Promises and Pitfalls of the Belt and Road Initiative


July 20, 2017

Asia Pacific Bulletin
Number 388 | July 19, 2017
ANALYSIS

Promises and Pitfalls of the Belt and Road Initiative

By Bipul Chatterjee and Saurabh Kumar

China’s signature economic and foreign policy project – the ‘Belt and Road Initiative’ (BRI), also known as ‘One Belt, One Road’ (OBOR) – is the most ambitious global connectivity project ever launched by China or any country. The project aims to connect 65 Asian, African, and European countries comprising two-thirds of world’s population, through various sub-projects. The estimated investment cost for realizing this project is $4-8 trillion.

The goal of BRI is to connect China with Asia, Europe, and Africa through a network of railways, highways, oil and gas pipelines, fiber-optic lines, electrical grids and power plants, seaports and airports, logistics hubs, and free trade zones.

The promise of BRI

First, a promising aspect of this initiative is the potential reduction in transportation costs which would reduce the price of trade more broadly. At a time when countries are looking for specific measures to reduce trade costs and shying away from free trade agreements, a reduction in transportation costs as a substitute for trade deals can effectively widen the volume of international trade. A Bruegel study pointed out that a 10% reduction in railway and maritime costs can increase trade as much as 2%, while the effects of a reduction in tariffs would take a much longer time to be felt. An Asian Development Bank and Purdue University study estimated that improvements in transport networks as well as trade facilitation measures could increase the gross domestic product (GDP) by 0.3 % for India and 0.7 % for the South Asian region as a whole.

Second, BRI presents huge business opportunities for companies engaged in infrastructure development. A total of over $900 billion is expected to be invested in roads, ports, pipelines and other infrastructure as part of the project. This could immensely benefit countries suffering from inadequate infrastructure for their economic development.

Third, from the point of view of trade facilitation there are a number of factors that will create dynamic effects. China may accrue significant long-term trade benefits if it reduces tariffs through free trade zones, particularly on products from BRI countries. Beijing is also expected to reduce some of the non-tariff barriers hampering the prospects of foreign firms doing business in China including in those emerging areas such as internet banking and electronic commerce.

Potential Implications

Apart from the sheer number of participating countries, BRI appears to be both economic and strategic in nature. This became visible during the recently held Belt and Road Forum for International Cooperation in Beijing. The initiative came under scrutiny after European Union officials voiced apprehensions over transparency, labor, and environmental standards. This resulted in the EU’s refusal to endorse a trade statement tied to BRI. India’s non-participation due to sovereignty issues relating to the China-Pakistan Economic Corridor passing through part of Jammu and Kashmir also served as a serious dampener.

Even though BRI seeks to create trade infrastructure around India, it also encircles the country by creating a ring through land and sea routes passing through several countries with which India has sensitive relationships. However, India – with around 90% of its international trade through maritime routes and only 10% by rail and road – is comparatively less likely to see much benefit through enhanced connectivity under the initiative. Most of India’s maritime trade occurs from its western ports located in Arabian Sea and via land routes within the Bangladesh-Bhutan-India-Nepal network.

In presenting BRI, China appears to be unaccommodating with respect to political and diplomatic issues as well as economic concerns. Trade facilitation alone cannot drive trade flow upward. There needs to be smart and secure management of trade routes so that end-to-end supply and value chain networks can be strengthened. In recent times, piracy has emerged as a major potential threat for railways and highways as well as maritime routes. BRI does not address these challenges in a meaningful way.

Although the project was launched around four years ago, it suffers from a lack of key information, operational strategy, terms of reference, and detailed work plan for the role of partner countries. This has eroded trust.

The Next Steps

While it is true that China’s economic and strategic interests are intertwined, it would have been beneficial for the BRI to be planned more holistically in order to give due consideration to the economic and political interests of other participating countries. For a large project like BRI, an international governance structure involving all the participating countries to institutionalize objectives and safeguard the interests of participants has to be established now with a particular emphasis on financial mechanism. The decision-making structure for the execution of BRI should be based on consensus.

