SOURCE:
https://mideastsoccer.blogspot.in/2017/04/towards-new-world-order-in-eurasia-21st_13.html
GEO STRATEGRY-THE GREAT GAME
111 - I N D E X - 111
GREAT GAME
[1] China is Working on the Largest Infrastructure Endeavor in Human History
http://bcvasundhra.blogspot.in/2017/05/the-great-game-china-is-working-on.html
[2] Towards a New World Order in Eurasia:The 21st Century’s Great Game (Part 1/3)
(A) http://bcvasundhra.blogspot.in/2017/05/the-great-game-towards-new-world-order.html
(B) http://bcvasundhra.blogspot.in/2017/05/towards-new-world-order-in-eurasia-21st.html
(C) http://bcvasundhra.blogspot.in/2017/05/towards-new-world-order-in-eurasia-21st_29.html
GWADAR PROSPECTIVE BASE
OF
PEOPLES LIBERATION ARMY
COMPOSITE TASK FORCE
The FPCCI warned that demographic concern “establishes a complementary hypothesis (apprehension) that native residents of Balochistan will not get their due share in the development of Balochistan,” the report added. Listing vast areas of Balochistan that would benefit little or not from CPEC, it warned that the “inflow of Chinese investment and business enterprises will adversely impact the interests of business community in Pakistan.”
Opposition to Chinese investment in Hambantota could render debate about the cost superfluous. Yi has warned that the protests and opposition could persuade Chinese companies to walk away from the $5 billion project. “We either go ahead or we stop here,” Yi said.[xxxv]
https://mideastsoccer.blogspot.in/2017/04/towards-new-world-order-in-eurasia-21st_13.html
GEO STRATEGRY-THE GREAT GAME
111 - I N D E X - 111
GREAT GAME
[1] China is Working on the Largest Infrastructure Endeavor in Human History
http://bcvasundhra.blogspot.in/2017/05/the-great-game-china-is-working-on.html
[2] Towards a New World Order in Eurasia:The 21st Century’s Great Game (Part 1/3)
(A) http://bcvasundhra.blogspot.in/2017/05/the-great-game-towards-new-world-order.html
(B) http://bcvasundhra.blogspot.in/2017/05/towards-new-world-order-in-eurasia-21st.html
(C) http://bcvasundhra.blogspot.in/2017/05/towards-new-world-order-in-eurasia-21st_29.html
GWADAR PROSPECTIVE BASE
OF
PEOPLES LIBERATION ARMY
COMPOSITE TASK FORCE
Thursday, April 13, 2017
Towards a New World Order in Eurasia: The 21st Century’s Great Game (Part 3/3)
By
James M. Dorsey
Translating Ambition into Reality
IS’s targeting of China called into question the strategy underlying CIPEC. In a sense, it puts China’s cart before the horse. A successful IS campaign would dash Chinese hopes that economic development in Pakistan would spur a similar development in Xinjiang. Pakistan and China’s failure so far to turn Gwadar into a thriving port and trading hub constitutes in part a MILITANT SUCCESS
Complicating efforts to make Gwadar viable is the fact that Pakistan will have to not only address Baluch grievances, but also ensure that Baluchistan does not become a playground in the bitter struggle for regional hegemony between Saudi Arabia and Iran or potential US efforts to engineer regime change in the Islamic republic. Separatist claims in the region are rooted in a broken British colonial promise of independence. To counter Baloch aspirations and dial back violence, Pakistan will also have to revisit its long-standing policy of distinguishing between jihadist groups with global ambitions and its proxies that target India and Kashmir.
Source: GlobBiz Avenue
To make Gwadar viable, Pakistan will have to either crackdown on militant Afghan groups, including the Taliban who operate with official acquiescence out of the Baluch capital of Quetta and facilitate an end to conflict in Afghanistan. Combatting the security threat in Balochistan would also have to involve expanding CPEC to cater to local needs by focusing not only on infrastructure but also agricultural development and giving the local population a sense of ownership rather than a belief that Baloch will be the last to benefit from it.
Perceptions of Chinese and Pakistani insensitivity to local concerns is buffeted by the debilitating effect of corruption. A survey of 22 Asian countries by Transparency International concluded that “the law and order institutions in Pakistan were the most likely of any country that we surveyed to accept bribes – around seven in 10 people who came into contact with either the police or the courts had to pay a bribe (75 per cent and 68 per cent respectively).”
[i] “Lack of farsightedness and prudence in the statesmen and the element of corrupt practices support foreign dominance and hegemony. Unfortunately, such apprehensions exist in Pakistan, where the lacking of trust on politicians and policy makers, favouritism in decision making and briberies and unlawful payments have been observed… The construction of China Pakistan Economic Corridor cannot be exempted from this perception. Despite the extreme importance of CPEC, there are several questions in public minds and investors regarding the transparency in the contracts of this gigantic plan,” the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said in a report.
[ii] The federation’s concerns were echoed by other Pakistani business organizations, including the Pakistan Business Council (PBC) that groups the country’s largest corporations. “We are being told by the government that the CPEC is a ‘gift horse’ from China. But who knows? It could turn out to be a Trojan horse for us. Unless the government ensures transparency in the deals it has made with the Chinese, the concerns will continue to rise,” said PBC chief executive officer Ehsan Malik.
[i] “Lack of farsightedness and prudence in the statesmen and the element of corrupt practices support foreign dominance and hegemony. Unfortunately, such apprehensions exist in Pakistan, where the lacking of trust on politicians and policy makers, favouritism in decision making and briberies and unlawful payments have been observed… The construction of China Pakistan Economic Corridor cannot be exempted from this perception. Despite the extreme importance of CPEC, there are several questions in public minds and investors regarding the transparency in the contracts of this gigantic plan,” the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said in a report.
