With China very much in mind, Congress has passed the Foreign Investment Risk Review Modernization Act, or FIRRMA, mandating the Committee on Foreign Investment in the U.S. (CFIUS) to review and, if necessary, block both foreign attempts to acquire real estate in sensitive areas and joint ventures that could involve the transfer of American technology to foreign companies.
At the same time, however, China has established its footprint in key logistical hubs worldwide and is seeking to expand it even further.
Its growing global logistical reach could pose serious national security challenges for the United States and its allies.
China has built a naval base in Djibouti, on the Horn of Africa, from which its ships have been operating since 2017. It financed the construction of the Sri Lankan port of Hambantota; when Sri Lanka could not repay its debts to China, Beijing obtained a 99-year lease on the port. At the end of June 2018, the Sri Lankan government announced that it would move the headquarters of its southern fleet to the Chinese-operated port. Whether this move will result in Chinese constraints upon Sri Lanka’s freedom of action remains to be seen, but it cannot be ruled out.
Yet, it is China’s increasing presence in Europe and its environs that may well be the cause of greatest concern for Washington, and should be for its allies. China has obtained a significant presence on the territory of four NATO allies — Greece, the Netherlands, Belgium and Germany — and almost managed to do so in a fifth. China capitalized on Greece’s financial crisis in 2008 to begin operating a container facility in Piraeus, the port of Athens; it since has acquired a 35 percent stake in Rotterdam’s Euromax container terminal, which can take the world’s largest container ships, as well as a 20 percent holding in Antwerp’s container terminal, one of the fastest-growing terminals in Europe. In July 2017, the Hamburg Port Authority awarded the construction of a new container terminal to a Chinese conglomerate.
Rotterdam, Antwerp and Hamburg are Europe’s three biggest ports.
The fifth attempt at a NATO incursion — a near-miss for China — was its attempt through the China Communications Construction Company, a state-owned enterprise, to expand and modernize three disused airfields in Greenland. The company asserted its intention was merely to expand tourism in the sparsely populated island. But Greenland hosts an American base in Thule, which operates systems related to missile warning and space-related missions. Moreover, should China deploy aircraft to these bases, its reach would extend to at least part of Western Europe. Not surprisingly, the Chinese bid was extremely worrying to Danish defense officials, especially since China already had sought to acquire a former American facility in Greenland, only to have the deal vetoed by the Danish government.
In fact, the Chinese attempt to win the construction contract for the three airports posed a much more difficult challenge for the government in Copenhagen. Denmark is responsible for Greenland’s foreign policy and national security, but Greenlanders manage their internal affairs — and the government in Nuuk considered the decision regarding the airfields to be a domestic matter. It was only at the eleventh hour that a Danish company was able to edge out the Chinese and come up with the winning bid.
Most recently, China has expanded its presence in the eastern Mediterranean, along NATO’s southern flank. In addition to operating the port of Piraeus, China now has won the right to build two facilities in Israel’s ports of Haifa and Ashdod. Haifa is the headquarters of the Israeli Navy while Ashdod also hosts an Israeli naval base. Moreover, American warships, including aircraft carriers, dock at both ports. China’s presence in the two Israeli ports thus would enable China to monitor not only Israeli operations and communications but, whenever the U.S. Navy is on a port visit, those of the United States as well.
Retired Israeli and American naval commanders have expressed their concerns about the awarding of these port contracts to the Chinese. Israel should take a lesson from the Danes and become far more active in blocking Chinese attempts to penetrate its infrastructure. Israel has no equivalent of CFIUS but, clearly, it needs to establish one posthaste, and do so in a manner that, like FIRRMA, has few loopholes. Indeed, our other NATO allies should do the same; they must close any loopholes that exist in their foreign investment laws.
Finally, Israel should reconsider the award of the contracts to China or, at a minimum, demonstrate to Washington that China will not be able to monitor American naval operations. Should it be unable to do so, Washington should cancel any planned port visits to Israel. China’s efforts to gain access to American operations and tactics is troubling enough; our allies and friends should not make it easier for Beijing.
Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was under secretary (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy under secretary of Defense from 1985 to 1987.