New piece: Norway, Mongolia and ‘normalising’ Chinese sanctions

A lot has been written about Norway’s normalisation of relations with China after six years of boycott. Most of what I read boils down to either ‘it’s good for seafood’ or ‘it’s a national humiliation’. I thought it could be interesting to assess how much the agreement is worth to China as foreign policy ‘goods’, rather than how much of a win (or loss) it is to Norway. China spent an amount of effort on enacting (more or less covert) diplomatic and trade sanctions against Norway, and after a few years won a sort of (non-)apology from Norway, together with, more importantly, the ‘normalisation’ of covert sanctions as a tool for extraterritorial enforcement of its policies on dissent. I’d say the existence of those two quantities is clear to everyone involved, as is the fact that they add up to a net policy win for China, but the question is how big a win it was. So one thing I set out to do was clarifying the nature and ‘cost’ of the Chinese sanctions against Norway. It turns out the sanctions were very shallow, with hardly any significant effect on China-Norway trade, let alone on the Norwegian economy. If you look at the numbers, rather than basing your analysis on literary criticism of the Beijing joint statement, you’ll see that the ‘normalisation’ agreement indeed handed China a considerable victory.

I guess you could say that such is the nature of relations between countries the size of those two, and that such an assymetric end result can’t beused to judge the expertise of the Norwegian diplomats and policy makers involved. I’m not going to discuss their policy-fu, although word has it that the Norwegian ambassador in Beijing, Svein Ole Sæther, did work on his tennis skills during his long tenure. (As of press time, it’s not clear to me if he learnt Chinese; at any rate, as any fule no, 闲中好,尽日松为侣。) But one way to approach the issue of whether this big victory for China was the only possible result is to look at another example of Chinese sanction policy: Mongolia after the last Dalai Lama visit. Now Mongolia is very different from Norway in many ways, especially vis-à-vis China, but it’s probably the best approximation to the Norwegian case. China sanctioned both countries for (how to put this) allowing non-state local entities (the Nobel committee and Buddhist clergy) to interact with individuals the Party-state dislikes (Liu Xiaobo and the Dalai Lama). In both cases China threw a diplomatic tantrum, and applied sort-of-covert economic sanctions. In both cases the boycott ended with deniably contrite statements of ‘acknowledgment’ of China’s ‘core interest’. And those statements, remarkably enough, came out within days of each other, for reasons that probably involve larger geopolitics than the relations with these two countries. So I think the comparison is warranted.

Now to do that comparison you need to do the same thing as in the Norwegian case: look at what the sanction policy against Mongolia looked like, and what China got in return. Here it’s easy to see that sanctions against Mongolia were potentially crippling, what in turns also means they were somewhat risky for China (you don’t normally want to destroy an economy that overwhelmingly depends on you). That part is uncontroversial. On the other hand, the ‘win’ for China has been reported as Mongolia ‘banning’ future Dalai Lama visits, which indeed would be a big concession were it true. Only it isn’t. In fashionable parlance, it’s ‘fake news’, or maybe guidance of public opinion, which I think can be traced back to a specific Xinhua story. To put it briefly, the Mongolians stated their non-apology through Mongolian media, then Chinese media spun it out of control. To understand how big the Mongolian concession actually was, you need to go to Mongolian-language sources and that’s another thing I did.

The details of the analysis of the less known among these quantities (the costs and ‘wins’ for China, Norway and Mongolia) are in my latest piece for the CPI Analysis blog, reposted by The News Lens with slightly modified spelling (and the Chinese bits in traditional characters). Next week I’ll post an extended version on this blog, including the numbers I used to measure the impact of sanctions on Norway, and more details from the work of Chen and Garcia, the authors of what I think is the best analysis of the salmon boycott.

Tempus fugit: Jahresrückblick 2015

Here’s a quick overview of what I’ve been up to in the last twelve months.

Greenland

Largely unnoticed by English and Danish-language media, Greenlandic officials visited China during 2015 to discuss not just mining, but also infrastructure projects. Greenland’s coalition agreed soon afterwards on plans to renew existing airports and build new ones, as well as a container port in Nuuk and new hydro-power plants.

