Fabien Baussart
Fabien Baussart

Is the Dragon gobbling up Ethiopia and Kazakhstan?

The threatening shadow of US sanctions against personalities in Ethiopia and Kazakhstan.

Influential members of the United States Congress are carefully investigating the beneficiaries of Chinese investments in Ethiopia but have now turned to Kazakhstan, where a prominent clan, led by Timur Kulibaev, is the subject of extensive investigations that could, according to some senators, lead to sanctions against him. This influential oligarch is not only a member of the Board of Gazprom but he is also China’s preferred gateway to Kazakhstan. To the bewilderment of his colleagues, Kulibaev has supported the efforts of certain members of the administration to postpone, and even cancel, the official visit of President Tokayev to India, despite an increase in trade between the two countries.

Some see the shadow of the Chinese Dragon. An investigation by the Financial Times, published on December 3 2020, implicating Timur Kulibaev revealed that tens of millions of dollars were allegedly siphoned off gas pipeline projects from Chinese loans. China’s lack of concern suggests a widespread system of corruption.

Half of Chinese investments in Kazakhstan focus on the oil and gas sector, amounting to $27.6 billion. Beijing’s presence continues to increase while many Anglo-Saxon oil groups continue to reduce their financial exposure especially due to oil projects, such as the Kashagan oil field, turning out to be costly and far less profitable than expected. Consequently, Timur Kulibaev, his protégés and associates risk being under attack by the US Congress in order to punish their Chinese competitors.

Currently, usurped by the Chinese wave, Ethiopia is one amongst the many African nations to be heavily influenced by China. It is hardly surprising to note that by June 2020, the Chinese were so entrenched in the Ethiopian economy, society and polity that they had investments in over 1,000 projects in just this one African country. The bilateral volume of trade between China and Ethiopia, which was as low as US$ 100 million in 2002, reached US$ three billion dollars in 2014. No doubt there has been a steady rise in China’s investment in Ethiopia but one also has to notice that there is a huge disparity in the Chinese export and import traffic to Ethiopia. China exports almost 10 times more into Ethiopia compared to the imports it makes from this country. Noticeably then, it is obvious that Ethiopia is losing enormously in terms of foreign exchange whereas China is gaining financially & maximizing its profits.

In order to alleviate such losses Ethiopia in 2018 allowed domestic and foreign investors to purchase shares in the Ethiopian Telecom, Airlines, Electricity, Shipping and Logistics companies that were earlier primarily state-owned enterprises. Moreover the Government also permitted complete, in some cases partial privatization of railways, sugar industries, industrial parks, hotels and other state-owned manufacturing enterprises. However, rather than diversifying the range of foreign investors, these measures served to benefit China, which put an end to all healthy competition. In 2019 alone, Chinese companies signed 346 new contract projects in Ethiopia, worth US$ 2.69 billion.

Still, in an innocuous expression of faith, Ethiopia relied on the fact that the local population would get some employment & benefits would trickle down to the citizens of the country. However, China had other plans and brought in more than 4,000 Chinese laborers to Ethiopia, in addition to an existing batch of over 8,000 laborers. The presence of a large number of Chinese workers in the country is increasingly being viewed as a threat to the African workforce, especially since there is a growing consciousness about China’s predatory debt trap policy.

This has raised serious security concerns with attacks being engineered by the “Tigray People’s Liberation Front” (referred to as “Tiren Front”) on armed personnel protecting Chinese compatriots working in sugar factories, engineering projects and industrial parks in the Tigray State. Just like Pakistan where the CPEC has generated negative sentiments amongst the locals, particularly in the Baloch dominated areas, the Tigray region too has witnessed turbulence over the brazen Chinese occupation and exploitation of resources in the region without any benefits to those originally inhabiting the place. Confrontation between the Chinese and the African workers also seems to have become a recurrent phenomenon in many parts of the African continent.

