Wednesday, June 14, 2017

Blood on the tracks of the New Silk Roads



China's COSCO shipping has suspended services to Qatar after several Arab countries severed diplomatic ties with the Gulf state. Photo: Reuters


Qatar chaos sends ripples of economic anxiety across the region

By PEPE ESCOBARJUNE 14, 2017 6:05 PM (UTC+8)2474

China’s cardinal foreign policy imperative is to refrain from interfering abroad while advancing the proverbial good relations with key political actors – even when they may be at each other’s throats.

Still, it’s nothing but gut-wrenching for Beijing to watch the current, unpredictable, Saudi-Qatari standoff. There’s no endgame in sight, as plausible scenarios include even regime change and a seismic geopolitical shift in Southwest Asia – what a Western-centric view calls the Middle East.


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And blood on the tracks in Southwest Asia cannot but translate into major trouble ahead for the New Silk Roads, now rebranded Belt and Road Initiative (BRI).

When he said, on the record, “I decided … the time had come to call on Qatar to end its funding [of terrorism]”, President Trump essentially took credit for the Saudi/UAE-orchestrated excommunication of Doha, the aftermath of his now notorious sword dance in Riyadh.

US President Donald Trump and Saudi Arabia’s King Salman bin Abdulaziz Al Saud attend the Arab Islamic American Summit in Riyadh, Saudi Arabia May 21, 2017. Photo: Reuters

Trump’s senior staff though maintains that Qatar never came up in discussions with the Saudis. Secretary of State Rex Tillerson, former Exxon-Mobil CEO and a certified old Middle East hand, has done his best to defuse the drama – conscious there would be no reason for Qatar to continue hosting Al Udeid Air Base and Centcom to a hostile superpower.

Meanwhile, Russia – the Beltway’s favorite evil entity – is getting closer and closer to Qatar, ever since the game-changing acquisition in early December by the Qatar Investment Authority (QIA) of 19.5% of the crown energy giant Rosneft.

That translates into an economic/political alliance of the world’s top two gas exporters; and that explains why Doha – still holding a permanent office at NATO’s HQ – has abruptly thrown its “moderate rebels” in Syria under the (economic) bus.

Russia and China are bound by a complex, multi-vector strategic partnership. Beijing, privileging economic interests, takes a pragmatic view and is never inclined to play a political role. As the world’s biggest manufacturer and exporter, Beijing’s motto is crystal clear: Make Trade, Not War.

But what if Southwest Asia is mired in the foreseeable future in a permanent pre-war footing?

China and BRI’s best pal Iran

China is Qatar’s top trading partner. Beijing was actively negotiating a free trade agreement with the Gulf Cooperation Council (GCC) before the current standoff. Moving forward, a possible scenario is Qatar even pulling out of the GCC.

Qatar is also China’s second-largest source of liquefied natural gas (LNG), while Saudi Arabia is China’s third-largest source of oil. Since 2010 China is ahead of the US as the biggest exporter to Southwest Asia while solidifying its position as the top importer of Southwest Asia energy.

When King Salman recently visited Beijing, the House of Saud ecstatically spun a “Sino-Saudi strategic partnership” based on the signing of deals worth $65 billion. The partnership, in fact, hinges on a five-year Saudi Arabia-China security cooperation agreement that includes counter-terrorism and joint military drills. Much will have to do with keeping the profitable Red Sea-Gulf of Aden corridor free of political turmoil.

Of course, eyebrows may be raised over the fact that Saudi Arabia’s Wahhabism is the ideological matrix of Salafi-jihadism threatening not only Southwest Asia and the West but also China itself.

The New Silk Roads/BRI imply a key role for the GCC – in a mutual investment, trademark Chinese “win-win” way. In an ideal world, the Saudi “Vision 2030” modernizing plan breathlessly being sold by Warrior Prince Mohammed Bin Salman (MBS) could, in theory, even reign in the appeal of Salafi-jihadism of the Daesh variety all across Southwest Asia.

What the Iranophobic MBS seems not to understand is that Beijing actually privileges its BRI-based economic relationship with Tehran.

Early last year, when President Xi Jinping visited Tehran, he and President Rouhani pledged to raise Chinese-Iranian bilateral trade to a whopping $600 billion in 10 years, most of it related to BRI expansion.

Iranian President Hassan Rouhani meets with Chinese President Xi Jinping in Tehran, Iran January 23, 2016. Photo: Reuters

China and Iran have been doing serious business. For over a year now, direct China-Iran cargo trains have been crossing Central Asia in only 12 days. That’s just the appetizer for high-speed rail connectivity spanning the arc from China to Turkey via Iran in the early 2020s.

And in a (distant?) future, a pacified Syria will also be configured as a BRI node; before the war, Syrian merchants were a top fixture in the trading-in-small-goods Silk Road running from the Levant to Yiwu in eastern China.

BRI does Turkey, Egypt and Israel

China’s Maritime Silk Road is not about a threatening “string of pearls” – but mostly about port infrastructure, built by Chinese companies, configuring key BRI stops from the Indian Ocean via the Red Sea and Suez all the way to Piraeus port in the Greek Mediterranean. Piraeus is owned and operated by China’s COSCO since August 2016; this upgraded, modern container hub for trade between East Asia and the West is already the fastest-growing port in Europe.

For his part, Turkey’s President Recep Tayyip Erdogan has already made it clear that Turkey’s national interests involve “the Suez Canal, the adjacent seas, and from there extending to the Indian Ocean.” As much as Ankara has set up a base in Qatar – with soldiers now flowing in – it has also established a Turkish-Saudi Strategic Cooperation Council.

Ankara may have been slowly and surely engaged in a strategic pivoting to Russia – as in the go-ahead for Turkish Stream. Yet that also qualifies as a pivot to China – expected to develop, bumps included, in all key areas, from membership of the Asia Infrastructure Investment Bank (AIIB) to membership of the Shanghai Cooperation Organization (SCO).

Both Turkey and Iran – a possible full member of the SCO as early as next year – are actively supporting Qatar in the current standoff, including via regular food shipments. That shows once again how Beijing simply cannot allow itself to be dragged politically into what is essentially the vicious, intractable Iran-Saudi regional power war. Once again; BRI trumps everything.

Egypt poses an extra problem. It aligns with Riyadh in the current standoff; after all Field Marshall President Al-Sisi depends on the House of Saud “largesse”.

In Egypt, the new Singapore-sized capital east of Cairo is essentially being financed by Chinese investment; $35 billion by the end of last year, and counting. Extra bonuses include Beijing facilitating currency swap deals – providing a much-needed boost to the Egyptian economy. Ahmed Darwish, chairman of the Suez Canal Economic Zone, has nothing but praise to the top investor in the Suez Canal Corridor, which happens to be Beijing.

And then there’s the budding Israeli-Chinese connection. Israel backs the Saudi-UAE anti-Qatar blitzkrieg essentially as yet another proxy war front against Iran.

China is bidding to build the Red-Med high-speed rail connecting the Red Sea to the Mediterranean. If the proverbial sea of containers can be accommodated near Eilat, the Chinese will be able to transship cargo via the Red-Med railway directly to Piraeus – an alternative route adding to the already Chinese-involved Suez Canal Corridor.

