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C3S Dialogue: BRI Summit and CPEC

C3S Article no: 0053/2017

The following is the text of dialogues held among C3S members and Young Minds of C3S on the articles written by Sundeep Kumar. S (Research Officer, C3S) on the Belt & Road Summit and by Commodore R. S. Vasan (Director, C3S) on the China-Pakistan Economic Corridor (CPEC) 

Responses

Mr B. S. Raghavan, Patron, C3S

The pros and cons have been set out very well. A very good paper, eminently readable. Having thought about all aspects deeply, I am, however, of the view that Modi would have made a tremendous impact if he had attended and put forward his views on the Initiative in a forthright manner. When so many high profile dignitaries from different countries and world institutions attended, including from Russia and the United States (the latter having the most reason to abstain given its reservations about China), Modi, representing India, would have given it a stature on par with China with his statesmanlike presence. On the international stage, India should conduct itself as a self-assured player of the big league, rather than adopting a posture marked by diffidence and self-doubt.

Mr Sashi Nair, Director & Editor

Press Institute of India – Research Institute for Newspaper Development

It was an opportunity missed – we could have made our standpoint clear. If we nurture ambitions of being a big power in the Indian Ocean Region (IOR), I don’t think avoiding meetings is an option.

Commodore R. S. Vasan, Director, C3S

We must have another look at the speech made by Xi and the statements made by officials in Delhi (what is meaningful etc.,?). While Xi waxed eloquent on Panchsheel, nothing that Xi has done can bring any confidence to his neighbours (both land and sea). Look at what has been done in the South China Sea (SCS). Blatant violations on the environmental front by dredging corals to build military bases on artificial Islands, utter disregard to the Permanent Court of Arbitration (PCA) award, etc.,  On the eve of the recent visit of Modi to Sri Lanka, China to send a signal wanted to berth a submarine in Sri Lanka and the same was denied. When Xi visited India, a submarine berthed in Colombo. Nothing that China does is without purpose.

On the One Belt One Road (OBOR) most of the interpretations are without basis. There is no master plan except statements. It is only in the China-Pakistan Economic Corridor (CPEC) which is detrimental to us that there is a clear focus and earmarking of funds (that has been enhanced). As per the report of the Dawn, it is clear it is about exercising absolute control over Pakistan to serve hegemon China’s interest in the coming decades. The East China Company is here to stay.  How can we keep quiet when two more mega dams are being planned? This has been termed as the water pincer against India. Please refer to Times of India article. At no stage of OBOR or CPEC India has been consulted. Let us get on with our own dams which in any case do not violate the Indus Water Treaty (IWT). Worse comes to worse, let us abrogate the treaty which is inequitable. How can we keep giving water to Pakistan when our own states are without water? India has to create alternatives that are available. Enough indications have been given about the interests of Japan and funding assistance to join with India to promote Chabahar as an entry point for access to Afghanistan and CAR. Please refer to this report.

Both China and Pakistan a vassal state understand the language that they speak. I do not want to repeat all the actions of China related to Nuclear Suppliers Group (NSG), United Nations Security Council (UNSC), Arunachal Pradesh and Masood Azhar which have been discussed ad nauseam. Please look at the detailed report by Dawn. I do not think that anyone will be left in any doubt about the long term plans which have been discussed with the impact on our western neighbour. There is a hidden agenda and it would be foolhardy to even indirectly endorse this plan and particularly CPEC which violates our sovereignty. Obviously, Pakistan Govt. is angry and the opposition has been questioning the Government vide.

Looks like there are more supporters in India than even in Pakistan (except the Pakistan Govt. and Army) for this plan. Not surprising when there is so much support for Pakistan even when they behead our soldiers and violate borders and kill civilians. There are have been many analysts in Pakistan who have questioned the wisdom of Pakistan in engaging in this initiative with huge investments but all to benefit China with marginal or very little benefits to Pakistan or its people.

The work on the China-Europe railway or Hambanthota or Gwadar were started long before OBOR. So on the ground except for some segments of CPEC, nothing has moved. In the cases which already has connectivity were all long term projects in the making. The Chinese are also including the Bangladesh-China-India-Myanmar economic corridor (BCIM) in OBOR as if it was part of OBOR which came much later. Yes, India has to ensure that BCIM to which is committed is operational.

