India's One Belt One Road boycott sent a message: India can now talk business to China at BRICS meet

So the curtain has come down on Beijing’s One Belt One Road (OBOR) summit, touted as the decade’s most epoch-making diplomatic show. After initial foot-dragging, even the US and Japan participated in it, making India the most conspicuous absentee. There have been arguments within India that, by boycotting the Beijing meet, India was denying itself unending benefits of something as big as OBOR. Left-leaning intellectuals as well as some well-meaning economists lamented that India was committing a monumental blunder by isolating itself from what Chinese media markets as “Globalisation Version-2”.

But they are forgetting two things:

1. Just four months from now, China will host the next BRICS summit (a five-nation grouping comprising Brazil, Russia, India, China and South Africa), where India can talk bilateral or multilateral deals involving Beijing-at its terms. Forget belt-and-road. India can begin the dialogue with China and others in the group where it ended at the 15-16 October 2016 BRICS summit in Goa.

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2. On 1 June, Prime Minister Narendra Modi  is meeting Russian president Vladimir Putin, an important-even if wary-member of the belt-and-road brigade. They will discuss a wide range of projects including gas pipelines and railways. India is already playing a key role in several regional infrastructure projects as part of BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation that has in it Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal) and Bbin (Bangladesh, Bhutan, India and Nepal).

By staying away from OBOR, India hasn’t shut its doors to either China or other countries of the region. OBOR is neither the beginning nor the end of India’s business with China. All that India said was that it objected to OBOR because it infringed on the nation’s sovereignty.

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There are other forums where India can do business with China in ways that do not kick up sovereignty issues, and on terms that are not as unilateral as in the case of OBOR deals with many countries. Without OBOR, or without even BRICS, India can still take advantage of Chinese investments and expertise in a mutually beneficial way on a bilateral basis.

Pakistan is China’s vassal, India isn’t

After keeping away from OBOR, India must now tell China that it’s ready to talk business.

It’s well-known by now that China is bulldozing countries like Pakistan and poor nations like Laos and many others in Central Asia into agreeing to OBOR projects with high-interest loans that could push them into debt-traps.

Obsessed with demeaning, denigrating and disintegrating India, Pakistan has turned itself into a vassal state of China and is ready to beg for and accept any military or economic help from it on any terms dictated to it. Its acceptance of China Pakistan Economic Corridor (CPEC), an OBOR offshoot, isn’t a surprise. It’s a repetition of what Pakistan had done with US assistance during the early days of Afghanistan crisis.

On its part, China is caught between a strategic interest in Pakistan and an economic stake in India. China needs Indian market as much as India needs Chinese investments and imports. But unlike Pakistan, India is no satellite or colony of China and needs to seek and push for honourable deals with the tricky, big neighbour.

Indian boycott of OBOR was no knee-jerk reaction. It was evident from the fact that India announced that it was staying away from it only in the last minute, though China’s President Xi Jinping was desperate to have Modi on board to give OBOR more legitimacy and acceptance.

To please India, China displayed uncharacteristic patience to explain why OBOR did not amount to violation of its sovereignty. China even went to the extent of forcing Pakistan’s Prime Minister Nawaz Sharif to drop Giljit-Baltistan chief minister from his entourage to Beijing. India’s main objection to attending the Beijing meet was that the Cpec projects run through Pakistani territories including Gilgit-Baltistan which India claims to be its own.

But the Modi government had no choice other than to boycott the Beijing summit. Modi had to deliver a message to China. He did.

This came after two other messages Modi delivered to Pakistan:

1. Following the September 2016 Uri attacks, India boycotted the 19th summit of SAARC (South Asian Association for Regional Cooperation) to be held in Islamabad in November. Bangladesh, Bhutan, Afghanistan, Sri Lanka and Maldives joined the boycott, leading to the summit’s indefinite “postponement”.

2. Earlier this month, India launched what had been planned as a SAARC satellite but what, without Pakistan, was renamed as South Asia Satellite.

With the Saarc summit and the SAARC satellite and then the Obor boycott, Modi did the best he could. The historic blunders of the foreign policies of his Congress predecessors committed over decades isn’t easy for Modi to correct in a matter of three years.

A Silk Route isn’t always smooth

Critics of Modi’s decision on OBOR not only overlooked India’s political compulsions but also the tension, un-profitability and failures underlying OBOR programmes worldwide.

In Laos, for instance, the government is wary of Chinese domination as the construction of a 420-km rail line gets underway, and local farmers there are agitated over losing land. Two months ago, China indefinitely put on hold work on the 1,000-km gas pipeline from Turkmenistan to China (via Uzbekistan, Tajikistan, Kyrgyzstan) because of Beijing’s reduced fuel demand. A huge controversy raged in Indonesia over land acquisition before work could finally begin last month on a rail line to connect Jakarta with Bandung.

And the construction of a $2.9-billion, 350-km Belgrade-Budapest rail line, a flagship belt-road project of Europe, is being investigated for possible violations of European Union rules on public tenders. Sri Lanka recently scaled down its deal with China over the Hambantota port following widespread protests by locals. It’s easy to see that China is biting more than it can chew.

As Wade Shepherd, the author of Ghost Cities of China, notes: “The Hambantota fiasco is sending a clear message to Beijing: showing up with bags of money alone is not enough to win a new Silk Road.”

The Economist quotes investment research firm Gavekal as saying: “The Chinese think they will lose 80 per cent of their money in Pakistan, 50 per cent in Myanmar and 30 per cent in Central Asia. Perhaps they can afford this, but it would be a costly mess.”

It’s clear that, even without the sovereignty violations, there was no compelling reason for India to jump onto the belt-road bandwagon, especially if there were other ways of doing business with China.

BRICS summit in China in September

China has already chosen a theme for the September 2017 BRICS summit to be held at Xiamen in its eastern province of Fujian: “Stronger partnership for a brighter future.”

The communiqué at the end of last year’s eighth summit in Goa, to which Xi was a signatory, talked of how “mega-regional trading agreements” significantly altered the nature and scope of cross-border trade. In his own individual statement, Xi called for “confidence-building measures” to ensure better prospects for BRICS members.

At the China summit, Xi must first begin building confidence among BRICS members if he really means business.