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China struggles to fend off allegations of debt trap diplomacy

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Desperate for cash, Tajikistan is about to sell yet another vital asset to China at a time that countries like Sri Lanka and the Maldives are demanding renegotiation of debt settlements that either forced them to surrender control of critical infrastructure or left them with unsustainable repayments.

The pending Chinese acquisition of  a stake in Tajikistan’s aluminium smelter, coupled with earlier tax concessions to Chinese companies that would substantially reduce the trickle down effect of investments for the troubled Tajik economy, suggest that China has yet to fully take account  of frequent criticism of its commercial approach to Belt and Road-related projects.

The Washington-based Center for Global Development warned last year that “23 of 68 countries benefiting from Belt and Road (BRI) investments were “significantly or highly vulnerable to debt distress.”

The centre said eight countries — Tajikistan, the Maldives, Pakistan, Djibouti, Kyrgyzstan, Laos, Mongolia, and Montenegro — were particularly at risk.

“There is…concern that debt problems will create an unfavourable degree of dependency on China as a creditor. Increasing debt, and China’s role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI countries,” the report said.

Progress on the construction of a road in Afghanistan’s Wakhan Corridor, a narrow strip in the east of the country that touches the Chinese border and separates Tajikistan from Pakistan and Pakistan-controlled Kashmir, may explain China’s seeming insensitivity to the concerns of beneficiaries of the People’s Republic’s largesse.

The road would link the corridor to Central Asia in the north and Pakistan’s Chinese-built Arabian Sea port of Gwadar in the south, a crown jewel in China’s infrastructure- and energy driven Belt and Road initiative.

To be sure, the road has local rather than geopolitical significance for workers building the road and the region’s shepherds as documented by anthropologists Tobias Marschall and Till Mostowlansky.

The road creates temporary employment for labourers. For shepherds, it facilitates access to mountain pastures.

For China, the stakes are geopolitical and economic.

The road would not only facilitate commerce with Central Asia as well as traffic from Gwadar but also construction of shorter pipelines as well as a fibre optic cable.

Perhaps more importantly, it would together with a military base in Tajikistan and Chinese cross border operations in the corridor itself, facilitate the movement of troops in China’s gradual projection of military power beyond its borders, particularly in regions adjacent to its troubled north-western province of Xinjiang.

The road’s potential military significance raises questions about the sustainability of a presumed division of labour between Russia and China under which Russia shoulders responsibility for security in Central Asia while China concentrates on economic development.

Ironically, if the examples of Sri Lanka, the Maldives, Pakistan and Malaysia coupled with anti-Chinese sentiment in Central Asia, fuelled in part by the brutal crackdown on Turkic Muslims in Xinjiang, are anything to go by, China’s approach to Belt and Road-related development could turn out to be a threat to its broader geopolitical ambitions and regional security policy.

Sri Lanka recently demanded that China return control of Hambantota port.

Sri Lanka became the poster child of allegations that China was pursuing debt trap diplomacy when it two years ago surrendered to China control of the port as part of a deal to reduce the country’s debt payments.

China lent Sri Lanka US$5 billion between 2010 and 2015 for infrastructure projects that included development of Hambantota at interest rates of up to 6.3 percent.

By comparison, World Bank and Asian Development Bank rates on soft loans range from 0.25 to three percent.

“The perfect circumstance is a return to the norm. We pay back the loan in due course in the way that we had originally agreed without any disturbance at all,” said newly appointed Sri Lankan prime minister Ajith Nivard Cabraal.

Similarly, the foreign ministry of the Maldives said earlier this month that it was seeking to restructure its Chinese debt.

“Borrowings by the previous government were unreasonable and put us in difficulty. But we can solve this mess through diplomatic means,” said foreign minister Abdulla Shahid.

Last month, former president Abdulla Yameen was jailed for five years and fined US$5 million for corruption during his term that ended late last year. Mr. Shahid’s government has accused China of land grabs during Mr. Yameen’s reign.

