Questioning,W.H.O. Relationship with China

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REUTERS/TIKSA NEGERI
Chinese train masters on the Addis Ababa to Djibouti line
Ethiopia and Kenya are struggling to manage debt for their Chinese-built railways
June 4, 2019
Yunnan Chen
By Yunnan Chen
FROM OUR OBSESSION
Because China
Even small changes in China have global effects.

In the wake of the Belt and Road Initiative (BRI) Forum in Beijing six weeks ago, Ethiopia gained another Chinese debt-concession. China’s second-largest African borrower and prominent BRI partner in infrastructure finance also received a cancellation on all interest-free loans up to the end of 2018. This was on top of previous renegotiated extensions of major commercial railway loans agreed earlier in 2018.

These concessions highlight the continuing debt-struggles that governments have in taking on Chinese large infrastructure projects. But they also demonstrate the advantages and flexibility, that African governments can gain in working with China—if they can leverage it.

Ethiopia’s railway projects have been an instructive case of both the benefits and pitfalls of Chinese finance. It has been over a year since the Chinese-built and financed Addis-Djibouti standard gauge railway (SGR) opened to commercial service in January 2018. A flagship project of China’s Belt and Road Initiative in the Horn of Africa, and constructed in parallel with Kenya’s showy Chinese-built SGR, the project was Ethiopia’s first railway since a century ago (another urban-rail project, the Addis light-rail transit (LRT) was completed earlier in 2015), as well as being the first fully-electrified line in Africa.

Costing nearly $4.5 billion, the SGR was partly financed through $2.5 billion in commercial loans from China Eximbank, according to figures from SAIS-CARI with further loan packages dedicated to transmission lines and the procurement of rolling stock and locomotives. Part of China’s wider ‘export-supply chain’ strategy, the railway uses a package of Chinese trains, Chinese construction companies, Chinese standards and specifications—and is currently operated under a six-year contract by a joint venture of the two Chinese contractors, CREC and CCECC, who built it.

As part of a wider nine-line railway network plan under the Ethiopian Railway Corporation (ERC), the line cuts travel time from the capital Addis Ababa to Djibouti from two days by road to 12 hours. Passing several industrial zone clusters in Addis Ababa and Dire Dawa, it also serves the government’s wider export-led industrialization strategy, through the strategy of “transit-oriented development”, writ on a national scale.

REUTERS/TIKSA NEGERI
Stewardesses stand in line during the inauguration of the new train line linking Addis Ababa-Djibouti line in October 2016.
But despite these lofty ambitions, the project has been afflicted by technical and financial challenges, calling into question the wisdom of relying on Chinese technology, as well as debt-financing, for major infrastructure. Despite the line’s completion in 2016, delays in the construction of the transmission network held up the railway’s commission, and problems with power outages and technical issues of over-voltage have continue to plague the line in the first year of operation.

Other social challenges have also emerged out of railway design choices: the decision to not erect fencing along rural tracts of the railway (both for cost-saving purposes and a concern to not divide pastoral communities) has led to the regular phenomenon of collisions between the train and livestock, resulting in conflicts over compensation; the railway become a target for blockades in regional ethnic tensions in the last year, leading several instances of disruption to service.

On an economic front, actual uptake of the railway by the industrial zones it was intended to serve remains low—even after a year, the vast majority of the railway’s freight cargo is made up of imports, not exports. Integration with export and industrial zones is low, as the main trunk line does not connect to individual industrial zones, creating significant last-mile shipping and logistics for firms, particularly at port connections. Most exporters continue to use road transport, despite the higher time and financial cost, due to its greater flexibility and reliability compared to the train’s twice-daily schedule.

REUTERS/STRINGER
The flashy Mombasa terminal of the SGR line constructed by the China Road and Bridge Corporation (CRBC) and financed by the Chinese government in Kenya
This is a major problem for the railway’s economic prospects. Few passenger-based rail systems in the world are profitable; in developing countries, most railways connect to mines: one of the few bulk goods that can generate returns for such capital-intensive transport.

China also bears these costs. State insurer Sinosure publicly commented on $1 billion in losses written off for the project, and Eximbank has halted previously-discussed funding for the country’s second line, the section from Weldiya to Mekele. Though contracted to another Chinese SOE, CCCC, Ethiopia faces little prospect of further loan finance from China, until the first railway can show demonstrable success.

