Why India Opposing BRI? India-Japan led Asia-Africa Growth Corridor (AAGC) is Mumbai

  0 comments   |     by Saikat Bhattacharyya on April 11 , 2018

India has no economic and geopolitical leverage to counter BRI but India can determine the course of BRI by getting engaged with it while India-Japan led Asia-Africa Growth Corridor (AAGC) is Mumbai centric, BRI is largely Kolkata centric. India must allow more Chinese investments across the Eastern part of India.

When asked why India is opposing BRI, New Delhi has constantly raised the issue of China Pakistan Economic Corridor (CPEC) going through India claimed Kashmir as the main cause of opposition. Now the point is why India is trying to block BRI investments throughout South Asia? So its official point relating opposition to BRI does not work.

India is trying hard to derail Chinese BRI investments not necessarily in CPEC only but also anywhere in South Asia. We can identify three points why India is opposed to BRI.

  • Indian ruling class regards entire South Asia to be its sphere of influence. So India fears Chinese investments can reduce its level of influence.
  • Indian ruling class is created by the British colonial rulers and hence it is in collaboration with Anglo hegemony. So the rise of China is seen by Indian ruling class as something that is threatening to its source of origin.
  • India is quite weak economically compared to China. New Delhi feels it will not be able to compete with Chinese money power. Most countries of South Asia other than Bangladesh are in dire needs of infrastructure and foreign exchange. Chinese investments will attract them as nothing else. Since New Delhi cannot lure these countries with money due to lack of deep pockets, the former feels political intervention is the only way by which its fall of influence can be prevented.

How India tried to counter BRI?

India has shown concern about Chinese investment in Gawdar and Hambantota and even tried to derail investments in Nepal and forced Bangladesh not to allow Chinese investments in Sonadihi and Chittagong ports. To thwart Chinese influence India has actively meddled in internal politics of Sri Lanka, Bangladesh, Nepal and the Maldives. In Sri Lanka, Indian media openly celebrated the defeat of Rajapaksa as the defeat of China. In Nepal, India instigated a Madhesi (Indian origin people living inside Nepal) led blockade near the Indo-Nepal border when Nepal was trying to reach consensus on a new constitution.

New Delhi is even believed to have conspired to dispose of Oli led government by destroying the alliance between Maoists and Communists and arranging an alliance between Nepal Congress and Maoists. In the Maldives too, New Delhi end up supporting opposition Nasheed when he was charged with corruption by the government. In Sri Lankan case, Indian diplomats and media vaunted about their geopolitical success after the defeat of Rajapaksa and victory of Sirisena. New Delhi urged Sirisena to scrap Chinese investments in Colombo port, Hambantota port, etc.

Reaction of Indian Opposition to BRI

In Bangladesh, the fair election process has become impossible under the present pro India Hasina led government. This is because India has given open support to Hasina government and that has alienated the opposition parties from New Delhi. Thinking that a change in government will bring the pro-China government in Dhaka, New Delhi ended up supporting a not fairly elected government. This resulted in public anger against India among common Bangladeshis too. While India got right to use Bangladeshi land to go to North East, the regular killing of Bangladeshis by Indian border security forces is regular news. Overall, India has landed itself in a position of the continuous downward spiral. On one hand, India cannot support fair election apprehending that might bring pro-Chinese in power of Dhaka and on the other hand, its support for present government only makes New Delhi more unpopular among common Bangladesh people. It also means common Bangladeshis no longer sees India as a respectable liberal democracy. This destroys the edge of India as a democracy over China.

India and USA helped Sirisena to power in Colombo, but when the new Lankan President sought investment from the two great democracies, none was ready to extend help. Sri Lanka is already an externally indebted nation who needs foreign investment and hard cash most. Being denied by India and USA, Sirisena government had to return to Chinese camp. After months of bargaining, Sirisena government ended up conceding the right of Hambantota port to China, a move highly criticized by India. In this episode, India won politically but failed to use the win because of lack of deep pockets compared to China. In case of Nepal, Oli was said toe disposed of by intervention of New Delhi but only for few days. Pro India Nepali Congress government even canceled a Chinese project raising transparency issues. Oli immediately said he will clear the project once in power. CPN UML and Maoists form an alliance again before the central election of Nepal and scored huge success. It is said that China took effort in forming this alliance and now even talks of the merger between these communist outfits is underway. New Delhi failed to make a successful alliance between Congress and Madhesi parties. UML being the larger partner, Oli is likely to become Prime Minister of Nepal. Prachanda sought party chief position after the merger of UML and Maoists.

