Regions in the Belt and Road Initiative 9780367194321, 9780429202346

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Regions in the Belt and Road Initiative

Introduced in 2013, China’s Belt and Road Initiative (BRI) has had a significant impact within Asia and across other regions. This book provides empirical case studies examining the relations between China and the states in specific regional groupings, including South-East Asia, Central Asia, South Asia, the Persian Gulf, the Horn of Africa, and Central/Eastern Europe. At the theoretical level, Buzan and Waever’s work on regional security complexes is used to develop a framework for analyzing the current impact of the BRI and its potential future effects within these regions, while the case studies explore the extent to which different International Relations and International Political Economy theories explain change in these relationships as the regional security environment shifts. The contributors address questions as diverse as the domestic political and economic drivers impacting the level of BRI cooperation; the effects of cooperation with the US; as well as the historical political and economic risk considerations for China in pursuing BRI cooperation; and the motivations of regional responses to the BRI and rivalries and variations in those responses. This book will be of interest to academics working in the fields of Chinese foreign policy, International Relations, International Political Economy, and area studies. Professionals in the corporate world and Governmental practitioners and non-government agencies will also find the contributions useful. Jonathan Fulton is an Assistant Professor of Political Science in the College of Humanities and Social Sciences at Zayed University, in Abu Dhabi, UAE, and a senior non-resident fellow at The Atlantic Council.

Rethinking Asia and International Relations

Series Editor – Emilian Kavalski, Li Dak Sum Chair Professor in China– Eurasia Relations and International Studies, University of Nottingham, Ningbo, China

This series seeks to provide thoughtful consideration both of the growing prominence of Asian actors on the global stage and the changes in the study and practice of world affairs that they provoke. It intends to offer a comprehensive parallel assessment of the full spectrum of Asian states, organisations, and regions and their impact on the dynamics of global politics. The series seeks to encourage conversation on: • • • •

what rules, norms, and strategic cultures are likely to dominate international life in the “Asian Century”; how global problems will be reframed and addressed by a “rising Asia”; which institutions, actors, and states are likely to provide leadership during such “shifts to the East”; whether there is something distinctly “Asian” about the emerging patterns of global politics.

Such comprehensive engagement not only aims to offer a critical assessment of the actual and prospective roles of Asian actors, but also seeks to rethink the concepts, practices, and frameworks of analysis of world politics. This series invites proposals for interdisciplinary research monographs undertaking comparative studies of Asian actors and their impact on the current patterns and likely future trajectories of international relations. Furthermore, it offers a platform for pioneering explorations of the ongoing transformations in global politics as a result of Asia’s increasing centrality to the patterns and practices of world affairs. For more information about this series, please visit: www.routledge.com/Rethinking-Asiaand-International-Relations/book-series/ASHSER1384

Recent titles China and Middle East Conflicts Responding to War and Rivalry from the Cold War to the Present Guy Burton Regions in the Belt and Road Initiative Edited by Jonathan Fulton

Regions in the Belt and Road Initiative

Edited by Jonathan Fulton

First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 selection and editorial matter, Jonathan Fulton; individual chapters, the contributors The right of Jonathan Fulton to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-0-367-19432-1 (hbk) ISBN: 978-0-429-20234-6 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon, Tyne and Wear

For my parents, Gary and Theresa

Contents

List of illustrations List of contributors List of abbreviations 1

Responses to the Belt and Road Initiative: a regional perspective

ix x xii

1

JONATHAN FULTON

2

Localizing China’s Global Silk Roads through the “17 + 1”

16

EMILIAN KAVALSKI

3

China’s Belt and Road Initiative in South Asia: unique characteristics and general framework

36

JABIN T. JACOB

4

Central Asia in the Belt and Road Initiative: policy-taker or policy-shaper?

54

LI-CHEN SIM AND FARKHOD AMINJONOV

5

China’s Maritime Silk Road: the Horn of Africa and Red Sea

75

DAVID STYAN

6

The Gulf monarchies in the Belt and Road Initiative: domestic, regional, and international pressures JONATHAN FULTON

97

viii Contents 7

Bumps in the Maritime Silk Road: domestic politics and the Belt and Road Initiative in ASEAN states

115

DANIEL O’NEILL

Index

140

Illustrations

Figures 2.1 4.1

Institutional framework of the “17 + 1” mechanism Central Asia’s trade with Russia and China

21

55

Tables 2.1 7.1 7.2

Sectoral associations of the “17 + 1” mechanism China’s infrastructure “official flows” to ASEAN states in early “Go Out,” late “Go Out,” and early BRI eras Official Development Assistance (ODA) vs. Other Official Flows (OOF) for public diplomacy to ASEAN states

22

118

119

Contributors

Farkhod Aminjonov is an Assistant Professor at the College of Humanities and Social Sciences, Zayed University. Before joining Zayed University, he was a Professor-Researcher at Narxoz University and Deputy Director of the Central Asia Institute for Strategic Studies based in Almaty, Kazakhstan. His recent publications include the 2017 report, “The Eurasian Economic Union and The Silk Road Economic Belt: Competition or Convergence?”; in 2018 for RUSI, “Central Asian Gas Export Dependency Diversification Policies: Swapping Russian Patronage for Chinese?”; and a series of reports on “BRI and Bilateral Chinese Projects in Central Asia.” Jonathan Fulton is an Assistant Professor of Political Science in the College of Humanities and Social Sciences at Zayed University, in Abu Dhabi, UAE. He is also a non-resident senior fellow at the Atlantic Council. He received his PhD in International Relations from the University of Leicester, UK, where his dissertation focused on China’s relations with the Gulf Cooperation Council member states. He has written widely on China–Middle East relations for both academic and popular publications. He is the author of the China’s Relations with the Gulf Monarchies (2019) and co-editor of External Power and the Gulf Monarchies (2019). Jabin T. Jacob is Associate Professor at the Department of International Relations and Governance Studies, Shiv Nadar University, Greater Noida and Adjunct Research Fellow at the National Maritime Foundation, New Delhi. He was formerly Fellow and Assistant Director at the Institute of Chinese Studies, Delhi and Associate Editor of the journal China Report. He holds a PhD in Chinese Studies and has spent time as a student/researcher/faculty in Taiwan, France, and Singapore. His research interests include Chinese foreign policy, Indian and Chinese worldviews, and center-province relations in China. He has co-edited several volumes on Indian and Chinese foreign policies and some of his work can be found at https://indiandchina.com/. Emilian Kavalski is the Li Dak Sum Chair Professor in China–Eurasia Relations and International Studies and the book series editor for Routledge’s “Rethinking Asia and International Relations” series. Prior to joining UNNC,

Contributors xi he worked at the Australian Catholic University and the Western Sydney University both in Sydney (Australia). He has also held research positions at the Institute for Political Studies, Academia Sinica (Taiwan), Aalborg University (Denmark), the Institute for the International Law of Peace and Armed Conflict, Ruhr Universitat-Bochum (Germany), the Rachel Carson Center (Germany), the Graduate Institute of International Politics, the National Chung Hsing University (Taiwan), Osaka University (Japan), the Research Institute for the Humanities and Social Sciences, National Taiwan University (Taiwan), as well as the Andrew Mellon Fellowship position at the American Institute for Indian Studies (New Delhi, India), and the I. W. Killam Postdoctoral position at the Department of Political Science, University of Alberta (Canada). Daniel O’Neill is an Associate Professor of Political Science in the School of International Studies at the University of the Pacific. His research concerns the politics of globalization, focusing on the interplay of China’s foreign economic policies and domestic politics in Asian states. His book, Dividing ASEAN and Conquering the South China Sea: China’s Financial Power Projection (2018), analyzes the impact of political institutions in Southeast Asian states on China’s efforts to expand its regional influence. His other publications include “Who Gains in Cambodia from ‘Win-Win’ Relations with China?” in The Deer and the Dragon: Southeast Asia and China in the 21st Century, ed. Donald Emmerson (2020); “Cambodia in 2016: A Tightening Authoritarian Grip” (2017) Asian Survey; “Cambodia in 2015: From Cooperation to Conflict” (2016) Asian Survey; “Playing Risk: Chinese Foreign Direct Investment in Cambodia” (2014); and “Risky Business: The Political Economy of Chinese Investment in Kazakhstan” (2014). Prior to earning his MA and PhD in political science at Washington University in St. Louis, he taught English in Taiwan (and studied Mandarin with this book’s editor). His move to Taiwan brought an end to a twenty-year career writing and performing songs in Austin, Texas during which time he also received his BA in economics from the University of Texas. Li-Chen Sim is an Assistant Professor of Political Science at Zayed University. She is a specialist in contemporary Russian politics and in particular the Russian oil industry; her concurrent area of research centers on the political economy of energy (hydrocarbon, renewable, nuclear) in the Middle East. She is the author of The Rise and Fall of Privatization in the Russian Oil Industry (2008) and a co-editor of External Powers and the Gulf Monarchies (2019). She is currently co-editing Alternative Energy in the Middle East and North Africa for publication in 2020. Her work has appeared on Lobelog, Rising Powers, the Arab Gulf States Institute in Washington, and World Energy, among other platforms. David Styan teaches in the Politics Department, Birkbeck College, University of London. He has written extensively on French and British foreign policy, as well as diverse aspects of political economy in the Horn of Africa.

Abbreviations

1MBD ACFTA ADB AIIB AMISOM ASEAN ATQ AU BRF BRI CAF CCP CCWAEC CEE CMG CMLV CNPC CNRP COSCO CPEC CPP CRRC CSCEC DIFTZ DPW EAEU ECRL EIPDC EPRDF EU FDI FOCAC GCC

1 Malaysia Development Berhad ASEAN–China Free Trade Area Asian Development Bank Asian Infrastructure Investment Bank African Union Mission in Somalia Association of South East Asian Nations Anti-Terror Quartet African Union Belt and Road Forum Belt and Road Initiative China–ASEAN Investment Cooperation Fund Chinese Communist Party China–Central West Asia Economic Corridor Central and East European China Merchants Group Cambodia–Myanmar–Laos–Viet Nam China National Petroleum Company Cambodia National Rescue Party China Ocean Shipping Company China–Pakistan Economic Corridor Cambodian People’s Party China Railway Construction Corporation China State Construction Engineering Corporation Djibouti International Free Trade Zone Dubai Ports World Eurasian Economic Union East Coast Rail Link Ethiopian Industrial Parks Development Corporation Ethiopian Peoples’ Revolutionary Democratic Front European Union Foreign Direct Investment Forum on China–Africa Cooperation Gulf Cooperation Council

Abbreviations xiii IMF IOR JCPDI JOCIC KIZAD LTTE MENA MPP MSRI NDRC NEP ODA OECCZ OECD OOF PH PLA PLAN PTI RSC SCO SEZ SEZAD SLOC SOE SREB UMNO UNMISS

International Monetary Fund Indian Ocean Region Jazan City for Primary and Downstream Industries Jiangsu Provincial Overseas Cooperation and Investment Company Limited Khalifa Industrial Zone Abu Dhabi Liberation Tigers of Tamil Eelam Middle East North Africa Multi-Purpose Port Maritime Silk Road Initiative National Development and Reform Commission New Economic Policy Official Development Assistance Overseas Economic Commercial Cooperation Zones Organization for Economic Co-operation and Development Other Official Flows Pakatan Haraban (“Alliance of Hope”) People’s Liberation Army People’s Liberation Army Navy Pakistan Tehreek-e-Insaaf Regional Security Complex Shanghai Cooperation Organization Special Economic Zone Special Economic Zone Authority Duqm Sea Lines of Communication State-Owned Enterprise Silk Road Economic Belt United Malays National Organization UN peacekeeping mission in South Sudan

1

Responses to the Belt and Road Initiative A regional perspective Jonathan Fulton

The Belt and Road Initiative (BRI), referred to as “the most significant and farreaching initiative that China has ever put forward,” is increasing China’s power, influence, and interests around the globe.1 It was announced in 2013, the same year David Shambaugh published China Goes Global, a major work in which he argued that China is – and would likely remain – a “partial power”; a global trading superpower but one with a broad yet shallow footprint in other indicators of international power such as global governance, security, economics, culture, and diplomacy.2 Given the more ambitious turn in China’s international orientation in the time since, one assumes that Shambaugh would adjust his analysis somewhat were he publishing the same book today. While much commentary about the BRI is breathless and exaggerated, it is undeniable that it represents a major shift in China’s approach to international politics. In each of the power metrics Shambaugh described we have seen a growth in Chinese capacities since the BRI was rolled out. This has happened during the same period that the United States’ relative power has declined, making for a more even playing field than in the post-Cold War era.3 In this systemic transition away from unipolarity toward a nascent multipolarity, the BRI represents Beijing’s preference for a future international normative order. This book is an analysis of how this is taking shape across regions in the first stage of the BRI. In order to address this, we need to first look at what the BRI is, how and why it has come about, and the responses it has inspired. The BRI is a series of infrastructure construction and investment projects that fit under two large umbrellas: the seaborne Maritime Silk Road Initiative (MSRI) and the overland Silk Road Economic Belt (SREB). Initially envisioned as having a focus on Eurasia and the Indian Ocean Region (IOR), its scope has since broadened as China’s ambitions have grown, and the BRI has come to include Latin America, the Arctic, and space. As O’Neill emphasizes in Chapter 7, the BRI has its roots in the “Going Out” (zou chu qu) policy of the 1990s. Recognizing that Chinese firms needed to transition beyond domestic markets and become internationally competitive, Chinese state-owned enterprises (SOEs) began to reorient to states and regions where they previously had little to no presence. As a result of this aggressive global outreach, China had accumulated approximately $3.2 trillion in foreign reserves by the

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time the BRI was announced in 2013.4 At around this time the development needs across Eurasia and the IOR were painfully obvious; a report from the Asian Development Bank (ADB) estimated that Asia was in need of approximately $8 trillion worth of infrastructure investment between 2010 and 2020.5 Existing institutions like the ADB, World Bank, and International Monetary Fund did not have the capacity to address this shortfall, and regardless were not perceived as especially attractive partners in large infrastructure projects. David Dollar, formerly of the World Bank, described its limitations in comparison with the BRI: Only about 30 percent of World Bank lending is for infrastructure these days. Having run the largest infrastructure program in the World Bank, I can say that it’s extraordinarily bureaucratic. Mostly, clients don’t like to come to the World Bank because it’s just too time consuming. It takes many, many years to get things going. China is offering to finance infrastructure, not at highly concessional terms, at what we would generally call commercial terms, but frankly at interest rates that most of these countries could not get from any other lender, unless they jumped through the hoops to go with the World Bank.6 It was in this environment that the BRI was rolled out in a series of events in late 2013. In September of that year, Chinese President Xi Jinping gave a speech at Nazarbayev University in Kazakhstan. Beginning with romanticized Silk Road imagery, Xi described relations between China and Central Asia as facing “a golden opportunity of growth” and expressed his desire to cooperate to “strengthen trust, friendship and cooperation, and promote common development and prosperity to the benefit to all our peoples.”7 He then announced his plan to build the Silk Road Economic Belt, articulating five types of issues with which China and Central Asian states could enhance cooperation: policy consultation, road connections, unimpeded trade, monetary circulation, and increased understanding between each other’s populations. These would later be revised and revealed as the five cooperation priorities found in the BRI white paper, “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road” (hereafter Vision and Actions). Former Kazakh President Nursultan Nazarbayev was at the event with Xi and expressed agreement in collaborating with China on this new Silk Road. Given the existing membership of China and the Central Asian states in the Shanghai Cooperation Organization (SCO), this policy announcement appeared to be building upon SCO relationships, and nothing from the speech indicated an expansion of the SREB beyond Central Asia. In October, President Xi delivered a speech to the Indonesian Parliament in which he called for “a more closely-knit China–ASEAN community of common destiny so as to bring more benefits to both China and ASEAN and to the people in the region.”8 Calling for the establishment of the 21st-century Maritime Silk Road, he presented a five-point strategy of somewhat vague goals: build trust and

The BRI: a regional perspective 3 develop good-neighborliness, work for win-win cooperation, stand together and assist each other, enhance mutual understanding and friendship, and stick to openness and inclusiveness. He suggested upgrading the China–ASEAN Free Trade agreement with the goal of expanding trade to $1 trillion by 2020 and announced the establishment of the Asian Infrastructure Investment Bank (AIIB), stating that it would prioritize development projects in ASEAN states. He said that China was interested in enhancing security cooperation with ASEAN states, focusing on “comprehensive security, common security, and cooperative security.”9 He also called for greater people-to-people exchanges between China and ASEAN countries. As with the speech in Kazakhstan, this speech appeared significant mostly as an expansion of existing relationships and did not represent a bold policy shift for China. One month later, the significance of these two speeches became clearer, as the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CCP) formally endorsed the construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. This gave the initiatives much higher profiles and linked them under the name Yi Dai Yi Lu, or One Belt, One Road (OBOR).10 Soon afterward the scope of the initiatives started to come into greater focus. Throughout 2014 and 2015 a wide range of bilateral agreements was announced as part of the initiative, and planned multilateral programs such as the Bangladesh–China–India–Myanmar Economic Corridor indicated that its geographic focus extended beyond Central Asia and South-East Asia, across Eurasia and the Indian Ocean. The BRI, as articulated by China, represents a “new model of international relations” based upon mutual respect, fairness, justice and win-win cooperation, and forge[s] partnerships through dialogue rather than confrontation and friendship rather than alliance. All countries should respect each other’s sovereignty, dignity, territorial integrity, development path, social systems, and core interests, and accommodate each other’s major concerns.11 The focus is on economic and developmental projects rather than hard power projection, reinforcing President Xi Jinping’s assertion that the BRI “is not a tool to advance any geopolitical agenda, but a platform for economic cooperation.”12 To this end, Chinese officials emphasize language like “inclusive,” “harmonious,” and “open to all” when discussing the initiative.13 Another important point that China’s leaders have insisted upon is that the BRI is an initiative (chang yi) rather than a strategy (zhan lue). In fact, after releasing Vision and Actions, the three ministries that published it – National Development and Reform Commission (NDRC), Ministry of Foreign Affairs, and Ministry of Commerce – issued a statement on standardizing foreign language translations of BRI, emphasizing that words like “strategy, project, program, or agenda” should not be used.14 The distinction here is important: an initiative in this usage indicates a call for action which provides a public good, while a strategy implies

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a plan that aims to achieve a security or trade advantage at the expense of a competing state. China’s careful messaging of an apolitical initiative aside, many have concluded that the BRI is an inherently political and/or strategic undertaking. Nadège Rolland, one of our most astute analysts of the BRI at this stage, reminds us that “roads and railroads crisscrossing Eurasia are not just meant to facilitate cargo transportation; they have a strong political component.”15 Callahan refers to it as an ambitious grand strategy: “to use economic leverage to build a Sino-centric ‘community of shared destiny’ in Asia, which in turn will make China a normative power that sets the rules of the game for global governance.”16 Benabdallah takes a similar view of the BRI, describing it as both Sino-centric and a means of diffusing alternative norms and practices. In her view, the BRI “is an example of not only Beijing’s capacity to generate new norms (in international development, mainly) but also its ability to socialize and persuade other actors to internalize China’s alternatives.”17 While Chinese leaders emphasize that the BRI is meant to complement the existing international order, it is reasonable to consider how this may be a catalyst for change, reshaping global norms. Despite the implications of this undertaking and the very open manner in which it was being announced, the BRI flew somewhat under the radar in Western media and policy circles for its first four years. After it was announced in 2013 things were relatively quiet on the surface; however, beneath, Chinese officials were developing the shape of the BRI, with one Chinese observer commenting, “The fact that a single initiative is taken as the focus of China’s diplomatic work for the whole year shows the weight given to the One Belt, One Road Strategy in China’s diplomacy.”18 In 2015, the results of that work became evident with two significant outcomes. In March 2015, Vision and Actions was released, announcing the five cooperation priorities that China would be emphasizing in BRI projects: policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds.19 In keeping with China’s narrative, security is not featured in Visions and Actions, with economic development the focus. Also in 2015, China hosted an Asia–Europe meeting in Chongqing during which Vice Premier Zhang Gaoli articulated the physical architecture of the BRI as a set of six economic corridors: • • • • • •

China–Mongolia–Russia New Eurasian Land Bridge China–Central and West Asia China–Indochina Peninsula China–Pakistan China–Myanmar–Bangladesh–India20

This gave structure to an initiative that had previously been dismissed as a shapeless catch-all, or, in Yuen Yuen Ang’s pithy phrase, “maybe the most talked about and least defined buzzword of this decade.”21 That these corridors

The BRI: a regional perspective 5 were not entirely new – New Eurasia Land Bridge and China–Pakistan Economic Corridor both predate the BRI – added to the perception that the Initiative is a “new slogan on stuff they’ve wanted to do for a long time.”22 This theme is found throughout the analysis in this book – existing projects have become BRI projects in each of the regions covered here. In terms of substantive BRI outcomes, 2016 was relatively quiet. The AIIB held its first annual meeting in June but coming directly on the heels of the United Kingdom’s Brexit referendum, it received scant attention. The year 2017 proved significant, however, as China hosted the Belt and Road Forum (BRF) in Beijing that May, an event that provided a large stage to promote the initiative. During his opening remarks Xi took advantage of the opportunity to shape a positive narrative of the BRI: We are ready to share practices of development with other countries, but we have no intention to interfere in other countries’ internal affairs, export our own social system and model of development, or impose our own will on others. In pursuing the Belt and Road Initiative, we will not resort to outdated geopolitical maneuvering. What we hope to achieve is a new model of winwin cooperation.23 This event drew 29 heads of state (or 30 including Xi) and had participants from more than 130 countries and 70 international organizations. Xi announced $133 billion in funding for policy banks and the Silk Road Fund, and claimed that during the Forum, 68 countries and international organizations signed BRI agreements.24 The joint communique, signed by the attending heads of state, offered praise for the achievements of the BRI thus far, stating “By providing important opportunities for countries to deepen cooperation, it has achieved positive outcomes and has future potential to deliver more benefits as an important international initiative.”25 Despite the successful outcomes from the BRF, there were notable indications of hazards ahead for the Road. For one, leaders of most major Western powers did not attend, a sign of their reservations about China’s growing ambition and influence. The EU presented another disappointment as its member states refused to sign the trade statement over concerns about social and environmental sustainability and transparency, with a European diplomat stating, “We made clear that, for Europe, the Belt and Road Initiative can only be a success if it’s based on transparency and co-ownership. Apparently to Chinese surprise, the EU was united on this.”26 The contrast between Western and/or highly developed states’ concerns about BRI and developing states’ enthusiasm for it has since been a constant feature of international responses to the initiative. Less internationally prominent but no less important, the 19th National Congress was another BRI landmark in 2017. Held twice a decade, the National Congress of the Chinese Communist Party (CCP) reflects upon the achievements of the previous five years and announces policy goals for the next

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five. During Xi’s nearly three-and-a-half hour speech he spoke of the “China model” as a new option for developing countries, claiming, “We have every confidence that we can give full play to the strengths and distinctive features of China’s socialist democracy, and make China’s contribution to the political advancement of mankind.”27 This confidence in the applicability of the China model is new; previous Chinese leaders shied away from such a prospect, claiming that its growth and development success was the result of a unique set of circumstances unlikely to be replicated. When asked what lessons could be taken from China’s Reform Era growth, officials typically encouraged leaders in developing states to follow their own path as China did. More importantly, the BRI was emphasized as a means of achieving this international prominence and was enshrined into the CCP’s constitution with the pledge to “pursue the Belt and Road initiative.”28 This directly linked the BRI’s success or failure to the CCP, making it unlikely that it could be abandoned should it encounter difficulties. Given the international coverage of the BRI after 2017 and the obvious importance the CCP was attaching to it, more critical analysis began to emerge, and under the global microscope the BRI narrative became more complex than one of “win-win” outcomes for all. Much of the focus from English-language media was on debt trap diplomacy, concerns about the export of China’s digital surveillance state model, lax environmental standards, and the prospect of China as a neo-colonial power.29 Reports that China had taken control of Sri Lanka’s Hambantota Port for 99 years because of an inability to service the loan fed into the predatory lending narrative.30 In democratic BRI partnering states Chinese dominance in their economies became a hot-button campaign issue; in Pakistan, Malaysia, the Maldives and Sri Lanka opposition parties all focused on their governments’ perceived over-reliance upon China.31 With this negative perception dominating in states inclined to perceive China as a rival, the CCP had to address these concerns. The 2019 BRF, held in Beijing that April, was a rebranding exercise in which Chinese leaders acknowledged it as a work in progress that will be in need of recalibration as it develops, and that China needs to do a better job of addressing the concerns of its partnering states if it is to continue along its impressive trajectory. Part of this was shifting the political projects away from the NDRC and over to the Ministry of Foreign Affairs, presumably more capable of rebranding the BRI overseas.32 During Xi’s opening address he spoke to the concerns of BRI skeptics, stating that there would be a new emphasis on intellectual property rights, trademark and trade secret protection, and an end to forced technology transfers.33 Other points were a commitment to high quality infrastructure, more sustainable projects, and more risk resilience.34 Xi’s tone helped, and the 2019 BRF was impressive, with 37 heads of state in attendance, an increase from the first forum, including nine out of ten ASEAN leaders, four out of five Central Asian leaders, and 12 heads of state from Europe, a noticeable difference from 2017.35 Beyond the event itself, it was important in underscoring the adaptive nature of the BRI as it evolves, a point Rolland has made:

The BRI: a regional perspective 7 In the face of the mounting international resistance against the Belt and Road Initiative, the Chinese leadership has proven capable of anticipating, assessing, and adapting to what looks like an increasingly adversarial environment.36 What has become clear is that in much of the world there is an appetite for what the BRI has to offer. Other countries – especially Japan and South Korea – can offer competitive and reliable infrastructure construction and investment but no other country has the combination of ambition, economic means, and an articulated strategy to match the BRI. The Blue Dot Network, announced in late 2019, has been labeled as an American response to the BRI. Led by the US Overseas Private Investment Corporation, Japan Bank for International Cooperation, and Australia’s Department of Foreign Affairs and Trade, it has the goal of promoting “market-driven, transparent, and financially sustainable” infrastructure development, clearly meant as a counterpoint to the most common complaints about some BRI projects.37 However, this is designed as a means of drawing private capital into investment without any associated US governmental lending, whereas the BRI is funded by Chinese SOEs and stateowned banks and financial institutions. The difference is significant. Blue Dot expects market forces to compete with BRI, whereas the BRI has the resources of the Chinese state to pursue projects motivated by market logic as well as political objectives that support the CCP. As such, it is unlikely that the Blue Dot Network poses a significant challenge to the BRI. Combined with the sixyear head start the BRI has enjoyed, it appears that it is a deeply entrenched, well-received series of projects that has serious momentum and little in the way of serious competition.

Why regions? There are many vantage points from which to analyze the impact of the BRI, but this volume uses regions. As the international system transitions toward a more decentered order, regions are becoming a more salient feature of international relations, and the nature of order transition is creating openings for non-traditional powers to play uncharacteristically robust roles within these orders, most of which have frequently been shaped by involvement of extraregional powers.38 As the BRI takes China farther afield, Chinese presence in these often delicate ecosystems bears watching closely. Will it find a way to peacefully integrate into these regional orders, or will China’s presence prove disruptive? In China’s Search for Security, Nathan and Scobell used a concentric circles model to demonstrate China’s foreign policy orientation. The first circle, China’s sovereign territory, is the dominant security concern for decision makers in the CCP. The next circle is those 20 states that share borders and maritime boundaries with China. The third circle consists of six regional orders (North-East Asia, continental South-East Asia, maritime South-East Asia, Oceania, South Asia,

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and Central Asia) that are home to direct Chinese security-related interests. The fourth circle represents the rest of the world.39 In the BRI era this is still true. Like all states, domestic pressures are driving a lot of Chinese foreign policy, and the BRI has to be understood at least partially as a response to concerns at this level as the Chinese economy transitions from the low-hanging fruit available during the Reform Era to the challenges of the New Normal. The pressures inherent in China’s performance legitimacy model make for a challenging terrain for CCP officials to navigate.40 However, for the purposes of this book we are considering the BRI as an international relations phenomenon. How do actors in regions perceive a deeper Chinese footprint? What challenges can China expect as it becomes an important regional actor? Can its non-interference principle hold when its assets and expatriates are in a competitive regional environment with the possibility of conflict? Can it avoid becoming entangled in intense regional rivalries? The move toward a more proactive role beyond its immediate borders became apparent with a 2013 Peripheral Diplomacy Work Conference held in Beijing. One of the more important lines from the speech that indicated a shift in official thought on foreign policy came when Xi said China must “be more proactive in seeking achievements” in its diplomacy.41 This seemingly innocuous phrase (fenfa youwei) has come to be seen as a new paradigm for a newly assertive Chinese foreign policy.42 Throughout the Reform Era, Chinese foreign policy could be summarized by Deng Xiaoping’s famous 24-character dictum: “Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.” Given the shorthand of taoguang yanghui, or “hide and bide,” this characterized a seemingly modest approach under which China would avoid antagonizing neighboring states by emphasizing domestic development needs as its most significant priority; rather than pursuing a more prominent role internationally, Beijing sought to reassure the global community that its attention was focused inward. Fenfa youwei seems to represent a break, consistent with a more assertive Chinese role internationally that had been building since the second Hu Jintao administration.43 To attribute this to Xi is therefore misleading, but at the same time he has been much more effective in articulating this expansive vision of Chinese power and influence. The BRI is a major component of this, as is his China Dream rhetoric: “In my opinion, the rejuvenation of the Chinese nation has been the greatest dream of the Chinese people since the advent of modern times.”44 In linking these together and articulating the fenfa youwei approach, we can see the making of a Xi doctrine that “reflects Beijing’s newfound willingness to play a leading role in reshaping the world, starting with its extended periphery.”45 The academic literature on regions helps us consider the relationship between the BRI and regional orders. Buzan’s seminal early work on regional security complex (RSC) theory found that during the Cold War the regional level of analysis was “an important, but seriously neglected, area of international relations analysis.”46 His introduction of security complexes was a useful innovation in

The BRI: a regional perspective 9 that “they come much closer to reflecting the operating environment of national security policy-makers than do higher level abstractions about the distribution of power in the system.”47 During a period when structural realism dominated much international relations theory, this was an important contribution that would become more evident with the end of the Cold War, when unipolarity had less to offer in explaining the durability of intense intra-regional conflict. As Katzenstein noted, “The end of the cold war has moved world politics from centrally organized, rigidly bounded environments that are hysterically concerned with impenetrable boundaries, to ones in which territorial, ideological, and issue boundaries are attenuated, unclear, and confusing.”48 Lake and Morgan also saw Cold War bipolarity as a factor that limited regional analysis, claiming that the order transition to unipolarity meant that regions became “a substantially more important venue of conflict and cooperation than in the past.”49 In their classic study on regions Buzan and Waever concurred, stating “the regional level is where the extremes of national and global security interplay, and where most of the action occurs.”50 Ayoob’s analysis of regions emphasizes the pressures that come from the structural level, pointing out that regional dynamics are affected by “the operation of the global balance of power and rivalries among the major powers.”51 This does not detract from the agency of regional actors, however, as decision makers within these regional states “attempt to utilize issues relating to the global balance to enhance their own state and regime interests. This leads to the inevitable intertwining not merely of global and regional, but of global and domestic dynamics as well.”52 This interplay between the regional orders and a changing international system described after the Cold War is relevant now, as the liberal international order moves toward a less centered multipolar one.53 As this takes shape it is increasingly clear that China’s role in the emerging order will be an important one, and the BRI is a central component of how this evolves. Chinese outreach into regions across Eurasia and the IOR offers insights into how it may behave as a global power; as Beeson and Li note, “many of the attitudes, policy preferences, and diplomatic tactics that it may eventually employ are being forged in its own regional relations.”54

Chapter summaries To address the impact of the BRI across different regions, I assembled a group of political scientists with strong area studies specializations and asked the following questions: • • •

What are the domestic political and economic drivers impacting the level of BRI cooperation? Are there specific, unique regional factors? Does cooperation with the US or other international powers appear to impact involvement in BRI? Do historical relations between the People’s Republic of China and the regional states in question play a role in their response to the BRI?

10 Jonathan Fulton • • • • • •

Are the regional states’ orientations toward the BRI shaped largely by economic or strategic considerations? Might the states in question be motivated by regional rivalries in pursuing closer ties to China through the BRI? If so, how could this affect the initiative’s success? What are the political and economic risk considerations for China in pursuing BRI cooperation in this region? Of the five cooperation priorities listed in Vision and Actions, which are especially well or poorly developed at this stage? If there is a development lag in this priority, why is this the case, and is it being addressed? How has the response of countries to China’s BRI overtures varied by level of development, regime type, and region (including the interaction of these variables)? Has there been any kind of a coordinated effort to draw BRI projects into the region?

As their initial drafts came in, I was happily surprised to see interesting recurring themes, providing us with generalizable patterns that help us better understand the BRI. First, each case study demonstrates BRI-style cooperation within these regions well before the 2013 announcements of the SREB and MSRI. O’Neill’s linkage of the “Go Out” (zou chu qu) as a precursor to the BRI is an important point. There is a degree of continuity in China’s approach to developing its overseas presence that my own research on China’s relations with the Gulf Cooperation Council states confirms. There are obvious similarities between Vision and Actions’ five cooperation priorities and the issue areas that China chose to develop while deepening its ties with the Gulf monarchies prior to the BRI.55 Another recurring theme is the tension inherent between regional and international levels, as the complicated relationship between China and the US spills into regional politics. States in every region analyzed here have to strike a balance between a desire to cooperate more closely with Beijing and not alienating Washington. This is made more challenging given the deteriorating state of the bilateral relationship between China and the US in recent years. Domestic political pressures come into play as well. Each case study demonstrates that domestic-level pressures, both political and economic, feature in decisions about whether or not to engage with China in the BRI. This would be a welcome focus for a different project: domestic politics and the BRI. However, this is an international relations book, and the domestic angle is explored only in that we must acknowledge the importance of unit-level pressures on foreign policy decisions. Finally, the agency of BRI partnering states is an important point emphasized throughout the following chapters. The cautionary tone increasingly used to describe the BRI and China’s intentions seems to imply that these states are helpless in the face of Chinese “predatory” behavior. However, as O’Neill’s discussion of regime types shows, states are able to push back or negotiate better

The BRI: a regional perspective 11 terms. States with high levels of corruption or low accountability will more likely have more to fear. In Chapter 2, Kavalski provides a deep dive into China’s emergence as a European power through the 17 + 1 mechanism with Central and Eastern European (CEE) states. His chapter explores why CEE countries are willing to partner with China in the BRI. While instrumental economic reasoning is the dominant factor, the analysis detects four distinct strategic narratives motivating CEE participation in the 17 + 1 mechanism, each of which are based upon identities. The result is a fascinating analysis of the power of identity narratives in shaping international political outcomes, asking important questions about China’s preparedness to respond to such identity geopolitics not only in the CEE region but also throughout the vast expanse of the BRI initiative. In Chapter 3, Jabin examines the expansion of Chinese power and influence throughout South Asia. It has been noted elsewhere56 that India’s response is an important bellwether for the challenges facing the implementation of the BRI. The complexities of the South Asian RSC and China’s proximity make it an especially important case study of the impact the BRI can have in competitive regions. Using examples from the political, economic, and military spheres, Jabin shows how Chinese activity in the region is multilayered and marked by the ability to learn from practice and adapt to changing circumstances. China has used economic diplomacy through the Belt and Road Initiative to gain political, diplomatic, and strategic mileage in South Asia, and attempted to undermine Indian influence as well as to cement its place at the top of the Asian hierarchy. In Chapter 4, Sim and Aminjonov turn their focus to Central Asia, where they find that states which are often portrayed as pawns in competition between much larger powers are actually exercising agency in the SREB to pursue their own agendas. They posit that the success of the SREB in Central Asia will hinge on the interplay of factors at the regional and international levels. The more that regional actors and their neighbors pull in opposite directions, the harder it will be for the SREB to reach its full potential in Central Asia. Their chapter examines the ability of the Central Asian regimes to manage, balance, and negotiate their relations with greater powers in the interest of regime security, rentseeking, and limited modernization as an equally important, although often neglected, part of the equation. In Chapter 5, Styan analyzes the Horn of Africa’s role in the BRI. The emergence of the People’s Liberation Army Navy (PLAN) Support Base – China’s first overseas military installation – combined with the PLAN’s antipiracy mission in the Gulf of Aden, add an unusually explicit security and strategic component to China’s regional presence. At the same time, its many infrastructure investments follow a more conventional BRI pattern. His chapter analyzes Chinese infrastructure investment in the Horn, most notably the EthioDjiboutian railway, industrial parks, and Djibouti’s Chinese-owned port facilities. In Chapter 6, I use a levels-of-analysis approach to examine how the BRI creates opportunities and challenges for the Gulf monarchies. All engaged in ambitious development projects, the BRI is perceived as a mechanism to build

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stronger relations with an increasingly important extra-regional power. This makes it a positive development at the domestic level. However, the competitive nature of the Persian Gulf regional security complex makes it more complicated at the regional level, as inter-GCC and intra-regional rivalries challenge Beijing’s preference to remain above the fray. At the international level, too, the BRI presents challenges for the Gulf monarchies’ BRI experience, as they must weigh the benefits of deeper engagement with China against the costs of potentially alienating other extra-regional partners and allies, namely the US and India. This demonstrates that despite Beijing’s insistence that the BRI is an economic initiative rather than a geopolitical tool, participating states must consider the strategic impact it may have on their own interests. In Chapter 7, O’Neill looks at South-East Asia, an important testing ground for analyzing the BRI. He focuses on its political and geopolitical impacts, uncovering three general trends. First, implementation of BRI infrastructure projects is more successful in less democratic states. Second, China uses a range of foreign policy carrots to secure these projects, including development assistance, trade benefits, and diplomatic support, all without “strings attached.” Third, this suggests China can more easily target those benefits when agreements lack transparency and when only the few close to the leadership must win from these “win-win” relations, as in more authoritarian regimes.

Notes 1 Wu Jianmin, in Michael Swain, “Chinese Views and Commentary on the ‘One Belt, One Road’ Initiative,” China Leadership Monitor 47(2) (2015), 3. 2 David Shambaugh, China Goes Global: The Partial Power (Oxford: Oxford University Press, 2013). 3 See Amitav Acharya, The End of American World Order (Cambridge: Polity Press, 2014); Simon Reich and Richard Ned Lebow, Goodbye Hegemony! Power and Influence in the Global System (Princeton, NJ: Princeton University Press, 2014); Charles A. Kupchan, No One’s World: The West, the Rising Rest, and the Coming Global Turn (Oxford: Oxford University Press, 2012); Christopher Layne, “This Time It’s Real: The End of Unipolarity and the Pax Americana,” International Studies Quarterly 56 (2012), 203–213. 4 Shambaugh, China Goes Global, 174. Unless otherwise indicated, all values are in $US. 5 “The Infrastructure Gap,” The Economist, March 19, 2015, www.economist.com/ asia/2015/03/19/the-infrastructure-gap. 6 “China’s Belt and Road: The New Geopolitics of Global Infrastructure Development,” Brookings, April 2019, www.brookings.edu/wp-content/uploads/2019/04/FP_20190419_ bri_interview.pdf. 7 Xi Jinping, “Work Together to Build the Silk Road Economic Belt,” in Xi Jinping: The Governance of China I (Beijing: Foreign Language Press, 2014), 316. 8 Xi Jinping, “Work Together to Build a 21st-century Maritime Silk Road,” in Xi Jinping: The Governance of China I (Beijing: Foreign Language Press, 2014), 320. 9 Ibid., 322. 10 The English naming of the Initiative officially transitioned from OBOR to BRI in 2015. 11 “The BRI Progress, Contributions and Prospects,” China Daily, April 23, 2019, www.chinadaily.com.cn/a/201904/23/WS5cbe5761a3104842260b7a41.html.

The BRI: a regional perspective 13 12 “Xi Says Belt and Road Initiative not Geopolitical Tool,” Xinhua, September 3, 2017, http://news.xinhuanet.com/english/2017–09/03/c_136579491.htm. 13 The Belt and Road Progress Research Team, Renmin University of China, “Adhering to the Planning, Orderly and Pragmatically Build the ‘Belt and Road,’ ” September 26, 2016, http://rdcy-sf.ruc.edu.cn/upfile/file/20161009164511_417161.pdf. 14 Xie Tao, “Is China’s ‘Belt and Road’ a Strategy?” The Diplomat, December 16, 2015, https://thediplomat.com/2015/12/is-chinas-belt-and-road-a-strategy/. 15 Nadège Rolland, China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative (Seattle: The National Bureau of Asian Research, 2017), 41. 16 William A. Callahan, “China’s ‘Asia Dream’: The Belt and Road Initiative and the New Regional Order,” Asian Journal of Comparative Politics 1(3) (2016), 228. 17 Lina Benabdallah, “Contesting the International Order by Integrating It: The Case of China’s Belt and Road Initiative,” Third World Quarterly 40(1), 93. 18 Swain, “Chinese Views and Commentary,” 4. 19 “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, March 28, 2015, http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html. 20 He Yini, “China to Invest $900b in Belt and Road Initiative,” China Daily, May 28, 2015. 21 Yuen Yuen Ang, “Demystifying Belt and Road: The Struggle to Define China’s ‘Project of the Century,’ ” Foreign Affairs, May 22, 2019, www.foreignaffairs.com/ articles/china/2019–05–22/demystifying-belt-and-road. 22 Charles Clover and Lucy Hornby, “China’s Great Game: Road to a New Empire,” Financial Times, October 12, 2015, www.ft.com/content/6e098274–587a-11e5-a28b50226830d644. 23 “Full Text of President Xi Jinping’s Keynote Speech,” China Daily, May 14, 2015, www.chinadaily.com.cn/beltandroadinitiative/2017–05/14/content_29341195_5.htm. 24 Shannon Tiezzi, “What Did China Accomplish at the Belt and Road Forum?” The Diplomat, May 16, 2017, https://thediplomat.com/2017/05/what-did-china-accomplish-atthe-belt-and-road-forum/. 25 “Full Text: Joint Communique of Leaders Roundtable of Belt and Road Forum,” Xinhua, May 15, 2017, www.xinhuanet.com//english/2017–05/15/c_136286378.htm. 26 Tom Phillips, “EU Backs Away from Trade Statement in Blow to China’s ‘Modern Silk Road’ Plan,” Guardian, May 15, 2017, www.theguardian.com/world/2017/ may/15/eu-china-summit-bejing-xi-jinping-belt-and-road. 27 “Full Text of Xi Jinping’s Report at 19th CPC National Congress,” Xinhua, November 3, 2017, www.xinhuanet.com/english/special/2017–11/03/c_136725942.htm. 28 Brenda Goh and John Ruwitch, “Pressure on as Xi’s ‘Belt and Road’ Enshrined in Chinese Party Charter,” Reuters, October 24, 2017, www.reuters.com/article/uschina-congress-silkroad/pressure-on-as-xis-belt-and-road-enshrined-in-chinese-partycharter-idUSKBN1CT1IW. 29 Paul Mozur, Jonah M. Kessel, and Melissa Chan, “Made in China, Exported to the World: The Surveillance State,” New York Times, April 28, 2019, www.nytimes. com/2019/04/24/technology/ecuador-surveillance-cameras-police-government.html; Maria Abi-Habib, “How China Got Sri Lanka to Cough Up a Port,” New York Times, July 2, 2018, www.nytimes.com/2018/06/25/world/asia/china-sri-lanka-port.html; Derek Watkins, K.K. Rebecca Lai, and Keith Bradsher, “The World, Built by China,” New York Times, November 18, 2018, www.nytimes.com/interactive/2018/11/18/ world/asia/world-built-by-china.html?mtrref=www.google.com&gwh=10666FB7842 099C9F81F1A3C672A25C0&gwt=pay&assetType=PAYWALL; Brook Larner, “Is China the World’s New Colonial Power?” New York Times, May 2, 2017, www. nytimes.com/2017/05/02/magazine/is-china-the-worlds-new-colonial-power.html.

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30 Barry Sautman and Yan Hairong, “The Truth about Sri Lanka’s Hambantota Port, Chinese ‘Debt Traps’ and ‘Asset Seizures,’ ” South China Morning Post, May 6, 2019, www.scmp.com/comment/insight-opinion/article/3008799/truth-about-sri-lankashambantota-port-chinese-debt-traps. 31 Jonathan Fulton, “The Gulf Between the Indo-Pacific and the Belt and Road Initiative,” Rising Powers Quarterly 3(2) (2018). 32 Brenda Goh and Michael Martina, “China to Recalibrate Belt and Road, Defend Scheme Against Criticism,” Reuters, April 24, 2019, www.reuters.com/article/us-chinasilkroad-forum-idUSKCN1S00AZ. 33 Teddy Ng and Lee Jeong-ho, “Six Key Takeaways from Xi Jinping’s Belt and Road Forum Speech to World Leaders,” South China Morning Post, April 26, 2019, www. scmp.com/news/china/diplomacy/article/3007758/xi-jinping-delivers-shorter-belt-androad-forum-keynote. 34 “Xi’s Full Remarks at the Leaders’ Roundtable Meeting of the Second Belt and Road Forum for International Cooperation,” China Daily, April 27, 2019, www.chinadaily. com.cn/a/201904/27/WS5d9c5982a310cf3e3556f389.html. 35 Shannon Tiezzi, “Who Is (and Who Isn’t) Attending China’s 2nd Belt and Road Forum?”TheDiplomat,April27,2019,https://thediplomat.com/2019/04/who-is-and-who-isntattending-chinas-2nd-belt-and-road-forum/. 36 Nadège Rolland, “Beijing’s Response to the Belt and Road Initiative’s ‘Pushback’: A Story of Assessment and Adaptation,” Asian Affairs 50(2), 229. 37 John Reed, “US Backs Infrastructure Scheme to Rival China’s Belt and Road,” Financial Times, November 4, 2019, www.ft.com/content/5c0a6226-fed1–11e9b7bc-f3fa4e77dd47. 38 Jonathan Fulton and Li-Chen Sim (eds), External Powers in the Gulf Monarchies (London: Routledge, 2018). 39 Andrew Nathan and Andrew Scobell, China’s Search for Security (New York: Columbia University Press, 2012), 3–7. 40 Zhu Yuchao, “ ‘Performance Legitimacy’ and China’s Political Adaptation Strategy,” Journal of Chinese Political Science 16(2) (2011), 123–140. 41 “Important Speech of Xi Jinping at Peripheral Diplomacy Work Conference,” China Council for International Cooperation on Environment and Development,” October 30, 2013, www.cciced.net/cciceden/NEWSCENTER/LatestEnvironmentalandDevelop mentNews/201310/t20131030_82626.html. 42 Yan Xuetong, “From Keeping a Low Profile to Striving for Achievement,” The Chinese Journal of International Politics 7(2) (2014), 153–184. 43 See, for example, Michael Swaine, “Perceptions of an Assertive China,” China Leadership Monitor, no. 32, May 2010; Alastair Iain Johnston, “How New and Assertive is China’s New Assertiveness?” International Security 37(4) (2013), 7–48; Michael Yahuda, “China’s New Assertiveness in the South China Sea,” Journal of Contemporary China 22(81) (2013), 446–459. 44 Xi Jinping, “Achieving Rejuvenation is the Dream of the Chinese People,” The Governance of China (Beijing: Foreign Language Press, Co. Ltd, 2014), 38. 45 Rollande, China’s Eurasian Century? 3. 46 Barry Buzan, People, States & Fear: The National Security Problem in International Relations (Chapel Hill, NC: The University of North Carolina Press), 105. 47 Ibid., 113 48 Peter Katzenstein, A World of Regions: Asia and Europe in the American Imperium (Ithaca, NY: Cornell University Press, 2005), 11. 49 Patrick M. Morgan, “Regional Security Complexes and Regional Orders,” in Regional Orders: Building Security in a New World, ed. David A. Lake and Patrick M. Morgan (University Park: Pennsylvania State University Press, 1997), 24. 50 Barry Buzan and Ole Waever, Regions and Powers: The Structure of International Security (Cambridge: Cambridge University Press, 2003), 43.

The BRI: a regional perspective 15 51 Mohammed Ayoob, “From Regional System to Regional Society: Exploring Key Variables in the Construction of Regional Order,” Australian Journal of International Affairs 53(3) (1999), 248. 52 Ibid., 251–252. 53 Barry Buzan and George Lawson, The Global Transformation: History, Modernity and the Making of International Relations (Cambridge: Cambridge University Press, 2015). 54 Mark Beeson and Fujian Li, China’s Regional Relations: Evolving Foreign Policy Dynamics (Boulder, CO: Lynne Rienner Publishers, 2014), 4. 55 Jonathan Fulton, China’s Relations with the Gulf Monarchies (London: Routledge, 2018). 56 For a strong treatment of the BRI in South Asia, see Jean-Marc F. Blanchard, China’s Maritime Silk Road Initiative and South Asia: A Political Economic Analysis of its Purposes, Perils, and Promise (London: Palgrave Macmillan, 2018).

2

Localizing China’s Global Silk Roads through the “17 + 1” Emilian Kavalski

Introduction Geopolitics is a complex and unpredictable game. In July 2018, many were puzzled when Johannes Hahn, the European Commissioner for the European Neighbourhood Policy and Enlargement Negotiations, singled China out for his denunciation of external meddling in European international interactions. In a time when tensions with Putin’s Russia seemed only to be escalating, Hahn’s criticism of Beijing appeared unexpected. In particular, by focusing on China’s relations with Central and East European (CEE) countries, Hahn insinuated that Beijing is populating the region with “Trojan horses” – that is, countries with split loyalties and prone to undermining the European integration process. As he put it: “I think we should be aware about the strategic concept of China and react in an appropriate manner. I think that this would be one of the greatest challenges for Europe.”1 This was far from an isolated diatribe. Earlier in the year, the French President Emmanuel Macron warned that some European countries – and it was quite clear that he had the CEE states in mind – seem to prioritize the Chinese interests, “sometimes even at the expense of European interests”. In this respect, the German Foreign Minister Sigmar Gabriel indicated in February 2018 that unless the EU “develops a [common] strategy regarding China then China will succeed in dividing Europe”.2 He had earlier irked Beijing by demanding that it observes a “One Europe” policy just as Brussels complies with the “One China” policy.3 The context for this criticism is China’s growing involvement in the CEE countries. But what does the EU find so upsetting about China’s involvement in the post-communist countries of Central and Eastern Europe? After all, the pledged €5 billion of Chinese investments in the CEE region are a mere fraction of the €64 billion that Beijing has already poured into the Western part of the continent.4 The suggestion of this analysis is that Brussels is neither particularly distressed by the actual amount of Chinese investments, nor by the growing number of meetings between Chinese policymakers and executives and their CEE counterparts. Instead, what the EU finds concerning is China’s staying power implicit in the creative institutional architecture that it is introducing in the continent. In this respect, China both participates in the existing framework

Localizing China’s Global Silk Roads 17 of European international relations and, through the Belt and Road Initiative (BRI), it engages in constituting “a qualitatively different regional relationality”.5 The “17 + 1” offers one of the clearest indications of China’s strategy of “reinterpreting (parts of) the international order by integrating it”.6 Under the auspices of the so-called “17 + 1” mechanism, China has been developing relations with sixteen CEE states: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia. Part of the large-scale BRI initiative, the “17 + 1” is tasked with facilitating the projection of the BRI to the CEE region. To varying degrees, all CEE countries participating in the “17 + 1” mechanism have shown that, apart from the “hardware” of investment opportunities provided by the BRI, their engagement with Beijing is also driven by the “software” of ideas and values that backstops China’s connectivity projects.7 For instance, the Hungarian PM Viktor Orbán was speaking for many of his counterparts when at the closing of the 2016 “17 + 1” summit in Riga he declared that while the EU “is struggling with the problem of economic stagnation, isolating ourselves from the world would be the worst response. We believe that we must open up and clearly it is beneficial for us to open up to China.”8 This context provides a unique opportunity to explore the motivations driving various countries to partner with China. Paradoxically, this still is an overlooked issue in the current debates on the BRI. In other words, while the value of the BRI for China is always already assumed, what is the value of the BRI for China’s counterparts? To the extent that this question is ever considered, its responses rarely go beyond the economic incentive for China’s BRI partners. Yet, is participation in the BRI always and only purely economic or does it reflect some other motivations as well? If, indeed, (some) countries participate in the BRI for reasons other than economic benefits, is China aware of these dynamics and how does it respond to such idiosyncratic motivations? In responding to these queries, this analysis looks at the experience of the CEE countries. The spotlight of the BRI is usually on the Asian (be they Central Asian, South Asian, or Southeast Asian) or African participants.9 Yet, Europe – especially, the post-communist region – forms an important part of the BRI. In fact, CEE was among the best represented regions at the 2017 Belt and Road Forum launching the initiative: of the 28 heads of state or government four were from the region (Czechia, Poland, Hungary, and Serbia), while Romania sent a delegation led by the country’s deputy prime minister. Such framing lends itself easily to a geopolitical reading of the relationship: the five countries represent the five largest territorial CEE states located at crucial economic and infrastructure junctures in Europe. Yet such an explanation says more about China’s reasoning for involving these countries in the BRI than that of the CEE countries themselves. As it would be explained, while economic factors are not insignificant, for most CEE countries the BRI also offers a novel platform for the (re)articulation of domestic identity politics. The majority of these identity games relate to distinct politicizations of the international identities of CEE states.10 The study detects four distinct identity narratives that can be

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inferred from the official statements of the governments of CEE states: (i) we are European – some CEE countries use the BRI to (re)assert their European identity; the point here is to confirm the commitment of those countries to EU membership and the principles of liberal democracy, and to counter the advances of Russia; (ii) we are independent Europeans – some CEE countries use the BRI to emphasize their foreign policy independence from the EU, articulate a proRussian stance, and indicate their suspicion of liberal democratic principles; (iii) we are distinct East Europeans – some CEE countries use the BRI as a tool of intra-CEE differentiation; the point here is that some CEE countries are more worthy of Chinese investment than others; (iv) we are who we say we are – some CEE countries use the BRI to affirm their own self-identity vis-à-vis contestation from the international community. The concluding section reflects on these strategic narratives and outlines briefly the opportunities and challenges of China’s staying power in European affairs.

