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2017: A bad year for major South Asian infrastructure projects

  • Published at 09:49 am January 25th, 2018
2017: A bad year for major South Asian infrastructure projects
For giant infrastructure projects in South Asia and beyond, a number of setbacks blighted their progress in the second half of 2017. The major reason has been the continued bickering between India and China to establish dominance, especially in the South Asian region. Ironically, every country suffered from the overwhelmingly negative mindset of its neighbours. India’s indifference effectively stalled the progress of the Bangladesh China India Myanmar (BCIM) Economic Corridor. China retaliated by persuading Myanmar to temporarily halt work on the Asian Highway Project, backed by the Asian Development Bank (ADB). The India-sponsored Bangladesh Bhutan India Nepal (BBIN) Motor Vehicle agreement eventually got off the ground without Thimpu’s participation. As for the ambitious China Pakistan Economic Corridor (CPEC) project, difficulties just do not seem to end. Observers point out that while economic interests of China and India are suffering in the short-term, countries like Bangladesh, Nepal, Myanmar, Thailand and Malaysia too, cannot escape the long-term negative consequences either. It has been reported how the promising South Asian Highway development project, which sought to link India’s Moreh town with a Thailand border town running through Myanmar, was stalled. Myanmar authorities, who had earlier agreed to participate, suddenly backed off, explaining that they needed to re- examine the economic benefits and other issues relating to the project. The ADB had announced its financial help for the project, which would have continued the traffic link-up from Thailand to Malaysia after completing the connectivity between India and Myanmar. Delhi-based observers feel this was China’s counter to India for its non co-operation on the BCIM corridor. The Chinese saw in the Asian Highway development project a strategic regional effort to forestall the economic prospects of the BCIM corridor itself, according to some reports. It has been suggested that for Myanmar and its neighbours, there could be a sense of déjà vu about this. The Burmese have been long used to living without international economic or other co-operation, having been subjected to economic sanctions until recently. A further similarity with the past is that then as now, China had remained Myanmar’s main support. Among major world capitals, only Beijing steadfastly maintains a silence over the contentious issue of the Rohingya. However, this does not bode well for either India or Bangladesh, the direct victims, of negative political developments beyond borders in Myanmar. As for the glitch within the BBIN – reduced to BIN for all practical purposes – Indian policymakers can certainly be faulted for not having done their due diligence and preparatory exercises properly. They should have sensed and assessed Bhutan’s environmental concerns, the fear of its small population and the consequences of the massive movement of people and goods on the fragile Bhutanese tourism infrastructure, before going public with BBIN. However, BIN has not failed either. Arrangements have been made for road (bus services) linkage for Bangladesh through Indian territories to Nepal for passengers and goods. Between India and Bangladesh again, Dhaka has been linked to Agartala, Guwahati and Shillong, while a proposal to connect Chittagong with Kolkata is under review. Kolkata is already linked with Dhaka and Khulna. Facilities for Nepal to use the Chittagong and Mongla ports more and also for Bangladesh to access South Indian states (such as Andhra Pradesh) by road/rail and other means have been agreed upon. With tourism recovering in Nepal and rapid economic growth projected in India and Bangladesh, the total trade within the region, estimated at nearly $11 billion in 2015, will go up considerably, according to economists. Furthermore, all three countries will gain substantially in terms of travel time and fuel consumption. As for the CPEC, not unexpectedly, concern within Pakistan is mounting over certain aspects of the most ambitious infrastructure project in Asia, both in terms of its reach and eventual cost estimated in the region of $50-58 billion by 2030. The Pakistan government has strenuously denied negative reports broadcast by local TV channels and the international media. Western analysts suggest that China appears keener on implementing certain projects that would bring its immediate economic benefits, instead of more long-term projects. With this objective in view, China recently proposed to put on the back burner two major road projects in Baluchistan – a 210km Dera Ismail Khan artery, and the 110km Khuzdar-Basima route. The proposed highway construction at Karakoram too was delayed on account of local tribal protests. Construction in Baluchistan areas has been affected several times because of kidnappings, murders and acts of sabotage by suspected Baluchistan pro-independence activists. Furthermore, negotiations were held between Chinese and Pakistani authorities over the implementation of railway projects for Karachi and the nearby industrial zone. China suggested that Pakistan make use of commercial loans from Chinese banks for these projects, even though they formed part of the overall CPEC scheme. There was even a suggestion that Pakistan use the Yuan instead of the US dollar in these and other bilateral dealings. Japanese media reports claim that China indicated it would avoid “overstretching” while carrying out CPEC projects, prioritizing the most important projects. Diplomatic circles were not sure whether China was really hitting back at Pakistan for its refusal to entrust China with the proposed $14 billion Diamaer-Basha dam project. Islamabad had objected to the cost factor and told Beijing it would implement the project on its own. On their part, Pakistani authorities have strongly denied that there were any negative vibes or disagreements between the two countries and insisted that all projects were progressing well. They had also deployed massive security forces in the project areas and elsewhere to protect hundreds of Chinese workers and officials in Pakistan. However, Pakistani critics pointed out that they had not clarified the position of specific projects in this regard. Given this generally disturbing background of 2017, authorities and policymakers, irrespective of where they are from – China, India, Bangladesh Myanmar or Pakistan – certainly wish that 2018 will be a better year for infrastructure development in the region.
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