Indo-Nepal Kalapani Dispute and Hidden Politics

Saurav Raj Panta and Anil Sigdel

Government of India released a new political map on 31st October 2019 after scraping the Article 370 of the Indian constitution. In addition to changes in Kashmir and Ladakh region including POK, the new map shows disputed border territory of Nepal, Kalapani, inside India. This caused Nepalis to protest India. Nepal government insists that Kalapani area is its integral part, whereas India says that India hasn’t change its border status with Nepal.

Historical facts

As per historical records, since 1952, Indian Military Mission started to cover Nepal-China border to fulfill India’s security interest against China. Indian Military Mission remained until 1970. During these periods, according to the book Border Management of Nepal by Buddhi Narayan Shrestha, in total 18 Indian Military Check Post were established , deployed from 1952- 1969, and they were located at:

Tinker, Taklakot, Muju, Mugugawn, Chharkabhot, Kaisang, Thorang, Larkay Pass, Atharasaya Khola, Somdang, Rasuwagadhi, Tatopani, Lambagar, Namche, Chepuwa Pass, Olangchungola, Thayachammu and Chayangthapu. (These locations are illustrated in the following map)

Nepal_Map_Dots

Illustration by Anil Sigdel, Source: Google Map.

The dots do not accurately show the exact locations: blue dots represent the location of Indian military deployment explained above; A red dot shows the Kalapani currently under dispute; Green dots refer to districts that have border issues with China according to SCMP news. 

Nepali Foreign Ministry doesn’t have the exact date since when Kalapani, Lipulekh and Limpiadhura has been encroached but historical events show that it might have begun at the time of Sino-Indian war of 1962. The high-altitude Kalapani area is a strategic location for India and China because it has a tri-country juncture (Nepal, China and India) and overlooks the Tibetan Autonomous Region (TAR) of China. India sees Kalapani as a valuable strategic point against Chinese aggression.

Regarding the dispute between India and Nepal, major argument is about the source of Mahakali river. India claims that the source of Mahakali river is Kalapani, whereas Nepal maintains that it is Limpiyadhura. The Sugauli Treaty of 1816 between Nepal and East India Company demarcated the boundary between Nepal and British India. The east of Kali River is Nepal and the West of Kali River is the British India. The then Prime Minister Jung Bahadur Rana and the East India Company approved the source of the Kali river was Limpiyadhura. However, Nepal believs that India is claiming the artificially created Kalapani lake as the source of Mahakali river without considering historical documents( Lumsali, 1996; K.L. Shrestha, 1996).

Serious lapse on Nepali side

Nepal faces a serious challenge as it has been so far unable to raise the issue internationally owing to various weaknesses of Nepali government.:

  • Missing document of 1958 General election voter list of Kalapani area, missing document of 1961 National Census (according to Bhairab Risal)
  • After 1962 Sino-Indian war, people living in Kalapani area were displaced and Nepal government doesn’t have a document showing their location of displacement (according to Bhairab Risal)
  • State Affairs Committee of the Federal Parliament of Nepal directed the government to release new map incorporating Kalapani inside Nepal’s national border. This indirectly means that the current political map of 2015 constitution excludes Kalapani and that Nepal has long before unlisted the Kalapani area in its national political map. So, what would be the relevance of raising this issue with India without strong proof? And, how would internationalization of this issue be possible?
  • Nepal released a statement against India’s new political map showing Kalapani region as its part by releasing a statement in Nepali language without signatories in the letter. This letter limits Nepal’s proper communication on the issue with India due to language barriers. This also shows Nepal’s weak diplomatic exercise.

Politics behind ‘Kalapani’

‘Kalapani’ is like a political rhyme in Nepal chanted by every politicians since 1990s as the issue especially came to the limelight after the 1990 people’s movement. The border encroachment issue in Kalapani was strongly raised by the-then Prime Minister Girija Prasad Koirala, argues Bhek Bahadur Thapa. Ever since, subsequent prime ministers continued to raise the issue just for the sake of raising. Protesting India by raising several issues is a regular political stunt in Nepal. Since 1950’s it has been observed that politicians make Nepali people anti-India despite the fact that from Royals to political and business leaders everyone has strong ties with India. Public vote political leaders to establish them in power hoping they may take strong steps against India for saving Nepal’s sovereignty. But once in power they act like a ‘puppet’ of Indian government. Current Nepali Prime Minister K.P Oli was a staunch Indian critic during 2015 blockade by India. People voted him to continue his strong stance against India. But he is now mute and decided to hold secretary level meeting to resolve this border crisis issues although for such critical matter Prime Ministerial level meeting was expected.

During Indian Prime Minister Indra I K Gujaral’s visit to Kathmandu on 9th June 1997, formation of Joint-Boundary Working Groups was agreed to resolve the Kalapani crisis. In addition, the then Prime Minister Girija Prasad Koirala conveyed to the Indian Prime Minister Atal Bihari Vajpayee that there are historical maps and documents, which depict that Kalapani belongs to Nepal (Colombo, 28 July ’98).  Koirala had further said that: “I cannot say, it was the positive achievement but I am sure that Vajpayee understood well what I wanted to tell him concerning the border problem.” (Budhi Narayan Shrestha, 2006).

In the meantime, some news media outside Nepal also reported about China’s encroachment of Nepal’s land. However, Nepal’s foreign minister Pradeep Gyawali said, talking to the Kantipur media’s Fire Side program, that there are few “minor problems” on Chinese side, especially the measurement of the height of Mt. Everest and Nepal’s own lackadaisical performance on saving the banks of our rivers. The minister also said that such news seem to be trying to distract Nepal from the main issue.

Finally, Nepal government has to do some serious homework to protect its territorial integrity while the nation has to refrain from street agitation.

Saurav is Associate of Nepal Matters based in Kathmandu, Nepal; Anil is Director of Nepal Matters based in Washington DC.

