EU screening rule set can be used in the case on Russia’s construction of the Nord Stream 2 gas pipeline through Danish territorial waters. A case that Denmark does not want to stand alone with Russia. The rule is also intended to provide both Greenland and Denmark with the assessment of contractors to Greenland’s expansion of the country.
Earlier this year, Canada used national screening legislation to refuse China Communications Construction Company to acquire Canadian contractor Aecon Group Inc. worth a value of 7.4 billion. It happened with direct reference to protect Canada’s national security, as Aecon Group Inc. among other things, have contracts at work in both the military and nuclear sector in Canada.
Greenland’s opportunity to seek shelter from the common EU regulatory framework takes place through Denmark, as Greenland left the EU in 1985.
Thus, there is another major challenge to a future independent Greenland when considering a new EU membership in China’s growing shadow. Greenland must therefore act deliberately to avoid ending up in China’s global power game by investing focused on security and foreign policy strategic capabilities and taking its foreign policy decisions with great care.
In this context, the choice of airport contractor may be of crucial importance for Greenland becoming a Chinese vassal state.
This is a translation from the original Danish article which appeared in Raeson on September 15, 2018.
We edited the English translation found here:2018-09-Jakobsson-PRC Greenland Geostrat-Ræson
We would like to thank our colleague Gary Schaub, Jr. for bringing this article to our attention.
The two co-authored a piece on Denmark and NATO, which can be found here: