China-OBOR; US-New Silk Road Initiative
Media reports are rife with the US `reviving' interest in two non-starter projects – New Silk Road Initiative and Indo-Pacific Economic Corridor, where India is touted to play an important role. These two infrastructure building projects are being positioned as a response by the US to China's One Belt One Road Initiative (OBOR).
These were projects that were hinted at by Hillary Clinton in 2011 during her visit to Chennai in India. However, these have remained just mentions by a US politician. There have been numerous other projects that have attempted to link and integrate South Asia, the world's most disintegrated region. Many free trade agreements have been signed in the region – SAFTA, SAARC, Indo-ASEAN FTA, among others. None of these have shown any significant results in improving trade or business relations. And there are several projects in the region where India has been in the driver's seat – BBIN and Asian highways, to name just two. Progress has been slow.
There are many prickly and seemingly insurmountable political and administrative issues in this region which keeps South Asia the least integrated region. It should be looked as a welcome move that the US is now taking interest in creating connectivities in this region to bolster economic growth and trade. But why has every media report tried to politicise this move of the US (if at all it takes off), and tried to pitch it against China's OBOR?
OBOR has ruffled political feathers – some justified, some not. But within four years, OBOR has progressed – infrastructure development in a difficult region like Central Asia is visible. China has planned investment of US$ 800 billion over the next five years into the project, whereas the US has not given out any cost or funding projections. US has moved out of TPP, to protect its own economy and jobs, as the administration believed that TPP helped the other signatory countries more than the US. US trade policies are moving towards increased protectionism. Why would the US then build infrastructure that could increase low cost imports into its markets?
It wasn't too long ago when the US, under Obama administration had launched TPP negotiations, keeping China and India out of the grouping. This had prompted China, India and others to start the Regional Comprehensive Economic Partnership (RCEP). There are better chances of the RCEP seeing the light of day.
OBOR is being looked at as a move by China to gain global political and economic supremacy. China has become the largest foreign investor and financial aid supplier in South Asia, Southeast Asia, Central Asia, Africa. So how would OBOR alone endanger political stability?
In the end, it would be more pragmatic for business communities to look at both the projects as facilitating global trade.