Why West should counter China's 'Shylockian' debt diplomacy towards Global South

Weeks ahead of travelling to Cuba for the G-77+China summit, External Affairs Minister (EAM) S Jaishankar took a pot-shot at Beijing, whose ‘opaque’ lending ‘initiatives’ have saddled the Global South with ‘unviable debt’. Both EAM Jaishankar and Prime Minister Narendra Modi told business leaders in New Delhi how the rest of the world has to stop looking at the Global South only as markets but also as manufacturing facilities. If Jaishankar was circumspect in naming China, as Beijing would also be present at the Cuba meeting – but without being a member of G-77 – Indian-American presidential aspirant Vivek Ramaswamy in the US was more forthright, though there was nothing common about the two speeches. Number Two in the Republican nomination race, the 38-year-old entrepreneur, wanted the US to team up even more with India, to become ‘independent of China’. He pointed out how American industry still had huge investments and markets in China, indicating that they should turn their whole attention towards India, in both departments. Ramaswamy even suggested for America-India strategic relations to include the Andaman Sea. It’s anybody’s guess if he had consulted American policy-makers even remotely before making such suggestions in public, nor is there anything to suggest if New Delhi would favour such an idea – especially so in an election year, or even without it. White elephant projects There is no denying that many, if not most nations in the Global South are saddled with China-funded ‘white elephant projects’, for which they do not really have much use. In turn, these project costs have caught these nations in a debt-trap, from which there is no escaping in the foreseeable future. In India’s neighbourhood itself, there are enough examples. Nations like Sri Lanka palmed off a piece of their territory, in southern-most Hambantota, for China to extend the repayment period to 99 years. Yet, Colombo, independent of the government, party or leader in power, had no compunction in borrowing more and more from China. More or less the same pattern prevails in other nations that had borrowed excessively from China, but in many such cases no Hambantota was there to interest China in a geo-strategic sense. The West has talked even more eloquently about China’s debt-trap. It did not do anything to stop it, nor have they now offered to bail out any, if not all the nations so trapped. To the debtor-nations it makes no sense unless the West combines its belated words with action on the ground – some kind of a bail-out package to begin with, and follow-up investments and credit-lines that would help sustain those economies that may at times look vulnerable to the point of being unviable even before China entered the scene. When it comes to helping out Third World nations whose populations have developmental aspirations that may not be matched by ready-resources at their disposal, the West then clamps up. Their accountants open up the books of those nations and tell them why they cannot borrow more, and why they themselves would not lend them more. It is unlike the prevailing situation in Sri Lanka, for instance, where the reasons for the nation going bankrupt last year were multiple, China being only one of them. Whether it is to say ‘No’, or to lend, the West has institutions like the IMF, World Bank and the ADB at its disposal. Not having access to them, China has founded its own substitutes, which are poor when it comes to assessment, rich when it comes to lending and cruel, when demanding it back. Simply put, when it comes to aiding member-nations of the Global South, the US and the rest of the West act as much like China, maybe worse. China first lends big money and then shows its Shylock-like face. The West does not rush to any other nation’s help, when required. China does. That is the difference. From a purely domestic context, independent of economic viability and repaying capacity, borrower-nations face a huge problem that cannot be explained away in economic terms. But in socio-political terms, they are real and are justifiable. The failure of elected governments to meet the ‘legitimate aspirations’ of their people, especially in this era of social media, could lead to public protests, militancy and insurgency, which the Global South had faced until they had turned around the first phase of national development in the years and decades immediately following the colonial era. Democratic burden There is another huge problem pertaining to nations of the Global South, intent on borrowing from wealthier nations or attracting investments from them. Either directly, or through the instrumentality of the IMF, World Bank and the ADB, among others, the West often lays down unacceptable conditions that keep going beyond lending conditions laid down by commercial banks. Thus, debt-sustainability over the short, medium and long terms, and also their maintainability becomes the core issue. China just does not care – and it suits not only the rulers of the day in individual Third World nations, but their State structures too to prefer lenders like China against the West. Then, there is what could at best be called ‘collateral conditions’, which too keep changing with times – and with colour. These pertain to the West’s current perception of democracy and human rights. Thus, what was once permissible in the West becomes abhorrent in Third World nations that are yet to shed their socio-cultural baggage that have existed through generations and centuries. The US, for instance, does not have the stomach yet to elect a woman President, but on women’s rights, the nation lectures others like Sri Lanka and India, which have elected female prime ministers long ago. Sri Lanka likewise had universal adult franchise since 1931, whereas the US had introduced it only in 1924, though it was a free nation for long and had a Constitution of its own for much of that period. Third World nations, big and small, see ever-changing western norms of democracy and human rights and their own insistence and methods of evaluating the borrower’s debt-sustainability are inherent impediments to their approaching the other for credit, as they did/do with China. Added to that is the unquestioned Chinese veto-use on their behalf, as small nations still have faith in the UN system more than the developed West, which are seen as using the facility in the post-Cold War era, to meet their own geo-political and geo-strategic ends. It is not that China has no such interests while lending, but it stops there. There are no facades of the western kind, which impose democratic and lending conditions, on a selective basis. And it is this bridge that the West has to cross for them to wean away borrower-nations of the Global South from China for now – and someone else in its place, with or without veto-power, later on. The writer is a Chennai-based policy analyst & political commentator. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost_’s views._

Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook ,  Twitter  and  Instagram