One Belt One Road Unique Opportunity for Sri Lanka

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By 2018-02-14

By Dr. Palitha Kohona


The One Belt One Road initiative invokes memories of the multitude of traders who visited us in the past and gave us the opportunity to prosper. Already the Chinese largesse is impacting on a swath of countries and regions. Pakistan, described as an all weather friend by the Chinese President, has been promised USD 54 billion in investments for infrastructure projects. China-Pakistan Economic Corridor is the flagship project under this initiative. The Bangladesh-India-China-Myanmar corridor links China with the Bay of Bengal.

Africa is reaping the benefits of China's investments and many African economies are prospering for the first time in years. Analysts ascribe this development largely to Chinese investments in infrastructure. By 2014, Chinese investments in Africa had risen more than 20-fold to $220 billion, according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies in Washington. It is likely that this trend will accelerate as China also learns from experience and responds more to the aspirations of the people of the continent. Since 2000, Ethiopia, where the African Union is headquartered, has been a major recipient of Chinese loans to Africa, with financing for dams, roads, railways and manufacturing plants worth more than $12.3 billion, more than twice the amount loaned to oil-rich Sudan and mineral-rich Congo. The OBOR concept while raising some concerns , especially among the former colonial powers who ruthlessly ravaged Africa and Asia when they had the opportunity, can be used by countries of the Indian Ocean region and beyond, to enhance their mutual prosperity without being constrained by the fears and suspicions inculcated by the colonial past. More importantly without territorial occupation, racial discrimination and forced alteration of cultures.


Investments in Australia


Further East, Australia received AUD 15.4 billion in Chinese investments involving 103 deals. Australia has been a major destination for Chinese investments after the US and Europe and investors have grabbed hotel assets, real estate, agri businesses, vineyards, health care, infrastructure, and so on, giving rise to a latent xenophobic anti-Asian and anti-Chinese sentiment. The port of Melbourne is now controlled by a Hong Kong-Chinese concern.
A significant share of Chinese investments has also headed to Europe. The EU whose second largest trading partner is China, received Euro 35 billion in Chinese investments in 2016 alone. Iconic facilities such as the Toulouse-Blagnac Airport where the Airbus 380 is assembled, was sold to the Shandong Hi-Speed Group and a Hong Kong investment firm, while Emanuel Macron was the Finance Minister. Volvo to Geely; the AC Milan football club the Piraeus Harbour now owned 70 by COSCO, German robot manufacturer Kuka is also now owned by a Chinese company. Not to mention a number of historic vineyards and buildings are in Chinese hands. Chinese companies are building the rail link between the Piraeus Harbour in Greece, and Serbia and Hungary. Chinese trains carrying Chinese produce now travel through the Euro-Asian land mass, the modern Silk Route, to European capitals, including London, and also link up with Tehran. Natural gas from Central Asia flows along four pipelines to China.


Tightening the belt


The US has received USD 90 billion since 2007. In New York, the Waldorf Astoria has been acquired by Chinese interests. However, China has also tightened overseas investments, especially in real estate, hotels, film and entertainment and sports clubs, to reduce excessive capital outflows and foreign exchange risks. Those countries seeking to benefit from the Chinese gravy train should be conscious of this development.


The expansion of China's economic and political reach has caused more than a few adverse reactions in certain international circles, especially among powers which had been used to dominating the world stage. France, Germany and Italy are leading an initiative to require the EU to scrutinize Chinese investments in Europe more carefully. Recently, it has been said that America's focus on terrorism as the main threat has now shifted to Russia and China. According to a new Pentagon strategy released recently by Defence Secretary Jim Mattis, the United States must build up its military to prepare for the possibility of a conflict with Russia and China. The US persists in viewing the world in terms of hostile competitors. Given that China and the US are closely intertwined in a complex economic embrace, the use of such terminology is curious. The US is China's major trading partner. The bilateral trade in 2016 was worth USD 579 billion while the US trade deficit was over USD 379 billion. And China is the main lender to the US and also holds over 1.2 trillion Dollars in US securities. China is the biggest market for many US agricultural products and millions of Chinese tourists visit the US annually. Any conflict between the two countries, including a trade war, would do irreparable damage to both, not to mention the rest of the world. The two countries have a unique opportunity in history to get away from historical power based competition to cooperate for the common good. Cooperation cannot be managed in a hurry but the opportunity is there. Many aspects of Chinese culture, including food, eating habits, traditional health care, martial arts, dress and philosophy have seeped in to Western and American life over the years.