November 18, 2019

 

Reference read:

Chinese Construction along the Nepal-Tibet Border Puts Strategic Land at Risk”  in The Kathmandu Post by Anil Giri and Dipendra Shakya

“Xi comes to Nepal, Modi responds by changing Nepal’s map” – Nepal Matters

South China Morning Post news on China-Nepal border problems – Click here

 

 

 

 

 

 

Xi comes to Nepal, India responds by changing the map

lipu

Google Map

Modi 2.0 has been forced to accept two facts that India very much dislike. One is, Pakistan PM Imran Khan has really internationalized the Kashmir dispute/issue. The other is, Chinese President Xi Jinping exercises equal influence in South Asian nations, if not more than India. Xi’s state visit to Nepal deeply unsettled New Delhi elites. Undoubtedly, these changes have added to India’s long-standing security paranoia, and given good excuse for security establishment backed by the strong Modi government to take some unprecedented steps that are widely unaccepted. In huge revisionist moves, Modi government changed the map of Kashmir and included western Nepal’s mountainous Lipulekh/Kalapani area near the tri-junction between Nepal, China and India into India. 

People took to street in Nepal to protest Indian move. Indian MEA reiterate that India’s map is “accurate,” and that consultations regarding the border matters are intact. Nepal’s veteran border expert Buddhi Narayan Shrestha has said that India that carried British legacy has simply disregarded the British-era evidence and mapping that clearly show that the region in dispute is Nepal’s. In an urgent response, Nepal’s all-parties meeting called by PM Oli has come out with one voice that “Kalapani is ours,” and the foreign minister has said that in a friendly spirit PM Oli will reach out to PM Modi to settle the matter diplomatically.

How the dispute unfolds remains to be seen, but there is sense that Modi 2.0 has begun to respond to Chinese inroads in South Asia not by competing with China as an equal power but as a much weaker power, humiliated by China, to disregard the sovereignty and territorial integrity of the small neighbor. If it is so, then South Asian relations will be under growing stress under Modi.

The winner of all this undoubtedly will be Xi Jinping!

Nepal Matters for America, November 09, 2019

 

 

 

 

 

 

 

 

Indo-Pacific strategy: A big opportunity for Nepal

Anil Sigdel

(**This article was originally published in the major vernacular Nepalkhabar.com on December 31, 2018 and the following is the English version of that article **)

The United States’ State department’s readout on the meeting between the Secretary of State Mike Pompeo and Nepal’s Foreign Minister Pradeep Gyawali highlights Nepal’s “central role” in the Trump administration’s Indo-Pacific vision, which naturally raises questions in Nepal and elsewhere about the meaning and implications of this for Nepal.

The Indo-Pacific strategy is not entirely new. The US has been a dominant maritime power in Asia for decades. In recent years, it started to refer to the larger Asian region from the Pacific to some part of Indian ocean as the Asia-Pacific region. And now with India’s increasing regional role and ambition, and deepening US-India defense partnership, the Trump administration recognized the importance of India’s role and in its national security strategy for the first time used the term “Indo-Pacific.” Different parties, from Australia to India and others, claim to have coined this term, but overall it is understood that it was originally Japan’s initiative to create a larger regional architecture to counter China’s active global outreach, and now the US takes the lead for that.

The Indo-Pacific region, concept, and framework is not yet fully defined, and the US is still working on to develop content to the Indo-Pacific with partners such as Japan, Australia, India and others to further develop partnership under the Indo-Pacific framework. As understood so far, it is a vast area covering entire Pacific Ocean to the Indian Ocean up to the eastern coast of Africa, and includes land that surrounds these two oceans. Since Nepal lies on the rim of the Bay of Bengal, a north eastern corner of the Indian Ocean, which connects South Asia with Southeast Asia by land, it is being seen as an important nation in the Indo-Pacific region. In the context of India’s Look East and Act East policy, Nepal has gained further value in all this.

The Indo-Pacific has two parts: one is strategic or security side, and the other is the economic side. While the security side is still unclear and there are several disagreements on this among major countries that support Indo-Pacific; there is a possibility of a quasi-military alliance such as QUAD, or a quadrilateral grouping that includes US, India, Japan and Australia, but no significant progress is taking place in its negotiations. At present, there is a lot of uncertainty and unpredictability in Washington itself under President Trump. But on the economic side these countries converge and have already introduced several economic initiatives in a single, bilateral and tri-lateral formats.

The US is going to establish soon the International Development Finance Corporation(IDFC) which will re-strengthen its old Overseas Private Investment Corporation (OPIC) with the Congress funding of 60 billion US dollars, and allows the IDFC to even buy equities unlike the OPIC which can pose a solid challenge to Chinese investment around the world. For the most part, this mechanism will focus on Africa, as the Trump administration has also introduced its Africa initiative. Similarly, India and Japan have introduced Asia-Africa growth corridor, and Japan-Australia-US have announced further investment in the Pacific region, and so on. Even in the US policymakers are re-considering its one-dimensional military power approach – the architect of “Asia pivot” policy under the Obama administration, Kurt Campbell recently said in an interaction program in Washington that if the US wants to convincingly engage with its partners in Asia, it has to go beyond its solely military interests to other non-military aspects as well, such as, aid and development, and diplomacy. Because in Asia, countries also want to work and get the benefits from their partnership with China.

As far as Nepal is concerned, the US’s emphasis on Nepal’s role in the Indo-Pacific is an opportunity for Nepal as it is an unprecedented window for Nepal that can lift Nepal from its geographical constraint of being pressed between India and China which it has always sought. In Nepal’s case, its geopolitical conditions are different from countries which are in military alliance or similar groupings, therefore, it is not entirely relevant for Nepal.; Nepal does not face any direct threat for its sovereignty in the neighborhood. It is also not logical to argue that any military-type alliance would lead Nepal to the same fate as Afghanistan’s. The critical strategic location value of Afghanistan, its history and social, pollical and cultural structure is totally different from those of Nepal.

