Nepal: Foreign policy
This is a collection of articles archived for the excellence of their content. |
2020
Nepal discourages NGO projects opposed by India, China
SD Pradhan, January 13, 2020: The Times of India
Of late, the Chinese Belt and Road Initiative (BRI) projects are receiving significant resistance from the local population and informed citizens in Nepal as they believe that the Chinese projects are not only harming the Himalayan environment but are actually debt traps, which Nepal cannot withstand. In recent years, several African and South East Asian countries had cancelled the Chinese projects. The example of economic power used for territorial concession was starkly visible in Sri Lanka’s Hambantota port.
The Youth Department of Nepal’s Rashtriya Ekta Abhiyan held a protest rally demanding the revocation of the agreement on China’s Belt and Road Initiative (BRI). The rally from Maitighar Mandal in Kathmandu to Naya Baneshwar witnessed the participation of hundreds of people. However, this is not first time that the Nepalese population demanded cancellation of BRI projects. For the last three years local population is increasingly opposing the BRI projects on the grounds of lack of progress and increasing debt alongside causing displacement of large number of people. With no progress, the license issued to Chinese state-owned China Gezhouba Group Corporation (CGGC) for the development of the Budhi Gandaki Hydropower Project was revoked in April this year.
Nepal and China signed a Memorandum of Understanding (MoU) on BRI in May 2017 under the leadership of then-Prime Minister Pushpa Kamal Dahal. He was widely considered to be a “pro-Chinese” Maoist leader. In early 2019, Nepal under the PM Oli, who was known for his dependence on China, proposed nine different projects to be pursued under the BRI. These included a feasibility study of the trans-Himalayan railway connecting from the Chinese port of entry of Jilong/Keyrung to Kathmandu, an extension of a 400 KV electricity transmission line, setting up a technical university in Nepal, and the construction of new roads, tunnels and hydro-electricity dams. But not a single project has progressed.
China is now facing the BRI backlash in a growing number of countries across Africa, Asia, Latin America, and Central and Eastern Europe. Some countries have cancelled high-profile BRI projects and many other countries have decided to take a second look at whether the benefits of BRI participation outweigh the risks. Malaysia, Myanmar, Pakistan, Sierra Leone, Kyrgyzstan, among other countries have cancelled, downsized, or postponed key BRI projects. More than 35% of the project portfolio is stuck on the implementation stage. Credit risks have increased, with the exposure to Chinese debt now exceeding 10% of gross domestic product (GDP) in many low- and middle-income countries. With several projects having failed to take off and increasing debt burden, the BRI projects are seen as the white elephants.
An examination of the BRI reveals the ulterior motives of the Dragon. This was announced by Chinese President Xi in 2013 as an ambitious plan to develop two new trade routes connecting China with the rest of the world. But the initiative is about far more than infrastructure. It is an effort to develop an expanded, interdependent market for China, grow China’s economic and political power, as also to create the conditions required for China to build a high technology economy, crucially at the cost of other countries.
There are three drivers for the BRI. First is the US-China growing rivalry making China concerned about its trade with other countries passing through the Malacca Strait off the coast of Singapore, which is a major ally of the US. China’s intention is to make countries on its trade route dependent on China and thereby ensuring continuation of its trade unaffected by the US-China rivalry. Second is the Chinese motive to find alternative markets abroad for the large number of State-owned companies. Third is the Chinese objective to stimulate economies of the country’s central provinces, which historically lag behind richer coastal areas. China uses the BRI to encourage and support businesses in these central regions, allocating budget generously, and incentivising businesses to compete for Belt and Road contracts.
Initially, it was referred to as two separate projects- ‘One Belt, One Road’ (OBOR) initiative and then later as the Belt and Road Initiative. The Silk Road Economic ‘Belt’ element refers to plans for a revitalised series of ancient overland trading routes connecting Europe and Asia to be built largely with Chinese expertise. This was first proposed by Xi in Kazakhstan in 2013. The Central Asia is the most important part of the ‘Belt’. Next year, Xi outlined plans to additionally establish new sea trade infrastructure along the old Marco Polo route – a maritime silk road connecting China, Southeast Asia, Africa, and Europe. The attempt was to avoid the Malacca Strait, incorporating fuelling stations, ports, bridges, industry, and infrastructure through Southeast Asia and into the Indian Ocean. Pakistan is the vital part of this scheme through the China Pakistan Economic Corridor (CPEC).
There are six important drawbacks of the BRI. First, it is a centrally designed scheme of China for its own economic and strategic interests. Second, neither the interests nor the capabilities f the participating countries have been taken into account. Third, the projects aimed at generating benefits to the Chinese companies and does not generate employment for locals except for the labourers. Fourth, the BRI projects do not bother about the sovereignty of nations from where it passes through. Fifth, the BRI is Eurasia focussed and it does not cater to the connectivity needed by the participating countries to other areas. Sixth, the loans are given at the exorbitant rates and the whole process remains opaque. The experience so far shows that the Chinese aims at making the project unsustainable and then demand political concessions for financial assistance.
Other powers like US, Japan, Australia, India as also some ASEAN countries are concerned over debt trap diplomacy of China. To counter the BRI, other nations have proposed different schemes. First, the G-7 (US proposed it) launched ‘Build Back Better World (B3W)’ as an intended economic initiative designed to provide an alternative to China’s BRI for the infrastructure development of low- and middle-income countries. The initiative is aimed at providing $40 trillion in infrastructure investment that developing countries will need by 2035. Second, Biden at the Quad Summit in Tokyo in May this year, proposed the Indo-Pacific Economic Framework (IPEF) which has four pillars: Trade; supply chains; clean energy, decarbonisation and infrastructure; tax and anti-corruption. Currently 14 countries including India representing 40% of the world GDP have joined this initiative. It is meant to be an arrangement focused around the further integration of Indo-Pacific economies, such as by setting standards and rules in new areas like the digital economy. It is aimed at balancing Beijing’s rising economic clout in the fast-growing region. Third, the Blue Dot Network (BDN) is a multi-stakeholder initiative formed by the US, Japan and Australia to bring together governments, the private sector and civil society to promote high-quality, trusted standards for global infrastructure development.
While the BRI is witnessing the retreat, other countries have to take steps speedily to ensure that low- and middle-income countries do not fall into the debt trap of China. Unless these countries see the benefits of the proposed schemes in a short frame of time, they can easily become victims of the BRI like Sri Lanka.
