China's Silent Army
Page 15
“CHINA IS HERE TO STAY”
The Turkmenistan Airlines airplane rises over Ashgabat just as the sun is beginning to set. The white buildings of the capital city are bathed in orange light, as is the sandy expanse of the Karakum desert which we fly over for most of the fifty-minute journey. The cabin, complete with a photograph of President Berdymukhammedov, is brimming with passengers carrying boxes and suitcases. The price of plane tickets to Turkmenabat, the country’s second city and the garden of the nation, is fairly bizarre; in accordance with the regime’s policy of subsidizing public services, the journey costs just $13 each way.
When we arrive at Turkmenabat airport, Lei Li is waiting for us at the exit as planned. We have never met each other before, but he recognizes us straightaway, and greets us with an outstretched hand and a smile.10 Our visit to the basecamp of the state-owned hydrocarbons company China National Petroleum Corporation (CNPC) is clearly a joyful occasion for this Chinese employee. After all, for just a few hours it will break the routine that has dominated his life for the whole three years he has spent in this remote and lonely corner of Central Asia. One by one, we climb into the shiny new Toyota Land Cruiser V8 with its diplomatic license plates. The Turkmen driver sets the GPS to take us straight along the M37 towards Farab, the closest town to the CNPC basecamp, a facility made up of four settlements which is aimed at exploiting the gas reserves stored in the country’s subsoil.
Lei is joined by a Chinese colleague who actually works in Turkmenabat but who has to return to the company’s headquarters at the end of each day, along with the rest of his colleagues: Turkmen authorities have banned Chinese men from spending the night in the town to stop them from having sexual relations with local women. According to one local resident we spoke to, this rule was enforced after some local women ended up getting pregnant by Chinese workers. “There’s a nine o’clock curfew now. Nobody is allowed to leave the camp after that time,” the local explained. It seems that the regime’s blatant racism and hostility towards foreigners stretches to the Chinese too, despite their privileged access to the country’s natural gas sector.11
After crossing the Amu Daria river, we eventually come to a military control post that is co-ordinating the flow of vehicles and people and which cannot be crossed without a special permit. There is no way that we can cross this internal border with our tourist visas—in fact, our very presence in the area is technically illegal. However, Lei does not seem particularly bothered by this fact. “They’re friends. They’re coming with us,” he blurts in Russian at the young soldier who is examining our passports with suspicion. After an uncomfortable silence, the soldier lets us through. After traveling for around 50 kilometers along a desert road dotted with herds of sheep and propaganda posters, we finally arrive at the CNPC’s biggest settlement in Central Asia.
The precinct is made up of four camps—two of them close to the gas treatment plant and another two based around 20 kilometers away—which are home to roughly a thousand people, most of them Chinese. “There were around 4,500 Chinese people here when we first built the complex and the gas pipeline,” Lei comments, after kindly putting us up in one of the rooms in the precinct. A stroll along the road that unites the different camps makes it clear that there are two specific risks to human life here: the heat (almost 60 degrees during the day, over 40 degrees at night) and the desert snakes and scorpions. Wide fluorescent lines are painted on the sand on either side of the road. “Snake poison,” Lei explains. “Four or five people were bitten over the last year. There are two doctors in the camp who are experts in these cases.”
Despite being in the middle of nowhere, the living conditions are exceptional: six buildings with just one floor each contain rooms with air conditioning, a satellite Internet connection, plasma TVs, private bathrooms with hot water and big, comfortable beds. Elsewhere in the precinct, basketball courts and Ping-Pong tables give the engineers, geologists and administrators a chance to keep fit and kill time, which can seem never-ending, while Sichuanese chefs prepare typical dishes from the region in the precinct’s kitchens. “We’ve built a greenhouse so we can grow all kinds of Chinese vegetables … even Sichuanese chilies!” Lei tells us, proudly.
These home comforts are somewhat surprising. They are far and away the best conditions that we will see throughout the course of our journey, and they seem to create a sense of well-being and camaraderie among the workers. At sundown, Turkmen and Chinese colleagues get together to compete in Ping-Pong tournaments or go walking or jogging along the roads that unite the various camps. The majority of local workers, who arrive at 6:30 in the morning on Chinese King Long buses and wear orange overalls bearing the CNPC logo, seem to be happy. When we ask them about it, they give us the thumbs up and say they are pleased with how things are. They hide their smiles behind the desert scarves that cover their faces in the style of Palestinian guerrillas, protecting them from the salt that has been left hanging forever in the air as a result of the slow death of the Aral Sea, causing asthma and bronchitis.
However, apparently things have not always gone so smoothly. One Chinese worker tells us about an incident in September 2009 when local employees helping to build the camp’s facilities alongside Chinese workers rose up in arms against the company as a result of deductions made to their salaries and certain contractual conditions. The locals attacked the Chinese employees, injuring thirty-six of them, and vandalized cars, computers, tables and other furniture until the police intervened to calm things down. The precinct even had to be closed for two days. Nowadays the rules are stricter: employees are forbidden to drink alcohol, bring women into the camp or even to wear clothes other than the company’s uniform during working hours. Keeping the peace is essential in a place of such strategic importance to China’s interests in the region.