“While it is true that China’s economic and strategic interests are intertwined, it would have been beneficial for the BRI to be planned more holistically in order to give due consideration to the economic and political interests of other participating countries.”

Several sub-projects of various Chinese companies to receive political and financial support from the Chinese government are being touted as part of this initiative but have nothing to do with it and should be de-coupled so that ambiguity can be cleared and only official BRI projects can be materialized. Participating countries should also get equal treatment in the financing of BRI, so that they can also reap the long-term benefits of the project, a step in this direction could be the revamping of the New Development Bank. A clear operational strategy for the entire project with an economic and political matrix should now be made to increase trust and transparency. This should clearly indicate relative as well as absolute potential losses and gains of participating countries. Active participation of global institutions such as the United Nations, the International Court of Arbitration, and International Court of Justice should be included for reliability as well as to resolve a potential dispute.

BRI should be executed in a selective manner with focus on economically viable sub-projects developing trade and economic corridors, for example a Bangladesh-China-India-Myanmar Corridor in the case of South Asia.

About the Authors

Bipul Chatterjee and Saurabh Kumar are Executive Director and Policy Analyst, respectively, at CUTS International. They can be contacted at bc@cuts.org and sbk@cuts.org.

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Peter Valente, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

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Let us face it: Donald Trump is No Harry S. Truman


July 12, 2017

Let us face it: Donald Trump is No Harry S. Truman

by Jeffery Frank

http://www.newyorker.com

Image result for Harry S Trump and Donald Trump

On April 17, 1945, five days after Franklin D. Roosevelt’s sudden death, of a cerebral hemorrhage, in Warm Springs, Georgia, his successor, Harry S. Truman, the nation’s thirty-third President, held his first press conference. Between then and the end of his Presidency, he held three hundred and twenty-four of them, during which he tried, usually with good humor, to answer what he was asked. In that first outing, he said, “If you want to ask me anything, I will try to answer, and, if I don’t know, I will tell you.”

Three months later, Truman was on his way to Potsdam, Germany, to attend a summit, which lasted more than two weeks, with the other members of the “Grand Alliance” that had defeated Nazi Germany: the Soviet leader, Joseph Stalin, and the British Prime Minister, Winston Churchill (who was about to be voted out of office and replaced at the conference, by Clement Attlee). Before Potsdam, Truman crammed, as if for the biggest exam of his life. “Have been going through some very hectic days,” he wrote in the journal he kept intermittently throughout his Presidency. “Eyes troubling somewhat. Too much reading ‘fine print.’ Nearly every memorandum has a catch in it and it has been necessary to read at least a thousand of ’em and as many reports. Most of it at night.” The conference wore everyone down, but Truman returned to Washington with generally good reviews from his peers. “He seems a man of exceptional charm and ability, with an outlook exactly along the lines of Anglo-American relationships as they have developed,” Churchill remarked.

Last week, shortly after the seventy-second anniversary of Potsdam, Donald J. Trump, the nation’s forty-fifth President, attended a summit meeting of the G-20 leaders in Hamburg. But, after six months in office, Trump looked, and acted, like an awkward, uninformed outsider, the guest at the dinner with whom no one wants to converse. On Friday, upon his first confirmed in-person meeting with the Russian leader, Vladimir Putin, Trump’s initial thoughts were that “President Putin and I have been discussing various things. I think it’s going very well. We have had very, very good talks. We are going to have a talk now, and obviously that will continue. We look forward to a lot of positive things happening between Russia and the United States and for everybody concerned.” While a new ceasefire agreement in Syria, announced after their meeting, sounded like welcome news, it also sounded a lot like several earlier ceasefire agreements in Syria. It’s far from clear what actually was said, or agreed to, in the leaders’ more than two hours of “very, very good talks,” though Trump soon tweeted this: “Putin & I discussed forming an impenetrable Cyber Security unit so that election hacking, & many other negative things, will be guarded.” Before Sean Spicer or Sarah Huckabee Sanders got a chance to translate the idea, which was widely judged to be silly and unworkable, Trump untweeted himself: “The fact that President Putin and I discussed a Cyber Security unit doesn’t mean I think it can happen. It can’t-but a ceasefire can, & did!”

