282019The New Silk Road and the Portuguese Speaking Countries in the New World ContextCom este nome se titula esta colecção editada pelo IIM, onde se dão à estampa or ig inais de autores e trabalhos de investigação sobre o vasto universo do Oriente, mormente dos contactos havidos no âmbito da triangular relação histórica entre Portugal, China e Macau.Suma Oriental, porque semelhantemente ao relato do notável descritor que foi Tomé Pires, o critério é de reunir temas e pers-pectivas que, na latitudinária variedade, vão dando um conspecto abrangente daquela complexa relação histórica.Suma Oriental, porque, sendo a obra que inscreveu o nome de Tomé Pires na lista dos primeiros autores que escreveram sobre o Oriente, é simbolicamente o teste-munho daquele que foi o primeiro embai-xador designado por Portugal para ser presente ao Imperador da China.Tomé Pires, boticário das drogarias orien-tais que haviam de ser remetidas ao reino, era hábil e “aprazível” em negociações, “mui curioso de saber coisas”, “e um espírito vivo para tudo”.Foi isto que terá decidido a sua escolha para embaixador à grande China desconhe-cida, para onde embarcou em 1516.O que esta colecção pretende é, hoje, dar modesta continuidade à Suma Oriental iniciada no Século XVI.The Belt and Road Initiative has progressed from a national Chinese economic development project aiming to develop its poorest provinces and to strengthen the openness and sustainability of the richer ones to a global initiative. Likewise, it progressed from a plan to create new drivers of economic growth with the revitalisation of the antique silk roads from China to Europe, great sources of trade and wealth in the past, to consider all countries in the world which expressed their intentions of willing to work together in a more sustainable and balanced new global economic model, with a new mindset based on knowledge, connectivity, trust, and cooperation.“We see the Belt and Road Initiative as the most relevant project today in the world, in the context of South-South cooperation, which would contribute to fairer globalisation, and fairer globalisation in the best way to have a future of shared prosperity among the different nations of the world” … “there is no peace without development, and no development without peace” António Guterres UN Secretary General at the 2nd Belt and Road Initiative International Forum. The geography of the Portuguese Speaking Countries is in itself an important asset for Belt and Road Initiative cooperation, as they have a combined population of 282 million people, who speak the 4th most widely-spoken language in the world, and the 1st language in the South Atlantic. Africa holds 13.5% of the world’s drinking water, 5.9% of its arable land, and is responsible for 3.9% of global trade and of many raw materials and energy resources. Therefore, this book aims to answer to the questions what is the position of the Portuguese Speaking countries integrated in their economic spaces towards Belt and Road Initiative and how they can cooperate with China in a bilateral and multilateral context, what is already being done and what future vision of this cooperation can be expected.The New Silk Road and thePortuguese Speaking Countriesin the New World ContextISBN 978-989-54193-8-89 7 8 9 8 9 5 4 1 9 3 8 8EDITED BYFERNANDA ILHÉU, FRANCISCO LEANDRO and PAULO DUARTECMYCMMYCYCMYKcapa_SUMA_28_Book_The_New_Silk_Road_final.pdf 1 14/10/2019 17:35

The New Silk Road and the Portuguese Speaking Countries in the New World Context EDITED BY FERNANDA ILHÉU, FRANCISCO LEANDRO and PAULO DUARTE282019

TECHNICAL CREDITS: Published by: Instituto Internacional de Macau and Associação Amigos da Nova Rota da Seda Title: The New Silk Road and the Portuguese Speaking Countries in the New World Context Edited by: Fernanda Ilhéu, Francisco Leandro and Paulo Duarte Cover illustration (watercolour): Maria Leonor Janeiro Graphic design: Maisimagem II Collection: Suma Oriental Print run: 500 copies Printed at: ACD Print Legal deposit: 462079/19 ISBN: 978-989-54193-8-8 Lisbon, October 2019Support

THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXTCONTENTS | FOREWORD | 5 António Costa Silva INTRODUCTORY NOTES | 9 Fernanda Ilhéu, Francisco Leandro and Paulo Duarte CHAPTER I PORTUGAL AND CHINA’S COOPERATION FOR THE NEW MARITIME SILK ROAD OF THE 21ST CENTURY | 15 Fernanda Ilhéu CHAPTER II THE BELT AND ROAD INITIATIVE IN LATIN AMERICA: A SINGLE OPPORTUNITY FOR CHINA | 37 José Nelson Bessa Maia CHAPTER III THE NEW SILK ROAD – STRATEGIC IMPORTANCE OF SÃO TOMÉ AND PRÍNCIPE FOR THE ATLANTIC ROAD | 53 Wilson Bragança CHAPTER IV AFRICA, CAPE VERDE AND THE NEW SILK ROAD | 67 Victor Borges CHAPTER V THE GEOPOLITICS OF TIMOR-LESTE IN THE CONTEXT OF THE BELT AND ROAD INITIATIVE (BRI) VIS-À-VIS ASEAN AND CPLP | 83 Francisco José B. S. Leandro, José Eduardo Garcia Leandro and Carlos Martins Branco CHAPTER VI HOW CAN THE SUSTAINABLE DEVELOPMENT GOALS BE USED IN PORTUGUESE-SPEAKING COUNTRIES TO PROMOTE THE BELT AND ROAD INITIATIVE? | 113 Pedro Neves CHAPTER VII CHINA ENERGY SECURITY AND PORTUGUESE-SPEAKING COUNTRIES | 123 Carla Patrício Fernandes CHAPTER VIII XXI CENTURY ECONOMIC TRENDS: THE STRATEGIC ROLE OF THE NEW SILK ROAD FOR AN EMERGENT LEADERSHIP OF PRC AND BRAZIL IN TODAY’S MULTIPOLAR WORLD | 139 Francisco Murteira Nabo and Albertina Dias CHAPTER IX CHINA AND THE EUROPEAN UNION IN THE DEVELOPMENT OF THE PORTUGUESE SPEAKING COUNTRIES IN AFRICA. COMPLEMENTARITY OR COMPETITION? | 165 José Luís Sales de Marques BIOGRAPHIES | 185

FOREWORD | This book edited by Professor Fernanda Ilhéu, Francisco Leandro and Paulo Duarte deals with a geopolitical issue that is shaping the evolution of the XXI century – the development by China of its New Silk Road strategy that encompasses a continental and a maritime dimension – and the intersection of this crucial geopolitical and geo-economical project with the role that Portuguese speaking countries may fulfil in the fantastic global journey that is on course. China is a very special country with whom the Portuguese are related after centuries. China is the birthplace of crucial inventions that changed the history of mankind ranging from the silk to the paper, the powder and others. The paper was invented in China in the year 100 BC and only many centuries after reached Europe. During great part of the history, China played a key role in the development of the human civilization and was the dominant power when the Portuguese navigators started their travelling around the world. What is impressive in this relation between China and Portugal is that the Chinese fleet travelled around the Pacific and reached the eastern coast of Africa in the XIII and XIV centuries, and the Portuguese came after continuing the development of the trade networks across the continents. Zhang He, the Admiral of the Chinese fleet during the Ming Dynasty, completed his last travel in 1433 when he died in Ku-li in his way back to China. The Chinese fleet comprised 160 vessels and was the largest on earth. But when the pirates start attacking the Chinese ports, the Ming emperor decided to close the ports and isolated China from the outside world. This is one of the most mysterious decisions in history and brought negative consequences to China. But what is amazing is that when the Portuguese navigators arrived at China and Japan years after, they organized the trade between these two great nations. China was willing to buy silver and the Portuguese traded silver from Japan, where it was produced in the Iwami 5THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

6 mines, located in the Honshu Island, and established strong commercial relations with China. In this context, this book presents, in fact, an impressive new framework to understand the role that Portugal, Brazil, Angola, Cape Verde, East Timor and other Portuguese-speaking countries, may play in the XXI century inspired also by the past of cooperation, trade and friendship with China. President Xi Jinping launched the New Silk Road project in a speech delivered in Kazakhstan, in 2013, but in fact the key idea of exploring the Asian corridor for trade and cooperation, started many centuries ago. The first attempt done by the Chinese emperors to link China to Central Asia was made in the year 138 BC through Zhang Qian who headed a commercial delegation that travelled till Fergana and Bactria and tried to establish commercial relationships with different Asian countries. The Skill Road is a Chinese invention that was reedited several times in history and, in spite of the fact that the first attempt failed, the others were successful and some generated periods of prosperity for China and other nations. Nowadays the New Silk Road project, inspired by the past ideas, encompasses new dimensions. It is a geopolitical and a geo-economical project, aims to establish connections between Asia and Europe, links almost 65% of the world population, almost 5 billion people. The dimension and the scale are astonishing, the project involves a continental and a maritime dimension, and essentially links China with Asia and Europe in terms of trade routes, energy supply chains, infrastructures, roads, ports. This is a global chain based on an inclusive approach and may bring prosperity and economic development to different nations. China knows that the New Silk Road is crucial to ensure also its internal stability and economic development. But China has also geopolitical ambitions that are embedded in the New Silk Road project and the key one is to establish the Eurasian link, re-establishing its functionality as a key driver of the economy and geopolitics in the XXI century, counterbalancing the hegemony of the Atlantic Ocean that prevailed during the last centuries. In spite of this fact, the Portuguese-speaking countries and other nations must respond positively to this fantastic initiative because trade, energy flows, commercial links, connectivity among nations, establishment of networks, are crucial for the economic and social development in the XXI century and for the maintenance of peace and stability. And this is why this book, edited by Professors Fernanda Ilhéu, Francisco Leandro and Paulo Duarte, fulfils an important objective, analysing and promoting avenues for the development of future cooperation

among Portuguese-speaking countries and China. The book opens with a chapter by Professor Fernanda Ilhéu that is focused in the analysis of the cooperation between Portugal and China in the XXI Century within the scope of the New Silk Road. The centrality of Macau and its role as an important rotating platform is emphasized. After that the book gives an insight, in multiple dimensions, of the different geographies where the Portuguese language is spoken and characterizes its dynamics in the context of the New Silk Road as a global project. This multidimensional approach ranges from Latin America to São Tomé and Principe, from Cape Verde to East Timor, from Europe to Africa and Asia. Other global dimensions are analysed, in the final chapters of the book, regarding the role of the Portuguese-speaking countries in the different networks of cooperation, including the energy security and the role of the economy and geopolitics in a multipolar world. Finally, the relationship between China and the European Union and its role in the development of the cooperation of the Portuguese speaking countries, is also addressed. In the world today we are witnessing a sharp contrast between the dynamism of China and Asia, as a whole, and some lethargy and fragmentation in Europe. The French writer Flaubert, in his novel “Bouvard et Pécuchet”, presented a sort of metaphor for Europe describing the Continent as diving in lethargy and lack of creativity. One of the characters, depicted in the book, says to the other: “At the end, Europe will be regenerated by Asia”. Nowadays, when some lack of focus in Europe future and bad decisions are taking place, which risk to drive Europe to irrelevance, a pertinent and challenging book like this one is crucial because it shows that Asia, and particularly China, can not only regenerate Europe but other continents. António Costa Silva October 20197THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

INTRODUCTORY NOTES | Fernanda Ilhéu, Francisco Leandro and Paulo Duarte As editors, it is a great honor to witness the fulfillment of such an important project meant to improve knowledge on challenges and opportunities arising from the Belt and Road Initiative (BRI) for Portuguese-speaking countries (PSCs). The timing could not be more relevant given the solemnity marking the 20th anniversary of Macau’s successful handover to China. The occasion matters for two main reasons: Macau was a jewel of Portuguese presence in the East for centuries; and this special administrative region is bound to play an important role in the 21st Century Maritime Silk Road. The latter is one of the two main components of the BRI, which is hybrid in its essence, as it consists of both land and sea corridors. However, we could also add a third major connectivity platform: digital silk roads that will be increasingly important in the future. The reader may certainly be wondering why on earth a book about PSCs was written in English? After all, it would make sense to write it in Portuguese, the fifth most spoken language in the world. Although we, the editors, are aware of this peculiarity, we believe that, despite the importance of the Portuguese language, English has nonetheless gained the status of a universal language and suits our main intent of reaching a broader audience. Allowing people from literally all parts of the world – and who share the same interest in China’s BRI and PSCs – to read this book certainly makes any editor proud of his work. Nevertheless, one must not confuse pride with fulfilling a mission, and, in that light, we recognize that the issues addressed by this monograph should remain a topic for careful thought in the future. In fact, since we are firmly convinced that the BRI is the future of regional and worldwide integration, such a huge initiative that is bound to gradually change borders (not in terms of sovereignty, but mainly with regard to economics and politics) would certainly require more and more books, an ongoing endeavor to 9THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

maintain the general public updated on this matter. The chessboard representing the BRI does not include any strange pieces, or remote places, because, in the end, they all fit together. That said, we felt that it would be somewhat unwise to limit our audience to Portuguese-speaking readers. Why should we editors limit the language scope by excluding potentially interested readers when the BRI is itself inclusive, rather than exclusive? Let us now highlight the added value of this contribution. Firstly, until now and to our knowledge, there is no other book in English addressing PSCs in the framework of China’s BRI. Even in Portuguese it is extremely rare to find one (one book so far has been written). Secondly, judging by the variety of subjects analyzed in this book, one cannot but conclude that this is a comprehensive monograph which can be used not only by lecturers as an academic tool, but also by anyone who wants to improve his/her knowledge on the BRI. In fact, this leads us to a third related added value which, in our view, is the book’s easily understood contents and language. The monograph was not written using technical language, although at times we cannot avoid certain expressions (recall that the BRI is itself a technical expression), so that a broader audience with different degrees of knowledge on the topics discussed here can easily understand our message. The book has other distinctive features, such as contributions by experts on each topic. These writers did not refrain from making policy recommendations to boost the BRI’s success within PSCs, thereby avoiding previous mistakes such as the ones that José Nelson Bessa Maia carefully stresses in his chapter when he refers to former integration projects in Latin America that failed to achieve their goal. Another added value of this book is that each author does not take sides. In other words, we invited experts who are not afraid of being critical. What do we mean by being critical here? We want to make clear that the purpose of this book is not formulating opinions for or against the BRI or any PSC, among others. Not at all. Instead, experts have made use of scientific and thus objective data, sources and arguments to provide original non-published and relevant contributions. Our aim here is not to tell a story, but to present facts and let readers judge for themselves. Finally, being critical as we see it, is being honest regardless of what one wants to hear or not, because facts do not lie, they merely reflect reality. Another distinct value of this book is that the chapters go beyond economics, as we acknowledge that the BRI is much more than figures. That is why we have sought to maintain a comprehensive approach, in which geopolitics and geostrategy aim at complementing what mere numbers cannot reveal. After all, as Fernanda Ilhéu explains in her chapter, the BRI is not a Marshall Plan, to the extent that it is not motivated or guided by a rationale of economic aid. The context of the BRI is actually very different from the scenario in which Europe needed to be reconstructed after 10 FERNANDA ILHÉU, FRANCISCO LEANDRO AND PAULO DUARTE

the Second World War. That however does not prevent the BRI from financially assisting some countries in need, which is indeed what China has been doing for a long time, even before the BRI was launched, either by pardoning external debt or by providing more advantageous loans than the ones made by Western countries, among other assistance measures. Nevertheless, the essence of the BRI is not purely based on altruism, to the extent that setting up the Community of Common Destiny is also combined with a market-oriented focus aimed at creating the most promising economic corridors in the world. This brings considerable opportunities for PSCs, as this monograph intends to explain. But again, risks are present, namely the one of deindustrialization, if PSCs rely solely on the opportunity provided by China and do nothing to diversify their economies. Most of these countries are still developing countries in Africa or Asia, but Brazil is an emerging country in South America and Portugal is a developed European economy recovering well from the serious financial crisis between 2010 and 2014. The strategic location or territorial size of a PSC country does not necessarily entail automatic gains from the BRI for that country. To be sure, a small state like Luxembourg or Switzerland can be economically important, while a large state like Angola or Brazil can still be struggling to defeat its own demons, since there is a long way to go before wealth is distributed among the entire population. Interestingly, what happens with PSCs is that they are all small states in terms of economics and military power. Some of them have gold, oil, gas, diamonds, yet these are insufficient per se to overcome the label of “small”. However, taken together, weak as they may be, their potential is considerable in many fields, in terms of market size, tourist destination, source of raw materials and, not less important, human capital. PSCs that are islands offer a gateway (let us include here Portugal which is not an island albeit certainly a gateway for the broad EU market) that is quite appealing for China’s BRI as this book underlines. Nonetheless, we, members of a broad community who speaks the Portuguese language and share a common cultural legacy, should (and this book aims at doing so) present our collective potential as an opportunity for the BRI rather than wait for the BRI as an opportunity. Otherwise, disappointment may arise if we together do not aspire a bit more than being mere bystanders (as Maia outlines in his chapter despite focusing specifically on the case of Latin America). In this light, we could, for instance, point out that no PSC has yet set up any institute focused on producing relevant academic information on China and its BRI. One thing is founding associations keen on studying the BRI, and another is having official research centers entirely dedicated to the study of the BRI and, lato sensu, China. Another curious factor is that China seems to be more pragmatic than us (as a community), as one of this book’s editors was able to witness in 2017 in Beijing during the inauguration ceremony for the Chinese 11THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

12 Research Center on PSCs. That should urge us to reciprocate China’s interest in us as a community of Portuguese speakers by showing China that we are also interested in learning more about the country, its culture and also about the BRI. Another aspect astonished one of this book’s editors when he visited some universities in China in late 2017. He was amazed to be welcomed by Chinese Portuguese language students (who have been increasing in number, albeit at that time there were approximately 2,500) who spoke to him in fluent Portuguese. All in all, we should not underestimate our potential (which obviously goes largely beyond geography) so that we can get the most from the BRI. To be precise, we have the essential elements for the success of China’s BRI hybrid plan: land and sea. Not all countries in the world have such potential that combines resources and geography. What we seem to lack for now is the will to devise a well-structured and clear strategy, as a whole, to cope with China’s BRI. This book is a milestone in that sense, as it contributes to improve knowledge on what we have, what we need and what we can expect from the BRI. This book is structured as follows. In the first chapter Fernanda Ilhéu provides an interesting and comprehensive assessment of cooperation between Portugal and China for the 21st Century Maritime Silk Road. Among her main claims, it is noteworthy that Portugal has everything to be a good partner within China’s BRI, albeit both countries should still work together to develop a vision and strategy for the South Atlantic (in which Africa and Latin America are included). This observation is indeed related to the contribution provided by José Maia in the second chapter, in which the author explores the challenges, opportunities as well as the major roadblocks that currently seem to hamper a deeper cooperation between China and Latin America within the framework of the BRI. The author has made it clear that Latin America is a vast subcontinent, composed of different countries and thus distinct realities. Therefore, in order to succeed, while so far US initiatives to unite Latin America’s countries have failed, the BRI must not treat equally what in its essence is different. While Maia strongly advises Latin American countries to forgo their passivity in dealing with China, the author also urges Beijing to reconsider its strategy toward Latin America so as to bring real gains to regional countries instead of contributing indirectly to foster the deindustrialization of their already underdeveloped economies. Chapter 3 does not leave the South Atlantic, although it leaves Latin America and turns to Africa, precisely to São Tomé and Príncipe, a Portuguese-Speaking Island State, whose strategic location in the Gulf of Guinea seems to be one of its most valuable assets, as Wilson Bragança argues. Within a context where the country has resumed official ties with the People’s Republic of China (after 20 years of cooperation with Taiwan), domestic debate in São Tomé and Príncipe has been increasing about what the latter should actually expect from FERNANDA ILHÉU, FRANCISCO LEANDRO AND PAULO DUARTE

cooperation with China and, at the same time, what to offer China. One thing is clear, regardless of the twists and turns in their future cooperation, São Tomé and Príncipe is bound to be a major regional gateway, located in Africa’s richest region where oil, gas, gold, diamonds and other important raw materials abound. In a context in which Bragança has no doubt that Africa will be the continent of the future, São Tomé and Príncipe has been adopting a new strategic mindset based on two main pillars, i.e. the construction of a deep-water transshipment port and a large airport, which may significantly improve the country’s geographic potential to make the most of its cooperation with China. Continuing in Africa, but moving to the next chapter, one finds the contribution of Victor Borges, who skillfully and interestingly has sought to analyze the specific relevance of Cape Verde and at the same time the overall gains, opportunities as well as possible roadblocks stemming from the BRI for Africa. Moreover, the author adopted a critical style from the very beginning, which he has used to provide recommendations to several players, including the so-called Global North, urging them to adjust their paradigm of cooperation with Africa toward different and more sustainable relations. Moving now from Africa to Asia, as the BRI is universal in its aims and scope, the next chapter focuses on East Timor (also called Timor-Leste) and was written by three eminent experts on the subject, Francisco Leandro, Garcia Leandro and Carlos Branco. With the main purpose of assessing the geopolitics of Timor-Leste in the context of the BRI vis-à-vis the ASEAN and the CPLP, the authors’ remarks about the country’s foreign policy are very interesting: complex and facing what they call a trilemma. Moreover, they make a compelling analysis on the functional power of a small state whose attempt to balance several external players’ interests with the country’s own foreign policy goals and its multiple affiliations to different multilateral fora is in fact quite complex. The last chapters address two important issues related to the overall scenario of PSCs in their synergies with the BRI. Pedro Neves investigates how sustainable development goals (SDGs) can be used in PSCs to promote the BRI. He argues that the latter enable cultural exchanges whilst fostering trade, peace and inclusiveness in all regions of the world, which certainly brings major benefits for PSCs. In the next chapter, Carla Fernandes focuses on one crucial motivation for China’s going abroad, which is energy, by assessing the potential of PSCs for China’s energy security. She concludes that PSCs are not only important suppliers of oil, gas, technology and clean energy to China, but also of utmost relevance for fostering the internationalization of Chinese energy companies. Moreover, Francisco Murteira Nabo and Albertina Dias explore the strategic role of the BRI in accomplishing 13THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

what they claim to be an emergent leadership of China and Brazil in the current multipolar world. In the last section of their chapter, they highlight some interesting 21st century economic trends without neglecting Portugal’s potential role in building efficient relationships between China, Asia, Africa and the Americas. Finally, in the last chapter, José Luís Sales Marques examines whether Official Development Aid (ODA) provided to African PSCs by China and the EU seems to function on a competitive or, instead, complementary basis. Moreover, the author makes the distinction between ODA and BRI projects, identifying the latter in each country, albeit in a non-exhaustive way. As editors, we would like to express our gratitude to the authors of the chapters who, through their knowledge and reflection, enlighten us on the respective topics. Additionally, we extend our gratitude to our friends at the publishing institutions, IIM (International Institute of Macau) and ANRS (New Silk Road Friends Association). Both have been doing remarkable work on the promotion and study of the BRI and on relations between China and PSCs within the new world context.14 FERNANDA ILHÉU, FRANCISCO LEANDRO AND PAULO DUARTE

CHAPTER I PORTUGAL AND CHINA’S COOPERATION FOR THE NEW MARITIME SILK ROAD OF THE 21ST CENTURY | Fernanda Ilhéu Introduction Six years after China’s President announced the Initiative ‘One Belt One Road and the New 21st Century Maritime Silk Road’ (BRI) in Kazakhstan, challenging Europe to jointly cooperate in the revitalisation of the ancient silk roads, most citizens of the world are still unaware of the importance of this initiative, how it should be classified and characterised, and its impact on the world economy. The objective of this initiative is to transform these routes into new drivers of global sustainable growth. The reaction to BRI has been controversial, with many countries jointly building it in cooperation with China, whilst others have shown concern regarding its emerging importance in the world scenario and see it as a commercial or security threat. The Belt and Road Initiative – a Vision or a Strategy? In the Second Belt and Road Forum for International Cooperation, which was held in Beijing on the 24th April 2019, António Guterres, the Secretary General of United Nations, affirmed in his speech that large amount of investment in BRI could allow many countries to overcome long-term gaps of development, and it is thus a key for development. He said “We see the BRI as the most relevant project today in the world, in the context of South-South cooperation, which would contribute to fairer globalisation, and fairer globalisation in the best way to have a future of shared prosperity among the different nations of the world”. He also mentioned that there 15THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

is no peace without development, and no development without peace (Hong and Zhu, 2019). Either way, this initiative is recent and is still underway, and it is a long-term ongoing process. Even in China there are many doubts about the way forward and how it will be handled. Many debates at think tanks, academies, and government entities are taking place on the subject, and the model is being interactively implemented by China in conjunction with countries with whom memorandums of understanding are being negotiated and signed regarding the terms of such cooperation. Analyses and reflection can be carried out regarding how to classify this initiative, but we have to ask ourselves – are we talking about a vision, a strategy, or a Marshall Plan? Having read some of the research, especially the book entitled “China’s One Belt One Road Initiative, Challenges and Prospects” by Sharma & Kundu (2016), we can conclude that China has two strategic visions regarding BRI – one external and one internal. Externally, it is not considered to be an entity, an institution, or an international organisation, but rather an idea – a vision focused on cooperation and development. BRI speaks of cooperation platforms, which aim to further proactive economic development, which is obtained through cooperation partnerships between China and other countries, on a bilateral or multilateral basis. The objective of these partnerships is to meet the rapid development needs of those countries involved, and thus open up new windows of opportunity which are based on the complementarity of their competitive advantages. Externally, the term strategy is never used in China’s official documents. Internally, BRI is a new strategy which China is adopting to promote its openness to the outside world and which is simultaneously designed to develop the poorest central and western provinces of China, and also strengthen the openness and sustainability of the provinces of the east coast and to the south, including the integration of the Greater Bay Area where Macao and Hong Kong are both included. Internally, the term used is ‘strategic vision’ – linking China’s domestic regional development strategies with the world vision of BRI. BRI is not a Marshall Plan, as its starting point and objectives are different – the Marshall Plan came about after the Second World War, in the face of a destroyed Europe in a bipolarised world, with two hegemonic countries – Russia, guided by communist ideology, and the USA, modelled on capitalism. There was a danger that if Europe’s economic and social recovery was not brought about rapidly, adopting a capitalist model, then Russia would have a fertile ground to extend its political influence to other European countries. The USA linked its economic aid to European countries with its political ideological loyalty. However, BRI has a very different framework – it aims to move 16 FERNANDA ILHÉU

towards a multipolar world, with economic globalisation based on cultural and political diversity. China uses overseas investment to develop a multilateral trading system and does not try to interfere in the political ideology of the recipient countries. For instance, with regards to relations with the African continent, President Xi Jinping mentioned at the Beijing meeting of the China-Africa Cooperation Forum in 2018 that China adopts cooperation with African countries without imposing the will of China in African countries, and without linking assistance to Africa with political principles, neither does it seek political gains in investment and financing cooperation with Africa (Frankopan, 2018). At the Second Belt and Road Forum, in his speech, Mr. António Guterres recognised the commitment of China to multilateralism, saying “China today is a country which is very committed to multilateralism and to the work of United Nations, and to peace and security, sustainable development and peacekeeping for many other areas of fruitful cooperation” (Hong and Zhu, 2019). The cooperation models are also different. For the Marshall Plan aimed to bring about the economic recovery of European countries which had already been developed and were scientifically and technologically advanced, as these countries knew how to make a development plan but having been devastated by the war they lacked sufficient finance and human resources to do so. The case of BRI is different, as it involves not only developed countries, but also emerging and underdeveloped countries which internally do not have tacit knowledge of the development process, and thus they cannot bring about development just by themselves. BRI is also linked to a new globalisation model – which is just as essential for the sustainability of world growth, as it is for the economic development of China, both of which are interlinked. It should be noted that China was responsible for 30% of the generation of the world’s wealth growth in recent years. The implementation systems of the Marshall Plan and BRI are also different. In the case of the Marshall Plan, the USA had a strong administrative and financial control over the aid provided, through the World Bank and the International Monetary Fund, which are both based in the USA. However, in the case of BRI, China affirms that those projects which are to be developed should respect international rules, whereby those Chinese finance institutions which fund BRI projects should cooperate with multilateral finance institutions, such as the World Bank, the European Investment Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development. For instance, in 2015, together with 57 countries, China created the Asian Investment Infrastructure Bank (AIIB) as a multilateral development bank, which will be one of the main financial instruments of BRI. The initial share capital of AIIB was US$100 billion, with 50 billion being subscribed by the founding members, where China was responsible for 50%. The 17THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

bank currently has 70 members and China’s percentage of the capital is 30%, with voting rights of 26.6%. The governance is secured by a multinational team, which is headed by a Chinese politically-nominated Chairman, and a British banker CEO. The Belt and Road Initiative – a great opportunity for development, or a major threat? The size and expansion of this initiative is enormous, in 2015, the 64 countries initially included in BRI represented 42% of the world’s population, and 27% of the world’s GDP. During the period 2010-2015, these countries were responsible for 13% of the world’s accumulated outward foreign direct investment, 50% of China’s exports of iron and steel, 49% of aluminum, 38% of cement, 65% of China’s imports of oil, and 78% of gas (OECD, 2017). According to the Belt and Road official portal, nowadays BRI encompasses more than 125 countries, including developed and developing economies, as well as 29 organisations with whom China has signed 173 cooperation documents. The value of the goods traded with these countries and regions over the last six years surpassed US$6 trillion during 2010-2015, which represented around 27.4% of total goods traded by China during this period. Indeed, this figure was US$1.3 trillion just in 2018, which represents an increase of 16.4% on last year, whereas total foreign trade of China during that year only grew by 9.7%. Furthermore, during this six year period, the Overseas Foreign Direct Investment (OFDI) of China in BRI countries amounted to US$90 billion, where the turnover of the contracted projects built by China surpassed US$400 billion. China has signed industrial cooperation agreements with more than 40 countries, with the 82 Chinese economic and trade corporations which are installed in just 24 of those countries generating more than US$2.28 billion in taxes for local countries, resulting in the creation of 300,000 jobs. Indeed, by the end of 2018, the overseas economic and trade cooperation zones implemented by China in BRI countries attracted 933 enterprises, which equated to US$20.96 billion of investment, with the creation of 147,000 jobs. Without doubt, the expected geoeconomy of BRI will profoundly alter world geo-economics and consequently its geopolitics – which is being seen by some as a great opportunity for development, and by others as major commercial competition or even a security threat. Accordingly, BRI is creating a wave of political, economic and public opinion – some in favour, and others against. Social media around the world is transmitting contradictory reports, opinions, and debates about BRI. Some merely submit descriptive narratives of the construction of infrastructure projects, referring to the spread around the world of railways, ports, bridges, dams, and highways, whilst others are geopolitical essays, reflecting on the 18 FERNANDA ILHÉU

attempt by China to challenge USA world leadership, or even suggest that BRI is debt trap diplomacy designed to place China in control of overseas assets in countries which can never pay back their loans. On the 13 April 2019, during a visit to Lima in Peru, US Secretary of State Michael Pompeo labelled some of the Chinese lending practices as being predatory. The view that BRI is a great opportunity for development can be explained by the dimension of the projects underway which are being described by China as examples of the success of the initiative. Examples cited include infrastructure projects such as the Yu’Xin’Ou Cargo International Railway which links Chongqing in China to Duisburg in Germany, and other international railway cargos network between China and Europe, such as the China Europe Express Train from Yiwu to Madrid, or from Yiwu to London. In total, 13,000 freight trains will run from China to Europe, linking 16 European countries and 108 cities, handling 1.1 million TEUS. In tangible terms, a common perception is that BRI is an enormous project for the construction of transport infrastructures, industrial parks and logistics, which gives rise to another commonly-cited explanation regarding BRI – which is that it is designed to counterbalance the slowdown of the Chinese economy, and thus contributes to finding markets for China’s overproduction, and will guarantee China’s needs for the supply of energy and raw materials. Another common topic which is often referred to in general and specialised social media, as well as academic papers and books, is China’s objective to control important natural resources to satisfy its industrial development. For instance, in the “Silk Roads - A New History of the World”, Peter Frankopan (2015) calls our attention to the wealth of natural resources existent in the Eurasian countries, affirming that on the border between Kazakhstan and Russia alone, there are 42 trillion cubic feet of natural gas and crude oil alone, and that beryllium, dysprosium and other rare minerals vital for the manufacture of mobile phones, laptops, and rechargeable batteries are also abundant in Kazakhstan, together with uranium and plutonium, which are both essential for nuclear energy. The author also mentions the coal deposits of 10 billion tons that lie on Ukraine’s eastern frontier with Russia, together with 1.4 billion barrels of oil and 2.4 trillion cubic feet of national gas. Other Eurasian countries are rich in natural resources, for instance, Turkmenistan controls the fourth largest supply of natural gas in the word, and Uzbekistan and Kyrgyzstan possess huge reserves of gold deposits in the Tian Shan Belt, second only to the Witwatersrand basin in South Africa. In the same book (p. 516), Francopan further considers that this initiative can benefit Europe as well, as “Trains half a mile long have started carrying millions of laptops, shoes, clothes and other non-perishable items in one direction, and electronics, car parts and medical equipment in the other, a journey that takes 16 days”, and that this is benefiting the countries located along these Silk Roads. 19THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

The approach that sees BRI as a commercial or security threat transmits perceptions which are based on the international relations theories, with many researchers, politicians and diplomats alike linking this initiative with Chinese soft power diplomatic strategy, which, with charm and persuasion, uses the control of strategic infrastructures assets to gain economic dependency and assert political influence on countries for the benefit of China. Examples include: the Port of Piraeus – the largest Greek seaport and the biggest port in the Mediterranean Sea; Pakistan’s Gwadar Port on the Arabian Sea; Djibouti Port in the Gulf of Tadjoura at the entrance of Red Sea; Colombo’s Port in Sri Lanka; or the electricity power and distribution grid of Portugal, amongst others. Cheng (2011) defends that the basic goal of the international relations arising from the power strategy of a state in the industrial era is to achieve economic development “obtaining broad-based markets, including markets for the sale of goods, the purchase of resources and production materials, as well as the foreign investment and currency markets relevant to production and sales” (p. 411). According to the author, in name of economic interests, states in the industrial era follow one of the four following strategies: territorial expansion, taking by force, construction of international order, or the spontaneous expansion of external markets and trade. The first three are all hard power policies with an aggressive foreign policy and military power, whereas the fourth is a soft power policy which relies on the expansion of free market competitive strategies, whilst carefully assuring an expansionist strategy that avoids resulting in a zero outcome, but rather a “win-win” game, for by doing so prevents external pressure or threats from other major power states which could be afraid of the other’s rising economic power. One view among Chinese scholars is that soft power is a broader concept, which includes economic and diplomatic references. For example, Zhang (2010) states that it means any initiative which is not classified as a military or security action, which, by definition, represent the hard power models, and thus these initiatives should be purposefully cultivated and build up, targeting foreign countries with popular and elite cultures (Mingjiang, 2008). According to Kurlantzick (2007), Chinese soft power can be “high”, which means that it is directed to the elites of a foreign country, or “low”, where it is oriented to charming the county’s general public. This author says that Beijing offers the “charm of a lion”. Chinese soft power utilises humanitarian support, culture, bilateral and multilateral diplomacies as persuasive tools, as well as Overseas Foreign Direct Investment (OFDI). This model of global cooperation requires a new bilateral and multilateral cooperation strategy based on the perception of mutual benefits for all the participants, resulting in a “win-win” situation for everybody involved in the deal. Speaking in Paris in March 20 FERNANDA ILHÉU

2014, Xi Jinping said that if China was seen to be a lion, then it is “peaceful, lovely and civilised” (Brown, 2018, p. 47). In fact, China utilises not only soft, but also smart power models, as per Nye’s (2004; 2011) definitions, the first being the ability to get what you want through attraction, using the ability to charm with the objective of shaping the preferences of others, rather than utilising coercion or payments. The second is the intelligent integration of diplomatic, defence, and development networks with hard and soft power tools. At the Munich Security Conference in 15 February 2019, NATO’s General Secretary, General Jens Stoltenberg, first presented reasons for concern about the intentions of Russia to abandon the Intermediate-Range Nuclear Forces Treaty, with the implicit implications for the security of Europe, and then referred to China by saying “But China’s rise also presents a challenge. One example is, of course, the concern many Allies have expressed about China’s increasing investment in critical infrastructure, such as 5G. We have to better understand the size and the scale of China’s influence and what it means for our security”. This vision is shared by the German Foreign Minister, Heiko Mass, who at the commemorative meeting of NATO’s 70th anniversary in Washington on 4 April 2019, said, “China will be the subject of the 21st century on both sides of the Atlantic, it is a challenge in almost every topic and it is important to have a better understanding of what this entails for NATO“. In addition, the European Commissioner with the budget portfolio, the German Gunter Oettinger, proposed at the end of March that the EU should have the right to veto China’s participation in infrastructure projects in Europe, saying that “in Italy and other European countries, important infrastructures such as networks and energy, rail lines or ports are no longer in European, but are in Chinese hands“. The explanation for Heiko Mass and Gunter Oettinge’s statement, as well as the recent great change in Germany’s and EU’s strategic relationship with China may well be due to the fact that large German companies are beginning to feel commercially and technologically threatened by the activity of large Chinese State-Owned Enterprises (SOEs). This political and diplomatic attitude fails to correspond to the reality of China’s economic relations with Germany, which is China’s main trading partner in Europe, and the second largest recipient of Chinese OFDI in Europe, with Duisburg, a city of about 500,000 inhabitants in Germany’s Rhinelandon, being the main destination port for Chinese products arriving in Europe by rail. China alleges that, although it may constitute a strategic and technological challenge for Europe, it is not positioning itself as a military threat. At the same time, the US does not stop pushing its European allies to follow its protectionist attitude towards China, arguing mostly about the risks that companies such as Huawei pose to Western security, particularly if they develop the 5G network. However, one might then ask why it is that European or American 21THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

companies fail to develop similar competitive technologies? Should technologic innovation be stopped, or should Europe and the US join forces to establish and regulate a fair competition? Can we thus conclude that this defensive position towards China could be symptomatic of a more strategic way to preempt the economic and technological competition of China in Europe and the USA, rather than from the perception that China constitutes a military threat. On analysing the document that structures this initiative – “Vision and Actions to Jointly Build the Silk Road Economic Belt and the 21st Maritime Silk Road“ issued in 2015 by the Chinese National Development and Reform Commission, we conclude that the purpose of this initiative is to achieve sustainable economic development for China, together with the development of those countries that wish to cooperate in the construction of this initiative. We also ascertain that the word politics is not written once in this document, and that thus by reading other related Chinese official documents, we conclude that the bounded vision is always one of building a multipolar world. When jointly meeting the press on 18 March 2019, Wang Yi, the Chinese Foreign Minister, announced together with Federica Mogherini, the European Union High Representative for Foreign Affairs and Security Policy, that China and the EU are comprehensive strategic partners, and that they share important consensus regarding ten aspects “First, both sides support multilateralism and oppose unilateral practice; second, both sides support the United Nations (UN) in playing a leading role in the international affairs, and safeguard the basic norms of international relations based on the purposes of the UN Charter; third, both sides support the building of an open world economy, and oppose protectionism; fourth, both sides support the rules-based multilateral trading system, and the reform and enhancement of the World Trade Organization; fifth, both sides support the peaceful settlement of the hotspot issues and regional disputes through dialogue and consultation; sixth, both sides support stronger international cooperation against global challenges including the climate change; seventh, both sides support the adherence to the international non-proliferation regime, and maintain global strategic stability; eighth, both sides support the implementation of the 2030 Agenda for Sustainable Development, and commitment to reducing economic inequality and the North-South divide; ninth, both sides support the campaign against all forms of terrorism, and taking holistic measures to contain the spread of extremism, and tenth; both sides support the post-war international system and order, and will not construct another system anew”. Even though BRI is basically an economic initiative, it is politically linked to China’s globalisation leadership challenge to the US, as expressed at the Davos 22 FERNANDA ILHÉU

Forum 2017 by President Xi Jinping in these terms: “If the U.S. does take a more mercantilist route, overall the Asians and Europeans will have to combine to preserve global free trade”, and “We must remain committed to developing global free trade and investment, (and) promote trade and investment liberalisation”. This led many to look to China as the challenger to the US in a bipolar world, and yet China invites Europe and other continents to jointly build this new world which should, from its conception, be multipolar. With its permanent threat of protectionism and trade war, not only with China, but also with Europe, Mexico, Canada and other countries, influenced by President Donald Trump’s mindset of ‘America first’, and its diplomatic way of building relationships with old allies in order to maintain the unipolar status quo, the US appears to be positioning China as the common enemy. In official US marketing communication strategy, the world can only be bipolar, just as it was in the 20th Century before the fall of the Berlin Wall, and China is now assuming the role of Russia, as if a new-cold war is going on and whoever cooperates with China is seen to be against the US. In this context, another important current impression of BRI strategy is the opinion that China employs “debt – trap diplomacy” strategy to be in control of overseas assets in those countries that fail to pay back their loans. This term became popular after 2017, when the Sri Lanka government was forced to give up control of the Hambantota Port to China Merchant Port Holdings – a joint-venture dominated by China, on a 99 years lease contract, in order to pay back Sri Lanka’s US$1.1 billion debt to China. Brahma Chellaney, an Indian analyst and professor of Strategic Studies at the New Delhi Centre for Policy Research, wrote an article for the Project Syndicate accusing Chinese leaders of intentionally using economic tools to achieve their geostrategic interests. He wrote the following: “Through its $1 trillion ‘one belt, one road’ initiative, China is supporting infrastructure projects in strategically-located developing countries, often by extending huge loans to their governments. As a result, some of these countries are becoming saddled with debt, leaving them even more firmly under China’s thumb”. This problem is being analysed by academics and research companies. For instance, the China Africa Research Institute based at the US Johns Hopkins University Research Institute of the Boston University of Global Development Policy analysed 3,000 projects between 2000 and 2017, and found that Hambantota Port in Sri Lanka was the only case which could be truly said to be “debt-trap diplomacy” (Brautigam, 2019). Furthermore, the German Rhodium group reviewed 40 cases of China’s external debt renegotiations of BRI projects and concluded that the case of Hambantota Port was exceptional, as all the others were renegotiated with an extension of loan terms and repayment deadlines, or even write-offs. In these 40 23THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

cases, approximately US$50 billion of debt was renegotiated (Kratz, Feng and Wright, 2019). In fact, huge infrastructures projects are necessary to boost economic growth in these countries, although they can only be paid off on a long-term basis if they generate returns. Therefore countries should analyse the impact of these infrastructures on their economic output very well, in order to see whether they can afford to take out such loans, for the process of their development will be delayed if the necessary infrastructures are not built. At the BRI Summit in March 2019, Christine Lagarde, the Chair of the IMF, called the attention of all present to the risk of these loans if such projects failed, or if funds are misappropriated. The Chinese government realises the importance of debt sustainability for economic growth when mobilising funds to finance BRI cooperation. Since 2017, the finance ministers of 28 countries have endorsed the Guiding Principles on Financing the Development of the Belt and Road, calling for cooperation between the governments, finance institutions, and companies of those countries participating in BRI, with the aim of guaranteeing a long-term sustainable financing system. On 25 April 2019, the Ministry of Finance of the People’s Republic of China issued a Debt Sustainability for Participating Countries of the Belt and Road Initiative. The procedures for debt sustainability analysis (DSA) includes the following phases: debt coverage, macroeconomic projections, realism tools, country classification and debt carrying capacity, stress tests, risk signals, the use of judgement, final risk ratings, and the DSA write up. In conclusion, we should not act on the basis of the presumption of China’s hidden intentions, with goals of world hegemony, even though history points to this in the past, when during the fifteenth and sixteenth centuries, in the Ming Dynasty, China was an important economy at the time, and a world leader in the use of gunpowder-based weapons with a high degree of knowledge in shipbuilding and navigation. However, China never attempted to raise flags for territorial or political dominance. The objective of the seven transatlantic voyages carried out by Zheng He was limited to the development of trade and to earning the admiration of other peoples of the grandeur of China. We can now observe that China’s requirement for its cooperation projects with other countries is that the countries involved do not interfere in Chinese politics, and do not recognise Taiwan as a sovereign state, although they are not obliged to follow China’s political model. Consequently, there is a need to get to know BRI better and to understand what kind of cooperation can be established with China can benefit Portugal with the building of this new globalisation model. 24 FERNANDA ILHÉU

Portuguese and Chinese Cooperation in the New Maritime Silk Road of the 21st Century The Maritime Silk Road is in Portugal’s DNA, and commercial and cultural relations are already established with China. Portugal’s geography dictated its history, being located on the extreme west of Europe, with Spain as a military powerful neighbour with hegemonic characteristics limiting its borders to the North and the East. Accordingly, the only solution for Portugal’s expansion and survival was to explore the enormous sea beyond its borders to the west and the south. The Portuguese began their maritime expansion in the 15th Century, sailing south down the Atlantic and bypassing it in an easterly direction, passing the Arabian Sea and entering the Indian Ocean, from where it reached Malacca and the South China Sea in 1518. In China, the Portuguese first settled in Sanchuam, and then in 1555 they moved to Lampacão, and later, in 1557 to Machao, now Macau – which was subject to a huge development as a trading hub between Asia, Europe, Africa, and South America (where the Portuguese had arrived in Brazil in 1500, during a maritime expedition to the west. With the establishment of Macau as one of the most important trade routes in the world at the time it was developed. The Portuguese black ships left Malacca or Goa in April or May, loaded with cotton Indian clothes, crystal glassware, and Flemish clockworks destined for Southern China. In China, at the bi-monthly fairs at Guangzhou in December/January and May/June, raw silk was acquired, as well as other products, which were subsequently shipped to Nagasaki in Japan. On their return, the ships were filled with silver, furniture and lacquer products, and swords. The silver was unloaded in Macau, where it was traded for silk at the next Guangzhou fair, and the ships then sailed on to Goa with the gold, silk, chinaware, and other products. This trade became known as the ‘Nanban trade’ and it ran from 1550 until 1639 as a monopoly of the Portuguese crown. Indeed, we can say that Nanban trade was the first ‘win-win’ trade experience between Portugal and China. Considering this context, Portugal’s positive assessment of the Chinese vision of revitalising the ancient silk roads and transforming them into new drivers of world trade is easily understandable. Indeed, the Chinese vision of creating a way for countries to interconnect their development strategies and complement their competitive advantages, is a vision that will create a new impetus for globalisation, in the same way as occurred during the 16th Century, when Portugal created a new world order (Ilhéu and Janeiro, 2018). The Belt and Road Initiative was introduced by the Chinese Government in Portugal in 2015. During a seminar commemorating the 10th anniversary of the 25THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

26 FERNANDA ILHÉU Figure 1. Map of the Portuguese Discoveries. Source: Wikimedia Commons.

strategic partnership between Portugal and China, the then Chinese Ambassador in Portugal Mr. Huang Songfu declared in the Portuguese Parliament that “Portugal positioned at the centre of the Atlantic Road could play an essential role in the realisation of Belt and Road initiative in Europe”. This was reaffirmed by his successor, Ambassador Cai Run, in an interview with the Diário de Noticias (DN) newspaper on 15 June, 2019, when he affirmed that “Being an important meeting point of the land and maritime Silk Road, Portugal is a natural partner in the joint construction of the Belt and Road”. Six years after the successful handover of the administration of Macau from Portugal to China was concluded in 1999, a strategic partnership was signed between the two countries, resulting from a high level of diplomatic relations. In 2014, during the visit of Portuguese President Cavaco Silva to China, a joint declaration was signed upgrading the then existing strategic partnership to a ‘Comprehensive Strategic Bilateral Partnership’. This is “Comprehensive”, because the cooperation must be global, far-reaching, and in multiple areas, where it covers economic, scientific, technological, political, and cultural domains, contains both bilateral and multilateral levels, and is conducted by both governments and non-governmental groups. It is “Strategic”, because it is long-term and stable, and “Partnership” means that the cooperation must be on an equal footing, and should be mutually beneficial and a ‘win-win’. Many government and civil society meetings, visits, missions were held between 2015 and 2018, including the creation of an association called the ‘New Silk Road Friends Association’ in 2016 by the Portuguese and Chinese civil society to promote the Belt and Road Initiative in Portugal and also to study possible areas of cooperation between Portugal and China and third-party countries in this context. Conditions were established for the governments of Portugal and China to sign a Memorandum of Understanding (MOU) on “The Silk Road Economic Belt and the 21st Century Silk Road Initiative”, ANRS (2018), during the visit of Chinese President Xi Jinping to Portugal in December, 2018. This document governs the future cooperation regarding BRI of the two countries, which basically agreed to promote: 1. Cooperation in the development of air, land, sea, port, transport, and logistics infrastructures. 2. Mobility and connectivity – electric vehicles, energy-saving infrastructures, intermodal transport solutions, and strategic rail connections with Trans-European Transport Networks. 3. Exchange of knowledge and experience in the integration of renewables, sustainable, and intelligent electricity transmission systems, as well as their network management. 27THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