[ii] The federation’s concerns were echoed by other Pakistani business organizations, including the Pakistan Business Council (PBC) that groups the country’s largest corporations. “We are being told by the government that the CPEC is a ‘gift horse’ from China. But who knows? It could turn out to be a Trojan horse for us. Unless the government ensures transparency in the deals it has made with the Chinese, the concerns will continue to rise,” said PBC chief executive officer Ehsan Malik.
Source: Transparency International
[iii] A proposal to turn Gwadar into a fishing industry hub by introducing game changing technology to aquaculture stranded when local authorities demanded a kickback. The technology would have created employment opportunities in hatcheries, grain processing plants, silos, fish processing factories, engineering and technical support for offshore operations, warehouses, and shipping docks. Western companies were happy to engage in Balochistan despite the violence because they would not have been restricted by environmental regulation. Corruption was where they drew the line.
[iv] The investment would have helped fishermen, a majority of Gwadar’s indigenous workforce, who have had difficulty accessing prime fishing waters since the development of the port began. Further development has deprived them of whatever waters they could still exploit. New fishing harbours being created are far from Gwadar and years behind schedule. As a result, large numbers of Baloch have migrated or been displaced by clashes between security forces and insurgents.
[iv] The investment would have helped fishermen, a majority of Gwadar’s indigenous workforce, who have had difficulty accessing prime fishing waters since the development of the port began. Further development has deprived them of whatever waters they could still exploit. New fishing harbours being created are far from Gwadar and years behind schedule. As a result, large numbers of Baloch have migrated or been displaced by clashes between security forces and insurgents.
With opportunity shrinking rather than increasing, Balochistan boasts Pakistan’s highest enrolment in madrassas and a rapid growth over the years in the number of religious seminaries.
[v] “The Pakistani state's ambitious plans to turn Gwadar into a Dubai-like megacity rub against the local fishermen, Baloch political activists, and ordinary residents' claims of rights in and sovereignty over land and fishing waters… The illegal/ informal activities of local land records officials, landowners, and real estate agents tend to interrupt, stall, and divert the implementation of official development plans or visions in significant ways by blurring the distinction between public interest and private gain,” noted social development scholar Hafeez Jamali.
[vi] Gwadar’s record is a testimony to China’s difficulties in translating grandiose ambition into reality. Phase II of Gwadar was completed in 2008. Few ships anchor, however, in a port that is slated to serve littoral states in the Gulf and Red Sea as well as Iran, India, Central Asia and China. It took eight years after completion of the first phase for the first containers carrying Chinese goods to depart Gwadar port.
[vii] The port is equipped to freighters with a capacity of 30,000 tons, container vessels going up to 25,000 tons, and 200,000-ton oil tankers.
[viii] Traffic in 2016 totalled 500,000 tonnes but is expected to double in 2017. Most of the cargo expected to arrive is likely to be construction materials for CPEC-related projects. The numbers are a far cry from the 3-400 million tonnes a year envision by the Gwadar Port Authority.
[ix] Recommendations by the Pakistani Senate to reduce tensions in Balochistan made more than a decade ago have gone unheeded. The Senate suggested that at least half of the seats on the board of the company managing Gwadar be allocated to representatives of Balochistan and that seven percent of the port’s proceeds be allocated for development of the province.
[v] “The Pakistani state's ambitious plans to turn Gwadar into a Dubai-like megacity rub against the local fishermen, Baloch political activists, and ordinary residents' claims of rights in and sovereignty over land and fishing waters… The illegal/ informal activities of local land records officials, landowners, and real estate agents tend to interrupt, stall, and divert the implementation of official development plans or visions in significant ways by blurring the distinction between public interest and private gain,” noted social development scholar Hafeez Jamali.
[vi] Gwadar’s record is a testimony to China’s difficulties in translating grandiose ambition into reality. Phase II of Gwadar was completed in 2008. Few ships anchor, however, in a port that is slated to serve littoral states in the Gulf and Red Sea as well as Iran, India, Central Asia and China. It took eight years after completion of the first phase for the first containers carrying Chinese goods to depart Gwadar port.
[vii] The port is equipped to freighters with a capacity of 30,000 tons, container vessels going up to 25,000 tons, and 200,000-ton oil tankers.
[viii] Traffic in 2016 totalled 500,000 tonnes but is expected to double in 2017. Most of the cargo expected to arrive is likely to be construction materials for CPEC-related projects. The numbers are a far cry from the 3-400 million tonnes a year envision by the Gwadar Port Authority.
[ix] Recommendations by the Pakistani Senate to reduce tensions in Balochistan made more than a decade ago have gone unheeded. The Senate suggested that at least half of the seats on the board of the company managing Gwadar be allocated to representatives of Balochistan and that seven percent of the port’s proceeds be allocated for development of the province.
Changing Chinese policy
[x] It’s, however, not only Pakistani policy that would have to change. Success would also require changes in Chinese policies in Balochistan. China has acquired rights to various development projects, including exploration of the Saindak gold and copper mine. The agreements allocate two percent of the proceeds to the Baloch provincial government with the remaining 98 percent divided up between China and Pakistan.
With China importing its own labour, few Baloch, who often lack training, benefit from employment opportunities. Hundreds of Chinese rather than Pakistani engineers have helped build Gwadar
.[xi] Of the 600 Pakistani workers building the port in 2006 only 100 day workers were Baluch.
[xii] In the old city of Gwadar where electricity is available six hours a day and tap water two hours a week, workers from faraway Karachi with no protective helms and no supervisors put pipes together for a new sewerage system using elementary materials.
.[xi] Of the 600 Pakistani workers building the port in 2006 only 100 day workers were Baluch.
[xii] In the old city of Gwadar where electricity is available six hours a day and tap water two hours a week, workers from faraway Karachi with no protective helms and no supervisors put pipes together for a new sewerage system using elementary materials.
Allocation of Gwadar’s proceeds matches that of Saindak. In fact, no Balochistan representative was present when President Pervez Musharraf in 2002 signed the Gwadar agreement with Chinese Vice Premier Wu Bangguo.