Image result for donald trump and vladimir putin at G20

America First versus Russia First–Screw Europe and the Rest of the World

It is to be hoped that Trump, at his next press conference, will be able to give a better sense of what went on in Hamburg. Perhaps he’ll begin to show that he intends to master big issues as well as the minutiae of the job. Since taking office, Trump has held eleven press conferences—ten of them in the company of other world leaders. In his only solo appearance, on February 16th, he rambled, and digressed; he boasted, as he often has, about what he viewed as his demonstrable greatness and enormous string of successes. “We have made incredible progress,” he said then. “I don’t think there’s ever been a President elected who, in this short period of time, has done what we’ve done.” His hostility to his interrogators was ever present, with references to “fake news,” “the failing New York Times,” and the pioneering cable-news network CNN, which led to this odd exchange with the correspondent Jim Acosta:

ACOSTA: And, just for the record, we don’t hate you, I don’t hate you.

TRUMP: O.K.

ACOSTA: So, just wanted to pass that along.

TRUMP: Ask [the President of CNN] Jeff Zucker how he got his job, O.K.?

Privately, in frustration, Truman sometimes referred to the “sabotage press,” or “the traitors and sabotage press,” or “character assassins.” He had a particular animus toward a few columnists, among them Westbrook Pegler, whom he called a guttersnipe; and a few newspapers, among them the Chicago Tribune, which several times called for his impeachment, and once described him as a “nincompoop” and a “vote-stealing, graft-protecting, gangster-paroling” President who, to boot, had been a “catastrophic failure as the director of foreign policy.” But, unlike Trump, Truman never lost sight of the tradition he was part of, and honored.

At Truman’s final press conference, on January 15, 1953, he said, “This kind of news conference where reporters can ask any question they can dream up—directly to the President of the United States—illustrates how strong and how vital our democracy is. There is no other country in the world where the chief of state submits to such unlimited questioning. I know, too, from experience that it is not easy to stand up here and try to answer, off the cuff, all kinds of questions without any advance notice. Perhaps succeeding Presidents will be able to figure out improvements and safeguards in the procedure. I hope they will never cut the direct line of communication between themselves and the people.”

Through seven years, Truman, for all his flaws, embodied patriotism, spine, personal dignity, and, as he demonstrated at Potsdam, a determination to assume the responsibilities of world leadership, the reverse image of what the world saw last week in Germany. Even in the worst moments of the postwar Presidency, that standard was always met. But that was another world, and another time; regarding it from the distance of the present age only increases alarm at what the nation, and the world, is trying to get used to.

Jeffrey Frank, a former senior editor of The New Yorker and the author of “Ike and Dick: Portrait of a Strange Political Marriage,” is working on a book about the Truman era.

India-China Relations: Give Diplomacy A Chance


July 10, 2017

India-China Relations: Give Diplomacy A Chance

By Dr. Sawraj Singh

http://thelinkpaper.ca/?p=63848

Tension between India and China is rising to a dangerous level and a military confrontation has become a real possibility. Such a conflict can prove catastrophic not only for this region but can also escalate to a Third World War. Unfortunately, Asia and the Indian Subcontinent can become an arena for the most dangerous and destructive Third World War. Before upping the ante we should also think of the most dangerous consequences which our actions can lead to. I feel that both sides are not taking this as seriously as they should. India and China are the largest countries of Asia and they have a moral responsibility to try to prevent Asia becoming arena for the Third World War.

Prime Minister Modi’s visit to America and Israel and President Xi Jinping’s visit to Russia show that the world is getting polarized and new alliances are emerging in the world. On one side America- Israel-India alliance and on the other side Russia-China –Germany alliance may emerge. The differences between America and Germany are growing and it has become a real possibility that Germany, the biggest economic power of Europe can switch sides like Turkey and join Russia to make Europe a rival of America rather than its biggest ally. If Europe switches sides then the emerging America-Israel-India can be perceived as an anti Russia anti China and anti Islamic alliance; Because Europe was always perceived as tilting toward the Palestinians (Muslims) and soft on Russia while America was seen as solidly backing Israel and vehemently anti Russia. If Europe leaves America then it will become very difficult for any Islamic country to be seen in the American camp and russia will see this alliance as anti Russia alliance.

