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China’s New Silk Road project: Focus on South Asia

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] C [/yt_dropcap]hina, the only veto power of Asia and major global power, is seen trying to take a larger role in global affairs by promoting its economic ventures across continents of Asia, Africa and Europe by joint efforts. Obviously, besides making joint ventures with wiling partners, China may be trying to put an end to US monopoly in world affairs, Beijing would like to share domination with USA.

China has come out with a fast forward idea of working together for greater benefits for all nations involved. The Silk Road Economic Belt and the 21st-century Maritime Silk Road or One Belt, One Road (OBOR) is a development strategy, proposed by Chinese President Xi Jinping that focuses on connectivity and cooperation among countries primarily between the People’s Republic of China and the rest of Eurasia, which consists of two main components, the land-based “Silk Road Economic Belt” (SREB) and oceangoing “Maritime Silk Road” (MSR).

The China Pakistan Economic Corridor (CPEC) and the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor are officially classified as “closely related to the Belt and Road Initiative”.

The strategy underlines China’s push to take a bigger role in global affairs, and its need for priority capacity cooperation in collective economic affairs in areas such as steel manufacturing.

The One Belt One Road initiative is geographically structured along 6 corridors, and the maritime Silk Road. New Eurasian Land Bridge, running from Western China to Western Russia; China – Mongolia – Russia Corridor, running from Northern China to Eastern Russia; China – Central Asia – West Asia Corridor, running from Western China to Turkey; China – Indochina Peninsula Corridor, running from Southern China to Singapore; China – Pakistan Corridor, running from South-Western China to Pakistan; Bangladesh – China – India – Myanmar Corridor, running from Southern China to India; Maritime Silk Road, running from the Chinese Coast over Singapore and India to the Mediterranean.

Essentially, the ‘Belt’ includes countries situated on the original Silk Road through Central Asia, West Asia, the Middle East, and Europe. It goes through Central Asia, Russia to Europe.

One Belt, One Road has been contrasted with the two US-centric trading arrangements, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership.

The China-proposed Belt and Road Initiative offers enormous opportunities for all the countries involved and Greek business community warmly supports all the efforts to deepen the two countries’ cooperation under this context, President of the Greek-Chinese Economic Council Fotis Provatas said recently.

OBOR Summit 2017

Chinese President Xi Jinping welcomed UN Secretary-General Antonio Guterres before the Leaders’ Roundtable Summit at the Belt and Road Forum (BRF) for International Cooperation at Yanqi Lake International Convention Center in Beijing, capital of China, May 14-15, 2017. Around 30 state and government heads as well as delegates from more than 100 countries – including the USA and North Korea – discussed the Belt and Road initiative, one of the world’s biggest economic diplomacy programs led by China.

In a keynote speech delivered at the opening ceremony of the two day Initiative called Belt and Road Forum for International Cooperation held in Beijing on May 14 President Xi Jinping said that China would launch Belt and Road cooperation initiative on trade connectivity together with some 60 countries and international organizations. Xi said that the Belt and Road Initiative embodies the aspiration for inter-civilization exchanges, the yearning for peace and stability, the pursuit of common development and the shared dream for a better life. President Jinping called for renewing the Silk Road spirit. Noting that “we are at a fresh starting point, ready to embark on a new journey together,” Xi said, “so long as we press ahead with a common vision without backpedaling or standing still, we will achieve greater connectivity and benefit from each other’s development.” Before the banquet, Xi and his wife Peng Liyuan greeted the guests at the Great Hall of the People.

Apart from this zone, which is largely analogous to the historical Silk Road, another area that is said to be included in the extension of this ‘belt’ is South Asia and Southeast Asia. Many of the countries that are part of this belt are also members of the China-led Asian Infrastructure Investment Bank (AIIB). North, central and south belts are proposed. The Central belt goes through Central Asia, West Asia to the Persian Gulf and the Mediterranean. The South belt starts from China to Southeast Asia, South Asia, to the Indian Ocean through Pakistan. The Chinese One Belt strategy will integrate with Central Asia through Kazakhstan’s Nurly Zhol infrastructure program. The coverage area of the initiative, however, is primarily Asia and Europe, encompassing around 60 countries. Oceania and East Africa are also included.

The summit was aimed to map out China’s ambitious new Silk Road project, of which the OBOR is an integral part. The scheme was proposed in 2013 by Xi to promote a vision of expanding links between Asia, Africa and Europe. China has earmarked US$40 billion for a special fund for the scheme, on top of the US$100 billion capitalization for the China-led Asian Infrastructure Investment Bank, many of whose projects will likely be part of the initiative. The OBOR’s wingspan is expected to include 68 nations from China through Southeast and South Asia to Africa and Europe.