The US has been an inspiration to China in liberal ideas, democracy, transparency, legal propriety, management style, sports, music, film, and so on. These ideas will not be adopted by China overnight. Nor will the Chinese style of living or doing business be adopted by the West any time soon. It will take time. There are clear opportunities for teaching the two to each other. Instead of breast thumping and posturing, it will serve humanity's interests better in the long run if the two giants of the world could cooperate for mutual betterment.


India's sensitivity


Similarly a major concern is India's sensitivities regarding China's outreach. The fact that, the two countries fought a border war in 1962, and has skirmished along a disputed colonial border has not been forgotten by policy makers. But India's sensitivities have impacted on the thinking of the smaller countries of the Indian Ocean region. India's growing relationship with the US has clear military implications and India does not camouflage this realignment nor does the US. The US has recently agreed to sell Guardion drones to India for maritime surveillance. Unfortunately, the need to convey public messages of this nature to each other appears to encourage the hawks. India, while strengthening its naval capabilities in the Andaman Islands, has also quietly developed strategic relations with Australia and Japan, participating in regular joint naval exercises. It seems unlikely that China, even if it wished, would be able to challenge nuclear armed India in the Indian Ocean for decades to come. India enjoys overwhelming military superiority in the Indian Ocean. Furthermore, the US maintains a mammoth base on Diego Garcia to the South of Sri Lanka.


It is highly improbable that Chinese policy makers would consider challenging the existing power arrangements in the Indian Ocean any time soon, if ever. They have not done so since Admiral Zheng He's flotilla entered the Indian Ocean in 1405 and returned many times till 1433. To prepare to meet a challenge from China would result in expending scarce resources for a confrontation that is unlikely to happen. To be obsessed with the thinking of a bygone era and continue to rattle ones weapons to demonstrate superiority may not necessarily serve the needs of today, when millions simply desire a better life, schools for their children, housing with at least essential amenities and appropriate employment. Europe learned this lesson after the Second World War and focused their attention on improving the lives of their people through cooperation. They have succeeded to a great extent. We in the Third World should follow this wonderful example.


Sri Lanka, as a small neighbour eager to ascend the development ladder in the shortest possible time is caught between the sensitivities of our closest neighbour and the need to develop stronger economic relations with another. There is little doubt that as a long time friend and a country that has provided much of Sri Lanka's religious and cultural inspiration, Sri Lanka must create and maintain an environment that makes India comfortable. The big neighbour must feel the reassurance that the small island to the south will not pose a strategic threat, even in collusion with any other country. It should not become someone else's large aircraft carrier! Sri Lanka's own interests will be served well with a reliable relationship with India. This does not mean subservience or servility or a one way approach dominated by hectoring and gratuitous advice. The relationship, if it is to be comfortable and sustainable, must be one between two proud sovereign nations. India has a positive role to play as the bigger neighbour to the North. India's burgeoning economy could provide an outlet for Sri Lankan businesses to expand but over-zealous and rash opening up of our economic doors with no comparable reciprocity could result in Indian industry swamping our businesses.


We must seek our own development path and that might mean seeking to collaborate with whoever we like, including China. Coincidentally, China is India's major trading partner. Both the Chinese and Indian leaders have made explicit overtures to each other, both recognizing the opportunities presented by cooperation than by confrontation. A prosperous and stable Sri Lanka will be an asset to India not an unhappy and resentful neighbour to the South. Sri Lanka's prosperity through the OBOR will be to India's advantage as well. India could also benefit extensively from a proactive engagement with the OBOR initiative.


(Former Ambassador and Permanent Representative of Sri Lanka to the United Nations)
(Concluded)

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