1.1 Introduction
On May 31, 2016 the Sindhudesh Revolutionary Army (SRA), a little-known local group which directly challenges the Pakistani central government’s control over of the Sindh province, made an attempt on the life of Chinese workers based in the Pakistani city of Karachi. The attack, made with an improvised explosive device, injured a Chinese engineer and his driver. In early 2016 three Chinese executives of the China Railway Corp were killed along with other foreigners in the terrorist attack at the Blue Radisson hotel in Bamako , Mali’s capital.
Both groups of Chinese had neither adequate protection nor an appropriate forewarning of the imminent threats in the area. In the case of the Bamako terror attack, the Chinese became a target of opportunity for no other reason than that they were foreigners. In the Sindhudesh Revolutionary Army (SRA) attack, the Chinese workers were the designated target in order to dissuade further Chinese economic support for Pakistan’s weakening economy. Beijing’s backing for Islamabad has already fomented open opposition in the Baluci tribal region. However, the port city of Karachi was considered a relatively safe area for the enclave of China’s workers. The China Pakistan Economic Corridor , with an estimated investment value of US$63 billion from China, is a strategic part of the Belt and Road Initiative (BRI) that connects Central Asia to the Indian Ocean port of Gwadar in Pakistan . The BRI , launched by President Xi Jinping in 2013, is intended to promote economic development and exchanges between China and over 60 countries. The BRI is the spearhead of renewed Chinese outbound direct investment (ODI) efforts.
Confrontations between the local population and Chinese workers are not new in Africa and Central and South Asia as disputes over working conditions and environmental degradation issues are a growing concern over China’s ODI. While the volume of Chinese overseas investment has increased eightfold in the last decade, the amount of Chinese funds dedicated to the BRI is unprecedented, with a Chinese estimate of US$8 trillion.
One oversight that must be addressed is that the BRI requires a wide range of security considerations along both the maritime and land routes. In the Karachi attack, the global reach of the BRI encountered a local problem that has not been given sufficient attention during the project’s economic and security impact analysis. What has been missing is an assessment of the local communities’ opposition to the BRI . According to an official press release, in the incident the attackers left a note that said that this was a protest against the ‘rise of Chinese imperialism’. The communiqué presents a propaganda clash against the BRI’s idea of win-win sustainable development. Since the launch of the BRI in 2013, China’s public diplomacy, utilizing the metaphor of the New Silk Road Global connectivity and win-win sustainable development, has attempted to manage or mitigate anxiety over what is characterized as ‘China’s rise’. This effort, which has not been successful, could be the harbinger of several other conflicts along the BRI route.
While the security problem has not gone unnoticed in Beijing, the solutions could be found elsewhere, namely in international companies that provide armed private security, special risk assessment , insurance and, perhaps most importantly, crisis mitigation.
The contemporary role of private security companies (PSCs) with ‘Chinese characteristics’ is entirely different from the role played by private military security companies (PMSCs) that were employed during the two Iraqi conflicts and the Afghan stabilization campaign. Nevertheless, Chinese state-owned enterprises (SOEs) that deploy PSCs still struggle with several perception gaps with regard to present security threats as well as how best to utilize security contractors. Most of the SOEs and private Chinese companies that are building infrastructure along the BRI tend to underestimate the risks, hoping that protection will be provided by the agreements that Beijing has inked with the host countries. Other companies that are aware of the threats tend to view PSCs as little more than ‘guns for hire’.
Contemporary PSCs are making efforts to differentiate and distance their business model from the shameful acts perpetrated by mercenaries during Africa’s postcolonial wars. Nonetheless, the stigma related to soldiers of fortunes is still alive.
During the past two decades, the demise of the bipolar global order has ignited the rise of private corporations that offer military-style services as part of their core business model. The modern mercenaries became contractors, offering their services through social media, including Facebook. In this respect, Chinese requirements for private security call for a more complex set of solutions. Chinese SOEs require a set of integrated services in which armed personnel are just one component.
