Analysis – Germany enters the fray for the reconstruction of the Port of Beirut; What about France, China, Turkey, the USA, Russia, the UAE & Kuwait?

Beirut, Lebanon (Ports Europe) April 7, 2021 – Germany is reportedly prepared to submit a proposal for the reconstruction of the port of Beirut, which was severely damaged by a huge explosions in August 2020. This is a very serious competitor to France, which is considered the front runner for the project, estimated to cost between €4.5 and €12 billion ($5-15 billion). France France undeniably stands out as the natural choice due to its historical and cultural ties to Lebanon and the Franco-Lebanese roots of the giant French shipping group CMA-CGM. Paris has imposed itself as a leading force in managing the crisis: it deployed its military capacities 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. French investments would not provoke tensions with the U.S. or outrage from the population. France could be joined by the United Arab Emirates (UAE). China China is the other possible suitor for the reconstruction of the strategic port, 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. Turkey Turkey declared its interest in the Port of Beirut reconstruction only four days after the explosion last summer. It does not control any ports in the area apart from its own in Turkey, and Beirut represents an opportunity for Ankara to broaden and solidify its sphere of influence, which is a key priority for Turkey’s President Recep Tayyip Erdogan. But 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, acting as a spearhead for Iran in Syria’s civil war and across the region, is also facing public anger over the explosion in the port that obliterated part of the city and traumatised the country. The Shiite Muslim party Amal has the most influence in Beirut’s port, where 70% of the 3,000 employees are Shiite. Amal is an ally of Hezbollah. In case the Lebanese refuse reforms as suggested by France and limit the Hezbollah influence in the port, the only choice left for them will be to turn to China which would rebuild the port fast and cheap, and would not raise the sensitive issues of reform and change. Hezbollah is both a political movement and a guerrilla army. It has been designated a terrorist organisation by the U.S., Canada, Germany, Great Britain, Saudi Arabia, the United Arab Emirates, Bahrain and Kuwait. The EU classifies Hezbollah’s military wing as a terrorist group. 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 will fit perfectly into China’s Belt and Road initiative. One Belt, One Road – a simplified version of the Silk Road and 21st Century New Maritime Silk Road – concerns the China-led infrastructural investment project which aims to symbolically revive the corridor that united the East and the West. This initiative covers more than 60 countries and regions from Asia, through Eastern Europe and the Middle East to Africa. 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 port of Lebanese port of Tripoli, which Beijing has already rehabilitated 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. Kuwait 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, but it’s unlikely that Kuwait will invest alone in the new port project. USA United States might also be interested to invest in the rebuilding of the Beirut port. This is going to help them counter the Iranian and Syrian influence in the region. It is also going to prevent China from establishing a near monopoly on the key ports in the Mediterranean. Russia Last but not least, Russia is also seen as a contender and potential investor in the rebuilding of the port, which would also be comfortable in working with Hezbollah, but it lacks money for such an investment. The European Investment Bank (EIB) seems to be ready to allocate up to €3 billion ($3.5 billion) for the project. Reuters reported that such a project could create up to 50,000 jobs and require 100 hectares of land. The detonation on August 4, 2020 of some 2,700 tonnes of unsafely stored ammonium nitrate that killed almost 200 people, injured 6,000, left over 300,000 without proper housing and with damages estimated at $15 billion, fuelled outrage over government corruption, incompetence, negligence and inaction. Any project for rebuilding the port by a Western country would come with stringent conditions focused on the political establishment stabilising the country’s finances and tackling inherent and widespread corruption. There is little sign of these issues being tackled by current political power brokers. German sources report that the consultant Roland Berger compiled the proposal for the port’s reconstruction which is expected to be submitted on April 7. Any rebuilding of the port and its associated huge investment has political as well as business implications. Lebanon has been in a chaotic state for many years, as various parties – including Iran and Syria – compete for regional influence and control. 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. It managed surprisingly to resume operations at its container port only four days after the explosions that 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. 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 (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 supposed to be issued for a new contract. It was delayed possibly to mid-2021 because of the explosion. 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). The other company to show interest in the new contract was French CMA-CGM (Compagnie Maritime d’Affrètement and Compagnie Générale Maritime) in a partnership with Geneva-based MSC (Mediterranean Shipping Company), a global business engaged in the shipping and logistics sector. Interest was reportedly also declared by Gulftainer (United Arab Emirates – 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 a local subsidiary, Gulftainer Lebanon, part of the capital of which is also owned by CMA-CGM. Gulftainer is a privately owned, independent port management and 3PL (third party logistics) company and a leading port operator in the Middle East. The majority shareholder in BCTC is Mersey Docks, a British company which was acquired in 2005 by Peel - one of UK’s biggest private property companies. Its international arm, Portia Management Services, replaced Mersey in managing BCTC. Portia’s chief executive, John Owens, owns a small personal share in BCTC. BCTC’s main partner is the Lebanese company International Port Management Beirut Holding. The U.S. firm Logistics and Port Management Americas, owns the smallest share of BCTC. Chinese companies are interested in Beirut port because of the complications of shipping through the Israeli port of Haifa to Arab countries due to historic political tension. The 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. The story behind this huge amount of explosive material rotting in a poorly secured and maintained warehouse in the port of Beirut that detonated in August 2020 is like one coming 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: Analysis – France expected to beat China in the race for the Port of Beirut – Hezbollah is the main obstacle – October 2020; Analysis – France expected to beat China in the race for the Port of Beirut – Hezbollah is the main obstacle – October 2020) Copyright (C) Ports Europe. All Rights Reserved. 2021.

Analysis – Germany enters the fray for the reconstruction of the Port of Beirut; What about France, China, Turkey, the USA, Russia, the UAE & Kuwait?

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Analysis – Germany enters the fray for the reconstruction of the Port of Beirut; What about France, China, Turkey, the USA, Russia, the UAE & Kuwait?

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