The Bridge | Issue 01 by Modern Diplomacy

diplomacy

07 China, Europe and the

G-Zero world | Dr.Katja Banik

12 Italy and the Belt & Road

Initiative | Tridivesh Singh Maini

16 Xi Jinpingâ&#x20AC;&#x2122;s visit to Italy

and the relationship between China and the Catholic Church | Giancarlo Elia Valori

27 Project of the century:

How the Belt and Road Initiative will impact the Eurasian region | Oleg Remyga

52 Challenges and prospects of Chinaâ&#x20AC;&#x2122;s Belt and Road Initiative | Dr. Zahid Latif

security

21 The “Neo-Cold War”

in the Indian Ocean Region | Kagusthan Ariaratnam

modern diplomacy moderndiplomacy.eu

23 China-Bangladesh

Cooperation under BRI to Mitigate Seaborne Security Threats in the Bay of Bengal | Noor Mohammad Sarker

47 One Belt-One Road

and the South China Sea: Xi Jingping’s Priorities | Kjell Tengesdal

economy

32 Five years on, the BRI is

still being perceived as a Debt Trap | M Waqas Jan

35 Freedom, Sovereign Debt, Generational Accounting and other Myths | Dr. Lu Wei

54 Debt-trap diplomacy is a

fallacy | Zhao Qingtong and Paul Wang

africa

38 Japan faces titanic

struggle to balance Chinese dominance in Africa | Kenneth Szabo

41 Trump’s New Africa

Strategy to Counter China | Tridivesh Singh Maini

43 Chinese Influence in

East Africa: Transcultural Connection as Foreign Policy Spur | Ecatarina Garcia

57 Djibouti’s “International”

Free Trade Zone is really just for one country | Samantha Maloof

The Bridge Mission Statement

Dr. Matthew Crosston

THIS NEWEST ENDEAVOR from the brain trust of Modern Diplomacy examines what we believe will be the single most signiﬁcant transnational geopolitical initiative undertaken by a country in this ﬁrst half of the 21st century and perhaps beyond. China’s Belt and Road Initiative is much more than a simple Chinese political plan to push further economic development for its own domestic consumption.

We believe it is also much more than a noble international effort to develop a so-called modern and technologized Silk Road, reconnecting the majority of the globe around massive infrastructure development and intensiﬁed economic partnerships. It is also, thinking more strategically and in classic terms of old school realism, not some diabolical plan to render more than half of the globe’s economic activity under the political thumb of the People’s Republic of China.

Investigating and analyzing the diplomatic, geopolitical, and economic aspects of the Bridge and Road Initiative allows us the chance to interact with just about every major corporation on the globe, with more than 50 major countries looking to heighten their impact and role on the global stage, and with some of the most important leaders and agencies currently in play. More than anything else, the effort of the contributors to our BRIDGE project will expose such biased thinking and overly simplistic posturing, aiming instead to reveal the important subtleties, nuances, and long-term consequences of the BRI. By looking in deep and following all of the connective networks, seen and unseen, overt and covert, MD’s BRIDGE Project hopes to not just be a chronicler of how the Belt and Road Initiative gets off the ground.

Rather, it hopes to become a legitimate contributor and watchdog in and of itself, informing all of the diverse actors directly and indirectly involved with the BRI. When our readers begin to understand just how all-encompassing and embracing the BRI could potentially be, the true grandeur of the scope of this undertaking will be revealed.

The BRIDGE is more than just an intellectual project: it strives to be a connector between all of the players. A beneficial bridge to the BRIDGE, if you will. In the coming years, we hope this project will be seen as influential and impactful as the actual BRI itself. Grandiose aims, to be sure, but not recklessly spoken nor aimlessly pursued. Here at Modern Diplomacy we welcome all of our readers, young and old, new and longstanding, to engage the biggest undertaking of our careers. In so doing, you yourselves will hopefully be making as many new partners, learning as many new possibilities, as China itself hopes the BRI will produce, from the Pacific all the way to the North Sea. These are exciting times in which we live. May the BRIDGE be one of the foundational knowledge-producers for you in your own efforts to make your way forward. This is not a project for those who want to sit on the sidelines. It is for those who want to be in the middle of it all!

contributors PROF. GIANCARLO ELIA VALORI is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Ofﬁcier de la Légion d’Honneur de la République Francaise.

KAGUSTHAN ARIARATNAM is multi-skilled security, defense, intelligence, and counterterrorism analyst with over 25 years of experience. He currently works as a research analyst at Project O Five.

KJELL TENGESDAL is a Health Physicist at Lawrence Livermore National Laboratory and has over 35 years of service in the United States Navy and Navy Reserve. He is currently a stuPAUL WANG is Professor of International Rela- dent in the Doctorate of Strategic Intelligence tions and Diplomacy at the School of Interna- Program at American Public University. tional and Public Affairs, Jilin University China. ECATARINA GARCIA is an Instructor in the Air DR. KATJA BANIK, since 2017, has been a Force’s Intelligence Oﬃcer Course where she inspeaker/guest lecturer on geopolitical and eco- structs initial skills training on topics such as nomic issues related to China, Europe and the Signals Intelligence, Cyber, Human Intelligence, USA and on different global governance scenar- Surveillance and Reconnaissance (ISR) foundaios. Katja Banik is the author of Les Relations tions and applied ISR to the Air Force’s newest Chine-Europe: À la Croisée des Chemins pub- Intelligence Oﬃcer students. She is currently a lished by L’Harmattan (Paris) in 2016. Further, doctoral student in the American Military Univershe is the Editor-in-Chief of PwC’s China Com- sity’s inaugural Global Security and Strategic Intelligence doctoral pro pass. gram. OLEG REMYGA Head of China Unit of SKOLKOVO Business School, Representative in TRIDIVESH SINGH MAINI is a New Delhi based China and an Expert at EMBA for Eurasia by Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global HKUST and SKOLKOVO programme University, Sonipat, India NOOR MOHAMMAD SARKER is a PhD Candidate at the School of Political Science and Pub- SAMANTHA MALOOF is a freshly minted gradlic Administration in Shandong University, uate in International Relations based in Cairo, currently working as a research assistant in a Qingdao, Shandong, China. small think tank looking at development and inZHAO QINGTONG Assistant to Research Fellow equality in Africa at Center for International Relations M WAQAS JAN Research Associate and ProZAHID LATIF earned Ph.D. degree from Beijing gram Coordinator for the China Study & InformaUniversity of Posts and Telecommunications, tion Centre (CS & IC) at the Strategic Vision China. He has been working in telecommunica- Institute, a non-partisan think tank based out of tion sector of Pakistan since 2003. Presently, he Islamabad. is working in National Telecommunication Corporation under the Ministry of Information and Communication Technology.

By introducing a Social Credit System (SCS), China wants to rate and classify its citizens in all areas of life. From creditworthiness to political and social behaviour, everything will be monitored. Total surveillance of this type is reminiscent of the methods employed by Big Brother in George Orwell’s novel 1984.

China, Europe and the G-Zero world by Dr.Katja Banik

WHAT DOES IT MEAN to live in a world without global leadership? Where is the European Union heading? What impact will Trump’s “America ﬁrst” policy and China’s Belt & Road Initiative have on tomorrow’s world order? Geopolitical reﬂections on the G-Zero world. Donald Trump in the White House, China’s mega Belt & Road Initiative (BRI) and, as a symbol of Europe’s identity crisis, Britain’s decision to leave the European Union – those are just three examples of recent radical developments transforming our globalised world.

While the American president continues to pursue his “America ﬁrst” policy, introducing punitive tariffs on Chinese imports and thus causing a massive trade conﬂict, China’s authoritarian political structures are growing ever stronger. Xi Jinping’s power has been expanded. He is the “president of all” and, as is again true of Mao Zedong, the centre of a pronounced personality cult.

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If all that were not enough, the European Union (EU) is stuck in an existential crisis. Geopolitical challenges thus abound and “interesting times” await. G-2 and a multipolar world

Globalisation – the cross-border exchange and interaction of people, goods, services and communication – was a phenomenon already known in antiquity. A new aspect today is the increasing interdependency of its various actors. Nation-states, globally active companies, international institutions and nongovernment organisations are now closely linked. Since many actors are unaware of this, often their policy responses to globalisation (read: their internationalisation strategies) are neither coordinated nor consistent with each other’s.

The world without global leadership is a world in chaos, one in which each country and region tries to advance its own interests, thus accepting there will be disadvantages for others. Y et since, in the long run, no country or region is capable of playing a leading worldwide role on its own, the question remains of how long the world can remain in chaos and without global leadership.

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Are we on the road to a G-2 world, one in which Key global challenges include: everything depends on how relations between Climate change and its consequences the US and China develop? One in which the EU, Demographic change in particular, must take a subordinate position? Increasing urbanisation Competition for the world’s natural resources What would be preferable would be a world of Equitable food distribution (including access cooperation (Banik, 2016, p.22),of peaceful multipolarity, one in which different actors compete to drinking water) International terrorism (including cyberterrorwith each other but in the spirit of global complementarity. It would be a new cosmopolitan ism) (Nida-Rümeling, 2017, p.178)world order in which international standards are established Because of globalisation and the deterritorialiand safeguarded and military conflicts are sation that results, various transnational forces avoided – a world in which Europe, above all, has have developed, including international organithe chance to define itself strategically and re- sations, interest groups, lobbying associations and globally active businesses. These transnaalign itself vis-à-vis the US and China. tional players act outside of the context of the Following a brief introduction to the current constitutional nation-state and independently of geopolitical situation, this article examines the it. Borders and the associated controlling mechimpact on the EU of the “China first” and “Amer- anisms are disappearing. The political order of ica first” policies. It concludes by highlighting internally and externally sovereign nation-states the importance of viewing diversity as an added according to the Westphalian model stands in value and, especially for the EU, cultivating an opposition to these transnational forces, and identité de cœur (identity of the heart) as advice versa. vanced by Jacques Ancel, a leading representa- Moreover, the general public is becoming intive of French geopolitics. creasingly aware of globalisation’s negative consequences, such as non-transparent capital Everything is geopolitics flows, global economic crime, corruption, money laundering, ongoing trade deficits, harsh compeGeopolitics is a multidisciplinary approach that tition and the exploitation of the world’s natural analyses the relationship between power and resources. The globalised world is producing territory. It thus sees all political decision-mak- winners and losers. Trust in the political elite is ing and economic strategies as aiming to exert therefore declining among the public in the power and influence within a given geographic countries or regions that are losing out, a cohort area. Eurasia currently plays a significant geopo- that includes EU member states. The result is litical role and will continue to do so in the fore- social conflict, political discontent and growing seeable future, as can be seen in China’s BRI. scepticism about the efficiency of today’s demAlthough the interdependence of the various ac- ocratic systems and institutions. If one looks at tors urgently demands cooperation and coordi- China, the question arises of whether authoritarnation to overcome global challenges, ian structures might be the better response to competition is the prevailing principle in today’s global challenges. An affirmative response would be misguided. world order. THE BRIDGE

Today’s world order, an aftereffect of the Second World War, is obsolete. Our international institutions are no longer capable of overcoming global challenges. The question of which world order will emerge in the future depends on geopolitical strategies, in particular on those pursued by China, the EU and the US. China’s meta-strategy

Which ramifications does BRI have for Europe and its companies? This gigantic infrastructure project certainly offers opportunities for the EU, but it is and will remain a Chinese project that exclusively serves Chinese interests. Once constructed, it will be used first and foremost to control and ensure the transport of raw materials, above all from Africa, to China’s production sites. The same purpose will be served by expanding the railway lines, roads and ports included in BRI. And while local economies will benefit from this expansion, the participating countries will find themselves more dependent on China both economically and politically.

These infrastructure projects are being ﬁnanced with Chinese loans; in return, China is securing unimpeded access to crucial raw materials. Moreover, the projects often have no positive impact on employment in the BRI countries since most of the workers at the major building sites are Chinese– thus minimising the jobless rate in China. MODERNDIPLOMACY.EU

Is BRI turning to a white elephant?

From the military perspective, BRI also has myriad implications. The People’s Republic maintains the world’s largest army as measured in the number of its troops. This army can easily monitor the building projects and transport routes (land/sea). Thus, BRI is expanding China’s military inﬂuence and driving the modernisation of its armed forces. China’s security strategy has changed. The army is evolving from a land-based military organisation to a naval power. In 2017, the Chinese People’s Liberation Army opened its ﬁrst foreign base in Djibouti. This was a cause for concern for France, the US and, in particular, India.

BRI has, moreover, a very strong ideological component. National unity and stability are top priorities for the Chinese government. Begun in 1978, China’s economic opening – welcomed and supported by the West’s business community – largely served to avoid social conﬂict among the country’s population. Private property and entrepreneurship were encouraged, and farmers could retain any surplus production. All these measures were also meant to jolt the often inactive populace from its lethargy. The country’s citizens were used as a factor of production enabling the country to catch up technologically. Foreign investors endorsed this strategy.

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With BRI, China is launching a new strategy for strengthening national unity and stability as a way of proactively preventing social unrest and the desire for democratic reforms. BRI is also being called the “path of Xi Jinping” and is meant to reinforce China’s power on the global level. One thing is certain: China is currently the only country in the world with a global strategy. Analog American president in a digital world

The US president’s “America ﬁrst” policy illustrates a different approach to globalisation’s challenges. Instead of opening to the world – as China is doing with BRI – “America ﬁrst” focuses on protectionism. Trump is withdrawing from multilateral trade agreements in favour of bilateral pacts. Although the US still evinces the qualities of a global leader in many areas, Trump’s unpredictable approach to governing is increasingly a cause for concern for the EU and NATO allies. What is at stake is the reliability of the US when it comes to Europe’s security interests.

Trump seems to be a president from another age. He appears completely unconcerned with globalisation and the interdependencies that have resulted for global actors. He seems to have no interest in acknowledging the world’s complex geopolitical contexts. On the contrary, he apparently still sees the world from the perspective of a real-estate magnate. Borders and walls are being rebuilt. The marketing of the “Trump” brand, moreover, must be visible to everyone.

Although Trump’s methods are very different from those of Xi, both have one thing in common: they are national strategies that strengthen the position of the country in question.

has not succeeded in becoming a political union. It lacks a joint strategy, particularly in terms of foreign, security and economic policies. This lack of a joint strategy is, geopolitically speaking, what prevents the EU from being an equal partner to the US and China. On the contrary, neither China nor the US wants a strong Europe. That is why they support individual member states, depending on which of their interests is at stake.