Region building with Chinese characteristics: the 17 + 1 China’s growing involvement in the CEE countries offers a qualitatively new context for Sino-EU relations. While such policy diversification has become commonplace across much of the so-called developing world, its emergence in the CEE region seems to challenge the very identity of the EU.11 It was the willingness of the post-communist countries to internalize the “European model” that has convinced the EU of its ability to set the domain and range of legitimate international behaviour. In this way, the CEE states provided the enabling environment for the international outreach of the EU. As many have stated, the EU’s influence has always been subject to contestation beyond the realm of its accession programme; however, its appeal – both material and normative – has never appeared in doubt within the domain circumscribed by EU membership and the prospect of membership. It is for this very reason that many commentators have long been insisting that the EU is a continental rather than a global international actor.12 Yet, in the wake of the Eurozone debt crisis and the Brexit referendum in the UK, there seems to be a reversal in roles – not only is the EU no longer the dominant partner in the Sino-European relationship, but also the coherence of the international identity of the EU appears to be challenged by the growing dependence of both the EU member states and EU candidate countries on Chinese trade. In this setting, many have started to interpret the gargantuan investments, trade opportunities, and cooperation initiatives of the BRI as a new model of globalization (if not global governance) pivoted on China. Especially in the context of an apparent US withdrawal from multilateralism and various international commitments, the conversation seems to naturally be focused on China. For instance, while in the immediate post-Cold War period China appeared to be a reactive adopter of international norms, Beijing has been quite willing to adopt an activist stance since the appointment of Xi Jinping to the presidency.13 Thus, while in many ways the BRI continues in the footsteps of previous

Localizing China’s Global Silk Roads 19 Chinese initiatives (such as the “Go West” programme), it also indicates a pronounced change in Beijing’s international outreach. In particular, the BRI has become probably the most conspicuous vehicle of China’s newly avowed aspiration towards regional and global prominence. The BRI can therefore be read as a Chinese attempt to influence the future patterns of world order by actively shaping it. In other words, the expansive global connectivity projects envisioned by the BRI aim to legitimize the emergence of alternative conceptualizations of political goods in global life and the appropriate way(s) for their attainment. In particular, Beijing seems keen to secure support for its global vision of a pluralist world order in which all countries will be able to exercise their right to pursue their own path of development. As such, many commentators claim that the BRI demonstrates China’s transformation from a good and responsible global “game player” to a global “game maker”. In this respect, the “17 + 1” mechanism has increasingly started to be seen as an indication of China’s capacity to use its economic prowess to contest dominant norms, rules, and arrangements.14 It would therefore be worthwhile to outline the make-up and brief history of the “17 + 1” cooperation. The “17 + 1” represents quite a heterogeneous group. Of the sixteen participating CEE states, eleven are EU member states (five of which are also members of the single currency Eurozone), four are EU candidate countries, and one is a potential candidate state. The origins of the “17 + 1” mechanism predates the BRI itself. The formation of a dedicated platform for China–CEE relations was suggested already in 2011 by then-Chinese Premier Wen Jiabao at a meeting in Budapest (Hungary) of the China and Central and Eastern European Countries Economic and Trade Forum.15 The following year, the Initiative for Cooperation between China and Central and East Europe was launched by Wen Jiabao on April 2012 in Warsaw (Poland). Subsequently, this has been lauded as the inaugural summit of the “17 + 1”. The “17 + 1” mechanism provides a unique framework for the formalization of China’s post-Cold War interests and relations with the CEE region. A dedicated Secretariat for Cooperation between China and CEE countries was established within the Chinese Ministry of Foreign Affairs. Beijing also set up a special credit facility providing CEE countries with preferential loans for joint infrastructure projects. All these are part of a “Twelve Measures Program” outlined by Wen Jiabao at the Warsaw Summit. The “17 + 1” is often treated as a carbon copy of the Forum on China–Africa Cooperation (FOCAC). It is easy to find evidence for such assertions. For instance, at the 2012 Warsaw Summit, China proclaimed that all the CEE countries are part and parcel of the developing world. Such positioning has then allowed Beijing to treat the “17 + 1” mechanism as an integral part of China’s growing paraphernalia of initiatives for South–South cooperation.16 At the 2013 Summit of the “17 + 1” in Bucharest (Romania), the participants agreed on specific “Guidelines for Cooperation between China and Central and East European Countries”.17 These were very much updates on the “Twelve Measures” proclaimed the previous year at Warsaw. It has since become a standard. Guidelines are being updated at every subsequent summit of the “17+ 1”. At the

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same time, the Bucharest Guidelines sought to align the “17+ 1” with the broader objectives of the BRI.18 The 2014 Summit in Belgrade (Serbia) reinforced the centrality of the initiative to the BRI and reiterated Beijing’s interests in closer cooperation with the CEE region. To that effect, the Belgrade Summit established a China–CEE Investment Cooperation Fund in order to strengthen the trade links and economic partnership between Chinese and Central and East European enterprises. It is this setting that large-scale connectivity projects – such as the BRI – presage an understanding of international action and agency – both cognitively and affectively – as simultaneously shaped and mediated by ethical obligations and commitments to others (the structure and content of which is acquired through the very relationships by which ethical obligations and commitments to others are disclosed). This experience reframes geopolitics into a relational practice simultaneously attuned and open to the contradictions, challenges, and opportunities of a dynamic and unpredictable global life. In other words, the geopolitics of China’s global outreach reveal an entanglement in the very practices through which ideas of sociality are shared.19 Yet, to all intents and purposes, it was the 2015 Summit in Suzhou (China) that seemed to draw international attention to the “17 + 1” mechanism. The Suzhou Summit was the first meeting attended by all the heads of state and/or government of CEE countries. Hosted by the Chinese Premier Li Keqiang, the Suzhou Summit seemed to presage a qualitative geopolitical shift in European affairs. In fact, some commentators started talking of the re-emergence of a new “Eastern Bloc” reminiscent of the Cold War division of the continent. However, rather than a Soviet “Iron Curtain”, this time – and perhaps paradoxically – it was a Chinese connectivity project that is alleged to be driving a wedge in the continent. In addition to an annual update of the guidelines for cooperation, the 2015 Suzhou Summit outlined a “Medium Term Agenda for Cooperation between China and Central and East European Countries”. The aim of the Agenda is to strengthen the cooperation between China and CEE countries by further institutionalizing and formalizing the “17 + 1” arrangement. It specifies the appointment of a Special Representative for Cooperation between China and Central and Eastern European Countries at the Chinese Ministry of Foreign Affairs; the establishment of bi-annual meetings of the Secretariat of the National Coordinators of the “17 + 1” – one in China and one in one of the CEE countries; and the convening of quarterly meetings between the Secretariat and the embassies of the CEE countries. At the same time, the Agenda outlines the establishment of annual benchmarks and deliverables to trace the impact of the “17 + 1” arrangement across the various sectors in which China and CEE countries cooperate.20 Since Suzhou, the “17 + 1” has held annual summits attended by the Chinese Premier and the heads of state and/or government of the CEE countries. The latest one – and the eighth for the initiative – took place in July 2018 in Sofia (Bulgaria). While in many ways it continued the tradition established at the 2015 Suzhou Summit, it also marked a significant change. To begin with, as the vagaries of circumstance would have it, the host country – Bulgaria – held the

Localizing China’s Global Silk Roads 21 rotating presidency of the Council of the EU. This was a first for the “17 + 1”. In this respect, Sofia found itself at the crosshairs of two competing connectivity projects spanning the Eurasian landmass: on the one hand, the EU’s continental integration programme pivoted on Brussels and on the other hand, the transcontinental Silk Road Economic Belt (SREB) initiative promoted by Beijing. The EU put immense pressure on Bulgaria – both informally and through official channels – to cancel the “17 + 1” summit. In fact, the criticism of China by various European politicians quoted in the introductory section of this chapter were part of the EU campaign both to compel Bulgaria to cancel the summit and to remind the other CEE countries that their strategic interests and allies are in Europe. As the EU (as well as other international actors) is starting to realize, the “17 + 1” is more than an annual summit. Figure 2.1 illustrates that since the launch of the 2015 Suzhou Agenda, the “17 + 1” has gradually morphed into a fully fledged regional organization for the participating CEE countries. Such regional institutionalization has been defined by Chinese initiatives. This pattern reveals BRI’s distinct modality for regionalization. Traditionally, regions have been defined in the literature as clusters of proximate states, constitutive of geographic or geostrategic “mental images”,22 “politically made”,23 “geopsychologically arranged”,24 or “spoken into existence”.25 Instead, as the “17 + 1” mechanisms reveal, regions are also – and mainly – constituted by the social practices of the communities of interacting international actors. This pattern proffers a regional

17+1 Summits (Heads of State and Government)

National Coordinators Meeting (twice a year)

Special Representative for China–CEE Framework at Chinese MFA

Sectoral Cooperation

Trade and Investment Science, Technology, Research, Environmental Protection

Industrial Capacity and Equipment Manufacturing

Finance Agriculture, Forestry, Quality Inspection

Local Level

Health

Culture, Education, Youth, Sport, Tourism Sectoral Associations (see Table 2.1)

High Level Meetings

Figure 2.1 Institutional framework of the “17 + 1” mechanism.21

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Table 2.1 Sectoral associations of the “17+1” mechanism27 Institution

Headquarters

Union of Colleges and Universities Agency for Tourism Promotions Contact Mechanism for Investment Promotion Commercial Union Mayors Association Association for the Promotion of Agriculture Technology Transfer Center Think Tanks Network Logistics Cooperation Union Transportation Infrastructure Cooperation Union Forestry Cooperation Union Energy Cooperation Union Association for Maritime Cooperation Center for Cultural Cooperation Health Cooperation Union Art Cooperation Union Customs Cooperation Union

Joint management Hungary Poland Poland and China Czechia Bulgaria Slovakia Chinese Academy of Social Sciences Latvia Serbia Slovenia Romania Poland Macedonia To be agreed To be agreed To be agreed

building attuned to the transient constellations of factors and actors that impact on the content, trajectories, and possible transformations in any social relationship. The underlying aim is to aid the ability to engage an ever-changing world. As demonstrated in Table 2.1, the “17 + 1” mechanism has permeated diverse sectors of the economic, social, and political life of CEE countries.26 The “17 + 1”, therefore, reveals that practices can engender social norms through the habit of regularized relations; yet, the crucial feature is that these are not imposed as conditions prior to the beginning of interactions. In this relational setting, regionalization is not about good or bad practices, but about what actors happen to do together. Strategically, then, “17 + 1” elicits that institutionalization is about the practices that become prevalent in a particular region. Although implicitly normative (in the sense of purveying certain rules and values of appropriateness), such regionalization is not conditional (i.e. explicitly premised on norms). In other words, the sociality of such deliberate relations recalls an outlook that favours contextual sensitivity to the subtleties of specific interactions at the expense of strict adherence to precise and rigid formulations. Consequently, the effectiveness of the “17 + 1” mechanism is contingent on its capacity to generate locally appropriate interactions. At the same time, the centrality of deliberate interactions suggests that region building is invariably an ongoing negotiated practice in the relations among participating actors. Regions, thereby, are always emergent, embedded in contingent spatio-temporal contexts, and shaped by interrelations with others (and the multitude of meanings that such interactions engender as their iterations are themselves inseparable from

Localizing China’s Global Silk Roads 23 the multiple webs of relations through which such communication gets refracted). In this respect, the dense institutionalization characterizing the “17 + 1” mechanism is quite peculiar both for China and for the BRI initiative. While the BRI uses regional appellations for the operationalization of its outreach, in practice, the BRI works through – and China, in general, has expressed preference for – contractual bilateral relations.28 Yet, in the case of the CEE, the regional template did not exist prior to the promulgation of the “16 + 1” in 2011 (which was not the case for either Southeast Asia, Central Asia, the Middle East or any of the other regions to which the BRI is being extended). It is true that the majority of the sixteen CEE countries have had some shared Cold War experience, yet their experience of both communism and Soviet control were not uniform. Likewise, after the fall of the Berlin Wall each of them has adopted idiosyncratic paths of post-communist development, which has led the sixteen CEE countries to diverge even further from one another. Even in the context of the EU and NATO enlargement, the sixteen were never grouped together and were both perceived and treated differently.29 In this respect, neither during the Cold War, nor in its wake have these countries participated in shared regional projects. As a result, the CEE region as defined by the “17 + 1” is a completely Chinese invention, which seems to ignore prior and persisting differentiation among the CEE states themselves. At the same time, it is curious to know how China decided which countries would be included in the initiative and which would be left out of the “17 + 1” mechanism. For instance, neither Kosovo, nor Ukraine, nor Moldova have been invited to participate in this arrangement.30 The driving force underpinning the “17 + 1” appears to be the practice of doing things together which affords ongoing opportunities for interpretative articulation and re-articulation of international exchanges that can engender, enhance, and reaffirm the reputational profile of participating actors.31 The inference here is that international agency emerges in a community not in a vacuum. Owing to the dynamic nature of such interactions, what passes for world order is not only constantly changing, but also demands ongoing commitment to participating in and maintaining relations.32 Thus, to the extent that the “17 + 1” has been able to frame a new regional reality in the eastern part of the European continent – and the various summits, committee meetings, and statements by representatives of CEE countries and China seem to confirm this – it is worthwhile interrogating the rationale for their involvement and continued participation.33 The following section analyses the strategic narratives of the CEE countries.

Why are CEE countries participating in the BRI? Both for China and the CEE countries, the “17 + 1” reveals an intriguing intersection of the discursive memory of the past with the context of the present and the anticipated tasks of the future.34 Instrumentally speaking, it seems quite obvious what China’s interests in the CEE region might be. On the one hand, CEE lies at the entry point of both the Maritime Silk Road Initiative (MSRI) and

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the SREB from Asia to Europe. Especially since China Ocean Shipping Company (COSCO) acquired a majority share in the port of Piraeus, the CEE countries became of crucial significance to the success of the BRI. On the other hand, being either EU member states or at various stages of the EU accession process allows China a soft entry point into the common European market as well as the ability to advance its production capacity cooperation. For instance, the Chinese Premier Li Keqiang has indicated that after becoming a global leader in high-speed rail, China needs to become a global leader in nuclear energy production, and all the CEE countries have knowhow and capacities that can assist China in this project. At the same time, China is looking to increase and harmonize its cooperation with the EU through developing closer relations with the CEE members and prospective members of the union. In particular, China has strived to position the “17 + 1” as a mechanism assisting the EU accession of the Western Balkan countries. For instance, at the 2016 Summit in Riga (Latvia), China committed financial support to the so-called “Juncker Plan” (a comprehensive investment plan for the EU) through the BRI’s Silk Road Fund. Last, but not least, the “17 + 1” mechanism allows China trade and economic diversification from its “traditional” relations with so-called developing/ third world countries.35 For the CEE countries, the instrumental incentive is also easily discernible. Since the bulk of them are already EU members they have witnessed decreasing levels of EU structural and cohesion funds.36 They have therefore been looking for diversification of their trade and economic relations. In this respect, the CEE countries are part of a global trend, where countries around the world are seeking to benefit from the bonanza promised by China’s huge reserves and growing markets. This trend has intensified particularly since the 2008 global financial crisis, which saw decreasing levels of funding from traditional donors and investors. Yet while such economic factors are quite obvious in the strategic rationale of the CEE countries to participate in the BRI, it is insufficient for the explanation of their ongoing commitment to participate in an ever-more institutionalized arrangement such as the “17 + 1” mechanism.37 In this respect, the chapter contends that while economic factors are not insignificant, for most CEE countries the BRI offers a novel platform for the (re)articulation of domestic identity politics. In short, almost three decades after the end of the Cold War, China’s BRI offers an alternative pivot on their foreign policy horizon. Traditionally, the outlook of the CEE states has been subject to a complex triangulation between the US (NATO), the EU, and Russia. In this respect, Washington, Brussels, and Moscow have provided the point of departure for the articulation of their international identities and interests. The emergence of China in the CEE region has provided a unique opportunity for the re-articulation and re-positioning of their established international stance. This does not mean that all CEE states will radically shift their outlook. The suggestion merely is that Beijing might provide a fourth pillar in the projection of the international identity of CEE states and, as such, it needs to be taken into account. The majority of these identity games relate to distinct contextualization of the international identities of CEE states in

Localizing China’s Global Silk Roads 25 the geopolitics of current European affairs. The following analyses four distinct identity narratives that can be uncovered from the official statements of the governments of CEE countries participating in the “17 + 1”. We are Europeans Few would blame the international media for overlooking to report the Ukrainian Silk Road International Forum held in Kiev on 8 November 2016. Yet as commentators were struggling to come to terms with the shocking results from the presidential elections in the USA, the Kiev Forum seemed to presage a similarly momentous realignment in European affairs. Coming in the wake of the 5th Meeting of the Heads of Government of Central and East European Countries and China held in Riga (Latvia) on 5 November 2016, the Ukrainian Silk Road Forum aimed to send a strong signal to Beijing that Ukraine is eager to be included in the “17 + 1” mechanism. In this respect, Ukraine offers a good instance of the flaws in the economic argument that seeks to explain interest in the BRI as rationally motivated by the attempt to secure much-needed economic investments. Ukraine is already part of the BRI connectivity project and, therefore, a recipient of Chinese investments. Instead, BRI and in particular Ukraine’s aspiration to be included in the “17 + 1” mechanism confirms Kiev’s underlying foreign policy rationale since the dissolution of the Soviet Union – namely, that it “belongs in Europe” rather than a geopolitical reconfiguration of the “postSoviet space” pivoted on Russia.38 What is different this time is that Ukraine’s “European” credentials appear to be associated with a project promoted by Beijing rather than Brussels. In this respect, for some CEE countries the BRI offers an opportunity to enact their Europeanness – in fact, their EUropeanness (i.e. either that they are worthy of EU membership or that they are model EU countries). What is particularly interesting about this strategic discourse is that such Europeanness is almost invariably articulated in the context of a perceived or actual Russian threat. In other words, the Europeanness of CEE states emerges in contrast to its absence in Russia. Latvia is a good case in point here where it has been positioning itself as a lead country in an Adriatic–Baltic–Black Seas “intermarium” infrastructure project within the BRI.39 Intermarium is an interwar idea for the establishment of CEE confederation from the Baltics to the Black Sea that would protect the region from either German or Russian domination. In its current iteration, the intermarium idea is framed as providing a “European” bulwark against Russia’s growing assertiveness and perceived panache for meddling in the internal affairs of CEE states. Poland and the Baltic states (Latvia, Lithuania, and Estonia) pursued the intermarium initiative under the aegis of the EU through the establishment in 2008 of the Baltic to Black Sea Alliance in Riga (Latvia). It would seem that the BRI’s infrastructure commitments have provided a new impetus for the articulation of that idea and has allowed its expansion to include the Adriatic littoral CEE states. In this setting, the BRI offers a novel opportunity for articulating anti-Russian sentiments (which might resonate with quite a few of

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the other post-Soviet BRI partners) in the context of asserting the liberal political and economic values of CEE countries. We are independent Europeans At the same time – and perhaps paradoxically – BRI has provided an opportunity to assert the independence of CEE states from the alleged “dictatorship” of the EU. Such non-EU Europeanness appears to be associated with disregard for liberal democracy and attempts to affiliate closer with Russia (and/or Turkey). Hungary, Poland, and Czechia are the most conspicuous instances of such shift in the normative compass of CEE states. In this respect, Beijing (and by extension the BRI project) is seen as a geopolitical partner to Russia that provides an alternative model for economic and political development. In particular, in the domestic political discourses of CEE states, the reference to China – either in support of its initiatives or their criticism – indicates a particular political (if not ideological) stance on the future directions of these countries. In this sense, Chinese discursive power is becoming increasingly “local” (and “localized”) as it is being adopted, adapted, and appropriated to fit the domestic political narratives of CEE states. Perhaps paradoxically, and contrary to the concerns raised by the EU and the US, it is the CEE countries that are engaged in the manipulation of China (rather than vice versa) for their individual specific aims. In the words of the Hungarian PM Viktor Orbán, “we [the Hungarian government] are doing our best to find ways of parting with Western European dogmas, making ourselves independent from them and organizing our political community in a way that can make us competitive in this great world-race”.40 Likewise, the Czech President Miloś Zeman proclaimed during the 2016 visit of Xi Jinping to the country – the first ever by a Chinese head of state – that Czechia is “once again an independent country” and no longer “submissive to the pressure from the US and from the EU”.41 The association between China and the pro-Russian sentiments of some CEE countries makes the BRI a particularly productive vehicle for channelling their aspirations for foreign policy independence. And by foreign policy independence, most of these CEE countries understand independence from the Brussels-based institutions – both the EU and NATO.42 Yet, it is not merely the Euro–Atlantic institutions that are the issue for these CEE countries, but the very idea and practices of liberal democracy that underpin them. Hence, the “17 + 1” mechanism provides these CEE countries with an alternative normative framework for the legitimation of their governance model. The implication is that China is an ideational alternative to the EU-focused foreign policy imagination of the CEE states.43 We are distinct East Europeans The BRI has also been used for the internal differentiation between the CEE countries. The intention has been to demonstrate that some of the CEE countries are more valuable (that is, more deserving) of Chinese investment than others.

Localizing China’s Global Silk Roads 27 Again, this is not a new phenomenon and such differentiation emerged in the context of the EU accession process during the 1990s. All the post-communist countries were competing for poll position in the race for membership. As a result, all of them were spinning strategic yarns about who is the “most European” of them all. Thus, in the internal hierarchy of CEE, Slovenia and the so-called Visegrad countries of Poland, Hungary, Czechia, and Slovakia held the top place for the most European from the former Soviet Bloc countries, followed by the Baltic states. In third place were the Southeast European states of Bulgaria and Romania.44 The bottom rung was reserved for the countries of the Western Balkans – the former Yugoslav states and Albania. This hierarchy seemed to be confirmed by the EU accession process, which was staged along the lines of this differentiation. As a result, while the countries from the first three groups are already full EU members, from the fourth group, only Croatia has been able to join the Brussels-based club as its youngest member.45 The advent of the BRI has yet again rekindled intra-CEE rivalry about who is “the most deserving” of Chinese investments. In particular, the Visegrad grouping – which to all intents and purposes went defunct after the 2004 EU enlargement round – has been revived so that it can secure more Chinese investments for the four CEE states.46 Also, just like the case of EU accession, when the Visegrad label provided merely an instrumental framework for cooperation between Poland, Hungary, Czechia, and Slovakia, while each of them actively pursued bilateral relations with Brussels, it appears similar utilitarianism drives the donning of the Visegrad identity in the context of the “17 + 1”.47 In this sense, while China presents the BRI – especially, the Silk Roads Spirit of mutuality and “win–win” relationships that it allegedly embodies – as a reflection of its understanding of what it means to be a responsible international stakeholder (at least to the extent that the experience of the “17 + 1” indicates), the BRI has intensified pre-existing competition among the CEE states. Thus, rather than merely promoting “developmental dividends” (fazhan hongli), the BRI is being localized by China’s partners to reinforce pre-existing and evolving identity narratives.48 We are who we say we are The BRI has also been used by the CEE states to assert their own selfidentification. While this narrative has largely remained symbolic, its deployment reflects the opportunities for emancipation of the small CEE countries to assert their authority as actors on the global stage. In this setting, China’s recognition – even if nominal – involves “an appreciation about what is distinct and valuable” about such states as international actors.49 Macedonia is probably the most prominent instance of this strategic discourse.50 The country has one of the most contested international identities of all CEE states. Owing to a dispute with neighbouring Greece, ever since the dissolution of the Socialist Federal Republic of Yugoslavia in 1991, Macedonia’s officially recognized name has been “FYROM” (which stands for the Former Yugoslav Republic of Macedonia). It

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was only in the wake of the allegedly Russian-sponsored coup attempts in both Macedonia and neighbouring Montenegro that Athens and Skopje reached an agreement in late 2017 on referring to the country as the “Republic of North Macedonia”. There have also been reports that China nudged both states to resolve their dispute so that it can connect the port of Piraeus via (North) Macedonia to the Budapest–Belgrade high-speed rail link and then onwards to the Western part of the continent. In the context of this protracted name dispute, it is quite interesting that the country has been participating in the “17 + 1” mechanism under its constitutional appellation – the “Republic of Macedonia”. It was in the context of the negotiations between Greece and Macedonia over the country’s name that graffiti appeared in the downtown Exarcheia neighbourhood of Athens, calling on all sides to “stop arguing, Macedonia is Chinese anyway”.51 Playing on the absurdity of the name dispute between Greece and Macedonia, the graffiti was also being ironic about the new geopolitical realities in the region where key infrastructure and services were being acquired by Chinese investors regardless of the formal “national” labels associated with them. Likewise, it is quite significant that China has effectively supported Serbia’s claim over the territory of Kosovo by refusing to include it as a participant in the “17 + 1” mechanism. This seems to support the national self-identification of Serbia, which sees the region of Kosovo as a breakaway province (not unlike Chinese perceptions of Taiwan), which is integral to the country’s statehood and subject-formation.52 This Chinese stance is also in accordance with its longstanding opposition to what it calls “splittism” – the violent cessation of a territory from the rest of a country.53 At the same time, Beijing’s position reflects the painful memory of the 1999 NATO bombing of the Chinese embassy in Belgrade during the Alliance’s operation against Serbia. The unintended effect of the bombing was that it pushed the two countries into closer cooperation. Chinese investments in Serbia had already begun in the mid-2000s, with major infrastructure development starting in 2009. Reflecting on this history, a former Chinese ambassador to Belgrade insisted that it would be more appropriate to refer to the “17 + 1” as the “15 + 1 + 1” – that is, CEE countries, plus Serbia and China.54 In this respect, China’s support for Serbia’s sovereignty is not merely strategic opportunism, but also has to do with Beijing’s commitment to the inviolability of national sovereignty and non-interference in the domestic affairs of states.55 China’s insistence on sovereignty reflects a normative strategy for nurturing mutual expectations premised on respect for each other’s integrity. In this sense, the BRI reflects China’s understanding of what it means to be a responsible international stakeholder and how stability should be nurtured.

Conclusion This study has sought to make an original contribution to the debates surrounding the BRI project by addressing the views, concerns, and the political as well as economic considerations of CEE states. The hope is that apart from adding new perspectives to the current conversations on the BRI, it has been able to

Localizing China’s Global Silk Roads 29 illuminate the strategic dynamics underpinning the participation of CEE countries in the “17 + 1” mechanism. The analysis provided an overview of the “17 + 1” mechanism in the context of the geopolitics and history of Sino-CEE relations in the context of the “17 + 1”. The aim is to illustrate that economics are far from the only (and probably not the main) reason for their participation in the BRI project. In particular, the analysis reveals four strategic narratives deployed by the CEE states in justification of their involvement in the BRI. While distinct, the four discourses uncovered by this analysis seem to coexist in the Sino-CEE relationship and CEE governments deploy them strategically in their relations with Beijing. In this respect, the BRI appears to offer an interesting interplay between continuity and change in the perception of CEE countries of China’s involvement in the region. For instance, just as during the Cold War when SinoCEE relations appear to have been subject to the context of Sino-Soviet relations, Russia appears yet again to be an important factor in the interaction between Beijing and the CEE capitals. Yet, today, it is the perceived camaraderie between Russia and China that appears to be the key inflection of this relationship. For China, however, the quagmire of CEE identity politics presages a dangerous scenario in which Beijing might find itself choosing between contending sides on whose strategic narratives it supports. Such a scenario might not be in the distant future and would affect other regions through which the BRI passes. In the beginning of 2019, both Poland and Czechia, two of Beijing’s erstwhile regional partners in the BRI, indicated their intention to exclude the Chinese telecommunications company, Huawei, from their respective 5G networks. In January, Poland arrested Huawei’s country director on allegations of espionage.56 At the same time, the Czech PM Andrej Babiš ordered a ban on the use of Huawei and ZTE devices by government officials after accusing the Chinese ambassador to the country, Zhang Jianmin, of wilful deception. According to Babiš, Ambassador Zhang made a false statement that Czechia will be reconsidering its ban on Huawei’s participation in the country’s 5G network.57 As expected, the Chinese reactions were swift and firm, accusing the two countries of “obeying Washington’s command” and becoming “accomplices” in a Western “bullying of Chinese enterprises”.58 And, indeed, it would be easy to interpret the Polish and Czech positions only in the context of a global struggle for power between the USA and China. Yet, while still part of the explanation, such an assessment both overplays the significance of the US in the CEE region, in general, and in Poland and Czechia, in particular. It also overlooks several contingent factors that have played a significant part in both Warsaw’s and Prague’s willingness to seek confrontation with Beijing. In October 2018, Wess Mitchell, the US Assistant Secretary of State, said that China has “snuck up on us” in the CEE region to expand its “political, military, and commercial influence”. As Mitchell insisted, “our allies in Central Europe must not be under any illusions that [China] is their friend”, but that through its “predatory ‘debt-mongering’ ” it seeks to undermine the “unity of the Western alliance”.59 In this respect, more than five years after the “17 + 1”

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was launched, apart from the EU and the US criticism, most of the CEE countries have little else to show as a tangible outcome of their relations with China. This does not mean that Chinese trade and investments in CEE countries have not increased; on the contrary, they have. However, their level has not matched the volume of Chinese rhetoric. The EU (and the EU member states) remain the main trade and investment partners for all the countries of the CEE region. In this setting, a number of the CEE participants in the “17 + 1” are growing increasingly frustrated with China and, in some instances (as the cases of Poland and Czechia might indicate) they appear willing to cut their losses before it is too late. Such rebound results – that is, outcomes that are contrary to the intended goals – are likely to become a more common feature of the BRI. The point here is that such unexpected outcomes are not necessarily harmful to the BRI. What however would be detrimental is if such rebound results remain unaddressed. In particular, China might need to take a moment of reflection, toning down its rhetoric and instead listening to the frustrations of its BRI partners. In the CEE region, one of the main reasons for dissatisfaction is the lack of implementation of the pledges made by China. As part of its promotion of the BRI, China insists that its investments are not instruments for political manipulation but means for economic connectivity that can contribute meaningfully to cooperation and peace.60 Yet, these aspirations appear oftentimes to be challenged by the ways in which the BRI is being appropriated by China’s partners. As such, the “17 + 1” mechanism indicates that China’s new Silk Roads project, as a constitutive component of its rise as a world power, are not only material phenomena but also part of a conceptual reorganization that will impact on the norms, institutions, and behaviour of international actors.61 In this respect, just like other great powers before it, China finds itself confronted with a growing expectations–capability gap: can it match the heightened expectations from its growing economic clout with the capabilities to deliver on these expectations? At the same time, China is discovering that these expectations are neither uniform, nor complementary. In the case of the “17 + 1”, it seems that the CEE countries are using the BRI to advance distinct strategic narratives about their international identities. At the same time, rather than increasing cooperation between China and the EU, the “17 + 1” appears to have contributed to the growing hostility between Beijing and Brussels. In this respect, China appears to be unwittingly and unwillingly sucked into the history and politics of intra-European identity conflicts.62 The question that still remains to be answered is how would China respond to such identity geopolitics and, in fact, would it? However, what is already becoming obvious is that, to all intents and purposes, China has emerged as an important factor in European affairs. At the same time, Beijing will not be a fleeting presence on the continent, but an actor who is there to stay. Such inference reflects not merely the dense institutionalization of the “17 + 1” mechanism, nor the multiple reactions by the EU and Euro–Atlantic organizations that the BRI has garnered. Instead, the claim here is that these are symptomatic of a much broader and more complex Chinese

Localizing China’s Global Silk Roads 31 entanglement in European affairs. As such, the practices of connectivity underpinning the new Silk Roads embed China firmly in local patterns of interaction by reifying its engagement, contribution to, and participation in the shifting geopolitical realities on the continent.63 In short, the assertion here is that China has already become a fully fledged European power. This move implies an acknowledgement that things in global life are not merely interconnected and/or interdependent, but that they gain meaning and significance within complex webs of entanglement and encounter with others.

Notes 1 Quoted in Ryan Heath and Andrew Gray, “Beware of Chinese Trojan Horses in the Balkans”, Politico, 27 July 2018, www.politico.eu/article/johannes-hahn-bewarechinese-trojan-horses-in-the-balkans-eu-warns-enlargement-politico-podcast/. 2 Quoted in “China Must Tread Softly in Balkans”, South China Morning Post, 22 February 2018; Emilian Kavalski, “Coming to Terms with the Complexity of External Agency”, Journal of Eurasian Studies 2, no. 1(2011), 21–29; Katarina Zakic and Katarina Tesic, “Managing Regional Development in CEE”, Progress in Economic Sciences 5, no. 1(2018), 95–109. 3 Quoted in Lucrezia Poggetti, “One China–One Europe?” The Diplomat, 9 September 2017, https://thediplomat.com/2017/09/one-china-one-europe-german-foreign-ministersremarks-irk-beijing/; Emilian Kavalski, “Breaking Out of the Middle Power Straitjacket?” in Rethinking Middle Power in the Indo-Pacific, ed. Tanguy Struye de Swielande, Dorothée Vandamme, David Walton, and Thomas Wilkins (London: Routledge, 2018), 162–173. 4 Lucia Frankova, “China’s Activities in 16+1”, AMO Briefing Paper 22(2018), 4; Emilian Kavalski, “Whom to Follow”, China Report 43, no. 1(2007), 43–55; J.P. Pepe, China’s Inroads into Central, Eastern, and Southeastern Europe (Berlin: FDGAP, 2017), 5. 5 K. Fierke and Francisco Antonio-Alfonso, “Language, Entanglement, and the New Silk Road”, Asian Journal of Comparative Politics 3, no. 3(2018), 202; Erika Cudworh, Stephen Hodben, and Emilian Kavalski, Posthuman Dialogues in International Relations (London: Routledge, 2017); Alice Garcia Herrero and Jianwei Xu, “China’s Belt and Road Initiative” China & World Economy 25, no. 6(2017), 84–99. 6 Lina Benabdallah, “Contesting the International”, Third World Quarterly 40, no. 1(2019), 2; Emilian Kavalski, “Divide and Reward”, Journal of Political and Military Sociology 34, no. 2(2006), 289–299; Emilian Kavalski, “Consensual Hegemony”, Ankara Avrupa Calismalari Dergisi 4, no. 1(2004), 81–97; Jiang Li, “The 16 + 1 Mechanism and One Belt One Road Initiative”, Global Economic Observer 5, no. 1(2017), 159–166. 7 Fierke and Antonio-Alfonso, “Language”, 194–206; Emilian Kavalski, “Do Not Play with Fire”, Journal of Muslim Minority Affairs 27, no. 1(2007), 25–36; L.H.M. Ling, The Dao of World Politics (London: Routledge, 2015); L.H.M. Ling, “Three-ness”, Politics 39, no. 1(2019), 1–15. 8 Quoted in Emilian Kavalski, “China’s Belt and Road Initiative in Central and Eastern Europe”, Asian International Studies Review 19, no. 2(2018), 15; Astrid H.M. Nordin, Graham M. Smith, Raoul Bunskoek, Chiung-chiu Huang, Yih-jye (Jay) Hwang, Patrick Thaddeus Jackson, Emilian Kavalski, L.H.M. Ling, Leigh Martindale, Mari Nakamura, Daniel Nexon, Laura Premack, Yaqing Qin, Chih-yu Shih, Emma Williams and Marysia Zalewski, “Towards Global Relational Theorizing”, Cambridge Review of International Affairs (2019).

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9 Benabdallah, “Contesting”, 2–15; Emilian Kavalski, “We Are the Hawks of Freedom”, Journal of Slavic Military Studies 19, no. 1(2006), 271–280; Zakic and Tesic, “Managing”, 100. 10 Astrid Pepermans, “China’s 16 + 1 and Belt and Road Initiative in Central and Eastern Europe”, Journal of Contemporary Central and Eastern Europe 26, no. 2–3(2018), 181–203; Magdalena Zolkos and Emilian Kavalski, “Recognition of Nature in International Relations”, in Recognition and Global Politics, ed. Patrick Hayden and Kate Schick (Manchester: Manchester University Press, 2016), 139–156. 11 Yong Chul Cho and Emilian Kavalski, “Worlding the Study of Normative Power”, Uluslararası İlişkiler 15, no. 57(2018), 49–65; R. Tuszynski, “Polish Perspectives on CEE-China 16 + 1 Cooperation”, Europolity 9, no. 1(2015), 189–220. 12 Frankova, “China’s Activities”, 3; Emilian Kavalski, “From the Crescent to the Circle of Security?” Historia 7, no. 1(2004), 87–100; Emilian Kavalski, “Complexity Thinking and the Relational Ethics of Global Life”, in Handbook on Rethinking Ethics in International Relations, ed. Birgit Schippers (London: Routledge, 2019); Zakic and Tesic, “Managing Regional”, 101. 13 Young Chul Cho and Emilian Kavalski, “European Union in Central Eurasia”, Asia Europe Journal 16, no. 1(2018), 51–63; Emilian Kavalski, “The State of Chaos”, Southeast European Politics 4, no. 1(2003), 68–90; Dragan Pavlićević, “China’s Railway Diplomacy”, China Brief 14, no. 20(2014), 20. 14 Emilian Kavalski, “The Struggle for Recognition of Normative Powers”, Cooperation and Conflict 48, no. 2(2013), 247–267; Emilian Kavalski, Stable Outside, Fragile Inside? (London: Routledge, 2010); Pepermans, “China’s 16 + 1”, 199. 15 Xinhua, “Full text of Chinese Premier’s speech at China–Central and Eastern European Countries Economic and Trade Forum”, 26 June 2011, www.xinhuanet.com/ english2010/china/2011–06/26/c_13950035.htm; Emilian Kavalski, “The Grass Was Always Greener in the Past”, in Multiplicity of Nationalism in Contemporary Europe, ed. Ireneusz Pawel Karolewski and Andrzej Marcin Suszycki (Lanham, MD: Lexington Books, 2010), 213–237; Tuszynski, “Polish Perspectives”, 213. 16 Anastas Vangeli. “China’s Engagement with the Sixteen Countries of Central, Eastern, and Southeastern Europe”, China & World Economy 25, no. 5(2017), 101–124; Emilian Kavalski, “The International Socialization of the Balkans”, Review of International Affairs 2, no. 4(2003), 71–88; Zakic and Tesic, “Managing Regional”, 101. 17 See www.china-ceec.org/eng/ldrhw_1/2013bjlst/hdxw1/t1410529.htm. 18 Matthew McCullock and Emilian Kavalski, “Pre-Westphalian Suggestions for a PostWestphalian World”, Atlantic Journal of World Affairs 1, no. 1(2005), 106–127; Emilian Kavalski, “The Balkan America”, New Zealand Slavonic Journal 38, no. 1(2004), 131–158; Pepermans, “China’s 16 + 1”, 195–201. 19 Benabdallah, “Contesting”, 10; Emilian Kavalski, “Chinese Concepts and Relational International Politics”, in Widening the World of International Relations, ed. Ersel Eydinli and Gonca Biletkin (London: Routledge, 2019), 95–111; Vangeli, “China’s Engagement”, 110. 20 Frankova, “China’s Activities”, 3; Emilian Kavalski, “Guanxi or What is the Chinese for Relational Theory of World Politics”, International Relations of the Asia-Pacific 18, no. 3(2018), 268–291; Pavlićević, “China’s Railway”, 20. 21 Valentin Katrandzhiev, “Geopolitical Implications of 16 + 1” (paper presented at the China–CEE Think Tank Symposium, 30–31 October 2018); Emilian Kavalski, “The Dynamics of External Agency in a Turbulent Region”, in The New Central Asia, ed. Emilian Kavalski (Singapore: World Scientific, 2010),1–25. 22 Amitav Acharya, “Regional Architecture”, World Politics 59, no. 4(2007), 629–652; Emilian Kavalski, China and the Global Politics of Regionalization (London: Routledge, 2009); Emilian Kavalski, “The Logic of Relationships of Normative Power China”, in Power in the 21st Century, ed. Tanguy Struye de Swielande and Dorothée Vandamme (Louvain: Presses Universitaires de Louvain, 2015), 139–154.

Localizing China’s Global Silk Roads 33 23 Peter Katzenstein, World of Regions (Ithaca, NY: Cornell University Press, 2005); Emilian Kavalski, “The Fifth Debate and the Emergence of Complex International Relations Theory”, Cambridge Review of International Affairs 20, no. 3(2007), 435–454; Agnes Szunomar, “Chinese FDI in CEE”, Global Economic Observer 2, no. 6(2018), 4–16. 24 T.J. Pempel, Remapping Asia (Ithaca, NY: Cornell University Press, 2005); Emilian Kavalski, “The Complexity of Global Security Governance”, Global Society 22, no. 4(2008), 423–443; Emilian Kavalski, “The Puzzle of India’s Relations”, Asian Security 15, no. 3(2019), 304–322; Pepe, China’s Inroads, 8. 25 Iver Neumann, Uses of the Other (Manchester: Manchester University Press, 1999); Emilian Kavalski, “The Peacock and the Dragon”, China Quarterly 203(2010), 719–725; Pepermans, “China’s 16 + 1”, 200. 26 Frankova, “China’s Activities”, 3; Emilian Kavalski, “Recognizing Normative State Action in International Life”, Political Studies Review 15, no. 2(2017), 231–242; Pavlićević, “China’s Railway”, 19. 27 Liu Zuokai, “China–CEEC Cooperation”, Croatian International Relations Review 23, no. 78(2017), 19–34; Emilian Kavalski, “Partnership or Rivalry between the EU, India and China in Central Asia”, European Law Journal 13, no. 6(2007), 839–856; Vangeli, “China’s Engagement”, 101–124. 28 Emilian Kavalski, “Timescapes of Security”, World Futures 65, no. 7(2009), 527–551; Emilian Kavalski, “Explaining Compliance”, International Studies Review 7, no. 3(2005), 651–653. 29 Simeon Djankov and Sean Miner, China’s Belt and Road Initiative (Washington, DC: PIEE, 2016); Simon Smith and Emilian Kavalski, “NATO’s Partnership”, in The New Central Asia, ed. Emilian Kavalski (Singapore: World Scientific, 2010), 29–47; Emilian Kavalski, “The EU-India Strategic Partnership”, Cambridge Review of International Affairs 29, no. 1(2016), 192–208; Tuszynski, “Polish Perspective”, 192. 30 Benabdallah, “Contesting”, 8; Katzenstein, World of Regions, 172; Emilian Kavalski, “An Elephant in a China Shop?” in China and India in Central Asia, ed. Marlène Laruelle, Jean-Francois Huchet, Sébastien Peyrouse, and Bayram Balci (Basingstoke: Palgrave, 2011), 41–60; Emilian Kavalski, “The Peacock and the Bear”, Indian Journal of Asian Affairs 23, no. 1/2(2010), 1–20. 31 Fierke and Antonio-Alfonso, “Language”, 195; Young Chul Cho and Emilian Kavalski, “Governing Uncertainty”, Comparative Sociology 14, no. 3(2015), 429–444; Zuokai, “China–CEEC”, 23. 32 Emilian Kavalski, “Relational Knowledge-Production in International Relations”, Korean Political Science Review 51, no. 6(2017), 147–170; Anastas Vangeli, “Global China’s Symbolic Power”, Journal of Contemporary China 27, no. 113(2018), 674–687. 33 Benabdallah, “Contesting”, 5; Chengxin Pan and Emilian Kavalski, “Theorizing China’s Rise in and beyond International Relations”, International Relations of the Asia-Pacific 18, no. 3(2018), 232–241. 34 Djankov and Miner, China’s Belt, 43; Emilian Kavalski, “Acting Politically in Global Life”, in Contending Views on International Security, ed. David Walton and Michael Frazier (New York: Nova, 2012), 87–101; Emilian Kavalski, “Playing the EU”, Mediterranean Quarterly 21, no. 1(2010), 101–121; Vangeli, “China’s Engagement”, 101–124. 35 Katrandzhiev, “Geopolitical Implications”; Emilian Kavalski, “Looking North”, in Handbook of India’s International Relations, ed. D. Scott (London: Routledge, 2011), 201–210; David Walton and Emilian Kavalski, Power Transition in Asia (London: Routledge, 2017). 36 Dragan Pavlićević, “China Threat”, Journal of Contemporary China 27, no. 113(2018), 688–702; Emilian Kavalski, “Notions of Voluntary Identity and Citizenship”, Jouvert 7, no. 2(2003), 44–56.

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37 Acharya, “Regional Architecture”, 641; Emilian Kavalski, “The Guanxi of Relational International Affairs”, Chinese Political Science Review 3, no. 3(2018), 233–251; Tamas Matura, “China–CEE”, Europe–Asia Studies (2019), 1–20. 38 Dimitar Bechev, Rival Power (New Haven, CT: Yale University Press, 2018); Emilian Kavalski, “Whose Security: Russia in Asia?” Ab Imperio 3, no. 3(2002), 631–641; Nicholas Ross Smith, “What the West Can Learn from Russia”, Orbis 61, no. 3(2017), 354–368. 39 Mladen Grgic, “Chinese Infrastructure Investments”, Territory, Politics, Governance 7, no. 1(2019), 42–60; Emilian Kavalski, “The Shadows of Normative Power in Asia”, Pacific Focus 29, no. 3(2014), 303–328. 40 Quoted in Emilian Kavalski, “China’s Belt”, 24; Emilian Kavalski, “China in Central and Eastern Europe: The Unintended Effects of Identity Narratives”, Asia Europe Journal 17, no. 4(2019); Matura, “China–CEE”, 16. 41 Quoted in Emilian Kavalski, “China: A Relational Normative Power”, Review of Global Politics 1, no. 3(2016), 15; Martin Hala, “Forging a New ‘Eastern Bloc,’ ” Journal of Democracy 29, no. 2(2018), 83–89; Emilian Kavalski, “The Myth of Assertive Posturing”, Harvard Asia Quarterly 14, no. 2(2012), 46–51. 42 Grgic, “Chinese Infrastructure”, 53; Emilian Kavalski, “Chinese Normative Communities of Practice”, in China–Africa Relations in an Era of Great Transformations, ed. L. Xing (London: Routledge, 2013), 49–70; Emilian Kavalski, “Identity of Peace”, in European Identity, ed. I.P. Karolewski and V. Kaina (Berlin: LIT), 92–112; Liu, “China–CEEC”, 23. 43 Benabdallah, “Contesting”, 5; Niv Horesh and Emilian Kavalski, Asian Thought on China’s Changing International Relations (Basingstoke: Palgrave, 2014); Emilian Kavalski, “Complexifying IR”, in World Politics at the Edge of Chaos, ed. Emilian Kavalski (Albany, NY: State University of New York Press), 253–271; Ling, “Three-ness”, 10. 44 Alfred Gerstl, “China’s New Silk Road”, Vienna Journal for East Asian Studies 10, no. 1(2018), 31–58; Emilian Kavalski, Extending the European Security Community (London: I.B. Tauris, 2008). 45 Livia Benkova, Apolonija Rihtaric, and Velina Tchakarova, Will the EU Lose the East? (Vienna: AIESP, 2018); Emilian Kavalski, “From the Western Balkans to the Greater Balkans Area”, Mediterranean Quarterly 17, 3(2006), 86–100; Patrycja Pendrakowska, “Poland’s Perspective on the BRI”, Journal of Contemporary East Asia Studies 7, no. 2(2018), 190–206. 46 Emilian Kavalski, Central Asia and the Rise of Normative Powers (New York: Bloomsbury, 2012); Dragan Pavlićević and Agatha Kratz, “Testing the China Threat Paradigm”, Pacific Review 31, no. 2(2018), 151–168. 47 Katrandzhiev, “Geopolitical Implications”; Emilian Kavalski, Ashgate Research Companion to Chinese Foreign Policy (Aldershot: Ashgate, 2012); Plamen Tonchev, “China’s Road into the Western Balkans”, EUISS Brief Issues 3(2017), 1–4. 48 Benabdallah, “Contesting”, 5; Emilian Kavalski, “Universal Values and Geopolitical Interests,’ in Global Trends and Regional Development, ed. N. Genov (London: Routledge, 2012), 280–296; Ling, “Three-ness”, 10. 49 Emilian Kavalski, “Shanghaied into Cooperation”, Journal of Asian and African Studies 45, no. 2(2010), 131–145; Emilian Kavalski, “India’s Bifurcated Look”, in Oxford Handbook of Indian Foreign Policy, ed. David Malone, C. Raja Mohan, and Srinath Raghavan (Oxford: Oxford University Press, 2015), 424–436; Philip Nel, “Redistribution and Recognition”, Review of International Studies 36, no. 4(2010), 965. 50 Liu Zuokai, Europe and the BRI (Beijing: China Social Policy Press, 2017); Emilian Kavalski, “Relationality and its Chinese Characteristics”, China Quarterly 226(2016), 551–559; M. Mayer, Rethinking the Silk Road (Basingstoke: Palgrave, 2018). 51 Quoted in Emilian Kavalski, The Guanxi of Relational International Theory (London: Routledge, 2018), 117.

