Can the OBOR Project Be Made to Work for Countries Other Than China?

Given the quantity of investments, China can’t afford to have the OBOR initiative fail. Sceptics like India can use that to persuade China to make modifications.

Chinese President Xi Jinping recently added another $124 billion to the already massive commitments to OBOR’s schemes.

Around the world, and especially in India, there is a lot of disbelief and suspicion about China’s One Belt One Road (OBOR) scheme. Many of its projects have actually been around for years, but its economics are questionable, as are its aims. However, it is clearly attractive to countries looking for development. So while critiquing it is legitimate, there is also need to ask why there is no comparable vision emanating from other countries.
In a speech at the recent Belt and Road Forum in Beijing, China’s President Xi Jinping put across the initiative as one aimed at promoting global development and trade liberalisation and as a factor in boosting peace and security. He added another $124 billion to the already massive commitments to the initiatives’s schemes of connecting China to other parts of Asia, Europe and Africa.

Looking for comparisons
Countries like the US, Japan, Germany, the UK and others have provided (and continue to provide) tens of billions of dollars in development assistance and grants through national agencies or through institutions like the World Bank and the Asian Development Bank for decades. Not many people know that India has been one of the biggest recipients of US economic assistance in the period 1946-2012. And India and China have been, and continue to be, major recipients of funds from these multilateral banks. But in recent times, the US has preferred to fritter away its great economic powers in military ventures in Iraq, Afghanistan and in propping up Pakistan.
Japan remains important in the developmental narrative, with its generous Overseas Development Assistance and other schemes run by agencies like the Japan International Cooperation Agency and the Japan Bank for International Cooperation. Following OBOR, in 2015, Japan said it would provide $110 billion over five years for financing “high quality and innovative infrastructure.” Half this sum would be spent through the ADB and the other half through other Japanese official aid agencies.
But comparing them with the OBOR is difficult because the Chinese goals are more complex. They are not just development assistance or investment. The OBOR is a mix of economic planning, market development, market dominance and political assertion – geoeconomics combined with geopolitics. Its schemes are shaped by its goals and those are layered.
At one level, it is to export China’s over capacity in the infrastructure industry, at another, develop markets and routes for high-end goods that China intends to produce in the next phase of its economic growth, this means the rich European market. Several projects and naval activity in the Indian Ocean littoral suggest that one of its aims is to overcome the so-called Malacca Dilemma, or the possibility of its oil sea lanes being blocked. Then, there are schemes which work on the traditional plan of helping China access commodities from resource-rich Africa.
There is no comparable vision, because there is no other country that has the political economy of a rising China. In contrast, the US has been moving away from its past global commitments. A lot of its money has been frittered in wars.
In the past decade and a half, Japan’s focus has become more political. Japan has been active in overseas development since the 1970s. Beginning in the 1980s, Japan has played a significant role in China’s modernisation by providing the latter with $24 billion in loans and $7.7 billion in grants, mainly in the period 1980-2000.
Now, Tokyo’s focus has shifted towards South and Southeast Asia. It has been playing a major role in India’s infrastructure development in the last two decades. It has many high-profile projects to its credit, including the Delhi Metro and the Delhi-Mumbai Freight Corridor. In 2014, Japan committed $33 billion for the next five years in a range of areas like transport systems, river development, clean energy and skill development.
Japan is also now taking up the challenge of developing India’s northeast region, with $744 million road projects in Assam, Mizoram and Meghalaya. Another project focuses on the development of the Andaman and Nicobar Islands. India and Japan are also in discussions for cooperating in Chabahar and the Trincomalee port development schemes. In its own way, Japan’s assistance to the development of India’s infrastructure is no less than what is said about OBOR. Japan may have geopolitical objectives in aiding India, but its schemes, whether in India or Myanmar, Sri Lanka and Vietnam, are not seen as overwhelming in scope and size.
On the other hand, that is exactly what worries people about OBOR. The indebtedness issue has already begun to rankle in Sri Lanka and Central Asia. There has been little consultation in the various schemes China has taken up and it is difficult to get away from the impression that OBOR investments are by China and for China.

