China claims damage to Balticconnector pipeline was an accident, Plus Beijing reneges on rural bond trades -- China Boss News 8.16.24

Newsletter

What happened

China claims that the severe damage caused last year to the Balticconnector, a major undersea gas pipeline running between EU and NATO members Estonia and Finland, was the result of a storm, according to Finbarr Bermingham at South China Morning Post, who broke the news last week.

Beijing shared the results of its internal investigation into Hong Kong-flagged NewNew Polar Bear in an untranslated copy of a Chinese-language report months after Estonian and Finnish investigators made several "legal aid requests" for information on the vessel.

In its report, Beijing acknowledged for the first time that the Chinese-owned cargo ship was involved. However, authorities said that the damage to the pipeline was accidental and caused by a storm the cargo ship encountered.

Although the report is circulating among various ministries in Tallinn and Helsinki, law enforcement officials say it cannot be used as official evidence. They are calling on Beijing to promptly provide the information that has already been requested.

Why it matters

Cold reception in Estonia, Finland

Authorities in Estonia and Finland have previously stated that between October 7 and 8, the NewNew Polar Bear pulled its anchor along the seabed, slicing through the Balticconnector and damaging two telecom cables connecting the two countries.

SCMP's Bermingham revealed that officials from both countries have lingering “doubts” over Beijing’s explanation and were deeply disappointed by China's response.

Kairi Küngas, head of public relations for the Estonian prosecutor, said his office "had submitted a legal aid request to the Chinese authorities to gather evidence from the vessel and its crew."

"In order to execute the legal aid request, the Chinese authorities can carry out the investigative operations by themselves or involve Estonian investigators, although all activities conducted on Chinese territory must conform to local legislation. The Chinese authorities have not provided a response on executing the legal aid request as of yet," he added.

But Estonia's defense minister, Hanno Pevkur, went further, casting doubt on Beijing's claim that the damage was accidental.

"Personally, I find it very difficult to understand how a ship's captain could fail to notice for such a long time that its anchor had been dragging along the seabed, but it is up to the prosecutor's office to complete the investigation," Pevkur told Estonia's public broadcaster.

The ship immediately fell under suspicion when it became clear that it was the only vessel that sailed over the pipeline on the day of the damage. Later, it was observed that one of its anchors was missing and that the anchor and the damage on the pipeline had the same type of paint.

Also problematic were the ship’s routes logged just before and immediately after the incident. NewNew Polar Bear had crisscrossed between Russian ports in St.Petersburg and Kaliningrad,' leading Estonian and Finnish officials to suspect the damage was an an act of sabotage against critical undersea infrastructure, according to The Barents Observer.

That suspicion has fueled growing tension and dubiousness over China's response.

The costs of an association with Putin

The ship’s commercial documents also show that Torgmoll, a Chinese transportation and logistics firm closely connected to Russian business interests, also had control over operations and that its current owner, NewNew Shipping Line, has multiple ships in Russian waters, The Barents Observer said.

Torgmoll, in turn, has contracted with a subsidiary of the powerful Russian-state-owned Rosatom, a diversified holding giant with investments in nuclear power, engineering, machinery, and construction.

According to CSIS analysts, the Kremlin has consistently deployed hybrid tactics to undermine European security for many years, and both the EU and NATO are keenly aware of Russia's threat to critical undersea infrastructure.

Recent developments, such as the Nord Stream pipeline explosions in the Baltic Sea and the cutting of subsea cables near Svalbard, an archipelago halfway between Norway and the North Pole, in 2022, lend significant weight to those concerns.

Since the attacks, the European Union has revised its maritime strategy and approved an enhanced directive on resilience to critical infrastructure. Additionally, the EU-NATO Task Force focusing on the resilience of critical infrastructure was initiated in January 2023, and the new EU Hybrid Toolbox, which consists of the Hybrid Fusion Cell and newly established Hybrid Rapid Response Teams, aids member states and NATO in identifying, preventing, and addressing threats.

Again, it should be emphasized that the damage to the Balticconnector and two telecommunications cables occurred at direct cost and harm to two EU member states that also belong to NATO. (Fearing Russia, Finland joined the alliance in April last year.)

In that light, the incident and the suspicion of Chinese sabotage are bound to gnaw at EU-China relations.

Last week, in his essay, China is in Denial About the War in Ukraine, for Foreign Affairs, CSIS foreign policy analyst Jude Blanchette gave critique of the new "cautious optimism" among Chinese intellectuals vis-à-vis the impact the war in Ukraine is having on China's relations with the West.

He warned it contained dangerous "blind spots" since “the war in Ukraine is serving as both an observatory and a laboratory” in China’s readiness “for heightened geopolitical conflict with the United States.”

"China's relations with most European countries have degenerated, probably irrevocably. In the declaration following its July summit, NATO included an unprecedentedly sharp denunciation of Beijing's behavior, calling China a 'decisive enabler' of Russia's war effort—language that would have been unthinkable before February 2022," Blanchette wrote.

If, as Beijing says, NewNew Polar Bear’s damage to the Balticonnector and telecom cables was accidental, why not respond directly and respectfully to investigators’ legal requests?

But, alas, the information provided and the form in which it was sent were crude at best, as if Chinese officials wanted to gaslight prosecutors in two smaller nations before washing their hands of a major international incident that cost tens of millions of dollars in repairs.

At worst, it looks like stonewalling.

And that is probably the lamest Beijing could do to improve deteriorating relations with Europe in today's troubled geopolitical climate where two wronged member states sit a stiff breath away from expansionist warmongers in Moscow.

As former career diplomat Colin Roberts put it in a post last year on Policy Magazine’s website, "Tallinn is a front line in the intelligence war between Europe and Russia," and "[f]or Finns" - who've suffered several Russian invasions over the past two centuries and, hence, “possess a clear-eyed perspective on Russia” and its “sudden turns” - the threat is “existential."

This Week's China News

The Big Story in China Business

BEIJING RENEGES ON RURAL BANK BOND TRADES: Chinese regulators instructed rural banks in Jiangxi province "not to settle recent purchases of government bonds," which is essentially "an order to effectively renege on their market obligations," Bloomberg staff reported last week.