Published: November 11, 2018 10:00 am On: Nepal
Washington, DC, November 10
US government officials and experts have expressed apprehension about China’s flagship multi-trillion-dollar Belt and Road Initiative.
They have warned it could lead to debt trap and undermine sovereignty in the long run, harming the participating countries’ interest. They also said the BRI, introduced by Chinese President Xi Jinping, lacked transparency and was aimed at fulfilling China’s own security and strategic interests rather than promoting economic development.
These views come at a time when Sri Lanka is struggling to repay Chinese debt to build a port in Hambantota at a cost of over US$1 billion due to inability to generate business. The asset and 15,000 acres of land around it have now been handed over to China for 99 years, giving the world’s second largest economy control over territory just a few hundred miles off the Indian coast.
Recently, Malaysian Prime Minister Mahathir Mohamad also warned that $23 billion worth of Chinese-funded projects could be cancelled as many of them did not make financial sense.
“China has right to invest in infrastructure projects and many countries are now a part of BRI,” Satu Limaye, director of East-West Centre in Washington and also the director of Asia Matters for America Initiative, told South Asian journalists during the ‘Amplifying the Indo-Pacific Strategy’ programme. “But there is a concern about countries’ sovereignty and debt trap.”
The BRI, which includes 71 countries from Asia, Europe and Africa, is a massive programme aimed at developing hard infrastructure such as transportation system and power grids and soft infrastructure such as signing of trade deals. But recently the Centre for Global Development said eight more Belt and Road countries, excluding Sri Lanka and Malaysia, were at serious risk of not being able to repay loans. The countries are: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan.
“Projects built by China under BRI have no commercial value,” said Alice G Wells, principal deputy assistant secretary, Bureau of South and Central Asian Affairs, the US Department of State. “This will increase debt, undermining the sovereignty of the country.” She also said the procurement and contract handover processes under the BRI were not transparent and open to competition.
Countries looking to attract private sector investment for economic development, according to Wells, should become a part of the US government’s Better Utilisation of Investments Leading to Development Act, or BUILD Act.
“Nepal can also benefit from the BUILD Act,” Wells said, adding, “The US and Nepal have a historic relationship and the US always wants to work with and help Nepal.”
The BUILD Act, a strategic move to counter BRI in the Indo-Pacific region, will create a new international development finance corporation, which will have the capacity to invest $60 billion. “Financial support will also come from other foreign banks,” Wells said, adding, “The projects under the BUILD Act will also work to promote security, peace and prosperity in participating countries.” US Secretary of State Mike Pompeo has already announced $300 million additional funds for the Indo-Pacific region.