China looks to invest in north Lebanon

The long-mooted revival of the railway between Tripoli and the Lebanese-Syrian border may have finally found an investor, with profound implications not only for the economy of north Lebanon but for the balance of power in the wider Middle East.

“We have a proverb saying, “If you want to get rich, build a road,” said Eliana Ibrahim, president of the China Arab Association for Promoting Cultural and Commercial Exchange. Ibrahim told The Daily Star that a Chinese company is ready to submit a proposal to finance the reconstruction of a much-discussed railway from Tripoli to the Lebanese-Syrian border, although she said the bid was “not at the stage” where she could name the company.

The railway, one of the transport projects listed in the government’s Capital Investment Plan presented at the recent CEDRE investment conference, would provide China with a means to transport materials from Tripoli into Syria, where Beijing could not only take advantage of the politically contentious issue of reconstruction in the country, but also set itself up long-term as a regional power.

According to Dr. Neil Quilliam, a senior research fellow at Chatham House in London and an expert in Syria and the Middle East, reconstruction in Syria is “a springboard for investment in the region.” China, he said, “is looking for typically a 20-to-25 year trend where it’s going to be putting money into infrastructure but with a long-term plan of slowly but surely replacing the U.S. ... in the region as a major player.”

The cost of the devastating civil war to Syria’s economy and infrastructure has been estimated by the World Bank at $226 billion. China recently made some major announcements to further position itself as one of the key actors, not just in Syria’s reconstruction, but in the region. At this week’s China – Arab States Cooperation Forum, China’s President Xi Jinping pledged over $23 billion in credit, loans and humanitarian assistance to various Arab countries. Some $91 million was earmarked for Syria, Lebanon, Yemen and Jordan in humanitarian assistance.

Lebanon’s Economy Minister Raed Khoury attended the forum and returned very positive about the prospect of further Chinese investment in the country. Having met with China’s foreign minister, Khoury told The Daily Star that China doesn’t “look at Lebanon as a small country of 4 million citizens but as a country with huge potential given its geographical location ... They see Lebanon as a platform for the whole region and for reconstruction as well of Syria and Iraq.”

The Syrian regime’s recent assault on southwest Syria and the massive resultant flight of refugees to the closed Jordanian border demonstrated that the war is far from over. Nevertheless, Quilliam said that China will not wait for a political resolution to the conflict before making its next move. “The debate on Syria is what comes first, political settlement or reconstruction, and China ... has made it very clear that reconstruction comes first.”

In order to facilitate such reconstruction, China needs access to a port on the eastern Mediterranean from which to ship materials. Syria has two major Mediterranean ports in Latakia and Tartous, but both present issues to Beijing. First, neither is deep enough to take large container ships. Second, Syria’s powerful ally Russia has a major military presence in both, with an air base in Latakia and a naval base in Tartous. “[China] doesn’t want to set itself up in direct competition [with Russia],” Quilliam said.

Lebanon offers a number of alternatives. Beirut has a major port, but is constrained in terms of how easily it can be expanded. Furthermore, Beirut does not have the prospect of a rail link to Syria, with freight forced to be shipped over the mountain road to Damascus, which can be impossible to pass in the winter months.

Tripoli, meanwhile, has a large deep-water port, and the prospect of the railway to ship freight. Speaking to The Daily Star in July last year Toufic Dabbousi, head of the Tripoli and North Lebanon Chamber of Commerce, said that the railway was “a daily topic of conversation” in Tripoli. Ziyad Nasr, the head of Lebanon’s Railways and Transportation Authority, said that plans for the railway from Tripoli to the Lebanese-Syrian border were, “final. The project is ready ... but there is a lack of funding.”

A Chinese investor may be what the railway project needs to get off the ground. While it has previously attracted interest it suffers from a major shortfall in that no potential investors have yet been able to establish what would happen to goods once they reached the border, with no functioning railway in place to ship the freight the remaining kilometers to Syria’s closest major city, Homs.

Hassan Dennaoui, a researcher at the Tripoli Special Economic Zone, told The Daily Star that the lack of transparency over what might take place regarding a railway on the Syrian side of the border had put off other investors.

While many potential investors, particularly in the region but also further afield, might face difficulties negotiating the development of such a railway with the Syrian regime, China has remained politically neutral throughout the Syrian Civil War. “It doesn’t have to take into account a complex history and the way it maneuvers and positions itself. It’s coming in on a transactional basis, so you don’t necessarily have the sensitivities that other states, other actors, even other companies would necessarily have, so it feels it has a blank canvas,” Quilliam said.

Furthermore, he said, China’s heavy investment in Syria and its willingness to begin work immediately puts Beijing in a strong position when it comes to negotiating any kind of cross-border deals, in a way that other states simply would not be able to achieve.

For Beijing, the reconstruction of Syria looks to be the opportunity it needs to assert Chinese influence in the region. China, Quilliam said, “sees itself as a strategic investor. It’s moving from a position where it’s invested in the region and in Africa but it’s now transforming into a political and diplomatic player.”