…country signs on to “troubled” Belt and Road initiative
“Pakistan is now one of several countries grappling with the financial and political fallout of taking on so much Chinese debt.”- The Wall Street Journal
By Abena Rockcliffe-Campbell
“Look and learn from the experiences of other countries.”
This is what most international agencies and individual experts keep telling Guyana. The advice is given as the nation is being governed, at a critical juncture, by an inexperienced administration. But, is this recommendation being taken…or even considered?
While several countries considered better off—economically—than Guyana are regretting the pen used to sign onto the China’s Silk Road Economic Belt initiative, Guyana thinks it is the way to go. These countries continue to grapple with the effects of the initiative, wishing to find a way out, but Guyana has calmly walked into what is being labeled a “trap.”
The initiative that Guyana signed on to is being widely considered, on the international stage, as a major theme in China’s plot to take over the world.
On Friday last, Minister of Foreign Affairs, Carl Greenidge and Chinese Ambassador to Guyana, Cui Jainchun, signed a Memorandum Of Understanding (MOU) within the framework of China’s Silk Road Economic Belt and the 21st century Maritime Silk Road, more commonly referred to as the Belt and Road Initiative.
The MOU makes provision for cooperation in the areas of policy coordination, facilities connectivity, trade and investment, finance and integration, and people to people interaction.
“One of our main priorities at this point in time is to work on the development of infrastructure and that would include assistance with the design, whether it is with roads, harbour and the like, as well as access to funding for the construction of such facilities,” Minister Greenidge said.
The Belt and Road Initiative was introduced by China’s President Xi Jinping in 2013. The massive trade and infrastructure investment project entails cooperation between China and more than 70 countries. The Belt seeks to recreate the old silk routes which connected China to the West through Europe and Africa. The road aspect is the strengthening of maritime routes.
Guyana is the first South American country to cooperate with China under its Belt and Road Initiative.
Many would wonder why China extended this project to Guyana. But the bigger question is why Guyana accepted, even with the glaring flaws of the project?
In April, Forbes reported, “Last year saw some projects (in some of the 70 countries) stopped due to fears of increasing political dependence on China. Then U.S. Secretary of State Tillerson warned of the dangers of debt servitude to China on his last foreign trip before being replaced. The IMF has recently put its own patient concerns on record, but more significantly, the press is beginning to catch on.” Read online: https://www.forbes.com/sites/douglasbulloch/2018/04/18/china-belt-road-initiative-obor-silk-road/#48f716d454da.
Take Pakistan, for an example of how the project has been landing counties into hot water.
The Wall Street Journal reported that Pakistan is in deep trouble mostly as a result of the China initiative.
Financed and built by Chinese state-run companies, the soon-to-be-finished overhead railway through Lahore is among the first projects in China’s $62 billion plan for Pakistan.
“Beijing hoped the $2 billion air-conditioned metro, sweeping past crumbling relics of Mughal and British imperial rule, would help make Pakistan a showcase for its global infrastructure-building spree,” the Journal reported.
Instead, it has become emblematic of the troubles that are throwing China’s modern-day Silk Road initiative off course.
Three years into China’s program, Pakistan is heading for a debt crisis, caused in part by a surge in Chinese loans and imports for projects like the Orange Line, which Pakistani officials say will require public subsidies to operate.
The Journal said that China Belt and Road Initiative, has been likened to the U.S. Marshall Plan that helped rebuild Europe after World War II. By building a network of ports, railways, roads and pipelines, China aims to open new East-West trade routes, generate business for Chinese companies and expand its strategic influence.
But, while the Americans mainly used grants in Post-war Europe, China has mostly extended loans in “opaque deals” often contingent on using Chinese contractors. Pakistan is now one of several countries grappling with the financial and political fallout of taking on so much Chinese debt.
Pakistan is actually now likely to turn to the IMF for a bailout. This may have some implications because of the known issues between China and America.
Thousands of Chinese nationals are working on China’s infrastructure program in Pakistan, including at a giant coal mine and power project.
In Malaysia, the second-biggest recipient of Belt and Road loans after Pakistan, a new government suspended work this month on a $20 billion Chinese railway project and is reviewing other Chinese projects.
Myanmar is trying to renegotiate a $10 billion Chinese port project. Nepal has halted plans for two Chinese-built hydroelectric dams since November.
In Sri Lanka, China’s takeover of a troubled port has raised questions about a loss of sovereignty. And neighbouring India openly rejects the BRI, saying China’s projects with neighbouring Pakistan infringe on its sovereignty. Read online: https://asia.nikkei.com/Spotlight/Cover-Story/Is-China-s-Belt-and-Road-working-A-progress-report-from-eight-countries.
Siegfried O. Wolf, a Director of Research at the South Asia Democratic Forum (SADF), a Brussels-based think tank, and Senior Researcher (affiliated member) at the South Asia Institute (SAI), Heidelberg University, was quoted by international media on his take of the initiative.
Wolf said that the initiative could intensify existing governance problems, especially economic accountability and corruption.
“It could also help empower governments that have a poor track record on democracy, human rights, security and development. The initiative also has long-term geopolitical implications; it increases political and economic dependencies. In this context, one must not forget that China’s financial support in the OBOR (One Belt One Road) framework is primarily based on loans. As such, participation in OBOR can produce a tremendous, unsustainable debt burden with disastrous consequences for the weaker economies.”
The European Union has its reservations.
Wolf explained that there are several reasons behind this “mistrust.” He said, “Firstly, there is the problem that OBOR has no formal institutional structure. Secondly, China prefers to negotiate the OBOR projects in bilateral arrangements, which was also confirmed in the summit. This does not favour the establishment of a multilateral dialogue which the EU espouses.
Also, there is a lack of transparency in decision-making combined with an insufficient level of communication by Chinese authorities regarding OBOR. Consequently, it seems that China cooperates with EU institutions when it finds it suitable for its objectives, otherwise it deals with individual states.
An effective OBOR dialogue platform between the EU and China is still missing. This would ensure that the EU’s economic actors have a fair chance to compete for business through open, transparent and non-discriminatory procurement procedures with Chinese competitors. As long as China doesn’t make any effort to bridge the gap between OBOR and different EU approaches, move toward multilateralism, and address the EU values based on good governance, the rule of law, human rights and democracy, skepticism regarding OBOR will persist.”
Despite the literature against the project and the obvious concern of many participating countries, Guyana has still signed on.
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