4. Bilateral trade and Investment with mutual benefit, namely developing cooperation in industrial production and cooperation with third markets. 5. Financial cooperation – the two countries should encourage their financial institutions to provide financing and financial services for production, trade, and investment. 6. Connectivity between people, the development of cities network, local government and cooperation agreements in education, health, culture, tourism, media, and think tanks. BRI has yet to develop a vision for the development of cooperation in the South Atlantic, which is a region where Portugal can be a good partner for the development of trade and industry, as it interconnects the maritime Atlantic road with the European inland belt. Some infrastructures have to be developed to enable this vision to be successful, namely the increase of port capacities and logistic platforms and the rail links to Europe. One of the Portuguese ports which has the best geographic position to be a driver of this growth, is Sines, which is the nearest port in Europe for the post-panamax vessels coming from Panama, which saves one and half days off the trip to the nearest one, which is Valencia. To fully carry out its role, Sines need to build a new container terminal, with capacity for 3 million TEUS and approximately 160 km of railway lines from Sines to the Spanish border which need to be modernised in order to reduce time and cost of transport. This port has ample space and conditions for developing logistic platforms, with 3,500 ha available, and a further 200,000 ha can be utilised. We predict that the Port of Sines and the Port of Setúbal, which is 100 km to the north, will provide huge opportunities for developing other activities, such as industry and tourism. Setúbal has an important automotive industry cluster, which is responsible for a large proportion of Portuguese exports, which is predicted to increase with the opening of an electric vehicles plant which is another possible project that could be developed with Chinese partners. 98 km to the east of Sines is Beja airport, which up until now has been unoperational, but could be developed as a transport and logistical hub for the region, or could be used for charter flights to the South of Portugal and to Spain – both of which are important tourism destinations, mostly in summer. Évora, which is 81 km to the north of Beja is a UNESCO world heritage centre, and also has an important aeronautic cluster located in its Aeronautical Industrial Park, where companies such as the French companies Mecachrome and Lauak operate from, as well as a consortium of Portuguese and Brazilian companies – OGMA and Embraer, which has two aeronautic factories which produce components for commercial executive jets – Phenon 100, Legacy 450, 500, and 650, and also for the military KC-390. 100 km to the north of Évora is Ponte de Sor, which has an aerodrome 28 FERNANDA ILHÉU

where L3 is based – a well-known commercial airline pilot flying school, which also operates in Florida and London. It can thus be seen that cooperation between Portugal and China is to be expected in this region. The cooperation in aerospace activities between Portugal and China is also beginning – with the Air Center project, which is a major research centre to be set up in the Azores for the construction and launch of the “all-Portuguese” STARlab Earth observation satellite, which will collect maritime and land surface data. This is a joint-venture – a consortium of public and private entities, namely universities and private companies. The Chinese partners are both the Microsatellite Institute of the Chinese Academy of Sciences, which has been responsible for the launch of around 40 satellites over the last fifteen years for scientific missions and the Institute of Oceanography of the Chinese Academy of Social Science, which specialises in assessing resources, climate change, and biodiversity. The Portuguese partners count with the Ministry of Science, Technology and Higher Education through the Foundation for Science and Technology (FCT) and a private technologic company called Tekever, which will focus on Space and CEiiA – a centre for innovative solutions in the oceans. The expectations for the cooperation between Portugal and China in BRI as the new driver of economic growth of the blue economy are very high, and they include the development of resources and activities in Portugal’s Exclusive Economic Zone (EEZ), which includes the Continental, Azores, and Madeira sea zones. 97% of Portugal’s territory is sea, and, according to the proposal submitted to the United Nations in 2009 to extend the Portuguese continental platform beyond 200 miles, this territory will transform Portugal into a huge maritime space of around 4,000,000 km2. Portugal is targeting cooperation in aquaculture, blue energy, marine mineral resources, blue biotechnology, as well as technological start-ups in the new maritime economy, in the arears of ocean environment protection, health sciences, pharmaceutical and cosmetics, the food industry, and tourism, sports, and leisure activities. The exchange of knowledge and experience in almost all areas of science and technology can be developed highly through cooperation between universities and research centres, as well as through the cooperation of private companies, such as in the energy sector – where the respective investments of the Chinese State Owned Enterprises China State Grid and China Three Gorges in the Portuguese companies REN and EDP will boost a sustainable cooperation between Portugal and China, and of both with tertiary countries, in energy and renewables projects, intelligent electricity transmission systems, and their network management. In an interview with the DN newspaper, Ambassador Cai Run affirmed that both these companies 29THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

30 FERNANDA ILHÉUExtended Continental Shelf(submitted)Azores EEZMadeira EEZPortugueseContinentalEEZ Figure 2. Map of Portugal’s Exclusive Economic Zone. Source: Wikimedia.

are actively promoting cooperation in the tertiary markets of Europe, America, and Africa – “CTG has been working with EDP to exploit the Brazilian hydroelectric market and wind power market in the United Kingdom, Poland, and Italy, among others. State Grid is working together with REN to explore Chile’s energy market. Fosun and Fidelidade cooperate in the Peruvian insurance market” (Cai, 2019). The cooperation in tertiary markets can be a good platform for cooperation between Portugal and China in BRI, not only for the development of energy and renewables integration systems, but also for the development of less-developed countries – namely in Africa. The geography of the Portuguese Speaking Countries is in itself an important asset for BRI cooperation, as they have a combined population of 282 million people, who speak the 4th most widely-spoken language in the world, and the 1st language in the South Atlantic. Africa holds 13.5% of the world’s drinking water, 5.9% of its arable land, and is responsible for 3.9% of global trade and of many raw materials and energy resources. The Portuguese Speaking Countries are integrated in important economic blocs – as can be seen in Fig. 3. The majority of Portuguese Speaking Countries are situated in Africa – which is a continent that urgently needs development, as 75% of the world’s poorest countries are located there. Ever since the Lomé Convention I, in 1975, external aid from Europe to Africa has amounted to millions and millions of euros, which has been important in terms of the education and health care of African populations, but has been shown to be a complete failure in terms of economic development. Over the past 50 years, Africa has been a laboratory of experiments to test the multidisciplinary nature of western ideas of how to alleviate poverty. Although Africa has 60% of the world’s arable land, most countries in the African continent have only achieved 25% of their potential for agricultural production. Africa has 10% of the world’s population, but only 1% of world trade, according to World Bank data. About 47% of the African population lives on US$1.90 or less a day, and around 200 million people are fighting against hunger and malnutrition. Half of the African population lives in poverty, and lacks access to basic human needs, such as food, water, housing, and electricity. 589 million Sub-Saharan Africans live without electricity, and almost 40% of the world’s population without access to clean water live in Africa. Nevertheless, Africa has enormous potential, although by itself it is incapable of generating development through industrialisation and urbanisation. This kind of process requires capital, technology, and foreign markets, and only export-oriented Foreign Direct Investment (FDI) can bring these three resources together. However, for this to come about, the country has to make themselves attractive, by building 31THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

32 FERNANDA ILHÉU Figure 3. The Integration of Portuguese Speaking Countries. Source: Worldwide Economic Blocs. Produced by the author.

the necessary physical, political, legal, and human infrastructures. By 2025, the population of Africa is expected to reach 1,400 million people of whom approximately 200 million will be aged between 15 and 24 years old – 25% of the world’s population under 25 years old will live in Africa. Every year about 10 million young Africans enter the labour market, and since there is a lack of jobs in Africa, they are forced to emigrate, mainly to Europe, which consequently creates problems of the integration of economic refugees in countries such as Italy, Germany, and France. On 4 June 2014, Angela Merkel suggested creating a Marshall Plan with Africa, aimed to solve the problem of African migration to Europe. No one in Europe has declared against it. Exactly 4 years later, on 4 June 2018, in a speech he made in the European Parliament, the Angolan President, João Lourenço, challenged the EU to establish a Plan for Multilateral Cooperation for Africa, which in the medium to long-term would reverse the situation of extreme poverty on the African continent. Why cannot this Plan be considered in the context of BRI? The approach of China to the African Development Plan has been to equip countries with physical infrastructures which enable them to attract FDI and technology for the production of tradeable goods for export. In her book entitled “The Next Factory of the World, How Chinese Investment is Reshaping Africa”, Sun (2017) affirmed that “Industrialisation is how China reshaped itself from a poor backward country into one of the largest economies in the world in less than three decades. By becoming the next Factory of the World, Africa can do the same”, because “manufacturing, unlike agriculture and services, engages mass labor in highly productive ways to participate in the global economy” (p. 7). However, Africa’s sustainable development must be based on the resources possessed by the countries themselves, many of them being agricultural, forest, fishing, and mineral resources. The key to the development process of these African countries is that it should begin with agro-industrial exports oriented to regional and global markets. The FAO - Food and Agriculture Organization of the United Nations recommends triangular programmes involving partnerships between governments and Chinese, African, and European companies to develop the complete “value chain” of agriculture production in Africa – namely production, industrial processing, packaging, and marketing. In the his speech at the Opening Ceremony of the 5th Macau Forum for Economic and Commercial Cooperation between China and Portugal in October 2016, the Portuguese Prime Minister, António Costa affirmed that “Portugal and China must join forces to promote triangular cooperation with other Portuguese-Speaking countries in sectors such as agriculture, infrastructures, and education” (Macauhub, 2016). 33THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Portugal and China are already cooperating in the finance sector, not only by the participation of Chinese banks and investors in the Portuguese banking system, but also in the cooperation of Portugal for the internationalisation of the Chinese currency RMB, ever since Portugal became the first country of the Eurozone to sell debt in Yuan-denominated bonds, the so-called ‘Panda bonds’, on 29 May 2019. This inaugural operation resulted in a demand which was three times higher than the offer, and 2 billion yuan (€260 million) worth of bonds were sold, with a maturity of three years, to be traded in Beijing stock exchange. The interest rate to be paid by Portugal is 4.09%, which is well above the negative rates (-0.24%) that Portugal is paying for similar operations. This operation has been explained by Portuguese Finance Ministry as being a new step in the relations between the two countries and long-term finance cooperation – indeed, it should also be considered to be an investment to enter a new market which has a huge dimension and high liquidity. Furthermore, in April 2019, Millennium BCP, a Portuguese Bank which has Fosun as a main shareholder, was the first bank in Europe to issue unionpay cards in cooperation with China Unionpay International. BRI is a long-term learning and building process and many sectors and projects of cooperation can be foreseen between Portugal and China, as well as of both with tertiary markets, however it is not yet clear how Small and Medium Enterprises (SMEs) can cooperate in this initiative. Up until now, one can observe that BRI is too much concentrated on the interaction of governments and large companies, although in the case of the development of agriculture, industry, and commerce, there has been private investment. As the majority of BRI countries have SMEs, and therefore private business investors and the civil society in general have to be mobilised for the initiative, in addition to government agreements. It can be concluded that Portugal and China can jointly participate in BRI construction in Europe and in China, as well as in tertiary countries, such as the African Portuguese-Speaking Countries. Cooperation can be expected in energy, finance, high technology, education, tourism, agribusiness, light industry, construction, the maintenance of infrastructures, and services implementation (e.g., in health services), among other sectors. With the signing of the MOU between Portuguese and Chinese governments in December 2018, a new chapter of cooperation between the two countries has begun, however, real projects need to be identified and developed if the two countries are going to experience programmatic and successful cooperation, such as that established between Portugal and China in the Maritime Silk Road of the 21st Century. China is open to working jointly with Portugal in the identification of mutually-beneficial development programmes, for as Ambassador Cai Run declared 34 FERNANDA ILHÉU

to the DN, “Being an important meeting point of the land and maritime silk road, Portugal is a natural partner in the joint construction of Belt and Road” and “Sino-Portuguese pragmatic cooperation under the Belt and Road in broad sectors will embrace new and valuable opportunities. There is a vast space for development. The Chinese side is willing to work together with the Portuguese side to better combine mutually-beneficial bilateral cooperation and respective country development programmes in order to promote pragmatic cooperation to achieve more meaningful results and better benefit the two peoples”. REFERENCES ANRS (2018), MOU the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative, http://www.anrs.pt/documentation/Acordo%20Portugal-China.pdf Brahma, C. (January 23rd 2017), China’s Debt Trap Diplomacy, https://www.project-syndicate.org/commentary/china-one-belt-one-road-loans-debt-by-brahma -chellaney-2017-01?barrier=accesspaylog Brautigam, D. (April 26th 2019), Is China the World’s Loan Shark? New York Times, https://www.nytimes.com/2019/04/26/opinion/china-belt-road-initiative.html Brown, K. (2018), “China’s Dream- The Culture of Chinese Communism and the Secret Sources of its Power”; Ed: Polity Press, UK, p. 47. Cai Run. (2019), Resultados Frutiferos da Cooperação Económica e Comercial e do Investimento China Portugal; (June 15th 2019, https://www.dn.pt/edicao-do-dia/15-jun-2019/interior/resultados -frutiferos-da-cooperacao-economico-comercial-e-de-investimento-china-portugal-11011654.html Cheng, G. (2011), Market Expansion and Grand Strategy of Rising Powers, The Chinese Journal of International Politics, Vol.4, pp. 405-446. Costa, A. (2016) Speech at Opening Ceremony of the 5th Macau Forum for Economic and Commercial Cooperation between China and Portugal, Macauhub, https://macauhub.com.mo/pt/tag/portugal/page/28/ Frankopan, P. (2015), The Silk Roads, A New History of the World, Ed: Bloomsbury Publishing Plc., UK. Frankopan, P. (2018), The New Silk Roads, The Present and Future of the World, Ed: Bloomsbury Publishing Plc., UK. Ilhéu, F. and Janeiro, L. (2018), A China e a Revitalização das Antigas Rotas da Seda – Novo Vetor do Comércio Mundial, Coleção Suma Oriental, Ed: Instituto Internacional de Macau e Amigos da Nova Rota da Seda. Jens Stoltenberg (February 15th 2019), Speech by NATO General Secretary at Munich Security Conference, NATO, https://www.nato.int/cps/en/natohq/opinions_163791.htm Heiko Mass (April 5th 2019), China, not Russia, the largest threat to NATO as the organization celebrate 70 years, WIB Politics, https://warisboring.com/china-not-russia-the-largest-threat-to -nato-as-the-organization-celebrates-70-years/ Hong, X. and Zhu, J. (April 25th 2019), UN Chief: BRI key for development, http://www.chinadaily.com.cn/a/201904/25/WS5cc0ef43a3104842260b829f.html Kratz, A., Feng, A. and Wright (April 29th 2019), New Data at the “Debt Trap” Question, Rhodium Group, https://rhg.com/research/new-data-on-the-debt-trap-question/ 35THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Kurlantzick, J. (2007), “The Charm Offensive. How China’s Soft Power Is Transforming the World”, Yale University Press, New Haven and London. Mingjiang, L., (2008),“China debates soft power”, Chinese Journal of International Politics, vol. 2 (2): 287-308. Nye, Jr., J.S. (2004), “Soft Power: the Means of Success in World Politics”, PublicAffairs, USA. Nye, Jr., J.S. (2011), “The Future of Power”, PublicAffairs, USA. OECD (2017). Economic Survey China. Sharma, B. K. & Kundu N. D. (2016), “China’s One Belt One Road Initiative, Challenges and Prospects”, Ed: Vij Books India PVt, Ltd. New Delhi. Sun, I. (2017), The Next Factory of the World, How Chinese Investment is Reshaping Africa, Harvard Business Review Press. Vision and Actions in Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road. (2015), National Development and Reform Commission, http://en.ndrc.gov.cn/newsrelease/201503 /t20150330669367.html Wang Yi (2019), Ministry of Foreign Affairs of People’s Republic of China, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/wjbz_663308/activities_663312/t1646858.shtml Xi Jinping (2017), Xi Jinping Speech Seen as a Move to fill Global Leadership Role, Wall Street Journal, January 17th, https://www.wsj.com/articles/chinas-xi-jinping-speech-seen-as-move-to-fill -global-leadership-role148466054 Xi Jinping (2017), Full Text of Xi Jinping Keynote at the World Economic Forum, CGTN, https://america.cgtn.com/2017/01/17/full-text-of-xi-jinping-keynote-at-the-world-economic-forum Zhang, B. (2010), “Chinese Foreign Policy in transition: trends and implications” Journal of Current Chinese Affairs, Vol. 39 (2): 39-68. 36 FERNANDA ILHÉU

37THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT CHAPTER II THE BELT AND ROAD INITIATIVE IN LATIN AMERICA: A SINGLE OPPORTUNITY FOR CHINA | José Nelson Bessa Maia Introduction It is widely known that China is becoming the powerhouse of the world because of its sustained high growth performance in the last 30 years. As China is now the second largest economy and the biggest exporter country it is natural and legitimate its intention to assume an increasing role in the world economic affairs. The times of low profile of China in the geo economic diplomacy are gone. That’s why the Chinese President Xi Jinping announced what is now known as the “Belt and Road Initiative” (BRI), formerly “the One Belt, One Road” (OBOR) launched in 2013, with the stated purpose of promoting the economic prosperity of the countries along the Belt and the Road and regional economic cooperation, thereby strengthening exchanges and mutual learning between different civilizations, and promoting world peace and development.1 The BRI consists of both ‘One Belt’ and ‘One Road’. The ‘One Belt’ component refers to the Silk Road Economic Belt, which extends from China to Southeast Asia, South Asia, Central Asia, the Middle East and Russia, and further to Europe. According to Kelvin (2018), the Belt is ‘land-based’ and comprises highways and railroads which connect China with numerous countries in Asia and Europe. The Belt is expected to grow into six economic corridors which span China and many parts of Eurasia. In its turn, the ‘One Road’ refers to the Twenty-First Century Maritime Silk Road, consisting of sea roads which connect the significant ports in China, other parts of Asia, Africa, and Europe via the South China Sea, the South Pacific Ocean, the Indian Ocean, the Red Sea and the Mediterranean Sea.2

The majority of existing literature that interprets the nature of the BRI tends to follow two basic categories. The first one approaches it as a capitalist endeavor, pursued in order to favor Chinese companies abroad and contribute to sustain the economic growth in China. This kind of thinking has been particularly well developed by Tim Summers (2016).3 According to Nordin and Weissmann (2018, p.234) this economic logic is emphasized by many scholars who draw on Marxist theory or on Liberal Institutionalism arguments about economic interdependence. The second category perceives it instead as a discursive strategy that seeks to position China as the leader of a Sinocentric Asian order, and ultimately of a new world order led by China.4 On the one hand, the geostrategic logic is highlighted by many scholars who draw on constructivist notions of national identity as well as by offensive realists who think about a balance of power in national zero-sum terms. Both categories of literature have significant bases in official Chinese documents, and both echo previous academic debates on China’s role in the world. The category that sees the BRI in terms of the building of a Sinocentric order, on the other hand, tends to emphasize the Chinese government calls to develop a ‘Silk Road spirit’ or draw comparisons with the US Marshall Plan for Europe after the Second World War. The contribution of William A. Callahan (2016) to this category of literature has been particularly strong in articulating how the BRI contributes to a planned reconstitution of regional, and eventually global, order with new governance ideas, norms and rules.5 Both categories in the literature above mentioned provide valid and important points about China’s changing role in the current world order. Generally, a work that falls into one of the strands acknowledges the relevance of the other. Here we build on both categories together to emphasize and further reflect on the combination of the two logics to explain the possible impacts of the BRI on Latin America. The article is divided into five sections. The first section shows how the BRI can be understood either as an ambitious Chinese geo-economic or a geo-strategic plan for the world. The second section deals with the extension of the BRI to Latin America, a former America’s backyard for the United States. The third one describes the remarkable passivity of Latin-American countries, including Brazil, the only Portuguese-speaking country in the region, in reaction to the incursions of China in general and the BRI in particular. The fourth section discusses the relevance of Latin-American integration as a crucial factor for the success of the Belt and Road Initiative in the region. The final section concludes with comments about the need for China to reconsider its strategy in Latin America in order to avoid a loss of opportunity for access to the huge resources and markets of the region and for the benefit of Latin-Americans themselves. 38 JOSÉ NELSON BESSA MAIA

China’s Belt and Road Initiative, a grand geo-economic and geo-strategic plan for the World In spite of China’s government discourse on the “win-win” nature for the BRI, this strategy is often perceived by the realist analysts of the International Political Economy as a way to redirect the country’s overcapacity and capital for infrastructure development abroad in order to keep Chinese industry growing and retaining acceptable GDP and employment growth rates as well as to pave the way for the export of Chinese goods and services to new markets. It is also seen as a way to boost its geopolitical influence over Southeast Asia, Central Asia and Eurasian countries. In other words, it would be an infrastructure financing initiative for a large part of the global economy that will also serve key economic, foreign policy, and security objectives for the Chinese government. In fact, several authors highlight different aspects that reinforce one another towards the geo-economic and geo-strategic objectives of the grand Chinese initiative. For Johnson (2016), the BRI will provide China’s regional governments with a way of remedying China’s over-capacity problems and of paying off non-performing loans which could potentially cripple its provincial economies in the future. Johnson also speculates that while the BRI achieves both strategic and economic goals, as well as securing China’s consumption needs, the economic goals seem to be the main drives. In his turn, Brugier (2017) focus on energy security as one of the primary goals of the BRI project. As much of China’s energy supplies come from Central Asia and the Middle East the BRI is considered a key component of its energy security policy. For Rolland (2015), the BRI overland route would be a strategical means of decreasing US supremacy over the international trade flows and bypassing the US Navy, which controls the world’s seas.6 According to Miller (2017), the current China’s foreign policy requires oiling the wheels of trade and investment. With the second largest economy in the world and larger than the other economies of East and Southeaster Asia combined, China’s next goal is to boost regional investment, which it does not dominate yet. This is a failing that the BRI is designed to rectify. By financing roads, railways, ports and power lines in underdeveloped parts of Asia, the Belt and Road Initiative aims to draw China’s neighbors ever tighter into Beijing’s economic embrace. The reality is that China is already challenging the post-World War II order established in Asia under the watchful eye of the US. With economic power comes geopolitical clout. Thus China’s foreign policy strategists now debate how a strengthening China should assert itself on the global stage.7 39THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

In addition, as emphasized by Leandro (2018, p. 331), geopolitics would be at the root of China’s initiative in such a way that the BRI could be seen as the concrete part of a long-term state transformation strategy, a veritable strategy of development, based on infrastructure interconnectivity and multilateralism designed to bring about comprehensive security to all countries involved. Leandro further asserts that the BRI results from a long-term vision, based on China’s vital interests, to resolve China’s problems. Leandro sums up by saying that the BRI “is something a long time thought out by the Chinese policymakers, the object of different narratives, debates, controversies, discussions, studies and research for many years”.8 Following a different perspective, Huang (2017), asserts that China’s remarkable economic performance is challenging the world’s geopolitical balance of power and triggering debates on the virtues of state-led versus market-led capitalism, even of democracy versus autocracy. It is true that China’s rise is seen positively for uplifting hundreds of millions out of poverty, but many analysts also see it as a threat to the established international order and Western democratic traditions. All this is occurring at a time when populist pressures in many places are raising concerns about the effective economic benefits of globalization and the capacity of extant institutions to deal with its social and geopolitical outcomes.9 Still in Huang’s view China’s trade and foreign investment flows underpin President Xi Jinping’s strategy to elevate China’s regional presence and to gain more friends by strengthening links with Eurasia through his “Belt and Road Initiative”, while the US “pivot to Asia” is an attempt to reassert itself in the region. The potential for conflict between the US and China increased because of the island disputes in South China sea waters. These have also made it difficult for China to nurture warmer relations with its neighbors. The extension of the Belt and Road Initiative to Latin America China has been more active economically and diplomatically across Latin America, particularly since 2005. China’s increasing presence in the region has been reinforced under President Xi Jinping and likely to continue to expand under the development of the BRI. According to Scobel et alli (2018), China has three main interests in the region: i) pursuing cooperation with Latin American countries to build regional support for Chinese government international initiatives; ii) seeking expanded trade and investment opportunities to support China’s economic growth; and iii) targeting strengthened political legitimacy in the form of public acknowledgement in Latin America of China being the sole political representative of China and the weakening of Taiwan’s footholds in the region.10 40 JOSÉ NELSON BESSA MAIA

Although Chinese trade with the region has increased quickly in the last 15 years, reaching almost US$302 billion in 2018, it is still low (about 6.5% of China’s total foreign trade) compared with Chinese economic engagement with other regions (see table 1). Latin America has been a source of food for China and raw materials for Chinese manufacturing as well as an export market for Chinese manufactured goods and machinery. China now seeks to strengthen trade with major regional economies, especially Argentina and Brazil, and has been willing to provide significant financial support in exchange for natural resources. In fact, China has provided 71 loans to Latin-American countries since 2005 up to 2018, amounting to US$136.2 billion (see table 2). The Chinese state-to-state finance in Latin America tops sovereign lending over same period from either the World Bank or the Inter-American Development Bank (IDB).11 To reduce the share of raw materials in China’s trade with the region, Beijing is increasingly focusing its investment on infrastructure, agriculture, and local production of value-added products. Since 2005, China has invested in 225 projects in the region (total of US$176.2 billion) including direct investment (FDI) and construction works (see table 3). Brazil, the only Portuguese-speaking country in Latin America and its biggest economy, has accounted for almost 50% of Chinese FDI (US$57 billion) and more than one third of total Chinese investment in the region. Outward FDI from Latin America to China is weak with few investments made by Latin American companies in China (ECLAC, 2015). Countries that are in political turmoil or in financial crisis, such as Argentina, Ecuador, and Venezuela, have particularly welcomed Chinese investment and financing.12 As Venezuela is concerned, the pre-BRI Chinese engagement with a country ruled by a regime in direct conflict with the US and other democracies in Latin America deserves some remarks. According to Kaplan & Penfold (2019), since the eve of the 2008 global financial crisis, late president Hugo Chávez and China’s then President Hu Jintao laid the foundations of a state-to-state relationship when they crafted their first loans-for-oil deals in 2007. Chávez was able to court a creditor to help expand the actions of the Venezuelan state. For Beijing, Venezuela’s abundant natural resources and energy supplies could help China secure long-term access to these vital national assets. By 2014, China’s main policy bank, the China Development Bank (CDB), had provided the Venezuelan government with more than US$30 billion in new oil-backed loans. This was a miscalculation. China overestimated Venezuela’s ability to sustain oil production and, hence, economic activity, but also its ability to successfully manage several commercial projects that were spread across broad sectors of the economy. China thus paid a high cost since 2015 when Venezuela fell into arrears on its oil collateral and failed to finance infrastructure 41THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

projects in amid the country’s worsening economic crisis and historic oil sector collapse.14 To react to recurring criticism against its supposed bilateral-biased approach in Latin America, and based on the experience of its various bilateral partnerships, China has not only updated the relations it has with Latin American partners, but also established an overall approach with the region through the China-CELAC Forum (CCF). According to Niu (2015), the design of this overall approach is clear evidence of the increasing importance of Latin America in China’s global economic diplomacy.15 The Chinese government has thus made an effort to articulate and coordinate its policy of economic relations with Latin American countries by means of a high level dialogue with CELAC, an organization inaugurated in 2011 whose membership of 33 countries (excluding Canada, the United States, and the territories of European countries) seeks to represent the interests of a diffuse set of sovereign actors.16 Each year, the country holding the CELAC presidency hosts multilateral talks among leaders from member countries with China. The summits of heads of state and government convene leaders to set the group’s agenda and objectives for the next year. In January, 2015, Beijing hosted the first ministerial meeting of the CELAC-China forum, established to formally create a mechanism for China to interact with Latin America. In addition to Chinese President Xi Jinping, the summit convened 22 foreign ministers from Latin American countries, as well as the presidents of countries like Brazil, Chile, Costa Rica, Cuba, Ecuador, and Venezuela. During the forum, the most relevant areas for Chinese investment were defined with a focus on infrastructure, energy and transportation. President Xi then pledged US$250 billion in new investments to Latin America over the next decade. During the II Ministerial Meeting of CELAC-China Forum, held in Chile in January 2018, China officially included CELAC in the BRI before the Latin American and Caribbean Foreign Ministers and invited their countries to join. In the Ministerial Meeting statement, the Chinese party considered that “Latin American and Caribbean countries are part of the natural extension of the Maritime Silk Road and indispensable participants in international cooperation of the Belt and Road Initiative”.17 This extension of the BRI to Latin America is clearly perceived by most of the countries of the region as a unique opportunity for countries to minimize the technology and infrastructure gaps that remain one of the great constraints for the progress of development and integration in Latin America and also in the Caribbean. By the way, China has already established bilateral Free Trade Agreements (FTAs) with Chile, Peru and Costa Rica and is looking forward to establish FTAs with Mexico, Argentina and Brazil, which refuse to do so. However, such a perspective promotes a sort of bandwagon strategy by smaller countries in Latin America that reinforces 42 JOSÉ NELSON BESSA MAIA

an uneven bilateral relationship between the countries of the region and China, rather than fostering a genuine multilateralism that may in fact provide a greater balance of regional power.18 In spite of the fact that China’s FDI in Latin America has increased as scheduled in the CELAC 2015-2019 Cooperation Plan, a question arises as to whether such investment waves really contribute to economic development in the region due to the trend of concentration of resources in some sectors (energy, soy, iron and oil), in certain countries, such as Argentina, Brazil and Peru, and the limited number of greenfield projects. In response to this question, it was agreed during the II China-CELAC Forum that China would diversify FDI receiving regions, focusing on the least developed countries, small island states and landlocked developing countries. Another criticism usually made is about what kind of development has been implemented in China-CELAC cooperation policies, since much of the Chinese direct investment is focused on extraction projects of primary commodities for exporting, disregarding the need to diversify the region imports away from commodities and towards more sophisticated goods and environment-friendly development projects. The passive stance of Latin America to the Belt and Road Initiative Latin America is important for China because of its abundant natural resources, its significant markets and its role as a piece in the chess of global competition with the United States of America. Given China’s clout in terms of resources deployment and capacity to transform the horizon of the trade and the infrastructure on Latin America, it is necessary to ask whether the management of the region’s economic relations agenda with the Asian power should not fall on the South Americans themselves? It is really a golden opportunity. If Latin American countries fail to assume a common strategy to deal with the Chinese they may incur in the same mistake they did with the US since the 1940s. As Cesarin (2016) argues: “In the new [world] reality, Latin America remains subject – If not prisoner – of prejudices and visions that should be modified so as to better face the challenges that extra regional powerful actors such as China impose. To admit that temporal projection of the impacts that it generates as extra-regional actor implies durability and commitments that should be assumed by future generations may serve as the spearhead for not to fall into historic errors again”.19 As previously mentioned, since the beginning of 2015, Chinese leaders have sought to change the Belt and Road discourse in order to include Latin America and 43THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

the Caribbean (LAC). China’s authorities now refer to the region as an extension of the Maritime Silk Road and an essential participant in the BRI’s construction. According to Barrios (2018), this language was first used by President Xi Jinping during his meeting with Argentina’s President on the sidelines of the 2017 Belt and Road Forum. It was also included in the Special Declaration on the Belt and Road. This was also signed during the II China-CELAC Ministerial Forum in January 2018.20 Since then China has started formally to include individual Latin American countries into the BRI through bilateral “Cooperation Agreements”. As of February 2019, ten of the roughly 105 countries (and international organizations) that have signed these agreements are located in the region. The first Latin American and Caribbean country to sign one was Panama in 2017, which had established ties with China just on the previous year. This was followed by small Caribbean island countries, and, most recently, by Bolivia, Chile, Costa Rica and Ecuador. Although the content of these agreements – as much as the so called “roads” that would connect Latin America to the rest of the BRI countries – remains unclear, their proliferation among Latin American countries confirms Chinese intention to include the regional members into its BRI.21 However, as the BRI starts to operate across the region it would be interest of Latin American governments should to examine the nature of their own relations with China and the BRI itself with more caution. Many countries in the region, including the major economies, seem unprepared to deal with the Chinese. The lack of strategy and negotiation capacity of Latin American governments are responsible for letting them as virtual hostages to the skilled Chinese diplomats and government envoys. Many governments in the region sometimes fail to defend adequately their own national interests and end up giving up their bargaining power in exchange for more Chinese investments or loans. Furthermore, the economic success of the Belt and Road Initiative projects, like that of any infrastructure undertaking, is not assured. Analysts still warn that without appropriate monitoring and supervision big construction projects are prone to corruption practices and underperformance as time goes by. This was the case before the Belt and Road, and it is still the case now.22 In addition, even if the projects were to be implemented as planned the BRI may incur in failures for the economic development in Latin America. Its emphasis on connectivity, for example, does not mean necessarily that there will be structural changes in the traditional bias of low value added commodities in the trade relations of the region with China. Increased connectivity with Asia-Pacific and not among the proper countries in the region could also aggravate the extant asymmetrical relationship between most of Latin American countries that are small commodity exporters, and China, which is a notorious big commodity importer. 44 JOSÉ NELSON BESSA MAIA

There is also concern that future debt problems will create an unfavorable degree of vulnerability or dependency on China as a creditor. According to Hurley, Morris & Portelance (2018), increasing debt, and China’s role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI countries, such as Malaysia, Sri Lanka and Pakistan, where Chinese officials openly appealed to politicians to embrace the construction of big projects funded by the BRI’s financial mechanisms.23 Beyond that, there is warranted apprehension regarding China’s propensity to come to control every phase of the supply chains, and the increased exposure of the region’s critical sectors, including energy, agribusiness and logistics, to Chinese companies. Environmental concerns – a constant source of uneasiness around Chinese engineering projects in Latin America – and concern over the rights of local communities (especially indigenous peoples) also remain and deserve to be taken into due account.24 Latin-American integration is crucial for the success of the Belt and Road Initiative in the region It is noteworthy that integration of Latin America faces huge obstacles due to the diversity of cultures in the region, the specific characteristics of the statehood of each country and the historical differences in their development models. As Beyhaut (1994) highlights, economists and planners from the United Nations’ Economic Commission for Latin America (ECLAC) and other regional organizations have tried since the 1950s to outline integrationist policies for expansion of markets, development of industries and increase of consumption capacity of Latin American nations. However, the disregard of the historical particularities of the several nations and the differences of mindsets and cultures in the region have led to results always different from those predicted in the technocratic plans. Successive models to integrate were proposed and systematically failed. China’s engagement in Latin American integration by means of BRI or other cooperation initiatives requires respect for the diversities of each region and the search for renewal formulas.25 The integrationist or regionalism efforts in Latin America took off in the late 1940s with the creation of the Organization of American States (OAS), a United States-led initiative, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) and, in the late 1950s, with the establishment of the Inter-American Development Bank (the IDB). As highlighted by O’Neill (2012), in 1960, Argentina, Brazil, and Mexico led their neighbors in the creation of the Latin American Free Trade Association-LAFTA (ALALC in Portuguese) whose goal was to establish free trade throughout the whole region in 12 years. After its failure, the 45THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

effort was renewed in 1980 by the Latin American Integration Association-LAIA (ALADI in Portuguese), which promoted a more gradual approach to put in place a common market in the region. Despite some advances with sub-regional integration like Mercosur, the customs union established in 1991 comprising Argentina, Brazil, Paraguay and Uruguay, and the Pacific Alliance, the 2012 integration agreement between Chile, Colombia, Mexico and Peru, the Latin America integration is still an unfulfilled promise after 70 years of efforts.26 As a matter of fact, there are overlapping initiatives in regionalism in Latin America, with at least 15 regional cooperation bodies, with different objectives, institutionalization levels and organizational development. As Ayuso and Villar (2014) well describe, in most cases it is not clear whether they are related or not, or whether, at least, they are not incompatible with one another. The huge geographic, economic and social asymmetries within the region explain why some countries are more motivated than others to go further in the integration process, having in mind the costs and benefits of being tightly integrated. Historic rivalries, lack of intergovernmental trust or political convergence all that ends up hindering common external action and a common position when negotiating with other regions or extra-regional countries. This feature prevailed for decades in the region’s relations with the US and it is now being repeated in the deals with China.27 In past decades, the United States took a cooperative market-based approach to the integration in Latin America with efforts such as the Alliance for Progress (1961-1967), the Enterprise for the Americas Initiative-EAI (1990) and the Free Trade Area for the Americas-FTAA (2001). However all of them failed for several reasons and it led the US government to disengage from the region in the end of XX century. Since then, as emphasized by ECLAC (2011), the share of the United States in the region’s trade and investment began to shrink as well as did its strategic interest vis-à-vis the region. At the same time, the Asia-Pacific region – particularly China – has become a privileged trading partner for Latin America. These closer trade and investment links outside the US orbit have been both a cause and a result of the increasing number of trade agreements in force or under negotiation that connects various Latin American countries with Asia-Pacific. The fact is that not even former President Barack Obama’s attempt to recover the US strategic initiative in the region in 2011 was successful, leaving Latin America completely unimpeded and open for increasing business with China.28 It turned out that Latin America experienced a strong growth path during the first decade of the 21st century. Such a path was the result of an episode of favorable terms-of-trade fueled by Chinese demand for commodities rather than a case of productivity growth acceleration. However, as Daniel, Pienknagura and Robertson (2017) assert, terms of trade are no longer fueling growth so that most 46 JOSÉ NELSON BESSA MAIA

of the region’s leaders are looking for new sources of growth. With the experience of East Asia in mind, many policymakers in the region would be currently looking for new international economic ties as a potential source of stable growth.29 The challenge that China’s BRI now faces in Latin America lies in establishing a cooperation scheme capable to design a development agenda comprising trade and factor market integration that is conducive to region-wide efficiency gains and that can really help Latin American countries enhance the added value of their manufacturing industries and global competitiveness in trade. The geography implies that pro-growth global integration can only be achieved with a strong network of prosperous neighborhood in the region. Thus, China needs to understand that Latin America’s regional economic integration agenda needs to go well beyond the bilateral agreements for some more trade or infrastructure projects – disconnected from neighboring partners – and simply maintaining the old fashioned and ineffective relation of core-periphery trade models deemed responsible for continued trade and economic disintegration or fragmentation in the region. According to Serebrisky, et all (2018) the total average of public and private investment in infrastructure in Latin America and the Caribbean increased until 2013, where it peaked at roughly 4.2% of GDP. Since then, the overall spending dropped again, and in 2015 it was just 3.2% of GDP.30 To overcome the infrastructure deficiencies, several studies have suggested that Latin America needs to invest around 5% of GDP in infrastructure for a prolonged period to close its notorious infrastructure gap. In a context of general fiscal constraint and contraction of finance by the multilateral development banks (MDBs) in Latin America, the extension of the BRI financing schemes to the region seems more than appropriate and welcome by most Latin American countries. However, for the BRI to be successful in Latin America the Chinese have to take into due account the needs of diversification of local exports and logistical integration among the countries of the sub-continent, something that the US leadership and its controlled MDBs over the region failed to accomplish in 70 years.31 Concluding remarks and policy advice Latin America is really a region of great interest to China, but some old and new obstacles conspire to reduce Chinese involvement in the region in the future. As highlighted by Myers (2019), a quick review of developments in Latin America is enough to appoint some moderation in the level of Chinese activity in the region, whether by Chinese investors, or at the behest of Latin American governments, which, in some cases, such as Brazil, are now seeking stronger ties with a wider 47THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

range of economic partners in the advanced economies, especially the US and European Union, and thus reduce their high trade dependence to China. Although trade flows remain dynamic, Chinese foreign direct investment and finance inflows are already losing steam in Latin America. Mergers and acquisitions and green field projects are dropping and Chinese policy banks (China Development Bank and China Export-Import Bank) have reduced their finance exposure to Latin American governments over the past two years. This decline in activity is attributable to a range of factors, some of which have inhibited Chinese activity in the region for decades. As it stands, the expected benefits that Latin America may derive from its ties to the BRI will depend more on the region’s own capacity to think strategically and collaboratively about regional integration of infrastructure than on an official BRI designation by the Chinese. Although some Latin American countries have approached Chinese banks and companies with well-developed plans for domestic infrastructure projects, regional and even subregional level strategies are generally lacking. One important exception is the so called South American Council on Infrastructure and Planning (Cosiplan), a forum composed by 12 Latin American countries, including Brazil. Created in 2009, Cosiplan has defined a strategic action plan for 10 years and designed a priority agenda for projects, which will act as inducers of the integration of regional infrastructure, something strategic for South American development. To start with, China’s BRI in Latin America would provide a good service to the cause of regional integration if it could mobilize efforts in China-CELAC Forum membership to overhaul and revitalize the working of Cosiplan and use its available dataset to identify the infrastructure projects mostly appropriate to promote the physical and logistical integration throughout the region. The prompt use of this project platform would certainly contribute to choose the best investment projects, accelerate public works implementation, lower transportation costs in cross-border trade and bring greater logistical efficiency in the region, keys to raising productivity.32 To conclude it is worthwhile to suggest that Latin American governments and multilateral development banks alike can and should encourage policies and procedures with the Chinese to improve the BRI’s development impact in the region. To do so, they should obtain clear commitments from the Chinese policymakers in charge of the BRI about the applicability of multilateral standards that pertain to debt and environment sustainability and the needs of economic integration in Latin America. For its part, this is a unique opportunity for China to embrace best practices in its bilateral and plurilateral engagements and realize the relevance to contribute to finance the infrastructure projects that are really required by the physical integration in the region. 48 JOSÉ NELSON BESSA MAIA

By adhering to widely accepted “rules of the road” for sovereign creditors, the Chinese Belt and Road initiative could make great strides in spurring productivity growth through sound infrastructure investments in Latin America and making a real difference in terms of social, economic and environment development and integration in the whole region. Otherwise the outcome will be a failed and expensive initiative that introduces new debt vulnerabilities in some countries and risks of growth setbacks in others. NOTES (by section) Introduction 1 Cf. National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China. ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road’, Preface, 2015. Available at: . 2 Cf., Kelvin Hiu Fai Kwok. ‘The Belt and Road Initiative: Cooperation in Trade Liberalization and Antitrust Enforcement’ in: International Governance and the Rule of Law in China under the Belt and Road Initiative, edited by Yun Zhao, Cambridge University Press, 2018, available at: . 3 Cf. Tim Summers, ‘China’s “new Silk Roads”: sub-national regions and networks of global political economy’, Third World Quarterly 37: 9, 2016, pp. 1635-7. 4 Cf. Nordin, A.H.M & Weissmann, M. ‘Will Trump make China great again? The Belt and Road Initiative and international order’ International Affairs, vol. 94, no 2, pp. 231-249, 2018. Available at: . 5 Cf. William A. Callahan, ‘China’s “Asia dream”: the belt and road initiative and the new regional order’, Asian Journal of Comparative Politics 1: 3, 2016, pp. 226-43. China’s Belt and Road Initiative, a grand geo-economic and geo-strategic plan for the World 6 Cf. i) Johnson, C. “President Xi Jinping’s Belt and Road initiative. A Practical Assessment of the Chinese Communist party’s Road Map for China’s Global Resurgence”. A Report of the CSIS Freeman Chair in China Studies, 2016, available at: ; ii) Camille M. Brugier. “The EU’s trade strategy towards China: Lessons for an effective turn”. Asia Europe Journal, Vol 15, issue 2, pp.199-212. Available at: , and iii) Rolland, N, “China’s New Silk Road”. The National Bureau for Asian Research, 2015. Available at: . 7 Cf. Tom Miller. China’s Asian Dream: Empire Building along the New Silk Road. London: Zed Books, 2017. The extension of the Belt and Road Initiative to Latin America 8 Cf. Francisco José Leandro. Steps of Greatness: The Geopolitics of OBOR. Macau: University of Macau, 2018 (p. 332). 9 Cf. Yukon Huang. Cracking the China conundrum: why conventional economic wisdom is wrong. New York: Oxford University Press, 2017. 10 Cf. Andrew Scobell et ali. At the Dawn of Belt and Road: China in the Developing World. Santa Monica: RAND Corporation, 2018. 11 Cf. Margareth Myers; Kevin Gallagher. “Cautious Capital: Chinese Development Finance in LAC”. The Dialogue. Global Development Policy Center. China-Latin America Report, February 2019, available at: . 12 Cf. ECLAC. First Forum of China and the Community of Latin American and Caribbean States - CELAC: Exploring opportunities for cooperation on trade and investment 2015, available at: . 49THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

13 As appointed by Scobell et alli (2018, p. 24), in Latin America, although China has engaged with many regional states, Venezuela stands out based upon an array of economic and military indicators. Venezuela’s large oil deposits made it an attractive partner for China, which rapidly offered Caracas significant levels of investment, military material, and loans, most of which Venezuela will pay for through future oil exports. Beijing continues to support Caracas despite its severe (and largely self-inflicted) ongoing economic crisis because there is money to be made and because Venezuela’s ability to pay back many Chinese loans is dependent on continued commodity exports. 14 Cf. Stephen B. Kaplan and Michael Penfold. China and Russia have deep financial ties to Venezuela. Here’s what’s at stake. Washington Post, January, 22, 2019. 15 It is evident that Latin America needs to correct asymmetries, and establish appropriate mechanisms for consultation and cooperation to ensure mutual benefits to all economies involved through the design of joint strategies and policies regarding its relationship with the Asian markets. The China-CELAC Forum (CCF) clearly represents an important platform to those aims. For more see: Haibin Niu. “A New Era of China-Latin America Relations. Coordinadora Regional de Investigaciones Económicas y Sociales (CRIES), Anuario de Integración no 11, 2015. Available at: . 16 Thus far, CELAC has served as a stage for dialogue and agenda-setting between regional and international leaders. The group’s annual summits, for example, publish plans of action that organize working groups with government ministers to be scheduled in the following year. However, some analysts say that CELAC to be more effective has yet to create institutions like those within Mercosur or at least a permanent secretariat. It lacks real commitment of its members, particularly major countries, to finance an integrative effort beyond bilateral trade and programs on social areas. The organization has no permanent body and no economic and social integration beyond ad hoc meetings. 17 Cf. Special Declaration of Santiago of the II Ministerial Meeting of the Celac-China Forum on the Belt and Road Initiative, § 2, available at: . 18 The bandwagon case in International Relations occurs when a state aligns with a stronger, adversarial power and concedes that the stronger adversary-turned-partner disproportionately gains in the spoils they conquer together. Bandwagon, therefore, is a strategy employed by weak states. For the present case see the paper: “II China-CELAC Summit – Santiago 2018 II China-CELAC Forum: shared prosperity or dependency?” available at: . The passive stance of Latin America to the Belt and Road Initiative 19 Cf. Cesar M. Cesarin. China, miradas desde el Sur in: Moneta, C; Cesarin, M (editores). La Tentación Pragmática China-Argentina/América Latina: lo actual, lo próximo y lo distante. Sáenz Peña: Universidad Nacional de Tres de Febrero, 2016. 20 Cf. Ricardo Bairros. “China’s Belt and Road Lands in Latin America”. China Dialogue. July 2018. Available at: . 21 The extension of the BRI to Latin America represents a kind of historical restoration of the old trade route of “Manilla Galleons” between China, Philippines and Mexico that operated from the XVI century to the beginning of the XIX century. 22 As highlighted in Venezuela’s abortive Tinaco-Anaco railway that is an emblematic case of just how badly and quickly an infrastructure project can fail in Latin America. 23 Cf. John Hurley; Scott Morris; Gailyn Portelance. Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective. Washington, DC: Center for Global Development. CGD Policy Paper, 2018, available at: . 24 It is noteworthy the recent decision by the Chinese government to take new steps to ensure the debt sustainability of the BRI projects as well as the launch of the green investment principle, which is a step forward for green, low-carbon and climate-resilient investment in the BRI. Thus debt sustainability and green sustainability are expected to strengthen the BRI sustainability as a whole. For more see Christine Lagarde, “BRI 2.0: Stronger Frameworks in the New Phase of Belt and Road”, IMF web site, 26 April 2019, available at: . Latin-American integration is crucial for the success of the Belt and Road Initiative in the region 25 Cf. Gustavo Beyhaut.”Dimensão cultural da integração na América Latina”. São Paulo: Estudos Avançados, vol.8 n.o20 Jan 1994, available at: . 26 Cf. Shannon K. O’Neil. “Latin American Integration: Two Hundred Years of Efforts”. July 17, 2012. Available at:. 50 JOSÉ NELSON BESSA MAIA

27 Cf. Anna Ayuso; Santiago Villar. ”Integration Processes in Latin America”. Jeddah, Gulf Research Center, GRC Papers, 2014. Available at: . 28 Cf. ECLAC. The United States and Latin America and the Caribbean: highlights of economy and trade, 2011, available at: . 29 Cf. Chad P. B. Daniel, S. Pienknagura, and Raymond Robertson. Better Neighbors: Toward a Renewal of Economic Integration in Latin America. The World, 2016. Available at: . 30 Among all investment types, investment in infrastructure is one of the most crucial for growth. Economic infrastructure (here defined as investment in transport, telecommunication, energy, water, and sanitation) complements other forms of capital and labor. If properly planned and built, infrastructure investment can eliminate bottlenecks that limit growth potential. 31 Cf. For more see: Tomás Serebrisky, Ancor Suárez-Alemán, Cinthya Pastor, Andreas Wohlhueter. “Lifting the veil on Infrastructure Investment Data in Latin America and the Caribbean”. IDB Technical Note; 1366. IDB, 2018, available at: . 32 It is noteworthy that Cosiplan derived from the former Initiative for the Integration of the South American Regional Infrastructure (IIRSA), which had been conceived during a meeting of Latin American leaders in 2000, and has since taken steps to support regional infrastructure development. For more take a look at: . ANNEX51THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT Exports of Goods Imports of Goods Trade Interchange ___________________________________________________________________________ Share in Chinaʼs Share in Chinaʼs Latin Share in Latin Share in Americaʼs the Americaʼs the Total Countryʼs Total Countryʼs Exports Exports to Total Imports from Total (+) Trade Countries Value China % Exports % Value China % Imports % Imports Balance _____________________________________________________________________________________________ Argentina 3,521 2.2 7.4 8,418 5.8 19.0 11,939 -4,897 Bolivia 331 0.2 5.1 836 0.6 21.0 1,167 -505 Brazil 77,512 49.3 22.0 33,669 23.3 19.0 111,181 43,843 Chile 26,874 17.1 27.0 15,876 11.0 25.0 42,750 10,998 Colombia 5,886 3.7 5.2 8,718 6.0 19.0 14,604 -2,833 Costa Rica 777 0.5 7.2 1,663 1.1 14.0 2,440 -885 Cuba 480 0.3 27.0 1,076 0.7 22.0 1,556 -596 Dominican Republic 190 0.1 1.6 2,108 1.5 14.0 2,298 -1,919 Ecuador 1,993 1.3 4.2 3,718 2.6 19.0 5,711 -1,725 El Salvador 164 0.1 1.9 927 0.6 14.0 1,092 -763 Guatemala 86 0.1 1.0 2,333 1.6 14.0 2,420 -2,247 Honduras 48 0.0 0.5 988 0.7 13.0 1,036 -939 Mexico 14,043 8.9 2.1 44,015 30.4 15.0 58,057 -29,972 Nicaragua 106 0.1 0.5 474 0.3 15.0 580 -368 Panama 82 0.1 1.9 6,939 4.8 24.0 7,021 -6,857 Paraguay 40 0.0 0.0 1,671 1.2 30.0 1,711 -1,631 Peru 15,043 9.6 26.0 8,066 5.6 23.0 23,110 6,977 Uruguay 2,556 1.6 23.0 2,065 1.4 18.0 4,620 491 Venezuela 7,394 4.7 23.0 1,146 0.8 18.0 8,540 6,248 _____________________________________________________________________________________________ TOTAL 157,126 100.0 7.4 (*) 144,706 100.0 5.8 (**) 301,832 12,420 Table 1. China-Latin America Trade Balance, 2018 (value in USD million). Source: WTO. Produced by the author. (*)= Latin America’s share in China’s total imports; (**)= Latin America’s share in China’s total exports.

