WSJ: IN CROATIA U.S. STOP CHINESE INFLUENCE IN EU
Photo: The Wall Street Journal
On Rijeka’s waterfront, vast piles of scrap metal stretch for hundreds of yards, the byproduct of an ongoing construction project to renovate the port in the northern Adriatic Sea. When a deal to remake the port emerged three years ago, it set off alarm bells in Washington: Three Chinese state-owned companies had won a bid for a 50-year deal to build and operate a modern new ship-container terminal at Rijeka, a deep-water port with easy access to central Europe’s markets.
That news, according to U.S. and Croatian officials, sparked an intense, behind-the-scenes campaign by Washington that used diplomacy, declassified intelligence and other tools to persuade North Atlantic Treaty Organization ally Croatia to keep China out. U.S. officials also quietly backed an alternate offer led by Danish shipping giant A.P. Moller-Maersk A/S.
U.S. diplomacy, coupled with pressure from the European Union, ultimately helped block Chinese ambitions, people familiar with the events said. The Croatian government canceled the tender without explanation in January 2021, rebid it, and awarded the 2.7 billion euro (about $3 billion) concession to APM Terminals, a unit of Maersk, and ENNA Logic, a Croatian logistics company.
“There was no direct intervention, but certain signals did exist”, Oleg Butkovic, Croatia’s transportation minister, said in an interview in the capital, Zagreb. “It’s a very sensitive issue.”
The effort to block China from the port in Rijeka, whose details haven’t previously been reported, provides a window into how U.S. officials are working under a broader strategy to counter Beijing’s influence in Europe, one of the few foreign-policy initiatives to span both the Trump and Biden administrations.
Under both presidents, U.S. officials have lobbied European governments to limit Beijing’s investment in strategic infrastructure, including ports and railways, energy grids and semiconductor plants. Perhaps the most high-profile of those efforts was urging European allies to keep China’s Huawei Technologies Co. out of its 5G communications networks.
China has been expanding its interests in ports across Europe, in countries including Spain, Belgium and Greece, where it has a majority stake in the Piraeus port authority. Last year, Washington weighed in on China’s plan to take a commanding role in the port of Hamburg, which some members of German Chancellor Olaf Scholz’s coalition government also opposed. “We strongly suggested that there be no controlling interest by China”, a senior U.S. official said.
Chinese Ocean Shipping Company’s stake was trimmed from 35% to 24.9%, and it won’t have any say in port management decisions.
Rijeka was particularly concerning for Washington because the NATO alliance has used the port to move military equipment in and out of Europe, and the U.S. Navy has used it for ship maintenance and repair.
“It would make it more difficult for NATO and other countries to push things through the port if it was controlled by a Chinese company,” recalled W. Robert Kohorst, U.S. ambassador to Croatia at the time.
U.S. national-security officials have expressed particular concern about China’s burgeoning role in strategic maritime ports. In 2021, U.S. intelligence agencies discovered that China was secretly building a military facility at a commercial port terminal in the United Arab Emirates, and prodded the Gulf country to halt construction. Last year, a U.S. delegation visited Equatorial Guinea, urging it to reject China’s bid to build a military base on the country’s Atlantic coast. The outcome of that U.S. persuasion effort remains unclear.
More recently, some U.S. officials have expressed concern that giant cranes made by China and operating at ports in the U.S. and worldwide could be used as spying tools. China also has access to vast data about the world’s cargo flows through its widely used cargo-data network called Logink.
The U.S. will have to choose its battles carefully given China’s commanding role in global ports and shipping, said Isaac Kardon, an expert on Chinese maritime strategy at the Carnegie Endowment for International Peace think tank.
“It’s going to be very difficult for any U.S. administration to stymie China at every turn,” Mr. Kardon said.
The centuries-old port in Rijeka, strategically valuable for its relative proximity to the Suez Canal, fell on hard times when war broke out and Yugoslavia disintegrated in 1991. Traffic shifted to nearby Adriatic ports in Italy and Slovenia, and Croatia went out of the shipping-container business, said Denis Vukorepa, executive director of the Port of Rijeka Authority.
“If you are port and if you don’t have the container terminal, you are no port,” said Mr. Vukorepa, who, like his father before him, has worked for more than three decades at the port.
Three Chinese firms— Ningbo Zhoushan Port Co. Limited, Tianjin Port Overseas Holding Limited and China Road and Bridge Corporation—initially won the bid to build the new, 920-foot container terminal.
U.S. officials said they were shocked when the Chinese companies appeared poised to secure rights to the project. “We were particularly allergic to the idea of China-owned or-operated ports,” said Matthew Pottinger, who was President Donald Trump’s deputy national security adviser.
In Zagreb, Mr. Kohorst, the U. S. envoy, voiced concerns in meetings with Croatian Prime Minister Andrej Plenkovic; Mr. Butkovic, the transportation minister; and officials from APM Terminals and ENNA Logic, the European bidders who had lost in the initial round, according to people familiar with the discussions.
The Americans’ pitch emphasized that Croatia was a valued member of both NATO and the European Union, and it could get a better deal for the port, U.S. and Croatian officials said. The EU also quietly weighed in, said a Croatian involved in the talks over Rijeka. The Croatian government took the unusual step of canceling the first port tender and issuing another.
To be sure, the quiet pressure campaign wasn’t the only factor. The Covid pandemic had intervened in the first months of 2020, scrambling global trade, and Mr. Butkovic also said new EU regulations passed in 2019 on direct foreign investments would have led to extra scrutiny for the Chinese bid.
Most important, Mr. Butkovic said, the first tender was written without guarantees for how much cargo would actually flow through Rijeka’s port—a point U.S. officials repeatedly made. Some in Croatia worried that China, with its stakes in ports across Europe, wanted to develop Rijeka but not use it actively, merely preventing others from doing so, the Croatian involved in the talks said. The second time around, the Chinese firms didn’t make a bid. The three companies didn’t respond to requests for comment.
In the discussions over Rijeka, Croatian officials reminded their American counterparts of Zagreb’s longstanding desire for admission to the U.S. Visa Waiver Program and for a treaty to avoid double taxation, said a U.S. official directly involved in the discussions.
In September 2021, Croatian citizens were granted the ability to visit the U.S. for up to 90 days without a visa, and the tax treaty was signed in December 2022. U.S. and Croatian officials said there was no direct quid pro quo for the port decision.
Construction at the Rijeka port is now under way and should be complete by May 2025, said Koen Benders, CEO of Rijeka Gateway, the joint venture between APM Terminals and ENNA Logic. Maersk is expected to be the port’s major client.
But China hasn’t been excluded entirely. The main port cranes are being bought from a Chinese firm, Mr. Benders said. And China remains the world’s biggest exporter of containerized goods. “In any case,” said Mr. Vukorepa, the port authority director. “The Chinese are here.”
