A harbor you never heard of, “Hamantota” in Sri Lanka is a signpost along the developing Chinese trade route called “Belt and Road” destined to significantly change our future. It will not only carry more trade than the US and South America combined, it will foist upon the world their brand of military and economic might ultimately altering the cost of living, where we work, what we buy, perhaps even with whom our children share their lives.
Sri Lanka the latest victim of China’s debt-trap diplomacy:
Beijing has been given a 99-year lease on Hambantota port as part of a debt-reduction deal, amid talk of creditor imperialism following China’s buy-up of strategic ports in Piraeus, Darwin and Djibouti
Unlike International Monetary Fund and World Bank lending, Chinese loans are collateralized by strategically important natural assets with high long-term value (even if they lack short-term commercial viability). Hambantota, for example, straddles Indian Ocean trade routes linking Europe, Africa, and the Middle East to Asia. In exchange for financing and building the infrastructure that poorer countries need, China demands favorable access to their natural assets, from mineral resources to ports.
Moreover, as Sri Lanka’s experience starkly illustrates, Chinese financing can shackle its “partner” countries. Rather than offering grants or concessionary loans, China provides huge project-related loans at market-based rates, without transparency, and often little or no environmental- or social-impact assessments. As US Secretary of State Rex Tillerson said recently, with the BRI, China is aiming to define “its own rules and norms.”
By wielding its financial clout in this manner, China seeks to kill two birds with one stone. First, it wants to address overcapacity at home by boosting exports. And, second, it hopes to advance its strategic interests, including expanding its diplomatic influence, securing natural resources, promoting the international use of its currency, and gaining a relative advantage over other powers.
China’s predatory approach – and its gloating over securing Hambantota – is ironic, to say the least. In its relationships with smaller countries like Sri Lanka, China is replicating the practices used against it in the European-colonial period, which began with the 1839-1860 Opium Wars and ended with the 1949 communist takeover – a period that China bitterly refers to as its “century of humiliation.”
China portrayed the 1997 restoration of its sovereignty over Hong Kong, following more than a century of British administration, as righting a historic injustice. Yet, as Hambantota shows, China is now establishing its own Hong Kong-style neocolonial arrangements. Apparently Xi’s promise of the “great rejuvenation of the Chinese nation” is inextricable from the erosion of smaller states’ sovereignty.
Just as European imperial powers employed gunboat diplomacy to open new markets and colonial outposts, China uses sovereign debt to bend other states to its will, without having to fire a single shot. Like the opium the British exported to China, the easy loans China offers are addictive. And, because China chooses its projects according to their long-term strategic value, they may yield short-term returns that are insufficient for countries to repay their debts. This gives China added leverage, which it can use, say, to force borrowers to swap debt for equity, thereby expanding China’s global footprint by trapping a growing number of countries in debt servitude.
Even the terms of the 99-year Hambantota port lease echo those used to force China to lease its own ports to Western colonial powers. Britain leased the New Territories from China for 99 years in 1898, causing Hong Kong’s landmass to expand by 90%. Yet the 99-year term was fixed merely to help China’s ethnic-Manchu Qing Dynasty save face; the reality was that all acquisitions were believed to be permanent.
Now, China is applying the imperial 99-year lease concept in distant lands. China’s lease agreement over Hambantota, concluded this summer, including a promise that China would shave $1.1 billion off Sri Lanka’s debt. In 2015, a Chinese firm took out a 99-year lease on Australia’s deep-water port of Darwin – home to more than 1,000 US Marines – for $388 million (A$506m).
Similarly, after lending billions of dollars to heavily indebted Djibouti, China established its first overseas military base this year in that tiny but strategic state, just a few miles from a US naval base – the only permanent American military facility in Africa. Trapped in a debt crisis, Djibouti had no choice but to lease land to China for $20 million per year. China has also used its leverage over Turkmenistan to secure natural gas via a pipeline largely on Chinese terms.
Several other countries, from Argentina to Namibia to Laos, have been ensnared in a Chinese debt trap, forcing them to confront agonizing choices in order to stave off default. Kenya’s crushing debt to China now threatens to turn its busy port of Mombasa – the gateway to East Africa – into another Hambantota.
