15 May 2017

Exclusive Opinion Piece: To Be Or Not To Be With One Belt One Road (OBOR)

By Lt Gen S L Narasimhan (Retd.)

On 07 September 2013, President Xi Jinping made a speech titled “Promote People-to-People Friendship and Create a Better Future” at Kazakhstan’s Nazarbayev University wherein he outlined the One Belt and One Road Initiative. He proposed that, “In order to make the economic ties closer, mutual cooperation deeper and space of development broader between the Eurasian countries, we can innovate the mode of cooperation and jointly build the “Silk Road Economic Belt” step by step to gradually form overall regional cooperation.”

He further highlighted five tenets of the initiative.

First, to strengthen policy communication. Countries in the region can communicate with each other on economic development strategies, and make plans and measures for regional cooperation through consultations.

Second, to improve road connectivity. To open up the transportation channel from the Pacific to the Baltic Sea and to gradually form a transportation network that connects East Asia, West Asia, and South Asia.

Third, to promote trade facilitation. All the parties should discuss the issues concerning trade and investment facilitation and make appropriate arrangements.

Fourth, to enhance monetary circulation. All the parties should promote the realization of exchange and settlement of local currency, increase the ability to fend off financial risks and make the region more economically competitive in the world.

Fifth, to strengthen people-to-people exchanges. All the parties should strengthen the friendly exchanges between their peoples to promote understanding and friendship with each other.

Out of the five tenets enumerated by him, the first one did not take place. However, China felt that the other countries should join her in the initiative. This has been the bone of contention between India and China. India maintains that this project was announced unilaterally and therefore it is a Chinese project and not a joint one. The third issue that stipulates that all parties should discuss issues concerning trade and investment facilitation is again an issue that has been given a go by.

The countries through which the OBOR runs have different rules and regulations for trade. For example, the European Union is bound by their own trade regulations and is yet to figure out how to go about dealing with OBOR. Similarly, many other countries are yet to do that exercise. The fourth issue of promotion and realisation of settlement in local currency is something that China is aspiring for and works bilaterally with countries. This is to obviate the dependency on the US dollar and gradually replacing it as the currency for international trade.

The Chinese Yuan has been included in the list of currencies that has Special Drawing Rights by the International Monetary Fund in September 2016. Only 33 countries have entered into a currency swap agreement with China since it started that effort in 2009. There is a long way ahead for China on this account to achieve the fourth tenet mentioned above. From these explanations it can be seen that even though China’s intentions may have been good, she was in a hurry to go through with the OBOR.

Initially when OBOR was conceived, there was one road and one maritime belt. (See Map 1 Below). It is worth noting that the map published by Xinhua indicated Kolkata as part of the OBOR even though India has still not concurred with the project.

Map 1: Initial Map of OBOR

President Xi Jinping visited Pakistan in April 2015 and announced a US $ 46 billion package to Pakistan for the China Pakistan Economic Corridor (CPEC). Slowly the CPEC was included in the One Belt and One Road Initiative. India voiced her concerns that the CPEC through Baltistan her (See below)

Proposed will pass Gilgit which is territory. Map 2

Map 2: CPEC as part of OBOR

(Please Note that Kolkata is still being shown as part of OBOR)

In many Track 2 discussions the issue was discussed. The Chinese response was that she is aware of India’s concerns but stopped short of saying what does China intend to do about it. In these discussions, Chinese also felt that more explanation and discussion was needed on the issue thereby substantiating India’s position.

Bangladesh China India Myanmar Economic Corridor (BCIM EC) was thought of as a transport-trade – tourism corridor in 1999. Over a period, it evolved as a transport- trade – energy corridor. India is in support of connectivity in the region.

This stance has been explained by India’s Foreign Secretary Mr Jaishankar. While conveying India’s position after the Strategic Dialogue in February 2017, Jaishankar said, “but from our side, I explained to them that India today is a pro connectivity country. We have connectivity initiatives with all sides and we are active participants (in) most of them.” “The fact is that China Pakistan Economic Corridor (CPEC) is part of this particular initiative. CPEC violates Indian sovereignty because it runs through Pakistan-occupied Kashmir (PoK).”

Even though the BCIM Economic Corridor precedes OBOR China has included it in the OBOR.

Therefore, it can be safely said that China keeps adding projects to the OBOR. (See Map 3 below).

Map 3. OBOR to BRI

Questions have been raised on the project’s name as to whose road and belt it is. Chinese delegations have been at pains to explain that it is not one belt one road but Belt and Road initiative. But the translation of the Chinese term for the project (一带一路) reads as one belt one road.

China is holding a summit on this project on 14 and 15 May this year. On 18 April 17, Mr Wang Yi, Foreign Minister of China said, 110 countries are taking part in the summit and leaders of 28 countries amongst them are attending the event. However, leaders of important western countries are conspicuous by their absence in the list made public by him.

Chinese officials have been trying to explain that Xuan Zang, Fa Xian and Admiral Zheng He, all had visited India and that was the early instance of OBOR. They have also mentioned that India being part of BCIM corridor, Asian Infrastructure Investment Bank, BRICS New Development Bank and becoming part of the Shanghai Cooperation Organisation are indicative of the fact that India is already part of the OBOR.

Further, they also quote the Agreement between the Government of the People’s Republic of China and the Government of Pakistan on the Boundary between China’s Xinjiang and the Contiguous Areas the Defense of Which is Under the Actual Control of Pakistan signed in 1963 and say that their position is consistent with that agreement and that their stance has not changed on Kashmir.

Unfortunately, none of these explanations are addressing India’s apprehensions on China violating India’s sovereignty and territorial integrity. Unless that issue is resolved and an inclusive process is adopted, it is unlikely that India will become part of the OBOR.

Chinese are known for their astute business acumen. It is also a known fact that there are no free lunches in international relations. The question that arises is why China has become so benevolent all of a sudden. The jury is still out on the answer to that question.

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