The Tug of War Between BRI & FOIP and its Economic Implications on Bangladesh

ABSTRACT

Belt and Road Initiative has been one of the master strokes of the Chinese President Xi Jinping since he joined the office in 2013. This project aims to connect Europe, Asia and Africa. The progressive approaches of the project is also visible in many countries. However, the success of BRI is not without any potential threat. The Trump Administration in 2017, came out with a new strategic policy known as Free and Open Indo Pacific, which is commonly known as Indo- Pacific Strategy. This paper aims to elucidate the over achieving infrastructure projects initiated by the BRI and whether US proposed FOIP is being considered an alternative to that in tackling the rising China. The main argument of the paper, however will be to show that whether in this tug of war there would be any economic implications on Bangladesh. The context of Bangladesh is being raised because Bangladesh, although, over the years having a growing economic growth, but still has poor Infrastructure. It aims to become a middle-income country soon and wants to get involved in more trade and strengthen its infrastructure. China has already being highly involved in fulfilling these aims of Bangladesh through its BRI. Nevertheless, recently, US also has considered the broader part Bangladesh might be playing in its Indo-Pacific Strategy.

INTRODUCTION

Belt and Road Initiative has been one of the major stroke initiated by President Xi Jinping, since 2013. Through this grand strategy, the President aims to connect Asia, Africa and Europe. President claims that the BRI strategy will not only benefit China alone but all the countries involved in the projects undertaken by BRI. It focuses on regional as well as global connectivity of trade and development. BRI had been one such project solely discussed over the years about its various political and economic implications. However, under the President Donald Trump administration Free and Open Strategy (FOIP), also known as Indo-Pacific Strategy had been reinforced on. The concern that has been raised now is whether FOIP is reaction to the extensive success of BRI. This estimation is due to the sore relation between United States and China. The tug of war between the two countries might also affect the other countries getting involved in the project.

Bangladesh, due to its geographic position has become one of the hot spots for both China and USA. BRI has already engaged Bangladesh in various infrastructure projects. As Bangladesh is a developing country, soon to be graduating as a middle income country, it requires funds and assistance. The tug of war which is about to begin between China and USA regarding their hegemonic power and having control over the resources might eventually make the other countries involved face dilemma. The same situation applies in the case of Bangladesh as well. The concern, however, is whether this battle of powers might have economic implications on Bangladesh and who will Bangladesh align with in order to tackle the dilemma it might be soon facing.

 

THE THEORETICAL LENS

Belt and Road Initiative might have been a Xi Jinping strategy to connect the global trade and to strengthen infrastructure, and investment links between China and some 65 other countries that account collectively for over 30 percent of global GDP, 62 percent of population, and 75 percent of known energy reserves. Nevertheless, it might have created a security dilemma for the United States, the flag bearer of world responsibility, from development to ensuring global security and enhancing liberal values. The result of such insecurity could be the formation of the Indo- Pacific Strategy, in order to tackle a Chinese hegemony. The US President Donald Trump had initiated a strategy combining India, Japan and Australia. This situation clearly depicts the realist perspective of International Relations. Thucydides Trap would be the appropriate term in understanding the dilemma that might have arisen in US regarding the extensive growth in the Chinese economy and its steps towards getting and becoming the hegemon. The ‘China Threat’ has led US to reinforce towards ‘China Containment strategy’, a perception which seemed more relevant when the Trump administration waged a trade war with China. The reason other countries, notably, Japan, India and Australia might be interested in aligning with the Indo-Pacific Strategy is because they rely on Chinese trade or are vulnerable to coerce Chinese economic statecraft. They must balance and align with other power in order to placate China. Amongst the South Asian countries, Bangladesh is also of great significance because of its geostrategic location which is situated right above the Indian Ocean. China with its BRI has been initiating projects surrounding Indian Ocean. Whereas on the other hand, India feeling threatened and in order to tackle China in the region, has been trying to align with other powers, notably, the US in its Indo-Pacific strategy. Thus, Bangladesh could be facing a dilemma where both the precedents of BRI and FOIP will be needing Bangladesh to have a significant control over the Indian Ocean. Given that, Bangladesh currently is a part of Belt and Road Initiative from where it expects to be more regionally strong with enhance its economic growth. Indo-Pacific Strategy has also many things to offer to Bangladesh. Thus, it could be said that Bangladesh is swinging between this so-called tug of war between China and US under their respective strategy projects like BRI and Indo-Pacific. However, on which way Bangladesh may align will depend on its own national interest. Hence, again realism plays a key role in this spectrum. In the contrary, it could also be argued that according to Gowher Rizvi Bangladesh has always avoided taking sides, in line with its main Foreign Policy dictum, ‘Friendship to all, malice to none’.