[xiii] The port development is moreover slated to change Gwadar’s demography with the expected influx of two million non-Baloch into a city of 70,000 predominantly Baloch residents.
[xiv] As a result, Chinese personnel have become walking targets. A parallel town, Gwadar Smart Port City, with a five-star hotel atop a hill overlooking the port and Gwadar’s slums, is protected by paramilitaries who bar access to ordinary locals. The new city boasts an elite housing enclave, and a high-class coastal resort as well as a naval base in the vicinity.
[xv] Pakistan’s Planning Commission tasked with overseeing CPEC has sought to dampen expectations that Chinese projects would foster employment and investment in testimony to the Pakistani Senate. The overseers reported that only Chinese investors would be allowed to invest in the nine proposed special economic zones across Pakistan and that it was uncertain whether Pakistan labour would be engaged. The zones would be open exclusively to Chinese companies. The overseers said Pakistan may not see a revenue windfall from the massive Chinese engagement.
[xvi] While Pakistani cement and steel factories were expanding to fulfil CPEC-related contracts, cable producers complained that China was importing Chinese product tax free for multiple energy projects. Kamal Amjad Mian, whose family owns Fast Cables in Lahore, invested $30 million in anticipation of increased demand for Chinese-funded projects. Mian’s phone never rang. “The government, instead of giving us a level playing field, gave them an advantage,” he said. Mian and other Pakistani cable producer fear that without Chinese contracts their industry could die slow a death.[xvii] Similarly, Pakistani textile producers believe that CPEC will undermine their sector once new roads and rails allow producers in Xinjiang to dump their goods in the Pakistani market. China has ploughed billions of dollars into building a textile industry in the north-western and offered producers vast incentives.
[xviii] Pakistani textile exports dropped by 40 percent in 2016.
[xix] Planning Commission officials said interest charged on Chinese loans would be above market rate.
[xx] A report by a Pakistani financial brokerage concluded that interest on China’s more than $50 billion investment and CPEC-related loans would result in Pakistan paying the Middle Kingdom $90 billion for principal, interest on foreign currency debt, and repayment of profits and dividend on equity investment over a 30-year period. The brokerage, Topline Securities, calculated that China was getting a 40 percent return on investment.
[xxi] Topline’s $90 billion figure did not include the cost of significant tax incentives or costs that are passed on to consumers such as higher utility prices imposed by Chinese-funded energy projects. Pakistani officials have rejected fears that their country may not be able to service its debt if export earnings fail to meet expectations and the country’s current account gap continues to widen.
[xxii] Separately, the FPCCI report predicted that at the current rate of influx of Chinese nationals into Balochistan, Pakistan’s least populated region, Chinese would outnumber the indigenous population of the province by 2048. “This trend has sparked fear of marginalisation among the Baloch citizens, who are unsure of how will the unskilled people of the province maintain their lives without land ownership which is their only asset,” the report warned.
[xxiii]
[xiii] The port development is moreover slated to change Gwadar’s demography with the expected influx of two million non-Baloch into a city of 70,000 predominantly Baloch residents.
[xiv] As a result, Chinese personnel have become walking targets. A parallel town, Gwadar Smart Port City, with a five-star hotel atop a hill overlooking the port and Gwadar’s slums, is protected by paramilitaries who bar access to ordinary locals. The new city boasts an elite housing enclave, and a high-class coastal resort as well as a naval base in the vicinity.
[xv] Pakistan’s Planning Commission tasked with overseeing CPEC has sought to dampen expectations that Chinese projects would foster employment and investment in testimony to the Pakistani Senate. The overseers reported that only Chinese investors would be allowed to invest in the nine proposed special economic zones across Pakistan and that it was uncertain whether Pakistan labour would be engaged. The zones would be open exclusively to Chinese companies. The overseers said Pakistan may not see a revenue windfall from the massive Chinese engagement.
[xvi] While Pakistani cement and steel factories were expanding to fulfil CPEC-related contracts, cable producers complained that China was importing Chinese product tax free for multiple energy projects. Kamal Amjad Mian, whose family owns Fast Cables in Lahore, invested $30 million in anticipation of increased demand for Chinese-funded projects. Mian’s phone never rang. “The government, instead of giving us a level playing field, gave them an advantage,” he said. Mian and other Pakistani cable producer fear that without Chinese contracts their industry could die slow a death.[xvii] Similarly, Pakistani textile producers believe that CPEC will undermine their sector once new roads and rails allow producers in Xinjiang to dump their goods in the Pakistani market. China has ploughed billions of dollars into building a textile industry in the north-western and offered producers vast incentives.
[xviii] Pakistani textile exports dropped by 40 percent in 2016.
[xix] Planning Commission officials said interest charged on Chinese loans would be above market rate.
[xx] A report by a Pakistani financial brokerage concluded that interest on China’s more than $50 billion investment and CPEC-related loans would result in Pakistan paying the Middle Kingdom $90 billion for principal, interest on foreign currency debt, and repayment of profits and dividend on equity investment over a 30-year period. The brokerage, Topline Securities, calculated that China was getting a 40 percent return on investment.
[xxi] Topline’s $90 billion figure did not include the cost of significant tax incentives or costs that are passed on to consumers such as higher utility prices imposed by Chinese-funded energy projects. Pakistani officials have rejected fears that their country may not be able to service its debt if export earnings fail to meet expectations and the country’s current account gap continues to widen.
[xxii] Separately, the FPCCI report predicted that at the current rate of influx of Chinese nationals into Balochistan, Pakistan’s least populated region, Chinese would outnumber the indigenous population of the province by 2048. “This trend has sparked fear of marginalisation among the Baloch citizens, who are unsure of how will the unskilled people of the province maintain their lives without land ownership which is their only asset,” the report warned.
