OBOR- One Belt One Road

Context:

According to a China based think tank report, investments in China’s much-touted Belt and Road Initiative (BRI) have fallen by 5% since 2019.

What is OBOR:

• The Belt and Road Initiative (BRI, or B&R), formerly known as One Belt One Road or OBOR for short, is a global infrastructure development strategy adopted by the Chinese government in 2013
• China OBOR invest in nearly 70 countries and international organizations.
• It consists of 4 projects
  • Land-based Silk Road Economic Belt (SREB)
  • Sea-based Maritime Silk Road (MSR).
  • Ice Silk Road
  • Super grid
• It is considered a centerpiece of the Chinese leader Xi Jinping’s foreign policy.
• The BRI forms a central component of Xi Jinping’s “Major Country Diplomacy strategy, which calls for China to assume a greater leadership role for global affairs in accordance with its rising power and status
• Xi originally announced the strategy as the “Silk Road Economic Belt” during an official visit to Kazakhstan in September 2013 “Belt” is short for the “Silk Road Economic Belt,” referring to the proposed overland routes for road and rail transportation through landlocked Central Asia along the famed historical trade routes of the Western Regions; whereas “road” is short for the “21st Century Maritime Silk Road”, referring to the Indo-Pacific sea routes through Southeast Asia to South Asia, the Middle East and Africa.
• Examples of Belt and Road Initiative infrastructure investments include ports, skyscrapers, railroads, roads, airports, dams, coal-fired power stations, and railroad tunnels.
• The initiative was incorporated into the Constitution of China in 2017.
• The Chinese government calls the initiative “a bid to enhance regional connectivity and embrace a brighter future.”
• The project has a target completion date of 2049, which will coincide with the centennial of the People’s Republic of China (PRC)’s founding.
• China is spending around $1 trillion to revive and renew the overland and maritime trade links through the construction of modern ports which are linked to high-speed road and rail corridors.
• Some observers and skeptics, mainly from non-participant countries, including the United States, interpret it as a plan for a sinocentric international trade network.
• In response the United States, Japan and Australia had formed a counter initiative, the Blue Dot Network in 2019, followed by the G7’s Build Back Better World initiative in 2021.
• A 2019 study conducted by global economic consultants CEBR forecasted that BRI was likely to boost world GDP by $7.1 trillion per annum by 2040.

What are the objectives of Belt and Road Initiative (BRI)? (How China Benefits?)

• Markets for excess capacity: BRI will help China access new markets for its excess capacity in the manufacturing and construction industries particularly steel, cement and machinery that will be utilized in the development of BRI infrastructures like ports, railways, pipelines, and highways.
• Boost trade: with the rich European markets by means of transportation links.
• Develop western regions of China: particularly Xinjiang which is relatively underdeveloped by increasing economic activities in those regions. Xinjiang has had ethnic tensions and is regarded as a vulnerability of China.
• Creating alternative energy supply routes: to the choke points of Straits of Hormuz and Malacca, through which almost all of China’s maritime oil imports pass.
• Increase influence: BRI can strengthen China’s influence over countries in both western and eastern hemispheres, reinforce its ambitions to become a maritime superpower and develop financial institutions competing with the Bretton Woods System (WB and IMF). Already China led financial institutions like Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB) have been well received by the countries across the world.
• New investment options: China has accumulated a large amount of capital over the last few decades. It is now looking for new investment opportunities that preserve and increase the value of that accumulated capital.
• Internationalization of Renminbi: The massive overseas investment in the BRI will speed-up the internationalization of the Renminbi (China’s currency) just like the US Dollars.
• Counter Asia-Pivot: BRI is also seen as a strategic response to the military re-balancing of the United States to Asia which is famously called the Asia-Pivot strategy.

What are the challenges to Belt and Road Initiative (BRI)?

Poor governance and instability:

• The different levels of development and the poor governance conditions of countries along the BRI may affect infrastructure development, trade and investment in those regions.
• Moreover, the political instability in the increasing number of countries like Syria, Yemen, Sudan, etc. along BRI poses serious security issues for BRI.

Separatist movement and ethnic tensions: particularly in Xinjiang province prove to be a primary challenge for the development of BRI. Also, the regional disparity between the eastern and western regions of China complicates the use of the western region to connect to neighboring countries.

Cooperation from neighbouring nations:

• China has many sovereignty-related disputes with neighbouring countries such as India which makes them uncooperative with the BRI development.
• Furthermore, the potential ecological and environmental consequences, particularly in developing countries along the BRI, makes the project undesirable for many countries including India.