A Qatari-flagged LNG tanker crosses through the Suez Canal. Photo: Reuters

Connectivity is frantic on all fronts. Shanghai International Port Group is running Haifa port. China Harbor Engineering will build a new $876 million port in Ashdod. Israel is already China’s top supplier of advanced agricultural technology – as in water desalination, aquaculture and cattle farming, for instance. Beijing wants more biomedical, clean energy and telecom technology Israeli imports. And the clincher is Israel’s imminent membership of the AIIB.

It’s fair to argue that from now on everything that happens across Southwest Asia will be conditioned by, and interlocked with, BRI’s land-sea superhighway emporium from East Asia and Southeast Asia to southeastern Europe.

Focused on BRI’s comprehensive drive for multipolarization, “inclusive” globalization 2.0, and the rapid spread of information technology, the last thing Beijing needs is a throwback to the past; a foolish, manufactured standoff as the new front in an existential proxy war between the House of Saud and Iran, and with Saudi Arabia, the UAE, Egypt and Israel pitted against Qatar, Turkey, Iran – and Russia.

Talk about sleepless nights in the Zhongnanhai these days

Iran, China Team Up on New Silk Road Project
Wednesday, June 14, 2017

Saeed Jalili



Domestic Economy Desk

The 926-km railroad linking the capital Tehran to the eastern religious tourism hub of Mashhad is part of China's New Silk Road initiative named "One Belt, One Road", which will cut short a long journey for Iranian passengers and cargo.

“All obstacles to the implementation of the project have been removed and, next week, operations for the electrification of Tehran-Mashhad line will begin,” deputy for Islamic Republic of Iran Railways, Maziar Yazdani, said.

“Previously we had signed a contract regarding the financing of the project–a $1.6 billion cheap loan,” he was quoted as saying by ILNA in a press conference.

China National Machinery Import and Export Corporation, known as CMC, is in charge of the railroad's electrification.

Asghar Fakhrieh-Kashan, deputy minister of roads and urban development, who oversees Iranian firms’ talks with international businesses, said last month Iran had finalized a €2.2 billion deal with the Chinese company in this regard.

Speaking to Financial Tribune on Wednesday, Fakhrieh-Kashan stressed that the final financial documents have not yet been signed, though he stressed that construction work will likely be started by either the Chinese company or its Iranian partner MAPNA Group.

He said the official financial deal is expected to be signed late June or early July.

Two-thirds of the contract are financed by the Chinese government and the rest is covered by Chinese insurer China Export and Credit Insurance Corporation Sinosure.

Iran resolved issues with government guarantees during the Iranian Economy Minister Ali Tayyebnia’s visit to China last month to represent Iran in the New Silk Road summit. He met with senior Chinese officials, including his counterpart Xiao Jie and Chairman of China Banking Regulatory Commission Guo Shuqing.

The route, which will be a strand of China’s New Silk Road, was proposed by He Huawu, the chief engineer of China Railway Corporation, in late 2015. The idea came just before the sanctions imposed on Iran over its nuclear program were lifted in January 2016, as part a deal Tehran clinched with world powers months earlier.

The proposed 3,200-kilometer New Silk Road rail link would begin in Urumqi, the capital of China's western Xinjiang Province and end in the Iranian capital. It connects Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way, according to China’s state-owned paper China Daily.

From there, it would join Iran’s east-west network leading to Turkey and eastern Europe. It could also open a way to Europe via a developing rail route from southern Iranian ports to Azerbaijan and Europe.

The Belt and Road initiative, put forward in October 2013 by Chinese President Xi Jinping, includes several corridors through land and sea, including the New Silk Road rail route.

The route would become a tailwind for transport of goods and energy between Iran and China, which have set a long-term bilateral trade target of $600 billion/year.

For Iran, the electrification of Tehran-Mashhad line is part of its wider rail development plans. Its vision plan stipulates the electrification of all railroads by 2025. But the country is also aware of its capacity regarding global transport and logistics.

In a meeting with his Chinese counterpart in China last month, Tayyebnia said, “Iran’s position in Xi Jinping’s innovative plan to revive the New Silk Road is spectacular and ideal. Therefore, we intend to play an effective role in its implementation.”

He noted that Iran has been a part of the ancient Silk Road—a route contributing for centuries to trade and cultural exchange—stretching from Japan to the Mediterranean Sea and intends to have a more important part in the new plan.

"The Chinese company will start operations with a 138-km railroad connecting Mashhad to the city of Neyshabour," Yazdani said, adding that the traffic on the line will not be interrupted while construction proceeds.

The project is expected to be completed in four years.

The Tehran-Mashhad line is double-tracked and both tracks will be electrified as part of the deal with the Chinese company. This will raise the speed of the line from the current 160 kph to 200 kph, reducing the duration of a trip between the two cities significantly.

A subsidiary of China General Technology Group, CMC is an international engineering contractor in transportation infrastructure, industrial facilities and power plants.

In 2014, the company built the Ankara-Istanbul high-speed railroad, together with China Railway Construction Corporation Limited and Turkish companies.

MAPNA Holding signed a preliminary deal in October 2016 with Germany’s Siemens for the joint manufacture of 70 electric locomotives to be used on the Tehran-Mashhad route

Silk Road in the air' links to Luxembourg

'By Zhang Yunbi | China Daily | Updated: 2017-06-15 07:07

China supports building a Silk Road in the air between Luxembourg and Zhengzhou, capital of Henan province, President Xi Jinping said on Wednesday.

The two countries should deepen cooperation in finance and production capacity within the framework of building the Belt and Road, Xi said when meeting with visiting Luxembourg Prime Minister Xavier Bettel in Beijing on Wednesday

The airfreight industry has been a highlight of Bettel's official visit to China, which started on Sunday. His country already serves as a key partner of China for financial services in Europe.

Observers said there is huge potential for cooperation in air transportation when countries, particularly European countries, are helping build the Belt and Road with China.

On Monday, Bettel and Premier Li Keqiang witnessed the signing of a joint investment deal involving airline freight shipping companies from Luxembourg and Henan province.

Xi said the two countries should nurture new highlights of cooperation, including shipping by air, high and leading technologies, and green economy to achieve greater mutual benefits.

Also, the two countries should strengthen exchanges in culture, education and sports and facilitate travel, Xi said.

Bettel said the two countries have strong economic complementarity, and his country is ready to expand cooperation in areas including finance, investment, science and technology, tourism and cultural exchanges. Luxembourg is also ready to boost cooperation within the framework of the Belt and Road Initiative, he said.

On Tuesday, Bettel visited the Zhengzhou airport. Zhengzhou has seen booming cooperation with Luxembourg in sectors including tourism, air transportation and railway shipping.

Since airfreight operations between the two started in 2014, shipments to and from Luxembourg have accounted for nearly a fourth of Zhengzhou airport's total cargo shipments, according to the Henan Daily newspaper.

Wang Yiwei, professor at the School of International Studies of Renmin University of China, said China's support for the Silk Road in the air "showcases Luxembourg's ambition, foresight and quick action to grasp the new opportunities".

"Both Luxembourg and Zhengzhou are key hubs that link the airways and railways meeting there, and such great infrastructure is ideal for building a Silk Road in the air," Wang said.

The Silk Road in the air also will boost the development of Central China, Wang added

Exclusive: How Doval drafted "Balochistan plot" to make China bow down to India

The truth is that, although Ajit Doval has not been able to control the situation in Kashmir so far, his policy regarding the Balochistan is certainly been successful in increasing pressure on China

14 June 04:44 2017

Deepak Sharma


New Delhi, June 14: National Security Adviser Ajit Doval has given a tremendous response to the "conspiracy" through which China had been trying to weaken India taking help of its rapidly growing strength. Doval's aggressive strategy towards Balochistan has compelled China to bow to India. Embroiled in this new master plan of Doval, China's President Xi Jinping was forced to embrace Prime Minister Narendra Modi.

