Millennium Post

On the question of OBOR

On May 14, the Chinese government hosted representatives from 130 countries to promote its One Belt One, One Road initiative. The ostensible aim of this initiative is to create a major global platform for economic cooperation built on a network of infrastructure projects and, over-land and sea links connecting China with the rest of Asia, Europe and West Africa. Experts have compared it to the Marshall Plan—a similar business stimulus initiative launched by the United States of America to aid Western European economies following the devastation of World War II. They believe that the initiative is a "game changer" and an indicator of China's growing domination in the global economic order. The National Democratic Alliance government's decision to not send an Indian representative to the Belt and Road Forum (BARF) has split public opinion down the middle. There are some who believe that New Delhi's decision not to attend this historic meeting of nations reflects an inability to acknowledge the tremendous commercial benefits of this initiative and the changing geopolitical landscape of the Asian continent, where China has become a leading player. In other words, New Delhi's decision could potentially isolate India, as it is the only large economy not to have a representative at BARF. Although one could make a case for these criticisms, New Delhi's position of dissent is valid on many grounds. In fact, one could praise the Narendra Modi government for taking such a stand, and its recent statement on the subject possesses a real clarity of thought.

"Connectivity initiatives must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities; balanced ecological and environmental protection and preservation standards; transparent assessment of project costs; and skill and technology transfer to help long term running and maintenance of the assets created by local communities," said a statement by the Ministry of External Affairs. Following these concerns, New Delhi has also articulated its legitimate objections to the China-Pakistan Economic Corridor (CPEC), which is part of the OBOR initiative. The $54 billion CPEC, which stretches between Chinese province of Xinjiang and Pakistan's Gwadar Port, remains a vital subject of concern for the Indian government. Strategic experts believe that this "economic corridor" will give China quicker access to markets in both Europe and the Middle East. But it runs through Pakistan-occupied Kashmir and Gilgit-Baltistan regions, and India has raised security concerns in the neighbourhood. Despite China's assertion that it would not like to interfere in India-administered Kashmir, and the OBOR initiative is "based on principles of mutual benefit and that it is not interested in interfering in the participating countries' internal affairs," New Delhi remains rightly wary since there were no extensive consultations. Moreover, with connectivity stepped up between Pakistan and China as a result of the massive infrastructure push, it becomes easier for their armed forces to indulge in cooperative action. Some believe that India's objection to the CPEC falls below concerns on issues of both sustainability and transparency. Vindication came in the form of the EU's decision not to endorse this initiative because "it did not include commitments to social and environmental sustainability and transparency," as reported in The Guardian. Even in the CPEC, many in Pakistan have begun to raise uncomfortable questions on issues of transparency. The reputed 'Dawn' daily recently leaked major details of the project to the discomfort of the Pakistani establishment.

In a recent column for an Indian news website, Mohan Guruswamy, chairman of the Centre for Policy Alternatives, presents a compelling argument for what China seeks to achieve through the OBOR initiative. "China has accumulated foreign exchange reserves of $3.5 trillion. The capital it claims it is prepared to subscribe for the New Development Bank (previously BRICS Development Bank), the Asian Infrastructure Investment Bank and the Silk Road Fund would amount to only around 7% of its total foreign exchange reserves invested in western banks. Since these China-promoted institutions will be providing infrastructure lending rather than grants (for the OBOR initiative), the return on capital from these investments could be significantly higher than the returns China is getting from its foreign exchange reserves currently invested in low-yielding US government bonds. It is very simple. China needs to get value for its money and also help its demand-starved industries. And they have found a typically Chinese solution to it and are making a virtue of a necessity," Guruswamy writes. One can already witness how participating government have found themselves with unviable infrastructure projects laden with debt from Chinese banks. The Sri Lankans are now being asked to begin repayment for the Chinese-funded Hambantota port project. One prominent European commentator calls the One Belt One Road project "One Belt, One Road and One Trap".

It is evident that India's objections to OBOR do not merely stem out of a sense of distrust of the Chinese. On the question of infrastructure finance, India has stepped up to the plate and signed on to the BRICS Bank and the Asian Infrastructure Investment Bank, among other such initiatives. Unlike OBOR, India believes that these forums do not necessarily raise the same concerns. Despite the government's stand, it also does not necessarily mean that private Indian companies cannot take advantage of sea and over-land links established as a result of OBOR. Unlike the previous United Progressive Alliance, the current ruling dispensation has not shown the same level of deference to the Chinese, especially when Indian interests are on the line. Admittedly, New Delhi does not possess the kind of geopolitical and economic leverage that Beijing possesses on the global map, but at least there is some pretence of protecting sovereign Indian interests. New Delhi's decision not to send a representative for the OBOR summit in Beijing is also a clear sign of its unhappiness with Beijing's concessions to Pakistan and attempts to undermine Indian security interests. China has provided no assurances of dropping its resistance to UN sanctions against Pakistan-based terror mastermind Maulana Masood Azhar, who India holds responsible for the terror attacks in Pathankot and Uri. China also continued to stall on India's application for membership of the Nuclear Suppliers Group (NSG). Unlike past governments, which were cowed down by the scars of the 1962 war, the current ruling dispensation has shown some appetite in taking on Beijing's imposing tactics. All this talk, however, must be followed up by action. India must step up its regional connectivity initiatives, especially among neighbouring countries, South East Asia and West Asia. Besides, New Delhi must embark on greater economic cooperation with Japan and other East Asian economies, in light of America's receding role in the region.
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