In the context of the New Great Game in Eurasia, the New Silk Roads, known as the Belt and Road Initiative (BRI), integrates all of China’s instruments of national power – political, economic, diplomatic, financial, intellectual and cultural – to shape the 21st century geopolitical/geoeconomic order. BRI is the organizing concept of China’s foreign policy for the foreseeable future; the heart of what was conceptualized, even before President Xi Jinping, as China’s “peaceful rise.”
The Trump administration’s reaction to the breath and scope of BRI has been somewhat minimalistic. For the moment, it amounts to a terminological switch from what was previously known as Asia-Pacific to “Indo-Pacific.” The Obama administration, up to the former president’s last visit to Asia in September 2016, always referred to Asia-Pacific.
Indo-Pacific includes South Asia and the Indian Ocean. So, from an American point of view, that does imply elevating India to the status of a rising global superpower able to “contain” China.
US Secretary of State Rex Tillerson could not have stated it more bluntly: “The world’s center of gravity is shifting to the heart of the Indo-Pacific. The United States and India – with our shared goals of peace, security, freedom of navigation, and a free and open architecture – must serve as the eastern and western beacons of the Indo-Pacific. As the port and starboard lights between which the region can reach its greatest and best potential.”
Attempts to portray it as a “holistic approach” may mask a clear geopolitical swerve where Indo-Pacific sounds like a remix of the Obama era “pivot to Asia” extended to India.
Indo-Pacific directly refers to the Indian Ocean stretch of the Maritime Silk Road, which as one of China’s top connectivity routes, features prominently in “globalization with Chinese characteristics.” As much as Washington, Beijing is all for free markets and open access to commons. But that must not necessarily imply, from a Chinese point of view, a single, vast institutional web overseen by the US.
‘Eurasifrica’?
As far as New Delhi is concerned, embracing the Indo-Pacific concept entailed quite a tightrope act.
Last year, both India and Pakistan became formal members of the Shanghai Cooperation Organization (SCO), which is a key element of the Russia-China strategic partnership.
India, China and Russia are BRICS members; the president of the BRICS New Development Bank (NDB), headquartered in Shanghai, is Indian. India is a member of the China-led Asia Infrastructure Investment Bank (AIIB). And until recently India was also participating in BRI.
But then things started to unravel last May, when Prime Minister Narendra Modi refused to attend the BRI summit in Beijing because of the China-Pakistan Economic Corridor (CPEC), a key BRI node that happens to traverse Gilgit-Baltistan and the sensitive region Pakistan defines as Azad Kashmir and India as Pakistan-occupied Kashmir.
And right on cue, at an African Development Bank meeting in Gujarat, New Delhi unveiled what might be construed as a rival BRI project: the Asia-Africa Growth Corridor (AAGC) – in partnership with Japan. AAGC could not be more “Indo-Pacific,” actually delineating an Indo-Pacific Freedom Corridor, funded by Japan and using India’s know-how of Africa, capable of rivaling – what else – BRI.
For the moment, this is no more than an avowed “vision document” shared by Modi and his Japanese counterpart Shinzo Abe to do some very BRI-like things, such as developing quality infrastructure and digital connectivity.
And adding to AAGC comes the Quadrilateral, which the Japanese Foreign Ministry spins as projecting “a free and open international order based on the rule of law in the Indo-Pacific.” That once again pits the “stability of Indo-Pacific region” against Tokyo’s perception of “China’s aggressive foreign policy” and “belligerence in the South China Sea” which imperils what the US Navy always describes as “freedom of navigation”.
As much as Xi and Abe may have recently lauded a new start of Sino-Japanese relations, reality says otherwise. Japan, invoking the DPRK threat but actually fearing China’s fast military modernization, will buy more US weapons. At the same time, New Delhi and Canberra are also quite worried about China’s economic/military onslaught.
Essentially, AAGC and the Quadrilateral link India’s Act East Policy with Japan’s Free and Open Indo-Pacific strategy. Reading these documents in tandem, it’s not far-fetched to qualify the Indo-Japanese strategy as aiming for a “Eurasifrica.”
In practice, apart from the expansion in Africa, Tokyo is also driven to expand infrastructure projects across Southeast Asia in cooperation with India – some in competition or overlapping with BRI. The Asian Development Bank (ADB), meanwhile, is mulling alternative financing models for infrastructure projects away from BRI.
As it stands, the Quadrilateral is still a work in progress, with its “stability of Indo-Pacific region” pitted against Beijing’s avowed desire to create a “community with a shared future” in the Asia-Pacific. There are reasons to worry that this new configuration might actually evolve into a stark economic/military polarization of Asia.