There is a need to look at the Maritime Silk Road (MSR). What has actually happened on the ground along their routes except for discussions? All the investments and development on the ground in any port or facility can happen only after bilateral discussions with each country on the planned route. Each country has its own systems and the nature of dialogue itself will be complex with each destination.  MSR is being touted as if there is no connectivity today! Today ships of 1.5 lakh tonnes and beyond are already plying the oceans serving different nations. India has its own plans for modernising its ports and infrastructure.  Irrespective of who modernises a port and where it is located, no country will be denied access to that port as long as the laid down tariffs are paid. Why is that this is not taken into account?  Next, the question of Foreign Direct Investments (FDIs). We already have a huge trade deficit with China and it will continue to grow. It is time to diversify our own economic engagements and look at other sources who likewise would like to move away from China.

There is no time for niceties when China and Pakistan are ganging up to work against the interests of India. Between, when Xi came to India he promised an investment of 20 billion. As per records, there is not even a 20 percent investment to date. Do we want it when there are other economies willing to engage with us in the same sectors? To my mind, India has taken a principled stand and needs to be complemented. All talks of isolation are meaningless. No international system can isolate either China or India in a global village. The countries that attended (Russia and representatives of the USA) have no border disputes with China and have their own reasons to attend (they have nothing to lose). China keeps the pot on the boil by its stonewalling of all proposals by India to occupy the high table. Why do we need to oblige is one question that haunts me when I see this kind of support for China on a very idealistic plane which is devoid of ground realities. India has to chart its own course after taking the China and Pakistan factor into account. Well, as I have always advocated, let us “Bide for time, build our strengths and work on our options without falling into this traps laid by our adversaries”

Colonel R. Hariharan, Member, C3S

Yes, Modi’s participation would have given an opportunity to expound India’s objections to the OBOR to the summit audience. You can call it a missed opportunity.

Cmde. Vasan has put powerful arguments why India’s boycott was legitimate. I agree with the complexities of this issue he had brought out. That itself makes it necessary for us to understand the issue in all its facets.

The objective of Belt & Road (BR) summit was to legitimise China’s ambitious strategic foray into Europe through the trans-Asia route using the Belt & Road Initiative (BRI) bandwagon. I call this a reiteration of imperial China’s Middle Kingdom syndrome. How much should India help China in its imperial ambitions? We need to answer this question from our national self-interest perspective. And Modi has taken his call on this from this perspective.

I would not dismiss Modi’s foreign policy making, as casually, as his detractors are doing. I think it is an informed decision, probably part of India’s larger China policy architecture. Modi, very much like Xi, plays his cards too close to his chest. So we will have to wait and watch.

In any case, boycotting the summit is not the end of the universe for India. India is the biggest neighbour of China capable of cramping its style and vice versa. So China needs India as much as India does; so, at best, the boycott adds to the collection of mutually unsavoury issues that the two countries have not been able to digest in their relations since they fell out in 1962.

Actually, I do not think China expected Indian PM to attend the summit. Modi with his oratorical skills, loudly expounding on India’s concerns on sovereignty and transparency issues of OBOR, would have been most uncomfortable for Xi, who was trying to charm the heads of states. So, despite China’s repeated invitation to India to attend the summit, it must have given a sigh of relief that Modi boycotted it and saved a lot of blushes for China.

The OBOR does not directly involve India except the BCIM corridor project in the Northeast India, which predates the OBOR concept. So India’s participation does not directly benefit the OBOR and its subsidiary CPEC. However, India’s participation in the OBOR would confer it legitimacy, as many Asian countries (including Pakistan) are uneasy about getting too close to China, because of its style lacks transparency. Of course, India as the largest Asian economy next to China and Japan would have increased the financial viability of the gigantic venture with its dubious financial architecture (which is yet to undergo due diligence).

I suppose India has the option to join it at a strategically opportune moment of its choosing if it desires. But unless the India-Pakistan relations on resolving Jammu and Kashmir (J&K) standoff undergo a sea change, it would not make sense to join the OBOR bandwagon as CPEC does violate our sovereignty.