These experiences should serve as a warning that the BRI is essentially an imperial project that aims to bring to fruition the mythical Middle Kingdom. States caught in debt bondage to China risk losing both their most valuable natural assets and their very sovereignty. The new imperial giant’s velvet glove cloaks an iron fist – one with the strength to squeeze the vitality out of smaller countries, and menace larger ones.
www.project-syndicate.org from an article by Brahma Chellaney. Brahma Chellaney is a Professor of Strategic Studies at the New Delhi-based Center for Policy Research and a Fellow at the Robert Bosch Academy in Berlin. He is the author of nine books, including Asian Juggernaut, Water: Asia’s New Battleground, and Water, Peace, and War: Confronting the Global Water Crisis.
Not many years ago a Chinese general wrote a book saying, “War with the United States is inevitable.” Today, even Newsweek Magazine intones a similar view.
Though little talked about in the West, many Chinese officials have long felt that war between Washington and Beijing is inevitable. A rising power, the thinking goes, will always challenge a dominant one. Of course, some analysts dismiss this idea; the costs of such a conflict would be too high, and the U.S., which is far stronger militarily, would almost certainly win. Yet history is riddled with wars that appeared to make no sense.
Today, the maritime dispute between the U.S. and China has become the most contentious issue in their complex relationship, and conditions seem ripe for a military clash between the two countries: This summer, an international court will rule on a Philippine challenge to China’s claim to the disputed waterway, and for the first time, Beijing appears poised to send nuclear-armed submarines into the South China Sea.
On one level, the dispute is about territory. Beijing insists that nearly the entire sea—from its islands, reefs and submerged rocks to its fish and underwater energy reserves—historically belongs to China. The U.S., however, regards the South China Sea as international waters—at least until rival claims by several neighboring countries can be resolved. Until then, Washington contends, only the U.S Navy can be trusted to ensure freedom of navigation in those waters, which include some of the world’s most important shipping lanes.
The larger conflict, however, revolves around China’s emergence as a major regional power and America’s insistence on policing the Pacific. It also involves the system of international rules and institutions that Washington and its allies crafted after World War II. Chinese President Xi Jinping has repeatedly complained this system favors America and prevents Beijing from taking its rightful place as the dominant power in Asia. And at a time when China’s economy is slowing, Xi is under increased pressure at home to find other ways to demonstrate China’s advances under his leadership. A clear reassertion of Beijing’s control over the South China Sea after more than a century of foreign domination would do just that. Failure to do so, however, analysts say, could threaten Xi’s grip on power.
China says its claim to the South China Sea dates back thousands of years. But historians date the modern dispute back to about 130 years ago, when various European countries took over the waterway. Over the next century, the sea formed part of French Indochina, then Japan’s Pacific empire, and after World War II, the U.S. Navy acted as its caretaker. But in the 1970s, oil and gas deposits were discovered under the sea bed, prompting the Philippines, Vietnam, Malaysia, Brunei and Taiwan to stake their own claims to the region. Those countries have since seized 45 islands. Since 2012, China has occupied seven shoals and, through land reclamation operations, turned them into man-made islands with landing strips and missile defenses.
“History matters,” says Fu Ying, a former ambassador to Britain and now spokeswoman for the National People’s Congress, China’s parliament. In recounting China’s litany of foreign invasions, beginning in the 1840s with Britain’s seizure of Hong Kong and ending with Japan’s brutal occupation of China before and during World War II, she notes that the Chinese remain acutely aware of the country’s past humiliation. “The people won’t tolerate it if we lose territory yet again,” says Fu. “We’ve lost enough.”
Wary of an armed conflict, U.S. President Barack Obama has responded by quietly permitting Beijing to operate in the South China Sea while building up military and economic relations with China’s neighbors in hopes of weakening its influence. And despite the administration’s repeated vows to sail continuously through the disputed waters, it has mostly avoided them. “We’ve done a lot sailing in the South China Sea but in areas that aren’t claimed by anybody,” says Bryan Clark, a retired Navy veteran who last served as a special assistant to the chief of naval operations.