52 JOSÉ NELSON BESSA MAIA Direct Investment Construction Total __________________________________________________________________________________ Number Number Number of of of Countries Value Share % Projects Value Share % Projects Value Share % Projects _____________________________________________________________________________________________ Argentina 11,140 9.7 13 17,610 28.5 13 28,750 16.3 26 Bolivia 0 0.0 0 5,010 8.1 18 5,010 2.8 18 Brazil 57,040 49.9 61 7,850 12.7 14 64,890 36.8 75 Chile 9,440 8.3 9 0 0.0 0 9,440 5.4 9 Colombia 1,410 1.2 2 500 0.8 2 1,910 1.1 4 Costa Rica 0 0.0 0 810 1.3 3 810 0.5 3 Cuba 0 0.0 0 300 0.5 2 300 0.2 2 Ecuador 5,640 4.9 5 7,410 12.0 20 13,050 7.4 25 Guatemala 0 0.0 0 700 1.1 1 700 0.4 1 Honduras 0 0.0 0 350 0.6 1 350 0.2 1 Mexico 2,130 1.9 5 610 1.0 2 2,740 1.6 7 Nicaragua 300 0.3 1 230 0.4 1 530 0.3 2 Panama 0 0.0 0 2,260 3.7 6 2,260 1.3 6 Peru 22,610 19.8 13 1,830 3.0 4 24,440 13.9 17 Venezuela 4,620 4.0 6 16,370 26.5 23 20,990 11.9 29 _____________________________________________________________________________________________ TOTAL 114,330 100.0 115 61,840 100.0 110 176,170 100.0 225 Table 3. Chinese Investment in Latin America, 2005-2018 (value in USD million). Source: The American Enterprise Institute and The Heritage Foundation. Produced by the author. Loans ______________________________________________________________ Countries Value Share % Number of Loans _____________________________________________________________________________________________ Argentina 16,900 12.4 11 Bolivia 2,500 1.8 9 Brazil 28,900 21.2 11 Costa Rica 395 0.3 1 Cuba 240 0.2 3 Ecuador 18,400 13.5 15 Mexico 1,000 0.7 1 Peru 50 0.0 1 Dominican Republic 600 0.4 1 Venezuela 67,208 49.3 18 _____________________________________________________________________________________________ TOTAL 136,193 100.0 71 Table 2. Chinese Finance in Latin America, 2005-2018 (value in USD million). Source: The Dialogue. Produced by the author.

CHAPTER III THE NEW SILK ROAD – STRATEGIC IMPORTANCE OF SÃO TOMÉ AND PRÍNCIPE FOR THE ATLANTIC ROAD | Wilson Bragança Introduction São Tomé and Príncipe is an archipelagic country, located in the South Atlantic Ocean, specifically in the Gulf of Guinea, 150 kilometers from the African coast. It is crossed by the equator, which gives it a latitude of 0 degrees and a longitude of only 0.7 degrees, which is why it is also known as the islands in the middle of the world. After independence in 1975, the country established diplomatic relations with the People’s Republic of China, and both countries signed various cooperation agreements until 1997 when São Tomé and Príncipe decided to recognize the island of Taiwan as an independent country. About 20 years later, in December 2016, São Tomé and Príncipe re-established bilateral cooperation with the People’s Republic of China. Since then, the Sino-São Toméan cooperation relationship has been a subject of interest by the international community, namely the World Bank, the International Monetary Fund, the European Union, and has been the theme, internally and externally, of various analyses and reflections on China’s real interests in São Tomé and Príncipe, on what São Tomé and Príncipe can offer and receive in return, and on the potential benefits and/or advantages of this cooperation for both countries? China is committed to establishing a global strategic partnership so that it may increase its global influence and power through the initiative called “the New Silk Road”, in which São Tomé and Príncipe, taking into account its geostrategic location in the Gulf of Guinea, may play an important role in the maritime road in 53THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

the South Atlantic. According to a Financial Times investigation of January 2017, China has spent billions of dollars in expanding its port network to secure sea lines and thus re-establish its sea power, and the Islands of São Tomé and Príncipe in the Atlantic Ocean have also attracted the interest of Chinese investment. In this context, the purpose of this essay is to analyze the relationship between China and São Tomé and Príncipe by seeking essentially to answer fundamental questions such as: what is the strategic geostrategic importance of São Tomé and Príncipe in the Atlantic Road, within the framework of the New Silk Road Initiative? And what are the implications for São Tomé and Príncipe of this initiative for the New Silk Road? Brief overview of São Tomé and Príncipe São Tomé and Príncipe is one of the smallest states in the world and the second smallest in Africa, after the Seychelles, with a total area of 1,001 km2 and a population of approximately 200,000 inhabitants, predominantly young people under 25 that comprise 62% of the population. The country has a strong democratic system, and in 2017 ranked 11th in the Ibrahim Good Governance Index and 7th in the Transparency International corruption perception index among the 49 sub-Saharan African countries in 2018. The São Toméan economy is similar to that of Small Island Developing States (SIDS) and is extensively affected by the country’s insular nature, economic fragility, resource scarcity, poor absorption capacity, vulnerability to external shocks and heavily dependent on official development assistance, of more than 90%, to finance investment expenses. The largely informal tertiary sector accounts for about 30% of GDP and employs 60% of the active population, while the primary and secondary sectors contribute 8% and 17% to GDP, respectively. Despite the 4.5% average annual growth rate in the last decade, driven mainly by increased foreign direct investment, the launch of new donor-funded projects and improved tourism revenues, the country’s poverty rate remains high, affecting 66% of the population. The weak diversification of São Tomé’s economy, the heavy dependence on imports and the low level of exports means that the balance of payments is structurally deficient. Despite this, São Tomé and Príncipe was considered eligible for the category graduation of least developed countries for middle income group by the United Nations Development Committee in 2015, based on its per capita GDP of 1,912.97 USD, above the graduation threshold (1,242), and its score on the Human Asset Index (HAI) of 77.4, also above the graduation threshold of least advanced countries, which is 66.0. 54 WILSON BRAGANÇA

However, a set of structural and conjectural vulnerabilities persist due to its status as a small island developing state (SIDS) and as a highly indebted country, subject to development challenges stemming from factors such as relative isolation, small size, resources and base of limited exports, susceptibility to external economic shocks and vulnerability to the effects of climate change, etc. That is why the country needs to quickly find sustainable solutions to overcome the many challenges and to find the path to development. Location as a comparative advantage of São Tomé and Príncipe Prospective experts are unanimous in saying that Africa is, by excellence, the “Continent of the Future” and that it should contribute significantly to global growth in the coming decades. In the midst of this boiling Africa, the countries of the Gulf of Guinea play a preponderant role, thanks to their considerable natural resources, as a complement to or even substitution of the global supply that comes from the complex, saturated and very problematic, in terms of security, Persian Gulf region. The region’s oil and natural gas deposits are increasingly being sought by large powers and associated companies, as there are huge oil reserves to be explored, with offshore reserves estimated at around 20 billion barrels of oil (Leandro and Almeida, 2017). According to these authors, the Gulf of Guinea has one of the largest offshore oil reserves in the world, as well as considerable reserves of natural gas. This region is also rich in onshore oil and gas. And the fact that it is about 14,000 km (closer to the Middle East) from the American shores (by open ocean, without channels or straits that hinder transportation), makes it ideally located and an important player in the global energy map. Global interests in the Gulf of Guinea region may be based on various factors. However, for Barros (2013), the main attraction to different worldwide actors in the region is fundamentally determined by the energy interests linked to the oil industry. For this author, the region’s geographical and geo-economic position, from a perspective of energy security, and its abundance of hydrocarbons is the key motivation for private and governmental actors who bring to the region a unique opportunity to maximize their economic and financial dividends and to supply increasing energy needs and security. For this reason, the zone became the main destination of foreign direct investment, mainly carried out by global multinational oil corporations, especially EXXON Mobil, Total, Chevron, Shell, British Petroleum (BP) and ENI (Clarke, 2010). The Gulf of Guinea is widely known for its immense natural resources (oil, gas, diamonds, gold and other minerals) and is arguably the richest region in Africa 55THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

(Lins, 2011, Aguiar, 2013). Thus, the Gulf of Guinean region emerged as a global power in the production of hydrocarbons, which has led to the definition of a new regional and continental political-strategic realignment. According to Nascimento (2011), due to changes in the world, the Gulf of Guinea region has become an economically vital zone due to its energy reserves. The region is a supplier of energy resources to capitalist and emerging economies. According to this author, “the Gulf of Guinea will soon become the second largest oil region in the world”, (Nascimento, 2011: 108). A real oil boom is under way in the Gulf of Guinea, says Andre-Louis Sanguin (2014). In fact, the Gulf of Guinea has become important both as a resource bed and as a crossroads, and thus maritime safety has regional and global implications. As Pavia (2013) points out, the Gulf of Guinea is an important region, as is the Middle East, in view of the refined and revitalized interest in Africa’s oil, within the framework of the new geopolitical configuration of oil. However, the instability experienced in the Persian Gulf gave greater importance to countries like Angola, Equatorial Guinea, Nigeria and São Tomé and Príncipe, designated as the “Strategic Quartet” (Pavia, 2013: 217). In fact, according to Almeida & Bernardino (2013), of the eight countries belonging to the Gulf of Guinea, Angola, Equatorial Guinea, Nigeria and São Tomé and Príncipe are a very important axis, forming what they define as a “strategic quartet” within the framework of the new regional oil geopolitics, pointing out that it is facing the first, second and third largest producers in Sub-Saharan Africa. According to Escorrega (2010), recent discoveries of large oil blocks in the Gulf of Guinea, namely in Equatorial Guinea, São Tomé and Príncipe, Angola and Nigeria, on a scale that includes the world's largest reserves, have particularly mobilized the interests of the USA for this region in the African continent. If in this booming Africa the countries of the Gulf of Guinea play a preponderant role, in the center of the Gulf of Guinea is São Tomé and Príncipe, a country with unique geographical attributes enabling it to become a strategic point in the region. Therefore, to speak of São Tomé and Príncipe on the Atlantic Road, particularly in the Gulf of Guinea, we must necessarily refer to its geostrategic position. Its location in the center of the Atlantic Ocean makes it a crossing point between North and South and vice versa. Moreover, by being located in the middle of the Gulf of Guinea it plays an integrative role as a connecting platform and a transit and distribution center for the sub-region. In fact, over the centuries the strategic position of the islands has been identified as the greatest resource for their inhabitants, their most valuable currency of exchange and their comparative advantage. According to Neves (2017), the geographical location of São Tomé and Príncipe has given the country greater 56 WILSON BRAGANÇA

geopolitical, geostrategic and geo-economic importance, in light of new challenges facing the African sub-region. To this end, the Government of São Tomé and Príncipe prepared a Transformation Agenda in 2015 with the vision of transforming the country into a logistics platform, a gateway, or a regional hub for maritime, port and airport services for the Gulf of Guinea. This vision is based on two pillars: the construction of a deep-water transshipment port and a large airport. In fact, the geographical location of São Tomé and Príncipe makes it a natural “gateway”, i.e. a facilitating point of contact with the region’s other countries, a link between the sub-region’s countries, a facilitation platform, to organize the flow of services between several countries of the sub-region. The short distance by air from the mainland and from the main capitals of the Gulf of Guinea makes it possible for the country to become a true “hub” in the region and to act as a new center for the distribution of people, goods and services to the region’s countries (Costa, 2011). Transforming the country into a logistics platform is fundamental for attracting foreign direct investment, increasing trade dynamics and integrating the country into the regional and global economy. São Tomé and Príncipe should make better use of the opportunities arising from its location and its entry into the club of oil-producing countries, given that the conflicts afflicting many countries in the region contrast with the country’s social peace, absence of ethnic, tribal or other conflicts, which can be a substantial competitive advantage, creating a unique opportunity for its economy by attracting foreign investment (Costa, 2011). But in order to make better use of its geostrategic position in the Gulf of Guinea, the country needs to develop a true strategy geared towards taking advantage of factors derived from its geographic position and to give greater value to economic strategies based on the exploitation of various competitive edges derived from its location. The geostrategic importance of São Tomé and Príncipe for the Atlantic Road, within the framework of the New Silk Road Initiative The New Silk Road Initiative is a global strategic partnership between China and the rest of the world and is meant to increase China’s international influence. It is a bridge connecting many markets from China, Central Asia, Europe, Africa and Latin America, creating a single market. The initiative aims to make China the engine of world economic growth by expanding Chinese power in the world, is another 57THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

step in China’s quest to become the world’s greatest power, reaching at least the level of the United States of America. The project is about strengthening the ties of cooperation and integration of the world economy with China as its center. This integration gives China access to many new markets and energy resources, especially oil and gas and other mineral resources. Beijing aims to connect the infrastructures of participating countries, while encouraging them to open their markets to facilitate trade, link their financial markets and even align their economic development policies with that of China (Eder, 2018). According to Nantulya (2019) the New Silk Road Initiative also increases Beijing’s control over global supply chains critical to its ability to redirect the flow of international trade. And since the African continent is an important part of this ambitious Chinese project, China’s engagement with Africa is a critical element in the evolving global strategy that has at its core “the great rejuvenation of the Chinese nation” (Nantulya, 2017). Through this initiative Beijing obtains, on one hand, access to Africa’s natural resources and, on the other hand, creates a coalition of friendly countries in international organizations (Krukowska, 2018). São Tomé and Príncipe, due to its ideal geostrategic location, may play an important role as a strategic position for the management of China’s interests in the Gulf of Guinea and the South Atlantic within the framework of the New Silk Road Initiative. Although it is not a final consumer market, São Tomé and Príncipe boasts a strategic location, political and social stability, and is surrounded by countries where there are industries with very long-term Chinese investments, particularly extractive industries. The country can become a logistical support base for Chinese activities and investments in the Gulf of Guinea, a support base for Chinese shipping and transportation in the South Atlantic. We are talking about a platform for business and investment by China in the Gulf of Guinea, a base for offering services, namely air and port logistics to the activities and investments of Chinese companies in the region. The Gulf of Guinea is one of the African continent’s areas with many resources, a very young population and a middle class set to grow in terms of purchasing power, therefore a target market for Chinese products. It should be noted that the land area lying within two hours from São Tomé and Príncipe is responsible for 40% of the continent's GDP, amounting to 900 billion dollars, and the countries of the Gulf of Guinea have a current population of 350 million which, by 2050, is expected to reach between 400 million and 500 million inhabitants with increasing purchasing power. 58 WILSON BRAGANÇA

São Tomé and Príncipe can be a strategic hub on the Silk Sea Road, a critical node for the Silk Sea Road in the South Atlantic and Gulf of Guinea. According to Nantulya (2019), the ports of Mozambique, Angola and São Tomé and Príncipe will be linked to China’s New Silk Road Initiative. In this sense, the construction of the deep-water port and of the airport, two essential infrastructures for which the country has long been seeking financing, can be constructed in order to respond to the interests of São Tomé and Príncipe, thereby creating jobs, improving the business climate, attracting investments, and improving operations underlying economic activities. Moreover, and perhaps most importantly, the port and airport will meet China’s own interests by serving as a logistics platform for Chinese investments, activities and interests in the sub-region in various ways. According to Nantulya (2019), in 2017 Chinese state-owned enterprises – already active in 40 ports in Africa, Asia and Europe – have announced plans to buy or obtain stakes in nine foreign ports, all located in regions where China plans to develop new shipping roads, including São Tomé and Príncipe, where a new deep-water port is planned. 59THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT Figure 1. Location of São Tomé and Príncipe in the Gulf of Guinea Region. Source: Google Maps, with author’s change.

São Tomé and Príncipe lacks infrastructures such as a deep-water port and a larger capacity airport on one hand. On the other hand, China needs a multifunctional or multimodal logistics port for its operations in the Gulf of Guinea, for which São Tomé and Príncipe is ideal given its prime location and its social, political and cultural environment. In this sense, Chinese companies can support the deep-water port construction project, help improve the infrastructure network, facilitate connections between São Tomé and Príncipe and countries in the sub-region and make the country a logistics center for the region. This is as convenient for São Tomé and Príncipe as it is for China. Therefore, the new silk road initiative fits perfectly within the development plan of São Tomé and Príncipe and vice versa. It became clear at the 4th China Africa Cooperation Forum in September 2018 that security engagement, including counter-terrorism, piracy, protection of Chinese citizens and economic infrastructures is China’s new priority and an important part of the China-Africa Cooperation Action Plan 2019-2021. In line with this plan of action, 50 new security programs were established associated with the risk of the new silk road through counter-terrorism assistance, law enforcement, early warning system and infrastructure protection in addition to traditional military assistance (Nantulya, 2019), because Chinese investments are becoming increasingly vulnerable to local conflicts and instability. Here, too, as a logistics platform São Tomé and Príncipe is viewed as an ideal stage for establishing a comprehensive security policy to fight against terrorism, protect infrastructures, protect Chinese missions and activities and protect Chinese initiatives for the new road in the South Atlantic, particularly in the Gulf of Guinea. The country is at a crucial stage in its development and faces unprecedented challenges and opportunities, and China is in the process of expanding its activity and investments in the world, particularly in the African continent, including in the countries of the Gulf of Guinea. Therefore, the two countries should strengthen pragmatic cooperation and transform São Tomé and Príncipe’s strategic location into advantages for both countries. By searching for common points, São Tomé and Príncipe can implement its agenda, namely, construction of the deep-water port and airport, two infrastructures that are essential for its interconnection with and economic integration in the sub-region at the same time as China fulfills its interests in the region using São Tomé and Príncipe as a platform. However, to make this cooperation more successful, São Tomé and Príncipe should deepen its knowledge of China’s strengths and, above all, deepen its knowledge of its own strengths and establish a link between the two countries. The country has to clearly define what it wants from China, or how China fits into its own development strategy, explicitly formulate and structure what role it will play 60 WILSON BRAGANÇA

and China’s needs. The country should avoid adopting the classic model by which some African countries see China as the only solution to their problems. São Tomé and Príncipe should seek a smart partnership, a strategic and comprehensive partnership, i.e. a long-term, stable, mutually beneficial and win-win three-dimensional, broad and multi-stakeholder cooperation, taking into account its own limitations and their individual characteristics (Wekesa, 2015). Implications arising for São Tomé and Príncipe from the New Silk Road Initiative Soon after independence in 1975, São Tomé and Príncipe and China initiated various cooperation agreements. Thus, on 25 December 1975 the two countries signed the agreement on economic and technical cooperation in which China granted São Tomé and Príncipe a loan of thirty million RMB, free of interest and for a five-year period starting on 1 January 1976 until 30 December 1980. On the same date the two countries agreed to grant each other most-favored-nation treatment regarding customs duties and other charges and taxes on import and export goods and transit. In 1975, the two countries had already signed a cooperation protocol for the Chinese medical team to work in São Tomé and Príncipe. This protocol also included the supply of medicines and medical devices. Several other agreements followed, such as the cultural agreement signed in July 1983, the agreement on economic and technical cooperation, in which China granted a credit in the amount of eight million RMB, free of interest or any another conditions, from 1 January 1984 until 30 December 1988, for the construction of the Congress Palace. Other agreements were signed such a credit grant for São Tomé to purchase commodities in 1983, an interest-free loan of 30 million RMB for a five-year period starting on 1 July 1993. Meanwhile, in 1997 São Tomé and Príncipe broke diplomatic relations with the People's Republic of China due to its government’s recognition of Taiwan. However, about 20 years later, in December 2016, in defense of national interests, considering China’s growing influence in the international arena, beyond the African continent, the Government of São Tomé and Príncipe decided to reorient its foreign policy and recognize the principle of the existence of a single China – the People’s Republic of China – represented by international law. From that moment onward China and São Tomé and Príncipe entered a new era of diplomatic relations with growing momentum and amplitude. China and São Tomé and Príncipe can now establish a mutually beneficial strategic partnership. China seeks to build a moderately prosperous society by 2021 and to fulfil the dream of a great revitalization or rejuvenation of the Chinese nation by 2049, 61THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

while São Tomé and Príncipe seeks to implement its agenda of transforming the country into a platform for providing services to the sub-region and achieving greater global economic integration. As we have seen, China is the main investor in the African continent and one of the world’s leading investors, and São Tomé and Príncipe, as a small, insular and developing state, could not be left out of this considerable wave of Chinese investments in the African continent. For this reason, even before the resumption of diplomatic relations, the national authorities were negotiating investments with Chinese entrepreneurs from China, Angola, Portugal and Gabon for the construction of the deep-water port and other structural projects such as communications, sanitation and energy, as well as investments on other infrastructures, by strengthening business cooperation. We can say that the resumption of diplomatic relations with the People’s Republic of China was part of the effort by the São Tomé government to find partners to leverage structural investments in São Tomé and Príncipe. It should be noted that since resuming diplomatic relations at the end of 2016 China has contributed with only US$30 million in direct donations to the State Budget, of which US$11 million was disbursed in 2017, 10 million in 2018 and 8 million by 2019. This figure does not include assistance to projects in the fields of agriculture, health, education and infrastructure. As such, China became, in a period of two years, the main development partner of São Tomé and Príncipe. São Tomé and Príncipe can take advantage of the opportunities offered by the New Silk Road through the China-Africa Action Plan for the next three years (2019-2021) to implement its transformation agenda. As part of this initiative, China will be able to assist São Tomé and Príncipe in strengthening its endogenous growth capacity, which includes the construction of a deep-water transshipment port, the development of a maritime and airport logistics platform, a sub-region and in several other domains. São Tomé and Príncipe has very favorable weather and soil conditions for the development of agriculture. But its agriculture is underdeveloped, and the country faces the challenge of ensuring a safe supply of food. Therefore, in light of its vast experience, China will be able to assist the country in developing this fundamental sector, to guarantee a sufficient food supply, by modernizing infrastructures, transferring agricultural technologies, strengthening production capacity, and technical training. Economic and social infrastructures are fundamental to development, and the country lacks these infrastructures. In this area, China can play a very important role. The country’s development vision is based on two fundamental pillars – a deep-water port and a larger airport. Being such a small country, in the next 30 to 40 years there will only be one deep-water port and one large airport. Therefore, these projects will 62 WILSON BRAGANÇA

have a great impact and can make China the country’s first partner and, above all, a key partner in the structural transformation of the economy of São Tomé. And that achievement is significant from a political, diplomatic, and geostrategic perspective. The various difficulties faced by traditional partners in financing the deep-water port project in São Tomé and Príncipe may give China the opportunity to reaffirm once again its role as an alternative power for the country’s development. It is worth emphasizing the importance of these two infrastructures for the country, seeing as there are only two ways to reach the country: by sea through the port, or by air through the airport. In addition to the two already mentioned port and airport structural projects, China can assist São Tomé and Príncipe in the construction of roads, bridges, social housing, administrative buildings, energy, etc. The economy and development of São Tomé and Príncipe goes unchallenged by industry or activities linked to the sea. The fact that the maritime territory is about 160 times larger than its land surface is a natural indication that the country’s partners who help to develop this part of the territory should be supporting and seeking more development. The maritime territory of São Tomé and Príncipe is superior to that of many African countries, e.g. Cameroon and Gabon. In this aspect, China can also play a key role by supporting the country in developing a maritime industry, promoting the blue economy, in the development of industrial fishing, with the construction of a land-based processing industry, development of coastal aquaculture, shipbuilding and ship repair works, maritime safety, exploration and use of marine resources, development of special economic zone planning, zones of seafaring ports, the training of professionals in the field of maritime navigation and other sea-related activities. Given the abundant wealth in the sea, São Tomé and Príncipe should define the sea and the development of all activities linked to the sea as a national goal. Sea-related issues are crucial and should be a core part of São Tome’s foreign policy (Nascimento, 2011). São Tomé and Príncipe is essentially a country of tourism, one of the best tourist destinations in the world, and China is currently one of the main sources of foreign tourists. Therefore, in this area the two countries also have here an area for the development of cooperation. In this context, the Chinese ambassador to São Tomé and Príncipe, Wang Wei, announced in October 2018 that his government added São Tomé and Príncipe to the list of countries that the Chinese should visit. But to develop tourism São Tomé and Príncipe needs investments in infrastructures, namely the construction of an airport providing direct flights from the main sources of tourists, such as Asia, America and even Europe. Therefore, São Tomé and Príncipe can take advantage of the opportunity offered by the New Silk Road to develop other fields of activity, such as health and 63THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

education. But this does not mean that China will solve all the country’s problems, that is to say, if well exploited, as part of an intelligent partnership, São Tomé and Príncipe can take advantage of existing opportunities, mechanisms and funds to create conditions that can leverage the country’s economy and development. Particularly in a scenario where official development aid is declining, where European countries are still recovering from the economic and financial crisis of 2008, and in which there is great uncertainty as to what to expect from the United States of America. Conclusion São Tomé and Príncipe is located in a strategic geographical area in the center of one of the most important regions in the African continent, not only in terms of natural resources, but also in terms of its demographic weight and growing purchasing power. The country’s characteristics and interests and China’s investments in Africa, particularly in the Gulf of Guinea, make São Tomé and Príncipe a strategic point in the new Silk Road, a hub for the development of Chinese enterprises and investments in the Gulf of Guinea. Infrastructures such as an airport and a deep-water multipurpose port, i.e. a hub port, can serve as a central base for business logistics and Chinese investments in the sub-region. Therefore, the country’s development agenda is perfectly suited to the initiative of the new Silk Road and vice versa, and China’s cooperation with São Tomé and Príncipe is mutually beneficial. However, the country needs to deepen its knowledge about itself and the role that it can play in the South Atlantic and Gulf of Guinea, to develop political thinking, and a consistent strategy geared toward exploiting its geostrategic position in the Gulf of Guinea. It needs to develop a true political strategy aimed at taking advantage of all factors derived from its geostrategic position, of giving greater value to the economic strategies based on the exploitation of various assets derived from its location and, consequently, it needs to play a more active role in the South Atlantic and Gulf of Guinea. REFERENCES André-Louis Sanguin, São Tomé e Príncipe, as ilhas do meio do mundo: avaliação crítica sobre sua geografia política, Confins [Online], 20 | 2014, posto online no dia 31 março 2014, consultado o 09 novembro 2018. URL: http://journals.openedition.org/confins/9018; DOI: 10.4000/confins.9018. Bates Gill, Chin-hao Huang & J. Stephen Morrison, Assessing China’s Growing Influence in Africa, China Security, Vol. 3 No. 3 Summer 2007, pp. 3-21, 2007 World Security Institute. 64 WILSON BRAGANÇA

Brautigam D. (2009), The dragon’s gift: The real story of China in Africa, Oxford-New York, Oxford University Press. Corkin, Lucy Jane (2014), China’s rising Soft Power: the role of rhetoric in constructing China-Africa relations, Rev. Bras. Polít. Int. 57 (special edition): 49-72 [2014]. Eder, Thomas S. (2018), Mapping the Belt and Road initiative: this is where we stand, Mercator Institute for China Studies. Garcia, Francisco Proença, Cabo Verde e o Espaço do Atlântico, Austral: Revista Brasileira de Estratégia e Relações Internacionais, e-ISSN 2238-6912 | ISSN 2238-6262| v.6, n.º 11, Jan/Jun 2017 | pp. 99-117. Hanauer, Larry and Lyle J. Morris, China in Africa: Implications of a Deepening Relationship. Santa Monica, CA: RAND Corporation, 2014. https://www.rand.org/pubs/research_briefs/RB9760.html. James Kynge, Chris Campbell, Amy Kazmin and Farhan Bokhari, Beijing’s Global Power Play: How China Rules the Waves, Financial Times, January 12, 2017. Johnston, Lauren A. (2016), Como a iniciativa chinesa “nova rota da seda” afeta o presente e o futuro da África?, PONTES, VOLUME 12 – NUMBER 10, ICTSD - International Centre for Trade and Sustainable Development, Dezembro de 2016. Krukowska, Monica (2018), China’s economic expansion in Africa – selected aspects, International Business and Global Economy 2018, n.º 37, pp. 84-97, University of Gdansk. Lammers, Ellen (2007), How will the Beijing consensus benefit Africa? The Broker, Março 2007. Mendes, Carmen Amado (2010), A China e a cooperação Sul-Sul, Relações Internacionais n.º 26, 2010 [pp. 39-046]. Mohan, Giles (2013). Beyond the enclave: towards a critical political economy of China and Africa. Development and Change, 44(6) pp. 1255-1272. Monte, Joao Bosco (2010), China e África: a política de Pequim para o continente africano, Meridiano 47 n.º 116, março 2010 [p. 12 a 13]. Nantulya, Paul (2019b), Implications for Africa from China’s One Belt One Road Strategy, Africa Center for Strategic Studies, SPOTLIGHT, Março, 2019. Nantulya, Paul (2019a), Chinese hard power supports its growing strategic interests in Africa, Africa Center for Strategic Studies, SPOTLIGHT, Janeiro, 2019. Nantulya, Paul (2018), Grand Strategy and China’s Soft Power Push in Africa, Africa Center for Strategic Studies, SPOTLIGHT, Agosto de 2018. Nantulya, Paul (2017), Pursuing the China Dream through Africa. Five elements of China’s Africa strategy, Africa Center for Strategic Studies, SPOTLIGHT, Abril, 2017. Nascimento, Augusto (2011), São Tomé e Príncipe e os desafios da segurança marítima no Golfo da Guiné, Nação e Defesa n.º 128 – 5ª Série, Lisboa: Instituto da Defesa Nacional, pp. 93-121. Neves, Maria (2017), São Tomé e Príncipe como um Gateway Regional (Estratégia para um Desenvolvimento Sustentável), ISCSP, Lisboa. Ouriques, Helton Ricardo e Lui, Aline (2012), China e África: Uma parceria estratégica, Boletim Meridiano 47 vol. 13, n.º 134 nov-dez, 2012 [p. 19 a 27]. Pavia, J. F. (2013), Política Externa Angolana em tempo de guerra e paz: colonialismo e pós-colonialismo. Disponível em: https://estudogeral.sib.uc.pt/bitstream/10316/31604/1/Pol%C3%ADtica%20externa%20angolana.pdf Sousa, Maria Eduarda e Oliveira, Henrique Altemani (2013), As dinâmicas da cooperação China-África: perspectivas e controvérsias, Boletim Meridiano 47 vol. 14, n.º 137, mai-jun 2013 [p. 27 a 34]. Wang, Zheng (2013), The Chinese Dream From Mao to Xi, THE DIPLOMAT, September 2013. Wekesa, Bob (2015), China’s Africa policy 2015: New policy for new circumstances, posted on December 24, 2015.65THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

CHAPTER IV AFRICA, CAPE VERDE AND THE NEW SILK ROAD | Victor Borges Preliminary remarks Separating personal preferences from rigorous analysis (neutral) is one of the hardest epistemological challenges faced by think-tankers, scholars and researchers in social sciences, particularly when dealing with economics, policy, politics and even with development. Preferences originate from cultural systems of beliefs and trust, historical awareness, prejudice and stereotypes, roots (race, nationality, class, gender…), ideology, political identity and economic interests that are deeply imbedded in people’s minds and not immediately perceptible. Undeniably, they distort our listening attitude, shape our understanding and interfere in our discussions, analysis and conclusions. I will try to be vigilant in keeping my personal preferences and convictions from influencing my endeavour to describe and analyse the nature, scope and reach of the New Silk Road, as I understand it, and put forward some suggestions on how to improve the approach to this project. Arguably, it is an almost impossible task to completely eliminate my own views, although it is not my intent to state, in this paper, my personal views and position on the New Silk Road or cooperation with China. Instead, I will point out and analyse sentiments and interpretations of history and politics I observed in African countries and in the developed world with an impact on the way people see the BRI and cooperation between African countries and China. In this paper, and whilst maintaining the relation between Africa and China in the backdrop, I will also talk about traditional partners (EU and member states, US, Japan…). The reason seems obvious to me – they also have a considerable presence in Africa! Despite a presentation revealing contrasts between these 67THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

partners, it is not my intent to oppose them. Secondly, the expression “traditional partners”, as used in this paper, is a rough simplification of the diversity of interests, positions and practices. For instance, Europe’s practices in development assistance or private investment are quite different from Japan’s. Even within one single country there is a great variety of analyses and perspectives on BRI, development assistance, trade and investment and even internal matters. In this regard, the expression “traditional partners”, used for mere language convenience, may be considered an abusive generalization. The same applies for African countries! Lastly, I should highlight that this is not a research paper. A la rigueur, it is the reflection of an observer from the Global South; someone who considers development as Africa’s top priority; an advocate of enhanced and fecund cooperation with traditional partners and with China as an opportunity to accelerate the development process. Belt and Road Initiative (BRI) The New Silk Road is a Chinese initiative meant to build or renovate infra-structures, increase connectivity, boost international trade and development, both in China and in foreign countries. The designation is somehow misleading. It may imply that only countries bordering the ancient Silk Road will be involved. As a matter of fact, it is much more inclusive. In this regard, the Belt and Road Initiative (BRI) is a broader and more meaningful designation. The BRI is an impressive economic initiative with the potential to further development, connectivity and trade between China and participating countries and among the latter. The list of participants at the “Leaders’ Roundtable of the 2nd Belt and Road Forum for International Cooperation” (27 April 2019, Beijing) demonstrates the global dimension covered by this initiative. The ambition and scope of the BRI have not been viewed with indifference. It has engendered a great range of reactions around the world. The BRI has been enthusiastically welcomed in some countries, particularly those in need of funding and in search of opportunities for economic partnership, infrastructure and connectivity. These countries perceive the BRI as a great opportunity for economic growth, trade and development. On the other hand, there were mitigated or even blatant negative reactions, particularly from scholars, think-tankers, observers, corporations and government leaders, mainly in some developed countries. Some of them, while recognizing the BRI’s relevance, voiced concerns about economic sustainability, expressed worries about transparency, quality of infrastructures, debt risks for the countries involved, raised doubts about the effectiveness of some projects and requested more information and fair competition in the BRI’s projects and bids. 68 VICTOR BORGES

Furthermore, there are negative concerns that mutated into open and growing hostility. Underlying these reactions are veiled and large economic interests, short-term political concerns and, in particular, geostrategic apprehension and anxiety. The strongest negative reaction seems to be based on the assumption that the BRI is China’s geostrategic move to reshape international order and challenge US global leadership. As a matter of fact, the BRI has only amplified a reaction which surfaced a few years ago about China becoming the world’s main trade player and a major foreign direct investor. Its growing worldwide presence raises political and geostrategic concerns in some countries of the so-called Western Hemisphere. The BRI has therefore been under tight scrutiny and criticism. Some scholars, think tankers and government officials have made strong negative political statements related to the BRI. The exaggerated language has blemished and obfuscated the credibility of reasonable concerns: a) For instance, when the BRI is criticised as a colonial approach, critics underplay and mask the nature of colonialism, as we knew it. In a colonial situation, there is no national government let alone the possibility to negotiate, renegotiate or cancel agreements with colonial powers. Decisions are just imposed on colonised countries. They did not have a say.1 This is the very essence of colonialism and of some neo-colonial situations.2 b) Some critics referred to the BRI as “predatory economics”. Without discarding the alert behind this strong warning – African countries should take it as a reminder for countries involved to continually reassess partnerships and to place their interest first – most of the time it tends to be misjudged because of history. Some African leaders argue that regrettably, long before Sino-African partnership and the BRI, Africa has already experienced, and some parts of it still experience, the hardship and catastrophic effects of “predatory economics” and political domination by those who now denounce the BRI or China-Africa cooperation. For them it is a question of historical awareness and consistency with current practices of some western international corporations. I will come back to this very sensitive question of representing and using history that can play against Africa’s modern challenges. c) Much could be said about the international order. Ironically, this international order is being undyingly disrupted by a series of deeds performed by many players in developed countries, including those who circumstantially claim that it must be preserved. For instance, European government officials, despite enormous political and urbane efforts to hide their exasperation, are visibly distressed by the US Administration’s 69THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

current means of dealing with NATO and world trade agreements, which are the backbone of Transatlantic relations and cooperation.3 Allied Asian countries felt helpless with US withdrawal from the Trans-Pacific Partnership (TPP). It is not difficult to spot the awkwardness and piercing silence by international organizations, even though they are deemed to be the guarantee of international order. From a perspective of developing countries, the present international order must be protected in regard to what it conveys in terms of peace, security, stability, human rights, transparency, democratic governance and enforcement of international law and fair practices in trade and international affairs. On the other hand, today’s international order must change in regard to what it conveys in terms of the impoverishment of developing countries, injustice, lack of development, unbalanced trade regulation, unfair trade practices (subsidies), corruption and environmental degradation that put the lives of millions of human beings in danger. d) Talk about the end of American global leadership is, at the present time, abundant and inescapable. What many perceive as threats to US leadership arise, mainly, from the growing claim by rising powers (BRICS...) and regional entities (African Union…) to have a say and a place in the international arena. This perception may also derive from these iterative media talk-show where Westerner renowned scholars and pundits keep recycling old beliefs, juggling catchy and misleading expressions (The End of History, The Clash of Civilizations...) reiterating outdated narrative of the world and nurturing collective anxieties instead of helping the audience to understand and adapt to the changing world we all live in. These scholars and pundits smartly lecture the world on the inevitability of change as they display a dismaying inability to recognise and learn from the blatant change occurred in the “international pitch”, in the last decades. Finally, Westerner leaders should consider the cultural and political impact of the very idea of democracy they spread around the Global South. In spite of the simplistic approach and blunders in promoting democracy, they made a huge impact on supporting freedom and human rights. In most cases, they deserve to be commended for having done so. At the same time – this is the most astonishing contradiction of democracy sponsor – they were and still are unable to understand, anticipate and manage the spontaneous transfer of the underpinning values and ideals of democracy to the international arena. Democratic values are far-reaching driver of transformation as they have the power to influence individuals, societies, governments and the way 70 VICTOR BORGES

people see international relations. Indisputably it is not artful to neglect the size and percentage of the world population in these emerging countries, their growing economic influence and the new individual and collective idiosyncratic disposition generated by the values and ideals of democracy. Having said this and despite China’s rising power and the ambition of other regional powers, I think we are still far from a consistent challenge to American world leadership. The US military might, economic and trade power, diplomatic influence, knowledge and innovation capabilities, media and entertainment industry, currency and financial clout in international business and its global network of cultural, political, diplomatic and strategic alliances make its leadership resistant to supposed threats. The US is still and will continue to be “the nerve centre of the global economy” (The Economist). Perhaps the content and contour of US leadership need to be updated and redesigned. Who knows whether current anxieties correspond to the disarray that leads to a new leadership pattern? For many observers, including in the US, the main threat to its global leadership comes from within – unpredictability, disregard for other countries’ concerns, excessive unilateral actions and “weaponisation of economic tools” even against friends, as The Economist put it. This may undermine its legitimacy in the eyes of allied countries. In short, by systematically opposing the BRI in disregard of the historical background and socio-political environment, even relevant arguments risk being unwelcomed, misinterpreted or simply ignored by the countries involved.4 BRI and the countries involved BRI opponents tend to ignore the need of countries involved for the infrastructure and connectivity necessary for their development, needs which are difficult to solve under the current standards and practices of international economic cooperation. Oddly, interests and needs of developing countries seem not to be part of the equation of the BRI’s opponents. And that is precisely its strength. So much so that countries that were not part of the BRI in the beginning now request to be included. Despite the BRI’s stated and reaffirmed sole trade and development goals, if it succeeds, it will have geostrategic implications, regardless of the initial intent and goals. Development is not a minor part of international order. For instance, if all developing countries achieve the SDGs (2030 agenda) the international order will consequently rebalance. If not, it will impact international order in another manner. 71THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

If African countries do not achieve SDGs the effect will be calamitous. The mix of demographic dynamics, bad governance, deprivation, poverty, and disease will bring about a chain of social upheaval, political instability, insecurity, un-governability and uncontrolled movement of people that will cross all seas and borders shaking dreadfully the international order.5 In this line of thought, China should acknowledge the BRI’s geostrategic implications and accept discussing it. BRI and Africa The BRI focuses on Central Asia and Europe. At the very beginning, only a few eastern African countries showed interest in it. Only one African head of state attended the 1st Belt and Road Summit, in Beijing, in 2017. Today most African countries, some at their request, have signed a memorandum of understanding or agreements associating themselves with the Belt and Road Initiative. Even so, Africa is still marginal in the BRI approach. Until now, its interventions are concentrated in eastern Africa. One could say that the BRI is hesitant in the African west coast, despite the BRI’s growing global scope, its specific maritime component and the importance of the Atlantic Basin in international trade. The barely concealed concerns of some European countries and of America behind their strong opposition to the BRI entail a risk of a political trap for African leaders, particularly to those who feel frustrated by their economic partnership with traditional partners. Seemingly, some of them feel politically (and emotionally) vindicated by the concerns and worries inspired by the partnership with China. In a strictly political and business perspective, this is not a smart attitude, for at least two reasons: i. African leaders take on a less rational approach than what state business requires. The resulting excitement of having a handy partner that provokes envy or annoyance in comparison to traditional partners may prevent a serene analysis and negotiating posture indispensable to define and forge a sound and fruitful partnership with China. By this almost un-business reaction, they may, unwillingly, overlook project relevance, effectiveness and sustainability and the country’s interests. This attitude is equally not good for China itself as it might not feel compelled to really understand a country’s needs and hence might fail to fine tune its approach to ensure the soundness of projects. ii. All this inconsiderate gaming may exacerbate the feeling of a geostrategic move by China and build up rivalry, tension and, once again, trigger a contest for supremacy in Africa. It is not in the interest of African countries to push for or bolster geostrategic competition in Africa.6 72 VICTOR BORGES

Economic partnership is a ponderous construction that requires time, hard work, skills and, above all, rational attitudes. There is no perfect format or solution at the first attempt. Thus, to move towards a balanced and equitable partnership it is crucial to make room for and promote analytical and critical thinking. That is why it is helpful to be attentive to criticism of any kind, even to make sure it is baseless. Otherwise it may play against critical and evaluative thinking that is the starting point for improvement of any human endeavour. For that reason, there is a need for endogenous evaluation. Decades after its start, African countries should evaluate their partnership with China to capitalise on best practices and adjust, redefine or abandon failing ones.7 Contrary to what is hinted, the BRI also requires good governance in Africa. Once again, African leadership is challenged at national and regional levels. Partnership with China will not achieve desired outcomes unless it is based on committed leadership, strong capacity and sound governance practices. The challenge of upgrading cooperation with China (or any other partner) is a reminder of the urgency for a comprehensive capacity development strategy to cover all fields of development and governance. Otherwise sound economic partnerships and ownership of natural resources will continue to be self-deceit and fashionable rhetoric. BRI and Cape Verde Most of China’s cooperation with Cape Verde has been oriented to support Cape Verde’s institutional development (construction of administrative, cultural and sports facilities). There are also interventions in the domain of water conservation (the first dam in Cape Verde was built by China), health, social housing, education (construction of secondary schools, university campus and fellowship programmes) and ICTs. It is not exaggerated to say that cooperation with China is a noticeable feature of Cape Verde’s development dynamics. Two ongoing interventions could fall within the scope of the BRI. Although they were negotiated and launched before 2013, the BRI has the potential to upgrade them and reinforce their potential for Cape Verde’s economic growth and integration in regional and international markets. I am referring to the Cape Verde Data Centre, in Praia, and the Special Economic Zone of Maritime Economy, in São Vicente. In the aftermath of the China-Africa Summit held in Beijing in 2006, which announced the creation of 6 special economic zones in Africa, the Cape Verdean government immediately informed high-level Chinese government officials about its interest in being one of them. The arguments were clear: Cape Verde’s 73THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

stability and governance records; its geographical position between four continents; the importance of the Atlantic basin in international trade; and its proximity and accessibility to European, American and African markets. These factors are undeniable advantages for transforming the country into a platform of services for trade, maritime industry and seafaring related activities. Up to now, China’s government has given Cape Verde technical support to develop the idea but, apparently, the Special Economic Zone of Maritime Economy in São Vicente is not really included in and framed by the Belt and Road Initiative. Cape Verde’s incumbent Prime Minister signed a MoU on 5 September 2018, in Beijing, demonstrating the government’s openness to and interest in being part of the BRI. During his stay in China, he visited the Tianjin port and immediately pointed out the BRI’s relevance to the Cape Verdean project for creating a Special Economic Zone of Maritime Economy. Since the country’s independence in 1975, successive Cape Verdean governments have strived to make it happen. The idea did not become an economic reality due to a lack of funding, know-how and an appropriate partnership with trade networks. The BRI could be an enabling partner to boost this much-needed project for Cape Verde. The second project that could fall within the scope of the BRI is related to information technologies and connectivity. The Data Centre project started in 2009. Long before the technological, commercial and political wrangling between China and the US involving the Chinese giant Huawei emerged, Cape Verdean officials and engineers favoured diversified sources of equipment, to also be obtained from other countries considered, at the time, technologically more advanced. Cape Verdean officials guarantee that there is no concern about data security and safety. The Data Centre has continued its expansion and has been converted into a kind of technological park, funded by the African Development Bank, AfDB. Construction of this centre is still underway. Explicit integration in the BRI may attract more investments, more advanced technological solutions and, above all, more commercial opportunities. As American political pressure is maintained on allied and like-minded countries to boycott Huawei equipment and services, there are reasons for concern from a Cape Verdean perspective. The appeasement of Sino-American relations will be a plus for the economic viability and expansion of the Data Centre. Challenges of cooperation between Cape Verde, Africa and China As it is impossible to achieve perfect solutions at the first attempt, any partnership requires permanent evaluation and the necessary enhancements. 74 VICTOR BORGES

Without anticipating the conclusion of any evaluation exercise, it is only sensible to stand for improving partnership with China in order to achieve more “relevance, effectiveness and efficiency, impact, sustainability and development ownership”. And African countries should be using best practices of any other partnership, or, at least, considering its more relevant and impactful features, to negotiate and frame other development partnerships. Following up on the openness shown and often reiterated by the Chinese government, including in the Joint Communiqué of the Leaders’ Roundtable of the 2nd Belt and Road Forum for International Cooperation (Beijing, 27 April 2019), here are some suggestions and clues for Cape Verde, African Countries, China and third countries on how to approach this important initiative. For Cape Verde 1. Without excluding other partners, the Cape Verdean government should deploy diplomatic efforts to convince China leadership to go further and to fully integrate the project of the Special Economic Zone of Maritime Economy in the BRI. 2. It should bring together national and foreign experts to provide a multi-disciplinary analysis of the Data Centre equipment and services and continually assess quality, security and safety concerns. 3. It should also discuss the issue with the funders (China and AfDB) and partner countries like the US and the EU (Commission and some member-states individually) to prevent the ongoing dispute around Huawei from interfering with the Data Centre’s commercial activities. 4. It should promote and take the lead to implement a marketing and diplomatic strategy to appease worries and attract clients for the Data Centre. 5. More than any African country, Cape Verde should be prepared to have and manage multiple partnerships and keep its own agenda. Because of the size of its territory and population, its structural vulnerabilities, including the lack of conventional natural resources, fast climate changes (severe drought...) and its geostrategic location, Cape Verde should work to build a strong national capacity and visionary leadership to navigate successfully and safely through the current and upcoming international wrangling. 6. And Cape Verde is advised to monitor the whole China-Africa cooperation and the BRI expansion process in the Atlantic Basin to learn from it, anticipate risks and capitalise on any opportunity it might contain. Therefore, all applicable suggestions put forward for African countries are also relevant for Cape Verde. 75THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