Nevertheless, Nepal can benefit tremendously from the economic side of the Indo-Pacific. With a little bit of imagination and increased investment in country’s diplomacy, Nepal government can work on taking the lead in the region and beyond benefiting from the US partnership, and increasing its own regional weight and diplomatic clout, which otherwise has always been depressed under India’s which is the elephant in the room.  Rather than just limiting ourselves in the traditional way of receiving aid money whenever given and accepting the patronage, political engagement of this level will give us a chance to increase Nepal’s diplomatic clout. Any Nepali diplomat or individual engaged in the sector knows that Nepal is invisible in the international diplomatic and strategic arena. It is almost impossible to get time form high level official unless they want us to come to listen to their advice or receive grants in their terms.

Thinking about these global initiatives merely in ideological terms will not help Nepal. Nepal signed China’s BRI, which does not mean that Nepal is being part of China’s global hegemonic ambition or China’s take on the US leadership. Similarly, signing into the Indo-Pacific does not mean that Nepal is being used to uphold US hegemony or its containment strategy vis-à-vis China. It will also be incorrect to claim that Nepal is of the biggest strategic value for the US in the region, as the power relations are shifting, Sri Lanka is emerging as equally important nation, if not the most important South Asian and Indian Ocean nation, and the US has made very clear in recent days how much emphasis it is willing to give to the nation. In the US there is definitely a confusion about the fact that why Nepal or other smaller nations do not get along with India. And regarding India, the US still lacks a deep understanding about what is India and its behavior in the neighborhood. The US-India relationship itself is very new.

I myself asked the principal deputy assistant secretary for South and Central Asia, Alice Wells, whether the US and India are planning to twist arms of Nepal and other South Asian nations, in the answer she clearly said that the US will not support any policy that would undermine the sovereignty of these countries, and emphasize that the US and Nepal should build partnership upon its own deep ties, therefore the Indo-Pacific is an opportunity for Nepal.

Besides, the US policy on South Asia is not solely about aligning with India’s interests and helping India, the US interest is also to make sure that India and China will come too close, in which Nepal has a space to maneuver. While China itself is increasingly worried about the Western resistance of BRI and America’s anti-China policies, Nepal fully relying on potential help from China will not be wise. The US- led rules and regulations for financial and trade policies and dollars as the main international currency will continue, thus Nepal simply cannot ignore the US leadership. Therefore, Oli government’s policy to engage with all its partners for Nepal’s best interest is a right policy, and the Indo-Pacific can help Oli government to show some tangible benefits.

And the argument that by being part of the Indo-Pacific, we are further constrained under India’s dominance is not entirely relevant. The Indo-Pacific is clearly an opportunity if carefully taken and worked out. For instance, if the US is set to found a regional institution for Indo-Pacific or China for its BRI, Kathmandu can offer to host them, which will increase Nepal’s stature.  And why not? Nepal has the ability and has had very good relationship with China and has managed its relations in South Asia very well except some hiccups in its relationship with India which are attributed to India itself than Nepal. Nepal’s independent role in South Asia vis-à-vis India will not annoy China as much as it would to India, but the US’s Indo-Pacific partnership will certainly enable Nepal this time to convince India.

Image: Google Map

Dr. Anil Sigdel is the director at Nepal Matters for America in Washington DC, and the Member Secretary of Nepal Policy Institute (NPI) under the Non-Residential Nepali Association (NRNA), a partner think tank of Nepal government. Dr. Sigdel holds  a PhD and a Master degree in International Relations.

Also read: United States and the Need for a New Block in South Asia – Real Clear Defense by Anil Sigdel

Secretary Pompeo to welcome Nepal’s FM Gyawali

Nepal’s Foreign Minister Pradeep Gyawali is all set to visit Washington DC from December 17-21. He will be accompanied by Nepal’s Foreign Secretary Shanker Bairagi, and the US Ambassador to Nepal H E Randy Berry will arrive in DC soon. The visit will be quite significant since after 17 years the foreign ministerial meeting is going to take place. Minister Gyawali will lead bilateral consultations with his American counterpart, and will also discuss about areas of economy and trade, security and developmental aid, people-to-people relations among others with high level officials from different agencies in Washington DC. HE Dr. Arjun Karki in Washington told Nepal Matters for America that “first time we are going to have a political meeting”, therefore this visit will be of “very high significance.”

The visit signifies the growing convergence between the two nations, which of late was labeled as a secondary kind of relationship, in that while the US is prioritizing Nepal in its Indo-Pacific vision, in Nepal also there is growing realization of strongly “reviving” its ties with the long-time friend US. In the quickly changing dynamics of South Asia, Nepal especially being a nation sandwiched between the giants China and India, the US-Nepal relationship has a particular significance  in terms of Nepal’s peace and stability, democracy and rule of law, and economic growth and development. It is particularly important to note for stakeholders on both sides that Nepalis want result-oriented policies from its old allies especially in the time in which Nepal has new options available and new narratives are becoming stronger.

Nepal is the 12th biggest source of international students in the US universities. About 300, 000 people of Nepali heritage live in the US. Every year thousands of Americans visit Nepal. The US is the biggest development donor of Nepal at present. The US is willing to commit more fund for Nepal’s infrastructure development and regional connectivity in South Asia.

Nepal Matters for America, December 2018

Secretary Pompeo to welcome Nepal FM Gyawali

US proposes Nepal to participate in Indo-Pacific:

Nepal’s Foreign Minister Pradeep Gyawali is all set to visit Washington DC from December 17-21. He will accompanied by Nepal’s Foreign Secretary Shanker Bairagi, and the US Ambassador to Nepal H E Randy Berry will arrive in DC soon. The visit is quite significant since after 17 years the foreign ministerial meeting is going to take place. Minister Gyawali will lead bilateral consultations with his American counterpart, and will also conduct discuss areas of economy and trade, security and developmental aid, people-to-people relations among others with high level officials from different agencies in Washington DC.

