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Local, global security firms in race along China’s ‘Silk Road’

SHANGHAI/BEIJING Global security companies and their smaller Chinese rivals are jostling for business along Beijing’s modern-day “Silk Road”, the grandiose plan for land and sea routes connecting the world’s second largest economy with the rest of Asia and beyond.

Representing investments of hundreds of billions of dollars, the pet project of Chinese President Xi Jinping is seen boosting economic growth at home, and as positive for everything from steel prices to cement makers.

Security firms also expect to tap the rush, offering to protect thousands of Chinese workers – and the pipelines, roads, railways and power plants they build – as they fan out across the world under the “One Belt, One Road” (OBOR) initiative.

It won’t be easy, however, with executives warning that state-owned enterprises running or planning projects from Africa to Vietnam sometimes prefer to deal with fellow Chinese, treat safety as an afterthought and try to keep costs to a minimum.

“OBOR is a lifetime (of work) for us,” said John Jiang, managing director of Chinese Overseas Security Group (COSG).

The small consortium of security providers was set up early last year and operates in six countries: Pakistan, Turkey, Mozambique, Cambodia, Malaysia and Thailand.

“In eight years’ time, we want to run a business that can cover 50-60 countries, which fits with the One Belt One Road coverage,” Jiang told Reuters.

Chinese personnel are essentially barred under Chinese law, and that of many host nations they work in, from carrying or using weapons.

Instead, COSG and its rivals usually work with and train local staff and focus on logistics and planning.

In Pakistan, for example, where attacks by militants and separatist insurgents are considered a serious threat, COSG has a joint venture with a local security firm with links to Pakistan’s navy.

The Pakistani army also plans to provide 14-15,000 armed personnel dedicated to guarding Chinese projects, according to local media reports.

The $57 billion China-Pakistan Economic Corridor, the largest single project under the OBOR banner, envisages roads, railways, pipelines and power lines that link China’s western reaches with the Arabian Sea via Pakistan.

CHINESE VERSUS INTERNATIONAL

Major international security operators hope their scale and experience can convince China’s price-conscious state-owned giants to pay for foreign expertise.

Firms like Control Risks and G4S (GFS.L) offer staff with military backgrounds and decades of experience in risky regions around the world.

G4S said it had seen an acceleration of interest in its services since OBOR began gaining traction.

Michael Humphreys, a Shanghai-based partner at Control Risks, said around a third of the security consultancy’s work in China was related to OBOR.

Hong Kong-based logistics firm Frontier Services Group (0500.HK), co-founded by Erik Prince who created the U.S. military security services business Blackwater, announced in December it was shifting strategy to capitalize on OBOR.

It plans to set up an office in the southwestern province of Yunnan, which adjoins Southeast Asia, and another base in Xinjiang in China’s west, the starting point for the CPEC project crossing Pakistan.

Smaller Chinese firms like COSG, Shanghai-based Weldon Security and Dewei Security, meanwhile, see their advantage over multinationals in state-owned enterprises’ preference for hiring Chinese to handle sensitive projects.

Only a handful of the estimated 5,800 Chinese security companies operate overseas, with the vast majority focusing on the domestic market.

“For Chinese firms, especially with security work, they (state companies) want to speak with another Chinese person. We can also one hundred percent reflect their thinking when we work,” said Dewei general manager Hao Gang.

NO EASY SELL

Security risks facing Chinese workers abroad are varied and often unpredictable.

Yu Xuezhao, a former soldier working in Kenya for Dewei, is helping to train hundreds of local guards to protect Chinese contractors operating there, including oil giant Sinopec (600028.SS) and China Road and Bridge.

Africa, where China invested long before OBOR was formally created, is considered a part of the initiative.

“The most common incidents we encounter are thefts and strikes,” 27-year-old Yu said, speaking from a training compound in the Kenyan capital Nairobi he has managed since 2015. “We train security guards to inspect cars and do ground patrols.”

Events can quickly escalate.

In 2015, for example, an attack on a hotel in Mali killed three workers at a Chinese state firm, leading to calls by Beijing for beefed up security.

Officials revealed then that 350 security incidents had occurred between 2010-2015 involving Chinese firms abroad.

Such concerns do not easily translate into lucrative contracts, however.

In some cases, security companies are called in to deal with an emergency rather than to coordinate a long-term strategy.

“For a lot of companies, they come to us when they’ve (already) got a problem,” said Humphreys of Control Risks.

“They’ve started the project and they can’t move it forward because they have a labor dispute or someone is throwing petrol bombs at their trucks.”

Hao and other Chinese security executives added that most state-owned enterprises were building their overseas security capabilities from a low base.

