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May 22, 2018

Trump urged to counter Chinese Belt, Road Initiative


May 22, 2018

ISLAMABAD: China’s trillion-dollar Belt and Road initiative (BRI) is sounding alarm bells in Washington and experts are urging the United States (US) to urgently chalk out a comprehensive counter strategy otherwise “illiberalism” accompanying the initiative will spread across the globe unchecked.

In a lengthy article in US publication, two former officials of the State Department and Pentagon mentioned Pakistan as one of the countries at risk of debt distress due to future Belt and Road-related financing and urged President Trump to join hands with Japan and Europe to meet the challenge posed by the mega initiative.

“Nearly two decades after China’s entrance into the world economy, it is up to US President Donald Trump to ensure that the illiberal values China is exporting under the guise of the Belt and Road Initiative do not take root across the globe,” says the article jointly written by former State Department official Richard Fontaine and former Department of Defence official Daniel Kliman.

The article notes that great power competition is back. And China is now combining its vast economic resources with a muscular presence on the global stage. One of Beijing’s key efforts is the Belt and Road Initiative, a trillion-dollar endeavour to link together Asia, the Middle East, Africa, and Europe through a web of mostly Chinese-funded physical and digital infrastructure.

The experts argued that the United States could not ignore the Belt and Road Initiative. The offer of financing and other assistance addresses a real need in many countries for roads, ports, railways, telecommunications networks, and other infrastructure. And given that many see no credible alternative on offer, straight-out American opposition is bound to fail.

Instead, the Trump administration should try to shape the project, where possible, through a combination of engagement and pressure. At the same time, it is imperative to counter the initiative’s most illiberal elements. This means advancing a free, open, and sustainable model of development, fostering political resiliency in select countries, launching a new digital development fund, and more.

“Undertaken in concert with U.S. allies and partners, these kinds of moves will not demand massive new resources. But absent steps like them, Belt and Road-fueled illiberalism will spread across the globe unchecked,” it reads.

“By fueling debt dependency, advancing a “China First” development model, and undermining good governance and human rights, the initiative offers a deeply illiberal approach to regions that contain about 65 percent of the world’s population and one-third of its economic output,” it mentioned.

According to these experts and former officials many of the countries participating in the project lack the capability to assess the long-term financial consequences of China’s loans — or they may simply accept them, assuming the bills will come due on a future government’s watch.

“Ballooning, unsustainable debt is the predictable result. Sri Lanka, where in 2017 some 95 percent of government revenue went to debt repayment, represents the best-known example of Belt and Road’s negative impact on a country’s balance sheet,” it adds.

The article mentions a recent study by the Center for Global Development which identified eight countries — Djibouti, the Maldives, Laos, Montenegro, Mongolia, Tajikistan, Kyrgyzstan, and Pakistan — that are at particular risk of debt distress due to future Belt and Road-related financing.

It says large government-backed loans to foreign countries come with political strings attached. The potentially destructive international economic consequences of failing to make repayments breeds long-term dependence on China and expands Beijing’s influence. As a result, recipient countries will find their foreign-policy choices constrained — even if future governments seek to exit Beijing’s orbit.

The experts opined that the Belt and Road Initiative provides a vector through which China can exert influence well beyond countries’ foreign-policy choices.

“Given that some projects are clearly linked to geopolitical objectives — like gaining control over commercial assets with potential military uses — Beijing may well employ graft to ensure that foreign political elites look favorably on its offers,” it adds.

It also warned about China’s planned development of a “new digital Silk Road”.

“China’s digital blueprint seeks to promote information technology connectivity across the Indian Ocean rim and Eurasia through new fiber optic lines, undersea cables, cloud computing capacity, and even artificial intelligence research centers. If realized, this ambitious vision will serve to export elements of Beijing’s surveillance regime,” it adds.

It notes that Chinese technology companies have a track record of aiding repressive governments. In Ethiopia, likely prior to the advent of Belt and Road, the Washington Post reports that China’s ZTE Corporation “sold technology and provided training to monitor mobile phones and Internet activity.” Today, Chinese tech giant Huawei is partnering with the government of Kenya to construct “safe cities” that leverage thousands of surveillance cameras feeding data into a public security cloud “to keep an eye on what is going on generally” according to the company’s promotional materials.

The US former officials warned that beyond fueling corruption and enhancing surveillance, the initiative will stifle free speech, at a minimum by strengthening Beijing’s ability to silence criticism.

“States financially beholden to China will become less willing to call out Beijing’s domestic human rights abuses, for instance, and less eager to object to its foreign-policy practices,” it reads.

Similarly, companies dependent on the Chinese market are already acquiescing to Beijing’s demands. As the initiative extends its reach, it is easy to imagine government officials feeling similarly compelled.

The former officials admitted limited choices that the US has against the initiative.

“Lacking additional billions of dollars in government-directed funds, a raft of state-owned enterprises, or well-capitalized banks linked to the government, Washington cannot simply outbid Beijing. Nor should it try to do so. The best course for Washington is to offer a positive vision of physical and digital connectivity while taking concrete steps to limit the initiative’s most illiberal effects.”

The experts urged Trump administration to collaborate with other democracies such as Japan, European nations, and India, to advance an alternative approach. “It should emphasize local capacity-building, the transfer of skills, responsible financing, quality, and innovation. These elements should become the watchword of the free, open, and sustainable model.”

The United States, working with its allies and partners, can play a critical role in helping to develop the human capital necessary to adequately determine whether a country should take on a Belt and Road project. This would include such mundane but important efforts as building technical financial assessment capacity, training procurement officials, and enhancing the project management skills of government officials.

The experts also urged the United States to strengthen its international support for democracy, civil society, and rule of law.

“Transparency, domestic checks and balances, and a free press can function as powerful impediments to the sort of corrupt backroom deals that leave China with enduring financial leverage and receiving governments with a long-term debt hangover,” it says adding that even modest efforts in nondemocratic countries — to train investigative journalists, for example, or to strengthen the capacity of civil society organizations — may constrain China from pursuing the most one-sided Belt and Road deals.

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