The conspicuous absence of the heads of state from the major Western economic powers and Japan at the belt and road summit this month in Beijing is a big mistake and a missed opportunity for enhancing dynamic and cooperative globalization. India, also seeking wide stage to promote its own interests, chose to ignore the China initiate.

Cost and Benefits

The initiative, unveiled in September 2013 by President Xi Jinping, aims to connect China by a network of overland corridors and sea routes to the rest of Asia, Africa and beyond, linking the dozens of countries through infrastructure and financial and trade ties. The economies along the routes account for about 63 per cent of the world’s population and 29 per cent of global GDP.

Anticipated cumulative investment over an indefinite timescale is variously put at US$4 trillion or US$8 trillion. President Xi said in his speech at the opening of the forum that China will contribute an additional 100 billion yuan (about 14.5 billion US dollars) to the Silk Road Fund. Xi certainly looked keen to begin exercising a leadership role, offering to help tackle the economic and security problems faced by Greece and Turkey, issues the EU has struggled to deal with.

The Belt and Road Initiative is expected to bridge the ‘infrastructure gap’ and thus accelerate economic growth across the Asia Pacific area and Central and Eastern Europe: World Pensions Council (WPC) experts estimate that “Asia alone (excluding China) will need up to $900 billion in infrastructure investments annually in the next 10 years, mostly in debt instruments. This means there’s a 50 percent shortfall in infra spending on the continent.” The gaping need for long term capital explains why many Asian and Eastern European heads of state “gladly expressed their interest to join this new Chinese-led initiative focusing solely on ‘real assets’ and infrastructure-driven economic growth.

Xi told his audience that he had proposed an additional RMB780 billion (approximately US$113 billion) to be disbursed through multiple sources. These include the Silk Road Fund; the China Development Bank; the Export and Import Bank of China and also overseas capital provided by Chinese banks. The Asian Infrastructure Investment Bank (AIIB) is not part – at least not yet – of this proposed package.

Out of this amount, RMB250 billion will be provided in loans from China Development Bank, and RMB130 billion from Export-Import Bank of China. This funding is not direct investment but loans, as in the case of China-Pakistan-Economic Corridor, which the Chinese sources will provide to the participant countries. That would put Beijing in a position to steer the course of each country’s development to a direction it deems fit for its own interests. China, as the primary financer of loans, therefore stands to gain the most and it stands atop the list of potential beneficiaries.

The whopping trade imbalance that China has vis-à-vis almost all the OBOR countries and the way the OBOR initiative is solidifying, through various agreements, worries New Delhi.

Less-developed countries along the new Silk Road stand are among the big winners of investment as China revives ancient land and maritime trade routes, according to estimates by a top bank. The potential benefits of the belt and road, if the dream were even only partly realized, could be enormous. The inclusion of the Middle East and Central Asia could contribute to peace and prosperity in these currently dramatically turbulent regions.

Credit Suisse forecasts that China’s massive inflow of investment over the next five years as part of Beijing’s “Belt and Road Initiative” could amount to as much as US$502 billion, or equivalent to 4 per cent of the total gross domestic product of the 62 countries along the routes in 2015. Credit Suisse estimates that China’s overseas investment in the initiative over the next five years will range between US$313 billion to US$502 billion, depending on how much investment the countries need and how much China is willing to put in.

According to an HSBC estimate, the “Belt and Road Initiative” will generate roughly 300 billion yuan to 500 billion yuan in railway investment, financing more than 15,000km in high-speed rail links along the route. The Credit Suisse report said the initiative could become even more promising as a more “isolationist” administration in the United States created windows of opportunity. “With the new US government pulling out of the Trans-Pacific Partnership, it is unavoidably sending a message to the world that US government policy is turning more ‘isolationist’,” the report said. At the same, China was striving for greater global influence, it said. Chinese investment could also help make up for any capital outflows in the region. If the dollar strengthens, especially as the US moves along the path of rate normalization, emerging market countries also have to face the risks of capital outflow.

The biggest recipients of the investment dollars were expected to be India, Russia, Indonesia, Iran and Egypt, the bank said in a report released earlier this month. India stands to be the biggest gainer overall, according to the report, with China putting in ¬between US$84 billion and US$126 billion. Russia is next with US$53 billion to US$80 billion; ¬Indonesia third on US$35 billion-US$52 billion; Iran fourth attracting US$17 billion-US$26 billion; and Egypt fifth with US$13 billion to US$20 billion. The report also says China could invest between US$52 billion and US$79 billion in 13 African countries. “Africa is rich in resources, and an important destination for Chinese investment over the past decade,” it said.

A successful, inclusive, globally collective effort to make the belt and road a reality could be a harbinger of peace and prosperity. It is a pity that myopia and prejudice prevent Western and Japanese leaders from being present at this potentially seminal event.