[xxiii]
Source: The Federation of Pakistan Chambers
of Commerce and Industry,
of Commerce and Industry,
The FPCCI warned that demographic concern “establishes a complementary hypothesis (apprehension) that native residents of Balochistan will not get their due share in the development of Balochistan,” the report added. Listing vast areas of Balochistan that would benefit little or not from CPEC, it warned that the “inflow of Chinese investment and business enterprises will adversely impact the interests of business community in Pakistan.”
Source: The Federation of Pakistan Chambers
of Commerce and Industry (FPCCI)
of Commerce and Industry (FPCCI)
To counter multiple threats, including regional nationalism, and to make Gwadar and CPEC a success, China would have to fundamentally change its investment and employment policies. It would also have to break with long-standing principles of its foreign and defence policy that propagates non-interference in the domestic affairs of other countries no matter whether it opts to push Pakistan to be more flexible in dealing with Baloch aspirations or it is forced to maintain stepped-up security to counter threats emanating from opposition to its handling of big ticket projects. So far, China has shown little inclination to revisit its approach. China’s ambassador to Pakistan, Zhao Lijian, denounced critics of CPEC as being “out of mind” in a Twitter spat with a prominent journalist
.[xxiv]
.[xxiv]
Violent protests
China’s ride is proving equally rough in Sri Lanka, another important maritime node. Former Sri Lankan President Mahinda Rajapaksa warned Chinese officials in December2016 that public protests would erupt if plans proceeded to build in Hambantota a 6,000-hectare economic zone that would buffet a $1.5 billion-deep sea port, a $209-million inetrnational airport, a world-class cricket stadium, a convention centre, and new roads.[xxv]
Protests led by Buddhist monks erupted a month later and quickly turned violent as the zone’s first bricks were being laid.[xxvi]
Similar protests against Chinese investment have also flared in recent years in the Sri Lankan capital of Colombo as well as in Kyrgyzstan, Kazakhstan and Tajikistan. Colombo’s problems were exasperated by the port’s contracting with China Harbour Engineering Company, a subsidiary of the state-owned China Communications Construction Company (CCCC). CCCC and all its subsidiaries have been banned from participation in World Bank projects after it violated tender terms in the Philippines.[xxvii]
Similar protests against Chinese investment have also flared in recent years in the Sri Lankan capital of Colombo as well as in Kyrgyzstan, Kazakhstan and Tajikistan. Colombo’s problems were exasperated by the port’s contracting with China Harbour Engineering Company, a subsidiary of the state-owned China Communications Construction Company (CCCC). CCCC and all its subsidiaries have been banned from participation in World Bank projects after it violated tender terms in the Philippines.[xxvii]
The protesters in Hambantota opposed the granting of policing and other powers to China within the economic zone as part of 99-years lease and charged that it would amount to a Chinese colony being established in Sri Lanka. The protests have prompted Pakistani media to ask whether China would enjoy similar privileges in special economic zones planned in Pakistan.[xxviii]
The Sri Lankan government has delayed the signing of agreements with China on the port and the economic zone after the protests catapulted the controversy onto the national agenda with opposition politicians and trade unions railing against them. A Sri Lankan opposition member of parliament moreover initiated legal proceedings to stop a debt-for-equity deal with China.
With the delay of projects, Sri Lankan president Maithripala Sirisena was making good on campaign promises to extricate his country from the Chinese debt trap. That is proving however easier said than done.
China’s state-owned Global Times noted that Sri Lanka had “no alternative” given that neither India or the United States had been willing to make similar investments in the country.[xxix]
Chinese setbacks in Sri Lanka began when Sirisena beat in elections in 2015 Rajapaksa, a Chinese protégé whom China had provided with weapons needed to defeat Tamil rebels in a three-decade-long civil war Asia’s longest. China stepped in after the US and India had criticized Rajapaksa for his brutal tactics.
China’s state-owned Global Times noted that Sri Lanka had “no alternative” given that neither India or the United States had been willing to make similar investments in the country.[xxix]
Chinese setbacks in Sri Lanka began when Sirisena beat in elections in 2015 Rajapaksa, a Chinese protégé whom China had provided with weapons needed to defeat Tamil rebels in a three-decade-long civil war Asia’s longest. China stepped in after the US and India had criticized Rajapaksa for his brutal tactics.
Hambantota is as much a reflection of the strategy underlying One Belt, One Road as it is of Chinese nimbleness in exploiting diplomatic opportunity. China’s offer of a spree of large-scale infrastructure projects came as the United States sanctioned Sri Lanka for allegedly having committed war crimes in in its war against Tamil militants and the European Union refused to renew preferential trade concessions.
The debt burden left Sirisena, however, with few options. Servicing the debt is eating up government revenues[xxx]
and has forced it to negotiate an International Monetary Fund bail-out.[xxxi]
Sirisena has also had to concede on some of the Chinese projects and reduce debt by converting some of it into equity. The president has allowed the $1.4 billion development of Colombo port to go forward and sold an 80 percent stake in the Hambantota port to China Merchants Port Holdings Co. for $1.1 billion. China was likely to take over stakes in more shared projects “to help the government solve its finance problems" in the words of Yi Xianliang, China’s ambassador to Sri Lanka.[xxxii]
and has forced it to negotiate an International Monetary Fund bail-out.[xxxi]
Sirisena has also had to concede on some of the Chinese projects and reduce debt by converting some of it into equity. The president has allowed the $1.4 billion development of Colombo port to go forward and sold an 80 percent stake in the Hambantota port to China Merchants Port Holdings Co. for $1.1 billion. China was likely to take over stakes in more shared projects “to help the government solve its finance problems" in the words of Yi Xianliang, China’s ambassador to Sri Lanka.[xxxii]
Criticism of Chinese investments also focused on the terms of Chinese loans that like in Pakistan are proving to be less soft than projected. Interest for credits extended by state-owned Chinese banks for the first phase of Hambantota infrastructure was 6.3 percent. That compared favourably to rates of about nine percent from commercial banks but was at least double those of multi-lateral institutions such as the World Bank and the Asian Development Bank which range from 0.25 to three percent.[xxxiii]
“The heavier the debt burden on smaller countries, the greater China’s own leverage becomes,” noted strategist Brahma Chellaney.[xxxiv]
“The heavier the debt burden on smaller countries, the greater China’s own leverage becomes,” noted strategist Brahma Chellaney.[xxxiv]
Opposition to Chinese investment in Hambantota could render debate about the cost superfluous. Yi has warned that the protests and opposition could persuade Chinese companies to walk away from the $5 billion project. “We either go ahead or we stop here,” Yi said.[xxxv]
Much like Gwadar, Hambantota’s immediate future appears to be that of a white elephant. "The previous government built these without thinking about whether or not they made economic sense," said Sri Lanka's development minister Malik Devapriya Samarawickrama.[xxxvi]
Situated in a jungle that is best known as a stomping ground for elephants and bird sanctuary, Hambantota’s inactivity matches that of the Pakistani port. The city’s Chinese-funded airport boasts at most four flights a day, including ones to Colombo, Dubai, Shanghai and Beijing. Its conference centre and cricket stadium are barely in demand and its highways idle away.
