Obor Troubles: How China’s ambitious silk road initiative has hit massive potholes – from Pakistan to Tanzania

By: |
New Delhi | Published: January 11, 2018 6:25:21 PM

OBOR Troubles: China's ambitious plan for setting up a modern Silk Road connecting Asia with Europe has hit potholes in many countries.

obor, china silk road, obor troubles, china pakistan, cpec, pakistan china, obor news, bri, bri news. cpec newsFile Photo: Chinese President Xi Jinping, third from left, walks with Russian President Vladimir Putin, third from right, and other leaders as they arrive for a group photo during the Belt and Road Forum outside Beijing, China, Monday, May 15, 2017. (AP)

China’s ambitious plan for setting up a modern Silk Road connecting Asia with Europe has hit potholes in many countries. In Pakistan alone, projects worth around $14 billion are at stake. This has happened even as China and Pakistan have come very close to each other in recent years. The proposed Silk Road aims to connect the two continents through railways, ports and other facilities.

Associated Press reports that Diamer-Bhasha Dam project in Pakistan was stopped in November last year when the chairman of Pakistan’s water authority said that Beijing wanted an ownership stake in the hydropower project, which was against “Pakistani interests.” The dam was among the several other projects being developed by both countries.

The news agency reports that several projects under Chinese president Xi Jinping’s ambitious ‘Belt and Road Initiative” (also referred to OBOR – One Belt, One Road) are being “delayed, canceled, renegotiated” from Pakistan to Tanzania to Hungary. Reason: Disputes have emerged about the costs. Host countries have also complained of getting “too little” out of the projects that mostly favour Chinese companies. China is also facing a political backlash in some countries because of fears of being dominated by the biggest economy of Asia.

The OBOR initiative includes a maze of roads and port projects including CPEC, Bangladesh, China, India, Myanmar, (BCIM) Economic Corridor, New Eurasian Land Bridge, China-Mongolia-Russia Economic Corridor, China-Indochina Peninsula Economic Corridor and 21st century Maritime Silk Road.

OBOR was first announced by China in 2013. It is a loosely defined umbrella term for China-backed or financed projects in 65 countries – from the South Pacific through Asia to Africa and Europe, including projects like oil drilling in Siberia to the construction of ports in Southeast Asia, railways in Eastern Europe and power plants in the Middle East.

In May last year, several media reports across the world had criticised the China-led initiative. In fact, the New York Times had described OBOR as “Global commerce on China’s terms”. “Mr. Xi is aiming to use China’s wealth and industrial know-how to create a new kind of globalisation that would dispense with the rules of the ageing Western-dominated institutions. The goal is to refashion the global economic order, drawing countries and companies more tightly into China’s orbit,” NYT had then said.

On Thursday, Associated Press reported experts as saying that OBOR has not yet become a “win-win” situation for China. “Pakistan is one of the countries that is in China’s hip pocket, and for Pakistan to stand up and say, ‘I’m not going to do this with you,’ shows it’s not as ‘win-win’ as China says it is,” Robert Koepp, an analyst in Hong Kong for the Economist Corporate Network, a research firm, told the agency.

Some of the OBOR projects that have been derailed or disrupted, as per AP report, include:

  • Nepal: Chinese companies’ pla to build a $2.5 billion dam was canceled by Nepal in November after the country’s authorities reached the conclusion that contracts for the Budhi Gandaki Hydro Electric Project violated rules requiring multiple bidders.
  • Hungary: The European Union is examining whether Hungary has violated the trade bloc’s rules by awarding contracts to Chinese builders of a high-speed railway to neighboring Serbia without competing bids.
  • Myanmar: Plans of a Chinese oil company to build a $3 billion refinery were canceled in November last year due to financing difficulties.
  • Projects in Asia, Africa, and the Middle East: Consulting firm BMI Research has compiled a database of $1.8 trillion of infrastructure investments announced across Asia, Africa and the Middle East that include Chinese money or other involvement. Many of them are either still in the planning stage or up to three decades in the future.
  • Pakistan: Both countries are developing facilities with a total cost of $60 billion including power plants and railways to link China’s far west with the Chinese-built port of Gwadar on the Indian Ocean. The visit of a Chinese assistant foreign minister in November, however, couldn’t lead to an agreement on railway projects in the southern city of Karachi valued at $10 billion and a $260 million airport for Gwadar. In November, Pakistan Water and Power Development Authority chairman withdrew from joint development of Diamer-Bhasha Dam in Gilgit-Baltistan, which is part of Kashmir region and also claimed by India.
  • Thailand: Work on a $15 billion high-speed railway was suspended in 2016 after complaints that too little business went to Thai companies.
  • Tanzania: The country’s government has reopened negotiations with China and another investor, the government of Oman, over ownership of a planned $11 billion port in the city of Bagamoyo. The Tanzanian government has failed to raise $28 million for its contribution, and it is unclear what share it might get in the project.
  • Sri Lanka: The country’s sold an 80 percent stake in a port in Hambantota to a Chinese state-owned company on December 9 after it failed to repay $1.5 billion borrowed from Beijing to build it. This led to complaints that the deal was too favorable to Beijing.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Covid fallout: US govt job losses are piling up, and it could get worse
2Black Lives Matter protests in Australia, Asia and Europe
3By the numbers: Donald Trump reads economic boom into jobs data