South India’s take

President Xi’s project was intended to present the world with a view of statecraft different from what the West espoused. But so far Beijing had failed to find a rhetoric that would appeal to Westerners. China invites the world to join its “project of the century. The president’s vision, however, is winning supporters from across the globe. Xi told the conference: “Swan geese are able to fly far and safely through winds and storms because they move in flocks and help each other as a team,” The message is: the best way to meet challenges and achieve better development is through cooperation.”

Pakistan

Pakistan where the Sino-Pakistani joint projects succeeded is the corner stone of China’s economic project. India is opposed to it.

The project OBOR was first unveiled in September and October when Chinese leader Xi Jinping visited Central Asia and Southeast Asia in September and October 2013 he raised the initiative of jointly building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road and announced two major projects revealing the SREB and MSR, respectively. It was also promoted by Premier Li Keqiang during the State visit in Asia and Europe. The initiative calls for the integration of the region into a cohesive economic area through building infrastructure, increasing cultural exchanges, and broadening trade.

China–Pakistan Economic Corridor (also known by the acronym CPEC) is a collection of infrastructure projects currently under construction throughout CPEC is intended to rapidly modernize Pakistani infrastructure and strengthen its economy by the construction. On 13 November 2016, CPEC became partly operational when Chinese cargo was transported overland to Gwadar Port for onward maritime shipment to Africa and West Asia. The CPEC in particular is often regarded as the link between China’s maritime and overland Silk Road, with the port of Gwadar forming the crux of the CPEC project.

The Belt and Road Initiative proposed by China provides opportunities for the whole world to promote peace and prosperity, experts in Bangladesh said China’s peaceful development is a blessing and opportunity for countries which face extreme difficulties given the rising protectionism in some countries. Bangladeshi experts highly lauded China’s contribution to socioeconomic development of the world and said the initiative of reviving the ancient Silk Road through a network of roads and maritime waterways will surely be a boon for cooperation between China and the rest of the world.

According to the experts, countries on the Belt and Road, especially those with underdeveloped infrastructure, low investment rates and per-capita income, could experience a boost in trade flow and benefit from infrastructure development.

Pakistan foreign affairs expert Muhammad Mehdi says that the trade plan is not solely a Chinese enterprise. “China sees annual trade volume with Silk Road countries from US$1 trillion to US$2.5 trillion within a decade. It reflects 9.6 per cent of annual growth. If South Asia taps this opportunity, it can change the fate of its poor people,” he says. An example of convergence of interests is clearly visible in the Asian Infrastructure Investment Bank, a multilateral development bank which India joined as the second largest shareholder after China. Similarly, the New Development Bank, where Brazil, Russia, India, China and South Africa (the BRICS) are equal partners, is headquartered in Shanghai, and is not envisaged as a Belt and Road initiative by them.

South Asia

The OBOR project, designed to span 65 countries covering 65 percent of the world population, would enable China to not only champion as the primary engine of one third of global economic output, but also accumulate vast amounts of capital as repayments, and through its own direct trade from Central Asia to Europe. The project would obviously impact on the South Asian region.

Plagued by territorial conflicts, poor governance and limping economies, the SA region has drawn inspiration from China’s plan and unleashed an effort to join a shared destiny. South Asia is marred by corruption that is undermining its growth trajectory. The World Economic Forum, in its 2015 Global Competitiveness Index, pointed to corruption as the primary reason for the region’s poor global competitiveness. As China puts conditions on every beneficiary of the trade plan to get rid of corruption, Pakistan and other South Asian countries must gear up to liberate themselves from vicious chains of corruption.

Unemployment is a daunting challenge for South Asia. In order to increase socio-economic viability, it has to create one million jobs every month till 2020. According to the International Labour Organisation, global unemployment will go up by 3.4 million in 2017. With the belt plan a catalyst for transformational change in the economic profile of South Asia, CPEC has started showing its productivity by opening up thousands of jobs for local people. China’s ambassador to Islamabad, Sun Weidong, told reporters that so far the initiative has generated 13,000 local jobs. Experts claim that CPEC projects are likely to create more than one million jobs in various sectors of Pakistan by 2030.

South Asia’s emergence as a leading economic power is in the making, and credit goes to China’s “Belt and Road Initiative”. The grand plan has set into motion game-changing strategies that will lead to free trade agreements, economic integration, physical infrastructure plans, shared growth and structural reforms, all in tune with future demands.

Since this epic plan was announced, South Asia – weighed down by a reputation for regional conflicts, security threats, bad governance, impaired transparency, an energy crisis, poor infrastructure, fragile institutions and limping economies – has unleashed its effort to be part of a shared destiny.

