The Financial Express

Wheel within wheels: China vs India

| Updated: October 22, 2017 01:37:02

Evaly and Fianancial Express Evaly and Fianancial Express
Wheel within wheels: China vs India

While still vacillating about the Chinese President Xi Jinping's signature initiative of One Belt, One Road (OBOR) or the new Silk Road project, India, of late, seems to be toying with the idea of developing its own connectivity network in both Southeast and Northeast-Central Asia. Indian Prime Minister Narendra Modi is under severe political pressure from voters for failing to translate his lofty electoral promises of Acche din (good days) into reality, is now trying to use his much hyped global rendezvous to put his new ideas into test.
India is now trying to negotiate the regional comprehensive economic partnership (RCEP) on top of the India-ASEAN (Association of Southeast Asian Nations) free trade agreement (FTA). Besides, Delhi is also actively working on the 14,000-km-long highway linking India with Southeast Asia through Mayanmar and Thailand. The Indian official news agency PTI reported from Bangkok last week that Delhi is funding to renovate 73 bridges built decades ago during the WWII to safely cross the highway to reach Thailand.   
Quoting Indian Ambassador to Thailand Bhagwat Singh Bishoni, PTI said when the repair work completes in the next 18 months, the highway could be opened for traffic from India through Myanmar to Thailand. It starts from Northeast India's Moreh going through Myanmar's Tamu City to Thailand's Tak, Mae Scot district. Currently negotiations are on to conclude a three-nation motor vehicle agreement for the use of the highway.
Bishoni said, the road will help transportation of goods from the seven Northeast Indian states to Myanmar, Thailand and other Asean member-countries. There has been a meeting of mind between India and Thailand and the two countries share cultural, spiritual and linguistic ties.  Besides, under-construction deep-sea port and industrial estate project in Myanmar near the Thai border is also expected to integrate Northeast India with Southeast Asian countries, he added.  
CONNECTIVITY WITH NORTHEAST-CENTRAL ASIA: Now link this with Indian Prime Minister Narendra Modi's visit to Tehran late last month in an attempt to revive economic ties with Tehran after the withdrawal of Western sanctions. He met the senior Iranian officials including President Hasan Rouhani and said that the visit would mark a "new chapter in our strategic partnership."
After some discussions, he offered to help build south Iran's southern port of Chabahar with funds from India's EXIM Bank. The port located on the strategic Gulf of Oman, not very far from Pakistan's Gwador port which is being built by the Chinese. A happy Rouhani, as reported by AFP from Tehran, hailed the project and said: "It could become a great symbol of cooperation between Iran and India."
Early in June, Indian minister for shipping, highway and road transport Nitin Gadkari was quoted by India's Business Standard saying that Indian investment in the Iranian port would be to the tune of Indian rupees 6.5 billion and the port is likely to be commissioned in 18 months.    
Modi's visit in May was the first by an Indian prime minister in 15 years and took place after the international sanctions were lifted in mid-January. The sanctions were lifted following an agreement with Iran after prolonged negotiations by the five UN veto-power nations plus Germany on its nuclear programme. The agreement was signed in July 2015 but sanctions were lifted in mid-January 2016. Since the lifting of sanctions dozens of Asian and European countries visited Iran seeking a share of the 80-million strong market.
Before sanctions were imposed on Iran, it was India's second largest oil supplier but dropped to the seventh place in 2014. Delhi would now like to import more oil from Tehran but informed sources say, it also has to sort out the repayment of $6.5 billion that it currently owes to Iran.   
The two leaders were later joined by Afghan President Ashraf Ghani in Tehran to sign an earlier agreed three-way transit agreement. After the deal was signed, a gleeful Modi said, the deal connecting Iran, India and Afghanistan and to central Asia  by-passing its arch enemy Pakistan will also boost growth in the region. Modi said: "We want to link to the world, but connectivity among ourselves is also a priority," and added: "The corridor would spur unhindered flow of commerce throughout the region. Inflow of capital and technology could lead to new industrial infrastructure in Chabahar."  He intends to transform South Iranian port Chabahar into a trading hub of the region. This could be possible only when a semblance of peace restored in Afghanistan.