Anatoly, a young local geologist, does however seem satisfied with the conditions offered by the company. “I earn more than my father and mother put together,” he declares proudly, before telling us that he is currently applying for a similar job with a German company operating in the Caspian Sea. “I don’t want to spend thirty years of my life here,” he argues, in reference to the timeframe for Turkmenistan’s supply of gas to China, according to the contract between the two countries. However, many people, Anatoly among them, believe that “China is here to stay.” There is no shortage of strategic reasons why this might be true: it is estimated that Turkmenistan possesses the fourth largest natural gas reserves in the world, and China’s gas consumption is likely to triple over the next two decades.12
Night falls heavily over the precinct, swallowing everything in its path. All that is left alive in the darkness are the flames which rise over the gas treatment plant. “We’re measuring how much gas we can extract per day to send to China,” Anatoly explains. The aim is to reach 65 billion cubic meters each year—a little less than half of China’s current gas consumption—for the next five years.13 In order to make this happen, China has had to bring two loans to the table with a total value of $8.1 billion via the China Development Bank (CDB).14 These loans were lent under favorable conditions and were given directly to the local state-owned company Turkmengaz.
It is no small matter that the CDB is acting as the lender here. Along with the Exim Bank, the CDB is one of the two Chinese banks that act in response to China’s geostrategic interests abroad rather than for strictly commercial reasons. These designated “policy banks” carry out the financial side of China’s diplomatic strategy, granting billion-dollar loans with the sole aim of securing the country’s supply of natural resources, giving support to Chinese SOEs in their ventures abroad, and tightening political relations with countries of strategic interest to China.15 These agreements, carried out using the formula “your resources for my loans and/or infrastructure,” are common between China and its partner countries, who are always rich in natural resources. Few nations in the so-called “developing world” can resist being seduced by China’s vast supplies of quick an
d easy money. The temptation to secure millions of dollars in loans—often at preferential rates—in return for providing China with long-term acquiescence to exploit their natural resources is generally far too strong. Beijing has successfully understood the needs of its foreign business partners and therefore offers them an irresistible menu.
This process highlights one of the peculiarities—and strengths—of China’s international offensive for natural resources: the power of “China Inc.” In other words, China’s effective use of all the cogs in the state’s machinery in order to secure juicy contracts and strategic investments in countries that are in dire need of funding. The financial (banks), economic (state-owned companies) and political institutions, the last of which have the final say, work together as one body to achieve the country’s national objectives. The leitmotif is always the same: obtaining or guaranteeing China’s long-term supply of natural resources, ousting the competition, and gaining in terms of political influence and power.
The financial viability and environmental effects of the projects financed by Chinese policy banks and carried out, in the vast majority of cases, by Chinese state-owned companies are often pushed to the side-lines. That does not mean, however, that Chinese banks and the companies involved in these projects do not try to make their overseas investments commercially viable, particularly when these are not state priorities. Even if they do require the state’s approval, Chinese corporations are trying to become more independent from the political powers in terms of the day-to-day running of their business, but when push comes to shove it is the Communist Party that provides the score for the orchestra (banks, corporations, diplomats) in order to play out their symphony.16
Of course, resorting to the use of a triumvirate—made up in the case of Turkmenistan by the CNPC, the CDB and the diplomatic community—in order to achieve strategic objectives is not something unique to China. Other countries also use their development banks in order to further their diplomatic objectives or to benefit their companies; for example, by granting a loan on the condition that the receiving country must buy a specific quantity of local equipment or contract services from the lending country. However, this can hardly be compared to China’s proposals or methods. In terms of scale, for example, China currently possesses the largest currency reserves in the world,17 providing the country with a devastating amount of financial muscle. It is also important not to underestimate the amount of leeway provided by the lack of any real counterbalance (from the press, civil society or opposition parties) in the Chinese single-party system, which means that China is free to carry out its projects exactly as it pleases.
THE OBLIGATORY PATH OF CORRUPTION
“The governments of Central Asian countries such as Turkmenistan and Kazakhstan see Chinese people and businesses as a source of money that is willing to pay bribes and participate in systems of corruption. That’s what you have to go through if you want to do business in this country. The bribes are usually small amounts, a little bigger from time to time. For Chinese people, this is nothing unusual because of our tradition. We consider it easier to deal with things in that way rather than causing bigger problems. You just pay up and then the problem goes away.” The words of a high-ranking Chinese businessman in Turkmenistan, whose name, role and other details are omitted here for obvious reasons, perfectly summarize the “flexibility” demonstrated by Chinese corporations when it comes to walking the line of the law. When we ask him how CNPC manages to square these bribes within its budgets and balance sheets, our contact answers with complete honesty: “We plan these payments into our budgets. We know about it here in Ashgabat and they know about it in Beijing. They know that’s how things work here, and so we include the bribes in our balance sheets. We don’t have any other choice.”