When difference arose on the matter, Indian media tried to break the alliance between Oli and Prachanda. The Nepali Congress is taking advantage of the situation and trying to elongate the time of formation of the new government. Nepali people are already protesting the elongation of new government formation. Prachanda has also tried to blame India by saying external forces are trying to destroy the merger process. Here the lesson is short-term political gain can enchant you but it can have very high long-run cost. Before provoking Madhesi led blockade or intervening in Nepal’s politics to oust a Prime Minister who not very long ago was thought to be pro India with the help of Maoist leader Prachanda who was again thought to be anti-India not very long ago, New Delhi should have some long-run vision. China, on the other hand, called for two biggest communist parties’ merger on Chinese communist party level and offered infrastructural investment in Nepal on the government level. The Chinese government never said anything against Nepali Congress-led government but at the party, level sought Oli-Prachanda cooperation. While India looks for short-run gain China sows the seeds of long-run fruits. In December 2017, Maldives President Yamin visited China and made a Free Export Zone deal. This deal raised eyebrows in Indian media. On February 1, this year, Supreme Court suddenly stepped out and squashed convictions of nine opposition leaders including exiled former President Nasheed. Supreme Court brought existential crisis for the Yameen led government by reinstating a dozen lawmakers who defected Yameen’s Party last year. The USA, UNO, and India asked Yameen to abide by Supreme Court orders. Main opposition leader Nasheed took the opportunity and claimed from Colombo Yameen is selling the Maldives to China from the UK. President Yameen ordered military to take street against Supreme Court orders and declared the state of emergency and arrested two Supreme Court judges. The remaining three judges immediately canceled the previous court orders. Nasheed then called for help from India. Here again, it seems USA-India are favoring Nasheed.

China, on the other hand, urged Chinese citizens not to travel Maldives tourist spots but remained committed to investment and supported internal talks in resolving the issues. Again, it is getting clear that India is siding with Nasheed while China trying to stay neutral. This implies that present President Yameen is becoming anti-India while Nasheed has a full probability to jump onto Chinese boat for investment like Sri Lanka’s Sirisena when the time is ripe. In the short run, either Yameen or Nasheed will win. But in the long run, Chinese victory is ensured. Common Maldivians are also feeling that India is intervening inside their country.

Can India Counter BRI?

The answer is no. China is growing for last 35 years at a rate 9.5%. It has become the largest exporter and manufacturing hub of the world. China holds foreign exchange reserves of value $ 3.1 trillion. Almost 70% of foreign exchange reserves come from current account surplus i.e. earned foreign exchange. China exports value of $ 80 billion to India last year and it is just 2% of entire export of China. India though maintaining 7% growth on average for last twenty years, its growth is not export-led and mainly debt led. India has huge current account deficit and trade deficit and it’s $ 400 billion foreign exchange mainly comes from capital account surplus. India’s external liability is as much as $ 1.4 trillion.

Its export basket still consists of low-value goods. It needs immediate reforms for more flexible land and labour laws. But political interests always come to stall reforms that can make Indian production competitive in the global market. Indian higher education previously got much respect at the global level but recent vote bank based reservation politics is gradually eroding its strength in higher education too. China has the huge excess capacity which is searching demand outlet in forms of infrastructural investments at home and abroad. International forums like Asian Infrastructural Investment Bank (AIIB) and Silk Road Fund were formed to shape BRI through which huge China will go for huge infrastructural spending. India on the other hand, is still a supply constrained economy. It has no earned foreign exchange to spend in the infrastructure of home or abroad.

International Alliance against BRI

Now an alliance with other anti-Chinese countries help India to counter BRI? That is also unlikely. Japan and USA are only two key players that might engage with India against BRI. Japan will not try to derail BRI but will use its economic clout to gain more say in BRI projects and not give China monopoly. This is proved by the fact that Japan showed interest to invest in Gawdar and Hambantota ports. Japan has also shown interest in participating in BRI. Above all, China will become much larger economy almost 5 times the size of Japan by 2025. The USA under Trump wants its allies to take more burdens of geopolitical engagements.

Thus the USA wants India to be more involved in Afghanistan and buy weapons from the former to counter the trade balance in favour of the later. Thus when Trump stopped aid to Pakistan, India showed no enthusiasm. This is because New Delhi knows the more USA and Pakistan will be drifted apart, the more pressure will come upon India to send troops to Afghanistan. India will not find any of these policies ideal. Vietnam though buying missiles from India is courting Chinese economic initiatives including BRI. Thus chance for a successful alliance against BRI is very least.

Conclusion

India has no economic and geopolitical leverage to counter BRI. But India can determine the course of BRI by getting engaged with it. While India-Japan led Asia-Africa Growth Corridor (AAGC) is Mumbai centric, BRI is largely Kolkata centric. India must allow more Chinese investments across the Eastern part of India. Thus India can have a say about BRI. Moreover, Indian economic underbelly is still soft. It must give priority to its economic development rather than geopolitically dominating South Asia. Already, its misadventure is proving to be a failure in Sri Lanka. Its political intervention has drifted away Nepal and Maldives further to China. For people of Bangladesh, Maldives and Nepal are already watching Indian intervention with great anger. India can use internal political differences within these countries to hang on, but that will further push them to Chinese camp. India has no chance to win against BRI and so it is better for India to accept the same and develop itself.

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