Further financial challenges afflict the projects, along with Ethiopia’s growing debt burden. A long-term foreign exchange shortage, worsened by poor export performance, has challenged Ethiopia’s ability to repay many of the loans that financed these projects. Repayments on the principal for the Chinese railway loan began in 2017, before the line was even operational. As of the beginning of 2019, the ERC was not only behind in its loan repayments to China, but also unable to front the remainder of the management fees for the Chinese companies operating the railway.

In late 2018, Ethiopia negotiated with Beijing to restructure of the Eximbank loan terms, extending the repayment period from 15 to 30 years.

China’s railway loan concessions to the Ethiopian government also contrast to the other debt-financed railway project the government is constructing: under Turkish contractor Yapi Merkezi, Ethiopia’s second railway line from Awash to Weldiya is still under construction, financed by a consortium of mostly European lenders including Turkish Eximbank and led by Credit Suisse. Despite its delayed Chinese debt repayments, Ethiopia has reportedly never missed a payment to its European creditors, where the penalties to future access to credit are harder.

In this, China’s deep and strategically-tied pocketbook has been a big advantage, allowing Ethiopia to juggle its external obligations and leverage Chinese flexibility where it can. Ethiopia’s renegotiation and rollover of debt indicates that this BRI project is unlikely to have a Hanbantota-esque Chinese takeover. In contrast, Kenya’s Mombasa-Nairobi railway—another Chinese-designed and built SGR which has seen similar concerns over debt-burdens—but curiously has not received similar concessions from China—and has struggled to gain further funding from China for its expansion. Longer-term challenges remain in the national railway’s development and success. Financial concessions buy Ethiopia more time, but the government still faces an ongoing challenge of capacity building for the eventual handover of railway operations to Ethiopian ownership. China has supported through training exchanges in the form of student exchanges and in the construction of a new railway academy dedicated to vocational staff training—and the case of the light rail transit shows some early success: after three years, daily operation has been entirely localized to Ethiopian staff.

However, the Addis-Djibouti SGR has seen more missed opportunities: the very fact that operations and maintenance were awarded to construction contractors with no actual railway operations experience is indicative of the failure of adequate capacity building during construction. The government too, has learned from this, pressuring Turkish contractors Yapi Merkezi in the Awash-Weldiya rail project much harder on capacity building for ERC engineers and construction staff.

Under Ethiopian premier Abiy, the Horn of Africa country is also learning and adapting in other ways in managing its external partners, increasingly looking to encourage private sector finance and public private partnerships to finance future railway developments.

Outside of railway, though, China remains a viable partner: the recent signing of a new power project still demonstrates the considerable sway that China holds as a financier where other international sources of credit remain scarce. But both sides have been burned: while the strategic discourse of the Belt and Road mean that the SGR will not be abandoned, both lender and borrower now show greater caution in the infrastructure they pour money into.

*The author acknowledges the generous support of SAIS China Africa Research Initiative in funding field research for this article.

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The coronavirus crisis is raising questions over China's relationship with the World Health Organization
Analysis by James Griffiths, CNN
Updated 9:23 PM EST, Fri February 14, 2020


Hong Kong(CNN)Sitting alongside Chinese President Xi Jinping in Beijing's Great Hall of the People, World Health Organization director general Tedros Adhanom Ghebreyesus was effusive in his praise of the country's response to the coronavirus crisis.

"We appreciate the seriousness with which China is taking this outbreak, especially the commitment from top leadership, and the transparency they have demonstrated," Tedros said, in comments that would be repeatedly quoted in China's state media for weeks.

This was in late January, after Xi had taken control of the situation due to local officials' apparent failure to contain the outbreak to Hubei province.


As the two men met in the Chinese capital, the number of cases was rising, and revelations were emerging that officials in Hubei province and Wuhan -- the city where the virus was first detected -- had sought to downplay and control news about the virus, even threatening medical whistleblowers with arrest.

Days later, the WHO declared a global public health emergency, and once again Tedros praised Beijing's response.

While China did act quickly following Xi's intervention, placing several major cities on lockdown and pouring resources into the battle against the virus, it has maintained tight control over information about the virus and efforts to control its spread have veered on the side of draconian.