 

Read More: Seeking Stability over the Fault Line of Palestine

 

TUG OF WAR BETWEEN BRI AND FOIP

Belt and Road Initiative has been one of the major projects undertaken by Xi Jinping since the day he joined the office in 2013. Through this project, the Chinese president aims to widen the Chinese economy and be a global leader. BRI would connect, Asia, Africa and Europe. This project will cost more than $1tn (£760bn), although there are differing estimates as to how much money had been spent till date. According to one analysis, China had already invested more than $210bn in Asia. Ever since BRI had been enshrined in the Chinese Communist Constitution, it had been more seriously undertaken by Xi. Speeding up the process of the projects and with a strong aim to complete the projects in whatever length of time that he needs. Belt and Road initiative entails to cover five major areas, such as; policy coordination, infrastructure connectivity, unimpeded trade, financial integration and connecting people. The Chinese initiative has proved to connect and seeks to socialize regional countries by developing shared beliefs and norms that will build the ‘community of shared destiny’ of the Sino-centric regional order. Moreover, a gap that has been created by the Trump administration by becoming isolationist, protectionist, unilateralist and anti-globalist had provided Xi’s China with a unique opportunity in playing a leading role in the world affairs. This eventually had provided Xi Jinping to form a foundation, where he wanted to represent China or more precisely himself as a responsible and global citizen that champions’ globalization, free trade, open economy and multilateralism and that can provide solutions to the world’s woes.  which he had been trying over the years has over these years tried to form a foundation where he presented China or more precisely, himself as a responsible and capable global citizen that champions’ globalization, free trade, open economy and multilateralism and that can provide solutions to the world’s woes.

In accordance with the BRI, many have been predicting that Indo-Pacific Strategy is a response to the China led initiative. This is thought to have been highly contentious at this moment in order to balance against China. The Quad is in full action, where United States under Donald Trump had rejuvenated the Obama’s Asia-Pacific rebalancing strategy. The quest over the Indian Ocean has been intensifying. India being already present in the South Asian region and also due to its economic rise, has become a leader among the emerging nations. Thus, US is keener to align with India in order to balance the power of China over the Indian Ocean region. The main purpose, which predicted by many Chinese scholars and foreign policy analysts is that through this Indo-Pacific Strategy, US along with the quad, aims to contain China’s rise and safeguard US leadership in the region. The other quad members also have distinctive aims and foresights which they aim to fulfill through the Indo-Pacific Strategy. Firstly, Japan has its own insecurities as an island nation. It fears North Korea in the region as well as the rise of China in both economy and military strength has somewhat made Japan uniting with India and the United States. Secondly, India can take this opportunity to be a part of Indo-Pacific Strategy and to promote the justification and rationalization of its interests in Southeast Asia, expand its presence in East Asia, strengthen its political, economic and military cooperation with the United States and its allies, and comprehensively increase India’s influence in International affairs. Lastly, Australia actively wants to be a part of the Indo-Pacific Strategy, promoted by the United States as it wants to enhance US-Australia trade relations, and at the same time to improve its presence and scope of interest in Southeast Asia.

