Sunday, July 30, 2017

Points to ponder over big power connectivity projects


Saturday, 29 July 2017

logoAsian rivals China and India are busy putting together intercontinental connectivity projects to enhance their economic and strategic power well beyond their borders, in pursuance of the goal to be the new Big Powers in the 21st Century aptly named the “Asian Century”.

China is touting its humongous One Belt One Road (OBOR) global connectivity project as a non-political and purely commercial one, based on mutual economic advantage. But sensing the “hidden” agenda in the OBOR, India has refused to fall in line and is floating its own connectivity projects to be independent of China and build its own independent international economic and strategic network.

However, both the Chinese and Indian schemes have their strengths and flaws which have to be taken note of for them to succeed and stand the test of time.


China’s One Belt One Road (OBOR) initiative also known as the Belt and Road Initiative (BRI), was launched in 2013 by President Xi Jinping as his flagship project to make an already prosperous China a world economic, political and military power.

China has earmarked $ 1 trillion for the OBOR which is to cover 65 countries across Asia and Europe, accounting for 40% of the world’s GDP.  Starting in China’s Fujian Province, the OBOR in the form of the 21st Century Maritime Silk Route, passes through the Malacca Straits, the Indian Ocean, the Red Sea and on to Venice. Myanmar, Bangladesh, and Sri Lanka are part of this maritime route. The Hambantota port and the Colombo International Terminal in Sri Lanka have already been built.

The land route traverses Central Asia and Pakistan. The $ 55 billion China Pakistan Economic Corridor (CPEC) with a port at Gwadar, is already under construction.

India’s objection to OBOR

India and Japan are strongly opposing the OBOR. India’s objection stems from the fact that the CPEC passes through Gilgit-Baltistan which is part of the chunk of Kashmir which Pakistan seized from India in the 1948 India-Pakistan war. India has kept up its claim to this area despite the virtually impossibility of getting it back. India says that China has eroded its sovereignty by agreeing to build a road and rail line through Gilgit-Baltistan without seeking its consent.

However, the real reason is that India is against the strengthening of China-Pakistan ties which it considers as being inimical to India. China could use the road, railway, and the Gwadar port to destroy India’s maritime assets in collaboration with Pakistan. India receives 65% of its energy needs from West Asia through the sea route adjoining Gwadar.

India feels hemmed in by China in South Asia. It is worried that China might use the Hambantota and the Colombo International Container Terminals (CICT) in Sri Lanka for military purposes. Both are funded and run by the Chinese company China Merchants Port Holdings Company (CMPort) in collaboration with the Sri Lanka Ports Authority. In Bangladesh, China is building a port at Payra and in Myanmar at Kyaukpyu, which could curtail India’s sway over the Bay of Bengal.

China has also made deep inroads into Nepal where the pro-China Communist Party of Nepal (UML) lead by K.P. Sharma Oli could capture power in the next parliamentary elections. A Bangladesh under the Bangladesh Nationalist Party could tilt markedly towards China unlike the present ruling party the Awami League which is adroitly balancing China and India.

Bhutan is could swing towards China if China continues to put military pressure on India in the Doklam sector. Bhutan has major grievances against India. The trade monopoly enjoyed by the latter; the country’s heavy indebtedness to India; and the unfavourable agreement with India on power generation and sale are worrisome.  Bhutan could accept China’s “package deal” on the border, by which, Doklam will be given to China in exchange for China’s giving up claims in other areas.

Bhutan could do this, despite India’s considering Doklam as vital for the defence of the Siliguri Corridor, the narrow chicken neck connecting mainland India with its North Eastern states.

Since independence in 1947, India has been having a problem with China on the 3500 km long border with it. In 1962, the two countries had even gone to war in which India got badly beaten. Another war with China will be equally disastrous for India as India continues to be weaker than China militarily. It has also become economically weaker being 13 years behind China.

While China can fight a long war on account of its built-up industrial and financial strength, India has ammunition for only ten days; its army officer cadre is grossly below strength and its Air Force is short of planes.

India’s bid to rise up

Its relative weakness notwithstanding, India wants to maintain its status as the South Asian hegemon. And to be able to sustain this increasingly challenging status, India is trying to match China’s influence in the South Asian region by giving aid and offering to execute major infrastructure projects on better financial terms.

In addition to bilateral aid programs in the region, India is also involved in extra regional projects to establish its status as an international developer and as an alternative to China’s OBOR.

Within the South Asian cum East Asian region it has the Bay of Bengal Initiative for Multi Sectoral Economic and Technical Cooperation (BIMSTEC); the Bangladesh, Bhutan, Nepal and India (BBIN) initiative, and the South Asian Sub Regional Economic Cooperation (SASEC) initiative. Funding for projects under these initiatives is largely from the Asian Development Bank (ADB).

Beyond the region

In addition, India is part of the North-South Transport Corridor (NSTC) which links India with Iran, the Central Asian countries, and Russia. When this link up is made, cargo from Mumbai can reach St.Petersberg in Russia in 25 days and not 46 as now and the cost will be lower by 30%.

India is building a port in Chabahar in Iran which will be part of the NSTC besides giving India a place in the region to match the Sino-Pakistan port at Gwadar.

Like China, India is also investing heavily in Africa, which, with an average growth rate of 5% per annum, has become a hot bed of international economic and political rivalry.

Between 1999 and 2016, India had invested $ 54 billion in Africa and Indo-African trade has gone up from $ 7 billion to $ 56 billion in the same period. India hopes to increase the total volume of Indo-African trade to $ 100 billion by 2018.

China is also a heavy investor in Africa with an investment of $ 194 billion in 2016. China-Africa trade is huge, totalling $ 75 billion in 2016. Ten million Chinese are working in African on Chinese-funded projects.

However, while Chinese projects under OBOR are underway, many of the Indian projects, especially those in the South Asian region, are still on the drawing board or under discussion. In BIMSTEC, detailed project reports are ready, but there is little action on the ground.

Animosities and fears about Indian domination make India’s smaller neighbours balk at India-funded projects and tend to delay them. On its part, India does not want to work with Pakistan at all.

India does not want to work with China either, as seen in its opposition to OBOR and the BCIM (Bangladesh, China, India, Myanmar) corridor project. At a meeting of  BRICS think tanks in China recently ,India not only wanted praise of OBOR deleted from the final communiqué, but also suggested that BRICS projects should not be linked to OBOR and that Pakistan should not be included as an  associate country.

Denting China’s image  

India and Japan are also on a campaign to expose China’s “hidden agenda” in pressing countries to join the OBOR. They say that the smaller and poor countries will become heavily indebted to China and will soon have to surrender control over the assets created under OBOR. This has already happened in Hambantota in Sri Lanka partially.

Another allegation is that China builds assets abroad mainly to benefit itself and not the host country.  China could also use its economic (even military) power to twist the arms of recalcitrant or defaulting recipient countries. A fear generated by Japan is the use of substandard material in construction.