Bulatov, international observer

 China’s presence in Egypt’s ports has grown markedly in recent years. It is expressed in the participation of both private and state-owned Chinese companies in the partial acquisition, development and operation of Egyptian seaports and terminals under concession terms for up to 38 years. Beijing does not hide its interest in the Suez Canal zone and is consistently implementing it in specific projects.

Since coming to power in 2014, Egypt’s last president has changed the country’s foreign economic priorities. Cairo, which has maintained a strategic partnership with the US since the 1970s, has begun a calculated rapprochement with US adversaries such as Russia and China. The strength of growing Egyptian-Chinese ties has been evident in the signing of numerous bilateral agreements, leading to a notable increase in Chinese investment (317% from 2017 to 2022) and increased borrowing.

China has now become Egypt’s fourth-largest global lender, with loans totaling $8 billion. For Egypt, ties with China are not only a means of diversifying global partnerships and leveraging relations with the United States, but also reflect Egypt’s need for foreign direct investment without the liberal conditions attached to International Monetary Fund loans and other sources of Western financing.

A major overhaul of Egypt’s port infrastructure is due to be completed this year and includes 80 projects worth a total of $4 billion. Due to difficulties with financing, Egypt decided to carry out construction work on its own, offering subsequent operation of the ports to foreign investors. In the face of a growing internal financial crisis, Egypt sought and successfully awarded concessions to leading companies and consortiums from various countries, including China.

Egypt’s population is over 105 million people. This is a fairly significant market for Chinese companies. Imports from China totaled approximately $13.2 billion in 2022 and continue to grow. In these conditions, the importance of the port infrastructure of the country, located at the crossroads of Africa, Europe and Asia, can hardly be overestimated.

Managing the Suez Canal, a critical shipping route through which 12% of global trade passes, further enhances Egypt’s strategic importance as a logistics crossroads for global shipping routes. The canal serves as the main route for the supply of goods from China to the West, including about 60% of exports to Europe. The volume of purely Chinese trade turnover is a tenth of the annual traffic of the Suez Canal.

The importance of Egypt’s ports extends to the eastern Mediterranean. This region is becoming increasingly important for China. The ongoing NWO in Ukraine, sanctions imposed by the West, the blockade of the Odessa port – all this has affected China’s overland supply chains. As a result, it was forced to develop alternative transport corridors involving eastern Mediterranean countries such as Greece, Turkey, Israel and Egypt.

  In addition, as China is the world’s largest consumer of energy, its energy needs are generating interest in the eastern Mediterranean, where energy exploration and production are located and liquefied natural gas (LNG) export facilities are located. Here China will face competition from players from the EU, which has signed an agreement with Egypt and Israel to optimize natural gas exports to compensate for its shortage due to the cessation of supplies from Russia.

Undoubtedly, allowing private investors to participate in the operation and modernization of Egypt’s maritime infrastructure could bring economic benefits to the country if measures are taken to prevent monopolism. Cairo understands that if China operates some of Egypt’s ports along with other global operators, then Egypt can expand its port capabilities, benefiting from its strategic location and contributing to income and employment growth. However, the lack of public oversight in Egypt and the opacity of agreements with Chinese operators and shareholders raise some concerns. In particular, the unclear distinction between civil and military aspects in the use of port infrastructure raises questions about its potentially dual nature.

It is no secret that PLA Navy warships, under the guise of technical berths, use many overseas ports operated by Chinese companies for repairs and maintenance, including in Sri Lanka, Tanzania, Greece, Malaysia, Singapore, Indonesia and Spain. Egypt is unlikely to be an exception. These activities are not related to commercial port operations, but are related to the military presence of Chinese Navy ships in the eastern Mediterranean.

Numerous studies have emphasized the importance of overseas commercial port facilities for securing maritime routes, reflecting the interconnectedness of the growth of Chinese overseas commercial ports with the modernization of the PLA Navy and its presence in the so-called “far seas.” China’s naval strategy, released in 2015, outlines the PLA Navy’s goals to expand its sphere of influence. While “near seas” refers to the waters adjacent to China’s borders, “far seas” cover sea lanes around the world, control of which is consistent with Beijing’s intention to exert global influence without overtly designating its overseas installations as military bases.

By constructing or modernizing commercial ports around the world, China gains an extensive and reliable logistics network that can ensure the maintenance of PLA Navy ships and the combat readiness of crews. This is consistent with a law passed in China in 2017 that lays the groundwork for the use of civilian transportation resources to support military missions. The structure of such mobilization is complex and requires cooperation between the military, civilian government, and civilian enterprises, which may be located anywhere in the world. Not surprisingly, this blurred distinction between civilian and military functions at Chinese trading ports is a concern for the United States and its allies.

However, the fact of the presence of the Chinese fleet far from its native shores has already become a reality. Recent confirmation of this was the appearance of a detachment of Chinese Navy ships in the Mediterranean Sea after the outbreak of an armed conflict in the Gaza Strip. “Demonstration of the flag” is a mandatory tool in the politics of states that claim global leadership. China is mastering this instrument diligently and at a good pace. Russia, which has a rich history and extensive experience in this matter, provides him with diverse assistance and support. Evidence of this is the regular naval exercises of the two countries, including in the Mediterranean Sea.