Europe’s vulnerability is particularly evident in the military arena. Since Trump has taken oﬃce, Europe can no longer rely on the US as NATO’s mainstay and main ﬁnancial contributor. Now that America’s security interests in Europe are no longer a priority for the president, the EU is being forced to step up and take responsibility. China is taking advantage of Europe’s strategic weakness as well. Chinese investments, especially those relating to BRI, are concentrated in Eastern Europe, and the 16+1 negotiations are further marginalising Brussels.

The world without global leadership is creating major challenges for the EU. Internally, member states are increasingly critical of the diktat from Brussels and are demanding a return to national sovereignty. At the same time, the EU has not been successful in responding to the needs and fears of its citizens – ie, unemployment, especially among young people, and a growing feeling of uncertainty caused by the loss of control in Europe. Borders and the reintroduction of national control mechanisms are again being discussed.

Externally, the EU finds itself facing increasingly dominant nation-states, including China, Russia and the US. The “age of the strongmen” seems to have dawned, strongmen who are unfailingly pursuing their own interests around the globe. If EU: lost dreams the EU is not successful in defining shared, uniform European interests – above all in the area From a global perspective, the European Union of security, foreign and economic policy – the is hard to classify. It is neither a nation-state nor Union will sooner or later find itself relegated to the “United States of Europe”. Until now the EU geopolitical obscurity. THE BRIDGE

Cosmopolitan and multipolar

Globalisation does not mean that borders – and thus countries, territories, regions and communities – disappear (Zajec, 2017, p. 238).On the contrary, the more globalised the world is, the greater the sense of belonging people have for their country, region or area. When all is said and done, we want to remain who we are.

Personality cults, like those currently being cultivated in China and Russia, and projects and visions, like BRI and “America ﬁrst”, not only deﬁne national interests, they also provide the strategic and ideological framework required for ensuring national cohesion. This is where the EU continues to come up short. Europe does not have a shared strategic vision, either internally or externally. Diversity is seen as a weakness rather than a strength.

This is where it is worth taking a closer look at the ideas of Jacques Ancel (1879–1943), a thinker who, from a geopolitical perspective, accords a central position to people while also introducing the concept of “identity”. According to Ancel, there are no natural borders, only those that people recognise based on shared memories, history, culture, language and the express desire to coexist. Thus, in contrast to the German geopolitical nation-state school, he represents a non-rational vision of the “nation of the heart” or an “identity of the heart”. «C’est le cœur qui vaut et qu’il faut considérer avant tout» (Jacques Ancel)

In this sense, the EU could strategically position itself externally vis-à-vis China and the US as an avant garde actor while also responding internally to the public’s concerns. Nationality, national sovereignty and the shared European identity must be respected as complementary elements and not seen as mutually exclusive. Europe’s diversity must, in turn, be leveraged as a strength and not condemned in a hostile ploy against Brussels.

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Geopolitically, this could serve as the EU’s contribution to a new, more equitable, cosmopolitan world order, one characterised by balanced and fair global trade, by a just distribution of the world’s natural and food resources, and by joint efforts to ﬁght terrorism.

In our globalised world, the EU, China and the US are not isolated island paradises. No one is privy to the absolute truth. The challenges stemming from climate change, growing global competition (for natural resources, food, water, etc), the rivalry between national and transnational forces and, above all, international terrorism are forcing us to face reality. The illusions underlying various ideologies must be relinquished. These include the Europe of elites; patriotic Chinese-style capitalism; “America ﬁrst”; personality cults; and a return to revisionist power structures. Differences must be bridged (Banik, 2016, p. 127). The goal is a cosmopolitan world order in which human values take precedence in keeping with an “identity of the heart”.

Italy and the Belt & Road Initiative by Tridivesh Singh Maini

THERE HAS BEEN A GROWING SCEPTICISM with regard to the Belt and Road Initiative (BRI) project in many quarters, due to the lack of transparency with regards to terms and conditions as well as the economic implications for countries which are part of the project. A report published by the Center for Global Development (CGD) Washington in April 2018 ﬂagged 8 countries (including Pakistan, Maldives, Laos and Djibouti where the level of debts are unsustainable.

Apart from red ﬂag raised by a number of researchers, the removal of Pro-China leadership in countries like Malaysia, Maldives and Sri Lanka has also resulted in the problems of the BRI project, and China’s economic dealings (which are clearly skewed in favour of Beijing) with other countries drawing more attention.

The most vocal critic of China’s economic links has been by Malaysian Prime Minister Mahathir Mohamad. During a visit to China in August 2018, Mahathir not known to mince his words while alluding to China’s trade relations

with poorer countries could lead to ‘a new version of colonialism’.

Mahathir later on denied that his statement was targeted at China or the BRI. The fact is that the Malaysian Prime Minister did scrap projects estimated at well over 20 Billion USD (which includes a rail project, East Coast Link as well as two gas pipelines).

Top oﬃcials in the Trump Administration, including US Vice President Mike Pence, have also been critical of the BRI project for a variety of reasons. The major criticism from US policy makers has been the economic ‘unsustainability’ of the project as well as the point that the project is skewed in favour of China. THE BRIDGE

Italy to join BRI

As the debate carries on with regard to the BRI,no body can ignore the fact, that Italy (the world’s 8th largest economy) is likely to become the only G7 country to join the BRI.

During Chinese President Xi Jinping’s visit to Italy, later this month (March 22-24) a Memorandum of Understanding MOU, and could be signed. Senior oﬃcials in the government have been cautious, and have emphasised on the fact, that the MOU would be ‘non-binding’. Commenting on the status of the MOU, Undersecretary in Italy’s economic development ministry, Michele Geraci stated: ‘…it is possible that it will be concluded in time for [Xi’s] visit.”

The current government has given immense attention to China, and there have been 3 high level visits ever since the ruling coalition took over the reigns last June (senior oﬃcials who visited include – Italy’s Finance Minister Giovanni Tria, Geraci, and Deputy Prime Minister Luigi Di Maio — who also holds the charge of economic development minister). The Italian PM is also likely to attend the second Belt and Road Forum to be held in Beijing in April 2019.

The clear objective of becoming part of BRI, according to senior officials, is to get access for its goods and to also leverage its geo-political location within Europe. During his visit to China in September 2018, the Italian Deputy PM had spoGeraci a Sinophile, who has spent a fair amount ken in favour of Italy joining the project. of time in China, is said to be driving the ruling coalition’s policy (The Five Star Movement The Deputy PM who had gone to attend the 17th (M5S) and right leaning Lega joined hands to Western China International Fair had made the form a government in June 2018) towards point that Italy was identifying the possible avChina. enues for participation in the project, and that the G7 country could benefit immensely, if it sucItalian PM, Giueseppe Conte while addressing a cessfully harnessed it’s own economic and geseminar, in Genoa, made the point, that while ographical strengths. joining BRI would open new opportunities and horizons for Italy, Rome was likely to be cau- In 2018,the inaugural meeting of Italy’s China tious, and would not do anything in haste. Task Force was held in Rome (this is headed by Michele Geraci). The key objectives of this task Current state of Italy-China relations force are; to give an impetus to bilateral economic cooperation (to give a boost to Chinese If one were to look at the state of China-Italy bi- investments in Italy, giving a push to Italian exlateral relations. China-Italy bilateral trade ports to China, cooperation in Research and Dereached nearly 50 Billion USD in 2017. China is velopment) and also to explore how Italian Italy’s largest trading partner in Asia. It would be companies could seek financing under the BRI pertinent to point out that ties between both initiative. countries are not restricted to the economic sphere. There has also been a rise in Chinese Italy has also been seeking to expand cooperatourists visiting Italy (over 1.5 million annually). tion with China in Africa (the argument is that Even in the sphere of education, linkages be- African growth will help in putting a check on imtween both countries are rising. As of 2017, migration to Italy). Interestingly, former PM there were over 6,000 students Italian students Paolo Gentiloni had urged EU and US to invest in China and nearly 20,000 Chinese students in more in Africa, and to counter China’s growing Italy. influence.

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Scepticism with regard to Italy-China economic relations While the government has unequivocally spoken out in favour of this decision. Many argue, that Italy will need to develop it’s own infrastructure – especially the rail system, if it needs to benefit significantly from BRI. Given Italy’s current fiscal situation, too much investment into infrastructure seems highly unlikely. With China having invested in Piraeus (Greece) it is important that the Venice Port becomes more competitive. This will require not just economic investments, but strategic thinking.

There are those who also argue, that the current Italian government has given too much attention to Beijing, at the cost of relations with other countries. The China policy, it is argued will also have an adverse impact on EU’s common China policy.

WHILE ITALY WILL JOIN THE BRI, IT WILL ENSURE THAT THIS BENEFITS BOTH, AND THAT EU NORMS AND VALUES ARE NOT FORGOTTEN

Unlike other Western countries, Italy has not given a very strong reaction on the Huawei controversy. Italian Deputy Prime Minister was quick to state that “We are in no way tilting the geopolitical axis,”Italian PM also made it clear, that while Italy will join the BRI, it will ensure that this and to ensure it was beneficial for both. The projbenefits both, and that EU norms and values are ect would also take into account financial and environmental sustainability. not forgotten. US reaction to Italy joining BRI

It is argued, that by reaching out to Euro skeptics in EU, Beijing is trying to create divisions within the bloc. Countries like Hungary and Greece, which are being increasingly dependent upon China, have taken a different stance from other EU countries on issues such as The South China Sea and Human Rights violations.

US also took note of Italy joining BRI. As expected, the US was critical of Italy’s decision to join the BRI. A White House National Security Council spokesperson, Garrett Marquis in a media interview stated:

It has even come up with its own version of BRI. In September 2018, EU’s strategy for connecting Europe and Asia. Senior EU oﬃcials including High Representative/Vice-President Federica Mogherini made it clear, that EU’s strategy was to enhance connect between Europe and Asia,

As mentioned earlier, senior members of the Trump Administration too have ﬂagged the shortcomings of the BRI project and how the dependence of certain countries in Asia and Africa is rising.

The EU has been critical of the BRI..

“We view BRI as a ‘made by China, for China’ initiative,”

THE BRIDGE

Conclusion

It is important for countries within the EU as well as other countries sceptical of the BRI to adopt a more pragmatic stance towards Italy’s decision. One must also keep in mind the fact, that while speaking about signing an MOU with China it has left room for manouevre. It is also important for countries vary of increasing Chinese inﬂuence to themselves stand up for liberal values, and greater economic integration. One of the reasons for Beijing’s increasing economic clout, is increasing the inward looking economic policies being adopted by a number of countries – not just the US. At the January 2017, World Economic Forum (WEF) Chinese President Xi Jinping had warned against the increasing scepticism with regard to globalisation. Said the Chinese President: ‘Some people blame economic globalization for the chaos in our world. Economic globalization was once viewed as the treasure cave found by Ali Baba in the Arabian nights, but now it has become the Pandora’s Box.’

The only country which has attempted to put up a cohesive alternative to BRI is Japan’s ‘Partnership for Quality Infrastructure’ (PQI). Japan along with Asian Development Bank will be providing over 100 Billion USD (50 Billion from Japan and 50 Billion from ADB) for infrastructure in Asia. Japan’s economic presence in Africa is also steadily rising, though it is assisting Africa in a number of other areas like health, education through Tokyo International Conference on African Development (TICAD) ( which is co-hosted by the Government of Japan, The World Bank, United Nations Development Programme (UNDP), the African Union Commission and the United Nations).

While it is true, that globalization may not be perfect and some scholars went overboard, but there is also no denying the point that populist policies which have favoured economic isolationism may have helped in achieving political successes, but their limitations are beginning to show in the economic sphere. It is for this reason, that even leaders like Mahathir who are critical of Chinese projects have stated, that if he were to chose between China and an ‘unpredictable US’ he would choose the latter. Italy on its part must be cautious and should astutely balance its own interests and not allow Beijing to have a free run. Differences with the EU, should not lead to Italy and other countries becoming excessively dependent upon China.

Very few leaders have spoken up on this issue forcefully enough. Similarly, if the US has flagged problems of the BRI it should be willing to invest in an alternative narrative. So far even if one were to look about the narrative of a ‘Free and Fair’ Indo-Pacific, Washington has not made significant financial commitment (In July 2018, the Trump administration did make a commitment of 113 Million USD for areas like energy, digital economy and infrastructure). While it is There is no denying the fact, that Italy’s acceptbelieved that the US IDFC (International Devel- ance of the BRI has important implications opment Finance Corporation) created through which go well beyond EU. BUILD (Better Utilisation of Investment leading to development act) may be able to give the much required boost to some important connectivity projects, but it’s total budget estimated at 60 Billion USD pales in comparison to China’s budget.

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Xi Jinping’s visit to Italy and the relationship between China and the Catholic Church by Giancarlo Elia Valori

NO OFFICIAL MEETINGS between President Xi Jinping and Pope Francis are oﬃcially scheduled on the agenda for the Chinese President’s next visit to Italy.

Neither party wants to jeopardize the agreement reached last September on the appointment of bishops and, however, as is well-known, both diplomacies like silence, long processes and long time schedules.

Whoever remembers the old diplomatic precedents, also remembers that, just ten years ago, there was the possibility of another meeting between Benedict XVI and Hu Jintao in Italy for the G8 in L’Aquila. The Chinese leader, however, had to return quickly to Beijing, for a revolt in Xinjiang which was – as usual – more dangerous than we could believe.

From the outset, however, Cardinal Zen opposed the “parallel” appointment of bishops by China and Italy, as envisaged by the agreement currently in force between China and the Vatican.

It should be recalled that, from the beginning, Cardinal Zen who was Archbishop of Hong Kong until 2009, dismissed the agreement between the Secretary of State, Cardinal Parolin, and the Chinese regime as an “incredible betrayal of Faith”.The old prelate was born in Shanghai in 1932, just a year after Mao Zedong founded a sort of Soviet republic in Jiangxi. Nevertheless, the new strategies and opportunities or new contrasts are beginning to take shape. Since January 30 last, for example, Peter Jin Lugang has no longer been a clandestine bishop from Nanyang, while Cardinal Filoni has recently gone to Macao to inaugurate some new facilities of the Saint Joseph University. THE BRIDGE

In 2018, as many as 48,365 people were baptized in the churches and parishes of the People’s Republic of China. Currently there are almost ten million Chinese Catholics. There are also 104 dioceses recognized by the government of the People’s Republic of China, with 30 national provinces. Currently the largest number of newly baptized people in China is found in the Hebei province, with 13,000 new people baptized in 2018, followed by Shanxi, with 4,124 new Catholics, as well as Sichuan with 3,707 new people baptized, and ﬁnally Shandong with 2,914 new Christians.

