Anger Over Nobel Peace Prize Stalling Beijing’s Admission to Polar Group

China wants a bigger say in the Arctic, where thinning ice is opening faster trade routes to Asia in a region that could hold 20 percent of the world’s undiscovered oil and natural gas.

But its condemnation of Norway for Liu Xiaobo’s Nobel peace prize has some Scandinavians questioning Beijing’s temperament to join an Arctic Council that is more about collegiality than confrontation.

China lashed out at Norway following Liu’s 2010 award, suspending talks on a free trade agreement, snubbing visiting diplomats, and imposing new import controls on Norwegian salmon.

Oslo reported Beijing to the World Trade Organization over the fishing dispute. But otherwise, it tried to work quietly to resolve the tensions, stressing the independence of the Nobel committee. With little appreciable progress, Norway is now speaking out about China’s application to join the Arctic Council as a permanent observer next year.

In principle, Foreign Minister Jonas Gahr Stoere says Norway favors accepting new observers in 2013 — But with two conditions.

The first is codifying the difference between full members — Canada, Greenland, Norway, Russia, the United States, Sweden, Finland, and Iceland — and the role of permanent observers, which currently include the Netherlands, the United Kingdom, Germany, France, Poland, and Spain.

The second is respect for Arctic Council principles linked to the Convention of the Law of the Sea and the obligation to settle conflicts through consensus-based negotiation.

U.S. Secretary of State Hillary Clinton and Norwegian Foreign Minister Jonas Gahr Stoere talk near Tromso, Norway June 2. Stoere has concerns about China joining the Arctic Council. Photo: AP

“For that to function, we need to have a very open dialogue with each of the member states and with each of the observer states,” Stoere says. “So each observer that would like to join should also pledge, in my view, to have an open political dialogue in the membership.”

“In the case of China, they would have to be ready to engage in an open and transparent political dialogue with all the member states of the Council, including Norway. And when I say that, it is because that is today not an obvious thing.

“The political dialogue between Norway and China for the last one and a half years has been at a pretty low level,” Stoere says, “Not of our choice but of their choice, linked to their dissatisfaction with the decision of the Nobel committee.”

“For this Arctic governance structure to work, political dialogue is absolutely necessary to deal with common interests and diverging interests,” the Norwegian foreign minister concluded.

Russia and Canada share concerns about greater Chinese influence in the Arctic, as do some of the indigenous peoples represented on the Arctic Council.

Chinese Deputy Foreign Minister Song Tao says Beijing hopes to “cooperate with relevant countries like Sweden and Iceland on issues of peace, stability and sustainable development in the Arctic.”

Denmark sees new supplies of oil, iron ore, and rare earth minerals in melting Greenland ice, and China is a primary market. The Danish ambassador to China, Friis Arne Peterson, says China has “natural and legitimate economic and scientific interests in the Arctic.”

With as much as $9-trillion dollars in oil and minerals at stake, Gunhild Hoogensen Gjorv, a political scientist at the University of Tromso, says energy security is now the leading driver of polar relations.

“Everyone is interested in moves that China is making,” she says. “For such a long time, the north has been ignored. It has been that cold spot up there. There is clearly a deeper appreciation now that the Arctic is a region that has global consequences.”

With only 2 percent of exports going to China, Gjorv says Norway is better positioned than most small countries to withstand Beijing’s considerable influence.

“From the Norwegian perspective, it puts Norway in a rather powerful position because such a powerful country wants to have this sort of position” on the Arctic Council, she says.

Given the increase of pollutants in the Arctic, both from Asia and from the Atlantic Gulf Stream, Gjorv says better protecting the region means working with growing industrial economies.

“China is really interested,” she says. “We should be interested about them being here too to be part of a regime-building system where more and more countries are on side to create regulations that will protect this region.”

Norwegian Foreign Minister Stoere says the attention generated by China’s application to the Arctic Council shows “the emergence of a region which used to be frozen both politically and climatically, and now there is a thaw.”