Localizing China’s Global Silk Roads 35 52 Benkova et al., Will the EU Lose the East?, 34; Emilian Kavalski, “Inside/Outside and Around: Observing the Complexity of Global Life”, in World Politics at the Edge of Chaos, ed. Emilian Kavalski (Albany, NY: State University of New York Press), 1–23; L.H.M. Ling, “Heart and Soul”, International Relations of the Asia-Pacific 18, no. 3(2018), 313–337. 53 Grgic, “Chinese Infrastructure”, 54; Mayer, Rethinking, 124; Pendrakowska, “Poland’s Perspective”, 198; Magdalena Zolkos and Emilian Kavalski “The Hoax of War”, Journal of Contemporary European Studies 15, no. 3(2007), 377–393. 54 Katrandzhiev, “Geopolitical Implications”; Emilian Kavalski, “More of the Same”, Monde Chinois 4, no. 48(2016), 111–118; B. Kowalski, “China’s Foreign Policy towards Central and Eastern Europe”, Cambridge Journal of Eurasian Studies 1, no. 1(2017), 1–16. 55 Lee Jones, “Does China’s Belt and Road Initiative Challenge the Liberal Rules-Based Order?” Fudan Journal of the Humanities and Social Sciences (2019), 1–21; Emilian Kavalski, “The Balkans after Iraq … Iraq after the Balkans: Who’s next?” Perspectives on European Politics and Societies 6, no. 1(2005), 103–127. 56 Joanna Plucinska and Anna Kopper, “Poland Sets to Exclude China’s Huawei”, CNBC Wires, 24 January 2019; Emilian Kavalski, “The Complexity of Empire”, Canadian Journal of History 42, no. 2(2007), 271–280; Ling, “Heart and Soul”, 321. 57 Keegan Elmar, “Czech Prime Minister Hits Back at Chinese Diplomats”, South China Morning Post, 28 December 2018; Emilian Kavalski, “Whether a Nation and … Whither if One?”, Ab Imperio 4, no. 1(2003), 558–568; Emilian Kavalski, “Making a Region Out of a Continent”, in China and the Global Politics of Regionalization, ed. Emilian Kavalski (London: Routledge, 2009), 177–189; Kowalski, “China’s Foreign Policy”, 11. 58 “Poland Becoming a US Accomplice”, Global Times, 13 January 2019; Emilian Kavalski, “From the Cold War to Global Warming”, Political Studies Review 9, no. 1(2011), 1–12; Pendrakowska, “Poland’s Perspective”, 200. 59 David Wemer, “State Department Official Sounds Warning on Chinese Influence in Central and Eastern Europe”, New Atlanticist, 19 October 2018; Emilian Kavalski, Encounters with World Affairs (London: Routledge, 2015). 60 Benkova et al., Will the EU Lose the East?, 21; Emilian Kavalski, “Community of Values or Community of Practice?” East Asian Community Review 1, no. 1/2(2018), 5–17; Matura, “China–CEE”, 16; Pavlićević and Kratz, “Testing”, 160. 61 Fierke and Antonio-Alfonso, “Language”, 195; Emilian Kavalski, “Recognizing Chinese IR Theory”, in Asian Thought, ed. Niv Horesh and Emilian Kavalski (Basingstoke: Palgrave, 2014), 230–347; Kowalski, “China’s Foreign Policy”, 12; Mayer, Rethinking, 146. 62 Vincent K.L. Chang and Frank N. Pieke, “Europe’s Engagement with China”, Asia Europe Journal 16, no. 4(2018), 317–331; Emilian Kavalski, “Venus and the Porcupine”, South Asian Survey 15, no. 1(2008), 63–81; Matura, “China–CEE”, 15; Magdalena Zolkos and Emilian Kavalski, Defunct Federalisms (London: Routledge, 2008); Zuokai, “China–CEEC”, 22. 63 L.H.M. Ling and Alisha C. Perrigoue, “BRI and the Silk Road Ethos”, Asian Journal of Comparative Politics 3, no. 3(2018), 207–218; Emilian Kavalski, “Waking IR up from its ‘Deep Newtonian Slumber’ ”, Millennium 41, no. 1(2012), 137–150; Pendrakowska, “Poland’s Perspective”, 198; Vangeli, “China’s Engagement”, 110.

3

China’s Belt and Road Initiative in South Asia Unique characteristics and general

framework

Jabin T. Jacob

China’s Belt and Road Initiative (BRI) is part of Communist Party of China (CPC) General Secretary and Chinese President Xi Jinping’s vision and plan to promote the country as a global leader, taking advantage of the current state of international affairs and based on China’s current economic power and influence. The international situation referred to is the state of flux and uncertainty engendered not just by China’s rise and by the rise of a few other powers besides – notably, India – but also by the weakening of the European Union by Brexit, for example, and most significantly, of an increasing unwillingness by the United States to bear the cost of maintaining the post-Cold War global order. This last is a phase that has extended from the Barack Obama presidency to the present American administration under Donald Trump. At the same time, China’s economy is not without its problems and the BRI should also be understood as an exercise in shifting domestic overcapacity and old technologies abroad while allowing for technological scaling-up, specialization and innovation at home. This helps simultaneously meet the demands of China’s declining labour force as well as those for better pay, nature of work and quality of life. The BRI has received a wide range of reactions in the South Asian region. At the state level these have ranged from rapturous welcome in Pakistan to bitter opposition in India, the latter on grounds of violations of sovereignty through the China–Pakistan Economic Corridor (CPEC) passing through Pakistanoccupied Kashmir.1 Between these two extremes, Sri Lanka has swung wildly from welcome to consternation at the Chinese debt burden to sullen acceptance of the need to part with equity in the form of the Hambantota port to pay off the debt. The governments of Nepal, Bangladesh and Afghanistan have welcomed the BRI but are at differing levels in terms of Chinese attention and largesse. While many of China’s projects predate the launch of the BRI, they are all now viewed under the rubric of this initiative – for example, the Bangladesh, China, India, Myanmar Economic Corridor announced during Chinese Premier Li Keqiang’s visit to India in May 2013 was subsumed under the BRI, which saw its first official iteration by President Xi only in September of that year. Clearly, the enthusiasm of Indian authorities for the Economic Corridor has cooled considerably since then. To take further the previous point about Sri Lanka’s

China’s BRI in South Asia 37 experience with the Hambantota port, enthusiasm for BRI projects elsewhere in the region, too, has been tempered over time, with questions being raised frequently – especially in Pakistan and Maldives – about the terms of Chinese investments, loans and aid. This chapter highlights some key Chinese approaches to the countries of South Asia in promoting the BRI. Given that South Asia has multiple disputed or sensitive borders, is the site of a “flagship project” of the BRI in CPEC, and one of the largest markets in the world, China’s approaches here might be both sui generis as well as provide a useful general framework for analysing its BRIrelated policies in other parts of the world.

China and South Asia As evident from Xi’s political report at the opening session of the 19th Congress of the CPC, China is now ready to take on the mantle of global leadership and it will have scant patience for challenge from any quarter.2 In its quest, China proceeds in a step-by-step fashion beginning with its own neighbourhood. While there is a tendency to forget about South Asia as neighbouring China or to consign the region to a significantly lesser degree of importance than Northeast Asia, Southeast Asia or Central Asia, this is a perspective engendered by a Western lens on China. For Chinese leaders and diplomats, South Asia is significant, and not least because China actually physically neighbours five countries of the region: Afghanistan, Pakistan (through the latter’s occupation of Kashmir), India, Nepal and Bhutan. This is a reality that Indian analysts, too, are often guilty of forgetting and therefore, also failing to appreciate the nature and level of Chinese interest in the region. The other big reason for China’s interest in South Asia is economic, given India’s size as a market and, of course, South Asia’s size as a whole, which Chinese entrepreneurs see as territory that remains underexploited by Western, Japanese or Korean multinationals and with scope still for them to sell their wares. As a result of both physical proximity and economic interests, South Asia impacts China’s security in several ways. Besides the boundary dispute with India and Bhutan, Nepal and India are destinations for Tibetan refugees while Afghanistan and Pakistan are sources of extremist influences in Xinjiang. Political instability or unrest in any of the smaller countries creates opportunities for Beijing – which has traditionally played second fiddle to New Delhi – to parlay its influence. In Pakistan, however, China’s influence has been historically strong and with recent peaceful transitions of power and the Pakistan Army remaining in the background even as it imposes its will on the political process, China has been able to push and promote ties, including such BRI projects as the CPEC. And the fact that it continues to do so, despite murmurs of dissatisfaction and questions raised about its economic feasibility and fairness in Pakistan, testifies to the strong and deep military-to-military cooperation between the two countries. Bangladesh and Sri Lanka, meanwhile, have swung between India and China but are increasingly now able to carefully balance their interests between the two.

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Following the launch of the BRI in 2013, China moved quickly in the following year to bring South Asia into its fold. India was also equally quick to declare its opposition to the BRI though it was not until May 2017 that it first properly articulated officially the substance of its opposition.3 In November 2014, Chinese President Xi announced that his country would set up a US$40 billion Silk Road Fund “to boost infrastructure and resource development while improving industrial and financial cooperation along the centuries-old Silk Road trading routes.” What is important to note is that he made the announcement in a dialogue with leaders from Bangladesh, Cambodia, Laos, Mongolia, Myanmar, Pakistan and Tajikistan and he specifically stated that the goal of the fund was to “break the connectivity bottleneck” in Asia – Chinese policymakers believe that these countries need the infrastructure development and that China benefits from a more prosperous and stable neighbouring environment.4 Speaking to a visiting Pakistan People’s Party delegation led by former Pakistani President, Asif Ali Zardari in 2014, for instance, Premier Li explicitly drew a link between Pakistani “efforts to realize national security, stability and economic development” and China’s support for “deepen[ing] strategic cooperation with Pakistan” and “the construction of the ‘One Belt and One Road’ [BRI] … to push forward regional economic integration.”5 In Nepal, too, there is an obvious connection between the political and the economic with, for instance, the joint exercises by Nepalese and Chinese armed police forces in midNovember 2014 or subsequent joint military exercises.6 Nepal’s falling out with India over the latter’s new constitutional provisions and the Indian response of a months-long fuel blockade across 2015–2016 forced Kathmandu and its political elites to turn even more strongly to China and the BRI. And after initially keeping the Tibet Autonomous Region out of the BRI, Beijing has over the last couple of years opened up to an expansion of the BRI towards South Asia also through the province. Nepal seeks to gain from linking up to the rapid physical infrastructure developments taking place across the border in Tibet. India’s two farthest neighbours in the South Asian region, Afghanistan and the Maldives, have also both expressed interest in being a part of the initiative, while Sri Lanka has sought to marry its own long-standing ambition of becoming a maritime, commercial, knowledge and energy hub linking Europe and Africa with Asia to China’s Maritime Silk Road Initiative (MSRI).7 Meanwhile, observers in Bangladesh have also welcomed the MSRI with hopes perhaps centring on the revival of Bangladeshi ports.8 India’s South Asian neighbours have been more receptive to BRI than India itself and since 2013 it has become clear that the Chinese have tried to keep their promises even if there are costs associated that host countries ignore at their peril. While it needs to be underlined that New Delhi has, through its own big brotherly attitude, contributed to creating the space for Beijing to increase its influence in South Asia, the region’s orientation towards the BRI is shaped not just by strategic considerations but also largely by economic ones. This is so simply because India has not had the resources to help the large populations in its neighbourhood climb out of poverty.

China’s BRI in South Asia 39 Thus, in Sri Lanka, despite an initial hiccup following the 2015 exit of President Mahinda Rajapaksa, perceived to be close to China, the Colombo Port City project, a major Chinese initiative – and the largest foreign investment in the country – was put back on track eventually under Rajapaksa’s successor, Maithripala Sirisena. The importance of China to the Sri Lankan economy can be gauged from the fact that during the election campaign then, even the opposition United National Party stated that its promised review of all major infrastructure projects to check for irregularities did not mean that there were “any misgivings or bad blood with China,” but that it considered China “a good friend.”9 This feeling extends to the economic elite as well. The Ceylon Chamber of Commerce, for instance, in a statement after the elections declared that enhancing competitiveness and productivity in the Sri Lankan economy required deepening economic ties not just with India, but also with China and through a Free Trade Agreement.10 Similarly, for Bangladeshi politicians and policymakers, an association with China has several advantages and fills critical gaps as far as the national economy is concerned. These are areas where India has failed to make its presence felt due to fraught political ties with Dhaka over the decades. As a result, China–Bangladesh relations have progressed significantly over the years. China has been Bangladesh’s largest trading partner for several years now and is also increasingly a major investor in the country. Following the Rana Plaza tragedy in April 2013, when over 1,000 garment workers were killed in a building collapse in Dhaka and many Western foreign investors withdrew their contracts over lack of proper safety and labour standards, Bangladesh has become even more dependent on Chinese investments in the readymade garments sector, one of its major exports. The Chinese have since stepped in with encouragement from the Bangladeshi government.11 Alongside, China has committed to various physical infrastructure projects, ranging from bridges and railways to water and sewage treatment plants in Bangladesh. After the World Bank withdrew, China stepped in to financially support the building of a bridge over the Padma in Bangladesh’s southwest, which is expected to add up to 1.2 per cent to Bangladeshi GDP.12 It is evident, therefore, that Chinese approaches to dealing with their South Asian neighbours are multilayered – implemented at the diplomatic, political, academic and military levels through the greater availability of financial resources and large numbers of personnel tasked to engage with their South Asian counterparts. The following section highlights some of the approaches that China employs in its dealings with South Asia under the rubric of the BRI and uses a number of case studies to highlight these.

Chinese approaches to South Asia The Chinese have embarked on an approach to gaining influence in Asia that is radically different from that used by the US. For decades, American/Western

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domination of the world economy and of global institutions like the World Bank and the International Monetary Fund has been a source of resentment for Third World economies that were left with little choice in times of economic distress but to agree to stringent terms regarding accountability and governance as well as of economic restructuring in order to access funds and bailouts. This reality was seen as nothing short of interference in their internal affairs by these countries. China, has by contrast, appeared to offer opportunities to Third World countries that catered to immediate and pressing requirements, in tandem with the respective national development objectives, at reasonable costs and with faster implementation. More crucially, unlike Washington and European capitals, Beijing made no demands or comments on the nature of political systems in these countries, making it also a politically acceptable alternative, and possibly also a preferred one, even when doubts remained about the economic conditionalities. The BRI, therefore, represents economic diplomacy, including infrastructure diplomacy, as a means for Beijing to gain political, diplomatic and strategic mileage in its Asian neighbourhood and cementing China’s place at the top of the Asian hierarchy.13 Soft militarization in the Indian Ocean As China’s role in the global economy has grown, so also has its attention to its maritime interests, given that some 85 per cent of its trade goes through Indian Ocean sea lines of communication (SLOCs). This includes crucial oil and gas imports from the Middle East and Africa. These concerns about the safety of its SLOCs has led Chinese analysts to also declare that the Indian Ocean is part of China’s “grand national maritime strategy.”14 While Chinese scholars deny that their country’s naval build-up is aimed against another country, Indian naval planners do not buy this argument given the nature of Chinese military sales to the littoral states. In the East China Sea or the South China Sea, Chinese actions and strategies are backed up by advantages of geography and stronger capabilities. By contrast, its naval capabilities and opportunities are substantially more limited in the Indian Ocean. As a result, the Chinese prefer to highlight non-traditional security threats such as piracy as the primary case for Chinese naval activity in the Indian Ocean region. China has thus used the excuse of anti-piracy operations to allow People’s Liberation Army Navy (PLAN) ships to spend considerable time in the Indian Ocean, making port calls at many of India’s neighbouring states where they often engage in joint military exercises. For New Delhi, the presence of Chinese submarines in Indian Ocean waters certainly does not convey any benign intent, and Chinese justifications – anti-piracy, counterterrorism and humanitarian assistance and disaster relief – ring hollow. That Beijing does not shy away from including the desire for status as an important consideration adds to India’s resentment.15 Under the MSRI, China is entrenching its economic and development presence in the Indian Ocean littorals with the added prong of military sales to the

China’s BRI in South Asia 41 navies of the region. All the while it builds up its prestige both at home and in front of the smaller nations that have hitherto not seen anyone challenge India for regional dominance. In 2015, Pakistan approved its largest-ever military deal with China – also China’s largest arms exporting deal – purchasing eight submarines worth some $5 billion.16 Further cementing Pakistan’s significance from a naval perspective is the development of Gwadar port in Baluchistan, a facility that potentially guarantees maintenance and supply for Chinese naval vessels in the Indian Ocean.17 From 2009 to 2013, 82 per cent of Bangladesh’s arms and equipment came from China, making it the world’s third-largest buyer of Chinese weapons.18 Bangladesh also received its first submarines from China in 201619 as well as two frigates, which are among the Bangladesh navy’s most advanced warships. In July 2018, China announced the gifting of a naval frigate to Sri Lanka. This comes in addition to other elements of military engagement such as various submarine port calls, Chinese training courses for all three services in the Sri Lankan armed forces, and a Chinese-funded auditorium complex at the Sri Lanka Military Academy.20 Frigates are generally designed for protection duties while accompanying other warships and merchant ships, including especially hunting submarines, and it might be possible that, as part of expanding Sino-Sri Lankan military cooperation, Chinese-supplied frigates of the Sri Lankan Navy will accompany Chinese naval convoys or participate in Chinese anti-piracy missions. Global goods activities such as anti-piracy operations then also help bolster the image of the BRI by association. There should be no doubt that China is looking to develop a two-ocean presence as part of its ambitions of being a global superpower. To this end, a robust presence in the Indian Ocean is a sine qua non for China, and Beijing realizes that India’s maritime neighbours will be crucial cogs in the wheel. This in turn will strengthen China’s BRI ambitions for the region. Nepal: telecom infrastructure as entry point It was announced in early January 2018 that Nepal had received additional Internet bandwidth through China, a project that had been in the offing for some time. On the one hand it appears to be a simple infrastructure upgrade benefiting Nepalese consumers and businesses, but the message out of China tells a different story. In July 2017, the Global Times published an article with the headline: “Nepal Set to Escape Reliance on Inadequate Indian Internet as Chinese Option Arrives.”21 Subsequent questions raised by journalists for the state-run China Global Television Network also pointedly asked if India had the sense it was losing out in some way. This is additional evidence that Chinese actions, even when offering a public good, appear to also run on the logic of trying to break India’s monopoly in South Asia.

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It is interesting to see the language used from an Indian perspective. The title begins by characterizing Indian Internet as “inadequate” and moves on to such statements as “ending India’s bandwidth supply monopoly,” that “Indian Internet services … sometimes can lose the connection” and “the Indian option … is slow yet expensive.” Clearly, there is a case being built that the Chinese alternative is better than the Indian. The article points out that better Internet services is a “growth driver and job creator” and in the aftermath of Nepal’s 2015 earthquake offers the opportunity for “an economic leap forward.” It suggests that Nepal could develop an “Internet economy” and highlights the rise of Chinese phone brands such as Huawei and Xiaomi in the country. In essence, it is such actions as the Indian fuel blockade on Nepal, or the continuing impact of demonetization in India on the Nepalese economy and incomes, that have created opportunities to push into Nepal as a source offering alternatives to economic and technological dependence on India. The Maldives: tourism as cover China’s importance to the Maldives cannot be understated, especially in the tourism sector. In 2010, China became the largest source of tourists to the Maldives and in 2014,22 the number of Chinese tourists exceeded the population of the Maldives for the first time, providing some 30 per cent of the archipelago’s tourists.23 With the Maldives being a top choice among Chinese travellers for overseas weddings and honeymoons, the island nation’s luxury resorts and hotels also took to hiring Chinese staff and providing Chinese menus.24 And while it was reported in March 2015 that tourist arrivals from China had begun to fall, it is unlikely to be a long-term trend given how the Chinese government too can push and promote tourism to particular destinations if it deems this important. There are already up to seven direct flights from China to the Maldives, which is remarkable given that India, a much closer destination, has only a few cities in its south that have direct flights and a Mumbai–Malé flight actually stopped operations.25 Meanwhile, the Chinese ambassador to the Maldives has been on the record stating that three focus areas where the two countries ought to increase their cooperation were tourism, infrastructure projects and the maritime domain. These are slated to cover training of maritime personnel, cooperation in fisheries and marine research, and oil exploration among other things.26 In July 2015, the Maldives passed a constitutional amendment making it legal for foreigners to buy land. Earlier, foreigners could only lease land up to 99 years. Among the stipulations under the new amendment is that foreigners who wish to purchase land must invest over $1 billion and that 70 per cent of the land should be reclaimed from the sea.27 No doubt, the Maldives has the right to attract large-scale foreign investment to promote its economic development and to reduce its dependence on tourism. However, what is interesting about the amendment is how much it actually fits with the capabilities that China displays

China’s BRI in South Asia 43 more than any other country at the moment. And the BRI/MSRI provides the perfect platform to put these capabilities for economic purposes but without actual clarity ever forthcoming about their economic viability or potential dualuse nature. For instance, China has plenty of private individuals and enterprises – including state-owned ones and military-backed ones – that have the resources to meet the conditions set by Malé. As the current rapid pace of reclamation by Chinese vessels in the disputed waters of the South China Sea demonstrates, there is perhaps no one better in the field than the Chinese.28 The reclamation clause is practically an open invitation to the Chinese to take possession of territory in the middle of the Indian Ocean even if Malé will ultimately exercise sovereignty. Former Maldivian President Mohamed Nasheed has been quoted as saying China had leased 17 of the 1,200 islands in the archipelago. In contrast, opposition candidate and later winner of the 2018 presidential election Ibrahim Solih campaigned with complaints of a Chinese “debt trap” and described Chinese development projects as a form of “land grab.”29 The fraught domestic politics in the Maldives raises the demand for vigilant and nimble foreign policy from countries dealing with it. While India remains an important player in the calculations of Maldivian politicians by virtue of history and geography, China is no less significant for them as a means of checking excessive Indian demands and because Beijing itself is interested in being involved in the region. Devaluing India’s democracy It is well known that India has been a rather reluctant or instrumentalist purveyor of democratic values in its foreign policy. Perhaps Indian policymakers thought and continue to think that there is value to be had by merely letting the poor record of other nations in its neighbourhood from Pakistan to China make India look better by comparison. And this has often worked, with Western democracies, and the rest of the world more generally, ignoring India’s own democratic deficits and highlighting the more prominent negative example of fully authoritarian states. This period of enjoying a positive image by default has probably run its course. China under Xi is more forcefully challenging the very concepts of “democracy” and “good governance” with its actions in its near and extended neighbourhood. In recent years China has used its membership in global and regional organisations to call for a “democratic” global order.30 While this matches India’s own calls for democracy in the international system, it also creates an image of China being “democratic” in public perceptions. Combined with China’s economic might, this then adds further ballast to China’s global political influence. From a South Asian point of view, it is interesting to see how the Chinese are beginning to engage in areas hitherto the preserve of regular democracies, however value-laden this expression itself might be. To take the case of Nepal,

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China has for some time been engaged in supporting local elections in the country through monetary and other resources.31 For India, meanwhile, this aspect of China’s BRI suggests that it is time for it to back its May 2017 statement on why it did not participate in the Belt and Road Forum in Beijing. India could offer support to BRI host nations in building up competence and expertise in the legal, economic and legislative systems of these countries to help them prevent or deal with the ill-effects of BRI projects. This could be in the form of helping these countries develop governance norms to various infrastructure projects such as the establishment of environmental impact assessments, detailed project reports, and financial and legal accountability standards, among other things. In many ways, it could be argued that the BRI has forced India to reconsider its own positions on long-held values such as democracy and accountability that, in many instances in its foreign policy, appear to have turned into tropes without substantive meaning.

Political and economic risk considerations for China Regional ignorance is a big problem for China – South Asian expertise is only now gaining in numbers and quality in China, and it still might not be enough to keep up with the fast-moving political situations in the countries of the region. Take for example the fall of Nawaz Sharif as Prime Minister in Pakistan in 2017 and his party’s loss at the general elections the following year, or the surprise victory of the opposition Maldivian presidential candidate in 2018. In each of these cases, China lost what it and the world in general perceived to be leaders close to Beijing. With the BRI, the China–Pakistan relationship has moved from a hitherto largely political and military relationship – and a robust one at that, controlled by elites on both sides – to an economic relationship that, as it grows, increases the number of stakeholders and consequently also multiplies the points of conflict between Pakistan and China. China will not be a running source of funds for Pakistan. Its state-owned enterprises (SOEs) want positive returns from Pakistan. However, having set such high expectations in its South Asian neighbour, Beijing is likely to come under increasing pressure with the passage of time from both Islamabad and Rawalpindi, both of which have significant political capital riding on CPEC/BRI. Discontent within Pakistan has also been clear for some time, especially from Khyber-Pakhtunkhwa and Baluchistan provinces that see the major axis of the CPEC passing through the east of the country through Punjab and Sind.32 In another instance, the Diamer-Bhasha dam was excluded from the CPEC framework in 2017 on the grounds that the conditions of the Chinese proposal were too onerous.33 Projects have also been shelved because of fears of creating overcapacity and because they were thought to have been included out of political considerations.34 One way CPEC activity could be speeded up, as both the Sharif government demanded previously and the current Imran Khan government too is demanding,

China’s BRI in South Asia 45 is by bringing in Chinese labourers. However, in an already poor and populous country, this could likely create friction between locals and Chinese. Once ordinary Pakistanis run into flesh-and-blood Chinese who are taking their jobs or discriminating against them, goodwill for China could dissipate rather quickly. Further, depending on the level of political stability in Pakistan, these projects and their Chinese and Pakistani staff could also be targets of attacks by the Pakistani Taliban36 and/or by separatists.37 Meanwhile, there is some knowledge already among ordinary Pakistanis of China’s continuing mistreatment of its Uyghur Muslims, and China might well become “the new America” in the minds of ordinary Pakistanis. It is no wonder then that the Pakistani Army is raising security forces several tens of thousands strong exclusively for protecting the CPEC.38 The Chinese are not unaware of these problems. China’s official news agency, Xinhua, reporting on VicePresident Wang Qishan’s visit to Pakistan in May 2019, stated that he “hoped that Pakistan will take effective measures to provide security guarantees for the cooperation and exchanges between the two countries.”39 China’s close military ties with Pakistan also suggest Beijing is seeking to balance India by supporting Pakistan. A determination to ensure that India is only a secondary player in its own neighbourhood clearly animates sections of China’s strategic community. For instance, in continuation of the above-mentioned Chinese undermining of the concept of democracy, Beijing is willing to accept whatever works in terms of providing stability within a country. Chinese authorities support a political process in Afghanistan that is “Afghan-led and Afghan-owned.”40 In other words, a reconciliation process between the Taliban and the Kabul government need not end in the preservation of the democratic regime but whatever might be the most appropriate kind of government for Afghan conditions,41 even if this would mean the return of a Taliban regime. Such a position is, at the moment, still anathema to India, which has strongly supported the democratically elected regimes in Kabul. For the Chinese however, it is a core political principle that every nation has the right to develop its political system the way it sees fit. Such political differences between India and China cannot simply be ironed out in either their bilateral dialogues or the recent plan for joint training of Afghan civil servants that India and China have embarked on.42 Meanwhile, references to a “united” Afghanistan indicate that China would be extremely uncomfortable with the country divided on ethnic lines for the message it sends to its own ethnic minorities.43 It is for this same reason that Beijing has strenuously been against a federal set-up in Nepal, especially one based on ethnicity, again a position of some considerable variance with what New Delhi believes.44 And it cannot be guaranteed that the same development that China’s BRI seeks to promote in these populous and multi-ethnic South Asian nations will not lead to strengthened ethnicity-based demands for autonomy or representation. Issues of the debt trap and unwillingness to take on board local inputs are also important in assessing Chinese BRI projects in the region. The Sri Lankan 35

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case is by now, quite well known: the government had to hand over Hambantota port and 15,000 acres of agricultural land on a 99-year lease to the Chinese to meet debt obligations. There are many well-known Pakistani economists and intellectuals, too, which have raised concerns regularly about the economic viability of the CPEC, referring to the Sri Lankan experience.45 In essence, there is a great deal of hubris that surrounds Chinese actions in South Asia. Even as New Delhi struggles with coming up with concrete and actionable policies in response to the Chinese ingress in South Asia, the Chinese leadership, elites and ordinary people who consider India tend to dismiss it as a chaotic democracy whose political model they consider as entirely unsuitable for China. Despite India’s own rapid economic growth, it still trails significantly behind Chinese growth and there is a very real difference in resultant capabilities. Thus, despite the Chinese rhetoric of both India and China being ancient civilizations and the fact that the two countries partner on various multilateral forums and organisations, there is often little consideration and sometimes even dismissal from Chinese leaders and scholars when it comes to India’s own status as an emerging power. This is evident, for example, in China’s response to Indian interests on counterterrorism46 or entry into the Nuclear Suppliers Group47 but also in how the Chinese have gone about implementing the BRI in India’s neighbourhood despite the latter’s objections and including its sovereignty claims over Pakistan-occupied Kashmir.

Learning and renegotiation And yet, China is not without its strengths. Alongside the hubris is also the ability to make quick turnarounds in policy and abandon long-held positions if the situation demands it. South Asia is an area where such examples abound, two of which are examined below. A new leader in Pakistan Imran Khan’s election as Prime Minister of Pakistan introduces several degrees of uncertainty in the China–Pakistan relationship, given his past record of statements on the CPEC. Khan has previously criticised the CPEC, if not the Chinese themselves, for favouring the bigger Pakistani provinces and ignoring the smaller ones such as Khyber-Pakhtunkhwa, where his Pakistan Tehreek-e-Insaaf (PTI) has been in power since 2013. It is also worth remembering that Chinese President Xi Jinping had to postpone his visit to Islamabad in late 2014 because Imran Khan’s PTI and the cleric Muhammad Tahir-ul Qadri’s Pakistan Awami Tehreek had shut down Islamabad in a months-long protest against the Sharif government.48 In a telephone conversation with Khan congratulating him on his victory, Chinese Premier Li underlined the importance of CPEC to the relationship, and praised Pakistan’s cooperation in its construction as well as in protecting

China’s BRI in South Asia 47 Chinese personnel and institutions involved in the project. In an acknowledgement of the growing imbalance in bilateral trade and Khan’s past belligerence, Li also added that China was willing to import more competitive and highquality products from Pakistan and facilitate a balanced development of trade.49 Khan, for his part, acknowledged the Chinese concern about his statements over the years questioning CPEC’s value. In his remarks to Li, he noted that China had always stood by Pakistan’s side and that his new Pakistani government was willing to develop stronger relations with China.50 Of course, Khan also was dealing with the reality of a tougher US mood against Pakistan under the Donald Trump administration,51 leaving him also rather heavily dependent on China and Saudi Arabia to have Pakistan’s back politically and economically. A Global Times editorial titled unequivocally “China–Pakistan Ties, CPEC will Endure” is representative of the Chinese government’s surprise over the fast pace of political change in Pakistan, its quick recovery, and current plan of action.52 The article’s central objective appeared to be about ensuring Khan cooperated with China even as he remained suspicious and critical of the West. While stating that “All Chinese scholars interviewed by the Global Times expressed firm confidence in China–Pakistan ties,” it did not also note that even a year ago nobody in China was predicting that the then ruling dispensation of the Pakistan Muslim League under Nawaz Sharif would so quickly be displaced from power both at the central government and provincial levels. Instead, it sought to highlight “Beijing never interfered in Islamabad’s domestic politics.”53 China’s trump card is its close relationship with the Pakistani military. With Pakistani Chief of Army Staff Gen. Qamar Javed Bajwa making his first foreign visit following the elections to China, it is clear on which side the military sits. The Chinese PLA Army chief Gen. Han Weiguo played his part in making his guest feel welcome. In addition to discussing the regional security environment, CPEC security and bilateral cooperation, the Pakistan Army’s press release noted that the PLA chief had “expressed his keen desire to benefit from Pakistan Army’s combat experience.”54 Further, Gen. Bajwa had noted in a speech in October 2017 “that during National Security Council meetings, the economy remains one of our highest concerns,” indicating an eagle eye on the development and progress also of the CPEC. In fact, he called it “a complete development platform” whose completion “and, more importantly, optimisation of its socio-economic dividend for Pakistan and the region” depended on ensuring security in the country.55 Nevertheless, it might be remembered that China backed placing Islamabad on a terror-financing watch list earlier in 2018, making it harder and more expensive for Pakistan to raise the funds it needs from international sources.56 While a Global Times piece on CPEC copies Gen. Bajwa’s October 2017 speech in the view that “the political, economic and cultural interests of a country can barely be safeguarded if its national survival is under threat,” at one time the Chinese would have presented this same fact with a little more nuance privileging economic growth as the foundation of political stability.57 The fact that the same

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article mentions “some local Chinese citizens, deceived and brainwashed by extreme religious ideas, embraced extremism, joined terrorist organizations and came back to China to launch terror attacks” suggests a very obvious reference to Pakistan and its shortcomings in this regard.58 In other words, coming as these statements do from the Chinese side, they reinforce Chinese pressure on Pakistan to meet its security obligations to China vis-à-vis CPEC, Xinjiang, and perhaps India as well. All told, these Chinese moves and statements in the context of the BRI actually both turn up the pressure on Pakistan and extend Beijing’s control and influence on it. Political crisis in Sri Lanka Towards late October 2018, Sri Lankan President Maithripala Sirisena set off a political crisis by sacking Prime Minister Ranil Wickremesinghe and replacing him with former President Mahinda Rajapaksa without calling for a vote in Parliament. During Rajapaksa’s time at the helm the Chinese had begun to gradually involve themselves in Sri Lankan politics. Besides supplying arms to the Sri Lankan armed forces in the civil war against the Liberation Tigers of Tamil Eelam (LTTE), the Chinese were involved in financial transactions directly to Rajapaksa’s family and cronies in exchange for swinging major infrastructure deals China’s way.59 Therefore, when Rajapaksa lost power, it was widely perceived as China also having lost their man in power. Nevertheless, the degree of Chinese involvement in Sri Lanka was such that despite concerns raised during the elections about Chinese BRI projects, many continued as indicated above. Meanwhile, the current shake-up in the Sri Lankan system possibly helps take attention away from such pressure points for the Chinese in Sri Lanka as their 99-year lease on Hambantota. India might not be so lucky with the aggrieved parties led by Wickremesinghe looking to some sort of support from New Delhi and his opponents equally wary of, and waiting to pounce on, any such Indian action. In the short term, there can be no doubt that the Chinese will be able to recover some lost ground as Sri Lanka’s politicians slug it out. Across the board, no matter what their personal views on China, Sri Lanka’s politicians have learnt to do business with Beijing. Sirisena has called China’s support “indispensable” for his country’s development, while as PM Wickremesinghe was quick to deny Hambantota would be used as a Chinese military base and supported the various BRI projects in Sri Lanka.60 But it is also a sign of the times and of China’s increasing presence that allegations have quickly surfaced of China funding certain parliamentarians amidst the ongoing political crisis.61 While the Chinese embassy denied the allegation, it also described China as “a friendly neighbour” of Sri Lanka’s, and emphasized its principle of non-interference, declaring, “We believe that the Sri Lankan government, parties and people have the wits and ways needed to deal with the current situation.”62

China’s BRI in South Asia 49 The interesting part is not the patronising note about the Sri Lankans being able to manage their own affairs but the declaration that China was “a friendly neighbour.” One – of course, China is geographically nowhere near Sri Lanka to be calling itself a “neighbour,” but it gives a sense of the thinking in Beijing that sees South Asia as part of China’s near neighbourhood and an area of interest. This is a facet that has become particularly evident since the launch of the BRI. Two – to say that it was a “friendly” neighbour is to imply that Sri Lanka has unfriendly neighbours, which, of course, can only be a reference to India. Even if Beijing might be reflecting an important point of view on the island nation, this is still an attempt to undermine New Delhi’s privileged status in the country and the wider region. This said, the confidence for such statements from the Chinese embassy in Colombo also reflects the reality of an increasingly close relationship between Sri Lanka and China. Consider for instance, some developments in the relationship in just the month before the political crisis broke out. In late September, the two sides inaugurated a new building for the China–Sri Lanka Joint Centre for Education and Research at the University of Ruhuna in southern Sri Lanka, which collaborates with the South China Sea Institute of Oceanology of the Chinese Academy of Sciences. And in early October during a visit, the China National Agriculture Wholesale Market Association declared that there is “a huge export opportunity for the Sri Lankan agriculture and fresh produce sector.”63 These developments are significant given that Sri Lanka is still a developing country with a large rural population and large reliance on the agricultural sector.

Conclusion As an analyst from a Chinese think-tank speaking about China–Sri Lanka relations put it, no one would want to “miss the chance to catch the express train of China’s development.”64 Further, in cases such as Pakistan, the Chinese might even deserve credit for being willing to take on the onerous task of bringing development to one of the world’s most unsafe places. And this really is the big attraction of the BRI in South Asia – the need for rapid development coupled with the fact that India itself is not able to provide the resources or the speed in implementation that its neighbours require. In fact, there are views within India itself that suggest a more nuanced approach to the BRI which involves a selective participation in Indian interests65 – India, too, has a large infrastructure deficit which could be tackled more quickly if Chinese capital were more readily available through the BRI. Nevertheless, China’s hard line on sovereignty disputes and its blatant disregard for international norms and best practices in its projects and elsewhere are obstacles to this approach and entrench suspicions that its economic development programmes in the form of BRI are a disguise for political and security objectives. In this there is still opportunity for India to step into the breach or plug the gaps and by extension, for the smaller countries of South Asia to play one large

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neighbour against the other. Naturally, there is also an opportunity here for the United States to focus greater attention on South Asia if nothing else because successive administrations have highlighted the threat China poses to American interests.66 The revival of a US–Japan–India–Australia grouping – the Quadrilateral Security Dialogue – focused on security issues in the Indo-Pacific and closer India–US ties form part of this response. It might be that this triangular or multisided interaction between India, China, one or more of the smaller South Asian countries and, with one or more outside powers such as the US or Japan, is actually the most stable system in which all states are balanced. But it remains too soon to tell how the countries involved see such a regional order. What is certain is that the BRI has queered the pitch and raises both the stakes as well as several questions in South Asia.

Notes 1 Ministry of External Affairs, Government of India, “Official Spokesperson’s Response to a Query on Participation of India in OBOR/BRI Forum,” Media Briefings, 13 May 2017, www.mea.gov.in/media-briefings.htm?dtl/28463/official+spokespersons+respon se+to+a+query+on+participation+of+india+in+oborbri+forum. 2 Xi Jinping, “Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era,” delivered at the 19th National Congress of the Communist Party of China, Xinhua, 18 October 2017, www.xinhuanet.com/english/download/Xi_ Jinping’s_report_at_19th_CPC_National_Congress.pdf. 3 Ministry of External Affairs, “Official Spokesperson’s Response.” 4 Zhao Shengnan, “Xi pledges $40b for Silk Road fund,” China Daily, 9 October 2014, www.chinadaily.com.cn/china/2014–11/09/content_18888916.htm. 5 Xinhua, “China Supports Pakistan’s Security, Development: Li Keqiang,” 27 August 2014, http://news.xinhuanet.com/english/china/2014–08/27/c_126925865.htm. 6 People’s Daily, “Chinese, Nepali Armed Police Conduct Joint Exercise,” 18 November 2014, http://english.peopledaily.com.cn/n/2014/1118/c98649–8810384.html. 7 Xinhua, “Afghan Media Urge Government to Further Join Belt and Road Initiative,” 15 May 2017, www.xinhuanet.com//english/2017–05/15/c_136286084.htm; Xinhua, “China Hails Maldivian FM’s Remarks on BRI,” 28 December 2018, www.xinhuanet. com/english/2018–12/28/c_137705175.htm. 8 China Daily, “Bangladesh Lauds China’s Pledge on Silk Road Fund,” 9 November 2014, www.chinadaily.com.cn/world/2014apec/2014–11/09/content_18890770.htm. 9 Ellen Barry, “New President in Sri Lanka Puts China’s Plans in Check,” New York Times, 9 January 2015, www.nytimes.com/2015/01/10/world/asia/new-president-insri-lanka-puts-chinas-plans-in-check.html. 10 The Sunday Leader, “Reforms Needed To Enhance Competitiveness, Productivity,” 11 January 2015, www.thesundayleader.lk/2015/01/11/reforms-needed-to-enhancecompetitiveness-productivity-2/. 11 Rejaul Karim Byron, “Beijing, Help Build,” Daily Star, 14 February 2014, www.thedailystar.net/beijing-help-build-11255. 12 bdnews24.com, “China Leads in Padma Bridge Race,” 24 April 2014, http:// bdnews24.com/economy/2014/04/24/china-leads-in-padma-bridge-race; Rejaul Karim Byron, “Beijing, Help Build.” 13 Zhu Feng, “Beijing’s Successful Agenda-Setting,” China Daily, 14 November 2014, www.chinadaily.com.cn/opinion/2014–11/14/content_18911960.htm.

China’s BRI in South Asia 51 14 Xinlang Junshi Weibo, “Shendu: Zhongguo Nanhai Zhanlüe Ruhe Buju Ke Rang Meiguo Mianlin Shengcicunwang” (In-depth: How China’s South China Sea Strategy Creates a Critical Situation for the United States), 23 October 2016, http://mil.news. sina.com.cn/jssd/2016–10–23/doc-ifxwztru6936723.shtml. 15 Jabin T. Jacob, “China’s Evolving Strategy in the Indian Ocean Region: Risks in China’s MSR Initiative,” in India and China at Sea: Strategic Competition in the Maritime Domain, ed. David Brewster (New Delhi: Oxford University Press, 2018), 208–223. 16 People’s Daily, “China, Pakistan to Sign Largest Military Contract: Reports,” 3 April 2015, http://en.people.cn/n/2015/0403/c90786–8873628.html. Unless otherwise indicated, all values are in US$. 17 Liu Sha and Chen Heying, “Gwadar Set to be Regional Hub as Port Readies Launch,” Global Times, 15 April 2015, www.globaltimes.cn/content/916884.shtml. 18 According to SIPRI, cited in www.reuters.com/article/2015/05/27/india-bangladeshchina-idUSL3N0YG2QG20150527. 19 The Daily Star, “2 Submarines for Navy Arrive at Ctg Port,” 22 December 2016, www.thedailystar.net/country/2-submarines-navy-arrive-ctg-port-1333963; Xinhua, “CSIC Builds Two Light Frigates for Bangladesh,” 3 April 2019, www.xinhuanet. com/english/2019–04/03/c_137947179.htm. 20 Easwaran Rutnam, “China to Boost Military Ties with Sri Lanka and Gift Frigate,” Colombo Gazette, 23 July 2018, https://colombogazette.com/2018/07/23/china-to-boostmilitary-ties-with-sri-lanka-and-gift-frigate/. 21 Xiao Xin, “Nepal Set to Escape Reliance on Inadequate Indian Internet as Chinese Option Arrives,” Global Times, 13 July 2017, www.globaltimes.cn/content/1056138. shtml. 22 Ministry of Tourism, Republic of Maldives, Tourism Yearbook 2014 (Malé, Republic of Maldives: 2014), www.tourism.gov.mv/downloads/2014dec/tourism%20year%20 book%202014.pdf. 23 Mohamed Mamduh, “Tourist Arrivals Reach 1.2 Million in 2014,” Hotelier Maldives, 29 January 2015, www.hoteliermaldives.com/stories/tourist-arrivals-reach-1–2-millionin-2014/. 24 Patrick Boehler, “ ‘It’s the Gucci Handbag of Holidays’: Maldives Tops Chinese Travelers’ Wish List,” South China Morning Post, 21 January 2015, www.scmp.com/ news/china/article/1688260/chinese-tourists-increasingly-be-beside-seaside-exoticisland-nation. 25 China Daily, “Direct Flight to Link China’s Wuhan with Maldives,” 3 July 2014, www.chinadaily.com.cn/business/2014–07/03/content_17641703.htm. 26 Embassy of the People’s Republic of China in the Republic of Maldives, “Chinese Envoy sees Expanded China–Maldives Economic Cooperation,” 22 July 2014, http:// mv.chineseembassy.org/eng/whjy/zgwh/t1176843.htm. 27 Ahmed Naish, “Majlis Approves Foreign Freeholds in Second Amendment to Constitution,”MinivanNews,22July2015,http://minivannewsarchive.com/politics/majlis-authorizesforeign-ownership-of-land-in-second-constitutional-amendment-101193. 28 See also Li Xiaokun, “Land Sale isn’t for Military Purpose, says Maldives,” China Daily, 25 July 2015, www.chinadaily.com.cn/world/2015–07/25/content_21404471.htm. 29 Nirupama Subramanian, “Churn in the Neighbourhood: In Maldives, Storm Subsides, Ocean Calmer,” Indian Express, 31 October 2018, https://indianexpress.com/ article/explained/maldives-new-president-ibrahim-solih-storm-subsides-ocean-calmer5426220/. 30 Such calls are regularly made at meetings of South Asian think tanks and scholars organized in China. 31 Xinhua, “Chinese Aid of Logistics Crucial to Conduct Fair Local Elections: Nepal,” 17 April 2017, www.xinhuanet.com/english/2017–04/17/c_136215750.htm.

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32 Rooh-ul-Amin, “China’s Role as Peacemaker Welcomed in AfPak Region,” Global Times, 8 May 2015, www.globaltimes.cn/content/920663.shtml. For a contrary view, see Xinhua, “China–Pakistan Economic Corridor to Benefit all Regions in Pakistan: Pakistani Senator,” 10 June 2015, www.xinhuanet.com/english/2015–06/10/c_13431 2003.htm. 33 Shahbaz Rana, “Pakistan Stops Bid to Include Diamer-Bhasha Dam in CPEC,” ExpressTribune,15November2017,https://tribune.com.pk/story/1558475/2-pakistan-stopsbid-include-diamer-bhasha-dam-cpec/. 34 Khaleeq Kiani, “Govt Puts Major CPEC Power Project on Hold,” Dawn, 14 January 2019, www.dawn.com/news/1457449. 35 Huanqiu Wang, “Ba Gongshanghui Zhuxi: Wu Da Houli Xiyin Zhongguo Qiye Lai Ba Touzi” (Pakistan Chamber of Commerce and Industry Chairman: Five Big Incentives to Attract Chinese Enterprises to Invest in Pakistan), 19 June 2015, http://world. huanqiu.com/exclusive/2015–06/6729585.html. 36 See, for example, Jiang Jie and Fan Lingzhi, “China Verifying Video of Taliban Hostage,” Global Times, 26 May 2015, www.globaltimes.cn/content/923549.shtml and Rooh-ul-Amin, “Joint Intelligence Work Can Frustrate Terrorists’ Plans,” Global Times, 1 June 2015, www.globaltimes.cn/content/924768.shtml. 37 A case in point is the attack on the Chinese consulate in Karachi in November 2018 by suspected Baloch insurgents. Imtiaz Ali and Asim Khan, “Terror Attack on Chinese Consulate in Karachi Foiled; 3 Terrorists Killed,” Dawn, 23 November 2018, www.dawn.com/news/1447192. 38 Raza Khan, “15,000 Troops of Special Security Division to Protect CPEC Projects, Chinese Nationals,” Dawn, 12 August 2016, www.dawn.com/news/1277182. 39 Xinhua, “China, Pakistan Vow to Further Strengthen Ties, Cooperation,” 28 May 2019, www.xinhuanet.com/english/2019–05/28/c_138096924.htm. 40 Xinhua, “China, Afghanistan, Pakistan Reach Broad Consensus on Cooperation, Afghan Peace Process, Anti-Terrorism,” 15 December 2018, www.xinhuanet.com/ english/2018–12/15/c_137676877.htm. 41 People’s Daily, “China Respects Afghan People’s Choice: FM,” 16 June 2014, http:// en.people.cn/n/2014/0616/c90883–8741980.html. 42 Sanjeev Miglani, “India, China Launch Joint Training for Afghanistan, Plan More Projects,” Reuters, 15 October 2018, https://in.reuters.com/article/india-chinaafghanistan/india-china-launch-joint-training-for-afghanistan-plan-more-projectsidINKCN1MP1KB. 43 People’s Daily, “China Respects Afghan.” 44 Shishir Ghimire, “China and the Federalism Question in Nepal,” ICS Analysis, June 2013, www.icsin.org/uploads/2015/06/03/9a9e2db3ceeb850c14887ab1813fd1fd.pdf. 45 Jabin T. Jacob, “China’s Belt and Road Initiative: Perspectives from India,” China & World Economy, Vol. 25, No. 5, September–October 2017, 78–100. 46 The Wire, “China Again Blocks Move to List Masood Azhar as Global Terrorist,” 2 November 2017, https://thewire.in/193852/china-blocks-move-list-masood-azharglobal-terrorist/. 47 The Telegraph, “China Blocks NSG Path,” 23 May 2017, www.telegraphindia. com/1170523/jsp/nation/story_153066.jsp. 48 Dawn, “Chinese President Delays Pakistan Trip over Islamabad Protests: FO,” 6 September 2014, www.dawn.com/news/1130261. 49 Renmin Wang, “Li Keqiang Tong Bajisitan Zongli Yimulan Han Tong Dianhua” (Li Keqiang Phones Pakistan Prime Minister Imran Khan), 21 August 2018, http://cpc. people.com.cn/n1/2018/0821/c64094–30240131.html. 50 Renmin Wang, “Li Keqiang Phones Pakistan.” 51 The News International, “US Cuts Pak Security Aid to Historic Low, Ends Conditions,” 3 August 2018, www.thenews.com.pk/latest/350119-us-cuts-aid-to-pakistan.

China’s BRI in South Asia 53 52 Global Times, “China–Pakistan Ties, Economic Corridor Will Endure,” 27 July 2018, www.globaltimes.cn/content/1112721.shtml. 53 Global Times, “China–Pakistan Ties.” 54 DG ISPR, @OfficialDGISPR, Twitter, 17 September 2018, https://twitter.com/Official DGISPR/status/1041700986904043520. 55 Khurram Husain, “Army Chief Says Economy Showing Mixed Indicators,” Dawn, 12 October 2017, www.dawn.com/news/1363192. 56 Salman Masood, “At U.S. Urging, Pakistan to be Placed on Terrorism-Financing List,” New York Times, 23 February 2018, www.nytimes.com/2018/02/23/world/asia/ pakistan-terror-finance-list.html. 57 Wang Peng, “CPEC Key to Developing Western China and Consolidating Regional Security,” Global Times, 26 August 2018, www.globaltimes.cn/content/1117108. shtml. 58 Wang, “CPEC Key.” 59 Maria Abi-Habib, “How China Got Sri Lanka to Cough Up a Port,” New York Times, 25 June 2018, www.nytimes.com/2018/06/25/world/asia/china-sri-lanka-port.html. 60 Embassy of the People’s Republic of China in Sri Lanka, “China’s Support Indispensable for Sri Lanka’s National Development: President Sirisena,” 12 May 2018, http:// lk.china-embassy.org/eng/xwdt/t1558817.htm; Embassy of the People’s Republic of China in Sri Lanka, “PM Wickremesinghe Counters the Rumour of Chinese Militarization at the Hambantota Port,” 23 April 2018, http://lk.china-embassy.org/eng/xwdt/ t1553332.htm. 61 NDTV, “As Lankan Crisis Deepens, Minister Says China Financing Horse-Trading,” 30 October 2018, www.ndtv.com/world-news/as-lankan-crisis-deepens-minister-sayschina-financing-horse-trading-1940043. 62 Xinhua, “China Dismisses Allegations of Funding Political Legislators in Sri Lanka,” 30 October 2018, www.xinhuanet.com/english/2018–10/30/c_137568808.htm. 63 Xinhua, “Sri Lanka Aims to Increase Agriculture Exports to China,” 17 October 2018, www.xinhuanet.com/english/2018–10/17/c_137539318.htm. 64 Natalie Obiko Pearson, “China’s Indian Ocean Influence at Risk in Sri Lanka Election,” Bloomberg, 7 January 2015, www.bloomberg.com/news/articles/2015–01–06/ china-push-for-indian-ocean-influence-at-risk-as-sri-lanka-votes. 65 Ravi Bhoothalingam, “One-Belt-One-Road – to Join or Not to Join?” The Wire, 14 June 2016, http://thewire.in/42582/one-belt-one-road-to-join-or-not-to-join/; Jabin T. Jacob, “Thinking Out of the Box: Reconfiguring the India-Pakistan-China Triangle,” India Global Business, February 2017, https://indiaincgroup.com/thinking-boxreconfiguring-india-pakistan-china-triangle/; Jabin T. Jacob, 2017, “Is the China– Pakistan Economic Corridor a Threat to India?” in China: Threat or Challenge?, ed. J. S. Bajwa (New Delhi: Lancer), 336–52. 66 This is best encapsulated in the official document The White House, “National Security Strategy of the United States of America,” December 2017, www.white house.gov/wp-content/uploads/2017/12/NSS-Final-12–18–2017–0905.pdf.

