Though reports made headlines yesterday that China had stopped funding of three major China Pakistan Economic Corridor (CPEC) road projects in Pakistan citing corruption as the reason, there are more worrying signs ahead for whole One Belt, One Road initiative (OBOR), also known as Belt and Road Initiative (BRI), China’s ambitious plan to establish global hegemony by building economic corridors linking Asia, Europe and Africa. The CPEC, a long term $75 billion project from Gwadar port in Balochistan to Kashgar China’s Xinjiang province, is just a part of it.
According to a report in Voice of America (VOA), in recent weeks, Pakistan, Nepal and Myanmar have either put on hold or cancelled major hydroelectric projects worth $20 Billion.
Last month, Pakistan withdrew Diamer-Bhasha Dam project from the CPEC as it found the lending conditions imposed by the Chinese consortium too tough. The dam is a $14 Billion project to be built on the Indus River in Pakistan-occupied-Kashmir and Pakistan has now decided to fund it through local resources.
The proposed Daimer-Bhasha dam is a controversial project as it lies in Gilgit-Baltistan, part of PoK that India considers its own and for that very reason, agencies like the World Bank and the Asian Development Bank have refused to fund it. India is also opposed to the CPEC for the very same reason as it passes through PoK. For strategic reasons also, India doesn’t welcome a Chinese presence just across the border in a disputed territory that is legally India’s.
Similarly Nepal, on November 13, cancelled the agreement with a Chinese state firm for the Budhi Gandaki hydropower project citing corruption. The $2.5 Billion project was signed recklessly and shadily, Nepal said while cancelling the deal that was supposed to make it a BRI project. Nepal too, like Pakistan, is going to fund the project internally.
In case of Myanmar, the Myitsone dam project is a classic example to see China’s hegemonic designs.
The $3.6 billion dam project was financed by China. Built on the Irrawaddy River, the project was doomed from the beginning. After being in making for years, the project was suspended in September 2011 amid democratic reforms as the Burmese Junta government had taken a unilateral decision to allow the controversial project that was expected to bring cultural, environmental and sociological disaster for Myanmar and its people. The ethnic Burman majority of Myanmar is against any dam on the Irrawaddy River as it traces its roots of civilization there.
Add to it the cunning Chinese business model. The project was sold saying the electricity it would produce, 90 per cent of it would be sold to China while 10 per cent was to be given free to Myanmar. Being a power starved country, protests were held against it in Myanmar. Under pressure, China later said Myanmar was the primary market and rest was to be exported. That was when Myanmar is among the countries with lowest electrification rate and no grid structure to connect its cities and town. A World Bank report says only 33 per cent of the country’s population has an electricity connection.
And China has tried this junked project that has displaced thousands of people to leverage its position in Myanmar or we can say, to blackmail the Myanmarese government as it would have to give China back a huge compensation, or the way China wants it, i.e., “concessions on other strategic opportunities in Myanmar”, Reuters report says. The Myanmarese experience has been so bad here that the country has declared that it would not go for big hydroelectric dams in future even if it is power starved.
PUMPING MONEY THE CHINESE WAY
China is pumping huge sums of money in projects that fit in the Chinese narrative of its ‘One Belt One Road’ initiative albeit, at much higher interest rates. Critics of the BRI say the Chinese design is simple, lend in huge sums to the financially weaker countries in need and then blackmail them when they fail to pay back.
If the international line of credit by different organizations or countries for soft loans ranges from 0.1 per cent to 3 per cent, the Chinese lenders charge anything above 6 per cent. In 2015, Japan sanctioned a loan amount of $50 billion with interest rate of 0.1 per cent and a repayment period of 50 years for India’s Mumbai-Ahmedabad bullet train corridor.
India’s neighbourhood countries that China is eyeing through BRI are Pakistan, Bangladesh, Sri Lanka, Nepal and Myanmar. Having a strong Chinese presence in these countries would give China strategic advantage over India. So, China, in the name of building economic corridors, is offering these countries huge loans for infrastructural projects at higher interest rates and when these economically poor countries are not able to repay the loans, China goes on to acquire controlling stakes in them, as high as 85 per cent.
The growing consensus about Chinese designs on the BRI was aptly summed up in a Quartz analysis, “While most countries along the Belt and Road initiative welcome foreign investment and assistance in building modern infrastructure, the pressure being exercised by Beijing doesn’t always go down well. Countries on the receiving end of Chinese cash are starting to realize that when all is done and dusted, the infrastructure that is built is likely to end up controlled by China.”