Suddenly one of his colleagues walks into the office, interrupting our conversation. Our source politely makes his apologies, leaves the room and returns around five minutes later. “An example of what I was talking about has just happened at the airport. We have a problem with the Turkmen immigration department. They don’t want to allow some of our employees into the country. Fortunately I have a lot of friends there, thanks to guanxi and the network of relationships I’ve built up here. It’s essential to build solid personal relationships in order to do business here.” Of course, China is not the only country prepared to follow the codes of corruption and bribery in order to further their interests in Turkmenistan. Allegedly Russian, German and Turkish businesses operating in the hydrocarbon, automotive and construction industries act in a similar way and consequently have to increase their project budgets by between 20 and 30 percent to include the payment of “commissions.” Investors also have to do a ridiculous amount of groveling to the nation’s leader, for example by commissioning foreign translations of the Ruhnama, a work written by President Niyazov which, like Mao’s “Little Red Book,” aims to provide guidance on how to behave as well as an official history of the nation.18
A prime example is seen in the case of the French company Bouygues, the world’s second biggest construction company and a key player in Turkmenistan’s property industry. Between 1994 and 2010, the company managed to secure over fifty construction projects to the value of 2 billion euros thanks to its close ties with the country’s authorities. Among other things, these ties were built by translating the Ruhnama into French and by the relationship developed over the years between Niyazov and the chairman and CEO of the French company, Martin Bouygues.19 When we tried to arrange a meeting with the staff of the French embassy in Ashgabat, they rejected our proposal in order to steer clear of any compromising questions about the activities of the business group whose leader is a close friend of former President Nicolas Sarkozy.
Like the rest of the corporations operating in the country, CNPC is not prepared to “pass up the many opportunities offered by Turkmenistan,” despite the country’s widespread corruption and systematic violation of human rights, as our contact in the Chinese company explained. CNPC has therefore become extremely involved in what the company calls the “silk road of the energy industry,” getting hold of as many gas assets as possible in the Central Asian country. This carefully calculated strategy, which China has also undertaken elsewhere in the region, has seriously jeopardized Russia’s dominance in the area, a position of influence inherited from the Soviet era.
Beijing made its strategic entrance into the country of golden statues at a time when sales of gas from Turkmenistan to Russia had dropped by 90 percent, significantly affecting the Turkmen economy. Russia’s official reason for drastically reducing its acquisition of Turkmen gas was an explosion in a pipeline in April 2009. However, in reality Russia’s actions were most probably motivated by the fall in the price of gas after the 2008 financial crisis. As Russia channels and resells gas from Turkmenistan to the West through its own infrastructure, it appears likely that the country deliberately caused a reduction in its gas supply by orchestrating the incident. This behavior highlights Moscow’s former role as the caretaker of Turkmen gas, as Russia’s pipelines were the only route for Turkmen gas to reach other markets before China’s arrival in the country.20 The Russian–Turkmen crisis lasted until Russia resumed exporting Turkmen gas in 2010, by which time Ashgabat had lost $1 billion in income every month.21
However, this will not happen again now that China has offered the country an alternative. The pipeline built by CNPC means that Turkmenistan is no longer dependent on Russia. It has also significantly boosted Beijing’s influence not only on the Turkmen regime, but also in Uzbekistan and Kazakhstan, countries on the route of the pipeline which are also planning to supply gas to China in the future. This is just one more step in China’s strategy to become lord and master of the entire region, as we saw in Chapter 2. Thanks to its sales of gas to China, Turkmenistan—whose gas exports make up 80 percent of its total exports—has found a new source of income to allow the Turkish company Polimeks to continue building gold statues to the glory of the preside
nt. Meanwhile, corruption and tyranny continue to mar the daily lives of the Turkmen people.
A HELPING HAND FOR THE ISLAMIC REPUBLICS
While China’s dramatic entrance into Central Asia’s energy sector does represent a serious setback for Russia’s hegemony in the region, it is not the scene of the world’s biggest geopolitical changes resulting from the country’s urgent energy needs. The greatest impact has in fact taken place in the epicenter of the world’s oil supplies, the Middle East, and its offshoot in northeast Africa. Despite the risks this may cause to its relationship with the West, China has found two oil-rich allies in the region who are both well-known enemies of Washington and Brussels: the Islamic republics of Sudan and Iran.
On a trip down Khartoum’s Nile Avenue, the city’s main thoroughfare and home to a significant part of Sudan’s economic and political institutions, it is easy to see the Chinese presence in what was the biggest country in Africa until July 2011, when it was divided into two nations.22 The street is full of buildings constructed using Chinese and local labor, giving a new look to the northern capital. Meanwhile, the surrounding areas are bursting with Chinese-run shops selling consumer goods and groceries, travel agencies aimed at the growing Chinese market, and clinics offering acupuncture and traditional Chinese medicine with doctors hailing from the provinces of Hubei and Henan. One particular corporation has changed the country’s economic map: CNPC.23 “It’s the most powerful company in Sudan,” we were told time and time again by the local civil servants, experts, activists and journalists whom we met for cups of tea and conversation. This is a reference to the million-dollar investments that have greatly boosted the local economy in return for oil, thereby filling the coffers of the state controlled by the dictator Omar al-Bashir.