Concerns/Skepticism regarding BRI as follows:

Contracts and jobs:

• There are serious concerns regarding the contracts and jobs since the majority of them will be given to Chinese firms and people.
• Hence, there have been protests by people in several countries over the implementation of BRI.

Debt trap:

• Experts have pointed out how China is pushing countries in its debt trap by providing loans to countries for unviable projects and increasing leverage.
• Pakistan has already fallen victim to the Chinese debt trap as it has taken USD 50 billion dollars which are going to balloon to USD 80 billion over a 30 year period.
• Likewise, countries such as Cambodia and Sri Lanka have fallen into the debt trap of China.

Transparency concerns: There are several instances of nations like Nepal and Pakistan abandoning the deal with China to build the infrastructure project due to the closed tender process and strict deal conditions.

India’s Stand on the OBOR initiative

• The Indian security establishment is deeply suspicious of China’s silk road initiatives.
• Delhi’s strategic community has long objected to China’s road construction on land frontiers and port-building in the Indian Ocean as “strategic encirclement”.
• The problem is even more compounded with the presence of the China-Pakistan Economic Corridor (CPEC). It is the presence of CPEC that actually lends credence to the “strategic encirclement” theory.
• However, optimists feel India needs to take a fresh look. Canning the issue will be paving the way for India’s marginalisation from the unfolding geo-economic Options for India

Options for India regarding OBOR

• Firstly, the Indian Government must decide for itself whether the OBOR is a threat or an opportunity. In the case of the latter, how making use of it will largely depend on the institutional agencies the strategic objectives India is able to bring forth.
• Improve India’s border infrastructure by refurbishing border management, building new ports. Foreign corporate entities can be collaborated with by the government in order to take up infrastructure projects abroad.
• India needs to match the ambition to back the capacities that allow it to be a net security provider in the Indian Ocean region (Read about Indian Ocean Rim Association in the linked article.). For this to happen New Delhi has to overcome its habitual inability to take speedy decisions with respect to defence partnerships and procurement.

How could India counter Belt and Road Initiative (BRI)?

India has already launched many connectivity initiatives of its own to counter the Belt and Road Initiative as follows.

Project Mausam:

• It is India’s soft power strategy.
• The project is under the Ministry of Culture.
• Its objective is to reconnect and re-establish communication links between countries of the Indian Ocean and improving their cultural values.
• This project focusses on the natural wind phenomenon, especially monsoon winds used by Indian sailors in ancient times for maritime trade, that has created relations amongst nations and groups connected by the Indian Ocean.

SagarMala:

• It is a port-led direct and indirect development project with a focus on infrastructure and connectivity.
• The project seeks to improve the capacity of major and non-major ports and also to start their modernization process.

Chabahar Port:

• India has been involved in the development of the chabahar port in Iran.
• Chabahar’s unique location provides India access not only to Iran but also to Afghanistan, central Asia, and Europe, bypassing Pakistan and considerably reducing current travel distances and time.
• Chabahar is also the gateway to International North South Transport Corridor (INSTC) which was initiated by India, Russia, and Iran. It will increase the strategic presence of India in the region…Read More.

Naval Ports:

India is also developing naval ports in Indian Ocean countries such as Madagascar, Seychelles, and Mauritius.

Indian Ocean Rim Association (IORA):

• India is involved in the grouping named Indian Ocean Rim Association which was established in 1997.
• The objectives are,
  • Sustainable growth and balanced regional development in the region and member states.
  • Economic Cooperation.
  • Liberalisation.
  • Social development.

Alliances:

• India is making alliances with like-minded countries like Japan.
• Japan has agreed to promote the “Act East” policy of India by developing and fostering reliable, sustainable and resilient infrastructure that strengthens connectivity within India and between India and other countries in the region.
• Japan and India could establish rail and road connectivity across the Eurasian region running parallel to the BRI.