Such a polarization of the world sets a stage for a quick escalation of India-China conflict to a Third World War. Unfortunately, Russia, the closest and the most time tested friend of India may be forced to take the opposite side. Similarly the perception of an alliance of America, Israel and India can force the Islamic countries to take the opposite side. We can already see that Iran which was at one time a close friend of India has now started to equate the situation in Kashmir to the situation in Palestine. It is not in India’s   interest to be perceived as a part of an anti Russia, anti China and anti Islamic alliance. I feel that China does not want to be dragged in a world war. Such a war will go against the policy of focusing on the economic development and developing China’s internal market. This has been the crux of China’s policy in the last three decades.

A military conflict is in nobody’s interest. Therefore, both sides should try everything to find a diplomatic and a political solution before resorting to a military confrontation. India should also try to get Russia involved in finding an amicable solution because Russia has good relations with India and China. India and China in spite of the differences have many common goals. Both the countries can only get the status they deserve in a multi-polar world rather than in the present western dominated unipolar world. Let us concentrate on our commonalities rather than our differences and give peace a chance.

Dr. Sawraj Singh, MD F.I.C.S. is the Chairman of the Washington State Network for Human Rights and Chairman of the Central Washington Coalition for Social Justice. He can be reached at sawrajsingh@hotmail.com.

 

Donald Trump’s Washington is paralyzed


July 4, 2017

THE ECONOMIST

American Politics

Donald Trump’s Washington is paralyzed

And the man in the Oval Office is making a bad situation worse

Image result for Trump's 4th of JUly

JULY 4th ought to bring Americans together. It is a day to celebrate how 13 young colonies united against British rule to begin their great experiment in popular government. But this July 4th Americans are riven by mutual incomprehension: between Republicans and Democrats, yes, but also between factory workers and university students, country folk and city-dwellers. And then there is President Donald Trump, not only a symptom of America’s divisions but a cause of them, too.

Image result for Trump's 4th of JUly

Mr Trump won power partly because he spoke for voters who feel that the system is working against them, as our special report this week sets out. He promised that, by dredging Washington of the elites and lobbyists too stupid or self-serving to act for the whole nation, he would fix America’s politics.

His approach is not working. Five months into his first term, Mr Trump presides over a political culture that is even more poisonous than when he took office. His core voters are remarkably loyal. Many business people still believe that he will bring tax cuts and deregulation. But their optimism stands on ever-shakier ground. The Trump presidency has been plagued by poor judgment and missed opportunities. The federal government is already showing the strain. Sooner or later, the harm will spread beyond the beltway and into the economy.

From sea to shining sea

America’s loss of faith in politics did not start with Mr Trump. For decades, voters have complained about the gridlock in Washington and the growing influence of lobbyists, often those with the deepest pockets. Francis Fukuyama, a political theorist, blamed the decay on the “vetocracy”, a tangle of competing interests and responsibilities that can block almost any ambitious reform. When the world changes and the federal government cannot rise to the challenge, he argued, voters’ disillusion only grows.

Mr Trump has also fuelled the mistrust. He has correctly identified areas where America needs reform, but botched his response—partly because of his own incontinent ego. Take tax. No one doubts that America’s tax code is a mess, stuffed full of loopholes and complexity. But Mr Trump’s reform plans show every sign of turning into a cut for the rich that leaves the code as baffling as ever. So, too, health care. Instead of reforming Obamacare, Republicans are in knots over a bill that would leave millions of Mr Trump’s own voters sicker and poorer.

Institutions are vulnerable. The White House is right to complain about America’s overlapping and competing agencies, which spun too much red tape under President Barack Obama. Yet its attempt to reform this “administrative state” is wrecking the machinery the government needs to function. Mr Trump’s hostility has already undermined the courts, the intelligence services, the state department and America’s environmental watchdog. He wants deep budget cuts and has failed to fill presidential appointments. Of 562 key positions identified by the Washington Post, 390 remain without a nominee.