“The Hambantota fiasco is sending a clear message to Beijing: showing up with bags of money alone is not enough to win a new Silk Road,” commented Wade Shepard, author of a forthcoming book on China’s One Belt, One Road initiative.[xxxvii]
Journalist Tom Miller, author of a book on One Belt, One Road, warned that “populist blowback will remain a hazard for Chinese firms operating abroad, especially in fragile states run by authoritarian regimes, where changing governments can see dramatic shifts in the prevailing political winds.”[xxxviii]
Journalist Tom Miller, author of a book on One Belt, One Road, warned that “populist blowback will remain a hazard for Chinese firms operating abroad, especially in fragile states run by authoritarian regimes, where changing governments can see dramatic shifts in the prevailing political winds.”[xxxviii]
Chinese and Russian leaders likely breathed a sigh of relief in 2016 when power was transferred to Shavkat Mirziyoyev following the death of Islam Karimov. Karimov was the first of Central Asia’s aging former Communist Party leaders, who became presidents of Central Asian states as a result of the breakup of the Soviet Union, to pass away.
Russian and Chinese analysts cautioned however that Uzbekistan may not be a model for others. In a report issued in 2016 by the Moscow-based Valdai Club, the analysts said that there was “no clear mechanism for the transfer of power after the ruling ‘patriarchs’ in Astana and Tashkent inevitably leave the scene due to natural causes. Even the internal stability that does exist suffers occasional setbacks by outbursts of violence, as happened, for example, in early June of this year in the Kazakh city of Aktobe, and in July in the former capital of Kazakhstan, Alma-Ata.”[xxxix]
By pointing to unrest in Kazakhstan, the analysts were highlighting the Achilles Heel of Russian and Chinese policy: a desire to sustain unpopular autocratic rule in Central Asia for as long as possible. “Russia and China do not seek to transform, but to stabilize the political regimes in Central Eurasia, to freeze the situation there as much as possible, and for as long as possible,” the Valdai report noted.
With One Belt, One Road involving a strategy that will only become sustainable in the long-term, the risks of an ultimately unsustainable approach are significant. The risks are compounded by the resistance generated by Chinese business practices. Lack of transparency of Chinese-backed projects enhances the risks. It frequently masks networks of politically opportunistic and/or corrupt government officials and middle men who stand to profit from economic and commercial arrangements that don’t take local interests into account. Volatility is fuelled by high expectations of trickle down economic growth and development that are dashed and drive anti-Chinese sentiment, weakening China’s hand in the region’s Great Game.
The gripes at the grassroots level echo one another whether they are expressed in Gwadar or Hambantota, “The whole area has been captured by the government with local people pushed aside,” a fisherman in Gwadar told The Guardian.[xl]
Like elsewhere, residents of Gilgit-Baltistan, the only land link between Pakistan and China through which all CPEC road and pipelines run, fear that they are unlikely to benefit despite the region’s potential to export agricultural products to China, produce hydropower and become a mountaineer’s paradise. Their fear is not ungrounded. Nestled in between Xinjiang, Afghanistan’s Wakhan Corridor, and Pakistan- and India-controlled Kashmir, Gilgit-Baltistan is the one region that is not slated to get one of the nine special economic zones planned under CPEC.
Like in Gwadar, locals in Gilgit-Baltistan too worry that an influx of Chinese nationals and Pakistanis from other parts of the country will eventually turn them into a minority on their own land. Local fears have been reinforced by a crackdown on dissidents that led in August 2016 to the arrest of 500 people, some of whom have been charged with sedition.[xli]
Similarly, protests in Myanmar, the only Southeast Asian nation to border on both India and China, forced the government to cancel a railway project that would have linked Kyaukpyu to Yunnan in China. Amid opposition to the creation of a Kyaukpyu Special Economic Zone In Rakhine State, a Myanmar legislator warned that “it isn’t known whose land will be seized and how they will be compensated… Nothing is known about the potential developers and investors. There are growing concerns and doubts among the people due to lack of transparency.”[xlii]
The opposition is effecting not only Kyaukpyu, but also its Indian-backed competitor in Sittwe, also in Rakhine State. Afraid of being displaced, local residents have demanded that the projects be put on hold.[xliii]
The opposition is effecting not only Kyaukpyu, but also its Indian-backed competitor in Sittwe, also in Rakhine State. Afraid of being displaced, local residents have demanded that the projects be put on hold.[xliii]
Showcasing Engineering Genius
Lack of transparency in scores of One Belt, One Road-related projects is causing China problems far and wide. A European Union investigation into a Chinese-funded $2.9 billion, 350-kilometre rail link between the Hungarian capital of Budapest and Belgrade, the capital of Serbia, heightened suspicion that China at times persuades its partners to circumvent or flout international standards of doing business.[xliv]
The investigation into whether the deal seemingly granted to Chinese companies violated EU laws stipulating that contracts for large transportation projects must be awarded through public tenders, could punch a hole into Chinese plans to extend its planned Asian transportation network into Europe.