A split at the heart of BRICS
Asia needs a whopping $1.7 trillion in infrastructure projects a year, according to the ADB. In theory, Asia as a whole would benefit from an array of BRI projects coupled with some others that are ADB-financed and AAGC-linked.
Considering the extremely ambitious breath and scope of the whole strategy, BRI enjoys a substantial head start. Beijing’s vast reserves are already geared towards investing in Asia-wide infrastructure in tandem with exporting excess construction capacity and improving connectivity all around.
In contrast, New Delhi barely has enough industrial capacity for India’s own needs. In fact India badly needs infrastructure investment; according to an extensive report, India’s needs amount to at least $1.5 trillion over the next decade. And on top of it India holds a persistent trade deficit with China.
A tangible would-be success is the Indian investment in Chabahar port in Iran as part of an Afghan trade strategy (see part two of this report). But that’s about it.
Apart from energy/connectivity projects such as the national digital ID Aadhaar system (1.18 billion users) and investing in an array of solar power plants, India has a long way to go. According to the recently published Global Hunger Index (GHI), India ranks at 100 out of 119 countries surveyed on child hunger, based on four components: undernourishment, child mortality, child wasting, and child stunting. That’s an extremely worrying seven notches below the DPRK. And only seven notches above Afghanistan, at the bottom of the list.
New Delhi would hardly lose if there were a conscious bet on building up on India-China cooperation under the BRICS framework. And that includes accepting that BRI investment is useful and even essential for India’s infrastructure development. The doors remain open. All eyes are on December 10-11, when India will host a trilateral Russia-India-China – all BRICS members – at the ministerial level.
Next: China and India slug it out, from the Gulf of Oman to the Arabian Sea
perhaps when the 16 nation RCEP pact is completed in a year or two, India will come to its senses and participate in the Silk Roads inititive.
Ram. I’ve read some idiotic narratives. But yours comes on top .so why don’t you yourself Bugger off all
"seven notches below the DPRK". LOL. It shows.
But the British commited lots of massacres in India other than stealing all her wealth.
Pepe Escobar,
Good objective journalism, just stating the facts without bias, fear or favour. I enjoyed it. There should be as many roads or belts or trade and infrastructure financing banks as possible, like the equivalent of a competition of various supermarket chains. Why? Trade and development competition is better than military wars.
The one important thing to watch out is of course unfair underhanded methods like the bribing of corrupt country leaders and officials.
The Chinese method of BOT (build with Chinese manpower, equipment and resources, and then deliver on time but to be owned for a set number of ‘licensed’ years with the nominated country nominee (usually the corrupt head of State), and then later full transfer of ownership) at least gets to see the infrastructure built before the project funds are mysteriously squandered away.
But there is still an element of ‘corruption’ with BOTs, even though not in terms of immediate cold hard cash in the hands of despots. Certainly lots of room for improvement and scope for greater transparency in the entire process and dealing. But it is never a perfect world is it?
Copy cat abe san leading the blind and jealous mice.
Quoting another article from the same issue of Asia Times:
"China will bag a 91% share in gross revenues from Gwadar port, in Pakistan’s Balochistan province, and 85% from the surrounding “free zone,” under a 40-year deal finalized by Pakistani authorities with the China Overseas Port Holding The numbers were revealed by Pakistan’s federal minister for ports and shipping, Mir Hasil Bizenjo, in the Pakistan Senate last Friday. He also disclosed that Pakistan will pay back US$16 billion in loans obtained from Chinese banks for the development of Gwadar port, the free-trade zone and all communications infrastructure, at rates of over 13%, inclusive of 7% insurance charges"
BRI is all about what benefits China.
That’s not correct. China takes 91% of revenue but bears all the operating cost. Pakistan takes 9% of revenue but bears interest rate on the loan. Please do not distort.
By the time the "CLUELESS" Indian leadership figures it all out the Chinese will already have a colony on Mars. The leadership of India doesn’t have the smats are the guts to reach out to China for help————Yep——–they think Japan and the U.S. will pull them out of the 19th century——————-WRONG———only the Middle Kingdom can help them——–BUT——–first they have to be smart enough to ask for HELP!!
Kwan Tuck What are the operating costs for a port? In the power industry that I know pretty well and which is also within infrastructure, the internatinally accpected figure for O&M costs are around 2% of capital costs.