China’s investment strategies
In a bid to calm those concerns, Xi announced in his speech inaugurating the Belt and Road Forum that among the new institutions China will set up to boost the OBOR will be a Multilateral Development Financial Cooperation Centre, in cooperation with various other multilateral development banks like the World Bank and ADB, and an IMF-China Capacity Building Centre. Presumably this is with the view of promoting international best practices in the OBOR investments as well.
Despite this, concerns over the lack of commitment to social and environmental sustainability and transparency prevented the EU from endorsing a statement on trade prepared by China as part of the Belt and Road summit outcome.
There is a lot of hype with OBOR. Some of the schemes are enormous in scope, but they will only prove their value in decades, not years. This is especially true of the centrepiece of the project – closer economic integration with the European economy. Investments being made in rail connectivity to Europe seem to defy the fact that marine transport is by far the cheapest way of shipping goods. It is true that some trains have been successful because of the respective businesses they service, but a lot of them are not economical as yet and may never be. Countries in Central Asia worry that they will merely be way stations on the Chinese route to Europe and not receive much investment. The Belt and Road Initiative bandwagon has also led to a number of unviable projects being funded that will in time be abandoned.
Yet Chinese investments offer a powerful allure and have already-visible geopolitical consequences. For example, the Chinese aid and investment programmes have more or less sundered ASEAN unity. Likewise, the Chinese have succeeded in luring Eastern and Central Europe with investments sufficient to get them to water down the EU statement on the South China Sea arbitration. In the end, the EU merely acknowledged the decision, rather than supported it. More recently, Australia refused to go along with the EU in rejecting the trade statement after the Belt and Road Forum in Beijing.
Among the more interesting aspects of OBOR are Chinese activities in the relatively poorer Eastern and Central Europe. They have created an entity called the 16+1 grouping or the China-Central and East Europe cooperation arrangement which have held five summits so far, the last in Suzhou attended by Chinese premier Li Keqiang.
Besides a China-CEE think tank in Hungary, there is a China-CEE Investment Cooperation Fund funded at $435 million for investing in CEE countries. In 2016, a $11 billion Sino-CEE Fund was created by the Industrial and Commercial Bank of China which aimed at raising 50 billion euro to finance projects in infrastructure, high-tech manufacturing and consumer goods.
The Asian Infrastructure Investment Bank’s (AIIB’s) total lending is now around $2 billion. Recent loans included $125 million for dam improvements in Indonesia co-financed by the World Bank. Another $100 million, again, along with the World Bank was approved for developing regional infrastructure. A $60-million loan was given to Bangladesh for developing natural gas infrastructure. Earlier this month, the AIIB approved the first loan of $160 million to support the Andhra Pradesh 24×7 Power for All scheme. Andhra Pradesh is also seeking money for developing its new capital city of Amaravati. There are several other projects from India on the AIIB table.
It is difficult to argue that all of them are there to serve Chinese interests. Indeed, when it comes to financing projects which have a strategic content, China uses the option of its official policy banks such as the China Development Bank or the Export Import Bank of China which, in turn, fund the big Chinese state-owned enterprises involved in projects such as the China-Pakistan Economic Corridor or the Jakarta-Bandung and Kunming-Vientiane railway projects. These banks have already put up $200 billion worth of loans in Asia, Middle East and Africa.
In addition, there are commercial banks such as the Bank of China, Agricultural Bank of China, China Construction Bank and the Industrial and Commercial Bank of China which offer money at commercial rates.
There is also the $40-billion Silk Road Fund controlled by the Chinese government, which has funded part of the Nairobi-Mombasa railway, the Karot hydropower project in Pakistan and the acquisition of an LNG project in Siberia. It has committed some $4 billion.
There is also an interesting financing mechanism for Beijing’s European ventures. Of the additional $124 billion announced by Xi in Beijing at the forum, $14.50 billion will go the the Silk Road Fund, also the CDB and ExIm bank have been authorised to set up special loans of $36 billion and $18 billion respectively for infrastructure, industrial capacity and financing. Another $40-50 billion will be spent by the commercial banks.
With investments of this scale, clearly China cannot afford to fail. And this is the point of entry for the sceptics like India. The need to succeed can persuade China to modify the OBOR in a way that limits its single-minded commitment to Chinese goals. In other words, projects can be shaped and modified in such a way that they serve a wider purpose than to merely meet some perceived need by Beijing. This can set the stage for a more equitable framework of globalisation. China may still be a big, if not the biggest, winner, but others too will gain.
The Wire May 23, 2017

President Hasan Rouhani's landslide victory in Iran shows that elections alone do not make a democracy

President Hasan Rouhani's landslide victory in the Presidential elections is good news for Iranians as well as for India.It should assist Iran to become more democratic, moderate and prosperous over time, but that is not a given.

