Saturday, July 28, 2018

One Belt One Road (OBOR) and India, An Analysis

OBOR is a highway and Railway connectivity project envisaged to connect the Chinese mainland to Europe through Central Asian Republics (CAR) region. This is supposedly an economic initiative of China. Proposed in 2013, this route aims to replicate old Silk Route, once used for commerce between China and Europe with primary export from China being Silk. This ancient trading route is proposed to be recreated by building modern highway and railway network. There is a maritime silk route (sea trading route) also proposed as part of this initiative.

China touts OBOR as a sure recipe of growth and progress of the region. OBOR, as per the Chinese declaration is supposed to bring progress to the Central Asian Region and provide improved connectivity to China and CAR to Europe. Infrastructure and connectivity is definitely an issue in the CAR region. If google map is asked for a road route Between Almaty, Major Cultural and commercial city of Kazakhstan and Urumqi in resistive Xinjiang region, Google returns “ Sorry, we could not calculate driving direction from Almaty to Urumqi”. Connectivity from China to Europe exists through Russia but not through CAR, hence there is definitely a need for connectivity through this region.

The underlying reason for promoting OBOR as predicted by the experts is to create newer markets for Chinese Goods. The growth of Chinese goods sales has become stagnant elsewhere and thus China needs newer Markets. China needs avenues to sell its goods, an outlet to its engineering and infrastructure companies and jobs for its population. as the Chinese economic growth rate is down from its days of glory. The Chinese growth rate has fallen consistently and it has come down from 7.8 % per year in 2014 to 6.7 % in 2016 as seen from the graph below:-

OBOR seems to meet all the three needs mentioned in the previous paragraph. The OBOR initiative has been supported by all the nations of the region except India. Many strategic thinkers have been suggesting that India should join the initiative of OBOR else there is a fear of India being left out of the benefits of OBOR.

Before we pass a judgement on India’s stand with respect to OBOR, let us look at the business model of China in various nations where China is doing some development. Chinese development comes with their own money as a loan (that is how aid is provided by many countries including India), that is not unusual.  What is unusual is, the contract for that work goes to Chinese Company, the labour and engineers come from China, Material comes from China, even the insurance is also done by a Chinese company.

There are examples galore of this style of Chinese aid. What does it mean in real terms is, China gives by one hand and takes it away by the other hand, all the jabs, all the benefits of the business, everything goes to China. On top of it, the insurance cost and the interest on the given loan also goes to China.  The nation where the project is run by China gets just the plain infrastructure which that nation has to maintain and the scale of that infrastructure may be such that the poor nation supposedly being helped may either have little or no use of that infrastructure. The Chinese loan also has to be paid without earning anything as the earnings have all gone to China.

Hambantota port of Sri Lanka is the one such example. Sri Lanka borrowed heavily from China. The port was built in the same manner as explained above. The debt burden became so much on Sri Lanka that it had to hand over the port to China on a 99 years lease as repayment of the loan. To quote from CSIS Brief of 02 Apr 2018, In pursuit of that dream (of building Hambantota port), Sri Lanka relied on Chinese financing. But Sri Lanka could not repay those loans, and in 2017, it agreed to give China a controlling equity stake in the port and a 99-year lease for operating it. On the day of the handover, China’s official news Agency tweeted triumphantly, “Another milestone along the path of #BeltandRoad.”

There lies the trap that China has set for the nations of OBOR. Chinese strategy is simple, raise the dreams in the target nation. Make that nation borrow heavily from China, Syphon off all the money and additional profit back to China. Leave the nation with an infrastructure that it either does not need or even if it needs, it can not use and also huge debt burden. Finally, as a way out for settling the debt, takes control over that infrastructure form the host nation.

Coming to India’s reluctance to join OBOR initiative, the official stand is that China Pakistan Economic Corridor (CPEC, a part of OBOR initiative though not indicated in OBOR maps)  from China to Gwadar (a Chinese built port) in South West Pakistan, travels through Pakistan Occupied Kashmir (See the pink area indicating POK in the map below) which is a sovereign part of India. The OBOR initiative, therefore, infringes on the Indian Sovereignty. It’s a rightful stand for India to take.

Is the sovereignty infringement reason good enough to oppose the OBOR? Will India be left out of the benefits of this initiative if India does not join it? While many Indian thinkers are of the view that India stands to lose economic benefits if it does not join OBOR initiative, I do not agree with that view. Nation’s sovereignty is supreme. Apart from that, India's geopolitical interests do not always coincide with China. Also, OBOR initiative, if joined by India, will empower China to have total Hegemony in the region which is definitely against India’s interest.

It is not just India, OBOR does not find much favour from European Governments too. Many Europen governments do not consider OBOR a multilateral project, they consider it as a bilateral project between China and the concerned country.

Many nations of the South China Sea are already suffering the Chinese illegal hegemony and they look up to India as a counterweight to China. In days to come, OBOR nations, particularly CAR nations, when they will realise the debt trap disguised as the development of infrastructure, would turn to the only other similarly capable nation in this area, India. India is very much aware that sooner than later the CAR nations will look up to India. As such, India also maintains a very good relationship with CAR nations. The political ecosystem is fragile in CAR and China is the only major surviving communist government in the world. Chinese communist regime is stable at present but the future of this government cannot be predicted in the years to come.

It is important to note that there are many Indian initiatives in the CAR area for improved connectivity. India is a partner in the Asian Highway Project which is the connectivity Project between Europe and South Asia. Other nations partnering the project are Srilanka, Pakistan, Japan, Bangladesh, Nepal, Iran, South Korea and China with funding coming from India, Japan, China. South Korea and Taiwan. There is also a Trans Asian Railways project underway. Asian Highway project, in fact, covers many areas similar to OBOR. This also explains why India need not support OBOR. There are many roads that are planned to be built but the longest among them is Asian Highway 1 of over 20000 km, whose alignment is given below

“India – Myanmar – Thailand” Road and motor vehicle agreement is another such initiative. India also has a partnership in the “Connect Central Asia” project in which International North-South Corridor is envisaged for moving freight between IndiaIranAfghanistanArmeniaAzerbaijanRussiaCentral Asia and Europe. Chabahar port in Iran is being developed by India to support the INSC initiative. There are other similar projects where India is deeply involved.

The Chinese intentions about objectives and plan for OBOR are secret even after 5 years. However, OBOR seems to be an act of gaining supremacy in CAR and that is where India’s interests clash with China. Since Inda already is either a promotor or partner in many such initiatives, India has no immediate requirement of joining or supporting OBOR. Even without getting involved in OBOR, India is well poised to have its rightful influence in CAR. As and when the CAR nations realise the Chinese game plan of dragging them in debt plan, transparent India would gain even more confidence of these nations.

 With all this, the question is not, “why is India not supporting OBOR”, the question really should be, “Does India need to support OBOR”? Going by the overall perspective of the OBOR initiative and Indian’s own plans which are similar to OBOR but with the more transparent regime, unlike OBOR, India does not stand to lose by not joining or supporting OBOR and should continue to maintain that stand till the factors around this (OBOR) initiatives change in such a manner that joining this initiative becomes beneficial to India’s interest, India may reconsider its decision.


  1. Very interesting perspective and information in this article. The example of Sri Lankan port should actually be a wake up call for other nations relying on Chinese aid.

  2. That was a great write up on OBOR. Simple and succinct!

  3. Very informative and comprehensive blog...