In a rare success, Malaysia earlier this year negotiated a one third reduction in the cost of a US$15.7 billion Belt and Road-related rail project.  In a further concession, China agreed that 70 percent of the workforce would be Malaysian and that Malaysian contractors would get 40% of the civil works.

China has repeatedly been accused of employing Chinese rather than local labour for Chinese-funded projects along the Belt and Road and importing materials from China rather than sourcing them locally.

The government of Pakistani prime minister Imran Khan has been less successful than its Malaysian counterpart.

It recently bowed to Chinese pressure to revive hundreds of projects initially suspended after it came to office in 2018.

The appointment of a retired lieutenant general as head of a new authority overseeing the China Pakistan Economic Corridor (CPEC) that groups Belt and Road-related projects reflected China’s wariness towards messy Pakistani politics and preference for dealing with the country’s military.

With Sri Lanka as the anti-thesis, analysts suggest that China is determined to make Pakistan a success story.

“The big battle at the moment is about CPEC’s reputation, and Beijing cares about salvaging that. They need to show BRI has been a success, that it hasn’t put Pakistan’s economy in trouble and that there isn’t a backlash. If they can’t do it in a context like this, it suggests that there is something flawed in the model,” said Pakistan and China scholar Andrew Small.

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

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East Asia

Shared Territorial Concern, Opposition to US Intervention Prompt Russia’s Support to China on Taiwan Question

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image credit: kremlin.ru

The situation around the island of Taiwan is raising concerns not only in Chinese mainland, Taiwan island or in the US, but also in the whole world. Nobody would like to see a large-scale military clash between China and the US in the East Pacific. Potential repercussions of such a clash, even if it does not escalate to the nuclear level, might be catastrophic for the global economy and strategic stability, not to mention huge losses in blood and treasure for both sides in this conflict.

Earlier this week, Russian Foreign Minister Sergey Lavrov stated that Moscow continued to firmly support Beijing’s position on Taiwan as an integral part of China. Moreover, he also underlined that Moscow would support Beijing in its legitimate efforts to reunite the breakaway province with the rest of the country. A number of foreign media outlets paid particular attention not to what Lavrov actually said, but omitted his other remarks: the Russian official did not add that Moscow expects reunification to be peaceful and gradual in a way that is similar to China’s repossession of Hong Kong. Many observers of the new Taiwan Straits crisis unfolding concluded that Lavrov’s statement was a clear signal to all parties of the crisis: Russia would likely back even Beijing’s military takeover of the island.

Of course, diplomacy is an art of ambiguity. Lavrov clearly did not call for a military solution to the Taiwan problem. Still, his remarks were more blunt and more supportive of Beijing than the standard Russia’s rhetoric on the issue. Why? One possible explanation is that the Russian official simply wanted to sound nice to China as Russia’s major strategic partner. As they say, “a friend in need is a friend indeed.” Another explanation is that Lavrov recalled the Russian experience with Chechnya some time ago, when Moscow had to fight two bloody wars to suppress secessionism in the North Caucasus. Territorial integrity means a lot for the Russian leadership. This is something that is worth spilling blood for.

However, one can also imagine that in Russia they simply do not believe that if things go really bad for Taiwan island, the US would dare to come to its rescue and that in the end of the day Taipei would have to yield to Beijing without a single shot fired. Therefore, the risks of a large-scale military conflict in the East Pacific are perceived as relatively low, no matter what apocalyptic scenarios various military experts might come up with.

Indeed, over last 10 or 15 years the US has developed a pretty nasty habit of inciting its friends and partners to take risky and even reckless decisions and of letting these friends and partners down, when the latter had to foot the bill for these decisions. In 2008, the Bush administration explicitly or implicitly encouraged Georgian leader Mikheil Saakashvili to launch a military operation against South Ossetia including killing some Russian peacekeepers stationed there. But when Russia interfered to stop and to roll back the Georgian offensive, unfortunate Saakashvili was de-facto abandoned by Washington.