His challenge is to overcome significant hurdles on his path, which arise from domestic politics, and an equally difficult challenge thrown up by the Donald Trump-led United States.

Economic reforms

Rouhani came to power in August 2013 promising economic reform. Despite vast oil resources, Iran's economy has remained moribund because it has not been able to get technology to exploit its resources effectively, or exploit the market when oil prices were riding high.

He set about the process by working out the nuclear deal with the US and other Western powers so as to persuade them to lift sanctions, which badly affected the Iranian economy.

The sanctions have been lifted, but low oil prices are thwarting Iran's recovery. But the bigger problem is Iran's domestic politics. The country is, at best, a quasi-democracy.

Its system is structured so as to maintain the power of the clergy and their allies, the Islamic Revolutionary Guards Corps (IRGC).

At the top is Supreme Leader Ayatollah Ali Khamenei who has a veto on virtually everything.The legislature has two wings - the lower house or Consultative Assembly and the upper house, the Guardian Council.

Newly re-elected Iranian President Hassan Rouhani gestures during a televised speech after his victory in presidential election

The former is like a regular Parliament with legislators elected through secret ballot. 

The latter has 12 members, of which half are clergy chosen by the Supreme Leader and the other half are jurists chosen by the lower house.

The Guardian Council has a veto on all legislations. The Supreme Leader is elected for life by an Assembly of Experts, a group of 88 top clergymen who are elected once in eight years through direct voting.

In addition, there is the powerful Expediency Council of some 30-40 people chosen by the Supreme Leader to assist him in managing the system.

Ebrahim Raisi, the candidate Rouhani defeated, is a former judge and was spoken of as a potential successor to the 78-year old Khamenei.

Both Rouhani and Raisi are clerics, and the latter has been a member of the Assembly of Experts since 2006. 

Importance for India

The Iranian situation shows that elections alone do not make a democracy. The power of the Rouhani government is severely constrained at every step by the clergy. The IRGC, which is a parallel military organisation, complete with an army, navy and aerospace wings, have extensive business interests and serve as the storm troopers of the clergy.

They are involved in domestic repression, and support Assad's forces against the ISIS. Developments in Iran can have an important fallout in India.

Last year, oil imports hit record levels and Iran  became the fourth biggest oil supplier to India.

This was because of the lifting of sanctions. Given its oil and gas resources and proximity to India, Iran's importance in the energy sector cannot be underestimated. But oil is not the only factor in India- Iran relations - connectivity is.

India has two projects in mind - the Chah Bahar port and related development scheme aimed at developing links to Central Asia and Afghanistan, and the International North South Transportation Corridor (INSTC) to connect western Indian ports through a multi-modal network to Europe via Iran.

During Prime Minister Narendra Modi's May 2016 visit, the two countries signed a $500 million (Rs 3,200 crore) agreement to develop the Chah Bahar port and fund a railway line to Zahedan.

Further India indicated its interest in building an LNG plant in Chah Bahar economic development zone.

New Delhi also returned $6 billion (Rs 3,900 crore), which was owed to Iran on the oil account during the sanction period.

Smoothing edges

The problem is that there are still rough edges to the India-Iran relationship. A deal to develop the Farzad B oil fields remains stuck.

Little or nothing has been done on the INSTC front, except the running of test cargoes to Russian destinations. Properly pursued it can be India's answer to China's One Belt One Road, which also aims to use Iranian routes and already exploits the Russian ones.

Given the potential Iran offers, India has reasons to worry about the US-Iran dynamics. Should relations deteriorate, India may once again be forced to curtail its Iranian commitments, just as it had to do in the 2007-2015 period.

