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25-12-15, 09:46

China Plans a New Silk Road, but Trading Partners Are Wary

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China Plans a New Silk Road, but Trading Partners Are Wary
Beijing’s effort to revive ancient trade routes is causing geopolitical strains, with countries like Turkey increasingly worried about becoming too dependent on China.
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A Russian warplane that was shot down by a Turkish fighter jet on Nov. 24. Turkey wanted to produce a missile system with China, in part to reduce its dependence on patrolling jet fighters. Credit Fatih Akta/Anadolu Agency, via Getty Images
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ANKARA, Turkey — As tensions in the Mideast and Ukraine rose in recent years, Turkey moved to jointly manufacture a sophisticated missile defense system. The $3.4 billion plan would have given Turkey’s military more firepower and laid the foundation to start exporting missiles.


But Turkey abruptly abandoned the plan just weeks ago in the face of strong opposition from its allies in the North Atlantic Treaty Organization.

Their main objection: Turkey’s partner, a state-backed Chinese company. Western countries feared a loss of military secrets if Chinese technology were incorporated into Turkey’s air defenses.

As one of its highest economic and foreign policy goals, China has laid out an extensive vision for close relations with Turkey and dozens of countries that were loosely connected along the Silk Road more than 1,000 years ago by land and seaborne trade.

But Beijing’s effort to revive ancient trade routes, a plan known as the Belt and Road Initiative, is causing geopolitical strains, with countries increasingly worried about becoming too dependent on China.


Turkish officials, including the prime minister, Ahmet Davutoglu, third from left, at a military base in Ankara. The country's plan to produce a missile defense system with China raised alarm with Turkey's longtime Western allies. Credit Hakan Goktepe/Anadolu Agency, via Getty Images
Kazakhstan has limited Chinese investment and immigration for fear of being overwhelmed. Kyrgyzstan has pursued warmer relations with Moscow as a balance to Beijing.

With the missile deal, Turkey was turning toward China partly to reduce its reliance on NATO. “Our national interest and NATO’s may not be the same for some actions,” said Ismail Demir, Turkey’s under secretary for national defense.

But the deal immediately raised red flags in the West.

Besides the technology issues, the Chinese supplier, the China National Precision Machinery Import and Export Corporation, was the target of Western sanctions for providing ballistic missile technology to Iran, North Korea, Pakistan and Syria. So Turkish exports based on a partnership with China National Precision could have also been subject to sanctions.

Complicating matters, China and Russia are close allies on many issues. Russia is especially distrusted in Turkey because of its military intervention in Syria and its annexation of Crimea from Ukraine. And Turkey had been a close American ally ever since it sent a large contingent of troops to fight North Korea and China during the Korean War.


A Turkish military plane at a base near Adana, Turkey. Even without the missile deal, the Chinese are already a military supplier for Turkey, providing lower-tech battlefield rockets. Credit Ibrahim Erikan/Anadolu Agency, via Getty Images
The Chinese missile project “was one of the things that really made people say ‘Turkey is shifting, wow,’” said Mehmet Soylemez, an Asian studies specialist at the Institute for Social and Political Researches, an independent research group in Ankara. “China wants to remake the global financial and economic structure.”

With its wealth and markets, China is a tantalizing partner.

Many countries along the former Silk Road are frustrated by the difficulty of developing closer economic ties to the European Union. And they are alarmed that the American-led Trans-Pacific Partnership, a major regional trade deal, could give an edge to Malaysia and Vietnam.

“So many years, we have been kept waiting at the edge of the E.U., and people are losing hope,” said Sahin Saylik, the general manager of Kirpart Otomotiv, a large Turkish auto parts manufacturer. “Turkey is not in the Trans-Pacific Partnership and problems in the Arab world are pushing Turkey to have other alternatives.”


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But the relationship with China is lopsided. Turkey imports $25 billion a year worth of goods from China, while exporting only $3 billion there.

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The World According to China
China’s enormous overseas spending has helped it displace the United States and Europe as the leading financial power in large parts of the developing world.

In Turkey, stores are full of Chinese goods, from vacuum cleaners to tableware. Chinese companies have purchased coal and marble mines, as well as a 65 percent stake in Turkey’s third-largest container port. China is helping build nearly a dozen rail lines, and it is already a military supplier, selling lower-tech battlefield rockets to Turkey.

Companies are increasingly turning to China for cost reasons, buying components or importing fully assembled products. Arzum, one of Turkey’s best-known appliance manufacturers, did the engineering and marketing for its popular new Okka single-cup Turkish coffee brewers locally. But the brewers are manufactured in southeastern China.

“Ten years ago, Turkey didn’t exactly see the threat of China for manufacturing,” said T. Murat Kolbasi, Arzum’s chairman. “The threat has to be changed to the opportunity.”

