GZE, a wake-up call we’d better answer

Not now, but as Member of Parliament in 2015 and since July 2017 as an independent consultant, I have been sending red flags about our dealings with the Chinese State Company Guandong Zhenrong Energy (GZE) regarding the future of the refinery in Curaçao. I had mentioned China’s and the Chinese Communist Party’s (CPC) modus operandi and geopolitical ambitions in these types of projects and the lessons learned in Myanmar. This, to enable us to determine what price we are willing to pay for GZE. These warnings have been met with both positivism and disgruntlement by members of the current Council of Ministers. So while it is good to know that the Government of Curaçao (GoC) has now warmed up to the idea that GZE is not the celestial solution it was purported to be, it is nevertheless disconcerting that not all the political parties in the GoC are on the same line. Believe me, in China all relevant parties talk the same language. Let’s not forget that there is no opposition in that country and that the CPC rejects the principle of separation of power. As a matter of fact, a few years ago senior CPC member, Mr. Zhang, at the end of an official party gathering on promoting ‘communist cultural development’ said of the GZE boss, Mr. Xiong:  “In the past I thought Mr. Xiong was just a brilliant entrepreneur. Now I find that he is also a  [..] true communist.”

The second point I want to make is that unbeknownst to many, yesterday, 6 November, 2017, a dispute over a US$500 million railway contract between the Philippine government (GoPh) and a large Chinese state-owned company, SINOMACH, was settled outside of the Hong Kong International Arbitration Centre. This costly row had been going on for years after the Chinese first contended that the GoPh made a contractual breach by discontinuing the project. This begs the following observation. Now that GZE is pointing fingers at the GoC and the MDPT (Refinery Project Team) claiming contractual breach, what can we expect? What kind of arbitration have we agreed on in the documents we have signed? We know that for China, Hong Kong is the pre-eminent choice of arbitration involving mainland Chinese parties. How impartial can Hong Kong be? Singapore for example has it that Hong Kong is too close to China. Have we negotiated arbitration in Hong Kong, New York, the ICC International Court of Arbitration? Another venue? Is the fact that we are not WTO-compliant going to play a role in an eventual arbitration case? Independent from the GZE’s accusations, how much thought have we given to the proper mode of dispute resolution as well as the choice of venue? I am not saying they will surely take us to court since it is not unusual for the Chinese to shelve controversial projects or settling out of court. But as Myanmar can attest when it cancelled the Myitsone Hydro Dam due to environmental concern, such actions come with a heavy price tag with China pressuring for preferential treatment in other projects. In any case we received the wake-up call in Curaçao. Next, we should answer it.

Kathmandu, 7 November 2017

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Author: alexdavidrosaria

Alex Rosaria is from Curaçao. He has a MBA from University of Iowa. He was Member of Parliament, Minister of Economic Affairs, State Secretary of Finance and United Nations Development Programme Officer in Africa and Central America. He is an independent consultant active in Asia and the Pacific.

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