As harmful as what Mr Trump does is the way he does it. In the campaign he vowed to fight special interests. But his solution—to employ businesspeople too rich for lobbyists to buy—is no solution at all. Just look at Mr Trump himself: despite his half-hearted attempts to disentangle the presidency and the family business, nobody knows where one ends and the other begins. He promised to be a dealmaker, but his impulse to belittle his opponents and the miasma of scandal and leaks surrounding Russia’s role in the campaign have made the chances of cross-party co-operation even more remote. The lack of respect for expertise, such as the attacks on the Congressional Budget Office over its dismal scoring of health-care reform, only makes Washington more partisan. Most important, Mr Trump’s disregard for the truth cuts into what remains of the basis for cross-party agreement. If you cannot agree on the facts, all you have left is a benighted clash of rival tribes.

Til selfish gain no longer stain

Optimists say that America, with its immense diversity, wealth and reserves of human ingenuity and resilience can take all this in its stride. Mr Trump is hardly its first bad president. He may be around for only four years—if that. In a federal system, the states and big cities can be islands of competence amid the dysfunction. America’s economy is seemingly in rude health, with stock markets near their all-time highs. The country dominates global tech and finance, and its oil and gas producers have more clout than at any time since the 1970s.

Those are huge strengths. But they only mitigate the damage being done in Washington. Health-care reform affects a sixth of the economy. Suspicion and mistrust corrode all they touch. If the ablest Americans shun a career in public service, the bureaucracy will bear the scars. Besides, a bad president also imposes opportunity costs. The rising monopoly power of companies has gone unchallenged. Schools and training fall short even as automation and artificial intelligence are about to transform the nature of work. If Mr Trump serves a full eight years—which, despite attacks from his critics, is possible—the price of paralysis and incompetence could be huge.

Danger in Foreign Policy

The dangers are already clear in foreign policy. By pandering to the belief that Washington elites sell America short, Mr Trump is doing enduring harm to American leadership. The Trans-Pacific Partnership would have entrenched America’s concept of free markets in Asia and shored up its military alliances. He walked away from it. His rejection of the Paris climate accord showed that he sees the world not as a forum where countries work together to solve problems, but as an arena where they compete for advantage. His erratic decision-making and his chumminess with autocrats lead his allies to wonder if they can depend on him in a crisis.

July 4th is a time to remember that America has renewed itself in the past; think of Theodore Roosevelt’s creation of a modern, professional state, FDR’s New Deal, and the Reagan revolution. In principle it is not too late for Mr Trump to embrace bipartisanship and address the real issues. In practice, it is ever clearer that he is incapable of bringing about such a renaissance. That will fall to his successor.

This article appeared in the Leaders section of the print edition under the headline “A divided country”

Remembering India’s Diplomat and Historian. K.M. Panikkar


June 16, 2017

Remembering India’s Diplomat and Historian. K.M. Panikkar

By Sam Bateman

https://dinmerican.files.wordpress.com/2017/06/1fdd5-portraitofindianpoliticiank-m-pannikar-1946.jpg?w=506&h=659

Sardar Kavalam Madhava Panikkar (or K. M. Panikkar) (June 3, 1895[1] – December 10, 1963) was an Indian scholar, journalist, historian, administrator and diplomat.

Over 20 years ago, at a conference in Sydney hosted by the Australian Navy, then-Indonesian Ambassador to Australia Sabam Siagian referred to the ‘Vasco Da Gama Epoch’. That was a reference to an expression originally coined by the noted Indian historian and diplomat, K.M Panikkar, in his book Asia and Western Dominance: A Survey of the Vasco da Gama Epoch of Asian History. It described the period between the arrival of Vasco da Gama in Calicut in Southern India in 1498 and the post-World War II period. This was the period when Indonesia and most of Asia fell under European economic and political domination until the Japanese ended the aura of European colonial invincibility in World War II. The post-war period saw former British, Dutch, French and American colonies and territories in Asia gain their independence.

