Sri Lanka-china relations and the rules-based international order 

By SANJA DE SILVA JAYATILLEKA-

October 24, 2017, 8:43 pm

"If you look at initiatives like OBOR or Maritime Silk Road, the challenge for us is to understand what that is about. Where is that going to go, who benefits from that? …Your people deserve hope and the country needs investments. But the people don't deserve to be shackled in the future either."

US Rear Admiral Don Gabrielson (Interview by Rathindra Kuruwita, Ceylon Today, 11 Oct 2017)

The Admiral’s question "Where is that going to go?" is a relevant inquiry, since it is about a road, and a road has to go somewhere. Right now, it seems to have gone to Asia, Europe and Africa. "Who benefits from that?" he asks. Presumably Asians, Europeans and Africans, since it is fair to assume they wouldn't let a road go through their lands or indeed seas without some benefit to themselves.  

According to a study at a French Institute of International Studies (IRIS) reported in Asia Focus #36 (June 2017), it seems that Ethiopia for one, has benefited to the tune of US$ 380 bn (two road construction projects and upgrading the electric grid system) for a start. Obviously they feel they can benefit even further, since they plan to develop this relationship in infrastructure, minerals and technology in the future.There are many others.

In Asia, the Philippines is apparently planning to borrow $3.4bn from China for three infrastructure projects "for irrigation, water supply and railway projects". It says that "Vietnam has sought infrastructure investments coming from the AIIB, with a total investment across of circa $50bn." Thailand too is "willing to develop infrastructure projects, especially the railway activity." Not to mention a "high-speed rail linking Jakarta to Bandung (project cost: $5.1bn)".

And while the road winds through the Asian plains, OBOR seems to be adapting to local conditions, "with Pakistan, where the China-Pakistan economic corridor (CPEC) has been created and whose financing tools will partly come from Islamic finance (which are Sharia compliant). It is estimated that the CPEC would create over 700,000 jobs and add 2.5 points of Pakistan’s GDP growth".

The road is also heading to the Arab Peninsula, where "the United Arab Emirates (UAE, Dubai notably) wants to diversify its energy mix by developing a massive "clean coal" project worth $2bn."

And on to Central Asia to the China-Kazakhstan oil pipeline, Turkmenistan-China gas pipeline and China-Kyrgyzstan rail network.

The road has also entered the Arctic region with "investment from the Silk Road Fund (9.9% stake) in the Yamal LNG project, which is a crucial project in terms of transportation. China and Russia are expected to further cooperation in the Arctic projects."

While One Belt One Road traverses large parts of the globe, building much needed infrastructure, Asia Focus points out that "the stock market has been favorable of the OBOR initiative: financial securities related to OBOR have seen their price rise in February 2017". It’s fairly clear that most countries think that they benefit from OBOR as well as China.

Why is Sri Lanka different? How is it that we might be shackled? Vice President LeniRobredo of the Philippines has said that "Our fear is we might get stuck in a debt trap like the one experienced by Sri Lanka" (LasandaKurukulasuriya in DBS Jeyaraj). Whose fault is it that we are stuck in a debt trap, if in fact we are? One no longer knows how the supposed debt trap came about, when it looks increasingly like there was a secret infrastructure project in the form of a virtual tunnel right into the Central Bank, the cost to the country of which the Auditor-General says cannot be estimated.

Is there a clue in US Secretary of State Rex Tillerson’s speech in Washington on 18th October 2017? He said "China, while rising alongside India, has done so less responsibly, at times undermining the international rules-based order". Which rules have China so shamelessly flouted, getting Sri Lanka shackled in the process? How else has it challenged the international order? In 2015, the Challenges to the Rules-Based International Order were discussed at Chatham House, the Royal Institute of International Affairs, at its London Conference 2015. They identified three problems which had little to do with China.

The first was to do with Legitimacy. They said "For a system based on rules to have effect, these rules must be visibly observed by their principal and most powerful advocates."They meant the United States. They said, the US decision "to invade Iraq in 2003 under a contested UN authorization continues to cast a long shadow over America’s claim to be the principal defender of a rules-based international system."

This was apart from "The failure to close the Guantanamo Bay detention facility; the Senate report on the use of torture under the previous administration"and "directives to carry out lethal drone strikes in the Middle East and Pakistan; and the exposure by Edward Snowden of the way US intelligence services used the dominance of US technology companies over the internet to carry out espionage". A few rules broken there, it has to be admitted.

They concluded that the US appeared to be "as selective as any country about when it does and does not abide by the international norms and rules that it expects of others."

The second problem was to do with Equity. They concluded that "a rules-based order must work to the advantage of the majority and not a minority." It seems that the impact of the global financial crisis of 2008–09 exposed the "structural weaknesses and unfairness of much of the established international economic system.

The third issue they identify as Self-confidence. This is where attempts by the West to spread modernity is seen by the rest of the world as an "aggressive bid for dominance by Western economic and political interests". It says that "For many regimes, the Western agenda is truly an existential threat."