During the Ukrainian conflicts of 2013-14, the Obama administration enthusiastically supported the overthrow of the legitimate president in Kiev. However, it later preferred to delegate the management of the crisis to Berlin and to Paris, abstaining from taking part in the Normandy process and from signing the Minsk Agreements. In 2019, President Donald Trump promised his full support to Juan Guaidó, Head of the National Assembly in Venezuela, in his crusade against President Nicolas when the government of Maduro demonstrated its spectacular resilience. Juan Guaido very soon almost completely disappeared from Washington’s political radar screens.

Earlier this year the Biden administration stated its firm commitment to shouldering President Ashraf Ghani in Afghanistan in his resistance to Taliban advancements. But when push came to shove, the US easily abandoned its local allies, evacuated its military personal in a rush and left President Ghani to seek political asylum in the United Arab Emirates.

Again and again, Washington gives reasons to conclude that its partners, clients and even allies can no longer consider it as a credible security provider. Would the US make an exception for the Taiwan island? Of course, one can argue that the Taiwan island is more important for the US than Afghanistan, Venezuela, Ukraine and Georgia taken together. But the price for supporting the Taiwan island could also be much higher for the US than the price it would have paid in many other crisis situations. The chances of the US losing to China over Taiwan island, even if Washington mobilizes all of its available military power against Beijing, are also very high. Still, we do not see such a mobilization taking place now. It appears that the Biden administration is not ready for a real showdown with Beijing over the Taiwan question.

If the US does not put its whole weight behind the Taiwan island, the latter will have to seek some kind of accommodation with the mainland on terms abandoning its pipe-dreams of self-determination and independence. This is clear to politicians not only in East Asia, but all over the place, including Moscow. Therefore, Sergey Lavrov has reasons to firmly align himself with the Chinese position. The assumption in the Kremlin is that Uncle Sam will not dare to challenge militarily the Middle Kingdom. Not this time.

From our partner RIAC

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Russia-Japan Relations: Were Abe’s Efforts In Vain?

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Expanding the modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward.

One year after the end of Shinzo Abe’s long period of leadership, Japan has a new prime minister once again. The greatest foreign policy challenge the new Japanese government led by Fumio Kishida is facing is the intensifying confrontation between its large neighbor China and its main ally America. In addition to moves to energize the Quad group to which Japan belongs alongside Australia, India, and the United States, U.S. President Joe Biden’s administration has concluded a deal with Canberra and London to provide Australia with nuclear-powered submarines which in future could patrol the Western Pacific close to Chinese shores. The geopolitical fault lines in the Indo-Pacific region are fast turning into frontlines.

In this context, does anything remain of the eight-year-long effort by former prime minister Abe to improve relations with Russia on the basis of greater economic engagement tailored to Moscow’s needs? Russia’s relations with China continue to develop, including in the military domain; Russia’s constitutional amendments passed last year prohibit the handover of Russian territory, which doesn’t bode well for the long-running territorial dispute with Japan over the South Kuril Islands; and Russian officials and state-run media have been remembering and condemning the Japanese military’s conduct during World War II, something they chose to play down in the past. True, Moscow has invited Tokyo to participate in economic projects on the South Kuril Islands, but on Russian terms and without an exclusive status.

To many, the answer to the above question is clear, and it is negative. Yet that attitude amounts to de facto resignation, a questionable approach. Despite the oft-cited but erroneous Cold War analogy, the present Sino-American confrontation has created two poles in the global system, but not—at least, not yet—two blocs. Again, despite the popular and equally incorrect interpretation, Moscow is not Beijing’s follower or vassal. As a power that is particularly sensitive about its own sovereignty, Russia seeks to maintain an equilibrium—which is not the same as equidistance—between its prime partner and its main adversary. Tokyo would do well to understand that and take it into account as it structures its foreign relations.

