One Belt, One Road (OBOR):American Perspectives

Charles E. MorrisonEast-West Center

10 November 2015

DRAFT, NOT FOR GENERAL DISTRIBUTION

The Belt, Road Initiative combining:Silk Road Economic Belt (land route)

& the 21st Century Maritime Road

These Are Ancient Eurasian Routes

"Transasia trade routes 1stC CE gr2". Licensed under CC BY-SA 3.0 via Commons - https://commons.wikimedia.org/wiki/File:Transasia_trade_routes_1stC_CE_gr2.png#/media/File:Transasia_trade_routes_1stC_CE_gr2.png

Routes in Roman Empire-HanDynasty Period, First Century AD

Features of OBOR

• Coordinating economic development strategies and policies

• Enhancing connectivity• Trade and investment facilitation and removal of

barriers• Deepening financial integration• Financial institutions: Silk Road Fund, AIIB,

BNDB, SCO• People to people exchanges

Eurasian Routes, but Open to All for Participation

Our Belt and Road initiative, our establishment of the Silk Road fund, and our proposal to set up the AIIB, are all aimed at helping the common development of all countries, rather than seeking some kind of spheres of political influence. The Belt and Road initiative is open and inclusive; we welcome participation of the U.S. and other countries, and international organizations.Xi Jinping speech, Seattle, 22 September 2015.

Lack of American Commentary

• Both routes from Asia toward Africa, the Middle East, and Asia, not the Americas.

• Does not seem to directly, negatively impact on significant US security or economic issues.

• The framework is still quite abstract and evolving, so difficult to understand how to engage. Easier to engage clearly laid out business plans and concrete projects.

• For most American business, central Asia is a difficult, distant business environment.

Characteristics of American Commentary

• Tendency to focus on Belt rather the Road• Tendency to focus on China’s domestic

economic and international geopolitical interests, recognizing that China’s interests and engagement in central Asia are centuries-old

• While skeptical of the ability of China to successfully carry through on the initiative, there is interest in how the OBOR may dovetail with US interests in Central and South Asia

Our Understanding of China’s Domestic and Geostrategic Interests

• OBOR represents a “pivot” to the West• Eurasian connectivity is vital for the development of

China’s west (though not without risks)• Project supports China’s infrastructure-related

industries, plagued with over-capacity • May help stabilize central Asia where there is

significant actual or potential radicalism• Increases and diversifies China’s oil and gas imports

(helping to overcome the ‘Malacca dilemma’)

Global Transportation Patterns

Global Rail Map

From presentation by Bert Hofman, World Bank Group, http://www.mappery.com/maps-World-page-4

Eurasia at Night: C Asia Donut Hole

China/Mongolia Population Density

Not Unlike US, Except US Has Two Coasts

US Appreciated Strategic Importance of China’s West in WWII (1944 map)

From the atlas "Look at the World: the Fortune Atlas for World Strategy", pp. 38-39. Copyright 1944 Time Incorporated. Coastal region almost entirely occupied by Japan.

China’s “Malacca Dilemma”

Turkic Languages

Other Central Asian Initiatives

• Eurasia Economic Union (Russia – 2014) To promote the free movement of goods, capital, services and people and provides for common transport, agriculture and energy policies, with provisions for a single currency and greater integration in the future

• EurAsia Initiative (South Korea - 2013) To make Eurasia a continent that is truly “One,” promote creativity, and peace through integrated transport and logistics network, science and technology, and dialogues

• Central Asia Plus Japan Dialogue (Japan - 2004)Cooperation in the areas of agriculture, disaster relief, empowerment of women, anti-drug policies, border control, peaceful resolution of disputes, arms reduction, non-proliferation between 4 Central Asian countries and one observor.

• Connect Central Asia (India - 2012)designed to pursue stronger cooperation with 5 Central Asian nations in politics, security, multilateralism, energy and resources, health, education, culture, people-to-people exchanges and ICT

• New Silk Road Initiative (United States - 2011)

The U.S.-backed “New Silk Road”

• 2011 Hillary Clinton announced the “New Silk Road Initiative”

• Intended to support Afghanistan’s integration into the region, encourage regional projects, and encourage Central-South Asian links

• Major projects include Turkmenistan-Afghanistan-Pakistani-India Pipeline (TAPI) and the Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000)

Problems w/ US-backed NSR

• Under-funded, most money coming from international organizations

• Continuing high level of violence in Afghanistan makes cooperation projects risky

• Central Asian governments leery of cooperation with Afghanistan

• Lack of high-level, consistent US backing, unlike OBOR initiative

Points of Convergence of China-US Security Interests in Central Asia

• Economic development and political stabilization of Pakistan and Afghanistan (discussed below)

• Containing internationally oriented terrorist organizations

• Diversification of economic and geopolitical space for the Central Asian countries

Positive US Commentary on CPEC

• “Some suggest the project [CPEC] will further enhance China’s standing in Asia at America’s expense. But that is perhaps too narrow a view. Both the United States and China share an interest in a stable Pakistan. If China can advance that goal through development programs, the whole region would benefit.” New York Times editorial board, 23 April 2015.