 

ECONOMIC IMPLICATIONS ON BANGLADESH

The tug of war is not only between the United States and China, but also the other countries involved in the BRI and FOIP strategy projects. Bangladesh is no different, as it is already a part of China proposed project BRI and might also get involved with the US based Indo-Pacific project. This, however, raises the concern that whether this tug of war will have any economic implications on Bangladesh.

Shahidul Haque, Foreign Secretary of Bangladesh, reaffirmed in 2017 that Bangladesh desired to join the Belt and Road initiative, at the World Economic Forum in New Delhi. He further stated that his country needed to be better connected to the rest of the world. Given that the government of Bangladesh recognizes that this project could have an impact on its sovereignty, but the fact that could also not be denied that greater the regional integration, more the prosperity for its people. Bangladesh occupies a significant strategic position on the 21^st century Maritime Silk Road along with its bustling port of Chittagong as a major maritime hub through the Indian Ocean. Additionally, Bangladesh is also centrally situated along the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor. Considering these factors BRI had incorporated Bangladesh in its projects in 2016. This clearly reflects, the importance Bangladesh is ought to get from BRI due to its geostrategic location. Similarly, as far as the interest of Bangladesh is concerned, it could also be stated that Bangladesh is striving to become one of the middle income countries, therefore, more infrastructural development required as well as an increase in its exports. In this case, BRI is a lucrative project for Bangladesh to be involved in as two of its major components are considered, infrastructural growth and boosting exports. In accordance with it, BRI supports the notion that without adequate infrastructural growth, it is impossible to boost exports. Thus, in this case, BRI surely is a blessing for Bangladesh as it requires more than US$24 billion in infrastructure spending every year to become a Middle Income Country (MIC).  In addition to that BRI would also help Bangladesh to explore alternative markets for its export goods as it will establish more connectivity among Asian nations.

In contrary to the BRI projects, Ambassador Earl R Miller of US Embassy in Bangladesh shared the perspectives on the significant areas of Indo-Pacific Strategy, economy, security and governance. He affirmed that the Indo-Pacific Strategy would provide a wide range of opportunities for Bangladesh in order to protect and enhance a rules-based order. He added, that in the Indo-Pacific, there would be respect for principles such as peaceful resolution of disputes, freedom of navigation, an open and transparent investment environment and responsible governing institutions. Bangladesh shares many of these goals of building a more prosperous and secure interconnected region, and with its strategic location and fast-growing economy the country has all the propensity to achieve them all. Ambassador further claimed that US conducted USD 1.8 trillion in two-way trade with the Indo-Pacific in 2017 and the value of direct US investment in the region reached USD 940 billion. Furthermore, US has new initiatives under the Indo-Pacific vision to include in July USD 113 million to expand partnership with the private sector in the areas of energy, digital economy and infrastructure.

 

ANALYSIS

The tug of war as that has been predicted seemed to be in fact real. BRI had already its projects undergoing in many countries with enormous infrastructure investments, it is about roads, ports, bridges, fiber optic network, satellites, digital network, and so on. There is also huge implications from AIIB which has become an alternative to the World Bank. Notwithstanding, a significant number of the issues that is creating nations requirement for infrastructural interest in the Asian region and China had very gracefully ventured in by BRI. On the other hand, Indo-Pacific is a work in advancement. It would be wrong to say that Asian countries are only venturing in BRI, rather Asian countries like Japan and India are aligning with US in FOIP project. Although, similar initiatives like Indo- Pacific had been discussed by the former U.S President Barack Obama but the dimension given by the Trump Administration is new. The main argument lies here is how Bangladesh will face an economic implication if the tug of war intensifies. Bangladesh might face a dilemma because Bangladesh as referred in the paper, is setting forth to become a middle income country soon, hence, with such prospects it must get involved in the infrastructure development and growth in exports to have an economic growth of 7.5-8% every fiscal year. Bangladesh, in accordance with its foreign policy dictum does not want to get sided with either of the strategies. This is due to the fact that, as not being a bigger state it cannot pose any whimsical challenge to any of the strategies. Hence, it might do a cost-benefit analysis and a balanced decision. Ever since, BRI got involved with Bangladesh in 2016, it had made extensive promises to help Bangladesh. In accordance with that the current Chinese infrastructure projects worth US$10 billion in Bangladesh include the 6.5-kilometer-long Padma Bridge and an industrial park approximately 3 square kilometers in area. China also aims to relocate its labor intensive industries in Bangladesh as its population is aging.  In addition to that, Bangladesh offers a huge garment-industry labor force at a minimum cost, the importance of Bangladesh for offshore Chinese investment is growing. Thus, it proves to be beneficial for Bangladesh in all aspects. Additionally, BRI projects had imposed another notion that due to the isolationist and America first policies of Donald Trump, America might no longer strive to be responsible for maintaining the world order. Hence, more power leverage comes automatically to China with Xi’s aim of establishing a rule based order. However, things might take a whimsical change considering the policies the newly elected president Joe Biden might be taking when he begins his office in 2021.

