India not isolated: OBOR has a long way to go

The One Belt, One Road (OBOR) Summit organised on 14-15 May 2017 in Beijing, had attendance from leaders across the globe, with India as a major absentee. As in the case of the United States and Japan, China had hoped that India would send a delegation at the last minute to what it labelled as “the project of the century”, but instead, India chose to boycott it. India’s major concern regarding OBOR is the China Pakistan Economic Corridor (CPEC). While many questioned India’s decision and called it a diplomatic failure, others described it as a sign of India’s confidence. India’s reaction to OBOR cannot be compared with that of other nations, as it was the only country whose sovereignty and territorial integrity was violated. The question remains: was this a show of India’s diplomatic strength, or isolation? And even a bigger question remains on the viability of OBOR and whether the summit was a success or not.

The summit was declared a “success”, but, if after months of lobbying, China could persuade only under 30 heads of state or government to attend, can this summit really be labelled thus? None of the major European countries attended and the 28-nation European Nation rejected the trade statement issued by Beijing at the summit on grounds of lack of social and environmental sustainability and transparency. This is a huge blow to Chinese President Xi Jinping, who hoped that the two-day summit would get world leaders to endorse his Belt and Road Initiative (BRI).

As far as India is concerned, those who say that CPEC was launched in 2013 and India chose to remain silent then, are factually incorrect. OBOR was announced in 2013, but until recently, Chinese authorities maintained that its details were still being worked out. The CPEC was announced much later, in April 2015 and India raised its concerns at the highest level, when Prime Minister Narendra Modi visited China in May 2015, but these were ignored. In his speech at the summit, Xi Jinping laid out an expansive vision of OBOR and said it would respect the “core concerns” and sovereignty of all countries. He obviously did not take into account India’s concerns, instead describing the CPEC as “underpinning” the OBOR. Xi Jinping was, obviously, in the light of the protests in the Gilgit region against CPEC and Sri Lanka’s inability to repay loans given by China, wanting to reassure the audience that China would not use OBOR to dominate other countries.

Other than the sovereignty issue, India has also questioned OBOR’s economic viability and motives. OBOR has been touted as an economic project to integrate the world and provide a much-needed thrust to globalisation after the protectionist policies of the United States, post Barack Obama. However, is this project purely economic in nature? In simple words, OBOR is an attempt by the slowing Chinese economy to link itself to global production centres and markets. Besides, the CPEC has clear strategic and military overtones as far as India is concerned. For example, a secure fibre optic link has been laid from Kashgar, the westernmost Chinese city in Xinjiang province, located near the border with Kyrgyzstan, Tajikistan, Afghanistan, and Pakistan, to Rawalpindi, the Pakistan army’s General Headquarters, and the recent developments in Gwadar port, such as the deployment of Chinese submarines, have clear military implications. Gwadar gives China access to the Indian Ocean. Its request to deploy another submarine in Hambantota, Sri Lanka also indicates that this project is not purely economic and will have military and strategic needs. What is more, the presence of 30,000 Chinese security personnel in Pakistan to safeguard Chinese investment, ostensibly, will sooner or later make Chinese non-interference in domestic affairs of other countries questionable.

The presence of 30,000 Chinese security personnel in Pakistan to safeguard Chinese investment, ostensibly, will sooner or later make Chinese non-interference in domestic affairs of other countries questionable.

In pure economic terms also the project’s viability is questionable—the land route is four times more expensive than the traditional maritime route. The European Commission has reportedly ordered a probe into the planned 350-kilometer-long USD 2.89 billion high-speed railway line between Serbian capital Belgrade and Hungarian capital Budapest.

Secondly, both the Bank of Pakistan and the Sri Lankan government have clearly stated that they are unable to repay the loan and interest to the Chinese government. 

Sri Lankan debts have been turned into equity and would finally turn to ownership for Chinese firms that will adversely impact Sri Lanka. When 80% of the total share and a 99-year lease of Hambantota port were given to Chinese firms, there was public outrage in the island nation, compelling the Sri Lankan government to put the decision on hold.

China has allocated $40 billion to its Silk Road Fund and established the $100 billion AIIB. According to a few analysts, the actual fund needed for the plan might exceed three or four times the amount allocated. In this case, China will have to tap its foreign reserves, which will adversely affect the already tepid Chinese economy (Moody’s Investors Service downgraded China’s credit ratings last week for the first time in nearly 30 years, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise).

The four proposals advanced by the Chinese ambassador in his speech at the United Service Institute in New Delhi on 5 May exhibited the eagerness of the Chinese to convince India to join OBOR. The proposals offered nothing new, other than the first point: the China-India Treaty of Good Neighbourliness and Friendly Cooperation, which has also not been defined and remains as vague as OBOR. They were merely offered as bait for India to come on board for OBOR.

OBOR is still evolving and has a long way to go. Of the 68 countries that attended, only 40 have signed up for projects. OBOR will traverse many troubled areas and much rough terrain. The question, therefore, of India’s isolation does not arise; it is simply too early to judge OBOR/BRI and its potential success.

Namrata Hasija is Research Associate at the Centre for China Analysis and Strategy, who is currently pursuing her doctoral studies, besides being the president of Taiwan Alumni Association in India