The WHO's praise of China's response have led critics to question the relationship between the two entities. The UN agency relied on funding and the cooperation of members to function, giving wealthy member states like China considerable influence. Perhaps one of the most overt examples of China's sway over the WHO is its success in blocking Taiwan's access to the body, a position that could have very real consequences for the Taiwanese people if the virus takes hold there.

The WHO's position regarding China has also renewed a longstanding debate about whether the WHO, founded 72 years ago, is sufficiently independent to allow it to fulfill its purpose.

China's Ministry of Foreign Affairs did not respond to questions regarding Beijing's relationship with the WHO. A spokesman for the WHO directed CNN to comments made by Tedros this week, when he again praised China for "making us safer."

"I know there is a lot of pressure on WHO when we appreciate what China is doing but because of pressure we should not fail to tell the truth," the WHO director said. "We don't say anything to appease anyone. It's because it's the truth."

Tedros added that "we are giving qualified recognition and actually my call is, please, let's recognize as a world, as a globe what China is doing and help them and show solidarity."

The novel coronavirus outbreak
Authorities watch as the Westerdam cruise ship approaches a port in Sihanoukville, Cambodia, on Thursday, February 13. Despite having no confirmed cases of coronavirus on board, the Westerdam was refused port by four other Asian countries before being allowed to dock in Cambodia.
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Mixing health and politics
The WHO was founded in 1948 under the auspices of the still infant United Nations (UN), with a mandate to coordinate international health policy, particularly on infectious disease. Since then it has had many successes, chief among them the eradication of smallpox and a 99% reduction in polio cases, as well as work against chronic disease and tackling tobacco usage.

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But in its seven-decade history, the WHO has rarely been without its critics. They argue that it is overly bureaucratic, bizarrely structured, too dependent on a handful of major donors, and often hamstrung by political concerns. Following his election in 2017, Ethiopian politician Tedros became the latest WHO director general to promise large-scale reforms.

The first African to hold his position, Tedros took over following the WHO's self-acknowledged poor response to the 2013-2016 Ebola epidemic in West Africa. The WHO took five months to declare a public health emergency of international concern (PHEIC) over Ebola, a delay that "undoubtedly contributed to the unprecedented scale of the outbreak," according to one academic assessment.

The failure was blamed in part on the WHO's cumbersome and complex bureaucracy -- it is made up of six regional offices which are only loosely controlled by headquarters in Geneva. Other factors blamed for the Ebola failure include an overstretched and underfunded surveillance team, and political pressure from West African governments unwilling to take the economic hit caused by a PHEIC declaration.

Tedros Adhanom, Director General of the World Health Organization, attends a meeting with Chinese President Xi Jinping at the Great Hall of the People, on January 28, 2020 in Beijing, China.
But while Ebola may have highlighted those issues, experts had been sounding the alarm for years. In a 2014 report, former WHO consultant Charles Clift wrote that most observers -- including many former insiders -- agreed that the organization "is too politicized, too bureaucratic, too dominated by medical staff seeking medical solutions to what are often social and economic problems, too timid in approaching controversial issues, too overstretched and too slow to adapt to change."

"The WHO is both a technical agency and a policy-making body," Clift wrote. "The excessive intrusion of political considerations in its technical work can damage its authority and credibility as a standard-bearer for health."

Unlike organizations like Medecins Sans Frontieres (MSF), the WHO does not usually have its own teams on the ground gathering information, instead it relies on data provided by member states, filtered through regional organizations -- a structure that was blamed for the delays in declaring Ebola an emergency.

This means that the WHO is only as informed as its member states want it to be. If a country where an epidemic is developing does not share data, there is little the WHO can do about it.

With a government like China's, with a historical aversion to transparency and sensitivity to international criticism, that can be a problem.

Taiwan in the dark
It is on the issue of Taiwan that Beijing's political sway at the WHO is most clear.

In an impassioned speech last year before the World Health Assembly (WHA), the organization's annual meeting in Geneva, Luke Browne, the youthful health minister of the Caribbean nation of St. Vincent, demanded that Taiwan be allowed a seat at the table.

"There is simply no principled basis why Taiwan should not be here ... the only reason that it is not here now is because the government in Beijing does not like the current government in Taiwan," Browne said.

