Chinese's BRI: A Threat to the Nations' Sovereignty

Disciplining China

The 'Paris Club' is an informal group of creditor nations whose objective is to find workable solutions to payment problems faced by debtor nations. The Paris Club has 19 permanent members, including most of the western European and Scandinavian nations, the United States of America, the United Kingdom and Japan. The Paris Club has an informal nature of its existence and deems itself a "non-institution." 

China's discriminatory approach towards relief to indebted countries is due to the fact that it is not a member of the Paris Club. In G20 presidency in 2016, China did show some interest in Paris Club's membership, however, it did not give any commitment for the same. There is a history of non-transparent credit activities of China. If China takes membership of Paris Club and Chinese authorities fully participate in Paris Club activities, then as per the commitments of Paris Club, it will have to share data with other members on reciprocal basis. It is hoped that if China 'walk the talk', then China would move towards greater policy coherence and discipline when it comes to avoiding unsustainable debt.

BRI's future is in doldrums

The Belt Road plan which China had put forward to the world with great fun fare and the enthusiasm with which this plan was welcomed by all the concerned countries, a plan which was implemented in many countries with fast speed and of which many projects were constructed and were completed in a short span of time, today its future seems to be hanging in the balance.

The whole world is shocked by the worst crisis in Sri Lanka. It is being said that behind the crisis in Sri Lanka, the major reason is the debt which Sri Lanka has dipped into deep debt. This is the loan that Sri Lanka took from China for the construction of its ports and rail etc. Due to not being able to repay the loan taken for the construction of the Hambantota port, China not only snatched that port from Sri Lanka, later due to possible default in repayment of other similar loans, it got trapped into the vortex of sovereign debt and today its credit rating has come down to such a low level, that it has become impossible for it to reschedule its loans. During the Corona period, Sri Lanka’s revenue from tourism has also reduced significantly, due to which its problems have increased manifold.

Similarly, Kenya's Mombasa port is also almost certain to be captured by China. The strings of Pakistan's financial crisis are also connected with China in some way or the other. Many other countries like Maldives, Laos, Djibouti (Africa), Montenegro, Mongolia, Tajikistan, Kyrgyzstan etc. have all become victims of this debt trap diplomacy of China. In view of this, Malaysia has reduced its Belt Road projects significantly.

Overall, wherever China's Belt Road project was started, that plan is not in a position to achieve completion. In all these countries, where these schemes were started in connivance inappropriately, due to the dishonest ruling regimes, people are the real sufferers. Due to this, agitations have started against these BRI projects in many parts of the world.

Since the real motive was to trap vulnerable countries into the debt trap, under the debt trap diplomacy, under China's Belt Road, preference was given to the projects, which were not economically viable. Habantota port is one such port where there is very less traffic. The power projects built under CPEC in Pakistan did not have the infrastructure to distribute the electricity produced by them, due to which the project was not profitable. Traffic has yet not started on most of the rail and roads built under this project. But due to these projects and other wrong policies, a total foreign debt of $ 90 billion has accumulated on Pakistan, of which $ 25 billion is from China alone. It is not a matter of Pakistan's ability to repay such a huge debt. As a result, not only its credit rating has dipped due to sovereign crisis, its rupee has also depreciated hugely. Today Pakistan Rupee has reached around Rs 191 per dollar.

Today, when the concerned countries are in trouble due to the Belt Road project, the attitude of the whole world towards China is changing rapidly. It is worth noting that the countries of Europe had taken the Belt Road plan hand-in-hand. But due to the role of China in the spread of the pandemic, the thinking of the affected countries is changing fast. Not only this, due to the lockdown caused by Covid-19 and disruption in economic activities, these projects generally have come to a halt. But at the same time, due to the increasing bitterness between China and USA, the attitude of the countries of Europe, towards BRI is also changing.

War and Belt Road

It has to be understood that the stated objective of the China-backed Belt Road project, is to connect the whole world by rail, road and waterways. However, BRI is not the only initiative of its kind, along with it many other projects have also started. These include the European Union's 'Global Gateway', the US-led Bluedot Network (BDN), the G-7-led 'Build Back Better Word' (B3W), Japan's Quality Infrastructure Investment (QII), Russia's Euroasia Economic Union (EAEU)) and the International North South Transport Corridor sponsored by India, Russia and Iran.

It is true that the China-backed Belt Road project is currently the largest  among such endeavours in the world, involving 142 countries, focusing on the geography of Africa, Asia and Europe. But the rapidly changing international equations in wake of the Russia-Ukraine War, could have a huge impact on this project and other projects. The landmass of Russia to China was considered to be the most reliable route for European markets. Russia, Ukraine, Poland, Belarus etc. were a major part of the Belt Road and Rail Plan. This plan may be eclipsed due to the Russo-Ukraine war. The Belt Road Cooperation Forum, comprising China and 17 Central and Eastern European countries, is already in trouble due to escalating tensions between the USA and China. And now due to the increasing tension between Russia and European countries, this forum may further get pushed back. For connectivity between China and Europe, China will now have to rely on the old maritime route. That is, China's dream of rail connectivity can now get shattered.

It is also possible that Russia, affected by US sanctions and other actions against Russia, may also move closer towards China, for which America may also have to bear the brunt. On the other hand, the friendship between Russia and India is important for both the countries. In the short term it is possible that Russia will have to rely on China's Union Pay after the departure of MasterCard and Visa, but in the long term it is possible for Russia to pursue the EAEU infrastructure project. But, China's stake will be significant in that. European countries must understand that China may become a headache for them. In such a situation, it will be important for them to stop the success of China's Belt Road plan. Nothing can be said about the final outcome of the tug of war between various international powers to protect their respective interests in the times to come, but it can be certainly be said that chances of China's Belt Road plan getting success are very-very meagre.