Meanwhile, two mining projects which China Nonferrous (中色) has signed (no-strings-attached) agreements to develop and buy into are moving towards getting production permits: GME’s rare earth and uranium Kvanefjeld deposit and Ironbark’s Zn+Pb project at Citronen fjord. If they do go ahead and Nonfezza does get involved, China’s SOE would become (by far) the largest actor in Greenland mining, but it’s too early to toast to that yet (think ore prices, domestic opposition in the case of the uranium project).

For background on Chinese interest in Greenland’s ores, there’s my post from March for the CPI blog. A new post there gave an update as of December, including the remark that the Citronen fjord project could make China Nonferrous (and of course Ironbark) not just the world’s northernmost miner, but their (largely foreign, quite likely Chinese) staff the inhabitants of the northernmost human settlement on dry land at 83°N.

2015 started with news of General Nice (俊安集团) acquiring production rights for the once promising Isua iron ore project. I wrote a long read on that company’s rather peculiar history, including plenty of data you won’t find elsewhere (at least in a Western language). Later updates on General Nice are also worth a look if you follow what is still Greenland’s only Chinese production permit holder.

Russia

Russia’s recent ‘pivot’ perhaps could be more adequately described as ‘away from the West’ than ‘to Asia’; admittedly increased cooperation with China in some domains has been overspun, especially by Russian and Chinese state media, to make up for the fact that trade between the two countries, and crucially between Russia and Heilongjiang, has actually gone down rather drastically. But the fact that Russia, and especially the Far East, needs Chinese investment more than ever before, means potential Chinese investors are being offered better conditions by the Russians (and sometimes, indeed, accepting them).

The Sakha Republic (Yakutia), specifically, has been quite active in trying to attract Chinese investment, for projects such as, first of all, the bridge over the Lena in Yakutsk, but also others like the Tirekhtyakh Тирехтях lead mine at 69°N, to mention one nobody else seems to have reported in English. For more, go check my posts on Yakutia.

Meanwhile in Vladivostok, or actually near it, Russia’s largest casino had its grand opening. As it was to be expected, most customers were from Mainland China even before they started advertising there at all.

Iceland

Other than their projects in Greenland, China Nonferrous also have plans to build an aluminium smelter in Iceland. Their agreement is all non-binding and the plans didn’t look that serious at first, but (again unbeknownst to Western-language media) meetings in China in the last few months suggests they are planning to go ahead with the thing.

In July, car maker Geely 吉利 (Volvo’s parent) agreed to buy a stake in Carbon Recycling International, a methanol fuel producer.

Construction of the joint Chinese Icelandic aurora observatory is, to put it mildly, delayed, but it has finally started and should be working next autumn.

CNOOC (中海油) and local partner Eykon Energy have started exploring for oil in the Icelandic sector of the Jan Mayen area (Drekasvæði).

Ragnar Baldursson, Iceland’s representative at the Wuzhen internet conference last month, had the honour to become the only Western official to be quoted by Chinese media at the event. His comments (actually quite noncommittal) were spun as “high praise” for Xi Jinping’s ‘cyber sovereignty’, freedom-and-order speech.

Norway

The Hålogaland bridge in northern Norway is already being built. The contractor for the steelwork is SRBG (四川路桥), a Sichuan SOE that won that tender in rather peculiar ways. Peculiar enough, in fact, that two people ended up in jail in Germany as a result. My modest investigation on the case is still the only English source of information on what’s the first Chinese transport infrastructure project in the Arctic.

Huang Nubo 黄奴般, poet, mountaineer, tycoon, has given up on buying land in Iceland for now. Plans to buy a plot in Norway are stalled as well, allegedly for political reasons.

Chinese media

Spurred by an article on Icelandic media (viz. Stundin) on China Radio International’s outlet targeting that country, I did some research on the state broadcaster’s ambitious network of ‘borrowed boats’, radio stations and news sites in several languages that help disseminate the views of the Chinese state while staying discreet about their status as part of the state media system. An July article of mine for the CPI blog focused on GBTimes, the arm of that network covering includes Northern Europe.