For African countries 1. The implicit insignificance of African States in the BRI’s equation for some observers and third-country officials is, simultaneously, expressive and upsetting. As irrepressible as it might be, the eagerness to criticise the BRI cannot explain how some observers completely omit the needs, goals, decisions and, above all, the responsibility of African States. It would be instructive to discuss the cause of this omission. Nevertheless, any recipient country is not or, at least, should not be a minor player in the development cooperation process. This noteworthy disregard is a strong reminder of the critical need for consistent leadership, commitment to development and reliable governance practices. Therefore, African countries should face the utmost task of smartly making their case while accurately assessing and (re)shaping partnerships with any development partner. 2. The odd attitude of some African leaders in assessing the partnership with China is arguably a weakness. I have even heard African ministers and top government officials reducing international concerns about China-Africa cooperation to mere “jealousy and covert irritation” provoked by the presence of an unexpected competitor in a kind of African “chasse gardée” (preserve). The counterproductive mix of a revengeful mood and disguised political blackmail in their attitude towards traditional partners is not suitable and helpful. It can even undermine the quality of the partnership with China. A sound partnership requires a systematically rigorous analysis, a consistent approach and, above all, a rational and purposeful mood. This approach is the only way to ensure that short and long term national (or regional) interests are taken into due account and are well protected. Therefore, those African leaders are challenged to go beyond simplistic “psycho-politics”. 3. In the same line, those African leaders and observers subtly hint that partnership with China will make traditional partners irrelevant. Clearly China represents an opportunity to increase direct foreign investment, to catch up with infrastructure deficit and to boost the development process. Yet that hint, even if not clearly articulated most of the time, is a trap because of the logic it conveys. The implied message of “either-or” should be wisely replaced by “and and”. African leaders should adopt a strategic stand to purposefully manage and improve all partnerships for the sake of their own development agenda.8 4. African countries should be aware of the impact of their attitudes and words in this crescendo of rivalry between superpowers. They should remember that the so-called “Cold War” was scorching on people and scourging for peace, security, stability, development and governance in the Global South and particularly in Africa. African leaders (in government, opposition parties, private sector and civil society organizations) should learn from the past and steer clear of the risk of making 76 VICTOR BORGES

Africa an easy playing field for superpower competition. And above all learn and improve their capacity and capabilities to creatively manage multiple partnerships centred on their own needs, interests and vision. This goal will be a challenging endeavour for national and regional governance in the upcoming years. 5. African countries (government, private sector, civil society organizations, academia...) are challenged to deepen their knowledge and acquaintance with the mechanics of success or failure in past and current partnerships to thus draw lessons that can be helpful to define and shape new ones. This is indicative of the importance of research and of an endogenous evaluation of development. However, doing research and promoting rigorous analysis and open discussion are tough tasks in most African countries, characterised by a near absence of research centres and think-tanks, confronted with a lack of funding, weak government institutions and sometimes a hindering political environment. Yet research outcomes (data, evidence, rigorous analysis...) are indispensable tools for policy formulation, partnership negotiation, and the implementation and evaluation of projects. Therefore, African governments should create an enabling and supportive environment and form a partnership with academia and think tanks for endogenous research and evaluation (institutional and independent alike). 6. One of the criticisms of the BRI is related to a debt trap. In my view, this warning is not insignificant. Contrary to some observers’ propensity to target and criticise China on this matter, this should be, first and foremost, an African concern. African countries have a record of getting into situations of unsustainable debt with a devastating impact on the delivery of basic services and development. Most African countries do not master the indebtment process and debt stock and management. They should learn from those past experiences to avoid history from repeating itself. Heads of Government and Ministers of Finance, Planning and Economy should show more accuracy, leadership and responsibility on this matter, including facing the institutional challenge of capacity development for loan assessment, sound debt management and timely reporting, beyond specific concerns about the BRI’s debt risks. 7. It is also said that African countries, including Cape Verde, play an almost passive role in the design and implementation of projects, leaving all the responsibilities and tasks to their Chinese counterparts. Is it a Chinese way of doing things? But perhaps it is also due to a lack or deficit of capacity, institutional disregard, technical neglect or even naivety. “Turnkey solutions” somehow illustrate this situation. African countries need a new pattern for project design with strong involvement of national experts at all stages. During the implementation stage, they should be able to increase participation by national enterprises, workers and professionals to a pre-defined level. African countries should also set up strong 77THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

monitoring mechanisms. All those measures aim to ensure ownership and capacity building through learning, knowledge and technology transfer. Surely these measures will contribute to craft human and organisational capabilities for the huge task of infrastructure management and maintenance. 8. Cooperation with China, like any other partnership, is inseparable from the recipient country’s sound governance, development of the private sector and empowerment of civil society. To a certain extent patterns and practices result from the quality, number and commitment of professionals, civil servants, leaders, governing elite, scientists and researchers, entrepreneurs and workers. In conclusion, the overall and specific challenges of upgrading cooperation and owning the development process desperately point out a comprehensive and lasting capacity development strategy and appropriate actions to develop skills in all fields, from science, engineering and technology to management and leadership. This is crucial, since all suggestions made above depend on national capacity. It is, therefore, a political and institutional urgency that cannot be put off or underestimated. For China 1. Despite the BRI’s objectives in promoting trade and development, China should accept that it will have a geostrategic impact. A successful BRI will raise China’s status and profile in the international arena. The real question is not the resulting geostrategic prominence but, rather, the type of global role China wants to play. More than ever it must accept and discuss BRI strategic implications, reaffirm its peaceful intent and maintain a steady course. 2. Being, above all, a responsibility of the countries involved – let’s not infantilize them – China should contribute to the debt management of partner countries, improve financial information and reporting on projects, including special arrangements, details and related financial obligations. Transparency and accountability are paramount. 3. China should also mainstream the strategic goal of knowledge and technology transfer. This should be translated into unambiguous and effective integration of capacity development in the cooperation framework and resulting projects. In practical terms, it means providing training programmes for national experts and professionals and involving them actively in project design, implementation, management and maintenance. It means also the involvement of national enterprises and workers. Sound capacity development for infrastructure planning, management and maintenance is critical for sustainability, prevention of misuse, early decrepitude and decline. 78 VICTOR BORGES

4. One of the criticisms of the BRI is the lack of transparency in the bidding process. It seems that most, if not all, projects are implemented by Chinese enterprises that tend to use Chinese equipment, materials and workers. We are not far from the format of “tied-aid”, which was/is practised by traditional partners in the past. African countries and international organisations, including OECD, were against these practices that now are less expressive. Therefore, there is room for opening up the BRI’s bidding process to allow for joint-ventures and competition that certainly will have a positive impact on costs and quality. 5. Exploitation of natural resources is one of the main fields of investment in Africa. Without underplaying the key role of African countries in framing, regulating and following up the proceedings, China should avoid the old paradigm and practices (“leonine contracts” as someone put it!) that are harmful to national interests. Furthermore, if it wants cooperation to last in a welcoming environment, it should fully integrate the needs of neighbouring human settlements (jobs creation for locals, protection of farmland...), ecological concerns and environmental precautions in any extractive activity. 6. Lastly, China should accurately analyse and reflect on previous African partnership with westerner countries and draw lessons from that experience to define and fine-tune its political, technical, financial, social and people-to-people approach. History tends to repeat itself. As China rises it must be aware that power always brings about unconscious political features and practices and subtle human attitudes and behaviours that have the knack of poisoning grand ideas, upsetting economic partnerships and blotching images. An image can change suddenly and even instantaneously! For traditional partners This paper is about China and Africa. However, since traditional partners are also important actors in many fields such as investment, trade, development assistance, security cooperation, human rights and governance inputs, historical and cultural relations, it is reasonable to bring them into the equation. 1. First and foremost, traditional partners must recognise and act consistently within the principle that choosing and diversifying partnerships is a sovereign right of any country. They do the same! Despite some geostrategic concerns and recent trade disputes with the US, China is an important trade and investment partner for all countries of the Global North. There is a need for coherence. 2. Assuming that cooperation with China and, particularly, assuming that the BRI has flaws and encompasses risks, traditional partners should find a smart and constructive way of discussing the issue with African countries as they do in other 79THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

matters. Despite all the talk about Chinese presence, investment and trade in Africa, traditional partners have still a set of advantages when discussing any political and strategic matter with African countries. In this regard it is important to stress their long experience and knowledge of Africa: policy, politics, security and development cooperation frameworks; diplomatic networks and connections with national authorities, the private sector and civil society organizations; ongoing investment; socio-cultural and language commonalities. They only need to use these leverages in an innovative way beyond routine proceedings. 3. If ever the BRI’s risks are so large and so obvious, one can wonder why they are being overlooked or underestimated. One reason, among various, is certainly a lack or deficit of capacity. The strategic response should be to join efforts in supporting sound capacity development.9 Strangely, traditional partners are sending mixed, if not, opposite messages. While China is increasing its fellowship programme and openness to welcome African students in its universities, traditional partners are closing the doors of their universities to African students and professionals through intricate and burdensome visa procedures, disproportionate university fees (see the recent measures in France) and phasing out fellowship programmes. The impact of these policies and measures will be felt in 10 or 20 years. It is not difficult to anticipate the subsequent geostrategic concerns. It’s fashionable to discourse about strategy but concrete actions are still marred by mere bureaucratic and short-term goals. 4. Finally, to make their analyses and warnings more credible, governments from the Global North should work with and encourage their (inter)national corporations and expatriate personnel to adjust their paradigm of relations and business with African counterparts to take on a more responsible approach to investment, fiscal and financial liability, labour practices, natural resources exploitation and ecological and environmental protection. Credibility begins with setting the example! NOTES 1 Prime Minister Mahathir Mohammad (Malaysia) who spoke out vehemently against the BRI as new colonialism was able to cancel the agreement signed by Malaysia’s former Prime Minister without putting his life at risk or having sanctions imposed on his country. This is unimaginable in a colonial and even in some post-colonial settings. 2 Africa has a history of social strife, instability and even coups d’état sponsored by foreign countries and or international corporations when they consider their economic interest is being threatened by the local governments. 3 One can wonder if they would be so tolerant and civilized with disruptive actors and actions coming from other regions of the world. 4 Warnings coming from nations, officials, corporations and even individuals with a past and a present of unbalanced economic partnership and obnoxious natural resources exploitation in Africa, to say the least, may be perceived suspiciously. Despite the latest positive change in relation pattern between North and South countries, some actors in the North should be aware of the historical and political background that automatically frames their actions and statements. They should remember that some of these developing countries have a long-lasting record of colonialism (some of neo-colonialism!). Westerner (inter)national corporations have a 80 VICTOR BORGES

record of despoiling natural resources, disruptive ecological practices, interference in internal affairs, including sponsoring of coups d’état and plotting for the assassination of African leaders. Without considering current leaders and citizens of former colonial powers guilty of their predecessors’ misdeeds (State responsibility is another matter!), they should be aware of History. And, above all, that hurt societies and humiliated victims’ memory, last longer and is more deep-seated than that of oppressors. Victims tell and repeat their history to exhaustion to their sons and daughters and friends. They may even exaggerate it to emphasize and abhor domination. Oppressors rarely tell their misdeeds to their sons and daughters. They tend to embellish it to fit the national heroic narrative to justify subjugation. This generates a kind of “memory and narrative mismatch”. Therefore, current leaders and even scholars from developed countries are challenged to show consistently new attitudes and practices to give credit to their warnings. 5 That is why African countries should understand the strategic need to achieve development, if they want peace, stability and security for their country and have an audible say in the international arena. 6 The hypothetical prospect of rivalry and superpower competition for influence is a strong reminder of the need to assess past experiences and draw lessons from the so-called “Cold War”. Managing superpower competition without losing one’s agenda requires effective and committed governments, competent officials, skilful diplomats, and empowered and engaging civil society organizations. In managing geostrategic competitors, African leaders should steer clear of, let’s say, philosophical and ideological ambush of the binary vision, kind of Manichaeism that reduces the complexity of the world into two entities: The Good and the Evil. Once you identify or are made believed who is the Evil, you only have a unique and definitive choice. This is opposite to the complexity, diversity and changeability of the world, particularly, the interest of Nations and States. Africa has not to choose between West and East. Africa needs to go beyond superpower antagonism, to align its stand with its own agenda and cooperate with both partners, traditional and new ones alike to achieve development, its agenda top priority. And other countries should understand and help Africa to focus on development. Global North’s security and safety and democratic rule are linked to Africa’s development. 7 African countries dramatically need to promote a culture and practices of endogenous evaluation of all partnership. The feeling of doing the right thing is no guarantee of relevance, effectiveness and sustainability. 8 SDGs challenge African countries to diversify, expand, intensify, and upgrade partnership in an integrated, responsible and mature way. The 2030 deadline may appear far away but it requires from the very beginning strong and consistent actions. Probably African Nations are already late in creating conditions for its achievement. 9 Capacity development should not be just a minor component of projects with erratic training activities and incongruous institutional support. Most of the time training has the limited goal of ensuring local professionals to know donors’ rules and procedures. This is just project implementation support and not capacity development. Developing countries need a strategic approach for unleashing individual analytical thinking and enhancing skills and collective capability to manage and assess development practices, to adjust and improve organizations’ performance and to create a new socio-cultural and institutional environment for development and governance. Traditional partners are challenged to be more coherent with the Paris Declaration on Aid Effectiveness and more consistent with OECD guidelines and recommendations on delivering development assistance. Development ownership will not happen, just by quoting OECD’s guidelines and declarations.81THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

CHAPTER V THE GEOPOLITICS OF TIMOR-LESTE IN THE CONTEXT OF THE BELT AND ROAD INITIATIVE (BRI) VIS-À-VIS ASEAN AND CPLP | Francisco José B. S. Leandro, José Eduardo Garcia Leandro and Carlos Martins Branco The authors wish to convey special gratitude to Danilo Lemos Henriques for his suggestions and contributions. Danilo Lemos Henriques is currently the representative of Timor-Leste at the Forum for Commercial and Economic Cooperation between China and Portuguese-Speaking Countries (Macau), and PhD candidate as well as a research fellow at City University of Macau. Introduction ‘We are conscious of our geography, which compels us to coexist with our neighbors in that part of the world. We will seek membership in ASEAN and APEC.’ President Ramos-Horta (2000) Timor-Leste has been at the center of the geopolitical and geo-economic debate in South-East Asia since its inception as a sovereign state in 2002, and a point of convergent interests of several Asian states. With the launch of the Chinese Belt and Road Initiative (BRI) in 2013, Timor-Leste became part of the equation of the South Asian maritime component of the BRI, especially because of its location between Indonesia and Australia. It is in this context that Timor-Leste’s request for 83THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

accession to ASEAN must be evaluated, along with the implications of its affiliated groups, bearing in mind Timor-Leste’s national commitment to development. Moreover, Timor-Leste is the only Asian member state of the Community of Portuguese Language Countries (CPLP), with historical and symbolic political bilateral ties to all Portuguese-speaking countries. Timor-Leste faces a sort of ‘trilemma’. On the one hand, the history of Timor-Leste compels it to carefully balance all the interests at stake, especially in relation to the possibility of deeper economic relations with China, because this may affect the perceptions of Indonesia and Australia. On the another hand, Timor-Leste perceives accession to ASEAN as the way forward in terms of regional integration, but that integration could give the small island state, with the help of China, a functional power which may not be well received by others. Finally, CPLP membership links Timor-Leste to a set of geographic, cultural and diplomatic rationales, which are difficult to reconcile with regional economic interests. All of this exists in the context of national development and the accompanying challenges, which calls for long-term political stability within this young country. Discussion Geopolitics of Timor-Leste The discussion on BRI tends to focus on the Eurasian region and in particular takes the Sino-European perspective as these are the two leading commercial blocks. We, however, view the BRI as an access strategy, combining the land corridors and the maritime routes to establish a network of trade and commercial flows across continents. Therefore, our discussion starts from the assumption that the geopolitical relevance of Timor-Leste should be viewed in the context of its maritime dimension. In fact, the six economic land corridors and the Maritime Silk Road were initially developed in Central and Eastern Europe, but the BRI has turned global and now extends far beyond Eurasia. Three Chinese domestic development axes were initially extended into six economic corridors and the Maritime Silk Road. This ‘3=6+1’ structure (see Figure 1) is the core network of a global strategy spanning Central and Eastern Europe (the B&RI for the Western Balkans, the Arctic Silk Road and the Greenland Arctic Base1); Africa (the Maghreb-Sahel Silk Road, Great Lakes Silk Road, the Trans-Africa Highway, the Western Africa Railways, the Angola-Tanzania Railways and the Great Lakes infrastructure plan); Asia (the ASEAN integrated master plan network of connectivity – The Thailand Regional Connectivity Plan2, the Southeast Asia Railways Plan – The Pan-Asia Railway Network3, the Mekong India Economic Corridor), the Pacific (Trans-Pacific Maritime Silk Road); and the Americas (the Latin America Silk Road, the Inter-Oceanic Railway, the Nicaraguan Canal, and the 84 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

Cartagena-Caribbean Railway). All of these material components of the BRI are complemented by pathways in other domains, such as the Digital Silk Road, the Green Silk Road, Cultural Silk Road, Education Silk Road for the future (EU/China), and the Space Silk Road. Timor-Leste is located on none of the land routes, but its location on a natural sailing route between the Indian Ocean and Pacific Ocean is significant and cannot be ignored, especially in the context of the maritime Silk Road. Timor-Leste is indeed the only alternative sovereign state, in an immense area dominate by Indonesia and Australia. Chauprade (2003, pp. 130-131) asserted that island states benefit from maritime routes, particularly in the establishment of land points of support. Timor-Leste is a young island nation state, a fragile state4, and low-income country, exercising sovereignty over a non-continuous island territory. It lies in South-East Asia between the Timor Sea and Banda Sea, in the group of the Lesser Sunda Islands at the eastern end of the Indonesian archipelago. It comprises the eastern half of Timor Island (approximately 5,400 square miles, bordering Indonesia’s Nusa Tenggara province), the separate exclave of Oecusse in West Timor, and the small off-shore islands of Atauro and Jaco. The Wetar Strait, in particular the passage between Atauro and Timor-Leste, which connects it to Ombai Strait, has a depth of close to 3,000 m and approximately 30% of water movement between both the Pacific and Indian oceans5. Timor-Leste shares land and maritime borders with 85THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT Figure 1. 3 Domestic Development Axes = 6 Land Corridors + 1 Maritime Road Source: Adapted from Francisco José Leandro (2018). The OBOR global geopolitical drive: the Chinese Access Security Strategy, Brill Nijhoff, Chapter 5, p. 89.

Indonesia, and a maritime border with Australia. Timor-Leste and Australia are separated by the Timor Sea at a distance of approximately 300 nautical miles. Situated between the Indian Ocean and Pacific Ocean, Timor-Leste is at the center of the Coral Triangle, home to the most biodiverse marine ecosystem in the world. Its territorial waters are part of the Western Pacific Warm Pool. Positioned between Wallace’s line, Weber’s line and Lydekker’s line, Timor-Leste is situated in an area of abundant fauna and flora diversity. The abundance of natural resources and Timor-Leste’s position make it natural choice for other actors to consider using the island as a sea-land platform to support commercial shipping. The Timor-Leste archipelago is at approximately the same latitude as the Torres Strait, which is an important maritime passage and one of the maritime bottlenecks in commercial navigation. The distance between Díli and Port Moresby (Papua New Guinea) is approximately 2,400 km and the Torres Strait is a natural maritime access point, connecting the Pacific and Indian oceans. Almost all maritime traffic from the eastern edge of the Indian Ocean to the South Pacific must pass through the Timor Sea, one of the most biodiverse regions on the planet. Timor-Leste sits on the outer Banda Arc, a west-facing horseshoe-shaped arc near eastern Indonesia, which is the locus of three converging major plates, the Indo-Australia Plate, the Pacific Plate, and the Eurasian Plate. The climate is tropical and generally very hot and humid, depending upon the altitude, which reaches 2,963 m (Mount Ramelau). It is characterized by distinct rainy and dry seasons, floods, landslides, earthquakes, tsunamis, and tropical cyclones. The mountainous terrain that dominates Timor-Leste impacts human activities, especially in terms of domestic transportation. The deep valleys, semi-permanent water courses, small and isolated communities spread out around the territory and a variety of microclimates make it difficult to access populations and immensely increases the costs of road maintenance. The only way to access some communities is by small-sized horses6. The different microclimates also facilitate the production of agricultural goods and timber. Being part of an archipelago, Timor-Leste fisheries are abundant, especially along the southern coast. Local people refer to the Timor Sea as ‘Mar Homem’ (Tasi Mane7) because of its violent and rough waters. The history of Timor-Leste could be summarized as a strong native cultural history mixed with the long-standing presence of foreigners, more recently shaped by the circumstances of the Portuguese departure and the US and Indonesian Cold War fears. The small size of Timor-Leste also played a role in its fortunes, alongside the watershed media coverage of the Santa Cruz graveyard massacre in 1991, which brought international attention to the suffering of the Timorese people. Priscilla Roberts (2018) asserted that modern Timor-Leste is not only a by-product of the 86 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

Cold War, but also the result of skillful promotion of the Timorese cause for independence: With the ending of the Cold War and the consequent down-grading of fears of communism and radicalism in Southeast Asia, East Timorese activists and their far-flung and influential network of well-placed supporters were able to keep up the pressure ... East Timor, initially too small and inconsequential to count for anything in the international balance sheet, displayed great skill in deploying those assets and allies it possessed to win external sympathy and ultimately full independence. Timor-Leste’s history has profoundly shaped its national identity, a result of a diverse native population, Portuguese colonial rule, Japanese occupation, Indonesian occupation, the proximity of Australia and the recent significant international presence. Sahin (2014, p. 11) summarized Timor-Leste’s history in the following words: ‘four centuries of Portuguese colonial administration, 24 years of Indonesian occupation and two-and-half years of UN transitional rule.’ The population of Timor-Leste is approximately 1.1 million according to a 2016 estimate8, approximately 25% of whom live in Díli, the capital city. The country’s two official languages are Portuguese and Tetum, with English and Indonesian as working languages as well as a myriad of local dialects. According to a 2005 World Bank report, 98% of the population is Catholic, 1% is Protestant, and less than 1% is Muslim. Most citizens also retain some vestiges of animistic beliefs and practices, which some regard as more cultural than religious. With all of these factors in mind, the national character of Timor-Leste is aptly described in the following statement displayed at the National Archive and Museum of Timorese History (Díli) –‘To resist is to win. To resist is to know how to accommodate past divergences to address the challenges of the present and the future’. According to the Timor-Leste Strategic Development Plan 2011-2030, the country is pursuing a strategy of regional development corridors9 and is making a significant investment to develop the nation’s social capital. According to the same document (p. 47), the traditional gender biases affect all aspects of life in Timor-Leste. Adult male illiteracy rates are lower than women’s (21% compared to 32% for women; albeit some progress made by the latter), and more men are in higher education (83 women for every 100 men). Nearly 40% of women over the age of 15 in Timor-Leste have experienced physical violence. Of women who have been married, 34% have experienced physical violence from their husbands and many have not been able to obtain justice and redress for their grievances. Fertility rates are still among the highest in the world, and while health statistics are improving, too many Timorese women still die in childbirth. The Timor-Leste maternal mortality 87THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

rate remains high, with 42% of all deaths of women aged 15 to 49 related to pregnancy. Timor-Leste ranked 132 on the human development index (HDI) (2017). For this reason, Timor-Leste’s public budget allocation gives a high priority to the education and health sectors, followed by the justice sector and the public sector10. Alongside investment in human social capital, the priority development areas seem to be connectivity (roads, airports, and seaports), energy production and tourism. Timor-Leste is heavily dependent on a single national port in Díli for all of its general cargo imports and exports. Regular direct shipping services are currently provided to Darwin in Australia, Kota Kinabalu in Malaysia, Surabaya in Indonesia, and Singapore. Other services also operate to Indonesian ports. A ferry service runs between Díli and Oecusse Ambeno twice a week and between Dili and Atauro once a week. There is a strategy of regional development corridors which includes two regional development corridors, the northern and southern corridor developments, as well as a number of special zones designed to guide development based upon the specific characteristics of certain regions. The proposed national strategic zones are: (1) Dili – Tibar – Hera; (2) Suai – Betano – Beaço Liquiça – Ermera – Aileu; (3) Manatuto – Baucau – Lautem; (4) Bobonaro – Cova Lima; and (5) the Oe-Cusse Ambeno exclave. A logistics base for the petroleum sector will also be established in Suai11. This base will provide capacity for the south coast to develop a domestic petroleum sector along with related and supporting industries and businesses. The centerpiece of this development will be the construction of a new port at Suai. This facility will open up the south coast to investment and growth and provide an international access point to Timor-Leste. The new Suai Port will provide an entry point for the materials and equipment needed to build infrastructure and plants for the petroleum industry. Suai Port will be a multi-purpose seaport and include a container park, a warehouse logistics area, and fuel storage facilities. The port may also provide shipbuilding and repair facilities. Construction of the port will require a breakwater to provide protection from the Timor Sea. The port will be part of the Suai Supply Base12, which will become a national industrial base and logistics center to drive job creation and economic development on the south coast. The base will also support the establishment of petroleum centers at Betano-Manufahi and Beaço-Viqueque. The centerpiece of the Timor-Leste government’s development strategy is Tasi Mane, a corridor of petroleum infrastructure along the southwest coast of the country. This ambitious project is described in the Timor-Leste Strategic Development Plan 2011-2030 (p. 138) as ‘a multi-year development of three industrial clusters on the south coast which will form the backbone of the Timor-Leste petroleum industry.’ Furthermore, according to the Timor-Leste Strategic Development Plan 2011-2030 (p. 101), the country will pursue a connection to either an Indonesian 88 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

cable, such as the PT Telkom fiber-optic backbone that will soon connect Kupang in West Timor, or to an Australian cable. Such a connection would be operated either on a commercial basis by private telecommunications operators or by the government. Concerning energy production, Timor-Leste has access to vast reserves of gas in the Timor Sea. The availability of natural gas for electricity generation has the potential to provide much cheaper and cleaner fuel than liquid fuels. In environmental terms, for the same amount of electricity produced, the carbon emissions from natural gas-generated electricity are considerably lower than from diesel-generated electricity. The development of renewable energies in Timor-Leste will help drive economic growth and allow Timor-Leste to embrace new technologies that will make the country a model of sustainable development. Population growth and the needs of an expanding economy are likely to increase electricity consumption in Timor-Leste from the current level of about 160 GWh to 800 GWh by 2020. At least half of the country’s future energy needs will be provided by renewable energy sources. Analysis undertaken for the Strategic Development Plan (p. 87) identified more than 450 MW of potential renewable energy projects across the following technologies: hydro (wire-to-water and regulation): 252 MW; hydro pumping: 100 MW; wind: 72 MW; solar: 22 MW; and biomass/solid waste: 6 MW. In relation to the tourism industry, the government has pursued a policy of establishing national protected areas such as the Nino Konis Santana National Park, Timor-Leste’s first national park. The park, established on August 3, 2007, covers 1,236 square kilometers. Timor-Leste’s Strategic Development Plan 2011-2030 (p. 128) observed that ‘Timor-Leste is blessed with tropical waters rich in marine life, white sand beaches, spectacular mountain ranges, unique Timorese culture, Portuguese colonial heritage and resistance history.’ The value of international tourism in Timor-Leste can be measured by the number of arrivals. In 2015 this was 62,000 and in the 9 years between 2006 and 2015 arrivals reached a maximum of 79,000 in 201313. Overall, there is an increasing trend in the number of tourist arrivals. Investment in the country by international brands such as Heineken14 and Hilton Hotels15 also shows an upward trend. Timor-Leste seems to have a clear view of its past, a strong national will and balanced plans for the near future. Development, investment, infrastructure and human capital are at the center of its efforts to consolidate what was previously a fragile existence into a nation with real sovereign capacities, especially in relation to its neighbors. Timor-Leste’s determined commitment to development, its abundant natural resources, and its location in the context of the Indian Ocean-Pacific Ocean sea lines of communication have attracted China to include it in the Maritime Silk Road. 89THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Timor-Leste Foreign Affairs: Australia, Indonesia and China ‘As a territory, seated … between Australia and Indonesia – giant neighbors with different backgrounds, which have been in the past able to adopt a common policy in relation to our destiny – East-Timor has to avoid falling into political naivety.’ Xanana Gusmão, Timor-Leste Prime-Minister ‘As a small nation in a highly strategic geographic location, Timor-Leste’s security will depend upon forging strong relationships with our neighbors and friends, making a positive contribution to a stable and peaceful region, and participating in global peacekeeping missions and cooperative international forums and initiatives.’16 Despite its limited resources and a small diplomatic corps, Timor-Leste has made a tremendous effort on the diplomatic front to increase its strategic power and room for maneuver, both bilaterally and multilaterally, in its aim to be listened to and to be relevant. For that reason, Timor-Leste has established diplomatic relations with almost 100 states and international organizations17, and is a founding member state of G7+, a voluntary association of countries that are or have been affected by conflict and are now in transition to the next stage of development. Timor-Leste is not a regional power and does not intend to be. However, the ‘functional balancing’ of this ‘small’ territory could make the difference, especially in the vast region dominated by Indonesia and Australia. In case of a global or a regional crisis, the strategic importance of the sea lines between the Pacific and Indian oceans will leverage the functional power of Timor-Leste. The country’s future accession to ASEAN could also play a very important regional role, especially in relation to future ASEAN-China relations. Likewise, from a regional economic standpoint, the possibility of setting up some sort of support to Chinese interests should be considered, in terms of communication, sea resources exploration, scientific research, and shipping infrastructure. From the perspective of Australia, and bearing in mind Chinese activities in the Pacific Islands (especially Vanuatu), it is crucial for Australia not to allow an antagonistic power free access to Timor-Leste18. If controlled or strongly influenced by a hostile power, Timor-Leste could be used as a platform to prevent Australian ships entering the northern Indian Ocean or from reaching Java and the Banda Sea. From this perspective, Timor-Leste can be considered a geopolitical pivot by Australia. Controlling Timor-Leste seems strategically more important to Australia than to China. China, as a regional power, has other options in relation to the Indian Ocean. Australia, Indonesia and the ASEAN member states have to develop their existing relations with Timor-Leste, knowing that this small country needs them all 90 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

to balance its small size and to make the most of its presence in this part of the world. Timor-Leste’s agency in the international arena has been dependent on the cooperative and constructive relations it has established with its neighbours and world powers, balancing its relationships with them, and avoiding creating enemies. Timor-Leste has pursued a hybrid strategy of neutrality, practicing ‘leadership in niche diplomacy and active multilateral diplomacy’. On the one hand, it has sought to strengthen its independence vis-à-vis its neighbors, while on the other hand it has not ignored Australia’s security shadow and intends to join ASEAN, a regional group dominated by Indonesia (Tomé, 2008, p. 72). It is important to understand the nuances of this strategic positioning. Nevertheless, Timor-Leste did not adopt an ad hoc neutrality to conflicts led by major powers, such as the US invasion of Afghanistan and Iraq. It did not contribute with troops but also did not refrain from supporting the former and condemning the latter. Timor-Leste has not pursued a de jure neutrality, or neutrality by international law, nor has it adopted a de facto neutrality. The young state does not host foreign military bases, although it benefits from military cooperation programs with China, the US, Australia, Portugal, and Indonesia and is willing to join Asian regional arrangements, such as ASEAN and the ASEAN Regional Forum (ARF)19. Security is not ASEAN’s primary role, but it is a domain to which the organization pays particular attention. Timor-Leste and Australia Unlike Indonesia, Timor-Leste does not perceive Australia as a security threat. Rebecca Strating (2014, pp. 242-243) asserted that Timor-Leste faces low-level external security threats such as illegal movement of goods and people and illegal fishing, and that its most serious security threats to date have been internal, largely due to the weaknesses of state security institutions. Díli looks to Canberra as a security provider that will help preserve its sovereignty. Australia was there in 1999, leading the INTERFET, and again in 2006 in response to a request from the government of Timor-Leste during another difficult period. Moreover, Australia has been the primary provider of equipment and training for the Timor-Leste Defense Force. Timor-Leste is conscious of the limits to setting up a formal defense relationship with Australia due to the negative reaction this might provoke in Indonesia20. For obvious reasons, Timor-Leste cannot alienate Indonesia, but at the same time it cannot do without Australian defense and security assistance. It has to find a cooperative security solution with Australia which does not involve a formal military pact or alliance. 91THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

‘Australia’s hardball tactics in the convoluted negotiations over oil and gas reserves in the Timor Gap’ (Smith, 2005, p. 26) caused rising anti-Australian sentiment in Timor-Leste. As Timor-Leste never agreed to be a province of Indonesia (Díli rejected the principle of uti possidetis iuris), it effectively had no maritime boundaries in place21. The lengthy negotiations over the resources in the Timor Gap have poisoned relations between Australia and Timor-Leste. Australia negotiated from a position of strength, acting as a primus inter pares, treating its ‘partner’ in an overbearing way, something that Timor-Leste considered unfair. Australia wanted access to resources to which their rights were very questionable under the United Nations Convention on the Law of the Sea (UNCLOS), but this did not prevent them maneuvering Timor-Leste into a corner. Australia withdrew early on from the legal process for resolving maritime boundaries within the International Court of Justice (ICJ) and from the dispute settlement mechanism under UNCLOS. Timor-Leste was helpless to bring them back to the negotiating table, which revealed how weak Timor-Leste’s bargaining position was, and how far major powers play deviate from norms and rules when these do not serve their interests. ‘[Xanana] Gusmão has spoken of an ‘unequal relationship’ and likened the stakes surrounding the negotiations for the Timor Gap as akin to the independence struggle itself’ (Smith, 2005, p. 27). Maritime borders between Timor-Leste and Australia remained unsettled until March 6, 2018, when the governments of Timor-Leste and Australia signed a boundary delimitation agreement that should open the way for the development of the Greater Sunrise oil and gas project22. This agreement will first of all increase Timor-Leste’s control over oil and gas deposits in the Timor Sea. Despite the apparent setback to Australia’s ambitions caused by Timor-Leste initiation of compulsory nonbinding conciliation proceedings against Australia, and the finding by the Conciliation Commission that the Australian position was unfair, the 2018 boundary delimitation agreement is not the end of the story. Timor-Leste will continue to foster a relationship with Australia because it needs services23, education and basic goods, but the boundary delimitation agreement will position Australia closer to Timor-Leste, preventing excessive proximity to Indonesia. This agreement also expands the economic potential of Timor-Leste and may facilitate its accession to ASEAN. Nevertheless, Australia will continue imposing bilateral dispute management, an adverse situation for Timor-Leste, and the country might have no choice but to acquiesce. Australia has supported Timor-Leste, because it needs a strong and stable partner in the region. The latest developments in the light of the Pacific Maritime Security Project (PMSP)24 – “Australia and Timor-Leste are collaborating as Timor-Leste prepares to receive (until 2023) two Australian-built Guardian-Class Patrol Boats for its military’s naval component, along with a comprehensive package of Australian support to operate these vessels” confirm 92 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

precisely that. Timor-Leste strives to continuously consolidate its relationship with Australia because there are few other alternatives for regional balance. Timor-Leste and Indonesia Timor-Leste’s political elite have dealt very cautiously and strategically with Indonesia. They have been able to put geography (and its security implications) before history, prejudices and hard feelings, even with many important issues unresolved. Cognizant of their constraints, they understand very well what state survival requires and what is at stake. Developing and maintaining good relations with Indonesia is a top priority for Timor-Leste’s foreign policy25. In this way, Timor-Leste’s government hopes to create the necessary goodwill in Jakarta to facilitate open sea lanes, cross-border trade (especially food, oil and gas), access to the Oecussi exclave (inside West Timor), movement of people, and general territorial security with special concern for a common border (Smith, 2005, p. 20). Timor-Leste’s government is well aware that the 24 traumatic years under Indonesia rule and the brutal attacks carried out by pro-Jakarta militias after the referendum had a psychological effect that is difficult to reconcile, at least in the short term. According to Rebecca Strating (2014, p. 238), ‘the prioritization of good relations with Indonesia above the pursuit of senior Indonesian inductees was further highlighted in June 2014, when President Xanana Gusmão met with his “dear friend” General Wiranto less than two weeks after the former Tentara Nasional Indonesia (TNI) chief’s indictment by the Serious Crimes Unit (SCU) ... Timor-Leste’s leaders obstructed the achievement of retributive justice in order to advance other national interests, presenting problems for Timor-Leste in developing political order through rule of law and separation of powers’ Timor-Leste has also learned how to live in disadvantageous conditions, appease aggressive behaviour and promote conciliatory policies. Such is the balance between Timor-Leste and Indonesia, a relationship which depends on the ability of the weaker party to please (or at least to have good relations with) the giant, knowing that it can bite, because there is no other option but to work for mutual advantage. Timor-Leste’s decision makers have often surprised foreign observers, who expected to see Timor-Leste at the vanguard of human rights promotion. But this has not always been the case, as this topic puts Timor-Leste in a delicate relationship with its neighbors. Moderation has prevailed in Díli when it comes to human rights activism, thus avoiding misinterpretations by Jakarta, especially with regard to human rights in Indonesia and the prosecution of those involved in serious crimes during the 24 years of Indonesian occupation. Forgetting the past – or conveniently pretending to forget it – has become a fundamental principle of Timor-Leste’s 93THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

foreign policy. Smith (2005, p. 35) suggested that ‘East Timor’s leaders, who were once seen as left-wing radicals that would upset the regional order, have proved to be cautious and conservative in their foreign policy approaches.’ The same author further proposed that this principle was determinant in Timor-Leste’s decision to give up the trial of those implicated in the 1999 acts of violence. In line with this, Timor-Leste did its best to avoid cooperation with UN efforts to secure their trials26. They understood that, at the end of the day, that no matter the outcome, these trials would not do Timor-Leste any good. Smith (2005, p. 22) suggested that, in the interests of remaining in Indonesia’s good books, Timor-Leste’s leadership not only opposed the UN trials but went further by maintaining ‘that the two countries involved would jointly decide on what course of action would be taken’, thus avoiding international embarrassment to Indonesia. Timor-Leste’s government never protested the ludicrous outcome of trials held in Indonesia, which were challenged by many, including the US State Department27. It is easy to say that Díli engaged in realpolitik for its own benefit, especially since Díli has avoided making negative comments on any of Indonesia’s domestic issues, let alone secession matters, such as Aceh or Papua28. Díli’s official line has been to support Indonesia’s territorial integrity and distance itself from any possible perception of tacit support to secessionist movements, ‘an issue that Jakarta is obsessive about’ (Smith, 2005, p. 23). To be quite clear, as observed by Rebecca Strating (2014, pp. 240, 242, 246, 252 and 253), Timor-Leste faces a pressing dilemma. On the one hand, the state needs to instil trust in its new judicial institutions, to curb possible domestic unrest; on the other, the country’s economic and social dependence on Indonesia (particularly for foodstuff – such as rice) and its foreign affairs objectives (especially candidacy to ASEAN) makes it vital to develop harmonious relations with its nearest neighbor. Perhaps this is why Timor-Leste has made it clear that it will not offer support to any secessionist movements within Indonesia, to make sure that Indonesia does not entertain any illusion of a presence in Timor-Leste. It was not by chance that Timor-Leste’s March 2011 revised application for ASEAN membership was submitted when Indonesia was ASEAN Chair. It was also not by chance that in 2012, Prime Minister Xanana Gusmão declared ‘when building a State and Nation, there is no room for nurturing past hatreds’. It was not a coincidence that in 2008, the Commission of Truth and Friendship issued a report (From Memory to Hope), which stated ‘To this end, the two nations desire conducive circumstances for peace and development, including harmonious relations.’ Eagerness to please Jakarta has turned Díli into an advocate of Indonesia in the international arena: supporting Indonesia’s bid for a non-permanent seat on the UN Security Council; requesting ‘greater western assistance to Indonesia, including debt write-offs’ (Smith, 2005, p. 23); and appealing to the the US ‘to resume military-to-94 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

military ties, which were severed in the first place because of violence in East Timor in 1999’ (Smith, 2005, p. 24). Timor-Leste also joined international efforts to provide aid to Indonesia following the devastating earthquake and subsequent tsunami that ravaged Indonesia in 2005, contributing US$60,000 (Smith, 2005, p. 24)29. This act was full of symbolic meaning and entirely in line with Díli’s strategic diplomatic choice to appease Jakarta. Timorese leaders also cultivated (or tried to cultivate) a relationship with Indonesian presidents and members of the elite. Díli did its best to reassure the Indonesian presidents of its willingness to develop close ties with Jakarta30, not even excluding those who were politically responsible during the occupation31. Despite being imprisoned in Indonesia during Suharto’s presidency, Xanana Gusmão attended his funeral in January 2008 (Kingsbury and Leach, 2007). At the same time, Timor-Leste avoided at all costs getting involved in territorial disputes with Indonesia over the demarcation of the border between the eastern and western parts of the island, and over misunderstandings around the exact location of Batek Island, which is part of Indonesia but is located near the Timorese exclave of Oecussi, and whose waters are used by fishermen from both countries. Progress was also made in border coordination and management, and in visa exemptions for travel between Timor-Leste and the Indonesian province of West Timor (World Politics Review, 2012). On August 21, 2011, Prime-Minister Xanana Gusmão and the Indonesian Minister of Defence, Purnomo Yusgiantoro, signed a Memorandum of Understanding on Defence Cooperation, showing a will to heal old wounds and proving that Timor-Leste does not intend to enter into a formal military alliance with Australia. ‘It is vital to Timor-Leste to assure Indonesia that it will not become an offshore base for an outside power’ (Smith, 2005, p. 29), and that it will not pursue any formal military alliance with Australia32. Díli had to balance the pressing need for assistance, notably in the military field, provided by other countries, especially Australia, while reassuring Indonesia that it will not host military bases of foreign powers, including China. In this context, we have spoken of appeasement before. We understand ‘appeasement’ in an international sovereign context as a diplomatic policy of making political, diplomatic, and/or material concessions to a dominant power in order to avoid conflict. This applies in this context as Timor-Leste pursues good relations with Indonesia not only to avoid conflict, but also to facilitate cooperation. The location of Timor-Leste and its territorial discontinuity provide no other smart options. A dominant alliance with any of the contenders for deeper cooperation with Timor-Leste will trigger negative perceptions from others, something that Timor-Leste cannot afford. Timor-Leste basically relies on diplomatic action for its security. However, it also created a domestic defense capability to be prepared for the worst. The 95THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

FALINTIL-Timor-Leste Defense Force (F-FDTL) has made significant strides in its development as a conventional military force from its origins as a guerrilla force33 and it has already sent members to serve in peacekeeping operations in Lebanon (integrated with the Portuguese Peacekeeping Force operating with UNIFIL) and in South Sudan. This participation requites the international community for what it has done for Timor-Leste and it is also an act of foreign policy. Timor-Leste’s patient approach to foreign affairs is bearing fruit. There are some signs of change, as shown by the Indonesian support of Timor-Leste’s candidacy to ASEAN34 and Indonesian promotion of the development and economic diversification of the nascent manufacturing industry in Timor-Leste (Hägerdal, Berlie, 2018, p. 98). Timor-Leste’s relationship with Indonesia remains an enormous challenge, requiring careful balancing in each and every foreign policy, particularly towards Australia and China. In the areas of security (border control and illegal fishing), trade (e.g. Timor-Leste’s dependence on manufactured goods), and international support (ASEAN accession), cooperation is the only way forward. Timor-Leste and China When Timor-Leste unilaterally declared independence on November 28, 1975, the People’s Republic of China was one of the few countries which immediately granted it official recognition, an act that would shape future friendly relations between Timor-Leste and China35. The Hakka Chinese community in Díli were guaranteed full citizenship in the new country by the FRETILIN36 government. In 2002, soon after the restoration of independence, China was the first to initiate consistent diplomatic relations with Timor-Leste. Today, Timor-Leste is an active member of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries (Forum Macau), established by China in Macau in October 2003. The Forum Macau is the result of an initiative by China’s central government in co-ordination with seven Portuguese-speaking countries – Angola, Brazil, Cape-Verde, Guinea-Bissau, Mozambique, Portugal and Timor-Leste – and with the collaboration of the Government of the Macau Special Administrative Region (Macau SAR)37. This institution facilitates Chinese economic and trade policies for Portuguese-speaking countries, for which the government of Macau provides effective support and facilitates multilateral action. The bulk of the relations between Timor-Leste and China take place at a bilateral level. Nevertheless, the Forum Macau and the funds associated with it have a complementary role, especially in terms of promotion of trade, attraction of investment38 and the enhancement of human resources39. It seems that the Forum Macau has the potential to help Timor-Leste divert its economy 96 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

from excessive dependence on gas and oil, by initiating new projects and industries. Among the different projects are the establishment of the Oecussi special economic zone, and the contribution of the Greater Bay Area, composed of Macau, Guangdong, and Hong-Kong. From China’s perspective, the role of the Forum Macau is supported by three very important elements: a common language (Portuguese), the China and Portuguese-speaking Countries Cooperation and Development Fund, and the practical opportunities offered by the Closer Economic Partnership Arrangement (CEPA). Timor-Leste has no issues with China about its existence. China is neither a threat nor a security provider for Timor-Leste. However, Timor-Leste perceives China as an important diplomatic partner. It has turned to China as a counterbalance in critical moments in its troubled relationship with Australia, showing that it has other alternatives and is not entirely at Australia’s disposal. Timor-Leste has been a recipient of Chinese assistance and aid, and has also signed a number of bilateral trade and aid agreements with China, including conferring most favored nation status on one another. Chinese companies have constructed two heavy oil power plants under a US$360 million contract as part of the national power grid. Timor-Leste also paid US$25 million for two petroleum tankers from China. The number of Chinese projects in Timor-Leste is remarkable and is likely to increase. Among the most significant are the Díli sanitation and drainage project (US$50 million)40, the Suai-Beaco highway connecting three industrial clusters on the southern coastline (US$171 million), and the Tibar Bay Port, a public-private partnership (US$278 million). According to the Asia Times (2018) quoting41 the Macau News Agency in early 2019, negotiations are underway to establish an airline connection between Timor-Leste and Guangzhou in southern China. As of February 2019, the only direct flights to Díli are from Bali and Darwin. Several Macau-based firms, including Charlestrong Engineering Technology and Consulting Ltd, are building housing and resorts in Timor-Leste’s special region of Oecusse. There are also persistent rumours that Ina Chan Un Chan, a prominent Macau-based businesswoman and wife of Macau’s casino tycoon Stanley Ho Hung Sun, is interested in investing in Timor-Leste’s tourism sector. Beijing also cooperates with Timor-Leste in the military field. China donated nonlethal equipment (uniforms, tents, transport vehicles, etc.) to the Timorese armed forces, built barracks and houses for their soldiers, and set up a program of practical military cooperation which included education and training courses in China. Military cooperation also involved Timor-Leste making acquisitions from China. In 2006, Díli signed a contract with a Chinese vendor to purchase eight light armed jeeps. Díli further turned down an Australian invitation to join the Australian Pacific Patrol Boat Program in favor of Poly Technologies, a Chinese company with close links to the 97THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

