A Fight Is Brewing Over Chinese Money in Norway

It’s back to the good old days of globalization in Norway—at least for some. A small town needs an investor for a major piece of infrastructure, and in certain foreign nations there are investors with deep pockets to be found. Local politicians energetically court the investor, who has money to spare and is keen to spread it around the world. Hooray! There’s hope for the town’s future!

This, alas, is 2024, and the piece of infrastructure concerned is the port in Kirkenes, Norway—which also happens to be the NATO port closest to Russia. The magnanimous investor: China’s state-owned shipping giant COSCO.

“I take the liberty of proposing the following agenda:

1. Status and development plans

2. A potential establishment of a Cosco Shipping engagement in Kirkenes.”

The person who sent this message was Terje Jorgensen, the director of the Port of Kirkenes. (Norwegian broadcaster NRK obtained Jorgensen’s message and others between the port director and COSCO through a freedom of information request.) The Arctic coastal town is located a mere 20-minute drive from Russia, and its deep-water port is just 53 nautical miles from Russia’s Port of Pechenga—making it a potential critical site in any conflict with Moscow.

The Port of Kirkenes is owned by the municipality of Sor-Varanger, of which Kirkenes is the largest town. Sor-Varanger, however, only has some 10,000 residents. Even with the taxes paid by local businesses, that’s not a large enough taxpayer base to support a port that receives all manner of vessels, including cruise ships. And since the port has an extraordinarily strategic location thanks to the Northern Sea Route, which is looking more potentially lucrative every year as the Arctic ice retreats, the port’s management, which reports to a board that is in turn appointed by the municipality, unsurprisingly sees opportunities for expansion. But that would take a big injection of capital to pull off.

That’s why Jorgensen sent his message: He wanted COSCO to invest in the port. Indeed, the message was just one of many dating back to February 2023, NRK reports. It’s easy to see why Jorgensen and his colleagues were interested in what COSCO had to offer. The Chinese state-owned shipping company is huge: It owns 1,417 vessels with a total capacity of 116 million deadweight metric tons, more than any other shipping company. It has just placed an enormous order for 42 more ships worth $1.8 billion, most of which will be built before 2027, Lloyd’s List reports.

COSCO is, in fact, precisely the sort of company that Western towns and cities, and even national governments, spent decades courting. Not chasing Chinese investors would have been foolish, especially when everyone else was doing it. When the United Kingdom needed investors for three nuclear power plants a decade ago, it turned to the state-owned China General Nuclear, which signed on the dotted line in 2015.

But times have dramatically changed since 2015, and these days, few Western countries, cities, or towns are courting Chinese investments, especially from state-owned conglomerates. Indeed, in its most recent annual report, Norway’s military intelligence agency notes that China is expanding its cooperation with Russia in the Arctic, while the Norwegian Police Security Service warns in its 2024 national threat assessment that China wants more control over critical supply chains and is positioning itself in the Arctic. “We expect the Chinese party-state wants to continue prioritizing its long-term positioning in the Arctic and gradually increase its presence and intelligence activity,” the assessment notes.

But China has a well-thumbed playbook for winning over local leaders. Kirkenes has received several Chinese delegations. At least five other Chinese companies, including a textile manufacturer, a carmaker, and an investment fund, have rather mysteriously also expressed an interest in establishing themselves in the town.

As for COSCO, the Australian Strategic Policy Institute (ASPI) reports that there’s evidence the shipping firm supports the Chinese authorities. “For instance, COSCO operates its own militia, which is likely capable of conducting paramilitary activities such as maritime surveillance, counter-piracy missions and search-and-rescue operations,” Charlie Lyons Jones and Raphael Veit wrote for ASPI in 2021, adding that “COSCO appears to be developing the capability needed to comply with CCP requests to assist with intelligence operations, national defense mobilisation or grey-zone activities.”

Despite the security services’ warnings, Kirkenes’s leaders have pressed ahead with their Chinese engagement. They’re following a path already well-trodden by other European port operators. Last year, COSCO bought a 24.9 percent stake in the Port of Hamburg’s container terminal. It also owns significant stakes in the Belgian ports of Zeebrugge and Antwerp; Seattle; Valencia and Bilbao in Spain; and Vado in Italy. In Greece’s Port of Piraeus, COSCO is the majority owner. As I’ve previously discussed in Foreign Policy, Peru’s Port of Chancay was sold to COSCO after local administrators apparently failed to read the fine print.

The Port of Kirkenes envisages not just shipping between Chinese ports and Kirkenes but a presence for COSCO in the port itself. In May, Jorgensen met with COSCO representatives at the shipping firm’s Helsinki office. Because the port leadership knew the courting was controversial, Jorgensen subsequently proposed an alternative name to be used in Kirkenes’s communications, NRK’s muckraking reporters discovered. “I think it will be politically very beneficial if we start using the term OCEAN ALLIANCE. … [D]escribing it as cooperation with the alliance will probably take some of the heat out of the issue politically,” he wrote in an email on May 8.

But the heat hasn’t gone away. As things stand, COSCO would only lease parts of the Port of Kirkenes, not own it. But a major presence of a state-owned Chinese entity in Norway’s border region with Russia is still a risky undertaking. It’s an open question why COSCO is interested in the small port at all. Yes, it could be a useful staging post as the Northern Sea Route gets underway, but there are other ports COSCO could use. Murmansk, on the Russian side of the border, is a major Arctic shipping hub. Norway’s center-right opposition has asked Prime Minister Jonas Gahr Store to intervene.

Port boss Jorgensen, though, appears determined to make the deal happen, and Kirkenes’s leaders point out that they’re in charge of investments and jobs in their community—not the national security agencies. This sounds a whole lot like the Swedish island of Gotland in 2007, when Nord Stream offered an attractive payment for the right to use Gotland’s Slite harbor for its construction of Nord Stream 1. Local leaders, keen to benefit from the globalizing economy, eagerly accepted the proposal. (I write about the case in my book Goodbye Globalization.)

Will the Norwegian government try to thwart the Kirkenes leaders’ COSCO plans? On Sept. 4, it seemed to have made up its mind. “We want a good interaction between the authorities and the municipalities to balance consideration for business and local communities on the one hand and national security on the other. However, the government is prepared to say no to Chinese actors if it is necessary to safeguard national security,” Norwegian Minister of Justice and Public Security Emilie Enger Mehl declared in a statement. The Port of Kirkenes, though, is unlikely to let go of its Chinese dream without a fight. As for Gahr Store, he’s shortly taking off for a trip to China.

Get ready for more such clashes between business, job creation, and national security—and local communities and those in charge of protecting our countries.