A Reuters report on CRI’s network came out in November. It had more of a US focus, but it did discuss GBTimes as well. I wrote an update a few days after that, including, as is my wont, some previously unpublished information e.g. on CRI’s affiliate in Mongolia.

A couple of weeks ago, CRI got a new partner, this time in Siberia. That partner also has an interesting background, in particular as a defence contractor.

Languages

All this reporting wouldn’t be possible without (often rather unrewarding) work on original-language sources, in English and Chinese of course, but also in Russian, Korean, Danish, Icelandic, Norwegian, Mongolian and a few others. Those specifically interested in the linguistic angle might like my recent guest post on the names of the Lena river on Language Log; more than my post, I recommend the comments, where you’ll find remarks by experts in Tungusic and Yukaghir.

Hålogaland: the first Chinese-built bridge in the Arctic

After winning a tender in ways unorthodox enough to land two engineers in jail, a Sichuan SOE has become the first Chinese company to be involved in a major transport infrastructure project in the Arctic region. A rather peculiar kind of partnership with a German bridge-builder helped a company whose previous activities abroad were concentrated in Eritrea to be chosen over established Western competitors to build the steelwork for large bridge in northern Norway. The fact that the project, started in late 2013, has gone unimpeded despite the freeze in Chinese-Norwegian relations after Liu Xiaobo’s Nobel provides an interesting data point to understand what exactly falls under the boycott.

An unprecedented success

In October 2013, Sichuan Road and Bridge Group (SRBG, 四川路桥), owned by the provincial government, won the tender to build the steelwork of the Hålogaland bridge near Narvik, some 200 km inside the Arctic circle. Over 1500 m long, the suspension bridge will be the second longest of its kind in the country and will shorten the travelling distance northwards from Narvik by 18 km. It was the first time a Chinese contractor was awarded such a project in the West, and SRBG’s first-ever contract in Europe.

SRBG has completed a number of technically impressive projects in China, such as the suspension bridge with the second longest mainspan in the world, the Xihoumen 西堠门 that links Zhoushan 舟山 to the mainland. In contrast to the multiple collapses of often just-built bridges that have made news in China in recent years, SRBG has a comparatively clean record. Serious damages to SRBG bridges have been blamed on exceptional natural conditions, such as the 2009 collapse of the Chediguan 彻底关 bridge SRBG was chosen to rebuild after the Wenchuan earthquake. (The new collapse was personally explained by company chairman Sun Yun 孙云 as due to the unforeseeable impact of an “enormous rock”.) But a company partially established by SRBG, Sichuan Chuanjiao Road and Bridge (四川川交路桥有限责任公司), has a decidedly less stellar record: the partial collapse in 2013 of the third Tuojiang 沱江 bridge Chuanjiao was building in Ziyang, eastern Sichuan caused five deaths. At the time, the chairman of Chuanjiao was Huang Jinping 黄金平, also a vice-general manager at SRBG. Huang would eventually fall victim to an investigation for “serious violations of discipline”, usually a euphemism for corruption.

Impressive though SRBG past achievements in bridge building already were, the Norwegian tender was an unprecedented success. Although the company’s activities abroad began as far back to 1979, their major operations so far have been in Cambodia, Yemen, Tanzania, Micronesia, and most saliently Eritrea, where SRBG have even diversified into gold mining. Winning contracts in at least some of those locations, Eritrea in particular, surely involves more government-to-government contacts to a greater degree than technically outcompeting other bidders. SRBG’s Hålogaland contract, the second cheapest contender for which was MT Høygaard, looked like the first such infrastructure project awarded to a Chinese company in Scandinavia.