People’s Liberation Army (PLA). In 2010 it signed a US$25 million contract to buy two Shanghai-class patrol boats mounted with 30-millimeter cannons, to combat illegal activities in Timor-Leste’s exclusive economic zone42. This, Timor-Leste’s largest defense acquisition to date, was seen by some observers as a slap in the face for Australian diplomacy, a sort of retaliation for Australia’s disregard of Timorese demands in the negotiations over their maritime boundaries. Some believed that Díli bought these boats to ‘demonstrate to Canberra that it has other choices when it comes to defence partners’ (Murdoch, 2010). We see these military agreements are part of Timor-Leste’s balancing strategy, extending cooperation with China into the traditional hardline sectors to send a message to Indonesia and Australia. Likewise, this purchase was evidence of Timor-Leste willingness to assume more responsibility for its territorial waters and therefore to increase its particular-intrinsic power. Such cooperation will probably continue in the near future. However, Timor-Leste’s cooperation with China is unlikely to lead to a substantial Chinese military presence in the country. As Sahin (2014, p. 13) suggested, with this action Timor-Leste hopes to leverage its competitive position to reinforce Indonesia’s and Australia’s support for its accession to ASEAN and to avoid being heavily dependent on either of its powerful neighbour’s. The importance of China in the context of Timor-Leste foreign relations has grown over the course of time. Timor-Leste has established an embassy in Beijing and China has the largest diplomatic presence in Díli43. China has raised its profile in several other ways, exercising ‘symbolic structural charm diplomacy’. According to Sahin (2014, p. 12), China has provided funding for the construction of a new Presidential Palace, the Ministry of Foreign Affairs, defence buildings and military residential quarters in the capital city44. China has also allegedly financed the construction of Timor-Leste’s embassy in Beijing. China’s efforts to establish closer contact with Timor-Leste included participation in all the UN peacekeeping missions deployed in Timor-Leste, mainly contributing civilian police officers45. In 2017, a Chinese PLA Navy hospital ship visited Díli, the second time that a PLA Navy vessel had visited the country. In January 2016, a Chinese Navy task force arrived in Dili to pay a five-day official visit to the country. This task force comprised a destroyer, a frigate and a supply ship (Xinhua)46. Timor-Leste is rich in sandalwood, coffee, minerals (copper, zinc and rare blue marble), marine resources and hydrocarbons (oil and gas)47. The competition for oil and gas is high. PetroChina, one of China’s largest state-owned energy companies, financed a US$1.6 million onshore seismic study for oil and gas exploration in the country’s interior, and it expected to be involved in offshore oil field development (Storey, 2006). However, exploitation of offshore deposits was won by Australian and other international companies. Although advancing its interests and slowly 98 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

establishing a stronger foothold in Timor-Leste would increase Beijing’s political clout, we must bear in mind Timor-Leste’s relative importance to China. To quote Loro Horta, ‘Timor-Leste is not a priority for China, but Beijing is definitely keeping an eye on it.’48 This statement expresses the situation well. However, geopolitical dynamics may dictate so far unforeseen developments. From being just a good friend, Beijing may become Dili’s closest friend in the future49. Heine (2013, p. 58) asserted that ‘One of the greatest contributions of the BRI is its potential to push states out of an exclusive narrow domestic definition of self-interest.’ The Maritime Silk Road for South Asia provides context for a dialogue between Timor-Leste and China on their interests, with two different but complementary perspectives. China needs Timor-Leste as a sea-land support platform in a region dominated by Indonesia and Australia. Timor-Leste needs China to aid development of its functional ability as a sea-land support platform to promote stable and balanced relations with Indonesia and Australia. China sees Timor-Leste’s candidacy to ASEAN as another element in favor of solving the South China Sea disputes by peaceful means. For economic, political and historical reasons, it seems unlikely that China will displace Australia and Indonesia as the main players in Timor-Leste’s foreign relations in the near future. Timor-Leste’s leadership certainly appreciates Beijing’s support of its independence since 1975, but this does not mean that China will occupy a position comparable to Australia and Indonesia in Timor-Leste’s foreign affairs, at least in the short and medium term. China achieved an important foreign affairs objective when it induced Timor-Leste to recognize the principle of ‘one China’, in which Taiwan is an inalienable part. This will be one of the core issues governing relations between the two countries. Timor-Leste and International Organizations International organizations are receptive to small states, since they offer good opportunities to small states to operate and to defend their interests. In contrast to the immediate post-Cold War scarcity of institutions promoting regional integration in Asia, today there is a dense and complex network of institutions all set up in less than two decades50. This is a dimension of foreign policy that states must explore, especially small states. Despite its limited assets, Timor-Leste has dedicated considerable resources to participate in multilateral forums. Timor-Leste’s leaders are actively engaged in an ‘assertive campaign’ of multilateral diplomacy with multiple alignments beyond the lusophone world or the non-aligned movement, which according to them is sliding into irrelevancy. Timor-Leste has joined various international and regional organizations. It is a full member of the UN as well as a number of UN organs, and has ratified a wide range of international conventions51. 99THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

It joined the Community of Portuguese Language Countries in 2002, a few months after independence, which opened the way to connection with regions on five continents. The next section specifically addresses the process of Timor-Leste’s accession to ASEAN. However, it is worth noting here that Timor-Leste’s membership in ASEAN52 is probably one of the most important aspirations in its national strategy, because such membership will give Timor-Leste a functional power as a land support platform for commercial shipping and sea resource exploration in the context of ASEAN and its affiliated groups, namely the East Asian Community (10 ASEAN+ 353), the Regional Comprehensive Economic Partnership (10 ASEAN+ 654), the Asia-Pacific Economic Cooperation (10 ASEAN+ 855) and the ASEAN+ 956. As Sahin (2014, p. 11) observed, by choosing ASEAN (which does not allow double membership) rather than the Pacific Islands Forum (dominated by Australia and New Zealand), Timor-Leste’s leadership has indicated their interest in becoming part of a bigger, more flexible and stable regional grouping, with perhaps more to gain also in terms of security. Timor-Leste is part of a free trade zone, the Timor-Leste–Indonesia–Australia Growth Triangle (TIA-GT). On December 7, 2016, the General Council of the World Trade Organization agreed to establish a Working Party on the Accession of Timor-Leste and granted it observer status. This allows attendance at meetings of the General Council and ‘as appropriate, [at] meetings of other WTO bodies as observers’ during the accession process. According to official WTO information57, the Trade Ministers, led by Afghanistan and Liberia, officially inaugurated the G7+ WTO Accessions Group58 on December 10, 2017, on the margins of the 11th WTO Ministerial Conference in Buenos Aires, Argentina. Timor-Leste has also been pursuing ‘leadership in niche diplomacy’59. In 1997, Ramos-Horta gained much attention headlining a ‘People’s Summit’ in Vancouver which hosted the Asia-Pacific Economic Cooperation (APEC) summit. The summit offered a vision of human rights counterpoised against the economics-first philosophy of APEC leaders, including Indonesia’s Suharto. Within the G7+, Timor-Leste has made an effort to shift the language of development from state ‘failure’ towards hope in the face of long odds, very much echoing the themes of the earlier campaign for East Timorese independence. This effort is aimed at a group of states placed in a position of weakness or even helplessness in the global system, and seeks to shift their weakness into collective moral strength. Timorese diplomats do not try to intervene in every global issue, but they are far from shy in asserting leadership in targeted areas, such as the economic development of ‘fragile states’. Timorese diplomats are very active, as in the example of Milena Pires, an East Timorese politician and women’s rights activist who served as director of the United Nations 100 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

Development Fund for Women (UNIFEM) in East Timor. Since 2016, Milena Pires has been the Permanent Representative of East Timor to the United Nations. The country still has a long way to go in combatting violence against women, but it has taken on a leadership role in the region on this issue. While East Timor aspires to feature more prominently at the regional level, with ASEAN membership as a primary foreign policy goal, so far it has been unable to gain more than candidate status60. Timor-Leste and ASEAN On May 20, 2002, soon after regaining independence, Timor-Leste was granted observer status to ASEAN. Timor-Leste also joined the ASEAN Regional Forum in 2005 and signed the Treaty of Amity and Cooperation in Southeast Asia on January 13, 2007, during the ASEAN Summit in Cebu, the Philippines. The formal effort to become the 11th ASEAN member state began on March 4, 2011, when Timor-Leste officially applied for membership. So far Timor-Leste is still considered a guest, and was addressed as such at the 31st ASEAN Summit in 2017 (Zamora, 2017). Timor-Leste’s full membership in ASEAN has been vetoed by some member states61. It has often aligned its foreign policy with Western countries on issues such as humanitarian intervention and human rights, which has not helped its cause62. A number of ASEAN members do not support humanitarian intervention. Boasting of being a Western liberal democracy in a region where autocratic regimes and illiberal democracies has created a negative impression. Another argument against Timor-Leste’s accession to ASEAN is its CPLP membership, which, according to a few member countries, could cause other, conflicting regional loyalties63. Windraskinasih and Afriansyah (2018, p.88) observed, The CLMV64 countries … were accorded observer status during their “candidacy-in-waiting,” [while] Timor-Leste has only the status of a guest in attending open sessions of ASEAN Foreign Ministers Meetings and ASEAN Summits. And, further (Windraskinasih and Afriansyah, 2018, p.96), the case of membership application by CLMV countries as well as Timor-Leste truly signifies the changes [in] the membership system of ASEAN. During the era of the ASEAN Declaration, as the constituent instrument, the membership system was informal to which the conditions of membership only [required] two factors, namely: geographical location and subscription to aims, purposes and principles. Evidently, the ASEAN Charter prescribes additional requirements, such as one’s capacity in carrying out obligations of 101THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

membership. Said condition becomes a huge obstacle for a Southeast Asian country to enter into ASEAN, as illustrated by the case of Timor-Leste… This suggests that Timor-Leste is ‘relatively well integrated’ regionally speaking, and that the ASEAN decision-making process is now more demanding, especially in relation to the capacity of a country to carry out the obligations of membership. This is why the position of Singapore in relation to Timor-Leste’s accession to ASEAN is unclear. According to Windraskinasih and Afriansyah (2018, p. 94), Singapore has been the most reluctant to endorse Timor-Leste’s admission [on] the basis of economic reasoning [based on] which it views Timor-Leste as [a possible] burden [to] ASEAN. However, it [should] be noted that [there is little disparity between] the economic [situation] of Timor-Leste and CLMV countries, particularly Cambodia. With the support of Indonesia and the Philippines, a steadily developing economy and a stable political system, Timor-Leste seems to meet all the requirements for a smooth accession: (1) location in Southeast Asia; (2) the political recognition of all ASEAN member states; (3) the agreement of the Timor-Leste government to be bound to and to be abide by the ASEAN Charter; and (4) the ability and willingness to carry out the obligations of membership. In relation to requirement (4), there are not reasons to doubt that Timor-Leste’s accession to ASEAN would be economically beneficial to all. Its market is so far untapped by Southeast Asian trade institutions and the region similarly represents a largely unexplored market for Timorese goods. In our view, it would benefit all involved, and there are no objective reasons to deny or postpone Timor-Leste’s accession to ASEAN, especially since the Economist Intelligence Unit’s 2016 Democracy Index65 ranked Timor-Leste the most democratic in Southeast Asia. The Community of Portuguese Language Countries (CPLP) Timor-Leste joined the United Nations and the Community of Portuguese Language Countries in 2002, and since then the CPLP has made an important contribution to the country in terms of infrastructure, justice, education and human rights. Timor-Leste shares three factors in common with the CPLP member states: culture and language, maritime domain and political values. Timor-Leste is not only the youngest CPLP member after Equatorial-Guinea, but also the only Asian CPLP member state. Timor-Lest’s CPLP membership enables it to reinforce its identity vis-à-vis its dominant regional neighbours. Sahin (2014, p. 21) observed that ‘although strategically positioning Timor-Leste in South east Asia, the government 102 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

has also sought to distinguish the sovereign identity of the state from its two powerful neighbors, Australia and Indonesia, by referencing Portuguese heritage’. The CPLP continuously reinforces the identity of Timor-Leste, providing a non-Asian reference, which is one of the determinants of its existence as a sovereign state. The CPLP is an international forum where Timor-Leste can be more active, since its relative power is equal (at least de jure) to all other 8 member states. The more Timor-Leste develops diplomatic, cultural and economic relations with the CPLP, the more its relative regional importance will be asserted, despite reservations put forward by a few ASEAN member states. A small, young state 103THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT Figure 2. Timor-Leste EEZ. Map Source: https://www.researchgate.net/figure/Map-of-Timor-Leste-East-Timor-including-islands-of- Atauro-and-Jaco-and-exclave_fig1_311511099

surrounded by large states such as Indonesia and Australia must strengthen its position through partnership with other states and relevant international organizations. Thus, the more the CPLP gains prestige internationally, the better Timor-Leste will be equipped to develop balanced relations with its regional neighbors. The CPLP could also see Timor-Leste as a sort of platform for developing economic relationships in South-East Asia, especially in the context of ASEAN if its political leadership takes steps in that direction. But this will only be possible if the CPLP invests seriously in developing its common economic strengths and if Timor-Leste manages to overcome its difficulties in terms of accessing markets. In both cases, infrastructure and social capital appear to be the essential factors. The prevalence of several languages in Timor-Leste (Tetum, Portuguese, English and Bahasa Indonesia) could boost regional competitiveness in the long term, if the skills and quality of the country’s labor force match those of its ASEAN counterparts. Timor-Leste’s position in the maritime domain close to Australia and embedded in the Indonesia Archipelago, not far from Philippines (Banda and Celebes seas), and midway between the Pacific islands, will only be relevant to the CPLP if projects such as the Tibar Bay port (10 km West of Dili) are successfully developed. However, CPLP participation in this kind of infrastructural investment is almost nonexistent and is not expected. Another maritime factor is the opportunities provided by the Timor-Leste Economic Exclusive Zone (EEZ) and Kitan fields. ‘Australia and Timor-Leste have agreed that the companies which hold the production sharing contracts [in the Bayu-Undan and Kitan fields] will be subject to the same fiscal and regulatory regimes although under Timor-Leste’s jurisdiction not joint Australian and Timorese jurisdiction as is the case under existing treaty arrangements’66. Bearing in mind this new agreement and the map in figure 2,67 CPLP membership should represent an opportunity to fully explore the possibilities offered by such a large area. Unfortunately, the economic cooperation within CPLP is far from this level of ambition. One of the main standards of CPLP membership is unity of political values, with democracy, human rights and respect for sovereign rights at the top of a long list. However, none of these political values appear to have spurred fellow member states to cooperate on large investment projects, capable of generating significant revenues. The CPLP seems to be happy with niche diplomacy (developed by Timor-Leste), without extending to other forms of cooperation. But for Timor-Leste, CPLP membership could still be advantageous if the Community were to embrace other forms of economic activism. If not, Timor-Leste’s membership in CPLP might simply become irrelevant. 104 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

China and the BRI: Filling the gap left by CPLP and ASEAN? Chinese and Timorese diplomacy are marked by strong historic ties and a very clever pragmatism. China needs Timor-Leste as a regional presence and influence. Timor-Leste needs China for regional empowerment, development and ‘balancing’. Despite the fact that Timor-Leste is not yet directly involved in the BRI, its maritime component provides potential for two parties aiming for further cooperation. As previously stated, Timor-Leste’s accession to ASEAN68 is probably one of the most important of the country’s national aspirations. A good part of the Chinese interest in Timor-Leste lies with its potential as a sea-land platform to support commercial shipping in the context of the ASEAN member states once it accedes to the organization. Nevertheless, the absence of ASEAN and CPLP support for national structural development projects in Timor-Leste will contribute to the deepening of Sino-Timorese relations. The two main limitations to cooperation between China and Timor-Leste are Timor-Leste’s aversion to excessive debt (or other forms of dependency on China), and the Indonesian and Australian authorities’ perception of China. The symbolic, cultural and language ties between Timor-Leste and the CPLP are important for the next generation, but if not properly cultivated, these ties will lose theirreal importance within two or three generations. Conclusion Timor-Leste’s foreign affairs policy has been to keep the country’s options open, to balance multiple relationships and to increase its geopolitical relevance. Any foreign affairs strategies and tactics adopted by Díli have taken into account the need to preserve the special partnerships Timor-Leste has developed with its two nearest neighbour’s. As Ramos Horta summarized, Timor-Leste’s foreign policies are based on the need ‘to consolidate and maintain good relations with Indonesia and Australia’. Timorese authorities are well aware of the importance to their security of retaining Australian support, without alienating Indonesia. It has not been easy, especially in the first decade of to gain the support of Australia needed to underpin its security without, at the same time, alienating Indonesia. Timor-Leste’s relational network also includes the United States, China and the ASEAN member-states. Dealing with and satisfying both a rising China and the United States, with their conflicting interests, is an overwhelming task. To be everyone’s friend is not without stress and tension. For Timor-Leste to be everyone’s friend, it has to carefully manage its relationships with all its neighbors, with particular attention to China’s place in the balance. 105THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Timor-Leste is building it’s armed and police forces with the help of its partners, to increase its power and to achieve a deterrent capability against external asymmetric threats. These forces will also be an instrument of Timor-Leste’s foreign policy to fight threats to regional and global stability. Aware of the limitations of its power and reflecting a careful reading of the regional structure, correlation of forces and distribution of power, Timor-Leste has avoided bandwagoning and has carried out a careful positive sum game foreign policy strategy. Its acquisition of military equipment from China showed Australia and Indonesia that Timor-Leste is not entirely at their disposal… the two Australian-built Guardian-Class Patrol Boats as part of the PMSP, which were announced in 2019 is a result of that movement. This could be interpreted as Timor-Leste leveraging its particular-intrinsic power to appease its neighbour’s, placing itself as a contributing partner in that region of the world. On the other hand, diversification of foreign investments and international loans for development is an assurance to all regional partners that none will gain an upper hand in relations with Timor-Leste nor gain control, directly or indirectly in Timor-Leste’s economy. This is why Timor-Leste should consider all options in its association with the BRI. The BRI is an opportunity for Timor-Leste as well as for China, to advance further existing economic and diplomatic relations. From this perspective, the Forum Macau will complement bilateral relations between Timor-Leste and China. It seems clear that Timor-Leste is keen to create a sort of functional power between giant actors in the region, shaping the conditions that would serve all interests, with Timor-Leste as a sea-land platform supporting shipping and international trade in that area of the world. To attain the goals, it has set and to gain a rightful place in the region, Timor-Leste is focusing its resources and efforts in the following areas: 1. National development within the perimeters of controlled debt; 2. Reform of domestic institutions to increase their credibility and curb domestic threats; 3. Balanced economic and diplomatic interests vis-à-vis Indonesia, Australia and China; 4. Full regional integration and ASEAN membership; 4. Development as Timor-Leste’s national priority, developing human social capital69, agriculture, oil, gas and tourism, alongside massive investments in sewage, potable water distribution, and roads; 5. Active membership in the CPLP and a strong commitment to development and human rights in this organization. 106 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

All in all, Timor-Leste is important to Indonesia, Australia, ASEAN, China and CPLP. All these actors have Asian interests and perspectives, except the CPLP whose centre of gravity is in the South Atlantic. Therefore, the existing CPLP symbolic capital vested in Timor-Leste must be used to promote effective large-scale cooperation and development. Otherwise any ensuing gap will be filled by others, namely China, Indonesia, Australia and eventually ASEAN. NOTES 1 Retrieved on December 19, 2018, from https://www.bbc.com/news/world-europe-46386867 2 Retrieved on December 19, 2018, from https://canchamthailand.org/thailands-infrastructure-plans-and-canadian-capabilities/ 3 Retrieved on December 19, 2018, from https://photos.nomadicnotes.com/img/s7/v163/p368258383.png 4 Listed by the World Bank in 2019, http://www.worldbank.org/en/topic/fragilityconflictviolence/brief/harmonized-list-of-fragile-situations 5 Adapted from Sebille, E., J. Sprintall, F. U. Schwarzkopf, A. S. Gupta, A. Santoso, M. H. England, A. Biastoch, and C. W. Böning (2014). Pacific -to-Indian Ocean connectivity: Tasman leakage, Indonesian Through flow, and the role of ENSO, J. Geophys. Res. Oceans, 119, 1365–1382, doi:10.1002/2013JC009525, p. 1373. 6 The East Timorese horse is short and has strong legs. Locally called Cuda or Kuda in the Tetum language. 7 Male Sea - the Tetum name for the Timor Sea between Timor-Leste’s south coast and Australia. 8 Retrieved on November 23, 2018, from East-Timor Strategic Development Plan 2011-2030, p. 107, and http://www.statistics.gov.tl/pt/census-2/key-census-results/ 9 East-Timor Strategic Development Plan 2011-2030, p. 114. 10 East-Timor Strategic Development Plan 2011-2030, p. 208. 11 East-Timor Strategic Development Plan 2011-2030, p. 94. 12 Suai International Airport, in the municipality of Covalima, was opened on June 20, 2017 and operates regular domestic flights to and from Dili. An air link between Darwin and Suai is operated by Northern Oil & Gas Australia (NOGA) for human resource transport to oil platforms in the Timor Sea. This link will allow the company to set up its base of operations in Suai, which will promote the economic development of the region. Retrieved on January 13, 2019, from http://timor-leste.gov.tl/?p=20598&lang=en&n=1. 13 Retrieved on December 21, 2018, from https://www.indexmundi.com/facts/timor-leste/indicator/ST.INT.ARVL. 14 Heineken was the first foreign investor in the manufacturing sector. A Special Investment Agreement was reached in 2015, and commercial beer production began in 2017. A total investment of US$38 million created 600 direct and indirect jobs. 15 Hilton has invested in the construction of a hotel with 140 guest rooms of 49 square meters, 10 suites of 60 square meters, an executive lounge, a signature restaurant, a lobby bar, a rooftop bar, a fitness center, a spa and an outdoor swimming pool. Construction was scheduled for completion by the end of 2018. The latest information mentions: ‘This hotel will soon be joining the Hilton Portfolio of Brands but is not yet accepting reservations. It is scheduled to open in the Fourth Quarter of 2019’. Retrieved on April 2, 2019, from https://www3.hilton.com/en/hotels/east-timor/hilton-dili-palm-springs-DILTSHI/index.html 16 East Timor Strategic Development Plan 2011-2030, p. 176. 17 Particularly important are the embassies in Bangkok, Beijing, Brussels (to the European Union), Canberra, Geneva (combined with the Mission to the United Nations in Geneva), Havana, Jakarta, Kuala Lumpur, Lisbon, Manila, Maputo, Sao Paolo, Seoul, Tokyo, the Holy See (Vatican), and Washington; and the diplomatic missions in Jakarta (Liaison Office to ASEAN), Geneva (Mission to the UN), New York (Mission to the UN) and Lisbon (Liaison Office to CPLP), and the Consulate-Generals in Sydney and Denpasar. 18 ‘A secure, resilient Australia extends into our northern approaches, our Exclusive Economic Zone, and our offshore territories’, 2016 Defence White Papers, §3.5, p. 69. 107THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

19 Even before independence, Xanana Gusmão called China a ‘reliable friend’ and pledged commitment to a ‘One China policy’. 20 Australian foreign policy towards Timor-Leste has been very much conditioned by Indonesia. Australia has always done its best to nurture good relations with Indonesia, even when this obliged the country to court the dictatorial Suharto regime and to maintain close ties with it at the expense of Timor-Leste. 21 China-Lusophone Brief, 2018. Retrieved on October, 03, 2018, from https://clbrief.com/greater-sunrise-at-last. 22 It is important to point out Australia’s double standards regarding maritime boundaries. It was critical of China’s behavior in the South China Sea vis-a-vis the Philippines, but behaved in a similar way in relation to the Timor Sea. 23 As Australia’s Foreign Policy White Paper highlights, a strong and prosperous Timor-Leste is of fundamental importance to Australia. ‘We look forward to partnering with Timor-Leste to develop the Greater Sunrise gas field, with benefits for both countries … We are Timor-Leste’s leading economic partner [$96.1 million in total ODA in 2017-18]. We will continue to support Timor-Leste’s objective of economic diversification and private sector growth through our development cooperation and labor mobility schemes.’ Retrieved on December 21, 2018, from https://dfat.gov.au/geo/timor-leste/Pages/australias-maritime-arrangements-with-timor-leste.aspx 24 Retrieved on April 11, 2019, from https://www.asiapacificsecuritymagazine.com/australia-and-timor-leste-step-up-defence-engagement/ 25 Despite the assurances and friendly behavior consistently shown by the Timor-Leste leadership since the restoration of independence, putting aside the grievances and hard feelings created by past experience, some in Indonesian intellectual and political circles have not yet accepted Timor-Leste’s independence. 26 This issue is discussed in detail by Smith (2005). The Timorese leaders wanted to drop the issue, some because of ‘forgiveness’, others for pragmatic reasons. 27 This course of action was not always well received by the opposition parties in the Timor-Leste? parliament. 28 The Foreign Minister of Timor-Leste also stated that ‘we [Timorese] must also say that we cannot as a small nation in the making go around and endorse every secession claim in the region or anywhere in the world’. 29 Margesson, R., Coordinator (2005). CRS Report for Congress. Indian Ocean Earthquake and Tsunami: Humanitarian Assistance and Relief Operations. Updated February 10, 2005. Retrieved on October 2, 2018, from https://fas.org/sgp/crs/row/RL32715.pdf.. 30 On July 23, 2001, Xanana Gusmão and Ramos Horta issued a joint statement congratulating Megawati as the new president of Indonesia, despite her having opposed the referendum in Timor-Leste. A similar gesture was made in 2004 with President Susilo Bambang Yudhoyono. 31 Díli gave indications that it would work with General Wiranto if he were elected president, despite the fact that he led the TNI in Timor-Leste during the 1999 events. 32 On this issue, Hadi Soesastro, a leading Indonesian scholar, stated that the development of a formal defense relationship between Australia and Timor-Leste ‘is likely to arouse negative reactions in Indonesia’. According to him, the relationship between the United States and Singapore – which is close but has no formal pact – should be a model for Timor-Leste to follow; Smith (2005, p. 29) quoting Hadi Soesastro in New Neighbour, New Challenge, Australia and the Security of East Timor, May 2002, p. 28. 33 Australian Government, Department of Defence, Supplementary Submission (76) to the Joint Standing Committee on Foreign Affairs, Defence and Trade, Australia’s Relationship with Timor-Leste. On the model adopted by the East Timorese Armed Forces, see Simões’s (2012) essay on the implementation of ‘Força 2020’. 34 See Hägerdal and Berlie (2018, p. 98) referring to Indonesian President, Susilo Bambang Yudhyono, supporting Timor-Leste’s 2011 bid to join the organization. 35 China’s support of Timor-Leste dates back to its first independence attempt in November 1975, when the ‘Frente Revolucionária de Timor-Leste Independente’ (FRETILIN) declared Timor-Leste’s independence from Portugal. After Indonesia’s annexation of Timor-Leste, China continued to support the Timorese cause at the UN and provided financial aid to its government, in exile in Mozambique. This support diminished in the late 1970s, when Beijing needed the support of ASEAN, and most particularly Indonesia, to oppose Vietnam’s occupation of Cambodia. 36 Revolutionary Front for an Independent East Timor (FRETILIN). 37 Retrieved on December 21, 2018, from http://www.forumchinaplp.org.mo/about-us/mission-and-objectives/ 108 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

38 Retrieved on January 8, 2019, from http://www.plataformamacau.com/china/timor-leste-aposta-na-cooperacao-com-o-sul-da-china/ 39 Retrieved on January 8, 2019, from https://expedientesinico.com/2018/12/05/timor-leste-forum-macau-pode-ter-papel-reforcado-na-formacao-de-recursos-humanos. 40 Approved by the Council of Ministers to take place in 4 phases between 2011 and 2025. Retrieved on March 8, 2019, from http://mucp-mfit.org/wp-content/uploads/Joao.pdf. 41 Retrieved on January 8, 2019, from http://www.atimes.com/article/will-timor-leste-become-chinas-next-debt-trap/ 42 Storey (2012, p. 299), citing The Australian, April 16, 2008 ‘Alarm Grows at China’s Influence in East Timor’. The contract included the training of 30 to 40 F-FDTL personnel in China and the construction of a landing dock on the country’s south coast. The patrol boats were delivered on May 20, 2010, the country’s Independence Day. 43 China and Timor-Leste exchanged military attaches in 2002. 44 ‘China’s capacity-building support for the F-FDTL was small-scale in comparison with countries such as Australia and Portugal, but since 2007, the PRC has become a major player in Timor-Leste’s defense sector. In 2008, Beijing agreed to finance the construction of office complexes for the Ministry of Defense and Security and the headquarters of the F-FDTL, estimated to cost US$10 million’ (Storey, 2012, p. 298). 45 UNTAET - UN Transitional Authority East Timor (1999–2002); UNMISET - Mission of Support in East Timor, 2002–2005; and UNMIT - UN Integrated Mission in Timor-Leste, 2006-2012. 46 Retrieved on March 8, 2019, from http://en.people.cn/n3/2016/0118/c90786-9005098.html 47 ’Marine resources’ is a broad category, including fish and seafood, oil, gas, minerals, renewable energy resources, tourism potential, unique ecosystems such as coral reefs, and so on. In this case we refer only to fish and seafood. In 2017, Timor-Leste authorities caught 15 small Chinese ships catching sharks and filling the holds of larger vessels. 48 Loro Horta interviewed by Sunanda Creagh and Tito Belo. Retrieved on December 21, 2018, from https://www.reuters.com/article/us-timor-china-idUSTRE58D0GD20090914 49 For an American perspective on Chinese aid to Timor-Leste, see Mydans (2007). 50 In the last decade, China was a leading promoter of the present regional arrangements. For a condensed and comprehensive summary of regional institutions in Asia, see Tomé (2016), Bacelette (2014), and Chien-peng (2008). 51 Timor-Leste’s eagerness to join international organizations was evident in the interest of some of its leaders in joining the Organization of Islamic Conference and the Commonwealth. Still during exile, Timorese leaders wanted to join the Pacific Islands Forum (PIF) (Timor-Leste is an observer at the PIF) but were informed by ASEAN that Timor-Leste would have to choose either ASEAN or PIF. 52 (ASEAN member states) Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia. 53 (ASEAN member states plus 3) China, Japan and South Korea. 54 (ASEAN member states plus 6) China, Japan, South Korea, India, Australia, and New Zealand. 55 (ASEAN member states plus 8) China, Japan, South Korea, India, Australia, New Zealand, the United States and Russia. 56 (ASEAN member states plus 9) China, Japan, South Korea, India, Australia, New Zealand, the United States, Russia, and Canada. 57 Retrieved on November 23, 2018, from https://www.wto.org/english/thewto_e/acc_e/mc11g7group_e.htm 58 The main objectives of the G7+ WTO Accessions Group are: (1) to facilitate the integration of post-conflict and fragile economies into the multilateral trading system through WTO accession-related reforms, including the establishment of credible economic and trade policy frameworks and institutions, and the promotion of transparency and good governance, based on international best practices; and (2) to support the efforts of acceding governments to the WTO in the Group, through information and experience sharing. These steps were taken to facilitategreater regional integration and to reinforce Timor-Leste’s candidacy to become a a full member state of ASEAN. 59 Retrieved on November 23, 2018, from https://www.asiapacific.ca/canada-asia-agenda/15-years-after-independence-whatever-happened-east-timor 109THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

60 Timor-Leste has pushed hard for membership. In 2011 and 2015 it submitted membership applications to ASEAN. It has also tried to get closer to the ASEAN community by participating in the Southeast Asian Games since 2003, a sport event commonly associated with ASEAN. For a detailed review of the evolution of Timor-Leste’s relationship with ASEAN, see Hägerdal and A. Berlie (2018, pp. 91-112 (Chapter 4)) and Dupont (2000). 61 The literature identifies various protagonists and multiple arguments. Singapore doubts that East Timor could cope with ASEAN’s attempts at integration, and whether Timor-Leste has enough qualified diplomatic and bureaucratic staff to attend the more than three hundred ASEAN meetings per annum (Smith, 2005, p. 19). Also, Timor-Leste has been unable to establish relations with Myanmar due to Timor-Leste’s solidarity with Aung San Suu Kyi and its criticism of Myanmar’s military junta. On this topic, see Hägerdal and A. Berlie (2018). 62 Timor-Leste publicly supported the US invasion of Afghanistan, a stand which clearly diverged from that of Indonesia and Malaysia. 63 Some ASEAN countries have difficulties with Timor-Leste’s foreign policy orientation, specifically with the alleged presence of Portuguese functionaries in its government. 64 Cambodia-Laos-Myanmar-Vietnam Membership Admission to ASEAN. 65 Retrieved on December 21, 2018, from www.eiu.com/topic/democracy-index 66 ‘On March 6, 2018, Australia’s then Minister for Foreign Affairs, and Timor-Leste’s Minister in the Office of the Prime Minister for the Delimitation of Borders signed the Treaty between Australia and the Democratic Republic of Timor-Leste Establishing Their Maritime Boundaries in the Timor Sea. According to the Australian Government (2018), the ‘oil and gas fields currently shared between Australia and Timor-Leste in the Joint Petroleum Development Area will transition to Timor-Leste’s exclusive jurisdiction. The Treaty provides that the security of title and any other rights held by the titleholders previously under the Timor Sea Treaty and the International Unitisation Agreement will be preserved through ensuring [that] conditions and terms [remain] equivalent. In the case of Bayu-Undan and Kitan fields, Australia and Timor-Leste have agreed that the companies which hold the production sharing contracts will be subject to the same fiscal and regulatory regimes although under Timor-Leste’s jurisdiction not joint Australian and Timorese jurisdiction as is the case under existing treaty arrangements.’ Retrieved on December 21, 2018, from https://dfat.gov.au/geo/timor-leste/Pages/australias-maritime-arrangements-with-timor-leste.aspx 67 Retrieved on December 21, 2018, from https://www.researchgate.net/figure/Map-of-Timor-Leste-East-Timor-including-islands-of-Atauro-and-Jaco-and-exclave_fig1_311511099 68 (ASEAN member states) Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia. 69 English and Bahasa Indonesia are widely spoken, but Tetum and Portuguese are the official languages. Therefore, investment on the Portuguese language remains important for at least another generation. REFERENCES Bacelette, R. (2014). A Crescente Integração do Leste da Ásia, os Novos Arranjos Institucionais e o Papel da China. Boletim de Economia e Política Internacional, No. 18, Sep./Dec. pp. 41-58. Retrieved on Aug 19, 2018 from: http://repositorio.ipea.gov.br/bitstream/11058/5324/1/BEPI_n18_Crescente.pdf. Chauprade, Aymric (2003). Geopolitique, Constants et Changements dans l’Histoire. Paris, Ellipses, 2nd edition. Chien-peng, C. (2008). The role of Asia–Pacific Organizations in Maintaining Regional Security, Korean Journal of Defense Analysis, 20:2. pp. 169-185. Dupont, A., 2000. ASEAN’s Response to the East Timor Crisis, Australian Journal of International Affairs, Vol. 54, No. 2., Strategic and Defence Studies Centre RSPAS, Australian National University. East Timor Government (2010). East Timor Strategic Development Plan 2011-2030. Hägerdal, H., Berlie, J. (2018). Timor-Leste and ASEAN. In Berlie, J., ed., East Timor’s Independence, Indonesia and ASEAN. The Education University of Hong Kong, Palgrave, pp. 91-112. 110 FRANCISCO JOSÉ B. S. LEANDRO, JOSÉ EDUARDO GARCIA LEANDRO AND CARLOS MARTINS BRANCO

Heine, Jorge (2013). From Club to Network Diplomacy, The Oxford Handbook of Modern Diplomacy, Edited by Andrew F. Cooper, Jorge Heine, and Ramesh Thakur, Oxford University Press. Kingsbury, D.; Leach, M. eds. (2007). East Timor: Beyond Independence. University Press. Melbourne. Leandro, Francisco (2018). Steps of Greatness: Geopolitics of OBOR, University of Macau. Leandro, Francisco (2018). The OBOR global geopolitical drive: The Chinese Access Security Strategy, in the Belt and Road Initiative – Law, Economics, and Politics, Brill Nijhoff, Chapter 5, pp. 89-106. Margesson, R., Coordinator (2005). Indian Ocean Earthquake and Tsunami: Humanitarian Assistance and Relief Operations. CRS Report for Congress. Updated February 10, 2005. Retrieved on Oct 12, 2018 from: https://fas.org/sgp/crs/row/RL32715.pdf. Murdoch, L. (2010). Relations Strained as East Timor Buys Chinese Navy Boats. The Sidney Morning Herald. June 07. Retrieved on Aug 19, 2018 from: https://www.smh.com.au/world/relations-strained-as-east-timor-buys-chinese-navy-boats-20100606-xn5y.html. Mydans, S. (2007). Aid From China Builds an Ally in East Timor. July 26. The New York Times. Retrieved on Aug 19, 2018 from: https://www.nytimes.com/2007/07/26/world/asia/26dili.html. Roberts, Priscilla (2018). East Timor: Hostage to the Cold War? City University Macau, East Timor International Symposium, October, Unpublished paper. Sahin, Silver B. (2014). Timor-Lente’s Foreign Policy: Securing State Identity in Post-Independence Period, Journal of Current Southeast Asian Affairs, 33, 2 pp. 3-25. Sebille, E., J. Sprintall, F. U. Schwarzkopf, A. S. Gupta, A. Santoso, M. H. England, A. Biastoch, C. W. Böning (2014). Pacific-to-Indian Ocean Connectivity: Tasman leakage, Indonesian Through flow, and the role of ENSO, J. Geophys. Res. Oceans, 119, 1365–1382, doi: 10.1002/2013JC009525, p. 1373. Simões, J. (2012). Novo Modelo das Forças Armadas de Timor-Leste (FALINTIL-FDTL). JDRI. Retrieved on Sep 11, 2018 from: http://database.jornaldefesa.pt/assuntos_diversos_defesa/Novo%20modelo%20das%20For%C3%A7as%20Armadas%20de%20Timor%20Leste%20Falantil%20FDTL.pdf. Smith, A. (2005). Constraints and Choices: East Timor as a Foreign Policy Actor. New Zealand Journal of Asian Studies, Vol. 7, No. 1 (June). pp. 15-36. Storey, I. (2012). China’s Bilateral Defense Diplomacy in Southeast Asia, Asian Security, 8:3. pp. 287-310. Strating, Rebecca (2014). The Indonesia-Timor-Leste Commission of Truth and Friendship: Enhancing Bilateral Relations at the Expense of Justice, Contemporary Southeast Asia, Vol 36, 2, pp. 232-261. Tomé, L. (2016). Multilateralismo e Regionalismo na Ásia-Pacífico. Janus 2015-2016. van Sebille, E., J. Sprintall, F. U. Schwarzkopf, A. S. Gupta, A. Santoso, M. H. England, A. Biastoch, and C. W. Böning (2014). Pacific -to-Indian Ocean connectivity: Tasman leakage, Indonesian Throughflow, and the role of ENSO, J. Geophys. Res. Oceans, 119, 1365–1382, doi: 10.1002/2013JC009525. Windraskinasih, Mutiara; Afriansyah, Arie (2018). The Struggle of Becoming the 11th Member State of ASEAN: Timor-Leste’s Case, Brawijara Law Journal, Volume 5, Number 1, April 2018, pp. 74-101, DOI: http://dx.doi.org/10.21776/ub.blj.2018.005.01.06. World Politics Review (2012). A New Partnership Emerges for Timor-Leste and Indonesia, 2 July. Retrieved on July 03, 2018, from http://www.worldpoliticsreview.com/trend-lines/12116/global- insider-a-partnership-emerges-for-timor-leste-and-indonesia. Zamora, Rosemarie A. (2017). Government Bares Preparations for 31st ASEAN Summit, Business World. Retrieved on November 23, 2018, from http://bworldonline.com/govt-bares-preparations-31st-asean-summit/ 111THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

CHAPTER VI HOW CAN THE SUSTAINABLE DEVELOPMENT GOALS BE USED IN PORTUGUESE-SPEAKING COUNTRIES TO PROMOTE THE BELT AND ROAD INITIATIVE? | Pedro Neves The SDGs spirit Sustainable Development represents a new paradigm, as it combines simultaneously agendas for People, Planet and Prosperity. The process of combining economy, ethics, and environment can be traced to the work accelerated in the past decades by the United Nations but its origin has centuries. This perspective is important to understand the present tendencies taking place across the world. The industrial revolution and the technological innovation associated with new ways to produce energy, to move goods and people, and to communicate, lead to unprecedented economic growth. In parallel, the impact of reorganizing people in cities to support the factories led to an urban environment characterized by a higher human density that was associated with social inequality originating social conflicts. This challenge created the basis for people and social cohesion to be integrated into the development agenda. The industrial urban transformation was also responsible for the poor quality of air, water, and solid waste management, raising the need to bring environment aspects with development. Although these challenges can be traced to the 18th century, they were not approached as part of one development equation. In the 1950s Polanyi considered simultaneously the need to integrate labor, land, and money, (Polanyi, 1944) representing that an integrated approach combining environment, ethics, and economy was taking shape by the mid 20th century. When the UN in 1972 (Nations Conference on the Human Environment, 1972), discussed the need to associate Planet to the Development Agenda, and 113THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

later in 1987 Brundtland presented the concept of Sustainable Development (Commission on Environment, 1987) the innovation came from addressing simultaneously the social, environmental and economic agendas and to integrate them in an integrated development model. The Sustainable Development concept originated a new paradigm and it took several decades for this concept to evolve and to be accepted globally. Key dates of this process are the UN conferences in 1992 Rio, in 2002, Johannesburg, (Rio +10), and in 2012 again in Rio (Rio +20). The full adoption by all UN member states came in 2015 when Sustainable Development was adopted as the UN agenda for 2030 (United Nations, 2015). Sustainable Development is associated with three Ps: People, Planet and Prosperity, that could not be separated and had to be developed in parallel. The concept had been accepted but its implementation was and remains a challenge. Understanding Sustainable Development at the local level is complex and requires Institutional Innovation, but when this is taken at the global level, the perception that multiple players and new rules are needed becomes even more evident. Implementation became the new challenge and to address it, new rules and new players were needed to face it. A forth P for Peace and Strong Institutions and a fifth P for Partnerships were added, and the Development game with three pillars people, planet, prosperity had now rules, and players for the game to be implemented. Development today, and considering the SDGs is associated with People, Planet, Prosperity, Peace (and Strong Institutions) and Partnerships. The current challenge and the way to address it, is reflected today by the UN agenda for 2030, and the opening text of the agenda inspires all development policymakers to adopt a new attitude towards fighting poverty while protecting the planet: We are resolved to free the human race from the tyranny of poverty and want and to heal and secure our planet. We are determined to take the bold and transformative steps which are urgently needed to shift the world onto a sustainable and resilient path. As we embark on this collective journey, we pledge that no one will be left behind. The 17 Sustainable Development Goals and 169 targets demonstrate the scale and ambition of this new universal Agenda. This new paradigm is being adopted by all member states, through different institutional shapes. The European Union (EU) has been very explicit as it can be seen in this text from the EU Consensus: The 2030 Agenda for Sustainable Development (2030 Agenda), adopted by the United Nations in September 2015, is the international 114 PEDRO NEVES

community’s response to global challenges and trends in relation to sustainable development. With the Sustainable Development Goals (SDGs) at its core, the 2030 Agenda is a transformative political framework to eradicate poverty and achieve sustainable development globally. It balances the economic, social and environmental dimensions of sustainable development, including the key issues of governance and peaceful and inclusive societies, recognizing the essential interlinkages between its goals and targets. It must be implemented as a whole and not selectively. The 2030 Agenda aims to leave no-one behind and seeks to reach the furthest behind first. The 2030 Agenda and its 17 SDGs are universal and apply to all countries at all stages of development, based on national ownership and shared responsibility. Multi-stakeholder partnerships are key to the implementation of SDGs. (EU THE & GOVERNMENTS OF THE MEMBER STATES MEETING WITHIN THE COUNCIL, 2017) The Silk Road spirit & BRI Although the way China has adopted the SDGs on its new industrial policy and consequently it’s export policy, is not as evident as the one taken by the EU, its approach to the People, Planet, Prosperity, Peace, and Partnerships can easily be traced as shown below. The last decades have been marked by the way and the impact China has grown, to become, soon, the largest economy in the world, but also for through this process has taken 800 million people out of extreme poverty. This represents an alignment between development policies and transformational projects implementation. It started by using a great number of manpower with low wages but evolved to involve the adoption of new technologies and institutions. The complexity of the industry and the resulting products increased, and with it grew the quality of life and the cost of labor. To cope with exports and the improvement of labor conditions associated with labor costs, new integrated industrial policies and export strategies were required. The symbology of the Silk Road and its spirit is today reflected in the Belt and Road Initiative (previously called One Belt One Road). Considering two variables of an export equation Labour and Transport Costs, to keep the prices competitive for the end buyers, and considering that the main market is composed by buyers in Europe, if the cost of labor increases, then transport costs have to decrease. Looking at the Silk Road as complex transport network with multiple nations and multiple transport and logistics bottlenecks the challenge becomes to address simultaneously countries and infrastructure assets and to transform nations into partners and 115THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

bottlenecks into manageable processes and therefore to decrease transport time and consequently transport costs. To approach this objective the Silk Road has been taken as a trade route to increase exports and optimize transport solutions. By associating in parallel development with the SDGs and with Trade and Cultural Exchanges, with Cooperation and Communication, a bridge is established between the past and the present, the east and the west development models. This perspective is reflected by the way the Silk Road is presented by NDRC. More than two millennia ago the diligent and courageous people of Eurasia explored and opened up several routes of trade and cultural exchanges that linked the major civilizations of Asia, Europe, and Africa, collectively called the Silk Road by later generations. For thousands of years, the Silk Road Spirit – “peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit” – has been passed from generation to generation, promoted the progress of human civilization, and contributed greatly to the prosperity and development of the countries along the Silk Road. Symbolizing communication and cooperation between the East and the West, the Silk Road Spirit is a historic and cultural heritage shared by all countries around the world. In the 21st century, a new era marked by the theme of peace, development, cooperation and mutual benefit, it is all the more 116 PEDRO NEVES Figure 1. IMF: China rapid growth/ rising living standards.

important for us to carry on the Silk Road Spirit in face of the weak recovery of the global economy, and complex international and regional situations. When Chinese President Xi Jinping visited Central Asia and Southeast Asia in September and October of 2013, he raised the initiative of jointly building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (hereinafter referred to as the Belt and Road), which have attracted close attention from all over the world. The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents and their adjacent seas, The Belt and Road Initiative is in line with the purposes and principles of the UN Charter. It upholds the Five Principles of Peaceful Coexistence: mutual respect for each other’s sovereignty and territorial integrity, mutual non-aggression, mutual non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence. The Belt and Road run through the continents of Asia, Europe, and Africa, connecting the vibrant East Asia economic circle at one end and developed European economic circle at the other, and encompassing countries with huge potential for economic development. (NDRC Shaoshi, Release, Release, Background, & Mechanisms, 2015) Matching SDGs with Silk Road Spirit: SDGs: People (1), Planet (2), Prosperity (3), Peace (4) and Partnership (5); Silk Road Spirit: Peace (4) and Cooperation (5), Openness (3) and Inclusiveness, Mutual Learning (1), Mutual Benefit (3); Silk Road Cooperation priorities, 5 major goals: Policy Coordination (5), Facilities Connectivity (2), Unimpeded Trade, Financial Integration (3), People to People Bond (1). The Silk Road represents the industrial and export policy, and Belt and Road Initiative the implementation program. To implement BRI the Government of China has chosen NDRC (National Development and Reform Commission) as the Implementing Organization with two supporting arms, Tsinghua University as the Knowledge Centre and Think Tank, where the best practices of world development models are researched for Chinese adoption and adaptation, and the Asian Infrastructure Investment Bank as the economic arm to structure the financial solutions needed. 117THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

The recognition to have an institution to vertically and horizontally, design and implement medium and long-term development is not the only key for BRI but for the success of China growth, as it can be recognized by the description of NDRC main functions: To formulate and implement strategies of national economic and social development, annual plans, medium and long-term development plans; to coordinate economic and social development; to carry out research and analysis on domestic and international economic situation; to put forward targets and policies concerning the development of the national economy, the regulation of the overall price level and the optimization of major economic structures, and to make recommendations on the employment of various economic instruments and policies; to submit the plan for national economic and social development to the National People’s Congress on behalf of the State Council. Recognizing and adopting Innovation as a key for development success represents the need to create an environment for knowledge to thrive consistently. China has adopted a proactive approach to Research and Development and has adopted a clear partnership between proactive academy research centers and policymakers. Tsinghua University represents this Knowledge Center, where researchers from around the world, share best practices and see them being adopted and adapted to the Chinese reality. This tangible and very explicit use of technological as well as institutional innovation creates a development ecosystem for social scientists to live an ongoing social lab. Institutional Innovation is used by present and future global leaders. The living experience of being part of the Tsinghua Team of Experts namely on the design of new partnership models to implement BRI allows testifying the efficiency of the process. The rationale of Tsinghua University is reflected: With the motto of “Self-Discipline and Social Commitment” and the spirit of “Actions Speak Louder than Words”, Tsinghua University is dedicated to the well-being of Chinese society and to world development. As one of China’s most prestigious and influential universities, Tsinghua is committed to cultivating global citizens who will thrive in today’s world and become tomorrow’s leaders. Through the pursuit of education and research at the highest level of excellence, Tsinghua is developing innovative solutions that will help solve pressing problems in China and the world. Having an implementing agency and a knowledge center represents having a vehicle and a driver to define direction and goals, the third element is the energy to allow the vehicle to move. The energy, in this case, is the capital that is required for program and project implementation. Considering that multilateral development 118 PEDRO NEVES

banks can transform an origination pipeline of ideas into bankable projects, by structuring the required finance, combining equity, debt, and sovereign guaranty instruments and ensure the delivery of infrastructure assets that will solve bottlenecks affecting trade, the need to have this instrument is vital for the process. Considering the global framework of IFIs (International Financial Institutions) are based in Washington DC for the World Bank Group (WBG) and in Manila, for the Asian Development Bank (ADB) the same concept was adapted for a Beijing IFI, and the Asian Infrastructure Investment Bank (AIIB) was created. Asian Infrastructure Investment Bank, Articles of Agreement, Article 1 Purpose: The purpose of the Bank shall be to (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions. This triangle composed by implementing agency, knowledge center, and a financial institution, or vehicle, driver and energy, is not new, but as with the SDGs the fact that is organized simultaneously and its geographic center of gravity is now in China represents another development paradigm. The Portuguese Silk Road The Silk Road presented today, BRI is normally associated with two land routes, linking China to Europe, one through Russia and another through Iran. Then there is a maritime route from China to Kenya and then to Europe through the Strait of Suez. I have been defending there is a second, maritime route through the Cape and arriving in Europe at Sines Portugal. This Cape Route adds all Portuguese speaking countries and cities to the Silk Road, starting in Macau, Malacca, Goa, Mozambique, Angola, São Tomé e Principe, Guiné Bissau, Cape Vert, and Portugal. The Portuguese Silk Road brings an Atlantic dimension to the world largest transport infrastructure program designed. The corridor definition that combines a pair origin-destiny between China and Europe is kept, where China is the origin, and Portugal, the port of Sines, is the destiny, being the first European port for the Cape Route. But it represents as well that all Portuguese speaking countries in Africa become part of this development program associated with the SDGs, as well as with an industrial policy, where all benefit from developing their infrastructure assets and management processes enhancing trading of products and services. As China has created a triangle combining implementation, knowledge, and capital, the same could be used by the Portuguese speaking nations where CPLP, 119THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