String of pearls and necklace of diamonds

• The Indian Ocean has emerged as a key intersection zone of Indian and Chinese strategic interests. The geopolitical competition for strategic influence in the Indo-Pacific region between India and China has progressively been intensifying.
• China’s ‘string of pearls’ in the Indian Ocean or India’s ‘necklace of diamonds’ strategy are not officially promulgated strategies of the government, but these are the interpretation of respective government policies by commentators.
• String of Pearls 
• The String of Pearls is a geopolitical hypothesis proposed by United States political researchers in 2004.
• In 2004, US defence contractor Booz Allen Hamilton, in a report titled ‘Energy Futures in Asia’, had used the term “String of Pearls” to describe China’s strategy to expand its naval presence throughout the Indian Ocean Region (IOR) through built-up of civil maritime infrastructure. 
• The term refers to the network of Chinese military and commercial facilities and relationships along its sea lines of communication, which extend from the Chinese mainland to Port Sudan in the Horn of Africa. 
• The sea lines run through several major maritime choke points such as the Strait of Mandeb, the Strait of Malacca, the Strait of Hormuz, and the Lombok Strait as well as other strategic maritime centres in Pakistan, Sri Lanka, Bangladesh, the Maldives, and Somalia.
• Through its String of Pearls strategy, China is expanding its footprints to contain Indian hold in the Indian ocean. It is creating a ring around India through strategically placed nations such as at Chittagong (Bangladesh), at Karachi, Gwadar port (Pakistan) and at Colombo, Hambantota (both in Sri Lanka) and other facilities.
• The emergence of the String of Pearls is indicative of China’s growing geopolitical influence through concerted efforts to increase access to ports and airfields, expand and modernise military forces, and foster stronger diplomatic relationships with trading partners.
• Many commentators in India believe this plan, together with the China–Pakistan Economic Corridor and other parts of China’s Belt and Road Initiative under Chinese Communist Party general secretary Xi Jinping, is a threat to India’s national security.
• Such a system would encircle India and threaten its power projection, trade, and potentially territorial integrity. 
• Furthermore, China’s support for India’s traditional enemy of Pakistan and its Gwadar Port is viewed as a threat, compounded by fears that China may develop an overseas naval military base in Gwadar, which could allow China to conduct expeditionary warfare in the Indian Ocean Region.
• At the same time, Chinese officials have consistently denounced “the so called ‘string of pearls’ construct” as a motivated distortion of their regular economic engagements.

Necklace of Diamonds

• The phrase ‘necklace of diamonds’ was first mentioned by India’s former Foreign Secretary Lalit Mansingh while speaking at a think tank in August 2011 on ‘India’s Regional Strategic Priorities’. 
• Just as the Chinese are building port facilities, India is tying up naval cooperation with almost all the major powers of the Indian Ocean region
• This strategy aims at garlanding China or in simple words, the counter encirclement strategy. India is expanding its naval bases and is also improving relations with strategically placed countries to counter China’s strategies. 

Why should India join the Belt and Road Initiative (BRI)?

Economic benefits:

• It will provide many economic benefits such as a boost to trade, investment, and business engagement.
• It will provide direct access to Central Asia and Afghanistan.
• BRI would ease the tensions between India and Pakistan = remove the challenges in the implementation of two major energy cooperation projects such as Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and Iran-Pakistan-India (IPI) gas pipeline. These projects are really important for India’s energy security.

Improve Indo-China ties: BRI will increase cooperation between India and China at several global fronts.

Security: Development of Gilgit-Baltistan region through BRI would help reduce security threats in the region.

Isolation of India: All neighboring nations except Bhutan and several other countries from Central Asia and South-East Asia have joined BRI. Therefore, not joining BRI may result in the isolation of India.

Geopolitical benefits: Several geopolitical issues and differences can be addressed by means of economic integration.

Nearly every country across different continents have joined BRI. BRI is particularly important in times of increasing protectionism across the world. However, the success of BRI is mainly dependent on how China manages its debt as many countries that have joined BRI are in debt crisis and China need to address the issues of transparency and employment issues as well. Moreover, the political stability and regional cooperation in countries along BRI is also significant for the success of BRI.

Belt and Road Initiative: Reasons for decrease in investment

• Environmental concerns: Chinese projects in Europe, particularly in Serbia coal mining is facing public flak as the project would pollute both land and water.
  • In Ghana, the bauxite mine is located in key biodiversity areas and the project could pollute the source of clean drinking water.
• Dangerous working condition: In Georgia, local workers are complaining about low wages and dangerous working conditions in the railway project.
• Privatization: In Greece, people protested against privatization of ports and long working hours.
• Transparency: Transparency remains an issue for Chinese projects. For example, Belgrade metro system in Europe drew criticism from people as there was no public tender was placed.
• Major changes in public sentiment: Some low-and-middle income countries have to cancel BRI projects because of major change in public sentiment.
• Delay in project completion: The Tehran-Mashaad High-Speed Railway Electrification Upgrading project was expected to be completed within 48 months from the date of commencement (2016), however, till 2019, the project has completed only 3% of the project.
• Counter initiatives by the western countries: Initiatives like Build Back Better World (B3W), Global Gateway initiative by EU have also affected investments in BRI.

Source: Business Standard

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