Despite Browne's speech, and the intervention by several other member states, from Belize and Haiti in the Caribbean to the African kingdom of Eswatini and the tiny Pacific nation of Nauru, the proposal to include Taiwan was swiftly struck off the agenda, as it has been every year since 2016.

Taiwan is a self-governing democratic island of 23.7 million people off the coast of China. It has never been ruled by the government of the People's Republic, but is claimed by the authorities in Beijing as part of their territory. Beijing blocks Taiwan from participating in many international organizations unless it does so in a way that conforms to the "one China" principle, such as calling itself "Chinese Taipei" in the Olympics.

Beijing's exclusion of the island from international organizations does not usually have global ramifications. Health is one area, however, where an effective international response requires that all governments be equally connected and informed.

"Taiwan's exclusion from the WHO leaves its population vulnerable during this crisis -- a lack of direct and timely channels to the WHO have already resulted in inaccurate reporting of cases in Taiwan," said Natasha Kassam, an expert on China, Taiwan and diplomacy at Australia's Lowy Institute. "Taiwanese authorities have complained about the lack of access to WHO data and assistance."

Similar concerns were raised during the 2003 severe acute respiratory syndrome (SARS) outbreak, when Taiwanese scientists complained they were stonewalled by WHO officials, who told them to ask authorities in China for data about the disease.

The issue has global ramifications: Kassam pointed out that around 50 million foreign travelers pass through Taiwan's largest airport every year, "with an expectation that Taiwan would be receiving WHO advice on any public health issue."

"Taiwan's healthcare system has been consistently ranked one of the best in the world -- and at a time like this, every country should put politics aside to focus on containing the virus," Kassam said.

As coronavirus cases were reported in Taiwan -- which has major business and cultural links with China no matter the discord politically -- the WHO couldn't even settle on what to call the island. Speaking to reporters last month, a spokesman used the bizarre construction of "China, Taiwan;" while a February 4 report flipped it and listed "Taiwan, China," but got the number of cases wrong, relying on data from Beijing not Taipei. Subsequent reports have since dropped the term Taiwan altogether, instead including "Taipei and environs" in a list of affected cities in China.

When he addressed the WHA last year, Browne predicted just this type of confusion, saying "we all know that the PRC does not exercise control and authority over Taiwan and cannot be reasonably expected to represent it here."

Trapped in the middle
Just as Beijing's sway at the United Nations means that Taiwan is likely never to regain its seat there, the WHO is unlikely to reverse course on this issue until Beijing does. While Taiwan's allies have spoken out in favor of it since the coronavirus outbreak began, China has far more diplomatic clout that it can bring to bear.

And this is the fundamental problem with the WHO: it cannot treat member states equally because they are not equal. During the Cold War, it was the United States that was seen as having too much influence, leading the Soviet Union and its allies to walk out from 1949 to 1956. The US retains major sway due to its position as one of the largest individual funders of the WHO, as do other major economies such as Japan and the United Kingdom, and private donors like the Gates Foundation. While it has not historically been a major funder, the WHO has praised China's "growing contribution" to global health initiatives.

Beyond financial issues, the WHO is also directly controlled by its member states, who nominate and elect the organization's director general and set its agenda. This means the WHO cannot afford, politically or financially, to antagonize countries like the US or China that wield outsized influence over other nations.

World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus speaks during a press conference following a WHO Emergency committee to discuss whether the Coronavirus, the SARS-like virus, outbreak that began in China constitutes an international health emergency, on January 30, 2020 in Geneva.
"If Tedros wants WHO to stay informed about what's happening in China and influence how the country handles the epidemic, he cannot afford to antagonize the notoriously touchy Chinese government -- even though it is clear the country has been less than fully transparent about the outbreak's early stages, and perhaps still is," Kai Kupferschmidt wrote in the journal Science this week.

Indeed, had Tedros done so, there would likely have been a raft of articles criticizing the WHO for needlessly offending China at a time of crisis and hamstringing its own ability to operate.

Thomas Abraham, an associate professor at Hong Kong University Journalism and Media Studies Center and former WHO consultant, sums it up well: "The WHO, and China too, is in a damned if you do, damned if you don't situation."

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