The visit signifies the growing convergence between the two nations, which of late was labeled as a secondary kind of relationship, in that while the US is prioritizing Nepal in its Indo-Pacific vision, in Nepal also there is growing realization of strongly “reviving” its ties with the long-time friend US. In the quickly changing dynamics of South Asia, Nepal especially being a nation sandwiched between the giants China and India, the US-Nepal relationship has a particular significance  in terms of Nepal’s peace and stability, democracy and rule of law, and economic growth and development. It is particularly important to note for stakeholders on both sides that Nepalis want result-oriented policies from its old allies especially in the time in which Nepal has new options available and new narratives are becoming stronger.

Nepal is the 12th biggest source of international students in the US universities. About 300, 000 people of Nepali heritage live in the US. Every year thousands of Americans visit Nepal. The US is the biggest development donor of Nepal at present. The US is willing to commit more fund for Nepal’s infrastructure development and regional connectivity in South Asia.

Nepal Matters for America, December 2018

Chinese investment raises concerns in Nepal

Nepal’s strategic imperative to engage with China deeply vis-à-vis India is gradually causing trouble

In the first eight months of the fiscal year 2017/18, Chinese investors, nearly double the Indians, received investment approval from the Nepal government. Although in terms of the investment India covers the largest portion, with 1200 companies China surpasses India, which has 700 firms. India holds 35 percent of the total foreign investment in the country, and China and Hongkong have 26 and 11 percent respectively. Altogether 92 countries have investment in Nepal.

But recently the Nepal government seems to favor Chinese companies by granting them projects without competitive legal process. There is a legal provision in which the ministerial council has the discretion to fact-track the process.  The government right now is interested in granting contract directly to Chinese companies in projects such as the outer ring road of Kathmandu (to China Energy Engineering Corporation), for which dozens of other firms had applied, or to revive the contract with Gezhouba for the 1200 MW Budi Gandaki which was revoked by the Nepali Congress or the Deuba government.

Therefore, stakeholders in Nepal are gradually voicing their concerns  about this non-transparency trend which can increase the cost of projects and lead to financial irregularities. The government has 3 major motivating factors for this preference – strategic imperative to engage more with China vis-à-vis India as PM Oli has singed energy cooperation agreement with China, confidence in Chinese companies’ capacity to finance projects, and the high-priority given to these projects. In one case, apparently a free DPR offer by a Chinse firm cut the deal. Nevertheless, Nepal’s decision to give the Arun III to India also did not follow the standard procedure. But in any case,  it is in Nepal’s interest to  stick with legal process than ad-hoc decision makings. (Data Source: BBC Nepali)

10/02/2018

Nepal Matters for America

Give Development a Chance: US-China-India and OBOR

China undoubtedly needs others’ cooperation and the US and India have the capability to play a critical role

In 2013 China introduced a vast intercontinental connectivity plan called “One Belt One Road”  initiative,” later renamed “Belt and Road Initiative” (BnR), that connects Asia with Europe and Africa by land and sea.  Under BnR, the Silk Road Economic Belt contains land connectivity as its core area—road, railway, fiber optics, energy— between Asia and Europe, and China and the Indian Ocean. Then the 21st -Century Maritime Silk Road Initiative connects South China Sea with Mediterranean via Indian Ocean.  By some estimates, BnR will cover more than 65 countries, and stimulate about US $ 4 trillion in investment in the next three decades.

BnR has come at a time when Western economies have struggled to come out of the 2008 financial crisis, and, there are serious threats to international peace and stability. In the face of these considerable challenges, it is in the interest of the international community to join efforts in making good use of the opportunities BnR may generate and carry out projects transparently, inclusively and effectively. BnR has a great potential for cooperation given the region’s need for massive infrastructure development that would in turn boost economic growth, development and foster security and stability.

However, as China prioritizes infrastructure investment towards the west, in regions such as Central Asia and South Asia, regional power rivalry and territorial dispute might well get into BnR’s way. In Central Asia, Russia has not ceased to see those former Soviet states as its backyard, US has already introduced its own infrastructure plans –New Silk Road –in the region as it drew down its forces in Afghanistan, and India for its growing economic clout also eyes influence in the region. Similarly, regarding the beneficiary countries, there are apprehensions and concerns about Chinese-led projects, primarily in terms of the advantages for the host countries. Therefore, China undoubtedly needs cooperation from other partners.

Importantly, India has of late given the signal that there is room for India and China to work together. Despite concerns and mistrust in some areas, India’s and China’s interests have overlapped in other areas, for instance, Bangladesh-China-India-Myanmar corridor (though slow in progress), China-led Asian Infrastructure Investment Bank (AIIB) and so on; in fact, China already has significant investment in India on infrastructure. In fact, India has become the largest recipient of AIIB financing.

For its part, the United States has the capability to play a critical role to help overcome the aforementioned challenges, but it would act only if it has sufficient incentives from BnR to do so, and if BnR is truly meant for the service of international development ; or perhaps if China cooperates with US on security matters.  Despite the bumps on the road in US-China engagement, as the former US Vice president Joe Biden put it, “cooperation and competition with China will coexist.” And there is room for these powers to engage constructively because China is willing to invest massively, is encouraging co-investment with Chinese contractors, and the US is not discarding the possibility of putting its expertise into play.

According to some US experts, BnR projects create opportunities for US firms especially in their areas of strength — telecommunications and clean energy.  In addition, there are areas where both China and the US need security on the ground. They can have mutually reinforcing roles in ensuring it; China through its investments and the US through its already established role in the area of security, whether it is Afghanistan or Horn of Africa, among others.

In terms of funding, China plans to finance BnR through AIIB, Silk Road Fund, New Development Bank, Chinese government funds, and the BRICS Development Bank. By some estimates the existing international banks’ capacity to finance Asia’s infrastructure building only covers about 10 percent of the needs, and that together with China’s funding sources will not generate enough funds either. Hence, if US is involved, that is going to draw the IMF, World Bank, and other Asian and European investors into BnR.

