Belt and Road initiative

 What is Belt and Road Initiative?

1. The Belt and Road Initiative is a Chinese foreign policy initiative promoted by president Xi Jinping in 2013
2. Initially the idea of Silk Road Economic Belt (SREB) and Maritime Silk Road (MSR) was put forward
3. Subsequently, the two projects together came to be known as ‘One Belt One Road’ (OBOR) Initiative. Later, it came to be known as Belt and Road Initiative (BRI)

Aim of BRI: Build a trade, investment, and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes
The Communist Party of China (CPC) has incorporated Belt and Road Initiative into the Chinese Constitution

Significance of BRI for China:

1. Financial Institutions: Promotion of Chinese-led financial institutions like the Asian Infrastructure Investment Bank
2. Maritime power: Put forward China as a maritime power in the South China Sea and the Indian Ocean and its littoral
3. Development of Western Provinces:

• Develop poorer western provinces of China, especially Xinjiang. Xinjiang has had ethnic tensions and is considered to be vulnerability for China.
• Chinese government has designated Xinjiang Uighur Autonomous Region as ‘Core zone of Silk Road Economic belt’ The government has been giving incentives to attract manufactures and real estate developers

4. Energy route: Creation of an energy route from the Middle East and Africa. This will act as a proof against any possible prohibition at points like Hormuz and the Malacca strait
5. Market: Transportation links will help access rich European markets better and boost trade
6. Boost to domestic infrastructure industry: Development of ports, railways, pipelines and highways across Asia and the Indian Ocean will help China utilise its excess capacity in steel, cement and infrastructural engineering.
7. Trading norms and regimes: Help China to compete with Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) or any other future mechanisms which seek to establish new trading norms

Challenges to BRI

1. Commercial viability:
Very high development costs of projects.
Sources for financing project development, to be financed either through public grants or through equity are scarce
Limits to debt financing, particularly in foreign currencies is also a major challenge

2. Institutional Challenges:
Countries along the Belt and Road have different levels of development and at times poor governance conditions. This may hinder infrastructure development and the development of trade and investment.

3. Political instability in countries along BRI:
According to the Fragile States Index (FSI), Yemen, Somalia, Syria, Afghanistan, and Iraq are very unstable politically.
Further, in the previously considered stable countries, political instability has been increasing. Example: Turkey- Conflict between the government and Partiya Karkerên Kurdistan (PKK).
The political instability in growing number of countries along BRI poses serious security concerns for BRI.

4. Regioanl Disparity and Ethnic Tensions in China:
Regional disparity between western and eastern provinces of China complicates the use of the western region to connect to neighbouring countries
Separatist movements and ethnic tensions particularly in Xinjiang is a serious challenge for development of BRI

5. Cooperation from neighbouring countries:
China has raised sovereignty disputes by putting forward territorial claims against neighbouring countries
China rejected the ruling of the UN tribunal regarding its claims in the South China Sea.
In 2017, at Doklam, China challenged Bhutan’s sovereignty. This had led to a military standoff with India.

6. Issues with transparency in tenders and deal conditions:
In 2017, the government of Nepal abandoned deal to build the Budhigandaki hydroelectric project dam with a Chinese company. The reason highlighted was that it was signed without an open tender process
Pakistan pulled out from a deal to build Diamer-Bhasha dam with China. The reason cited was strict deal conditions.

7. Potential ecological and environmental consequences especially in developing countries along the BRI.

India and BRI

India has opposed the BRI and did not attend the 2017 BRI Summit held in Beijing. It cited issues of sovereignty, transparency and unilateral decision making.

Major reasons for India’s reluctance towards BRI are as follows:

1. China-Pakistan Economic Corridor (CPEC):
The main reason for India’s opposition to the BRI is the CPEC which is a flagship programme of the BRI
The CPEC passes through Pakistan-Occupied Kashmir (Gilgit-Baltistan). As both India and Pakistan claim all of Kashmir, the area is considered a disputed territory by India. According to India, it undermines India’s strategic interests and territorial integrity.
Further, China will get access to western Indian Ocean with Gwadar port. This would facilitate China in controlling maritime trade and this could be detrimental to freedom of navigation and trade-energy security of India

2.Unilateral Decision:
India has alleged that China has taken unilateral decisions. There has been lack of consultations with India before the launch of BRI.
Transparency issues:
India has highlighted the importance of openness and transparency
According to India, mutual agreements on infrastructure projects should be transparent and debt repayments be made easier for recipient countries
Concern over China’s expanding presence in neighbouring countries and Indian Ocean:
China’s port development projects in the Indian Ocean raises security concerns for India.

Advantages for India if joined BRI

1. Direct access to Afghanistan and Central Asia
2. Economic benefits; Boost to trade, investment and business engagement
3. Security: Development in Gilgit- Baltistan area would help to curb security threats
4. Energy: BRI is expected to normalize India-Pakistan ties. This would remove the obstacles in implementation of two major energy cooperation projects: the Iran-Pakistan-India gas pipeline and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. This is crucial for India’s energy security.
5. Improve Indo-China ties; India and China may cooperate at many global fronts
6. All neighbouring countries (except Bhutan) and other countries from SE Asia, Central Asia has joined BRI. Thus, not joining BRI may lead to isolation of India
7. Many geopolitical issues and differences can be resolved through economic integration

What lies ahead?

1. More than 65 countries- nearly every country in Asia (barring few like Bhutan, Japan), East and Central Europe have joined BRI
2. With the rise of protectionism, the BRI would give boost to Asian trade
3. The future of BRI largely depends on how China manages its debt as 23 countries that joined BRI are at debt distress.
4. Further, regional cooperation, political stability in countries along BRI is important for BRI to succeed.
 

By: Priyank Kishore