120 PEDRO NEVES Figure 2. The Belt and Road Initiative, Merics. Adapted by Ana Thudichum Vasconcelos.

could be the Implementing Agency, a group of Universities form these Nations and Cities could team up to form a knowledge center and a group of Development Financial Institutions (DFIs) from each of these nations and cities could originate a pipeline of investable and sustainable projects for people not to be left behind to protect the planet while promoting prosperity. The Portuguese Silk Road – Atlantic Silk Road, linking all Portuguese speaking communities with SDGs and BRI is therefore a way to promote Sustainable Development for the Silk Road where routes of trade and cultural exchanges link the major civilizations of Asia, Europe, and Africa to promote peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit and leave no one behind. REFERENCES Asian Infrastructure Investment Bank, Articles of Agreement, Article 1. https://www.aiib.org/en/about-aiib/basic-documents/_download/articles-of-agreement/basic_ document_english-bank_articles_of_agreement.pdf Commission on Environment, W. (1987). Our Common Future: Report of the World Commission on Environment and Development. Retrieved from http://www.un-documents.net/our-common-future.pdf EU THE, J. S. B. T. C. A. T. R. O., & GOVERNMENTS OF THE MEMBER STATES MEETING WITHIN THE COUNCIL, T. E. P. A. T. E. C. European Union THE NEW EUROPEAN CONSENSUS ON DEVELOPMENT ‘OUR WORLD, OUR DIGNITY, OUR FUTURE,’ Development § (2017). https://doi.org/10.1162/qjec.2009.124.3.1265 THE NEW EUROPEAN CONSENSUS ON DEVELOPMENT ‘OUR WORLD, OUR DIGNITY, OUR FUTURE’ https://ec.europa.eu/europeaid/sites/devco/files/european-consensus-on-development-final- 20170626_en.pdf IMF: China rapid growth/ rising living standards. https://www.actionforex.com/live-comments/116400-imf-shift-from-high-speed-to-high-quality- growth-in-china-key-for-decades-to-come/ Merics. https://www.merics.org/en/bri-tracker/mapping-the-belt-and-road-initiative Nations Conference on the Human Environment, U. (1972). Report of the United Nations Conference on the Human Environment - A/CONF.48/14/Rev.1. Retrieved from http://www.un-documents.net/aconf48-14r1.pdf NDRC Shaoshi, X., Release, N., Release, P., Background, I., & Mechanisms, V. C. (2015). Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road Issued by the National Development and Reform Commission, Commerce of the People’s Republic of China, with State Council authorization Ministry of Forei. http://en.ndrc.gov.cn/mfndrc/ Polanyi, K. (1944). The Great Transformation (Karl Polanyi). Tsinghua University Research Center: http://www.ppp.tsinghua.edu.cn/Team/Experts/index.html http://www.ppp.tsinghua.edu.cn/rcpy/integrated/4fc8ad12-7460-4844-b4fa-1ad821afd03b.htmlhttp://www.ppp.tsinghua.edu.cn/Information/ad7cff35-94fb-4dd6-9654-e8505d5373ac.html http://www.ppp.tsinghua.edu.cn/rcpy/integrated/8b3d7358-ceda-4d75-acd1-c71d18aedf59.html https://www.tsinghua.edu.cn/publish/thu2018en/newthuen_cnt/01-about-1.html United Nations. (2015). Transforming our world: the 2030 Agenda for Sustainable Development. General Assembly 70 Session, 16301(October), 1–35. https://doi.org/10.1007/s13398-014-0173-7.2121THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

CHAPTER VII CHINA ENERGY SECURITY AND PORTUGUESE-SPEAKING COUNTRIES | Carla Patrício Fernandes Introduction The People’s Republic of China (PRC) is one of the largest players in the world energy market. It is both the largest producer and the largest importer of fossil fuels, the world’s largest energy consumer and the largest contributor to the global consumption growth1. It is also one of the largest investors in the energy sector in several countries around the world, a leading producer of wind and solar power, as well as a significant producer of clean energy technologies. China’s commitment to the Paris Agreement2 and the subsequent G20 summit reflects its willingness to assume more international responsibility to address climate change issues3. Furthermore, by 2050, China will also have a leading and “participatory role in Global Energy Governance” (National Development and Reform Commission of China, 2017). According to Hongyi Harry Lai (2007, p. 519) oil is a “strategic resource” for the PRC. Although primary energy consumption is still dominated by coal, it is this resource that brings more challenges to China’s energy security (Negyuan Anquan), especially because of the high ongoing external dependence of the country. After ceasing to be energy self-sufficient in 19934, China emerged as an oil importing country, rapidly reaching and surpassing the world’s leading consumers and importers5. The effects on the economy, social cohesion and job creation resulting from a possible shortage of supply or a sharp increase in oil prices are issues of great concern to the Chinese leadership (Salameh, 2010, p. 21). Therefore, they seek to 123THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

ensure “stable, continuous and affordable” energy resources to maintain economic growth and political stability in China. Initially, this concern was reflected in the concept of Chinese energy security, dominated by a traditional and realistic view of energy security (Downs, 2004, p. 23; Fernandes, 2013). China’s energy security tended to be state-centered, focused on the supply of energy, and insecurity stemmed from external dependence, especially on oil. The objective of energy security was to ensure long term adequate and continuous supplies of oil (Chang, 2001, p. 233) and the recommendations emphasized the diversification of supply sources and transport infrastructures to reduce the risk of possible embargoes and other risks and threats. Nowadays, energy security concerns have become broader, addressing not only security of supply, but also the defense of the development of endogenous energy resources, energy conservation and environmental and climatic protection (Chen Xinhua, 2003; Xu Yi-Chong, 2006; Fernandes, 2013; Fernandes, 2018a). In this article, we will examine the main challenges and strategies for China’s energy security, especially regarding energy supply security, focusing on external strategies, particularly on the “Going Out Strategy” (Zou Chu Qu) and on the “Belt and Road Initiative” (Yīdài yī lù chàngyì). We will also analyze the potential of Portuguese-Speaking Countries for Chinese energy security. Chinese Energy Challenges The PRC is a country of contrasts in energy terms. On the one hand, it has high mineral and energy reserves, with the largest reserves of coal, the fourth largest oil and gas reserves in Asia Pacific and the world’s largest reserves of shale gas (BP, 2018b, pp. 36, 12, 26). It has also been the world’s largest energy producer since 2009, the world’s largest coal producer and the fourth largest oil producer (BP, 2018b, pp. 36, 14). However, on the other hand, China is also the world’s largest energy consumer being, since 2011, the world’s largest consumer of coal6, the world’s second-largest oil consumer and third-largest natural gas user (BP, 2018b, pp. 18, 31, 39). China’s primary energy consumption is dominated by fossil fuels, with coal and oil respectively accounting for 58% and 20% of total consumption in 2018 (BP, 2019) (Cf. Figure 1). In June 2014, in the sixth plenary meeting of the Central Finance Leadership Group, President Xi Jinping called for an “Energy Revolution” by increasing the share of non-fossil fuel in primary energy and strengthening energy efficiency measures (Qilin Liu et al., 2018). Efforts for this revolution involve enabling hydropower, natural gas, nuclear power and other renewable energies (wind, solar and biomass and geothermal), to gradually increase their share of China’s energy 124 CARLA PATRÍCIO FERNANDES

mix (Cf. Figure 1). China is highly externally dependent on imports, being the largest importer of oil and natural gas in the world. In 2018, import dependency on oil rose to 72%, the highest in the past half century and import dependency on gas increased to 43% (BP, 2019). One of the major challenges for oil security for China is the traditional reliance on imports from distant countries, located in unstable and volatile areas of the Middle East (52%) and Africa (22%) (BP, 2018a). The risk of supply disruptions due to conflicts7, piracy, terrorism, price peaks or a possible embargo from other countries, including the possibility that some powers may exploit the heavy dependence on the Malacca or Hurmuz Strait, are major concerns for the Chinese leadership (Fernandes, 2013). This vulnerability is strengthened by the fact that energy imports from these areas have to cross maritime regions where instability is endemic. Although the PRC has additional channels for energy transportation, particularly the corridors by land from Kazakhstan, Russia and Myanmar, only a small portion of imported oil is transported by pipeline. This means that the country continues to be heavily dependent on maritime transportation of energy. In addition, about 83% of China’s imported oil is transported by long sea routes, which cross geostrategic chokepoints, 125THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXTHydroelectric8.3% Natural gas7.4%Nuclear2.0%Other renewables4.4%Coal58.0%Oil20.0% Figure 1. Primary Energy Consumption, by type of source, 2018 (%). Source: BP, 2019.

in areas of high instability, such as the Hormuz and Malacca Straits. As an example, more than 40% of China oil imports pass the Strait of Hormuz and almost 80% is transported through the Malacca Strait (Fernandes, 2018). In order to reduce the risk of reliance on a limited number of countries and insecure sea lines, PRC has focused on the “through proximity” energy security strategy, concentrating on the diversification of suppliers in neighboring Asian countries. China Energy Security Strategies Given its current and future energy perspectives, Beijing has developed internal and external measures for its energy security. Internally, these strategies are divided into three levels – institutional, consumption and supply –, and include a wide range of measures. In particular, they include the reform of the energy sector management system, the creation of strategic oil and gas reserves, the diversification of consumption of energy sources and the increase and development of onshore and offshore8 production of conventional and unconventional energies (such as Shale gas and coal bed methane). In terms of the diversification of energy sources, the main goal is to increase consumption of alternative and less polluting energy sources. The 2017 energy strategy9 established that non-fossil fuel in the energy mix should be higher than 15% (by 2020) and 20% (by 2030) and that natural gas should account for more than 15% of the mix by 2030. This strategy predicts that primary energy consumption will stabilize and that non-fossil energies should account for more than half of this consumption (National Development and Reform Commission of China, 2017). External strategies are also manifold and encompass diverse but complementary objectives for three groups of countries: producers, consumers and transport. Through intense Energy Diplomacy, the PRC is strengthening relations bilaterally and multilaterally with those groups of countries. For producers it is pursuing diversification and securing long-term supply contracts, reducing dependence on imports from distant and unsafe countries, accessing new investments especially upstream and obtaining know-how. For consumer countries, China is trying to coordinate potential conflicts of interest when pursuing the same energy goals. Moreover, for the transport countries, energy diplomacy has had a dual objective: to ensure land and sea supply security and to diversify transport routes. To achieve that, China is investing in land transport and in the construction of routes closer to the Chinese territory and better interconnection between supplier countries and China. 126 CARLA PATRÍCIO FERNANDES

Since 2002, energy diplomacy has been reinforced by the China “Going Out” strategy. With this strategy, Beijing politically and financially supports China national companies – such as China National Petroleum Corporation (CNPC), China Petroleum and Chemical Corporation (Sinopec) and China National Offshore Oil Corporation (CNOOC) – investing and acquiring exploration interests abroad in priority areas set by the Chinese government, mainly chosen due to their natural and energy resources. This includes, for example, the purchase of oil investments, integration in new explorations, participation in drilling and/or refining and investment in the construction of refineries, gas and oil pipelines outside China. Supported by loans granted by state-owned banks – such as the China Development Bank (CDB) and China’s Export-Import Bank (Eximbank of China), China Export and Credit Insurance Cooperation (Sinosure) –, the companies have been investing in different geographical areas. In exchange for “loans-for-oil” or “loans-for-gas”, it has been able to obtain long-term supply contracts. At the same time, by establishing strategic partnerships with other state oil companies and international oil companies, Chinese companies have been acquiring know-how and technical expertise, particularly in Deepwater exploration, which is essential knowledge with which to develop domestic Deepwater reserves in the South China Sea. And also in renewable projects in various parts of the world, obtaining knowledge for building a clean, low-carbon, safe, and efficient china energy system. In order to ensure maritime security for energy transportation, the RPC has been developing a strategy characterized by the protection and control of bottlenecks in maritime communication lines, in particular in the South China Sea and the Straits of Malacca and Hormuz. This strategy, known as the “String Pearl Strategy”,10 consists of strengthening diplomatic relations and increasing cooperation with the coastal countries where Chinese imports pass. In addition, it comprises the construction of alternative ports or the improvement of existing ones in those countries. Each port is a “pearl” in this strategy. The construction of these “pearls”, such as Chittagong in Bangladesh, Sittwe in Myanmar, Laem Chabang in Thailand, Sihanoukville in Cambodia and Gwadar in Pakistan, was accompanied by vast investments in new infrastructures (roads, highways and railways) and new energy transport corridors (gas and oil pipelines, electricity transmission grids). As part of this strategy, China developed three oil import channels from the north-west (Kazakhstan), northeast (Russia) and southwest (Myanmar). All these investments provide alternative routes for energy imports, avoiding the risks and threats associated with the “Malacca Dilemma” (Maliujia Kunju)11. In 2013, Beijing reinforced the “Going Out strategy” with the “Belt and Road Initiative”. The BRI, consisting of two corridors – China’s Silk Road Economic Belt 127THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

and 21st Century Maritime Silk Road Strategy –, “aims to increase energy cooperation, improve regional energy safety and optimize the distribution of energy resources” (NDRC, 2017) in Asia, Europe and Africa. The 21st Century Maritime Silk Road Strategy creates connections among regional waterways from China’s east and south coast to the Indian Ocean to Africa and through the Bab el-Mandeb Strait to the Mediterranean. China’s Silk Road Economic Belt is composed of six “corridors”: i) the New Eurasian Land Bridge (from western China to western Russia); ii) the China-Mongolia-Russia Corridor (from northern China to eastern Russia); iii) the China-Central Asia-West Asia Corridor (from western China to Turkey); iv) the China-Indochina Peninsula Corridor (from southern China to Singapore); v) the Bangladesh-China-India-Myanmar Economic Corridor (from southern China to Myanmar); and vi) China-Pakistan Economic Corridor (from southwestern China to Pakistan). Energy cooperation is one of the main characteristics of BRI. In March 2015, the RPC highlighted energy-infrastructure co-operation when outlined the priorities for the BRI. In May 2017, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) released a white paper Vision and Actions on Energy Cooperation in Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road (NDRC, 2017) to promote the implementation of energy cooperation under the BRI, to improve regional energy safety and optimize the distribution of energy resources, integrate regional energy markets and push forward green and low-carbon development. This document confirms the PRC’s aim to strengthen energy security and integration within BRI countries while fostering the development of its energy sector and diversification of its supply base and transportation routes (EURObiz, 2019). More recently, on 25 April 2019, China established the “Belt and Road Energy Partnership” (BREP) for strengthening the cooperation of the countries participating in the BRI in the energy sector. With 30 members12, the BREP will promote infrastructure connectivity, enhance energy investment and promote cooperation in clean energy, energy efficiency, capacity building and personnel training (NDRC, 2019). A win-win energy cooperation involving 65 BRI partner countries, covering eight countries from South Asia, ten ASEAN countries, eighteen from West Asia and Northern Africa, five countries of Central Asia, Mongolia from East Asia, seven from the Commonwealth of the Independent States and sixteen from Middle Eastern Europe (Duan, F. et all, 2018). In terms of energy, these countries represent an opportunity for China’s energy security, with “132.54 billion tons of oil reserves, 157.99935 trillion m3 of gas, 446.2 billion tons of coal, and 130 tons of reliable uranium resource, which accounts, respectively, for 58.7%, 79.4%, 50.1% and 23.3% of the world’s total reserves” (Zehu Jin, 2018). 128 CARLA PATRÍCIO FERNANDES

The energy cooperation involves all sectors of the energy system in major areas, such as exploitation of resources (for onshore and offshore oil and gas fields, coal mines and renewable energy sources), infrastructure construction (oil and gas pipelines, refineries, power-transmission corridors, power plants, and solar panels), energy utilization and transformation (nuclear plants, for example) and energy services including a think-tank service, product certification, projects and equipment. However, as in the String Pearl strategy, cooperation also includes construction and development of other logistics and transportation infrastructure, such as ports, airports, trans-national railways, highways, bridges and storage facilities (Belt and Road Portal, 2019) (Cf. Figure 2). Between 2013 and 2016, 70% of BRI projects were concentrated in the energy and infrastructure sectors (EURObiz, 2019). According Elder & Mardell (2019) two thirds of Chinese spending on completed BRI projects went into the energy sector, where the investment in power plants and grids dominate China’s spending on BRI-related infrastructure. 129THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT Figure 2. Projects subsumed under China Belt and Road Initiative. Source: Mercator Institute for China Studies, 2019.

One of the major projects of the BRI is the China-Pakistan economic corridor (CPEC), a 3,000-kilometer corridor that runs from China’s Kashgar to Pakistan’s Gwadar that includes a wide array of energy projects such as hydro, solar, wind and coal-fired power plants. Over the past 5 years, under the CPEC, seven of 16 energy projects have already been completed and other projects are being actively promoted, such as the 1,100MW Kohala Hydro-Power Project, the Gwadar Coal-fired Power Plant and the Matiari (Port Qasim) to Faisalabad Transmission Line (CPEC, 2019). This project demonstrates how the BRI initiative can contribute to the energy security of the countries involved and can create opportunities for both Pakistan, China and the countries of Central and South Asia. In fact, the CPEC provides affordable energy to Pakistani consumers in a diversified way and will contribute to turning Pakistan into an energy hub, while allowing landlocked Central Asia countries to become land-linked nations, with access to the Indian Ocean and to Persian Gulf ports (Fernandes, 2013, p. 243)13. To China it will permit to reduce the time, the cost and the risk of its energy imports by circumventing the Straits of Malacca and the South China Sea. Portuguese-speaking countries and Chinese energy security The Portuguese-speaking countries consist of eight different countries in terms of their geographical, demographic and economic dimensions, but with a common cultural and historical heritage. If they are considered as a group, the countries that speak Portuguese represents a market of more than 279 million people (World Population Review, 2019)14, located in four different continents. Those countries are members of different regional economic organizations, which broadens the interest potential for Beijing. In energy terms, Portuguese-speaking countries represent a diverse set of sources of energy, natural resources and rare materials. Brazil, for example, has the second-largest proven oil reserve in South America, after Venezuela (EIA, 2019a) and the world’s seventh largest reserves of uranium. It is the world’s second-largest iron ore producing country, with resources such as soybeans and petroleum, imported by China. Angola is the second-largest oil producer in Africa, following Nigeria, with its proven crude oil reserves increasing in recent years, from 8.3 billion barrels to 9.5 billion barrels at the beginning of 2018 (EIA, 2019b). In terms of energy resources we can organize the PLP countries into different groups: i) a group composed of three countries with proven oil reserves (Brazil, Angola and Timor-Leste); ii) a group of three countries that have oil reserves, although still in the exploration phase (Guinea-Bissau, São Tomé and Príncipe and Portugal); iii) a group composed of four countries that have gas reserves (Brazil, 130 CARLA PATRÍCIO FERNANDES

Angola, East-Timor and Mozambique); iv) a country with vast coal reserves (Mozambique); v) a group with hydropower (Brazil, Portugal and São Tomé and Príncipe); vi) a country with rare-earth elements (Brazil) and vii) a group with two countries with uranium reserves (Brazil and Angola). Parallel to energy resources, PLPs are important for China’s energy security, as a source of knowledge, for new investments in energy projects, especially in renewable energy (in particular Brazil and Portugal), for the production and cooperation of biofuels (Brazil) and the exploration and production of non-conventional energy (Angola and Brazil). 131THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT Table 1. Main Resources of Portuguese-Speaking Countries (2019). Source: Prepared from the EIA, CIA, 2019.Country Natural Resources Oil reserves Gas reserves (billion barrels) (trillion cubic feet) ___________________________________________________________________________________ Brazil Alumina, bauxite, beryllium, gold, iron ore, manganese, nickel, niobium, phosphates, platinum, tantalum, tin, rare 12.6 13 earth elements, uranium, petroleum, hydropower, timber ___________________________________________________________________________________ Angola Petroleum, diamonds, iron ore, phosphates, copper, feldspar, 9.5 10.9 gold, bauxite, uranium ___________________________________________________________________________________ Portugal Fish, forests (cork), iron ore, copper, zinc, tin, tungsten, silver, gold, uranium, marble, exploration phase – – – – clay, gypsum, salt, arable and, hydropower ___________________________________________________________________________________ Mozambique Coal, titanium, natural gas, hydropower, tantalum, graphite – – – – 100 ___________________________________________________________________________________ Guinea-Bissau Fish, timber, phosphates, bauxite, clay, granite, limestone, unexploited exploration phase deposits of petroleum with Senegal – – – – ___________________________________________________________________________________ East-Timor Gold, petroleum, natural gas, manganese, marble 0.554 7.1 ___________________________________________________________________________________ Cape Verde Salt, basalt rock, limestone, kaolin, fish, clay, gypsum – – – – – – – – ___________________________________________________________________________________ São Tomé Fish, hydropower exploration phase and Príncipe

Currently, Angola and Brazil contribute to the security of the oil supply and due to the recent discoveries in deep waters, especially in the pre-salt areas of their territories, they have the capacity to increase their share of Chinese oil imports. The attraction of Chinese companies to the Angola energy market can be explained, firstly, by the high quality of the oil, suited to the needs of Chinese refineries15. Moreover, because of the high success rate of exploration of oil wells (Fernandes, 2013, p. 338). China is the main destination for Angolan oil exports, since it overtook the US in 2007. What is more, Angola, after surpassing Iran in 2005, is the second largest supplier of oil to China (EIA, 2019b). In recent years, Russia has been competing with Saudi Arabia and Angola, respectively, in the first and second place ranking of the main suppliers to China. Brazil is the ninth-largest liquid producer in the world and the third-largest producer in the Americas (EIA, 2019a). It is the second largest source of oil supply among the PLP to China, after Angola, and the second among Latin American countries after Venezuela, while the RPC has been the largest importer of Brazilian crude oil since 2011. The volume of Brazilian oil exported to the Asian giant has progressively increased since the beginning of Sinopec’s collaboration with Petrobras in 2004, in the development of Brazilian energy transportation infrastructures. Since then, energy cooperation has been consolidated, allowing not only Chinese companies to participate directly (as Sinopec) or through joint ventures (as in the case of Repsol Sinopec Brazil), in the exploration of oil in Brazilian pre-salt. If, from 2010 and 2013, the Chinese companies’ investments in Brazil were concentrated on projects related to mining activity and the extraction of oil and gas, since 2014, they have been concentrated in the electricity generation and transmission sector. State-owned companies such as State Grid Corporation of China (SGCC) and China Three Gorges Corporation (CTG), acquired operations in hydroelectric plants and lines transmission, as well assets of Brazilian and foreign companies operating in the country. And, currently, Brazil occupies the top spot in Chinese funded energy generation and distribution in Latin America (Elder & Mardell, 2019). In Portugal, the investments of Chinese companies also lie in the electric power sector and in renewable energy. Since the state visit of President Hu Jintao to Portugal, in December 2010, supported by credit lines from Chinese state banks, Chinese companies, such as CTG16 and the SGCC, are increasing their participation in these two sectors (Fernandes, 2013). For CTG this represents the possibility of participating in the new investment projects that Energias de Portugal (EDP) wishes to carry out between 2019-2022 in the US, Latin America and the Iberian Peninsula. That is an investment of more than 12 billion euros, in which almost 7 billion will be applied to renewable energies (Ribeiro, 2019). SGCC paved the way to cooperate 132 CARLA PATRÍCIO FERNANDES

in the expansion of REN’s business in Portuguese-speaking countries, especially in Brazil, Angola and Mozambique, directly or through joint ventures. Both Portugal and Brazil are important for Chinese energy security, as sources of know-how in the technological advances that can contribute to the goals of energy transformation in China, especially in the sectors of renewable energy, particularly hydropower, solar and wind. The energy relation between this PLPs countries and China includes also cooperation in energy projects, with the creation of research and development centers in the energy sector in Portugal and Brazil. This centers, such as for example the New Energy World research Center and the Nester R&D Center17 in Portugal, allows China to shape the research and development and acquire the newest technologies, contributing to the country’s effort to be perceived as one of the leading players in the global energy transformation and to meet the decarbonization and climate mitigation goals set out in the Paris Agreement. Although none of the PLP countries are officially highlighted in the official BRI and in energy projects in land or sea corridors, some, such as Angola, Mozambique18 and Portugal19, have signed agreements concerning BRI, bilaterally or multilaterally, which have expanded the areas of energy cooperation between China and PLP countries. In terms of China’s external energy security strategies, due its high gas reserves, potential as a liquefied natural gas export and also because of its geographical proximity, Mozambique may be integrated into the energy corridors of the BRI20. Final Remarks Energy insecurity is contributing to the expansion of China’s influence and activities worldwide. The search for new opportunities, access to natural and energy resources, has led Beijing and Chinese state-owned companies to all continents, investing upstream, midstream and downstream projects. Through intense energy diplomacy, the PRC has sought not only to ensure stable long-term supplies, transport security, access to energy technology and know-how, but also to boost energy efficiency and climatic and environmental protection. To ensure the security of its energy supply, the RPC is developing external energy security strategies, strengthening economic and cooperation relations with producers and transit countries, firstly through its Going Out Strategy and currently with its Belt and Road Initiative. The BRI reflects China’s enhanced interregional cooperation in the exploration of energy resources and energy investments and it is accelerating the process of energy market integration in the Asia-Pacific region and the Asia-Europe region. 133THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

China’s efforts to secure energy resources extend beyond the boundaries of the Belt and Road initiative across all continents. It is in this context that we have included Portuguese-speaking countries, different countries in terms of resources and that represent different opportunities for Chinese energy security. China’s strategies for PLPs are embedded in external energy security measures aimed at ensuring a secure supply. Although the relationship between these countries and China is very old, the interest in accessing their energy resources is recent, starting mainly from 2004. In energy terms, PLPs primarily enable access to exploitable energy resources and access to know-how and cutting-edge technologies needed for the implementation of internal energy security measures; and finally they can expand China’s global energy market by strengthening its presence in energy assets in countries of different continents. NOTES 1 According to British Petroleum (2019), despite slowing growth in energy demand, China remains the world’s largest energy consumer, and will account for 22% of world energy consumption in 2040, contributing 20% of the world’s net increase. 2 Chinese President Xi Jinping participated in the Paris Climate Change Conference. This was the first time a top leader from China attended the Conference of the Parties, which is of landmark significance (Yun Gao, 2016, p. 235). 3 In June 2015, China issued the document “Enhanced Actions on Climate Change: China’s Intended Nationally Determined Contributions”, a document submitted to the Secretariat of the United Nations Framework Convention on Climate Change that sets four major targets that demonstrate the country’s determination to deal with climate change (NDRC, 2015). 4 The principle of self-sufficiency implied that the production of energy was supported by endogenous resources, which included human and physical capital and natural resources (Zhang Jian, 2011, p. 5). At the level of the oil sector, it indicated that Beijing would have to develop the oil industry through endogenous resources rather than foreign resources. 5 In 2003, China surpassed Japan and in 2009, the United States (USA). 6 According to BP Energy Outlook 2019 (2019), coal demand peaked in 2013. However, China remains the world’s largest consumer of coal, and this consumption will continue, accounting for 39% of global demand for coal by 2040. 7 In 2011, the conflict in Libya for example, had negative repercussions not only for state-owned and private Chinese companies that suspended their activities in the territory, but also for about 36,000 Chinese citizens working on various oil and gas exploration projects and who had to be evacuated. This conflict also caused disruption to the 150,000 barrels of oil per day that were sent by Unipec, the commercial arm of Sinopec Corp, to China (Fernandes, 2013, p. 11). 8 In terms of oil, this translates into the development of production in the central and western areas of the country, namely in Xinjiang, Sichuan, Gansu, Inner Mongolia and Chinese offshore development, in particular the Bohai Bay and the South China Sea and, to a lesser extent, in the South China Sea. 9 China’s energy strategy has three important pillars, the “Four Revolutions and One Cooperation” Vision, the 13th FYP for Energy Development (2016-2020) and Energy Supply and Consumption Revolution Strategy (2016-2030). On April 25, 2017, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) released the “Energy Supply and Consumption Revolution Strategy (2016-2030)” (2010), defining the sector’s main goals and strategies for energy by 2030. This strategy follows the guidelines of the 13th Five Year Plan for Energy (2016-2020). 10 The “string of pearls” term originated from a 2005 US study by defense contractor Booz Allen Hamilton, and China has never officially used the term. 134 CARLA PATRÍCIO FERNANDES

11 The “Malacca Dilemma” was first mentioned by Hu Jintao at the closing of a CCP economic work conference in November 2003. 12 The countries are Afghanistan, Algeria, Azerbaijan, Bolivia, Cambodia, Cape Verde, Chad, China, East Timor, Equatorial Guinea, Gambia, Hungary, Iraq, Kuwait, Kyrgyzstan, Laos, Malta, Mongolia, Myanmar, Nepal, Niger, Pakistan, Republic of Congo, Serbia, Sudan, Suriname, Tajikistan, Tonga, Turkey and Venezuela (NDRC, 2019). 13 CPEC will interconnect Pakistan with the overland corridors to the rest of Asia and to Europe, and by sea to Europe, Africa and other Asian regions. 14 Including Equatorial Guinea and Macau. 15 Angola oil composed of a sweet and light lower branch in its sulfur content. 16 CTG acquired 21.35% of the capital of EDP for 2.7 billion euros. This transaction was evaluated in the consulting report of Price Waterhouse Coopers (Pwc) Powers Deals 2012 (2012, p. 12) as the 9th largest energy sector acquisition project in the world in 2011. 17 The first results from the association from EDP and China Three Gorges Corporation (CTG). The second from Companhia Redes Energéticas Nacionais (REN) and China Electric Power Research Institute of State Grid. 18 Angola and Mozambique are part of the 28 countries that signed the BRI Memorandums of Understanding with African countries during the 2018 Forum on China-Africa Cooperation (FOCAC) (China Daily, 2018). 19 China and Portugal signed a memorandum of understanding on jointly advancing the construction of the Belt and Road Initiative during Xi’s visit to Portugal, December 2018 (CGTN, 2019). 20 Mozambique has the third largest gas reserves in Africa, after Nigeria and Algeria. Substantial natural gas deposits discovered in Mozambique’s Rovuma basin could transform the country into a significant liquefied natural gas (LNG) exporter (EIA, 2018). REFERENCES Belt and Road Portal, 2019. The Belt and Road Initiative Progress, Contributions and Prospects. [Online] Available at: https://eng.yidaiyilu.gov.cn/zchj/qwfb/86739.htm [Accessed 25 April 2019]. BP, 2018a. China’s energy market in 2017. [Online] Available at: https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics /statistical-review/bp-stats-review-2018-china-insights.pdf [Accessed 24 January 2019]. BP, 2018b. BP Statistical Review of World Energy 2018. [Online] Available at: https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf [Accessed 14 januaey 2019]. BP, 2019. BP Statistical Review – 2019 - China’s energy market in 2018. [Online] Available at: https://www.bp.com/content/dam/bp/business sites/en/global/corporate/pdfs/energy-economics /statistical-review/bp-stats-review-2019-china-insights.pdf [Accessed 14 May 2019]. Cagatay, G., 2017. China to rank 1st as global oil consumer in 2035: OPEC. [Online] Available at: https://www.aa.com.tr/en/energy/international-organization/china-to-rank-1st-as-global-oil-consumer-in-2035-opec/15946 [Accessed 12 January 2018]. CGTN, 2019. Xi: China views Portugal as ‘important partner’ in BRI cooperation. [Online] Available at: https://news.cgtn.com/news/3d3d414d35557a4d34457a6333566d54/index.html [Accessed 30 April 2019]. Chang, F., 2001. Chinese Energy and Asian Security. Orbis, Volume 45, 2, pp. 211-240. Chen Xinhua, 2003. Energy Security must be Attach Importance to Internal Factors and Stress the Safeguarding of the Policy System. Zhongguo Nengyuan [China Energy], Volume n.º 5. China Daily, 2018. Belt and Road Portal. [Online] Available at:https://eng.yidaiyilu.gov.cn/qwyw/rdxw/65620.htm [Accessed 24 May 2019]. CPEC, 2019. China-Pakistan Economic Corridor - Energy. [Online] Available at: http://www.cpecinfo.com/energy-generation [Accessed 30 May 2019]. 135THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Departamento Económico e Comercial da Embaixada da China em Portugal, 2012. As empesas chinesas e portuguesas vão desenvolver cooperação em terceiro mercado (Chinese and Portuguese companies will develop cooperation in third market). [Online] Available at: http://www.forumchinaplp.org.mo/pt/notice.php?id=1419 [Accessed 4 July 2012]. Downs, E., 2004. The Chinese Energy Security Debate. China Quarterly, Volume N.º 177, pp. 21-41. Dyer, G. & Anderlini, J., 2011. China’s Lending hits New Heights. Financial Times, 17 Janeiro. Eder, Thomas S. & Mardell, Jacob, 2019. Powering the Belt and Road. [Online] Available at: https://www.merics.org/en/bri-tracker/powering-the-belt-and-road [Accessed 28 July 2012]. EIA, 2012f. Country Analysis Brief - China. [Online] Available at: http://www.eia.gov/countries/cab.cfm?fips=CH [Accessed 10 September 2012]. EIA, 2018. Mozambique country energy analysis. [Online] Available at: https://www.eia.gov/beta/international/analysis.php?iso=MOZ [Accessed 14 May 2019]. EIA, 2019a. Brazil Country energy report. [Online] Available at: https://www.eia.gov/beta/international/analysis.php?iso=BRA [Accessed 25 April 2019]. EIA, 2019b. Angola Country Brief. [Online] Available at: https://www.eia.gov/beta/international/analysis.php?iso=AGO [Accessed 12 June 2019]. EURObiz, 2019. The Role of Energy within BRI. [Online] Available at: https://www.eurobiz.com.cn/the-role-of-energy-within-bri/ [Accessed 12 May 2019]. Fernandes, C., 2013. China Hoje – Necessidades Energéticas e Relações Internacionais. As relações com os Países de Lingua Portuguesa (China Today - Energy Needs and International Relations. Relations with Portuguese-speaking Countries), Lisboa: Faculdade de Ciências Sociais e Humanas da Universidade Nova de Lisboa. Fernandes, C., 2018a. A Contribution to the Analysis of Energy Security. Em: Geopolitics of Energy and Energy Security. Lisbon: Instituto da Defesa Nacional, pp. 61-79. Fernandes, C., 2018. Desafios e Estratégias da Segurança Energética Chinesa (Challenges and Strategies of Chinese Energy Security). In: A República Popular da China num Mundo Globalizado (The People’s Republic of China in a Globalized World). Lisbon: Instituto Universitário Militar, pp. 71-88. Kurlantzick, J., 2007. Charm Offensive: How China’s ‘Soft Power’ Is Transforming the World. New Haven: Yale University Press. Mercator Institute for China Studies (MERICS), 2019. [Online] Available at: https://www.merics.org/en [Accessed 10 July 2019]. National Development and Reform Commission of China, 2017. 能源生产和消费革命战略 (2016-2030) [Energy Supply and Consumption Revolution Strategy (2016-2030)]. [Online] Available at: http://www.ndrc.gov.cn/gzdt/201704/W020170425548780357458.pdf [Accessed 24 april 2018]. NDRC, 2015. Enhanced Actions on Climate Change: China’s Intended Nationally Determined Contributions. [Online] Available at: http://www.china.org.cn/environment/2015-06/30/content_35950951.htm [Accessed 10 July 2015]. NDRC, 2017. Vision and Actions on Energy Cooperation in Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road. [Online] Available at: http://www.nea.gov.cn/2017-05/12/c_136277478.htm [Accessed 24 may 2017]. NDRC, 2019. The Belt and Road Energy Partnership. [Online] Available at: https://bremc.obor.nea.gov.cn/index?lang=en_US [Accessed 23 May 2019]. Hongyi Harry Lai, 2007. China’s Oil Diplomacy: is it a global security threat?. Third World Quarterly, Volume 28, No. 3, 2007, pp. 519-553. 136 CARLA PATRÍCIO FERNANDES

PWC, 2012. Power Deals 2012 Outlook and 2011 Review, Londres: s.n. Qilin Liu et all, 2018. China’s energy revolution strategy into 2030. Resources, Conservation & Recycling, Volume 128, pp. 78-89. Ribeiro, S., 2019. EDP vai investir 12 mil milhões até 2022 com foco nas renováveis (EDP will invest 12 billion by 2022 focusing on renewables). Jornal de Negócios, 12 March. Salameh, M. G., 2010. China’s Global Oil Diplomacy: Benign or Hostile?. International Association for Energy Economics, pp. 21-25. World Population Review, 2019. Portuguese Speaking Countries 2019. [Online] Available at: http://worldpopulationreview.com/countries/portuguese-speaking-countries/ [Accessed 14 May 2019]. Xinhua, 2019. BRI an opportunity for global energy transition. [Online] Available at: http://www.chinadaily.com.cn/a/201904/18/WS5cb84887a3104842260b6fc3.html [Accessed 25 April 2019]. Xu Yi-Chong, 2006. China’s Energy Security. Australian Journal of International Affairs, Junho, Volume 60, 2, pp. 265-286. Yun Gao, 2016. China’s response to climate change issues after Paris Climate Change Conference. Advances in Climate Change Research, Volume 7, pp. 235-240, issue 4. Zhang Jian, 2011. China’s Energy Security: Prospects, Challenges, and Opportunities. [Online] Available at: http://www.brookings.edu/~/media/Files/rc/papers/2011/07_china_energy_zhang/07_china_energy_zhang_paper.pdf [Accessed 24 may 2011]. 137THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

CHAPTER VIII XXI CENTURY ECONOMIC TRENDS: THE STRATEGIC ROLE OF THE NEW SILK ROAD FOR AN EMERGENT LEADERSHIP OF PRC AND BRAZIL IN TODAY’S MULTIPOLAR WORLD | Francisco Murteira Nabo and Albertina Dias The emergence of the Silk Roads Although the creation of the Silk Road is attributed to the Persians in the 7th century BCE [1], the silk’s knowledge production was developed sometime around 2700 BCE in the Chinese Empire. Silk was seen as a luxury product and although the production monopoly was kept in China it was also traded extensively, becoming one of China’s major exports under the Han dynasty (206 BCE – 220 CE) [2], and eventually used as a means of payment [3]. The Silk Roads, along with its Maritime routes – also known as the Spice Routes – are considered to be the most important exchange system that existed during the Common Era. This time by sea, the Spice Routes connect the East with the West. As a result of these developments not only commodities were exchanged but also the intellectual and religious thinking. Just to name a few examples, in the Middle East, after the death of Jesus Christ, Christianity begins to spread and the Roman Empire adopts Christianism as an official religion. In China, by the end of the 1st century, the first Buddhism conversions take place. After the death of Mani in Persia (276 CE), Manichaeism (briefly, the main rival of Christianity) spreads successfully through Asia and Europe [2]. Along the trade roads and routes strong cultural and religious influences were spreading fast. And we could continue over the centuries describing all the changes brought about by increasing exchange of knowledge, creeds, cultures and even climate changes. 139THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Historians usually refer to two major periods of the Silk Roads (either overland and by sea): a first period (between 50 BCE and 250 CE) connected China, India, Kushan (actual Central Afghanistan), Iran, steppe-nomads (currently the region stretching from Mongolia to Hungary), and the Mediterranean; and a second period (approximately from 700 to 1200 CE) connected China, India, Southeast Asia, the Islamic realm, and the Mediterranean both over land and sea [2]. Accordingly to the political, economic, social and warfare developments of the regions involved in the Silk Roads different nations rose and fell, depending on what they were trading across countries – and that was definitely not only silk or spices. The Portuguese maritime expansion During the Ming dynasty, between 1405 and 1433, the Chinese Admiral Zheng He has made seven expeditions through various points of Asia, reaching the Persian Gulf and the Eastern coast of Africa. However, few decades later, in 1498, the Portuguese explorer Vasco da Gama arrived at Calicut in India and showed that it was possible to reach India by sea. From the fifteenth century, the fast-paced maritime Silk Road will provide an intensification of political, diplomatic, mercantile and cultural exchange between Asia and the West [1]. This is the end of the dependence on the highly disputed Mediterranean Silk Road. The emerging of the so-called Portuguese Overseas was only possible because of the developments in the art of navigation, cartography and maritime technology. By connecting the Atlantic and the Indian Oceans, Portugal established trade routes with the highly developed civilizations of China and Japan and maintained for decades a commercial monopoly of the commodities from Southeast Asia, like pepper and cinnamon among many others. Portuguese maritime expansion has been the key element explaining one of the longest-lived empires of the world. However, Portugal and Spain have had several disputes overtime that ended up in the establishment of important agreements. One of these important agreements was the Tordesillas Treaty (1494) because it established a division of the newly discovered and undiscovered lands outside Europe between the Kingdom of Portugal and the Spanish Crown – later this gave the Portuguese the legal claim of Brazil. These facts explain why Portuguese language is among the most spoken languages in the world. Portuguese traders and conquerors spread their language to Africa, Asia and the Americas, Portuguese is spoken by more than 200 million native speakers in countries like Brazil, Angola, Mozambique, Cape Verde, Guinea-Bissau, São Tomé and Príncipe, and places like Goa and Macau. Notwithstanding, these two empires, Portugal and Spain, even shared the same Kings (Filipe II and Filipe III of Spain) during 60 years – between 1580 and 1640 – 140 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

and Portuguese trade was thus affected by the instability brought by this monarch actions. The other countries of Europe rejected the terms of the Treaty of Tordesillas and pursued their own agendas regarding the colonization of the Americas [4]. The Dutch, the British Kingdom and France were hostile to Spain and thus, given these circumstances aligned with several other conditions but especially with the arrival of the Dutch and the British to East Asia, Portugal changed its strategic focus to Brazil, and later on to the African countries instead of Asia. Soon, other European countries, namely the Dutch Republic and England, followed by France and Denmark, were able to challenge Portugal’s monopoly and naval supremacy. During the 18th century Brazil becomes of paramount importance to the Portuguese economy due to its significant sugar production and then as a profitable source of precious metals [5]. In 1822, Brazil became independent as part of a wave of independence process in the former colonies in Portugal in the nineteenth century. The Portuguese Empire was now limited to its African colonies, East Timor and the enclaves in India (Goa, Daman and Diu), and in China (Macau). During the colonialism period the international trade was growing in volume and varying considerably across time and from empire to empire, and not surprisingly having, during several centuries (from the 1500s to the 1800s) Portugal and the United Kingdom ranking the top in terms of intercontinental trade, in per capita terms [6]. Nowadays, the Portuguese “presence” is reflected on every country and region that has been historically influenced both by language, educational system, economic administration and trading activities, or simply genetic heritage, and also by the presence of a long socio-cultural identity. After all, Portugal is not only a medium European country because is still “deeply rooted” in the three continents of Asia, Africa and America. Waves of Globalization transforming the economies The world dynamics in the last three hundred years, in part as a result of an increasing influence of rationality and science instead of religious dogmatism and mysticism, innovations in technology and especially in transports’ technology allowed a globalization of goods and services, as well as people and ideas. The word globalization is rather controversial because it has different meanings under different perspectives. Yet, in the traditional sense it means that trade volumes relative to Gross Domestic Product (GDP) might have peaked. Obviously the term globalization has a long history and it would very much appropriate to refer to the Silk Road trading, for instance. Globalization in the context of this chapter is seen as a continuous process, and is used to describe the impact of cross-border trade in goods and services, technology, people and information on the growing 141THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

interdependence of the countries’ economic, social, and political activities across national boundaries. Nevertheless, economists and historians often mention two major waves of globalisation, having the first wave started in the nineteenth century and ending with the beginning of the First World War, and the second wave started after the Second World War, and is still continuing [7]. The great technological advances and inventions, namely the steam engine and the mechanization of the textile industry during the First Industrial Revolution (between 1760-1840) followed by a Second Industrial Revolution (between 1870-1914) in which the electricity and the assembly line allowed for the mass production of goods and services, were the key elements explaining the economic growth and the emergence and/or development of core-nations, independently of the strategic and political ability of individual states to maintain their status over time. Only after World War I and II, with several nations leading efforts to revive investments and international trade, a Third Revolution (between 1969-2000) takes off with industrial computers and automation developments. Once this “Information and Communication Technologies” (ICT) Revolution has started the traditional trade transactions – already including goods (tangible products) and services, such as tourism and financial services – become increasingly global and complex. Somehow the ignition for a completely different global economy that has no empires or core-nations, at least able to endure their power and influence over other nations or regions in the long run, unless they keep up the pace of permanent and fast development. Many of the technologies that we use presently are improvements of the basic concepts laid during the previous revolutions. This probably explains why in the present we are still living the Fourth Industrial Revolution that started almost simultaneously along with the Third Industrial Revolution. Although the advent of the interconnected net – Internet – dates back from the 1960s, it’s only from the 1990s onwards that humankind is able to see the greatest changes transforming the way we do business and the way we interact. The World Wide Web (Web) environment represents the facility of having a graphical user interface for hypertext navigation with a browser. Under this perspective, the Web may be seen as the tool or the part of Internet that allows for easy navigation in the millions of interconnected computers across the all planet. Users send and receive the data files, create, and view or listen to the content based on Internet infrastructure. The power of individuals over digital contents keeps on growing as the proliferation of innovative gadgets produced by the ICT developments [8]. The international trade has grown remarkably over the last two centuries. The estimation (at constant prices indexed at 1913) shows that the value of the world exports over the period 1800-2014 is more than 4.000-times larger than in 1913 [9]. The fastest sharing of knowledge and information in recent times has 142 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

allowed many emerging countries to become part of the global supply chain, in which everything is produced and traded in an integrated world network of ports and inland cities across all continents. This extraordinary “inter-communication” among people, firms, countries, and even machines has had and is still having extreme effects, especially in the developing countries [23]. Back in the 16th century shipping was strategic for the international trade, and still is – some things did not change at all. An impressive interactive map created by the firm Kiln and University College London’s Energy Institute [10] couldn’t be more revealing on how intensive is trade nowadays and at the same time causing environmental negative externalities (https://www.shipmap.org/ on June 19, 2019). On average and daily, there are more than 50.000 merchant ships on the high seas, moving roughly 90% of all goods and commodities across the world during 2012. The map identifies ships by five types, each given a colour: containers in yellow (manufactured goods); dry bulks (e.g. coal, aggregates) in blue; tankers (e.g. oil, chemicals) in red; gas bulks (e.g. liquefied natural gas) in green; and vehicles (e.g. cars) in purple [10]. The net effect of successive industrial revolutions and consequently the enhanced international trade is then seen as positive because it raised the Gross Domestic Product (GDP) per capita globally. When analysing at country-level there is evidence that trade generates trade efficiency gains and consequently economic growth. According to several authors there is empirical evidence that there is a causal relationship between trade and economic growth [11]. A greater global economic integration, and of course openness to the world allows countries to learn faster and therefore innovate faster and to leverage their position in the competitive environment, and to benefit from economies of scale. However the conclusions are often controversial. The same way trade and technological revolutions brought a great positive impact via lower consumer prices and increased availability of products and services it is also a fact that for many countries the negative impact of unemployment and lower wages has affected millions of people, and many times not only temporarily. How much the world has changed? Before the nineteenth century China and India were the largest economies in the world. The Western countries started to emerge with the increasing of trade in the nineteenth century and then later, after the Second World War, and along with the successive industrial revolutions some of these economies register an impressive and fast growth. After the destruction of two World Wars and a Great Depression, the world finally understood the negative impact and high costs of economic and political closure. Many international agreements and institutions, such as the General 143THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Agreement of Tariffs and Trade (the GATT, later in 1995 replaced by the WTO – World Trade Organisation), the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund (IMF), the World Bank, and the beginnings of cooperation for a peaceful Europe – European Union (EU) – were created after the 2nd World War in order to reconstruct the shattered economies and to create a more integrated world. During the 19th and the 20th centuries the relative position of the highly developed countries – Group of Seven (G71) – in the international system was far from the rest of the world. The positioning of the states in the international ranking is influenced by many characteristics including not only its GDP but also its population, land size and geographic location, military power and so on. While it’s still fresh in the minds of many the Tiananmen Square protests against the Communist Party of China in Beijing in June 1989, shortly after the fall of the Berlin Wall in November 1989 breaks the Cold War international system, which for almost half a century (from 1945 to 1991) was centred in the two great powers, the United States and the Soviet Union. There was, of course, a wider context for these events, but indeed, the end of the Iron Curtain opened space for the emergence of a multipolar world, especially when the Doha Development Round (DDR) of the WTO commences in 2001. Despite any eventual criticism around the success of the DDR, the world geopolitics was somehow shaped by the power nations controlling the production and trade of different energy sources and specific manufacturing products and business services, brought by the liberalization of trade and financial flows as well as the revolution in transports and communications [12]. During the two or three decades of the G7 economic success the so-called emerging countries (E72), the BRIC’s (Brazil, Russia, India and China), and especially China and Brazil were able to keep up the pace, sometimes registering impressive rates of economic growth. According to Amaral (pp. 43-44, 2011) the emergence of China would not have happened as quickly as it had, had it not been for its accession to the WTO in 2001 and the right it had acquired from selling its products in the markets of the richer countries, and likewise, the high growth rates that Brazil achieved from 2003 to 2008 would not have been recorded were it not for the emergence of China and the liberalization of the commodities trade. Amaral (p. 44, 2011) also defends that after Brazil’s economic opening there is a reduction in the gap between developed and developing countries, with obvious benefit to various regions of the developing world, such as Asia, Latin America, and Africa [13]. Not being easy to summarize these waves of globalisation and technological revolutions in one page, because it doesn’t makes justice to the reality of the facts, these historical moments are worth to emphasize in order to understand the world dynamics and its future perspectives on the New Silk and Belt Road. Some of the concluding remarks about previous centuries are that Industrial and ICT revolutions 144 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