An unorthodox partnership

The thing is, SRBG weren’t competing on their own. As I, and seemingly nobody else in a Western language, reported in 2013, SRBG won the tender in partnership with DSD Brückenbau, part of a German group with a long experience in steel construction in Europe, the Middle East and China. The exact nature of the partnership remained elusive: while Chinese reports mentioned SRBG had sought DSD’s help to enter the European market, the contract was formally awarded to a joint venture of SRBG with a little-known Serbian company that shared an address with a DSD subsidiary. The German connection was still obvious: the contract was officially signed on SRBG’s side by He Saizhong 何赛中, a senior engineer with a decades-long career in the German bridge-builder, not known to work for the Sichuan SOE.

The truth would emerge a year later, during a trial conducted in Saarbrücken, Germany. He Saizhong, the DSD engineer, and Frank Minas, a colleague, were accused of defrauding their employer by preparing the Hålogaland bid at DSD, only to eventually present it as their own. As I have learnt from Helmut Jakob, a journalist who covered the trial for local media, the two first convinced the company to act as a subcontractor, managing the project through a Serbian company they were connected to. In the end, DSD was completely left out of the project when the project management was taken over by a company led by the wives of the two engineers. He Saizhong and his colleague were found guilty of ‘breach of trust’ (Untreue) and sentenced to four years’ imprisonment. The Chinese company has not itself been accused of fraud.

Although He Saizhong’s central role in the project should have made it clear to everyone from the beginning that the well-known German company was in some way behind SRBG’s bid, the Norwegian public roads authority (Statens vegvesen) have denied they were misled by the way the offer was presented. Einar Karlsen, a project manager for the project, told me in March that, although DSD had been originally mentioned as a possible subcontractor, the German company “was not important” in the evaluation of the bid. It is possible that the evaluation was only based SRBG’s past merits, but the fact that the offer was prepared at DSD by a DSD team, together with reports that SRBG had sought to partner with the German company, make it safe to conclude that SRBG did indeed benefit from the unorthodox way the offer was prepared. A source suggests it was He Saizhong who facilitated the Sichuan company’s partipation in the project.

An unimpeded deal

Construction is going ahead, seemingly unhindered by the German trial and the imprisonment of the contractor’s “representative”, and is expected to finish in 2017. Norwegian reporting on the bridge, an important project for the region, appears to have made no mention of the trial in Germany before an article published in a local newspaper last September (paywalled).

The defrauded German company and the now imprisoned He Saizhong are not the first to be sacrificed for Sichuan Road and Bridge to win contracts. In 2008, a manager with SRBG had admitted to bribing an official to earn the company the contract for the Xinlongmen 新龙门 bridge near Chongqing.

The fact that SRBG’s participation in a major project in Norway was not blocked by Chinese authorities is a telling detail about the unofficial boycott imposed on Norway after the award of the Peace Nobel prize to Liu Xiaobo in 2010. This could be the result of a publicity calculation. Most known aspects of the boycott can be interpreted as ways of showing the Norwegian public they were being punished: it became harder for Norwegians to get Chinese visas, salmon shipments were rejected; real-estate tycoon Huang Nubo 黄怒波 could not buy a 100 hectare plot in the north of the country until relations get better. Not letting SRBG bid to build their bridge would have simply meant a European competitor would build it.

Russian Arctic event kicks off today

The long-awaited patriotic Arctic event organised by a Russian NGO with strong state backing I wrote about recently (‘coming to a Pole near you‘) begins today with a ceremony in Moscow, but with a few changes. What was originally planned to be an expedition to the North Pole has been downscaled to a series of events in Svalbard, both in the Russian settlement of Barentsburg and in Longyearbyen.

The most visible aspect of the event, the unfurling of a 1000 m2 Russian flag and 250 m2 flags of Russian regions, towns and “socially responsible companies” will still take place, although in Svalbard and not at the Barneo polar station as previously announced. This, as well as the expected presence at the event of representatives of Norway and Russia-friendly countries like Cyprus and Serbia, somehow dilutes the patriotic overtones and moves the focus away from what had been described as an assertion of sovereignty.