Given New Delhi's compulsions to maintain good ties with the US, it would not like to buck Washington, and will thereby cede the ground to China which is unlikely to follow any new US lead in Iran. 

Mail Today May 21, 2017

Jadhav Case: Return to India Will Need More Than ICJ’s Verdict

There are two aspects of the judgement of the International Court of Justice in the Kulbhushan Jadhav case. One is legal, the other political. Despite all the legalese that goes with an ICJ judgement, Pakistan can completely ignore the verdict if it wants. As is well known, there is no way to enforce international law, except through the UN Security Council, and that too, on matters relating to peace and security.
 

But it can do so only at the peril of its own reputation. And, it has to reconcile the fact that it has actually participated in the proceedings till now. Had it ignored the hearing, it would have been one thing, but to have put up a case and lost, and then ignore the verdict will be a black mark with wider repercussions.

Tough for Pak Army to Flout ICJ Verdict

Not that people expect the Pakistan Army, which holds Jadhav, to bother about niceties, considering that it has long sponsored groups that conduct terrorist attacks in neighbouring countries.
Since Jadhav is in their custody, he can probably be executed at any time of their choosing.

But even the Pakistan Army has to think carefully if it wants to wilfully flout an ICJ judgement, since it is a creation of the United Nations. It’s one thing for the big powers like the US or China to flout international courts’ judgements and quite another for smaller countries like Pakistan.

Then, there is the matter of enforcement and this can only be done by the UNSC, where it is open to veto by one of the Permanent Five. In this case, it is more than likely that the UNSC will simply refuse to take up a matter which does not involve a threat to international peace and security, and only relates to an individual.

Legal Mis-Handling

 Pakistan’s legal handling of the case has been shoddy, considering that Jadhav has been tried by a military court martial, rather than a civilian court, and that too, in camera, rather than in public where he could have shown to have been defended and the evidence against him clearly laid out.

Military courts operate in an entirely different system and their evidentiary rules are questionable at the best of times.

Perhaps all that Pakistan has is the confession he has made. Everyone knows that in custody you can get anyone to confess anything, especially in South Asia where torture is prevalent. That does not necessarily mean that Jadhav is innocent of all the charges against him.
It is entirely possible that he was involved in an intelligence mission of some sorts. The fact that he had a passport made in the name of Mubarik Hussain Patel is something that has not been explained by anyone. No one has so far said that the passport was fake.
However, Pakistan has not provided any evidence that he was indeed arrested on Pakistani soil and involved in subversion and terrorism. If he was working in Chah Bahar and was doing something prejudicial to Pakistan, the matter could have been taken up with Iran which has given him a residence visa.

Fate of Jadhav

On the other hand, since the dhow that he owned has vanished with its crew, it is possible that he was in fact kidnapped on the high seas, which makes Pakistan guilty of an international crime.
All this would, of course, become clearer if Islamabad or Rawalpindi, to be precise, were to permit consular access to him. But that is what they have studiously avoided, hence arousing suspicions over the circumstances of his arrest.
What the court has essentially said on Wednesday is that pending a full hearing on the issue, Pakistan should not execute him.

Pakistan has two options – one to go the whole hog and present its case, and whatever evidence it has on Jadhav’s alleged role in terrorist activities. On the other hand, it is quite possible that it is unable to come up with any kind of a case that will meet public, leave alone, judicial scrutiny.

Return to India Won’t be Easy

Now, if Pakistan continues to participate in the hearings, it is almost certain that the court will ask Islamabad to give India consular access to him. If so, some of the details of the story may become clearer. If these are likely to significantly undermine the case that has been made against Kulbhushan till now, Pakistan is bound to refuse access and simply walk away from the hearings and not accept any verdict that emerges and weather the inevitable reputational damage.

It should be clear that even if the court has given some relief to India, and Pakistan stays the execution for the pendency of the hearing, Kulbhushan’s return home will not be easy. That will require more than the ICJ’s verdicts.

