Thailand's move on Kra Canal alarms New Delhi as route will boost Chinese naval power in Indian Ocean

Pushed by his country's powerful military junta, Prime Minister of Thailand Prayut Chan-o-cha has ordered the country's National Security Council to begin examining the feasibility of proposals to build a 120-kilometre mega canal that would slash 1,200 kilometres off the route Chinese warships now take to reach South Asian ports — dramatically enhancing the superpower's ability to project power in future Indian Ocean wars.

Private investors from China have already committed $30 billion for the construction of the Kra Canal, first conceived of almost 350 years ago. Longhao, a Chinese construction company involved in the government's controversial island-building work in the South China Sea, will be given the responsibility for the work, Indian government sources told Firstpost.

President Chan-o-cha's decision, Indian government sources said, could mean that the project could be completed late in the next decade, forcing the Indian military to significantly rethink its planning and preparedness for conflicts involving China's growing navy.

 Thailands move on Kra Canal alarms New Delhi as route will boost Chinese naval power in Indian Ocean

File image of Thailand Prime Minister Prayut Chan-O-Cha. AFP

Former Thai military commander Thawatchai Samutsakorn, who is vice-president of a private-sector consortium pushing for the Kra Canal, told The Bangkok Post that government committees to study the project will be set up before elections in February 2019.

"After the polls, when we have Opposition parties, they will oppose the campaign without taking into account the potential benefits to the country and the public," he said.


From China's point of view, the Kra Canal offers a means to secure its expanding demand for West Asia's hydrocarbons against overcrowding in the Strait of Malacca — the world's busiest maritime lane through which an estimated 84,000 ships pass every year, carrying around 30 percent of the global trade transit. The World Bank estimates that over 1,40,000 ships will seek to transit through the Strait of Malacca annually by the end of the decade, far in excess of its capacity of 1,22,000 ships.

Exiting the Kra Canal westwards, traffic would enter the Andaman Sea, transit past India's Andaman and Nicobar Islands and then head south towards the Chinese-owned port at Hambantota in Sri Lanka.

But that isn't the end of the story. The Kra Canal would offer an alternative to a route surrounded by US allies, and thus, would be vulnerable to a blockade in the event of a geopolitical crisis. Former Chinese president Hu Jintao had underlined China's concerns about the straits, referring to it as the "Malacca dilemma".

Indeed, the geopolitics of the Kra Canal are one reason why Thailand remains divided on moving forward on China's proposal. Some in Thailand's strategic establishment fear that Chinese investment in the project will, inexorably, erode the country's sovereignty — a fear founded on the experience of Egypt and Panama, where the canals led to decades of foreign control.

"The history of the Panama and Suez canals shows that despite the unquestionable economic advantages of a canal, one country's funding of its construction on the territory of another country usually leads to the spread of significant influence by the first country," scholar Ivica Kinder has pointed out.

Thai critics of the project also believe it will devastate tourism earnings from resort towns along the Andaman Sea.

Uncertainty over economic viability

Experts remain divided on the economic viability of the Kra Canal, with some sceptical that it will ever pay for itself. Earlier this year, energy specialist Gary Norman had estimated that the canal would need to generate $4.57 million each day to pay for itself. Based on the assumption that 40 ships will transit the canal each day, he noted, that would mean a user fee of $1,15,000 per transit.

But, Norman pointed out, the typical additional fuel costs for the longer routes through the Malacca, Sunda or Lombok straits range from $40,000 to $1,20,000 per trip — not enough to justify the fee to use the canal.

The Suez Canal and the Panama Canal, bypassing entire continents, are able to charge large ships fees of around $2,50,000 and $1,25,000, respectively, because of the far larger savings in time they enable.

However, advocates said the Kra Canal project would handle a far higher numbers of ships and also draw investments from businesses linked to shipping, which range from engineering, supplies and legal services. The Thai Canal Association's plans also envisages building two large free trade zones and a new international airport.

The proposal put forward by Longhao, an Indian government source said, involved building two offshore islands for ships to berth, warehouses and even entertainment hubs. The company also proposed bringing in over 30,000 Chinese workers to build the canal.

Lyu Jian, Beijing's envoy to Bangkok, has privately told the Thai government that his country sees the Kra Canal as a strategic investment, part of the One-Belt- One-Road plan that envisages pushing new networks of rail, road and maritime links from Asia to Europe and Africa.

The Kra Canal has haunted East Asia's strategic imagination since 1677, when King Narai, the Great, asked the French engineer M de Lamar to explore linking the Andaman Sea with the Gulf of Thailand. King Rama I revived the idea in 1793, thinking it might provide a line of defence for the capital. And in 1858, Imperial Britain secured permission to begin digging but ran out of funds before work could start.

Fearing Japan might build the canal and thus bypass Britain's naval base in Singapore, Thailand later signed signed a treaty to not build the canal at all.

But the idea was revived in the last century — with both Soviet and US engineers at one point suggesting using nuclear bombs to cut through Thailand's intractable mountain ranges.

Updated Date: Nov 05, 2018 18:00:51 IST