Finally, all stakeholders should work together in terms of needs assessment and sustainability of projects, establishing working relationships between different companies, transparency, inclusiveness, social, political and environmental considerations, and not repeating past failures.

Nepal Matters for America;  June 29, 2018

 

Expert Interview on China’s OBOR – Maj Gen Rajiv Narayanan, New Delhi

“India is ready to work with China for the larger good of the region”

Jennifer Loy interviews Retired Major General Rajiv Narayanan from India, Distinguished Fellow at the USI of India, on China ’s OBOR/BRI and the motivations behind it.

Q: In a simple way, can you explain China’s One Belt One Road (OBOR)/Belt Road Initiative (BRI)?

A: It is the deployment of the Chinese overcapacities of their factories and their labor to enable China’s growth. Concurrently, it plans to utilize this opportunity to gain geo-strategic space in Asia, especially East, SE, South and Central Asia.

Q:Do you believe Xi Jinping’s intentions are truly economic and almost nation-building, or do you think there are military motives as well?

A: Xi Jinping’s intention are purely to gain geo-strategic space using the geo-economic squeeze / ‘debt-o-nomics’ to ensure that it garners enhanced space for PLA to sustain itself well beyond its borders, viz., Gwadar, Hambantotta, Djibouti.

Q:The BRI is an incredible endeavor, a modern Silk Road.  How is the Chinese government funding this project?

A: The BRI is not something that was started by Xi Jinping. Most of these projects were on going under Hu Jintao, and a few under Jiang Xemin, viz., Hambantotta port construction began in 2009. Xi Jinping has coined this phrase and clubbed all these ongoing projects under one umbrella. Anyway, the Silk Route was not one road but a multiplicity of roads, connecting China, Central Asia, South Asia and West Asia. Under the umbrella of BRI, only one corridor, the China – Central Asia – West Asia corridor corresponds to the ancient Silk Route.

Q: How do the Chinese people view such an extensive project?

A: The common man is only able to read what the government wants him to know. The media and internet censorship within China is very harsh. As such he / she can only mouth what the Communist Party of China wants them to know.
Q: BRI projects would truly benefit the host nation if locals are employed.  Where are examples that they have been?

A: The BRI project is to provide jobs to the Chinese and not to the host countries. Very limited labor is being utilized from the host country – the CPEC is a classic case in point.

Q: In Xi Jinping’s first address to the UN in 2013, he stressed, “We should build partnerships in which countries treat each other as equals, engage in mutual consultation, and show mutual understanding.”  What can you say to this in terms of the BRI?

A: What XI Jinping stated was only meant for media consumption and for the US and West to treat China as equals. The manner in which the BRI has been invoked, and made part of the Constitution, tells the story. No host country was even consulted. India has never coveted another country’s territory, but China creates issues by specious territorial claims and creeping assertiveness – as it has done in the South China Sea. Post the 1962 fiasco, India has learnt its lessons, and the in subsequent border battles in 1967 in Sikkim China was decisively defeated. Similarly, in 1987 when China tried to create an incident in Arunachal Pradesh (Sumdurong Chu), it was surprised by India’s response and China blinked, pulled back and it led to the meeting between Den Xiaoping and PM Rajiv Gandhi. The Doklam standoff in Bhutan is a lesson to the major powers that if it militarily supports a smaller nation it can stand up to China’s arm-twisting, like Bhutan did with India’s support.

Q: India appears to be losing influence in Nepal, Sri Lanka, and the Maldives.  What do they need to do to regain this, or should they wait and see how the BRI aids the region?

A: Loss of influence depends on long term interests, and that I do not think will change in any of the three countries. Though temporarily it may seem so, the economic dependency cannot be wished away. All three understand that trade with China is not a viable option, but as with any country, they would prefer to hedge between two major countries to maximize the gains for their country.

Q: A couple months ago, India and China “reset” their relations. Was this for show or do you think it has worked?

A: China seems to understand that in the near to medium term, rapprochement with India would be a win-win for all. The two major powers in Asia need to work together and build on the convergences rather than allow the divergences to create sensitivities that could lead to avoidable contest. As such, India is ready to work with China for the larger good of the region.

Q: It appears Nepali Prime Minister Oli is interested in increasing relations with China.  Besides China Telecom Global and a Beijing funded railway into China, what other projects will Nepal benefit from with the BRI?

A: No corridor of the BRI touches Nepal. So, at best Nepal can look towards a link that could then connect it to the Central Asia-West Asia corridor. Any infrastructure needs to be economically viable to be able to repay the loans provided for executing the same. Hence, the projects that China proposes needs to be closely scrutinized for its economic viability. Accordingly, Mr Oli, Nepal’s prime minister, has stated categorically that concurrently he desires to maintain good relations with India also.

Q: How far do you think Sino-Nepali relations can extend before India intervenes, perhaps militarily?

A: Why would India intervene militarily at all? Nepal has very close relations with India, and it still continues. The Nepalese do not need any visa to visit India, or any work permit to take up jobs here. This will continue. So despite good relations with China, Nepal will also maintain its traditional relations with India – it’s not a zero-sum game.

Q: In 2017 at the World Expo in Astana, Kazakhstan, the China Pavilion was concerned with clean, green technology. How have they already taken steps to implement this within the BRI?

A: It does not seem so, as is evident from the projects planned for CPEC. Pakistan currently is electricity grid based on gas fired technology – considered rather green; but the energy grid being made by China is mostly Thermal that is not green.

Q: Chinese tourists make up the largest percentage in the Maldives.  How will the BRI improve the Maldivian economy besides tourism?

A: The BRI will not improve Maldivian economy, since the infrastructure costs are not covered by the visiting tourists. Thus if Maldives goes ahead with executing projects without any assessment of their economic viability,  it could also end up in a debt trap like Sri Lanka and Myanmar (Pakistan?).

Q: Besides the 99-year lease on the Sri Lankan port of Hambantota, how else will the BRI affect the island nation?

