As part of a series of discussions jointly organized by the leading English daily, Dhaka Tribune, and Bangladesh Institute of Peace and Security Studies (BIPSS) on important national and international issues, a roundtable discussion titled “Belt and Road Initiative: Connecting the World” took place on November 19 at The Westin, in Dhaka.
Dhaka Tribune Editor, ZafarSobhan, and BIPSS President, Major General (retd) ANM Muniruzzaman moderated the roundtable that was attended by academia, local and foreign diplomats, former and serving government officials, journalists, and university students.
Executive Director of Centre for Policy Dialogue (CPD), Dr Fahmida Khatun; and Assistant Professor of Economics at East West University, Parvez Karim Abbasi; spoke at the program as panelists.
Belt and Road Initiative (BRI): The context
The Belt and Road Initiative (BRI) is a combination of connectivity by land and maritime routes.The concept was first introduced by President Xi Jinping during his visit to Kazakhstan in 2013 and further explained during his address in Jakarta next year.
Touted as the reincarnation of the old Silk Road, the belt came first.The plan for the road was outlined by Xi Jinping in 2014. The road is the maritime route and the belt consists of the land routes.
So far, according to official statistics, 142 countries have signed on to BRI, which entails 42 countries in Sub Saharan Africa, 34 countries in Europe and Central Asia, 24 countries in East Asia and the Pacific, 17 countries of the Middle East in North Africa, 19 countries in the Latin America and the Caribbean, and 7 countries in South Asia. Thus, BRI’s expansion has touched all the continents.
There are also 66 international organizations that are connected to BRI, which includes various financial institutions and construction institutions, showcasing the variety of entities taking part in the initiative.
The total cost approximation for the vision of BRI is estimated to be $4 trillion which is massive to say the least. The World Bank estimates that by 2018, $600 billion has already been spent on the BRI project and the funding which had slowed down due to the pandemic for the last two years is again picking up, with the pace of disbursement over 100 billion dollars a year and increasing.
BRI has also taken up a lot of big construction and infrastructure projects all around the world. For example, the Padma Bridge Rail Link project in Bangladesh, Central Asia China Gas Pipeline, Doraleh Multipurpose Port in Djibouti, Mombasa-Nairobi Standard Gauge Railway in Kenya, the Melaka Gateway project in Malaysia, the Belgrade, Montenegro Bar port in Serbia etc including other very large mega infrastructure projects all around the world.
The BRI essentially rests on six economic corridors; four land corridors, and two corridors that have maritime access.
The corridors are Eurasia Land Bridge Economic Corridor, China-Mongolia-Russia Economic Corridor (CMREC), China-Central Asia-West Asia Economic Corridor (CCAWEC), China-Indochina Peninsula economic corridor (CICPEC), Bangladesh, China, India Myanmar economic corridor (BCIMEC) and China Pakistan Economic Corridor (CPEC).
Major General ANM Muniruzzaman (Retd), President, BIPSS
BRI currently has five focus areas, based on which it is undertaking policy coordination. The focus areas are facilitating connectivity, laying emphasis on unimpeded trade, ensuring a seamless way of trading between countries and regions, financial integration, people to people bond or contacts.
It is a major project, a grand strategy that is evolving, and we will have to wait and see how it progresses. But it’s needless to say that it will have a profound impact on most of the regions and countries of the world, including Bangladesh. One thing we have to remember is that it is not a project or a concept that ought to clash with other developments. Rather we should see it as a development effort; an effort to support infrastructure and connectivity, because there is a growing demand for improved infrastructure, mostly among third World countries. But we have to be careful in handling the finances that come with the projects.
In Bangladesh, we are beginning to understand some of the connotations of BRI. As we progress, we have to be extremely careful about how we handle them. But no big project of this size comes without geopolitical and geostrategic implications, BRI being no different to this notion. So, therefore, we have to understand all the implications and connotations concerning geostrategic, geo-economics, and, more recently, geo-energy associated with BRI. Bangladesh is part of one the six economic corridors of BRI, which is the BCIM economic corridor. A part of this corridor has now been implemented as the China Myanmar Economic Corridor (CMEC); we now have to see the fast implementation of the rest of the corridor that will connect Bangladesh so that we can get the benefit of the BRI connectivity network.
The newer concepts of the digital silk route and the polar silk route have deeper implications in terms of the strategic footprints of BRI.
The notion of BRI is also built upon a domestic Chinese belief, which essentially is linked to the Chinese aspiration to achieve the “Chinese Dream,” materialization of BRI is fundamental to Chinese internal politics because it has tremendous financial and economic consequences internally for China.
So altogether, it's a challenging concept. It is a concept that brings in not only ideas and prospects but also challenges, and every country needs to act responsibly. However, BRI will have a profound impact on the emerging world order.
Zafar Sobhan, Editor, Dhaka Tribune
I feel that talking about the Belt and Road initiative, in a sense, long overdue, because this initiative is going to be one which is going to help shape the geopolitical world order over the coming decades, especially in this part of the world.