4

Central Asia in the Belt and Road Initiative Policy-taker or policy-shaper? Li-Chen Sim and Farkhod Aminjonov

Central Asia is in an unenviable position of being a key pillar in the ambitions of much larger neighbors to the south-east (China) and to the north (Russia). On the one hand, China perceives Central Asia as one of the pillars of its Silk Road Economic Belt (SREB), thanks to the region’s abundant natural resources, proximity to the less developed inner regions of China, and position along the overland route to European markets that circumvents the maritime “Malacca dilemma.” Consequently, it has been referred to as “the thickest piece of cake given to the modern Chinese by the heavens.”1 On the other hand, Russia claims Central Asia as part of its “near abroad” in view of the region’s significance for Russian security and the shared Tsarist/Soviet legacy since the nineteenth century. Indeed, some Central Asian states are members of a Russian-led security organization, the Collective Security Treaty Organization, while others belong to the Russian-dominated Eurasian Economic Union. Central Asia, therefore, “seems to make sense in international affairs mainly in terms of its geographic location: it is always set in a spatial relationship with another region or country,”2 be it as a buffer zone or transit corridor. At the same time, however, Central Asian states zealously defend their sovereignty via multivector foreign policies or even neutrality (in the case of Turkmenistan) and have reached out to extra-regional powers to balance their giant neighbors. This chapter will examine the challenges to the SREB at the regional and international levels. The first part of the chapter provides an overview of the trade and investment dynamics in Central Asia. The second part discusses Central Asia’s role in China’s SREB and vice versa, while the third section examines the extent to which Russia and other extra-regional powers affect the success of the SREB region’s significance for Russia’s economic and security policies. Unlike conventional analysis that depict Central Asia as mere pawns in the game between great powers, the chapter posits that the agency exercised by some Central Asian states has and will pose challenges to the grand designs of their more powerful neighbors, including China’s SREB.3 In other words, while Central Asia will undoubtedly be impacted by the SREB, it is not merely a policy-taker but will also, to some extent, be able to shape the success of the SREB.

Central Asia in the BRI 55

Trade and investment trends in Central Asia While China and Russia are among the top five trading partners for all Central Asian states, China has overtaken Russia in trade and investment in the region (see Figure 4.1). In the 1990s, trade between China and Central Asia amounted to less than $1 billion.4 By 2008, China’s total trade with Central Asia exceeded that of Russia’s, and, with ups and downs, by 2018 China–Central Asia trade had surged to $27.2 billion.5 Conversely, Russia’s post-Soviet monopoly of overall trade with the region has declined to $18 billion in 2017; it is only in Kazakhstan that Russia has retained its lead over China. While Russia continues to be the main source of imports for some Central Asian states, it is slowly losing out to China’s relatively inexpensive finished goods (consumer products, machinery, processed foodstuffs, textiles, shoes, electronic goods, pharmaceutical products, and automobile parts). These have a price advantage over Russian, Turkish, and Western goods and hence are well-suited to low purchasing power of local consumers.7 Indeed, over 85 percent of China’s exports to Central Asia are processed products and consumer goods while Central Asia exports mainly raw materials and unprocessed products to China.8 China is also the leading foreign investor in all Central Asian countries.9 Energy, industrial, and infrastructure sectors have received the lion’s share in investment packages. Kazakhstan China’s trade with Kazakhstan has grown from $432 million in 199210 to $11.6 billion in 2018.11 While Kazakhstan imported twice as much from Russia than China in 2017, the latter is the top destination for Kazakh goods, having

Uzbekistan Turkmenistan Tajikistan Kyrgyzstan Kazakhstan 0%

20%

40% 60% 80% China Russia Others

Figure 4.1 Central Asia’s trade with Russia and China. (Source: Stratfor Worldview, 2018).6

100%

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replaced Russia already in the mid-2000s.12 China is also the country’s largest investor in infrastructure and energy. Foreign Direct Investment (FDI) alone accounted for $14 billion of the total investment package of $42.8 billion and loans worth over $50 billion from China between 2005 and 2017. The number of joint venture companies between Kazakhstan and China is constantly increasing – for instance, 2,783 registered companies with Chinese capital as of February 2017; quite often, joint ventures are financed with Chinese money.13 Tenders in the 1990s presented international energy companies with opportunities to develop Kazakhstan’s hydrocarbon industry. Over the past two decades, however, China has been expanding its presence in Kazakhstan’s oil and gas sector and today owns almost 25 percent of it.14 Within the SREB initiative, China is now heavily investing in East–West rail and road infrastructure projects in Kazakhstan, including the Khorgos-East Gate project that aims to replicate Dubai’s Jebel Ali port and which encompasses a dry port, rail, warehousing facilities and industrial zones, and the Western Europe– Western China highway that reduces road travel between St Petersburg and Lianyungang from 45 days to just ten. Both parties have also signed an agreement on relocating 51 Chinese industrial facilities, including aluminum smelters, to Kazakhstan for over $27 billion. By late 2019, 15 have come onboard, with 11 under construction and the remaining 29 still in the planning stage.15 Kyrgyzstan As export destinations, neither China nor Russia plays an important role in Kyrgyzstan’s foreign trade balance. Over the past decade, Kyrgyzstan has exported more to Switzerland than to Russia and China combined, with gold constituting its main export commodity.16 The situation is less likely to change even after Kyrgyzstan is fully integrated into the SREB, since there is not much the country can offer to Russia or China. These countries, however, represent the main sources of imports for Kyrgyzstan. And since 2016, China has replaced Russia as a major supplier. Traditionally, the bulk of trade between China and the Central Asian region went through Kyrgyzstan, from which Chinese goods were distributed to the rest of the post-Soviet region.17 Chinese companies are involved in the construction of major roads in Kyrgyzstan. They constructed and completed the Datka Kemin electricity transmission line worth $389 million in 2015, and Chinese companies built two refineries in Tokmak and Kara-Balta. Chinese firms also participate in natural resource extraction such as gold mining.18 New projects within the SREB, including the North–South Road (phases 1 and 2) and rehabilitation of the Bishkek–Naryn–Torugat road, will further increase Chinese influence in the country. Tajikistan Russian imports still dominate the Tajik market, with second place shared by goods from Kazakhstan and China. Russia, however, is only the third largest

Central Asia in the BRI 57 market for Tajik exports. There are around 130 joint ventures with Russian capital in Tajikistan and Russian investments total $1.7 billion.20 Chinese investments, which currently account for almost half of FDI inflow, is changing the power balance in favor of China.21 Within the SREB initiative, instead of merely importing mineral resources from Tajikistan, China is investing in developing local industries to boost the import of value-added products from the country later on.22 The Dushanbe-Kurgantube railway (Vahdat-Yovon section), two combined heat-and-power plants in Dushanbe and (temporarily frozen) Line D of the Central Asia–China gas pipeline are examples of SREB projects financed by loans from China; the latter previously helped to fund vanity works like the world’s tallest free-standing flagpole, the world’s largest teahouse, and the region’s largest museum. 19

Turkmenistan Turkish goods dominate the import market in Turkmenistan and the former’s private companies are very active in the construction sector.23 China, however, is far and away the top export destination for Turkmen products. For instance, while exports from Turkmenistan to Russia have declined from over $1 billion in 2000 to less than $80 million in 2017, exports from Turkmenistan to China have increased from $6.2 billion to $8 billion within the same period.24 Trade turnover between China and Turkmenistan remained at $8 billion in 2018.25 Consequently, Russia is only the fifth export destination for Turkmen products. During the 1990s and most of 2000s, 90 percent of Turkmenistan’s gas was exported to Russia. Today, however, China is the country’s sole customer of natural gas, with Turkmen gas accounting for one-third of China’s gas consumption. This gas is exported through Lines A, B, and C of the China-financed Central Asia–China pipeline, the first ever to bypass Russian territory. With gas exports accounting for 80 percent of Turkmenistan’s budget revenues, the country is heavily reliant on China for its economic well-being and the government has belatedly tried to revive relations with Russia to reduce this dependence.26 Uzbekistan Since 2016, China has eclipsed Russia to become the largest exporter of goods and technologies to Uzbekistan. As an export destination for Uzbek products, China replaced Russia even earlier, in 2013. In May 2015, during the official visit to China of the new President of Uzbekistan, Shavkat Mirziyoyev, more than 100 intergovernmental deals worth $23 billion were signed.27 Consequently, an escalation of China’s economic influence in Uzbekistan is expected, particularly in the joint production of synthetic fuel ($3.7 billion), oil industry ($2.6 billion), energy-generation plants ($679 million), and railroad infrastructure development agreements ($520 million).28 Currently, Chinese telecommunication giants ZTE and Huawei operate assembly plants in the country.

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Nevertheless, there has been a discernible upswing in Russia–Uzbekistan trade, which increased by 21.2 percent in 2018 compared with the previous year and accounted for $5.73 billion; this is aimed at diversifying Uzbekistan’s trade and restoring its multi-vector foreign policy.29 The impact of this openness in its relations with China and Russia is still inconclusive.

Central Asia’s role in the SREB The foregoing section has highlighted Central Asia’s significance for China’s SREB initiative. More specifically, China is keen to take advantage of Central Asia’s strategic geographical location as a land-based transit corridor between China and markets in Europe, thereby reducing the country’s dependence on sea routes. Central Asia is also valuable in and of itself because the region’s hydrocarbon and mineral resources are needed to fuel and sustain China’s economic growth and prosperity. Finally, Central Asia’s geographical and cultural proximity to China’s Xinjiang, along with the associated positive or negative spillover effects, informs Beijing’s focus on these states. The Central Asian region is “central” to China’s Eurasian ambitions to link China’s west to South Asia, the Middle East, and Europe.30 The China–Central Asia–Western Asia Economic Corridor, linking China to the Persian Gulf through Iran and the Aegean Sea/Piraeus Port via Turkey, is particularly important within the SREB architecture of economic corridors. For instance, to extend transport infrastructure, Beijing and Astana are attempting to link special economic zones and dry ports between Kazakhstan and China, including the Khorgos-East Gate Special Economic Zones, to boost trade-led economic growth across the entire Eurasian region. Central Asia is also part of Beijing’s plans to create a network of major land and rail transit routes from Asia to Europe. Apart from upgrading existing and building new land routes throughout Central Asia, China is also considering the feasibility of linking up SREB rail routes to Turkey’s Middle Corridor via Kazakhstan and the Caspian Sea; this shorter route would compete with the existing Trans-Siberian Railway owned by Russia. Central Asia’s bountiful energy and other natural resources are integral inputs for the sustainability of China’s economic success. China is the second largest importer of crude oil in the world with dependence on imported oil growing from a mere 6.7 percent in 1993 to 52 percent in 2009 to 70 percent in 2018 and to an estimated 80 percent by 2030.31 Given that over 50 percent of its oil originates from the Middle East and that over 80 percent of its imports are seaborne, China has looked to land-based suppliers to diversify oil suppliers and delivery routes to enhance energy security. An early example of Central Asia’s importance in this regard is the Kazakhstan–China oil pipeline which has transported crude oil from western Kazakhstan to refineries in Xinjiang since 2006. It is estimated that up to 30 percent of all oil extracted in Kazakhstan is controlled by Chinese companies.32 In terms of natural gas, around 15 percent of China’s consumption is supplied by Turkmenistan, Uzbekistan, and to a lesser

Central Asia in the BRI 59 degree Kazakhstan through the Central Asia–China gas pipeline. With this pipeline running at almost full capacity, a fourth line (Line D) of this pipeline is being constructed with BRI loans; this will help to offset the higher costs associated with importing liquefied natural gas and to reduce dependence on Russian gas. Kyrgyzstan and Kazakhstan are also important suppliers of rare earths and metals to China, the world’s largest importer of these commodities; the latter is used in China’s factories to produce many high-technology items including solar panels, mobile phones, rechargeable batteries, and hard drives. For instance, there are several Chinese-owned gold mines in Kyrgyzstan and a tungsten mining project in Kazakhstan. While some of the above-cited projects pre-dated the official start of BRI, the point here is that the enhanced connectivity and funding opportunities as a result of BRI will provide China with even more incentive to engage Central Asia economically. China is mindful of the degree to which its restive Xinjiang Uighur Autonomous Region can be impacted by economic, social, and political developments in neighboring Central Asia. According to one Chinese official, for example, “terrorist attacks in Xinjiang are closely related to the activities of terrorist, separatist, and extremist forces in Central Asia.”33 Conscious that the legitimacy of the rule of the Chinese Communist Party may be undermined by the huge economic disparity between inland regions like Xinjiang and coastal areas in the east of China, Beijing has pursued a “double opening” approach to economically integrate Xinjiang into other parts of China and into Central Asia through shared development. Consequently, three of the six BRI corridors pass through Xinjiang, with Kashgar and Khorgos in Xinjiang as key gateways close to the border with Central Asia. On the assumption that economic development will bring social peace and political stability to Central Asia as well as Xinjiang, a pacified Xinjiang will enable Beijing to further tap into the region’s potential. The latter contributes to indigenous energy supplies since it is China’s largest gas producing region and its third largest oil producer. It also accounts for 40 percent of cotton in China, which is crucial for the textile industry along the coast. The interest in promoting SREB projects is mutual. Central Asian states benefit from: their role in the SREB as a transit territory linking China with the West; the use of Chinese loans as an economic tool to boost local development; and the availability of resources to strengthen authoritarian regimes in the region. The regional infrastructure is inadequate and outdated. The Asian Development Bank has estimated that $33 billion per annum would need to be spent between 2016 and 2030 to tackle the infrastructure deficit in Central Asia. Much of the existing connections reflect the hub-and-spoke arrangement that privileged center–periphery relations between Russia and Central Asia during Soviet times. Another problem relates to the Soviet-era rail tracks that are wider than the standard gauge used in China and Europe; this necessitates a timeconsuming transfer of cargo from one set of trains to another, which hardly incentivizes trade. Consequently, SREB infrastructure projects are expected to

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facilitate trade expansion – and hence economic development – for landlocked states like those in Central Asia.34 In fact, it is anticipated to comprise over 100 large- and small-scale projects (roads, railroads, pipelines, industrial parks, and special economic zones) that would improve connectivity between China and Europe via the Central Asian region.35 Central Asian authorities perceive physical infrastructure development projects promoted by the SREB initiative to be critical for the growth of local economies.36 China has already been negotiating with Central Asian countries to partner their development programs with the SREB initiative. For instance, Kazakhstan designed a comprehensive infrastructure development plan called Nurly Zhol and officially linked it to the Chinese BRI in 2015, hoping that it would boost local development.37 Kyrgyzstan has likewise launched its “Taza Koom” or “Smart Nation” program to position the country as the SREB’s digital hub; in 2018, it concluded an agreement with China’s Huawei to transform Osh and Bishkek into smart cities via better management of human resources and urban planning. As for Uzbekistan, the Chinese-built $455 million Kamchiq tunnel has provided direct links between Tashkent and its resource-rich Fergana valley; previously, the latter was only reachable through neighboring countries. SREB-related loans are not conditional on political, economic, or human rights reforms, unlike loans and outright grants disbursed by the EU, Japan, or multilateral lending agencies like the IMF.38 They are hence more attractive to the authoritarian patrimonial regimes of Central Asia, who presumably agree with Uganda’s leader that the Chinese “don’t ask too many questions” and they “come with big money, not small money.”39 Some of these funds are then channeled to regime supporters whose companies partake directly or indirectly in SREB projects, as illustrated by examples in this chapter. This embrace of limited globalization and state-defined modernization therefore facilitates regime entrenchment. At this stage, there has been neither competition nor strong coordinated efforts among Central Asian states to attract loans and draw SREB projects into the region. The over $1 trillion investment package that Beijing is willing to allocate for BRI, including SREB projects, and the loans to Central Asian states seem large enough to preclude intra-Central Asian competition. Moreover, Beijing has always favored bilateral funding arrangements over multilateral provisions, even prior to the SREB, partly due to weak institutions and fragmented links in Central Asia.40 Finally, participation in the SREB is an attempt by Central Asian states to balance against the demands of the traditional regional hegemon, Russia, which continues to dominate the region’s political, cultural, and security realms. The implicit threat to defect to alternative institutions like the SREB allows Central Asian regimes to extract concessions that are more in line with their political and economic interests.41 For instance, following the annexation of Crimea in 2014, Kazakhstan – where almost 20 percent of its population are ethnic Russians – issued repeated statements calling for a negotiated and peaceful settlement. Putin’s response that Kazakhstan was an artificial state drew a sharp

Central Asia in the BRI 61 response from its president, Nurusultan Nazarbayev, who warned that the country would withdraw from the Eurasian Economic Union (EAEU) if its independence were threatened; he also ordered the recall of new textbooks in Kazakhstan showing Crimea to be a part of Russia. As for Kyrgyzstan, it managed to pry $200 million from Russia and $100 million from Kazakhstan to build EAEU infrastructure such as laboratories for export certification as part of its ascension to the organization. It also persuaded Russia to create and seed the Russia-Kyrgyz Fund for Development with $1 billion; this was ostensibly aimed at encouraging the growth of small and medium-sized businesses in Kyrgyzstan to minimize the effects of an influx of Russian goods with the EAEU. Since the death of long-serving President Islam Karimov in 2016, Uzbekistan has likewise wrung concessions out of a Russia concerned about closer Uzbek–China relations. These include preferential prices for Russian military equipment (such prices are usually reserved only for members of the Russian-led Collective Security Treaty Organization which Uzbekistan withdrew from); a simplified customs regime for the export of Uzbek fruits and vegetables into Russia despite the former not being a member of the EAEU; and relaxation of work-registration requirements for Uzbek migrants in Russia whose remittances are significant for Uzbekistan. The unprecedented dependence of Central Asia on Chinese investments and infrastructure interconnectivity, and the fact that most of the national economic development programs are now aligned with the SREB masks several risks for China and, by extension, for the Central Asian regimes. In their hurry to escape from excessive dependence on post-Soviet Russia, the Central Asian states are actually falling into a similar trap in their rush toward China. The nature of this new dependency on China differs from that on Russia since Beijing has never imposed projects or development models on Central Asian governments. Nevertheless, taking full advantage of local governments’ receptivity to Chinese loans, Beijing has been promoting projects with limited positive contribution to the development of local economies and to the livelihoods of the majority of the population. Such an agenda may, in turn, trigger local discontent that adversely affects the results and sustainability of the SREB for all concerned parties, especially China.42 This, and other challenges to the SREB, are addressed below.

Challenges to the SREB: the regional context The success of the SREB in Central Asia will hinge on the interplay of several factors. At the regional level, these include the outcome of, and receptivity to, SREB projects from the Chinese and Central Asian perspectives, as well as the impact of long-standing intra-Central Asian governance issues. At the international level, the degree to which Russia is willing to accept China’s economic dominance in the region and to a lesser extent, the role of interlocutors such as the EU, Japan, and the USA, will also shape the trajectory and future of the SREB.

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Lack of governance, transparency, and accountability Some investment deals do not appear to benefit the wider population and are accompanied by accusations of lax regulation and collusion between Chinese and Central Asian elites to capture SREB-related rents. According to Stuenkel, Chinese officials have privately acknowledged that up to 30 percent of their SREB investments in Central Asia will be lost to corruption.43 Taking full advantage of its privileged position as a major financier of proposed projects, China also promotes no-tender procurement, unlike EU practices. For instance, the Chinese company TBEA was granted an exclusive right and $385 million to refurbish the Bishkek Power Plant. According to the director of the Power Plant, a tender would have been held if Kyrgyzstan had access to non-Chinese sources of funding. A parliamentary report into the scandal, which has embroiled loyalists of former President of Kyrgyzstan Almazbek Atambayev, concluded that $100 million was siphoned off by inflating the prices of materials and equipment.44 In another example, Hong Kong-listed Kaisun Energy was unable to seek redress in Tajikistan’s courts when Tajik authorities charged his company more than twice the profit tax it was obliged to pay by law. In Tajikistan, the Dushanbe-Chanak highway refurbished by Chinese contractors with a $300 million loan from Beijing was transformed into a toll-road shortly after opening, which had been prohibited by local legislation. The operator of the toll-road was said to be a company belonging to the son-in-law of the president.45 In the absence of transparency and accountability, Central Asian regimes have also taken on loans to finance white elephant projects that generate minimal productive return on investment, as per the earlier cited examples in Tajikistan. Such practices divert financing from more urgent areas like public services.46 Moreover, local activists have protested about the lack of respect for environmental concerns, particularly since China is planning to export polluting industries into the region. As part of China’s attempt to deflect criticism of its BRI financing model and accusations of commodity dumping contrary to World Trade Organization rules, China has recently introduced its so-called International Capacity Cooperation policy. As a result, entire factories have been relocated from China to BRI partners, including Central Asia; China secures a pass on “country of origin” rules while host countries are grateful recipients of modern industrial facilities that can, in theory, allow these states to move up the value-added chain instead of simply exporting raw materials. Chinese investors, for example, have increased cement production in Tajikistan tenfold by opening new cement plants. Currently, 13 coal-fired cement plants have the capacity to produce almost five million tons of cement annually, almost all of which are exported. The lack of accountability makes it impossible to check if they comply with environmental regulations, thus causing local discontent. Elsewhere in Aravan in neighboring Kyrgyzstan in 2012, protests occurred after local residents complained about potential environmental damage from a Chinese-run cement plant.

Central Asia in the BRI 63 Sovereign debt China has been accused of being a rogue donor that channels money to, and colludes with, authoritarian regimes to plunder resources; the practice is variously labeled as “new colonialism,” “neo-colonialism” or “debt-trap diplomacy.”47 China is, indeed, the single largest creditor in some Central Asian states where indebtedness is unprecedented and rising. Tajikistan’s debt-to-GDP ratio has risen from 33.4 percent in 2015 to an estimated 56.8 percent in 2018, just in three years, and is estimated to reach 79 percent once SREB-related projects are completed. While taking on debt to finance infrastructure projects can boost local economies, too much debt is dangerous if it fails to boost local economies and generate large-scale revenues and returns to local budgets. The report published by the Center for Global Development, which examined the debt implications of 67 countries with BRI-linked projects, indicates that two Central Asian countries are in the highest risk category.48 In Tajikistan and Kyrgyzstan, authorities have signed-off on exclusive rights in the energy sector, mining, and the use of land.49 Tajik authorities, for instance, ceded 1,100 km2 of land to China and allowed Chinese farmers to till 2,000 hectares of arable land. Additionally, in exchange for $332 million investment in the much-needed Dushanbe-2 coal power plant that began operating in 2012, China’s TBEA company was granted the exclusive right to use and profit from several gold mines until the investment is recouped.50 While Tajikistan currently imports coal from its neighbors Uzbekistan and Kyrgyzstan, it has not gone unnoticed that future power stations may have to import coal from China, which is weaning itself off coal. As for Kyrgyzstan, China’s share in its foreign debt has grown from 2 percent to 41 percent to reach $1.7 billion,51 in a country where public debt is expected to skyrocket from 37 percent in 2016 to 71 percent of GDP as a result of the SREB and which has no hydrocarbon exports with which to service debt repayments. Having taken on so much debt to build Chinese railways, roads, digital facilities, ports, airports, and energy plants, the danger is that the hoped-for trade expansion may not be as bountiful as expected. One reason relates to concerns that the subsidies that make rail freight possible between more than 30 Chinese and European cities may not be sustainable. Subsidies from China range from $1,000 to $7,000 for a 40-foot container52 to encourage rail traffic as a way of minimizing China’s vulnerability to the conventional seaborne route. Consequently, lower economic growth in China or globally may put paid to such largesse. A second reason has to do with onerous customs procedures and trucking monopolies linked to ruling elites in Central Asia that raise the cost of overland trade by one-quarter when crossing borders.53 Such unfulfilled promises may, in turn, threaten social peace and result in blowback against China and the regimes in the region.54 Limited, positive contribution to local economies Central Asian authorities often highlight that the SREB will not simply transform Central Asia into a transit region but will also boost domestic economies,

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raise living standards, and reduce poverty rates that are among the highest in the post-Soviet space. Current projects, however, suggest otherwise. Because Tajikistan and Kyrgyzstan do not have local content requirements, local workers often get short shrift. For instance, Kyrgyzstan’s Osh–Sarytash–Irkeshtam and Bishkek–Naryn–Torugat roads, partly funded by China, were built by a workforce of 30 percent locals and 70 percent Chinese workers, with 60 percent of imported raw materials.55 The situation is similar in Tajikistan, where China is funding Line D of the Central Asia–China gas pipeline (see below) at a cost of over $3 billion. Unfortunately, benefits for the local economy will be tempered; much of that money will go to Chinese contractors since a subsidiary of China National Petroleum Company, based in Tajikistan, is building the pipeline. While suitably skilled local labor or qualified materials suppliers may be difficult to find in these countries, the problem is more likely a function of China’s procurement model. Comparing projects funded by China and by multilateral partners, one report found that 89 percent of contractors were Chinese and 7.6 percent were locals in the former, while 29 percent were Chinese and 41 percent were local in the latter case.56 Indeed, while SREB loans and more generally loans from China are not tied to political, economic, or social reform obligations due to the policy of non-interference in the internal affairs of others, there is implicit conditionality in the form of “tied aid.”57 The latter addresses the interests of Chinese firms since no less than half of the materials, equipment, technology, and services procured must come from China. Non-Chinese companies, including local companies, therefore are somewhat excluded from these lucrative projects. The case of the Central Asia–China gas pipeline is also illustrative of the SREB’s limited, positive impact on local development thus far. Construction of Lines A, B, and C of the pipeline cost the parties around $7.3 billion; China covered half of the cost as its own share and provided loans to Uzbekistan, Turkmenistan, and Kazakhstan for the remaining 50 percent which would be recouped through gas sales.58 Thus, the contribution to Central Asian budgets from gas exports to China will be limited until Chinese investments are recovered. Worse still, Turkmenistan has been affected by the slowing Chinese economy and, hence, demand for gas as well as by the relatively lower price of gas due to a supply glut in the global market. The limited returns from the export of gas, which used to fill up more than half of the budget, has resulted in high inflation, unemployment of over 50 percent, shortage of basic goods, and current account deficits.59 Sinophobia The SREB draws its legitimacy from the funding of infrastructure projects linking countries and markets or “hardware” but has lagged in connecting local spirits and minds or “software.”60 On the one hand, China’s rise inspires admiration in Central Asia, particularly among its leaders and elites. Chinese projects are presented as drivers of economic development in the region and the

Central Asia in the BRI 65 authorities have not taken discernable measures to manage the possible impact of a rapidly increasing Chinese presence in Central Asia. On the other hand, governance issues identified above in Central Asia, coupled with fears of the “yellow peril” promoted by anti-Chinese discourse during the Soviet-era, anger over elite corruption, and concerns over the environmental impact of Chinesefunded projects, have fueled anti-Chinese – and by extension anti-regime – sentiments among the population.61 According to Nargis Kassenova, public opinion seems to be in a counter cycle to the government: while the political elites are warming up for a tight embrace with China, ordinary citizens seem to be growing more worried, with discussions of the “China threat” serving as a staple of public discourse on security and the future of the country.62 For example, in early 2016, protests broke out in major Kazakh cities against attempts to allocate agricultural land for long-term lease since China was assumed to be the main beneficiary. In Kyrgyzstan, the Chinese-managed TaldyBulak Levoberezhny gold mine was shut down after clashes between local employees and Chinese workers. A suicide bomb attack on the Chinese embassy in Bishkek in August 2016 raised fears in Beijing about security vulnerabilities. In addition, a Chinese-run refinery in Kara-Balta was forced to suspend operations temporarily after local demonstrations against pollution.63 More recently, in January 2019, an anti-Chinese rally described as “the biggest public protest to date in Central Asia against Beijing’s growing influence” occurred in Bishkek; protestors called for controls on work permits for Chinese citizens and on Chinese–Kyrgyz marriages and a reduction of Kyrgyz debt to China.64 So far, China has been relying on Confucius Institutes and education programs in promoting people-to-people interactions with the region. Beijing established 11 Confucius Institutes across Central Asia and 23,000 students from the region study at Chinese universities thanks to generous Chinese stipends.65 Unfortunately, these measures have met with limited success in changing local perceptions of China.66 Russian media, and with it the perspectives of the Russian state, is still the staple across Central Asia. The Russian language continues to be the most commonly spoken language by far. Russian universities still enroll far more students from Central Asia – around 50,000 in 2014 – than China or the USA (just over 3,000) although numbers are declining.67 Multi-year surveys since 2012 indicate that more than three-quarters of the population in Kazakhstan and Kyrgyzstan continue to support Eurasian integration today, while the level of support has declined to less than 70 percent in Russia and Tajikistan over the same period.68 At best, SREB-related problems may prompt Central Asian states to reengage more seriously with other external actors. At worst, these could result in yet another popular revolt as happened in Kyrgyzstan in 2005 and 2010. Any such political instability may undermine the viability of the China–Central Asia– Western Asian Economic Corridor. Already, counter-reactions against China’s

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BRI have resulted in political turmoil against incumbent regimes in Sri Lanka and Maldives, which are as deeply indebted to China as Kyrgyzstan and Tajikistan. The analysis in the foregoing section questions the conventional wisdom, implicit in the SREB, that the lack of modern road, rail, and energy infrastructure as well as regional and global interconnectivity explains economic underdevelopment in landlocked countries such as Central Asia. This is because the high logistical cost of transit in the region – from 20 to 40 percent of the total value of goods compared to 5 to 10 percent in China, Europe, and the United States69 – is the outcome of infrastructure deficit as well as governance issues including corruption and accountability deficits. In this regard, it is worth noting two other regional issues likely to hobble the full realization of economic and political benefits as a result of the SREB’s infrastructure-facilitated trade expansion. Political extremism in the region could threaten the stability that is crucial for trade and investments to flourish. Some of the 2,000 to 4,000 Central Asian citizens and more than 300 Uighurs who had left to fight in Iraq and Syria70 may return to invigorate long-standing local movements like the Islamic Movement of Uzbekistan or the East Turkestan Islamic Movement. Nevertheless, it is arguable that authorities in China and Central Asia have a vested interest in exaggerating the threat of Islamic extremism since this justifies continued heavy-handed repression within these states.71 Historical animosities and disputes over pasture, rivers, and borders among the Central Asian states may also boil over into sustained, open conflict that would put paid to the SREB’s transnational connectivity projects. For instance, a shortlived war among transit states of Line D of the Central Asia–China gas pipeline would disrupt supplies from Turkmenistan (which has no border with China) to China. The on-again, off-again China–Kyrgyzstan–Uzbekistan railway that starts in Xinjiang is also symptomatic of the lack of trust between the two Central Asian parties; at stake for China is access to the jointly owned Mingbulak oil field in Uzbekistan where operations have been suspended since 2008 due to an infrastructure deficit. In any case, the passing of the first generation of postSoviet leaders in Central Asia and the recent resolutions between Tajikistan and Uzbekistan of border issues and over the construction of the Rogun dam suggests political will to peacefully manage intra-regional disputes without adverse effects on the SREB. The next section will consider international level challenges to the success of the SREB in Central Asia.

Challenges to the SREB: the international context Russia in Central Asia Russia is the only other major actor that can realistically shape the SREB’s success in Central Asia. Central Asia is important to Russia for a variety of reasons. At a strategic level, it is perceived as an extension of Russia’s backyard and its “natural” sphere of influence; consequently, Russia can legitimately

Central Asia in the BRI 67 claim to be a great power “only if it holds a leadership position in post-Soviet Eurasia.”72 Regime weakness in Central Asia, of which drug trafficking, Islamist terrorism, and popular revolts are symptoms, is also a concern due to potential spillover effects into Russia itself. Moscow’s leadership of the Collective Security Treaty Organization, which counts as members three of the five Central Asian states (Kazakhstan, Kyrgyzstan, and Tajikistan) is an attempt to manage such security concerns. Economically, Russia’s interest is to secure for itself significant influence over energy, resource, and trade flows. The creation of the EAEU, which includes Kazakhstan and Kyrgyzstan, and is aimed partly at re-asserting control over trade flows from China and other non-Union members, is but the most recent expression of this economic interest. Bearing in mind the above strategic, security, and economic interests, it was not surprising that Russia initially regarded as problematic China’s announcement of the BRI, and more specifically, Central Asia’s role in the SREB.73 Even though the reality was that China has edged out Russia as Central Asia’s largest trade partner since 2009 and has invested four times as much as Russia in the region, institutionalizing this status quo was a different matter.74 Moscow therefore sped up the implementation of regional integration initiatives to prevent further loss of Russia’s stature and influence in its post-Soviet space; this culminated in the EAEU in 2015 with Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan as members. In May 2015, four months after the official start of the EAEU and despite its initial reservations about BRI, Russia finally gave its support and proposed linking the EAEU with the BRI in a Greater Eurasian Partnership, thus lending a veneer of formal equality between the two visions. Russia’s turnaround was largely a reaction to its international diplomatic and financial isolation in the wake of its policies in Ukraine. More than ever, Moscow appreciated the strategic complementarity with China; the two countries share similar worldviews, ruling ideologies, threat perceptions about popular revolts in their “backyards,” opposition to greater Western, particularly US, involvement in Eurasia, and counterterrorism goals. Their priorities in Central Asia are also different: Moscow prioritizes political and security relations while Beijing’s focus is on tangible improvements in trade and investment.75 The so-called “division of labor,” in which Russia dominates politics and security while China takes responsibility for economic trade and connectivity, prevents these two great powers from engaging in direct competition.76 Moreover, Russia was buoyed by China’s financial largesse, in particular the conclusion in mid-2014 of a 30-year gas supply agreement worth $400 billion. This relieved diplomatic and economic pressure on Russia in the wake of international sanctions and plummeting oil prices. China has also taken pains to assuage Russia’s concerns about being left out of the BRI by accommodating its request to create a northern economic corridor in Eurasia in September 2014, alongside the existing southern and eastern routes, thereby offering Russia “colossal potential for business cooperation – a chance to

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catch the Chinese wind in the sails of [Russia’s] economy.”77 This was followed by the purchase of a 9.9 percent stake worth $1.1 billion in Russia’s Yamal gas project in the Arctic and a loan of more than $6 billion toward the Moscow– Kazan high-speed rail which would eventually connect to Beijing. Significantly, these investments were financed not through Chinese banks but through China’s Silk Road Fund. In spite of its initial dismissive appraisal of the EAEU, which led one Chinese scholar to suggest collapsing the organization into One Belt One Union,78 China has come to realize, post-Ukraine, that “Russia can and will undermine other powers’ plans in post-Soviet Eurasia if it considers them a threat to its interests. Thus, securing Russian buy-in is essential for major projects there.”79 After all, Russia is adept at maintaining “frozen conflicts” in the post-Soviet space – Nagorno-Karabagh, Transnistria, South Ossetia and Abkhazia, and eastern Ukraine – to maximize its leverage and influence and to keep out other powers. Facilitated by the bonhomie between Presidents Putin and Xi Jinping,80 China continues to align BRI with Russian interests. In January 2018, in response to earlier approaches by Russia, it released a government White Paper to extend BRI to the Arctic to form what is called the “Polar Silk Road” in China and the “Northern Sea Route” in Russia. Compared to the traditional route through the Suez Canal, the melting sea ice facilitates maritime traffic through the Northern Sea Route; this takes 20 days less due to the 40 percent reduction in distance. More importantly, China has calculated that Russia is less likely to close the NSR than the US is to curtail China’s access to the South China Sea through which 80 percent of its energy imports and most of its trade traverse. Ultimately, the larger debate over whether Sino-Russian relations are best characterized as a strategic partnership, an alliance, a “soft” alliance, an entente, an authoritarian axis, a condominium, or a marriage of convenience is an academic one. In the context of their relations in Central Asia, the pertinent point is that for now at least, China recognizes Russia’s legitimate interests in Central Asia, it acknowledges Russia’s capacity and will to act as spoiler, and it is willing to show deference to Russia’s vision for Eurasia while quietly enhancing its superior economic profile in the region. Sino-Russian conflict over Central Asia is, therefore, very unlikely. The impact of other actors in Central Asia Apart from Russia and China, no other actor at the international level boasts a decisive impact on the SREB’s fortunes in Central Asia. The USA’s engagement with the region has consistently piggybacked on other core US interests such as Russia, terrorism, and Afghanistan. For instance, the heyday of US influence in Central Asia was informed by the former’s post-9/11 War on Terror in Afghanistan; all five Central Asian states played key roles as part of the Northern Distribution Network by hosting bases (Kyrgyzstan and Uzbekistan) or providing refueling support for coalition aircraft (Tajikistan, Turkmenistan,

Central Asia in the BRI 69 Kazakhstan). Likewise, the launch of the USA’s New Silk Road initiative in 2011 was predicated upon support for energy projects that bypassed Russia in the wake of the latter’s war with Georgia in 2008. Even though it was one of the cornerstones of this initiative, the CASA-1000 project to deliver electricity from hydropower plants in Kyrgyzstan and Tajikistan to Pakistan and Afghanistan secured only $15 million worth of funding from the USA out of a total estimated cost of $1.2 billion. The announcement in December 2018 by US President Donald Trump that 7,000 troops (or half of all US forces) would be withdrawn from Afghanistan in the wake of the decline of extremist forces like Islamic State and Al Qaeda suggests that Central Asia will become less visible as a direct foreign policy concern. The USA, however, seems happy to offshore its Central Asia policy by lending support to Japan as part of the USA’s nascent Indo-Pacific strategy to counter China’s influence.81 Japan’s Overseas Development Aid and Partnership for Quality Infrastructure financing model offers an alternative to China’s BRI largesse, with Uzbekistan as a top recipient of Japanese development aid. With no conditionality clause, these programs are portrayed as financing wellregulated and high-quality infrastructure with reliable technology using sustainable and local resources, backed by an enviable record of private and public investment in Southeast and South Asia. This is in contrast to the low prices, quick construction times, non-transparent and often controversial developing country experience offered by China’s BRI. Even India, which has been wary of the BRI, has endorsed the principles of quality infrastructure mooted by Japan.82 Although the USA, Japan, and India are unable to match the funding offered by China, the alternative quality infrastructure program “serves to complicate China’s strategic calculus and also maintain a multipolar world as much as possible”83 in Central Asia. What about other actors? The EU is the region’s top trading partner and accounts for one-third of the latter’s total trade turnover, much of it driven by the energy sector. However, its focus in the post-Soviet space is on Russia and the Eastern Partnership states of Ukraine, Belarus, Moldova, and the South Caucasus. Besides, the EU’s values-driven agenda regarding human rights and democratization holds little appeal for the authoritarian regimes of Central Asia. The release of the EU’s new strategy for Central Asia in mid-2019 is not expected to result in much change. South Korea has capitalized on kinship ties to invest in Uzbekistan and Kazakhstan to reduce reliance on hydrocarbon imports from the volatile Middle East. In 2016, for instance, there were over 400 South Korean (and nearly 500 Chinese) companies operating in Uzbekistan.84 Other extra-regional powers include the Gulf states. As part of its strategy to diversify out of hydrocarbons, the UAE has invested in petrochemical plants and the management of special economic zones in Kazakhstan. As for Saudi Arabia, its strategy of containing Iranian influence in the region was underlined when it provided funding in 2017 for Turkmenistan to construct its section of the much-delayed Turkmenistan– Afghanistan–Pakistan–India gas pipeline.

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Conclusion As one of the regions in China’s BRI initiative, Central Asia will potentially be transformed by its people-to-people contacts, by infrastructure and communication networks, and by industrial projects that enhance Central Asia’s participation in the global political economy.85 This chapter has highlighted that the promise of the SREB – that is, the section of BRI in Central Asia – hinges on several considerations at the regional and international levels; the more they pull in opposite directions, the harder it will be for the SREB to reach its full potential in Central Asia. Given that the international environment, in particular Sino-Russian relations in Central Asia, are favorable for the SREB at the moment, the most formidable obstacles are China’s evolving management of SREB projects, governance issues in Central Asia, and public receptivity to the SREB. Ultimately, it is important to recognize that Central Asia is not simply “a vacuum waiting to be filled or controlled.”86 The ability of these regimes to manage, balance, and negotiate their relations with extra-regional powers in the interests of regime security, rent-seeking, and limited modernization is an equally important, although often neglected, part of the equation.

Notes 1 As quoted by Edward Wong, “China Quietly Extends Footprints into Central Asia,” New York Times, January 2, 2011. 2 Marlene Laurelle, “Introduction: China’s Belt and Road Initiative: Quo Vadis?” in China’s Belt and Road Initiative and Its Impact in Central Asia, ed. Marlene Laruelle (Washington, DC: Central Asia Program, George Washington University, 2018): vii. 3 Blank acknowledges that conventional approaches tended to “appropriate Central Asia for what it can do for us rather than what it is to and for the people who live there.” For examples of such approaches and a critique of them, see Stephen Blank, “Rethinking Central Asia and Its Security Issues,” UNISCI Discussion Papers No. 28 (Madrid: UNISCI, 2012). 4 Unless otherwise noted, all figures are in US$. 5 Sam Bhutia, “Who Wins in China’s Great Central Asia Spending Spree?” Eurasianet, October 2, 2019, https://eurasianet.org/who-wins-in-chinas-great-central-asia-spendingspree. 6 Stratfor, “Central Asia’s Economic Evolution from Russia to China,” Stratfor Worldview (2018). 7 Sébastien Peyrouse and Gaël Raballand, “Central Asia: The New Silk Road Initiative’s Questionable Economic Rationality,” Eurasian Geography and Economics, 56(4) (2015): 408. 8 Sebastian Schiek, “Movement on the Silk Road China’s ‘Belt and Road’ Initiative as an Incentive for Intergovernmental Cooperation and Reforms at Central Asia’s Borders,” SWP Research Paper, November 2017. 9 Robert Daly and Matthew Rojansky, “China’s Global Dreams Give Its Neighbors Nightmares,” Foreign Policy, March 12, 2018https://foreignpolicy.com/2018/03/12/ chinas-global-dreams-are-giving-its-neighbors-nightmares/. 10 Asian Development Bank, “Key Indicators for Asia and the Pacific 2017: Kazakhstan,” https://data.adb.org/sites/default/files/kazakhstan-key-indicators-2018.pdf. 11 Bhutia, “Who Wins.”

Central Asia in the BRI 71 12 Asian Development Bank, “Key Indicators for Asia and the Pacific 2017: Kazakhstan,” https://data.adb.org/sites/default/files/kazakhstan-key-indicators-2018.pdf. 13 Andrey Korolev, “Chinese Investments Swallowing Kazakh Economy,” (Китайские инвестиции поглощают экономику Казахстана), 365Info, May 29, 2018, https:// 365info.kz/2018/05/kitajskie-investitsii-pogloshhayut-ekonomiku-kazahstana/. 14 For example, CNPC owns stakes in CNPC-Aktobemunaigaz (94.4%), Mangistaumunaigas (50%), Buzachi Operating (50%), PetroKazakhstan Kumkol Resources (67%) and Kashagan (8.4%); SINOPEC’s subsidiaries include Sazankurak (100%), Prikaspian Petroleum Company (100%) and Sagis Petroleum Company (100%); and CITIC has a 50% stake in Karazhanbasmunai. See Kanat Shaku, “China Rising: Beijing’s Insatiable Appetite Transforms Central Asian Oil and Gas Flows,” Intellinews, July 11, 2017, www.intellinews.com/china-rising-beijing-s-insatiable-appetite-transforms-central-asianoil-and-gas-flows-125124/. 15 Shuhrat Nuryshev, “Kazakhstan and China: Strategic Partnership” (Казахстан и Китай: стратегическое партнерство и добрососедство), Ministry of Foreign Affairs of Kazakhstan website, September 14, 2018, http://mfa.gov.kz/ru/contentview/sahrat-nurysev-kazahstan-i-kitaj-strategiceskoe-partnerstvo-i-dobrososedstvo. 16 Asian Development Bank, “Key Indicators for Asia and the Pacific 2017: Kyrgyzstan,” https://data.adb.org/sites/default/files/kyrgyz-republic-key-indicators-2018_1.pdf. 17 Schiek, “Movement on the Silk Road”: 15. 18 Roman Vakulchuk and Indra Overland, “China’s Belt and Road Initiative through the Lens of Central Asia,” in Regional Connection under the Belt and Road Initiative. The prospects for Economic and Financial Cooperation, ed. Fanny M. Cheung and Ying-yi Hong (London: Routledge, 2018): 121. 19 Asian Development Bank, “Key Indicators for Asia and the Pacific 2017: Tajikistan.” 20 “Tajikistan and Russia: 25 Years of Cooperation” (Россия и Таджикистан: 25 лет сотрудничества), Sputnik, April 7, 2017, https://ru.sputnik-tj.com/infographics/2017 0407/1022020657/rossiya-tadzhikistan-let-sotrudnichestvo-otnosheniya.html. 21 “China Provides Around 50% of Investments to Tajikistan” (Около 50% инвестиций в Таджикистан приходится на Китай), Avesta, January 3, 2018, http://avesta. tj/2018/01/03/okolo-50-investitsij-v-tadzhikistan-prihoditsya-na-kitaj/. 22 “The Course and Results of the Tajik-Chinese Negotiations at the Highest Level,” President of Tajikistan website, September 13, 2014, www.president.tj/en/node/7501. 23 Harinder Kohli, “Looking at China’s Belt and Road Initiative from the Central Asian Perspective,” Global Journal of Emerging Market Economies, 9(1–3) (2018): 6. 24 Asian Development Bank, “Key Indicators for Asia and the Pacific 2017: Turkmenistan,” https://data.adb.org/sites/default/files/turkmenistan-key-indicators-2018_0.pdf. 25 Bhutia, “Who Wins.” 26 Carla P. Freeman, “New Strategies for an Old Rivalry? China–Russia Relations in Central Asia after the Energy Boom,” The Pacific Review (2017): 6. 27 Timur Dadabaev, “Uzbekistan as Central Asian Game Changer? Uzbekistan’s Foreign Policy Construction in the Post-Karimov Era,” Asian Journal of Comparative Politics (2018): 9. 28 Dadabaev, “Uzbekistan as Central Asian”: 10. 29 Abdul Kerimkhanov, “Uzbekistan, Russia Increase Trade Turnover by 21.2 Percent,” Azerinews.az, January 23, 2019, www.azernews.az/region/144466.html. 30 Lai Youwei and Wu An, “ Ideas and Policies for Promoting the Belt and Road Economic Corridor,” DRC Research Report No. 187, 2018. 31 Figures are cited by Qiang Wang, Shuyu Li, and Rongrong Li, “China’s Dependency on Foreign Oil Will Reach 80% by 2030: Developing a Novel Nmgm-Arima to Forecast China’s Foreign Oil Dependence from Two Dimensions,” Energy, 163 (2018). 32 This claim was made by a senior executive at Kazakhstan’s state-owned energy company, KazMunayGas as cited by Hao Tian, “China’s Conditional Aid and Its Impact in Central Asia,” in China’s Belt and Road Initiative and Its Impact in Central

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Li-Chen Sim and Farkhod Aminjonov Asia, ed. Marlene Laruelle (Washington, DC: Central Asia Program, George Washington University, 2018): 30. The quote is by the director of the Regional Anti-Terrorism Structure within the Shanghal Cooperation Organization, as cited in Colin Mackerras, “Xinjiang in China’s Foreign Relations: Part of a New Silk Road or Central Asian Zone of Conflict?” East Asia, 32 (2015): 36. When Tsarist Russia started building its rail network in the nineteenth century, it worried about invasion from a rail-borne foreign army and hence made tracks wider than the standard gage used in China and Europe. Vakulchuk, Roman and Indra Overland, “China’s Belt and Road Initiative through the Lens of Central Asia,” in Regional Connection under the Belt and Road Initiative. The Prospects for Economic and Financial Cooperation, ed. Fanny M. Cheung and Ying-yi Hong (London: Routledge, 2018): 115. Harinder Kohli, “Looking at China’s Belt and Road Initiative from the Central Asian Perspective,” Global Journal of Emerging Market Economies, 9(1–3) (2018): 6. Hao Tian, “China’s Conditional Aid and Its Impact in Central Asia,” in China’s Belt and Road Initiative and Its Impact in Central Asia, ed. Marlene Laruelle (Washington, DC: Central Asia Program, 2018): 30. Schiek, “Movement on the Silk Road”: 22. Anja Manuel, “China Is Quietly Reshaping the World,” The Atlantic (2017). Sarah Lain, “The Potential and Pitfalls of Connectivity along the Silk Road Economic Belt,” in China’s Belt and Road Initiative and Its Impact in Central Asia, ed. Marlene Laruelle (Washington, DC: Central Asia Program, 2018): 9. See Thomas Pedersen, “Cooperative Hegemony: Power, Ideas and Institutions in Regional Integration,” Review of International Studies, 28(4) (2002); Filippo Costa Buranelli, “Spheres of Influence as Negotiated Hegemony – the Case of Central Asia,” Geopolitics, 23(2) (2018). Filippo Costa Buranelli, “One Belt, One Road and Central Asia: Challenges and Opportunities,” in The Belt & Road Initiative in the Global Arena, ed. Y. Cheng et al. (Singapore: Palgrave Macmillan, 2018): 220. Oliver Stuenkel, “The Political Economy of China’s New Silk Road,” Post-Western World, November 6, 2016. International Crisis Group, “Central Asia’s Silk Road Rivalries.” Safovudin Jaborov, “Chinese Loans in Central Asia: Development Assistance or ‘Predatory Lending’?” in China’s Belt and Road Initiative and Its Impact in Central Asia, ed. Marlene Laruelle (Washington, DC: Central Asia Program, 2018): 35, http:// centralasiaprogram.org/wp-content/uploads/2018/01/OBOR_CAP_2018.pdf. Sam Reynolds, “For Tajikistan, the Belt and Road Is Paved with Good Intentions.” Jean-Marc F. Blanchard, “Revisiting the Resurrected Debate About Chinese Neocolonialism,” The Diplomat, February 8, 2018; Sui Noi Goh, “China’s President Xi Jingping Pushes Back against Charge of New Colonialism,” The Straits Times, September 3, 2018; Brahma Chellaney, “China’s Debt-Trap Diplomacy,” Project Syndicate, January 23, 2017. John Hurley, Scott Morris, and Gailyn Portelance, “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective,” CGD Policy Paper (Washington, DC: Center for Global Development: 2018): 14, www.cgdev.org/publica tion/examining-debt-implications-belt-and-roadinitiative-policy-perspective. Yueyi Chen, “Belt and Road Initiative Increases Sovereign Debt Risks in Tajikistan,” Global Risks Insight, July 23, 2018, https://globalriskinsights.com/2018/07/belt-and-roadinitiative-increases-sovereign-debt-risks-in-tajikistan/. Sam Reynolds, “For Tajikistan, the Belt and Road Is Paved with Good Intentions.” As cited by a Kyrgyz member of parliament in Maria Levina, “Kyrgyzstan Searching for Ways to Get out of Debts,” The Times of Central Asia, May 6, 2018.