“Fifteen years ago, the challenge of the Arctic Council was that nobody knew about it,” he says. “Today its challenge is that there are so many who would like to work with it, which is a good development.”

How Much Is About Oil?

Chinese diplomats are stepping up their pursuit of a deal between Sudan and South Sudan to end cross-border hostilities and resume oil exports from the south.

Following South Sudan President Salva Kiir’s state visit to Beijing, China’s Special Representative for African Affairs, Zhong Jianhua, shuttled between Khartoum and Juba championing an African Union plan to settle the border, citizenship, and oil-revenue-sharing issues left unresolved by a 2005 peace agreement.

Oil fields are concentrated in the border regions between Sudan and South Sudan.

So how much of this is about improving China’s image in Africa — where Beijing has been criticized by labor and human rights activists — and how much of this is about restoring Sudanese oil production, which accounts for 5 percent of Chinese imports?

Beijing is the largest single investor in Sudanese and South Sudanese oil fields and pipelines, with the China National Petroleum Corporation holding a 40 percent stake in the Greater Nile Petroleum Operating Company.

“We believe oil is the economic lifeline for both Sudan and South Sudan,” says Chinese foreign ministry spokesman Liu Weimin. “Maintaining the stability and sustainability of oil cooperation is fundamental to the interests of both countries and is consistent with the interests of Chinese enterprises.”

Obama Administration ‘Delighted’

Unlike other places in Africa where the United States has questioned China’s commercial motives (Guinea, Zambia, Democratic Republic of Congo), the Obama administration says it is “delighted” by Beijing’s increased involvement in Sudan.

“They have increasingly recognized that if the political issues in Sudan and between Sudan and South Sudan are not resolved, neither the oil nor their other interests can be served,” says Princeton Lyman, U.S. special envoy to the conflict. “It’s hard to see the full implementation of an oil agreement if the two sides are fighting at the border.”

During Sudan’s long civil war, Beijing sided with President Omar al-Bashir and the Sudanese military, helping to increase oil exports through Port Sudan. Cato Institute Senior Fellow Doug Bandow says that changed with South Sudan’s independence last June.

“China’s foreign policy so far has been very rational,” Bandow says. “They supported the Sudanese government. It gave them what they thought they wanted. But after secession, after you suddenly see a potential war between the new country and the former, they recognize that their interests are at stake.”

South Sudan President Salva Kiir: After a state visit to China, now gets a measure of Beijing's attention.

John Bradshaw is executive director of the Enough Project to end genocide and crimes against humanity. He says no one benefits from the destruction of oil infrastructure.

“The Chinese have recognized that the kind of dynamic they had working with the regime in Khartoum is just no longer sustainable, and they have to have a more balanced approach between Juba and Khartoum to try to bring the two sides together,” Bradshaw says.

Even so, neither Chinese diplomacy nor renewed efforts by former South African President Thabo Mbeki have managed to implement a previously agreed joint border monitoring mission between Sudan and South Sudan. Both sides, however, say greater Chinese involvement is helping.

“We value China’s role in the current situation,” says Issam Mitwalli, director of the China Department at Sudan’s Ministry of Foreign Affairs. “China has a good relationship with the two countries. As the friend of both sides, China is able to play a very important and valuable role.”

“There must be some sort of relationship where China can play a positive role, even in this war,” says Barnaba Marial Benjamin, South Sudan’s  Information Minister. He likens Beijing’s relationship with both Khartoum and Juba to “a case of a husband with two wives.”

China is Single Largest Investor
Sophie Richardson, China Director for Human Rights Watch, says Beijing has a special obligation to help resolve this conflict.

“China, as the single largest investor in the two Sudans, has a responsibility to make sure its support promotes human rights and not continued violence and violations,” she says.

Doug Bandow says China’s expanded diplomatic role in Sudan shows it is moving away from some of the ways it conducted foreign policy in the past.

