2 years ago

Geopolitics of foreign aid

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Western countries often accuse China of pursuing 'debt-trap diplomacy', especially with regard to low and middle-income nations. Originally coined by the Indian academic Brahma Chellany in early 2017, 'debt-trap diplomacy' describes a situation where a lending country attempts to lure a borrowing nation into taking loans in order to boost its influence and enhance leverage over that particular country. The terminology is often used against China by the Westerners and their allies, as they tend to view this as a pressure-tactic over developing nations with the goal of advancing China's geo-strategic interests. In support of this claim, they point out that China has by now become one of the largest creditors to low-income countries, and her outstanding debt claims on the rest of the world has shot up from USD 1.6 trillion in 2006 to USD 5.6 trillion by mid-2020.

In fact, China has been extending huge amounts of loans on easy terms to the developing states, mainly for constructing infrastructures like highways, railways, sea-ports, power-generation, mineral extraction, etc. under its belt and road initiative or BRI (previously known as one belt one road or OBOR) covering 70 nations since 2013. This liberal investment credit offered by China has become very popular among the recipient countries as it has proved to be an attractive alternative to development assistance offered by West-dominated multilateral agencies like the World Bank Group and ADB. It also appears to have become an effective Chinese tool for addressing the massive geo-political dominance of the USA and its Western allies. Therefore, the propaganda of 'Chinese debt-trap' is now being waged by the Western alliance as a component of its global geopolitical strategy.

Of late, the China-Pakistan Economic Corridor (CPEC) and the Gwadar Deep Seaport in Pakistan, Hambantota Deep Seaport and ColomboChineseCity in Sri Lanka, China-MaldivesFriendshipBridge across the sea in Maldives, and Kyaukpyu Deep-sea Port plus oil-gas pipeline in Myanmar are being cited in this propaganda war by the West. The word 'trap' is being applied as Sri Lanka was forced to sanction a 99-year lease of HambantotaPort to China after failing to raise its utilisation rate to the required level. Similarly, it has also not been possible to substantially enhance the use of GwadarPort in Pakistan, and the optimism of a rapid surge in industrialisation around the CPEC Highway is yet to materialise.

Of late, there has been some propaganda mainly in the Indian media claiming Bangladesh was also getting trapped by Chinese debt, although there is no such indication till now. Apparently, this publicity campaign has been waged to subvert the implementation of Teesta river water management project with Chinese assistance, the feasibility study of which was done by China after getting request from Bangladesh. Earlier, the Bangladesh Government shelved the Ganges Barrage Project in 2017 despite it's having enormous potential for socio-economic benefits to the country as shown by various studies, apparently due to Indian pressure.

In contrast to Chinese loans, the conditions incorporated in Indian 'line of credit' are considered to be much worse by most experts. This is because the Indian loans are tied-aid with preconditions of hiring contractors or consultants and bringing tools, equipment and materials from India. Many such projects have already been victims of callousness shown by the Indian contractors and consultants, as exemplified by the Rampal coal-fired power project. Luckily, the Bangladeshgovernment had the guts to reject the Chittagong bay-terminal project under suppliers' credit from India, as that would not have served the country's interest. 

It may be recalled that India decided to opt out of the BCIM (Bangladesh-China-India-Myanmar) economic corridor agreement after the BJP government came to power in 2014, although the previous Congress government had signed it (also known as 'Kunming Initiative') in 2006. Under that agreement, plan was made to establish communication network from Kunming of China to Kolkata of India via the Indian north-eastern states and Sylhet cum Dhaka of Bangladesh. Even the PadmaBridge was a component of that initiative, and it was China who offered help when the World Bank withdrew from its commitment to finance that bridge. Consequently, terming Chinese technical assistance for PadmaBridge as 'debt-trap' is absolutely non-sense as no Chinese loans are involved here.

Plans were also adopted under the Kunming Initiative to construct a deep seaport at Sonadiaisland of Cox's Bazaar and establish road cum railway linkage with Kunming by setting up Chattogram-Cox's Bazaar-Ghumdhum railway line. Bangladesh had even requested China in 2012 to finance the construction of the Sonadia deep seaport. But as a follow-up, just when everything was readied for signing the MOU between the two countries during Bangladesh prime minister's visit to China in 2014, the country abruptly stepped back apparently due to Indian pressure.

Speaking of debt-trap, one can cite the example of the Rooppur nuclear power plant being constructed with Russian credit worth USD 12 billion. With a financial outlay of Taka 113.92 billion that would produce only 2,400 megawatt of electricity, this project cannot be termed as feasible by any standard. There were many alternative technologies through which the same amount of electricity could be generated at less than half the cost by ensuring much better safety. Building a hazardous nuclear power plant in the middle of one of the most densely populated countries of the world like Bangladesh just because foreign loan was available can never be justified.

Similarly, another unnecessary project is the upcoming Second Bangabandhu Satellite project, as media reports indicate the capacity of even the First Bangabandhu Satellite could not be utilised yet. Consequently, this second in the series lacks any justification whatsoever. The construction of the Rampal power plant by imperilling the mangrove forest Sundarban in the coastal belt of Bangladesh can also not be supported on any ground, especially when the current power-related problem is not about generation, but about distribution. All these unwise projects may in fact propel Bangladesh towards a dreaded debt-trap that has been successfully averted till now.


Dr Helal Uddin Ahmed is a retired Additional Secretary and former Editor of Bangladesh Quarterly. Email: [email protected]

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