A: The nation is already in a debt trap. It needs to carefully weigh the fine print for the other projects that China has proposed around Colombo.

Q: The landlocked Kingdom of Bhutan is secluded and unique because of its geography as well as its environment and lifestyle.  Will the BRI affect it?

A: No. It has no connectivity with China. The Nation does not look at GDP but at Gross National Happiness (GNH).

Q: Bangladesh is often a forgotten South Asian nation.  It is poor and suffers from great infrastructure concerns and it would greatly benefit from the BRI.  Are there any such projects?

A: The India – Bangladesh – Myanmar – China project that was already in place had been unilaterally subsumed by China into BRI, which India has objected too. China is going slow on this project. However, due to the debt issues being faced by Sri Lanka and Myanmar, Bangladesh is wary of projects with China and is carefully selecting only those that would be economically viable to it.

Q: What are the prospects for Gwadar and Kyaukphyu as Indian Ocean ports for China to decrease sea shipping?

A: Neither would reduce China’s maritime trade footprint.

Q: How is the “China Model” affecting nations in Africa?

A: The ground swell against ‘China Model’ of exporting its men and material for execution of projects is rising.

Q: The BRI will extend to Europe eventually. Explain those that are and are not interested and their reasoning.

A: The extension of BRI to Europe is basically for optics and is not economically viable. The train from Yuili (Eastern Seaboard of China) to UK took 21 days and carried 200 x 20 ft containers. There were 11 x transshipment involved. Due to this, in a month only about 10 trains can run in a month, i.e., 2000 x containers can be shipped to UK. Compared to it the larger container ships can carry 12000 x 20 ft containers with almost 20 x ships being handled in a month, i.e., 240,000 x containers can be shipped in a month. The economics are stark.

Q: Xi described the BRI as a “win-win” for the nations involved.  I understand it is too soon to truly tell.  Regardless, what needs to happen for it to be a “win-win” for those involved?

A: As has emerged from the experience of both Sri Lanka and Myanmar, the win-win appears to be only for China – win in the near term and another win in the medium to long term. In the near term it gains space and in the medium term with geo-economic squeeze due to debt it gains geo-strategic space.

Jennifer is Research Associate at Nepal Matters for America in Washington.

Image source: Tibetan Review (customized)

 

Expert Interview — Priyajit Debsarkar

“One Bill One Ruin (OBOR)  / Bankrupt Ruin Initiative (BRI)”

Jennifer Loy interviews Priyajit Debsarkar, author of Pakistan’s Atlantique Attack & Arbitration  and the previous book The Last Raja of West Pakistan,  on China ’s OBOR/BRI and the motivations behind it.

  1. In a simple way, can you explain China’s One Belt One Road (OBOR)/Belt Road Initiative (BRI)?

My honest candid explanation would be one Belt of Debt, Road to nowhere. One Road Multiple traps. One Bill One Ruin (OBOR)  / Bankrupt Ruin Initiative (BRI).

  1. Do you believe Xi Jinping’s intentions are truly economic and almost nation-building, or do you think there are military motives as well?

Most certainly martial myth of double digit growth to keep the deep seeded socio- economic issues at bay. Domestic debt, poverty and climate change linked pollution are the key spheres that President Xi should concentrate on.

  1. The BRI is an incredible endeavor, a modern Silk Road.  How is the Chinese government funding this project?

Estimates for the capital needs of projects under its scope range from US$4 trillion to US$8 trillion over an indefinite period. China will try to provide concessional funding through institutions like the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, But Chinese banks alone will not be able to fully fund these Belt and Road projects as the scale of the initiative expands. That’s when private capital will come in and public-private partnerships (PPP) have an important role to play. Port in Pakistan, Bridges in Bangladesh and Railways to Russia can’t be conceived out of thin air.

4. How do the Chinese people view such an extensive project?

I really doubt how much information the common Chinese has access to make an educated assessment of the entire project. It’s highly likely they will not have access to any real-time debt to GDP figures at best they can guess.

  1. BRI projects would truly benefit the host nation if locals are employed.  Where are examples that they have been?

The best example is Tibet were locals have been involved in Chinese sponsored infrastructure development model.

6. In Xi Jinping’s first address to the UN in 2013, he stressed, “We should build partnerships in which countries treat each other as equals, engage in mutual consultation, and show mutual understanding.”  I feel this does not prove true today with Sino-Indian relations, especially as China is gaining influence in South Asia.  What can you say to this in terms of the BRI?

Delhi-Beijing aligning can work to Kabul’s advantage; this was reportedly decided at the informal summit in Wuhan on April 27-28 between Prime Minister Narendra Modi and Chinese President Xi Jinping. If this gets operationalized, it has the potential to reshape the geopolitics in and around Afghanistan.

  1. India appears to be losing influence in Nepal, Sri Lanka, and the Maldives.  What do they need to do to regain this, or should they wait and see how the BRI aids the region?

India must show pivotal role to ensure Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation emerges the prime alliance in South East Asia a beacon of hope in the region.

  1. A couple months ago, India and China “reset” their relations. Was this for show or do you think it has worked?

China inaugurated its first overseas military base in Djibouti, increasing India’s anxiety about China’s growing profile in western Indian Ocean; maybe the Reset Button is made in China.

  1. It appears Nepali Prime Minister Oli is interested in increasing relations with China.  Besides China Telcom Global and a Beijing funded railway into China, what other projects will Nepal benefit from with the BRI?

India and Nepal agree on key infrastructure and agriculture projects, two countries agree to expand rail links from Raxaul to Kathmandu apart from key Electricity projects. It’s not all doom and gloom. India and Nepal are connected by the same umbilical cord after all.

  1. With positive and seemingly strengthening Sino-Nepali relations, it is odd that in early May Nepal withdrew from the Budhi Gandaki hydroelectricity project. Can you elaborate?

“Political prejudice or pressure from rival companies may have been instrumental in the scrapping of the project. But for us, hydropower is a main focus and come what may, we will revive the Budhi Gandaki project”, these are Nepal PM K P Oli’s own words; it can rise as a phoenix.