It would need direct, back-channel negotiation, and some kind of give and take. New Delhi cannot possibly be unaware of this. Presumably, the ICJ effort is just the first step in a more complex set of moves that New Delhi has in mind to get Kulbhushan Jadhav home, safe and sound.
The Quint, May 19, 2017

India should work with China on OBOR for its own economic benefit

India should know that the OBOR scheme is not about CPEC and Pakistan; but in fact its primary goal is to integrate the rich European economy with that of China’s.

President Xi Jinping has just hosted a mega show to sell China’s massive Eurasian connectivity scheme, known variously as the One Belt One Road (OBOR), or the Belt Road Initiative (BRI), to the world. Present at the occasion were presidents and prime ministers, and leaders of other parts of the world and, more disconcertingly, our neighbouring countries as well.




If you get the impression that India was isolated in its boycott of the meeting, you are not wrong. But this has been an avoidable injury. The basis of New Delhi’s rigid opposition to OBOR has never been quite clear. Speaking at the Raisina Dialogue in March 2016, foreign secretary S Jaishankar had implicitly criticised China for building connectivity without “consultative processes,” and hardwiring the choices for its participants.

Subsequently, New Delhi raised the issue of the China Pakistan Economic Corridor (CPEC) passing through POK. Last week, in listing out his objections to the scheme, official spokesman Gopal Baglay said that “no country can accept a project that ignores its core concerns on sovereignty and territorial integrity.”
But this sounded more of a pretext to oppose OBOR than anything else; India has never seriously sought the return of Gilgit-Baltistan and has wanted the LoC as an international boundary.
 
Actually a lot of the hardwiring is already done. 2017 will see over 2,000 trains (estimated) travel from a dozen Chinese cities to over 20 European destinations on newly built lines and tunnels in Central Asia. Pipelines and railroads have already shifted the economic orientation of the region from Russia to China. South-east Asia is undergoing a similar process through new rail lines overlaying the traditional maritime routes. In the Indian Ocean Region (IOR), Chinese companies have built, are building and, in many cases, operating, ports in (Kyaukpyu) Myanmar, (Hambantota) Sri Lanka, (Gwadar) Pakistan, (Bagamayo) Tanzania, (Lamu) Kenya. As part of this, China has made strategic investments in central and eastern Europe as well.
It is important to understand what OBOR is and what it is not. Its primary goal is to integrate the rich European economy with that of China, not about CPEC and Pakistan, which are just sideshows of the ambitious scheme.

The shorter term goal is for China to emerge as the dominant regional power in its neighbourhood, where it is already the leading economic presence. Linked to this is the compulsion of protecting Chinese maritime commerce, particularly oil, in the IOR.
India lacks the resources to match China’s ambitious plans for Eurasia, but it is directly affected by Chinese money pouring into its neighbourhood and the marked surge in Chinese naval activity in the IOR since 2014. Beijing has now established a base in the Djibouti and you can be sure that Gwadar, is a Chinese naval facility in all but name. And this is just the beginning.
After connectivity, Beijing is moving on the second leg of its strategy – an economic policy to make China a developed country. For this China intends to sit at the top of the global manufacturing value chains instead of being a low-level aggregator. Beijing is investing hundreds of billions of dollars to gain the global pole position in areas like integrated circuits, Artificial Intelligence, robotics, bio-pharma, electrical cars and so on. The European connection is the key to this, since high-end products need a rich market.

A major problem with the Indian response is that it concentrates exclusively on the geopolitical leg of OBOR—Pakistan, Sri Lanka and so on. But the scheme is primarily about geo-economics. By staying out of it, India risks being systematically frozen out of business opportunities in an enlarging area that is integrating with the Chinese economy around the world.
India cannot stop the scheme, but it can hamper it in many ways. We are not without clout in our region, and we possess a vast and growing market for Chinese products. India’s geographical location is a huge advantage, especially for the maritime leg of the scheme in the IOR
These factors can be parlayed into a hard-headed negotiation with the Beijing to insist that the benefits of participating in OBOR must be shared. But, first, New Delhi needs to stop whining and learn to cherry-pick the OBOR menu.
True, it is a Chinese scheme, funded by their banks and largely executed by Chinese companies. But Beijing now realises that it is too big and complex to be done on its own. If China is open to working with other countries, as Xi’s speech seemed to suggest, it may yet be possible to get them to understand how their favourite phrase “win-win” cooperation can really be win win.
Hindustan Times May 17, 2017