have facilitated the moving of ideas around the globe in an impressive exponential scale, affecting not only the behaviour of humans but especially firms and governments. Business had to reorganize and the role of the states had to change by intervening redistributive policies, while advances in automation and artificial intelligence will eventually cause geographical barriers to disintegrate. The competition among nations for getting access to oil, natural gas and coal reserves hasn’t stopped, yet the innovative renewable energies and the need for a higher level of soft skills tend to reshape and reposition the states in the international system. Computer technology changed the world economy and for the first time the world is experimenting a revolution that is not based on the emergence of a natural resource, a new form of energy or a transport cost reduction, however it also brought widening inequalities in wealth and income distribution. The world is more democratic! The majority of the world’s countries are now governed by democratic regimes [16]. While the less developed and the emerging countries have been working towards less poverty, enhanced education by extracting benefits from the digital access, fighting digital divide, and especially becoming more democratic, the Western countries face the problems of unemployment and stagnation of real wages driving the Western societies to a growing socio-economic divide. Unlike previous democratic administrations, the oldest democracies are signalling chaotic performance in terms of equality and income distribution among the population, and too often associated with debt, dysfunction at home and abroad and corruption. In a recent report examining social divide in Europe it is possible to conclude that income inequality has been growing in most wealthy countries during the last decades and that the “Great Divide” pertains not only to growing gaps between the bottom and the top of the income distribution within the European countries but also to diverging trends between countries – “In the 1980s, the average disposable income of the richest 10% was around 7 times higher than that of the poorest 10%; today, it is around 9 ½ times higher” (OECD, 2017, pp. 7-8). Of course this situation raises questions about the success or failure of the redistribution policies and affects directly, not only the stability and sustainability of the social and economic systems but also the political stability in Europe. Indeed, behind the eventual Brexit situation – the United Kingdom (UK) leaving the European Union (EU) – has far more deep and longer history than the simple facts actually discussed, however, the socio-economic aspects do intensify the political relationship between the UK and the EU. Income inequality, measured through the Gini coefficient, was generally lower one generation ago. In European countries, the Gini coefficient increased on average from 0.28 in the 1980s to 0.30 in 2014 [15]. 145THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Nevertheless, income inequality is not a European phenomenon; in the wealthiest countries we find traditional highly unequal incomes, like for instance in the US and the in the UK. In his book “Has the West Lost It? A Provocation” Mahbubani (2018) refers to the failure of the “American Dream” [17] and alerts to the interesting statistics presented by Johnson (2016): “Between 1948 and 1973, productivity rose by 96.7 per cent and real wages by 91.3 per cent, almost exactly in step; From 1973 to 2015 – the era of globalisation, when many of those jobs vanished abroad – productivity rose 73.4 per cent while wages rose by only 11.1 per cent”; and that “on average in 1965 an American CEO earned 20 times what a worker did. By 2013, on average, the number was 296 times” [18]. Federica Mogherini (2016), the High Representative of the Union for Foreign Affairs and Security Policy introduces the annual report on ‘Human Rights and Democracy in the World in 2016’ by stating “Our world is facing opposing trends, some of them worrisome. On the one hand, we witness a return of authoritarian tendencies and a widespread attack against civil society. Conflicts, political instability, but also global phenomena such as migration, pose new challenges to human rights worldwide” [19]. Since the collapse of state socialism, the democratization of the old Soviet Union seemed unavoidable, yet the contours of an alternative social order have become almost impossible to discern. Although democracy has been the most successful political idea of the 20th century, after the 2007 global financial crisis, intensified by erratic implementation of democracies and several setbacks in much of the Middle East, Latin America and Africa, along with the rise of the Chinese economy, both democracy and neoliberal capitalism have come under question. The once wealthiest nations are now living times of frustration because their population has already generally achieved high levels of education, living standards, and with an extremely easy access to information provided by the fast development of ICT and yet, they can no longer have the expected return or at the least the same reward as before – and hardly they’ll ever become as rich as their parents once became a few years after graduating, for example. These circumstances gave momentum and place to the ascending populism and nationalism. At the same time, Europe has been keeping interest rates at very low levels and even negative – which is supposed to work in the short run but not so much in the longer term since it is likely to produce deflationary circumstances and serious drawbacks in the quality and quantity of investments. The last decades’ falls have been related to the 2007 global financial crisis and its aftermath but the decline in yields, particularly for longer-term rates, began in the late 1990s and it has been primarily associated with lower real interest rates, rather than a decline in inflation expectations. Furthermore, this phenomenon has been widespread and not in particular countries and the 146 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

integration of China into global financial markets has probably resulted in additional downward pressure on global real interest rates in recent years [20]. While internal inequality increases in the Western countries, at the global level, there seems to be a very well established trend in terms of fast economic convergence of the emerging countries regarding income distribution. Global inequality increased for 2 centuries and is now falling. In the 19th century the majority of the world population (~90%) was extremely poor, in the 1970s the world became more unequal, and was divided into a poor developing world and approximately a 10-times richer developed world. Over the following 3 decades, the poorer countries, especially in South-East Asia, started catching up. Compared to 1975, the world has become richer and less unequal and a small percentage of the global population earns less than $2/day [21]. This conclusion is naturally pointing to a future ‘Global Market’ rather than internal markets of the wealthiest nations. In a public presentation of his book The Third Industrial Revolution, Rifkin (2011) stated then that “we need a ‘New Game Plan’ to face the changes of our societies and economies, as a result of the digitalization of communication, energy, and transportation, and it needs to move equally as fast in the developing countries as in the industrial nations” [22]. Markets are driven by efficiency and profit rates worldwide The world economy has already changed a lot! The world is more deeply integrated and interdependent along multiple dimensions: economic, cultural and political. Although it’s difficult to measure socio-cultural and political dimensions with precision, it is necessary to recognize these profound changes in the world economy. How important have been the very first theories on international trade that identified the absolute advantage (The Wealth of Nations by Adam Smith in 1776) and the comparative advantage (Principles of Political Economy by David Ricardo in 1819)? How important has been the development of the first matrix of inter-industrial relations (also known as Leontief Matrix, 1953) for describing and understanding the structure of the world economy? Back in 1965 Portugal developed its first Input-Output Matrix in order to identify important inter-sectorial relations – needless to say that the decision-making processes should then be wiser and potentially enhancing global efficiency [23]. All the advances in information technology, the changing of energies’ paradigm and the improvements in transports and logistics have had a greater impact over time in the trading system and will certainly continue in a faster pace, challenging the nations’ governments daily. National companies have been substituted by multinational enterprises, often spread across all countries in the 147THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

world. It is unlikely to find a single country that does not have certain largely well-known products that are immediately “flagged”. The global value chain is now studied and analysed like never before, multilateral relationships are actually more and more relevant for the economies. Thus, it is urgent to put in place new strategies suitable for the increasingly changing world. As we mentioned before in the beginning of this chapter, the ancient Silk Roads was simply the name attributed to the “market driven strategies” of several nations pursuing profits. The Belt and Road Initiative as the New Silk Road for the XXI Century In 2013 the President of the People’s Republic of China (PRC), Mr. Xi Jinping, has announced the will to take responsibilities in deciding the rules of the world’s conceptual model of relationships. At the same time the PRC immediately structured a global diplomatic action to the world on the project One Belt One Road (OBOR) – New Maritime Silk Road for the 21st Century. OBOR, also known by Belt and Road Initiative (BRI), is a global project in which the Chinese government planned to invest, over the next 10 years, around US$1 trillion in infrastructure projects in different parts of the world, including Asia, Europe, the Middle East and Africa. This strategic decision has been followed by its immediate take-off and is already producing concrete and relevant results. Indeed, the state control over economy is likely to influence a faster implementation than in any other systems; where possibly over complicated measures, processes and procedures would slowdown the process. In Chinese the word China means “the centre of the world” or “between heaven and earth” and this reformulation of the historic Silk Road, after one century of isolation and humiliation might be the backbone of Eurasia. What first has been clearly China’s foreign policy strategy, during many years – China led its expansion towards its terrestrial borders in order to maintain their security – seems now to have been wisely transformed into a global economic strategy for the world. China is committed to become a great technological power, based on human capital and is making a huge effort in education and training. Finally, the BRI is not simply a Chinese aid program to the world, and is certainly not an innovative idea – it was always there… however it is in fact an impressive vision on how to connect China with the world in a way that may help Chinese trade flows and thus, contributing for an efficient re-engagement of China, which has been “baptised” as One Belt, One Road strategy. When China goes Global, it is fundamental to understand that the necessary internationalisation strategies for such a big country to go global must really affect profoundly the rest of the world. The typical short-term strategies in the Western 148 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

economies, usually related to the short-term elections’ period are not comparable to China’s vision, which, in principle, has to deal with a very long timeline as any centrally planned economy. No wonder that in many Western countries some of the most mediatised news announce the BRI with some reserves and preoccupations – maybe it is not so easy to understand the logic of such a long-term strategy when one is concerned with the short-term issues. Probably, not even China is actually aware or fully sure on how this long-term vision is expected to work. But one thing can be easily understood, and many nations do have this understanding by now: it is impossible that such sizable network of infrastructure projects do not affect us all! Naturally, after this simple understanding, many ideas, projects, and concrete actions that had initially nothing to do with the BRI are now willing to be integrated in its long list of projects, and not only because there is a hope for finance aid but simply because it is rather difficult not put in perspective a close collaboration with this vision. What has never started as an innovative idea may now represent a new game-changing scenario on international policy challenged by the need of fast developments at the social, economic and cultural levels, at least in a first approach. The opening of China known as “one country, two systems” begun in 1976 with Deng Xiaoping, after the death of Mao Tsé Tung, was more in the economic aspects than political, and somehow behind the Chinese idea that “China is the centre of the Earth” – it is unavoidable that China is to play a relevant role in the economic, political, technological, social and cultural transformation that the world will live in since the last quarter of the 20th century, and as a result of globalization of the world economy. For this reason, in addition to the profound transformation of China’s domestic policies – with the abandonment of the policy of isolation from the rest of the world – the Chinese first and original strategic view was to become a world economic power in the long run, and of course such a major achievement demands for exceptional ability to compete with the Western economies, especially the North American and the European economies. Therefore, long before we start talking about an investment strategy centred on the ancient and well-known Silk Road, China has discreetly defined, but as the Chinese always do, in a very planned, effective and disciplined way, a policy of participation in projects of various types and sizes all over the world, from Europe to Africa, through Latin America and Australia. The BRI challenges from China to Europe While Central Asia might be seen as the birthplace of the BRI, the inner country Uzbekistan may well be seen as the birthplace of the ancient Silk Road. Central Asia is bounded on the north by Russia and on the south by Iran, 149THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Afghanistan, and China. The region consists of the former Soviet republics of Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan, and Turkmenistan. However, also Afghanistan (which is part of South Asia) is sometimes included in Central Asia. Four of the five “stan” countries speak languages related to Turkish indicating, among other important socio-economic aspects, some degree of cultural converge. According to the “OBOR Economic Roadmap” published by the Economist Intelligence Unit (EIU) in 2016 the most important investments include the large-scale energy projects such as the Central Asia-China Gas Pipeline and the even bigger investments associated with the Power of Siberia system for gas delivery from Russia to China [24]. On one hand, China needs the Russian excess of resource inputs; on the other hand, China may represent a key-trading partner for Russia to cover the risk of losing access to the Western markets of goods and capital. However, the biggest challenge of all possible investments in Central Asia is that the BRI activities should provide support to multi-lateral flows of valuable resources (goods, services, people and information) which hasn’t been easy to implement so far due several socio-economic bottlenecks, like for instance the difficulty in achieving a reasonable return on investment in non-industrialised and underdeveloped territories along with the incompatibility of the region’s existing rail systems (Russian standard) with the Chinese high-speed rail technology. The BRI also expanded to what is also known as the “16+1 mechanism”, which consists of China and 16 Central and Eastern European Countries (CEEC). These countries had several challenges after the fall of the Soviet Union with varying degrees of integration both in Western Europe and in terms of their positioning with Russia. Just to mention a few, Poland became the first Belt-Road destination in the region with the inauguration of the China-Poland railway in 2013, and in June 2015, Hungary became the first China-CEEC member to formally sign an agreement for co-operation with China within the BRI context. While bridging China with the Western European countries, one of the first major infrastructure projects, in December 2014, was the 1.5 km Pupin Bridge crossing the Danube to connect urban area of Zemun in the Serbian capital, Belgrade, and neighbouring suburban Borca, including a 21 km connecting route. Following this successful project, China has made an even bigger push into the European continent by launching a Budapest-Belgrade high-speed railway project. The system is supposed to combine with high-speed connectivity to Skopje, the Macedonian capital, onwards to the Greek capital, Athens, and its nearby port of Piraeus. The Chinese state-owned shipping conglomerate Cosco already has been investing heavily in improvements at Piraeus Port through its long-term concessions on cargo piers. From Piraeus Port and expanding Eastern European high-speed rail network, ocean-borne Road and 150 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

overland Belt traffic will be converging as a modern, large-capacity, high-throughput intermodal trade corridor [25]. Even the critical opportunities in the Middle East are covered by the BRI objectives. It isn’t recent the critical stability of the Middle East region. One decade after Vasco da Gama discovered the seaway to India, the Portuguese arrived in Oman and occupied Muscat for a 143-year period, from 1507 to 1650 [27]. In need of an outpost to protect their sea-lanes, the Portuguese built up and fortified the city, where remnants of their colonial architectural style still remain. The Ottomans drove out the Portuguese, but were pushed out themselves about a century later (1741) by the leader of a Yemeni tribe, who began the current line of ruling sultans. A few years later Oman suffers another brief invasion by Persia, the Omanis became an economic power in the early 1800s, largely by using their position on the Indian Ocean and seafaring knowledge gained from the Portuguese to gain access to foreign lands. They took control of the coasts of present-day Iran and Pakistan, colonized Zanzibar and Kenyan seaports, brought back enslaved Africans, and sent boats trading as far as the Malay Peninsula [28]. Anyhow, more recently, since 1908, the discovery of oil in Iran (then known as Persia) and later discoveries in Saudi Arabia and throughout the region, the Middle East turns out to be much more attractive [25]. Initially there were no plans announced regarding the BRI in the Middle East, possibly due to the prevailing confrontations and conflicts. Yet China is the world’s largest oil importer and also has other than energy trade ties with the Gulf Cooperation Council (GCC) states. Therefore, China is now seen as a valuable partner by all the GCC countries for the success of their “Vision” programs, to which the development of modern infrastructure and economic diversification are crucial factors. After the Mr. Xi Jinping visiting Iran in January 2016 new 17 deals and a 25-year co-operation pact for economic, political and military relations were signed [29]. The historic role of Portugal in the Silk Road and the CPLP impact The Silk Roads’ vision of land and maritime logistics’ network connecting Asia, Europe and Africa, should be seen as a complex network of exchanges that linked different regions of the World into a single system, and have played a significant role in the development of several civilizations opening long distance political and economic relations. Africa’s Silk Road is clearly about far more than natural resources, and Brazil, as a major producer, is now open to establish a strategic partnership with the biggest market in the world for their products. In fact, all the countries of the Community of Portuguese Language Countries (CPLP) – also 151THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

known as Lusophone Commonwealth – where Portuguese is an official language are now in position to participate in the BRI, broadening its geo-strategic reach since the CPLP countries are spread over 4 continents: Europe, America, Asia, and Africa. The CPLP is now counting 9 full member states and 19 associate observers. After more than 20 years, the CPLP has proved to be efficient in bringing mutual and multilateral benefits based on the principle of sharing the same language and historical interests and thus, another 17 countries across the world are formally interested in associate observer status. The ancient Sino-Portuguese relationships and the actual strategic partnership Accounting more than 500 years of Sino-Portuguese trade and economic relationships and after establishing diplomatic relations since 1979, bilateral trade has grown up to US$100 million in 1993, and in 2018 trade volume reached US$6016 million which means that China represents actually Portugal’s largest trading partner in Asia. In 2018 Portugal and China signed 17 cooperation agreements under the BRI and issued the BRI “Memorandum of Cooperation” as well as other agreements on cooperation in the areas of economics and trade, investment, energy, finance, sea, technology, education and culture. After the Debt Crisis in Portugal, several Chinese companies invested in Portugal, like China Three Gorges and State Grid, which enabled a rapid development of Sino-Portuguese investment cooperation. According to a preliminary statistic, Chinese investment in Portugal has exceeded 9 billion euros in many sectors like energy, finance, insurance, telecommunications, water works, health, design and engineering, architecture, aquaculture and restoration, among others. Up until now, the largest investment was in the energy sector where China has invested 4,5 billion Euros. Portugal also received 3,2 billion Euros of investment in financial companies, and on May 30, 2019 Portugal became the first country in the EURO Zone issuing public debt in Renminbi [30]. Portugal, like Luxembourg and Italy, have signed the “Memorandum of Cooperation” adopting the model of the European strategies for the BRI, which is different model than that signed by Greece and the CEEC (China Style management). Portugal is aiming to make the most out of the country’s geography (terrestrial and maritime confluence between continents) and the potential of the Port of Sines as one of the rare European deep-water ports. Today, the Sines container terminal is managed by Singapore. One-third of the liquefied gas exported by the US to Europe enters through Sines, one of the few European ports with specific storage capacity. As for the new terminal to be built, named Vasco da Gama, whose public tender is 152 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

going to open soon. Chinese interest would be seen as fundamental as a guarantee of development of the Sines platform, giving meaning to the use of the new Panama Canal by China as the fastest and cheapest way to reach the Atlantic markets [31]. Portugal for China may well represent, after all, not only a “gateway to Europe” but also an important “gateway to the Atlantic markets” as well, especially regarding the Portuguese Language Countries (PLCs). The BRI challenges in Africa As was one of the last colonizing nations, after the independence of more than 50 former colonies, Portugal assumed responsibilities of active and effective cooperation with these countries that once were Portugal Overseas and have assimilated deeply the Portuguese culture and language. Unlike any other decolonization process, Portuguese Republic has granted independence peacefully and removed all military personnel from the colonies without continued warfare. Portugal remained particularly involved in Angola and Mozambique by receiving refugees and to help mediating their civil wars that broke out following independence [42]. Today different trends are evidenced and the former colonies are, in many ways, the new colonizers in the most positive way of bilateral relationships. Through economic partnerships and organizations such as the CPLP, the former Portugal Overseas tends to become an even more strategic area for many geo-economic and even geo-political reasons. Portugal represents somehow the best “gateway” to integrate and connect the PLCs worldwide, primarily through language and culture legacy. From all the European biggest imperial powers, Portugal is the most striking example, where almost all the country’s aid budget goes to former colonies. The first seven are Cabo Verde, Mozambique, Angola, East Timor, São Tomé and Príncipe and Guinea-Bissau, all of them former Portuguese colonies [37]. Not only language and cultural heritage have been crucial but also the dramatic post-civil wars emergence gave (and still gives) Portugal the opportunity/responsibility to act on its diplomatic relations and to contribute to the growth of these economies. In Angola, for example, the end of the civil war is very recent (2002) and what Portugal is able to offer to all its former colonies – beyond language, culture or the way of doing business, formal educational systems’ legacy – is rather important and critical when compared with other countries or investors interested in African economies. However, Portugal is still recovering from the 2007 global financial crisis and to improve relations with the former colonies is consequently negatively affected unless very good strategies are adopted by using the existing strengths. At the same time, many other countries are interested in African countries and the PRC is no exception. At the start of this century China was a relatively minor investor in Africa. 153THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Today, China represents Africa’s single largest funder and builder of infrastructure. China has been investing largely in Africa: Kenya, Tanzania and Zimbabwe were recently awarded public-private partnership (PPP) infrastructure projects, followed by an extended listing of projects still in a deal flow “pipeline” of predevelopment, like for instance the largest infrastructure project in East Africa, the Kenya’s Standard Gauge Railway (SGR) with an estimated total cost of US$14 billion [25]. Anyway, China as a large population nation is interested, at least, in what Mozambique has to offer in terms of agriculture potential and in Angola as a major oil provider. China’s commitment to Africa stands to benefit the inadequate infrastructure as this considered to be the biggest bottleneck to Africa’s development. The BRI also points to increase private Chinese investments in tourism, real estate, and agriculture, alongside infrastructure projects. These infrastructure improvements will be very important to strengthen African trade relationships with the world, and at the same time fostering Portuguese-African bilateral trade and investments. Both from the Portuguese perspective and from the BRI commitment to contribute to the globalization in trade and investments much is still to be done. By 2010, Germany, Japan and the US were still dominant hubs within their respective contribution to the global value chain (GVC), however China has reached the top in 2011, ranking the first place as a manufacturing producer. There are substantial changes in GVCs over the last two decades due to the declining importance of Japan and the rise of China and India exhibiting strong growth while other economies such as South Korea maintain their position in terms of GDP growth [36]. However, for some industries there are profound changes, with clear changes across countries. The actual capacity of China in investing and the symbiotic relationship between Portugal and the CPLPs may not only disrupt the competitiveness of these countries in the global markets, but also contribute to its governability and “direction”, impacting their economic and business environment. At the same time, Portugal, as a European country, is also well aligned with the European Union (EU) efforts in Africa, pursuing the main objectives of promoting peace, security and sustainable development. In September 2017 the Africa Investment Facility became an integral part of the European Fund for Sustainable Development (EFSD) as the Africa Investment Platform (AIP). The EU, as well as China, is fostering investments in infrastructures in transport, communication, water, energy, agriculture and private sector development, in particular small and medium enterprises (SME’s), however the difference is that the EU action in Africa dates back from the early foundation of the European Community in 1957. The EU has been supporting the PALOP-TL (the acronym stands for the six Portuguese speaking countries) group since 1992, which is composed of five African countries using Portuguese as official language (Angola, Cape Verde, Guinea-Bissau, Mozambique and São Tomé e Principe) and Timor-Leste, in the South-Western 154 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

Pacific. The PALOP-TL, as one of the oldest and most cohesive African Caribbean and Pacific (ACP) groupings began cooperating in the 1970s (with the exception of East Timor that became the sixth member in 2007), covering now a large spectrum of themes including cultural, economic, social, and political components. This collaboration is based on the Cotonou Agreement and financed through the European Development Fund (EDF). Under the 10th EDF, the PALOP-TL allocation was of EUR 33.1 million. The EU support has prioritised the broader good governance field including economic governance, public services, rule of Law, democratisation and human rights. The coordination of the programme is currently managed by the National Authorising Officer of Mozambique [38]. Hence, is then quite obvious that there is a potential threefold strategic action needed from China, Portugal and the EU that is workable in the short run for obtaining greater results in the African countries’ development. The BRI challenges in Brazil In a world seriously worried with climate change-related policies, Brazil is a country naturally involved in the equation not only given its territorial extension but also due to its geo-spatial characteristics like the Amazonian Forest which is one of the main places in the world where to strategically avoid environmental collapse. On the other hand, Brazil faces many other critical situations, like for example in terms of water and waste management (the mega city of São Paulo already faces worrying drought situation). Although Brazil has made its road-up to the establishment of very well designed Law and Regulations concerning environmental sustainability the remaining issue is all about its implementation, which will require massive capital investment, at both levels of financing and specific technical knowledge. There is a clear challenge for action in Brazil, and the investors, both public and private, are called to play a leading role in the innovation, recovery, and restoration needed to avoid the degradation of planet earth. Much before the announcement of the BRI, China’s global strategy was focused in strengthening the relations with other developing countries in Africa, the Middle East, and Latin America as well. Besides the WTO, the Climate Change Conference, and especially after the United Nations Conference on Sustainable Development held in Rio de Janeiro in 2012, when Brazil’s actions were supported by China (and India as well) it is also possible to observe the articulation of efforts between Brazil and China in the newly created G-20 and the International Monetary Fund (IMF). Both countries have been substantially active within these two international organisms and have already presented solutions to overcome the European sovereign debt crisis. The Chinese Premier Wen Jiabao stated in September 155THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

2011 that China was ready and willing to help the European countries to overcome the crisis, and the Brazilian Minister of Finance, Guido Mantega, went further and declared that the BRICS3 should work together and offer a joint rescue plan to the European countries [39]. As already mentioned before, China has been developing important infrastructure investments in the CPLP countries, and of course Portugal and Brazil are very good examples of “how old” Chinese strategy and disciplined planning is being worked ahead of any BRI announcement. Roughly, around 68% – US$54 billion – of Chinese investments in Brazil are, between 2003 and 2017, especially focused on oil and gas extraction, electric power, mineral extraction and metallurgy, and mainly regarding on public capital companies through mergers and acquisitions. As well as in other countries, China is focusing attention in the areas of transports, information technologies and telecommunications, banking, agribusiness (soy, sugar and meat) and, of course, retail trade [40]. The BRI is coming after these investments, now guiding the economic relations between the two countries to a greater sophistication of reciprocal investments – for Brazil China is very important, but Brazil also understands that Brazil is not less important for China. It is from this time on, as a result of this long-run strategy, that COSBAN – Brazil’s High-level Sino-Brazilian Commission for cooperation, New Development Bank, State Grid and China Three Gorges (giant Chinese companies), and other greater Chinese investments, especially betting in aeronautical material like in the case of the EMBRAER, start to be widely spread on every media around the world. The facts that Brazil and China are part of the BRICS and that Brazil is integrated into MERCOSUR4 have not been decisive in the economic relations between the two countries until now. However, after 20 years of negotiations, MERCOSUR and the European Union have finally concluded a trade agreement – the largest trade agreement ever closed by the European Union – involving 25% of the global economy and 780 million people – almost 10% of the world’s population. Today, the European Union is MERCOSUR’s second trading partner, which in turn shall be positive for the environment and for the consumers since the signatory countries are committed to implementing the Paris Climate Agreement. According to estimates by the Ministry of Economy of Brazil, the agreement will represent an increase in the country’s GDP equivalent to R$336 billion over 15 years, with potential to reach R$480 billion, if aspects such as the reduction of non-tariffs. However, Brazil will necessarily have an important role in economic relations in the future, and in the framework of the BRI. The common denominator of the WTO has probably had a greater relevance (up to now) for the promotion of economic relations between the two countries and, in the future, the fact that Brazil participates in the Macau Forum which, as is well 156 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

known, is an institution created a few years ago by China for the promotion of strategic investments in the space of Portuguese-speaking countries, may assume greater importance. The maritime route of the New Silk Road can contribute greatly to Brazil’s deepening of bilateral relations and mutual respect, by reducing as much as possible any “uncomfortable feelings” that may arise as a result of China as the embryo of a future world economic power. Brazil is increasingly considering China as a special partner, enhancing its economic relations, entering into partnerships in strategic sectors worldwide, such as climate change, new energies and the green economy. Also in Portugal, similar to what happened in Brazil, the Chinese strategy consisted of selecting Portugal as a strategic destination in Europe and promoting economic relations between China and the CPLP, before even speaking about the BRI. It is therefore not surprising that Portugal is included in the list of Top Ten, i.e. the ten countries where China most invested in after the TROIKA5 (between 2008 and 2017), around 9 billion Euros (~5% of the Portuguese GDP), and including real estate investments encouraged by the so-called “Golden Visa” [41]. As in Brazil, the targeted sectors of the Chinese investments in Portugal were energy, banking and insurance, and health. Today China holds a shareholder position in EDP (energy sector) of 28.25%, and in REN (energy sector as well) approximately 25%, in the Bank BCP nearly 27%, and Fidelidade insurance around 15% [41]. China has quickly achieved great investment success when taking full advantage of the European crisis beginning in 2007/8, and has positioned itself as one of the most important strategic investors in Portugal, rapidly adding investments in several sectors, like in tourism, in the press (like for instance Global Media in the north of the country), in the health sector, especially in the Luz Saúde Group, controlled by Fidelidade Insurance, and in the banking sector by installing the Bank of China in Portugal and taking a dominant shareholder position in Haitong Bank. Portugal, like Brazil, is not in a privileged position on the “old Silk Road”, but given the strategic importance of the Sines Port to the “Mediterranean Sea route”, it has been widely spread by the media that China has been considering a set of projects in the area that goes from the Port of Sines to the region of Setúbal, in a complex project known as “Baia do Tejo” or in english language ‘Tagus River Bay’ in the Southern part of Lisbon, and which will include significant investments in the future, like real estate, ports, railways and possibly a container port, and even a new airport. It is expected that the Sines’ platform and the Tagus River Bay are discussed by both countries China and Portugal, as well as it is expected that President Xi Jinping discusses strategically important projects and agreements with Brazil, 157THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

enhancing the use of the Panama Channel as the fastest and cheapest way to reach the Atlantic markets. Economic trends of the 21st Century Back in 2011 in a public presentation at the Business IT South America (BITS), Dias (2011) presented a different view on her work “The Wisdom Innovation Model – Adjusting New Insights and Hosting New Perspectives to Human Augmented Reality” in which the they make the “Wake Up Call for Latin America” based on the following relevant aspects by the time being: Latin America as a whole has an economic growth similar to the world average and well above the OECD countries. Future envisions 3 characteristics that may influence it: (a) large population and very high birth rates; (b) low income per capita, with a great disparity of distribution; and (c) low level of economic modernization. Seen these features as a whole could give Latin America the status of the “next China“, more in terms of economic boom, social and technological development, rather than in terms of industrialization – the aspect of “world factory” which was the long term bet on investment of China is probably unrepeatable, and China looks forward to be considered the “next giant Germany”. Latin America (as is happening with India as well) can jump several steps in technological development, and here there is a clear advantage over China: unlike China, Latin America has little to fear, in the political sense, with social, technological and cultural development. ICT fast development in a context of open innovation, especially in the case of Brazil, which has for long established tight relations with European countries due to its historical connection with Portugal and the use of the Portuguese language, may well have a decisive role in the development and empowerment of people and, consequently, on the economy – this may be the “secret” for Latin America to quickly establish itself as the “next China”. It is undeniable that the European Union, as a XX century project, has brought peace, prosperity and democracy. However, global growth, mobility, and technological progress present now new challenges regarding energy, migration, climate change, and security. The Chinese economy has in the last decades positioned for a take-off into a rich and dominant nation. China grew at a rate of around two digits every year and is now slowing down, yet keeping high average rhythm along with India. Being aware of the Chinese investments’ scale in some of the CPLP countries - as in the case of Angola and Mozambique – it is not surprising that the Chinese strategy does not differ much from the strategy followed in Brazil, and in Portugal, i.e. within the BRI and China’s overall strategy claiming to be a relevant economic power in the world within 30 years – beyond the US and Europe – it becomes clear that China considers that Portugal has a key position for Chinese 158 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

objectives due to its Atlantic geo-strategic position in Europe, along with its privileged relationship with the African countries, with Brazil in South America, and especially for its historical relationship with the group of Portuguese speaking countries. The rapid growth of emerging countries does not represent a problem in itself for the EU economy (Europe has been influenced by the US, and in many ways it has already adjusted to China). The continuing high levels of Chinese investment in the emerging economies shall benefit European industry because it represents a growing market for the European high quality consumer goods. On the other hand, it is also undeniable that the fact of having higher or growing GDP is not as important as having a real sustainable development. In fact, to have a growing GDP might even (and is often) be the result of negative behaviours regarding sustainability objectives. Today, a potential world’s leader will have to take into consideration the sustainability targets at all levels and to collaborate with the world nations to answer to the great challenges of today’s societies, like for example: environmental preservation, climate sustainability, resources’ security, automation and robotics for the quality of life, or the realization of the promising Industry 4.0. Four trends at the global level are: i) The continuous and gradual decelerating growth of population, and especially in Europe; ii) A rapid economic convergence of emerging markets; iii) The third recent trend, probably not yet so established, is the global growth rapid slowing over the last year; iv) The last and not the least trend indicate a sharped slowdown of the World Real Trade. Notably, the first two of them appear to be well established. But seen as whole these four trends combined might result in completely different geo-political and geo-economic scenarios, and it is reasonable to believe that internal markets will become less important than global markets unless, of course, its own national market have the size and weight of a global auto-sufficient market by itself. Other trends and considerations shall be critical like for instance the fact that China, as the largest producer of manufactured goods in the world along with the possibility to easily trade enhanced by the new transports’ facilities and partnerships across the Belt and Road initiative will soon (if not already) face a completely new macroeconomic situation: value chains will become more complex, as the GDP grows (even if slowing nowadays) its internal market will be more demanding following the living standards of the Western regions and naturally the labour costs will grow. As China gets richer, manufacturing growth will be slowing giving place to other lower-cost locations to compete. At the same time, as evidenced through the long 159THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

list of infrastructure projects and associated need to provide related services, China has already changed the focus of their future competitive areas, namely where to source inputs, where to establish production, and where to sell goods. The new Eastern European states, the Western European economies recovering from the latest crisis, and the emerging African nations were all taken into to account in the BRI planning – transforming these countries, at least in the way they may now approach business. However, South and Latin America have much to offer to China’s approach under the BRI, and especially Brazil, when considered within the CPLP countries and within enlarged Lusophone Diaspora, may represent the major opportunity of all due to its intrinsic social and economic characteristics. The political environment and its decision-making processes, at the national or international levels, involves different interests in a complex dynamics – and many times opposing strategies – among nations, institutions and firms, yet the markets are driven by efficiency and profit rates worldwide, and for this particular reason, trade activities are much simpler and easier than any other kind of relationship. The interactions across nations need to provide a broader cultural and ideational context in order to be successful, both in terms of social, political and economic levels. And Portugal, as a medium European country, is still very “present” in its former countries overseas, hence it may contribute to smooth negotiations among nations and give sense to a more collaborative and efficient relationships between China and the three continents of Asia, Africa and America. NOTES 1 The Group of Seven (G7) is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. 2 The seven emergent economies (E7) is a group consisting of Bangladesh, China, Indonesia, India, Nigeria, Pakistan and Vietnam. 3 The BRICS is the acronym of a group consisting of 5 big emerging countries: Brazil, Russia, India and China. 4 Mercosur (in Spanish), or Mercosul (in Portuguese), officially Southern Common Market, is a South American trade bloc consisting of 5 countries: Argentina, Brazil, Paraguay and Uruguay, where the official languages are Spanish, Portuguese, and Guarani. Venezuela is a full member but has been suspended since December 1, 2016. 5 The so-called European TROIKA refers to the decision group formed by the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF), in the context of the “bailouts” of Cyprus, Greece, Ireland and Portugal caused by the world financial crisis of 2007–2008. REFERENCES [1] Ilhéu, F. & Janeiro, L. (Coords.) (2018). A China e a Revitalização das Antigas Rotas da Seda – Novo Vetor do Comércio Mundial. [2] UNESDOC (2002). The88 Silk Roads Project: Integral study of the Silk Roads: Roads of Dialogue, 1988-1997. UNESCO Digital Library. https://unesdoc.unesco.org/ark:/48223/pf0000159189 160 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

[3] Francopan, Peter (2015). As Rotas da Seda – Uma Nova História do Mundo. Relógio d’Água Editores, Março de 2018. [4] Ramos Pires, M. R. (2017). Relações Portugal Holanda. Dissertação realizada no âmbito do Mestrado em História, Relações Internacionais. Porto: Faculdade de Letras da Universidade do Porto. [5] Fontes da Costa, P. & Leitão, H. (2008). Chapter Two: Portuguese Imperial Science, 1450-1800. A Historiographical Review. In Bleichmar, D. et al. (Orgs.) (2008). Science in the Spanish and Portuguese Empires, 1500-1800. Stanford Scholarship Online: June 2013. DOI:10.11126/stanford/9780804753586.001.000 [6] Freire Costa, L., Palma, N. and Reis, J. (2015). The great escape? The contribution of the empire to Portugal’s economic growth, 1500-1800. In Leonor Freire Costa Nuno Palma Jaime Reis European Review of Economic History, Volume 19, Issue 1, 1 February 2015, Pages 1–22, https://doi.org/10.1093/ereh/heu019 [7] Ortiz-Ospina, Esteban, Beltekian, Diana and Roser, Max (2014). Trade and Globalization. https://ourworldindata.org/trade-and-globalization on April 28, 2019. [8] Dias, A. et al. (2011). The Wisdom Innovation Model - Adjusting New Insights and Hosting New Perspectives to Human Augmented Reality. In M.M. Cruz-Cunha et al. (Eds.): CENTERIS 2011, Part I, CCIS 219, pp. 73-85, 2011. Springer-Verlag Berlin Heidelberg. [9] Federico, G. and Tena-Junguito, A. (2016). A tale of two globalizations: gains from trade and openness 1800-2010. London, Centre for Economic Policy Research. (CEPR WP.11128). [10] Kiln and University College London’s Energy Institute (2012). Interactive Map of Shipping across the oceans. https://www.kiln.digital/ [11] Alcalá, Francisco and Ciccone, Antonio (2004). Trade and Productivity. The Quarterly Journal of Economics, Volume 119, Issue 2, May 2004, pp. 613-646. https://doi.org/10.1162/0033553041382139 [12] Fouquin, M. and Hugot, J. (2016). “Two Centuries of Bilateral Trade and Gravity Data: 1827-2014”, CEPII Working Paper 2016 - 14, May 2016, CEPII. http://www.cepii.fr/cepii/en/bdd_modele/presentation.asp?id=32 [13] Amaral, Sérgio (2011). A competição do século: China, Índia e Brasil? in Reis Velloso, J. P. (Coord.) (2011). China, Índia e Brasil: O país na competição do século. José Olympio Editora. Rio de Janeiro, Brasil. [14] International Monetary Fund. 2018. World Economic Outlook: Growth Slowdown, Precarious Recovery. Washington, DC, April 2018. [15] OECD (2019), OECD Economic Outlook, Volume 2019 Issue 1: Preliminary version, OECD Publishing, Paris, https://doi.org/10.1787/b2e897b0-en [16] Wimmer and Min & Polity IV (2006). Political Regime, 2015. Center for Systemic Peace for a measure of the political regime. https://ourworldindata.org/democracy#world-maps-of-political-regimes-over-200-years on April 28, 2019. [17] Mahbubani, Kishore (2018). Has the West Lost It? A Provocation. Allen Lane – Penguin Books. [18] Johnson, R.W. (2016). Trump: some numbers. London Review of Books – LBR Online, 14th November 2016. https://www.lrb.co.uk/2016/11/14/rw-johnson/trump-some-numbers [19] Mogherini, Federica (2016). Foreword in the “Annual Report on Human Rights and Democracy in the World”, 2016. European Commission.161THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

[20] Bean, Charles et al. (2015). Low for Long? Causes and Consequences of Persistently Low Interest Rates. Geneva Reports on the World Economy 17. International Center for Monetary and Banking Studies (ICMB), Geneva-Switzerland. Centre for Economic Policy Research (CEPR), London-UK. [21] Rosling, Hans & Rosling, Ola (2015). World income distribution, 1800, 1975, and 2015 – Gapminder. Stockholm. www.gaminder.org on April 28, 2019. [22] Rifkin, Jeremy (2011). The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World. Palgrave Macmilan. [23] Dias, Albertina (2017). Segredos de Gestão Estratégica e Inovação – a PT e outros desafios de Murteira Nabo. Ed. Gradiva. [24] Gazprom (2019). GAZPROM official website. http://www.gazprom.com/projects/power-of-siberia/ on May 28, 2019. [25] Koepp et al. (Eds.) (2016). “ONE BELT, ONE ROAD”: An Economic Roadmap. The Economist Corporate Network (ECN), part of The Economist Intelligence Unit (The EIU) March, 2016. [26] Oh, Miyeon (2018). How energy infrastructure is shaping geopolitics in East Asia. World Economic Forum. https://www.weforum.org/agenda/2018/11/impact-shaping-energy-infrastructure-asian-geopolitics/ on November 2, 2018. [27] Holt, Peter Malcolm; Lambton, Ann K. S. and Lewis, Bernard (1977). The Cambridge history of Islam. Cambridge University Press, ISBN 0521291364. [28] Oman History. (2019) Sultanate of Oman in http://www.omansultanate.com/history.htm on June 14, 2019. [29] Ahmad, Talmiz (2019). China’s Belt and Road Initiative embraces the Middle East. Arab News in http://www.arabnews.com/node/1484966 on April 19, 2019. [30] Run, Cai (2019). Resultados frutíferos da cooperação económico-comercial e do investimento China-Portugal. Diário de Notícias 15 de Junho de 2019, Nº 54842. [31] Sousa, Teresa (2018). Costa oferece a Xi a visão europeia da Rota da Seda para fortalecer cooperação. In Público, December 1, 2018. [32] Portugal Global (2017). Macau - Uma Ponte na Relação Económica entre a China e os Países de Língua Portuguesa. AICEP Portugal Global, nº 95, Fevereiro, 2017. [33] MacauHub (2019). Brasil quer ampliar parceria estratégica com a China. MacauHub, May 20, 2019. https://macauhub.com.mo/pt/feature/pt-brasil-quer-ampliar-parceria-estrategica-com-a-china/ on June 15, 2019. [34] Aizenman, J. & Sengupta, R. (2011). Open Economies Review. 22: 387. https://doi.org/10.1007/s11079-010-9196-7 [35] Dias, Albertina (2011). The Wake Up Call for Latin America. Public presentation of Wisdom Innovation Model - Adjusting New Insights and Hosting New Perspectives to Human Augmented Reality. In M.M. Cruz-Cunha et al. (Eds.): CENTERIS 2011, Part I, CCIS 219, pp. 73-85, 2011. Springer-Verlag Berlin Heidelberg. [36] Bayoumi, T. et al. (2018). Measuring Competitiveness in a World of Global Value Chains. IMF Working Paper, Strategy, Policy, and Review Department. International Monetary Fund WP/18/229, 2018. [37] The Guardian (2015). Europe’s former imperial powers continue to target aid to ex-colonies. https://www.theguardian.com/global-development/2015/apr/22/europes-former-imperial-powers-target-aid-ex-colonies on April 22, 2015. 162 FRANCISCO MURTEIRA NABO AND ALBERTINA DIAS

[38] European Commission (2019). International Cooperation and Development - Building partnerships for change in developing countries. https://ec.europa.eu/europeaid/regions/africa/palop-tl_en on June 27, 2019. [39] Cardoso, Daniel (2012). China-Brazil: A Strategic Partnership in an Evolving World Order. in East Asia Vol.29, n. 4. Springer. ISSN 1096-6838. DOI: 10.1007/s12140-012-9186-z [40] Pinto, Nuno Tiago (2018). Os Novos Donos de Portugal in Revista Sábado, Edição 727, April 5, 2018. [41] Kupfer, D. & Freitas, F. R. (2018). Direções do Investimento Chinês no Brasil 2010-2016: Estratégia Nacional ou Busca de Oportunidades. IBRACH & UFRJ-IE. In Direction of Chinese global investments: implications for Brazil, of Anna Jaguaribe (Org.). Brasília: FUNAG, 2018. [42] van Streepen, Jade, “Portugal and its former African colonies: a unique opportunity” (2015). Perspectives on Business and Economics. Volume 33. Paper 7. http://preserve.lehigh.edu/perspectives-v33/7163THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

CHAPTER IX CHINA AND THE EUROPEAN UNION IN THE DEVELOPMENT OF THE PORTUGUESE SPEAKING COUNTRIES IN AFRICA. COMPLEMENTARITY OR COMPETITION? | José Luís Sales de Marques Introduction China’s relations with the Portuguese Speaking Countries (PSC) have witnessed dramatic growth since the inception of the Forum Macau (The Forum for Economic and Trade Co-Operation between China and Portuguese Speaking Countries) in 2003, having Macau as its base. In 2003, two-way trade between China and the PSC recorded merely US$8 billion whilst in 2018 the figure was near US$147.4 billion1 (Table F) an 18-fold increase in 15 years. Forum Macau is a complement to bilateral relations between China and the eight Portuguese Speaking Countries (Angola, Brazil, Cape Verde, Guinea-Bissau, Portugal, Mozambique, São Tomé and Príncipe, East Timor). Whatever comments one might have on the relevance of the Macau Forum vis-à-vis bilateral relations, there is no way denying that the aforementioned trade data proves that a new era was established after the inception of the said forum. However, it is also important to acknowledge that the Forum has presently extended into several dimensions beyond trade, extending boldly into unchartered territory such as cultural and people-to-people relations. As a privileged and active witness to many events under the umbrella of the Forum, one should say that this platform initiated by China has created a substantial number of opportunities for second-track and pear-to-pear engagement among experts, business people and government officials from the PSC with peers from Macau and the Chinese Mainland. 165THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

With the inception of the Belt and Road Initiative, launched in 2013 under the personal stewardship of president Xi Jinping, relations between China and the Portuguese Speaking Countries have also felt into its framework, with several of these countries expressing support to the initiative. This is the case, for instance, of Cape Verde, when President Jorge Carlos Fonseca met with Chinese Foreign Minister Wang Yi during his visit to Praia in May 2017, promising to deepen bilateral cooperation, particularly in areas such as infrastructure construction and marine economy. On the other hand, the European Union (EU), of which Portugal is a Member State, also enjoys strong relationship with the PSC having established diplomatic relations with all of them and playing important role as providers of Official Development Assistance (ODA)2 to those PSC in greater need; it has also signed with the Portuguese Speaking Countries in Africa and East Timor a memorandum of understanding (MOU) and other instrument of cooperation, aiding to their developmental needs. EU member states are also the main trade partners of several of these countries, particularly with the smaller African states. Chinese and EU economic engagement with the PSC in Africa (PSCA) through development aid, financial assistance in the form of grants, loans or other instruments, greenfield investment and trade in goods and services are potential contributors to foster sustainable development in these countries. We opted to limit the scope of this work to the PSCA because there has been ongoing debate in the EU and elsewhere on Chinese investments3 in Africa, particularly in the Sub-Saharan Africa, a continent vastly colonized by European powers for most of the 20th century. We have used the concept of sustainable development as an operational tool and the ranking on the Human Development Index (HDI) as the indicator of the level of development of the PSCA under analysis. Accordingly, countries are listed using a composite index that weights in not only income per capita, but also health and education achievements, in an attempt to measure national development in a broader approach rather that the limited view of tying it only with standard economic measurements4. Four categories of human development are considered: very high, high, medium and low. African PSC ranking are between the medium and low-income HDI categories: Cape Verde (125), São Tomé and Príncipe (143), and Angola (147) are in the first group and Guinea-Bissau (177) and Mozambique (180), among the least developed countries. Particularly, we will identify development needs and processes by referring to the Sustainable Development Goals5 for each of those countries, monitoring progress and directions that have been defined by the United Nations (UN). Since there are basic differences between the Chinese approach and European and Western norms and practices on the meaning to development assistance, we will use as source material documents from PSC’s national governments and the Chinese Government, EU official documentation, reports and analysis of multilateral bodies and respected research organizations. 166 JOSÉ LUÍS SALES DE MARQUES

Development needs of the PSC in Africa6 and assistance from the EU and China Portuguese speaking countries in Africa have different developments needs and the way forward to overcome those needs are also country specific. There are two countries, Cape Verde and São Tomé that are Small Island Development Economies (SIDE); Guinea-Bissau went through several changes of government alternate with military uprisings, becoming a very unstable and at times bordering under international eyes the infamous status of a failed state. Angola is an important regional power in Southern Africa, oil producing country and OPEC member that has developed a cooperation mode with China since 2004, known as oil backed financial cooperation. Mozambique, on the other hand, went recently through major natural catastrophes, destroying lives and crippling its already ailing economy, in spite of the potential of its rich natural resources, strategic location of the Port of Beira towards land locked states in Southern Africa and beautiful scenic. Notwithstanding all differences, most of the PSCA are suffering from structural fiscal deficits and current account issues, development aid represents a significant share of the Gross Domestic Product (GDP) and inflow of foreign funds; in several of them the economy is overdependent on one commodity or sector, and there are severe issues of unemployment and income inequality, low levels of education, primary public health needs and widespread poverty. Nature and geography have, on the one hand, blessed some of these countries with natural resources and strategic geographical locations; on the other hand, exposing them to natural disasters or climate challenges. This comparative study adopts the benchmark of the United Nation’s Sustainable Developments Goals focusing on the contributions of international aid, financial assistance and investment to the PSCA to progress on their development goals. These indexes are crucial to understand the current state of development of the PSCA. Cape Verde is the country that has a better ranking due to its socio-economic indicators. Per capita GDP is reasonably balanced with life expectancy (73.0) and expected schooling (12.6), both measures in years, although mean schooling is less than half that figure. São Tomé and Príncipe has poor economic indicators however its social indicators are quite reasonable, therefore it is able to be placed under the mid income category. Both Mozambique and Guinea-Bissau have low per capita GDP and poor social indicators. Therefore, they can only advance from their current ranking as low-income countries if there are dramatic improvements at the social as well as economic dimensions and state building is given the proper attention and priority. 167THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Last but not least, Angola shows the weakness of a highly unbalanced economic structure combined with poor social structure. Its per capita GDP has a similar level of Cape Verde, although the later in not naturally resourceful, mean schooling is low. It is clearly an economy that has enormous potential that is not realized for the great majority of its people. EU and China’s contributions to sustainable development in the PSC in Africa – Overall principles and approaches EU and China have distinctive or even alternative modes of assisting developing countries, particularly in regard to the conditionality clause associated with the EU, whereby assistance is tied to those countries respecting certain conditions imposed by the EU normative standards; whilst China adopts the so-called “no strings attached” way of engaging with third countries, by not differentiating them by their internal political and humans’ rights standings. The PSC in Africa, which are also known by their Portuguese acronym of PALOP, have all established diplomatic relations with the EU. Moreover, they 168 JOSÉ LUÍS SALES DE MARQUESHDI HDI Life Expected Mean (GNI) per GNI rank HDI expectancy schooling schooling capita PC minus rank HDI rank __________________________________________________________________________________ Rank (Value) (Years) (Years) (Years) (2011 PPPUS$) __________________________________________________________________________________ 2017 2017 2017 2017 2017 2017 2017 2016 __________________________________________________________________________________ 125 Cape Verde 0.654 73.0 12.6 6.1 5,983 2 124 __________________________________________________________________________________ 143 São Tomé and Príncipe 0.859 66.8 12.5 6.3 2,941 16 143 __________________________________________________________________________________ 147 Angola 0.581 61.8 11.8 5.1 5,790 -16 145 __________________________________________________________________________________ 177 Guinea-Bissau 0.455 57.8 10.5 3.0 1,552 0 175 __________________________________________________________________________________ 180 Mozambique 0.437 58.9 9.7 3.5 1,093 4 179 Table A. HDI indexes and other development indicators regarding Portuguese Speaking Countries in Africa (PSCA). Source: UNDP.

are participating countries in EU-ACP7 cooperation frameworks as well as EU-PALOP plus East Timor Memorandum of Understanding8, covering several areas of development. China is not a member of the Organization for Economic Cooperation and Development (OECD) and it does not follow that organization’s Development Assistance Committee (DAC) definition of Official Development Assistance (ODA). It has its own way in engaging financially with the developing world. Chinese policy-oriented banks, such as China Export-Import Bank (EXIMBANK), China Export and Credit Insurance Corporation (SINOSURE), China Development Bank (CDB) and China Agricultural Bank (CAB) are instrumental in those financial operations. Current Chinese engagement with Africa had been set since 1982, during premier Zhao Ziyang’s visit to the continent, with four guiding principles: equality and mutual benefit; an emphasis is practical results; diversity in form; and economic development. These principles are still very much in place, although presently China views the path to economic development for developing countries as something closer to their own experience of success more than anything else written in economic textbooks on the same subject. For instance, China had begun promoting its own pattern of development as guidelines, not necessarily a model, by establishing Special Economic Zones in Africa and elsewhere. In the particular case of the PSCA, export buyer’s credits, mixed credit which combines lines of export buyers’ credit and concessional loans for specific projects and natural-resource backed loans, whereby a country uses their natural resources to guarantee a loan9 provided by China, have been used in different occasions. This last model is known as the Angola Mode, since it was used in China’s first massive loan and credit line arrangement with the country in 2004. Chinese economic cooperation with the PSC is usually commercial in nature, with mutual gains as a principal. However, it uses both the approach derived from their bilateral country-to-country relations as well as the multilateral mechanism of FOCAC (CHINA AFRICA Forum) as well as the Forum for Trade and Economic Cooperation between China and the Portuguese Speaking countries. The latter is becoming a comprehensive international actor not only for the potential financial assistance it is able to offer, but also because it shares through the intermediation of Macau the Portuguese language as a common tool for communication and cultural relation. On another note, their legal systems are similar to Macau’s own. Moreover, the Macau Forum have also financial instrument developed by China for cooperation and engage civil servants and technical staff from the Portuguese Speaking Countries in technical training and familiarization trips to promote the Chinese model of development.169THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

EU’s contribution through ODA EU’s cooperation with the PSCA follows the classical pathway of using bilateral as well as multilateral instruments, under the principles defined by OCDE. To evaluate its cooperation towards those countries sustainable development we used data provided by that organization. The following Table B provides information on recent contributions of the top ten donors (DAC members) and the respective contributions of EU donors to each PSCA. The above table shows that assistance to each country is mainly focus on the social area, education and health. Assistance to economic infrastructure building and production is only relatively significant towards Mozambique. This is the country that also receives the most significant amount of nominal ODA. However, EU’s assistance has a significant weight in smaller countries such as São Tomé and Príncipe, Cape Verde and Guinea-Bissau. In regard to Foreign Direct Investment (Table C), which translates a deeper, long term engagement between the investor and the recipient economy, the EU main investment destination among the PSC in Africa is Angola. Most of the investment in this country comes from France, the Netherlands and Portugal and they are related to oil exploration and associated activities. Portugal is an important investor, actually a major one, particularly in the smaller economies of São Tomé and Príncipe, Cape Verde and Guinea-Bissau. Mozambique is another important recipient. 170 JOSÉ LUÍS SALES DE MARQUES Cape Verde São Tomé Angola Guinea- Mozambique and Príncipe Bissau __________________________________________________________________________________ Top 10 ODA 132 42.89 229.92 142.71 1,386.1 __________________________________________________________________________________ % Net ODA/GNI 8.1% 13% 0.3% 11.2% 13.9% __________________________________________________________________________________ EU+MS 93.93 (71%) 20.78 (48%) 47.43 (21%) 86.87 (61%) 353.8 (26%) __________________________________________________________________________________ Main Sector Other Social Other Social Other Social Education Health and Infrastructure Infrastructure Infrastructure Population __________________________________________________________________________________ Econ. Infra+ Production 3% 2% 7% 8% 18% Table B. Top ten donors and EU and member States ODA to Portuguese Speaking Countries10, 2016-2017 average US$ million. Source: OECD and author’s own calculation.