Even in Tibet as many as 8 baptisms were celebrated. In Hainan there were 35 baptisms and in Qinghai 43. This applies even to the Islamic Xinjiang, with as many as 57 new Catholics. On point of law – and not only canon law – Cardinal Filoni requires that the members of the unoﬃcial Chinese Catholic communities should not be forced to join the speciﬁc “Patriotic Association” – as is instead subtly envisaged by the Chinese government. Nevertheless, for the Chinese government, this Patriotic Association is still a “people’s association” and hence has no ecclesial relevance. Moreover, participation in it is always “voluntary and never imposed”. This is what China, not the Vatican, maintains.

Nevertheless, the Vatican precisely knows that in the areas in which – as we have seen above – there is a greater presence of new Catholic vocations, the People’s Association puts strong pressure to make priests and bishops be nationally independent “from the Vatican and from any foreign interference”. Without very strong nationalism, however, there is never any Chinese ideology – and certainly not the Communist one born from the Party founded in Shanghai in 1921.

Hence currently a political and cultural policy – and even a religious, cult and sapiential one, if I may say so – would be needed to make the Chinese regime understand that a Chinese Catholic is all the more Chinese precisely because he is truly Catholic.

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Being Catholic is precisely the moment in which, as Saint Josemaria Escrivà de Balaguer used to say, we understand that “conversion is the matter of a moment, sanctiﬁcation is the work of a lifetime”.

And the sanctiﬁcation of work and daily life applies to everybody, both believers and non-believers. This means that the universality of Catholicism includes everything, namely being Chinese, Italian, Indian from America or anybody else. For a Chinese, there is not being a Catholic outside being fully and absolutely Chinese.

Moreover, the current Chinese law does not oblige priests and bishops to join the Patriotic Association, while in all the areas in which the Catholic faith is more widespread, the Chinese government tries to push clerics to join the aforementioned Association, which not too implicitly proposes “independence” from the Holy See.

In Chinese politics, this is the heritage of a weak and divided Catholic Church, as experienced at the time of the “Chinese Rites Controversy”, which started in the early seventeenth century under the pontiﬁcate of Gregory XV and lasted almost three centuries until 1939.

As you may recall, on the one side there were the Jesuits, who accepted and condoned the pagan practices and beliefs relating to the traditional cult of the dead according to the ancestral Chinese local traditions, but on the other there were the Franciscans and Dominicans, who thought that those practices – essential in the Chinese symbolism and tradition (even at political level) – should be radically changed in relation to the new, but perfect and unique, Catholic faith.

Hence currently – and here the problem of its Communism is even marginal – China still fears to lose its “soul” and its profound identity, while the Catholic Church cannot certainly afford to be turned into a sort of Protestant Church, also subjected to the political power even in its Rites.

Obviously the penetration of the Protestant-style sects – often of American tradition – could become dangerous both for the Catholic Church and, all the more so, for the Chinese government. There is also the issue of the four priests of the unoﬃcial community of Zhangjiakou, Hebei, who are still detained in a secret place by the People’s Police. According to Chinese Catholic sources, the issue began in late 2018.

Local governments’ factionalism and different CPC configurations in the various regions, as well as a proxy struggle between the Centre and the Periphery, are all factors which could explain the different approach of the various regional governments to the issue of Chinese Catholicism and its official presence in present-day Chinese society (and also in its the power system). There is fear for a dangerous competitor in the power game, but it should be clarified – especially at political level – that the Catholic person has not his/her own State, but is defined by the side of the currency in which Caesar is engraved.

There is nothing else – and a true Catholic is not allowed to worship anything else.

According to some Vatican sources, however, while Pope Francis did not mention the issue of the priests detained in Hebei, the Vatican’s “policy line” could currently be to consider the Patriotic Association an organization to which the adhesion of bishops and clerics is fully optional.

Again in Hebei, a priest accused his Bishop, Monsignor Agostino Cui Tai, of wanting to “oppose” the Sino-Vatican agreement and even asked the police to arrest him.

Once again petty internal settling of scores, old tensions, as well as the usual problematic personal relations ﬁt into the grand design of regularization of the Catholic Church in China, as certainly happens also on the government side.

However, all the Chinese bishops to whom Pope Francis removed excommunication are in favour of abolishing the “Church of Silence” and massively adhering, instead, to the Patriotic Association.

For the Chinese media, however, Prime Minister Conte’s position is extremely important and, in all likelihood, China will enhance on the media the success it is already expecting to have in Italy.

Nevertheless, also for this negotiation by which China sets great store, there is the key issue of relations with Italy. The Chinese media notes that currently Italy has substantially adhered to the One Belt One Road project (OBOR), but that hopefully the agreement should be oﬃcially signed during Xi Jinping’s State visit to the country.

Surely, according to Chinese analysts’ economic projections, the ﬂow of goods and services going from Italy to the United States would decrease – albeit to the beneﬁt of China – while it is likely that, in the near future, the 5G issue will emerge again, and hence China could have some more chances.

While recognizing the Chinese government’s full right to control the political activity of the Chinese Church, what about thinking about a very different instrument from the Patriotic Association, which is the obvious heir to an archaic Third International logic, together with the “United Front” and the other organizations that control political, religious and cultural heterodoxy in China? This is a topic about which Pope Francis and President Xi Jinping could talk if they met in Italy.

According to Chinese analysts, the US nervous reaction to Italy joining the OBOR project stems from the fact that is a crucial and decisive country for the European Union, from both an economic and geopolitical viewpoint. China is subtly trying to make us understand that while the United States ﬁnally wants to thwart the single currency and weaken the great network of duties and protections that the EU is essentially for it, China has no interest in undermining the EU nor certainly in plunging the Euro area into a further crisis.

Should this not happen, it would be an irrepara- Hence a clear loss of US relevance in Italy, which ble offense for China. would give rise to a long series of very harsh countermoves by the United States. Over 60 It should also be noted that the Chinese media’s countries, including 12 European ones, have so attention is very much focused on the “Special far signed a Memorandum of Access to the Working Group on China”, a structure recently or- OBOR network, in whatever manner. We enter ganized by the Italian Government. In particular, here directly into the project that Xi Jinping has China underlines the fact that both Greece and recently outlined in the “Two Sessions” of the Portugal have already agreed to be part of the National People’s Congress, which are always OBOR project, without the United States having held in the ﬁrst two weeks of March. had much to say about that. In this year’s two sessions, President Xi Jinping Certainly the strategic relevance of Italy in the has underlined that the limit whereby the PresiMediterranean is very different from Greece’s dent of the Republic and CPC Secretary, as well and Portugal’s geopolitical function for China as the President of the Central Military Commisonly regards its Atlantic projection and its tradi- sion, shall serve no more than two consecutive tional ties with Western Africa. terms has been removed. MODERNDIPLOMACY.EU

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CHINA HAS NO INTEREST IN UNDERMINING THE EU NOR CERTAINLY IN PLUNGING THE EURO AREA INTO A FURTHER CRISIS The meaning is clear: my power lasts and is stable, possibly until 2027 – hence the many factional areas of the Party and the State would do well to conform again with the Party’s policy line and not to cause too much trouble. President Xi Jinping emphasized once again the importance of the anti-corruption campaign, with 621 civilian oﬃcials and military oﬃcers punished in 2018 alone.

China also knows that an attack on Taiwan would enable the United States, in particular, to massively and harshly return to the Asian continental region.

Certainly this has much to do with the relationship between the Chinese government and the Catholic Church. With speciﬁc reference to foreign policy, after the “two sessions”, Xi Jinping currently tends to ﬁnalize as soon as possible the negotiation for a “Shared Code of Conduct” between China and the ten ASEAN countries, while the Chinese control over the Taiwan and Hong Kong seas is expanding.

As can be easily imagined, peaceful unity is directly related to the Taiwan issue – to which the rule of “one country, two systems” will soon be applied.

As we will also see in Italy, for President Xi Jinping, China must define – as soon as possible – a “Chinese” model to resolve all current international tensions, so as to ensure that China can become a “contributor and promoter” of both He also highlighted the new widespread pres- global free trade – in contrast with Trump’s US ence of the Party’s committees in Chinese pri- trade policy – and of multilateralism. vate companies – a presence that has now reached 70% of companies – as well as the In the “Two Sessions”, President Xi Jinping also huge reduction of NGOs operating in China from proposed “Xi’s five Study Points”. 7000 to just 400. Finally, there was the reaffirmation of the “mistakes” made by the Western They concern above all peaceful unity, also repropaganda, as well as the reaffirmation of the ferring to the fact that Xi in Chinese also means pillars of the CPC doctrine and practice. “to learn, to study, to put into practice”.

In Xinjiang, the Chinese government will soon accept a UN mission, provided it “does not interfere in domestic matters”.

It should be made clear that China will never conquer the Kuomintang island militarily, but it will wait for its internal political transformations to lead to a de facto reuniﬁcation. THE BRIDGE

The “Neo-Cold War” in the Indian Ocean Region by Kagusthan Ariaratnam

ADDRESSING AN EVENT last week at London’s Oxford University, Sri Lankan Prime Minister Ranil Wickremesinghe said some people are seeing “imaginary Chinese Naval bases in Sri Lanka. Whereas the Hambantota Port (in southern Sri Lanka) is a commercial joint venture between our Ports Authority and China Merchants – a company listed in the Hong Kong Stock Exchange.”

Prime Minister Wickremesinghe has denied US’ claims that China might build a “forward military base” at Sri Lanka’s Hambantota port which has been leased out to Beijing by Colombo. Sri Lanka failed to pay a Chinese loan of $1.4 billion and had to lease the China-developed port to Beijing for 99 years. Both New Delhi and Washington had in the past expressed concerns that Beijing could use the harbor for military purposes.

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The USA, China, and India are the major powers playing their key role in the “Neo-Cold War” in Central Asian landmass and the strategic sea lanes of the world in the Indian Ocean where 90% of the world trade is being transported everyday including oil. It is this extension of the shadowy Cold War race that can be viewed as the reason for the recent comment made by the US Vice President Mike Pence that China is using “debt diplomacy” to expand its global footprint and Hambantota “may soon become a forward military base for China’s expanding navy”.

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The greater Indian Ocean region covers an arc of Islam, from the Sahara Desert to the Indonesian archipelago. Its western reaches include Somalia, Yemen, Iran, and Pakistan — constituting a network of dynamic trade as well as a network of global terrorism, piracy, and drug traﬃcking […]

Two third of the global maritime trade passes through a handful of relatively narrow shipping lanes, among which ﬁve geographic “chokepoints” or narrow channels that are gateway to and from Indian ocean: (1) Strait of Hormuz (2) Bab el-Mandab Passage (3) Palk Strait (4) Malacca and Singapore Straits and (5) Sunda Strait. While Lutz Kleveman (2003), argues that the Central Asia is increasingly becoming the most important geostrategic region for the future commodities, Michael Richardson (2004) on the other hand explains that the global economy depends on the free ﬂow of shipping through the strategic international straits, waterways, and canals in the Indian Ocean.

According to some analysts, the deep-water port, which is near a main shipping route between Asia and Europe, is likely to play a major role in China’s Belt and Road Initiative.

In his book “Monsoon” Robert D. Kaplan (2010), a senior fellow at the Centre for a New American Security notes the following:

[…] the Indian Ocean will turn into the heart of a new geopolitical map, shifting from a unilateral world power to multilateral power cooperation. This transition is caused by the changing economic and military conditions of the USA, China and India. The Indian Ocean will play a big role in the 21st century’s confrontation for geopolitical power.

According to the US Energy Information Administration (EIA) report published in 2017, “world chokepoints for maritime transit of oil are a critical part of global energy security. About 63% of the world’s oil production moves on maritime routes. The Strait of Hormuz and the Strait of Malacca are the world’s most important strategic chokepoints by volume of oil transit” (p.1). These channels are critically important to the world trade because so much of it passes through them. For instance, half of the world’s oil production is moved by tankers through these maritime routes. The blockage of a chokepoint, even for a day, can lead to substantial increases in total energy costs and thus these chokepoints are critical part of global energy security. Hence, whoever control these chockpoints, waterways, and sea routes in the Indian Ocean maritime domain will reshape the region as an emerging global power. THE BRIDGE

In a recent analysis of globalization and its impact on Central Asia and Indian Ocean region, researcher Daniel Alphonsus (2015), notes that the twists and turns of political, economic and military turbulence were signiﬁcant to all great players’ grand strategies: (1) the One Belt, One Road (OBOR), China’s anticipated strategy to increase connectivity and trade between Eurasian nations, a part of which is the future Maritime Silk Road (MSR), aimed at furthering collaboration between south east Asia, Oceania and East Africa; (2) Project Mausam, India’s struggle to reconnect with its ancient trading partners along the Indian Ocean, broadly viewed as its answer to the MSR; and (3) the Indo-Paciﬁc Economic Corridor, the USA’s effort to better connect south and south east Asian nations. (p.3)

Lanka at the center of the twenty-ﬁrst century’s deﬁning economic, strategic and institutional frameworks. Furthermore, alongside the MSR, China is building an energy pipeline through Pakistan to secure Arabian petroleum, which is a measure intended to bypass the Indian Ocean and the Strait of Malacca altogether.

A recent study done by a panel of experts and reported by the New York Times reveal that how the power has increasingly shifted towards China from the traditional US led world order in the past five years among small nation states in the region. The critical role played by the strategic sea ports China has been building in the rims of Indian Ocean including Port of Gwadar in Pakistan, Port of Hambantota in Sri Lanka, Port of Kyaukpyu in Myanmar and Port of Chittagong in Bangladesh clearly validates the argument that how these small states are being used as proxIndia the superpower of the subcontinent, has ies in this power projection. long feared China’s role in building outposts around its periphery. In a recent essay, an Indian This ongoing political, economic and military ricommentator Brahma Chellaney wrote that the valry between these global powers who are fusion of China’s economic and military inter- seeking sphere of influence in one of the world’s ests “risk turning Sri Lanka into India’s Cuba” – most important geostrategic regions is the bea reference to how the Soviet Union courted ginning of a “Neo-Cold War” that Joseph Troupe Fidel Castro’s Cuba right on the United States’ refers as the post-Soviet era geopolitical conflict doorstep. Located at the Indian Ocean’s cross- resulting from the multipolar New world order. roads gives Sri Lanka the strategic and economic weight in both MSR and Project Mausam plans. MSR highlights Sri Lanka’s position on the east-west sea route, while Project Mausam’s aim to create an “Indian Ocean World” places Sri

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China-Bangladesh Cooperation under BRI to Mitigate Seaborne Security Threats in the Bay of Bengal by Noor Mohammad Sarker

THE ‘BELT AND ROAD’ INITIATIVE (BRI), commenced by the Chinese President Xi Jinping in 2013, has been the most significant and far-reaching project that China has ever put forward. Bangladesh is an important strategic partner with China in this two-dimensional mega-project, comprising of the Silk Road Economic Belt and the Twenty-first Century Maritime Silk Road (MSR). The maritime area of Bangladesh in the Bay of Bengal falls under the sea route of MSR, whereas both China and Bangladesh share common interest of ensuring the free flow of international trade.