Central Asia in the BRI 73 52 Jonathan E. Hillman, “The Rise of China–Europe Railways,” Report, Center for Strategic & International Studies, March 6, 2018. 53 Jean-Francois Arvis, Gaël Raballand, and Jean-Francois Marteau, The Cost of Being Landlocked: Logistics Costs and Supply Chain Reliability (Washington, DC: The World Bank, 2010). 54 Kemal Kirişci and Philippe Le Corre, “The New Geopolitics of Central Asia”; Sébastien Peyrouse and Gaël Raballand, “Central Asia: The New Silk Road Initiative’s Questionable Economic Rationality,” Eurasian Geography and Economics 56(4) (2015): 405. 55 As cited by Ramtanu Maitra, “Kyrgyzstan and Tajikistan: The Crucial Challenge in Central Asian Development,” EIR News Service, February 3, 2017. 56 Jonathan E. Hillman, China’s Belt and Road Initiative: Five Years Later (Washington, DC: Center for Strategic and International Studies, 2018). 57 Tian, 27–28. 58 “China Pipelines Sold Far Below Cost,” Newzasia, December 28, 2015, www.newzasia. com/2015/12/28/china-pipelines-sold-far-below-cost/. 59 Stronski, Getty Paul, “Turkmenistan at Twenty-Five: The High Price of Authoritarianism,” Carnegie Endowment for International Peace, January 30, 2017, http://carne gieendowment.org/2017/01/30/ turkmenistan-at-twenty-five-high-price-ofauthoritarianism-pub-67839. 60 Filippo Costa Buranelli, “One Belt, One Road and Central Asia,” 220. 61 See International Crisis Group, “Central Asia’s Silk Road Rivalries”; and Marlene Laruelle and Sébastien Peyrouse, The Chinese Question in Central Asia: Domestic Order, Social Change, and the Chinese Factor (New York: Colombia University Press, 2012). 62 Kemal Kirişci and Philippe Le Corre, “The New Geopolitics of Central Asia: China Vies for Influence in Russia’s Backyard What Will it mean for Kazakhstan?” Brookings, January 2, 2018, www.brookings.edu/blog/order-from-chaos/2018/01/02/thenew-geopolitics-of-central-asia-china-vies-for-influence-in-russias-backyard/. 63 International Crisis Group, “Central Asia’s Silk Road Rivalries,” ICG Report 245, July 27, 2017, www.crisisgroup.org/europe-central-asia/central-asia/245-central-asiassilk-road-rivalries. 64 “Kyrgyz Police Disperse Anti-Chinese Rally,” Reuters, January 17, 2019. 65 Indra Overland and Roman Vakulchuk, “China’s Belt and Road Gets a Central Asian Boost: Uzbekistan’s Transformation Will Fast-Track the New Silk Road,” The Diplomat, May 3, 2018, https://thediplomat.com/2018/05/chinas-belt-and-road-gets-acentral-asian-boost/. 66 Roman Vakulchuk and Indra Overland, “China’s Belt and Road Initiative through the Lens of Central Asia,” in Regional Connection under the Belt and Road Initiative. The Prospects for Economic and Financial Cooperation, ed. Fanny M. Cheung and Ying-yi Hong (London: Routledge, 2018): 118. 67 Figures are cited by Douglas Blum, “Central Asian Students between Russia and the West,” PONARS Eurasia Policy Memo (2014). 68 EDB, EDB Integration Barometer 2017 (Moscow: European Development Bank, 2018). 69 Sobir Kurbanov, “The Importance of Anticorruption, Trade, and Investment Climate Reform in Central Asia in the BRI Context,” in China’s Belt and Road Initiative and Its Impact in Central Asia, ed. Marlene Laruelle (Washington, DC: Central Asia Program, George Washington University, 2018): 91. 70 Colin P. Clarke and Paul Rexton Kan, “Uighur Foreign Fighters: An Underexamined Jihadist Challenge,” International Center for Counter-Terrorism, November 15, 2017. 71 See Edward Lemon, “Assessing the Terrorist Threat in and from Central Asia,” Voices on Central Asia, September 27, 2018; John Heathershaw and David W. Montgomery, “The Myth of Post-Soviet Muslim Radicalization in the Central Asian Republics,”

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Li-Chen Sim and Farkhod Aminjonov Chatham House, November 14, 2014; Reid Standish, “Putin to Central Asia: Let Daddy Save You from the Islamic State,” Foreign Policy (2015). Richard Sakwa, “How the Eurasian Elites Envisage the Role of the EEU in Global Perspective,” European Politics and Society 17, no. 1 (2016): 4–22. For a selection of Russian commentary about BRI, see Ivan Timofeev, Yaroslav Lissovolik, and Liudmila Filippova, “Russia’s Vision of the Belt and Road Initiative: From the Rivalry of Great Powers to Forging a New Cooperation Model in Eurasia,” China & World Economy 25(5) (2017): 63. In contrast, Russia backed the creation of a similar BRICS Development Bank since India and Brazil’s economic weight and voting rights would help counterbalance that of China. The estimate of China’s investments in Central Asia is from Alice Ekman et al., “Three Years of China’s New Silk Roads: From Words to (Re)Action?” Études de l’Ifri, February 2017). Marcin Kaczmarski, “Two Ways of Influence-building: The Eurasian Economic Union and the One Belt, One Road Initiative,” Europe–Asia Studies, 69(7) (2017): 1028. Morena Skalamera, “Russia’s Lasting Influence in Central Asia,” Survival 59(6) (2017) 123–142. For an analysis of BRI as a flexible work in progress that is constantly adjusted in line with realities on the ground with regard to stakeholder diversity and project scope, see Ekman et al., “Three Years.” The quote is by Vladimir Putin, “Russia and the Changing World,” RT.com, February 27, 2012. The scholar, Yang Lei, is cited by Gilbert Rozman, “The Sino-Russia–US Strategic Triangle: A View from China,” The Asan Forum (2019). As quoted by Samuel Charap, John Drennan, and Pierre Noel, “Russia and China: A New Model of Great Power Relations,” Survival, 59(1) (2017): 34. The fact that Yamal LNG was owned by Novatek, a rare, privately held gas company owned by President Putin’s close associate, Gennady Timchenko, was not lost on the Chinese. For Chinese assessments of the EEU, see Jeanne L. Wilson, “The Eurasian Economic Union and China’s Silk Road: Implications for the Russian–Chinese Relationship,” European Politics and Society, 17(1) (2016): 118. China has continued to incentivize Russia’s buy-in. In December 2016, the Silk Road Fund purchased 10 percent of SIBUR, a leading Russian gas processing and petrochemicals company; with this, China now owns 20 percent of SIBUR. For potential conflicts between Russia and China over BRI, see Paul Stronski and Nicole Ng, “Cooperation and Competition: Russia and China in Central Asia, the Russian Far East, and the Arctic,” Carnegie Endowment for International Peace, February 28, 2018. On the role of personal relations between the leaders, see Bo Xu and William M. Reisinger, “Russia’s Energy Diplomacy with China: Personalism and Institutionalism in Its Policy-Making Process,” 32(1) (2019); Morena Skalamera Groce, “Uncovering the Domestic Factor in the Sino-Russian Energy Partnership,” Geopolitics (2018). See, for example, Stephen Blank, “Central Asia: Trump’s Newfound Ally?” Navigator, January 17, 2018. Tobias Harris, “Quality Infrastructure: Japan’s Robust Challenge to China’s Belt and Road,” War on the Rocks (2019). As cited by Keith Johnson, “Japan’s Own Belt and Road,” Foreign Policy (2018). Figures cited by Timur Dadabaev, “Japan Attempts to Crack the Central Asian Frontier,” AsiaGlobal Online, August 30, 2018. As Cooley and Heathershaw (2018) have argued, it is a misconception that Central Asia is currently isolated from the global economy. The region’s regimes have, in fact, made selective use of global financial networks to advance their kleptocratic tendencies. Troy Sternberg, Ariell Ahearn, and Fiona McConnell, “Central Asian ‘Characteristics’ on China’s New Silk Road: The Role of Landscape and the Politics of Infrastructure,” Land, 6(55) (2017).

5

China’s Maritime Silk Road The Horn of Africa and Red Sea David Styan

Introduction Addis Ababa, Ethiopia’s highland capital city, sits 3,000 meters above sea level, providing a unique vantage point from which the physical impact of China’s Maritime Silk Road Initiative (MSRI) infrastructure in the Horn of Africa can readily be seen. It is also home to the headquarters of the African Union and as such it is the diplomatic and political capital of the African continent, as well as the de facto regional hub for the states of the Horn of Africa.1 It is China’s ties with these states, most of which long pre-date Chinese foreign policy initiatives under President Xi Jinping, which are the subject of this chapter. It focuses primarily on the BRI’s considerable impact on Ethiopia and Djibouti, while briefly considering China’s impact on the neighboring states of Somalia (and its autonomous northern province, Somaliland), Eritrea, and both North and South Sudan. China’s investment in Sudan and its oil industry goes back quarter of a century, predating both the Belt and Road Initiative (BRI) and the secession of Southern Sudan in 2011. As such, Sino-Sudanese relations stand largely apart from more recent MSRI investments in the Horn. The topography of the Rift Valley, coupled with a little imagination, allows one to visualize what the Maritime Silk Road actually looks like in this specific region. Like everywhere else, Ethiopia’s booming indigenous film and music industry now routinely uses drones for aerial shots. Were they to launch a Chinese drone camera from the 48th floor of the almost completed tower being built by the China State Construction Engineering Corporation (CSCEC) for the Commercial Bank of Ethiopia, one would get a bird’s eye view of the forest of new skyscrapers. Sprouting near the derelict old railway station, many are built by Chinese contractors. Zoom higher out and Chinese infrastructure is everywhere visible. By 2015 the city had already spilled beyond the irregular loops of Addis Ababa’s ring-road, which, at over 40 km long, was completed in stages since 1998, primarily by the China Road and Bridge Corporation. More spectacularly, since 2015 a Chinese-designed and managed Urban Light Railway has bisected the old neighborhoods of rusty corrugated roofs. To the northwest sits the silver spaceship of the African Union headquarters, a gift from Beijing in 2012. Its rounded contours are now rivaled by a colossal new national stadium

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complex to the East, just one of several other major CSCEC building sites in Ethiopia. Our drone would soon spot Addis’s most explicit physical link to the Maritime Silk Road: the new electric railway snaking out of Addis’ southern suburbs. Here the Ethio-Djibouti railway, the backbone of China’s new presence in the Horn, begins its 750 km journey south-eastwards. En route it passes several new industrial zones, home to a growing number of Chinese and other Asian manufacturers. It then descends from the highlands through desert now punctuated with central-Asian style stations, to the ports of Djibouti on the Red Sea coast. These sit on the key shipping routes linking Europe to Asia, more explicitly the Chinese ports of Shenzhen, Shanghai and Dalian beyond. In the Horn, these shipping lanes converge on the Bab al-Mandab straits. Barely 30 km wide, the straits squeeze between the Yemeni, Eritrean and Djiboutian coasts at the foot of the Red Sea. Just south of the Bab al-Mandab, across the Gulf of Tadjourah lies Djibouti’s eponymous capital city and port complex. Part-owned by the Shenzhen-based China Merchants Group, the ports are not only the terminus for the Addis railway, but now also host the first-ever overseas base of China’s People’s Liberation Army Navy (PLAN), which has been active alongside other maritime powers in anti-piracy activities in these waters for a decade. In barely five years, Djibouti has become the fulcrum of a range of MSRI projects, comprising the physical infrastructure of rail, fiber-optic cables and telecoms links, ports and free trade zones. As such Djibouti almost perfectly incarnates the second core coordination priority of the 2013 Visions and Actions document regarding connectivity.2 Although in 2018 still at a relatively embryonic stage, MSRI investments in Djibouti also involve the first tangible presence in Africa of “soft” infrastructure of banking and data management, including a putative system to facilitate global ports’ payments transfers. This chapter highlights a paradox; one the one hand, in addition to the overwhelming economic dimension of the MSRI, China has an extensive diplomatic and military presence in the countries of the Horn itself, including its inaugural overseas military installation in Djibouti. Yet the evidence suggests that China has not, at least to date, had a significant impact on the Horn’s putative regional security complex (RSC) characterized by both complex inter-regional inter-state and state-rebel rivalries and wars, as well as substantive United States’ and multilateral military presences.3 To date Beijing’s MSR presence in, and impact on, the states of the Horn of Africa themselves is, above all, economic. However, as the chapter explains, at sea – that is, in the actual maritime context of the MSRI – this is nuanced somewhat by the manner in which China’s antipiracy role off Somalia has been used by the PLAN as an anchor for their expansion, both in the Indian Ocean and globally.4 The chapter is structured in three sections. Following some historical context to China’s ties with the region, a first substantive section opens by examining the physical infrastructure projects which, de facto, constitute the MSRI in the region. It analyzes select aspects of the domestic political and economic impetuses and reception of BRI cooperation, highlighting that there are two specific

China’s Maritime Silk Road 77 factors shaping the MSRI in the Horn. The first is Ethiopia’s status as a fastgrowing developmental state that is explicitly positioning itself globally as a manufacturing hub using Asian templates, infrastructure and finance. Second, Djibouti’s own pre-existing developmental strategies dovetailed well with Beijing’s priorities for the MSRI. Djibouti has few natural resources and lives primarily from income generated from its ports, benefiting from its military and commercial strategic location at the crossroads between Asia, Africa and Europe. Thus, Djibouti’s long-term economic aims are to consolidate its role as a gateway for Ethiopia’s trade, and to ensure it grows as a regional trade hub, notably for container trans-shipments. These domestic priorities chimed well with Chinese ambitions for the MSR – most explicitly those of one of the leading commercial actors in the Initiative, the China Merchants Group (CMG), which seeks in part to replicate its own successes in spearheading economic growth and commercial expansion from its Shekou base near the southern city of Shenzhen, just across the border from Hong Kong. This was China’s first Special Economic Zone, established in 1979, and acted as a template for other SEZs in China, which now in turn the MSRI seeks to replicate in Africa and elsewhere.5 This section then focuses on two specific policy aspects of BRI that appear particularly pertinent to the Horn. First, it examines the nature of Ethiopia’s nascent industrial zones, and asks to what degree these are integral to the BRI scheme. After analyzing Djibouti’s own policy priorities, it then examines specific economic weaknesses of BRI in the region, in particular the debates around debt sustainability, which in the Djiboutian case has prompted comparison with Sri Lanka’s decision to rescind ownership of the Hambantota port to China. The chapter thus evaluates selected political and economic risk considerations for China’s BRI in the Horn of Africa; it argues that to date these have been largely economic, linked to the large-scale and poor project management, notably on the railway. In both cases, an argument can be made that local priorities appear to have coincided with Beijing’s prerogatives and desire to reformat key components of African policy within the MSR framework. As such, we should be mindful both of the manner in which African agency molds Beijing’s blueprint to its own ends, and that the MSRI itself is malleable enough to take different regional and national approaches to specific individual states. The second section evaluates the Horn’s unique status as, at least to date, the only Chinese military installation on the MSRI. It examines the evolution of Beijing’s naval presence in the Western Indian Ocean. This developed via its participation in multilateral anti-piracy activities. The chapter notes that China’s justification for establishing a military facility in Djibouti is very similar to other global (US, EU, Japan) and regional (United Arab Emirates, Turkey) powers, all of which now have military facilities in the Horn. In the region it is Djibouti which has the most extensive experience of hosting overseas military facilities; as such it was both logistically and politically straightforward for its government to host China’s naval base, which nestles within the

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large Chinese-owned and constructed civilian multi-purpose port discussed in section one. Djibouti’s government embraced China’s naval base, ignoring US and EU reservations. Notwithstanding this, the chapter argues that China’s presence has not fundamentally altered the regional balance of power. Nor has it significantly modified the stance of the de facto dominant regional military player in the Horn – Ethiopia.6 The third and final section examines local and global powers’ responses to the new Chinese commercial and military presence in the region. To what extent do these modify regional security equations? Both the US and European states have extensive policy engagement, both civil and military, in the Horn of Africa. As indicated above, the chapter suggests that the impact in the short term is limited. China’s regional policy priorities are closely aligned with Western powers across issues such as anti-piracy, Islamist violent terrorism emanating from neighboring Yemen and Somalia, peacekeeping in Sudan, and stability in Saudi Arabia and other GCC states. As such there is little evidence that China’s interaction with the US and other powers has really modified BRI priorities. However, this may shift due to Beijing’s growing political implication in multilateral affairs in Africa and the Middle East, not least via the Red Sea and the Horn of Africa.

Historical context: China’s pre-BRI ties with the Horn of Africa China’s economic and political ties with the Horn have expanded rapidly over the past decade. Yet, to understand the nature and impact of recent BRI investment in the region it is important to stress that Beijing’s ties with the Horn of Africa did not start with the BRI, and that the initiative’s policy priorities do not encapsulate the totality of China’s ties in the region. Ethiopia’s dense relations with China pre-date the BRI, yet the ruling party has adopted a “developmental state” set of economic policies partly inspired by China’s recent growth strategy, which has a significant effect upon the configuration of key BRI initiatives in the Horn. In contrast, Djibouti’s ties with Beijing are more recent and more strategic in nature, so the relationship is profoundly shaped by BRI initiatives. Ethiopia opened cultural ties with Beijing gradually in the early 1960s, simultaneously shifting diplomatic support behind the PRC in the UN. Addis Ababa formally recognized the Beijing government in 1970, a delay that reflected the PRC’s support for the rebel insurgency in Eritrea; aid to the Eritrean liberation fronts stopped after recognition.7 Despite Ethiopia’s Marxist-backed revolution in 1974, Chinese ties remained low-key due to Sino-Soviet tensions and substantive Soviet backing for Ethiopia’s revolutionary government.8 This Cold War background is one of several reasons why the rebel force that took power in 1991, the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF), forged substantive ties with Beijing. Diplomatic and military exchanges intensified over the subsequent two decades. Prime Minister Meles Zenawi and other key EPRDF ministers regularly visited Beijing, and by 2010

China’s Maritime Silk Road 79 Chinese state-owned enterprises (SOEs) were the leading contractors in upgrading Ethiopian infrastructure. Chinese projects include extensive road building, including the Addis ring-road; a $70 million first-phase expansion of Addis’s Bole airport; an Urban Light Rail network in the capital; several hydroelectric projects; and key contracts for ZTE and Huawei in the rapid expansion of Ethiopia’s telecommunications network which, even in 2010, remained one of the least developed in Sub-Saharan Africa. The vast majority of these were funded by China’s state-owned Exim Bank. A private consortium of Chinese investors also opened Ethiopia’s first industrial zone in Dukem, 30 km south of Addis Ababa. Early in the century, Ethiopian Airlines (EAL), Africa’s leading carrier, had also pioneered direct passenger and cargo flights between Africa and China. By 2019 EAL flew scheduled flights to 14 Chinese cities, with Addis Ababa’s Bole airport – now expanded twice by Chinese contractors since 2004 – being Africa’s principal aviation hub with China. The depth of Chinese infrastructure projects in Ethiopia prior to the 2013 announcement of the BRI follows a similar pattern throughout the region. The Ethio-Djiboutian railway, the first stage of which was signed in 2011, is pivotal to China’s presence in the region. Initial Chinese investment in Djibouti’s port also dates from 2011 to 2012. This is also the case for China’s substantive investments in Sudan’s oil industry, discussed below. The same is true of China’s most substantive symbolic diplomatic investment in the Horn, the African Union headquarters. Opened in 2012 at a cost of $200 million, the vast complex was paid for and constructed by China. It is important to note that China had become a significant supplier of weaponry to Ethiopia, particularly during its border war with Eritrea between 1998 and 2000. However, such arms sales were largely commercial. China also sold arms to Eritrea, as well as other regional governments such as Sudan. It did not seek or obtain privileged military links with Addis Ababa. Thus, at least until 2015, Beijing remained a relatively marginal player in both regional security in the Horn of Africa, and in terms of wider foreign involvement in multilateral peacekeeping in Africa, notably in Somalia (the African Union-led Mission to Somalia – AMISOM) and Sudan. In terms of both active diplomacy and multilateral peacekeeping in East Africa, China’s most substantive participation has been in Sudan. Yet this, too, pre-dates the BRI. In 1996, the China National Petroleum Company (CNPC) acquired a dominant stake in Sudan’s oil industry, the first such Chinese investment in Africa. Sudan’s protracted civil wars, culminating in the independence of Southern Sudan – where the principal oilfields are located – in 2011, was followed in 2013 by internecine strife and the collapse of government in the south. NPC’s substantive investments tested China’s principle of noninterference in the domestic affairs of other states, as it engaged in the peace process held in Ethiopia, hosted discreet talks among warring factions in Sudan, shaped UN Security Council action,

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China also included protection of oil workers in the UN peacekeeping mission’s mandate in 2014 and deployed its first-ever peacekeeping infantry battalion of 700 troops to South Sudan in January 2015. As China’s largest commitment to UN peacekeeping, this is of broader significance. While Beijing’s multilateral engagement in Southern Sudan’s civil war has diplomatic ramifications for other powers in the Horn, most notably Ethiopia, there are few military repercussions in the wider region from internal Sudanese matters. However, the deployment of Chinese troops to UN missions in Sudan helped provide logistical and political justifications for China’s military presence in Djibouti. China’s wider commercial presence has facilitated changes in Ethiopian, Somali and Eritrean policies, and is part of a broader configuration of US, EU and Arab policies in the region. Their geostrategic significance is further boosted by both the ongoing famine and war in Yemen, which has had far greater regional impact than war in Southern Sudan.

What constitutes the BRI in the Horn of Africa? This section outlines the physical infrastructure projects that constitute the BRI, or more specifically its MSRI, in the region, focusing on the domestic political and economic drivers, as well as local attitudes toward BRI cooperation. Two specific factors are significant. The first is Ethiopia’s status as a fast-growing developmental state, positioning itself globally as a manufacturing hub using Asian models, infrastructure and finance. The second is Djibouti’s significant role in the MSRI. Principal BRI infrastructure investments in the Horn In the absence of a definitive list of BRI projects or partners there is no clear answer as to which Chinese investments actually constitute the MSRI in the Horn of Africa. However, there are four clear examples of infrastructure projects: the Ethio-Djibouti railway; diverse new ports installations in Djibouti; Chinese-backed manufacturing and export zones in Ethiopia; and finally, a series of pipeline and telecommunications projects. The latter link regional states (Ethiopia and Djibouti, but potentially including Somalia, Sudan and Eritrea in the future), both to each other and to the MSRI. On MSRI maps, Djibouti features as a key nodal hub, comparable to the Sri Lankan ports of Colombo and Hambantota or Gwadar in Pakistan, providing access to the Indian Ocean for the China–Pakistan Economic Corridor (CPEC).10 Djibouti’s ports on the Gulf of Aden and Red Sea are key to linking the region to China and Europe.

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The Djibouti–Ethiopia rail link The first MSRI component and the physical and financial centerpiece of China’s investment in the Horn is the renovated Djibouti–Ethiopia rail link. Formally inaugurated in 2016, comprehensive commercial services for both cargo and passengers were scheduled to open fully in 2018. The 750 km railway is central to plans for regional economic integration in the Horn. As such, the railway is arguably the most tangible component of the MSRI in East Africa to date. While it should drastically cut costs for all of Ethiopia’s foreign trade, its specific role is to provide a maritime outlet for Ethiopia’s burgeoning industrial zones – themselves part-planned and financed by China, and now attracting Chinese companies producing for a global market. With the first contracts signed in 2011, the railway renovation project cost an estimated $3.5 billion. China Exim Bank financed 70 percent of the cost with the remaining 30 percent financed by the Ethiopian government, with 650 km of the track traversing Ethiopia. China Railway Construction Corporation (CRCC), under a separate contract which the Djiboutian government signed in February 2012, built the final 100 km segment across Djibouti to its ports. It is difficult to analyze China–Ethiopian ties separately from those with Djibouti. Yet the impact of MSRI projects on the two states is very unequal due to their vastly differing sizes. In Ethiopia’s case, with its population of just over 100 million and clear economic growth plans, the Addis-Djibouti railway is just one component in an ambitious national infrastructure plan, including several other railways currently under construction. The same Chinese companies who built the Djibouti line also implemented the Addis Ababa Urban Light Railway system, operational since late 2015, one of several large prestige Chinese construction projects in Addis Ababa. These include the 2012 African Union building, several private and state-owned banking headquarters, and a new national sports stadium. China’s presence in Djibouti’s ports: port authority, free zones and Doraleh ports The Shenzhen-based maritime conglomerate China Merchants Group acquired a 23.5 percent equity stake in Djibouti’s state-owned port authority in 2012–2013. Evidently, negotiations over CMG’s investment in the port were well advanced long before the inauguration of the MSRI. However, CMG has gone on to be a major player in China’s maritime expansion and is the lead investor in Djibouti’s main MSRI project, the Doraleh Multi-Purpose Port (MPP).11 This lies just to the west of the capital, beyond the separate Doraleh Container Terminal which, until early 2018, was managed and part-owned by the Emirati Dubai Ports World (DPW) group. Doraleh MPP encompasses container, general, and bulk cargo facilities. Work on the $590 million port began in mid-2013 and it opened in May 2017; the Djiboutian authorities, CMG and Dalian Ports are the principal investors.

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The 1.2 km quayside provides deep-water moorings that can accommodate up to six of the world’s largest cargo ships simultaneously.12 The new facilities massively increase Djibouti’s trans-shipment trade capacity and introduces an element of competition into the Djibouti–Ethiopian trade corridor.13 Contractually, the Doraleh MPP is separate from the surrounding Djibouti International Free Trade Zone (DIFTZ). However, Chinese management of the FTZ was announced in January 2016, at the same time as the launch of new regulatory frameworks for Chinese banks and trans-shipment companies operating in Djibouti. The first phase of DIFTZ opened in July 2018, adjacent to CMG’s new Multi-Purpose Port at Doraleh. Such FTZs are an integral part of the MSRI and in terms of the Horn of Africa are planned to be linked by road and rail to inland logistics centers close to Chinese industrial parks in highland Ethiopia. DIFTZ enhances China’s commercial presence in the Red Sea, with COSCO and other Chinese companies having established comparable ports closer to Suez, further north in the Red Sea.14 Ethiopia’s export zones If and when it is completed, Djibouti’s Free Trade Zone is planned to cover 4,800 hectares at a cost of $3.5 billion, in theory the largest free trade zone in Africa. Its size reflects the ambitions of both the Chinese and Ethiopian authorities, whose exports it is primarily designed to handle. The Ethio-Djibouti railway and the associated ports’ infrastructure are integrally linked to the Ethiopian government’s ambitious developmental strategies. These seek to effect rapid industrialization via a series of newly established, export-orientated, Special Economic Zones (SEZs) which benefit from Ethiopia’s low labor and hydroelectric costs.15 The first of these, the Eastern Industry Zone, was opened in 2009. Based in Dukem, 30 km south of the capital Addis Ababa, it was established initially by two Chinese groups, with the aim of attracting further Chinese companies. By 2018 there were ten further industrial parks in Ethiopia, all but three of them on the principal Addis-Djibouti corridor. In its BRI projects, Ethiopia is especially focused on two cooperation priorities: unimpeded trade and facilities connectivity. Ethiopia’s mixed progress to date, and whether the SEZ experiment is to prove successful and mutually beneficial, remains to be seen. Early results are mixed: several of the original private Chinese investors have withdrawn from the SEZs, and Ethiopia’s net exports have yet to increase. Pipelines, fiber-optics, fintech and telecommunications Beyond rail and port investments, Djibouti is home to several other strands of MSRI activities. In financial terms, after the railway and MPP, the third most significant Chinese project is a $340 million aqueduct, able to pump 100,000 m2 per day of fresh water from Ethiopia to Djibouti, which suffers from water

China’s Maritime Silk Road 83 shortages. Djibouti is also the anticipated terminus for gas pipelines to bring gas from Chinese-developed oil and gas fields in Ethiopia’s south-eastern Ogaden province. Chinese telecommunication companies are also part-investors in the Djibouti International Free Trade Zone, following an investment template used elsewhere in Africa.16 China Merchants Group owns a 15 percent stake in the digital data giant IPZ, which plays a key role in China’s promotion of global e-payments systems. China Merchants and IPZ jointly formed “Silk Road E-Merchants” to promote a “Global Port Alliance,” a networked system of e-payments and container logistics, linking 29 ports and 55 container terminals on the MSRI.17 In the Horn, Djibouti hosts Africa’s first branch of the International Silk Road Bank and a Big Data Centre run by IPZ.18 Ethiopia’s industrial zones: the BRI facilitating inward investment? For Ethiopia, the domestic political and economic impetus for engaging with China is clear. From the mid-1990s, the EPRDF government emphasized the need for massive infrastructure development as the centerpiece of its economic development plans. Sustained GDP growth in the second decade of the twentyfirst century was underpinned by investment, notably in roads, rail and telecommunications, which only China seemed able and willing to provide.19 Growth, in turn, accelerated the need for additional infrastructure, to link and further expand fast-growing cities, hence the Urban Light Railway and intensive Chinese SOE involvement in prestige construction projects in Addis. The EPRDF, with Marxist roots and having inherited and then reinforced a de facto single-party state (particularly after bruising elections and unrest in 2005) also had a clear political affinity with the Chinese Communist Party’s (CCP’s) model of dirigiste state development. Premier Meles Zenawi, who co-chaired the 2006 Forum on China–Africa Cooperation (FOCAC) meeting in Beijing, and other senior ministers were frequent visitors to China. In 2011, Seyoum Mesfin, a leading figure in the EPRDF, switched from being foreign minister to the key role of ambassador to Beijing, and was later instrumental in ensuring Chinese involvement in the Southern Sudanese peace negotiations. Such moves reinforced strong ties between the EPRDF and CCP. Premier Li Keqiang made a state visit to Ethiopia in May 2014, during which a comprehensive ten-year cooperation agreement was signed, along with numerous contracts and finance agreements, including for the railway.20 This political context raises two analytical considerations. First, it reinforces the important point that the BRI can be seen as the repackaging of existing strands of Chinese foreign policy, in particular toward Sub-Saharan Africa. The consolidation and expansion of Sino-Ethiopian ties were clearly under way before the launch of the BRI. The second consideration is to what degree BRI is about the construction of infrastructure which then facilitates Chinese commercial manufacturing investment overseas. Much of the discourse on BRI globally emphasizes investment in new ports, pipelines and shipping lanes, this frequently being seen as an end in

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itself. However, Ethiopia’s experiment with Chinese-funded and largely Chinese-run manufacturing zones suggests that BRI investment perhaps should be seen as a longer-term means to an end. This is the thesis of Pairault, who argues that SEZ’s in Africa are explicitly envisaged by Beijing planners as being “Overseas Economic Commercial Cooperation Zones” (OECCZ). As such they are different to domestic Chinese SEZs, being designed instead for the explicit promotion of Chinese Outward FDI. Second, he and others note that to date they haven’t been as successful as intended, with only Nigeria’s Lekki FTZ and Ethiopia’s Eastern Industry Zone tentatively taking root in Africa and attracting Chinese companies. Even then, there have been reversals, and growth has been slower and less profitable than originally envisaged.21 It is too early to assess whether Ethiopia’s Dukem Eastern Industry Zone will lead to a demonstration effect. Recent critical studies are cautious over its likely role in Ethiopia’s overall development strategy, despite the promotion of ten such zones by the Ethiopian Industrial Parks Development Corporation (EIPDC) by 2018.22 Djibouti: a development strategy made for the BRI? In Djibouti development plans, we can see an even closer correspondence between local ambitions and China’s own BRI aims. Djibouti’s official “Vision 2035” economic development framework presents the future of the state’s economy as being a gateway to the wider Horn region and a logistics hub acting as a hinge between Africa, Asia and Europe. The plan is premised on the successful growth model of port cities such as Dubai and Singapore, and was actively encouraged by the World Bank.23 Indeed, some analysts highlight the direct involvement of Lin Yinfu, the chief economist and senior vice-president of the World Bank between 2007 and 2012, in encouraging Djibouti to adopt this strategy, having also reportedly supported Ethiopia’s industrial park strategy.24 Although it predates China’s MSRI, the vision effectively shares its “gateway” notion of linking Africa to world markets, the commercial objectives of China Merchants Group and the “connectivity” rationale of the MSRI more broadly. This can be seen when one examines other Chinese investments in Djibouti with broader implications for regional integration and connecting regional infrastructure to Djibouti’s coastline. In 2016, preparatory work began on a Chinese-financed and -built Liquified Natural Gas (LNG) facility at Damerjog, just south of the capital; this is scheduled to be the terminus of a 700-km pipeline from gas fields in south-eastern Ethiopia, being developed by an EthioChinese joint venture. Chinese companies were involved in the construction of two smaller ports in 2017: one for salt and one for livestock, which is imported from Ethiopia and Somalia. Contracts for two new airports have also reportedly been signed, both of which will be Chinese financed and constructed. Bicidley, 25 km south-west of the capital, is the proposed site of the new international airport, while the second proposed airport is close to Obock at Ras Syan.

China’s Maritime Silk Road 85 BRI: poor project management and unsustainable debt in the Horn? In terms of China’s political and economic risk considerations in the Horn of Africa, there are two obvious economic issues. The most oft-cited potential liabilities of the BRI are mismanagement and low profitability of projects for Chinese investors, and the sharp rise in debt burdens occasioned by the scale of Chinese infrastructure lending. This is particularly a potential problem in African nations with very weak fiscal systems and limited abilities to repay. On the surface, these particularly apply to Ethiopia and Djibouti in terms of debt. In the Djiboutian case indebtedness to China has risen steeply due to port and rail infrastructure, prompting direct comparisons with Sri Lanka, where in 2017 China Merchants foreclosed on unpaid debts from the Sri Lankan government on Hambantota port, another hub on the MSRI. The modalities of the railway financing have been a source of unease between Beijing, Addis and Djibouti. In the Djiboutian case, this included overt disputes and a stopgap $20 million debt-for-equity swap after a misunderstanding over who would pay to electrify the line.25 In October 2018, the specific issue of debt and poor management of the Addis-Djibouti railway was cited in a BRI symposium in Hong Kong by the chief economist of China’s Export and Credit Insurance Corporation, Sinosure. He noted that “developers and financiers of projects in developing nations supported by Beijing’s ‘Belt and Road Initiative’ need to step up their risk management to avoid disaster,” suggesting that Sinosure might have to take a $1 billion loss on the project due to mismanagement.26 On the margins of the FOCAC summit in Beijing in September 2018, rescheduling on the railway debt was discussed. Ethiopia reported that the repayment period of the loan was extended from 10 to 30 years. Neither they nor the Ethiopians specified the new payment terms or rates.27 Djibouti’s overall indebtedness toward China has been repeatedly highlighted by the IMF, which noted that non-concessional loans from China are not sustainable given Djibouti’s fragile fiscal base, stating that the: large-scale investment program financed by external debt … has raised public external debt from 50 to 85 percent of GDP in two years.… Much of the debt consists of government-guaranteed public enterprise debt. Djibouti continues to be at high risk of debt distress, as all debt sustainability indicators are above their thresholds for a prolonged period.28 In 2016, total Djiboutian external debt stood at $2.3 billion, and the IMF lists a further $5 billion of planned investments within the Vision 2035 portfolio. All but one of these are Chinese projects, including $3 billion for the proposed LNG pipeline, where works have already been inaugurated.29 As a counterpoint, the US-based China–Africa Research Initiative cautioned on some of the more alarmist, journalistic reporting of Djibouti’s indebtedness to China, producing a useful snapshot of actual liabilities on the core projects flagged above, suggesting

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in mid-2016 that debts stood at only $1.3 billion. However, they do not refer to IMF data, which itself is drawn uniquely from Djiboutian government sources. Notwithstanding such debates, two points regarding debt appear salient. First, high African debt levels are a recurrent refrain in critical Western, China–Africa discourse. Yet these should not automatically be taken at face value. This is particularly the case for journalistic accounts, which rarely distinguish between proposed and actual project expenditure. Djibouti’s history is littered with “paper projects” with very high price tags attached. Often these evaporate with time. Second, the BRI comparisons with Sri Lanka’s Hambantota may also be misplaced. Analyzing CMG’s role in Hambantota, Zhang notes that: “the ‘debt-trap diplomacy’ narrative therefore fails to capture the critical, changing role played by China’s SOEs, the driving force of China’s global economic expansion. It also underestimates the appeal of China’s state capitalism for political elites in developing countries.”30

A military cutting edge to ‘Maritime Silk’? Anti-piracy and naval logistics This section outlines the Horn’s unique status as home to the only Chinese military installation on the MSRI, at least to date. It examines the evolution of Beijing’s naval presence in the Western Indian Ocean, which developed via its participation in multilateral anti-piracy activities. It notes that China’s initial justification for establishing a military base in Djibouti is very similar to other global (US, EU, Japan) and regional (United Arab Emirates, Turkey) powers with military facilities in the Horn. China’s naval presence Arguably, two factors make Djibouti’s role in the MSRI unique. First, while the Gulf of Aden is a crucial maritime transit corridor to Europe for Asian trade and Middle Eastern oil, under the sea it is also a vital telecommunications hub at the crossroads of key African and Asian submarine fiber-optic cables. Relatively little attention has been focused to date on the telecoms and undersea-cable dimension of the MSRI, but these are very present in Djibouti. The, Pakistan– East Africa Cable Express, or “PEACE” cable, links Gwadar in Pakistan with Djibouti and Kenya in East Africa. It is a reminder that China is intent on decreasing reliance on Western-owned commercial cables, and that fiber-optics are very much part of BRI infrastructure. However, it is the military characteristic that is far more significant for the Horn of Africa and broader geopolitics. Since 2017, Djibouti has been home to China’s first permanent overseas naval base. Formally known as the People’s Liberation Army Navy’s (PLAN’s) “logistics center,” this base shares quays with the new commercial Multi-Purpose Port at Doraleh. Military ties did not come out of the blue; in early May 2014, Djibouti had signed a limited military cooperation agreement, providing China with mooring

China’s Maritime Silk Road 87 and bunkering facilities in exchange for military supplies. Chinese armored vehicles and weaponry were displayed in Djibouti shortly afterwards. Chinese naval vessels had also become frequent visitors to Djibouti from 2008 onwards, when China began regular anti-piracy patrols in the region. The naval base which, in practice, is a heavily militarized annex of the Doraleh civilian MultiPurpose Port, was officially inaugurated on August 1, 2017. During construction, the Chinese navy and media routinely referred to a “36-hectare logistics base” for the PLAN. The facility can accommodate up to 400 marines and comprises ammunition depots, an office complex, a heliport with a short airstrip and other facilities. Both the naval base’s inauguration, and the first live-fire exercises by Chinese troops operating from the base, received extensive publicity in China’s media. Press reports stressed Djibouti’s links to the MSRI and China’s long-standing involvement in anti-Piracy patrols in the Indian Ocean and Gulf of Aden. These began in 2008 and have been a key factor in legitimizing China’s naval presence in the Indian Ocean and European waters.31 In this sense, China is following both the European Union and Japan, both of which also have anti-piracy forces based in Djibouti. Just as the BRI partially subsumes (but does not fully encompass) elements of pre-existing China–Africa policies, it equally overlaps with China’s plans for global military and naval expansion. Its 2015 Military Strategy white paper declared that: “It is necessary for China to develop a modern maritime military force structure commensurate with its national security and development interests.”32 The paper announced that PLAN’s role would expand to protecting strategic sea lines of communication (SLOCs). It would maintain anti-piracy operations around the Horn of Africa, while enhancing maritime cooperation and supporting an enlarged Chinese role in international peacekeeping. All these have since been played out in practice in waters off the Horn of Africa, and the Western Indian Ocean more broadly.33 It is at sea and in ports that great and mid-ranking power rivalry has played out in the past decade around the Horn, with the Chinese navy’s growing presence in the Indian Ocean generating debate, rather than their – to date limited – presence on land. However, there is huge symbolic importance in Djibouti being the first PLAN overseas base. This highlights the manner in which China’s naval activities in the Gulf of Aden are an integral part of PLAN’s global “Blue Ocean” presence, for consumption both at home and abroad.34 The opening of the Djibouti base also coincided with President Xi’s heightened emphasis on China’s new global presence and status during the 19th Congress of the Communist Party of China in October 2017. The Djiboutian President was also the first overseas head of state to visit China after the 19th Congress. His November 2017 visit saw the two leaders announce a strategic partnership consolidating existing cooperation agreements.35 In addition to providing technical support to Chinese anti-piracy and other naval and merchant vessels in the region, three other factors drive Beijing’s requirement and justification for establishing a naval base and permanent presence in the region.

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The first factor is to be able to physically protect Chinese interests and investments in East Africa and Arabia. The second is to reassure and if necessary be able to evacuate the large number of Chinese nationals now working in Africa and the Middle East. During the 2011 war in Libya and again in Yemen in 2015 the Chinese government had to rapidly evacuate its citizens, diverting ships from anti-piracy patrols in the Horn. In 2011 it was heavily dependent on NATO forces and there was much criticism and unease in China at the operation. The far smaller Yemen evacuation was more successful and presented as a national success for the PLAN. Both of these two factors can be seen as having something of a “chicken and egg” relationship with the BRI; if the BRI is designed in part to accelerate outward Chinese FDI, then more Chinese corporations will be investing overseas, resulting in a larger Chinese expatriate population. Beijing then feels under an obligation to be able to defend its citizens, with the PLAN very explicitly and publicly positioning itself as Beijing’s lead military agency with the ability and willingness to project and protect Chinese interests overseas. Perhaps curiously, the Horn of Africa and Gulf of Aden have played disproportionately prominent roles in the new domestic Chinese perceptions of the MSRI and the new Chinese expansion, thanks in part to cinema.36 A third factor for a permanent logistics presence in Djibouti is China’s growing multilateral role in Africa. China has a growing number of peacekeepers deployed with the UN in Africa, including 1,000 in nearby South Sudan, as well as in Liberia and Mali.37 Beijing has pledged to increase these numbers. The Djibouti facility clearly enhances China’s ability to project military power in the Red Sea and Indian Ocean and to quickly deploy troops elsewhere in Africa. This is identical to the role Djibouti has long played for French and US militaries, linking their garrisons in central Africa, the Indian Ocean and Middle East. However, to date China’s only terrestrial multilateral intervention in the Horn has been to provide troops to the UN contingent in South Sudan. It has not played a direct role, either financially or as a trainer in the Horn’s main multilateral operation, the African Union mission in Somalia (AMISOM). Both French and US contingents based in Djibouti have undertaken training of African troops for AMISOM. As Chinese naval and military contingents develop closer ties with their Djiboutian counterparts, they may also develop such training facilities. Djibouti currently has a battalion serving in AMISOM.

Local and global actors’ reactions to China’s arrival This third section examines local and global powers’ responses to the new Chinese commercial and military presence in the region. To what extent does the BRI modify regional security presences? It begins with a consideration of the US’s response to China’s arrival. Countering conventional analyses, it argues that China’s arrival may complement, rather than displace, existing Western powers’ presence, despite some US policymakers’ reservations.

China’s Maritime Silk Road 89 US and EU reservations or tacit cooperation? The United States’ only permanent African military base lies barely 15 km from the Chinese navy’s facility on the perimeter of the China Merchants’ Doraleh multipurpose port. When then-US Secretary of State Rex Tillerson visited Djibouti in March 2018, he expressed unease over Chinese maritime ambitions in the region. Despite concerns in Washington, the reality is that US military leaders in Djibouti – like their European counterparts – have said little publicly about practical coexistence with the Chinese. The only overt, publicized, point of friction came in May 2018 when US pilots accused the Chinese of attempting to blind them with weapons-grade lasers, which Beijing strenuously denied. There have been no subsequent reports of such incidents. However, there is little objective basis to US–China rivalry in the Horn, this is not necessarily how it appears to hawkish elements in Trump’s Washington. Launching a revamped US–Africa Strategy in mid-December 2018, former National Security Advisor John Bolton attacked China and the BRI in Africa, explicitly referring to the Chinese in Djibouti.38 Early in the speech, after criticizing Djibouti and Zambia’s increased exposure to Chinese debt, Bolton alleged that: China uses bribes, opaque agreements, and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands. Its investment ventures are riddled with corruption, and do not meet the same environmental or ethical standards as U.S. developmental programs. Such predatory actions are sub-components of broader Chinese strategic initiatives, including “One Belt, One Road” – a plan to develop a series of trade routes leading to and from China with the ultimate goal of advancing Chinese global dominance. In Africa, we are already seeing the disturbing effects of China’s quest to obtain more political, economic, and military power. In May 2018, US officials accused China of using military-grade lasers from this base to target and distract US pilots on ten different occasions. Two American pilots suffered eye injuries from exposure to laser beams. And soon, Djibouti may hand over control of the Doraleh Container Terminal, a strategically located shipping port on the Red Sea, to Chinese state-owned enterprises. Should this occur, the balance of power in the Horn of Africa – astride major arteries of maritime trade between Europe, the Middle East, and South Asia – would shift in favor of China. And, our US military personnel at Camp Lemonnier could face even further challenges in their efforts to protect the American people.39 Here Bolton compounds confusion over the fate of the DTC, which has been the subject of a legal tussle between the Djiboutian and Emirati (DPW) authorities for several years. As noted earlier, CMG has been a minority owner of Djibouti’s Port Authority for over five years and has run the multi-purpose port adjacent to the DCT. While it is not inconceivable that a Chinese company would buy DPW’s contested stake, this could only occur after the conclusion of

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DPW’s legal case. There is no evidence to date that this is CMG’s intention, or that the MPP has insufficient capacity for Chinese purposes. While potential super-power tensions draw surface attention, on the ground practical constraints breed caution and cooperation. Regionally, Chinese and Western interests converge, with the goals of ensuring freedom of navigation and to managing regional threats. China was a major investor in Yemen, including in the port of Aden, and has played an active diplomatic role there since 2015. It also has close economic and political ties to Saudi Arabia and the United Arab Emirates (UAE). Djibouti’s tight, congested airspace and port facilities require cooperation; Chinese, US, Japanese and EU vessels all share the same refueling facilities. In practice, the French military still manages key local military zones. These include the Chebelle airstrip, now used by the US for drone strikes on Yemen and Somalia. China is simply the latest customer to use Djibouti’s remote live-fire ranges and rugged exercise zones which make the state such a valued training ground for foreign militaries. China’s navy generated both domestic and international legitimacy during a decade of cooperation over anti-piracy activities in the region. It may be that its new base in Djibouti will act as much as a fulcrum for quiet multilateral military cooperation with the US, EU and other NATO powers as a new geostrategic point of tension between Western powers and China. Linked to this, it is notable how little official French or broader EU commentary there has been on China’s presence in Djibouti. This despite the fact that the EU’s longest running, and arguably most successful, Common Foreign and Security Policy mission, the EUNAVFOR anti-piracy mission, is run out of Djibouti. EUNAVFOR and Chinese vessels have had some limited interaction; the operational head of EUNAVFOR visited the Chinese base in August 2018 and in October the EU and China held their first joint operation in Djibouti.40 The broader regional and maritime security context: Middle Eastern overspill? However, viewing US–China rivalry as being the defining regional power relationship would be highly misleading. For a variety of factors – of which the post2015 phase of the war in the Yemen and the 2017 split in the Gulf Cooperation Council (GCC) are the most prominent – there has been considerable debate over other external powers’ presences in the Red Sea region. These include Turkey and Qatar, as well as the GCC states engaged in the war in Yemen, most notably the UAE. Since a disagreement over its principal container terminal began in 2012, Djibouti itself has been engaged in a form of commercial Cold War with the UAE, particularly the emirate of Dubai. However, Djibouti’s domestic ports’ dispute with the Emirates evolved in an exceedingly fraught regional context, none of which has much impact on Chinese long-term policies in the Horn. By 2018, the broader regional and global context in the lower Red Sea and Gulf of Aden is that regional rivalries and alliances on both sides of the Red Sea

China’s Maritime Silk Road 91 coast, as well as global rivalries – above all between China and the United States – appeared to be playing out in a race for military and commercial port infrastructure spanning almost 1,200 km of the Horn of Africa coastline. This is most pronounced in terms of the implications of foreign government involvement in Somali politics, and how other actors, particularly the other Somali states (quasi-autonomous Puntland and the de facto independent Somaliland), view Gulf Arab involvement. It is also of concern to Ethiopia and Djibouti, both of whom contribute troops to the AU mission in Somalia, AMISOM. This in turn appears inextricably linked to the GCC military campaign in Yemen. The military and commercial rivalry between disparate Gulf and other powers in the Horn also complicates Western strategic responses to the rapid increase of Chinese naval power in the Indian Ocean and Red Sea, as outlined above. In the short term, recent developments point to a gradual hardening of positions into increasingly concrete and fractious regional blocs. In the longer term, US and EU concerns about strategic shifts in the region will remain focused primarily on Chinese plans and the containment of Islamist threats emanating from Yemen and Somalia, rather than regional tussles between local powers, or indeed the fate of Yemen. As such, what Saudi, its allies, and Qatar do in the Horn of Africa is of only peripheral importance to US, European and Chinese stances regarding the splits in the GCC as a whole. Nevertheless, the escalation of war in Yemen in 2015 and the blockade of Qatar in 2017 have had a profound impact on regional geopolitics in the Horn of Africa, as competition and patronage, which increasingly fell along an Egypt– Saudi–UAE vs Turkey–Qatar fault-line, have disrupted old patterns of patronage and positioning. In 2016, Dubai Ports World, the maritime logistics giant which in practice is a rival to CMG and COSCO, decided to invest in Berbera’s civilian port infrastructure. Subsequently, in March 2017, Somaliland’s parliament approved plans for the UAE to construct a separate naval facility in Berbera, which in the Cold War had harbored first a Soviet and then a US naval facility. The facility will be separate from Berbera’s merchant port, which is the focus of a $400 million refurbishment by the Emirati state-owned firm DP World, in a joint venture between Somaliland, Ethiopia and DP World. The UAE is also present in the Eritrean port of Assab, which lies just 60 km west of Yemen. In mid-2018, the UAE, alongside Saudi Arabia, also claimed to have played a leading role negotiating peace between Ethiopia and Eritrea and has pledged to significantly increase commercial investments in both countries. Regional peace, which is far from being consolidated, is unlikely to alter the outlook for China in the Horn. However, the potential gradual reincorporation of Eritrea into the region commercially does open up opportunities for China; Chinese companies now have stakes in mining in Eritrea and such investments are likely to increase. Turkey is also a major player in regional security; the most visible aspect of the expansion of Turkey’s ambitious strategy in the Horn of Africa has hitherto

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rested on substantial investment in Somalia. Following several years of humanitarian and commercial activity by Ankara, in September 2017, the Turkish government opened a military base in Mogadishu, providing extensive funds and training for the nascent Somali National Army. Subsequently, during a highprofile visit to Sudan in December 2017, President Reccep Tayip Erdogan declared Turkey would rehabilitate part of the abandoned Ottoman port of Suakin and construct new naval facilities nearby. Qatar has also provided patronage for key Somali politicians in Mogadishu’s federal government including, allegedly, the president. This was likely a major factor behind the rupture in April 2018 between the UAE and Somalia, prompting the UAE to precipitously close their hospital in Mogadishu and withdraw from military training programs for the federal government. Qatar had also acted as a mediator when a border dispute between Djibouti and Eritrea erupted in 2008. Qatar withdrew its troops when Djibouti sided with the rump GCC states in mid-2017. This prompted a rare Chinese offer of direct involvement in inter-state relations in the Horn; China’s ambassador in Djibouti floated the idea, which was not pursued, that China might help negotiate the border dispute. Thus, the potential overspill of Middle Eastern rivalries complicates both the long-term strategic repercussions of China’s new naval presence in the Red Sea and China’s attempts to avoid interference in local or regional politics. Another fraught inter-regional issue in which China is likely to find itself implicated is relations between Somalia, Djibouti and Ethiopia. This is due to the growing presence of Chinese companies in the oil and gas fields of Ethiopia’s south-eastern Ogaden province, which borders Somalia and Somaliland. Ethiopia’s Somali region remains unstable and the current proposals to construct a pipeline from there to a refinery to be built in Djibouti are likely to attract local opposition. In 2007, Ogadeni rebels killed nine Chinese oil workers employed by a subsidiary of Beijing’s Sinopec, along with over 60 Ethiopian soldiers. Over a decade later, with a far more substantive Chinese economic and expatriate presence in Ethiopia, it seems conceivable that violence against Chinese nationals and/or a major attack on the new pipeline would now prompt a military response from Chinese forces based in Djibouti, or from Ethiopian forces. Even in the absence of violence, it seems likely that Chinese diplomats and businesses will find themselves playing a more assertive regional role, particularly as the autonomous authorities in Somaliland also seek to develop hydrocarbon deposits in their own territory, something that the federal government in Mogadishu will oppose. In this sense the manner in which Chinese investment in Sudan’s oil fields subsequently prompted Beijing’s more activist diplomatic stance (as when Sudan ruptured in 2011) may be replicated elsewhere in the Horn.

