Daily News Analysis

THE BRI AT 10, SOME HITS, MANY MISSES

19 Oct,2023 Download Pdf 5 Min Read

Why in the News?

The Third Belt and Road Initiative for International Cooperation was convened in Beijing, China and marked the 10^th year of anniversary of Chinese President Xi Jinping’s signature initiative.

The Belt and Road Initiative (BRI):

It was perceived as a gateway for China to transition from a regional power with global influence to a global power with comprehensive strength.
Chin also wanted to develop alternative transport and trade arteries as rivals could put the squeeze on the Strait of Malacca, the jugular vein for China’s economy.
The establishment of the Asian Infrastructure Investment Bank with $100 billion was with the idea to enable Mr. Xi to harvest early gains of the BRI.
BRI’ launch enabled Mr. Xi to brand himself as a global statesman and project China’s power and influence overseas.
The Chinese government’s white paper on BRI revealed that
1. around 200 BRI cooperation pacts had been inked with over 150 nations.
2. The total two-way investment between China and partner countries from 2013 to 2022 touched $380 billion.
Under China’s Marshall Plan (BRI), motorways, power plants, ports, railway networks, and digital infrastructure have been built.

Many misses of BRI:

Issues related to ecological damage, displacement of people, disputes over payouts and labour unrest have been associated with BRI.
1. For instance, in Indonesia, anxieties related to Chinese labourers filling up positions earmarked for locals have erupted.
2. The super-fast trains in Laos and impressive dam projects over the Mekong River have affected those displaced due to lack of compensation and affected people due to droughts led by dam-construction projects.
Unsustainable debt
1. Debt burden: Laos owes China around $12.2 billion i.e., about 65% of its GDP.
Tarnished tagline of ‘win-win cooperation’
1. In the China-Pakistan Economic Corridor (CPEC) , China has cornered 91% of Gwadar port’s revenue while Pakistan pocketed just 9%.

Global alternatives

United States and Japan initiative of “United States-Japan infrastructure investment alternatives in the Indo-Pacific region”.

‘Build Back Better World’ (B3W)” or Partnership for Global Infrastructure and Investment initiative by the US.
1. It seeks to channelise private capital into climate change and energy security, health care and health security, digital technology, and gender equity.

Key details about the 'Build Back Better World' (B3W) initiative:

B3W is a infrastructure development initiative proposed by G7 countries led by the United States in June 2021.
It is positioned as a competing initiative to China's Belt and Road Initiative (BRI).
B3W aims to raise hundreds of billions in infrastructure investment to finance projects in developing countries globally.
The key stated goals are to mobilize private sector capital, promote transparency, sustainability and high labor and environmental standards.
B3W will focus on climate, health, digital technology and gender equity related infrastructure.
It plans to initially mobilize financing for projects in Latin America, Africa, the Indo-Pacific and low and middle-income countries.
The U.S. has billed it as representing the democratic values of openness, economic growth for all, high standards, and transparency.
Critics argue that B3W lacks details on its capital base currently. More concrete project funding plans need to emerge.
B3W is still in early conceptual stages. Its implementation will depend on coordination between G7 countries, private investors and recipient nations.
It represents efforts by the U.S. and its allies to provide an alternative to BRI and counter China's growing influence over global infrastructure financing.

In summary, B3W aims to be a transformational global infrastructure partnership, but its actual execution remains to be seen.

2. India-Middle East-Europe Corridor (IMEC) proposed in the G20 Delhi summit, which seeks to link India, West Asia, and Europe through railways and shipping lines.

Trade connectivity, electricity, digital infrastructure as well as a pipeline for clean hydrogen export have been envisioned.

The India-Middle East-Europe economic corridor refers to plans to establish an integrated freight corridor connecting India with Europe via the Middle East:

The idea is to develop a smooth transport corridor that would allow efficient movement of goods from India to major markets in Europe via the Middle East.
This would involve upgrading infrastructure like ports, highways, rail networks across the regions to enable seamless connectivity.
Key middle eastern ports like Chabahar in Iran, Bandar Abbas in Iran and Duqm in Oman would act as crucial transit hubs on this route.
The international north-south transport corridor already connects India with Russia and Europe via Iran. This would be expanded under the broader India-M.East-Europe corridor plan.
For India, it will provide an alternative and shorter route for trade with Central Asia and Europe compared to the traditional Suez canal transit.
The corridor is expected to boost India's connectivity and economic ties with the resource-rich Middle East and Central Asian nations.
Strategically, it would allow India to counter China's increasing presence in the region through its Belt and Road Initiative.
However, instability in the Middle East and diplomatic tensions between key partners pose challenges to establishing this corridor currently.
India is still in talks with nations like Oman, Iran, Saudi Arabia to work out issues related to costs, infrastructure and operationalization of the corridor.

So in summary, the proposed economic corridor could strategically and economically benefit India but its progress depends on regional geopolitics and joint efforts with Middle Eastern countries.