Doval grabbed China's sore throat

The truth is that for the past few years, China was making an indirect challenge to India by increasing its penetration within Pakistan rapidly. After India's opposition, China took out its mega project "Silk Route" Highway, deliberately from Pakistan Occupied Kashmir. China was increasing its pressure when Doval took a new stance in Balochistan and caught the sore throat of China. This is the reason behind China's changed attitude in the recent Kazakhstan summit, in which President Xi Jinping gave more importance to Modi than its old friend Nawaz Sharif.

China embroiled in the mass protests in Balochistan

According to a report in the Pentagon, the Silk Route that goes from Pakistan to China, also known as 'China-Pakistan Economic Corridor' ... is now a challenge for China. The cost of this mega project of China and Pakistan is being estimated at 3762 billion rupees. Under this project, China will not only be able to occupy the Guarani port of Pakistan but in the coming time, China is preparing to set up 34 major industrial projects. Any 10,000 Chinese engineers and artisans in China are engaged in these projects of billions of rupees. But it is difficulty is that a large part of this economic corridor passes through the Balochistan. And the situation in Balochistan is getting worse with the rising demand of "freedom".

Many of the eminent leaders of their freedom struggle want India's help. For the first time, Ajit Doval had extended his hand to help these leaders in public knowledge. Not only this, India also openly opposed the suppression of these leaders by the Pakistani army. Because of this kind of Doval's diplomacy, there was such an atmosphere in India's favour in Balochistan that China remained stunned. Overall, the situation is that the Chinese project of the trillion dollars is trapped in Balochistan today and the key to the Baloch leaders is with the Doval.

Confronting Doval is harmful

Pakistan has made several attempts to counter the 'Doval's policy' in Balochistan, but every time he has got disappointed. Now even the American agencies believe that the abduction of the former naval commander of India Kulbhushan Jadhav from Iran and his conviction of spreading violence in Balochistan was done to pressurise India on the Baloch issue. However, the hurry in which the Pakistani intelligence agency ISI made a fake case on Jadhav led to its expose in the international court.

As of now, Doval defeated Pakistan on this front as well. China also changed its strategy after seeing India's psychological domination on the Baloch issue. China has realised that directly engaging with India will be harmful to its expensive project in Balochistan. The truth is that, although Ajit Doval has not been able to control the situation in Kashmir so far, his policy regarding the Balochistan is certainly been successful in increasing pressure on China

Russian helicopter to be delivered to Balochistan authorities next week


QUETTA: A Russian-made helicopter purchased by the Balochistan government earlier this year will be delivered to the provincial government next week.

The Balochistan authorities had concluded a contract with Russian Helicopters for a Mi-171 civil helicopter. In this regard, finance secretary Akbar Hussain Durrani had visited Moscow last month to finalise arrangements for delivery of the helicopter in Balochistan. The pilot and crew of the Mi-171 have already received their training in Moscow.

The helicopter costs  $15.2 million and will be arriving in Lahore by June 21. Thereafter, it will be handed over to the Balochistan government.

Durrani told local media outlet that the copter can serve multiple purposes. It can accommodate  14  VIPs and 26 other passengers. In the case of medical emergencies, the copter has a capacity of carrying 14 stretchers if the seats are replaced.

The provincial government could also employ the aircraft for passenger and cargo transportation and emergency response for the army, Frontier Corps and interior ministry.

The Mi-171 is the civilian version of the Mi-17 military cargo helicopter, which is already in service with the Pakistan Army. The Mi-17 is widely used across the world due to its reliability and ability to operate in all climates

Battagram locals halt work on CPEC tunnel project protesting non-payment of compensation

Umar BachaUpdated about 10 hours ago

Almost 100 locals in Battagram's Gajborai area on Tuesday stormed the site of a China-Pakistan Economic Corridor (CPEC) project, forcing Chinese workers to halt construction, in protest over non-payment of compensation for their land.

A photograph of the under-construction tunnel falling under the CPEC. ─ Photo by author.

Nearly 1,000 locals have been affected by the construction of a tunnel falling under the CPEC scheme that runs for 60 kilometres from Kas Bridge to Thakoot Bridge.

Locals fear that as work on the tunnel progresses, their houses will be demolished and land seized, as the government has already seized the land of some locals without making compensatory payment, members of a local action committee told Dawn.

The 35-member CPEC Affectees Action Committee headed by Haji Anwar Baig, Gul Muhammad Khan, Muhammad Hanif and Altaf Hussain led the protest, which was staged after locals warned they would disrupt work on the multi-billion dollar initiative until they were paid a competitive rate as compensation for their property.

District administration had earlier asked locals to vacate their lands and houses without consultation. Locals also claim the government did not notify them before work started on the project.

"The government has forced us to come out to claim our rights. The government started work which is due to be completed 2018 but has not spoken to [us] regarding land payments," Anwar Baig of the action committee told Dawn.

The landowners insist that the area from Kas Bridge to Thakoot Bridge is commercial property and the government should, therefore, provide landowners a commercial rate for their property as was the case in Abbottabad, Haripur and Mansehra.

In Abottabad and Haripur, the government has started distribution of compensatory payment. In Mansehra, affectees have been assured that their payment will be made to them before the completion of the project, a local journalist told Dawn.

Battagram residents told Dawn that they have had several meetings with National Highway Authority district administration regarding the seizure of their lands and non-payment of dues but the authority had only made "false commitments".

"We are tired of the false assurances of the government and NHA authorities," Baig said. "They forced us to make them stop the work on the project, so we made them stop work on it today."

The construction of the tunnel has also created difficulties for locals who use chairlifts to travel, the action committee said.

There are 15 chairlifts in Battagram, a local journalist told Dawn. After construction on the project is complete, locals will be able to use the tunnel route. In the meantime, however, their mode of transport will be affected.

The affectees said they would not allow work to continue on the CPEC project until compensatory measures are taken.

Deputy Commissioner Sardar Asad Haroon, when contacted, told Dawn that he is aware of peoples' concerns, adding that he had spoken to the NHA to expedite the issue as per law.

He added that he had also spoken to Hazara Commissioner Arbab Akbar Hayat in this regard.

Asad added that district administration would try to convince protesters to allow work on the project to resume.

Update: work resumes after successful negotiations

The negotiations between the affected locals and district administration proved to be successful after DC Haroon assured the landowners that their charter of demands would be met after Eidul Fitr.

The locals allowed Chinese workers to resume construction of the project after the DC assured them they would be dealt in the same manner as people from other areas affected by CPEC projects were dealt by their respective administrations.

A meeting to hold negotiations was attended by DC Battagram, district nazim Attaur Rehman, NHA officials, LG representatives and the affectees

CPEC: the need for a second look by India

New Delhi should open negotiations with the Chinese to explore if CPEC can be extended west to Afghanistan and east to India

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Ranjit Singh Kalha

China’s Xi Jinping and PM Narendra Modi. India will be faced with a daunting challenge as the construction and other activities pick up in China-Pakistan Economic Corridor (CPEC) through Pakistan Occupied Kashmir (PoK) in the years ahead. Photo: AFP

Most narratives on the subject published in India stress that as the proposed China-Pakistan Economic Corridor (CPEC) traverses through Indian sovereign territory in Gilgit-Baltistan (GB) which is a part of Pakistan-occupied Kashmir (PoK), India is well within its rights to refuse any participation. This stand is a principled one with considerable merit. While this position meets with the short-term tactical requirements it does not answer what should be India’s long-term strategy on this issue.