Conclusion This chapter has examined the manner in which the Horn of Africa and its maritime links to the Red Sea constitute a key hub within China’s BRI, specifically

China’s Maritime Silk Road 93 through its MSRI. It is misleading to talk of a new economic and military presence for China framed within the BRI. As seen throughout this chapter, China’s deep regional footprint predates the BRI. Existing conditions in the region have implications for how China’s role may continue to develop. First, the states of the Horn clearly have close interstate (i.e., “bilateral”) security interdependence. Indeed, this characteristic has been accentuated by the tentative peace settlement signed between Eritrean and Ethiopia leaders in mid-2018. However, the interstate dynamics in the north of the region (i.e., the Ethiopian–Eritrean–Sudanese linkages) and the conflicts of the southern Horn (those involving Ethiopian, Somalian and Djiboutian actors) remain strategically and geographically distinct. This can equally be seen in terms of China’s relatively recent involvement in intraregional diplomacy, focused primarily on securing Chinese interests in the civil wars of Sudan (both bi-laterally and via its participation in the UN Mission in Southern Sudan, UNMISS), rather than conflicts in and around Somalia. The second factor is that China’s broader regional political interests are largely convergent with those of the US and other Western powers present in the region. These include securing the safety of SLOCs via the Red Sea, containing the fallout from regional wars (Yemen, Southern Sudan), and combating Islamist violence (Yemen, Somalia). Thus, any regional tensions do not necessarily have a spillover effect at the international level. This indicates that there is room for cooperation among extra-regional powers in the Horn, rather than an inherently competitive environment. This links to a third factor. As China’s economic assets and expatriate population in the Horn steadily increase, it seems inevitable that Beijing will gradually be increasingly drawn into playing a greater multilateral role. This may be in the form of regional peacekeeping or a more activist diplomatic role in interstate regional disputes. This likelihood will be accentuated as Chinese companies take a greater stake in the development of oil and gas in the Horn’s Somali-speaking regions. A fourth, final factor can be presented as something of a regional paradox; on the one hand it is in the maritime domain that the MSRI may have the greatest impact on international relations toward the Horn of Africa. Unsurprisingly, it is at sea that the very rapid expansion of China and its PLA Navy poses the greatest concern to the hitherto hegemonic presence of the US and other aspirant regional powers such as India. This is both as China begins to lay its own networks of fiber-optic cables, and as Chinese vessels increasingly play an active role in the Western Indian Ocean, Gulf of Aden and Red Sea. Despite the fact that one of the key logistical fulcrums of that activity is in the Horn of Africa – the PLAN naval base in Djibouti – the paradox is that this geostrategic shift appears unlikely to have much impact on the states and peoples of the Horn themselves. Rather it is other regional dynamics, most notably overspill from tensions in the Middle East, the war in Yemen and the GCC split, that are impacting the security dynamics in the Horn.

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Notes 1 The Horn does have a United Nations- and African Union-recognized regional body: the Intergovernmental Authority on Development (IGAD), which is based in Djibouti. Donor-funded, it has been largely ineffectual since the Ethio–Eritrean war of 1998–2000. Nevertheless, it has played the leading role in Southern Sudanese peace negotiations since 2014. 2 This refers to the BRI white paper, “Visions and Actions in Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” released by the National Development and Reform Commission and Ministries of Foreign Affairs and Commerce in 2015. 3 Buzan and Waever devote only three pages to the Horn in their global analysis of Regional Security Complexes. They perceive the Horn as a “pre-complex,” due to its perceived characteristics as having close inter-state (“bilateral”) security interdependence, but a lack of linkages – notably between its northern, Ethio–Eritrean–Sudanese dynamics, and those of the southern Horn, effectively an Ethio–Somali nexus of conflicts. Barry Buzan and Ole Waever, Regions and Powers: The Security of International Security (Cambridge: Cambridge University Press, 2003), 241–3. Christopher Clapham provides a detailed examination of how environment, economy and history have influenced recent wars in The Horn of Africa: State Formation and Decay (London: Hurst, 2017) resulting in the Horn being one of the regions in the world to have spawned new, post-Cold War states: Eritrea, Somaliland and Southern Sudan. 4 Exemplified by the two Chinese frigates which made PLAN’s inaugural official tour of northern European ports in late 2017; these vessels were drawn from the antipiracy forces based out of Djibouti. 5 Detailed and evocative accounts of CMG’s role in Shenzhen’s transformation can be found in Mary-Ann O’Donnell’s blog: “Shenzhen noted,” https://shenzhennoted.com/. 6 On Ethiopia’s ambivalent military dominance, see Sonia Le Gouriellec, “Regional Power and Contested Hierarchy: Ethiopia an ‘Imperfect Hegemon’ in the Horn of Africa,” International Affairs, 94: 5 (2018). 7 Eritrea’s president since it achieved independence in 1991, Issaias Afeworki, was part of a group of rebels trained in China in the late 1960s. 8 David Shinn, “Ethiopia and China: Two Former Empires Connect in the 20th Century,” paper presented to the Russian Academy of Sciences, 13th International Conference of Africanists, May 2014, www.zehabesha.com/wp-content/uploads/2014/06/Ethiopiaand-China-Two-Former-Empires-Connect-in-the-20th-Century.pdf. 9 International Crisis Group, China’s Foreign Policy Experiment in South Sudan (New York: International Crisis Group, 2017), www.crisisgroup.org/africa/horn-africa/ south-sudan/288-china-s-foreign-policy-experiment-south-sudan. 10 For official sources and maps, see the BRI portal, http://english.gov.cn/beltAndRoad/. Berlin’s Mercator Institute for China Studies also provides clear BRI cartography, www.merics.org/en. 11 On CMG and the MSRI see Mathieu Duchatel and Alexandre Sheldon Duplaix, Blue China: Navigating the Maritime Silk Road to Europe (Brussels: European Council on Foreign Relations, April 2018), 15. 12 Xinhua, “Djibouti’s Doraleh Port officially opens,” May 24, 2017, www.xinhuanet. com/english/2017–05/24/c_136312120.htm. 13 For details of CMG’s global role in the MSRI see: Duchatel and Sheldon Duplaix, Blue China, 15. 14 China has invested in Egypt’s Port Said and al-Adabiya facilities. See David Shinn, “China’s Power Projection in the Western Indian Ocean,” China Brief, 17: 6 (April 2017), https://jamestown.org/program/chinas-power-projection-western-indian-ocean/. 15 Deborah Brautigam and Xiaoyang Tang, “African Shenzhen: China’s Special Economic Zones in Africa,” Journal of Modern African Studies, 49: 1 (2011), 27–54.

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Philip Giannecchini and Ian Taylor, “The Eastern Industrial Zone in Ethiopia: Catalyst for Development?” Geoforum, 88 (January 2018), 28–35. Pairault, Djibouti et les routes électroniques de la soie (Paris: EHESS, 2017), 4–6. Thierry Pairault, “La China Merchants à Djibouti: de la route maritime a la route de la soie,” Espace Géographique et Société Marocaine (REGSM: Rabat), 24–5 (2018), 72. However, in April 2019, IPZ were reported to have been ousted from the Bank. Nizar Manek, “China merchants in talks to replace ousted Djibouti-Bank Partner,” Bloomberg News, April 17, 2019, www.bloomberg.com/news/articles/2019-04-17/china-merchantsin-talks-to-replace-ousted-djibouti-bank-partner. Nevertheless, the World Bank was the principal funder of road infrastructure in the 1990s, and remains closely involved in Ethiopia’s economic transformation, including in logistics and infrastructure. Shinn, “Ethiopia and China,” 10. Thierry Pairault, China in Africa: Phoenix Nests versus Special Economic Zones (January 2019). HAL open archives, Paris, 8, https://hal.archies-ouvertes.fr/hal019 68812. Giannecchini and Taylor, “The Eastern Industrial Zone in Ethiopia,” 33. For a government’s view, see the Industrial Parks Agency, www.ipdc.gov.et/index.php/en/, and the Ethiopian Investment Commission, www.investethiopia.gov.et/. For details of the Djiboutian government’s “Vision 2035” plans, see: www.djibouti. dj/en/about-djibouti/djibouti-vision-2035/. Thierry Pairault, China in Africa, 4. The agreement signed in Beijing in August 2016 was not made public. The ongoing high-cost and confusion around the railway debt is reflected in interviews with Djiboutian officials. Djibouti’s finance minister claimed in late 2018 that $500m railway debt had been extended once, at Libor +3%, and needed renegotiating. Chris Wright, “Africa: Why Djibouti’s China debt is raising the alarm,” Euromoney, January 7, 2019, www.euromoney.com/article/b1clfx2rfvlhx6/africa-why-djiboutischina-debt-is-raising-the-alarm?copyrightInfo=true. Eric Ng, “Botched Chinese railway project in Africa is a warning to belt and road investors,” South China Morning Post, October 23, 2018, www.scmp.com/business/ banking-finance/article/2170549/ botched-chinese-railway-project-africa-warning-belt-and. Ethiopian News Agency, “China extends debt repayment for Ethiopia,” September 6, 2018, www.ena.et/en/2018/09/06/china-extends-debt-repayment-for-ethiopia/. IMF, Djibouti: 2016 Article IV Consultation Documents (Washington, DC: IMF, April 6, 2017). IMF, Djibouti: 2016 Article IV, Table 1, p. 22. Hong Zhang, “Beyond ‘Debt-Trap Diplomacy’: The Dissemination of PRC State Capitalism,” China Brief, 19: 1 (January 5, 2019), https://jamestown.org/program/ beyond-debt-trap-diplomacy-the-dissemination-of-prc-state-capitalism/. Andrew S. Erickson and Austin Strange, Six Years at Sea … and Counting: Gulf of Aden Anti-Piracy and China’s Maritime Commons (Washington, DC: Jamestown Foundation, 2015). State Council of the People’s Republic of China, China’s Military Strategy (2015). Available at The Jamestown Foundation, https://jamestown.org/wp-content/ uploads/2016/07/China%E2%80%99s-Military-Strategy-2015.pdf?x87069. David Shinn, China’s Power Projection. Andrew S. Erickson and Austin M. Strange. “China’s Blue Soft Power: Antipiracy, Engagement, and Image Enhancement,” Naval War College Review, 68: 1 (Winter 2015). China Daily, “China, Djibouti agree on cooperation,” November 24, 2017, www. chinadaily.com.cn/china/2017–11/24/content_34922597.htm. The film “Operation Red Sea,” a highly fictionalized account of the rescue of Chinese nationals from Yemen in 2015, was the highest grossing film in China in 2018. The

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David Styan film was sponsored by PLAN, whose elite commandos are its heroes. Djibouti features in the film, which closes with a government message that China will always rescue its citizens if they are in danger anywhere in the world. A similar East Africabased (and PLAN-sponsored) movie, Wolf Warrior II, was the most popular film in China in 2017. Chris Alden, Abiodun Alao and Zhang Chun (eds.) China and Africa: Building Peace and Security Cooperation on the Continent (London: Palgrave MacMillan, 2018). Abdi Latif Dahir, “The Trump administration’s Africa policy is all about countering China’s influence,” Quartz Africa, December 14, 2018, https://qz.com/africa/1495859/ bolton-unveils-trump-africa-strategy-to-counter-china-russia/. John Bolton, “Remarks [on] Trump Administration’s new Africa strategy,” Heritage Foundation, Washington, DC, December 14, 2018, www.whitehouse.gov/ briefings-statements/remarks-national-security-advisor-ambassador-john-r-bolton-trump administrations-new-africa-strategy/. EUNAVFOR, “Ongoing work with the Chinese Navy,” September 21, 2018, https:// eunavfor.eu/ongoing-work-with-chinese-navy/; “Eunavfor conducts first exercise with Chinese PLA(N) in Djibouti,” October 16, 2018, https://eunavfor.eu/ eu-navfor-conducts-first-exercise-with-chinese-plan-in-djibouti/.

6

The Gulf monarchies in the Belt and Road Initiative Domestic, regional, and international pressures Jonathan Fulton

Introduction The six monarchies of the Persian Gulf – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) – present a useful case study to examine the implications of the Belt and Road Initiative (BRI) on regions. The Gulf monarchies, also known collectively as the Gulf Cooperation Council (GCC) states, all have deep and multifaceted relations with China, and all have embarked upon ambitious development programs that have a natural complementarity with the BRI.1 As such, the BRI is perceived as having a positive effect on individual states’ domestic political economies. At the same time the two other Persian Gulf states, Iran and Iraq, are also deeply engaged with China and are using the BRI as a means of intensifying their own bilateral ties to China. In providing political and economic benefits to states that have long been challengers to the Gulf monarchies’ preferences of regional order, the impact of the BRI at the regional level puts the initiative in a less positive light. Further complicating matters, the Gulf monarchies, with a long-standing reliance on extra-regional powers as security partners, must consider how closer collaboration with China can affect their relations with other states, especially the USA, which views the BRI as a challenge to its dominance in the Indo-Pacific region.2 To a much lesser but still important degree, Indian reservations about the BRI could complicate the GCC states’ involvement as it is a major economic partner for the monarchies. This chapter uses a level of analysis approach to understand the opportunities and challenges inherent in the BRI when approached from the perspective of the Gulf monarchies. It argues that opportunities at the domestic level must be considered against the pressures it creates at the regional and international levels. This underscores an important point about the BRI. It is framed by Beijing as an initiative rather than a strategy, focusing on supposedly apolitical economic and developmental outcomes. Partnering states, however, have to consider it strategically – the impact of a major new actor in a competitive region like the Persian Gulf will likely have significant political and security ramifications.

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Features of the Persian Gulf region The Persian Gulf is a highly competitive subregion within the larger Middle East North Africa (MENA) region. While much literature on Middle East international relations takes a holistic approach, recent years have seen a growing literature that treats the Persian Gulf as a distinct system.3 This is especially useful in assessing the BRI’s impact as the Persian Gulf meets a range of specific BRI-related interests that other regions in MENA do not, at least not to the same degree. Home to 55 percent of the world’s oil reserves and major liquified natural gas (LNG) deposits, the Persian Gulf states are major actors in global energy markets. As a result of this energy abundance, they are significantly wealthier than other MENA states and have achieved higher levels of development. This has contributed to a much greater degree of political stability among the GCC states, making them attractive partners for BRI cooperation, given the perception that investments there carry less risk than other MENA states.4 At the same time, tensions within the region are a regular feature. The Gulf monarchies and Iran have long been at odds, but relations have been especially fraught since the Iranian Revolution, when its monarch the Shah was deposed and his government replaced with an Islamic republic. Exporting revolution soon became a key pillar of its foreign policy, and it actively attempted to destabilize Iraq, Kuwait, Bahrain, and Saudi Arabia, all of which also have sizable Shia populations, feeding into the perception of a sectarian divide as well as a political clash between competing regime types. As a result, security issues are generally considered both in terms of material and ideological threats; competing transnational ideologies and identities, including ethnic (Kurdish, Arab, Persian) and religious (Sunni, Shia, Ibadhi) identities, as well as various strands of political Islam and Arab nationalism have contributed to threat perceptions of most governments in the Persian Gulf. This ideational feature of regional political and security concerns and how leaders approach them is an important variable in understanding Persian Gulf international relations.5 A useful framework for understanding these pressures and the outcomes they contribute to is Buzan’s regional security complex (RSC) theory. Buzan defines an RSC as “a group of states whose primary security concerns link together sufficiently closely that their national securities cannot realistically be considered apart from one another.”6 This was an important contribution, offering a richer analytical framework than both the structural approaches that dominated much International Relations (IR) theory at the time and the preference for domestic political explanations in foreign policy analysis. Buzan’s RSC theory placed the regional level at the center of security considerations and threat perceptions for many states in contested regions.7 A common feature of RSCs is that external states can play a major role, although the region itself may not be central to their own security concerns. The MENA in general has long been characterized as a penetrated region, with extra-regional powers playing dominant or important roles in local affairs.8 The US presence in the Persian Gulf, steadily expanding since the Carter Doctrine was announced in 1980, is an example of the centrality

The Gulf monarchies in the BRI 99 of an external power in the Gulf and the impact it can have on regional order. At the same time, the importance of external powers does not deny the agency of regional actors, all of whom engage with these states as a means of addressing their own security concerns.9 The Gulf monarchies, threatened by Iran’s revisionist foreign policy and its potential to upend the regional status quo, have been pursuing denser ties with a wide range of non-traditional external powers to address a perceived overreliance upon a US that increasingly appears less inclined to act as security guarantor.10 Among these powers, China’s long-term ambitions, laid out in the Arab Policy Paper (2016) and the 2015 BRI white paper, “Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st-Century Maritime Silk Road” (hereafter Vision and Actions), indicate an important long-term role for China in the Persian Gulf.11

The BRI in the Persian Gulf: a levels-of-analysis approach While engagement with China through BRI projects seems a positive development, using a levels-of-analysis approach underscores the complexities that arise when a new extra-regional power becomes involved in an RSC. Much discussion on the BRI appears on either side of a positive/negative axis. On one side, leaders in participating states reliant upon Chinese largess tend to present it as an unqualified net positive. On the other are warnings of debt-trap diplomacy and lax labor and environmental standards. Adopting a levels-of-analysis approach provides a deeper pool of descriptive, explanatory and predictive data, and as such is useful in understanding the different variables at play in competitive regions. This chapter analyzes the impact of the BRI on the Gulf monarchies at three levels: the domestic, regional, and international. Domestic At the domestic level, there is considerable interest in BRI participation in each of the Gulf monarchies. In recent years all have identified it as a mechanism for developing stronger ties with Beijing while also linking it to their own development programs. For China this aligns with the policy coordination cooperation priority in Vision and Actions, which asks BRI partnering states to “fully coordinate their economic development strategies and policies.”12 The GCC states, under significant pressure to reform their economies from an energyexport dependent rentier model, have embarked upon similar development programs that are meant to create more sustainable economies, understood to be an important legitimizing feature in states with limited political participation. There is remarkable synergy between these programs and the BRI. Each of the GCC states are monarchies and have proven to be remarkably durable despite persistent predictions of their pending collapse. The ruling families of each have long-standing claims to their legitimacy, and relative to other regional governments, enjoy high levels of popular support. Each has a limited

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degree of popular participation in the Majlis al Shura, or consultative councils, in which chosen citizens are elected as representatives, but these bodies are consultative – they do not draft, pass, or revise legislation, which is the domain of executive bodies and mostly consist of senior royals for key ministries. Only Kuwait has a parliament, the National Assembly, although it has been dissolved by the emir on three occasions, most recently in 2012 when he unilaterally changed the election law after an election in which Islamist opposition politicians fared especially well.13 Given this hold on political power, the ruling families within the Gulf monarchies have substantial latitude, especially in the realm of foreign policy. While they enjoy a high degree of autonomy and support, there is substantial pressure on the state; just as the successes of the state are attributed to the ruling families, the shortcomings can be as well. This is especially apparent in the most pressing domestic-level concern facing each of the Gulf monarchies: the need to develop a post-rentier state. Rentier states are those in which “their economic power and ultimately their political authority rests on their dual capacity to extract rents externally from the global environment and subsequently to distribute these rents internally.”14 The wealth accumulated through oil and gas exports has enabled the Gulf monarchies to achieve relatively high levels of development and strengthen state capacity to the point where the state is the employer of choice for most Gulf citizens. It is the central economic actor in the lives of their citizens, and the rulers who distribute this largess enjoy no small degree of goodwill. The pressure to maintain this patronage is substantial, however, and with declining oil prices since 2014 – or in the cases of Oman and Bahrain, declining reserves – Persian Gulf states must move beyond rentierism or face possible challenges to the existing state structures. The UAE, Qatar, and Kuwait enjoy a combination of oil and/or gas abundance and small citizen populations, and as such can continue as “extreme rentiers”; Saudi Arabia, Bahrain and Oman by comparison are “middling rentiers” and it is not a coincidence that the former three continue to enjoy popular support while the latter three face more urgency for political and economic reform.15 Given these conditions, all six monarchies have announced development plans that would transition away from the rentier model. All share similar ambitions, and names: Saudi Vision 2030, New Kuwait 2035, Abu Dhabi Economic Vision 2030, Qatar National Vision 2030, Oman Vision 2040, and Bahrain’s Economic Vision 2030. All also focus on economic development without addressing political change, all involve major projects requiring significant infrastructure construction and investment, and all aim to move beyond a singleresource economy. Saudi Arabia’s Crown Prince Mohamed bin Salman Al Saud has claimed, “Within twenty years, we will be an economy that doesn’t depend mainly on oil.… We don’t care about oil prices – $30 or $70, they are all the same to us.”16 The UAE’s Crown Prince, Mohamed bin Zayed Al Nahyan, has made similar statements, saying that “in fifty years when we might have the last barrel of oil, the question is, when it is shipped abroad, will be we sad? If we are

The Gulf monarchies in the BRI 101 investing today in the right sectors, I can tell you we will celebrate at that moment.”17 With the requirement for foreign investment inherent in these vision plans, there is an alignment between GCC development goals and the BRI. The five cooperation priorities outlined in Vision and Actions – policy coordination, facilities development, unimpeded trade, financial integration, and people-to people bonds – are consistent with patterns of pre-BRI China–GCC cooperation and provide opportunities to build upon existing bilateral relations in order to merge BRI and vision projects. Infrastructure projects have come to feature significantly in China’s relations with the GCC states, although unevenly. Oman, the UAE, Saudi Arabia, and Qatar have initiated several China-partnered projects, while Kuwait has begun to become more active through its Silk City-related projects. Bahrain lags in comparison. Generally, there are two broad categories of BRI projects taking place in the GCC: those that support domestic development within GCC states and those that promote intra-regional connectivity.18 We can expect that the latter will receive significant interest from China, as the BRI is at heart a series of projects focused on enhancing connectivity across Eurasia and the Indian Ocean region. Initiatives that support this goal contribute to the success and expansion of the BRI. Here, the UAE, Saudi Arabia, and Oman have astutely linked development projects with Chinese ambitions, and the result provides a glimpse of the emerging physical architecture of China’s presence on the Arabian Peninsula. In July 2018, the Ministers’ Meeting of the China– Arab States Cooperation Forum was held in Beijing, and Foreign Minister Wang Yi announced the “Industrial Park-Port Interconnection, Two-Wheel and Two-Wing Approach.”19 This is a set of projects linking four industrial park complexes and four ports, creating business clusters and connecting supply chains from the Persian Gulf to the Arabian, Red, and Mediterranean Seas. The industrial parks are Khalifa Industrial Zone Abu Dhabi (KIZAD), the China– Oman Industrial Park in Duqm, Jazan City for Primary and Downstream Industries (JCPDI) in Saudi Arabia, and the TEDA–Suez zone in Ain Sokhna, Egypt. The ports are Khalifa Industrial Zone Abu Dhabi, Oman’s Duqm Special Economic Zone Authority (SEZAD), the People’s Liberation Army Support Base in Djibouti, and Port Said in Egypt. That these three GCC states feature prominently in this initiative is indicative of both their geostrategic advantages as well as their geopolitical awareness; in each case they have linked their own projects to the BRI, drawing substantial Chinese foreign direct investment (FDI). Chinese firms have committed to nearly $11 billion worth of projects in Duqm and nearly $4 billion in Jazan.20 Abu Dhabi has the potential to be the largest of the three investments, anchored by a 35-year concession agreement with COSCO Shipping combined with a 50-year lease for the Jiangsu Provincial Overseas Cooperation and Investment Company Limited (JOCIC), a provincial consortium leading Chinese investments into the KIZAD/KPFTZ complex. This has led to several investments valued at over $2 billion, with the expectation that more is to come very soon; in early 2019 China’s East Hope

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Group announced that it is planning a $10 billion investment into Abu Dhabi.

East Hope’s chief executive officer linked the series of projects to the BRI, claiming that it “will become the benchmarking project along the BRI between China and the UAE.”21 Chinese multinational corporations, especially in the infrastructure construction and financial sectors, are also very active in those stand-alone domestic development projects in GCC states. In the wake of 2014’s state visit from Emir Tamim bin Hamad Al Thani, the China–Qatar relationship appeared to have strong momentum.22 The two states signed a strategic partnership agreement and several major contracts, including one to build the Lusail Stadium, the opening and closing venue for the FIFA 2022 World Cup tournament.23 China Harbor Engineering Co Ltd won a $880 million contract for a port expansion project in capital city Doha, and China Gezhouba Group signed a contract to build a megareservoir.24 However, given Qatar’s political isolation since the 2017 dispute with three of its GCC partners (Saudi Arabia, UAE, and Bahrain) and Egypt, the limits of its ability to take advantage of BRI projects has been apparent. Unable to contribute to intra-regional connectivity projects, an artificial ceiling has been placed on Qatari BRI participation, although this would likely change should the GCC dispute be resolved. Kuwaiti activity in BRI projects has potential but little in the way of accomplishment thus far. A Chinese firm participated in a joint venture to expand Kuwait International Airport, but otherwise there have not been any notable infrastructure or construction projects. This is expected to change, however, as momentum for Kuwait’s Madinat Al Hareer (Silk City) grows. Under its “New Kuwait 2035” development plan, the Kuwaiti government has announced 164 strategic development projects and that it plans to increase FDI by three hundred percent.25 The keystone project is Silk City, a new development being constructed in Kuwait’s uninhabited northern region of Sabbiya. Upon completion, this new city will be a free trade zone linking Kuwait to Central Asia and Europe. The Kuwaiti government has committed $132 billion to the project, which is scheduled to be completed in 2023.26 During his visit to Kuwait in August 2017, Vice Premier Zhang Gaoli called on China and Kuwait to integrate development strategies, describing the BRI and New Kuwait 2035 as “highly compatible” and said China is “ready to encourage Chinese companies to participate in building railways, ports, roads, bridges, housing and other projects related to Silk City and islands development projects.”27 Future investment in Kuwait will build upon the already strong foundation of Chinese FDI. Between 2015 and 2017, Kuwait attracted $7 billion of FDI, and Chinese firms accounted for nearly half of that.28 Kuwait’s Minister of Commerce and Industry Khaled Al Roudhan visited China in August 2017 to attend the China–Arab States Expo in Yinchuang, and met with China’s Vice Minister of Commerce Qian Keiming, as well as representatives from Chinese firms specializing in financial services, investment, and transportation. Traveling with him were officials from Kuwait Direct Investment Authority, which offered incentives to Chinese firms to facilitate FDI opportunities.29 Since then there has been positive momentum, with plans for the Chinese

The Gulf monarchies in the BRI 103 Construction and Communications Company to partner with Kuwait in an investment–implementation–operation deal for Mubarak Port, a free trade zone planned for Silk City.30 Both the UAE and Saudi have signed on for a number of development program-related BRI projects. In the UAE we see an interesting split, as Abu Dhabi has been more involved with the intra-regional projects while Dubai has drawn more development projects, especially as it has undertaken several highprofile infrastructure projects for the Dubai World Expo 2020. China State Construction Engineering Corporation won a $2.17 billion contract to build the Dubai Motor City development, a residential complex that will feature nearly 200 units.31 Dubai also awarded a joint contract to Shanghai Power and Saudi Arabia’s Acwa Power to build a 700 megawatt extension for the Mohamed bin Rashid Al Maktoum Solar Complex, the world’s largest solar power plant, a project estimated to cost $3.86 billion.32 At the 2019 Belt and Road Forum, Dubai also signed a $3.4 billion deal to build a storage and shipping station in Jebel Ali as well as a food importing, processing, and packaging facility.33 In Saudi Arabia, Chinese firms have been especially active with regards to energy projects in recent years, with nuclear energy cooperation a central focus. China National Nuclear Corp signed a Memorandum of Understanding (MoU) with Saudi Geological Survey to promote cooperation in exploring and assessing uranium and thorium resources.34 This is especially significant, as Saudi Arabia is currently in the early stages of a feasibility and design study for two commercial nuclear reactors, which would total 2.8 gigawatts. However, Saudi Arabia is considering a larger move toward nuclear energy, with a plan under discussion to build 17.6 gigawatts of nuclear capacity by 2032.35 This, in turn, is part of a larger strategy to develop a large-scale renewable energy plan that is expected to draw between $30 and $50 billion in investments by 2023.36 As such, China is expected to pursue a contract for this first set of reactors aggressively. In this, China can draw upon other nuclear energy projects, such as an MoU signed between Saudi Technology Development and Investment Co and China Nuclear Engineering Group Corp to develop seawater desalination using gas-cooled nuclear reactors.37 In short, there is substantial evidence that the Gulf monarchies are actively involved in BRI projects to support their own development agendas, making the initiative a useful means of addressing domestic pressures for economic diversification. Regional This domestic-level interest in BRI cooperation is tempered by a different set of complex dynamics at the regional level, where distinctions between the Gulf monarchies’ agendas and interests diverge, and cooperation becomes more difficult. There are two types of regional considerations at play here: inter-GCC disputes and intra-regional competition. Inter-GCC disputes are not a new feature of regional affairs but have increasingly come to the forefront since the Arab uprisings. Political leadership within

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a quasi-coalition of Saudi Arabia, the UAE, and Bahrain all perceived the uprisings as a potential threat to their preferences of regional order and were especially concerned with the prospect of political Islamic groups – most prominently the Muslim Brotherhood (MB) – acquiring power and spreading an antimonarchical ideology. As such, Saudi Arabia and the UAE devoted significant diplomatic energy and economic resources to shoring up weak regimes. Qatar, on the other hand, offered material support to the MB and, through Al Jazeera, broadcast ideational support as well. As a result, Saudi Arabia, the UAE, Bahrain, and Egypt – the group that would eventually call itself the Anti-Terror Quartet (ATQ) – recalled their ambassadors from Qatar in 2014.38 While the two sides were able to reconcile, a series of events in early 2017 culminated in the rupture between Qatar and the ATQ that June.39 Releasing a list of 13 demands, the ATQ blockaded Qatar after it refused to comply, and Qatar has been effectively isolated within the GCC since. What does this mean for China and the BRI? In terms of its relations with Qatar, China, like many other extra-regional powers with interests in the Persian Gulf, has found itself in an uncomfortable situation.40 The 2014 strategic partnership agreement paved the way for a series of MoU and construction projects, and with Qatar’s winning bid to host the 2022 FIFA World Cup and the attendant infrastructure needs, there appeared to be no ceiling to China–Qatar cooperation. In retrospect, 2014 has been the high watermark as fewer projects have come on the books. Chinese officials have been characteristically low-key in discussing the inter-GCC dispute, calling for a negotiated reconciliation and Foreign Minister Wang Yi offered to mediate.41 China’s ambassador to the United Nations said “whatever the countries can do to mend fences and get back to good neighbourly relations, that would certainly be welcomed by China.”42 Despite Beijing’s perceived neutrality, it has become apparent that in the dispute China has indicated a preference to work more closely with the ATQ states than Qatar, not surprising as they offer much more in terms of intra-regional connectivity, and with larger markets are more important economic partners. In July 2018 President Xi paid a state visit to the UAE and elevated the 2012 strategic partnership to a comprehensive strategic partnership, the highest level in China’s diplomatic hierarchy. The joint communique expressed support for “the constructive role being played by the UAE in regional affairs.”43 In January 2019 Emir Tamim visited Beijing, and instead of a similar upgrade, the joint communique announced that the two states would continue working at the same level.44 Soon afterwards Qatar became the only GCC state to not endorse China’s Xinjiang policy.45 It is unlikely that ATQ states have sufficient leverage to coerce China into a more favorable Gulf policy; more likely Beijing interpreted the intra-GCC feud as one that Qatar stood little chance of winning and, given the regional isolation it has experienced since, it has become less useful as a BRI partner. The GCC dispute has also put Chinese ambitions for deeper financial integration with the Gulf monarchies on hold. A China–GCC free trade agreement (FTA) has been in the works since 2004 and while it appeared permanently

The Gulf monarchies in the BRI 105 stalled by 2006, the introduction of the BRI revived negotiations.46 During Xi’s state visit to Saudi Arabia in 2016 a renewed emphasis was placed on the completion of the FTA and a round of talks was held throughout the year. The sudden rupture within the GCC in mid-2017 has put the FTA on the backburner once again. At the intra-regional level, the BRI is no less complicated due to the intense rivalries between competing Middle Eastern powers. The features of the Gulf RSC described above have become more of a challenge throughout MENA in the period since the Arab uprisings began in late 2010, as regional instability threatened to spill over into the Gulf. Regimes collapsed in Tunisia, Egypt, and Libya, and wars broke out in Yemen and Syria. Iran has been aggressive in supporting the Assad regime in Syria, while some Gulf monarchies have supported rebel factions – not always the same ones – against it. At the same time, Iran has continued its support for Hezbollah and Hamas, both non-status quo actors in Lebanon and Palestine, and the Houthi rebels in Yemen. In each of these cases, the goal has been apparent: to upend the existing MENA order and replace it with one more consistent with Tehran’s objectives. In supporting revolutionary movements throughout the region, Iran has aimed to establish itself as a pole of influence and power within the region, challenging the status quo preferred by most leaders in the GCC. The result has been referred to as a Saudi–Iran cold war, fought through proxies across the Middle East.47 Turkey is another source of a competing vision of MENA order that diverges with the Saudi-led Gulf monarchies, presenting itself as an alternative Sunni Muslim leader in the Middle East and in the process alienating itself on much of the Arabian Peninsula. Prior to the Arab uprisings Turkey and the GCC states appeared to be improving relations.48 The Turkish response to revolution in Arab states was a sign of challenges to come, however, with then-Prime Minister and current President Erdogan demanding “democracy, prosperity, justice, freedom … for our fellow nations,” and indicating a significant divergence from GCC preferences.49 This became more apparent as the Turkish government “expressed its full, unconditional support for the demands of the protestors, be it in Egypt … or even Bahrain.”50 The strain in ties between Turkey and the Gulf monarchies intensified as Turkey supported Qatar in the GCC dispute and deteriorated further with the murder of Saudi journalist Jamal Khashoggi in the Kingdom’s Istanbul embassy. Turkish authorities’ steady leak of details about the Saudi government-authorized killing was widely perceived as a means of eroding support for Saudi Crown Prince Mohamed bin Salman. While China is not directly involved in these intra-regional tensions, the BRI has the potential to tip the scales in favor of either side and as such has to be considered strategically by Persian Gulf actors. When the economic corridors of the BRI were announced in 2015 much was made of the fact that there were no corridors on the Arabian Peninsula, contributing to the perception that the Gulf monarchies were being excluded.51 Meanwhile, both Iran and Turkey feature significantly in the China–Central West Asia Economic Corridor (CCWAEC), an important component of the Silk Road Economic Belt that begins in

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Xinjiang, passes through Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan before forking to Iran and Turkey. Within this corridor, the Central Asian states are strategically important, both in providing connectivity and in dealing with several shared security concerns that are addressed through the Shanghai Cooperation Organization (SCO).52 At the same time, the combined total value of trade between China and Turkmenistan, Kyrgyzstan, Uzbekistan, and Tajikistan was just under $18 billion in 2018. China–Turkey trade, on the other hand, was valued at nearly $24 billion, and China–Iran trade was worth over $30 billion.53 For China, the destinations are clearly worth more than the journey for this particular corridor. This is evident in the dense relations between China and Iran. Energy trade has been a crucial component of the economic relationship, but like those between China and the Gulf monarchies, it has developed to encompass much more than simply energy. China has considerable investments in Iran, with nearly $28 billion worth of investments and construction contracts between 2005 and 2019.54 This is more impressive when considering the limitations placed upon China–Iran economic cooperation throughout much of this time due to United Nations and US sanctions. Despite this imposed ceiling, there have been transportation infrastructure projects linking China and Iran, such as the railway connecting Tehran to Yiwu that cuts transportation down to two weeks, rather than over a month by sea.55 Other Chinese-funded BRI-related projects have been planned, including a railway connecting Tehran and Mashhad, and a high-speed railway from Xinjiang to Iran, through Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan.56 Iran’s geostrategic location and long history of relations with China would seem to make for an abundance of BRI potential. For leaders in the Gulf monarchies, Iran’s prominence in the CCWAEC is a concern, although not uniformly. Kuwait and Oman have traditionally had relatively good relations with Iran. Qatar’s have strengthened as a result of the blockade, although this is more likely a foul weather friendship rather than an enduring one. Leaders in Saudi Arabia, Bahrain, and the UAE, on the other hand, see Iran as their foremost threat. In a region where political and security considerations typically assume a zero-sum logic, one side’s BRI gains are the other side’s loss. Similarly, albeit not as intensely, Turkish gains in the BRI would be a concern in Gulf monarchies. Annual trade flows are significant, with China ranking as Turkey’s highest or second highest source of imports every year since the BRI was announced in 2013.57 China is also investing into Turkish infrastructure projects, with over $10 billion of FDI into Turkey over the same period.58 Projects include a high-speed railway across Turkey, funded partially with a $750 million Chinese loan, and the Salt Lake underground gas storage facility.59 Like Iran, Turkey also enjoys a geostrategic advantage, providing a corridor linking the Caspian, South Caucasus states, and Iran to Europe through the Silk Road Economic Belt. The Baku–Tbilisi–Kars railway is key to this, with the shortest rail link between Asia and Europe.60

The Gulf monarchies in the BRI 107 At the same time, relations between Turkey and China have been uneven. The same ambition to be perceived as a leader in the Sunni Muslim world is at play, as Turkey’s self-perception as a leader of Turkic people contributes to friction with China. The issue of the detention of Uighurs in Xinjiang features here; Ankara has been more outspoken of China’s treatment of the ethnically Turkic Uighurs than other MENA states, leading to occasional tension in China– Turkey relations. A February 2019 statement from the Turkish Ministry of Foreign Affairs was especially pointed: It is no longer a secret that more than one million Uighur Turks incurring arbitrary arrests are subjected to torture and political brainwashing in internment camps and prisons. Uighurs who are not detained in these camps are under heavy pressure. Our kinsmen and citizens of Uighur origin living abroad cannot get news from their relatives in the region. Thousands of children have been removed from their parents and became orphans. The reintroduction of internment camps in the XXIst century and the policy of systematic assimilation against the Uighur Turks carried out by the authorities of China is a great shame for humanity.61 A Chinese response, posted to its embassy website, demanded that the Turkish government “take back false accusations and adopt measures to eliminate evil influences.”62 After this unusual burst of tension both sides eased off somewhat, with President Erdogan using a trip to Beijing in July 2019 to shift the focus away from Xinjiang and onto areas where the two states can cooperate through the BRI.63 At the regional level, therefore, the BRI has the potential to be more problematic for the Gulf monarchies. However, in both inter-GCC and intra-regional issues to date, at least in economic terms and planned BRI projects, there are indications that China’s preference is to work more closely with the status quooriented bloc of the Gulf monarchies. China–Qatar relations have lost the momentum they had in 2014, while the other GCC states have enjoyed a surge in their ties to Beijing. This could be because of incentives offered by the other states, but without evidence a more likely explanation is that the BRI drive for intra- and cross-regional connectivity is better achieved through cooperation with states like the UAE and Saudi Arabia, which enjoy better relations with other regional actors. Effectively isolated, Qatar has less to offer. In terms of intra-regional pressures, here too the GCC comes out ahead of rivals Iran and Turkey, despite their initial lack of representation in any official corridor and the other two being prominently placed in the CCWAEC. As in the inter-GCC case, here a plausible explanation is the potential to contribute to the BRI ambition of building networked commercial clusters. The GCC states, in supporting a vision of MENA order consistent with China’s, have built up considerable capital with other MENA states – most importantly Egypt, with its crucial Suez Canal providing access to the Mediterranean – that put them at the center of an admittedly fragile regional order. Turkish support for political Islamist opposition in

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MENA has considerably reduced its standing, as has Iran’s support for revolutionary groups and the deeply unpopular Assad regime in Syria. As a result, neither offers the same degree of connectivity that the GCC states do, and while China continues to develop relations with them, neither has the same degree of BRI participation that the GCC states have. International Likewise, the BRI’s impact at the international level is somewhat more complex for the Gulf monarchies. Central to this is the role of the US, the most important extra-regional relationship for all of the GCC states. Each has a long-standing security partnership or alliance with the US, forming the main pillar of their security and foreign policies. There are more than 35,000 US troops on the Arabian Peninsula, with bases and facilities in each GCC state except Saudi Arabia. Washington has Defense Cooperation Agreements with Kuwait (1991), Bahrain (1991), Qatar (1992), and the UAE (1994), and has a Facilities Access Agreement with Oman that was signed in 1980 and has been continuously renewed since then. American troops and facilities are a more contentious issue in Saudi Arabia, but security has underpinned the bilateral relationship from the start. In a competitive RSC with aggressive neighbors, the smaller Gulf monarchies have long relied upon extra-regional powers to help address their security concerns, and the depth of the US presence, combined with its military training programs, intelligence sharing, and weapons sales, make American preferences an important consideration for Gulf leaders. As such, how Washington perceives a greater Chinese role in the region through the BRI has to be a consideration for GCC leaders in their own orientation. Washington’s misgivings toward the BRI were evident from the beginning, when the Obama administration refused to join the Asian Infrastructure Investment Bank and tried to encourage its allies to do the same. As discussed in the first chapter of this book, Chinese officials have tried to emphasize that the BRI is not meant as a competitor to the existing international order. Furthermore, they have tried to brand the BRI as an economic initiative rather than a geopolitical strategy. Much of this appears to be an attempt at managing the threat perception of other powers that worry about Chinese ambitions for a larger role in shaping international political norms. However, the Trump administration has been more aggressive in its framing of the BRI as a challenge to existing order. The National Security Strategy released in December 2017 describes China as a threat to stability in the Indo-Pacific, referring to BRI infrastructure investments as a means of achieving geopolitical ambitions, and claiming, “Chinese dominance risks diminishing the sovereignty of many states in the Indo-Pacific. States throughout the region are calling for sustained US leadership in a collective response that upholds a regional order respectful of sovereignty and independence.”64 The US–China relationship has been under increasing strain with the trade war, and both sides increasingly see the relationship as inherently competitive.

The Gulf monarchies in the BRI 109 An example of how this has the potential to spill over into the Gulf monarchies is the technology sector. Beijing’s Digital Silk Road is a focal point in its relations with MENA states, emphasized in the Arab Policy Paper’s “1 + 2 + 3 cooperation pattern,” in which “1” represents energy, “2” trade and investment and infrastructure construction, and “3” nuclear energy, space satellite and new energy.65 The joint communique from the 2017 Belt and Road Forum expressed support for “innovation action plans for e-commerce, digital economy, smart cities and science and technology parks.”66 The Gulf monarchies, particularly the UAE, have responded enthusiastically and digital cooperation has been intensifying. In 2019, the UAE, Saudi Arabia, Kuwait, and Bahrain all announced that they would be adopting Huawei’s 5G networks, resulting in friction with the US which views the 5G Authentication and Key Agreement Protocol as unsecure, with backdoors that could lead to data theft or sabotage. A Chinese law requires Chinese companies to cooperate with the state in cases of national security, and as a result officials in Washington see Huawei as a potential threat to US security.67 The US government has pressured allies and partners to reconsider adopting China’s 5G networks; Secretary of State Pompeo warned, “If a country adopts this and puts it in some of their critical information systems, we won’t be able to share information with them, we won’t be able to work alongside them.”68 With Chinese investments in GCC ports, this presents potential issues, especially with the dense US naval presence. This illustrates the challenge facing the GCC states in developing closer ties to China while their most important security partner perceives China as its main strategic rival. To a much lesser degree, but nonetheless intriguing, India is another consideration at the international level. New Delhi has been vocal in expressing its concerns with the BRI in general, and China’s expanded presence into South Asia in particular.69 The China–Pakistan Economic Corridor (CPEC) is especially a concern, mainly because it offers material support to India’s primary enemy, and also because it passes through contested territories. China reportedly has offered approximately $46 billion in loans and investments associated with CPEC, presenting the Pakistani government with opportunities for inbound FDI that would be difficult to find from any other source. Passing through contested Kashmir and Gilgit-Baltistan, officials in New Delhi perceive CPEC as presenting a challenge to Indian sovereignty. India has therefore been very vocal in condemning CPEC and the BRI. Further considerations are the expansion of Chinese power projection into the Maldives, Sri Lanka, Bhutan, and Nepal.70 For India, this looks like encirclement at the hands of a state with which tensions have always remained relatively high since their last war in 1962. For the Gulf monarchies, this poses some challenges. For one, the GCC– India–Pakistan triangle has long been a delicate balance. As a Muslim state, Pakistani–Gulf relations have historically been strong. There is substantial GCC investment in Pakistan. Pakistani troops supplement Gulf militaries, and in Saudi Arabia’s case, there has long been Pakistani military personnel deployed there.71 While India, with its complicated relationship with Islam, has

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had difficulties in the past in effectively managing its diplomatic relations with the Gulf monarchies, it has a very large population of non-resident-Indians in GCC states, and remittances from the Gulf have long been important to the Indian economy. In recent years India has come to think of the Persian Gulf in more strategic terms, announcing a “Look West” policy under which it has attracted more investment from the Gulf monarchies, and involving a nascent security relationship. 72 The volume of trade between the combined GCC states and India in 2018 totaled just under $130 billion, while GCC–Pakistan trade was worth $18 billion.73 The realities of this trade, combined with a more muscular foreign policy under Prime Minister Modi and the fact that India’s energy requirements are growing at a tremendous pace, come together to indicate that Gulf monarchies are going to need to be increasingly sensitive to Indian concerns. As such, the GCC states must try to maintain equilibrium between cooperation with China and India.

Conclusion The rapid and intense growth in China–GCC relations over the past two decades rightly underscores a fundamental shift in the Gulf monarchies’ geopolitical orientation. After a long period of facing west, they are increasingly turning their attention eastwards. Given the shifting economic center of gravity, this appears to be a structural political and economic reality, and states like China, India, Japan, and South Korea will inevitably come to play increasingly important roles in the Persian Gulf region. The ambition of the BRI indicates that among those states, China has established itself as the early front-runner among its Asian neighbors in building a sustainable presence within the GCC. However, as this chapter has explained, it is not as easy as grafting the BRI cooperation priorities upon the Gulf monarchies’ “Vision” programs. The natural synergy at the domestic level provides an opportunity for both sides to achieve a “win-win” in the idiom of the Belt and Road. At the same time, in offering other rival states the same opportunities, the regional level is a more complex set of dynamics. Thus far, the Gulf monarchies – with the obvious exception of Qatar – have been able to navigate this regional complexity adroitly. It is at the international level, however, where the tension becomes even more difficult, as the GCC states have to measure their burgeoning relationships with Beijing against the established ones with Washington. Here the challenge for the GCC is to manage both sides’ expectations and hedge expertly, a strategy they have long ago mastered. For China, the challenge is to implement the BRI in partnering GCC states without alienating or antagonizing the US. It will be a fascinating process to watch.

Notes 1 For an overview of China–GCC relations, see Jonathan Fulton, China’s Relations with the Gulf Monarchies (London: Routledge, 2019).

The Gulf monarchies in the BRI 111 2 Jonathan Fulton, “The Gulf Between the Indo-Pacific and the Belt and Road Initiative,” Rising Powers Quarterly 3, no. 2 (2018). 3 For larger MENA works, see Fred Halliday, The Middle East in International Relations: Power, Politics and Ideology (Cambridge: Cambridge University Press, 2005); Raymond Hinnebusch, The International Politics of the Middle East (Manchester: Manchester University Press, 2015). For Gulf-specific treatments, see F. Gregory Gause, III, The International Relations of the Persian Gulf (Cambridge: Cambridge University Press, 2010); Mehran Kamrava, The International Politics of the Persian Gulf (Syracuse, NY: Syracuse University Press, 2012). 4 While Bahrain and Oman both experienced varying degrees of public protests during the 2011 Arab uprisings, none were strong enough to actually destabilize or topple the regimes. 5 See Arshin Adib-Modhaddam, The International Politics of the Persian Gulf: A Cultural Genealogy (London: Routledge, 2006); Gause, The International Relations of the Persian Gulf, 12. 6 Barry Buzan, People, States & Fear: The National Security Problem in International Relations (Chapel Hill, NC: The University of North Carolina Press, 1983), 106. 7 Ibid., 105. 8 L. Carl Brown, International Politics and the Middle East: Old Rules, Dangerous Game (Princeton, NJ: Princeton University Press, 1984), 5. 9 Steven R. David, “Explaining Third World Alignment,” World Politics 43, no. 2 (1991). 10 Jonathan Fulton and Li-Chen Sim, “Quo Vadis? External Powers in a Changing Gulf Region,” in External Powers and the Gulf Monarchies, ed. Jonathan Fulton and Li-Chen Sim (London: Routledge, 2019). 11 “China’s Arab Policy Paper,” Ministry of Foreign Affairs of the People’s Republic of China, January 13, 2016, www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1331683.shtml; “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, March 28, 2015, http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html. 12 “Vision and Actions.” 13 Jill Crystal, “Eastern Arabian States: Kuwait, Bahrain, Qatar, United Arab Emirates, and Oman,” in The Government and Politics of the Middle East and North Africa, ed. Mark Gasiorowski and Sean L. Yom (8th ed.) (Boulder, CO: Westview Press, 2017), 346. 14 Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkley, CA: University of California Press, 1997), 49. 15 Michael Herb, The Wages of Oil: Parliaments and Economic Development in Kuwait and the UAE (Ithaca, NY and London: Cornell University Press, 2014). 16 Paul Hodges, “Saudi Arabia’s ‘Vision 2030’ is Looking a Lot Less Clear,” Financial Times, October 26, 2017, www.ft.com/content/6f27998a-ba3d-11e7–9bfb-4a9c83 ffa852. 17 “Sheikh Mohamed’s Inspirational Vision for a Post-Oil UAE,” The National, February 10, 2015, www.thenational.ae/opinion/sheikh-mohammed-bin-zayed-s-inspirationalvision-for-a-post-oil-uae-1.8710. 18 Jonathan Fulton, “Domestic Politics as Fuel for China’s Maritime Silk Road Initiative: The Case of the Gulf Monarchies,” Journal of Contemporary China, https:// doi.org/10.1080/10670564.2019.1637566. 19 “Wang Yi: China and Arab States Should Jointly Forge the Cooperation Layout Featuring ‘Industrial Park-Port Interconnection, Two-Wheel and Two-Wing Approach,’ ” Embassy of the People’s Republic of China in the Republic of Malta, July 10, 2018, http://mt.chineseembassy.org/eng/zyxwdt/t1576567.htm. 20 Nawied Jabarkhyl, “Oman Counts on Chinese Billions to Build Desert Boomtown,” Reuters, September 5, 2017, www.reuters.com/article/us-oman-china-investment/omancounts-on-chinese-billions-to-build-desert-boomtown-idUSKCN1BG1WJ; Li Wefgang,

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“Pan-Asia’s Saudi Project to Break Ground Next March,” China Daily, June 27, 2017, www.chinadaily.com.cn/business/2017–06/27/content_29896950.htm; Jonathan Fulton, “China’s Gulf Investments Reveal Regional Strategy,” Arab Gulf States Institute in Washington, July 29, 2019, https://agsiw.org/chinas-gulf-investments-reveal-regionalstrategy/. “China’s East Hope Group Considers $10 Billion Investment in UAE,” Reuters, May 26, 2019, www.reuters.com/article/us-china-emirates-industry/chinas-east-hope-groupconsiders-10-billion-investment-in-uae-idUSKCN1SW0HO; Jonathan Fulton, “China Deepens Ties with UAE with Industrial Investment,” Al Monitor, July 10, 2019, www. al-monitor.com/pulse/originals/2019/07/china-investment-uae-kizad-industrial-zone. html. “China, Qatar Announce Strategic Partnership,” China Daily, November 4, 2014, www.chinadaily.com.cn/world/2014–11/04/content_18863364.htm. Zhong Nan, “CRCC Nets Contract for Qatar Stadium,” China Daily, December 1, 2016, www.chinadaily.com.cn/business/2016–12/01/content_27535600.htm. “Qatar and China Sign $8bn Infrastructure Deals in ’14,” Gulf Times, April 8, 2015, www.gulf-times.com/story/434171/ Qatar-and-China-sign-8bn-infrastructure-deals-in-1. “Chinese Vice Premier Calls for China, Kuwait to Merge Development Strategies,” Xinhua, August 23, 2017, http://news.xinhuanet.com/english/2017–08/23/c_136549 296.htm. “Kuwait’s Silk City Project Expected to Top $100 Billion,” Daily Sabah, March 8, 2017, www.dailysabah.com/business/2017/03/09/kuwaits-silk-city-project-expected-totop-100b. “Chinese Vice Premier Calls,” Xinhua. Salem Al-Methen, “Chinese Firms Account for 50 pct of FDI in Kuwait,” Kuwait News, September 5, 2017, www.kuna.net.kw/ArticleDetails.aspx?id=2631777&lang uage=en. Kuwait Direct Investment Promotion Authority, KDIPA Takes Part in the Kuwaiti Official Delegation to the People’s Republic of China, September 14, 2017, https:// kdipa.gov.kw/en/archives/13930. “Kuwait, China in Deal to Build $82bln Silk City Project,” Zawya, February 19, 2019, www.zawya.com/mena/en/business/story/Kuwait_China_in_deal_to_build_ 82bln_Silk_City_project-SNG_138083143/. “UAE, China Join Efforts to Develop Dubai Motor City,” Xinhua, September 11, 2017, www.xinhuanet.com/english/2017–09/11/c_136601289.htm. LeAnne Graves and John Everington, “Sheikh Mohammed bin Rashid Announces Winning Contract for World’s Largest CSP Solar Project,” The National, September 16,2017,www.thenational.ae/business/energy/sheikh-mohammed-bin-rashid-announceswinning-contract-for-world-s-largest-csp-solar-project-1.628906. “Sheikh Mohammed Announces $3.4bn Investment in Dubai Via China’s Belt and Road Initiative,” The National, April 26, 2019, www.thenational.ae/uae/government/ sheikh-mohammed-announces-3–4bn-investment-in-dubai-via-china-s-belt-and-roadinitiative-1.854063. “Saudi Arabia Signs Cooperation Deals with China on Nuclear Energy,” Reuters, August 25, 2017, www.reuters.com/article/saudi-china-nuclear/saudi-arabia-signs-co operation-deals-with-china-on-nuclear-energy-idUSL8N1LB1CE. Reem Shamsedding and Jane Chung, “Saudi Arabia Said to Plan Nuclear Power Tender in October,” Reuters, September 14, 2017, www.reuters.com/article/us-saudinuclear-exclusive/exclusive-saudi-arabia-plans-to-launch-nuclear-power-tender-nextmonth-sources-idUSKCN1BP1M7. “Saudi to Launch $30–50 Billion Renewable Energy Program Soon,” Reuters, January 16, 2017, www.reuters.com/article/us-saudi-energy-renewables/saudi-to-launch30–50-billion-renewable-energy-program-soon-minister-idUSKBN1501HE.