The project, part of a plan to connect the Chinese-managed Greek port of Piraeus with the heart of Europe, was also intended to showcase the engineering genius of China, the world’s foremost builder of high-speed railways. China built 19,000 kilometres of high speed rail at home in the last 15 years.[xlv]
Driven by geopolitics, China’s Eurasian rail ambitions are rooted in the 9,289-kilometre Trans-Siberian railway, long the world’s longest railway built in the early 20th century that initially linked Moscow with the Russian Far East.
Driven by geopolitics, China’s Eurasian rail ambitions are rooted in the 9,289-kilometre Trans-Siberian railway, long the world’s longest railway built in the early 20th century that initially linked Moscow with the Russian Far East.
The Budapest-Belgrade line is but one building block in a network of 16 Chinese and 15 European cities serviced by trans-continental trains traversing more than 12,000 kilometres across the Eurasian expanse. It’s taken China a decade since the first train reached Europe in 2008 travelling 17 days from Xiangtan in Hunan province to Hamburg in Germany. The train ride was a test run but failed to generate a sustainable market buzz. The breakthrough came five years later with the inauguration of a link between Chengdu and Lodz in Poland that runs on a regular schedule. Trains have become core strategy for many companies to get products across Eurasia in less than half the time it takes to ship by sea for less than half the cost of air. By June 2016, some 1,700 trains had crossed the Eurasian expanse in as little as 10.5 days, with upwards of 35 routes in operation connecting China, Europe, and the Middle East.[xlvi]
The problem with the Budapest-Belgrade link is but one of several hick-ups in Chinese railway projects across Eurasia and beyond. Beijing’s $23 billion railway diplomacy has faltered over the last decade in efforts to forge consensus on the construction of multiple railways that would connect 10 major Southeast Asian cities on a 3-4,500-kilometre line from Kunming in China to Singapore. It would constitute an economic boon in a region in which many countries have not invested in their railway infrastructure for decades.[xlvii]
China’s plans have been complicated by the struggle of some Southeast Asian nations to find a way to balance benefitting economically from China’s grandiose vision while limiting Beijing’s increasing political influence in the region against the backdrop of tensions in the South China Sea.
China’s plans have been complicated by the struggle of some Southeast Asian nations to find a way to balance benefitting economically from China’s grandiose vision while limiting Beijing’s increasing political influence in the region against the backdrop of tensions in the South China Sea.
The central link would cross Laos and Thailand as it heads south towards Malaysia's capital Kuala Lumpur and then Singapore. The eastern line would run through Vietnam and Cambodia before linking up with the central line in Bangkok. Finally, the western line would traverse southwestern China and Myanmar before also ending up in Bangkok. China has completed construction of the Vietnam section and is working on the stretch that will hook up Laos with Kunming.
Myanmar, however, put its part of the plan on indefinite hold in 2014 and Thailand has insisted that it would fund the Thai bit after it failed to agree with China on terms of financing the project. Thailand said it would initially build a line linking Bangkok with the northern city of Nakhon Ratchasima, but would only proceed with connections to Laos and Kunming once demand for those lines had been established and funding had been secured. A separate $5.1 billion project for a Chinese-built high-speed railway in Indonesia between Jakarta and Bandung has been shelved.[xlviii]
The difficulties cast a pall over the ambition of Chinese engineering firms and train manufacturers such as China Railway Rolling Stock Corporation (CRRC) and China Railway Group Limited (CREC) to successfully compete with the industry’s traditional Japanese and European giants. Chinese companies will build the Laotian bid. China’s expects the rail links to spur economic growth that would enhance Chinese influence as it underwrites cost in Southeast Asia’s poorer nations.
Disputes over funding threaten to undermine expectations that China would manage the rail link to Thailand on which Chinese-made trains would run. Vietnam, moreover, with its long history of distrust of China and dispute over sovereignty in the South China seas leans towards Japanese technology. Malaysia and Singapore differ over who should upgrade an existing railway from Singapore to Kuala Lumpur. Singapore favours Japanese or European contractors while Malaysia wants to opt for the Chinese.
China is locked into fierce competition with German[xlix] and Italian[l] companies for a contract to connect Moscow with Kazan where some of the 2018 World Cup matches will be played. The $5.2 billion, 770-kilometers rail would traverse seven regions of Russia, stop in 15 cities and serve 200 million passengers a year. China hopes that winning the contract would allow it to invest a further $100 billion in extending the line to Kazakhstan and on to Beijing, a project that would reduce travel by rail from the Chinese capital to Moscow to a mere 33 hours. China Railway Group won in 2015 a $390 million contract to design the Moscow-Kazan link.
Difficulties in Southeast Asia and fierce competition in Russia arose on the back of failures elsewhere. Mexico in 2015 abruptly cancelled a contract awarded to CRRC to build a $3.75 billion railway linking Mexico City and Queretaro.[li] Mexican President Enrique Pena Nieto said he wanted to avoid "any doubts about the legitimacy and transparency" of the bidding process. An agreement for China to fund a high-speed rail from Los Angeles to Las Vegas ran afoul of American economic nationalism even before the rise of US President Donald J. Trump. US company XpressWest cancelled its contract with China Railway International (CRI) nine months after it was concluded.[lii]
“The team at XpressWest is optimistic CRI and its affiliates will one-day succeed in establishing a viable presence in the United States rail market, however, our ambitions outpace CRI’s ability to move the project forward timely and efficiently…. Our biggest challenge continues to be the Federal Government’s requirement that high-speed trains must be manufactured in the United States. As everyone knows, there are no high-speed trains manufactured in the United States. This inflexible requirement has been a fundamental barrier to financing high-speed rail in our county. For the past 10 years, we have patiently waited for policy makers to recognize high-speed rail in the United States is a new enterprise and that allowing trains from countries with decades of safe high-speed rail experience is needed to connect the Southwest region and start this new industry,” XpressWest said in a statement.