>>US$16 billion in loans obtained from Chinese banks for the development of Gwadar port
Total bullshit fact. Is this port made of gold or what that it would cost US$16 billion? Reality is this port was built with US$250 million during 2001-2007. Only new thing added under CPEC is Gawader Free Trade Zone and allied sevices hardly enough to be even US $1 billion or $500 million. US$16 billion is probably total CPEC related road and railway constructions related consessional loans which Pakistant government will take on long term period of 2% interest. Remember power plants are chinese investment not loans. For Indian Idiots another fact is total Chinese invest in Pakistan that is $60 billion is what it earns in a year from India. So think about that who are the idiots…
May be you should tell own your minister what an idiot he is. The figures and words I quoted are his own and were reproduced in the same edition of the Asia times! Anyhow it does not take an Einstein to figure out that if an investor takes home 91% of the yearly revenue for 40 years and that investors in infrastructure normally expects 10-15 years payback based on net revenues, the said investor must indeed be congratulating himself. Further as regards loans, 13% was also mentioned by your minister which although absurdly high is not actually bad considering that Pakistan for long has been in the Risk Tier 5 meaning Highest Country Risk. All said, if you folks are convinced that CPEC is a great deal for you, good luck.
The problem is not with India its with the Chinese… They have never acted trust worthy in their relationship with India…Indians are happy as Indians… But then will never ever allow the Chinese to rule them.. What ever happens… Let China learn the age old history… China can remain as China and India will remain as India… 🙂
9% gross revenue (mark not profit) is a good deal as ports world over hardly make any profit, specially a greenfield port which will take many years to operationalize and mature as well as investor have to sunk in a lot of money upfroant for it before he see any profit.
Just if its is published in news papaer does not make it a fact. There are idots all sorts including journalists and their readers. Just last week Pakistan solds eurobonds and sukuk bond of US$2.5 billion with less then 5% interest, Why the hell it would take 13% interest loan from china. Even US$ commercial loans are available with less the 5 to 6%. The 13% intersert it is taking about are for chinese power plant inverstors which have taken loans from chinese commercial banks and on top of it includes insurence as there are currecy exchange risk. These loans are chinese investors headache not Pakistan government as it only pays for electricity with upfroant fixed tariff determined by regulator. Similar power plants in IPP mode are from others foreign investors as well. India has alo similar IPP power plants as well though with better tariff as competion is high in India. When emrgency power requirements are met Pakistan can also get better tariff from new investors. Infact recently Pakistan got better deals for wind and solar power investors than earlier and tariff decreased significantly.
Greenfeld? You just told us that the port was as good as ready already in 2007! Anyhow. As for 9% gross revenue per year if it is a good deal then 91% gross revenue is nothing short of a Platinum deal. It would have been a good deal for both parties (only if) the ownership of port and power plants were transferred back to a local company after say 25 years. Regarding the 13% interest, once again the source was your own minister but then even if what you are saying were true, be rest assured that the cost of such high interest is thouroughly embedded in the tariff that has been agreed upon and hence in the 91% gross revenue that the Chinese party takes home. Finally regarding borrowing thorugh Eurobonds, all countries with credit and risk ratings similar to Pakistan are able to raise capital through this route at about 7% but then such bonds are backed up by soverign guarantees and the ceiling for such borrowing at such rate is pretty low.
While China has the money to do it, it doesn’t matter if it’s BRI or some BRI plus local alternatives. In the end the key point is the Eurasian landmass, plus Africa, become economically integrated. That spells the end of the American world order.
If Japan or India want to finance, or co-finance parts of the infrastructure they should.
endias ultimate is to be broken into pieces as in history there is no country like present time endia.
I like Pepe’s articles. But I would not call them objective. I call them informative. Pepe has a clear and obvious bias, but it’s OK, because it is clear and obvious.
Anyone following the New Silk Road can see his. But China takes most of the risk with some pretty risky countries. China is putting China first. So does everyone else. These countries will benefit and some day may be free of financial obligation to China and maybe not, but the benefit will still be there if they don’t blow it.
master class pepe..evrything is spot on..this article is not about pakistan or japan..this article is the fact that indai has joined the western camp,at the expense of BRI,does india understand that BRI is about connectivity with all asia…or is indias leaders have no sense that their country exist in asia and not europe..
India is in danger of being left standing up in this political musical chair.
This is the first time I read that India is ranked 100 out of 119 in the child hunger index. This is atrocious especially when we know that India is trying to be the Big Brother in South Asia (forget about Asia let alone the world). What India needs to to is to get rid of the caste system where one section of the people looks down and trample on another section of people who are classified as from a different caste. The other issue that I am puzzled especially when Indians talk of nationalism and being great is how is it that they were ruled and subjucated by the British for a few hundred years and the only thing they can show the whole world is the Indian Mutiny. As for China, since the first Opium War, the Chinese have fought and fought and millions died in battles, famines and natural disasters until Mao took over. So do not continue to bow to the Sahibs. They always have their own interests in mind when they deal with you. Its about time to wake up and do some great things for India and for the Indians and not worry that China is ahead of you.