Further, China’s predatory policy in Ethiopia has gained momentum with the capture of nearly all major infrastructure projects within the country. The Chinese companies are currently undertaking major highways, railways, gas pipe lines, oil-depots, hydro-power and communication projects within this African nation, exercising their clout not just within the country but even between nations. The recent conflict between Ethiopia and Sudan/Egypt over building a dam on the river Nile is a case in point where China has been volunteering to partake as a strategic player capable of resolving disputes between countries it has strategic interests in.

On winning projects in a country, the Chinese tend to depend on low grade cheap technology that help negate competition and increase the reliance of the host country on it for maintenance and repairs. In the case of Ethiopia, the Chinese are known to have followed very low standards in executing the expressway projects using their own design and construction material, in complete disregard of locally available resources that would suit the environment and the general populace. Being an African nation, in terms of economic resources, Ethiopia has been offered support by the African Development Bank, Italy, France and other aid giving countries.

For instance help was being rendered to carry out a feasibility study of the railway project connecting Sudan and Eritrea & other important development projects that would directly benefit the African people. However, China uncomfortable with the influence these aid giving countries could have on Ethiopia left no table unturned to ensure these projects do not see the light of the day and remain stalled or embroiled in delays and unnecessary controversies. In fact, with the intent to provide uninterrupted supply to its cement and industrial park projects, the Chinese government also granted an interest free loan of US$ 80 million and a preferential loan of US$ 150 million to Ethiopia for the Mekelle City water supply project, constituting roughly 85% of the finances required.

Apart from being engaged in infrastructure related projects, China also has defence ties with nations of strategic significance with whom it has persuasive economic ties. To Ethiopia, China discreetly sells arms and ammunition, including artillery, light armored vehicles, rockets, long-range missiles as well as troop transport vehicles for the Ethiopian army while training an undisclosed number of Ethiopian officers. Piggybacking on Chinese influence, other countries close to China such as Pakistan also try to sell low quality, downgraded equipment to the African countries. Moreover, China’s involvement in espionage activities through satellite launches just cannot be ruled out; as such projects are executed in complete collaboration by the Africans with the Chinese experts. Though overtly, these exercises are said to be undertaken for analysis and an understanding of weather patterns, drought and mining etc, in reality they are known to have dual usage in terms of military affairs too.

Not to forget, the Chinese state-owned enterprises have already built nearly 190 government buildings in Africa including 14 sensitive intra-governmental telecommunication networks as part of the China-Africa Artificial Intelligence (AI) mission that is contracted to Huawei and ZTE for equipment procurement and network establishment. As is known, Huawei is globally recognized as a front company of the Chinese Government, particularly the Chinese Communist Party and is facing bans in many European and western countries for allegedly illegally undertaking surveillance activities. For its part, China which closely engages in monitoring & executing projects of sensitive nature in the country, loopholes are created in the system which are later exploited by Chinese hackers, who redirect surveillance activities to their handlers in China.

In the past, Chinese hackers’ are known to have transmitted footage covertly through their data servers and CCTVs at the AU headquarters in Ethiopia to their viewers based in China. Apart from such surveillance which is a direct breach of privacy, these hackers are also involved in data theft and passing on of sensitive information to China during peak working hours (10am- 2pm), deliberately in order to avoid any kind of suspicion or scanning by tech-units of the African government’s enforcement agencies.

Interestingly, in the name of tourism, more than 2.5 million Chinese travel to Ethiopia each year. But rather than engaging in tourism in the African nation, these Chinese nationals are more involved in expanding their business interests and assessing their hold within the country to amplify their returns back to China. Over the past some years, having emerged out a difficult crisis ridden situation, Ethiopia has been glorified as a flag bearer of sorts for signing the famous ‘Belt and Road Initiative’ with China. Sadly, however, by signing the MoU, Ethiopia seems to have signed off its fate to the Chinese who are determined to exploit its natural resources, build the infrastructure to make them more prosperous through the very roads, railways and flagship projects meant to serve the African interests.

About the Author
Fabien Baussart is the President of CPFA (Center of Political and Foreign Affairs)
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