As we talk about Bangladesh, its place in the world, the challenges and the opportunities that are going to unfold over the coming years, I think it's absolutely incumbent upon us to really start to look at the world as it exists and the forces that are shaping the world in its current incarnation.
All countries act upon their self-interest; no one is operating economic or political projects in initiatives such as these out of the goodness of their own heart, out of a sense of altruism. The idea is whether other countries in here I'm speaking specifically about us here in Bangladesh, but this is true for all other countries involved as to whether we can also take these initiatives and act in our own self-interest and whether there's a commonality of our self interest. And that really is the perspective through which to view these projects at an individual to a national level.
This discussion of debt trap, is not so dissimilar to the discussion we had in Bangladesh starting in the 1980s. You see, there are always strings attached when people lend money, when people get involved in economic projects. And of course, it could be a good question to raise as to whether conditionality is better or worse than the so called debt trap, which we are seeing with the Chinese projects. In the end of course, when you talk about a debt trap, what's really happening is the transfer of debt investment into an equity investment. So I don't even know if a trap is necessarily a correct way of viewing actually what's happening in those relationships.
Dr Fahmida Khatun, Executive Director, Centre for Policy Dialogue (CPD)
The infrastructure gap in Bangladesh is a huge question here. If we look at the physical infrastructure, considering its graduation from least developed country to developing country and from low income country to a lower middle income country, the country itself is investing massively on infrastructure, which requires a lot of financial resources.
In Bangladesh the largest proportion of BRI projects are in the energy and transport sector. So from that point of view, BRI is supporting or meeting the gaps in the energy and transport sector.
Partnership cannot happen in isolation, it has to be made comprehensive through mediums like trade, investment or education. So, BRI is an example of this comprehensive partnership.
The debt issue of BRI is a major concern, but there are also examples that China is now trying to reduce the burden of debt on many countries. In case of Bangladesh, we are still in a comfortable situation in terms of GDP ratio, but caution has to be taken.
The cost overrun is so huge in case of larger projects that at the end of the day the cost will be also inflicted on the common citizens which will directly affect them even though it may facilitate communication.
The difficulties and limitations of aid have always been there. One should not lose sight of the fact that in terms of foreign aid or official traditional development assistance, the effectiveness of foreign aid has always been a rather challenging and highly debated issue. It is not only about the creditors or the donor, but also the preparation of the recipient country by ensuring good governance, good management, less corruption, institutional reform, strong institutions, accountability and transparency. Otherwise, foreign aid never works. The effective utilization of aid has also been a challenge for the donor countries and realizing that the associated issues are not very conducive for the implementing countries.
Parvez Karim Abbasi, Assistant Professor Department of Economics, East West University
Whether Xi Jinping stays in power, or somebody else takes his place, BRI has been launched and it will not be redacted. The fate of China is inextricably linked to BRI.
China has become the financier of last resorts. How so? If you take a closer look, in terms of spending on annual International Development and financial commitments, China spends around $85 billion annually. That means it has outspent the United States of America. But over here, debt rather than development assistance of grants is the main vehicle of its provision of assistance to low middle income countries. So it is a debt-driven model. There is no argument about this.
And since the introduction of BRI, China has maintained a ratio of loans to grants to 31:1, which means that if $31 is provided in terms of loans, one dollar is provided through grants, then it is perfectly fine. But that's the Chinese way of doing this.
It is not about how low the interest rate is, because it is also about the volume of loans that you take. Because once a country thinks that China is the lender of last resort, often host countries themselves feel emboldened to take on bigger and larger projects, greater risks, and as a result, what happens is internal insight or oversight capacity by the host country is conspicuously absent. So you take on more risk, because you think, okay, if the western countries do not bail me out on this, the Chinese are going to come in, and once the Chinese somehow give you the loan, and then you're unable to pay it, because of internal issues or because of mismanagement, then the questions of Chinese alleged debt trap will take place.
Many of these projects are given in terms of high risk, high reward mindset. And as we say, no risk no gain. So in this case, collateralization of debt comes into play. What happens over here, that often in order to recover debts and cover fiduciary obligations, future export receipts are often collateralized. And this is the part which leads to a lot of controversies.
And whether we say the debt trap exists or not, the actual fact is, we don't have enough data. BRI needs to take place for another 10 to 20 years before we can say for certain.
Shamim Ahmed, Former Ambassador
I feel that it's a bit early days for BRI to be judged in the context of the interest and the benefits that it can accrue to the recipient countries. But I feel that most of the BRI systems that are being extended to the recipient countries are basically biometric systems. It is also to be seen how much extra has been given to these countries.
We haven't seen any connectivity projects, both regional and global in incomplete form, which could be a great example of how much benefits these projects have accrued to the people.
China will attempt to reach the warm waters through Myanmmar, but what about Bangladesh, you mentioned Chittagong. Would it be possible to reach Chittagong port for China without India? I don't see any other way to reach here without India.