The South Asian Association for Regional Cooperation (SAARC), a critical regional alliance in South Asia accounting for 21 per cent of the world’s population and 7 per cent of its economy, will receive a new lease of life after staying dysfunctional due to a long decade of differences among member countries, especially Pakistan and India. To help SAARC benefit from regional connectivity, China has already stepped up its endeavor to become a full member of the association.

India and China are part of the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC), a sub-regional economic cooperation initiative involving the four countries which are engaged in talks for developing cooperation through a joint study group. This group had its latest meeting in Kolkata, India in late April. The BCIM-EC is now being projected as a component of the BRI by China. However, this initiative was conceived well before the Belt and Road Initiative was formulated, and it should not be subsumed within that strategy but instead pursued as a separate grouping for sub-regional cooperation. It involves full and equal ownership of all four countries involved, rather than a subsidiary position as a loop of the Belt and Road.

Like China, India has its own agenda of connectivity and cooperation within Asia and beyond. For instance, India’s “Act East” strategy is aimed at developing close economic synergies with the Association of Southeast Asian Nations and East Asia. Two great nations and civilizations such as India and China need not endorse or sign on to each other’s strategies. A more pragmatic approach will be to explore synergies and look at projects they can work on together, without insisting on artificial labeling.

In the view of MP Lohani, former Nepalese ambassador to Bangladesh, China’s ambitious plan for regional connectivity will revitalize SAARC. So China’s induction into the regional body on the basis of its geographical, historical, cultural and economic features will be a breath of fresh air.

The trade plan’s impacts will make China’s free trade agreements with Pakistan, Sri Lanka, Bangladesh, Nepal and India more lucrative, triggering an economic boost. Though Pakistan and China are yet to finalize the second phase of a free trade deal, trade between the countries was valued at US$4 billion in 2006-07 and reached US$13.77 billion in 2015-16.

The potential benefits of the belt and road, if the dream were even only partly realized, could be enormous. The inclusion of the Middle East and Central Asia could contribute to peace and prosperity in these currently dramatically turbulent regions. The trade plan undoubtedly will have a deep impact in alleviating poverty plaguing South Asia, home to 1.7 billion people. As per the World Bank’s latest poverty calculation, about 570 million people in South Asia still survive on less than US$1.25 a day.

Peace is another dividend that will come to fruition with the new Silk Road initiative. India, with a fast-growing economy, has many disputes with China and Pakistan. It opposes the China Pakistan Economic Corridor (CPEC), a pilot project of the trade initiative, due to its route passing through Gilgit Baltistan, which India considers a disputed area between Pakistan and India. However, Indian lobbyists in collaboration with their Chinese counterparts have been brainstorming to build a peaceful neighborhood for relishing joint economic benefits.

India’s worry

Nukes, Pakistan, Kashmir and cricket are the major concerns of India as it wants to control them at accost, including bribing big powers. All these domains, effectively managed by Indian lobbyist and agents, gave its economy strong footing.

Sandwiched between China and Pakistan and facing a strong freedom movement in occupied Jammu Kashmir, India took an uncharacteristically bold foreign policy stance by turning down China’s invite. India’s objections are rooted on the fundamental issue of its own sovereignty and territorial integrity, which it says have been violated due to the project. India feels the OBOR will basically further interests of Chinese banks and Chinese companies while ignoring Indian sensitivities. It appears to be a rapacious penetration of Pakistan’s economy and territory, including that of Pakistan Occupied Kashmir and Gilgit-Baltistan to which India lays claim, by Chinese enterprises and agencies.

Whenever India, ignoring the freedom struggle being waged by Kashmiris who have been fighting for their lost sovereignty, has lobbied at international forums for entry to the Nuclear Suppliers Group, permanent membership of the UN Security Council and push for UN sanctions against Pakistan, Beijing has always opposed i. Beijing thus offers New Delhi little incentive to be ebullient about bolstering its own causes and crusades especially at the international level

India is keen not to lose out Jammu Kashmir under any new project in South Asia. India opposes and ignores the OBOR. China’s relations with India are not as smooth as its Pakistani ties, although all these nations occupy parts of Jammu Kashmir. India is suspicious of Chinese moves. Plans are being hammered out for a free trade agreement between India and China. That effort comes amid India-China trade volume hitting US$70 billion in 2016 as India sought to increase exports to US$30 billion. Meanwhile, joint feasibility studies for a FTA linking Nepal, Sri Lanka and Bangladesh are on the fast track.

There is room for closer consultations between China and India on the objectives, contours and future directions of the Belt and Road. However, India has considered synergy-based cooperation on a case-by-case basis, where its interests for regional development converge with that of other countries, including China. This pragmatic approach is formulated on India’s stance that as the two major powers in Asia, there is bound to be common understanding on many global and regional issues between India and China. They have cooperated on international platforms with similar positions on climate change and global trade, for instance.

