 Hello and welcome to NewsClick. Today, we have with us Rajat Nag, former managing director general of Asian Development Bank. And we are going to discuss a project which has become controversial due to various reasons, named the Belt Road Initiative. Without getting into the India, Pakistan and the economic corridor issue, I would like to look at the larger picture of the Belt Road Initiative. There have been two kinds of criticism. It is a Chinese expansionist project, which is one criticism. The second criticism is that it is forcing the countries who participate into kinds of debt, which they will not be able to pay. And therefore, this is a project which is likely to endanger the economic stability of a number of countries. Do you think this is real? Do you think it is motivated propaganda? Or the truth lies somewhere in between, if we want to be cautious? My view is that the situation is actually more nuanced than that. But your two basic points, is it Chinese expansionism without a doubt? Is it endangering the sovereignty of the borrowing nations? Yes. But I think it is a question of how this is then managed in a more global context. First, because the countries that we're talking about, be it in Asia or Africa or in Latin America, certainly need huge capital for infrastructure development. And for these countries, it is very difficult to sort of turn it down because there is capital being made available now. And the risks, like always, is later. So I think, and I think this applies to India, and as a matter of fact, the world as a whole, we should see how we can manage this process to make it win-win proposition, or at least not a lose-lose proposition, lose for China, lose for the rest of the world. And the first premise there for me is try to make it a multilateral initiative. Let's face it, China is putting money on the table, which others are not. China is putting more money on the table than the Asian Development Bank, World Bank, everybody else combined. So if I'm Nepal, or I'm a country in Africa or Latin America, it's difficult to say, I will not take it from China and not have any alternative. But I think it's a huge risk, which is what you implied, that if the debt is not repaid, then what happens? And we've just seen what happens in Sri Lanka. I think there are concerns like that in parts of Africa already, the famous Nairobi-Mombasa rail link in Malaysia. So it's a question of structuring it. And I think structuring loans like this is best done in a multilateral sense. And therefore, even though you haven't asked that, I take it once to further, countries like India, which rightly are concerned A and B, they want to see being multilateralized, should stay at the table, as a matter of fact be part of it, to push some of these. And we can talk about what those aspects are. But I think the Belt and Road Initiative certainly is a reflection of Xi Jinping's desire to see China's influence grow. And I'm going to park the India question for later, because I think this, the Belt Road Initiative has a much greater salience globally, particularly in Asia and Africa. And India is in that sense, staying out of it or not, is not going to change the course. What's going to happen? The question I would have you look at is that, you know, China is an economic player which has come on the table right now. It wasn't there for so long. But it's also true that the colonial powers who became later on the ex-colonial powers with the United States, what they have done in Africa is actually a loot of the resources of the continent. If you take the mineral resources, you go to Congo for instance, probably the most mineral rich part anywhere in the world. And you have abysmal poverty, a very poor structure of the state and a continuing loot of its minerals. And one of the reasons that it has happened is also Africa is not internally linked. It's only linked externally with ports and air connections, again mostly to Europe and to United States, not to each other. Now some generally, some links being developed because of Emirates and some other African airlines. So if we see that this was where it is coming from, would we not also think that this expansion in this way puts the Eurasian continent, particularly the Asian part of the Eurasian landmass, much more in the center of economic activity, which is what also would look, if we look at the population figures would justify. That this in fact is reconfiguring global trade towards the Eurasian landmass, particularly the Asian landmass, in a way that the colonial trade had actually disrupted because that's what it was before the colonial expansion. But as a matter of fact, in a couple of weeks time, interesting you mentioned this, there is a conference being organized in Switzerland exactly on this issue, that how the Central Asia connectivity play into this whole BRI initiative. I think there is absolutely no doubt about the need for connectivity, intra-regional and inter-regional. So therefore from the demand side, even if we leave aside the past, there is absolutely no question, there's a huge demand for infrastructure connectivity. And the Asian Development Bank did a study a couple of years back in which it was seen that you need almost about $1.7 trillion a year for some of these connectivity projects. That's just Asia alone and of course if you take rest of the world is higher. So China comes in basically saying we are prepared to finance not all of it, but a large part of it. Which other international agencies bilaterally cannot. So I think the issue is not whether that's needed. It's an issue's question of how will it be managed. And I think there are two distinct issues. One is what we've already talked about, the dead burden which is unsustainable on the borrowing countries. So what