India's rivalry with China is well-known. However, Modi was the last of the major countries to reach Tehran while Chinese President Xi Jinping was among the first ones to meet the Iranian leaders. China was also a member of the UN committee of 5-plus-one to discuss the lifting of sanctions over Iran's nuclear programme. So Chinese President Xi Jinping visited Tehran in late January, only days after the lifting of sanctions. Without losing any time, he pledged to expand bilateral trade to a whopping $600 billion in ten years. This was quite in line with Xi's foreign policy initiative of "One Belt One Road" (OBOR), which he launched in 2013.
NAVIGATING THE ONE BELT, ONE ROAD: Since its launching in 2013, the OBOR attracted considerable attention around the world. A joint article by Liu Mingkang, former chairman of China Banking Regulatory Commission, and Wenzhi Lu of Hong Kong University of Science and Technology distributed by Project Syndicate in January this year said, OBOR involves more than 60 countries and several international organisations, implies unprecedented opportunities and challenges. The original Silk Road, established over 2,000 years ago, was a critical network of trade routes that promoted economic, political and cultural exchange among Asia, Africa and Europe.
They pointed out: "China's new 'Silk Road Economic Belt' and 'Twenty-First Century Maritime Silk Road' will do the same with newly built or upgraded infrastructure facilitating the flow of trade, investment, culture, and ideas, and thus supporting shared economic growth… From China's perspective, the logic behind the strategy is clear. With its sources of gross domestic product (GDP) growth coming under increasing strain, China must continue to make progress in opening up the economy…." The idea was to make sure that it could become a win-win situation for all participants.
Discussing the Chinese project, London's Financial Times (FT) in a syndicated story by Amy Kazmin in early May said with the 3,488km dispute-ridden border between the two Asian neighbours, Indian strategic policy analysts are divided whether the OBOR project is a strategic and economic threat to their country or an opportunity. Many see it as something that must be carefully navigated as Beijing develops large projects in the region that India considers its natural sphere of influence. However, FT pointed out that India lacks the financial powers to offer a credible alternative.
Here the Indian government is seemingly in a dilemma. Shashank Joshi, a senior research fellow at a British defence and security think-tank the Royal United Services Institute (RUSI), was quoted to explain the reason in the story. No question that India has to be very careful in evaluating the situation. It can't be expected to come running and join the Chinese bandwagon but has made it clear that it is keeping the options open. Some of the Asian neighbours have liked the project as a good opportunity for a large flow of Chinese investment that India cannot match. So it can't be seen actively hostile to it for losing strategic support in the region.
INDIAN THINKING ON STRING OF PEARLS STRATEGY: Indian policy strategists and think-tanks seem to be heavily influenced by what has been attributed as China's so-called string of pearls strategy and are quite unable or unwilling to make any change in their thinking pattern. This theory argues that by investing in the development of ports in South Asia Beijing intends to establish naval bases in an effort to surround India. China has already helped build a major port at Hambantota in Sri Lanka overlooking important shipping lanes carrying much of the world's trade including oil. Obviously India considers it strategically important for its defence. Its suspicion was aggravated when Chinese submarines visited Colombo in 2014 that the purpose of the Chinese investment in Sri Lankan port is military and not economic. China has also offered to build ports in Bangladesh and Myanmar and while these are is still far from reaching any conclusive deals, they have nevertheless raised Indian concerns.
However, India's main concern is Beijing's plans to develop economic corridor with a $46-billion investment to link China with Pakistan, its nuclear armed next-door neighbour and arch enemy. It believes that Pakistan's Gwadar port is an essential part of the Chinese developed facilities and is part of Beijing's scheme of things to also link up the Gulf region with Northeast and Central Asia.
This scenario reveals serious clash of interests and strategies among the regional major players who are busy building their own wheel within wheels to outweigh each other. Clearly, it is long-drawn game and it appears difficult to understand and rationalise how with such deep suspicion, India is to negotiate and exercise its options on China's One Belt, One Road project.
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