Why India should adopt China’s predatory economic tactics in neighbourhood

During his recent three-nation India Ocean Region (IOR) visit closer to the Indian shores, Chinese foreign minister Wang Yi claimed to have floated the idea of creating a new forum for Indian Ocean island-nations, whose development needs, he said, were similar. Needless to say, if such a group is put in place, it will have China’s blessings and funding, purportedly for development projects in member-nations. Yet, it can also be expected to act as a political ginger group against India and also the West, which has contested Beijing’s hegemonic approach on ‘freedom of navigation issues’, though now only in the South China and East China Seas.

During his five-nation New Year tour, which took him also to Eritrea and Kenya, Wang Yi visited Comoros, Maldives and Sri Lanka. According to a Chinese Foreign Ministry statement in Beijing, he had floated the idea of the islands-nation forum in talks with Sri Lankan counterpart GL Peiris. It is not known if he had flagged the proposal while in the Maldives and Comoros. If so, China cannot hide its hand any more, and also does not want to do so. If not, Wang Yi was also proposing to Sri Lanka to take the initiative and lead, to float such a forum.

China’s possible choice of Sri Lanka to execute its intentions is understandable. Just now, Colombo would be more beholden to Beijing than any other in the list, to take the initiative and also put its heart into it. Indications are that the funds for pulling Sri Lanka out of the forex-morass will have to come more from China than the Indian neighbour, which is chipping in, big-time, all the same.

In terms of political logistics too, Sri Lanka is also the largest and more identifiable island-nation in the region. Thanks to a series of political developments nearer home, including the LTTE years, and now the Hambantota deal involving China, the world knows Sri Lanka better than any other in a possible grouping of the kind.

Not the best of times

Clearly, this is not the best of times for Sri Lanka, especially to initiate such an idea, given the forex and economic crisis that the nation is facing just now, and the consequent political instability that some Sri Lankan analysts are now foretelling. Other IOR nations, especially those in the shared Indian neighbourhood, would think a thousand times even for evaluating the concept if it came from China-friendly Sri Lanka just now.

China is also not unaware of it. But Beijing is also quite aware of the near-similar economic situation that small island-nations in the IOR and elsewhere, too, face, especially in this pandemic era. Wang Yi thus seems to have concluded that the idea would remain in the Sri Lankan minds to revive in better times.

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Without hurting Chinese sentiments, and even accepting voluntary Chinese aid in pandemic times, almost every one of them has benefited from India’s ‘neighbourhood grace’ of pandemic-time assistance in every form. They would also know, this is more sustainable than a weird idea of getting everyone together, and keeping them together, and go to Beijing every now and again, with a shared begging-bowl.

The resultant debt trap, of which Sri Lanka alone has individual experience in the form of the Hambantota lease, would also be common to them all, possibly in proportionate terms. If the Sri Lankan past is any experience, the entire exercise has the potential for China to be able to push all IOR island-nations into a debt trap all at once without having to take time off to do so, individually.

Internally, internationally

What China has now proposed is what India’s Ministry of External Affairs (MEA) has been doing for internal management of the nation’s IOR interests and concerns. Through the past decade or so, the MEA has created a separate IOR Division for handling bilateral and multilateral issues with nations of the Indian Ocean Region (IOR) closer to the coast.

The IOR Division is in charge of countries such as the Maldives and Sri Lanka, Mauritius and Seychelles, Comoros, Madagascar and French Reunion, forming the outer periphery, all of them falling closer to Indian mainland or island-territories like the Andaman and Lakshadweep. China now intends to create a similar grouping, not for internal purposes as with India’s MEA, but for floating a new international forum.

Though it does not openly interfere with domestic politics in these countries, as some others, at times including India, clearly, Beijing’s plan is to have China-friendly parties and leaderships in power in each of these nations, if only over time. It would mean a lot in terms of China’s hidden hand in domestic politics in any or many of these nations, including those mentioned but not excluding others like them.

However, the current Sri Lankan experience should also show for communist China, the vagaries of electoral democracy, which is alien to the nation’s political psyche. The Rajapaksas, thanks to the folly of their political rivals, could come back to power so very comfortably. But they are showing how ineffective a leadership they are for giving an effective and efficient government in times of peace, minus the LTTE kind of war and terrorism.

It may be no different picture elsewhere, starting with neighbouring Maldives, where former President Abdulla Yameen, in power from 2013-18, is still believed to be their favourite. Barring future court verdicts that could send him to prison again and thus disqualifying him from contesting the 2023 presidential polls, he is seen, at least by his Opposition PPM-PNC combine as the favourite for 2023. Right now, he is breathing free air after the nation’s Supreme Court acquitted him in a money-laundering case from his days as president.

Predatory practice

The Chinese initiative can be as effective as it is imaginative. Unless New Delhi puts an end to its decades-old practice of piecemeal economic assistance to neighbouring nations and is willing to put in big money for big-ticket projects, the chances are that it would continue to lose out, time and again.

The grandiose projects that China puts on the table, with its own bottom-line alone in mind, blinds host-nations, particularly their political administrators at any given time. Who cares if the projects are really worth the monies borrowed and would be able to bring in the annual returns required to pay back the Chinese debt. Sri Lanka is a prime example. There is a difference. India funded projects provide jobs for the teeming millions in the host-nations, unlike China, which takes away all the monies that it lends, by bringing in all the material and men from its shores.

It also means that New Delhi should be able to apply China’s predatory practices without the kind of moral qualms that nations, especially in the immediate neighbourhood, have identified India with. The alternative would be for the Government of India to treat each of these nations as a Union Territory (UT) requiring tons of money every now and again to keep itself afloat, yet with no real hope of any return on investments — at least until these nations imbibe economic discipline, if only over a period.

That seems to be a far cry, just now, given the pandemic situation. But then, if New Delhi were to wait until after the pandemic had subsided to come up with such ideas, China is not going to wait. It has chosen the right time and mood to float its idea of a new grouping of IOR island-nations. But then, it may have also chosen the wrong leader. Or, is it that Beijing is also aware of the ground situation, where no island-nation is economically better off than the other, and only a few like Sri Lanka get caught in the crosshairs of geopolitics that derives from geo-strategy and gets projected in geo-economic terms?

The writer is Distinguished Fellow and Head-Chennai Initiative, Observer Research Foundation, the multi-disciplinary Indian public-policy think-tank, headquartered in New Delhi. Views expressed are personal.

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