Silk City: Belt and Road’s Kuwaiti Keystone in the Persian Gulf

Guest contribution by Tom Fowdy. Tom is a UK based analyst, researcher and writer. He graduated from the Msc. Contemporary Chinese Studies Program at the University of Oxford. He has contributed to around 30 publications for CGTN and written extensively on Sino-North Korean relations. Follow Tom on Twitter: @Tom_Fowdy

The tiny Emir of Kuwait sits directly at the terminus of the Persian Gulf, a waterway where the Indian Ocean squeezes itself between the Arabian Peninsula and Iran. Almost near the definition of a city state, the country was created as a protectorate of the British Empire out of former Ottoman lands. The purpose was strategic. Whilst its territory appears small and unremarkable, beneath it sits enormous crude oil reserves, even 8% of the world’s total, which to no coincidence benefit from unfettered access to the adjacent waterway. Gaining its independence in 1961, the Emirati has been subsequently able to enrich itself over the decades through such exports and climb towards attaining the world’s 4th highest Gross Domestic Product by Capita. By cooperating with likeminded petroleum monarchies in Saudi Arabia, Bahrain and the United Arab Emirates, Kuwait has worked to sustain a regional economic order in the Middle East to preserve its political independence and economic prosperity; something in turn which has been supported by Western Powers, most notably the United States.

However, the world is changing. What has allowed the small gulf kingdom to prosper will not last forever. Oil reserves have a limited lifespan. According to a report by BP in 2014, at current rates of extraction the world’s oil supplies are expected to last no longer than 53 years or so in total. But that isn’t all, there are closer and more demanding pressures. As the world becomes increasingly concerned about the effects of carbon production on climate change, there is more and more international incentive to move past the production of petroleum vehicles. The United Kingdom and France are two countries which vow to ban the production of new petrol- and diesel-powered cars and vans from the year 2040, and China by 2050. It is expected that other countries will follow suit. In numerous ways, crude oil is a market with a limited future. This poses geopolitical considerations for a small state which has built itself upon such a commodity, the future needs to be prepared for.

Kuwait thus faces the pressing challenge of diversifying its economy and adapting itself for a post petroleum world. Because the country has no other natural resources to offer and a tiny population which is already dependent upon expatriate labour, its future success hinges upon its ability to sell its strategic value in the Persian Gulf to larger powers. This is where China comes into the picture. Planning for this future, the Emir of the Country Amir Sheikh Sabah Al-Ahmad Al-Sabah has established a grand version of transforming it into a pivotal financial and trade hub by 2035.

Consequentially, Beijing’s maritime Silk Road project, extending across the Indian Ocean, to Africa and up through the dual channels of the Red Sea and the Persian Gulf, represents an enormous opportunity which can help reinvigorate the city’s position in global and regional supply chains and enhance its international significance and appeal. After all, despite the wealth of Kuwait, its visitor appeal far trails that of its more well-established neighbours such as the UAE, with the Emirati only receiving less than 400,000 annual visitors in contrast to Dubai’s 14.6 million as of 2016. Thus, large scale investment is needed to transform the area into a hub of international investment and activity.

The country has been not shy of recognizing China’s importance here and relations between the two parties have accelerated rapidly in the past 12 months. In July, reports emerged that the two countries signed a “strategic partnership” which concerned a commitment to upgrade the number of joint projects and areas of economic cooperation. It tied the Emir’s 2035 vision with Kuwait’s participation in the Maritime Silk Road project. With it came the unveiling of a $100 billion joint development project dubbed the “Silk City”, which will consist of large-scale infrastructure development within the country. The deal for the silk city was formally signed off in November between the two parties.

In detail, the Silk City project contains a number of key assets for the Maritime Silk Road. It is clear that it seeks to emulate the UAE’s Dubai model. The project involves the creation of a new international airport within the country, quite clearly seeking to rival Dubai and Doha in becoming a strategic centre of aviation traffic between the East and West. In turn, the fund will also provide for the creation of a new 36km bridge which will link the country’s five outlying islands to the mainland, improving connectivity.

Most crucial to China’s interest, however and thus the centrepiece of this project concerns the development of the Mubarak Port, which is aimed at creating one of the largest trading ports in the region. This will allow the country to link itself to the routes China is establishing across the broader Maritime Silk Road. Its closest partner would likely be the Gwadar Port in the China-Pakistan Economic Corridor, enhancing the Mubarak port’s integration with greater Eurasia and providing links to the land based Silk Road Economic Belt. Whether this port will connect to potential BRI projects Iran however, remains to be seen.

Peripheral to the Port Project will also include the development of numerous skyscrapers and a brand-new business district. As a whole, the Kuwaiti government are openly confident that this development can help realize their future economic goals. As their Ambassador to China, Samih Hayat, quoted, “There is mutual and substantial consensus between New Kuwait 2035 vision and the Belt and Road Initiative to revive the Silk Road and establish a commercial centre to serve the world,”.

In summary, as the Middle East is striving to diversify its economic options for the future, it is turning towards China as a source of opportunity and external infrastructure investment. The Emirati has consequently staked its future goals upon enthusiastic participation in the Maritime Silk Road, seeking to completely reinvent itself in a bid to stay relevant and uphold its strategic worth. The Construction of a Silk City in Kuwait offers enormous opportunities not just for the country itself, but the wider region. We should expect China to continue to facilitate its diplomatic relationships in this area of the world and for likeminded regional countries to press forward their involvement in these kinds of projects. In turn, the days of these states sustaining themselves solely as western clients is now drawing to a close. A new economic order is thus being born in the Middle East.