Contrary to the prospects heightened by BRI, Indo-Pacific strategy highlights some alternative key areas, which Bangladesh must also take into consideration. China often makes countries getting entangled into a Debt Trap. Infrastructural projects are initiated through loans but not grants. Later, when the countries fail to pay back the loan, they automatically gets trapped into a debt and need to surrender the whole of project to China. This clearly entails a loss of sovereignty. Hambantota Port of Sri Lanka is now owned by China as the former failed to pay back the loan. Given that, Bangladesh has been really proactive in such matters and has taken such matters into consideration. This might be the reason that Prime Minister Sheikh Hasina has formally cancelled the project at a cabinet meeting in late August 2020. This must also be stated that Indo-Pacific Strategy is not only confined around trade but also to establish liberal values. It aims to safeguard democracy and establish rule-based order in the Asia-Pacific region, which seems at risk in Bangladesh. Indo-Pacific Strategy also aims to make Bangladesh accustomed with tolerance, good governance, transparency and also fighting extremism which has taken a hold in Bangladesh over the years, whereas BRI still lags behind in establishing such values.

 

CONCLUSION

In conclusion it could be stated that Bangladesh surely is going to face some economic implications if the tug of war intensifies, because the already escalated trade war between US and China has made both the countries vulnerable to the other. Although it is still to be seen how the Biden Administration is going to deal with this issue compared to the Trump Administration.  Similarly, it is hard to say how dire the economic implications will be for Bangladesh, this is because FOIP is yet to engage in overseas projects like BRI. Although FOIP is still on its initial stage of planning and incorporating projects, but it does proposes to promote and fulfill more of liberal values, which BRI clearly lacks. FOIP believes in the notion of a strong foundation, because if there is weak base with inadequate liberal values, then growth over that weak foundation is less likely to sustain. In addition to that, FOIP has also pointed out the debt trap Bangladesh might get into if it gets too involved with the projects proposed by BRI. Hence, FOIP might not have still made major economic implications to Bangladesh but it has surely pointed out some setbacks of BRI, encouraging Bangladesh to associate with FOIP instead. As far as the dilemma of Bangladesh is concerned, regarding aligning with either BRI or FOIP, it seems Bangladesh is in a much more balanced position. This is because, insight of the current context Bangladesh has played quite a balanced role in the International spectrum. Bangladesh, rather than aligning and entangling in the war between BRI and FOIP, has made decisions in favor of its national interest. This is because Bangladesh has not completely denied all the BRI proposed projects. For instance, Bangladesh has denied the Sonadia port project but had agreed with the Padma Bridge Project proposed by BRI, because according to Bangladesh perspective, Padma Bridge project is more like an economic pie rather than a debt trap. Lastly, it could be said, the geographic location of Bangladesh has given it a strong leverage over its decision making, it might not need to choose between BRI or FOIP , rather it could be a part of both and benefit itself and fulfil its national interest.

 

Writer

Farhat Zaman

Masters Graduate, Department of International Relations,

Bangladesh University of Professionals

 

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