When India gained independence in August 1947, the state of Jammu and Kashmir had an area of 222,236 sq. km. Since then, due to conflict and aggression, Pakistan occupies about 78,114 sq. km and China about 42,685 sq. km, including 5,180 sq. km illegally ceded by Pakistan to China. About 101,437 sq. km remains with India. Thus three states are now in contention in Kashmir, with China denying strenuously that Aksai Chin, the area that it occupies, was ever a part of Kashmir. However, as far as CPEC is concerned, what interests us is the position of GB.

Over the years Pakistan has tried assiduously to maintain that PoK and GB are two separate entities. There is no mention of GB as a part of Pakistan in the various constitutions of Pakistan, be it the 1956, 1962, 1972 or the 1973 constitution. Even the Sino-Pak Agreement of 1963 states in Article VI that “after the settlement of Kashmir by India and Pakistan, the sovereign authority will reopen negotiations with the People’s Republic of China...” Thus both Pakistan and China admit that presently they do not exercise sovereignty over GB till a final settlement is reached. Perhaps Pakistan would like GB to become its fifth province, but prudence dictates that this would adversely negate its position on the Kashmir issue and that is why it has desisted so far. Pakistan prefers to rule GB directly rather than through the PoK authorities. The possibility exists, therefore, that China may encourage Pakistan to detach GB from PoK and to declare it as a province of Pakistan with full Pakistani sovereignty over it.

Apart from forthright statements, India’s actual policy too has been one of strategic ambiguity. Soon after the 1962 conflict with China, both the US and the UK pushed India into talks with Pakistan with a view to arrive at a final settlement of the Kashmir issue. The Swaran Singh-Zulfikar Ali Bhutto talks that followed had as their basis the partition of Kashmir along the ceasefire line (CFL) with a few more areas going to Pakistan. The conflict of 1965 led to the Tashkent Agreement where both the great powers, Soviet Union and the US, determined to restore the CFL by asking both India and Pakistan to withdraw to positions previously held. It was the same story in 1972 as also the Kargil conflict of 1999. In fact US official maps show PoK with the same colour wash as Pakistan and a similar position for India. In Chinese maps, Aksai Chin is never shown as a part of Kashmir.

In our several discussions with the Pakistanis over the years, India has maintained that if Pakistan accepts the CFL/LoC (line of control) as the international boundary between India and Pakistan, then it would be quite willing to give up its claims on PoK. That was the unstated logic of the Simla Agreement also.

CPEC is a net geo-strategic power addition to the formidable Sino-Pakistan nexus as it exists today. Assured of unstinted Chinese support, it will considerably embolden Pakistani ambitions for adventurism in Kashmir. There is no doubt that India will be faced with a daunting challenge as the construction and other activities pick up in CPEC in the years ahead. What is perhaps more disconcerting is the fact that in the area of CPEC, Chinese-run establishments are likely to dot the landscape, with perhaps the presence of the People’s Liberation Army (PLA) at vital junctions. This will limit India’s military options, since no serious military planner in India would wish for a two-front situation to emerge simultaneously. The real issue is what are the options available to India?

The first option is to plan a diplomatic offensive with vigorous protests to both China and Pakistan. This may not get us far. The second option is to cause sufficient turmoil in the Baloch areas particularly by verbal and diplomatic support to dissidents there. This option also has limited value since the Chinese can push back in the Ladakh sector in retaliation. The third option is the most interesting one: Why not enter into negotiations with the Chinese on CPEC?

The Chinese ambassador to India while speaking at United Service Institution, a think tank, offered to change the name of CPEC, if that would help India join the inaugural Belt and Road Forum Summit. Later this was withdrawn perhaps on Pakistani protests. Nevertheless what could the agenda for the talks be? The first issue would be on how to circumvent the vexed issue of sovereignty in the GB area, since this has emerged as one of the more important points in the position taken by India. After all China also takes a hardline position when development issues are on the table in the case of Arunachal Pradesh. Perhaps diplomatic finesse and obfuscation would be necessary.

But the most important issue on the agenda could be the extension of CPEC (or a renamed version of it) into a western arm to Afghanistan and an eastern arm to India. If this can be agreed upon, then can India not export its goods via the eastern arm both to Afghanistan and to Xinjiang and beyond to Central Asia? We have long desired a land link to Afghanistan and to Central Asia and this would be a major strategic gain for us. Would Indian trucks be able to ply on the road links thus created? If this could be negotiated, it would represent a major strategic gain for us.

However the fundamental question remains: Would China buy into this narrative? And could it persuade Pakistan to comply? The only way to test it is to open negotiations with the Chinese.

Ranjit Singh Kalha is a former secretary (West), ministry of external affairs and a former member, National Human Rights Commission

India, Australia kick off joint exercise Down Under

Indrani Bagchi | TNN | Updated: Jun 15, 2017, 06.21AM IST


The first AUSINDEX was held in the Bay of Bengal in 2015.Australia and India are natural partners in maritime security, particularly in the region where India has its greatest strategic interests.

NEW DELHI: Weeks after India refused Australia's request to join the Malabar exercises, Indian warships began a week-long naval exercise off the coast of western Australia. The second AUSINDEX exercises, the first in the Indian Ocean, are aimed at increasing interoperability between Australian and Indian naval forces, executing complex naval manoeuvres.

The first AUSINDEX was held in the Bay of Bengal in 2015. The bilateral exercises come on the back of two apparently contradictory developments.

As the only countries with the largest Indian Ocean coastline, Australia and India are natural partners in maritime security, particularly in the region where India has its greatest strategic interests. In the past couple of years, the two countries have ramped up security cooperation beyond mil-to-mil exercises. Over the years, the two countries have cleared political hurdles created by the nuclear deal with uranium shipments expected to start in the coming months and Australia is one of the favourite destinations for Indian students.

Politically too, things have looked up for the bilateral relationship and security has taken a larger slice of the bilateral relationship. After the Malcolm Turnbull visit in April this year, the joint statement reaffirmed the importance of the bilateral Framework for Security Cooperation of 2014.

Nevertheless, India turned down Australia's request to join the trilateral Malabar exercises. In its previous iteration in 2007, Australia was the first to pull out of the "quadrilateral" between US, India, Japan and Australia after China demarcated all four participants. Since then Malabar has been an India-US exercise, with Japan being admitted only in 2016.

Top Indian officials involved in the decision said India would work with Australia bilaterally, but New Delhi, they said, is less certain of Australia's "strategic clarity" vis-avis China, particularly as China has made significant inroads into Australia.

Equally, India feels there is little reason at present to raise hackles in China. Having clashed with Beijing recently on the Dalai Lama and OBOR summit, India believes it has cemented its space as an emerging balancer to China. But New Delhi has also reckoned that turning the trilateral Malabar into a quadrilateral at this point in time offers little tactical gain. As a matter of fact, in recent weeks, India and China have gone out of their way to bring down temperatures. PM Narendra Modi held India-China border as a model while Xi Jinping held a cordial bilateral meeting with him in Kazakhstan but did not balance it with a Pakistan meeting.

