Routes of Prosperity - BRI (OBOR) deciphered

The Belt & Road Initiative BRI (old name (OBOR) project initiated by China has propelled a stormy debate in India. While more than a hundred countries have shown interest in the same, India has kept herself at bay. It therefore becomes imperative to understand the nature of this Chinese engagement and its strategic implications comprehensively vis a vis India’s efforts in theme Connectivity.

China proposes to link the continents of Asia - Africa - Europe and Australia with the BRI by land and sea routes. The theme driving the project is indeed Connectivity and countries coming under its umbrella may not have so far overtly expressed their doubts about its benevolent nature. However even while expressing interest in the projects, there exists an all-pervading restlessness among the participating states. It is of utmost importance to know the reasons for this restlessness. India has proposed her own projects in the same geographical areas whose theme is also Connectivity. It is worth knowing as to how they stand different from and superior to the Chinese proposals.

Financial Drivers

China's GDP has soared to $11.9 trillion in 2017 with large cash reserves. It goes congruous in this context that China is aggressively establishing herself as a super-power by capitalizing this gigantic financial potential to link multiple countries with a promise to lead them onto the road to mutual prosperity. World has witnessed similar efforts previously in, say, the Marshall plan whose scope but was much limited compared to China's BRI. During 1980s and 90s Japan became a financial super power and enjoyed almost same status as what China has achieved today. The Japanese financial potential enabled the flight of Japanese capital to other countries. Domestic savings increasing at faster rates - enormous funds accumulated in current accounts - Japanese currency Yen becoming costlier - stagnated domestic demand for goods were driving the flight of Japanese capital. Such examples in the past did not raise any alarms globally. Why did the world not witness a global hue and cry back then over the flight of Japanese capital to other countries? Why is there this restlessness we are today witnessing in the Chinese case?

Two obvious reasons. The world was convinced that Japan did not have any monstrous invasive global political ambitions. Secondly Japan could never become a military adversary. For its defense, it was itself dependent on USA. The world did not witness any existential threats in Japan's rising financial stature. No one doubted its nature as anything other than merely the rise of financial superpower. Does China's financial super power status invoke similar comfort? If not, then why?

Present Connectivity

China's hunger for importing raw materials and other inputs will remain on a relentless ascending graph of international trade in immediate future. The Chinese economy today is $3.95 Trillion out of which $3.55 Trillion worth goods get transported via the sea routes being the cheapest alternative. Consider just oil. China imports 85.7 lakh oil barrels per day. Their immediate minimum need would be to use at least 5 VLCC (Very large Crude Carriers) or 50 non-VLCC carriers through sea routes. Such being the importance of China's international trade being conducted over sea routes, China has adequately braced herself up with securing these routes with the help of String of Pearls initiative as well as building of artificial islands - converting them into mighty naval bases and blocking the South China Sea to other countries beyond the "red lines".

Scope for more Connectivity

Asia's underdeveloped poor countries are lacking resources (estimated awesome $1.7 Trillion) to build the basic infrastructure and amenities required for their sustenance. Are these countries coming forward with enthusiasm to make use of the Chinese offer and accept the funding they are in dire need of? Yes, advisable indeed to do so, but, provided the opportunity poses a win-win situation for China as well as the participating country where both sides need the infrastructure and can use it at affordable costs. Should the underdeveloped countries be desperate to grab this opportunity?

Are sea routes inadequate?

If sea route is the preferred natural option because of minimum costs, why does China want to engage and invest enormous capital into building the costly land routes? The only plausible answer therefore could be to build alternate means - "fall back" during emergency - to ensure continuity in supply of essential goods should its sea routes get threatened or blocked during times of conflicts. Irrespective of the gigantic level of military protection extended to the vulnerable sea routes, fact remains that if an adversary is bent on blocking the routes, it has enough opportunity to do so.

Who really needs BRI?

The reality is that it is China which strategically needs this infrastructure more than the poor underdeveloped countries. Should China not initiate the creation of this infrastructure, it faces the risk of halted vital transportation needs. On the other hand, keeping the Chinese enormous capital idle without investment would deteriorate its real value. If the underdeveloped countries ought to be desperate to avail of this vital opportunity, China is even more "vulnerable" in the absence of such infrastructure howsoever odd or unrealistic this may look.

Connectivity or Security?

