Playing the China Card


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Picture source: http://www.nationmultimedia.com/opinion/Myitsone-Dam-a-new-catalyst-for-reform-in-Burma-30167013.html

The foreclosure of the Hambantota Port in Sri Lanka is a grim reminder of what is the real score in China’s Bridge and Road Initiative (BRI). The country lost control over one of the most important ports to the Chinese after it failed to pay its amortization.  Loans from the Chinese were projected as an alternative to those coming from western-dominated multi-lateral financial institutions like the World Bank (WB) and the Asian Development Bank (ADB). Countries with financing needs who cannot qualify with these traditional financial institutions were enticed to the lenient requirements of the Chinese funds.

However, the other end of the line is filled with one-sided provisions favoring the Chinese lender. High interest rate, use of Chinese instead of local workers, in some cases question in the quality of work and as Sri Lanka experienced, as steep price for defaults.  The loans now look more like a Trojan horse rather than a development tool that will help boost the economy of the recipient country.

Some countries are having second thoughts on the proposed projects to be financed with Chinese funds. In South Asia where China has developed a pool of friendly countries, Pakistan has shelved the $14 billion Diamer-Bhasha Dam, and Nepal following the footsteps of its neighbor also shelved the $2.5 billion Budhi Gandaki Dam. In Southeast Asia, Thailand has renegotiated the $5.2 billion high-speed train system between Bangkok and Nakhon Ratchasima due to provisions considered disadvantageous to the country. The Philippines despite the closeness of the current administration has not finalized any project to be financed by China.

China may be the global leader in production, but it has to prove itself as good financial service provider and diplomat.  Chinese financing and its development programs outside China is now suspect. Politically-isolated countries like North Korea and those kowtowing to Chinese interest like Cambodia finds the funds palatable.

Myanmar was able to veer away from the Chinese influence of its patron as it realigned itself to the global economy after decades of isolation and sanctions. It was able to work out the lifting of sanctions and has attracted foreign direct investments to the country. However, the recent crisis in Rakhine pointed out the fragile partnership between Myanmar and the West.  When hundreds of thousands fled to Bangladesh and reports of death, rape and torture surfaced in the global media, the response of the West was swift. It has withdrawn support to some programs, took back awards given to State Counsellor Daw Aung San Suu Kyi and threaten to impose again sanctions.

Western countries have very low tolerance with the government and has not considered the internal dynamics between the civilian government and the Tatmadaw. The European Chamber of Commerce expressed that some companies were in a wait-and-see attitude in its engagement with Myanmar. This posturing has dented the image of the State Counsellor in the West as an icon of democracy, but in the domestic audience, a substantial part of the population silently approved of what happened.

Feeling the heat, the government sought refuge in the arms of its former patron. The trip of the State Counsellor in China is a subtle message that the country cannot be threatened as it has survived decades of sanction with China’s help. Is Myanmar now moving back to the old order? With more punitive actions from the West, it is a possibility. For now, certain balance has to be attained and appropriate approaches be employed to give the government a leeway to respond to the consequences of the events that led to the crisis, and for the international community to be conscious of the dynamics among the political players in Myanmar.

 

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