India’s Snub to China on OBOR: Unwise to Ignore Economic Interests

Out to isolate Pakistan on the issue of terrorism, India finds itself isolated in the bigger game reshaping the geopolitical map of the world. China’s ‘One Belt One Road’ scheme will have momentous consequences, yet New Delhi has refused to even engage China on the issue by staying out of the Belt and Road Forum that took place in Beijing on Sunday and Monday.
The Chinese work on long-range plans; many of their achievements of today are a result of the effort that has gone into them in the past thirty years. Take Shenzen, the greenfield city that today powers China’s economy. It began as a rural backwater opposite Hong Kong on the mainland 40 years ago. Or, the six Chinese high tech zones – which started with a dozen or so establishments in the 1990s and today typically feature 30-40,000 businesses, including the leading companies of the world.

Why is China Seeking an Economic Embrace?

What does this have to do with OBOR? Everything. Having achieved the status of the world’s largest manufacturer and exporter, China is now in the process of transforming itself once again. The benchmarks are 2021, the centenary of the founding of the ruling Communist Party of China, and 2049, which will mark hundred years of the People’s Republic of China. The first involves the doubling of the GDP as of 2010, and making China a “moderately prosperous society”, and the second is to take China to the level of a “moderately developed country”, which means a per capita GDP of $55,000.

 

To achieve this, China needs to maintain an annual per capita growth rate of at least 6.3 percent till 2021 and 5.8 percent through 2049. Both these are daunting targets and China is facing severe challenges in meeting them, in part because of the headwinds of the global economy, and, in part, the excesses of the past, which include over-investment, overcapacity in certain industries, and indebted state-owned enterprises (SOEs).

Pakistan Prime Minister Nawaz Sharif, left, is greeted by Chinese President Xi Jinping during the welcome ceremony for the Belt and Road Forum in Beijing on 15 May 2017. (Photo: AP)

China can no longer depend on an investment and export driven model. Instead, it must enhance domestic consumption and enhance productivity through innovation-driven growth. This is where OBOR comes in.
Using its vast monetary reserves to invest in developing infrastructure and economies around its periphery, China is simultaneously seeking to get rid of its excess capacity in areas like steel and cement while drawing large swathes of its neighbourhood into a closer economic embrace.

Raising the Stakes

The actual Chinese target is Europe with its affluent economy, high levels of technology and lifestyle products that the Chinese middle class crave for. China is reaching out to the affluent West through high-speed rail links and enhanced maritime connectivity.
Simultaneously, China is upgrading its own industrial capacities through R&D and acquisitions. In the past year, China has acquired the Swiss agribusiness giant Syngenta and the world’s foremost automotive robotics company, KUKA. It has spent over $150 billion in acquiring companies in the area of integrated circuits or chips, though in the past year, the regulators have prevented companies like Micron, Western Digital, AIXTRON and Toshiba from selling their chip businesses to China.
Western assessments are that in areas like artificial intelligence, biotech and electric cars, Chinese technology, backed by an enormous amount of government funding, is already amongst the best in the world.

Distracted by Pakistan

We in India are distracted by the China-Pakistan Economic Corridor or the activities of China in Sri Lanka, and are taking our eye off the ball in the main game. The Indian Ocean activity is a side-show, albeit understandably important for India because it’s in our neighbourhood and its military elements are all too clearly visible.
OBOR is a Chinese national project, aimed at fulfilling Chinese goals.

The government of India cannot but formally protest the CPEC going through Pakistan-occupied-Kashmir. But the tone and tenor suggests that, perhaps, we are protesting too much.

And that the remonstrations are a pretext to adopt a needlessly confrontationist stand against China. At least thrice in the past 70 years, India has been willing to formalise a border along the Line of Control in Jammu & Kashmir, so to make out that Chinese projects in Gilgit-Baltistan are the cause of Indian ire is to truly miss the wood for the trees.