The territorial dispute with Russia is considered to be very important for the Japanese people, but it is more symbolic than substantive. In practical terms, the biggest achievement of the Abe era in Japan-Russia relations was the founding of a format for high-level security and foreign policy consultations between the two countries. With security issues topping the agenda in the Indo-Pacific, maintaining the channel for private direct exchanges with a neighboring great power that the “2+2” formula offers is of high value. Such a format is a trademark of Abe’s foreign policy which, while being loyal to Japan’s American ally, prided itself on pursuing Japanese national interests rather than solely relying on others to take them into account.

Kishida, who for five years served as Abe’s foreign minister, will now have a chance to put his own stamp on the country’s foreign policy. Yet it makes sense for him to build on the accomplishments of his predecessor, such as using the unique consultation mechanism mentioned above to address geopolitical and security issues in the Indo-Pacific region, from North Korea to Afghanistan. Even under Abe, Japan’s economic engagement with Russia was by no means charity. The Russian leadership’s recent initiatives to shift more resources to eastern Siberia offer new opportunities to Japanese companies, just like Russia’s early plans for energy transition in response to climate change, and the ongoing development projects in the Arctic. In September 2021, the annual Eastern Economic Forum in Vladivostok did not feature top-level Japanese participation, but that should be an exception, not the rule.

Japan will remain a trusted ally of the United States for the foreseeable future. It is also safe to predict that at least in the medium term, and possibly longer, the Russo-Chinese partnership will continue to grow. That is no reason for Moscow and Tokyo to regard each other as adversaries, however. Moreover, since an armed conflict between America and China would spell a global calamity and have a high chance of turning nuclear, other major powers, including Russia and Japan, have a vital interest in preventing such a collision. Expanding the still very modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward. The absence of a peace treaty between the two countries more than seventy-five years after the end of the war is abnormal, yet that same unfinished business should serve as a stimulus to persevere. Giving up is an option, but not a good one.

From our partner RIAC

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Kishida and Japan-Indonesia Security Relations: The Prospects

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image source: twitter @kishida230

In October, Japan had inaugurated Fumio Kishida as the new prime minister after winning the Liberal Democratic Party (LDP) presidential election earlier. Surely this new statesmanship will consequently influence Tokyo’s trajectory in international and regional affairs, including Southeast Asia.

Not only that Japan has much intensive strategic cooperation with Southeast Asians for decades, but the region’s importance has also been increasing under Japan’s Free and Open Indo-Pacific (FOIP). Southeast Asia, as a linchpin connecting the Indian Ocean and the Pacific Ocean, is key to Japan’s geostrategic interest and vision.

Since the LDP presidential election debate, many have identified Kishida’s policy trajectory, including in the defense and security aspect. Being bold, Kishida reflected its hawkish stance on China, North Korea, and its commitment to strengthening its alliance with Washington. Furthermore, Kishida also aimed to advance the geostrategic and security initiatives with like-minded countries, especially under FOIP.

One of the like-minded countries for Japan is Indonesia, which is key Japan’s key partner in Southeast Asia and Indo-Pacific.

This article maps the prospect of Japan’s security cooperation with Indonesia under the new prime minister. It argues that Prime Minister Kishida will continue to grow Japan’s security cooperation with Indonesia to adjust to the changing security environment in Indo-Pacific.

Japan – Indonesia Common Ground

In its basic principle, Japan and Indonesia shared the same values in democracy, rules-based order, and freedom of navigation in developing strategic cooperation, especially in the maritime security aspect. 

In the geostrategic context, Japan and Indonesia also have significant similarities. Both countries are maritime countries and seeking to maximize their maritime power, as well as having formally synchronized geostrategic vision. While Japan has FOIP, Indonesia has Global Maritime Fulcrum (Poros Maritim Dunia) and leading initiator for ASEAN Outlook on the Indo-Pacific (AOIP).

In capitalizing on this shared vision, since Shinzo Abe and Joko “Jokowi” Widodo era, Japan and Indonesia have initiated much new security cooperation ranging from a high-level framework such as 2+2 Foreign and Defense Ministers’ Meeting in 2015 and 2021 to capacity building assistances and joint exercises. Furthermore, defense equipment transfers and joint technology development were also kicked off under Abe-Jokowi.