After the killing of 17 Iraqi civilians in Nisour Square in Baghdad, the actions of the American PSC Blackwater , also labelled PMSC, generated a media outcry against the employment of private security contractors. The immediate fallout forced Blackwater’s CEO Eric Prince to abandon the US government’s lucrative contracts. In stark contrast to Western perceptions, a significant section of the Chinese security apparatus and PSC management perceive the Blackwater model as efficient . Mr Eric Prince’s sales pitch for his former company Blackwater , which claims ‘no client died during Blackwater’s watch’, has found fertile ground in China.
Therefore, it is no surprise that Mr Prince’s newly established corporation in Hong Kong, Frontier Service Group, has an office in Beijing. In addition, he was one of the few foreign guests of honour who were invited to the Chinese 2016 PSC Association annual meeting.
An important problem, however, is that the laws in several countries that receive Chinese ODI do not permit the use of armed foreign PSCs. To compensate for this, risk assessment officers that cooperate with the Chinese corporations and local law enforcement could provide significant support. Meanwhile, Chinese insurance companies that are just entering the special insurance market must improve their operational capabilities to levels consistent with international best practices. Special insurance is a lesser-known niche market, but due to the expansion of Chinese ODI, this is already proving to be a highly profitable sector. Leading Chinese insurances companies such as Ping An and China Taiping are already extending feelers that seek cooperation with British and other international insurance experts.
Chinese corporations acknowledge that the risks associated with ODI in emerging economies include a higher failure rate due to intertwined factors such as economic crises, conflict, civil unrest, assets nationalization and currency devaluation. At the same time, the Chinese SOEs, due to their public nature with commercial capacity, have the tendency to blur the lines between commercial and political factors. Consequently, they tend to rely too optimistically on Beijing’s support in case of a crisis.
The security threats to the Chinese workers in Pakistan were known in Beijing, but previous risk analyses concentrated on the bellicose factions seeking independence in the Baluchistan area. Islamabad has already deployed a considerable military force to protect Chinese nationals in that region. The attack in the Sindh area reflects the lack of a comprehensive, ongoing risk assessment as the project rolled out. While an initial risk analysis is mandatory during the pre-project assessment, it is also imperative to monitor how the ongoing project is affecting local communities.
Separatism and insurgency are primary variables in the risk assessment equation, but their value is often overestimated without taking into account local problems ignited by the influx of Chinese capitals and workers. The impact of Chinese infrastructure projects in local communities disrupts the internal dynamics of power and wealth, creating a new breed of winners and losers as well as provoking the danger of anti-Chinese sentiments. Several cases, from Central Asia to Africa and from Vietnam to Indonesia, have already showcased how the changes stimulated in the local communities by Chinese investments have ended in violent confrontations.
The number of crises that the Chinese SOEs face operating along the BRI land route’s new railway lines linking China to Europe via Central Asia is increasing. Threats range from regional political and social instability, such as the border clashes between Tajikistan and Kyrgyzstan or the Kyrgyz ethnic violence in Osh (2010), to the increasing protest and acts of violence that erupted between Chinese SOE workers and the local populations such as the incident at Aktogay copper mine (Kazakhstan, 2015).
The BRI approach to crisis management is rooted in the government-to-government (G2G) agreements. This bilateral approach provides a risk assessment that is legally binding between China and the countries involved in the BRI . Nevertheless, the G2G approach is encumbered by several limitations. The most obvious is the separatists’ antagonism towards their central government. Other limitations include weak links between central and provincial governments, cultural and religious barriers as well as historically rooted unresolved disputes. Due to these challenges, the ability of Chinese PSCs to provide accurate, ongoing security assessments, scenario planning, crisis prevention and mitigation is going to be a key requirement for the success in a long-term international economic cooperation and sustainable development that is at the core of the BRI.
Since 2014 the People’s Public Security University in Beijing has offered a dedicated training course for counter-terrorist o...