One Belt, One Road offers economic opportunities for those in its path - but not without geopolitical implications
By Dr. Mona S. AlMunajjed
Fri 11 May 2018 03:31 PM
Globalisation is hardly a novel idea; 2,000 years ago merchants traded goods along a network of routes that grew organically across Asia and into Europe.
The network, dating back to the Han and Tang Chinese empire dynasties, extended some 7,000km from Chang’an (today’s Xian) in China, via Central Asia, into the Middle East and into Europe and Africa.
In the 19th century, German geographer Ferdinand Von Richthofen coined the name Silk Road or Silk Routes to describe the passage of Chinese, Turkish, Indian, Persian and Arab merchants and their goods – including silks – from China and incense, frankincense and copper from the Arabian peninsula and the Levant.
Alongside commerce, these routes also facilitated cultural exchange, including knowledge of the arts and literature, languages, sciences, technology and crafts, and helped to spread religions like Buddhism, Christianity and Islam.
Today, there are plans to create new “Silk Routes”. China, the world’s largest economy, is developing a modern version of the ancient trade route through a hugely ambitious $900bn plan called the One Belt, One Road initiative to link China to 68 countries in the rest of Asia, Africa and Europe. Underpinning it are infrastructure projects such as pipelines and a port in Pakistan, bridges in Bangladesh and railways to Russia – all facilitating trade and economic growth.
The location of Pakistan and the Gulf countries makes them key partners in this project. Beijing’s ties with Islamabad have been close for decades and China is now Pakistan’s main economic, financial and military supporter – a partnership that has only grown stronger with India’s emergence as a rising economic power. Pakistan’s centrality in Beijing’s global plans makes it likely to become a centre of business and trade in Asia.
Oil continues to bring China and the Arab countries closer economically, too; as the world’s largest crude oil importer, China is looking for long-term energy cooperation with the region. The Gulf countries together account for 60 percent of China’s energy supplies, and in 2017 Saudi Arabia was its second largest supplier of crude oil after Russia.
By 2030, the new Silk Road will extend 3,218km from Kashgar in China’s Xinjiang, itself a stop on the ancient Silk Road, to Gwadar Port in Pakistan, a strategic location as it overlooks the Arabian Sea and is surrounded by countries with two-thirds of global oil reserves.
Middle Eastern oil currently travels 16,000km by sea to reach China. That distance will be reduced to 2,500km under the China Pakistan Economic Corridor (CPEC) project of highways, railways and pipelines across Pakistan.
China also seeks to establish a maritime corridor connecting oil and gas fields in the Middle East through the Gulf “string of pearls” – the six GCC countries plus Iraq and Iran – to China and the cities of East and South East Asia.
Taken together, these projects will not only provide new markets and business opportunities, but will also ensure that oil and natural gas will reach its markets quickly, solving the so-called “Malacca Dilemma” of oil imports from the region arriving via the congested Malacca Strait. Gwadar’s strategic importance lies in being another pearl in the “string” as a terminus for GCC, African and Iranian oil. China will also gain powerful facilities in the Arabian Sea and onwards to the rest of the Indian Ocean.
GCC countries are looking for stronger collaboration with China, a market of great potential. According to The Economist, the largest share of GCC exports will go to China by 2020, worth around $160bn, while China will also dominate the GCC import market, providing about $135bn of goods to the Gulf.
Relations between China and Saudi Arabia are already flourishing, built on a comprehensive strategic partnership as Beijing seeks to promote stability on its 21st-century Maritime Silk Road – and Saudi has agreed to invest in Gwadar Port and join the CPEC. Chinese port construction will also extend via the Red Sea and Suez Canal to the Greek port of Piraeus on the Mediterranean, a major entry point for European markets, and where China has made huge investments.
Likewise, the UAE has established a close partnership with China and will participate in the One Belt, One Road initiative to strengthen its own regional hand. Dubai in particular is seeking to become an important gateway for Chinese companies accessing markets in the GCC, Africa and Europe.
In contrast, India is now collaborating on a rival project with Iran and Afghanistan, the expansion of a North-South economic corridor extending from Central Asia to Afghanistan through Chahabar in south-eastern Iran, on the Gulf of Oman out of the Strait of Hormuz. Chabahar is located 165km from Gwadar, and Iran aims to turn it into an economic centre for the Middle East, South Asia and Central Asia.
In addition, Chabahar port is India’s gateway to the rich energy reserves of Afghanistan and Central Asia. India is the third-largest crude oil consumer in the world and imports 80 percent of its requirements, mostly from the Middle East.
The One Belt, One Road initiative has, as a result, become an arena for a regional power struggle. While these economic corridors can boost development and nurture regional integration and intra-regional global trade, they can also be manipulated as tools of influence for strategic control in Asia.
The CPEC may well boost China’s hegemony and may possibly be interpreted as strategic encirclement of India. Chabahar, as a maritime counterweight to Gwadar, may also be interpreted as a competition to Pakistan and a challenge to China’s growing influence.
The new Silk Routes have the potential to improve infrastructures and technologies, and stimulate socioeconomic and agricultural development”
The new “Silk Routes” have the potential to improve infrastructures and technologies, and stimulate socioeconomic and agricultural development. They will also promote financial cooperation, communication and cultural exchange – rather like the ancient trade routes.
For half a century, the world has experienced an increase in global economic exchange and a decrease in conflict and global war. Theorists still argue that countries will not go to war with their trading partners and that multilateral economic trade creates a more stable environment.
But the new trade routes to the Middle East and Central Asia could equally be the new battle lines of the future. The winner will be the one with the largest trade and the shortest and most secure access to natural resources.