Kishida’s Foreign Affairs and Defense Profile

Compared to his predecessor, Suga Yoshihide, Prime Minister Kishida is more familiar with foreign affairs.

Personally, Kishida comes from a political family and spent several years living in the United States, reflecting his exposure to the international and political environment from an early age. This is significantly different from Suga, who grew up in a strawberry farmer family in a rural area in Akita Prefecture.

Politically, served as foreign minister under Shinzo Abe, Fumio Kishida is the longest-serving foreign minister in Japan’s history. This reflects his extensive understanding of current world affairs, compared to Suga who spent most of his prime political career in the domestic area such as being chief cabinet secretary and minister for internal affairs & communication.

Specifically, in defense and security posture, Prime Minister Kishida is willing to go beyond the status quo and not blocking any key options in order “to protect citizens”. During his policy speeches, he stated that he is not ruling out the option to build attacking capabilities due to the severe security environment surrounding Japan. Also, Kishida will not limit the defense budget under 1% of Japan’s gross domestic product if necessary.

Future Security Cooperation Trajectory with Indonesia 

In short, policy continuity will play a huge role. One of the reasons why Kishida was able to win over more popular Kono was due to his moderate liberalness, demonstrating stability over change. This was more preferred by faction leaders in LDP.

In defense and foreign affairs, the continuity is boldly shown as despite appointing entirely new ministers in his cabinet, the only two ministers retained by Kishida are Foreign Minister Motegi and Defense Minister Kishi. By this, it sent the narrative to the international community that there will not be significant turbulence caused by the changing leadership on Japan’s side.

As a background context on Indonesia, Fumio Kishida was the foreign minister from the Japanese side behind the 2+2 Foreign and Defense Ministers’ Meeting with Indonesia in 2015. Indonesia is the only country Japan has such a high-level security framework within Southeast Asia. This framework has led Japan and Indonesia to have a second edition of the 2+2 meeting in 2021, resulting in many practical cooperation deals in defense and security.

The other setting supporting Kishida’s policy continuity, especially in the context with Indonesia is that his foreign minister’s counterpart, Retno Marsudi, was still in charge from the last time Kishida left the foreign minister post in 2017, until today. Initiating the 2+2 framework together, it will be easier for Kishida to resume his relationship with both President Jokowi and Foreign Minister Retno in advancing its strategic cooperation with Indonesia, especially in the defense and security area.

The prospect of continuity is also reflected in Kishida’s commitment to continue the geostrategy relay of both his predecessors, Shinzo Abe and Suga Yoshihide, in achieving the FOIP vision.

Not only that Indonesia is having a similar vision of maritime prosperity and values with Japan, but Indonesia is also concerned with South China Sea dynamics as it started to threaten Indonesia’s remote islands, especially Natuna Islands. As this is a crucial cooperation opportunity, Kishida needs to continue assisting Indonesia to improve the security and prosperity of its remote islands. Thus, as Kishida also admitted that Indonesia is a major country in ASEAN, having favorable relations with Indonesia is important for Japan’s geostrategy.

Challenges

To capitalize on the potentials with Indonesia, Kishida needs to support Indonesia’s strategic independence as well as to make the best of his position as one of the United States’ allies in Asia.

Despite his tougher stance on China and Taiwan issues, Kishida cannot fully project Japan’s rivalry with China to Indonesia. In addition to its strategic independence, Indonesia has and needs strong strategic relations with China to support many of the vital development projects surrounding Indonesia. This cannot be touched.

Also, Japan needs to bridge Indonesia, as well as other like-minded Southeast Asian countries, with the Quad and AUKUS proponents. Indonesia is formally stated that it is concerned about the ownership of nuclear-powered weapons by its neighboring countries. On the other side, Japan supported AUKUS and is a close ally of the U.S. Kishida’s ability to grab this opportunity will solidify Japan’s credibility and position among Southeast Asians.

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