• “We think there’s a great amount of potential complementarity between a China-Pakistan infrastructure corridor and the interests we’ve talked about in South and Central Asia for some time,” said a State Department official. The U.S. and China “have coincident interests in seeing a stable, peaceful and prosperous Pakistan.” Reported in the Wall Street Journal, 16 April 2015.

• “If the corridor proceeds according to plan, it will be in the interest of Pakistan, China and the US as well. We support the corridor,” said USAID-Pakistan Mission Director John Groarke while talking to a group of journalists on Thursday. Reported in The Express Tribune (of Pakistan), 16 October 2015.

Contrasts in US, China Programs in Pakistan

• Most US aid to Pakistan has been military aid.• US more focused on governance and society,

ends up funding capacity-building, while China more focused on visible, concrete projects.

• More conditionality in US aid.• Highly negative Pakistan attitudes toward the

US encourage suspicion of its aid programs.

Differential Treatment of Afghanistan in Silk Road Concepts

• American New Silk Road centered on Afghanistan, while China Silk Road appears to bypass it.

• US route more north-south; China’s more east-west.

• China has been suspicious that US efforts in Afghanistan intended to help “contain” China. US suspicious that China welcomed US being “bogged down” in Afghanistan, and believed China not been sufficiently supportive in international aid for Afghanistan

Recent Political Developments in Relations between China-Afghanistan

• Oct 2014: President Ghani makes first official overseas trip to China. China co-hosted the “Istanbul Process” for the first time.

• Dec 2014: Private talks in London between officials from Afghanistan, China, and US. • Early-mid 2015: China moved toward mediation role, urging Pakistan to bring Taliban to

negotiating table. Xi tells Pakistani parliament that "China will work with Pakistan to advance the reconciliation process and smooth transition in Afghanistan and work together to build a new type of international relations of win-win cooperation."

• July 2015: Pakistani-brokered Murree meeting between Afghan government and at least some elements of the Taliban. China-US observers. (2+1+2)

• Sept 2015: Xi visit to Washington. China-US support an “Afghan led, Afghan owned” reconciliation process, and promote trilateral dialogue. Co-chaired with Afghanistan a high-level event on Afghanistan’s reconstruction and development in NYC along side UNGA.

Points of Convergence in China-US Economic Interests

• US and Chinese emphases are complementary. US (TPP, for example) focuses on rules and regulations that affect trade and investment; China (AIIB, for example) on infrastructure that facilitates the same.

• Economic development of Afghanistan. China is increasingly concerned and involved as investor, aid donor, and mediator.

• Diversified economic opportunities for Central Asian states, once very dependent on Russia

• Economic infrastructure, including railway development • Reduced border barriers to trade, e.g., customs and inspection

requirements. OBOR blueprint regards this as a priority area. (Central Asian economies among least business friendly by World Bank measures).

• But these points of convergence become more apparent with specific activities and projects.

The 21st Century Maritime Road

• These routes are already among the world’s most trafficked sea lanes.

• Substantial investment already occurring, e.g., the recently finished expansion of the Suez Canal, significantly reducing waiting time.

• The compatibility of the Chinese proposal with the hub and spoke pattern of development of modern container traffic is unclear.

• Political issues, including suspicion of Chinese motives, are obstacles. Countries in much of this region, including Vietnam, Indonesia, India will not be accepting Chinese workers. US also tends to be more suspicious.

Concern About Territorial Disputes

Areas of Potential Conflict w/ US

• If OBOR is seen as undermining US, EU, or UN sanctions, relevant for:– North Korea, nonproliferation – Iran, nonproliferation– Russia, aggression

• If OBOR seems to restrict rather than open economic and political space for central Asian economies

US Sanctioned Countries (or firms and individuals within countries)

Wikimedia

Connecting the South Korean “island”

Korea’s Eurasia Initiative

• Connecting Korea to Europe through new routes (trans-Siberia, Arctic, silk road) has been a long-standing Korean interest

• Even more than China, Korea is dependent on energy supplies through Strait of Malacca

• Connecting the rail links is often seen in Seoul as a step toward inter-Korean cooperation, reconciliation, and unification

• Linking Eurasia Initiative/Trans-Korea Railway with OBOR is economically logical (potentially as much as 30% reduced shipping costs for some items)

• North Korea’s nuclear program remains a priority for the US and international community