How Portugal Is Using China to Get The USA

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An economic flash-point between the two superpowers is developing in the Portuguese port of Sines, which is the closest port in mainland Europe to America’s eastern shale basins, and has long been recognised by foreign powers for its geostrategic importance as a deepwater port.
London: Portugal is part of a battlefield between the US and China. This small country on the south-western edge of Europe rarely features in the Indian press, but perhaps these words of George Glass, the US ambassador in Lisbon, suggest why it should. Glass was commenting two months ago on the intensifying rivalry between Washington and Beijing over Portugal. A few years ago, the boss of a major Portuguese bank, Fernando Ulrich, put China’s interest another way: “I’m shocked to see Portugal used as China’s aircraft carrier for Chinese investments into Europe!”
While the world looks towards China’s build-up in the South China Sea as a potential military flash-point between the US and China, a less visible economic flash-point between the two superpowers is developing in a Portuguese port on a peninsula 65 miles south of the capital, Lisbon. Jutting out into the Atlantic Ocean, Sines is the closest port in mainland Europe to America’s eastern shale basins, and has long been recognised by foreign powers for its geostrategic importance as a deepwater port.
Portugal launched an international tender in August this year for a contract to build and operate a new container terminal in Sines and is expected to pick a winner soon. There is very strong US interest in Sines, where US firms want to expand the port’s liquid natural gas (LNG) terminal in order to increase gas exports to Europe, which they argue would also help reduce the EU’s energy dependence on Russia. On the other hand, China is fighting hard to build a huge $770 million Chinese-built container port in Sines, a key project in its Belt & Road Initiative of which Portugal became a member in 2018. At the time, President Xi Jinping borrowed an ancient Chinese saying to describe the bilateral relationship: “A partnership forged with the right approach defies geographical distance; it is thicker than glue, and stronger than metal or stone.” Portugal’s President Marcelo Rebelo de Sousa reciprocated with a state visit to Beijing in late April that also coincided with the 2nd Belt & Road Forum.
So will it be America’s huge LNG terminal, or China’s huge container port? Whoever is the winner, the geopolitical consequences will be massively significant.
By coincidence, Sines is the birthplace of the great Portuguese explorer, Vasco da Gama, whose initial voyage to India, landing at Kappadu in 1498, was the first to link Europe and Asia by an ocean route. He had entered a world of well-established, multicultural trading networks that had existed for eons. His and his successors’ bold naval explorations converted Portugal into a global empire with a geopolitical reach far beyond its modest size. Portuguese traders reached China in 1515, when they established a diplomatic and trade mission. Twenty years later they were allowed to settle in Macau, starting a durable and friendly relationship between the two countries which lasts to the present day, even surviving the voluntary return of the colony to China on 20 December 1999.
The Macau connection has played a crucial role in the continuation of the Sino-Portuguese relationship, assisted by a group of influential politicians once posted in the former colony. Some of these were instrumental in bringing in the first wave of Chinese investors in the 1990s, mainly in real estate. Several thousands of Chinese businessmen were then granted Portuguese nationality through a “golden visa” scheme that allows anyone with a $600,000 investment, such as in real estate, to apply for permanent residency and ultimately an EU passport. China was the only country willing to step in and help Portugal at the height of the financial crisis in 2010, when its economy suffered so badly and the Lisbon government was under pressure from the European Commission to sell state assets.
Following the crisis, Chinese firms have invested vast sums in a wide range of Portuguese sectors: electricity, oil, transport, financial services, insurance, health, real estate, hospitality, and the media, to name a few, making Portugal the largest recipient of Chinese investment per capita in Europe. Chinese groups have become the biggest single shareholders in Portugal’s leading power and national grid utilities, and in 2018, the two-way trade exceeded $10 billion, an increase of more than 7% from the previous year. Last year, Portugal became the first Eurozone country to issue bonds in Chinese Yuan, so-called “Panda Bonds”.


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