Australia will probably get into the Malabar exercises in the coming years. Already India-Australia-Japan conduct a fairly successful minilateral grouping, as do India-Japan and US. For the moment, bilateral is the way between India and Australia

Akhtar Mengal in US

Picture of the day

Greatness is not in words, rather actions that comes out from heart.

China-led AIIB boasts rising lending power



BEIJING: The China-backed Asian Infrastructure Investment Bank expects to more than double its lending power for regional projects over the next five years, a top executive said, denying it was an arm of the Communist Party.

The brainchild of Chinese President Xi Jinping, the multilateral financial institution was launched in January 2016 to counter Western dominance of the World Bank and the International Monetary Fund.

It has already bankrolled a dozen projects, including a highway in Pakistan, a power plant in Myanmar and a
deepwater port in Oman, and AIIB’s vice president Thierry de Longuemar said more will follow.

So far none of the projects are part of Beijing’s much-vaunted Belt and Road infrastructure initiative, but de Longuemar said the bank would be prepared to get involved but not as “an instrument” of the government.

China is the bank’s largest shareholder with a 28 percent stake, followed by India with eight percent, and it is chaired by a former Chinese vice minister of finance, Jin Liqun.

“You can’t deny that it’s a Chinese initiative,” de Longuemar told AFP, ahead of the bank’s second general assembly on the South Korean island of Jeju on Friday.

‘Enormous sum’

“China has a higher interest in the success of this institution. But to say that it is a Chinese bank rather than an international bank would be… a big exaggeration,” he added, during an interview at the AIIB’s temporary Beijing office staffed by 100 people.

“China’s wish isn’t to create a new instrument of the Chinese state, it is to demonstrate its ability to promote a truly international institution based in China.”

The bank’s shareholders have pledged to raise the AIIB’s total capital to the “enormous sum” of $20 billion over five years, de Longuemar said, from $9 billion today.

By tapping financial markets, it could quadruple its lending power to $80 billion, added the Frenchman, a former Asian Development Bank vice president.

The bank approved $1.7 billion in loans in 2016 and plans to increase lending to $2.5 billion this year.

“In a few years, we will have a loan capacity that will most likely reach $10 billion a year or more,” de Longuemar said.

Critics had feared the bank would set low standards for projects and undermine principles adhered to by the World Bank and other multilateral development finance institutions.

But de Longuemar said the AIIB had a set of principles on financing projects, ensuring they are financially viable and that they follow social and environmental rules.

“There are things it won’t finance, like coal-fired power plants,” he said.

Door ‘open’ to US

Having the bank’s headquarters in Beijing “obviously creates an environment that favours Chinese interests”, de Longuemar conceded.

In areas such as transport infrastructure, for instance, “Chinese businesses are particularly competitive”, he said.

“If the Chinese are the best bidders, there is no reason to reject their companies.”

The bank’s three-day meeting on Jeju will officially welcome 19 new members, including Canada, Belgium and Hong Kong, bringing the number of shareholders to 77.

While several European nations have joined the bank, holding a fifth of the capital, the United States and Japan have notably declined to become members.

Former US president Barack Obama’s administration chose to stay out of the AIIB on concerns about its transparency and governance.

While it is not clear if Xi raised the issue during talks with US President Donald Trump in Florida in April, it would have been “politically perfectly coherent” for him to have done so, de Longuemar said.

“The door remains open” to Washington, he said

AIIB to host meeting in South Korea's Jeju island

June 14, 2017 9:14 pm JST

Beijing, Seoul set aside tensions, as speculation mounts over Xi's attendance

KIM JAEWON, Nikkei staff writer

President of Asian Infrastructure Investment Bank Jin Liqun speaks at a news conference in Beijing in January 2016. © Reuters

SEOUL -- The Asian Infrastructure Investment Bank will host its second annual meeting in the South Korean resort island Jeju over the weekend, as the Beijing-led organization seeks to expand its role and leadership beyond China.

About 2,500 participants from 77 member countries will discuss the direction of AIIB, a multinational development bank, under the theme of sustainable infrastructure, South Korea's finance ministry said. The list includes Chinese Minister of Finance Xiao Jie, Indian Finance Minister Arun Jaitley as well as Sri Mulyani Indrawati, their Indonesian counterpart.

South Korea's new Finance Minister Kim Dong-yeon will chair the conference while AIIB President Jin Liqun will lead the board of governors made up of finance ministers.

"Governors will make key decisions on the operation of AIIB through the meetings," said the ministry in a statement. "It is also the first large-scale international event that our country will host since the inauguration of the new government."

But it is still unclear whether Chinese President Xi Jinping will attend and South Korea's finance ministry has declined to comment. Xi took part in the inaugural meeting of AIIB in Beijing last year.

South Korean President Moon Jae-in is expected to participate, according to government sources, although the finance ministry refused to confirm this. If Moon does attend, it will be his debut on the international stage since taking office on May 10.

Seoul and Beijing had been at odds over the deployment of a U.S. anti-missile system in the southeastern rural village of Seongju earlier this year. But Moon's administration suspended the deployment on June 7, citing the need to assess the system's impact on the environment, which could take up to a year.

China wants South Korea to withdraw the High Altitude Area Defense System, or THAAD, run by the American military forces. And Moon had previously expressed his objection to the deployment under the previous government.

The AIIB was set up by China and other member countries to bolster economic development through infrastructure investment. With the AIIB, Beijing will be competing with its regional rival Japan which leads the Asian Development Bank and the U.S., the largest shareholder in the World Bank and the International Monetary Fund

The Contentious International Waltz Over the South China Sea


For long, South Asian countries have protested Chinese aggressions in the naval region, while a distracted White House shows tepid commitment to back them.

Arleigh Burke-class guided-missile destroyer USS Dewey transits the South China Sea May 6, 2017. Credit: Kryzentia Weiermann/Courtesy U.S. Navy/Handout via Reuters

The South China Sea is a volatile place – or rather, its politics are.

China, Vietnam, Malaysia, Brunei, the Philippines and Taiwan have been fighting over this azure stretch of the Pacific for more than a century. But tensions increased markedly in recent years as China, claiming the South China Sea as its own, has built on and militarised some 250 islands off the coasts of Vietnam, the Philippines and Taiwan.

Brunei, Malaysia, the Philippines and Vietnam, along with an arbitration tribunal, are now challenging the legitimacy of China’s presence there.

Meanwhile, the US continues to insist that the sea remain under international control. Presidents Donald Trump and Xi Jinping were supposed to discuss the situation during their first meeting at Mar-a-Lago on April 5, 2017. But the launch of 59 Tomahawks in Syria and growing tensions on the Korean peninsula completely overshadowed the maritime issue.

Two months after that meeting, the US triggered a classic confrontational cycle in the South China Sea. On May 24, the guided-missile destroyer USS Dewey passed through the contested waters and sailed close to Mischief Reef, in the Spratly archipelago.

The island, controlled by China, has become a symbol of the country’s assertiveness since it was occupied in 1995.

The operation was the first military maritime exercise in eight months and the first of Trump’s presidency. Under the Obama administration, starting in 2015, American patrols in the South China Sea were regular practice.