“A lot of the larger state-owned enterprises have only just started to go out in the last few years. As such, overseas security work remains a blank space for those firms who had not gone out before,” he said.Some Chinese experts said companies operating abroad were beginning to think more about the importance of safety.

“This is something Chinese companies need to study more,” said Lu Guiqing, general manager of private builder Zhongnan Group and former chief economist at China State Construction Engineering Corporation.

“When you ‘go out’ safety is the most important. What’s the point if you end up losing people?”

(Additional reporting by Joseph Campbell in BEIJING and George Ng’ang’a in NAIROBI; Editing by Mike Collett-White)

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‘PHL should take charge of fisheries in the South China Sea’–research

THE Philippines may be enjoying close relations with China, but the country must now advance its own fisheries-management policies in the disputed South China Sea (SCS), a research recommended. In a study by the Stratbase Albert del Rosario Institute, Maria Carmen A. Lagman said the Philippines must reinforce the ruling of the arbitral tribunal on the country s case against China. Lagman, who is also biology professor at the De La Salle University, said the Philippines must insist on a national and regional fisheries-management agenda in the SCS. The advocacy, which was aimed at addressing the challenges of food security, environment protection and climate change, would require the Philippines and other countries encircling the SCS to establish transboundary marine parks or areas of joint protection, Lagman wrote in the study, titled Converging on the Fisheries in the South China Sea . She added the Philippines and other countries should also bring into discussions other international policy instruments and develop regional-level policies targeted toward small-scale fisheries.

Lagman said these options are becoming more than ever urgent because failure to manage the fisheries in the SCS could lead to exploitation of marine life in the area.

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Citing data from another research, Lagman reported fisheries landing in the SCS in 2015 amounted to 10 million tons (MT), which was 12 percent of the total global catch.

Likely underestimated

LAGMAN said this data is likely to be underestimated and it might even increase to 16.6 MT if catch from subsistence, illegal, unreported and unregulated fishing are included. Fisheries-trade figures said the SCS contribute 11 MT to 17 MT in traded fisheries catch annually, with a landed value of no less than $12 billion. This translates to over 3 million jobs associated with fishing activities.

With so much at stake, Lagman said, it is no wonder that control of the fisheries [in the SCS] will definitely be a source of economic and political tension. However, she argued that other countries with claims over the SCS should also come up with a focused set of policy instruments on small-scale fisheries, which was seen to be the practical alternative to industrial fishing.

Lagman said small-scale fishers lose income when commercial vessels intrude their fishing areas, as these boats make use of abusive catching tools trawls, ring nets and purse seines that virtually harvest all organisms. The unregulated business of industrial fishing in the SCS led to the collapse in a number of large predatory fish, according to the study. The latter, which include tunas and groupers, are now slowly replaced by smaller fish highly reliant on zooplankton, like the tilapia and crawfish.

Spatially explicit

LAGMAN said overfished stocks would result to the phenomenon known as fishing down the food web , highlighted by a reduction in the quality and size of catch. Lagman surmised the reduction in catch quality and size were already factored in by countries surrounding the SCS, as they have seen a decrease in demersal and pelagic fish stocks over the past decades.

The maximum sustainable yield (MSY) of the Philippines, Vietnam, east Malaysia and southern China has long been exceeded since the late-1980s, the study said. The MSY is seen as the threshold, and hence, immediate and substantial action must be taken to secure the harvested stock. The study said exhaustion of the MSY is reason enough for countries contending over the SCS to discuss the convergence of the fisheries in the area.

The fish are a common resource for the countries in the SCS, Lagman said. Unless effort is taken to accommodate the transboundary nature of the resources, managing them would not be effective. She noted that fisheries policies in many of the disputing countries were almost, if not fully, spatially-explicit. Citing the Philippines, the country declared some of its key fishing grounds closed seasons for commercial fishing. These included the East Sulu Sea, Basilan Strait and Sibuguey Bay to sardine fishing, selected areas of the Visayan Sea to sardines, herring and mackerels and the West Philippine Sea to Northern Sulu Sea to round scad fishing.

Strategy focus

JUDGING by the oceanographic features of the SCS, Lagman pinpointed the Spratly Islands and the Scarborough Shoal as the sources of the area s propagules and, therefore, should be the focus of management strategies. Lagman also raised concern over the effects of pollution, siltation, destructive fishing and eutrophication resulting from human activities on the coastline, as this would contaminate the mangroves, sea grass meadows and coral reefs in the SCS. Already threatened by coastal activities that deposit sediments, nutrients and effluents, the SCS is further jeopardized by destructive fishing practices that make use of trawls, push nets, dynamite and poison. In addition, about $5.3 trillion of trade courses through the SCS every year, with the aspiration that no accident will occur, such as the Guimaras oil spill in 2006, when a tanker carrying 2 million liters of bunker fuel sank at the Guimaras Strait, damaging biodiversity-rich areas in the Philippines.