The Gulf monarchies in the BRI 113 37 “Saudi Arabia Signs Cooperation Deals.” 38 F. Gregory Gause III, “Understanding the Gulf States,” Democracy, 36 (2015). 39 Kristian Coates Ulrichsen, “Qatar: The Gulf’s Problem Child,” The Atlantic Monthly, June 5, 2017, www.theatlantic.com/international/archive/2017/06/qatar-gcc-saudiarabia-yemen-bahrain/529227/. 40 Jonathan Fulton, “China’s Approach to the Gulf Dispute,” Asia Dialogue, May 3, 2018, https://theasiadialogue.com/2018/05/03/chinas-approach-to-the-gulf-dispute/. 41 “China Ready to Play Constructive Role in Qatar Peace Talks: Wang,” The BRICS Post, July 21, 2017, www.thebricspost.com/china-ready-to-play-constructive-role-inqatar-peace-talks-wang/#.XiCBsRdRXX9. 42 “China Says Arabs and Qatar Should Solve Crisis,” US News & World Report, July 3, 2017, www.usnews.com/news/world/articles/2017–07–03/the-latest-egypt-to-hostgulf-nations-in-dispute-with-qatar. 43 Nick Webster, “UAE and China Declare Deep Strategic Partnership as State Visit Ends,” The National, July 21, 2018, www.thenational.ae/uae/uae-and-china-declaredeep-strategic-partnership-as-state-visit-ends-1.752515. 44 “China, Qatar Agree to Deepen Strategic Partnership,” Xinhua, January 31, 2019, www.xinhuanet.com/english/2019–01/31/c_137790332.htm. 45 Zainab Fattah, “Qatar Withdraws Support for China Over its Treatment of Muslims,” Bloomberg, August 21, 2019, www.bloomberg.com/news/articles/2019–08–21/ qatar-withdraws-support-for-china-over-its-treatment-of-muslims. 46 Qian Xuming and Jonathan Fulton, “China–Gulf Economic Relationship Under the ‘Belt and Road’ Initiative,” Asian Journal of Middle Eastern and Islamic Studies 11, no. 3 (2017), 16–17. 47 Simon Mabon, Saudi Arabia and Iran: Power and Rivalry in the Middle East (London: I.B. Tauris, 2013); Seth G. Jones, “War by Proxy: Iran’s Growing Footprint in the Middle East,” Center for Strategic & International Studies, March 11, 2019, www.csis.org/war-by-proxy. 48 Birol Baskan, “Between Geopolitics and Economics: Turkey’s Relations with the Gulf,” in External Powers and the Gulf Monarchies, ed. Jonathan Fulton and Li-Chen Sim (London: Routledge, 2019), 111–115. 49 “Erdogan to Mubarak: ‘Listen to the Egyptians,’ ” SETA, February 1, 2011, www. setav.org/en/erdogan-to-mubarak-listen-to-the-egyptians/. 50 Baskan, “Between Geopolitics and Economics,” 115. 51 Jonathan Fulton, “The GCC Countries and China’s Belt and Road Initiative: Curbing Their Enthusiasm?” Middle East Institute: Middle East-Asia Project, October 17, 2017, www.mei.edu/content/map/gcc-countries-and-chinas-belt-and-road-initiative. 52 Turkmenistan is the exception, as it is not an SCO member. 53 All figures are from International Monetary Fund: Direction of Trade Statistics. 54 China Global Investment Tracker. 55 “First Freight Train from China Arrives in Iran in ‘Silk Road’ Boost,” Reuters, February 16, 2016, www.reuters.com/article/us-china-iran-railway-idUSKCN0VP0W8. 56 Thomas Erdbrink, “For China’s Global Ambitions, ‘Iran is at the Center of Everything,’ ” New York Times, July 25, 2017, www.nytimes.com/2017/07/25/world/ middleeast/iran-china-business-ties.html; Emma Scott, “Defying Expectations: China’s Iran Trade and Investments,” Middle East Institute, April 6, 2016, www. mei.edu/publications/defying-expectations-chinas-iran-trade-and-investments. 57 International Monetary Fund: Direction of Trade Statistics. 58 China Global Investment Tracker. 59 Rod Sweet, “Turkey’s New High-Speed Rail: Victory for Erdogan – and China,” Global Construction Review, July 29, 2014, www.globalconstructionreview.com/ news/turkeys-new-high-speed-rail-victory-erdogan0938346/; “Spotlight: Turkey, China Show Desire to Expand Cooperation Under BRI,” Xinhua, August 18, 2019, www.xinhuanet.com/english/2019–08/10/c_138297128.htm.

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60 “Two Years on, Baku-Tbilisi-Kars Railway Line Carries 275,000 Tons of Freight,” Daily Sabah, October 27, 2019, www.dailysabah.com/business/2019/10/27/ two-years-on-baku-tbilisi-kars-railway-line-carries-275000-tons-of-freight. 61 See www.mfa.gov.tr/sc_-06_-uygur-turklerine-yonelik-agir-insan-haklari-ihlalleri-veabdurrehim-heyit-in-vefati-hk.en.mfa. 62 Shannon Tiezzi, “Why is Turkey Breaking its Silence on China’s Uyghurs?” The Diplomat, February 12, 2019, https://thediplomat.com/2019/02/why-is-turkey-breakingits-silence-on-chinas-uyghurs/. 63 Ben Wescott and Isil Sariyuce, “Erdogan Says Xinjiang Camps Shouldn’t Spoil Turkey–China Relationship,” CNN, July 5, 2019, https://edition.cnn.com/2019/07/05/ asia/turkey-china-uyghur-erdogan-intl-hnk/index.html. 64 The White House, “National Security Strategy of the United States,” December 2017, www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12–18–2017–0905.pdf. 65 “China’s Arab Policy Paper.” 66 “Full Text: Joint Communique of Leaders Roundtable of Belt and Road Forum,” Xinhua, May 15, 2017, www.xinhuanet.com//english/2017–05/15/c_136286378.htm. 67 Adam Satariano, “U.A.E. to Use Equipment from Huawei Despite American Pressure,” New York Times, February 26, 2019, www.nytimes.com/2019/02/26/technology/ huawei-uae-5g-network.html. 68 “U.S. Won’t Partner with Countries that Use Huawei Systems: Pompeo,” Reuters, February21,2019,www.reuters.com/article/us-huawei-tech-usa-pompeo/us-wont-partnerwith-countries-that-use-huawei-systems-pompeo-idUSKCN1QA1O6. 69 For a deeper analysis of the implications of the BRI in South Asia, see Chapter 3 in this volume. 70 For a single-volume study on the Maritime Silk Road Initiative’s impact on South Asia, see Jean-Marc F. Blanchard (ed.) China’s Maritime Silk Road Initiative and South Asia: A Political Economic Analysis of its Purposes, Perils, and Promise (London: Palgrave Macmillan, 2018). 71 Umer Karim, “Why Pakistan has Troops in Saudi Arabia – and what it Means for the Middle East,” The Conversation, March 6, 2018, https://theconversation.com/whypakistan-has-troops-in-saudi-arabia-and-what-it-means-for-the-middle-east-92613. 72 David Brewster and Kadira Pethiyagoda, “India and the Gulf States,” in External Powers and the Gulf Monarchies, ed. Jonathan Fulton and Li-Chen Sim (London: Routledge, 2019). 73 International Monetary Fund: Direction of Trade Statistics.

7

Bumps in the Maritime Silk Road Domestic politics and the Belt and

Road Initiative in ASEAN states

Daniel O’Neill

Introduction In October 2013, when Chinese leader Xi Jinping announced the 21st Century Maritime Silk Road Initiative (MSRI)1 during the first-ever speech by a foreign leader to the Indonesian parliament, he noted that 2013 was the 10th anniversary of the China–ASEAN (Association of Southeast Asian Nations) strategic partnership.2 In the speech he emphasized what has become his mantra of win-win foreign relations: “By making joint efforts, we will build a more closely-knit China–ASEAN community of common destiny so as to bring more benefits to both China and ASEAN and to the people in the region.” Specifically, he offered to help ASEAN countries “benefit more from China’s development” by establishing the Asian Infrastructure Investment Bank (AIIB) and enhancing the ASEAN–China Free Trade Area (ACFTA) in order to increase Sino-ASEAN trade to $1 trillion by 2020. Before the end of the decade, China–ASEAN trade had surpassed China–United States trade for the first time since the twentieth century. However, through 2018, the trade partners had only made it to about 60 percent of Xi’s $1 trillion goal.3 While falling short of some of Xi’s lofty ambitions, undoubtedly the years since his announcement have seen China’s economic, diplomatic, and even military influence increase in Southeast Asia. China’s emphasis on economic cooperation and particularly trade, stand in rather stark contrast to rising protectionism by its key rival in the region, the United States. Nevertheless, while China’s economic power projection in the region has provided leverage over domestic governments (and, importantly, some of their key constituencies), it has also been met with a backlash. This has been particularly true within states like Myanmar and Malaysia that, concomitant with increased engagement with China, have experienced some degree of political liberalization, providing greater voice and influence to opponents of increased engagement with China. This could have been predicted, given the backlash against major Chinese infrastructure in the democratic Philippines a decade earlier. Indeed, while much attention by the media and civil society, regional governments, and China’s rivals has been given to the Belt and Road Initiative (BRI), the expansion of linkages between China and foreign states at the heart

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of the BRI is not a new phenomenon in Southeast Asia. In fact, in some ways Southeast Asia can be seen as a testing ground for the BRI globally as China has pursued similar policies, particularly those aimed at enhancing the reach of China’s state-owned enterprises (SOEs) and state policy banks, since the BRI’s “Go Out” (zou chu qu) predecessor began to take shape as the last century ended.4 Nevertheless, the MSRI has accelerated, broadened, and deepened that process and provided China with opportunities to alter the geopolitical status quo in Southeast Asia. It has also provided Southeast Asian states with new economic and even diplomatic opportunities; there are, to be sure, win-win aspects to enhanced Sino-ASEAN relations under the BRI umbrella. But international relations does not just occur among states; it also happens within them. Therefore, while China’s regional power and influence are on the rise, in many states there have been domestic political backlashes, particularly against certain Chinese infrastructure investments and, of course, against its broad sovereignty claims in the South China Sea. And just as BRI policies are not altogether new, neither is the backlash against them. In order to illustrate both the political and geopolitical impacts of the MSRI in Southeast Asia, this chapter will focus on a few cases that display three broader trends. First, China can more easily implement MSRI infrastructure projects in less democratic states, which, by definition, have smaller ruling coalitions, whose support keeps the leadership in power and who must, therefore, be positively influenced in order to secure implementation of BRI agreements. Second, because the Chinese state fundamentally is what is promoting the BRI, China can use a broad range of foreign policy carrots (and to a lesser extent, sticks) to secure BRI projects, including not just capital from state banks but trade benefits, other forms of development assistance, and diplomatic support, all without “strings attached.” Third, the first two trends suggest that China can more easily target those benefits when the details of the agreements lack transparency and the few close to the leadership, rather than the many in the broader public, must win (or at least not lose) from the “win–win” relationship.

China–ASEAN cooperation The BRI appears to be China’s global coming out party. But China has been an active player economically in Southeast Asia for two decades. In many ways, 1997 marked the year of China’s economic ascendance and the beginning of the transition from Japan to China as the more impactful regional player. In that year, China proved it was a regional economic powerhouse as it weathered the Asian Financial Crisis far better than nearly all of its neighbors. In particular, it chose not to engage in competitive currency devaluations as the values of currencies in the region plummeted. This would have kept Chinese exports competitive but would have almost certainly deepened the economic crisis. Instead, China took one for the Asian team and maintained currency stability. By not engaging in competitive currency devaluations with its Southeast Asian neighbors,

Bumps in the Maritime Silk Road 117 several of whom appeared to have few tools for fighting the tremendous downward market pressures on their currencies, China showed it had become a regional economic power and, at least in economic terms, a cooperative power.5 This was at the same time that Japan announced its economy was in recession for the first time in more than two decades. China–ASEAN diplomatic and economic cooperation accelerated following the 1997 crisis. Partially due to the regional financial contagion, in that year the first ASEAN plus Three meeting was held, including China, Japan, and South Korea. At their first formal meeting in 2000 in Thailand, the thirteen parties established the Chiang Mai Initiative as an alternate mechanism to the International Monetary Fund (IMF) for dealing with short-term liquidity problems. In 2002, the sides signed the Declaration on the Conduct of Parties in the South China Sea in an effort to resolve frictions resulting from the competing claims of China and four ASEAN members: Malaysia, Vietnam, Brunei, and the Philippines. The following year, China signed the ACFTA agreement, which greatly reduced tariffs between China and the more developed ASEAN members, while the less developed CMLV states were allowed to delay tariff reductions.6 This was ASEAN’s first free trade agreement as a collective. Along the way to implementing the ACFTA, the two sides signed the ASEAN–China Framework Agreement on Comprehensive Economic Cooperation in 2002, the ASEAN–China Trade in Goods Agreement in 2004, and the ASEAN–China Trade in Services Agreement in 2007. All of this evidence suggests that it was at the end of the century that China accelerated its engagement in Southeast Asia, which included among its many goals breaking the regional hegemony of the US as well as replacing Japan as the dominant region-based economic power. As China rose and began extending its regional reach, the US, which had been pulling out of Southeast Asia as the Vietnam War and then the Cold War wound to a close, shifted its focus and resources toward the Middle East, particularly following 9/11/2001.7 The US pivot toward the Middle East coincided with China’s thrust into Southeast Asia, propelled by its “Go Out” policies. China’s ultimate aim was to become a power on par with the early industrializing states in Europe and North America that, along with Japan, China still blamed for the “Century of Humiliation” that ended only when Mao’s New China “stood up” in 1949. In effect, it was to finally bring Mao’s Great Leap-era call to “surpass England and catch up to the United States” (chaoying ganmei) to fruition. That, in turn would give China the economic and military power to compete with any player in the region and, eventually, around the globe. As Haacke wrote in 2002: By achieving influence in the ASEAN region, the Chinese government also hopes to promote multipolarity. The goal of a multipolar world signals Chinese leaders’ aspiration to win recognition for the PRC as a true great power. However, a second purpose of promoting multipolarity has been to forestall China’s containment and encirclement.8

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Thus, the MSRI is part of a long-term goal of the CCP to make China the focus of international relations in East and Southeast Asia that it had been prior to the arrival of the West, whose economic, diplomatic and, especially, military power was fueled by their own industrial revolutions.

Aid, trade, and FDI in the MSRI In order to fuel the MSRI, in 2013 China proposed the AIIB with an infusion of $50 billion. Although it is a multilateral development bank, it is to China as the World Bank was to the US, meaning the banks were originated by, received the bulk of initial funding from, and are located in, each respective country. It is, therefore, a challenge to the status quo of international development organizations. China’s EXIM Bank, with the approval of the State Council and the National Development and Reform Commission, had earlier established the $10 billion China–ASEAN Investment Cooperation Fund (CAF) targeting investments in communication and transportation infrastructure as well as energy and natural resources.9 The BRI in its early stages has been focused on linking China to the rest of the world, particularly its neighbors, through infrastructure investment. Funding for infrastructure investments, therefore, dwarf other forms of Chinese financial assistance in the region. According to AidData (Table 7.1), China provided $41.7 billion in infrastructure “official flows” to ASEAN states from 2000 to 2016. Some $18.9 billion of that was from 2013 to 2016 (the last year for which their data are available). Thus, in the first four years of the BRI, China provided $4.73 billion toward infrastructure investments annually on average to ASEAN states; whereas from 2000 to 2012 the average was just $1.75 billion annually.10 This suggests a fairly dramatic increase in infrastructure funding in the BRI era. However, infrastructure investment in the four-year period from 2000 to 2003 totaled just $3.5 billion (averaging less than $1 billion annually); therefore, a decade later, before the BRI, China had already nearly tripled its average annual financial assistance for infrastructure. The BRI, therefore, represents a continuation in the rise of Chinese infrastructure investment in the region.11 Table 7.1 China’s infrastructure “official flows” to ASEAN states in early “Go Out,” late “Go Out,” and early BRI eras Years

Era

Total

Annual Average

2000–2012 2000–2003 2009–2012 2013–2016 2000–2016

“Go Out” Early “Go Out” Late “Go Out” Early BRI “Go Out” plus BRI

$22.8 billion $3.5 billion $10.2 billion $18.9 billion $41.7 billion

$1.75 billion $875 million $2.55 billion $4.73 billion $2.45 billion

Source: AidData. Note All values are in US$.

Bumps in the Maritime Silk Road 119 According to these data, much of the increase in infrastructure funding in the first four years of the BRI flowed to Malaysia and also Cambodia (where funding was already very high and merely continued to increase at a high rate). Indonesia showed the greatest increase in the first four years of the BRI compared to the four previous years (although it received more from 2008 through 2009 than in either period). Malaysia received no actualized infrastructure investment from China from 2009 to 2015 but did receive $12.1 billion in 2016, which is responsible for nearly all of the overall increase during the BRI era. Surprisingly, infrastructure funding in the first four years of the BRI era fell in Laos, Myanmar, the Philippines, Thailand, and Vietnam compared to the four years leading up to the BRI. Oil-rich Brunei received $207.7 million in 2015, its first infrastructure financing assistance from China. Unsurprisingly, highly developed Singapore received no infrastructure funding from China from 2000 to 2016.12 In terms of financial assistance aimed at public diplomacy (Table 7.2),13 there has also been a notable increase in Chinese diplomatic “aid” (broadly defined) in the BRI era. In the four years prior, Chinese official development assistance (ODA) and other official flows (OOF) in this category equaled $2.3 and $5.2 billion, respectively; in the subsequent years, those figures were $14.1 and $1.7 billion.14 In other words, diplomatic financing more than doubled under the BRI. Of this “aid,” the data show a total of $18.8 billion in finance that would qualify as ODA, or aid, by the standards of the Organization for Economic Cooperation and Development (OECD) and a total of $14.1 billion in OOF for financing that does not meet the OECD criteria for ODA.15 These figures appear to suggest that China relies roughly equally on both forms of financial assistance, but $14.1 billion (of $18.8 billion) of the ODA was provided in the first four years of the BRI, while, in that same period, China provided just $1.7 billion in OOF.16 There has therefore been a clear switch toward China’s providing aid in forms that fit the standard Western definition of the concept. This could be viewed as an effort to conform to international norms. The increase in China’s provision of aid could certainly enhance China’s reputation with governments in Southeast Asia and, when the aid is viewed as providing public goods, the general population. Given that much of that assistance Table 7.2 Official Development Assistance (ODA) vs. Other Official Flows (OOF) for public diplomacy to ASEAN states Years

Era

ODA

OOF

2000–2012 2009–2012 2013–2016 2000–2016

“Go Out” Late “Go Out” Early BRI “Go Out” plus BRI

$4.7 billion $2.3 billion $14.1 billion $18.8 billion

$12.4 billion $5.2 billion $1.7 billion $14.1 billion

Source: AidData. Note All values are in US$.

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also comes with Chinese SOEs and even Chinese workers to implement the agreements funded, such financial support also increases China’s presence on the ground, which, of course can have both positive and negative impacts on the perception of China in the region. Chinese capital also arrives in foreign states in the form of foreign direct investment (FDI). According to ASEAN data, China was the source of nearly $10 billion in FDI to ASEAN countries in 2018. This is about 50 percent more than in 2013, when the BRI was announced. In total, in those six years, China provided $52.8 billion to the region, averaging $8.8 billion per year. This compares to $18.7 billion from 2010 to 2012, in the years preceding the BRI, an average of $6.2 billion annually. Despite rising Chinese outward FDI, it still lags behind global rival the US and regional rival Japan in Southeast Asia. The US has averaged $18.4 billion in outward FDI to ASEAN members in the BRI era and Japan has been the source of nearly twice as much FDI to ASEAN members as China during the same period.17 But now China dominates trade with ASEAN members, particularly trade in goods. In 2018 alone, China–ASEAN merchandise trade (IMTS) equaled nearly half a trillion dollars.18 In the BRI era thus far (2013–2018), trade in goods between the two sides has totaled $2.38 trillion (averaging $339.3 billion per year) compared to just $1.34 trillion with the US and $1.33 trillion with Japan. In contrast, during the nine years prior to the BRI (for which ASEAN provides data), ASEAN–China trade and ASEAN–Japan trade were roughly equal. Trade with China totaled $1.74 trillion at an average of $193 billion annually, rising from $89 billion in 2004 to $319 billion in 2012. Total ASEAN trade with Japan in the same period was $1.75 trillion, while ASEAN trade with the US was $1.54 trillion.19 Broadly speaking, these data show several patterns. First, they reflect an increase in China’s external infrastructure funding and aid for diplomatic purposes in the BRI era; however, they also show that infrastructure funding had already been rapidly increasing prior to the BRI. Second, they indicate increasing investment and trade between China and ASEAN following the announcement of the BRI. Again, however, they also indicate similarly rising trade and investment prior to the BRI. Lastly, goods trade with China now far outpaces that between ASEAN and other trade partners; in 2018, merchandise trade with China roughly equaled ASEAN goods trade with the US and Japan combined. This is because trade with Japan has remained steady for a decade, while ASEAN trade with the US has risen at a much slower pace than trade with China. But, like flows of aid and FDI, rapidly rising ASEAN–China trade is nothing new. While China’s trade with ASEAN rose by nearly $300 billion from 2015 to 2017 and by nearly $400 billion from 2016 to 2018, it rose by nearly $500 billion from 2010 to 2012 and was actually higher in 2013, when the BRI was announced, than it was in either 2015 or 2016.20 Similarly, Chinese FDI in ASEAN more than doubled from 2010 to 2011, when it reached $7.19 billion. It did not pass the 2012 total of nearly $8 billion until 2016, despite the fanfare surrounding the BRI.21 This is not to suggest that over the long run the BRI will

Bumps in the Maritime Silk Road 121 not lead to increased economic ties between China and ASEAN member states; it is simply to illustrate that the MSRI is to a great extent a continuation of economic relations and underlying policies that China has been pursuing in the region since the end of the last century. And, importantly, thus far the BRI has not witnessed an exponential leap of Chinese FDI and trade in the region. This is because China, its state-owned firms, and its state policy banks have been heavily engaged in much of Southeast Asia for two decades. The data above do not show a significant jump in infrastructure investment agreements at the heart of the BRI partially because these data reflect actual financing and not simply the promises of funding that often steal headlines (and raise concerns among China’s rivals). For example, other data by the London School of Economics and CIMB identify nearly $700 billion dollars in “BRI projects” with ASEAN member states. Leading the way is $171 billion in Indonesia and $151 billion in Vietnam. Interestingly, the Philippines, whose closer ties with China since Rodrigo Duterte took office in 2016 have been seen as a potential seismic geopolitical shift in the region, is last with just $9.4 billion. Of the top ten largest projects they identify – mostly high-cost, high-speed rail – several have seen significant delays in implementation. These include the costliest: the $14.3 billion Kuala Lumpur to Kota Bharu rail line in Malaysia; the $3.2 billion high-speed rail project in Indonesia; and the $5.4 billion Bangkok to Nakhon Ratchasima High-Speed Railway in Thailand.22 In the next sections, I analyze the impact of domestic politics on the implementation of Chinese infrastructure projects in Southeast Asia. This helps to explain the differences in data reflecting announced projects and implemented projects. Just as many of the important policies promoting the BRI, especially Chinese state financing, date to the “Go Out” era, problems in implementation of bilateral agreements have plagued many of China’s most high-profile infrastructure projects in Southeast Asia since China, its banks, and SOEs began concertedly “going out” into the region two decades ago. Cambodia has been a particular target of both the “Go Out” and Belt and Road initiatives and illustrates the advantage for China in partnering with a long-ruling, authoritarian leader to minimize the political risk that can threaten project implementation.

The road through Cambodia: bridges of friendship An early Belt and Road map issued by China’s National Development and Reform Commission showed Cambodia as the first stop on the Maritime Silk Road, bypassing Vietnam and the Philippines.23 This is emblematic of the role Cambodia plays as the most ardent supporter of China within ASEAN as well as the importance that China’s government places on bilateral ties with its relatively diminutive partner. When Xi Jinping paid his first state visit to Cambodia as China’s leader in October 2016, he made it clear what China and its initiative have to offer Cambodian Prime Minister Hun Sen’s government: capital. The two governments signed thirty-one agreements that included $237 million in soft loans from China, China canceled $89 million in debt owed to it by Cambodia,

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and the Chinese promised $14 million for Cambodia’s military.24 In May of the following year, Hun Sen not only led a large delegation to Beijing’s Belt and Road Forum on the 14th and 15th but was wooed with a two day “official visit” on the 16th and 17th during which he received promises of $240 million in grant aid. The two sides signed thirteen agreements within the BRI framework focusing on infrastructure, trade, and finance.25 All of this would suggest that the BRI has had a profound impact on SinoCambodian ties, particularly in promoting capital flows from China to Cambodia. However, Chinese state capital had been flooding into Cambodia for well over a decade. Nevertheless, while qualitatively similar to the SinoCambodian pre-BRI partnership, the Belt and Road era has led to an expansion of transportation infrastructure projects in Cambodia. Among the nineteen agreements signed during Chinese Premier Li Keqiang’s meeting with Hun Sen in Cambodia in early 2018 were a Friendship bridge across the Mekong River, a $2 billion highway linking Phnom Penh with the booming port city of Sihanoukville, and proposals for a network of roads and rail improvements that would not only better link Cambodia with neighboring states, but also better link Cambodians, who mostly still live in rural provinces, with each other.26 However, the fact that seven other China–Cambodia Friendship bridges had already been built prior to the most recent, with the first dating back to 2007, suggests that rather than a paradigmatic shift, the MSRI is an evolution in previously established ties promoted by China’s “Go Out” policies. It is worth noting here that at the ceremony opening the third Chinese Friendship bridge, Hun Sen, as he often does, praised the lack of conditions on Chinese aid: “China respects the political decisions of Cambodia.… There are no complicated conditions.”27 But the statements and actions of Hun Sen’s government on issues vital to the political survival of the Chinese Communist Party indicate that there are implicit conditions to Chinese lending: support for Chinese firms in Cambodia and support for Chinese sovereignty claims, whether on the mainland, on Taiwan, or in the South China Sea.28 This is in clear contrast to more explicitly conditional aid from Western governments and international organizations, which often includes provisions that would threaten Hun Sen’s rule, such as calling for political reforms and an end to human rights abuses. In reference to this dichotomy, a section of Hun Sen’s speech at the groundbreaking ceremony for the eighth bridge was titled “Working with China is Mutual Respect, with Some (it) is Bullying.”29

Chinese financial flows to Cambodia Cambodia’s political economy is rife with factors found to deter foreign direct investment, including weak rule of law, high corruption, and political risk.30 Yet Chinese firms are far from deterred; Chinese FDI, as it has for most years since 2008, topped the sources of FDI in Cambodia in 2017 and 2018, accounting for 23 percent and 26 percent of the $2.7 billion and $3.1 billion totals. This is more than the total from the other nine states of ASEAN. Japan and Korea each

Bumps in the Maritime Silk Road 123 invested less than 10 percent of the total in each year.31 In stark contrast to China, US firms provided just $151 million in total FDI stocks in Cambodia through 2017.32 Given both Cambodia’s need for investment capital and China’s need to secure approval and protection by Hun Sen’s government for controversial, high-risk infrastructure investments, the rise in Chinese FDI in Cambodia has seen a concomitant rise in inflows of Chinese aid and loans to fund and support these projects. These can be thought of, therefore, not only as investments by Chinese firms, but as investments by the Chinese state. This often-concessional (according to Hun Sen’s government) financing funds major projects by Chinese SOEs and appears to have been a necessary condition for successfully investing in Cambodia’s hydropower sector and others with high-cost, immobile assets and requiring land concessions. According to the Cambodia Ministry of Economy and Finance, Cambodia received a total of $9.69 billion in bilateral and multilateral aid from 1993 through 2017 with just $1.24 billion of that from traditional donor, Japan.33 China, on the other hand, has provided $4.05 billion, even more than the $3.31 billion from multilateral sources, most of that since the beginning of the twenty-first century. China provided about $224 million to Cambodia in 2017, more than twice that from either Japan or the Asian Development Bank and World Bank (combined), and nearly four times the amount from either the US or the EU.34

Chinese hydropower and the façade of democracy in Cambodia Chinese SOEs that dominate Cambodia’s hydropower sector bring some of the most costly and “specific” assets, which cannot simply be picked up and moved out of the country. And the most controversial state-funded Chinese projects in Cambodia have been those requiring land concessions. Concessions provide revenues to the Cambodian government but are often in environmentally sensitive areas and require the relocation of citizens. Such projects include hydropower but also agriculture and real estate developments. China and its firms overcome opposition to these high-risk investments in Cambodia and secure approval and protection for them by gaining the support of Hun Sen’s government through the provision of aid and loans, as well as offering diplomatic support. Increasingly, Chinese firms investing in hydropower or Cambodia’s land and resource sector have relied on joint ventures with a Cambodian stakeholder with close ties to the Prime Minister, such as ethnic Chinese Cambodian Senator Lau Meng Khin and President of the Cambodian Chamber of Commerce Kith Meng, in order to secure approval for, and long-term protection of, sizable investments requiring sizable land concessions. Successful efforts by China and its SOEs to invest in Cambodia’s controversial hydropower sector prior to the announcement of the BRI in 2013 bode well for the immediate future of the MSRI in Cambodia. Despite foreign hydropower firms facing not only domestic and international opposition but also Vernon’s

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“obsolescing bargain” (the loss of bargaining power with host governments once fixed assets are in place), there are currently six Chinese-built, -funded, and -operated hydropower dams, costing over $1.6 billion, in Cambodia.35 A seventh, the Lower Sesan II, was completed after the BRI announcement by a Chinese majority joint venture, bringing the total cost to $2.4 billion.36 Given the specificity of their assets and the controversial nature of the projects – often located in protected forests and causing massive flooding affecting local livelihoods – Chinese hydropower firms face extreme risk in Cambodia’s political economy. They, therefore, seek (and receive) formal payment guarantees with the support of Hun Sen from the Cambodian National Assembly.37 This legislation, pushed by Hun Sen, is designed to protect these investments from political risk; according to Minister of Industry, Mines, and Energy Suy Sem: “In case of any political incident that causes these operations to suffer losses, the government will be responsible.”38 The build, operate, transfer (BOT) agreements between China and Cambodia require the Chinese firm to build the project and then operate it for a term of three to four decades. The Cambodian government guarantees payment for electricity output to the Chinese SOE whether it is needed by Electricite du Cambodge or not. Finally, the project’s ownership is transferred to the Cambodian government after the set term has expired.39 Thus the Chinese firm is protected from both economic and political risk during its operation of the project.40

Liberalization and authoritarian backsliding The pre-BRI success of Chinese hydropower projects in overcoming widespread Cambodian and international opposition by securing the support of Hun Sen’s authoritarian government stands in stark contrast to a brief period of Cambodian government responsiveness from mid-2014 to mid-2015. This followed the relatively poor showing of the Cambodian People’s Party (CPP) in the 2013 elections, in which the ruling party, despite alleged voter fraud in its favor, received its lowest seat share since 1993. A year of protests against Hun Sen’s and the CPP’s continued rule included the opposition Cambodia National Rescue Party’s (CNRP) refusal to take the National Assembly seats they had won. In an effort to end protests, in mid-2014 the government began to allow greater political space and voice for the political opposition. Not only was long-time opposition leader Sam Rainsy, as head of the CNRP, allowed to take a position as the official “leader of the opposition” in the National Assembly, but there was even brief oversight by the parliament of the Lower Sesan 2 hydropower project with the Minister of Mines and Energy Suy Sem called before the parliament to answer questions about population displacement and environmental impacts. This was unprecedented legislative branch oversight of a project backed by China and linked to politically connected local businessman, Kith Meng, whose Royal Group was in a joint venture with Hydrolancang International Energy Co. Ltd, based in Kunming, China, to build and operate the dam.41

Bumps in the Maritime Silk Road 125 At the urging of the CNRP, Hun Sen even announced the delay of the Chhay Areng dam until after the 2018 elections; protesting local villagers had slowed Sinohydro’s work on the project, and military police had intervened to protect the Chinese SOE giant’s local headquarters. Opponents, including local human rights groups and opposition politicians, claimed the project would flood protected forests, force the removal of approximately 1500 villagers from their homes, and threaten endangered species.42 However, Hun Sen and the CPP quickly chafed at the newly invigorated parliamentary opposition, as it appeared more and more likely that their regime could face a serious threat to its rule in the 2018 elections. By the end of 2015, the ruling coalition had used a series of defamation charges in the Phnom Penh Municipal Court to force key members of the CNRP, including Rainsy, to flee in exile abroad.43 In the year before the election, the government jailed Rainsy’s successor, Kem Sohka, and banned the CNRP, enabling the CPP to secure all of the seats in the National Assembly in the 2018 election compared to just 55 percent in 2013. It had become clear that Hun Sen no longer felt the need to present even a façade of democracy, and the election was the final piece of evidence that the regime had tightened the authoritarian grip it had long held prior to the brief period of liberalization.

Tightening the belt to pave the road Along with this backsliding toward an even deeper authoritarianism by Hun Sen’s regime has come even closer relations with China, including the Belt and Road investments announced during the reciprocal state visits by Xi Jinping and Hun Sen. In addition, the two countries held their first joint naval exercises, Golden Dragon, in late December 2016, and Hun Sen also canceled the longrunning Angkor Sentinel exercises with the USA. In another geopolitical win for China, Cambodia has played a crucial role acting as a proxy for China within ASEAN, thereby inhibiting collective action by the multilateral organization on the South China Sea issue.44 China also supports Cambodia diplomatically. In November 2017 after the Supreme Court, prompted by Hun Sen, banned the opposition CNRP – and in sharp contrast to both the strong condemnation from the EU and the US decision to end funding for the 2018 elections – China’s Foreign Minister Wang Yi backed the Cambodian government’s crackdown: “China supports the Cambodian side’s efforts to protect political stability … and believes the Cambodian government can lead the people to deal with domestic and foreign challenges, and will smoothly hold elections next year.”45 At the opening ceremony for the Lower Sesan 2 project, which was not halted by the brief legislative oversight, a representative of Hydrolancang International Energy stated that the dam represents a big achievement in the implementation of the Belt & Road Initiative … [and] is a key project done with the support of the government. Since the start of construction in February 2014, we had to deal with some

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This quote evidences both the conflation of the Belt and Road with the earlier “Go Out” policies, as the project was approved in 2012 prior to the announcement of the BRI the following year, as well as the importance of Hun Sen’s government in helping Chinese SOE’s deal with the “challenges” of investing in Cambodia. The enthusiasm for the MSRI by the government of Hun Sen appears to be unrivaled. This is partially because aid “with Chinese characteristics” works synergistically in support of authoritarianism with Cambodian characteristics. But it is also because the goals of the initiative fit very well into the development plans and needs of Cambodia, not unlike the symbiotic relationship between Japan and Singapore as Japan further globalized in the 1980s.47 Hun Sen and his regime are well placed to receive a windfall of Chinese capital from the BRI, or, more accurately, even more rapid inflows of Chinese capital than those which Cambodia had been receiving since China initiated its “Go Out” policies at the turn of the century. Well over a decade of successful investments by Chinese SOEs in several sectors in Cambodia, but most notably in riskintensive hydropower, suggest that the MSRI should find particular success in Cambodia. And Hun Sen’s return to authoritarianism after his brief flirtation with political pluralism indicates that his government will continue to repress, not only opposition to his regime, but also opposition to Chinese infrastructure projects and investments. Former deputy prime minister Prince Nordom Sirivudh has warned about the potential detrimental impact of poor governance in Cambodia on the BRI: “without good governance – which includes transparency and accountability – the BRI projects will fail.”48 However, the relative success thus far of controversial investments by Chinese SOEs in Cambodian hydropower and other sectors under China’s “Go Out” policies suggests that it is actually poor governance that may allow BRI projects there to be approved and successfully implemented, at least as long as Hun Sen’s regime remains in power.

Malaysia: the benefits of backlash Just as Cambodia and China appear to be a good match for the BRI, former Malaysian Prime Minister Najib Razak’s need for capital and Chinese leader Xi Jinping’s Initiative aiming to spread it across much of Southeast Asia made Malaysia appear to be the perfect partner to illustrate the gains to both sides from China’s win-win foreign policies. Instead, with the stunning victory of the opposition led by former Prime Minister Mahathir Mohamad in the 2018 general election, Malaysia has quickly become a case illustrating four key points about the BRI. First, the opaque nature of many of these financial agreements makes them more susceptible to corruption, especially when both partners operate in regimes that suppress transparency; the lack of transparency also

Bumps in the Maritime Silk Road 127 makes these agreements useful tools for both Chinese foreign policy and domestic political leaders. Second, because there are also losers from these so called “win-win” arrangements, these agreements can be useful tools for the political opposition, especially when China’s bilateral partner operates under relatively democratic institutions. Third, there are, indeed, specific winners from BRI projects, but when those winners lose at domestic politics, the implementation of those projects can be jeopardized. Finally, the Malaysia case, along with the case of Myanmar mentioned below, shows that the hand-tying aspects of democracy, in which a leader can legitimately claim to be constrained by the public, can actually provide bargaining power for elected officials who seek to renegotiate the agreements with China made by their predecessors.49 Given Prime Minister Najib’s family legacy, it was unsurprising that he would seek closer ties to China after taking power in 2009; it was Najib’s father, Prime Minister Abdul Razak Hussein, who had switched diplomatic recognition from the ROC on Taiwan to the PRC in 1974 at the height of the Cold War in Southeast Asia.50 In addition, the MSRI seemed a perfect complement to Malaysia’s Logistics and Trade Facilitation Master Plan aiming to “improve the efficiency of transport and trade facilitation and elevate Malaysia to become ‘The Preferred Logistics Gateway to Asia.’ ”51 Infrastructure brought by the MSRI, especially the East Coast Rail Link (ECRL) and the Kuantan Port, would not only improve Malaysia’s logistics and trade, it would provide a partial solution for China’s oft-discussed “Malacca dilemma,” the country’s dependence on the transportation of petroleum imports through the Malacca Strait, a potential chokepoint in any future conflict with the US.52 And Najib had more personal financial reasons for seeking Chinese capital beyond the general need among most of China’s MSRI partners for infrastructure financing. He also needed a powerful diplomatic partner, as his government faced corruption charges in several countries. The need for both a financial and a diplomatic partner was related to allegations concerning the 1 Malaysia Development Berhad (1MDB), a state-owned investment fund for which Najib served as chairman of the board of advisors. Media reports suggested that Najib embezzled $681 million from the fund and sought a bailout from China, which, in turn, requested Najib’s approval for a range of Belt and Road infrastructure projects in Malaysia.53 Those projects included the $13 billion ECRL agreement signed during Najib’s 2016 visit to China and two pipeline agreements valued at $2.3 billion with China Petroleum Pipeline Engineering (CPPE), a subsidiary of China National Petroleum Corporation. The benefits to China’s partner of such bilateral agreements, of course, include funding and construction of infrastructure projects. However, there may also be more targeted benefits aimed at securing approval and protection of those projects, such as those suggested by a Wall Street Journal report on the agreements made during Najib’s 2016 visit to China, one of eight during his nine years in office: Senior Chinese leaders offered in 2016 to help bail out a Malaysian government fund at the center of a swelling, multibillion-dollar graft scandal,

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Daniel O’Neill according to minutes from a series of previously undisclosed meetings … Chinese officials told visiting Malaysians that China would use its influence to try to get the U.S. and other countries to drop their probes of allegations that allies of then-Prime Minister Najib Razak and others plundered the fund known as 1MDB, the minutes show.54

The report suggests a quid pro quo in which Najib’s government approved the rail and pipeline projects in return for Chinese diplomatic and financial support. China helped keep 1MDB afloat by purchasing stakes in several of its assets, including China General Nuclear Power Corporation’s purchase of $2.3 billion in power-related assets and a $1.7 billion deal for a 60 percent stake in the Bandar Malaysia Berhard transit hub, a partnership between a Malaysian firm and China Railway Engineering Corporation. Political pressure led to the abandonment of the second deal, particularly as evidence arose that it may have been linked to agreeing to award China a highly sought-after high-speed rail link between Kuala Lumpur and Singapore.55 This suggests the range of benefits that China can offer foreign governments as it seeks to extend its economic and geopolitical influence while securing opportunities for Chinese firms through the Belt and Road. In May 2017, following a visit to Beijing in which he inked MOUs for trade and investment deals worth $27.8 billion, Najib heaped praised on the BRI on his blog and echoed Xi’s “win-win” rhetoric: Just imagine the Belt and Road network, which is … large-scale and comprehensive. It will definitely give a boost to the development of various sectors and industries, hence generate bigger growth through good infrastructure as the catalyst … Insya-Allah (God willing), with the concept of shared prosperity and win-win situation, I believe Malaysia, as well as other countries, will be able to realize its potential under the One Belt, One Road initiative.56 As I write at the beginning of 2020, Najib is on trial before the Malaysian High Court on civil charges of misfeasance of public office and is facing a number of criminal charges also related to the 1MDB scandal.

The MSRI under Mahathir During Najib’s second term in office, Malaysia’s participation in China’s BRI had been the target of the political opposition in Malaysia, particularly by Tony Pua of the Democratic Action Party, who later filed the civil suit against Najib. But it became an especially hot button issue during the run-up to the 2018 general election when former Prime Minister Mahathir, who had ruled Malaysia for decades under the one-party rule of the United Malays National Organization (UMNO), began to explicitly condemn many of the agreements signed by Najib, who now held the leadership positions Mahathir had held

Bumps in the Maritime Silk Road 129 prior to retirement. Mahathir joined his long-time foe (and once heir-apparent) Anwar Ibrahim in the Pakatan Haraban (PH or “Alliance of Hope”) in an effort to end the dominance of the Barisan National coalition (and its Alliance Party predecessor) through which the UMNO had ruled Malaysia since independence in 1957. Rarely had Malaysian foreign policy, and particularly relations with China, become a major focus of a general election.57 However, it was not the foreign policy aspects of the China critique that resonated with voters; it was the perceived impact of tighter relations on the lives of the politically dominant Malay majority. The Mahathir-led opposition broadly criticized Najib’s engagement with China, complaining of the rising physical presence of China in the country, the rising debt owed to China, and the potential tradeoff of sovereignty in the South China Sea for Chinese capital in the form of loans and FDI.58 The dominance of the ethnic Chinese minority, who make up less than a quarter of the population, of the Malaysian economy has long been at the core of both politics and economic policy in Malaysia. This is most clearly reflected in the wide-ranging affirmative action programs for the Bumiputra majority (Malay and other indigenous peoples) dating to the PTI (NEP) program of the 1970s and 1980s. As Malaysian political scientist Chandra Muzaffar stated, Mahathir, like a handful of other politicians, knows that criticism of Chinese investments resonates with a segment of the Malay electorate. It is a way of winning votes in a society in which ethnicity colors almost every facet of public life.59 Malaysian scholar Amrita Malhi further describes how Mahathir used the BRI to bring down the UMNO’s monopoly on political power: Prime Minister Mahathir Mohamad successfully used his opponents’ connections with China and the BRI to externalize voters’ concerns about ethnic Chinese political power in Malaysia, transferring these concerns on to the People’s Republic instead. PH’s campaign also connected Chinese projects with issues of debt and corruption, allowing Mahathir to portray his opponent, Prime Minister Najib Razak, along with the 1Malaysia Development Berhad scandal, as key sources of sovereign risk for Malaysia and Malaysians.60 Mahathir explicitly criticized BRI infrastructure agreements and their funding (and alleged associated corruption). He also echoed the tone of a rising number of candidates globally, such as Donald Trump in the US, utilizing nativist rhetoric to surprisingly seize power: “No country wants to have an influx of huge numbers of foreign people into their country.”61 Mahathir campaigned on reviewing Chinese megaprojects and renegotiating the East Coast Rail Link.62 Indeed, soon after taking office following his shock victory, Mahathir announced the cancellation of the ECRL and the Sabah pipeline project. And he

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did so in Beijing following a state dinner with Chinese leader Xi Jinping using charged terms – particularly to the Chinese given their “Century of Humiliation” – such as “colonialism” and “unequal treaties.”63 But just as Mahathir cleverly used opposition to the Belt and Road (and underlying antiChinese sentiment) for political gain by garnering votes among the Malay majority that had kept the UMNO in power, he used the cancellation of BRI projects and his loaded rhetoric to secure economic gains for the state. Nearly a year after his election victory, the Prime Minister signed a new ECRL agreement that cut the cost of Najib’s $16 billion deal by a third to $11 billion and increased the percentage of local construction workers.64 The shortened route would no longer go through the environmentally sensitive Gombak Selangor Quartz Ridge site, a segment delayed by the state government dominated by the UMNO’s opposition even prior to Mahathir’s 2018 victory. In addition, with the new agreement Malaysia avoided paying penalties of up to $5 billion for cancelation of the projects. Mahathir also played hardball over the canceled pipelines, seizing $330 million from a CPPE bank account using the logic that Malaysia had paid for 80 percent of the projects but CPPE had only completed 13 percent of the work prior to cancelation.65 In short, what the politically astute Mahathir accomplished was to use the hand-tying effects of democracy to improve Malaysia’s bargaining power with China while using the hand-tying effects of the agreements themselves (in the form of cancellation penalties) to justify renegotiation rather than cancelation. He thus framed the new agreements as win-win for Malaysia, claiming he faced a choice to either renegotiate or pay termination costs … with nothing to show for it.… As such, we chose to go back to the negotiating table and call for a more equitable deal, whereby the needs of the Malaysian people would be prioritized.66 The nuances of domestic politics in semi- (but increasingly) democratic Malaysia affect China’s ability to form successful BRI partnerships with the Malay state. Most impactful are informal societal and economic institutions and formal political institutions: the economic dominance of ethnic Chinese and the political dominance of ethnic Malays and a relatively weak central state autonomy due to Malaysian federalism. Indeed, Liu and Lim find that the relative success of BRI projects in Malaysia is a function of three factors: “fulfilment of Malaysia’s longstanding pro-ethnic Malay policy, a mutual vision between the state and federal authorities, and advancement of geopolitical interests for both China and Malaysia.”67 But unless the South China Sea disputes become even more heated and China quickens its efforts to change the status quo by seeking to enforce its claims to the entire Sea (including islands occupied by Malaysia and other ASEAN states), geopolitics will take a back seat to domestic politics, especially if Malaysia continues along its path toward more institutionalized democracy. Despite the political football that the BRI became in Malaysia, it has not led to dramatic changes in the general patterns of the bilateral relationship with

Bumps in the Maritime Silk Road 131 China, patterns established by Mahathir himself during his initial twenty-twoyear reign in office that ended in 2003. Viewing the relationship from a neoclassical realist perspective, Malaysian scholar Cheng-Chwee Kuik identified three themes in Malaysia’s approach to the relationship: a shift from Cold War hostility to eventual partnership, the maintenance of a hedging strategy given power asymmetries and the South China Sea dispute, and the continuity in this “policy of dualism” in the post-Mahathir era under Abdullah and Najib.68 While Mahathir was able to use Najib’s close financial relations with China as political leverage in his shock 2018 victory and followed that up with some dramatic announcements of cancelations of several major BRI projects, it is unlikely that Mahathir will substantially deviate from the careful but cooperative approach he established during his first decades in office. This is exemplified by the return of two controversial Chinese projects under Mahathir: the ECRL and the Bandar Malaysia development and transport hub, which was canceled under Najib.69 By the Second Belt and Road Forum for International Cooperation in April 2019, Mahathir had changed his tune from his earlier highly politicized rhetoric: “I am fully in support of the Belt and Road Initiative. I am sure my country, Malaysia, will benefit from the project.”70 Mahathir can use the democratic hand-tying advantage in negotiations with China in order to maximize those benefits, so that there are more winners in Malaysia from this “win-win” partnership. These winners will include government linked companies that have long served as vehicles for patronage aimed at securing allegiance among the selectorate, those in an autocratic regime whose support is necessary to maintain political power.71 And, if Malaysia consolidates its new democratic gains, those institutions will allow the Malaysian leader to more credibly claim the need to minimize drawbacks and maximize benefits from the BRI for the broader electorate, whose support is necessary in a democracy for maintaining political power.72

The MSRI and political regimes in Southeast Asia The above discussion shows that the MSRI is both a quickening and an expansion of policies that China has been pursuing in Southeast Asia since the turn of the century. Economically, China has been searching out opportunities for its firms – especially state-owned enterprises. It has been seeking sources of resources and energy and attempting to export excess capital and gain returns on that capital. All of this has been linked to increasing bilateral trade in the region. In Southeast Asia, the policies now associated with the BRI are nothing new. Of the ten ASEAN member states, Myanmar, Cambodia, Laos, and the Philippines all were subject to economic charm offensives aimed mostly at large-scale infrastructure projects following the announcement of the “Go Out” initiative. China’s efforts were broadly successful in the three authoritarian states but met far more difficulties in democratic Philippines, where major projects agreed to by the Arroyo administration, such as the NorthRail and ZTE national broadband network projects, became highly controversial and were quickly halted by

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opposition to them in the rival branches of government. Similarly, once Myanmar began transitioning from the decades-long rule of the military junta to a somewhat more liberal and democratic regime after 2010, opponents of major Chinese-funded infrastructure projects there successfully delayed or halted some of those most important to Beijing, including the high-profile Myitsone hydropower project and the Kunming–Kyaukphyu Railway Line.73 These examples, and the more detailed cases above, suggest that the linkages that China wishes to create through the MSRI may be inhibited by domestic politics in the host state. This will be particularly likely when potential opponents to Chinese infrastructure projects – including not just environmentalists or those who may be displaced but also domestic firms and workers who may compete with Chinese firms – have political voice. The most receptive state to both the “Go Out” and Belt and Road Initiatives among ASEAN members has been Cambodia, where opposition to Chinese investments is ignored or repressed by Hun Sen’s autocratic regime. The exception to that rule, the Chhay Areng hydropower project, illustrates the hurdles that more pluralist domestic politics can place along China’s Road. That brief period of government responsiveness in Cambodia, the cases of Myanmar and the Philippines during the pre-BRI “Go Out” era, and the case of Malaysia following Mahathir’s return to power, make it clear that domestic politics in China’s bilateral partner plays a key role in the success or failure of the types of projects at the core of China’s Belt and Road Initiative. The MSRI in Indonesia provides further evidence that major BRI projects face higher hurdles in a more democratic context, particularly as elections approach. As in Malaysia, the relative economic influence of Chinese Indonesians is frequently politicized for electoral gain, and they are often assumed to benefit from Chinese loans and investments. BRI infrastructure projects – such as the high-speed rail (HSR) line between Bandung and Jakarta, “an icon for China’s Belt and Road Initiative” according to the Chinese embassy – have faced delays in implementation. The HSR has been delayed by difficulties in land acquisition, which is far easier under more oppressive governments such as China’s own or its fellow one-party ruled neighbor Laos, and has also been criticized for cost overruns. Even former Trade Minister Tom Lembong, current head of the Investment Coordinating Board whose mandate is to increase investment in Indonesia, criticized the project saying it “represents everything that’s wrong with Belt and Road.… It’s opaque and non-transparent – even us cabinet members are having trouble getting data and information.”74 During his reelection campaign, Indonesian President Joko Widodo, like Najib, faced criticism over his government’s agreements with China from his chief opponent, Prabowo Subianto, who, like Mahathir, promised to review the agreements if elected.75 With the election taking place just one week before the Second Belt and Road Forum in Beijing in 2019, Joko expediently decided to stay home, becoming the only leader of an ASEAN member state not to attend Xi’s highly symbolic gathering.76 Even though the success of China’s MSRI in Southeast Asia appears to be correlated with the degree of authoritarianism of the ASEAN partner state, the

Bumps in the Maritime Silk Road 133 overall trend since the BRI was announced in 2013 has been a greater presence for China’s government, its state policy banks, and its state- and privateowned enterprises – not to mention Chinese workers and tourists – throughout the region. And this presence has seen a concomitant rise in China’s diplomatic strength. This has been nowhere more notable than in bilateral ties with the Philippines, for decades one of Washington’s strongest allies within ASEAN (despite having pushed out US troops as the Cold War closed in the early 1990s). It is also evident in Myanmar, where the once “Pauk Phaw” (kinship) ties with China seemed to rapidly deteriorate once political reforms began in 2011 and Western sanctions ended in 2012. Aung San Suu Kyi’s government, however, has found the “no strings attached” nature of bilateral economic relations with China convenient, given the international backlash (and renewed US sanctions) against her government’s policies toward the Rohingya and the diplomatic support China provides on the issue. But the Burmese government also leveraged anti-China sentiment to negotiate better terms for the Kyauk Pyu port. The cases of China’s relations with ASEAN states, with perhaps the one exception of Vietnam given historical and territorial animosities, illustrate that China is both too big to ignore and can offer financial benefits that are too enticing to refuse. Non-conditional diplomatic support from China, long based on one of the Five Principles of Peaceful Coexistence – “noninterference in each other’s internal affairs” – is attractive not just to authoritarian regimes but to more democratically selected governments, like those of Duterte in the Philippines and Aung San Suu Kyi in Myanmar, which are accused of human rights violations by Western governments. And despite historical tensions, Vietnam appears to be gradually warming up to the BRI. Data from the first half of 2019 showed Vietnam among the top four in new BRI contracts and Vietnam topped the list of ASEAN states “likely to benefit the most from the BRI” in a survey of regional government and business leaders.77 Thus far, however, the only major BRI infrastructure project completed in Vietnam has been the Cat Linh-Ha Dong metro line in Hanoi, finished at the end of 2019, reflecting Vietnam’s cautious approach to the Initiative.