Critics of Obama, including Republican Senator John McCain of Arizona, say such nonintrusive voyages easily could be construed as acknowledgement that China has a valid claim. McCain and others have called on Obama to get tougher with Beijing and conduct more aggressive operations in the disputed waters.
China’s neighbors, such as Vietnam and the Philippines, have also urged Obama to be more aggressive, and they’ve offered U.S. forces the use of their bases. But there’s a limit to how far they want Washington to go. While they may resent Beijing’s bullying, China is their largest trading partner and a major source of funding for infrastructure projects such as roads, railways and ports. Bilahari Kausikan, a senior Singaporean diplomat, notes that small Southeast Asian countries must navigate a path between China and the United States by constantly playing one against the other, hedging their bets and sometimes deferring to Washington or Beijing. “We see nothing contradictory in pursuing all…[of these] courses of action simultaneously,” he says.
The Obama administration is bracing for trouble this summer when an international court in the Hague rules on the Philippine challenge to China’s claim to the South China Sea. The ruling is expected to go against Beijing, which has declared it won’t accept any decision from the court. China says it’s willing to talk one-on-one with the Philippines, as well as with the other countries with rival claims—a position that would give Beijing a clear advantage over its smaller neighbors. The U.S. wants China to negotiate with these claimants collectively, and Beijing has told Washington to butt out. “Our view is the U.S. is stoking the dispute and using it to bring its forces back the Pacific,” said Chinese Vice Foreign Minister Liu Zhenmin during a meeting with a small group of visiting American and British reporters in May.
For U.S. officials, the big question is how China will react to an unfavorable ruling. Some fear Beijing will step up its land reclamation operations. Others worry it will restrict the air space over the South China Sea and begin intercepting unidentified aircraft—a policy that would force it to confront the U.S.’s spy flights. Or they could do something even more provocative. “The [Chinese] military is urging the leadership to put it in fifth gear, step on the gas and give the finger to the world,” says a U.S. official, asking for anonymity under diplomatic protocol.
Obama has warned Xi that such measures would prompt a substantial American response, including military action. Some regional experts say Beijing may counter an unfavorable ruling with tough rhetoric to mollify people at home, but take no actions before September, when China hosts the G-20 summit.
But once that gathering is over, the dispute could become much more volatile. U.S. officials are particularly worried about a Chinese plan to send submarines armed with nuclear missiles into the South China Sea for the first time. Chinese military officials argue the submarine patrols are needed to respond to two major U.S. military moves: plans to station a defense system in South Korea that can intercept missiles fired from both North Korea and China, and the Pentagon’s development of ballistic missiles with new hypersonic warheads that can strike targets anywhere in the world in less than an hour. Taken together, Chinese military officials say, these American weapons threaten to neutralize China’s land-based nuclear arsenal, leaving Beijing no choice but to turn to its submarines to retaliate for any nuclear attack.
The implications would be enormous. Until now, China’s nuclear deterrent has centered on its land-based missiles, which are kept without fuel and remain separate from their nuclear warheads. That means the country’s political leadership must give several orders before the missiles are fueled, armed and ready to launch, giving everyone time to reconsider. Nuclear missiles on a submarine are always armed and ready.
U.S. and Chinese warships operate in uncomfortably close proximity in the South China Sea. Add submarine operations to the mix, and the chances of an accident multiply despite protocols meant to minimize the risk of collisions. Submarines are stealthy vessels, and China is unlikely to provide their locations to the Americans. That means the U.S. Navy will send more spy ships into the South China Sea in an effort to track the subs. “With the U.S. Navy sailing more and more in the area, there’s a high possibility there will be an accident,” says a high-ranking Chinese officer, who spoke anonymously to address sensitive security issues.
War between a rising China and a ruling U.S. isn’t inevitable—provided each side is prepared to make painful adjustments. Xi said as much during his visit to the United States last fall. But in a warning to Americans (which could apply to China’s fighter pilots as well), he added: “Should major countries time and again make the mistakes of strategic miscalculation, they could create such traps for themselves.”
This story has been updated to add a more detailed history of which countries claimed the South China Sea
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