Plenty wrong with the rules-based international order then, which needs to be tackled along with China’s challenges to it. The Chatham House paper concludes that the rules need to be revised in order to be relevant. It adds "Who decides this agenda, and what it should contain, remain open questions." Obviously, this time around it cannot just be the West?It concludes that it is time for the West to decide what the new rules should be, and "how far it is willing to take into account the interests of its rivals or alternatively to fight for its own priorities." If it doesn’t, it says "there are now plenty of others who might." One sincerely hopes that rather than a race to set the rules, it will be a serious multilateral effort, which is its only guarantee of success.

Perhaps China saw that it could contribute to those new rules. In the official 2015 publication on the Silk Road Economic Belt and 21st Century Maritime Silk Road, it identifies what it considers as central to the International Order. It says that "the Belt and Road Initiative is in line with the purposes and principles of the UN Charter." And upholds the "Five Principles of Peaceful Coexistence: Mutual Respect for each other’s sovereignty, mutual non-aggression, mutual non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful co-existence". This is very appealing toSri Lanka.

The UN is certainly a good place to start. It has been described as the "only truly universal political organization in existence" (Falk 2004).

In a paper prepared by the Australian Parliamentary Library in 2015for a Member of Parliament, itaffirmsthat: "An effective rules-based international order depends largely on the professionalism and neutrality of the United Nations, and the effectiveness of the United Nations depends mostly on the commitment by its Member States." The paper outlines "the critical role of the United Nations in enhancing the rules-based international order, and contributing to a safer, fairer, and more sustainable world… the major organizational entities that the United Nations comprises, convenes or contributes to; [and] the critical role that the United Nations plays in the rules-based international system; and advocates that it is in Australia’s national security interests to contribute to, and strengthen, the United Nations".

Recent challenges to the UN have not come from China but from the United States. It has repeatedly threatened to act outside the UN, throwing half the world into a blind panic about a nuclear war. The Iran nuclear deal was mercifully saved by the rest of the signatories standing firmly resolved to stick to the rules. In the meantime, the US has left UNESCO.

When Sri Lanka rightly insists on a rules-based international order and freedom of navigation, as it did at the Galle Dialogue, it is hopefully thinking of its own interests. It is fortunate that all countries are concerned with adherence to its rules, bearing in mind that a few may need to be urgently revised to reflect the new dynamics, given that in 2016, aRANDCorporation research paper on "Understanding the International Order says that "… the United States has viewed mechanisms of order as tools to achieve narrow U.S. self-interests."

On the all-important ‘Freedom of Navigation’, it says that it "operates according to a more mixed logic." It appears that the United States is not a signatory to the United Nations Convention on the Law of the Sea, but"has committed to complying with most of its provisions. However, the rules of the Convention are not always the final arbiter. For example, China recently rejected a UN tribunal’s right to exercise jurisdiction over questions of territorial sovereignty in the South China Sea. The U.S. military has subsequently conducted freedom-of-navigation operations, in part to compel China to pursue negotiations with its neighbors over the issue."

It’s clear that there’s more to be resolved in the order of interstate relations. According to theRANDresearch paper "the United States has used its power to create much of the postwar order, write the rules in ways that serve its interests, and enforce those rules. Therefore, the presence of rules is not itself an indication that power dynamics are absent."

Basically, the paper confirms that the fate of the international order "may be disproportionately dependent on the status of great power relations". We had sensed that. What we need is for them to come to some understanding so that no region, not only the Indian Ocean region, becomes "a region of disorder, conflict, and predatory economics" as US Secretary of State Rex Tillerson warned in Washington.

In view of the US adviceto Sri Lanka on its economic future and its dealings with China, a few things have to be borne in mind. As the RAND paper asserts "It is, by now, self-evident that the dominant actor in determining the future of the order, apart from the United States, will be China."

Dr. Alan Bollard, (writing in The Diplomat, from the 19th National Congress in China) points out that China’s Central Bank Governor has said that their economy is growing at 6.8% and will grow to 7% in the second half of the year. Oh, for a Governor such as him! At the 21st Asia-Pacific Economic Corporation in Vietnam, the Finance Ministers of APEC (which accounts for 40% of the world’s population and 60% of its total GDP) reported "high growth and an encouraging economic outlook" and a major factor they said was the "consumption among expanding ranks of the middle class in emerging markets such as China, Mexico and Vietnam". Note that it said emerging markets.

The mystery here is hardly the motives of China and the OBOR, but how Sri Lanka came to be in this unfavorable situation. Umesh Moramudali , writing in The Diplomat (August 2017) thinks that "Given the poor performance of Sri Lanka’s external sector and slowed growth in the West, Sri Lanka, in fact, had no option but to reach out to China for money."

He wonders, as do we all, "how well these Chinese deals are negotiated and on what conditions Chinese debt is obtained". While taking account of the geopolitical implications to Sri Lanka of India staying away from the Belt and Road Initiative, he hopes that "if the Chinese bring good economic prospects through the BRI, adverse geopolitical consequences would not be a bad compromise given that many countries in the region are part of China’s initiative despite India’s objections."

The challenge for the government is to desist from "shackling the people in the future" by managing its economy and its geopolitics more competently.