China’s One Belt One Road Initiative – A push for influence or debt?
An interview with Sijbren de Jong, a strategic analyst at The Hague Centre for Strategic Studies. Interviewer: Małgosia Krakowska
MAŁGOSIA KRAKOWSKA: When the Chinese president announced the One Belt One Road Initiative (OBOR), it was hailed as the “project of the century”. A report that you co-authored for the Hague Centre on Strategic Studies sheds much less optimism. What raises your concerns?
SIJBREN DE JONG: The answer is hidden in the modus operandi of the project. “The One Belt” refers to the land, economic belt, while the “One Road” refers to the maritime corridor. Under the scheme, Chinese financial institutions issue loans to countries in which the proposed OBOR related infrastructure will be constructed. Countries with a poor trade balance, for example in the Western Balkans, may benefit from the Chinese loans but also see their debt burden increase as a result.
It is not clear, however, whether the planned infrastructure projects will become profitable and it could lead to a situation with projects having a negative return on investment, where countries will be unable to service their debt back to the Chinese. In such cases, China’s impact on regional economies, including national security, will be enormous.
The project is closely tied to China’s foreign policy. Its varying dynamics might also influence regional security, according to the report. Could you explain this further?
It is obvious that China wants to be the rule maker. However, the incompatibility of OBOR priorities with the European Union’s public procurement standards may come to naught. The fact that the European Commission has launched a proposal to carefully examine investments done in the EU by third countries – which includes China – is a sign of concern for Europe. Chinese investments do not always abide by the European standards.
Will there be any consequences for hard security issues as well?
We recognize that OBOR could have far-reaching consequences for hard security. China is developing its security establishment alongside the Silk Road. This includes potent military capabilities for the protection of critical infrastructure. Local armed forces or private military contractors will shield Chinese investments, forming a visible layer of protection at such sites. Furthermore, the roll-out of the new Silk Road favours the political status quo. One should expect that political reform incentives, for example in Central Asia, will slow down.
The New Silk road is a network of highways, sea lanes and railroads. The Baku-Tbilisi-Kars railway – which is to be completed later this year – is a main trade corridor which links East Asia with Europe. How would you judge China’s impact for regional security in the South Caucasus?
I do not think that China will become the dominant power in that area. Beijing wields much more influence in countries such as Uzbekistan, Kazakhstan or Turkmenistan for example. In 2016, for example, the Anaklia Deep Water Port construction was handed to a Georgian-Armenian company because negotiations with Chinese partners proved unsuccessful.
The Baku-Tbilisi-Kars railway line bypasses Russian territory. Could the One Belt, One Road initiative lead to Russia’s decline?
Considering regional power dynamics, you could say that Russia is playing second fiddle. Chinese investors do eye Russia, but not at the same level as they do other countries in the region. Negotiations were hampered by sanctions and mutual distrust. For China, the “road to riches” begins rather in Pakistan where Beijing plans to spend $57 billion on infrastructure projects.
Russia still hopes to lure Chinese investors. The Kremlin likes to demonstrate that Russians are able to get large energy projects off the ground despite western sanctions. The recent investments by China in the state-owned oil company Rosneft and the Yamal LNG plant serve as an example.
However, for the Chinese it is a drop in the ocean. Vladimir Putin’s economic and political adventurism has taken a big bite out of the Russian economy. The Russian government has not carried out any major economic reform since 1999. China’s One Belt, One Road merely serve to to amplify Russia’s lack of clout in the region.
Sijbren De Jong is a strategic analyst at The Hague Centre for Strategic Studies.
Małgosia Krakowska is a Polish journalist focusing on international affairs and international security issues.