Linked to this is the compulsion of protecting Chinese maritime commerce, particularly oil, in the IOR. India risks being systematically frozen out of business opportunities in an enlarging area that is integrating with the Chinese economy around the world.

Chinese scholars have been issuing dire warnings on how India would be isolated as most Asian nations as well as the USA and Russia are on board. India’s non-cooperation is also being linked to Sino-Indian ties, which have hit a new low lately. The unresolved decades-old border dispute, Chinese support for India’s arch-rival Pakistan and New Delhi’s backing of the Tibetan Buddhist spiritual leader, the Dalai Lama which rankles China, have affected bilateral relations.

Critics also feel that India’s underwhelming response to China’s grand scheme stems in part from the latter consistently squashing its neighbor’s ambitions to augment its influence at the global high table.

It is difficult to say whether India hated more China or Pakistan. India has repeatedly conveyed its strong objections regarding the CPEC to China. A flagship program and the most advanced component of the initiative, the China-Pakistan Economic Corridor (CPEC), passes through Pakistan-occupied Kashmir, a region that is under the control of Pakistan and India now claims to be its own as a ploy to force Pakistan to stop fighting for India occupied Kashmir. As a country acutely conscious of its own sovereignty-related claims, it wants China to appreciate India’s “sensitivities” in this regard.

Besides Indian objections, a document acquired by leading Pakistani daily Dawn lays out Beijing’s plans for the China-Pakistan Economic Corridor, which includes installing 24-hour surveillance in major cities and the dissemination of Chinese culture. Such designs could give fuel to those who frame OBOR as 21st-century Chinese colonialism.

Problems and Prospects

The Belt and Road plan, according to Beijing, is a practical economic strategy for China’s objectives to connect the region, seek new growth engines for its slowing economy, utilize its surplus capacity, and develop and stabilize its western regions. It would also bring benefits to partner countries.

The Belt and Road plan is a Chinese initiative rather than a multilateral enterprise undertaken after prior consultation with potential partner countries, and India has not endorsed it. It is one of the most imaginative and ambitious programs ever to be rolled out by a government. It represents a broad strategy for China’s economic cooperation and expanded presence in Asia, Africa and Europe, and has been presented as a win-win initiative for all participating nations. But for India seeking not to lose out Kashmir by any developmental projects in the region, the connotations of China’s Belt and Road Initiative” for New Delhi are somewhat different. By joining, India could benefit from Chinese investment in infrastructure projects, and fast-track its economic development through trade connectivity.

The origin of the belt and road idea is to open up China’s landlocked western provinces towards Central Asia in a sense it is exporting China’s internal needs to find external solutions.

It is however wrong today to presume that the One Belt-One Road in Beijing is fundamentally the elaboration of a Chinese dream wherein participant countries appear only as facilitators and fade away China would make maximum out of it. India opposes China to be on top of the hierarchy of the states participating in it and it does not approve Chinese leadership and seeks USA to contain China. .

Enthusiasm for Chinese money, however, does not equate to enthusiasm for Chinese leadership. OBOR revealed eye-catching figures including the Chinese government’s pledge to invest $124 billion into the scheme and provide $78 billion of financing for OBOR projects.

Both the Belt and Road are clearly intended to enhance connectivity not just across Eurasia but between China and Europe. However, the EU, which holds reservations over OBOR, can put the brakes on China’s plans, demonstrated by its ongoing investigation into the Belgrade-Budapest high-speed rail funded by Beijing.

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South Asia

Whether Pakistan’s membership in the IAEA Board of Governors is a major diplomatic achievement?

Sonia Naz

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Pakistan has once again been elected a member of the IAEA Board of Governors (BoG) for the next two years on September 20, 2018. The Board of Governors of the IAEA is one of its policy making organs. The BoG not only examines the financial statements, it also makes recommendations for the IAEA budget. It finalizes the membership applications, accepts safeguard agreements and contributes in the safety standard publications. The approval of Director General of the IAEA with the approval of General Conference is also the responsibility of the Board. Pakistan has been chosen 19 times to the Board in the past and has played an important role in the formulation of the agency’s policies and programmes. It also has the honor of chairing the Board thrice in 1962, 1986 and 2010.

A prominent Pakistani nuclear expert Dr. Naeem Salikin his book “Nuclear Pakistan Seeking Security and Stability” writes that Pakistan’s cooperation with the agency has been reciprocal. In other words it not only benefitted from the agency but also Pakistan’s nuclear expertise and its human resources proved to be invaluable contribution to the agency. Pakistani scientists and engineers have contributed to the IAEA work in numerous fields including in the area of nuclear safety and security. It also hosted nuclear safety and security workshops with the cooperation of IAEA on the regional level. Pakistan has been beneficiary of the IAEA assistance and its nuclear establishment is fully committed to increasing this cooperation in various fields ranging from nuclear power development to that of agriculture, medicine and livestock. Pakistan’s Country Program Framework (CPF) 2014-2019 provides assistance in the wide range of areas as nuclear safety and security, nuclear power development, industrial application, human health under the technical cooperation program of the IAEA.