Chinese cooperation with the PSC The following three tables offer a diverse view on Chinese cooperation with the PSC. The first one refers to investment stock, the second one to loans and the last one gives account on revenues obtained by Chinese companies involved in construction projects in the PSC. Angola and Mozambique are definitely the two main destination of Chinese investment, which is not surprising because of the resource rich and vast countries they are. There are, however, recent developments worth following, namely the surge of investment in Guinea-Bissau, the casino development in Cape Verde and 171THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXTCountry/Year 2015 2016 2017 __________________________________________________________________________________ Cape Verde 361 360 430 __________________________________________________________________________________ São Tomé and Príncipe 39 13 -72 __________________________________________________________________________________ Angola 31,734 31,245 27,749 __________________________________________________________________________________ Guinea-Bissau 17 19 24 __________________________________________________________________________________ Mozambique 1,869 2,367 1,856 __________________________________________________________________________________ TOTAL 34,020 34,004 29,987Country Total US$ million and Main sectors (last 3 years, average) __________________________________________________________________________________ Cape Verde 14.63 (0.16) Five-star Hotel and Casino __________________________________________________________________________________ São Tomé and Príncipe 0.38 (0) Multi-purpose port __________________________________________________________________________________ Angola 2,260 (286) Oil, Infrastructure __________________________________________________________________________________ Guinea-Bissau 675 (286) Figure in brackets Infrastructure, is for 2017 only communications __________________________________________________________________________________ Mozambique 872 (77) Farming, infrastructure Table D. Chinese Investment Stock by PSC in Africa11 for (2003-2017) and average flow (2015-17). Source: Johns Hopkins University SAIS China-Africa Research Initiative and author’s research. Table C. EU FDI in PSC in Africa between 2015-2017 - million EUROS (stock and flows). Source: Eurostat.

eventually investment in the strategic multi-purpose port project at S. Tomé and Príncipe, which according to media in under consideration. The following table depicts loans taken by PSC with Chinese financial institutions where the weight of Angola stands out. These loans borrowed amounts, which do not necessarily represent current debt, have found their way into mining, agriculture, power generation, transport infrastructure, and social infrastructure. It is highly concentrated towards Angola and, at a smaller scale, Mozambique. The figure for São Tomé is tied to its previous relations with Taipei, and Guinea-Bissau has suffered from political instability and only recently seems to be heading into more stability. Country Total US$ million 3 Main sectors (%) __________________________________________________________________________________ Cape Verde 149.16 (12) Other social (55.6), Trade (8.7), Power (6.7) __________________________________________________________________________________ São Tomé and Príncipe 0 (0) __________________________________________________________________________________ Angola 42,845.39 (24,339) Mining (17.5), Transport (6.85), Other social (5.9) __________________________________________________________________________________ Guinea-Bissau 0 (0) __________________________________________________________________________________ Mozambique 2,289.38 (156) Transport (61.6), Agriculture (7.4). Other social (3.0) __________________________________________________________________________________ TOTAL 45,283.93 172 JOSÉ LUÍS SALES DE MARQUES Table E. Chinese Loans (amounts borrowed, not necessarily debt) by PSC Governments in Africa (2000-2017) and last 3 years (2015-17). Source: Johns Hopkins University SAIS China-Africa Research Initiative.Country Yearly average US$ million __________________________________________________________________________________ Cape Verde 16.5 __________________________________________________________________________________ São Tomé and Príncipe 1.63 __________________________________________________________________________________ Angola 5,326 __________________________________________________________________________________ Guinea-Bissau 18.5 __________________________________________________________________________________ Mozambique 1,210 Table F. Gross Annual Revenue of Chinese Construction Projects by PSC in Africa (2015-2017) by year average. Source: Johns Hopkins University SAIS China-Africa Research Initiative.

Table F gives evidence on the amount of revenues derived by Chinese construction companies out of works performed at the PSC. It is clear from those amounts of the imbedded win-win feature of their operations in the PSC. Table G and F compares PSCA’s trade with China and the EU for the year 2018. If trade in oil and derivatives are excluded, China and EU total trade with the PSC in Africa are not that much different in volume. It changes according to each partner country due to its characteristics. However, both registered deficits with Angola and Mozambique. Trade figures are interesting in the sense that, excluding the export of oil from Angola to China, overall figures would be at close levels. Unit. 1000 million USD Unit. 1000 million EURO 173THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXTCountry Export Import Balance __________________________________________________________________________________ Angola 2,235 25,551 -23,316 __________________________________________________________________________________ Cape Verde 0,077 <0,001 0,076 __________________________________________________________________________________ Guinea-Bissau 0,029 0,008 0,021 __________________________________________________________________________________ Mozambique 1,864 0,652 1,212 __________________________________________________________________________________ São Tomé and Príncipe 0,007 <0,001 0,001 __________________________________________________________________________________ TOTAL 4,212 26,211 -22,006 Table G. Trade between China and PSC in Africa 2018. Source: Macau Forum, based on China’s Customs Statistics.Country Export Import Balance __________________________________________________________________________________ Angola 3,281 3,701 -0,420 __________________________________________________________________________________ Cape Verde 0,504 0,091 0,413 __________________________________________________________________________________ Guinea-Bissau 0,136 0,004 0,132 __________________________________________________________________________________ Mozambique 0,697 1,866 -1,169 __________________________________________________________________________________ São Tomé and Príncipe 0,068 0,009 0,059 __________________________________________________________________________________ TOTAL 4,686 5,671 -0,984 Table H. Trade between EU and the PSC in Africa 2018. Source: Eurostat.

Country-by-country Assessment Cape Verde It is strategically located at the North Atlantic Ocean, some 500 km west of Senegal, near major north-south sea routes and it is an important communication station as well as sea and air-refueling site. The Archipelago of Cape Verde is comprised of 10 islands and 5 islets with a total emerged area of 4,033 sq. km, 965 km of coastline and exclusive economic zone of 200 nautical miles. The population is 568,373 (July 2018 est.) with a labor force of around 200,000 people. Official languages are Portuguese and Crioulo. The population is distributed among the 9 inhabited islands and the urban population is 65.7% with an annual rate of change of 1.97% annually. Life expectancy is 71 years for men and 78 years for women. It sustains one of Africa’s most stable and democratic government. It is endowed with limited natural resources, namely salt, basalt rock, limestone, kaolin, fish, clay and gypsum. It is prone of natural hazards, including prolonged droughts, seasonal harmattan wind producing a yellowish obscuring dust, and volcanic and seismic activity. Cape Verde’s economy depends on development aid, foreign investment, remittances and tourism. The currency is Cape Verdean escudo. Its GDP (PPP) was US$3.777 billion in 2017 and US$1.776 billion by official exchange rate. The primary sector of the economy represented 8.9% of GDP, the secondary sector 17.5% and the service sector 73.7%. Health expenditure is 4.8% of GDP and it has a higher education expenditure of 5.2% of GDP, which partly explains its relatively good HDI. Government finances suffer from budget deficit of 3% of GDP, with public debt reaching 125.8% of GDP. Trade deficit stands at US$ (-647.1) million, accounting for US$189 million of exports and US$836.1 millions of imports, highly exposing the economy to exogenous factors. This relatively high deficit of 36% to GDP is due to high dependency on food and fuel importation. Food represents 35% of total imports. Production of energy is 75% depending on imports, with need of alternative sources of energy. Portugal is Cape Verde’s major trading partner. The European Union accounts for over 75% of trade. Two-way trade with Cape Verde in 2018 (Table H) was EUR595 million, dominated by importation with a figure of EUR504 million and trade deficit for Cape Verde of EUR413 million. Foodstuffs, beverages, tobacco, fish and fish products dominate Cape Verde exports to the EU while it imports mainly agricultural and fisheries products. 174 JOSÉ LUÍS SALES DE MARQUES

The development priorities are agriculture, import substitution, food security, connected to climatic issues, and development of services export, namely tourism that will allow influx of foreign exchange and improved fiscal revenue. EU and other major donors ODA’s are centered on health, sanitation and other social infrastructures, with little incidence on economic infrastructure and production (Table B). The EU has established a Special Partnership with Cape Verde approved by the Council in 2007 that is under implementation. It gives priorities to cooperation in sectors such as governance, security, information society, regional integration, normative and technical convergence towards EU standards and fight against poverty. The country also benefits from influx of funds from the 10th and 11th European Development Fund (EDF) the last one for 2014-2012, under the EU’s National Indicative Program. As such there is an indicative global number of EUR55 million for the said period, of which, EUR30 million are destined to poverty reduction and growth. It is also a member of the ACP-Cotonou Agreement13 and beneficiary of the EU Regional Cooperation Program with the Portuguese Speaking Countries and Timor-Leste. EU institutions together with member states made up 71% of ODA in recent years. Recently, Cabo Verde Airlines entered into a management agreement with Icelandic Air, aiming at transforming the island into an intercontinental hub in the crossroads between Africa, Europe and the Americas, with stopover’s program positioning the island in a similar fashion as Iceland has done in regard to their strategic location. China trade with Cape Verde was US$7.8 million in 2018 (Table G), which is relatively short compare to trade with other partners. Macau based investor David Chow poured around 300 million US dollars building a Hotel and casino development. Chinese loans to the country mainly cover social infrastructure, such as housing, trade and power supply. The Portugal’s FIDELIDADE Group, owned by FOSUN, reinsures Chinese investments in Cape Verde and other Portuguese Speaking countries. EU and China cooperation program do not seem to be conflicting actually they converge in helping Cape Verde sustain a middle-income level in the HDI and progress in attaining its sustainable development goals. EU’s support to social infrastructure is key to the country’s development in education that is considered among the highest performing in the Continent, EU is a key trade partner, until now a much important one than China. EU’s ODA does not have significant role in production. However, Chinese recent investment in the tourism sector not only creates job and injects the basis for a long-term development of tourism and gaming, with 175THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

direct effect on fiscal revenues and foreign exchange earnings, transforming the landscape of the existing small-scale industry and commerce, but it also creates challenges in several areas. Firstly there is the question of the retaining capacity of the Cape Verde economy of foreign exchange earned with export of services, since an increase in importation of goods and some services generated by that industry might diminished substantially the positive impact of the first one; secondly, there will be an increase demand on central and local government spending, namely in public safety and security, urban management, cultural sustainability, and public health, to name some crucial areas. São Tomé and Príncipe The Democratic Republic of São Tomé and Príncipe (STP) is located in Gulf of Guinea one of the richest regions in Africa. STP is a parliamentary democracy and is ranked amongst African countries enjoying most political freedom. It is an archipelago with two main islands located in the Equator, 300 km West of Gabon. It has an area of 1,001 km sq., one of the smallest countries in the world. The total population of the country in 2015 was 194,006 inhabitants. 2017 Gross National Income (GNI) per capita was US$2,941. About one third of its population lives on less than US$1.9 a day, and more than two thirds are poor, under a poverty line of US$3.2 per day. STP performs higher than the Sub-Saharan Africa average on UNDP HDI. The small population prevents its economy to gain the scale needed to meet demand from both local and export markets. Economic growth is driven by agriculture, tourism, oil fueled FDI, but mostly by government expenditure propelled by external aid and government borrowing. Local currency is dobra and is peg to the Euro. The tertiary sector, largely informal, represents 60% of the whole economy measured against GDP. Is a hugely dependent economy with 90% of investment financed by ODA. The top ten ODA donor’s contribution throughout 2016-17 was US$48.8 million, 13% of the GNI for the same period. GDP was US$374 million in 2017 with average growth of 4.5% from 2009-2017. Government budget runs a deficit of between 5-10% of GDP, mainly due to fiscal imbalance and weakness of tax services. The structural deficit of the balance of current account is due to extreme dependence on exports of cocoa, which accounted for 93.5% of all agricultural exports14, and fluctuation of market prices15. Its weight is around 30% of GDP and is only offshoot by official transfers. According to the African Development Bank16, overdependence on imports for private consumption creates imbalances. Current account deficit in 2018 stood at 6.7% of GDP narrowing from 8.2% registered in 2017. Capital expenditures have been decreasing due to the incapacity of the country 176 JOSÉ LUÍS SALES DE MARQUES

of investment absorption (12.7% of GDP in 2014) with realization of around 35%. FDI flux has been growing at the annual rate of 15% but from a low basis, fluctuating between few millions of US dollars per year to a peak of US$65 million in 2008. External debt was 349% in 2002, but significantly reduced after the HIPC17 initiative (100% in 2017). Domestic debt is low at 0.6% of GDP in 2014. Exchange reserves covered only 3.9 months of imports of goods and non-factor services. Multilateral institutions such as the World Bank, ADB, EU, IMF and the UN system provide external assistance. Bilateral aid is provided by Portugal, Taiwan18, Brazil, Nigeria and Angola. There are significant challenges because the country seems to be lingering in systemic debt and dependency traps. As Cape Verde, STP is one of the Small Island Developing States (SIDS). The government of São Tomé and Príncipe wishes to transform this small Island into a hub of maritime and air services, financial and health services, education and ecological tourism for the Gulf of Guinea. The hub project is very ambitious and will require huge financial and human resources to put together the infrastructure and facilities required for such plan to be feasible19. It will require a large ocean transshipment port and a large airport, a free trade zone and ICT infrastructure. It is questionable if the country can afford the debt service for such an investment. Moreover, state capacity building is of capital importance. Improved education and entrepreneurship are essential. Infrastructure building is crucial. São Tomé and Príncipe is also a beneficiary of the 11th European Development Fund with a global indicative number of EUR28 million for the period of 2014-2020, to be spent in two major areas: water and sanitation and improving the agricultural sector. Portugal is São Tomé and Príncipe main trade partner accounting for over 50% of its imports. São Tomé re-established diplomatic relation with China in 2016 with two-way trade surrounding US$7.8 million. Their main development issues are related with the lack of scale of the economy, with populations of 200 thousand and isolation derived from geography, and an inherited economic system of monoculture, with all the consequences thereof, namely chronic fiscal deficit, current account unbalances and capacity building. São Tomé and Príncipe cannot rely only on external assistance and needs to find the right path to break away from those underdevelopment traps towards sustainable development. The EU is their main trading partner and the assistance provided goes to development of the political systems, capacity building and social support. 177THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Chinese investment is for the time being, near inexistent, as reflecting STP’s previous connections with Taiwan. The re-establishment of relations STP-RPC only happened in 2016. It could, however, change rapidly if Chinese companies are to be involved in the maritime hub project. The same could be said of potential interest from EU’s based companies. There are, however, some doubts about the feasibility of such expensive project and if STP has yet the necessary capacity to handle it. The 2019 Macau Forum’s business fair was staged this year, for the first time at São Tomé. Prime-minister Jorge Bom Jesus, called Chinese entrepreneurs to invest in a range of opportunities offered by his country, mentioning the port and the airport, as well as telecommunications, tourism, agro-industry and oil exploration (Macau Hub, Jul 9th 2019). Guinea-Bissau Guinea-Bissau is one of the poorest20 countries in the world. Located in Western Africa, bordering the North Atlantic Ocean, between Guinea and Senegal. The Bijagos archipelago is comprised of over 100 islands. The population stands at 1.8 million inhabitants in an area of 36,125 km sq. The territorial sea extends for 12 nautical miles, with an exclusive economic zone of 200 nautical miles. Guinea-Bissau went through several government changes and military coups since its independence from Portugal in 1974. It has currently a democratic government. It is a multi-ethnic society with a muslin majority (45%). 60% of population is under the age of 25. High fertility rate, high unemployment, widespread poverty affecting over 60% of the population are some of the structural problems it has to face. Natural resources are fish, timber, phosphates, bauxite, clay, granite, limestone and unexploited deposit of petroleum. Agricultural land occupies 44.8% of the land and forest 55.2%. Portuguese is the official language spoken by 36% of population. Its currency is the CFA (African Financial Community) franc with a fixed exchange rate to the Euro. The economy is dependent on subsistence agriculture, cashew nut exports and foreign assistance. Illegal economy is rampant and there are suspicions of the country as being an intercontinental drug traffic platform. There is wide potential of mineral resources and oil. It is feasible to grow a diversity of crops, but it depends on the necessary investment to do it. GDP (PPP) is US$3.171 billion. GDP (official exchange rate) is US$1.35 billion. Per capita GDP in 2017 was (PPP) US$1,552. The GDP structure is divided by agriculture 50%; industry 13.1% and services 36.9%. 178 JOSÉ LUÍS SALES DE MARQUES

Budget revenue standing at US$242.2 million (2017) and expenditure US$263.5 million generates a budget deficit at (-1.3%) of GDP. Public debt is 53.9% of GDP (2017, est.). Current account balance was US$27 million, in 2017, and external debt stands at US$1,095 million (2010). The main export partners are: India 67.1%; Vietnam 21.1% and the main imports partners are Portugal 47.8%, Senegal 12.1%, China 10.4% and the Netherlands 8.1% (2017). Economic growth declined in 2018 to 3.8% from 5.9% in 2017 due to lower cashew production. Cashew export declined 25%, reflecting also lower global cashew prices. Inflation was low in 2018 at 1.2%, reflecting slowing domestic demand. Fiscal deficit deteriorated from 1.6% in 2017 to 5.1% in 2018 driven by weak fiscal revenue and increased capital spending. Total government spending increased from 19.7% of GDP to 21.8% largely due to foreign finance capital spending, mostly concessional loans. The EU Commission is launching a new program to support economic resilience and socio-economic opportunities. This program will include support to foster civil society; improve water and energy supply, promote mangrove agriculture and poultry value chain. It is a welcomed program worth around EUR30 million and it represents the return of international institutional trust in the country’s governance. Trade with China in 2018 was US$374 million. There had been significant Chinese investments in recent years, namely in infrastructure building, port and fishing industries, agriculture and tourism and the Macau Forum has been promoting the country’s investment opportunities. In conclusion, EU and China do not seem to be conflicting in terms of support to Guinea-Bissau sustainable development. What the country needs is political stability and a suitable business environment that will only come with the rule of law and good governance. And it needs crucial support to build up its own institutional and economic capacity. Angola Angola is located in Southern Africa, bordering the South Atlantic Ocean between Namibia, Zambia and Democratic Republic of Congo. Its total area is 1,246,700 km sq. The Exclusive Economic Zone is 200 nautical miles. Angola was almost destroyed by civil war that lasted 25 years from 1975 to 2000. The country is endowed with rich natural resources such as petroleum, diamonds, iron ore, phosphates, copper, feldspar, gold, bauxite and uranium. Agricultural land is 47.5% and forest land are 46.3%. 179THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

Population is 30,335,880 (2018 est.). It is a multi-ethnic country. Portuguese is the official language spoken by 71.2% of its young population, with the second highest population growth in the world, of which 65.5% lives in urban areas. There is high infant mortality rate and life expectancy is 61.8 years. Youth unemployment (15-24) is very high standing at 39.4%. Four in each ten persons between the age of 15 and 24 are unemployed. It is unsurprising that 40% of Angolans live below poverty line in such a rich country. Angola is an OPEC member. Oil production and export dominates Angola’s economy. 50% of GDP, 70% of Government revenue and 90% of the country’s exports are coming from the oil sector. It is indeed a state dominated by revenues coming from commodity exports. Diamonds contribute to 5% of those exports. Oil prices sensitivity is a major problem and hard currency became scarce. The kwanza exchange rate at 172.6 to 1USD is overvalued and the central bank reserves are spent in protecting the current rate. Credit from China, Brazil, Portugal, Germany, Spain and the EU is helping to rebuild Angola. GDP (PPP) was US$193.6 billion in 2017 (est.). Per capita (PPP) GNI was US$5,790 in 2017. The GDP by sector is: agriculture: 10.2%; industry: 61.4%; services: 28.4%. Gross national saving is low at 28.6% of GDP and unemployment rate stands at 6.6%. Inequality is high with the lowest 10% earning only 0.6% of GDP and 44.7% going to the highest 10% of income earners in the country. The Gini coefficient is 42.7. Fiscal revenues for 2017 were US$37.02 billion (est.) and government expenditures accounted for US$45.44 billion (est.) recording a budget deficit of (-6.7%). In 2018, it turned into a surplus of 4.8% in 2018, eventually reflecting new priorities of the government headed by João Lourenço. Public debt is 65% of GDP and inflation rate is high at 29.8% (2017 est.). The main export partners are China 61.2%, India 13% and the US 4.2%. Main exports are crude oil, diamonds, refined petroleum products, coffee, sisal, fish and fish products, timber and cotton. The main imports partners are: Portugal 17.8%, China 13.5%, US 7.4%, SA, 6.2%, Brazil 6.1%, UK 4% (2017). Angola development needs are monumental. On the one hand the country is endowed with rich mineral resources. On the other hand, oil is imposing onto the economy and overall development of the nation. It has all the features of suffering from Dutch disease its government elites are, until recently, overtly a rent seeking elite. It is a rich country with many poor people. Economic reform and diversification are crucial. The government needs to create the institutional condition and a level playing field for market forces to operate in an efficient way. Increase of production capacity, market integration and fiscal consolidation, are priorities to be addressed by the new government of João Lourenço. 180 JOSÉ LUÍS SALES DE MARQUES

Chinese investment in Angola ranks amongst their highest in Africa. Most of it is in the oil industry, in infrastructure and loans. The investment in the Luanda Lobito railway, in the last decade was important to re-operationalize a crucial transport infrastructure at a time juncture when Angola most needed it. According to the Chinese Embassy in Luanda, Chinese companies had in the last ten years rebuilt 2,800 km of railway line, 20,000 km of roads and built more than 100,000 houses in the country (Macau Hub, January 10th 2019). Chinese private investors are being called to participate in the country’s development by investing in industry and agriculture. The Luanda-Bengo Special Economic Zone, designed to build up industrial diversification and production for domestic market, is one of the areas those investors are being attracted to. The revenues derived from the involvement of Chinese construction companies are high which strongly support the win-win nature of those investments. EU aid is centered on the building up of social infrastructure and it has also featured limited support to production. It is, however, as mentioned, limited in result due to the size of the country and its large population still deprived from basic infrastructures. EU established with Angola a Joint Way Forward dialogue mechanism and at the last Ministerial meeting, conveyed to Luanda on 11th March 2019, the participants concurred on the need to boost investment, improve the business environment to become more conductive to domestic and foreign investment and to improve the efficiency of the legal framework for trade and foster domestic revenue mobilization. Angola has zero tariff access to the EU market for everything but guns. EU private investment is Angola is also centered in the oil sector. Most of the EU investment comes from France, the Netherland and Portugal. EU and China are effectively assisting Angola in different directions, although their investments are equally centered on the dominant sector of the Angolan economy, which is the only one where there is actually competition. However, it would be ideal if both China and EU based companies would help Angola towards sustainable development by building up its production capacity and diversifying its economy. Mozambique Cyclone IDAI and Cyclone KENNET both hit hard Mozambique during 2019, leaving a sow of destruction along its way. More than 160,000 people were affected in needing shelter, food and water. Mozambique borders Tanzania, Malawi, Zambia, Zimbabwe, South Africa and Swaziland. It has a long coastline of 2,500 km facing Madagascar. 28% of its 181THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

population live and work in rural areas. It is endowed with ample arable land and natural resources as well as water and energy. It is strategically located as many of the countries around it are landlocked and depends on Mozambique as access to the sea. Its vicinity to South Africa is a major element in its economic development. Recent political development has increased the risk of political instability. It was also hit by civil war after gaining independence from Portugal in 1975. Mozambique suffered in 2016 a hidden debt crisis21. Real GDP growth is estimated to be 3.3% in 2018, around the same level as of the last 3 years. Average between 2011 and 2015 was 7% growth. Inflation is 3.5% roughly the same level as pre-crisis, kept low by cautious monetary policy, stable currency and stable food prices. Debt levels are unsustainably high. External debt declined from 103.7% at the end of 2016 to 85.2% by the end of 2017, mainly due to the appreciation of the metical. Mozambique is still in default of its Eurobonds22, recently declared illegal by its Constitutional Court. The Mozambique government is seeking debt restructuring with private and institutional lenders. The development challenges of Mozambique are firstly to be able to maintain macroeconomic stability, considering the exposure of its economy and current accounts to commodity price fluctuations. Political stability is also crucial and it is important the upcoming general elections in 2019 will not bring instability. It is also important that the support of the public sector will move away from high capital intensity projects and low productivity subsistence agriculture towards a more competitive economy. Improved inclusion with quality education and health services, are long-term goals for an improvement in sustainable development. It is important since due to the current structural challenges, Mozambique is considered to be a 2-speed economy. The EU is supporting Mozambique with significant funds, over 1 thousand million US dollars, the highest value of ODA to any of the PSC. 18% of the assistance goes to production, namely in developing agriculture. Mozambican products have also free access to the EU market. In the meantime, 70% of Chinese investment to Mozambique goes mainly to oil and gas. China also realized some symbolic financing in Mozambique such as the Assembly of Republic building, and participates in important construction projects such as the Mozambique International Airport, Maputo-Catembe Bridge, among others. China is presently the biggest financier and infrastructure builder in Mozambique23. The Mozambican government contracted China’s CITIC construction to build 35,000 units of social housing in five years in a public private partnership deal, which budget was not released. 182 JOSÉ LUÍS SALES DE MARQUES

China and EU have no reason to be competitors in Mozambique in aiding this fragile country. The only competition that is welcomed is sound economic competition under market rules. Mozambique is facing terrible dilemmas, and it can take all the support in financing, direct investment and ODA to tune its economic process into the path of sustainable development. Conclusion EU and China have different approaches towards assisting the PSC in Africa. The evidence produces through several comparative tables suggest that both approaches are complementing each other with EU ODA concentrating on social infrastructure building and the Chinese on economic infrastructure building. On comparing FDI, we have seen a heavy concentration in Angola and in the oil sector, for both sides. It would be desirable to see more private investment channeled to economic diversification in all of the above-mentioned countries. Both sides should also aid in the strengthening of the institutional structure, governance and positive business environment, enabling job creation, proper training and promoting good and fair practices in all those countries. Most importantly, the PSC in Africa should be able to build on their own strengths to make the most of the cooperation EU and China is able to provide, while reducing the opportunity cost of any wrong decision. Macau can provide excellent complementarity to Chinese cooperation with the Portuguese Speaking Countries. On the one hand, Macau Forum is building up a complex network of interdependence and dialogue among all the participants from the Mainland and Macau-China with all PSC. On the other, Macau’s role in the Belt and Road Initiative as well as the construction of the HK-Macau-Guangdong Greater Bay Area is tightly connected to its function as a service platform for that particular relations. Therefore, Macau is already part of the investment fund associated with the Forum. It is also the will of the Macau SAR government policy to create mechanisms for Macau’s participation in special finance, including leasing to support the building up of industrial capacity in the PSC. It will also participate in the China-Africa Cooperation Fund as well as the Silk Road Fund and the multilateral AIIB. Moreover, Macau’s legal system and cultural assets brings extra value to cooperation, since its legal system is similar to those existing at PSC, language can flow freely and cultural interchange is almost instinctive. Macau can also bring in decades of its relations with cities across the Portuguese Speaking world, providing an extra dimension of closeness to the grass root urban populations of the PSC in Africa, helping in urban related issues and challenges and thus adding up another layer of cooperation that will go directly to the well-being and hearths of their peoples. 183THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT

NOTES 1 Macau Forum, http://www.forumchinaplp.org.mo/trade-between-china-portuguese-speaking-countries-nearly-us147-4-bln-in-2018/, retrieved 06/15/2019. 2 Official Development Assistance (ODA) is defined as government aid designed to promote the economic development and welfare of developing. 3 The term Chinese investment is generally referred to a wide range of items including greenfield investment, concessional and commercial loans as well as construction projects carried out by Chinese companies. 4 Human Development Index (HDI) is a composite index focusing on three basic dimensions of human development: the ability to lead a long and healthy life, measured by life expectancy at birth; the ability to acquire knowledge, measured by mean years of schooling and the ability to achieve a decent standard of living, measured by gross national income per capita. UNDP published the Human Development Report every year, that includes additional indexes, such as the inequality adjusted HDI, the Gender Inequality Index and Multidimensional Poverty Index. Source: www.hdr.undp.org, retrieved 05/02/19. 5 Sustainable Development Goals by UNDP as: no poverty; zero hunger; good-health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate action; life below water; life on land; peace, justice and institutions; partnership for the goals. 6 The profiles are made compiling data and information from the CIA Fact Book (2018), UNDP, the World Bank, Africa Union and African Development Bank. 7 EU-ACP conventions. 8 https://paloptl.eu/wp-content/uploads/2018/04/MoU-CE-PALOPTL_en.pdf, retrieved 06/15/2019 9 Deborah Brautigam and Kevin P. Gallagher, Bartering Globalization: China’s Commodity backed Finance in Africa and Latin America, Global Policy Volume 5. Issue 3. September 2014, https://deborahbrautigam.files.wordpress.com/2014/02/gp_brautigamgallagher.pdf, accessed 6/10/2019. 10 According to OECD-DAC: http://www.oecd.org/dac/financing-sustainable-development/development-finance-data-aid-at-a-glance, accessed 6/10/2019. 11 http://www.sais-cari.org/chinese-investment-in-africa, retrieved 6/26/2019. 12 https://ec.europa.eu/europeaid/sites/devco/files/nip-cape-verde-fed11-2014_en.pdf, accessed 6/24/2019. 13 https://ec.europa.eu/europeaid/regions/african-caribbean-and-pacific-acp-region/cotonou-agreement_en, accessed in 6/24/2019. 14 https://europa.eu/capacity4dev/buildingresilience/blog/sao-tome-and-principe-gets-us83-million-cocoa-exports-2016, accessed 7/20/2019. 15 20.2% and 18.8% of GDP in 2016 and 2017. World Bank. 16 https://www.afdb.org/en/countries/southern-africa/sao-tome-and-principe/sao-tome-and-principe-economic-outlook/, accessed 6/24/2019. 17 HIPC is the acronym for the Heavily Indebted Poor Countries Initiative, a joint effort by IMF and World Bank, https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/11/Debt-Relief-Under-the-Heavily-Indebted-Poor-Countries-Initiative, accessed 7/20/2019. 18 S. Tomé e Principe and the PRC reestablished diplomatic relations on April 2017. 19 Development partners Conference, London, 14-15 October 2015, organized by the STP Government. 20 World bank named it as one of the world’s poorest and most fragile countries. 21 Mozambique’s hidden debt crisis resulted from US$2 billion illegal loans. https://jubileedebt.org.uk/blog/can-mozambique-declare-the-2-billion-secret-debts-illegal, accessed 7/27/2019. 22 https://www.reuters.com/article/mozambique-debt/mozambiques-top-court-says-state-guaranteed-eurobond-illegal-idUSL8N23B5N8, accessed 7/27/2019. 23 https://macauhub.com.mo/feature/pt-china-e-o-maior-financiador-e-construtor-de-infra-estruturas-em-mocambique/, accessed 7/30/2019.184 JOSÉ LUÍS SALES DE MARQUES

185THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXT BIOGRAPHIES | Albertina Dias is an Associate Professor of Economics and Management and since 2008 she is acting as an expert evaluator of several research priorities of the European Commission’s Framework Programs and as a reviewer of research programs in the domains of national and regional strategies of economic development, which explore the changing conditions of innovation in the EU. Prior to these engagements she has held several positions of responsibility in companies such as CEO at Madragoa Film Production and Paulo Branco Holding, Business Analyst at Oracle Portugal, and Project Manager at Cap Gemini Portugal. Carla Patrício Fernandes holds a PhD in International Relations (specialization in China Energy Security), from NOVA University of Lisbon, with the thesis “China Today – Energy Needs and International Relations. The Relations with Portuguese Language Speaking Countries”. She is Invited Assistant Professor of the Faculty of Social Sciences and Humanities of the NOVA University, Instituto Português de Relações Internacionais (IPRI-NOVA) Integrated Researcher and the Research coordinator of the FCT project Geo4GER. She is also associate researcher at the Research Center for Security and Defense at the Institute of Higher Military Studies (IUM) and member of the Energy Security Studies Group of the National Defense Institute (IDN) of Lisbon. She has a degree in History and Social Sciences by the University of Minho, a Master’s Degree in Chinese Studies by the University of Aveiro. She is a National Defense Auditor by the National Defense Institute (IDN), with the final work China’s Energy Security and Relations with Portuguese Language Speaking Countries. Her research interests focus on energy security and China. She has published several chapters and papers in refereed journals dealing with these topics. She is the author of several books and articles in national and international reviews on these same subjects. Her most recent publication is the edited book The Future of Energy: Prospective Scenarios on EU-Russia Relations, Nova Science Publisher, New York, 2019.

186 Carlos Martins Branco is a Major-General (retired) with the Portuguese army. He is an integrated researcher with the Portuguese Institute of International Relations (IPRI) and associated researcher with the National Defense Institute (IDN). He has authored two books and more than 70 scientific paper and essays on conflict resolution, security and defense matters published in books, periodicals, and daily news, and has coedited four books. He lectures at various higher education and defense institutions on security and defense, and international relations (United Nations Peacekeeping, NATO, CSDP and Conflict Resolution), and was scientific co-director of post-graduate studies on Media and Crisis Management, in Instituto Superior de Ciências Sociais, do Trabalho e da Empresa (ISCTE). He was deputy director of the Portuguese War College and is a member of various think tanks and civic organizations. (Maria) Fernanda Pargana Ilhéu exercises her lectureship at ISEG/Lisbon’s School of Economics and Management. She is researcher at CEsA as well as a Coordinator of ChinaLogus at ISEG. Prof. Ilhéu is graduated in Economics by ISEG, is post-graduated in Marketing and Export Management at the Cambridge Institute of Massachusetts, got Master’s degree in Strategic Management at Lisbon’s Higher Institute of Business and Labor Sciences (ISCTE), and a European Doctorate degree in Business Administration and Marketing at the University of Seville. She lived in Macau 18 years executing roles of great responsibility in both the private and public sectors and lectured in Macau University. She is presently President of the New Silk Road Friends Association, a Portuguese Think Tank on BRI. Francisco José B. S. Leandro received a PhD in political science and international relations from the Catholic University of Portugal in 2010. From 2016 to 2017 he took part in a post-doctoral research program on state monopolies in China - One belt one road studies. In 2014 and 2017, he was awarded the Institute of European Studies in Macau (IEEM) Academic Research Grant, which is a major component of the Asia-Europe Comparative Studies Research Project. From 2014 to 2018, he was the Program Coordinator at the Institute of Social and Legal Studies, Faculty of Humanities at the University of Saint Joseph in Macau, China. He is currently an Associate Professor and Vice-Dean of the Institute for Research on Portuguese-Speaking Countries at the City University of Macau, China. His most recent book, published in 2018, is titled Steps of Greatness: The Geopolitics of OBOR.

187THE NEW SILK ROAD AND THE PORTUGUESE SPEAKING COUNTRIES IN THE NEW WORLD CONTEXTFrancisco Murteira Nabo is graduated in economics by ISCEF (ISEG) and Doctor Honoris Causa by Macau Science and Technology University. He was Minister of Social Equipment and Secretary of State for Transports of Portuguese Government (1983-1986). After he served on Macau Government as Head Secretary for Education Health and Social Affairs and as Head Secretary for Economy (1987-1989) being Acting Governor of Macau from 1990 till 1991. Francisco was CEO of important companies in Portugal such as Rádio Marconi (1976-1981), Marconi Internacional (1991-1995), PT (1996-2002), and Chairman of Galp (2005-2011), just to name a few. He also have a long-time experience in the associative movement being former President of the Portuguese-Chinese Chamber of Commerce and Industry, the Portuguese-Brazil Chamber of Commerce and Industry and the Confederation of Portuguese Language Countries (CPLP). Currently, is a Member of the Advisory Board of Banco de Portugal, Mota-Engil Company, and Senior Partner at SaeR. José Eduardo Garcia Leandro is a Lieutenant-general (retired) with the Portuguese Army. He was Chief of Staff to the Governor of Timor (1968-1970) and between 1974 and 1979 he was Governor of Macau. Garcia Leandro was a professor at the Portuguese Army War College (1991-1993) as well as its Deputy Director and Director (1996-2000), National Defense Institute Director (2001-2004), and Guest Professor at ISCSP (1999-2005) and at Universidade Autónoma de Lisboa (1992-1993). Between 2003-2009 he was a visiting professor at Instituto de Estudos Políticos da Universidade Católica Portuguesa; since 2009 he has been a member of the Consultative Council at Instituto Superior de Ciências de Informação e Administração de Aveiro (ISCIA). He currently holds the position of President of the Board of Trustees at Fundação Jorge Álvares, is a member of the Board of Trustees at Fundação Casa de Macau, and is a Correspondent Member of the International Academy of Portuguese Culture. In 1999 he coordinated the book Portugal and the 50 years of Atlantic Alliance published by the Ministry of Defense of Portugal, and in 2011 he authored the book Macau during the Portuguese Revolution – 1974-1979, published by Gradiva Editions. José Luís de Sales Marques was born and raised in Macau, and he holds a degree in Economics awarded by the University of Porto (Portugal), and a Master degree in European Studies by University of Macau, with a thesis on China-EU relations. Mr. Marques is also teaching at post-graduate programs in Macau and Europe dedicated to international politics, economic development and urban issues. Previously he was the Mayor of Macau from 1993 to 2001. Besides his administrative role at IEEM, he is involved in research, teaching and writing in areas as International Relations and European Studies, Urban Studies and Economics of Culture. His current research focus in Macau’s external relations, the Grand Bay Area and Belt and Road Initiative. Nowadays he is the President of the Institute of European Studies of Macau.

188 José Nelson Bessa Maia economist, master in Economics and PhD in International Relations by University of Brasília (UnB). He was the Brazilian Ministry of Finance representative at the G20 Framework Working Group (2012-2015); senior adviser at the International Secretariat for International Affairs of the Ministry of Planning, Development and Management of Brazil (2016-2019) and is now coordinator of International Financial Markets at the Secretariat for International Economic Affairs in the Ministry of the Economy of Brazil. Pedro Neves is a member of the UNECE Business Advisory Board and Task Force Leader for the implementation of SDGs through People-First PPPs. Visiting Professor at Ecole des Ponts Paris Tech, lectures at Toyo University in Tokyo, Geneva University in Switzerland, Beijing and Shenzhen, where is a Contributing Specialist for Tsinghua University PPP Research Center. Consultant of international organizations for development policies and implementation of infrastructures investment plans in 81 countries of Europe, Africa, America, and Asia. Victor Borges is a consultant, trainer and lecturer. He coordinates the Leadership and Development Management training programme at Pedro Pires Institute for Leadership. Previously, he was Minister of Foreign Affairs of Cape Verde (2004-2008). He also served as Minister of Education, Culture, Sports and Human Resources Development (2001-2004). He was President of the Council of Ministers of the ACP group, member of the Executive Board of UNESCO and member of other international organizations. He was a visiting fellow at the Bureau of European Policy Advisers, diplomat in residence at Bridgewater State University, visiting fellow at South African Institute of International Affairs and visiting professor at two Cape Verdean Universities. Mr. Borges holds a D.E.A. in Education Policy, a Master’s Degree in Psychology obtained in France and took various courses on international affairs cooperation and development. Wilson Celestino d’Assunção Sequeira Bragança holds a degree in Sociology, a postgraduate degree in African and Development Studies, a Master’s degree in Economics and Public Policy, and a PhD student in Development Studies. He is an independent consultant and university professor. He has served as Advisor to the Third Permanent Specialized Committee of the National Assembly (2004-2006), Secretary General of the Ministry of Planning and Development (2010-2012), General Planning Director of the Ministry of Finance, Trade and Blue Economy (2014-2019), and Director of the Trade and Investment Promotion Agency (2017-2019) of São Tomé and Príncipe.

Livros publicados no âmbito da colecção SUMA ORIENTAL 1 – Timor – da guerra do Pacífico à desanexação Fernando Lima 2 – Liou She Shun – Plenipotenciário do Império da China – Viagem ao Brasil em 1909 Carlos Francisco Moura 3 – Macau 1937-45 – Os anos da Guerra João F. O. Botas 4 – Filhos da Terra – A Comunidade Macaense, Ontem e Hoje Alexandra Sofia Rangel 5 – Chineses e Chá no Brasil no início do Século XIX Carlos Francisco Moura 6 – Portugal e Indonésia – História do Relacionamento Político e Diplomático (1509-1974) Coordenação - Jorge Santos Alves 7 – Brasileiros nos Extremos Orientais do Império (Séculos XVI a XIX) Carlos Francisco Moura 8 – Filhos da Terra – A Comunidade Macaense, Ontem e Hoje - Edição Chinesa Alexandra Sofia Rangel 9 – Figuras de Jade – Os Portugueses no Extremo Oriente António Aresta 10 – China na Grande Guerra – A Conquista da Nova Identidade Internacional Luís Cunha 11 – Mao, China y Los ‘Otros’ Beatriz Hernández 12 – Joaquim Guerra S.J. (1908-1993) Releitura universalizante dos Clássicos Chineses Antonio José Bezerra de Menezes Jr 13 – Macau Confidencial João Guedes 14 – O Oriente na Literatura Portuguesa – Antero de Quental e Manuel da Silva Mendes Carlos Miguel Botão Alves 15 – China’s Techno-Nationalism in the Global Era – Strategic Implications for Europe Luis Cunha 16 – Five Hundred Years of Macau Stuart Braga 17 – The Western Pioneers and their discovery of Macao J. M. Braga 18 – Da estada em Macau do Dr. Sun Yat Sen – interpretação do seu pensamento revolucionário Fok Kai Cheong 19 – Before the first Guangzhou uprising in 1895 – The Macau experience deciphering the revolutionary thoughts of Dr. Sun Yat Sen Fok Kai Cheong 20 – Instrumentos Musicais Chineses – Colecção do Museu do Centro Científico e Cultural de Macau/Lisboa Enio de Souza 21 – Para uma Literatura da Identidade Macaense – Autores/Actores Maria Barras Romana 22 – A Faixa e Rota chinesa: a convergência entre Terra e Mar Paulo Duarte

23 – A China e a Revitalização das Antigas Rotas da Seda Novo Vetor do Comércio Mundial Coordenação – Fernanda Ilhéu e Leonor Janeiro 24 – Pioneers of Macao – the story of 14 Chinese who helped to make the city Mak O’Neil 25 – Macau – um diálogo de sucesso Fernando Lima 26 – Figuras de Jade II – Os Portugueses no Extremo Oriente António Aresta 27 – Dating à chinesa – A comercialização do casamento na China contemporânea Shenglan Zhou

The Belt and Road Initiative has progressed from a national Chinese economic development project aiming to develop its poorest provinces and to strengthen the openness and sustainability of the richer ones to a global initiative. Likewise, it progressed from a plan to create new drivers of economic growth with the revitalisation of the antique silk roads from China to Europe, great sources of trade and wealth in the past, to consider all countries in the world which expressed their intentions of willing to work together in a more sustainable and balanced new global economic model, with a new mindset based on knowledge, connectivity, trust, and cooperation.“We see the Belt and Road Initiative as the most relevant project today in the world, in the context of South-South cooperation, which would contribute to fairer globalisation, and fairer globalisation in the best way to have a future of shared prosperity among the different nations of the world” … “there is no peace without development, and no development without peace” António Guterres UN Secretary General at the 2nd Belt and Road Initiative International Forum. The geography of the Portuguese Speaking Countries is in itself an important asset for Belt and Road Initiative cooperation, as they have a combined population of 282 million people, who speak the 4th most widely-spoken language in the world, and the 1st language in the South Atlantic. Africa holds 13.5% of the world’s drinking water, 5.9% of its arable land, and is responsible for 3.9% of global trade and of many raw materials and energy resources. Therefore, this book aims to answer to the questions what is the position of the Portuguese Speaking countries integrated in their economic spaces towards Belt and Road Initiative and how they can cooperate with China in a bilateral and multilateral context, what is already being done and what future vision of this cooperation can be expected.ISBN 978-989-54193-8-89 7 8 9 8 9 5 4 1 9 3 8 8