Dr Lailufar Yasmin, Professor, Department of International Relations, Dhaka University
There is leadership continuity in the case of China, which actually makes the BRI more sustainable. And for countries like Sri Lanka and Bangladesh when we needed money, there was no World Bank, no IMF that came in.
If you look at the latest reports, one which was published in a diplomat, the interest rate is 1.23% for the majority of the projects. So, this is something we need to remember, which is much lower than any other international interest rates from where the countries can borrow money from. So, that is why when there are no other sectors to provide money to Bangladesh, Sri Lanka or other countries, and then China would obviously be one possible funder.
The Chinese representatives speak better Bengali than we do, or the people of Kolkata do In Shanti Niketan. There is a huge soft power appeal that comes with BRI. This is something we're forgetting. We are seeing this from a very strategic perspective and depth of diplomacy.
Forrest Cookson, Economist, Research and Development Center
In order to repay a debt, a country has to successfully export to the creditor. The size of the loans involved here is mounting up towards the trillions of dollars, which means that either China has to reverse what has been its historical economic policy, which is to run a large current account surplus, or the countries like Germany or the United States will have to take the exports from the countries that have borrowed under the BRI. And that surplus that is earned by Bangladesh, India, and so forth will have to be used to repay the Chinese loans.
Dr Nadia Binte Amin, Chairman, TARA Foundation and Managing Director, Research and Computing Services Private Limited (RCS)
Internal infrastructure can be considered a challenge based on whether we are ready with our internal infrastructure in regards to connectivity or not. I think we need to focus on our internet infrastructure more since we are talking about connectivity with the different economic zones. It will make the process smoother while heading towards regional connectivity;and in the long run global connectivity.
So when it comes to mega projects, I find it really challenging for women entrepreneurs to get into this fair and transparent procurement system. Women promise sustainability and transparency in their business. Still, we are far from this supply chain, we want to be included in these mega projects. We want mega projects with women inclusiveness.
Ayesha Kabir, Editor (English), Prothom Alo
With the BRI, it's obvious that there are parties of regional powers and superpowers that are not terribly thrilled with it. Bangladesh naturally will face certain pressures about joining or if it has already joined the array. But as you see already, there are many stumbling blocks in the way. We don't even have the roots to be a part of this or to reap benefits from it.
So speaking from our track record, Bangladesh, unfortunately hasn't been one of the best negotiators, hasn't been very good at the negotiating table, including various international dealings that we've had. So what do you think are the stumbling blocks that will be put before us as a member of BRI by the regional or superpowers that are opposed to it? And what do you think should be our negotiation tactics to deal with it?
HE Prof Sudharshan DS Seneviratne, High Commissioner of Sri Lanka
We should look at countries like Sri Lanka, Bangladesh, from both subjective and objective conditions. We often forget the histories of these countries. We tend to take a very short memory, what you call lane on these situations; often these are clouded by the kind of propaganda and also the benchmark that was created by the West. This is something we've been dealing with in our country.
Like Bangladesh, we underwent so many hardships that many people don't realize. The 400 years of colonialism had ripped the country apart and left it almost scattered. Then we went through a 30-year war on terrorism. By the time the terrorism actually started, we had the threshold of almost beating Singapore. Then the tsunami happened, which took off the coastal area, with another terrorist attack taking placelast Easter.
But what I'm trying to portray to you is how many people actually helped during this situation. What do we do? We return to China, and still that’s my collector because of very low end interest compared to what the other interest rates we get from some western bank and funding agencies.
We should be looking at the broader picture without seeing immediately this whole debt trap you're talking about. Even if the debt trap comes, who will be there to help us?
Shahed Akhtar, ndc, Former Ambassador and Secretary
We have seen certain big projects like the Belt and Road initiative that has taken place within Bangladesh such as Asian highway. And that is quite evident and visible to us. China is connected with Bangladesh through exports and imports. Obviously, if the country is not going to benefit from this initiative, it would not be interested. I'm sure Bangladesh is going to gain a lot out of this. We need to develop this particular area in which there's a big gap. And I think BRI will help in bringing more development programs in this country.
Key points of the discussion
- The Belt and Road Initiative (BRI), the centrepiece of Chinese diplomacy involving trillions of dollars, will shape the world in the coming years and decades
- Transparency, accountability, strong institutions, and good governance with respect to the implementation of the projects under BRI will have to be ensured in order to reap maximum benefits.
- There is a huge infrastructure demand all around the world. So in order to comply with that demand, countries are willing to take the risk of borrowing the money.
- If the internal macroeconomic management is not sound to the countries taking the loans, then those Chinese loans can become onerous in terms of burden.
- The effective utilization of foreign aid has always been challenging for both the recipient and donor country.
- Regarding the debt issue of BRI, Bangladesh is still in a comfortable situation in terms of GDP ratio, but caution has to be taken.
