China’s Belt and Road Initiative (BRI) is an ambitious program to connect Asia with Africa and Europe through land and maritime networks along six corridors to improve regional integration, boost trade and stimulate economic growth. It was first proposed during a speech delivered in 2013 in Kazakhstan by President Xi Jinping titled “Promote People-to-People Friendship and Create a Better Future.” The project drew inspiration from the concept of the Silk Road established during the Han Dynasty 2,000 years ago an ancient network of trade routes that connected China to the Mediterranean via Eurasia for centuries.
It is expected that the program will involve more than US$ 1 trillion in investment, largely in port, road, rail and airport infrastructure development, as well as power plants and telecommunications networks. The geographical scope of the BRI is expanding constantly. So far it has covered over 70 countries, accounting for about 65 per cent of the worlds population and around one-third of the worlds Gross Domestic Product (GDP).
This article is an attempt to analyse the impacts of the projects undertaken by an assertive China under BRI on the South Asian neighbourhood through the prism of Maldives and Myanmar, the debt traps that these countries are confronted with and the state of domestic politics with the advent of BRI. It seeks to answer the possible challenges that India is facing to its aspirations of being the net security provider in South Asia.
Maldives
In spite of Maldives being a country that is a mere half of its biggest city, what makes China invest into this small archipelago so determinedly is an interesting premise in itself. The Indian Ocean is fast expected to bear in majority, the global trade, with ship lines zipping through its deep interiors. The island nation of Maldives is located next to one of the busiest shipping lines ensuring uninterrupted energy supplies to countries like India, China, Japan, Malaysia, etc. Growing maritime activity in Maldives implies a greater role for it as the nation controls maritime territory that is triple the land area of the UK, thus making it absolutely significant in the Indian Ocean.
Chinas BRI sought to cement the Sino-Maldivian friendship and take it to the next level. The Abdulla Yameen led government that came into power in 2013 adopted a highly pro-China stance which, apart from want only hurting the Indian support, also opened its doors, embracing the BRI, racking up millions of dollars in debt as China began to fund massive infrastructure and development projects. Under Yameens regime, China made massive inroads into the Maldivian economy. China too, in its favour, supported colossal projects, lending billions of dollars at low rates of interest. However, what started off as a well-intentioned act, soon turned into a trail of corruption, bribery, deceit and dishonesty.
The newly elected government, led by Ibrahim Solih, has unearthed numerous instances of power misuse by the former government. The tiny country began facing intense financial pressure and liabilities amounting to $1.4 billion, 75% of which was generated by BRI projects. The numbers are highly significant if one considers the fact that the Maldivian economy is slowly inching towards the $5 billion mark, indicating that the level of Chinese debt greater than a fourth of the economy. Centre for Global Development, a Washington based think tank, rates Maldives as one of the most at-risk countries involved in the BRI, citing enormous debt pile-up.
The government formed by Ibrahim Solih, has been highly vocal in its criticism against the Yameen regime. While Yameen ran his campaign on economic development (allegedly funded by the $1.5 million given by China), Solihs was a blitz against the vast corruption by the previous government. He criticized the China led development and Solihs victory was a surprise for all.
Solihs government has decided to relook at all the contracts and projects under BRI, taken during Yameens rule and conduct a true cost-benefit analysis. It has also, pledged to carry out a strict, impartial investigation into all the Chinese deals, after its landslide victory.
China, on its part, denies any wrongdoings. An interesting article into this, argues that the BRI is under attack not because of Chinas supposedly portrayed wily strategy, but the failings of the corrupt South Asian democracies. However, with Solih at the helm, India has a powerful advantage and must responsibly tread this journey, with China ready to pounce in any void created by India.
Myanmar
Myanmar is located on the southern tip of the peninsular region shared by India and China, making it an important commercial corridor for both its giant neighbours. On one side, it lies on the blinks of Indian Ocean and Bay of Bengal, hence making it a Chinas gateway into Indo-Pacific regional order; on the other side, it provides market access to Chinas landlocked southwestern regions into India and Bangladesh via transit trade. Given its strategic geographical location, Myanmar is growingly considered as an upcoming business destination.
China has had many years of close strategic relations with Myanmar during the latters military rule. However, the relations dove into a phase of uncertainty when Myanmar decided to take the route of democratisation in 2010. Furthering this, the leaders in Myanmars capital, Naypyidaw, have restrained from completely committing to Chinese backed infrastructure projects, including the BRI, owing especially to the fears of holding debt traps as well as landing up in a situation of economic over dependence on China. Additionally, there were concerns that such dependence would result in Chinas political influence in the country. However, Myanmars diplomatic balancing has been under stress in the face of Western criticism and reluctance to support or assist the country with its foreign investment needs, because of the countrys handling of the Rohingya crisis, particularly in the Rakhine state.
During this stressful time, the China-Myanmar-Economic Economic (CMEC) was proposed by Beijing as part of the BRI. This led to Myanmars recent decision of backing Chinas BRI policy and relying excessively on Beijing for diplomatic support. An MoU was signed by Myanmar State Counsellor Aung San Suu Kyi in Beijing in May 2017 at the Belt and Road Forum for International Cooperation. This would include development of projects like Kyaukpyu deep-water port, Kyaukpyu-Kunming high speed railway, SEZs, and natural gas pipelines, etc. These developments suggest that Myanmar and China will build closer political and economic relations, given that this step proves crucial in keeping the Myanmar economy afloat.
Contrarily, for India, this move is perceived as a security nightmare because although the new ports in the Indian Ocean are projected as commercial endeavours, India fears that they will allow China greater military access to its neighbourhood. Regarding this, Professor Swaran Singh from the School of International Studies at Jawaharlal Nehru University, says The Chinese influence is pervasive and writ large on the entire foreign policy of India, and it is especially acute when it comes to neighbours like Myanmar.” It is believed that these considerations and a view to deepen the two countries strategic engagement were in mind during the recent visit by Indian President Ram Nath Kovind to Myanmar in December 2018. This also led to Indias offer of development fund to Myanmar, especially the Rakhine State Development Programme, building houses for Rohingya refugees, etc. Furthering this view of catching up with these events, India launched many new projects including India-Myanmar-Thailand highway, various bus services, and opened border markets. The two countries are also working together on the Kaladan Multi Modal Transit Transport Project.
BRI projects pose the potential for significantly increased debt sustainability problems and is pushing recipient countries into indebtedness, without transfer of skills or technology and are environmentally unsustainable. This is already evident in many countries around the world and in Indias immediate neighbourhood. In this context, India feels BRI is less about economic development and more about political envisioning and strategic concessions, especially in smaller countries around it. India has built the strategically important Chabahar port in Iran to counter the Gwadar port and access the International North-South Transport Corridor (INSTC). India has been playing an active role in the Indian Ocean Rim Association with the objective of strengthening regional cooperation. It has also engaged itself in several bilateral and multilateral naval exercises like Malabar to maintain its influence and check Chinas assertiveness in the Indian Ocean.
The interesting question that remains is how long can India exercise restraint and avoid engagement in the BRI, given that China has expressed its displeasure by not listing BCIM corridor under the BRI in the recent BRI Forum. It is no secret that China is an economic powerhouse and has deep pockets, but it should demonstrate its commitment to a responsible role on the international stage by adopting and advancing multilateral standards for debt sustainability and improving debt management practices. India, on the other hand, can built its capacity, sustain its growth and strengthen its navy, to become the net security provider that it intends to and check Chinas influence in the sub-continent.
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