Petrochemical Abuse or Libya All Over Again?

The Libya uprising in 2011 cost Chinese multinational corporations (MNCs) billions. Now, the story seems poised to repeat itself, albeit this time in Iraq where Sunni radicals belonging to the Islamic State of Iraq and Levant (ISIL) now control large portions of western and northern Iraq. While ISIL has yet to endanger Iraq’s most valuable oil fields, its onslaught still poses multiple threats to Chinese interests. These include higher oil prices, disruptions of oil shipments from Iraq (no small matter given Iraq is China’s fifth largest oil supplier), damage to multi-billion dollar investments by Chinese MNCs such as CNPC and Sinohydro, harm to Chinese nationals, and the validation of radical Islam.

To date, China’s response has entailed expressing support for Iraq’s efforts to protect its sovereignty, offering (vague) political, humanitarian, and material assistance, calling for stepped up efforts by Baghdad to protect Chinese citizens, lobbying for increased involvement by the international community, and intensifying monitoring of the security situation of Chinese MNCs. Reports indicate Beijing may have even directed hackers to steal information from Middle East experts that might enhance its knowledge about ISIL and ability to confront it. The real question is if China will stay on the sidelines if the situation worsens and, if China does intervene, what form will its intervention take. China no longer can count on the US to do its heavy work in the Middle East. Neither can it hide behind the veil of a long-term investment horizon since inaction may produce a total investments loss. While some call upon China to act militarily, it is more likely to offer to mediate. Such a course is “cheap,” but questionable as a default model for protecting Chinese investments in unstable regions. The politico-economy of Chinese investment may be about to undergo its own radical turn.