However, Bangladesh’s maritime area in the Bay of Bengal has been in the verge of a number of sea-borne security threats, including maritime terrorism, piracy, drug smuggling, human traﬃcking, and environmental disasters.

As for example, in recent times, the use of maritime domain by the transnational terrorist groups has received a wider attention of the policymakers and security experts in the coastal countries. For the last two decades, a series of terrorist attacks on or by the sea, including the attack on French Oil Tanker in October 2012 and terrorist attacks in Mumbai in November 2008, clearly indicate the security exposure of the coastal countries against transnational terrorism. Particularly, the Mumbai attacks had a grave security impli cation for Bangladesh. The nature of the attack, in which terrorists used small ﬁshing boat to cross the maritime route and landed by sea to launch the attack on the city, introduced a new dimension of sea-borne security threat.

The Bay of Bengal is also one of the hotspots of maritime piracy in the world. The coastal livelihood of Bangladesh is highly dependent on ﬁshing, which merely includes trawlers and other small ﬁshing boats. Fishing in the coastal area contributes about 2.73 percent of the gross domestic product (GDP), e.g. about 4.9 percent of total export earning and about 12 percent of total employment, of the country. THE BRIDGE

Though, the matter of concern is that, Bangladeshi ﬁshermen often become easy targets of the local or regional pirates operating in the bay. An estimation of the Cox’s Bazar District Fishing Trawler Owners Association (DFTOA) of Bangladesh projects that, in between 2010 to 2015, at least 411 Bangladeshi ﬁshermen have been killed and more than 1,000 of them have been wounded by the pirates in the Bay of Bengal.

Apart from these, Bangladesh’s maritime area is located in between the two largest illicit opium producing areas of the world, i.e. “Golden Triangle” (Thailand, Myanmar, and Laos) and “Golden Crescent” (Afghanistan, Pakistan, and Iran). Almost half of the world’s illicit drugs, produced in these areas, are trafficked through the Bay of Bengal and its littoral countries to different parts of the world. In addition, transnational criminal networks use the bay as a maritime route of human trafficking, mostly Bangladeshi citizens and Rohingya refugees from Myanmar, to Southeast Asian countries, including Indonesia, Malaysia, and Thailand. According to a report of the United Nations High Commissioner for Refugees (UNHCR), around 31,000 people, together with Bangladeshis and Rohingyas, have been trafficked through the Bay of Bengal in the first half of 2015. Regional militant and terrorist organizations in South Asia and Southeast Asia are believed to be benefitting from this channel of human trafficking. MODERNDIPLOMACY.EU

Besides, climate-induced security threats in the coastal areas have been the major concerns for Bangladesh with the largest part of her surface lying less than 10 meter above sea level. Geosciences Australia reported in 2007 that, Bay of Bengal is the most dangerous area for large tsunamis and Bangladesh falls in the second position after Indonesia about the highest number of population threatened by tsunamis. In 2009, another study of Climate Change Cell, working under the Department of Environment, Bangladesh, predicted that, a 45 cm rise of sea level would inundate 10-15% of the country’s land by the year 2050, generating over 35 million climate refugees from the coastal districts. Given this context, a bilateral cooperation between Bangladesh and China to mitigate these common sea-borne security threats in the Bay of Bengal could serve the interest of both the countries. China has been actively ﬁghting these types of non-traditional security threats in the In-

dian Ocean for the last two decades. Since the beginning of 2000s, China’s maritime strategy has incorporated the idea of “far seas protection,” which includes the construction of its independent blue water naval strength in the greater Indian Ocean. This strategy was initially formulated to secure the Chinese interests abroad, including “security of overseas energy and resources, strategic sea lanes, overseas Chinese investment, and overseas Chinese citizens and legal entities.” Following these, China’s naval vessels have been navigating in the Indian Ocean since December 2008 and conducting regular anti-piracy operations and exercises. Chinese nuclear submarines have also joined these activities from 2013.

BRI has in fact put more emphasis of China’s ﬁght against sea-borne security threats in the Indian Ocean. For being a part of the Maritime Silk Road, the security of the Bay of Bengal also remains one of the primary focuses of China’s naval policy. For example, in February 2017, two

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Chinese destroyers, Haikou and Changsha, conducted anti-piracy drills in the eastern quadrant of the Indian Ocean. In April of the same year, a successful joint operation was conducted by Chinese and Indian naval forces in order to rescue a merchant ship hijacked by Somali pirates in the Gulf of Aden.

China, with its modern technological support, is also collaborating with Southeast Asian countries for the past several years in this regard. These engagements have been providing China with pragmatic experience as well as expertise on the nature of security threats in the Bay of Bengal and their possible prevention strategies. These policies aside, cooperation with other coastal countries in disaster management has long been a part of China’s naval diplomacy. As a Bay of Bengal littoral state, therefore, Bangladesh has the opportunity to engage in similar kind of cooperative framework with China under BRI. THE BRIDGE

Project of the century: How the Belt and Road initiative will impact the Eurasian region by Oleg Remyga

IN 2013, CHINA ANNOUNCED the creation of the Silk Road Economic Belt and the Maritime Silk Road of the 21st century – this initiative of “The Belt and Road” was designed to turn Asia and Europe into a single economic region. It focuses on the industries that are important for the internal growth in China and, at the same time, involves over 70 countries with a total population of 4.4 billion. Today, the initiative has already changed the economy of Eurasian countries signiﬁcantly. Over the last seven years, the region got approximately $98 billion in investments in order to implement 168 projects. What’s in it for China?

In recent years, China’s economic growth has slowed from double-digits to 6.4% in 2017. The wide-reaching economic model formerly in use (based on cheap labour, gross investment, and exports) has faced a number of serious challenges. MODERNDIPLOMACY.EU

The country has to overcome industrial overproduction – steel making in China is a great example of this challenge. According to oﬃcial data, China’s production capacity amounts to 1.1 billion tons per year, while internal demand is approximately 700 million tons, and China’s export partners cannot consume the remaining 400 million tons. The country needs to be provided with an access to new markets and to launch new resource-intensive projects.

In addition, Chinese authorities have been facing the problem of a sharp increase in labour cost. We live in a world where the average labour cost in China ($758) is higher than in Russia ($615).

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And it causes many multinational corporations to move their manufacturing facilities to other South-East Asian countries, such as Vietnam. China is losing its historical competitive edge – cheap labour, and analysts are increasingly talking about the risk of “stalling” in the trap of average income.

China helped create powerful financial institutions in order to finance projects within the framework of the Belt and Road initiative, such as the Asian Infrastructure Investment Bank with $100 billion in capital, and the Silk Road Foundation ($40 billion in capital). The New Development Bank (or BRICS Bank) is also seen as an important element of the Belt and Road projects’ financial infrastructure, which will also involve the participation of the largest Chinese state-owned banks and development institutions.

Furthermore, China needs to reduce its debt burden. The country is one of the world leaders in joint debt rating. In 2016, the total debt load in China amounted to $27 trillion, which equals 254% of the country’s GDP. Simultaneously, the amount of “bad” debt in the banking system is The total budget for projects under the Belt and growing. Road initiative is estimated at an astronomical $1.3 trillion. The bulk of these investments is exSocial inequality and poor ecology exacerbate pected to be sent to the countries of the the situation further. For example, 1% of the Eurasian Economic Union, including Russia, wealthiest Chinese control roughly 33% of total Kazakhstan, Armenia, Belarus and Kyrgyzstan, national wealth, while 25% of the poorest Chi- which are key to the implementation of The Belt nese possess just a mere 1%. Beijing sees as lit- and Road initiative. tle as 124 clean days every year, while total environmental destruction amounts to 3.5-5% of How will this Chinese initiative affect other China’s total GDP. In addition to a number of in- countries? ternal reforms adopted to create an economic model focused on domestic consumption, the The Belt and Road initiative will stimulate major Chairman of the People’s Republic of China, Xi infrastructure changes not only in China, but Jinping, proposed the “Belt and Road” initiative. also in other countries through which the New Among other things, it is designed to stimulate Silk Road passes. There are expectations for the domestic economic growth through external construction of new roads and railways, power forces – ensuring access to Chinese products plants, ports and fuel pipelines. in new sales markets, natural resources, integration into complex production chains, exchange The Chinese investments are expected to accelof advanced technologies, and the establish- erate the growth of the economies of the counment of new high-tech manufacturing facilities tries participating in the Belt and Road in China. initiative.This is precisely what is meant by mutually beneficial cooperation, or the “win-win” To do this, Chinese authorities are attempting to model, which Chinese officials often reference. create a large-scale platform that will enable the expansion of trade and investment relation- Many believe in the efficacy of such a model. A ships, as well as technological cooperation be- total of 69 countries and international organizatween China and Central Asia, Europe, and tions have entered into agreements with China Africa. This is believed to be a way for China to to cooperatively implement the framework of gain an access to the tools needed to overcome The Belt and Road initiative. In practice, cooperthe economic development challenges de- ation is developing in several key areas. scribed above. THE BRIDGE

THE CHINESE INVESTMENTS ARE EXPECTED TO ACCELERATE THE GROWTH OF THE ECONOMIES OF THE COUNTRIES PARTICIPATING IN THE BELT AND ROAD INITIATIVE

Trade

In the long run, the Chinese government is striving to create a single integrated economic space, with the ultimate goal of establishing a free trade zone. Already, by the end of 2017, China’s trade turnover with the countries that signed cooperation agreements within the framework of the Belt and Road initiative exceeded $800 billion. To further integrate the economies of Asia and Europe, the creation of six economic corridors has been proposed. The main routes of the Silk Road Economic Belt will connect China with Mongolia and Russia, IndoChina, Pakistan, the Republic of Bangladesh, India and Myanmar, as well as Central and Western Asian countries.

The formation of a modern transport and logistics infrastructure in the countries of Central Asia, the Caucasus and, even, Europe is a key component for the development of these national economies. Such projects enable China to unload their excess production capacity and deliver domestic goods to foreign markets. Not only large state-owned companies, but small and medium-sized businesses stand to gain as they provide services for complex projects implemented under the framework of the Belt and Road initiative. For example, since 2011 Chinese and European cargo trains have traveled through 28 cities in 11 European countries. Currently, there are more than 4,000 trips per year, and this number is expected to increase to 5,000 by Today, goods from China are most commonly 2020. delivered by sea, taking approximately 45 days. The construction of modern highways and high- Energy speed railways will shorten this delivery period to 10-15 days. The most important project in this The Belt and Road initiative also takes into acrespect is the largest Central Asian land port – count the need to create new energy capacities Khorgos. This facility is strategically located in – construction of interstate power lines, Kazakhstan in the Free Economic Zone called pipelines and gas pipeline systems, and the de“Khorgos – Eastern Gate”, which also includes velopment of new energy-deposit fields. One of logistics and industrial zones. China has in- the most promising projects in this area is vested over $3 million in this project, which saw Yamal LNG, the Russian liquified natural gas the first trains come to port in 2015. It is ex- plant that was commissioned at the end of last pected that the majority of cargo trains traveling year. The project’s budget is estimated at $27 between China and Europe will pass through it billion with approximately $20 billion provided by Chinese banks, led by the Silk Road Foundain the future.

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tion as the primary investor. Additionally, the Power of Siberia gas pipeline is expected to be complete by the end of 2019 – it will enable Russia to supply China with 38 billion cubic meters of gas per year for 30 years. The pipeline, traversing the Republic of Sakha (Yakutia), Irkutsk and Amur regions, will become the largest gas transportation system in Eastern Russia, thanks to over $70 billion in investment by Russia and China. Tourism

According to online companies Ctrip and Alibaba, Chinese citizens took 129 million tourism trips abroad last year, spending a total of $118.4 billion. Implementation of the “One Belt, One Road” strategy will contribute to the inﬂux of Chinese tourists to countries in the Eurasian Economic Union. Indicators of that inﬂux are already growing. For example, last year a record number of Chinese tourists visited Russia – 1.5 million. However, it is important to note that the bulk of revenue generated as a result of serving Chinese tourists goes to Chinese businesses, not Russian ones, as Chinese travelers tend to buy tour packages and order guide services from home, paying either in cash or through national Chinese payment systems.

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for Chinese entrepreneurs on how to effectively conduct business in Russia. Over 300 business leaders from China have been trained in this programme. In addition, in November, 2018 the Moscow School of Management SKOLKOVO and the business school of the Hong Kong University of Science and Technology will launch “EMBA for Eurasia”, a cooperative programme designed for business leaders in Eurasia. Innovations

The most widely-accepted theories of economic growth see technological development as the main driver of modern economic growth. Within the Belt and Road initiative, a special role is played by the sharing of technologies and technological innovations. As of today, 75 industrial parks are under construction as a part of the initiative.

In 2015, a Chinese holding bought 65% of YotaPhone, the Russian smartphone manufacturer. China also actively collaborates with other Eurasian countries on innovative projects in the fields of biotechnology, photonics, biomedicine, LED, food and consumer goods. In essence, it means that “One Belt, One Road” propels the industries of the Eurasian region to a new technological level. For example, several organizations Education from Belarus, Kazakhstan and Russia are developing an innovative project to cool heavy-duty The Silk Road Economic Belt also fosters busi- machinery – the so-called “double phase-shift ness cooperation between China and other cooling system” is being developed on a superEurasian countries in the field of education. computer technology platform. Today, 25% of all international students in Russia come from China. This indicates an especially high rate of international education collaboration with China as Russia’s share is a mere 2% of all Chinese students studying abroad (most still prefer European and American universities). China and the EEU countries are trying to solve the problem of a personnel shortage in the fields of economics, law and business, increasingly developing joint educational programs. For example, the Moscow School of Management SKOLKOVO runs specialized “Understanding Russia” programmes THE BRIDGE

Work is being done in other areas as well, as seven belts are planned to be put in place, including ﬁnancial and agricultural ones. In total, roughly one thousand different projects are expected to be implemented across different countries in the long term.

