Abraham Accords, Trump and China’s Belt and Road Initiative

The Abraham Accords is widely seen solely through the prism of the Arab-Israeli conflict with once hostile sides coming together to herald a new peaceful era for the region. While the peace agreement between Israel and the two Gulf nations, UAE and Bahrain, is a major step towards wider normalization between Israel and the Arab world, and a show of strength against Iranian expansionism and aggression, it can also be seen as a strategic masterstroke by the Trump administration to counter China’s aspirations to exert Beijing’s power in the Middle East and beyond.

Indeed, with Abraham Accords, when zoomed out of the Arab-Israeli conflict, a different picture emerges.

In November 2019, the United States, Japan and Australia announced the creation of the Blue Dot Network, an initiative to bring together governments, the private sector, and civil society under shared standards for global infrastructure development. 

More importantly, the Blue Dot Network initiative targets China’s Belt and Road Initiative, one of President Xi’s most ambitious foreign and economic policies to strengthen Beijing’s economic power through a vast program of infrastructure building throughout the globe.

China’s Belt and Road Initiative has its supporters and critics, but Gulf nations UAE and Bahrain have played a pivotal role in helping Chinese funds reach the Arabian Gulf.

According to Simon Pluckrose from the Dubai-based Brunswick Group, “the country (UAE) has thrown itself so strongly behind the BRI that it has literally redrawn the trade routes of the BRI, which seeks to connect about 70 countries economically, until recently did not include a stop in the Arabian Gulf. So the UAE created one.”

Pluckrose writes that more than 4,000 Chinese companies already operate in the UAE and the non-oil trade between the two countries exceeded $53.3 billion in 2017 with bilateral trade having grown 800-fold since 1984, and expected to reach $70 billion by 2020. In 2000, the Hong Kong Trade Development Council chose Dubai for its regional office.

As for Bahrain, Mordechai Chaziza’s recent paper for INSS gives an eye-opening take on the Kingdom’s importance to China’s BRI. According to Chaziza, Bahrain has great strategic geopolitical value for China’s new Silk Road strategy.

First, the Kingdom is a gateway to the Gulf and one of the key Gulf countries along the new Silk Road route, enabling it to serve as a transportation hub for the region (Olimat, 2016). The island is surrounded by several of the Middle East’s large oil fields and commands a strategic position amid the Persian Gulf’s shipping lanes, which is the access route for much of the Western world’s oil to the open ocean. Bahrain stands at the crossroads of China’s new Silk Road strategy, an important nexus for trade, investment, science, and cultural exchanges between the Arab and Chinese and the greater Asian, African, and European worlds. 

Second, the country benefits from a strategic geographical location on the crossroads of African, Asian, and European markets at the heart of the GCC market, which is currently valued at approximately $2.2 trillion. China has already become the GCC region’s largest trading partner; bilateral trade now exceeds $260 billion per year, and is projected to reach $350 billion in the next decade. 

Third, Bahrain, known as “the Pearl of the Gulf,” is an important port on the ancient maritime Silk Road. The relationship is deeply rooted in shared history, geography, culture, and economic exchanges. 

Fourth, Bahrain is also one of the most modern and dynamic countries within the top-ranking business environment in the Middle East (al-Mukharriq, 2018a; 2018b). Its open and liberal lifestyle, unique market access, world-class regulatory environment, and highly competitive taxation system, combined with the lowest operating costs in the region, high quality of life, and a technologically literate population make the Kingdom an ideal access point for Chinese companies to this $1.5 trillion GCC market (“Bahrain Strengthens Economic Ties with China,” 2018). For Chinese investors seeking business opportunities in the Gulf countries and Africa, Bahrain can be a commercial hub of operations.”

Since UAE and Bahrain hold great significance to China’s BRI ambitions, it would seem logical to assume that the Trump administration looked at the Abraham Accords as an opportunity to counter China’s activities in the Arabian peninsula.

Perhaps coincidental, leading up to the Accords, the Trump administration had been increasingly vocal about Israel’s deepening ties with Beijing. 

In March 2019, US Secretary of State, Mike Pompeo cautioned Israel about its increasing ties with China.

“Intelligence sharing might have to be reduced, co-location of security facilities might have to be reduced, we want to make sure countries understand this and know the risks,” Pompeo cautioned allies

Already in May 2020, David Schenker, U.S. Assistant Secretary of Affairs for Near Eastern Affairs, warned countries about Chinese government-backed companies that are on the hunt for cheap bargains in Europe and elsewhere to capitalize on the economic malaise caused by the pandemic. 

“Some of our partner nations have taken steps to bolster investment-screening efforts of late but Israel could also be well advised to add some of these mechanisms as well.”

Recent infrastructure projects, namely the Haifa Port and Red Med projects coupled with Chinese money pouring into Israeli tech intensified existing concerns among US state department officials. 

New reality?

Even though similar concerns were not voiced in the media vis-à-vis UAE and Bahrain, it certainly does not mean that such concerns were not expressed in private, and it is possible that China was an intricate part of the Trump administration’s calculations in devising the final blueprint for the accords.

While China’s reaction to the Abraham Accords was cautiously positive, it’s unlikely that Beijing is excited about the prospect of a US-backed Israel freely entering – and benefiting from – the many lucrative technology and infrastructure projects in the Gulf region, if it comes at the expense of BRI.

In 2019, China’s Silk Road Fund and a number of Chinese banks led financing for a 950-megawatt solar farm near Dubai, which promises to be among the world’s largest such facilities. 

Today we are starting to see signs of a shift in money flow as major US and Israel backed energy initiatives are emerging in the Middle East, likely to stir the pot and lead Gulf states to look for alternative partners for energy developments. 

Signaling a new reality, the energy ministers of Israel and the UAE met to discuss energy development in the region. “I spoke (with the UAE energy minister) on cooperating in linking power grids and developing the natural gas market for exports via pipeline to Europe … as well as other projects,” the statement quoted Yuval Steinitz as saying.

What’s more, in December, DC-based ACU Energy International revealed a plan “to form a ‘super consortium’ to construct 40 reactor units in the Middle East – interconnected with a high-voltage regional grid – is specifically designed to bring the benefits of economic reconstruction, and simultaneously remove the risk of nuclear proliferation in the region”.

It may be difficult to decipher the true picture of the Middle East energy scene as much of it is conducted away from the public eye. However, by facilitating the warm peace between Israel and the two Gulf countries and tying it into his wider China-strategy, Trump has done much to expand America’s footprint in the Middle East, while simultaneously curbing China’s global aspirations. 

Historically, though both UAE and Bahrain have enjoyed a close relationship with China, and while this may not change in the near future, Trump helped shape – whether intentionally or inadvertently – a new reality for the countries – and China – in the region.

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