The Chinese Nine-Dash Line and the scramble for the South China Sea. Credit:

Freedom of navigation

The South China Sea Freedom of Navigation Operations (FONOPS) is a US military program, open to regional allies (such as Australia, Japan and the Philippines), in which the US leads maritime exercises in the area. FONOPS is aimed at reiterating the inalienable principle of freedom of navigation in international waters laid out in the United Nations Conventions on the Law of the Sea (UNCLOS).

China disputes this application of the UN declaration and perceives FONOPS as essentially a unilateral American endeavour. The US Department of State asserts that it can and will exercise its freedom of navigation on worldwide, without interference by any other country.

War ships, it has affirmed, should enjoy the same freedom as any other vessel, meaning free access to both exclusive economic zones (EEZ) and territorial seas without permission from the relevant coastal state.

China, which has also been in bilateral talks on the South China Sea with the Philipines since early this year, has a different interpretation. For Beijing, military vessels cannot enter a coastal state’s territorial seas without official permission.

It also claims that military ships in EEZ territorial waters are unlawful and suspicious, and only non-military vessels enjoy the right to passage.

The clash of unilaterality is clear and both countries are firm in their stances. For the US, ensuring the freedom of navigation throughout Asia-Pacific region is a national prerogative and a matter of vital importance. As such, China – specifically, its military activities on some of the disputed South China Sea islands – is clearly its main obstacle.

A confrontation appears unavoidable, but, for now, interactions have cleverly been kept on a safe track, as no US allies have joined in the FONOPS exercises.

FONOPS is often misinterpreted as a challenge to China’s claims in the South China Sea. In fact, the freedom of navigation operations are not explicitly aimed at questioning Chinese sovereignty in the South China Sea.

Why it is important for Trump’s administration

Still, the US has a clear interest in preserving its role as a regional hegemon, and FONOPS could be seen as a provocation of Beijing and its divergent maritime stance.

During his first months in office, President Trump was accused of neglecting the South China Sea dispute and undervaluing the maritime routes encompassed in the Chinese Nine-Dash line. As the New York Times has reported, the Pentagon has on two occasions turned down requests by the US Pacific Command to conduct operations in the disputed waters, in February and April.

This has worried some US allies in the region, and may have encouraged others to start developing a more independent foreign policy.

Trump’s cabinet has given every sign that it will continue the South China Sea policy developed under the Obama administration. On February 4, 2017, Secretary of State James Mattis reiterated the importance of the South China Sea on the American agenda. Several months later, Admiral Harry Harris assured that the FONOPS in the South China Sea were planned as usual.

Timing is key in the waltz between Washington and Beijing. The US needs China’s support in facing a growing number of global challenges, from terrorism to North Korea. And with Trump already pushing China on trade, evidently his weapon of choice for addressing the nations’ multifaceted bilateral relationship, the administration may have seen a strategic reason for waiting to pressure Beijing on the South China Sea.

By relaunching operations in the region in May, the US reassured its Asian allies about its continued presence there. China was able to underline its different approach and criticise the US for jeopardising regional peace, thus bringing this FONOPS cycle to a close.

Beijing is well aware that such operations will continue, of course, just as Washington knows how China will respond. Ultimately, FONOPS is a geopolitical balancing act: it does not pose a direct threat to the status quo, which is favourable to China. But it asserts the US’ hegemonic role in the Asia Pacific.

Though competition between the two world powers will continue, it seems unlikely to escalate in the near future. Reciprocal accusation of undermining regional stability are, in the end, business as usual.

Alessandro Uras, Teaching Fellow in Southeast Asian Studies, University of Cagliari

Chinese nationals murdered in Balochistan not ‘preachers’, says South Korea, rejects Pakistan’s allegations

Chinese nationals murdered in Balochistan not ‘preachers’, says South Korea, rejects Pakistan’s allegations | HT Exclusive

The murders of Lee Zingyang, 24, and Meng Lisi, 26, have raised questions about the security of Chinese workers in Pakistan, central to Beijing’s ambitious Belt and Road Initiative.



File photo of the two Chinese nationals who were kidnapped last month from Quetta city of southwest Pakistan. The Amaq agency said on Jun 8, 2017 that the Islamic State had killed the two Chinese nationals.(Twitter)

Updated: Jun 14, 2017 20:19 IST

By Sutirtho Patranobis, Hindustan Times, Beijing

South Korea on Wednesday rejected Pakistan’s contention that two Chinese nationals abducted and killed by Islamic State in Balochistan were preaching Christianity under the guise of studying Urdu at a school run by a South Korean.

A South Korean official in Seoul told Hindustan Times there was no evidence to show the two were involved in Proselytisation under the guidance of a South Korean.

China has said it will cooperate with Pakistan to verify whether its citizens were involved in illegal preaching activities.

The murders of Lee Zingyang, 24, and Meng Lisi, 26, have raised questions about the security of Chinese workers in Pakistan, central to Beijing’s ambitious Belt and Road Initiative. The centerpiece of the new Silk Route plan, the China-Pakistan Economic Corridor, passes through insurgency-hit Balochistan.  

After the Islamic State claimed responsibility for the killings, Pakistan’s interior ministry said in a statement that the two Chinese nationals, who had been issued business visas, were “actually engaged in preaching” after they went to Quetta “under the garb of learning (the) Urdu language from a Korean national”.

The Chinese state media stopped just short of blaming the two for their own deaths. The kidnapped duo was part of a group of 13 Chinese nationals brought to Quetta in November by a South Korean who runs a school and language education “was merely a front for conducting religious activities”, the Shanghaiist website quoted the Global Times as saying.

But an official from South Korea’s foreign ministry rejected these allegations.  

With regard to the two Chinese confirmed to have been the Islamic State (IS), nothing has so far been found to verify the suspicion that they were involved with a Korean missionary group,” the official said.

The official confirmed that 12 Chinese nationals had been taking Urdu lessons at a school run by a South Korean in Quetta.

Nevertheless, it is a fact that the two Chinese, along with ten other Chinese, took classes at a local Urdu language school run by a national of the Republic of Korea by the name of Seo,” the official said. (South Korea is formally known as the Republic of Korea.)

The comments from Seoul deepen the mystery behind the abduction and deaths of the two Chinese.

Though Pakistan’s interior minister Chaudhry Nisar Ali Khan confirmed the death of the Chinese duo, Beijing has stopped short of an official confirmation and the foreign ministry has said it is waiting for more information from Islamabad.

Experts said the move to blame South Korean missionaries for allegedly “misleading and misguiding” Chinese youngsters into preaching Christianity in foreign countries was meant to mislead the Chinese people.

Most Chinese Christians have become Christian through Chinese evangelists. It has been very difficult for foreign citizens to proselytise in China. China does not have a visa category for religious clergy or missionaries. Some foreign students, professionals and business people may do evangelistic work within China, but evangelistic activities are restricted,” Yang Fenggang, director of the Centre on Religion and Chinese Society at Purdue University, told HT on email.

Carsten T Vala from the department of political science, Loyola University, Maryland, agreed. “Chinese nationals are themselves quite active in foreign missionary work and in my more than ten years of interviews of Chinese Christians, I found a number of Chinese Christians who were eager to go abroad as missionaries. At least one Chinese church leader I interviewed reported that his congregation had sent missionaries to Pakistan, Afghanistan, and other Arabic-speaking countries,” Vala, an expert in religion in China, said.

Yang pointed out that even if it was found that the two Chinese were preaching Christianity, it’s the IS terrorists who should be blamed for their deaths.