What are the barriers for implementing the strategy?

Another important roadblock is the fact that some of the announced projects have not been a success. For example, the construction of a high-speed railway between Moscow and Kazan, which was originally designated as one of the priority projects for the Belt and Road, stalled. The construction of this Russian segment was supposed to be the ﬁrst stage in building a railway between Moscow and Beijing, which was to be followed by an even more ambitious “Eurasia” railway project, connecting Beijing, Moscow and Berlin. Unfortunately, under current ﬁnancial conditions, these projects are not economically viable, which halted their development at the feasibility study stage. This is a clear example of collaboration in which strategic ambitions outpace, or fail to take into account, the economic and investment feasibility of the Belt and Road projects.

The Belt and Road is an initiative, not a project, meaning it has no defined goals or deadlines. China first mentioned its intention to establish the Silk Road Economic Belt and the Maritime Silk Road of the 21st century back in 2013, yet today, five years later, there is still no official information about the total number of projects or participating countries that should be involved, rendering the strategy somewhat amorphous. Unless the Belt and Road initiative is “institutionalized,” business can not use standard project Nevertheless, the initiative has emerged at the and investment approaches, which makes it dif- right time. At a time when protectionism is gainficult to implement the overarching plan. ing momentum in international trade, China is driving an expansion of free market values, simFurthermore, China is reducing investment in the plified customs and visa procedures, and the Eurasian region. In 2013, the country allocated creation of transportation and logistics infraas much as $18 billion toward the project, but structure that will ensure the quick and easy decut this amount down to $10 billion in 2016. If livery of goods to new markets. This approach China had not invested in Iran’s nuclear program enables multilateral development at the domesthat year, this amount would have dropped to $5 tic level and eliminates barriers to business that billion. Such an approach makes predicting fu- already seem archaic in the global world of the ture investments challenging. The internal eco- 21st century. nomic and political dynamics of China contribute to the challenge of forecasting the trajectory of the initiative – public and private investment banking institutions have begun to scrutinize these investment projects, as too much money was spent inefficiently or lost, drawing the attention of Chinese regulatory bodies.

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Five years on, the BRI is still being perceived as a Debt Trap by M Waqas Jan

FIVE YEARS SINCE President Xi Jinping laid out his grand vision for the Belt and Road Initiative (BRI), the implications of China’s economic supremacy have brought about marked questions over the impacts of its rise as a potential global superpower. These questions apply particularly to whether China, based on its present trajectory, may soon supplant the US’s hold over the International System as it increasingly comes to challenge it.

China has gone to great lengths to distance itself from the US, in terms of its approach towards International Politics. A key cornerstone of its foreign policy has always been based on the principle of non-interference in the internal affairs of other States. This has often been presented as a direct anti-thesis to the long history of US led interventions witnessed across the Middle East, Latin America and key regions in Asia.

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IWithin the Post-Cold War scenario, China’s insistence on non-interference in the internal affairs of states, and greater inclusivity within the international system have served as a rallying cry against what many have termed as US Imperialism and unilateralism.

However, the many intricacies of China’s newfound ability to project power overseas have brought with them their own set of challenges in direct contradiction to the above principles. Powered by its massive economy, China’s investments under the BRI spanning across Europe, Africa, The Persian Gulf, and large swathes of Asia, have caused feverish speculation, amongst both proponents and critics alike, as to the true motives behind its ﬁnancial largesse. China has repeatedly justiﬁed its investments in under-developed countries as part of its vision for global economic development. Yet, in whatever way China has maneuvered to ensure that these investments remain secure and true to their objectives, it has had to continuously ward off the perception that it is laying the foundations of a new form of imperialism of its own. THE BRIDGE

Particularly with respect to the BRI, these perceptions of Chinese Imperialism are rooted in what numerous analysts have termed as China’s ‘Debt Trap Diplomacy.’ Citing the cases of the Hambantota Port in Sri Lanka, the Bar-Boljare highway in Montenegro and the China Pakistan Economic Corridor (CPEC) in Pakistan, a growing number of critics have pointed out that, these projects while being funded through highly attractive and concessional loans from China are leading to unsustainable levels of debt for these countries. It is argued that with mounting debt in the guise of BRI funding, these countries would likely be reduced to being mere client states, with their sovereignty ﬁrmly in the grasp of Chinese creditors.

This issue of Chinese Debt was once again brought forcefully into the international spotlight, owing to a dramatic shift in Malaysia’s foreign policy towards China. The newly elected government under Mahathir Mohammad recently cancelled a series of large investment projects that were being implemented under the BRI framework. These comprised of the $20 billion East Coast Rail Link as well as two natural gas pipelines worth $2.3 billion. All of these projects were deemed as unaffordable by the new government based on the ensuing debt that would have followed.

Speaking at a press conference in the Great Hall of the People in Beijing, Prime Minister Mahathir stated clearly that he did not want a situation where there was a new version of colonialism based on unequal relations. His entire visit to China last week was geared towards delicately balancing Malaysian interests with respect to China’s sustained push towards realizing its BRI ambitions. He went at great lengths to lay the blame on his predecessor’s mismanagement of the economy, claiming he was conﬁdent that China would appreciate Malaysia’s present ﬁscal constraints, and its inability to afford such projects at this time.

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It is worth noting that during the run-up to the Malaysian elections, Mr. Mahathir had centered his election campaign on calling for greater oversight over Chinese funding. This was based under widespread allegations of corruption regarding the mismanagement of BRI project funds under his predecessor Mr. Najib Razzak. Partisan politics aside, Mr. Mahathir’s statements bear a striking resemblance to the election rhetoric of another newly elected leader in yet another key BRI partner country.

On the other side of the Indian Ocean, the newly elected Prime Minister of Pakistan, Mr. Imran Khan too had campaigned for greater oversight over the management of BRI funds under the massive China Pakistan Economic Corridor (CPEC). These were part of a series of allegations leveled against his predecessor, former Prime Minister Nawaz Sharif who also is accused of widespread corruption and mismanagement of the economy. Pakistan’s rampant debt crisis has been attributed in part to Mr. Sharif’s mismanagement. Since assuming power Mr. Imran Khan has been delicately balancing increasing calls for greater transparency and oversight over CPEC projects, all while ensuring that the bonhomie between Pakistan and China remains intact.

The parallels between Prime Ministers Imran Khan and Mahathir Mohammad present a highly interesting comparison, specifically within the context laid out earlier in this discussion. Both politicians have more or less defined their political identity as being staunchly against the last few decades’ US imperialism. Both came in to power on a surging wave of populism, on the promise of fighting corruption and providing better oversight over the economic direction of their countries. Both while being initially skeptical of Chinese investments were quick to acknowledge and provide a reaffirmation of China’s role in National development.

Mr. Khan’s direct appreciation of Chinese assistance in his speeches as well as his tweets in Chinese, directly point towards his attempts at alleviating Chinese suspicions regarding his commitment to the BRI. Mr. Mahathir’s visit to Beijing, as one of his ﬁrst overseas visits as Malaysia’s newly elected Prime Minister, also present a similar story. By positively engaging with China immediately after assuming oﬃce, both leaders have attempted to directly address any misperceptions that may have arisen from their pre-election rhetoric.

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ics. While his speech shows that there is a growing acknowledgement of such challenges amidst China’s top leadership, there are still certain issues that need to be addressed more directly. No matter how much China depoliticizes the BRI at the international level, the stark reality of debt repayments still remains as the most pervasive issue for its partner countries. This holds true even for staunch allies such as Malaysia and Pakistan.

Taking into consideration its experience over the past five years, China should take a long hard look at how to decouple its Belt and Road Initiative from being perceived as a ‘Debt Trap’. While the BRI’s critics have been quick to equate this aspect as a key characteristic of growing Chinese Imperialism, its proponents are still facing difficulty in financially justifying the grand scale of the BRI to their impoverished constituencies.

Both leaders however, while whole-heartedly welcoming Chinese assistance have also taken a much more measured response in terms of ensuring that their own countries’ interests achieve precedence. Looming debt and the maintenance of sovereignty still remain at the forefront of their political agenda, regardless of the commitments made by past governments. That is still the crux of the message being delivered to If China is to truly chart a more inclusive path to global leadership via the BRI, it must let its diploChina by both countries. matic goodwill take precedence over the ecoSpeaking at a seminar, marking the Five Year An- nomic reality of being a creditor to it indebted niversary of the Belt & Road initiative in Beijing allies. If not, it would likely lose its ability to earlier this week, President XI Jinping was clear stand in contrast to what itself refers to as the in asserting that the BRI was geared more to- US’s imperialist hold over international politics; wards economic cooperation as opposed to a all, in spite of China’s strict adherence to its long geo-political or security alliance. He re-empha- cherished principles of ‘non-interference’, and resized the openness and exclusivity of the BRI spect for the sovereignty and territorial integrity and dismissed allusions to the formation of a of its allies. ‘China Club’, in a direct riposte to the BRI’s critTHE BRIDGE

Freedom, Sovereign Debt, Generational Accounting and other Myths by Dr. Lu Wei

“HOW TO DRAW THE LINE between the recent and still unsettled EU/EURO crisis and Asia’s success story? Well, it might be easier than it seems: Neither Europe nor Asia has any alternative. The difference is that Europe well knows there is no alternative – and therefore is multilateral. Asia thinks it has an alternative – and therefore is strikingly bilateral, while stubbornly residing enveloped in economic egoisms. No wonder that Europe is/will be able to manage its decline, while Asia is (still) unable to capitalize its successes. Asia clearly does not accept any more the lead of the post-industrial and post-Christian Europe, but is not ready for the post-West world.” – professor Anis H. Bajrektarevic diagnosed in his well-read ‘No Asian century’ policy paper. ino-Indian rift is not new. It only takes new forms in Asia, which – in absence of a true multilateralism – is entrenched in confrontational competition and amplifying antagonisms. The following lines are referencing one such a rift. MODERNDIPLOMACY.EU

At the end of 2017, Brahma Chellaney, a professor with the New Delhi-based Center for Policy Research, wrote an article titled “China’s Creditor Imperialism” in which he accused China of creating a “debt trap” from Argentina, to Namibia and Laos, mentioning its acquisition of, or investment in the construction of several port hubs, including Hambantota in Sri Lanka, Piraeus in Greece, Djibouti, and Mombasa in Kenya in recent years. These countries are forced to avoid default by painfully choosing to let China control their resources and thus have forfeited their sovereignty, he wrote.

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through Pakistan-administered Kashmir, which India regards as an integral part of its territory. India is also worried that the construction of China’s Maritime Silk Road will challenge its dominance in South Asia and the Indian Ocean. Based on such a judgment, the Indian government has worked out its own regional cooperation initiatives, and taken moves, such as the declaration of cooperation with Vietnam in oil exploration in the South China Sea and its investment in the renovation of Chabahar port in Iran, as countermeasures against the Chinese initiative. Since January, India, the United States, Japan and Australia have actively built a “quasi-alliance system” for a “free and open Indo-Pacific order” as an alternative to the Belt and Road Initiative. In April, a senior Indian official attending the fifth China-India Strategic Economic Dialogue reiterated the Indian government’s refusal to participate in the initiative.

The “creditor imperialism” fallacy is in essence a deliberate attempt by India and Western countries to denigrate the Belt and Road Initiative, which exhibits their envy of the initial fruits the initiative has produced. Such an argument stems from their own experiences of colonialism and imperialism. It is exactly the US-led Western countries that attached their political and strategic interests to the debt relationship with debtor countries and forced them to sign unequal treaties.

The article described China as a “new imperial giant” with a velvet glove hiding iron ﬁsts with which it was pressing small countries. The Belt and Road Initiative, he concluded, is essentially an ambitious plan to realize “Chinese imperialism”. The article was later widely quoted by newspapers, websites and think tanks around China’s Belt and Road Initiative is proposed and the world. implemented in the context of national equality, globalization and deepening international interWhen then United States Secretary of State Rex dependence, and based on voluntary participaTillerson visited Africa in March, he also said tion from relevant countries, which is totally that although Chinese investment may help imdifferent from the mandatory debt relationship prove Africa’s infrastructure, it would lead to inof the West’s colonialism. creased debt on the continent, without creating many jobs. It is no accident that this idea of It is an important “Chinese experience” to use China’s creditor imperialism theory originates foreign debts to solve its transportation and enfrom India. New Delhi has openly opposed ergy bottlenecks that restrict its economic and China’s Belt and Road Initiative, especially the social development at the time of its accelerChina-Pakistan Economic Corridor as it runs ated industrialization and urbanization. THE BRIDGE

By making use of borrowed foreign debts, China once built thousands of large and medium-sized projects, greatly easing the transportation and energy “bottlenecks” that long restrained its social and economic development. Such an experience is of reference signiﬁcance for other developing countries in their initial stage of industrialization and urbanization along the Belt and Road routes. In the early stage of China’s reform and openingup, US dollar-denominated foreign debt accounted for nearly 50 percent of China’s total foreign debts, and Japanese yen close to 30 percent. Why didn’t Western countries think the US and Japan were pushing their “creditor imperialism” on China?

Japan, 12 percent of its total foreign debt. Japan has been Sri Lanka’s largest creditor since 2006, but why does no foreign media disseminate the idea of “Japan’s creditor imperialism”?

In response to the accusation that China is pursuing creditor imperialism made by India and some Western countries, even former Sri Lankan president Mahinda Rajapaksa wrote an article in July using data to refute it.

Most of the time, the overseas large-scale infrastructure construction projects related to the Belt and Road Initiative are the ones operated by the Chinese government and Chinese enterprises under the request of the governments of involved countries along the Belt and Road routes or the ones undertaken by Chinese enterSome foreign media have repeatedly mentioned prises through bidding. that Sri Lanka is trapped in a “debt trap” due to its excessive money borrowing from China. But It is expected that with the construction of largethe fact is that there are multiple reasons for Sri scale infrastructure projects and industrial parks Lanka’s heavy foreign debt and its debt predica- under the Chinese initiative, which will cause the ment should not be attributed to China. For most host country’s self-development and debt repayof the years since 1985, foreign debt has re- ment ability to constantly increase, the China’s mained above 70 percent of its GDP due to its creditor imperialism nonsense will collapse. continuous ﬁscal deﬁcits caused by low tax revenues and massive welfare spending. As of 2017, Sri Lanka owed China $2.87 billion, accounting for only 10 percent of its total foreign debt, compared with $3.44 billion it owed to

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Japan faces titanic struggle to balance Chinese dominance in Africa by Kenneth Szabo

EARLIER THIS MONTH it emerged that Japanese oﬃcials are planning to upgrade the country’s only foreign military base, in Djibouti. The news might come as a surprise, given that the scourge of piracy in the Horn of Africa, which prompted the base’s construction, has been almost completely eradicated. In 2011, when the facility opened, there were 237 incidents involving suspected pirates operating from neighboring Somalia. Last year, the ﬁgure was nine. If the battle against piracy has been a near-total victory, why is Japan looking to redouble its offensive? The question is particularly puzzling given that government debt now stands at 200% of GDP, and the country’s aging population has prompted fears of a social security crisis. Surely the Japanese government has more important things to spend its money on.