Conclusion: Questioning Core Policy
The sum total of problems China is encountering across Eurasia and elsewhere highlight a disconnect between grandiose promises of development and improved standards of living and the core of Chinese policy: an insistence that economics offer solutions to deep-seated conflicts, local aspirations, and a narrowing of the gap between often mutually exclusive worldviews. It also suggests that China believes that it can bend, if not rewrite rules, when it serves its purpose.
To be sure, protests in Sri Lanka and Central Asia are as much about China as they are expressions of domestic political rivalries that at times are fought at China’s expense. Even so, they suggest that for China to succeed, it will not only have to engage with local populations, but also become a player rather than position itself as an economic sugar daddy that hides behind the principle of non-interference and a flawed economic win-win proposition.
The problems also create ample opportunity for China’s competitors in Central Asia to ensure that China is one of several regional powers rather than the dominant power. China’s difficulties in North America may be an ocean away from Eurasia but resonate across the waters. The Great Game has just begun. China’s head start has so far cost the Chinese treasury billions with few tangible returns beyond the hardware. One joker in the game is Trump’s America that has yet to chart its course.
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 a forthcoming book, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africa
[i] Coralie Pring, People and Corruption: Asia Pacific, Transparency International, 2017, https://www.transparency.org/whatwedo/publication/people_and_corruption_asia_pacific_global_corruption_barometer
[v] C. Christine Fair, Does Pakistan Have a Madrasah Problem? Insights from New Data, SSRN, 20 July 2015, file:///C:/Users/jmdor/Documents/Archive%20(Main)/Islam/Pakistan/Does%20Pak%20Have%20Madrasah%20Probl-New%20Data_Fair.pdf
[vi] Hafeez Jamali, States of dispossession: plot, parchi and the politics of place in Gwadar, Pakistan, Lecture, Habib University, 18 March 2017
[vii] Danish Hyder and Mushtaq Khan, CPEC: The devil is not in the details, Herald, 11 January 2017, http://herald.dawn.com/news/1153597/cpec-the-devil-is-not-in-the-details
[viii] Frederic Grare, Pakistan: The Resurgence of Baluch Nationalism, Carnegie Papers, January 2006, http://carnegieendowment.org/files/CP65.Grare.FINAL.pdf
[ix] Australian Associated Press, Gwadar deep-water port nears completion, 18 April 2016, https://au.finance.yahoo.com/news/gwadar-deep-water-port-nears-040116880.html
[x] Senate of Pakistan, Report of the Parliamentary Committee on Balochistan, November 2005, http://www.senatedefencecommittee.com.pk/publication-detail.php?pageid=publication&rid=MTE=
[xi] International Crisis Group, Pakistan: The Worsening Conflict in Balochistan, 14 September 2006, https://d2071andvip0wj.cloudfront.net/119-pakistan-the-worsening-conflict-in-balochistan.pdf
[xii] Ray Fulcher, Balochistan: Pakistan's internal war, Green Left Weeklu, 23 November 2006, https://www.greenleft.org.au/content/balochistan-pakistans-internal-war
[xiv] C. Christine Fair and Ali Hamza, Rethinking Baloch Secularism: What the Data Say, Academia, 30 January 2017, https://www.academia.edu/31544654/Rethinking_Baloch_Secularism_What_the_Data_Say_1?campaign=upload_email
[xvi] Dawn, CPEC claims and doubts, 2 March 2017, https://www.dawn.com/news/1317784/cpec-claims-and-doubts
[xviii] Reuters, Some Pakistani power firms stuck in slow lane on China's Silk Road, 30 March 2017, https://www.dawn.com/news/1323767/some-pakistani-power-firms-stuck-in-slow-lane-on-chinas-silk-road
[xx] Syed Irfan Raza, Senate panel wants Pakistan’s interests fully protected under CPEC, Dawn, 1 March 2017, https://www.dawn.com/news/1317736/senate-panel-wants-pakistans-interests-fully-protected-under-cpec
[xxi] Saad Hashemy, Pakistan’s External Account Concerns and CPEC Repayment, Topline Securities, 10 March 2017
[xxii] Kamran Haider and Chris Kay, Pakistan Dismisses Chinese Debt-Trap Concerns, Bloomberg, 30 January 2017, https://www.bloomberg.com/politics/articles/2017-01-29/chinese-debt-trap-concern-dismissed-by-pakistan-as-gdp-quickens
[xxiii] The Federation of Pakistan Chambers of Commerce and Industry, FPCCI’s Stance on China-Pakistan Economic Corridor (CPEC), Farsightedness, Apprehensions and Background, 2016
[xxv] Wade Shephard, Former Sri Lankan President Warns Of Social Unrest If China Carries Out Its Plan In Hambantota, Forbes, 5 December 2016, https://www.forbes.com/sites/wadeshepard/2016/12/05/former-sri-lankan-president-warns-of-social-unrest-if-china-carries-out-its-plan-in-hambantota/print/
[xxvi] Wade Shephard, Violent Protests Against Chinese 'Colony' In Sri Lanka Rage On, Forbes, 8 January 2017, https://www.forbes.com/sites/wadeshepard/2017/01/08/violent-protests-against-chinese-colony-in-hambantota-sri-lanka-rage-on/#3d15feff13dd
[xxvii] Nikko Dizon, Chinese company banned by World Bank bags PH infrastructure project, Philippine Daily Inquirer, 26 October 2016, http://business.inquirer.net/217467/chinese-company-banned-by-world-bank-bags-ph-infrastructure-project