Sundeep Kumar. S, Research Officer, C3S (Author) Response

This was an important decision to make for our policy makers. So much has been pegged to how India will respond to the invitation extended to her by China. An issue of such significance bounds to have multiple points of views. The points raised that India’s participation would have enabled her to voice her concerns at the forum is one such view that has been presented by many analysts.

I agree that such an action might have its own advantages. Sticking to my approach of weighing pros and cons, I think by choosing not to attend, India has not only made its stance clear to China, it has also sent out a clear message to her neighbours. This must have been the primary factor that would have driven the Ministry of External Affairs (MEA) to no participate in the summit. Hence, the leverage gained out of making our view clear to our neighbours is greater than what we could have achieved by voicing our opinion at the forum.

Whatever might be China’s financial strength, it cannot overcome the geographical advantage India holds with countries like Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives. New Delhi’s decision will surely make these countries wary about tilting too much towards China. We have given more reasons to Beijing to rethink its approach towards its OBOR initiative by not attending. We also have to keep in mind that India has not and will not outrightly reject the connectivity project, it has only chosen to stay away given the current form of it. If our absence can push Beijing to get back to the drawing board, then it definitely is a wise decision. It is impossible for OBOR to become a reality without India’s participation, this is a fact Beijing is well aware of. I say that purely based on India’s geography.

As mentioned in my article, non-participation does not mean India is against multilateralism. India cooperates with China on various other forums such as the Asian Infrastructure Investment Bank (AIIB), Shanghai Cooperation Organisation (SCO), Regional Comprehensive Economic Partnership (RCEP) and BCIM which we need to dig deeper into. We as a civil society must push New Delhi to engage deeper in these forums rather than being critical of India not participating at an event which in its current design is not in our national interest.

As far as participation of U.S officials is concerned, we have to note that Xi paid a visit to Washington in April. A lot of development has happened on the China-U.S ties since Xi’s visit. Trump’s election rhetorics against China seems to have faded now. U.S is more concerned about its export of beef to China and market access for its financial services in China. With an unreliable U.S, it is more important for India to keep its neighbourhood friendly and fast track its ‘Act East’ policy.

In the case of Russia, since it was slapped with sanctions following the Crimean episode, it has been heavily reliant on China to sustain its economy. Hence it is in the Russian state’s interest to attend the summit.

Mr B. S. Raghavan, Patron, C3S

OBOR may eventually come to little or nothing. It may collapse under its own weight. In my connotation, participation does not mean endorsement. We could have attended and put out our opinions with clarity and forthrightness, and, yes, finesse. Our chief grouse is CPEC goes through Pakistan-occupied Kashmir (PoK). We could have voiced our objection so it is heard by the attendees. China has the self-confidence and assertiveness to do its own thing. We also could have shown the same assertiveness and expressed our reservations about the absence of tangible, concrete details of OBOR which so far is only a grand vision, other than bits here and there which pre-date OBOR. Modi could have given like Gandhi used to with the British, advance intimation to XI that if he came, he would be constrained to put forward his frank viewpoints, and in case Xi demurred, we could have stayed away. The world has long practised tit-for-tat, eye for an eye, nose for nose. What is the point of India being a land of Buddha and Gandhi if it doesn’t have the courage to be a game changer, especially in this era of knowledge, communications, technology and social engineering revolutions? How long are we to wallow in conventional thinking? This is a cry from one who was Gandhi’s attendant for seven days during his visit to Madras in 1945 and watched Nehru, his first and closest disciple, at close quarters for four years.

Mr L. V. Krishnan, Member, C3S

Many questions have been raised on Indian decision vis a vis participation in BR summit. To my simple mind, it is easier to judge that decision and the comments thereon if there are answers to some more.

  1. A basis for participation would be if India can either contribute by investing in the various infrastructure projects proposed under BRI or is interested in utilising them gainfully. Does the basis exist?

  2. Pakistan has been unwilling to promote bilateral trade with us. China is hesitant to allow entry of pharmaceutical products/industries from India for example. Is BR summit going to help in either case?

  3. Would both China and Pakistan be willing to suspend their covering territory in our possession, for the next five decades leaving it to the future? Does their continued action through proxy war and grim threats encourage participation?

