Creases On The Silk

ADVERTISED by its backers in Beijing as a modern-day version of the Han dynasty’s Silk Road, the Belt and Road Initiative, commonly referred to as BRI, is the most ambitious infrastructure project in modern history.

Now, five years since the initiative was first announced, there is good reason to believe the New Silk Road could be headed for more problems, imperilling Beijing’s vision of completing it by 2049.

Critics are pointing out that Chinese-financed projects are prone to vast markups and influence peddling. Many argue Beijing is luring recipient countries into debt traps (often cha-racterised as loan-to-own schemes), the most famous example being a billion-dollar port project in the district of Hambantota in Sri Lanka that ended in bankruptcy and the developer, China Merchants, taking control of the port with a 90-year lease. According to Rahul Kapoor, a shipping analyst with Bloomberg Intelligence: “Hambantota is a great example of the Chinese quest for global maritime dominance.”

Such critical issues have prompted an increasing number of heads of state, legislators and policymakers to enact measures to protect their countries from the types of excesses and risks that have plagued recipients. In Brussels, for example, the European Parliament is developing a legislation that would establish norms for vetting Chinese-funded projects. Some Asian politicians have also started to scale back, and in some cases even cancel, overly ambitious infrastructure projects.

With over US$1 trillion (RM4.18 trillion) of planned investments in 68 countries, the New Silk Road would, if completed, provide deepwater and dry ports, power stations, oil and gas pipelines, railways, highways and land bridges across Asia, Africa and Europe.

Beijing does its best to paint the New Silk Road as an economic development project, and China’s policy mandarins often talk about the potential benefits, namely its filling an “infrastructure gap” and therefore accelerating economic growth in recipient countries.

But Beijing’s description of “a bid to enhance regional connectivity and embrace a brighter future” needs to be viewed in a more sober light.

The reality is, China stands to be the main beneficiary of the New Silk Road, both economically and politically. In fact, the initiative is seen as a key driver behind Xi Jinping’s so-called “China Dream”, which envisions China becoming a major power by 2050.

Indeed, the New Silk Road, if realised, would give a tremendous boost to China’s trade by connecting it with more than a third of global gross domestic product and more than half of humanity. But equally, if not more important, are the energy security and potential military-related aspects of the initiative. Its ports and pipelines would give China the ability to dominate the global energy interstate stretching from the Middle East, through choke points into Europe, across the Indian Ocean in Pakistan, Bangladesh, Sri Lanka and Myanmar, and finally through the Straits of Malacca into the South China Sea. And, much to the consternation of the West and their Asia allies, it would offer docking and refuelling facilities for China’s blue water navy.

In Washington and Brussels, politicians are starting to believe Beijing is blending commerce with politics as a means of keeping the European Union from joining arms with the United States to contain China’s rise and neutralise opposition to its foreign policy.

In Asia, most leaders in the region have, until recently, tilted towards Beijing and, unlike Europe, have not shown much alarm over China’s leveraging its commercial diplomacy as a means of influencing domestic and regional politics.

Indonesia’s Jokowi, Philippines’ Duterte, and Cambodia’s Hun Sen are examples; this is especially troubling when it comes to crucial policy issues on a regional scale, such as the South China Sea dispute.

Yet, there is resistance. In Myanmar, for example, the government has scaled back plans for a Chinese-built deepwater port in the town of Kyaukpyu in the western state of Rakhine. Slashing the cost to US$1.3 billion from an initial US$7.2 billion, the project will start with only two berths instead of the 10 included in original master plan.

Most of Southeast Asia has remained uncritical of the New Silk Road. One important exception is Malaysia’s new prime minister, Tun Dr Mahathir Mohamad, who, at 93, is Asia’s undisputed senior statesman.

Dr Mahathir richly deserves kudos for pushing back against China when he sees it is warranted. He has said he does not want Malaysia to be beholden to China, and views Beijing’s use of economic leverage over its smaller neighbours in the region as a kind of colonialism.

Indonesia, the economic giant of Southeast Asia and arguably the most important player in Asean, when it comes to regional security and maritime-related issues, should take some lessons from Dr Mahathir.

Certainly, there is nothing wrong with doing business with China. Yet, just as China has laws and regulations on foreign direct investment that are designed to protect its national security interests, so too should China’s neighbours ensure they protect themselves from foreign interference and maintain control over strategic assets.

Brussels has realised creating a regional framework for assessing China-backed projects would be the best way to build a healthier commercial and diplomatic partnership. Dr Mahathir also recognises that deals coming from Beijing with a political agenda behind them often make for bad investments, and his government has been wise to screen, appraise and, where necessary, reject projects for the sake of guaranteeing Malaysia’s economic well-being and protecting its sovereign interests.

Whether the Jokowi administration would consider more scrutiny in its business with China is questionable. But more scrutiny is sorely needed, and it behooves Malaysia and Indonesia to find a mechanism �" such as through an independent panel of experts �" to work together to devise normative frameworks similar to those being developed in Europe that could be used as the starting point for a broader dialogue within Asean.

The writer is a former Indonesia minister of finance, coordinating minister for economics and, more recently, coordinating minister for maritime affairs.