But observers on the ground in Djibouti will understand. The tiny country is a powder keg of competing global interests, none more prominent than China, which opened its own monolithic military camp there last year. Japan’s political relationship with its perennial Asian rival may have thawed in recent years, yet the two countries remain locked in a ﬁerce economic struggle that now centers on Africa, whose untapped economic potential makes it the ideal proxy battleground.

Oﬃcials in Tokyo are open about the reasons for their interest in Djibouti. When plans to expand the Japanese base were announced last year – a precursor to the latest upgrade – government sources admitted they were responding to the new Chinese hub. Now analysts suggest Djibouti’s president Ismail Guelleh will gift the country’s monolithic Doraleh Container Terminal to China, after ejecting Dubai’s state-owned operator DP World. The Emirati company has even sued China over the dispute, claiming the state-owned China Merchants induced Djibouti to break contract. Japan is not the only country to raise concerns. In the US, a pair of senators recently wrote to the Trump administration expressing their alarm over Beijing’s rumored Doraleh deal. Yet Tokyo’s priorities are very different from Washington’s; THE BRIDGE

while the US relies on its own Djibouti base, Camp Lemonnier, as a jump-off point for military action in nearby Somalia and Yemen, Japan has maintained a strict policy of non-intervention in foreign conﬂicts since 1945. Until 2015, the policy was enshrined in law, and even today the Japanese army is known as the Self-Defense Forces. With the piracy threat all but extinguished, the primary purpose of the Djibouti base is to provide logistical support for Japan’s peacekeeping work with the UN.

In economic terms, however, Djibouti – and China’s stake in it – matters a great deal to Japan. Because, just like China, Japan sees huge potential in Africa, and has readily copied Beijing’s playbook in its attempt to capitalize. Aping China’s ‘One Belt, One Road’ investment strategy, the Japanese government has pledged billions of dollars to Africa and encouraged the private sector to follow suit. Like China, Japan has funded several major projects, from a port expansion in Mombasa to a digital broadcasting system in Botswana. And just like Chinese Premier Xi Jinping, Japan’s Prime Minister Shinzo Abe has invited Africa’s leaders to glitzy summits in Tokyo, his oﬃcials talking warmly of their commitment to the continent’s prosperity.

Above all, though, Japan wants to prevent China from surging too far ahead economically. Tokyo powered away from its vast neighbor after 1945, its economic miracle leaving China’s clunky bureaucracy sputtering in its vapor trail. But since the mid-1980s, when China’s planners mapped out their game-changing mixed economy, the balance of power has shifted. China’s economy overtook Japan’s in 2011. Now, it’s nearly three Age-old rivalry times as big. Japan has launched a fierce counter-attack, forging its own economic corriThis commitment is nothing new. Japanese dor with India to rival Belt and Road and attemptcompanies have been investing in Africa since ing to woo the ASEAN region, which has fallen the early post-war period and the first edition of under Beijing’s sway in recent years. the Tokyo International Conference on African Development was held as far back as 1993. But In this context, it’s easy to see why Africa is so the value of this relationship has been magnified attractive. The continent is a huge part of Beiby a string of factors, including rising commodi- jing’s growth strategy; what’s more, China’s inties prices, Japan’s chronic mineral deficit, and volvement is increasingly unpopular with the an energy crisis precipitated by the Fukushima African people. nuclear disaster.

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The hordes of Chinese companies parachuted in to deliver Beijing-backed infrastructure projects have been widely accused of racism and mistreatment of domestic workers, and there are fears that China’s ﬁnancial generosity is nothing more than a giant debt trap, which will soon snap shut to claim Africa’s most prized possessions. Japan has played on these fears, lamenting Africa’s vast debts while stressing that, unlike certain other foreign powers, they want the African people to share in the beneﬁts of their investment.

Yet, for all Japan’s optimism about claiming a major slice of Africa for itself, the reality is that China enjoys a huge head-start. For one thing, Xi’s government has far more money at its disposal; Japan pledged $30 billion to Africa in 2016, so China responded by promising $60 billion earlier this year.

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Furthermore, China’s willingness to offer loans with no strings attached appeals to some of Africa’s less scrupulous rulers. Finally, China’s economic model allows the state to blur the lines between international aid and investment – and means funding can be signed far more quickly than in rivals such as Japan.

If you want an example of the dominance China already enjoys in Africa, just go back to Djibouti. Guelleh’s government, blighted by allegations of corruption and despotism, has amassed a debt pile approaching $2 billion and nearly 90% is owed to China. For all Tokyo presents itself as a fairer, more enlightened partner, Beijing already has Africa ﬁrmly in its grip. It’s hard to see how Japan – or the region’s debt-riddled constituents – can loosen itW

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Trump’s New Africa Strategy to Counter China by Tridivesh Singh Maini

ON DECEMBER 13, 2018 US National Security Advisor, John Bolton while speaking at the Heritage Foundation highlighted the key aims and objectives of ‘Prosper Africa’ which shall probably be announced at a later date. The emphasis of this policy according to Bolton, would be on countering China’s exploitative economics unleashed by the Belt and Road Initiative, which leads to accumulation of massive debts, and has been dubbed as ‘Debt Trap Diplomacy’. A report published by the Centre for Global Development (CGD) (2018) examined this phenomenon while looking at instances from Asia as well as Africa.

During the course of his speech, Bolton launched a scathing attack on China for its approach towards Africa. Said the US NSA: “bribes, opaque agreements and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands”.Bolton apart from attacking China, accused Russia of trying to buy votes at the United Nations, through the sale of arms and energy.

Bolton also alluded to the need for US ﬁnancial assistance for Africa, being more eﬃcient, so as to ensure effective utilization of the US tax payers money.

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The BUILD

It would be pertinent to point out, that the Trump administration while realizing increasing Chinese inﬂuence in Africa set up the US IDFC (International Development Finance Corporation) which will facilitate US ﬁnancing for infrastructural projects in emerging market economies (with an emphasis on Africa) . IDFC has been allocated a substantial budget — 60 Billion USD. In October 2018, Trump had signed the BUILD (Better Utilization of Investments leading to Development) because he along with many members of the administration, felt that the OPIC (Overseas Private Investment Corporation) was not working effectively, and had failed to further US economic and strategic interests . Here it would be pertinent to mention, that a number of US policy makers, as well as members of the strategic community had been arguing for a fresh US policy towards Africa.

Two key features of IDFC which distinguish it from OPIC are; Firstly deals and loans can be provided in the local currency so as to defend investors from currency exchange risk. Second, investments in infrastructure projects in emerging markets can be made in debt and equity.

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There is absolutely no doubt, that some African countries have very high debts. Members of the Trump administration including Former Secretary of State, Rex Tillerson had also raised the red ﬂag with regard to the pitfalls of China’s unsustainable economic policies and the ‘Debt Trap’.

According to Jubilee Debt Campaign, the total debt of Africa is well over 400 Billion USD. Nearly 20 percent of external debt is owed to China. Three countries which face a serious threat of debt distress are Zambia, Republic of Congo and Djibouti. The CGD report had also ﬂagged the precarious economic situation of certain African countries such as Djibouti and Ethiopia.

African countries themselves have not taken kindly to US references to debt caused as a result of China. While Bolton stated, that Zambia’s debt is to the tune of 6 Billion USD an aide to the Zambian President contradicted the US NSA, stating that Zambia’s debt was a little over 3 Billion USD.

At the China Zhejiang-Ethiopia Trade and Investment Symposium held in November 2018, Ethiopian State Minister of Foreign Affairs Aklilu Hailemichae made the point, that Chinese investments in Ethiopia have helped in creating jobs and that the relationship between China and Ethiopia has been based on ‘mutual respect’. The Minister also expressed the view that Ethiopia would also benefit from the Belt US policy makers need to keep in mind a few and Road Initiative. points: During the course of the Forum of China-Africa Firstly, Beijing has also made efforts to send out cooperation in September 2018, South African a message that BRI is not exploitative in nature, President, Cyril Ramaphosa had also disagreed and that China was willing to address the con- with the assertion, that China was indulging in cerns of African countries. Chinese President Xi predatory economics and this was leading to a Jinping while delivering his key note address at ‘New Colonialism ’ as had been argued the China-Africa Summit in September 2018, laid Malaysian PM, Mahathir Mohammad during his emphasis on the need for projects being benefi- visit to China in August 2018. cial for both sides, and expressed his country’s openness to course correction where necessary. Washington DC needs to understand the fact, While committing 60 Billion USD assistance for that Beijing will always have an advantage given Africa, the Chinese President laid emphasis on the fact, that there are no strings attached to it’s the need for a ‘win-win’ for both sides. financial assistance. THE BRIDGE

To over come this, it needs to have a cohesive strategy, and play to it’s strengths . Signiﬁcantly, US was ahead of China in terms of FDI in Africa in 2017 (US was invested in 130 projects as of 2017, while China was invested in 54 projects). Apart from this, Africa has also beneﬁtted from the AGOA program (Africa Growth and Opportunity Act) which grants 40 African countries duty free access to over 6000 products.

Perhaps, Trump should pay heed to Defence Secretary Jim Mattis’ (who will be quitting in February 2019) advice where he has spoken about the relevance of US alliances for promoting its own strategic interests.

There are off course those who argue, that US should find common ground with China for the development of Africa, and not adopt a ‘zerosum’ approach. In the past both sides have Yet, under Trump, US adopts a transactionalist sought to work jointly. approach even towards serious foreign policy issues(the latest example being the decision to Conclusion withdraw US troops from Syria) and there is no African countries will ultimately see their own incontinuity and consistency terests, mere criticism of China’s economic policies, and the BRI project, and indirectly US can explore joint partnership with allies questioning the judgment of African countries, In such a situation, it would be tough to counter does not make for strategic thinking on the part China, unless it joins hands with Japan, which of the US. The key is to provide a feasible alterhas also managed to make impressive inroads native to China, along with other US allies, or to into Africa, in terms of investments, and has also find common ground with Beijing. Expecting nubeen providing financial assistance, though it is ance and a long term vision from the Trump Admore cautious than China and has been closely ministration however is a tall order. watching the region’s increasing debts. Japan and India are already seeking to work jointly for promoting growth and connectivity in Africa through the Africa-Asia Growth Corridor. US is working with Japan and India for promoting a free and open Indo-Pacific, and can work with both countries for bolstering the ‘Prosper Africa’ project.

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Chinese Influence in East Africa: Transcultural Connection as Foreign Policy Spur by Ecatarina Garcia CHINESE INFLUENCE IN EAST AFRICA is a topic of growing debate and concern for Western nations and allies. In fact, this purported growing Chinese inﬂuence in the region continues to expand as a prominent issue for United States (U.S.). The desire for the U.S. to protect its national interests in the region is apparent.

Speciﬁcally, this is a growing concern for the Combined Joint Task Force-Horn of Africa (CJTF-HOA). CJTF-HOA is strategically located in Djibouti on Camp Lemonnier and has a diverse mission that includes conducting security force assistance, executing military engagement, providing force protection, and military support to regional counter-extremist organization operations with the goal of supporting allied regional efforts, ensuring regional access and freedom of movement, and protecting U.S. interests (CJTF-HOA 2018).CJTF-HOA also maintains an area of responsibility (AOR) that covers the East African

nations of Burundi, Djibouti, Eritrea, Kenya, Ethiopia, Rwanda, Seychelles, Somalia, Tanzania, and Uganda.

CJTF-HOA respects the sovereignty of each of its AOR countries, even though many of its operations and engagements have as a major goal to maintain inﬂuence in the region. The task force is not the only group to partner with the various AOR countries: Chinese ﬁnancial aid, diplomacy, and involvement has been heightened with the establishment of a Chinese Support Base just miles away from CJTF-HOA’s Headquarters. THE BRIDGE

The Chinese base, built for the People’s Liberation Army Navy (PLAN), has direct access to the Doraleh Multipurpose Port, a strategic maritime chokepoint on the Gulf of Aden into the Bab-elMandeb Strait. This development begs the question: why did Chinese leadership choose Djibouti to build the first Chinese overseas base? Was this decision part of a larger strategic plan to increase influence within East Africa? By financial figures, Chinese aid and investment in Africa has skyrocketed over the last decade. Perhaps this increase is part of the Chinese push for outgoing investment, termed the “Going out” or “Going global” strategy. According to the China Africa Research Initiative, between 2009 and 2012, “China’s direct investment in Africa grew at an annual rate of 20.5%.” Moreover, a white paper published by the Chinese State Council in 2013 indicated: China has become the largest trade partner of Africa, Africa has become a major importer of Chinese goods, Africa is the second largest construction project market (overseas), and Africa is China’s fourth largest investment location (China-Africa Economic and Trade Cooperation 2013).

China has also enhanced cooperation in agricultural production, both for importation and exportation. According to the Chinese State Council, “The Chinese government attaches great importance to its mutually beneﬁcial agricultural cooperation with Africa and works hard to help African countries turn resource advantages into developmental ones and sustainably develop their agricultural capacities.” (China-Africa Economic and Trade Cooperation 2013) Moreover, the Chinese State Council indicated the signiﬁcance of capacity building throughout the continent. Of note, the white paper highlighted that China aids African nations while avoiding any demands for changing political conditions.