  4. Is India all that essential for the success of BRI? If we are not in it, does BRI close some of the doors for our international trade? Can we find ways of keeping them open?

  5. There is a saying that “Tact is the knack of making a point without making an enemy.” What made us discard tact further aggravating the enemy?

Mr L. V. Krishnan’s questions answered by Sundeep Kumar. S (author)

  1. India is the second largest shareholder in the China initiated multilateral development bank (AIIB). AIIB funds several projects across Asia. Please find below the link to the projects section of AIIB website.

  2. BR summit will not address any of these issues. Also, I believe India-Pakistan bilateral trade happens through a proxy (for example Dubai) where there is a mere change of labels. Please correct me if I am wrong.

  3. A definite no to the first question. As for the second question, a mixture of dialogue and hard-line posturing is needed based on prevailing ground realities. This has always proven to the challenge as it is a thin line between the two options. When we have a dialogue with the Pakistan government, the Pakistan military ensures it plays spoilsport. There needs to be a consensus on their side, which is beyond our responsibility. The ball has always been in their court.

  4. Yes, India is essential for the success of the BRI, considering our resources and geographical position. BRI is still in infancy, a door can close only if it has been open. BRI is yet to make a door of opportunity. As for India’s trade, we need to first make domestic reforms relating to land, labour and capital. Once we have enough to offer to the world, there will be enough buyers to buy.

  5. In my opinion, we have been tactful and we have not further aggravated the enemy. Making the perceived enemy rethink his/her stance on a singular issue need not necessarily equate to aggravating him/her.

I would also like to raise the question on the purpose of the summit at this juncture. Without having achieved any concrete tangible, does the BRI warrant such a spectacular summit now? Is it not too early for China to host such a mega-event? My belief is that Xi had to do it now ahead of the 19th Party Congress scheduled to take place later this year. He had to do it to consolidate his domestic position ahead of the key event. The purpose could have been to show his party men and people that the 18th Congress has achieved something big.

Mr Sashi Nair, Director & Editor

Press Institute of India – Research Institute for Newspaper Development

Being from the media (responsible media, that is), one does tend to take a critical look at developments. Here’s a piece by veteran journalist Prem Shankar Jha.

Commodore R. S. Vasan, Director, C3S

Here are the full details of EU’s opposition to Xi’s grandiose plan as reported in the Guardian.

I have no doubts that there would be greater opposition by many countries as a lot of what is required is shrouded in mystery. So as Sri B. S. Raghavan has pointed out, the OBOR may collapse under its own weight. While attending the summit may have its own merits, Modi and this Government have chosen to make a strong statement by not attending. So that is the statement for the world to take note of. The statement of a Chinese official “India though was not in the room was in the room” sums it all.

Mr Sashi Nair, Director & Editor

Press Institute of India – Research Institute for Newspaper Development

Here’s something interesting I happened to read.

We have all been interlinked over centuries. Yet we spend more than half our lives fighting and playing the game of one-upmanship.

Responses

Mr B. S. Raghavan, Patron, C3S

Commodore Vasan’s article is a model of clarity and logic. Hats off!

I am prepared to concede that in the context of Parliament’s Resolution on Pakistan occupied Kashmir (PoK), and in view of the tantrums thrown by China regarding Dalai Lama, Arunachal Pradesh, India’s deal with Vietnam and the like, India’s decision to stay away from BR Summit at Beijing helped rubbing in India’s concerns, although I still believe that our Prime Minister would have made a far greater impact by placing its concerns at the meet itself in a self-confident and straightforward fashion. However, the decision has done no irreversible damage.

I confess to having started off with scepticism about OBOR. I thought it was somewhere midway between will-o’-the-wist and wild goose chase, involving as it did reconcile the divergent interests of so many countries, economies, political systems and cultures and the intractable operational problems and mind-boggling financial outlays. In that sense, I felt, it was prudent on the part of India to wait and watch, and not get caught up in a bewildering medley of unequal and incompatible entanglements. But, after further reflection, I have veered round to less gloomy viewpoint about the Chinese ability to pull off OBOR. My gut feeling is that China will see to it that at least parts of it come to pass. I base my view on the following reasons:

(1) China, as a nation, and Xi Jinping, as the President, have staked all their prestige and reputation on OBOR, and will go to any lengths to make it happen.