Since the inception of Pakistan’s nuclear weapons it has faced allegations and hostilities which have not been faced by any other nuclear state in the world. Although, the formation of the NSG in 1974 was the result of Indian violation of peaceful use of nuclear material for military purposes but the irony is that now the founders of NSG are advocating India for the membership of NSG. China is the only state which understands that India is not the only country but Pakistan is also capable of producing highly enriched uranium and plutonium for civil and military purposes and it can easily assist developing states in advancing their nuclear infrastructures and technology. All nuclear power plants of Pakistan are under the IAEA safeguards while the US is extending exceptional treatment to India by letting it keep its eight reactors out of IAEA safeguards that are producing fissile material in large quantities, and intentionally ignoring this.

In this regard, Pakistan advocates a non-discriminatory approach towards the non-NPT nuclear weapons states for their entry into the NSG. Nevertheless, it is the prime time for Pakistan to fight its case through the IAEA as it is going to formulate policies of IAEA for future. It should also try to introduce the policies which treat all nuclear states equally because discriminatory behaviors and policies undermine the credibility of the non-proliferation regimes.

In a nutshell, Pakistan has been facing enormous amount of propaganda regarding its nuclear safety and security and the amount of literature projecting Pakistan’s perspective is inadequate and small. Therefore, it’s imperative that Pakistan projects its perspective concerning its nuclear safety and security. Pakistan has been in full compliance with the agency regime for over fifty years now. Pakistan’s cooperative and positive behavior towards the promotion of peaceful uses of nuclear technology and non-proliferation regimes requires equal treatment. Keeping in view the stringent nuclear safety and security record of Pakistan and its advanced nuclear fuel cycle capability, it should be considered eligible to be provided the nuclear fuel cycle services under the IAEA safeguards. Pakistan can make its membership in BOG a major diplomatic achievement by advocating its perspective with full determination.

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Can India Balance Between Beijing and Washington?

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On October 10, 2018, a Senior Chinese Diplomat in India underscored the need for New Delhi and Beijing to work jointly, in order to counter the policy of trade protectionism, being promoted by US President, Donald Trump.

It would be pertinent to point out, that US  had imposed tariffs estimated at 200 Billion USD in September 2018, Beijing imposed tariffs on 60 Billion USD of US imports as a retaliatory measure, and US threatened to impose further tariffs. Interestingly, US trade deficit vis-à-vis China reached 34.1 Billion USD for the month of September (in August 2018, it was 31 Billion USD). Critics of Trump point to this increasing trade deficit vis-à-vis China as a reiteration of the fact, that Trump’s economic policies are not working.

Ji Rong, Spokesperson of the Chinese Embassy in India said that tariffs will be detrimental for both India and China and given the fact that both are engines of economic growth it is important for both to work together.

The Chinese diplomat’s statement came at an interesting time. US President, Donald Trump on October 2, also referred to India as ‘tariff king’. Even though the India-US strategic relationship has witnessed a significant upswing, yet the US President has repeatedly referred to India imposing high tariffs on US exports to India (specifically Harley Davidson motorcyles).

It also came days after, after India signed a deal with Russia (October 5, 2018) for the purchase of 5 S-400 Air Defence system, during the visit of Russian President Vladimir Putin. The Chinese envoy’s statement also came days before India attended the China dominated Shanghai Cooperation Organization (SCO). Significantly, India and China also began a joint training programme for Afghan Diplomats on October 15, 2018 (which would last till October 26, 2018).

Trilateral cooperation between India, China and Afghanistan was one of the main thrust areas of the Wuhan Summit, between Chinese President, Xi Jinping, and Indian PM, Narendra Modi, and this is one of the key initiatives in this direction.

There are a number of factors, which have resulted in New Delhi and Beijing seeking to reset their relationship. The first is difference between New Delhi and Washington on economic ties between the former and Iran and Russia. Washington has given mixed signals with regard to granting India exemptions from Countering America Through Sanctions Act (CAATSA).

US ambiguity on providing waivers to India

While sections of the US establishment, especially Jim Mattis, Defence Secretary and Secretary of State, Michael Pompeo have been fervently backing a waiver to India, there are those who oppose any sort of waiver even to India. NSA John Bolton has been warning US allies like India, that there will be no exemption or waiver from US sanctions targeting Iran’s oil sector. On October 4th, Bolton while briefing the press said:

“This is not the Obama administration … is my message to them (the importers),

Trump himself has not been clear on providing India a waiver, when asked about this issue, he said India would  know soon about the US decision (Trump has the authority to provide a Presidential waiver to India from the deal with Russia). A State Department Spokesperson also stated, that the US was carefully watching S-400 agreement with Russia, as well as India’s decision to import oil from Iran, and such steps were ‘not helpful’. With the US President being excessively transactionalist, it is tough to predict his final decision, and with growing differences between him and Mattis, one of the ardent advocates of waivers for India, it remains to be seen as to which camp will prevail.