Chinese companies can quickly sever ties as well.

The state-controlled China Machinery Engineering Corporation abruptly backed out of a $384.6 million deal to buy a 75 percent stake in the electricity grid of Eskisehir and nearby provinces in Turkey. It happened days after national elections in Turkey last June cast uncertainty on the future of the industry’s regulations.


Power lines near an industrial park in Eskişehir, Turkey. In the summer, a Chinese company abruptly backed out of a deal to buy a stake in the electrical grid for Eskişehir and nearby provinces. Credit Byron Smith for The New York Times
China Machinery provided no official reason to Turkish Electricity for canceling the deal. The Chinese company declined to comment.

The Turkish Electricity Distribution Company, a nationwide grid company, is suing the Chinese company in an effort to collect a breakup fee. Mukremin Cepni, chief executive of Turkish Electricity, said that he had worked 18 months on the Eskisehir deal and was unenthusiastic about any more tie-ups with China.

“I won’t think well of them, because personally I struggled a lot, and their going away without giving any reason exhausted us,” said Mr. Cepni.

Ethnic issues have further complicated China’s relations. Many countries in the region are Muslim, and versions of Turkish are spoken in more than a dozen countries, partly a legacy of the Ottoman Empire.

That history has fanned regional tensions over Beijing’s stringent policies toward the Uighurs, Muslims in China’s Xinjiang Province who speak a Turkic language. Beijing has blamed Uighurs for a series of attacks on Han Chinese from eastern China.

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When China suppressed Uighur protests in 2009, Recep Tayyip Erdogan, the Turkish prime minister at the time, condemned the actions as “a kind of genocide.” Last July, Turks and Uighurs held two rounds of protests in Istanbul and Ankara.

Now the president of Turkey, Mr. Erdogan is prioritizing ties with China. He calmed the anti-Chinese protests last summer by urging his countrymen to be wary of rumors on social media about China’s treatment of the Uighurs.

Nationalistic Turkish groups like Anatolia Youth, previously outspoken about the Uighurs, have responded by softening their stance toward China. Mahmut Temelli, the chairman of Anatolia Youth’s foreign relations council, said that he believed that on missiles, “the bid should have remained with China.”


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The missiles became an international issue two years ago, when Turkey’s defense ministry announced it favored a Chinese bid. It beat out an American offer to sell fully built Patriot missiles, as well as similar deals with Western Europe and Russia.

Turkey wanted to churn out missiles, potentially for export in a few years, and to stop relying on NATO’s occasional deployments of Patriots. “You cannot protect a 911-kilometer border just with Patriots,” said Merve Seren, a security specialist at the Foundation for Political, Economic and Social Research, a pro-government public policy group in Ankara.


Arzum, maker of the popular Okka coffeemaker, designed the product in Turkey. But the brewers are manufactured in China, a sign of the economic ties between the countries. Credit Byron Smith for The New York Times
And Turkey’s F-16 fighters, like the two that shot down a Russian warplane in late November, cannot be on patrol continuously, said Mr. Demir, the defense under secretary. Missile systems can be ready around the clock.

As the Syrian conflict worsened, NATO’s limited supply of Patriot missiles meant that it sent only enough to protect three Turkish cities. NATO had begun to withdraw them when the Russian warplane was shot down.

“NATO’s deployment of air defense systems is on and off,” Mr. Demir said, just hours after the the episode with the Russian warplane, videos of which played on the television in the background. “I don’t know if it gives a message that your partners can rely on.”

But Turkey had a huge blind spot with the missile project.

Turkish military analysts compared a long list of variables, like missile range and the willingness to share technology and manufacturing. The analysis was approved by a committee including the defense minister, generals and Mr. Erdogan, Mr. Demir said.

But nobody consulted the foreign ministry on how Turkey’s allies would react, partly because NATO had already tolerated Greece’s acquisition of Russian air defense missiles from Cyprus. “They were informed after the process was completed,” Mr. Demir said. “It was not treated as a special project that will have a lot of political results.”

Within days of the announcement about China’s leading bid, NATO member countries organized a campaign to overturn the decision. President Obama, Western European heads of state and top NATO commanders contacted Turkish leaders.

NATO officials have been cautious, saying any country has a right to choose its own equipment. But they have publicly expressed concern that Chinese missiles might not be compatible with NATO equipment — and privately that they were loath to share technical details to make compatibility possible.

Last month, Turkey opted to go ahead on its own. It will probably subcontract some components to foreign manufacturers, possibly China National Precision.

An engraved metal plate from China National Precision in a polished rosewood box still sat on a shelf outside Mr. Demir’s office the morning the Russian warplane was shot down. Hours of negotiating with Chinese arms makers has forged a relationship that will make future military cooperation easier, Mr. Demir said.

“There is a value,” he said, “in the time we have spent with these companies.”