Even if it is found true that these two Chinese went to Pakistan for the purpose of Christian evangelism, blaming South Koreans is irresponsible. These were adult young people who made their own decisions to go there… Finally, if it was true that these Chinese were killed by the Islamic State’s terrorists, it is the terrorists that should be blamed, not anyone else,” Yang said

Baloch protesters demonstrate against Pak atrocities in front of iconic 'Broken Chair' in Geneva

Baloch protesters demonstrate against Pak atrocities in front of iconic 'Broken Chair' in Geneva

The protesters accused Pakistan of illegally annexing Balochistan in 1948 and alleged that the Punjabi-dominated state government has, on purpose, kept the region undeveloped.

Members of the Baloch Voice Association on Monday protested in front of the iconic “Broken Chair” in Geneva against the atrocities being committed by the Pakistan Army on the residents of Balochistan.
The protesters held the demonstration during the 35th Session of the United Nations Human Rights Council.
The protest was also joined by the Baloch Kashmiri Pashtoon and Uighur representatives.
The protesters accused Pakistan of illegally annexing Balochistan in 1948 and alleged that the Punjabi-dominated state government has, on purpose, kept the region undeveloped.

They also alleged that Pakistan is using brute force to suppress  demands of independence being raised in Balochistan.
"Balochistan, the land of the Balochs, was illegally annexed by Pakistan in March 1948. The Pakistan Government, by design, has kept the province underdeveloped, while looting its rich natural resources throughout the years. The Punjabi-dominated state establishment of Pakistan has used brutal force against the Baloch population and to suppresses any demand of independence," one of the protestors was quoted as saying by the news agency ANI.
Another protester alleged that originally the China-Pakistan Economic Corridor (CPEC) project was aimed at developing the Baloch and Pashtun regions but 80 per cent project and construction was dragged back to Punjab while using Pashtun and Baloch resources.

Baloch protesters demonstrate against Pak atrocities in front of iconic 'Broken Chair' in Geneva

Rethinking Baloch Secularism: What the Data Say

36 Pages Posted: 8 Apr 2017 

C. Christine Fair
Georgetown University
Ali Hamza
Georgetown University
Date Written: April 4, 2017


Since 1947, Baloch have resisted inclusion into the Pakistan and have waged several waves of ethno-nationalist insurgency against the state. Scholars and Baloch nationalist leaders alike generally assert that Baloch are more secular than other Pakistanis, more opposed to the political Islamist policies pursued by the state, and less supportive of Islamist militancy in the country. However, these claims lack empirical support. We employ data derived from a large national survey of Pakistanis from 2012 to evaluate these conventional wisdoms. Contrary to claims in the literature,we find that Baloch resemble Pakistanis generally with few important exceptions.

Download Complete Report

🔴Here is final comment of the report

▶"What does this analysis say about the ongoing conflict in Balochistan? While there is evidence that Baloch are increasingly willing to embrace the political Islamist projects of the state, there is no reason to believe that this has mitigated their ethnic identity and frustration with the state’s efforts to exploit the province. At the same time, there is no evidence that the state is willing to back away from its centralizing impulses or expand the benefits of CPEC and other projects in the state. If the Pakistan state is gambling that deepening support for its Islamist projects among the restive ethnic Baloch will make them more amenable to its strategic interests in Balochistan, they seem to be making a losing bet."

China’s dangerous ethnic policies in Xinjiang

12 June 2017

Author: Ben Hillman, ANU

In the latest tightening of the screws on China’s Xinjiang Uyghur Autonomous region, authorities have banned the use of several baby names, including Muhammad, Haji, Islam and Imam.

According to authorities, the naming regulations are designed to curtail ‘religious fervour’. But the ruling also targets Uyghur nationalism, which is often conflated with Islamic extremism in China. Names with the stem ‘Turk’ — such as Turkizat and Turkinaz — are also banned. But curiously Mehmet — the Turkic (and Uyghur) version of Muhammad and a very common male name in Xinjiang — has not been banned, suggesting that senior Communist Party officials might be unaware of its meaning. If so, this is a reminder of the cultural illiteracy and insensitivity that frequently underlies policymaking in the region.

The ruling on baby names follows an earlier ban on ‘abnormal’ beards and full-face and body coverings. New legislation also prevents people from rejecting ‘radio, television or other public facilities and services’, marrying in accordance with religious rather than legal procedures, and using the halal principle to interfere with the ‘secular life of others’.

The legislation codifies security policies that have been applied patchily throughout the region in recent years as part of government efforts to combat religious extremism. It also forms part of a response to a series of deadly attacks within Xinjiang and in other parts of China.

The tough new rulings follow the appointment of strongman Chen Quanguo as Xinjiang’s Party Chief in August 2016. Chen, former party secretary of Tibet, earned a reputation for quelling protests against government policies and dramatically reducing the number of self-immolations through the introduction of hardline security measures.

The measures, many of which are now being rolled out in Xinjiang, include neighbourhood ‘grid’ reporting systems, widespread checkpoints and searches, extensive electronic surveillance, the confiscation of passports and compulsory political education courses for returnees from abroad. To implement the measures, large numbers of auxiliary police have been recruited.

Since 2011, China has spent more per annum on domestic security than on external defence. The cost of China’s domestic security policies — once euphemistically known as ‘stability maintenance’ but increasingly described as ‘national security’ — is likely to escalate in the future. Many of these costs will be difficult to measure in monetary terms.

The increasingly draconian security policies adopted in Tibet and Xinjiang target entire populations and have become sources of deep resentment. They create the perception that Uyghurs and Tibetans are second-class citizens in China, and that the Chinese Communist Party does not value or respect local cultures despite the existence of formal laws that purport to safeguard minority rights.

While Beijing highlights preferential policies for minority ethnicities and its large investments in the region, which have led to improvements in material livelihoods, scholars working in Xinjiang and Tibet are acutely aware of ethnic insecurity among the populations. This insecurity stems from the fear that people are increasingly unable to express their ethnic and regional identity in everyday life and it appears to be growing in response to China’s security-first approach to the region.

These fears are further exacerbated by development policies that are rapidly transforming and homogenising cultural landscapes, and assimilationist policies that are said to promote inter-ethnic ‘mingling’, but amount to little more than incentives for adopting secular Han Chinese ways.

Another problem on the horizon for Beijing is a potential fallout with Muslim-majority neighbours across Eurasia. China’s policies toward Uyghurs and other members of its 20 million strong Muslim community are likely to arouse the ire of neighbours in the region and create frictions at a time when China is seeking to expand trade and cultural ties under the auspices of the Belt and Road Initiative.

Beijing is already concerned that Uyghur extremists are coordinating with global terror networks, boosting their resources and capabilities for hitting Chinese targets outside China. Uyghurs were allegedly involved in an attack against the Chinese Embassy in Kyrgyzstan in 2016 and Thai police accuse Uyghurs of masterminding a 2015 bombing in Bangkok that killed 20 people, mostly Chinese tourists. There are reports that Uyghurs are training with Al Qaeda and the Islamic State (IS) in preparation for launching future attacks.

But if China is perceived as anti-Islam, its home-grown Uyghur extremists might not be the only threat. Chinese citizens and assets could become targets for terror outfits in Central Asia, South Asia and the Middle East. Chinese-funded ports, railways, canals, dams and pipelines could become vulnerable to terrorist attacks. Many of the first-phase Belt and Road projects are in politically unstable majority Muslim countries such as Bangladesh and Pakistan. Kazakhstan — a lynchpin in the Silk Road Economic Belt — is also under increasing social, economic and political strain.