A security official walks by a pagoda at the Yanqi Lake International Conference Center, where the Belt and Road Forum was being held, in Beijing on 15 May 2017. (Photo: AP)

A Missed Opportunity

A more sophisticated policy would use OBOR for Indian purposes where it can. India cannot stop OBOR, neither can it ignore and nor will it be immune to its effects. While it’s true that pipelines and railroads hardwire a destination, ports do not, and can be used by anyone. If China promotes an economic zone in Sri Lanka or East Africa, Indian businesses are free to utilise them for their own ends.
India is a member of the Chinese-led Asian Infrastructure Investment Bank and the New Development Bank. What is to stop it from seeking funding there to hardwire its own connectivity schemes to South-East Asia and across Iran to Europe?

Focus on Implementation of Projects

New Delhi has two problems — first, India’s own hopeless internal infrastructure, setting which right should be its priority. Second, it lacks the structure of capable state-owned enterprises which can execute projects in quick time. The 19.2-km Kamchiq tunnel in Uzbekistan built by the China Railway Tunnel Group was completed in 2016 in exactly three years, the 756-km Addis Ababa-Djibouti railway in five years by the China Railway Group. These are just random examples of the accomplishments of Chinese companies.

 

As far as India is concerned, the Chabahar scheme, the Kaladan Multimodal project and the International North South Transportation Corridor have been in the works since the 2000s and none of them are complete and the last-named has not even begun.

The same is the case with the India-Myanmar-Thailand highway project begun in 2001.
Beyond the issue of connectivity, India needs to up its economic game by doing more, rather than less planning. As we see, China’s achievements are a result of sophisticated planning by outfits like the National Development and Reform Commission (NDRC). A slogan a day like IT+IT=IT, or Smart cities, Start-up India, Make in India and so on, are not going to work. We need a sustained strategy of promoting economic growth and qualitatively better governance, and a dose of modesty.
The Quint May 15, 2017

Making sense of the recent flurry of Chinese offers on Kashmir

The Chinese offer to rename the China Pakistan Economic Corridor is the latest manifestation of the new style of Chinese diplomacy. From the muscular assertion in the South China Sea, the waters of the Senkaku (Diayou) islands, and frozen wastes of Aksai Chin, Beijing seems to be taking a step back and learning to say “please”.
This was, in an intriguing way, also the message contained in a recent article in the party-owned Global Times suggesting that, maybe, China could mediate between India and Pakistan to resolve the Jammu & Kashmir dispute.
For decades now, the Chinese position has been quite straight-forward, and, even from the Indian position, quite neutral. It has spoken of the need for the two countries to resolve the dispute through bilateral dialogue, even while refraining from actually suggesting a solution or a mediation.

 

A week ago, in an article, Hu Weijia, a reporter with the Global Times, wrote:

“Given the massive investment that China has made in countries along the One Belt, One Road, China now has a vested interest in helping resolve regional conflicts including the dispute over Kashmir between India and Pakistan.” 

Predictably the article created some waves in New Delhi.
But as the context of the article reveals, the writer has urged change not so much on behalf of its “iron brother” Pakistan, but Chinese self interest, as he went on to add:

“China has always adhered to the principle of non-interference in the internal affairs of other countries, but that doesn’t mean Beijing can turn a deaf ear to the demands of Chinese enterprises in protecting their overseas investments.” 

Till now China had been advocating the idea of consensus-driven decision making, non-interference in the internal affairs of other countries and win-win outcomes. But as its economic remit spreads across the globe, its interests expand in regions which may be volatile or across regions where countries are locked in disputes where China may be forced to take sides.
As for Jammu & Kashmir, if it had wanted to do so, China could have simply supported the Pakistani claim anytime earlier, but the Chinese style in the past was to be cautious. The Chinese position on Jammu and Kashmir is set in the Sino-Pakistan Agreement of 1963 that established a border between them. It resulted in Pakistan ceding the Shaksgam Valley to China and receiving 1,942 kms in exchange.
The two sides agreed under Article 5 of the treaty that

 “after the settlement of the Kashmir dispute between Pakistan and India, the sovereign authority concerned will reopen negotiations with the People’s Republic of China , on the boundary…. So as to sign a formal Boundary Treaty to replace the present agreement.” 