Sabam Siagian, who died last year, was Indonesia’s Ambassador in Canberra from 1991 until 1995. However, he’s mainly remembered as the first Editor-in-Chief of The Jakarta Post, the English-language paper he helped to set up in Indonesia. He was a good communicator in English and, possessing an affable personality, was popular in Australia. Being forthright and outspoken, he wasn’t afraid of ‘rocking the boat’ of conventional wisdom. That was evident in his reference to the Vasco da Gama Epoch. Well ahead of his time, he wanted his Australian naval audience to contemplate a world in which Western powers, particularly the United States, didn’t enjoy the same power and influence in Asia as they had previously. Panikkar and his Vasco da Gama Epoch continues to have implications for Australia and our relations with Asia, particularly Southeast Asia.

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K.M. Panikkar is highly revered by Indian strategic thinkers, but others also subscribe to his view of Asian history. Kishore Mahbubani, currently Dean of the Lee Kuan Yew School of Public Policy in Singapore, echoes similar ideas in his book The New Asian Hemisphere: The irresistible shift of global power to the East, in which he argues that many Western strategic thinkers remain trapped in the past, with an inability to understand the new world, and that Western power and influence isn’t the same as it was before. Pankaj Mishra is another eminent Asian writer who has picked up on insidious aspects of the Western presence in Asia, primarily in his book From the Ruins of Empire: The Revolt against the West and the Remaking of Asia.

Resentment of centuries of Western dominance is a major part of the strategic psyche of both India and China. Strategic thinking in India remains influenced by Panikkar’s writings. India is intent on becoming a pre-eminent power across the wider Indo-Pacific region. However, memories of the deployment  of an American task force led by the aircraft carrier USS Enterprise to the Bay of Bengal at the height of the 1971 Indo-Pakistani War still linger in India’s strategic consciousness. That deployment was viewed by India as an act of American ‘gunboat diplomacy’ that India couldn’t deter at the time. That experience became part of India’s strategic justification for acquiring nuclear attack submarines and bolstering its aircraft carrier capability. In that context, the current détente between India and the United States could be short-term opportunism for India. Its vision of the regional future might well follow Panikkar by seeing no significant long-term role for the United States in Asia.

Similarly, repeated incursions by Western imperialist powers in Chinese history have left an indelible mark on Chinese strategic thinking, leading to an emphasis on national sovereignty and fears of encirclement. It’s unfortunate that many American strategic thinkers continue to show a lack of appreciation of China’s history, especially Western imperialism, and the wide extent of anti-Western sentiment in China.

The Trump presidency in the United States, and uncertainty about its future policies in East Asia, is now serving to strengthen regional views that the Vasco da Gama Epoch is near an end—more quickly perhaps than had previously been anticipated. President Trump’s recent visit to Europe has led to views that he’s ‘weakening the West’ . Those views can only support regional perceptions of declining Western influence.

Those perceptions may be under-appreciated in terms of their impact on regional strategic thinking and assessments of the future of the region. Philippine President Duterte’s stepping back from his country’s links with the United States and moving closer to China add further to the notion of the impending end of the Vasco da Gama Epoch. Similarly, Cambodia, Indonesia, Malaysia and Thailand, and even ASEAN itself as Southeast Asia’s principal regional institution, are all showing that they’re adjusting their strategic thinking to recognise the rise of China and the decline of American power and influence.

What does that mean for Australia? The late Coral Bell, one of Australia’s most eminent international relations scholars, addressed the implications for Australia of the end of the Vasco da Gama Epoch in a 2007 paper, concluding optimistically that ‘The United States will remain the paramount power of the society of states, only in a multipolar world instead of a unipolar or bipolar one’. Unfortunately events of the past decade, including the Global Financial Crisis and the faster than anticipated rise of China, mean some re-assessment of that conclusion is required.

The time will come when the Vasco da Gama Epoch does end and the West enjoys little power and influence in the region. When that happens, Australia won’t be able to lift up our anchor and sail across the Pacific to anchor off the coast of California. Malcolm Turnbull also acknowledged that Australia was locked into the region when, in his address to the recent Shangri-la Dialogue, quoted one time Australian Foreign Minister Paul Hasluck as saying that ‘Others can go…But we can’t go home because this is our home’. In the short-term, it might suit us to maintain support for the United States in the region, but we must also be realistic about the future when the United Sates is much less paramount in the region.