Question then arises as to why China feels the need to prepare for a military confrontation vis a vis the world, unlike Japan of 80s, unless it aims as a first step at displacing USA from its position no. 1 in the Asia to become the unchallenged global political and military super power? In all fairness, BRI fails to pass the label as a mere development project.On the contrary it betrays the concealed security related intentions. The "win" options for China in the project are not limited to overreaching security concerns but include her hegemonic political and financial designs spreading over four continents.

Financial Viability

The questions on financial viability of such proposals further strengthen the ambiguity over its hidden objectives.  Number of sub-projects which were not originally a part of OBOR have now been added to BRI but the purpose is ambiguous. The project BRI is not just a road building project - the catch word here is a "Belt" - a corridor - of prosperity planned along the proposed roads. The adjoining land would be marked for new industries and trade to come up and would promise to create new job opportunities much awaited in the poor underdeveloped participating countries. Here the ambiguity continues. Who manages the belt – the corridor and by what rules? Will the rules be mutually agreed to or imposed by China? Which country will set up the new industries and in which verticals? China alone? Participating countries? Will China allow industries to be put up by other countries? Will their citizens get a fair opportunity to compete? And if such opportunities are not viable, how far could the participating countries remain rooted to the project? Can the new industries provide employment to locals or only to Chinese? Some of the African countries' and Pakistan's experience shows that the key positions are held by Chinese.

Chinese Capital being provided is of course not for free consumption - there is a heavy premium - interests rates higher than those available from other sources. Even if one accepts the risk of this high interest rate capital, what could be the repayment modality? Ostensibly, BRI being an alternative fall back to sea route, does China really intend to set up profitable industries here? What if industries set up by participating countries do not take off well, how does one pay back the loans?

This could emerge as the debt traps which are already a reality in the case of under-utilized Hambantota port of Sri Lanka. Sri Lanka, faced with the crisis of inability to repay the loan, was left with only choice of converting debt into equity and surrendering 85% shares to CMPH China Merchants Port Holding and parting with the land for 99 years lease thereby letting China have control of the strategic port that oversees important sea-lanes in Indian vicinity.  In addition, Chinese firms have been given operating and managing control of the nearby Mattala Airport, built with Chinese loans of US$300–400 million, because the Sri Lankan government had been unable to bear the annual expenses of US$100–200 million. Similar questions exist regarding projects in Kenya, Malaysia, Maldives and Indonesia.

Security of Routes

Protection of the BRI projects is a major concern as the route passes through politically unstable and dangerous lands. e.g. CPEC which is a part of BRI would amply explain this concern. The region where India carried out the surgical strike in 2016 is not far away from the slated CPEC route. The Nangarhar region where America dropped the Mother of All Bombs is likewise nearby the planned CPEC route. This clearly indicates that the route passes through areas where terrorist organisations operate freely and challenge the government of the day. As Xi Jin Ping says that development provides security, security is also a pre-condition of development. If the route is not secured, can the belt remain secured and provide the vital stability to the financial ventures and industries slated to come up? Can we be assured that the supply of water, electricity, raw materials and human resources would remain unhindered in such provinces? If not, how could we assume that industrialists - capitalists would come forward to set up such factories and businesses along the belt? Pakistan has allotted 12000 regular security personnel to the security of CPEC this which is an overbearing additional cost.  In the Gwadar project, China likewise has also deployed its own security personnel to protect its interests. The security of the Gwadar project and the road linking it is governed by Chinese officials who have framed the rules themselves and monitor the management. In other words, the region is under Chinese control giving rise to objections such as sovereignty of the land being surrendered by participating countries to the project.

Connectivity - A double edged weapon

Especially with respect to CPEC, India apprehends that once the regions get joined, the radical Islamists from Chinese province of Uighur could easily move southwards creating a new security challenge to India. After the announcement of launching of CPEC, Pakistan has moved its Hatf XI missiles very close to Indian border. This has resulted into India revisiting its policy of No First Use and re-evaluating the adoption of "Cold Start". This is indeed a serious matter.