This is why the aggression of China on Mischief Reef in the Spratly Islands is a cause of concern for biologists, as Beijing was seen building seven new islands in the area by moving sediment from the seafloor to the reef.

Reefs have been destroyed outright to serve as foundations for these new islands, causing long-term extensive damage to the environment, Lagman added.

SitRep: US Navy Settles Near Korean Coast; Trump Says Iran Deal Working; Russian Bombers Buzz Alaska

With Adam Rawnsley

Sea legs. The USS Carl Vinson strike group has had its Pacific deployment extended by 30 days the ship s skipper announced on Facebook Tuesday night, a response to the threat coming from North Korea.

The ship, which is currently moving toward the Korean coast after plenty of confusion in recent days over its whereabouts, will reassure allies and our partners of our steadfast commitment to the Indo-Asia-Pacific region, strike group commander Rear Adm. James Kilby wrote in the post. We will continue to be the centerpiece of visible maritime deterrence, providing our national command authority with flexible deterrent options, all domain access, and a visible forward presence. [1][2][3]

The extended deployment comes days after North Korea held a massive military parade that showcased what analysts believe are new versions of medium and long-range missiles, and conducted a missile test that failed soon after launch.

U.S. considers shootdown of NK missiles? A report in The Guardian maintains that Defense Secretary Jim Mattis has briefed Congress on the possibility of shooting down North Korean missile tests as a show of strength as Pyongyang prepares for its sixth nuclear test. While no decision has been made, one US official said the prospective shoot-down strategy would be aimed at occurring after a nuclear test, with the objective being to signal Pyongyang that the US can impose military consequences for a step Donald Trump has described as unacceptable. [4]

But hold on. Missile defense expert Kingston Reif of the Washington D.C.-based Arms Control Association fired off a Tweet thread Tuesday laying out the reasons why intercepting missile tests is pretty hard, and in the end is an unlikely option given U.S. presence and options in the region. The New York Times reminds us that one of the reasons for the suddenly high failure rate for North Korean missile tests could be a U.S. government hacking program pushed by President Barack Obama in 2014 which has been adopted with enthusiasm by the Trump administration. [5][6]

Trump administration keeps on keeping on. Vice President Mike Pence continued the Trump administration s tough talk when it comes to North Korea on Tuesday while addressing sailors on the deck of the USS Ronald Reagan aircraft carrier docked at Yokosuka, Japan. The United States of America will always seek peace but under President Trump, the shield stands guard and the sword stands ready, Pence said. Those who would challenge our resolve or readiness should know, we will defeat any attack and meet any use of conventional or nuclear weapons with an overwhelming and effective American response. [7]

What s the plan? The Washington Post sums up Washington s diplomatic plan as much as there is one for dealing with Pyongyang. A series of binary, sometimes conflicting comments delivered by top officials in the past week highlight the Trump administration s hope that hard-line rhetoric will have a deterrent effect and, more fundamentally, the lack of attractive options it faces on North Korea. While officials are eager to signal a break from previous U.S. policy, their strategy appears to be a continuation of the Obama administration s attempt to use international economic and diplomatic pressure to force results in Pyongyang. [8]

Iran deal working. In a letter to Congress on Tuesday, the Trump administration said that the landmark nuclear agreement the international community reached with Tehran in 2015 is working. Thought it s looking for ways that it s not. Iran remains a leading state sponsor of terror through many platforms and methods, Secretary of State Rex Tillerson wrote in the notification.[9]

President Donald J. Trump has directed a National Security Council-led interagency review that will evaluate whether suspension of sanctions related to Iran pursuant to the [nuclear deal] is vital to the national security interests of the United States.

During the 2016 presidential campaign, Trump pledged to rip up the deal soon after assuming office, but some of his cabinet officials like Defense Secretary Jim Mattis cautioned against it. The president has said little about the deal, which was a mainstay of his stump speeches, since moving into the White House in January.[10]

Not a career killer. The skipper of two small U.S. naval boats that strayed into Iranian waters last year will be allowed to stay in the military, FP s Dan De Luce reports in an exclusive story. A U.S. Navy panel has rejected a recommendation from commanders that 28-year-old Lt. David Nartker be kicked out of the Navy. The officer s lawyer had argued that he prevented a potential conflagration with Iran over a navigational error.[11][12]

It s an exoneration by the rank and file of the Navy, Phillip Lowry, the officer s defense attorney, told Foreign Policy. His peers have looked at this, and they have decided that this doesn t warrant separation, they want to keep him as a colleague, he said.