happens to their debt sustainability? What happens if they can't pay? What happens to the whole issue of sovereignty issues etc. That's one. The other is whether the processes are multilateral enough. So the procurement is multilateral. The implementation is sort of more efficient rather than just being done by Chinese engineers. Whether there is any technology transfer etc. So I think even if I leave aside the geopolitical aspects of BRI for the moment about China's expansion etc. I think BRI obviously is a huge economic activity which can go horribly wrong if not managed properly. Therefore my own feeling is that BRI is here to stay whether or not India says yes or no or anybody else. So it's a question of can we make it more multilateral? Can we make it more international sort of opening up international competition? Open it up to international procedures for procurement, for implementation. Only when you say that I completely agree that it could be as far as possible, should be as far as possible multilateral, lateralized. The problem that lies here is what has stopped the Asian Development Bank and the World Bank to do this till now. And if you remember for instance when 1994 the World Bank put its World Development Report on the issue of infrastructure it argued it should be privatized that the way to go is to privatize infrastructure. As we know privatization of roads through toll roads, privatization of electricity, privatization railways even in countries like the UK has not shall we say given the best results for the people. And therefore I find the argument for multilateralization I would really welcome if there was a corresponding will of the multilateral institutions as you yourself have argued in a discussion in news click. In fact China was sort of frozen out as well as India out of the multilateral institutions forcing them to go in this way. The Asian infrastructure bank and all of it that we have talked about earlier. So now the you see you have also a lot of the international analysts who are tied up to the West shall I say in different ways singing the praise of multilateralization who had no such problems when it was being done shall we say by the Americans the French or the British. Even today as you know that I think there are about 15 countries in Africa whose reserve bank is the French bank central bank they don't have control even over their currency in spite of independence so we are really talking of also shall we say neocolonial situation that exists in the past world. I think we are talking as I've said this before of a different governance structure. The Bretton Woods institutional arrangements post World War II is now passe 70 years later the world has changed Asia is no longer what Asia was then Asia already sort of you know is well on its way to becoming the prime sort of you know mover for growth and China and India obviously major players China even more so I think the issue is not mutually exclusive it's not that it is China or nothing. I think the multilateralization is the governance structure of this institution be it ADB or be the World Bank is should be such that it gives more place at the table for say China and I've argued that before China and India China and India but China of course isn't a different league and when that did not happen China went ahead and created another multilateral not not a unipolar institution but a multilateral institution the AIIB. So I think what the rest of the world should do and certainly rest of Asia should do is make all efforts to mobilize the resources China is making available but do it in a way which actually makes these projects happen which are needed these infrastructure projects but ensure safeguards not only in terms of economic viability technical viability environmental viability but in debt sustainability my biggest concern is things that happen say for example in Sri Lanka the Hambantota port where Sri Lanka couldn't pay back the loan the Hambantota port was leased out to a Chinese state enterprise for 99 years that is of great concern to the countries and that is also has very serious security implications for the region say in this case South Asia. So my concern is that the BRI is seen by many in either or situation those who are proponents of it say that's the best thing since sliced bread here is the money for infrastructure why not take it and on the other hand there are people who say oh my god this is basically Chinese hegemony Chinese expansionism and China will take over the world truth is somewhere in between and I think effort should be made consciously to see that China is given its due place in a multipolar world and a multipolar Asia and to oppose China because it's Chinese money is I think unwise and self-defeating just as much as embracing BRI wholeheartedly is equally sort of foolhardy and unwise so the challenge for all of us is how do we get the Chinese resources to places where it's needed but without sort of compromising the sovereignty of this country so that's the biggest risk and exactly the point you're making about the European colonial experience we don't want to then replace it by another colonial experience and the world is now a different place but multilateralization doesn't mean multilateral banks only so I think it's important to not think of mobilization means adb or the world bank they will play a role but multilateralization would mean that these are all followed in a international best practices of project implementation environmental safeguards social safeguards resettlement issues uh debt sustainability analysis etc which at the moment is not happening so some of the concerns about BRI I think are well placed but I also think some of the rhetoric is not so it's as always how do you balance the other part of it