“They are going to have to be more nuanced, more reasonable,” Bandow says. “And I think that’s good for the United States and good for other countries because then there is more role for engagement and cooperation. If they see a practical reason to try to solve the Sudan problem, well the U.S. and the Europeans also want to solve that. We can work together as opposed to being at odds.”

But Ties To China Still Important

Burma is ripe for new foreign investment following the suspension of U.S. and European Union sanctions against the military-led government. So how would new business affect China’s economic and political patronage?

Doug Bandow, a senior fellow at the Cato institute in Washington D.C., believes one important factor in Burma’s recent political reforms is the desire to avoid ending up like North Korea — a pariah state dependent entirely on China.

“Part of it may be that the generals recognize that the system isn’t working, they are tired of the isolation,” Bandow says. “Clearly part of it is this sense that the only real firm support they have is China.”

Nowhere is that shift more clearly illustrated than in Burma’s suspension of the $3-billion, Chinese-financed Myitsone hydroelectric dam following protests by civilian activists, including Nobel Peace laureate Aung San Suu Kyi.

Heralded by Burma’s previous military government, the 6,000-megawatt hydroelectric station would have been the first to span the Irrawaddy River and was designed to supply electricity to southern China.

“They have run into these issues about this dam,” Bandow says. “They have had the war in Burma that has pushed people into China. China has gotten very upset. I think they suddenly say, ‘Maybe we need a little more maneuvering room. So if we are engaged with the U.S. and the EU, suddenly there are other places we can go, more money coming in.'”

Burmese Foreign Minister Wunna Maung Lwin explains the cancellation by saying the Myitsone project is only part of his country’s cooperation with China, and the government in Beijing understands.

“We have explained the situation very clearly to the authorities and the respective and responsible ministry, and the Chinese company (state-run China Power Investment) is discussing the matter also,” he says. “We have had very good cooperation with China. So I think that this will not jeopardize the future relations with China.”

Lex Rieffel, a global economy and development fellow at Washington’s Brookings Institution, says that instead of discouraging new Chinese investment in Burma, the suspended dam deal may help move the relationship forward.

“There is not a single China,” Rieffel says. “There is the government in Beijing. There is the provincial government. And there are the big Chinese companies, like the company that undertook this investment. They don’t all work together. This is not a single, homogenous China Inc.”

“There are some parts of the policy community in China that were upset by the dam being built in the first place and are not unhappy that it has been stopped and believe that this very important long-term relationship will improve once this obstacle is removed,” Rieffel adds.

Even without Myitsone, China remains Burma’s largest partner, passing Thailand with nearly one-third of all outside investment, primarily in hydroelectricity, mining, and oil and gas. That is partly a result of economic sanctions that kept out Western competition.

But now that those sanctions are easing, Western competition may be coming back. U.S. Secretary of State Hillary Clinton, for one, says China has nothing to fear from greater U.S. and EU involvement in Burma.

Secretary of State Hillary Clinton meets with Burmese Foreign Minister earlier this month at the State Department. Photo: AP

“The United States does not expect any country to give up relationships with their neighbors,” Clinton says. “China is a neighbor (of Burma) and there are longstanding ties that certainly are deep in the soils of both nations.

“What we are doing,” says Clinton, “is providing additional support for the kind of development, both politically and economically, that the reform process, which the government in Nay Pyi Taw has begun, has made possible.”

“So this is not about any other nation,” Clinton adds. “This is between us. This is rooted in the changes we have watched happen and our desire to support the continuation of those changes. And we fully expect that there will be many countries, as you’ve already seen, who want to develop stronger and better relationships in the neighborhood, in the region, and around the world. We think that’s good to open up the country and give the people more opportunities.”

And Rieffel says the ability of Burma’s banking sector to carry out normal financial transactions will be critical to raising living standards. He fears, however, that Burma is already being “smothered in love” with too many potential investors moving too quickly.

“My concern today is that there will be too much investment too fast, particularly in the natural resource sector,” Rieffel says. “Countries that invest heavily in natural resources tend to underinvest in human resources. Experience tells us that it’s the investment in human resources that pays off in the long term.”