Analysis – Could French and German plans to rebuild Beirut port be combined?

Beirut, Lebanon (Ports Europe) April 12, 2021 – An ambitious $5-7 billion plan with an up-to-20-year construction period by two German companies wants to relocate the explosion-destroyed Port of Beirut to the east side of Beirut River. A rival plan led by French shipper CMA CGM is less expensive and would take a shorter time to complete. May be the solution could be a combination of both. The French Connection France’s CMA CGM, whose founder (the French-Lebanese Saade family) is from Lebanon, has presented a much more realistic $400-600 million plan to rebuild only the port in its current place within three years. It envisions reconstruction of damaged docks and warehouses, along with port expansion and digitalisation. Read the Ports Europe article: CMA CGM interested in the reconstruction of Beirut port - April 12, 2021 The German proposal, presented by Hamburg Port Consulting (HPC) and Colliers Germany, relocates the main port from the city center, devastated by an explosion on August 4, 2020, to the town’s industrial area. The giant grain silos that shielded the western part of the city by absorbing much of the shock of the explosion would be replaced by smaller units. Read the Ports Europe article: The Project for a European revival of the Beirut Port and the surrounding area - April 12, 2021 But what if the two projects are combined? HPC and Colliers are ideally positioned to focus on urban development, while CMA CGM has the expertise to create a new port and its container terminal. Both sides will have the impressive backing of their governments, supported with authority and money from the European Union. The detonation of unsafely stored ammonium nitrate killed almost 200 people, injured 6,000, left over 300,000 without proper housing and with damages estimated at $15 billion. It was one of the world’s largest ever non-nuclear explosions, and fuelled outrage focussed on government corruption, incompetence, negligence and inaction. CMA CGM is the leading shipping operator at Beirut port, accounting for 60% of cargo volumes, and is a candidate, most likely in partnership with MSC, for the concession to run the container terminal. The postponed tender for the management of the container terminal is expected to be reissued by May. MSC, owned by the Aponte family, is a shipping and logistics company. The German Plan According to the German plan, the west side of the present-day port would be redeveloped into residential and business buildings, public and private beach areas and a large public park. It would be expected to generate significant profits that could be invested in rebuilding the damaged parts of the city. German business consultancy Roland Berger compiled the proposal. Chinese state-controlled companies and Dubai’s DP World are also interested in the rebuilding of the port. However, their plans also do not include any surrounding areas. The private German initiative would create a world class, state-of-the-art port, highly automated, cost-efficient and able to support regional trade growth. It is the first comprehensive rebuilding plan and has the support of the Berlin government. It would be financed by an independent trust company with international supervision that would be key to gaining the confidence of future investors. The French government is not part of CMA CGM’s reconstruction plan, but French companies and financial institutions have shown interest. The CMA CGM project sees a role for the Lebanese state via a public-private partnership (PPP). The reaction towards the German project was sceptical, mostly based on the inability of Lebanon’s leaders to create the basic conditions needed for foreign investment. Any plan for rebuilding the port and the devastated city is impossible without a new government to transform the country and launch long-stalled reforms. Chaos in Lebanon Lebanon defaulted on its debt in 2020, sending its currency crashing and last year its economy shrank by 25%. At the same time, the standoff over the make-up of a new government has intensified in recent months. The rebuilding of the port of Beirut is likely to be on the agenda of the U.S. Under Secretary for Political Affairs David Hale, who is expected in Beirut this week for talks on the maritime border between Lebanon and Israel. Lebanon is currently facing a perfect storm of political instability, deep economic crisis, coronavirus pandemic and meddling in its internal affairs by Iran and Syria. Together this has led to a situation worse than during the country's 15-year civil war that ended over 30 years ago. More than 50% of Lebanese today are living in poverty. Unemployment is 40%. Since 2019, the Lebanese pound has lost more than 85% of its value against the U.S. dollar on the black market. Reconstruction of the port and damaged parts of Beirut is estimated to cost between €4.5 and €12 billion ($5-15 billion). France is considered the front runner for the project - a natural choice due to its historical and cultural ties to Lebanon. Paris has imposed itself as a leading force in managing the crisis: it deployed military assets to assist Lebanon in the aftermath of the explosion, co-organised an international aid conference with the United Nations and prepared a draft proposal for reforms to Lebanon’s political parties. Also, French investments would not provoke tensions with the U.S. or local outrage from the population. Paris could be joined by the United Arab Emirates (UAE). Other Players China Beijing is the other possible suitor for the project, but accepting a Chinese investor for the port would alienate the U.S., which is already displeased by the China’s involvement in nearby Israeli port of Haifa. With Chinese companies controlling Alexandria port in Egypt, Haifa in Israel and Piraeus in Greece, securing a foothold in Lebanon would establish China’s domination over maritime trade routes in the Eastern Mediterranean. Such a development would fit perfectly into China’s Belt and Road initiative. The question is whether China wants to invest more money in Lebanon after it has seen much of the traffic