February 20, 2012
Despite hopes in China that it would soon be able to resume its profitable contracts in Libya, Beijing indicated today that . . .[restrict]it was not yet prepared to give the green light for a return of Chinese companies to the country,
Shen Danyang, a spokesman at the Ministry of Commerce said: “In light of a series of specific issues between China and Libya that require further communication, it remains difficult to predict a clear time for the full return and resumption of work by the Chinese companies”.
This decision follows a fact-finding mission, earlier this month, led by Wang Shenyang, director of the Department of Foreign Investment and Economic Cooperation under China’s Ministry of Commerce. His party included executives from a number of organisations including the China International Contractors Association and the China State Construction Engineering Corporation (China Construction).
The Chinese say their concerns revolve around the safety of personnel, adequate compensation for loss and damage caused by the fighting, the settlement of outstanding contractual payments, the unfreezing of bank accounts. They are also bothered by the revamped visa issuance regime and new arrangements for the clearance of imported materials. It is not yet clear how much money is owed Chinese contractors, nor what arrangements the cash-strapped NTC offered to clear the debt. Before the revolution China was lifting three percent of its oil imports from Libya and sources say that part of this crude was used to offset contractual payments.
The Libyan government will be disappointed with Beijing’s decision. It rolled out the red carpet for the Chinese fact-finding mission during their four-day visit. It promised to abide by all existing contracts, held out the prospect of fresh work on reconstruction and stressed the importance they attached to developing relations and cooperation with China.
The assault on the Chinese embassy in Tripoli by Syrian exiles and Libyan sympathisers during the delegations’ visit is thought to have contributed to China’s decision. The demonstrators were protesting China’s blocking, along with Russia, of the UN Resolution demanding Syrian leader Bashar Assad step down. Unlike the Russian diplomatic compound, the Chinese building sustained only superficial damage, thanks to the intervention of Libyan security forces.
Last September, China became the last of the five permanent members of the UN Security Council to recognise the NTC. It has consistently said that said it would “concretely abide by existing bilateral treaties and agreements” undertaken by the Qaddafi regime‚ seen as a specific undertaking to China and Russia that they should not fear for pro-existing contracts. However, Libya has also said that in future, preference will be given to companies from countries that supported its struggle last year — a position that is seen as ruling out any new Chinese contracts in the immediate future.
Beijing Ministry of Commerce has listed 75 Chinese companies and state enterprises that were involved on a contractual basis in some 50 Libyan projects worth around some $19 billion. . From 2007, just one company, China Construction, Beijing’s leading off-shore construction outsourcing company, had signed deals worth $2.7 billion, half of which were unfinished when the revolution broke out. These include some 100,000 housing units being built across the country .
There have been no actual investments made in the country by China.
Just over a year ago, some 36,000 Chinese nationals were evacuated from Libya in a major operation using chartered liners including vessels from Greece and Turkey. None has yet returned.
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