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To further this point, the State Council demonstrates this example by providing support to nations such as South Sudan, Malawi, Djibouti, Guinea, and Togo, easing water issues and improving the conditions of local facilities. (ChinaAfrica Economic and Trade Cooperation 2013)Redeﬁning its focus in East Africa, China has concluded at least 15 bilateral deals and has even forgiven enormous sums of debt. The Forum on China-Africa Cooperation

The desire for a continued and growing Chinese partnership in Africa is visible through the Forum on China-Africa Cooperation (FOCAC) Summit. During the 2018 FOCAC summit, the Chinese Premier offered a total of 60 billion dollars in trade and economic initiatives. The funds will be allocated to projects aligned to the Chinese government’s Belt and Road Initiative, covering telecommunications, construction of roads, bridges and sea ports, energy, and human capacity development. The funding is broken down into several parts where 15 billion is categorized as government grants, 15 billion as interest free loans, 20 billion of credit lines, and 5 billion for ﬁnancing imports from Africa. (Dube, 2016) FOCAC was formed in 2009 to establish closer Chinese ties and partnership with African nations. This strategy has been seemingly successful as Sino-African trade is estimated at 170 billion U.S. dollars in 2017, increasing drastically from only 10 billion dollars in 2000 according to China’s Ministry of Commerce. (KTLA 2018) As China’s Belt and Road initiative starts to take hold in Kenya, Uganda, and Rwanda, it might seem that its sole permanent military footprint outside of sovereign China may be getting overlooked by Beijing. However, China has now preserved a logistical hub exactly where it needed it.

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China’s role as a resource extractor will almost certainly continue: China now not only has a large workforce in nearly every East African nation, it also has the ability to remove its gains one ocean-going barge at a time from its deepwater port in Doraleh. The Chinese Military in East Africa

In 2014, Beijing confirmed that it would build their first military base overseas, a PLAN logistics support base at Doraleh, Djibouti, thereby raising tensions for Western nations and allies in the region and abroad. The U.S., France, Italy, and Japan all have bases in the rather small East African nation. There are various assessments as to why China opened the base in Djibouti. There is likely not a single, one- dimensional answer, but multiple factors that made this location advantageous for this investment. First, Djibouti is a strategic location. The Bab el-Mandeb strait is only 18 miles wide at its narrowest point and is of vital strategic interest, as it connects to the Suez Canal. The strategic importance of this location is no different for China than for the U.S. According to the Chinese State News Agency, Xinhua, the establishment of the base ensures “China’s performance of missions, such as escorting, peace-keeping and humanitarian aid in Africa and west Asia. (Al Jazeera 2017) In exchange for the PLAN’s use of its port, Djibouti’s government requested that China assist in the development of military capabilities, including patrol boats and airplanes, as well as the establishment of a civilian maritime complex. (Dube 2016)Interestingly, this construction of China’s first overseas base is a departure from their non-interference policy in African government affairs. Similarly, China has increased the number of soldiers it provides to the United Nations and African peace mission, notably increasing numbers in South Sudan. Aligning with Chinese interests, South Sudan is a major exporter of oil to China and perhaps catalyzed China’s shift away from their previous non-interference policy. (Council on Foreign Relations)

The military base will allow China to provide protection for its citizens in Djibouti and the greater Horn of Africa region, an ability that China currently lacks in other African nations. However, “experts warn that by relying too much on China’s infrastructure projects, Djibouti could become trapped and enter a state of quasi-dependence on Beijing.” (Dube 2016) While this warning heralds potential implications for Djibouti, this dependence could be a vital component of Chinese strategy. At the current juncture, over 80 percent of Doralehport traffic comes from Ethiopia, which has no coastline. Chinese investments, including the commissioning of the railway between Addis Ababa, Ethiopia and Djibouti, will strengthen the position of Djibouti as one of East Africa’s largest logistics gateways. By significantly increasing the share of port activities in Djibouti’s economy, Chinese projects will increase Djibouti’s vulnerability and dependence. However, as Ethiopia and Eritrea continue to smooth previously tense relations, Ethiopia is seeking to utilize Eritrea rather than Djibouti as a logistics hub. This potential move no longer only has implications for Djibouti, but China will now likely be a major player in the steering of this decision, as the port’s profitability has various implications for China’s continued success in the region. THE BRIDGE

Culture as a determinant of foreign policy

As one analyzes China’s increased involvement in East Africa, its culture is important and certainly impacts the evolution of its African foreign policy. According to Yaqing (2012), four major themes of Chinese culture are: contextuality, correlativity, complementarity, and changeability. Yaqing describes contextuality as looking at decisions as a matter of context in the environment without thinking about the individual. Of note, contextuality begets the “shi” assumption. According to Yaqing (2012), “For policy makers, shi is judgment regarding the timing, the themes, and the trends within the context.” In a 2018 Beijing declaration at FOCAC, the following demonstrates how contextuality shapes China’s vision for increased partnership: We believe that China and Africa are a community with a shared future. China is the largest developing country. Africa is the continent with the most developing countries. Sharing weal and woe, the Chinese and African peoples have forged a deep friendship rooted in our similar historical experiences, development tasks, and political aspirations. We agree to strengthen collective dialogue, enhance traditional friendship, deepen practical cooperation, and work together toward an even stronger China-Africa community with a shared future.

The next concept, correlativity, notes that all things relate to one another. This type of thinking is visible in the Chinese Belt and Road Initiative. Using the aforementioned excerpt from the Beijing declaration at FOCAC, this diplomacy and fostering of a positive interconnection between 53 African nations is apparent. The choice of words like “deep friendship,” “similar historical experiences,” “collective dialogue,” and the phrase “stronger China-Africa community with a shared future” speaks to the collectiveness of nations to achieve shared goals through cooperation.

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The third element, complementarity, describes the world as composed of two opposites. These opposites, the thesis and anti-thesis, “work as opposing forces to complete a transformation into this new synthesis.” (Yaqing 2012)While the Western world may remain wary of Chinese involvement in East Africa, this anxiety does not inherently wield conﬂict. In fact, China’s goal for stability and increased capacity building aligns with the American CJTF-HOA’s purported goals in the region.

Finally, changeability is a concept that contends that “seemingly irrelevant or even opposing objects can change, turn into each other, and become part of a combined whole.” (Yaqing 2012)It is this type of mindset that could explain why the Chinese started to invest and engage in Africa when other near-peers would not. They saw the promise of natural resources and the determination of the African nations to open up and do more globally. The Chinese theory that everything constantly changes and that “misfortune can be a forerunner for fortune” lends itself neatly into the current East African sphere of politics and foreign policy changes. (Yaqing 2012) One could hypothesize that the Chinese cultural outlook on change, coupled with the ongoing change afoot in the region, created a perfect situation for the current Chinese foreign policy expansion in East Africa. This has been shown by the amount of effort put into the recent FOCAC symposium by the African Union nations and also in the amount of money the Chinese are willing to invest into the area. The culture of any nation plays a role in determining policy. Some cultures drive initiatives and actions more aggressively than others. In this case, China is the nation that arguably has found an ability to successfully tie to its culture to the cultures of the East African region. If it continues to be successful in promoting this transcultural connection, then China will likely continue to outpace and outperform the United States in this critical global region.

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One Belt-One Road and the South China Sea: Xi Jingping’s Priorities by Kjell Tengesdal

WAR BETWEEN CHINA AND THE UNITED STATES over the South China Seas (SCS) is imminent. This is one example of the alarmist headlines that emblazon many western foreign policy journals and news articles following every incident between the U.S. and China. Kevin Rudd, former Prime Minister of Australia offered his warnings during his keynote speech at the “New China Challenge” conference in October2018. He highlighted the issue from the western perspective and called for a third approach aside from “capitulation or confrontation.”But how does China see the South China Sea issue? Are China’s interests inside the Nine Dash Line considered a ‘core value’ and something that China is willing to go to war over? How does China’s interest in the SCS compare to those related to its “One Belt-One Road” initiative? How does President Xi see these issues? This analysis evaluates these questions from the Chinese perspective.

On September 28, 2018, China surpassed the Union of Soviet Socialist Republics (USSR) as the longest surviving communist state. China sees itself as an ascendant power and Russia in decline.

China seeks to expand its inﬂuence in the Asian region and eventually emerge as a global power, equaling or exceeding the inﬂuence of the United States. Many economists project that China’s GDP will surpass the United States by2025. Binnendijk compares China’s economy to a speeding bicycle, provided it continues to maintain access to adequate natural resources, energy and trade routes, it will continue to expand. However, if one or more of these factors become unduly stres sed, then the Chinese economy is in great danger of collapsing and it could drive the economy to a halt. Identifying this need to support the economy well into the next decade, President Xi Jinping has implemented a “One Belt-One Road” plan for securing the economic future of China. THE BRIDGE

Figure 1: China’s “Nine Dash Line” and Territorial Claims in the South China Seas (source: Finance Twitter)

China has made ‘excessive maritime claims’ according to many western nations and regional rivals within the South China Sea resulting in many disputed claims, largely perceived as part of its pursuit of natural resources. China has also moved forward with enlarging and militarizing many of these islands and atolls in efforts to solidify and expand its regional inﬂuence (see Figure 1).All of these initiatives place China in direct competition with neighboring peers.

Like most countries, China has a set of core, vital, and principal interests. Chinese core interests are those with which it will “never waver, compromise, or yield”, haggle or bargain, and “must stand ﬁrm, be clear, have the courage to ﬁght and never surrender [these] principles.” These core interests are considered non-negotiable and include sovereignty issues like Taiwan, Tibet and Xinjiang. Vital interests are those that China considers as irrevocably necessary to the safety and survival of the state, which include political and economic independence. Principal interests on the other hand are negotiable and are targeted to enhance economic trade, foreign relations and friendly ties with regional partners.

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Is China’s expansion in the South China Seas a core or vital interest? Western analysts often see the answer as a ‘yes.’ However, from China’s perspective and Xi Jingping’s in particular, it appears that China may be less inclined for military action in defense of its SCS interests than previously thought. China first started to discuss its core interests regularly starting in 2004. Under President Hu’s regime, state councilor and foreign affairs expert Dai Bingguo declared China’s “core interests included maintaining the socialist system, national security, territorial integrity, reunification with Taiwan and economic development.” On April27, 2013, General Martin Dempsey, Chairman of the U.S. Joint Chiefs of Staff, reported in an interview with Japan’s NHK news network “that Chinese officials repeatedly told him during his visit to Beijing earlier in the week that the Senkaku islands are ‘one of China’s core interests.’” This would be confirmed later in the week by a Chinese Foreign Ministry official. It is important to note that this occurred before Xi Jingping came to power in 2013. For Xi, the South China Sea issue, while a principal interest, is less important to the successful execution of his long-term plans and economic policies for China.

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Prior to Xi’s election, China had pursued a twodecade foreign policy of ‘keeping a low profile and bidding time. ’Xi sees himself as a strong leader, from a long line of great Chinese leaders and has moved China towards a policy of “striving for achievement.”Early evidence of Xi’s economic plans occurred at China’s Periphery Diplomacy Initiative in November 2013 where he called upon China to “strive for obtaining an excellent peripheral environment for our country’s development, bring even more benefits of our country’s development to peripheral countries, and realize common development.” A year later, he would make a similar appeal to Asian leaders at the 2014 Asia-Pacific Economic Cooperation (APEC). This speech laid the ground work for his One Belt-One Road initiative. (Figure 2).

During his opening speech at the G20 summit in 2016, President Xi again called for a course change towards a new global economy that incorporates the following four keystones: (1) innovation, (2) openness, (3) interconnectedness and (4) inclusivity. In these and subsequent speeches, Xi has sought to highlight that OBOR

is a regional initiative that will beneﬁt all countries within its scope, not just China. Xi sees OBOR as his legacy and will be the driving factor in China’s emergence from a regional hegemon to a truly global power.

Under the United Nations Convention on the Law of the Sea (UNCLOS), if a nation has territorial control over an island or mainland that borders the sea, then that nation may claim a Territorial Sea (TS) of no more than 12 nautical miles (nm); an Exclusive Economic Zone of no more than 200 nm and a continental shelf of no more than 200 nm. As shown in figure 1, many of China’s maritime claims far exceed these allowed ranges. There is no question that China has become more assertive in expanding its sphere of influence in the South China Sea since President Xi took office, most notably its exertion of the Nine-Dash Line as territorial waters based on historical maritime claims. Several incidents highlight China’s aggressive stance in the region since Xi’s ascendance to the presidency in violation of UNCLOS.

Figure 2: China’s One Belt-One Road (source Economist.com) THE BRIDGE

First, in May of 2014, the China National Offshore Oil Company, a state run entity, deployed the HYSY-981 offshore oilrig accompanied by several military vessels to a disputed region near the Paracel islands and an area inside Vietnam’s Exclusive Economic Zone (EEZ). This move was not successful from the economic perspective as it did not result in any economic gains. Second, China has occupied, expanded, and militarized several of the Spratly Islands which are outside the UNCLOS recognized control of China as shown in figure 1. Third, in 2009, five Chinese vessels surrounded the USNS Impeccable, a research ship operating approximately 75 miles south of Hainan Island inside China’s EEZ. The ship was conducting routine seafloor mapping and submarine tracking activities.

China saw the U.S. vessel as violating its sovereignty and directly challenged its presence, forcing the ship to take collision avoidance measures. USNS Impeccable would return the next day escorted by a U.S. Navy destroyer. This event immediately sparked harsh criticism on both sides for the other’s actions, but it should be noted that UNCLOS does not regulate military activities within an EEZ.

Chinese scholars have laid out an historical case for China’s claim to the Nine Dash Line and a legal basis for its actions in the South China Sea (see for example Keyuan, and Xinchang and Yee.)Despite this, the present analysis contends that the South China Sea is not currently a ‘core interest’ for which China will seek to defend with unwavering commitment. For example, Xue Gong’s research shows that several Central State-Owned Enterprises (CSOEs) have lobbied for national policies to expand Chinese economic interests in the SCS, particularly in areas of tourism, oil exploration and infrastructure development.

The author argues that China will continue to support these state-run agencies as “long as business interests converge with the country’s national interests.”China does have economic interests in the SCS, but they largely come from a

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desire to be the deﬁning inﬂuence in the region as opposed to acquiescing and allowing that privilege to remain in the hands of the United States.

In regards to the SCS issue, China and Xi will continue to “remain vigilant against the incursion of foreign influence in issue areas as disparate as a variety of international regimes, even if it realizes that it cannot deal with complex problems by itself.” China has maintained bilateral relations with those nations with which it has territorial disputes, many going back centuries. This is why China rejects decisions by outside global organizations as being shadow arbiters of U.S. interests. Recent legal decisions on maritime claims against China, as well as its ratification of UNCLOS has superseded any historical claims to territories in the South China Sea. As such, China is facing a difficult task of convincing other parties of the legitimacy of its maritime claims. Xi realizes this and will limit provocative actions in the SCS to those that do not threaten the stability of the region. However, actions that threaten to contain China or challenge his “strong man image” among the domestic population are likely to provoke Xi. China wants a stable region to facilitate its economic development under OBOR. An increasingly unstable region threatens that success. As far as feasibility, Xi can achieve much greater success through OBOR than through the SCS issue.