The event is part of the celebrations of the 70th anniversary of the end of World War II, which Norway’s PM Erna Solberg, along with other Western leaders, will be boycotting over the Ukraine crisis. Ironically enough, not only will enormous flags of Crimea and Sebastopol be prominently displayed in Svalbard, but one of the organisators of the event is Sergey Mironov, a politician under Western (and Norwegian) sanctions, which he has said he’s “happy” to be under. Mr Mironov doesn’t seem to be flying to Svalbard, but he is supposed to be taking part in today’s ceremony on Poklonnaya Hill in Moscow.

The organisators have photoshopped a gorgeous picture of what the enormous flags will look like when laid on the snow in Svalbard. The work is a bit short of perfect: the Russian flag in the picture looks the same size as the regional flags, while it’s supposed to be four times bigger; and all the flags lie in a perfectly horizontal plane, so that rather than lie on the terrain they seem to be floating above ground, like a band of over-starched flying carpets.

The expedition leaves Moscow tomorrow and the events in Svalbard will take place during the weekend.

For some background on the organisation behind the event and its patriotic overtones, check my previous post on the project.

bad news in China for ‘Norway’s Ikea’: Listeria found in salmon, partial import ban

These aren’t the best days for Norwegian salmon in China. Just when it became known that China plans to block imports from three Norwegian counties on health grounds, Listeria was found in Norwegian salmon in Sichuan and Hong Kong.

First, news came from Norway’s food safety authority (Mattilsynet) that China would start forbidding importing salmon from the Norwegian counties of Nordland, Troms and Sør-Trøndelag, due to fears of ISA (infectious salmon anaemia) contagion to local fish farms. The Norwegians contend that such fears are unfounded: to begin with, there’s no way fish from Norway can pass the ISA virus to their Chinese brethren, since they arrive to China dead and frozen and are sold to humans. And the Chinese claim seems to be that Norway doesn’t comply with OIE (World Organisation for Animal Health) standards, while the Norwegians assert they do and say they have provided documents to the Chinese authorities to back up that claim. According to an official from the Norwegian food authority who talked to Aftenposten, the Chinese have their own risk assessment report, which the Norwegians haven’t been able to see while having trouble “getting in contact” with their Chinese counterparts.

Chinese authorities had already found ISA in Norwegian salmon imports in Shenzhen in May last year and ordered the destruction of 13 tonnes of it. Other (other than ISA) tainted Norwegian salmon had been found and destroyed earlier that yea and in 2013.

News of the new import ban has made it back to Chinese news sites, including for example on a Ministry of Commerce domain, but still sourcing the story to the Norwegian food authority and largely with the same content (minus the Norwegian claim that they do comply with international standards), without an official confirmation from the relevant Chinese authority.

The ISA virus poses no risk to humans.

Meanwhile, Listeria has been found in Norwegian salmon imported by a Sichuan trading company, leading to the destruction of 6.5 tonnes. Norwegian salmon processed in Hong Kong was also found to be tainted and recalled, according to the local Centre for Food Safety. There’s no indication of any connection between the Listeria incidents and the ISA issue, and at least in the Hong Kong case independent authorities are involved.

These bad news come around the time when Norwegian PM Erna Solberg has emphasised the importance of salmon for the Norwegian economy (‘Salmon is Norway’s Ikea‘, a motto duly quoted by the Chinese Ministry of Commerce). Li Yong 李勇, head of the United Nations Industrial Development Organization (UNIDO) and the first Chinese politician (he’s a former vice minister) to reach the top of such an organisation, was in Bergen earlier this month at t

he North Atlantic Seafood Forum, where he reportedly said he thinks Norwegian salmon exports are bound to increase in the long term, “also in China” (Sysla).

It’s hard to say if the ISA-related ban has anything to do with China’s protracted retaliation for the award of the Nobel peace prize to dissident Liu Xiaobo 刘晓波 in 2010. I suppose the key is whether the Norwegian food authority statement that they do satisfy international requirements on ISA prevention is indeed true, i.e. whether the Chinese ban is actually justified.

