China’s Eurasian initiatives

China brokered ISPI is part of a well-thought-out plan to make Beijing a major economic player in Central Eurasia

In the article published in this space last week, I wrote that the Iran-Saudi Arabia Peace Initiative (ISPI) brokered by China is not an arbitrary move. It is one part of a well-thought-out plan to make Beijing a major economic player in the region experts call Central Eurasia. The area includes the five countries — sometimes called the ‘Stans’ — that were part of the Union of Soviet Socialist Republics. When the USSR dissolved in 1991, the Stans became independent nations. The region also includes Armenia, Azerbaijan and Afghanistan. They are all landlocked countries with no access to open seas. Some of them border the Caspian Sea which is a landbound large lake. Ever since the collapse of the USSR, Beijing has been working on providing the region with systems of highways and railways that would open it to the sea and to the world outside. This could be done by developing deep-water ports in Iran and Pakistan.

The initial moves were made a decade ago in 2013 when China’s senior leaders announced two initiatives — Silk Road Economic Belt (SREB) and the China-Pakistan Economic Corridor (CPEC). The SREB and CPEC moves will lend substance to the ISPI and provide the Saudi Arabia-Iran project an economic dimension. China’s endeavour is to use land corridors for linking its economy with that of the landlocked countries of Central Asia and Afghanistan. The latter group of countries have large, still to-be-exploited, energy and mineral deposits China badly leads to fuel its growing economy. Beijing has begun to extract from the ground rich mineral deposits in the areas south of Kabul in Afghanistan.

A 2016 study by Asset Ordabayev of the Institute of World Economics and Politics based in Astana, the capital of Kazakhstan, reached several conclusions about the role land corridors could play in central Eurasia. This was also one of the subjects taken up by the Astana Club founded and funded by the then president of Kazakhstan. At the first meeting of the club, of which I was the only South Asian member, I was asked by the chairman to introduce the concept of land-based commerce. I spoke for about half an hour, explaining why the future of Central Eurasia depended on the construction of highways and railways that would open the region to the world outside. My contention drew an aggressive but negative response from a group of Japanese attending the meeting as members of the Astana Club. The leader of the group said that given my training as a development economist and my long experience at the World Bank, he was surprised that I was suggesting that land-based commerce could replace the movement of goods and commodities that used the seas.

I responded by saying that I was not surprised by the reaction of the Japanese delegation attending the Astana meeting since they belonged to a country that was essentially a cluster of islands separated by seas. The only way the Japanese could trade with the world was to use the sea-lanes as the mode of commerce. Britain was another example of a similarly situated nation. While Britain had used the sea not only to become a dominant trading nation, it had also used the sea to conquer a good part of the world and establish its colonies far and wide. The Japanese had tried to use the sea for the same two purposes. They succeeded in becoming a major commercial power but failed to colonise parts of the world to which it sent its troops. They were pushed back by the American and Chinese ground forces working together. Given their history, it was not surprising that the Japanese had little interest in land-based commerce.

“In order to assess the effectiveness of land transport and transit corridor, it is necessary first to evaluate its economic benefits and its competitiveness vis-à-vis its maritime alternative route,” wrote Asset Ordabayev in his study titled ‘Transport Corridors of South Asia and Caucasus’ published by the Astana-based Institute of World Economics and Politics. Secondly, it is necessary to consider the interest of all key players, both regional and global, as well as the situation in the transit country. Thirdly, one should avoid situations in which the construction of corridor means choosing sides, eventually narrowing the room for its foreign policy maneuver.”

I will use the Ordabayev format for examining how the ISPI could deliver economic rewards to the countries of the region and how the Chinese-sponsored détente between Iran and Saudi Arabia could dramatically change the economic and political situation of Central Eurasia. To begin with, the planned corridors would eliminate the dependence of China on the routes using the narrow Strait of Malacca neighbouring Singapore through which 80 per cent of the country’s oil imports are currently shipped. Given the growing geopolitical confrontation between China and the United States and the unresolved border disputes between China and India that have already resulted in confrontation in the Himalayas between the land forces of the two countries, there is some fear in Beijing that Washington and the nations of Southeast Asia acting on their own or working in tandem may be tempted to use the Strait of Malacca as a choke point, thus putting additional pressure on the rulers of China.

When I was working as the Director of World Bank’s China Department, Lou Preston, then the institution’s president, directed to my office a delegation from Japan’s megafirm, Mitsubishi, that was visiting him. When they came to see me, they said that they were interested in developing a land corridor that would connect Pakistan’s Balochistan coast to the ports such as Tianjin and Shanghai in China’s east. Such a corridor, they said, would reduce by one-half the cost of transporting oil and gas from the energy-rich Arab world and Iran to Japan. They were not looking for World Bank’s finance but for guarantees that would protect their investment. This is exactly what the CPEC project financed by China in Pakistan is aiming to accomplish.

American commentators such as David Ignatius, a column writer for The Washington Post, have begun to see the change in their country’s position in the Middle East. He sees China’s Xi Jinping as the new Trump — the big guy who indulges the Saudi leadership’s ambitions as a regional powerhouse. The China-brokered Saudi Arabia-Iran deal will no doubt take Riyadh in that direction. Crown Prince Muhammad bin Salman sees the United States as the kingdom’s partner but not the only partner.

Published in The Express Tribune, April 10^th, 2023.

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