(2) China has the economic might and the political clout to pull in especially small countries which are in parlous financial straits, mired in poverty and a pathetic state of development and are in insatiable need of funds to catch up. They will all line up behind China all the more in view of the waning influence of the USA and its inward-looking stance under Donald Trump.

(3) In their desperateness, these countries would be willing to take whatever is offered under whatever conditions, without worrying about their longer term implications such as debt trap and subservience to China. In any case, there is every possibility of China coming forward to write off the debts. In the late 1980s when many Third World countries found themselves in a veritable debt holocaust, euphemistically called debt overhang, the IMF and creditor countries wrote off what was owed by many countries.

(3) The amounts to which China has committed to carrying out BRI, and the amounts which it may eventually be writing off, are well within its means.

(4) .China’ has built humongous surplus capacity in various areas which it can ill afford to keep unused. Finding a use for them will help it regain and retain the economic momentum.

(5) China has time and again demonstrated its undoubted prowess in the execution and management of projects of unparalleled magnitude and complexity. The world’s biggest construction companies are in China. Not to mention the Three Gorges Dam or the Lhasa Railway, in 2011, China transported 6500 miles from Shanghai the whole San Francisco-Oakland Bay bridge in more than two dozen giant steel modules each with a roadbed segment of nearly the size of a football field. So, the projects planned by China for OBOR pose no formidable challenge.

(6) China’s political system and efficient governance facilitate fast decision making, and the Chinese people’s discipline, team spirit and hard work ensure adherence to stipulated specifications, guaranteed quality and committed delivery schedules.

India, which started its journey as an independent nation along with China, comes nowhere near it in any of these capabilities. It has got a bad name in Afghanistan, and its forays into Chahbahar, Asia-Africa Growth Corridor and the like, I am afraid, may also end up in a slanging match of recriminations and counter-recriminations. In the latter case, poor Japan is going to get into the cross-fire. In this race of the rabbit (China) and the tortoise (India), contrary to the Fable, the rabbit has already won. I doubt whether India can get abreast, leave alone ahead, of China in the foreseeable future. China is way ahead in R&D, inventiveness, innovation and ingenuity. So, India should aim at synergising by forging bonds rather than indulging in self-hallucination.

Mr Sivaraman, Vice-President, C3S

India has put a tremendous amount of its state resources to preserve democracy while still growing reasonably well.

Had Modi gone to the BR summit he would have been the equivalent of Turkmenistan paying obeisance to the mighty Xi in his palace as it used to happen when the Chinese emperors held court.

I do not want to predict anything on the BR.

Chinese companies are purchasing thousands of hectares of Pakistan’s agricultural land. They are owning properties there. No one knows what are the financials. I saw a programme on Sri Lanka which concluded that it is drowned in debt and now under compulsion to lease thousands of acres of land to Chinese companies.

Now Xi says they have no military intention in the BRI- why now?

What purpose would it have served India to say no in the meeting after the great Chinese hospitality? India would have stuck out like a sore thumb amidst those sycophants.

India took the right stand.

We must remember that the Government of India (GoI) has deliberately not released the National Institute of Public Finance and Policy (NIPFP) report on black money. That may raise huge problems of our GDP being grossly underestimated.

We can also build mighty structures to remain unoccupied, 8 lane highways and fancy bridges that will remain unused and build a mountain of debt. Millions of tonnes of steel-making capacity are being shut down in China and who knows which other industries are closing down.

Talking of China’s might, people refer to the $4 trillion foreign exchange reserve which has now diminished. I have seen how billions of such reserves disappear during the 1997 crisis. The 100 billion dollar Enron simply folded up in a matter of days.

Chinese debt is now nearing 300 percent of GDP of which HH debt is 45 % compared to India’s around 100% and 10 % respectively. Any country whose HH debt crosses 40 % is in for trouble.

While crediting China and its BRI let us keep some of these facts also in view.

I agree that this nation can be more disciplined and far less corrupt. I asked my friends how Indore became so clean. They said the CM, the MC, officers, children and the people made it into a movement with of course some carrots and sticks.

So given the will, it is possible here also.

(All views expressed in this dialogue are the members’ own.)

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