  1. How far do you think Sino-Nepali relations can extend before India intervenes, perhaps militarily?

The historical angle of Gorkha war, an invasion of Tibet by Nepal from 1788-1792 should be made more accessible to the youth of today to understand the founding stone of Sino- Nepali Relationships.

  1. In 2017 at the World Expo in Astana, Kazakhstan, the China Pavillion was concerned with clean, green technology. How have they already taken steps to implement this within the BRI?

Yes they have progressed – A new report released by the Institute for Energy Economics and Financial Analysis (IEEFA) delves deep into the country’s efforts to lead the world in laying an international foundation for renewable energy generation.

  1. Chinese tourists make up the largest percentage in the Maldives.  How will the BRI improve the Maldivan economy besides tourism?

Ex-president Mohamed Nasheed said Chinese interests had leased at least 16 islets among the 1,192 scattered coral islands and were building ports and other infrastructure there, they are on route of becoming the Sri Lanka 2.

  1. Besides the 99-year lease on the Sri Lankan port of Hambantota, how else will the BRI affect the island nation?

Mattala Rajapaksa International Airport is a perfect example of Ghost town developmental model which will benefit the Island Kingdom.

  1. The landlocked Kingdom of Bhutan is secluded and unique because of its geography as well as its environment and lifestyle.  Will the BRI affect it?

The taste of Doklam dim sums along with a fuzzy Beijing bluff  will live in the memories of Bhutan for a long time to come.

  1. Bangladesh is often a forgotten South Asian nation.  It is poor and suffers from great infrastructure concerns and it would greatly benefit from the BRI.  Are there any such projects?

The Dhaka Stock Exchange is the most recent Sino-progress in Bangladesh. It will not benefit in the long run as China has aggressively in recent times come up with export oriented finished garments. The political leadership in Bangladesh has resolved a 70- year old land dispute with India in the most amicable way possible. They are working closely to implement the Indira Mujib Accord signed in 1971.

  1. What are the prospects for Gwadar and Kyaukphyu as Indian Ocean ports for China to decrease sea shipping?

The string of Pearls from Myanmar to West Pakistan might not be beneficial to the dreams of Deep Sea shipping alternatives for China. With regards to Pakistan the entire region from Kashgar to Gwadar is plagued with security concerns and runs into foreign sovereign disputed territory. With an impending IMP bailout package with high premium of FATF black list its most likely to derail.

  1. How is the “China Model” affecting nations in Africa?

Offer the honey of cheap infrastructure loans, with the sting of default coming if smaller economies can’t generate enough free cash to pay their interest down. It’s a road of multiple traps.

  1. The BRI will extend to Europe eventually. Explain those that are and are not interested and their reasoning.

Only if it succeeds to lift off in Asia and Africa, which looks highly unlikely at the present time.

  1. Xi described the BRI as a “win-win” for the nations involved.  I understand it is too soon to truly tell.  Regardless, what needs to happen for it to be a “win-win” for those involved?

Win for some, Multiple Debt trap for all.

Jennifer is a Research Associate at Nepal Matters for America, Washington DC.

Photo Courtesy: South China Morning Post

Expert Interview – Frank O’Donnell

Jennifer Loy interviews Frank O’Donnell on China’s OBOR/BRI and the motivations behind it. Frank is a Stanton Nuclear Security Junior Faculty Fellow, International Security Program/Project on Managing the Atom.

ODonnell - Photo
In a simple way, can you explain China’s One Belt One Road (OBOR)/Belt Road Initiative (BRI)?

OBOR aims to fulfil multiple geopolitical objectives for China. The first is as a statement and demonstration of global influence. The Pakistan-specific element of OBOR alone, entitled China-Pakistan Economic Cooperation (CPEC), features an infrastructure loan to the Pakistan government of $46bn. This sum, as only one part of the overall OBOR initiative, has been estimated to be worth more than the total devoted to the Marshall Plan when converted into today’s dollar equivalents. The principal land corridor branch creates a land transport and infrastructure route from Chinese east coast cities through Xinjiang. It then enters Central Asia, Iran, Turkey and Russia, and terminates in Western Europe, China can improve its access to crucial energy resources in these states while elevating its influence in their politics. This will also serve to economically develop and further lock Xinjiang into the Chinese economic system – this province has been one the poorest and most isolated within China, and suffers from continuing Muslim extremism and brutal PLA Army crackdowns.

A branch of this corridor will also extend from Kashgar in Xinjiang through to the Gwadar port in Balochistan in southwestern Pakistan, sitting on the Arabian Sea. Both of these branches enable China to create viable alternative energy and other supply routes should the Malacca Strait become blocked for some reason. This second Pakistan branch also allows China to provide the aforementioned huge economic stimulus to Pakistan, to enable it to remain economically viable and also to upgrade its road and rail infrastructure. The latter is of relevance to Pakistan’s military, as these new networks can easily be commandeered for improved military logistics (for example surging Pakistani forces toward the Indian border) in a crisis.  As such, this second corridor – CPEC – enables Pakistan to remain militarily competitive with India, a core long-term foreign policy goal of Beijing.

The second major component of OBOR is the Maritime Silk Route. This intends to start from Chinese east coast ports and move through Hanoi, Jakarta, Singapore, Kuala Lumpur, Sri Lanka, the Maldives, East African port cities such as Mombasa and Dijibouti, before crossing through the Suez Canal to European Mediterranean ports. The Gwadar port in Pakistan could easily be added to this network. This Route extends Chinese political and economic influence to these states through port construction projects and associated generous loans. Building this network helps justify and regularize a growing Chinese military naval presence across the Indian Ocean. Many of these ports, such as Gwadar and Djibouti, are intended to be used for both Chinese military and commercial naval traffic.