usually passing through Beirut port being redirected to the Northern Lebanese port of Tripoli. Beijing has rehabilitated the port for its own use. A Chinese engineering company has been working in Tripoli to create a berth to accommodate Chinese-made cranes capable of moving about 700 containers per day. Chinese companies are interested in Beirut port because of the complications of shipping cargo through the Israeli port of Haifa to Arab countries due to historic political tension. State-owned Shanghai International Port Group (SIPG) is set to operate the Bay terminal at Haifa port for 25 years. It is also interested in a further concession at the port. Turkey Ankara declared its interest in the Port of Beirut reconstruction just four days after the explosion last summer. It does not control any ports in the area and Beirut represents an opportunity for Ankara to broaden and solidify its sphere of influence, which is a key priority for President Recep Tayyip Erdogan. Analysts view Erdogan’s empire building ambitions as one more incentive for France to take over the port. It is clear that the main foreign contenders to rebuild the geopolitically strategic facility in the Eastern Mediterranean will not invest billions of dollars/euro in a country where the predominant power is the Shi’ite movement Hezbollah. Hezbollah is both a political movement and a guerrilla army. It has been designated a terrorist organisation by the U.S., Canada, Germany, Britain, Saudi Arabia, the United Arab Emirates, Bahrain and Kuwait. The EU classifies Hezbollah’s military wing as a terrorist group. If the Lebanese government refuses reforms suggested by France and limits the Hezbollah influence in the port, the only choice left for them will be to turn to China which will rebuild the port quickly and cheaply, and will not show any interest in reforms and changes. Other Countries Only days after the explosion, Kuwait pledged to rebuild Beirut’s port grain silo, Lebanon’s largest, which was originally financed by a Kuwaiti development fund in 1969. However, it is unlikely that Kuwait will invest alone in the new port project. Russia is also seen as a contender and potential investor in the port, and would be comfortable in working with Hezbollah, but it lacks funds for such an investment. The United States might also be interested to invest in the rebuilding of the Beirut port. This could help it counter Iranian and Syrian influence in the region. It could also prevent China from establishing a near monopoly on the key ports in the Mediterranean. Last but not least, this would be seen as a pre-emptive move against possible Russian and Turkish influence in a strategically important region. Interest was reportedly also declared by Gulftainer (UAE), Hutchison Ports (Hong Kong) and state-controlled China Merchants Port (CMPort). Gulftainer currently operates a container terminal in Lebanon’s second port, in Tripoli (North Lebanon), via local subsidiary, Gulftainer Lebanon, part-owned by CMA-CGM. Gulftainer is a privately owned, independent port management and 3PL company and a leading port operator in the Middle East. Port of Beirut (Beyrouth) The Port of Beirut is among the 10 most important seaports in the Mediterranean Sea and has long been seen as the gateway to the Middle East. Surprisingly, it resumed operations at its container port only four days after explosions flattened the harbour front and surrounding buildings. Seismologists measured the event, which blew out windows at the city’s international airport 9 km away, as the equivalent of a 3.3 magnitude earthquake. The port handles 60% of all Lebanon’s imports. The country, suffering from a prolonged economic crisis, the massive spread of the coronavirus and rampant corruption, relies heavily on imports, especially for food supplies. It is very likely that Lebanon will adopt a build, operate and transfer (BOT) model for the renovated port in order to allow the investors to recover their investments. The European Investment Bank (EIB) has signaled that it will be ready to allocate up to €3 billion ($3.5 billion) for the Beirut port reconstruction. Reuters reported that such a project could create up to 50,000 jobs and require 100 hectares of land. French involvement in the port could increase if a French company takes over the management of Beirut’s container terminals. The British-Lebanese venture Beirut Container Terminal Consortium's (BCTC) 15-year contract for the management of the container terminals came to an end in early 2020, and a public tender for another 15-year period was to be issued. It was delayed because of the explosion and is expected to be held by May. BCTC has submitted a tender for a renewal of its management contract. It is bidding in a consortium with Lebanese-based International Port Management Beirut (IPMB), British-based Portia Management Services (PMS), and American-based Logistics and Port Management, Americas (LPMA). Read the Ports Europe article: Beirut Container Terminal back in operation - August 14, 2020 The story behind this huge amount of explosive material rotting in a poorly secured and maintained warehouse in the port of Beirut that exploded in August 2020 could come from a bad film: It was on board of a Moldova-flagged ship, owned by a Russian believed to be living in Cyprus, which was travelling from the ex-Soviet republic of Georgia, to be delivered to Mozambique, but was abandoned in the port in 2013. Further Ports Europe reading: Germany enters the fray for the reconstruction of the Port of Beirut. What about France, China, Turkey, United States, Russia, UAE, Kuwait? - April 7, 2021 Copyright (C) Ports Europe. All Rights Reserved. 2021.

Analysis – Could French and German plans to rebuild Beirut port be combined?

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Analysis – Could French and German plans to rebuild Beirut port be combined?

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DFDS bought Ekol Logistics at the end

Two cocaine shipments – 720 kg and 720 kg – seized in Vlissingen port

Malta sees reduced cruise ship passengers in Q3 2024

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