Welcome to SitRep. Send any tips, thoughts or national security events to [email protected] or via Twitter: @paulmcleary or @arawnsley.[13]

Parade trade. When North Korea drove its KN-11 submarine-launched ballistic missile down the street in its annual military parade, it used Chinese-made Sinotruk vehicles to haul the parade float, throwing China s trade with its troublesome southern neighbor into an uncomfortable spotlight. A Sinotruk dealer defended the company s trade with North Korea, saying the sale is allowed under international sanctions and that Pyongyang is responsible for converting civilian trucks to military purposes. China s foreign ministry also defended its trade practices, saying it adheres to sanctions rules while carrying out normal economic exchanges and trade with the North.[14]

Today in subtweets. As tensions between the U.S. and North Korea ratchet up, the Pentagon s Twitter accounts is putting Pyongyang on blast with some no so subtle hints about its preparedness. On Wednesday, Pacific Command tweeted out a picture of a Paladin self-propelled artillery vehicle, writing that U.S. artillery battalions in South Korea are ready to #FightTonight and win. Meanwhile, Reuters reports that North Korea surprised observers by showing up on satellite imagery playing volleyball at the country s nuclear test site ahead of an expected test. Experts say the test is either briefly on hold or North Korea is trying to mess with analysts, in the full knowledge that all eyes are on the facility.[15][16]

Air Alaska. The Cold War is back and so are Russian bombers off the coast of Alaska. The New York Times reports that the U.S. scrambled two F-22 stealth fighter jets to intercept two Russian Tu-95 bombers which ventured into the U.S. Air Defense Identification Zone. Russia has grown increasingly aggressive in the skies around the world since its invasion of Ukraine, buzzing American and NATO aircraft in the Baltics and skirting close to the borders of NATO allies. Its bombers also carried out a similar approach towards Alaska on July 4th, 2014.[17]

Saudi CT. A Saudi-led coalition of 41 countries is beginning to take shape and appears to have found a focus for its activities: keeping the Islamic State at bay as fighters from the group begin to flee from the militant group s strongholds in Iraq and Syria. The Wall Street Journal reports that the coalition, sometimes referred to as the Muslim NATO, is expected to have its first substantive meeting over the next few months in Riyadh when defense ministers from member states, from Morocco to Malaysia, will gather to agree on its structure and mission. However, these are Sunni-majority nations and absent from the alliance is Saudi Arabia s major rival in the Middle East, Shiite powerhouse Iran, which sees the grouping as a sectarian show of force. [18]

Drones. Congress is pressuring the Trump administration to greenlight the sale of armed drones to Jordan, Defense News reports. Twenty-two members of Congress 20 Republicans and two Democrats signed a letter calling for the U.S. to allow the sale. Rep. Duncan Hunter (R-CA), a longtime champion of drone sales to Jordan whose district includes drone-maker General Atomics, is behind the push. Hunter argues that Jordan will simply buy Chinese-made armed drones like many of its Middle Eastern neighbors if the U.S. continues to deny it American-made technology.[19]

Flexing. Jordan published a video of its King Abdullah flexing his muscles and participating in a live fire exercise with troops on Tuesday. The video shows Abdullah spilling out of an armored personnel carrier and clearing a series of buildings in a simulated special operations raid. Abdullah is no stranger to feats of stylized and heavily publicized bravado, posing in full operator gear in 2015 after the Islamic State carried out a grisly execution of a Jordanian pilot.[20]

Photo Credit: Petty Officer 2nd Class Dusty Howell/U.S. Navy via Getty Images

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References

  1. ^ plenty of confusion (www.nytimes.com)
  2. ^ its whereabouts (www.wsj.com)
  3. ^ wrote in the post (www.facebook.com)
  4. ^ maintains (www.theguardian.com)
  5. ^ fired off a Tweet thread (twitter.com)
  6. ^ could be (www.nytimes.com)
  7. ^ continued (www.reuters.com)
  8. ^ sums up (www.washingtonpost.com)
  9. ^ said that (www.wsj.com)
  10. ^ Trump pledged (www.cnn.com)
  11. ^ reports in an exclusive story (foreignpolicy.com)
  12. ^ argued (foreignpolicy.com)
  13. ^ @paulmcleary (foreignpolicymag.wordpress.com)
  14. ^ Chinese-made Sinotruk (www.defensenews.com)
  15. ^ on blast (twitter.com)
  16. ^ playing volleyball (www.reuters.com)
  17. ^ Russian bombers (www.nytimes.com)
  18. ^ beginning to take shape (www.wsj.com)
  19. ^ drones to Jordan (www.defensenews.com)
  20. ^ flexing his muscles (english.alarabiya.net)
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