China will never surrender control of BRI projects to participating countries. Connectivity is a double- edged weapon in Chinese hands which can be used in the interest of the participating country and if and when China decides to jeopardize its interests as well. This is not a mere bookish threat, but one supported by recent instances. In 2016, when Mongolia had planned to welcome Dalai Lama on its soil, China threatened with consequences. Brushing the threats aside, Mongolia welcomed Dalai Lama's visit. As a punishment for this "disobedience", China retaliated by blocking the road to Mongolia - stopping food supply - leaving its 20 million people starving and shivering without electricity in temperatures like -50 degrees.  In another example, on smelling that Norway had planned to honor Dalai Lama with Nobel Prize for Peace, China boycotted its trade with Norway forcing it to change its decision. So, can one be assured that BRI nations would not face similar arm-twisting in future? In short, while the participating country may hope to enjoy development and prosperity, the fear of getting enslaved by China will keep hovering and be a hanging sword on the participating countries' head.  China's belligerent disposition in these incidents is a major hurdle and is indicative of why China's coveted claim to be the world leader cannot be a success.

Trust Deficit

The examples above are sufficient to explain why China is not perceived as a responsible global power. There is a Trust Deficit experienced especially by its neighbors with each one of whom China has initiated a border dispute. Even when a conflict does not apparently exist, China unethically digs out border disputes with neighbors. Should an occasion arise for mutual talks, during the negotiations, the Chinese do not focus on resolving the issue but on constantly changing the goalposts and ensuring that the issues are kept hanging perpetuating instability, uncertainty and tensions benefiting the Chinese position. China's over-sized military power far exceeds her defense requirement and its further building and flaunting prove to be deterrents to normalization of relations. In Asian scenario, China considers India to be its rival not only in financial domain but also in political sphere. Keeping consistent with this, it unabatedly weaves traps to demoralize India. The two other countries disillusioned and feeling hurt by Chinese strategy are Japan and Australia.

Convergence of Strategic vision

China cannot claim its status as Asia's number 1 till it DISPLACES USA from this position. Therefore, the Chinese game plan formulates strategic challenges to not just Japan or India but mainly to USA militarily and financially. While the former US governments under-rated this danger, Trump govt has re-evaluated the risks and has focused on mitigating them. China's posturing has therefore forged convergence of strategic vision and closer relations between these countries which is also being seconded by other smaller countries in south Asia. Noteworthy is the fact that these countries are looking forward to India to take the initiative to harness China. In response, without losing the sight of China's short term and long-term goals, India has chalked her own plans around the theme of Connectivity bringing these aspiring countries together for sharing prosperity and encouraging mutual respect in a win-win situation truly reflecting Prime Minister Modi's vision of Sab ka Sath Sab ka Vikas.

India's Offerings

"Na aankhein jhuka kay, Na aakhein utha kay, balki ankhonse ankhein milakay - India's foreign policy will be implemented" - This was the promise made by Shri Narendra Modi to the electorate and he has lived by it on taking oath of Prime Ministership. A strong and stable immediate neighborhood is a catalyst of development and security and therefore India's vision is to first stabilize and develop its neighborhood. Adoption of "Act East" vision is also based on the same sound principle of collaborative development.

As 10 ASEAN leaders met in New Delhi on India's Republic day 2018, Narendra Modi wrote an op ed published in 10 languages by 27 newspapers in which he has stated that "India and ASEAN nations have relations free from contests and claims. We have a common vision for the future built on commitment to inclusion and integration, belief in sovereign equality of all nations irrespective of size and support for free and open pathways of commerce and engagement."  This explains the ethos of Modi's vision of the sound base for building strong relationships among countries with "shared values and common destiny".

Thus, the theme of Connectivity as envisaged by India vis a vis that of China are rooted differently. India's projects are carted to satisfy the mutual priorities of development and are scalable. They meet need of the hour and are realistic and financially viable. They leave no room for risk of debt traps. This lessens the risk of financial failures or financial burdens. The projects are not biased towards Indian investors. There is sufficient opportunity to local entrepreneurs in availing of the projects' benefits and scope for local employment. Indian ventures where involved look upon them as means to earn decent profits and not profiteering.

As was ably demonstrated in the case of Afghanistan, India holds cultural sensitivities in high esteem. This enhances the chances of projects being accepted wholeheartedly and enthusiastically and reduces the risk of local resistance.  Finally, India aims not at arm twisting but hand holding with its participating countries. Unlike China, India does not have major disputes with the participating countries. All in all, India is not posturing itself as a overpowering stick dangling terms dictating financial or military super power but as a true collaborator in upliftment, progress and development of all.