It should come as no surprise to China watchers that the country has followed its historical pattern of abstaining from voting on critical UN resolutions. I speak of course of the current Libyan crisis and the UN vote on a "no fly zone." For the most part, this was a reasoned policy balanced on its lack of influence in certain volatile parts of the globe. What is the point after all, leaders reasoned, of interjecting themselves into a volatile part of the world that has historically captivated the West and three monotheistic faiths? For example, China has famously abstained on UN votes in nearly all Middle East centered resolutions such as both Gulf Wars against Iraq. However, in the present situation, that same line cannot be used.
The Chinese presence in Libya was substantial - comprising tens of thousands of workers in petroleum extraction, refining, transportation, logistics, and engineering. Additional workers were active in construction and mining. Indeed, China was Libya's primary customer for oil and natural gas exports, superseding even the EU as a customer base. In the immediate days and weeks of the initial protests, Beijing reacted swiftly and decisively by withdrawing nearly all of its staff in a massive evacuation operation to protect them against political violence. No expense was spared in round the clock airlifts, boats, rail lines, and buses to evacuate nearly 36,000 Chinese citizens. The official China news agency, Xinhua called it "a decisive success in China's largest-scale overseas evacuation since the birth of new China in 1949." The reaction was a shrewd one given the rebels' treatment of loyalists and government allies - namely the violent street justice executed against "African mercenaries" hired by the regime. In any event, the operation was a combined military and civilian effort that was swift, orderly, and above all effective in comparison to the chaotic and often ad hoc efforts of other nations.
Now that its citizens have been largely evacuated, China is now in the difficult position of balancing its strategic energy policies against its role as an emerging global power in international relations. The cozy relationship between the Politburo and Muamar Qadafi would surely come under intense scrutiny and perhaps even be jeopardized by any new regime. Several rebel spokesmen have already threatened to cut off ties w/Qadafi's business partners, a thinly veiled allusion to China. Although the exact amount of capital invested in Libya is not readily available to the public, Beijing has surely spent an enormous amount of money, time, and resources in cultivating a decades long working relationship with the country's leadership. This relationship in turn was founded in the shadow of numerous Western sanctions against Libya in the 1980s and 1990s for Libya's erratic actions such as sponsoring terrorist groups. Qadafi himself has seemed to turn on his erstwhile (unnamed) business partners and condemned them as cowards for abandoning him so quickly. In that light, the Chinese actions can be viewed as a poor attempt to ingratiate itself with both the West while preserving its investments in Libyan soil.
Or perhaps I am being too critical of Beijing. After China's initial opposition to the 2003 invasion of Iraq due in no small part to its substantial investments w/the Saddam Hussein regime in infrastructure, personnel, and logistics, Chinese firms were able to move back into the energy market by working w/the new US/British run government. Perhaps a similar event would occur again.
The successful model for a no fly zone can be found in the 1999 NATO campaign against Serbia. But even this is an inaccurate description. While the political talking heads intended to start by owning the airspace over Serbia, it quickly became apparent that they needed to escalate their selection of targets beyond mere air fields and radar sites. Strategic targets - including those of no military value - were quickly added. Bridges, roads, power stations, broadcasting towers, and government party buildings were all added to the list. Air strikes were eventually coordinated w/ground assaults by the separatist KLA (Kosovo Liberation Army). In a similar vein, any air campaign against Libya would become a de facto air arm of the rebel army. Add to that mix that even the rebels are unsure who is in charge and we have a recipe for political disaster akin to the situation in Iraq following the deposing of Saddam Hussein. So, perhaps the Chinese are right after all to be cautious. Still, the threat of prolonged air raids may be enough to move Qadafi to the bargaining table. Indeed, the no fly zone's political value may supersede that of any military one. It is even possible that a partitioning of the country may emerge - the rebel held east (full of oil) and the more urban west (not so full of oil).
- The Bernanke Put and Volatility Collapse: A Look a...
- Japan Has Run Out of Bullets - The Implications of...
- The Chinese Position on Libya
- Is US Farmland a Bubble?
- Is is Time To Finally Short JGBs and Buy Equities?...
- Risky Business in Asset(less) Lending
- The German Success Story
- Chinese Farmland Continues to Experience Dry Condi...
- Argentinian Land Bubble?
- Equity Markets Tends To Rise in March
- Update - Volatility Where Art Thou?
- ▼ March (11)
- ► 2010 (53)
- ► 2009 (473)