Gwader port was ready since 2007 and was under rmanagement of Singapore Port Authority under same terms and conditions as of now with China. No change there. Only problem was, there was no connectivity with rest of Pakistan. Coastal highway from Karachi was built but last 20 miles were not completed then there was change of Musharaf government and projects got stuck. Under PPP regime nothing much happened due to internal instability, raise of militancy and terrorist attacks as well as tribal belth unrest had gotten focus away. With CPEC come roads and highways as well as power plants as it become the flagship project of BRI and with central focus.
Totalitarian fascist China is an infinitely greater enemy of India than the Western imperialists of the past.
Totalitarian fascist China is an infinitely greater enemy of India than the Western imperialists of the past.
Take for example power plants. These plants are being set up by Chinese investors using Chinese EPC contractors (who in turn buy Chinese equipment and services), and using Chinese loans. Debt to equity 80:20. No competitive bidding for the EPCs; cost of design, manufacturing, installation and commissioning much lower than corresponding international cost (all designs totally standardized meaning customer has to adapt its requirement to what supplier is offering rather than supplier customizing its offering as well as over 100 GW per year of manufacturing capacity that is probably enough to meet the entire worlds demand in the prevailing environment but currently well under-utilized) but the EPC prices comparable to International price levels; no need to even guess the profit margins of the EPCs which prices itself would have gotten neatly inflated in the absence of competitive bidding. As for the Chinese loans, no matter whosoever’s headache it is, 13% interest rate is well embedded in the agreed tariff that is high to say the least. Now throw in the best sugar coating namely 17-20% guaranteed rate of return on equity (in dollar terms) and it is easier than easy to figure out how quickly the Chinese investors will recover their investments while bleeding the other party for 30 years per the PPA. Indeed guaranteeing a rate of return on equity (and that too at 17-20%!) is just ludicrous- it only serves as another serious driver to further inflate the EPC prices so as to further accelerate recovery of equity which period is already extremely short. So yes China is taking some calculated risks but Reward to Risk is disproportionally in its favour to say the least – even taking into account only the direct benefits… So yes indeed China is putting China first. Like everyone else should do.
It is perfect OK for it to stay away.
Braham Bhushan You are preety much knows nothing. If Pakistan is in such bad ship then you should celerbrate, shouldn’t you?
For the good of rest of Asia and beyond, please let them be.:-)
Why are you surprized?
Pakistan was created so that a few could squeez the masses and live in comfort.
Every thing is on track except Mr. Jinnah did not get to see a dime for his well being.
Jo Snow It is incorrect to say "You are preety much knows nothing" ; you should say "You pretty much know nothing"! It is also incorrect to say "If Pakistan is in such bad ship…."; you should have written "If Pakistan is in such bad shape…"!! But perhaps you should still be commeneded for making only FOUR mistakes in the TWO sentences that you wrote. Even more commendable is your (so utterly) deep-rooted, dyed-in-the-wool kind of conviction of your own gravitas. Truly Awesome. As for celebration, shouldn’t actually you be doing that, this project being such a profound Game Changer…..for China.
China can ask Pakistan to dismantle terrorist support base. How can China expect India to take it easy when it is supporting India’s enemy.
China jealous of america and india jealous of china.
Porki loves terrorism…
"The New Great Game moves from Asia-Pacific to Indo-Pacific
Is the world’s center of gravity shifting to the heart of the Indo-Pacific – a new pivot to Asia?"
Hell, Pal, your guess is as good as mine.
Ajit Pandey I don’t think anybody is jealous of the USA anymore.
I’m staggered by the speed at which the US has headed for the gutter.
The money is also to build a gas pipeline from Iran, and an LNG plant.
I imagine there will also be a power station or 2.
I’m sure that if Pakistan could get a better deal it would, but with the US against development in Pakistan, China is the only option.
Pepe Escobar keeps political prespectives in focus of the bigger picture. He needs to be listened to and followed for our struggle against the oppressiors of society.
With the whole of Indian access to the Central Asian Republics in the West sealed off by Pakistan, a weak sea route via the new Chahbahar port also vulnerable to Pak/China interdiction from Pakistan’s rapidly rapidly rising Gwadar Port (at the tip of the China Pak Economic Corridor – CPEC) is only a consolation for the Indian ego and no answer to a viable westerly trade route.
Time for India to build bridges with Pakistan, link in with the CPEC, create strong land trade routes with Iran and Afghanistan thenceforth to the Central Asian Republics.
India has lots o talented people that blossom in veversity! I wish they are bold enough to face challenge on national issues, and work togather in community in nation building as opposed to ego centric personalities that con the voters to get themself rich billionnaries!
Most of the 7% insurance are provided by western insurance companies via chinese banks. It is rather high taking into account likely CIA activities to derail the projects.
Most of the 7% insurance are provided by western insurance companies via chinese banks. It is rather high taking into account likely CIA activities to derail the projects.