The third major component of OBOR is ultimately domestic. While economically developing Xinjiang, the initiative more broadly aims to address a major long-term economic problem for China: its oversupply of steel, cement and other similar factories, with insufficient demand within China for their products. This is part of China’s general problem of its previous investment-heavy economic model, which relied upon international and domestic capital to invest in new factories to increase supply. While it is attempting to move toward more reliance upon domestic consumption as a driver of economic growth, all of these rail, road, energy, and port infrastructure projects create international demand for the products of these existing factories, and thus avoids the politically and economically difficult challenge for Beijing of overseeing their shuttering and deliberate contraction of this sector of the economy.

Click on the image to enlarge:

obor

Sources: South China Morning Post; Mercator Institute for China Studies (Merics), IMF, World Bank, International Monetary Institute, Renmin University of China, Rhodium Group, HSBC, Daiwa Capital Markets, Geography Cement, hongxiang100.com

 

Do you believe Xi Jinping’s intentions are truly economic and almost nation-building, or do you think there are military motives as well?

There are clear military motives to OBOR. I have already pointed out their implications for Pakistan’s military competition with India, and for China’s naval ambitions. More subtly, the generous infrastructure projects and loans offered to OBOR member states are partly offered to bring certain of these states (such as Sri Lanka, Maldives, Nepal) more into China’s sphere of influence. This has obvious military implications in terms of threatening the continued ability of the United States to assemble and maintain a loose coalition of regional states that oppose the aggressive nature of China’s naval expansion. According to an excellent new report, titled “Harbored Ambitions,” on Chinese perspectives and management of the Maritime Silk Road project, they consistently view these projects as having greater strategic/military than economic importance.

 

The BRI is an incredible endeavor, a modern Silk Road.  How is the Chinese government funding this project?

It is being funded by multiple sources, but the most significant are Chinese state-owned banks, which are under direct control of the government, and therefore can be seen as spending from the central government budget by one remove. Second come international development banks in which China plays a leading role, such as the Asian Infrastructure Investment Bank (AIIB), BRICS New Development Bank, and the China Silk Road Fund sovereign wealth fund. Two good briefings on funding sources are available here and here

How do the Chinese people view such an extensive project?

 

It is difficult to accurately determine the level and quality of support for the initiative among the mass public. However, a useful recent article by Michael Swaine indicates that China’s political and strategic elite express consistent positive support for OBOR, but occasionally raise reasonable concerns relating to the sheer scale of the project and the accordant consequences of failure.

BRI projects would truly benefit the host nation if locals are employed.  Is this part of the BRI?

The majority of OBOR contracts go to Chinese state-owned construction and engineering enterprises who send Chinese workers and engineers to the host country to do the work. See here and the “Harbored Ambitions” report for details of this. This system permits maximum Chinese government control over the political and financial aspects of each project. In effect, it means that most projects take the form of a Chinese state-owned bank lending a recipient state a large sum of money with significant interest to pay for the project, which then goes directly to a Chinese state-owned construction or engineering firm that employs Chinese nationals. The Chinese firm may partner with a local firm from the recipient country, but it remains the lead contractor and in charge of the project.

Are the free-trade agreements China recently made in South Asia also part of the BRI or are they separate?

They are formally separate, but support the overarching Chinese effort to build economic and thus strategic influence within these countries, and lower political and economic barriers within these countries toward this end.

In Xi Jinping’s first address to the UN in 2013, he stressed, “We should build partnerships in which countries treat each other as equals, engage in mutual consultation, and show mutual understanding.”  I feel this does not prove true today with Sino-Indian relations, especially as China is gaining influence in South Asia.  What can you say to this in terms of the BRI?

I agree, and this is also shown by the nature of the OBOR projects I have discussed above. This demonstrates that this rhetoric by Xi Jinping is indeed just rhetoric.

India appears to be losing influence in Nepal, Sri Lanka, and the Maldives.  What do they need to do to regain this, or should they wait and see how the BRI aids the region?

Indian diplomats should warn their counterparts in these states of the dangers of agreeing direct OBOR projects, as evidenced by the recent Sri Lankan concession of the Hambantota port to China on a 99-year lease because it could not meet the payments of its loan agreement with China. India should, as far as is fiscally possible, offer its own competing economic development projects within these states that grant more of the contract to construction and engineering firms within those states, and on better loan terms. It should also seek to leverage the AIIB and New Development Bank to provide general and project-specific development loans to these states, to reduce their demand for the kinds of projects China would offer. Finally, given that it is now in greater direct competition for influence in these states with China, self-defeating Indian policies that only reduce its influence, such as the trade blockade with Nepal in 2015-16, should not be repeated (see here for the background).

 

What benefit(s) will India receive from the BRI?  What does it need to do to benefit from it?  Does Indian Prime Minister Modi even want Chinese investment?

Modi wants Chinese investment to help build Indian infrastructure, but is far more comfortable receiving it through the avenue of AIIB project funding, with the AIIB authorizing $1.5 billion of funding in 2018. This will largely be because India has a position on the AIIB board and ownership stake, and thus a greater degree of control in the terms of the loan. India actively opposes both the OBOR project and the idea of receiving direct Chinese funding through an OBOR-type agreement. New Delhi is also aware that withholding its support and cooperation with the broader OBOR network is a major point of leverage it has over Beijing. Scholars and analysts I spoke to in Beijing in January and February were well aware of the importance of Indian participation for the success of OBOR and that India had accordant leverage over China in continuing to refuse to participate.

Xi described the BRI as a “win-win” for the nations involved.  I understand it is too soon to truly tell.  Regardless, what needs to happen for it to be a “win-win” for those involved?

The OBOR projects would have to be structured as loans at low interest rates, if not grants, to support infrastructure development in the recipient countries, with the majority of contracts going to firms in those countries. There would need to be little military relevance to these projects, for example in the nature of port design. In such a way, the recipient countries would be able to modernise their infrastructure, while China would accrue important soft power benefits and be able to build a more positive image for itself in global politics and within the societies of the recipient countries.    

Jennifer is a Research Associate for Nepal Matters for America, Washington DC.