Imports of Norwegian salmon were hit hard by the Nobel punishment (I’ve discussed some exchanges between the two countries that were affected by the crisis, and others that weren’t, towards the end of an article from 2013), so it wouldn’t be surprising for them to continue to be used as a diplomatic tool.

Relations remain at a low level. Last January, news emerged that Huang Nubo‘s purchase of land in Norway has been stalled until relations between the two countries are in order. In February, Chinese diplomats forecast “a negative impact” in relations with Norway after Norwegian authorities expelled a Chinese PhD student accused of spying. The Global Times (环球时报), a state-owned nationalistic tabloid, blamed the Norwegian government for a new freeze in bilateral ties, and quoted Cui Hongjian 崔洪建 from the China Institute of International Studies (CIIS, 中国国际问题研究所), a government-affiliated think tank: “The Norwegian government either wants to develop communication and good trade relations with China, or it will be shouting slogans about so-called human rights and democracy. They need to make up their minds.”

Chinese plans for an Arctic research base in Canada?

PRIC (Polar Research Institute of China) director Yang Huigen 杨惠根, channelled by the Globe and Mail, says China might be interested in building a research station in northern Canada. According to other sources quoted by the newspaper, Tuktoyaktuk, a hamlet in the Northwest Territories, a couple hundred kilometres from the Alaskan border, seems to be a location under consideration because of the region’s oil hydrocarbon potential. Channelled by the Global Times, he denies clearly airing such an intention.

Arctic research cooperation between China and Canada was the topic of an event held last week at the Canadian embassy in Beijing. Chinese media reporting on the event (‘Canada welcomes Chinese participation in Arctic cooperation‘) summarises scientific exchanges between the two countries in that domain but makes no mention of plans for a new base. The event was attended by the Canadian ambassador, Guy Saint-Jacques (赵朴), as well as by David Hik, a University of Alberta biologist who sits at the International Arctic Science Committee (IASC) and the Canadian Polar Commission. Mr Hik also visited the PRIC in Shanghai, where he talked about the Canadian High Arctic Research Station (CHARS), expected to open in 2017 in Cambridge Bay, Nunavut. Addressing a public that included Arctic scientists and the freshly appointed Canadian general consul in Shanghai, Claude Demers (邓凯), Hik also referred to climate change, fisheries and clean energy among potential areas for future scientific cooperation between the two countries.

The Globe and Mail quotes Hik as being rather sceptical towards the idea of a Chinese NWT station. Rather than a separate base, a Chinese station would be “co-located directly within the Canadian research facilities”.

China has a research base in the Arctic, the Yellow River Station (黄河站) in Svalbard. There is also the Chinese-Icelandic aurora observatory in Kárhóll, near Akureyri. The observatory has been the object of some mild controversy in the past and perhaps something similar could be expected if plans for a base in Canada take a more concrete form.

We can already imagine what such a controversy could look like. Robert Huebert, a University of Calgary academic with a focus on Arctic security, questioned the wisdom of providing “a state that is that authoritarian” with the ability to “observe within the North”. These remarks, included in the Globe and Mail article, quickly made their way to the Global Times (环球时报), a state-owned nationalist tabloid, where they mutated into an article that refers to Canadian media fears that China ‘covets’ their territory. That’s what the title says; the article body eventually makes clear we’re talking about ‘coveting Canadian soil’ just to plant a research station on it. The article opens with a translation of Huebert’s comments, which is largely word-for-word except that the word ‘authoritarian’ (state) is replaced with its near-synonym ‘such’ (a country).

The Global Times asked Yang if he had talked about plans for a research base in Canada. Yang denied he explicitly referred to such plans.

I’ve written in the past about media debate over various Chinese projects in the Arctic, including nonexistent ones, such as poet-tycoon Huang Nubo’s alleged plans to buy Austre Adventfjord, a large coal-rich property in Svalbard. The Global Times is a reliable echo chamber for talk of various ‘fears’ in the Western press, and for their deconstruction. I’ve had occasion to discuss the paper’s style and editorial habits in a previous post.