US protectionism and New Delhi’s discomfort

Differences between Washington and New Delhi don’t end on the latter’s economic ties with Tehran and Moscow. India has on numerous occasions stated, that while strengthening strategic ties with the US, it was concerned about the Trump administration’s economic policies. This was clearly evident from the Indian Foreign Minister Sushma Swaraj’s speech at the SCO Meet (October 12, 2018) held at Dushanbe, Tajikistan where she pitched for an open global trading order. Said Swaraj:

“We have all benefited from globalization. We must further develop our trade and investment cooperation. We support an open, stable international trade regime based on centrality of the World Trade Organization,”

Even if one to look beyond Trump’s unpredictability, there is scope for synergies between New Delhi and Beijing in terms of economic sphere and some crucial connectivity projects.

Economic Opportunities

For long, trade has been skewed in favour of China, and this is a growing concern for India. Trade deficit between India and China has risen from 51.1 Billion USD in 2016-2017 to 62.9 Billion in 2017-2018 (a rise of over 20 percent).

The imposition of US tariffs has opened up opportunities for China importing certain commodities from India. This includes commodities like soybeans and rapeseed meal. In a seminar held at the Indian embassy in Beijing in September 2018, this issue was discussed and one on one meetings between potential importers (China) and sellers (India) was held. India urged China to remove the ban which had imposed on the import of rape meal seeds in 2011.

Connectivity and Afghanistan

Another area where there is immense scope for cooperation between India and China is big ticket connectivity projects. During his India visit, Uzbekistan President, Shavkat Mirziyoyev invited India to participate in a rail project connecting Uzbekistan and Afghanistan.

Afghanistan has welcomed this proposal, saying that this would strengthen cooperation between China and India in Afghanistan. India-China cooperation on this project is very much in sync with the China-India Plus Model proposed by China at the BRICS Summit in July 2018.

India and China can also work jointly for capacity building in Afghanistan. New Delhi has already been involved in providing assistance to Afghanistan in institution building and disaster management, and if Beijing and New Delhi join hands this could make for a fruitful partnership. The India-China joint training program for Afghan diplomats is a significant move in this direction. India and China can also look at joint scholarships to Afghan students where they can spend part of their time in China and the remaining time in India.

Both India and New Delhi for any meaningful cooperation in Afghanistan can not be risk averse, and will have to shed their hesitation. Beijing for instance has opted for a very limited ‘capacity building’ , where it will work with India in Afghanistan. While Kabul had expected that both sides will invest in a significant infrastructure project, Beijing with an eye on its ally Islamabad’s sensitivities opted for a low profile project.

Conclusion

New Delhi should not be too predictable in it’s dealings with Washington DC, and has to do a fine balancing act between Beijing and Washington DC. While on certain strategic issues are synergies between India and the US, on crucial economic and geo-political issues, there are serious differences, and India’s ties with Beijing are crucial in this context. New Delhi and Beijing should seek to expand economic ties, and the latter should give more market access to Indian goods. Apart from this, both countries should work closely on connectivity projects. If both sides build trust, the sky is the limit but it will require pragmatism from both sides. Beijing should not allow the Pakistani deep state to dictate it’s links with India (especially in the context of cooperation in Afghanistan). New Delhi on its part, should not make any one issue a sticking point in its complex but very important relationship with Beijing.

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South Asia

The “Neo-Cold War” in the Indian Ocean Region

Kagusthan Ariaratnam

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Addressing an event last week at London’s Oxford University, Sri Lankan Prime Minister Ranil Wickremesinghe said some people are seeing “imaginary Chinese Naval bases in Sri Lanka. Whereas the Hambantota Port (in southern Sri Lanka) is a commercial joint venture between our Ports Authority and China Merchants – a company listed in the Hong Kong Stock Exchange.”

Prime Minister Wickremesinghe has denied US’ claims that China might build a “forward military base” at Sri Lanka’s Hambantota port which has been leased out to Beijing by Colombo. Sri Lanka failed to pay a Chinese loan of $1.4 billion and had to lease the China-developed port to Beijing for 99 years. Both New Delhi and Washington had in the past expressed concerns that Beijing could use the harbor for military purposes.

