India can pride itself as the intellectual leader that helped shine a spotlight on BRI’s financial and security risks and thereby moulded the international debate

by Brahma Chellaney

Sierra Leone has become the latest country to scrap a Belt and Road (BRI) project, cancelling a $318 million airport deal with China. After smooth sailing, BRI is now encountering strong headwinds, as partner nations worry about sovereignty eroding debt traps. In multiple countries, BRI projects are being scrapped or scaled back.

India was the first country to come out against the opaque BRI, Chinese President Xi Jinping’s marquee initiative. India boycotted Xi’s much-hyped BRI summit, held to drum up global support for his initiative. The May 2017 summit in Beijing attracted 29 heads of state or government, including Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdogan. But, while the US sent a joint secretary equivalent official to the summit, India sent no one.

Indeed, India publicly portrayed BRI as a non-transparent, Neo-colonial enterprise aimed at ensnaring smaller, cash-strapped states in a debt trap to help advance China’s geopolitical agenda. An official Indian statement before the BRI summit declared that “connectivity initiatives must be based on universally recognised international norms, good governance, the rule of law, openness, transparency and equality” and that they must also “follow principles of financial responsibility to avoid projects that would create unsustainable debt burden”.

Some commentators in India were quick to claim that, through its summit boycott, India had isolated itself. They also predicted that India would come out a loser by turning its back on what they saw as a promising infrastructure building initiative that New Delhi too should have tapped.

But at the BRI summit itself, India received implicit support. The European Union openly echoed India’s concerns by saying BRI did not include commitments to transparency and social and environmental sustainability. The EU’s refusal to back Xi’s BRI-related trade statement marred the summit.

Before long, the US began depicting BRI as the dawn of a new colonial era. Then US secretary of state Rex Tillerson called China a “new imperialist power” whose practices are “reminiscent of European colonialism”.

The word “predatory” is now being used internationally about China’s practices. The International Monetary Fund has warned that Chinese loans are promoting unsustainable debt burdens. The price such burdens exact can extend to national sovereignty and self-respect. The handover of Hambantota port on a 99-year lease to China was seen in Sri Lanka as the equivalent of a heavily indebted farmer giving away his daughter to the cruel money lender.

Beijing has leveraged big credits to gain even military presence, as its first overseas naval base at Djibouti illustrates. Trapped in a debt crisis after borrowing billions of dollars, Djibouti was left with no choice but to lease land for the base to China for $20 million in annual rent. China is similarly seeking to employ its leverage over cash-strapped Pakistan to build a naval base next to Gwadar port.

In the Maldives, China has acquired several islets in that heavily indebted Indian Ocean archipelago. While the terms of the various lease agreements have not been disclosed, the acquisitions have come cheap; for example, China paid just $4 million for Feydhoo Finolhu, an island that previously served as a police training centre.

However, China’s grandiose BRI plans are running into broader resistance. Malaysian Prime Minister Mahathir Mohamad, with Chinese Premier Li Keqiang by his side in Beijing’s Great Hall of the People, recently criticised China’s use of infrastructure projects to spread its influence. By warning China against “a new version of colonialism”, Mahathir highlighted international concerns over Beijing’s use of Geo-economic tools to achieve geopolitical objectives.

Sri Lanka’s experience has been a wake-up call for other countries with outsize debts to China. A number of BRI partner-states have begun trying to renegotiate their deals with Beijing. Some have decided to cancel or scale back projects. Mahathir, during his Beijing visit, announced the cancellation of Chinese projects worth nearly $23 billion. And China’s close ally, Pakistan, has downsized its main BRI railroad project by $2 billion.

BRI seeks to export China’s model of top-down, debt-driven development through government-to-government deals clinched without competitive bidding. But, increasingly, BRI is being seen internationally as an attempt to remake global commerce on China’s terms and project Chinese power far and wide.

Vulnerable countries are awakening to the risks of accepting loans that are too good to be true and then slipping into debt entrapment. China is even replicating some of the practices that were used against it during the European colonial period, such as the concept of a 99-year lease. BRI, by creating a mountain of debt, risks undermining China’s international standing, including engendering hidden hostility. A broader push back against China’s mercantile practices is already emerging.

Against this background, India’s brave, principled stand against BRI stands fully vindicated. India can pride itself as the intellectual leader that helped shine a spotlight on BRI’s financial and security risks and thereby moulded the international debate. The larger international push back against China’s predatory practices is likely to intensify in the coming years, putting greater pressure on BRI.

The writer is a Geo-Strategist and author