Leaders in Beijing and Urumqi might be satisfied with the short-term results of their hardline domestic security policies, but they would be foolish to ignore the long-term risks of alienating Uyghurs and other Muslim citizens. China has every right to defend itself against terrorism, but any policies that target the general Muslim population, or curtail practices that lie at the heart of people’s cultural identities will only risk fanning the flames of resentment that energise extremism.

Ben Hillman is a senior lecturer at the Crawford School of Public Policy, The Australian National University

In Pakistan, China presses built-in advantage for "Silk Road" contracts

By Reuters | Updated: Jun 14, 2017, 07.17 AM IST

In Pakistan, whose geographical position makes it central to Beijing's "Silk Road" plans, contracts have been awarded for projects worth more than $28 billion.

ISLAMABAD: Last year, Pakistan held informal talks with General Electric, Siemens and Switzerland's ABB to build the country's first high-voltage transmission line. Chinese power giant State Grid committed to building the $1.7 billion project in half the time of its European counterparts - and clinched the deal. 

This is a familiar tale in Pakistan and many other countries. 

As China makes its "Belt and Road" initiative - a massive project to connect Asia with Africa and Europe through land and maritime routes - a policy priority for the next decade, ▶Chinese companies are taking the lion's share of infrastructure projects across the region. 

Just last year, Chinese firms won project contracts in Belt and Road countries worth $126 billion, state media reported. 

In Pakistan, whose geographical position makes it central to Beijing's " Silk Road" plans, contracts have been awarded for projects worth more than $28 billion - all by Chinese companies working together with local firms. More than $20 billion in new investment is likely in the next few years, Pakistan's Planning Minister Ahsan Iqbal told Reuters this week. 

Last month, Pakistan's government took out full-page newspaper advertisements on the first China-Pakistan project completed under the plan, a 1,300 mw coal plant that it said was constructed in 22 months, a record time for such a facility. The plant is owned by China's state-owned Huaneng Shandong and the Shandong Ruyi Science & Technology Group. 

China Inc's main advantage, officials in both countries said, is the ability of Chinese banks - with the blessing of the government - to fast-track loans for projects related to the Silk Road. That makes a huge difference to projects like Pakistan's power transmission line, which aims to end regular energy cuts that leave the country's 190 million population without electricity for several hours every day. 

"(Chinese companies have) that advantage because of the support of the Chinese government," said Mohammad Younus Dagha, a senior government official who was in charge at the Water and Power Ministry until earlier this year. 

Dagha, who spoke to Reuters shortly before being transferred to the Commerce Ministry, said Beijing was fast-tracking loan approvals and pushing its banks and insurance firms to speed up due diligence work. 

Chinese government officials declined comment on specific loan approvals. 

But two officials at two Chinese state-owned banks that direct government funding, China Development Bank (CDB) and Export-Import Bank of China (EXIM), told Reuters that they have been instructed by the government to favour lending to Chinese firms for Silk Road projects. 

The officials also said that the two banks prefer that companies working on infrastructure projects across the region import raw materials or purchase equipment from China. 

There is some criticism in Pakistan that the awarding of the contracts to Chinese companies - while speeding up projects - is also costing the country more money. 

In the transmission line project deal, for example, General Electric estimated it could make one key part of the line - the converter stations - for about 25 percent less than what State Grid was charging, according to a Pakistani government official and two power sources familiar with GE's projections. By awarding the contract to State Grid, Islamabad paid a higher price, they said. 

An official at Nepra, Pakistan's independent energy regulator, said State Grid was also given a tax break not on offer to other investors. 

Pakistani government officials declined to comment on tax issues regarding the deal. 

China Electric Power Technologies Company Limited (CET), the State Grid subsidiary that will build the line, said the price it asked for was fair. 

"It's a very reasonable cost," said Fiaz Ahmad Chaudhry, managing director of Pakistan's National Transmission & Despatch Company (NTDC) referring to the overall State Grid contract. 

Chinese Foreign Ministry spokeswoman Hua Chunying said the process for Belt and Road projects in Pakistan was "open and transparent" and would bolster bilateral relations and regional prosperity. 

The edge of Chinese companies in Pakistan is likely to continue. Under the Silk Road plan, China and Pakistan are planning to build $57 billion worth of power plants, port facilities, railway lines and roads in Pakistan. 

During a meeting in Bejing last month, Chinese President Xi Jinping said that the plan would be accelerated. 

The transmission line project was conceived as a government-to-government contract to build a 878-km (545-mile) connection between soon-to-built power plants near the coastal town of Matiari and Pakistan's industrial heartland by the eastern city of Lahore. 

According to Pakistani officials, no formal competitive bidding was sought for the project, which was finally awarded in December last year. 

But the officials said GE, Siemens and ABB were contacted when initial talks with State Grid stalled around mid-2016 over costs. 

Dagha told Reuters he briefly met officials from the three companies on the sidelines of a Paris power conference in August and informally talked about the transmission line contract with them. 

GE made an initial cost estimate of $800 million for the converter stations, against State Grid's initial bid of $1.26 billion, according to documents from Nepra and sources familiar with GE's cost estimate. 

Despite the lower cost, the problem for Prime Minister Nawaz Sharif's government was speed. Sharif has staked his political credibility on ending Pakistan's frequent power blackouts before the next general election are held by August 2018. 

So, Dagha said he asked the Western companies to also match State Grid's ambitious timeline and wrap up work in 27 months. 

"They said 'you must be's impossible'," Dagha recalled. Dagha said Western executives predicted it would take at least 48 months to build the line. 

"They said just to prepare the proposal...and for the banks to agree to that would require at least 8-9 months at the fastest pace." 

One Western energy company executive in Europe confirmed the meeting took place. Another executive in Europe who is familiar with the matter said "international companies did not have the opportunity to make a bid for the project". Both sources declined to be named. 

General Electric, Siemens and ABB declined to comment. 

There was domestic pressure in Pakistan to speed up the deal, several government and regulatory officials said. 

An official at Nepra, which had to sign off on the contract, said the government put pressure on the regulator to accept State Grid's price demands, warning the deal could come apart as the Chinese were prepared to walk away. 

Pakistan's government did not respond to claims Nepra was put under pressure, although government officials have in the past voiced frustrations that the regulatory agency was slowing down projects. 

The Nepra official also said the Pakistani government had sweetened the deal for State Grid by removing a 7.5 percent withholding tax on tariffs the Chinese company would charge consumers the next 25 years. 

The tax break, the Nepra official said, was not on offer for other companies. 

Federal government officials and the NTDC did not respond to requests for comment on the removal of the withholding tax. 

State Grid was awarded the contract in December last year. It charged $1.7 billion, including a trimmed $1 billion for the converter stations, according to public documents seen by Reuters. 

Khawaja Asif, Pakistan's energy minister, defended charges that Pakistan was favouring the Chinese or overpaying for power infrastructure. "That conclusion is a bit misplaced, or exaggerated," said Asif. 

Ashfaq Mahmood, a former top bureaucrat in Pakistan's Water and Power Ministry, said the reality of Pakistan's need to improve its infrastructure made a certain reliance on its bigger neighbour inevitable. 

"This is an opportunity on which the Chinese have capitalised and we cannot blame them.