[xxviii] Khurram Husain, CPEC enclaves, Dawn, 9 March 2017, https://www.dawn.com/news/1319301/cpec-enclaves
[xxix] Global Times, Prime minister’s visit expected to iron out Sino-Sri Lankan divergences, 4 July 2016, http://www.globaltimes.cn/content/977523.shtml
[xxx] Wade Shephard, Sri Lanka And China's Hambantota Debacle May Now Be 'Too Big To Fail', 4 August 2016,
[xxxi] Shihar Aneez, IMF agrees $1.5 billion bailout for Sri Lanka to avert balance of payments crisis, Reuters, 29 April 2016, http://www.reuters.com/article/us-imf-sri-lanka-idUSKCN0XQ063
[xxxii] Gordon Fairclough and Uditha Jayasinghe, Sri Lanka to Sell 80% Stake in Strategically Placed Harbor to Chinese, The Wall Street Journal, 8 December 2016, https://www.wsj.com/articles/sri-lanka-to-sell-80-stake-in-strategically-placed-harbor-to-chinese-1481226344
[xxxiii] Bandula Sirimanna, Chinese project loans at high interest rates, Economic Times, 19 June 2011, http://www.sundaytimes.lk/110619/BusinessTimes/bt01.html
[xxxiv] Brahma Chellaney, China’s Debt-Trap Diplomacy, Project Syndicate, 23 January 2017, https://www.project-syndicate.org/commentary/china-one-belt-one-road-loans-debt-by-brahma-chellaney-2017-01
[xxxv] P.K.Balachandran, Chinese investors losing patience over Hambantota agitations: Envoy Yi Xianliang, The New Indian Express, 16 February 2016, http://www.newindianexpress.com/world/2017/feb/16/chinese-investors-losing-patience-over-hambantota-agitations-envoy-yi-xianliang-1571267.html
[xxxvii] Wade Shephard, China's 'New Silk Road' Is Derailed In Sri Lanka By Political Chaos And Violent Protests, Forbes, 21 february 2017, https://www.forbes.com/sites/wadeshepard/2017/02/21/chinas-new-silk-road-is-derailed-in-sri-lanka-by-political-chaos-and-violent-protests/
[xxxviii] Tom Miller, China's Asian Dream: Empire Building along the New Silk Road, London: Zed Books, 2017, Kindle edition
[xxxix] Timofey Bordachev, Wan Qingsong and Andrew Small, Russia, China and the USA in Central Asia: A balance of interests and opportunities for cooperation, Valdai Discussion Club, September 2016, http://valdaiclub.com/files/11822/
[xl] Jon Boone and Kiyya Baloch, A new Shenzhen? Poor Pakistan fishing town's horror at Chinese plans, The Guardian, 3 February 2016, https://www.theguardian.com/world/2016/feb/04/pakistan-new-shenzhen-poor-gwadar-fishing-town-china-plans
[xli] Sudha Ramachandran, Unrest in Gilgit-Baltistan and the China-Pakistan economic corridor, The Central Asia-Caucasus Analyst, 29 September 2016, https://www.cacianalyst.org/publications/analytical-articles/item/13396-unrest-in-gilgitbaltistan-and-the-china-pakistan-economic-corridor.html
[xlii] Shannon Tiezzi, Chinese Company Wins Contract for Deep Sea Port in Myanmar, The Diplomat, 1 January 2016, http://thediplomat.com/2016/01/chinese-company-wins-contract-for-deep-sea-port-in-myanmar/
[xliii] Joshua Carroll, Kyaukpyu Villagers Renew Calls to Suspend SEZ Project, Myanmar Business Today, 6 February 2017, http://www.mmbiztoday.com/articles/kyaukpyu-villagers-renew-calls-suspend-sez-project / Chin Human Rights Organization, Press release: Four years on, no clear answers on Kaladan Project, 11 June 2014, http://www.chro.ca/index.php/chro-media/press-releases/98-2014/467-press-release-four-years-on-no-clear-answers-on-kaladan-project
[xliv] James Kynge and Arthur Beesle , EU sets collision course with China over ‘Silk Road’ rail project, Financial Times, 19 February 2017, https://www.ft.com/content/003bad14-f52f-11e6-95ee-f14e55513608
[xlv] Associated Press, China Plans 30,000-km High Speed Rail Network by 2020, 29 December 2016, http://www.voanews.com/a/ap-china-plans-30000-km-high-speed-rail-network-by-2020/3655234.html
[xlvi] Wade Shephard, How Those China-Europe 'Silk Road' Trains First Began, Forbes, 29 June 2016, https://www.forbes.com/sites/wadeshepard/2016/06/29/the-story-of-how-those-china-europe-silk-road-trains-first-began/#50abdd31734b
[xlvii] Nik Martin, China's high-speed rail plans for Asia inch closer, Deutsche Welle, 27 April 2016, http://www.dw.com/en/chinas-high-speed-rail-plans-for-asia-inch-closer/a-19217479
[xlviii] John McBeth, Why does Indonesia cling to it s plagued Chinese infrastructure projects? South China Morning Post, 11 December 2016, http://www.scmp.com/week-asia/geopolitics/article/2053395/why-does-indonesia-cling-its-plagued-chinese-infrastructure
[xlix] RT, German consortium to invest almost €3bn in Russian high-speed railway, 9 November 2016, https://www.rt.com/business/366074-kazan-railway-german-consortium/
[l] Tatiana Kanunnikova, Italians to take part in construction of Moscow-Kazan high-speed railway, 16 November 2016, http://russianconstruction.com/news-1/25477-italians-to-take-part-in-construction-of-moscow-kazan-high-speed-railway.html
[li] BBC News, Mexico cancels China contract for high-speed train line, 7 November 2014, http://www.bbc.com/news/business-29948331
[lii] XPressWest, XPressWest to continues development of Nevada-California interstate highspeed passenger rail system without assistance from China Railway International U.S.S. Co. Ltd (“CRI”), http://www.xpresswest.com/news.html
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