China, under President Xi, has undertaken an historic task to expand its economic inﬂuence across half the world through its OBOR initiative. China sees it is safer to pursue economic advances under the New Silk Road (OBOR),which are seen as beneﬁcial by China’s partners, than to push for aggressive expansion in the SCS over which the United States is most certainly going to challenge. China will take advantage in the SCS where it can, but it will prioritize OBOR over the SCS for the foreseeable future. Ever the long game player, China will bid its time until its position for expansion in the South China Sea is more tenable.

Challenges and prospects of China’s Belt and Road Initiative by Dr. Zahid Latif

IN THE PRESENT GLOBALIZED WORLD, the economic corridors have become an important tool for regional cooperation and development. The economic corridor highlights the integration of infrastructure improvement with various trade and investment opportunities, and it incorporates to address the social and other outcomes of increased connectivity. China is a most populated country of the world and most of the Asian countries particularly the Southeast Asian economies are dependent on China, as China is a key trading partner with these countries.

The concept of Belt and Road Initiative (BRI)was actually taken from the idea that the Central Asian countries situated along the old Silk Road could get advantages from well-established transport infrastructure. Because of the fact that most of the Central Asian countries have small economies with lesser potential for investment, therefore, the overland transportation becomes expensive as compared to sea shipment. China introduced a new idea of maritime road which runs from Chinese coast through the Southeast Asia to Indian Ocean and then to Europe.

The old Silk Road connected China with the western part of civilization through the ancient trading of silk, tea and ceramics, resultantly, this brought China closer to the rest of the world. During the market reforms in 1970’s, People’s Republic of China has become greatly independent for its sustained welfare without seeking any foreign inﬂow and technology. After the great global recession, China is facing several modern day problems including slow technological advancement, dropping of marginal capital product and low household consumption. In order to tackle these problems, China has launched Asian Infrastructure Investment Bank ‘AIIB’, together with BRI project. THE BRIDGE

In quest of oil and other natural resources, China wants to build connections with Central Asian countries via both physical and technological access. The BRI is aimed at providing other countries road and rail access to China via sea ports to strengthen economic growth; on the other hand, ﬁber connectivity gives the virtual access and connectivity.

In 2013, China’s President, Xi Jinping proposed the new concept of “Silk Road Economic Belt” during his visit to Central and South East Asia, which later on was called as “One Belt and One Road” initiative (一带一路, yidai yilu). He argued,” the concept will help to promote China cooperation with Central Asia and South East Asia in the ﬁeld of trade, connectivity, culture and exchange. In November 8, 2014, President Xi Jiping granted 40 billion US$ for Silk Road initiative to provide infrastructure and solid platform for ICT related projects. It is one of the reforms in Chinese close ideologies towards a liberal state. The area covered by BRI possesses 55% of the world GNP, 70% of the global population and 75% of the known energy reserves. It, therefore, becomes a main component of the regional economic strategy of the President Xi Jinping’s foreign policy.

China’s grand chess move. Moreover, consider it as the “Internationalization of Yuan”, creating alternative routes for Chinese economics in order to shape a more suitable political and secure environment for China. The US and few European countries have also shown their concerns about it and considered it Beijing’s expansion policy to rise in the world.

It is more likely that due to the BRI and AIIB initiatives of China, and the US initiated Trans-Paciﬁc Partnership (TPP) will lead towards regional blocks and disintegration of trade between US and China. On the other hand, the USSino competition will lead towards strength ening of economic institutions by developing trade routes throughout the whole of Asia and Asia-Paciﬁc.

Furthermore, it will give to China more confidence in reshaping the global world order. Resultantly, the balance of technology and growth is drifting slowly and gradually towards Asia from Europe. Asia is a dense populated region with more than 2.8 billion people, living in a land fertile for IT and communication industry, with cheap labor and capital, rich raw resources and tremendous absorbing capacity for new technologies and developments. All these factors Six economic corridors have been proposed of are molding the situation in favor of emerging Asian countries and will probably shift the rethe BRI project by China: gional balance towards Asia. New Eurasian Land Bridge Based on the above facts, it can be assumed China-Mongolia-Russia Corridor that in the next two decades, the emerging Asian China-Central Asia-West Asia Corridor countries may stand as the strongest opponents China-Indochina Peninsula Corridor to the US supremacy in Asia and Asia Pacific. China-Pakistan Corridor Furthermore, the impact of the BRI will enhance Bangladesh-China-India-Myanmar Corridor the entrance of ICT in leisure, health, retail, seSome Asian countries including India and Japan curity and business activities. Likewise, the are against the initiative and assertion it as Chi- other developments, it contributes in promoting nese long-term Marshall Plan strategy to gain the digital culture in e-government, e-business geopolitical preeminence in the Asia and Asia and e-commerce. Finally, the study can be conPacific. India, particularly, has strong reserva- sidered as unique as it critically assesses the futions about it and blaming that the recent years ture of the One Belt, One Road initiative and ambitious projects i.e. AIIB and BRI, of Chinese provides immense scope for the future studies diplomacy reflect the end of the Beijing Peaceful on this hot topic. Rise Policy and are alarming the West about MODERNDIPLOMACY.EU

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Debt-trap diplomacy is a fallacy by Zhao Qingtong and Paul Wang

TO CERTAIN EXTENT, the US scholars and politicians are truly creative and innovative in making new concepts. After the “Thucydides trap”, “aid trap” or “cultural trap”, now prevails the notion of “debt-trap”. According to the recent remarks of the US Vice President Pence during the APEC summit last week, US Vice President Pence argued against China by saying that unlike the United States which is a democracy, China, as an authoritarian regime, has drowned its partners in a sea of debt, which is a coerce and a compromise of the independence”.

Over the past decade or so, China has promoted one of the most dramatic and geographically far-reaching surges in peacetime lending in history. More than one hundred primarily low-income countries have taken out Chinese loans to ﬁnance their infrastructure projects, alongside their productive capacity in mining and other primary commodities. It is true that many of those debts come from the Belt and Road Initiative, China’s massive effort to upgrade trade and transport infrastructure throughout Eurasia, Africa and ASEAN member states.

Yet, China’s trade policy involving its activities has been accused, for example, Pence harshly criticized China’s global infrastructure drive, known as the “Belt and Road Initiative”, calling many of the projects low quality that also saddle developing countries with loans they can’t afford.

He argued that “the United States offers a better option, as we don’t drown our partners in a sea of debt since we do not offer constricting belt or a one-way road. When you partner with us, we partner with you and we all prosper.” Now the question is what are Chinese loans to the Eurasia, Africa and many other ones all over the world? THE BRIDGE

Actually much of the debate on China’s debt-trap to the developing countries has been misperceived or even wrongly presented, simply because little or no speciﬁc attention has been given to the nature and purpose of Chinese loans globally. First, using the cases of Tajikistan in 2011 that reportedly handed over land on its disputed border with China to repay some of its debts and Sri Lanka’s Hambantota Port Development Project, they have contended that China is or may use debt to gain economic and geopolitical leverage by trapping many other states in unsustainable loans. Second, they have suggested that African countries need a sustainable borrowing strategy if they are to meet the Millennium Development Goals.

In both theory and practice, it is widely-held that the appropriate external debt of a country can actually assist and improve its economic development. In today’s fierce international competition, the country which can attract large, low cost and sustainable foreign funds, will be the one to gain a competitive edge. Such a development reflects its financial prowess, not weakness. Given this context, it is worth underlining one of the reasons why China, since its “reform and openness” in 1978, has grown to become the second largest economic system in the world.

Accordingly, it is self-evident that the debt-trap diplomacy played by China through the Belt and Road Initiative (BRI) has been perceived wrongly Yet, although China is Africa’s largest trading and even a fallacy. Economically speaking, there partner and has spent billions of dollars in trade is a significant difference between national and and investments without political strings at- foreign debt. tached, it is still not among Africa’s top creditors. According to the World Bank, between 2015 and 2017 Africa’s external debt payments increased, yet, among external debt owed by African states, 35% is to multilateral lenders, 32% to private lenders, about 20% to China, and 13% to other governments. Besides, interest rates are higher on private-sector loans, which account for 55% of interest payments, compared with China’s 17%. In addition, it is reported that China is not Africa’s largest donor. That honor still belongs to the United States. Chinese loan finance is varied. Some government loans qualify as official development aid. Other Chinese loans are export credits, suppliers’ credits, or commercial, not concessional in nature.

Equally, it is crucial to understand why African countries go for Chinese loans. African countries are not borrowing from China for consumption and luxury, they are investing in critical sectors. Much as China has demand for natural resources, job creation and the need for markets abroad, African countries simply need infrastructure projects. In this, China has ﬁnanced more than 3,000, largely critical, infrastructure projects in different African countries. MODERNDIPLOMACY.EU

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For a nation to raise funds, the central government can issue treasury bonds. The debt generated by this means from home and abroad according to the CIA data is about normal in those countries involved. National debt proportion in GDP is only related to the size of the government bonds that has nothing to do with China. Hence, external debt is strictly the liability of residents of a country for contractual repayment to non- residents. It must be excluded from direct investments and corporate capital.

Also, many BRI nations have long received loans from European nations, the United States, Japan and even India. It is therefore intriguing why such investments from Western nations, Japan and India, with nearly identical “debts” are regarded as “sweet pies,” while those from China are “debt traps”?

For sure, it is because of unceasing foreign investments, China has steadfastly maintained the same economic policies in four decades. But, if nations along the BRI route often change their policies, and therefore cannot absorb lowcost and sustainable investments, they will surely be faced with questionable economic developments. That can be one of the hard lessons for China to share with the rest of the world in reﬂection of its 40-year reform and openness.

Djibouti’s “International” Free Trade Zone is really just for one country by Samantha Maloof

FOR THE PAST QUARTER CENTURY, Djibouti has ﬂourished as the Horn of Africa’s most strategic port, serving as a lifeline for landlocked Ethiopia’s $3.13 billion in exports at the mouth of the Red Sea and Gulf of Aden.

So on the face of it, the Phase 1 opening last month of the Chinese funded, multi-billion dollar Djibouti International Free Trade Zone (DIFTZ) appears to position the tiny nation as a growing trading hub for the entire East African region. But is that just wishful thinking?

The DIFTZ is a sprawling complex meant to house four industrial clusters specializing in trade and logistics, export processing, business and ﬁnancial support services, as well as manufacturing and duty-free merchandise retail. It’s touted to provide employment for tens of thousands and solidify Djibouti’s reputation as a businessfriendly place.

The geopolitical calculations behind China’s generous ﬁnancing in Djibouti are part of its Belt and Road Initiative, an aggressive economic plan designed to open up and create new markets for Chinese goods and technology by strengthening the traditional Silk Road trade route.

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That rationale is rooted in the fact that Ethiopia uses ports in Djibouti for about 95 percent of its external trade and pays around $1.5-2 billion in port fees. With the Ethiopian economy growing fast, obtaining better access to Addis Ababa is a crucial objective for the Chinese leadership.

But Djibouti should hold the champagne for now. Despite the glowing press releases, there are at least three major partners who have serious reasons for doubting the trustworthiness of the country’s leaders and its viability as a new axis for regional trade.First, many U.S. analysts are expressing concern that the DIFTZ is ﬁnanced by loans from state-backed ﬁnancial institutions from China, dulling Djibouti’s triumphant expansion as a critical line between the export-rich Ethiopia and vital shipping lanes.

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In East Africa, the Export-Import Bank of China is the major investor in at least eight infrastructure projects, including an ongoing $322 million water pipeline project from Ethiopia and the $490 million Addis Ababa-Djibouti railway. Yet critics have described the Belt and Road Initiative as a method of entrapping poor countries to Beijing as “economic vassals.” For instance, a major report from the Washington-based Center for Global Development released in March cautions that the Chinese iniatives raise “serious concerns about sovereign debt sustainability in eight countries it funds,” including Djibouti.

can political and military leaders pressuring the Djibouti government to block the construction of the base. U.S. military experts have expressed concern that a Chinese presence would hinder U.S. interests and its counter-terrorism missions, tensions that remain as American allies France, Japan and Italy also have bases of various sizes and capabilities in Djibouti.

The second reason: Ethiopia. Until a few months ago, Djibouti represented the country’s only way to access the sea and, as a stable partner, reaped the beneﬁts of a near-monopoly on thriving Ethiopian trade. While ports exist in Sudan, Somaliland, and Eritrea, Djibouti’s developed faEven more worrisome, Chinese commercial in- cilities, political stability and investment-friendly vestment in Djibouti has been paralleled by the atmosphere have proven more attractive than construction of a major Chinese military base, a anywhere else in the region. mere six miles from the United States’ long-established Camp Lemonnier — the only perma- Now, however, a new player is coming to town: nent U.S. military base in Africa. The Chinese according to reports from Bloomberg, Eritrea is base is the ﬁrst outside its borders and gives now mulling building a port on its coastline to Beijing a military foothold on the African conti- export potash from its own mines as well as nent, an outcome that previously led to Ameri- from Ethiopia. THE BRIDGE

The port will be based at the Bay of Anﬁle, close to Eritrea’s potash mine at Colluli, which contains large quantities of potash that can be used as fertilizers for fruits, vegetables, and coffee trees. Most signiﬁcantly, the development follows a historic rapprochement between Ethiopia and its former province of Eritrea in July, which has left Djibouti scrambling to protect its market share.

The third issue: the United Arab Emirates (UAE). Djibouti illegally seized a leased port container terminal from the UAE-based DP World company over a dispute dating back to at least 2012. Earlier this month, Dubai successfully sued the Djibouti government in a London-based international arbitration court over the seizure. Eyebrows were raised when Djibouti issued a statement dismissing the ruling as inconsequential, and the country is now trying to negotiate damages. But the scandal has already cast a shadow over Djibouti with potential foreign investors, as large shipping clients such as DP World publicly advocate for an additional 10 to 12 ports from Sudan to Somalia and continue to make a number of investments in East Africa, including in Somaliland.

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The Emiratis also have close ties to Eritrea, where they established a naval base in 2015 that has been used to support the Saudi-led war against Houthi rebels in Yemen. And it was the UAE that helped broker a peace deal between Eritrea and Ethiopia, a further indicator that UAE businesses may favor Eritrean ports over those in Djibouti.

Is Chinese investment in the DIFTZ and other infrastructure projects enough to make up for all of this disruption? Perhaps not. Beijing had already started to cool on Ethiopia as an investment destination, and if the Ethiopian market ﬁnds multiple alternative ports in Eritrea or Somaliland, the promises of a thriving DIFTZ may end up being little more than hype.

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