Image courtesy of Google

The USA, China, and India are the major powers playing their key role in the “Neo-Cold War” in Central Asian landmass and the strategic sea lanes of the world in the Indian Ocean where 90% of the world trade is being transported everyday including oil. It is this extension of the shadowy Cold War race that can be viewed as the reason for the recent comment made by the US Vice President Mike Pence that China is using “debt diplomacy” to expand its global footprint and Hambantota “may soon become a forward military base for China’s expanding navy”.

According to some analysts, the deep-water port, which is near a main shipping route between Asia and Europe, is likely to play a major role in China’s Belt and Road Initiative.

In his book “Monsoon” Robert D. Kaplan (2010), a senior fellow at the Centre for a New American Security notes the following:

[…] the Indian Ocean will turn into the heart of a new geopolitical map, shifting from a unilateral world power to multilateral power cooperation. This transition is caused by the changing economic and military conditions of the USA, China and India. The Indian Ocean will play a big role in the 21st century’s confrontation for geopolitical power. The greater Indian Ocean region covers an arc of Islam, from the Sahara Desert to the Indonesian archipelago. Its western reaches include Somalia, Yemen, Iran, and Pakistan — constituting a network of dynamic trade as well as a network of global terrorism, piracy, and drug trafficking […]

Two third of the global maritime trade passes through a handful of relatively narrow shipping lanes, among which five geographic “chokepoints” or narrow channels that are gateway to and from Indian ocean: (1) Strait of Hormuz (2) Bab el-Mandab Passage (3) Palk Strait (4) Malacca and Singapore Straits and (5) Sunda Strait.

While Lutz Kleveman (2003), argues that the Central Asia is increasingly becoming the most important geostrategic region for the future commodities, Michael Richardson (2004) on the other hand explains that the global economy depends on the free flow of shipping through the strategic international straits, waterways, and canals in the Indian Ocean.

According to the US Energy Information Administration (EIA)  report published in 2017, “world chokepoints for maritime transit of oil are a critical part of global energy security. About 63% of the world’s oil production moves on maritime routes. The Strait of Hormuz and the Strait of Malacca are the world’s most important strategic chokepoints by volume of oil transit” (p.1). These channels are critically important to the world trade because so much of it passes through them. For instance, half of the world’s oil production is moved by tankers through these maritime routes. The blockage of a chokepoint, even for a day, can lead to substantial increases in total energy costs and thus these chokepoints are critical part of global energy security.  Hence, whoever control these chockpoints, waterways, and sea routes in the Indian Ocean maritime domain will reshape the region as an emerging global power.

In a recent analysis of globalization and its impact on Central Asia and Indian Ocean region, researcher Daniel Alphonsus (2015), notes that the twists and turns of political, economic and military turbulence were significant to all great players’ grand strategies:

(1) the One Belt, One Road (OBOR), China’s anticipated strategy to increase connectivity and trade between Eurasian nations, a part of which is the future Maritime Silk Road (MSR), aimed at furthering collaboration between south east Asia, Oceania and East Africa; (2) Project Mausam, India’s struggle to reconnect with its ancient trading partners along the Indian Ocean, broadly viewed as its answer to the MSR; and (3) the Indo-Pacific Economic Corridor, the USA’s effort to better connect south and south east Asian nations. (p.3)

India the superpower of the subcontinent, has long feared China’s role in building outposts around its periphery. In a recent essay, an Indian commentator Brahma Chellaney wrote that the fusion of China’s economic and military interests “risk turning Sri Lanka into India’s Cuba” – a reference to how the Soviet Union courted Fidel Castro’s Cuba right on the United States’ doorstep. Located at the Indian Ocean’s crossroads gives Sri Lanka the strategic and economic weight in both MSR and Project Mausam plans. MSR highlights Sri Lanka’s position on the east-west sea route, while Project Mausam’s aim to create an “Indian Ocean World” places Sri Lanka at the center of the twenty-first century’s defining economic, strategic and institutional frameworks. Furthermore, alongside the MSR, China is building an energy pipeline through Pakistan to secure Arabian petroleum, which is a measure intended to bypass the Indian Ocean and the Strait of Malacca altogether.

A recent study done by a panel of experts and reported by the New York Times reveal that how the power has increasingly shifted towards China from the traditional US led world order in the past five years among small nation states in the region. The critical role played by the strategic sea ports China has been building in the rims of Indian Ocean including Port of Gwadar in Pakistan, Port of Hambantota in Sri Lanka, Port of Kyaukpyu in Myanmar and Port of Chittagong in Bangladesh clearly validates the argument that how these small states are being used as proxies in this power projection.

This ongoing political, economic and military rivalry between these global powers who are seeking sphere of influence in one of the world’s most important geostrategic regions is the beginning of a “Neo-Cold War” that Joseph Troupe refers as the post-Soviet era geopolitical conflict resulting from the multipolar New world order.

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