Conclusion While there has been much greater fanfare surrounding the Belt and Road Initiative, the underlying policies are quite similar to the those of the “Go Out” era: Chinese state banks funding infrastructure projects by Chinese state-owned enterprises following agreements by leaders from China and its bilateral partner. The BRI may be quantitatively more impressive, but it is qualitatively similar and, in many ways, simply a continuation of the types of foreign economic policies China has promulgated in much of Southeast Asia for two decades. Therefore, the region provides some insight into how the BRI may play out globally. What the region has shown thus far is that while China’s BRI policies are far from a zero sum game aimed solely at extending China’s geopolitical influence

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and securing opportunities for Chinese firms, they are also not fundamentally altruistic. There are beneficiaries of BRI policies and agreements both in China and in partner states; however, there are also those negatively impacted. Who wins and who loses in those partner states is partially a function of their regime type, the formal and informal rules in which the political game is played. And these rules impact how quickly and effectively BRI agreements are actually implemented. The MSRI has also shown that while China’s power, particularly its financial resources, provides it with influence, host state governments and other domestic actors in China’s bilateral partner are not merely going along the Road for a ride; they also have agency. The governments of Malaysia, Myanmar, and Indonesia, in particular, have shown that they have enough bargaining power to negotiate improvements in the terms of contracts and mitigate negative impacts. The latter includes not accepting all of the risk in these projects. One factor that improves their bargaining power is the hand-tying affects of democracy which, in a type of two-level game, allows negotiators to credibly claim that certain provisions of agreements would not be acceptable to their electorate.78 Another is the regional competition between China and Japan over infrastructure provision, particularly in high-speed rail which, for example, allowed Indonesia to receive highly favorable terms for its HSR.79 In short, host states have agency and ways to enhance their bargaining power despite the tremendous power assymetries between China and each member of ASEAN. The BRI in Southeast Asia further suggests how the Intiative may simultaneously increase Chinese influence while also heightening concern about China’s intent. A survey of one thousand experts in business, government, academia, civil society, and the media published by the ASEAN Studies Center at the ISEAS–Yusof Ishak Institute in Singapore in 2019 offers an elite-level view of geopolitics in Southeast Asia. That survey showed the lowest rate of trust and highest rate of distrust of China among active powers in the region. Only 19.6 percent of respondents expressed trust in China compared to 27.3 percent for the USA and 65.9 percent for Japan. Only 17.9 percent believed that China would do what is “right” in “contributing to global peace, security, prosperity and governance”; Vietnam and the Philippines, for whom China’s assertiveness in the South China Sea has been most problematic, had far lower scores than the other ASEAN states. In addition, 45.4 percent believed that China would become a “revistionist power with an intent to turn Southeast Asia into its sphere of influence,” while nearly half believed that the BRI would “bring ASEAN states closer into China’s orbit.” Unsurprisingly, Brunei, Laos, and Cambodia, the most authoritarian members of ASEAN, had the most positive view of the BRI. With regards to the lessons of projects like the ECRL, with the exception of Laos, a majority of respondents in all countries agreed that the biggest lesson was that their “government should be cautious to avoid getting into unsustainable financial debts to China.” Tang Siew Mun, head of the Center, suggested that the results indicate a backlash against Chinese assertiveness in the region:

Bumps in the Maritime Silk Road 135 Concerns about China’s growing assertiveness have been simmering in the past decade and are now coming to a boil. The survey reflects that heightened sense of wariness.… However, we should be careful not to interpret these findings as “anti-China,” but as a wake-up call that China’s strong-arm tactics and attempts to mold the region in its image will face considerable pushback.80 It is clear that if China does not learn from experience and revise the BRI and, particularly, if China simply attempts to conduct business as usual abroad, exporting the Chinese development model and all the assumptions about the appropriate role of the state that undergird it, the Belt may squeeze a bit too tightly and the Road will be a bumpy one. And even if it does learn, financing, construction, and operation of the BRI – in other words implementation – is not done by a monolithic Chinese state but by a range of state actors including leaders, diplomats, state bankers, and SOE heads as well as their domestic counterparts, in addition to a range of private sector actors. This principle–agent problem means that it may be difficult for China’s leaders to rein in the excesses of the BRI, even if they recognize them and want to. In addition, China must also learn that these agreements should indeed be winwin and not just for the political leadership on each side. And the extent of the winners must be broader (and the losers narrower). This is particularly true in more democratic states like Indonesia and the Philippines, and, increasingly Malaysia, if the BRI is to be a true success beyond strongly authoritarian states like Laos or even Cambodia, where those adversely impacted by BRI projects have relatively little voice and bilateral agreements lack transparency, so that it is difficult to even determine who the winners are. In short, China must take care in transforming the BRI from a concept of win-win linkages aimed at development to actual implementation if the Initiative is to enhance China’s geopolitical clout. As Guanie Lim wrote, “Coupled with other broader geopolitical issues such as the ongoing dispute between China and several Southeast Asian countries on the demarcation of the South China Sea, lopsided projects such as the ECRL could jeopardize China’s reputation, undermining the intended goals of the BRI.”81 That “lopsidedness” is partially a result of the lack of transparency and open bidding on the projects. Yet, despite the opposition that enhanced Chinese assertiveness in the region has garnered (both regionally and internationally), China’s rising power and Xi Jinping’s rising inclination to use it are changing the political status quo. These changes are not likely to be reversible, short of domestic economic collapse in China (or long-term stagnation as in Japan) and a genuine pivot to Asia by the US, neither of which appears likely in the foreseeable future. It is clear that the MSRI is leaving a permanent mark on both geopolitics and domestic politics in Southeast Asia as well as on bilateral relations between China and ASEAN member states. The MSRI has already given China more influence in the region, but the depth and breadth of that influence will depend on the extent to which the promise of the MSRI is actually realized on the ground. That will determine whether the BRI merely provides China with greater hard power emanating from its purse strings or whether it translates into longer term soft power

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because the people of Southeast Asia come to believe that China’s Initiative ultimately enhanced their quality of life and expanded opportunities for them.

Notes 1 The MSRI is the southern “Road” in the Belt and Road Initiative. 2 Jiao Wu, “President Xi Gives Speech to Indonesia’s Parliament,” China Daily, October 2, 2013, www.chinadaily.com.cn/china/2013xiapec/2013–10/02/content_ 17007915_2.htm. 3 “China–ASEAN Trade Continues to Boom Amid Global Growth Slowdown, Uncertainties,” Xinhua, July 23, 2019, www.chinadaily.com.cn/a/201907/23/WS5d3 67792a310d8305640082a.html. 4 The 走出去 (zou chu qu) policy is variously translated as “go out,” “step out,” or “go global.” 5 It should be noted, however, that China’s devaluation in 1994 may have helped precipitate the crisis by making Southeast Asian exports less competitive. See “Export Competition and Contagious Currency Crises” by Chan Huh and Kenneth Kasa (1998) at www.frbsf.org/economic-research/publications/economic-letter/1998/january/exportcompetition-and-contagious-currency-crises/. 6 The CMLV states are Cambodia, Myanmar, Laos and Viet Nam. They are often grouped because they joined later than the other members, in the second half of the 1990s, and because of their relatively low levels of economic development. 7 Jürgen Haacke, “Seeking Influence: China’s Diplomacy toward ASEAN after the Asian Crisis,” Asian Perspective 26, no. 4 (2002). 8 Ibid., 26, emphasis added. 9 “China–ASEAN Investment Cooperation Fund,” China–ASEAN Fund: Target Sectors, accessed January 13, 2020, www.china-asean-fund.com/investment.php?slider1=1. 10 For comparison, in the four years prior (2009–2012), China provided $10.2 billion toward the region’s infrastructure. 11 AidData, “AidData’s Geocoded Global Chinese Official Finance, Version 1.1.1,” accessed January 13, 2020, www.aiddata.org/data/geocoded-chinese-global-official finance-dataset. 12 Ibid. 13 Including humanitarian assistance, debt relief and infrastructure assistance with “diplomatic intent” (such as schools, roads, etc.). 14 AidData, “AidData’s Geocoded Global Chinese Official Finance, Version 1.1.1.” 15 Those criteria require that the assistance must include at least a 25 percent grant element and be in support of development. 16 AidData, “AidData’s Geocoded Global Chinese Official Finance, Version 1.1.1.” 17 “External Trade Statistics – ASEAN,” accessed January 13, 2020, https://asean. org/?static_post=external-trade-statistics-3. 18 Total ASEAN trade in services with all countries was less than $700 billion as of 2016. According to Chinese data, total trade (goods and services) between the two sides in 2018 reached $587.9 billion (www.chinadaily.com.cn/a/201907/23/ WS5d367792a310d8305640082a.html) while US data show $333 billion in total trade with ASEAN in the same year. Even including trade in services, China–ASEAN trade should soon be double that of US-ASEAN trade, https://ustr.gov/countries-regions/ southeast-asia-pacific/association-southeast-asian-nations-asean. 19 “External Trade Statistics – ASEAN.” 20 Ibid. 21 “Flows of Inward Foreign Direct Investment (FDI) by Host Country and Source Country, ASEANStatsDataPortal,” accessed January 13, 2020, https://data.aseanstats. org/fdi-by-hosts-and-sources.

Bumps in the Maritime Silk Road 137 22 “China’s Belt and Road Initiative (BRI) and Southeast Asia,” LSE IDEAS and CIMB Southeast Asia Research, October 2018, www.lse.ac.uk/ideas/Assets/Documents/ reports/LSE-IDEAS-China-SEA-BRI.pdf. 23 Aiswarya Lakshmi, “China Unveils Action Plan on Maritime Silk Road,” Marine Link, March 29, 2015, www.marinelink.com/news/maritime-unveils-action388448. 24 Prak Chan Thul, “Chinese President Xi Jinping Visits Loyal Friend Cambodia,” Reuters, October 13, 2016, www.reuters.com/article/us-china-cambodia/chinesepresident-xi-jinping-visits-loyal-friend-cambodia-idUSKCN12D0NV. 25 Vannarith Chheang, “Cambodia Embraces China’s Belt and Road Initiative,” Perspective 48, no. 2017 (July 6, 2017), 7; MOFA, “Wang Yi Meets with Minister of Foreign Affairs and International Cooperation Prak Sokhon of Cambodia,” Government, Ministry of Foreign Affairs of the PRC, December 15, 2017, www.fmprc.gov. cn/mfa_eng/zxxx_662805/t1520626.shtml. 26 Qi Lin, “Money Talks: China’s Belt and Road Initiative in Cambodia,” Global Risk Insights, January 7, 2018, https://globalriskinsights.com/2018/01/money-talks-chinasbelt-road-initiative-cambodia/. 27 Sebastian Strangio, “China’s Aid Emboldens Cambodia,” YaleGlobal Online, May 16, 2012, emphasis added, https://yaleglobal.yale.edu/content/chinas-aid-emboldenscambodia. 28 Daniel C. O’Neill, Dividing ASEAN and Conquering the South China Sea: China’s Financial Power Projection (Hong Kong: Hong Kong University Press, 2018). 29 Hun Sen, “Selected Off-the-Cuff Speech at the Ground-Breaking Ceremony to Build the Cambodian-Chinese Friendship Bridge at Stoeung Trang and Kroch Chhma,” Cambodia New Vision, September 2, 2018, http://cnv.org.kh/cambodian-chinesefriendship-bridge-stoeung-trang/. 30 Daniel O’Neill, “Playing Risk: Chinese Foreign Direct Investment in Cambodia,” Contemporary Southeast Asia: A Journal of International and Strategic Affairs 36, no. 2 (September 25, 2014). 31 “ASEAN Investment Report 2019: FDI in Services – Focus on Healthcare” (ASEAN and UNCTAD, October 2019), https://asean.org/storage/2019/10/AIR-2019.pdf. 32 “United States Trade Representative: Cambodia,” Government, Office of the United States Trade Representative, accessed January 13, 2020, https://ustr.gov/countriesregions/southeast-asia-pacific/Cambodia. 33 Ministry of Economy and Finance, “Cambodia Public Debt Statistical Bulletin” (Phnom Penh: Ministry of Economy and Finance, March 2018). 34 “The Cambodia ODA Database: Reporting Year 2017,” Council for the Development of Cambodia, April 18, 2018, http://odacambodia.com/Reports/reports_by_updated. asp?status=0. 35 Raymond Vernon, Sovereignty at Bay: The Multinational Spread of U.S. Enterprises (New York, NY: Basic Books, 1971). 36 Nguon Sovann and Yi Ling, “Interview: Chinese Investment in Energy Creates New History for Cambodia: Cambodian Minister,” Xinhua, October 11, 2016, www. xinhuanet.com/english/2016–10/11/c_135745394.htm. 37 O’Neill, “Playing Risk.” 38 Vong Sokheng, “Funding Law Approved for Hydropower Dams,’ ” Phnom Penh Post, January 2, 2009, www.phnompenhpost.com/national/funding-law-approvedhydropower-dams. 39 “Chinese Companies to Build Hydro-Power Plants for Cambodia,” People’s Daily Online, June 21, 2008, http://en.people.cn/90001/90776/90883/6434343.html. 40 Keqiang Xu, “Sinohydro’s First Overseas BOT Project Begins Operation,” People’s Daily Online. January 16, 2012, http://en.people.cn/90778/7706674.html. 41 “China Huaneng Group Successfully Completes the Share Acquisition of Cambodia Se San River II Hydropower Project,” China Huaneng, accessed January 13, 2020, www.chng.com.cn/eng/n75863/n75941/c1152506/content.html.

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42 Ian G. Baird, “Non-Government Organizations, Villagers, Political Culture and the Lower Sesan 2 Dam in Northeastern Cambodia,” Critical Asian Studies 48, no. 2 (April 2, 2016), 257–77, https://doi.org/10.1080/14672715.2016.1157958; Prashanth Parameswaran, “Cambodia Suspends China Dam Project to Silence Opposition,” The Diplomat, February 25, 2015, https://thediplomat.com/2015/02/cambodia-suspendschina-dam-project-to-silence-opposition/. 43 Daniel C. O’Neill, “Cambodia in 2016: A Tightening Authoritarian Grip,” Asian Survey 57, no. 1 (February 2017). 44 O’Neill, Dividing ASEAN. 45 MOFA, “Wang Yi Meets with Minister of Foreign Affairs and International Cooperation Prak Sokhon of Cambodia.” 46 May Kunmakara, “Dam in Sesan Begins Operations,” Khmer Times, December 17, 2018, www.khmertimeskh.com/50560364/dam-in-sesan-begins-operations/. 47 Chong Koh Ping, “China’s Belt and Road Project Could Bring Opportunities and Challenges to S’pore: Minister Lawrence Wong,” Straits Times, May 16, 2017, www. straitstimes.com/asia/east-asia/chinas-belt-and-road-project-could-pose-challenges-tospore-minister-lawrence-wong. 48 Vannarith Chheang, “Cambodia Embraces China’s Belt and Road Initiative,” Perspective 48, no. 2017 (July 6, 2017), 78, www.iseas.edu.sg/images/pdf/ISEAS_Perspective_ 2017_48.pdf. 49 Robert D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two-Level Games,” International Organization 42, no. 3 (1988). 50 Razak Najib, “PM Najib Razak Hails Groundbreaking China Visit Outcomes,” Straits Times, November 4, 2016, NST Online edition, www.nst.com.my/news/2016/ 11/185849/pm-najib-razak-hails-groundbreaking-china-visit-outcomes. 51 Much as the BRI glove appears to fit the capital-grabbing hand of Rodrigo Duterte’s more plainspokenly titled “Build, Build, Build” program in the Philippines. “Master Plan of Logistics and Trade Facilitation,” Official Portal, Ministry of Transport, Malaysia, accessed January 13, 2020, www.mot.gov.my/en/logistic/the-logistics-andtrade-facilitation-masterplan; Suan Teck Kin and Ho Woei Chen, “The Belt and Road Series: Connectivity Boost for ASEAN,” The Belt and Road Series: Connectivity Boost For ASEAN, May 22, 2018, 12. 52 Guanie Lim, “Resolving the Malacca Dilemma: Malaysia’s Role in the Belt and Road Initiative,” in A. Arduino and X. Gong (eds), Securing the Belt and Road Initiative (Singapore: Palgrave: 2018); Hong Liu and Guanie Lim, “The Political Economy of a Rising China in Southeast Asia: Malaysia’s Response to the Belt and Road Initiative,” Journal of Contemporary China 28, no. 116 (March 4, 2019). 53 Tom Wright and Bradley Hope, “WSJ Investigation: China Offered to Bail Out Troubled Malaysian Fund in Return for Deals,” Wall Street Journal, January 7, 2019, www.wsj.com/articles/how-china-flexes-its-political-muscle-to-expand-power-over seas-11546890449. 54 Ibid. 55 Liu and Lim, “The Political Economy.” 56 Eileen Ng, “China’s Belt and Road Initiative Presents Risks and Rewards for Southeast Asia,” Today, May 21, 2017, www.todayonline.com/world/asia/chinas-belt-and-roadinitiative-presents-risks-and-rewards-south-east-asia. 57 David Han, “China–Malaysia Relations and the Malaysian Election,” The Diplomat, May 8, 2018, https://thediplomat.com/2018/05/china-malaysia-relations-and-themalaysian-election/. 58 Ibid. 59 Shawn Crispin, “Malaysia’s Election a de facto Vote on China,” Asia Times, April 26, 2018, https://cms.ati.ms/2018/04/malaysias-election-a-de-facto-vote-on-china/. 60 Amrita Malhi, “Race, Debt and Sovereignty – The ‘China Factor’ in Malaysia’s GE14,” The Round Table 107, no. 6 (2018), 717.

Bumps in the Maritime Silk Road 139 61 Anisah Shukry and Yudith Ho, “Malaysia’s Mahathir Pledges to Review China Investment if Re-elected,” Bloomberg, April 8, 2018, accessed January 13, 2020, www.bloomberg.com/news/articles/2018–04–08/mahathir-pledges-to-review-chinainvestment-after-malaysia-vote. 62 Ibid. 63 Lucy Hornby, “Mahathir Mohamad Warns against ‘New Colonialism’ during China Visit,” Financial Times, August 20, 2018, www.ft.com/content/7566599e-a443– 11e8–8ecf-a7ae1beff35b. 64 Radzi Razak and Ali Nufael, “Mahathir: Malaysia Saves Billions in Renegotiated ECRL Deal with China,” BenarNews, April 15, 2019, www.benarnews.org/english/ news/malaysian/rail-deal-04152019164237.html. 65 “Malaysia Seized $330m from Chinese State Firm over Pipeline Project: Mahathir,” Straits Times, July 15, 2019, www.straitstimes.com/asia/se-asia/malaysia-seized-330-mlnfrom-chinese-state-firm-over-pipeline-project-pm-mahathir. 66 “PM: ECRL Revived to Avoid RM21 Billion Penalty,” Straits Times, April 15, 2019, www.nst.com.my/news/nation/2019/04/479687/pm-ecrl-revived-avoid-rm21-billionpenalty. 67 Liu and Lim, “The Political Economy,” 22. 68 Cheng-Chwee Kuik, “Malaysia’s China Policy in the Post-Mahathir Era: A Neoclassical Realist Explanation,” RSIS Working Paper, no. 244 (July 30, 2012), 55. 69 Chow-Bing Ngeow, “Malaysia–China Cooperation on the Belt and Road Initiative under the Pakatan Harapan Government: Changes, Continuities, and Prospects,” in NIDS ASEAN Workshop 2019: China’s BRI and ASEAN (National Institute of Defense Studies, Ministry of Defense, Japan, n.d.). 70 Dr M Expresses Malaysia’s Support for China’s Belt and Road Initiative (Beijing, China: YouTube, 2019), www.youtube.com/watch?v=z-fLft18wI0. 71 Susan Shirk, The Political Logic of Economic Reform in China (Berkeley, CA: University of California Press, 1993); Bruce Bueno de Mesquita, Alastair Smith, Randolph M. Siverson, and James D. Morrow, The Logic of Political Survival (Boston, MA: MIT Press, 2003). 72 Guanie Lim, “China’s Investments in Malaysia: Choosing the ‘Right’ Partners,” International Journal of China Studies 6, no. 1 (2015), https://dr.ntu.edu.sg//handle/ 10356/83110. 73 O’Neill, Dividing ASEAN. 74 “Indonesia Mulls Big-Ticket Chinese Investments as it Heads into Election,” Straits Times, March 31, 2019, www.straitstimes.com/asia/se-asia/indonesia-may-be-nextasian-country-to-spurn-china-in-election. 75 Fanny Potkin and Tabita Diela, “Fast Track: Indonesia, Malaysia Rail Projects May Give China More Deals,” Reuters, April 22, 2019, https://fr.reuters.com/article/indus trialsSector/idUKL3N21U1GW. 76 James Griffiths, “China is Becoming an Election Issue in Asia. And that’s Bad News for Beijing,” CNN, April 5, 2019, www.cnn.com/2019/04/04/asia/china-indonesiaelection-influence-asia-intl/index.html. 77 Dylan Loh, “Vietnam and Indonesia Stand Out as Belt and Road Bets, Reports Show,” Nikkei Asian Review, August 18, 2019, https://asia.nikkei.com/Spotlight/Beltand-Road/Vietnam-and-Indonesia-stand-out-as-Belt-and-Road-bets-reports-show. 78 Putnam, “Diplomacy and Domestic Politics.” 79 Potkin and Diela, “Fast Track.” 80 Charles McDermid, “Southeast Asia Doubts US Reliability in the Region: Survey,” South China Morning Post, January 7, 2019, www.scmp.com/news/asia/southeastasia/article/2180924/southeast-asia-has-major-doubts-about-us-reliability-region. 81 Lim, “Resolving the Malacca Dilemma,” 85.

Index

Page numbers in bold denote tables, those in italics denote figures. Abu Dhabi Economic Vision 2030 100 accountability 11, 40, 44, 62, 66, 126 ACFTA see ASEAN–China Free Trade Area (ACFTA) ADB see Asian Development Bank (ADB) Addis Ababa 75, 79, 81–82 Addis-Djibouti railway 81, 85 Africa 89, 91; see also Horn of Africa; Chinese investment in 79; debt levels 86; free trade zone in 82; “gateway” notion of 84; investment template 83; multilateral affairs in 78; multilateral peacekeeping in 79; multilateral role in 88; oil and gas imports from 40; principal aviation hub with China 79; SEZ’s in 84; soft infrastructure 76 African Union mission in Somalia (AMISOM) 79, 88, 91 aid, China 118, 118–121, 119 AIIB see Asian Infrastructure Investment Bank (AIIB) Al Saud, Mohamed bin Salman 100 AMISOM see African Union mission in Somalia (AMISOM); AU mission in Somalia (AMISOM) Ang, Yuen Yuen 4–5 anti-monarchical ideology 104 anti-piracy 11, 40, 41, 76–78, 86–88, 90 Anti-Terror Quartet (ATQ) 104 Arab nationalism 98 Arab Policy Paper (2016) 99 Arab uprisings 103–105 ASEAN: degree of authoritarianism of 132–133; goods trade 120; influence in 117; public diplomacy to 119 ASEAN–China Free Trade Area (ACFTA) 115

ASEAN–China trade 120 ASEAN–Japan trade 120 Asian Development Bank (ADB) 1–2, 59, 123 Asian Financial Crisis 116 Asian Infrastructure Investment Bank (AIIB) 3, 108, 115, 118 Atambayev, Almazbek 62 ATQ see Anti-Terror Quartet (ATQ) AU mission in Somalia (AMISOM) 91 authoritarian backsliding 124–125 autonomy 45, 100, 130 Ayoob, Mohammed, analysis of regions 9 Bahrain 97–98, 100–102, 104–106; Defense Cooperation Agreements with Kuwait 108; Economic Vision 2030 100 Bajwa, Qamar Javed 47 Baku–Tbilisi–Kars railway 106 Bangladesh 36, 37; arms and equipment 41; BRI 36; observers in 38; politicians and policymakers 39; ports 38 Beeson, Mark 9 Belgrade Summit 20 Belt and Road Forum (BRF) 5, 44, 122, 126; held in Beijing 6; outcomes from 5 Belt and Road Initiative (BRI) 1, 2, 4, 10, 17, 36–37, 75, 115–116, 125–126, 133; achievements of 5; adaptive nature of 6; agreements 116; Belt and Road Initiative (BRI) 26–27; CEE countries participating in 23–28; Central Asia see Central Asia; China and 37–40; crucial significance to success of 24; discourse on 83–84; domestic politics and 10; economic corridors of 4, 105; flagship project of 37; impact of 9, 98; India’s

Index 141 democracy 43–44; infrastructure 80,

129, 132; initiatives of 18; international

coverage of 6; international resistance

against 7; investment opportunities 17;

Kuwaiti activity in 102; landmark in

2017 5; launch of 38; learning and

renegotiation 46–49; Maldives 42–43;

narratives 6; natural complementarity

with 97; Nepal 41–42; objectives of 20;

opportunities and challenges 97;

outcomes, substantive 5; partnering

states 10; physical architecture of 4;

policy aspects of 77; political and

economic risk considerations for 44–46;

positive narrative of 5; projects 4, 7,

36–37, 116, 126, 127; rebranding 6;

regional implications of 97; and regional

orders 8; region’s orientation towards

38; skeptics 6; soft militarization in

Indian Ocean 40–41; spotlight of 17;

success and expansion of 101; testing

ground for 116; Tibet Autonomous

Region 38; value of 17

bin Zayed Al Nahyan, Mohamed 100

BRF see Belt and Road Forum (BRF) BRI see Belt and Road Initiative (BRI) Brunei 117, 119, 134

build, operate, transfer (BOT)

agreements 124

Buzan, Barry 8, 9; regional security

complex (RSC) theory 98

17–18; Europeanness of 25;

governments of 19; internal affairs of

25; internal hierarchy of 27;

international identity of 18–19, 24–25;

opportunities for emancipation of 27;

representatives of 23

Central Asia 54; authoritarian patrimonial

regimes of 60; SREB see Silk Road

Economic Belt (SREB); trade and

investment trends in 54–55, 55;

unprecedented dependence of 61

Century Maritime Silk Road 2–3, 99, 115

Ceylon Chamber of Commerce 39

Chhay Areng hydropower project 132

Chiang Mai Initiative 117

China–ASEAN community 2

China–ASEAN cooperation 116–117 China–ASEAN Free Trade agreement 3

China–ASEAN Investment Cooperation

Fund (CAF) 118

China–ASEAN (Association of Southeast

Asian Nations) strategic partnership 115

China–ASEAN trade 115

China–Bangladesh relations 39

China–Cambodia Friendship 122

China–Central West Asia Economic Corridor (CCWAEC) 105–106 China/Chinese 1, 10, 41; ambition and

influence 5; anti-piracy 76, 87, 88;

approach to international politics 1; and

CEE countries 16, 18; and Central Asia

2; connectivity projects 17; containment

Cambodia 119; Chinese financial flows to

and encirclement 117; debt trap 43;

122–123; Chinese firms in 122;

digital surveillance state model 6;

development plans and needs of 126;

economy of 8, 36, 61, 63, 115, 116;

FDI in 122–123; government

Exim Bank 81; Export and Credit

responsiveness in 132; high-risk

Insurance Corporation 85; external

investments in 123; hydropower and

infrastructure funding 120; Five

façade of democracy in 123–124; MSRI

Principles of Peaceful Coexistence 133;

in 123–124; need for investment capital

foreign direct investment (FDI) 101;

123; political economy 122, 124; poor

foreign policy 8, 83; General Nuclear

governance in 126; transportation

Power Corporation 128; global

infrastructure projects in 122

economic expansion 86; Global

Cambodia National Rescue Party’s

Television Network 41; “Go Out”

(CNRP) 124, 125

policies 126; grand national maritime

Cambodian People’s Party (CPP) 124, 125

strategy 40; hydropower projects 124;

cargo transportation 4

industrial parks 82; infrastructure 38,

CCP see Chinese Communist Party (CCP) 116, 132; interest in South Asia 37;

CEE states see Central and Eastern international orientation of 1;

European (CEE) states international relations 3; inter-regional

Central and Eastern European (CEE) states

issue in 92; investments 16, 79; joint

11; China’s growing involvement in 16,

ventures of 124; labour force 36;

18; differentiation among 23; economic

military presence in Djibouti 80;

and infrastructure junctures in Europe

military ties with Pakistan 45;

142

Index

China/Chinese continued multinational corporations 101; National Development and Reform Commission 121; near neighbourhood of 49; performance legitimacy 8; physical infrastructure projects 39; political and economic risk considerations for 44–46; power and influence 11; principle of non interference 79; Reform Era growth 6; regional policy priorities 78; regional power and influence 116; role in global economy 40; security obligations to 48; socialist democracy 6; sovereign territory 7; Special Economic Zone 77; SREB 54; state-owned enterprises (SOEs) 1–2, 78–79, 116; strategic concept of 16; telecommunication companies 83; Turkey and 107; and US 10; win-win foreign policies 126–127 China–GCC relations 110

China–Iran economic cooperation 106

China Merchants Group (CMG) 77,

82–84

China National Nuclear Corp 103

China National Petroleum Company

(CNPC) 79

China Ocean Shipping Company

(COSCO) 23–24

China–Pakistan Economic Corridor

(CPEC) 36, 80, 109

China–Pakistan relationship 44, 46

China Petroleum Pipeline Engineering

(CPPE) 127, 130

China–Qatar relationship 102, 104, 107

China Railway Construction Corporation

(CRCC) 81

China’s Search for Security (Nathan and

Scobell) 7

China State Construction Engineering

Corporation (CSCEC) 75

Chinese Communist Party (CCP) 3, 5–6,

36, 87, 122; goal of 118; model 83

CMG see China Merchants

Group (CMG)

coalition aircraft 68–69

Cold War 8–9, 78, 90, 117, 131

Collective Security Treaty

Organization 54

COSCO see China Ocean Shipping

Company (COSCO)

counterterrorism 40, 46, 67

Crimea, annexation of 60–61

currencies 117; devaluations 116

debt-trap diplomacy 63, 99

Declaration on the Conduct of Parties 117

democracy, concept of 45

developmental dividends 27

Diamer-Bhasha dam 44

DIFTZ see Djibouti International Free Trade Zone (DIFTZ) diplomatic financing 119

disaster relief 40

Djibouti 85; China military presence in 80; China’s presence in 90; development plans 84; external debt 85–86; fragile fiscal base 85; Free Trade Zone 82; indebtedness 85–86; International Free Trade Zone 83; natural resources 77; permanent logistics presence in 88; policy priorities 77; ports installations in 80; pre-existing developmental strategies 77; role in MSRI 86; symbolic importance in 87; ties with Beijing 78; “Vision 2035” 84 Djibouti–Ethiopia rail link 81; development strategy made for 84; Ethiopia’s export zones 82; pipelines, fiber-optics, fintech and telecommunications 82–84; poor project management and unsustainable debt in Horn 85–86; port authority, free zones and Doraleh ports 81–82 Djibouti International Free Trade Zone

(DIFTZ) 82

domestic identity politics 17–18 domestic political economies 97

domestic political pressures 10

domestic politics 9, 10, 76, 80, 98, 127,

130, 132, 135; economies 97; impact of

121; in Islamabad 47; in Maldives 43

Doraleh port 81–82, 89

Dubai: development projects 103; growth

model of 84; intra-regional projects 103;

Jebel Ali port 56; Motor City

development 103

Dubai Ports World (DPW) group 81

Dubai World Expo 2020 103

East Africa 81; Chinese interests and

investments in 88; diplomacy and

multilateral peacekeeping in 79

East Coast Rail Link (ECRL) 127, 129–130 Erdogan, Reccep Tayip 105, 107

Eritrea 75–76, 79, 91; border war with 79;

Djibouti and 92; mining in 91; policies

80; potential gradual reincorporation of

91; rebel insurgency in 78

Index 143 Ethiopia 75, 81, 84, 85, 91; Chinese

infrastructure projects in 79; Dukem

Eastern Industry Zone 84; Eastern

Industry Zone 84; export zones 82;

industrial park strategy 84; industrial

zones 83–84; peace process 79–80; ties

with Beijing 78

Ethiopian Industrial Parks Development

Corporation (EIPDC) 84

Ethiopian Peoples’ Revolutionary

Democratic Front (EPRDF) 78, 83

EU see European Union (EU) EUNAVFOR 90

Eurasia 1; development needs across 1–2;

economic corridor in 67–68; regions

across 9

Eurasian Economic Union (EAEU) 54, 61

European integration process 16

European international interactions 16

European international relations 16–17 European Union (EU) 36, 125; continental

integration programme 21; dictatorship

26; international identity of 18;

structural and cohesion funds 24

campaign in Yemen 91; political

stability among 98

Gulf, external power in 98–99 Gulf monarchies 97, 98, 106; diplomatic

relations with 109–110; domestic level

99–103; international level 108–110;

Persian Gulf 98–110; regional level

103–108

Gwadar port 41

FDI see foreign direct investment (FDI) finance infrastructure projects 2, 63

financial assistance 118–119

foreign direct investment (FDI) 56; in Cambodia 122–123; form of 120; opportunities 102–103 foreign investment 39, 42, 101

Forum on China-Africa Cooperation

(FOCAC) 83

free trade agreement (FTA) 104–105 free zones 81–82

Ibrahim, Anwar 139

India 39; on counterterrorism 46;

democracy 41, 43–44; economic and

technological dependence on 41;

monopoly in South Asia 41

Indian Ocean: economic and development

40–41; soft militarization in 40–41;

waters 40

Indian Ocean Region (IOR) 1, 9; development needs across 1–2 Indonesia 119, 121, 132, 134, 135

Indo-Pacific region, dominance in 97

infrastructure diplomacy 40

infrastructure funding 119

infrastructure investments 118, 118, 119;

agreements 121; funding for 118

infrastructure projects 2, 42; funding and

construction of 127

intellectual property rights 6

inter-GCC disputes 103–104 international community 19

international development

organizations 118

International Monetary Fund

(IMF) 40, 117

international relations (IR) 116; analysis

8–9; theory 9, 98

international system 7, 9, 43

intra-regional competition 103–104

Gabriel, Sigmar 16

Gaoli, Zhang 4, 102

GCC see Gulf Cooperation Council (GCC) GCC–India–Pakistan triangle 109

geopolitics 16, 24–25; broader 86; context

of 29; realities 31; regional 91

global governance 1, 4

global security 9

Gombak Selangor Quartz Ridge site 130

“Go Out” initiative 131

Greater Eurasian Partnership 67

Greece 27–28 Gulf Cooperation Council (GCC) 10, 90,

97; China’s relations with 101;

cooperation and provide opportunities

101; development goals 101; military

Haacke, Jürgen 117

Hahn, Johannes 16

Hamas 105

Hambantota port 36–37, 77

Hezbollah 105

Hong Kong 62, 77; BRI symposium in 85

Horn of Africa 76; China’s BRI in 77; MSRI in 80; pre-BRI ties with 78–80; regional geopolitics in 91; regional security in 79; Turkey’s ambitious strategy in 91–92 humanitarian assistance 40

Hussein, Abdul Razak 127

Hydrolancang International Energy 125

144

Index

intra-regional conflict 9 intra-regional connectivity projects 102 investment 55; in Kazakhstan 55, 55–56; in Kyrgyzstan 56; in Tajikistan 56–57; in Turkmenistan 57; in Uzbekistan 57–58 IOR see Indian Ocean Region (IOR) IR see international relations (IR) Iran 58, 97–99, 105–108; foreign policy 99 Iranian Revolution 98 Iraq 66, 97, 98 Islam 98 Japan 7, 116, 117, 122–123, 126; regional hegemony of 117 Jiangsu Provincial Overseas Cooperation and Investment Company Limited (JOCIC) 101 Jinping, Xi 2, 5–6, 8, 18–19, 36–38, 43, 46, 68, 75, 115, 121, 125, 126, 130; economic and developmental projects 3; state visit to Saudi Arabia 105; “winwin” rhetoric 128 Karimov, Islam 61 Katzenstein 9 Kazakhstan 60–61, 65, 67; crude oil from 58; economic zones in 69; hydrocarbon industry 56; infrastructure projects in 56; mining project in 59; trade and investment trends in 55, 55–56 Keqiang, Li 20, 24, 36, 83, 122 Khan, Imran 44–47; cooperated with China 46–47 Khin, Lau Meng 123 Kiev Forum 25 Kuantan Port 127 Kuik, Cheng-Chwee 131 Kunming–Kyaukphyu Railway Line 132

Kuwait 98, 100, 106; activity in BRI 102;

Direct Investment Authority 102–103

Kyrgyzstan 62, 65, 67; foreign trade balance 56; sources of imports for 56; trade and investment trends in 56 Laos 38, 119, 131, 132, 134, 135 Lembong, Tom 132 liberalization 115, 124–125 Liberation Tigers of Tamil Eelam (LTTE) 48 Li, Fujian 9 liquified natural gas (LNG) 84; deposits 98 “Look West” policy 110 Lower Sesan 2 project 124–125 LTTE see Liberation Tigers of Tamil Eelam (LTTE)

Macedonia 17, 27–28 Macron, Emmanuel 16 Malaysia 119; bargaining power with China 130; BRI in 130–131; Democratic Action Party 128; federalism 130; foreign policy 129; Logistics and Trade Facilitation Master Plan 127; participation in China’s BRI 128–129 Maldives 6, 37–38, 42–43, 66, 109 Malhi, Amrita 129 Maritime Silk Road 2, 76, 115–116; aid, trade, and FDI in 118, 118–121, 119; Cambodia 121–124; China–ASEAN cooperation 116–117; liberalization and authoritarian backsliding 124–125; under Mahathir 128–131; Malaysia 126–128; and political regimes in Southeast Asia 131–133; tightening belt to pave the road 125–126 Maritime Silk Road Initiative (MSRI) 1, 10, 23–24, 38, 75–78, 115, 116, 121; anti-piracy and naval logistics 86; BRI in Horn of Africa, principal infrastructure investments in 80; broader regional and maritime security context 90–92; in Cambodia 123–124; Chinese military installation on 77, 86; Djibouti–Ethiopia rail link see Djibouti–Ethiopia rail link; economic dimension of 76; enthusiasm for 126; framework 77; in Horn of Africa 80; infrastructure 75; infrastructure projects 116; local and global actors’ reactions to China’s arrival 88; naval presence 86–88; partners for infrastructure financing 127; pre-BRI ties with Horn of Africa 78–80; projects 81; US and EU reservations 89–90 Memorandum of Understanding (MoU) 103 Meng, Kith 123, 124 Mesfin, Seyoum 83 Middle East North Africa (MENA) region 98 Modi, Narendra 110 Mogadishu 92 Mohamad, Mahathir 126, 129–130, 132; MSRI under 128–131 MSRI see Maritime Silk Road Initiative (MSRI) Mubarak Port 103 Muslim Brotherhood (MB) 104 Muzaffar, Chandra 129 Myanmar 119, 132, 133; “Pauk Phaw” (kinship) ties with China 133 Myanmar Economic Corridor 36

Index 145 Nasheed, Mohamed 43

National Development and Reform

Commission (NDRC) 3, 6

national security 9, 87, 109;

policy-makers 9

National Security Council 47

Nazarbayev, Nursultan 2

neo-colonialism 63

Nepal 38; aftermath of 41; telecom infrastructure 41–42 new colonialism 63

New Kuwait 2035 100, 102

non-interference 8, 28, 64, 79;

principle of 48

Northern Distribution Network 68–69 Obama, Barack 36

official development assistance (ODA)

119, 119

Oman 97, 100, 101, 106, 108

Oman Vision 2040 100

One Belt One Union 68

O’Neill, Daniel 1, 10

1 Malaysia Development Berhad (1MDB) 127–128 Orbán, Viktor 17, 26

Organization for Economic Cooperation

and Development (OECD) 119

other official flows (OOF) 119, 119

Overseas Economic Commercial

Cooperation Zones (OECCZ) 84

Pakistan 46–48; Chinese pressure on 48;

economic feasibility and fairness in 37;

political stability in 45; terror-

financing 47

Pakistan Awami Tehreek 46

Pakistan-occupied Kashmir 36

Pakistan People’s Party 38

Pakistan Tehreek-e-Insaaf (PTI) 46

People’s Liberation Army Navy (PLAN)

40, 76, 86

Peripheral Diplomacy Work Conference

2013 8

Persian Gulf: features of 98–99; international relations 98; US presence in 98–99 the Philippines 115, 117, 119, 121,

131–135

Polar Silk Road 68

policy banks 116, 121, 133; funding for 5

policy diversification 18

political liberalization 115

political stability 47–48

political systems 45; nature of 40

port authority 81–82

poverty 38, 64

PTI see Pakistan Tehreek-e-Insaaf (PTI)

Pua, Tony 128

public diplomacy 119, 119

Putin, Vladimir 16, 60–61, 68

Qadri, Muhammad Tahir-Al 46

Qatar 92, 100, 110; Defense Cooperation

Agreements with Kuwait 108

Qatar National Vision 2030 100

Rainsy, Sam 124–125

Rajapaksa, Mahinda 39, 48

Razak, Najib 126–128; engagement with

China 129; financial relations with China 131

Red Sea 78, 80, 82, 88, 90–92

regional: security 91–92 regional analysis 9

regional financial contagion 117

regional institutionalization 21

regional integration initiatives 67

regional orders 9; BRI and 8; Gulf

monarchies’ preferences of 97

regional security complex (RSC) theory 8,

76, 98, 99

regional security environment 47

regions 7; academic literature on 8; across

Eurasia 9; Ayoob’s analysis of 9;

building with Chinese characteristics

18–23; economic power projection 115

Rift Valley 75

Rolland, Nadège 4, 6

Russia: economic and security policies 54;

post-Soviet monopoly 55; spillover

effects into 67

Russia-Kyrgyz Fund for Development 61

Sabah pipeline project 129–130 Saudi Arabia 69, 90, 98, 103; political

leadership 103–104; Xi state visit to 105

Saudi Vision 2030 100

sea lines of communication

(SLOCs) 40, 87

sectarian divide 98

security 1; center of 98; environment 47;

global 9; national 9, 87, 109;

obligations to China 48; regional 79;

threats 40

Sen, Hun 121–125; authoritarianism by

125; return to authoritarianism 126

Serbia 17, 20, 28

146

Index

“17 + 1” mechanism 17, 19; effectiveness of 22; institutional framework of 21, 21; institutionalization 23; sectoral associations of 21, 22 SEZs see Special Economic Zones (SEZs) Shambaugh, David 1 Shanghai Cooperation Organization (SCO) 2, 106 Sharif, Nawaz 44, 47 Silk Road Economic Belt (SREB) 1–3, 10, 21, 23–24, 54, 106; architecture of economic corridors 58; development programs with 60; impact of other actors in 68–69; infrastructure projects 59–60; investments in Central Asia 62; lack of governance, transparency, and accountability 62; limited, positive contribution to local economies 63–64; participation in 60; results and sustainability of 61; Russia 66–68; Sinophobia 64–66; sovereign debt 63; trajectory and future of 61 Silk Road Fund 5, 24, 38, 50, 68 Singapore 84, 119, 126, 128, 134 single-resource economy 100 Sino-ASEAN relations 116 Sino-ASEAN trade 115 Sino-Cambodian ties 122 Sino-European relationship 18 Sinohydro 125 Sino-Russian relations 68 Sirisena, Maithripala 48–49 Sirivudh, Nordom 126 Slovenia 27 “Smart Nation” program 60 soft militarization in Indian Ocean 40–41 Somalia 84; China’s anti-piracy role off 76; politics, foreign government involvement in 91 South Asia 11; China and 37–44; India’s monopoly in 41 Southeast Asia: geopolitical status quo in 116; infrastructure projects in 121; political regimes in 131–133 South Korea 7, 69, 117 sovereign debt 63 sovereignty 3, 28, 36, 46, 49, 54, 109, 116, 129; violations of 36 Special Economic Zones (SEZs) 58, 60, 69, 77, 82, 84 SREB see Silk Road Economic Belt (SREB) Sri Lanka 36–37; armed forces 41; Chinese embassy in 49; economy 39; naval frigate to 41; political crisis in 48–49

state-owned enterprises (SOEs) 1–2, 44, 78–79, 116, 123 structural realism 9 Sudan 75, 79–80, 88, 92, 93; factions in 79–80 Sunni Muslim 107 Suzhou 2015 Summit in 20 Syria 66, 105, 108 Tajikistan: mineral resources from 57; trade and investment trends in 56–57 terror-financing 47 Thailand 117, 119, 121 tourism, Maldives 42–43 trade 55; in Kazakhstan 55, 55–56; in Kyrgyzstan 56; in Tajikistan 56–57; in Turkmenistan 57; in Uzbekistan 57–58 transportation 4, 102, 106, 118, 122, 127 Trojan horses 16 Trump, Donald 129 Turkey 105; and China 107; FDI into 106; regional security 91–92 Turkmenistan: budget revenues 57; import market in 57; trade and investment trends in 57 UAE see United Arab Emirates (UAE) Ukrainian Silk Road International Forum 25 United Arab Emirates (UAE) 90, 100; Defense Cooperation Agreements with Kuwait 108; in regional affairs 104 United Kingdom (UK), Brexit referendum in 5, 18 United Malays National Organization (UMNO) 129–130 United States (US) 99, 125; China and 10; Defense Cooperation Agreements with Kuwait 108; Indo-Pacific strategy 69; involvement in Eurasia 67; New Silk Road initiative 68–69; presence in Persian Gulf 98–99; regional hegemony of 117; relative power of 1; withdrawal from multilateralism 18 UNMISS see UN peacekeeping mission in South Sudan (UNMISS) UN peacekeeping mission in South Sudan (UNMISS) 79–80 UN Security Council 79–80 Urban Light Railway 75, 81, 83 US see United States (US) US–China relationship 108 US–China rivalry 89, 90

Index 147 US Overseas Private Investment

Corporation 7

Uzbekistan: economic influence in 57; goods and technologies to 57; trade and

investment trends in 57–58; trade and

restoring 58

Vietnam 117, 119, 121, 133, 134, 139

Waever, Ole 9

Western media and policy 4

Wickremesinghe, Ranil 48–49

Widodo, Joko 132

World Bank 118, 123

World Trade Organization 62

Xiaoping, Deng 8

Yemen 90; drone strikes on 90; escalation

of war in 91; famine and war in 80;

Islamist threats 91; Libya and 88

Yinfu, Lin 84

Yi, Wang 125

Yugoslavia 27–28

Zardari, Asif Ali 38

Zeman, Miloo 26

Zenawi, Meles 78, 83