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Abu Dhabi, UAETuesday 25 September 2018

The example of Sri Lanka handing over a port to China shows the Belt and Road Initiative was never meant to be pure altruism

Hambantota Port has become the prime example of how the BRI can go wrong but it is up to both sides in each instance to make sure the reality is a win-win co-operation

Sri Lanka's Hambantota port has been given to China on a 99-year lease. Lakruwan Wanniarachchi / AFP
Sri Lanka's Hambantota port has been given to China on a 99-year lease. Lakruwan Wanniarachchi / AFP

On the face of it, China’s Belt and Road Initiative (BRI) could not be a better fit for Asia. The Asian Development Bank has estimated that developing countries in the continent will need $1.7 trillion dollars per year if the region is to “maintain its growth momentum, eradicate poverty and respond to climate change”. Those are not just some lofty goals that it would be nice if countries were able to achieve. Those are challenges they have to meet.

Who is going to help come up with the money? Not a European Union beset with its own internal problems, ever unsure about how much to project internationally. Not an America busy launching trade wars, while Secretary of State Mike Pompeo’s recent announcement of a new US investment package for the Indo-Pacific region of a mere $113 million was greeted with widespread indifference.

The BRI, by contrast, is in the right ballpark, involving estimates that between four and eight trillion dollars will go into building the Silk Road Economic Belt and the 21st century Maritime Silk Road that will connect Asia, Europe and Africa (and possibly beyond), with ports, railways, bridges and a plethora of projects funded and built by China and its partner countries in what some have suggested could be a “WTO 2.0”.

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Read more:

Sri Lanka hands over port to China to pay off debt

Afghanistan may be a major jewel in China’s Belt and Road Initiative

China’s ambitions leave Pakistan out in the cold

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Its “flagship” project is the $62 billion China–Pakistan Economic Corridor (CPEC) that will run throughout the country. Bangladesh is set to receive investment totalling $38 billion under the Bangladesh-China-India-Myanmar Corridor. These are – or should be – game-changing ventures for the many countries involved, which span one third of global trade and GDP and more than 60 per cent of the world's population, according to a World Bank estimate earlier this year.

I, for one, am optimistic about it and, as a European of my generation, I tend not to worry too much about whether new railways, for instance, will ever make a profit, on the grounds that they are public goods that governments should happily subsidise if necessary.

But it must be acknowledged that there is a wide and growing scepticism about this ambitious plan. Numerous articles have warned that the BRI is a “debt trap”, with Sri Lanka the most frequently stated example, where the government had to sign over Hambantota Port on a 99-year lease after it couldn’t meet its debt commitments for the construction of what Bloomberg called a “$1 billion white elephant”.

It has become the prime example of how the BRI can go wrong. Former Sri Lankan president Mahinda Rajapaksa pushed for the project – which just happened to be near his home town – but it is doubtful that it was ever commercially viable. Today, only one ship per day calls at the mammoth port, while the international airport that was also built matches that measly record.

Anger over his perceived closeness to China was one of the reasons why Mr Rajapaksa lost the 2015 presidential election and what happened to the port has come to sum up all the supposed dangers of taking up Beijing’s loans.

A report in April warned that a further eight countries might be taking on unsustainable debts, forcing them to be over-reliant on China in the future. Some suggest that this is a deliberate plan on Beijing’s part that will condemn states to “strategic subservience”. Others wonder if Chinese-run ports will be used to facilitate military projection.

The worries were crystallised when Malaysia’s Dr Mahathir Mohamad went to China last month to say that the large projects agreed with the previous administration had to be cancelled, delayed or renegotiated. He even went so far as to warn of a “new version of colonialism” – very strong words, considering he was sharing a platform with Premier Li Keqiang.

Dr Mahathir is pushing back strongly but some of the other complaints seem to reflect a curiously supine attitude. It is as though if China offers to fund a mega-project, the relevant country is duty bound to say yes. But on the contrary, it is surely for BRI partner governments to consider if a development is right for them or not and suggest something more modest if they think that would be more suitable. Similarly, it is for partner countries to be vocal about terms and conditions that ensure a large percentage of the workforce, contractors, caterers and other camp followers are all local.

If partner governments are not asking for these things, it is not fair to blame Chinese companies for making the most out of these projects – because the BRI is not an exercise in pure altruism. It is up to both sides in each instance to make sure that the reality is a win-win co-operation.

Are there steps that China can take to correct some current negative perceptions? Certainly. Help with transparency, for one thing. One of the problems with the big-ticket projects that Malaysia and China signed up to is that the public has no idea about the details. Did Malaysia overpay? Was that because there was a plan to divert funds? No one outside very high level circles really knows the truth.

It could also explain more. An irony of a World Wildlife Fund report warning of environmental and human disaster related to BRI projects in Myanmar is that it mentions that the Chinese Ministry of Environmental Protection has issued a “guidance on the building of the green belt and road”. So this is an issue that has not gone unaddressed. But is anyone being told about it?

Similarly, one could argue that the BRI is already having positive effects. Take the Kunming to Singapore corridor of the BRI, which has at its heart a rail route running through Laos, Thailand and Malaysia.

This is what a report by HSBC this year had to say about it: “The $5.2 billion stretch of this rail line that goes through Thailand is already seeding growth in multiple sectors. Airports and seaports are being built, homes are appearing, a major theme park is being developed and social institutions such as hospitals and schools are being constructed along the right-of-way of the impending track.”

Such conclusions, however, are at the moment being drowned out by a chorus of doom, stemming partly from suspicion about China’s intentions as it retakes its place as a great power on the world stage.

Beijing must address this if the BRI is to fulfil the great possibilities it undoubtedly promises. But partner country governments also have to be responsible, consider proposals on their merits – and not act as though they are helpless bystanders, forced to accept any deal they are offered and then complain about it afterwards. It's the least their countries' populations can ask for.

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