In other words, China did not endorse Pakistan’s claim to Jammu and Kashmir and has been open to the possibility of India re-establishing its claim.
In the 1965 war which was triggered by a Pakistani military grab for Jammu & Kashmir, China came out in support of Pakistan. Not so much the territorial claim, but plainly and simply to pull Islamabad’s burnt chestnuts out of the fire.

Chinese chequers

In the years since China has broadly maintained its stand of neutrality in the dispute, though, it has periodically played an intriguing game. One was the issuance of stapled visas for residents of Jammu and Kashmir, including infamously the chief of the Northern Command headquartered in Udhampur. In 2010, they suddenly declared that the disputed Sino-Indian border, which by Indian count was 4,057 kms, was only 2,000 kms in length. In other words, they refused to count the Sino-Indian border in J-K as being Indian.
In fact back in 2009, there was another episode in which China offered to play a “constructive role” in what it agreed was a bilateral issue between India and Pakistan. “Kashmir is an issue that has been longstanding left from history,” Hu Zhengyue, the Assistant Minister for Foreign Affairs in-charge of Asia told some visiting journalists. “As a friend, China will be happy to see such progress (in India-Pakistan consultations) and we will be happy if we can play a constructive role in resolving of the issue, but after all it is a bilateral issue,” he noted.
Of course, that was a time when direct India-Pakistan talks were taking place, though this was just at the point when the Musharraf government was about to melt down because of its quarrel with the Chief Justice of the Pakistan Supreme Court.
So, there are two compulsions now. First, that the dialogue between India and Pakistan is frozen and tensions are high all along the Line of Control. Second, China’s increasing commitment in Pakistan through the China Pakistan Economic Corridor. And third, the pressure that it feels as the OBOR gets underway to play a role in resolving disputes and quarrels so as to ease the path of its connectivity plans.
For that reason, Hu’s article actually leads off from the recent Chinese mediation between Myanmar and Bangladesh over the Rohingya issue. Now not many in India know that China has a key investment in the Rakhine state where the Rohingyas come from – this is the state where the port of Kyakpau is located and from where a pipelines are taking oil and gas to Kunming bypassing the Straits of Malacca. Stability in the region, therefore is as important for Myanmar, as it is for China now.
It is in this context that, as Hu noted, given its massive One Belt One Road investments, China had to abandon its long-held “principle of non interference in the internal affairs of other countries”. Indeed, China’s unique selling proposition used to be its claim that it does not interfere in the internal affairs of countries. So, it has conveneintly ignored the activities of despots like Robert Mugabe and the various Pakistani dictators.

Great power games

In Central Asia, it has to skirt between ethnic tensions involving the Uzbeks, Tajiks, Kazakhs and Kyrgyzstan. The demands of OBOR do not make it easy to avoid the continuing rivalry between Saudi Arabia, from where China imports the largest amount of oil, and Iran, to which it has given the largest amount of foreign aid in the 2001-2014 period. The situation in Europe is no better. In the Balkans, where the Chinese companies are active, there are tensions between Serbia and Kosovo, Greece and Macedonia, Serbia and Albania and so on. An even bigger headache is the standoff between European Union, the key target of the One Belt One Road plan, and Russia, a critical Chinese ally, even if it is for the short term.
So China has to learn to play the role of a great power. While its economic clout gave it a certain ability to mediate, it still had to steer through the shoals of competing nationalisms and emotions, which are much more tougher to deal with, as other great powers have realised over time.
As it is, along with its desire to play a role as a benign global power, China is also caught in the dilemma posed by its own assertiveness vis-à-vis India on the border, or South-east Asian states in the South China Sea. In such circumstances, it can hardly afford to put itself forward as any kind of a mediator.
But the even bigger question comes from the possibility that to protect its growing business interests, like other global powers, China may be forced to send in its military to protect its interests and nationals. In recent times, this has already happened in the case of Libya and, more recently, Yemen. And as flag follows trade, an expansive perception of national interests could require military presence in far flung areas. This means bases, allies and the entire paraphernalia of a great power. The bases are already there in Djibouti and Gwadar and the navy is growing by the day.
As for Kashmir, we can’t foretell what a Chinese mediation will bring. As the history since 1947 reveals, the British, the Americans, the Russians and the United Nations have been there, done that– and failed.
Scroll.in May 8, 2017