which has not been touched upon so much in the criticism criticism of the BRI and the BRI is also a risk for the Chinese people because there is a huge investment being made and whether it if the debt is not sustainable the projects are also not sustainable if the projects are not sustainable whatever China does it's not going to recover the money and the loss is going to be borne by the Chinese people so there is that element of it yeah no I'm very glad you have raised it because that's precisely one aspect which I am focusing on is the risk not just to the borrowing countries which we have talked about so far but to China because after all it's China's money the China Development Bank or the China XIM Corporation but ultimately it's Chinese money and if the projects are not viable economically and if the loans are not repaid to China Chinese people in that sense are left holding the bag and it endangers some of the Chinese institutions so you're absolutely correct and I'm very glad you've raised it because I think there's a high risk proposition when you take on projects which have not been so prepared well executed well and create the revenues which will pay back the loan for example the Nairobi-Mombasa railway which is a boon to that country is actually generating revenues at the moment which are less than 50 percent of forecast so if the revenues are less than half of forecast how will they be paid if they're not paid who is left holding the bag so yeah I think and in my most recent visit to Beijing last month that was precisely one of the issues that was discussed and I certainly made this point to my Chinese horse that look we all worry about the risks to the borrowing countries there is a risk as much to the lending lending countries well no it's a very valid point you know the last question of course India right India in fact has taken a pierce to me I could be wrong very much a Pakistan centric view of the BRI and instead of being a partner which it could have counterbalance somewhat not because of the money to the brought to the table but the sheer size its abilities and so on would have actually would have helped to counterbalance the Chinese influence over the projects more and probably in India self-interest also connecting to Southeast Asia connecting to Iran all of this would have been if we look forget the geo-strategic part would just narrowly on Pakistan China would have been actually also beneficial to what do you I could not make agree more with you and I'm on record and saying exactly this that India's reaction to BRI should not be only through the Pakistan lens China very understandably is really keen on east-west connectivity though there are spurs going south and all that but it's really China's connectivity through Eurasia into Europe that's the sort of in a main trunk line as it were India's on the other end is north-south India is very keen to go from Central Asia through Afghanistan into into India of course you know you'll have to cut through Pakistan the Chauh Bihar port in Iran connecting India through the sea into Iran then up through Chauh Bihar into the into the Central Asian countries and then there's the Southeast Asia then there is the so-called BC IM corridor the Bangladesh China India and Myanmar corridor which will be a critical element of India's look east and act east policy given all of that configuration I think oh and also the reality that India cannot match the resources that China puts at the table so strategically and if you take sort of an help of the game theory approach India's best bet I've felt and I've said so very openly that India has much more leverage being inside the tent than outside precisely for the points that you have raised yes India can sort of make the point that will not just say yes to whatever China says on you know the BRI but not being at the table not being at the summit where there are 67 leaders of other countries I think weakens India's position in the in the ultimate China I know is very keen to get India into the into the BRI partly because China feels that a India is of course you know Asia's major power and b it gives China a certain amount of respectability that is multilateral my feeling is that India playing hard to get may have been appropriate to begin with so they don't appear to be too readily willing to come to the party but now perhaps it's more strategic if India says with serious objections and rightly so about the China Pakistan economic corridor which goes through parts of occupied Kashmir but we will take a larger perspective as befits China and India China India of course much more at stake than just sort of you know one or two projects important as they might be and we will be in the game to influence it towards moving it to a multilateralization because India's keen interest is to multilateralize China's keen interest is not to multilateralize but if India is not at the table is difficult to argue that point too sort of forcefully from outside so I could not agree more with you that India should be part of BRI BRI has several risks sovereignty security all of those are valid concerns but in the at the end China is putting its money with its mouth is and it's very difficult to tell Nepal or Bangladesh or Myanmar or whoever that don't take that money unless you are willing to sort of say don't take that money hit his mind and India is in no position to say that so India should ride the BRI hotel it's interesting because even on the project it has committed its space has been shall we say at best glacial yes so absolutely the particularly the as one example the IMT trilateral highway India Myanmar Thailand trilateral highways five six years behind schedule and it's just a very small project in the global sense of things so and I'm also happy you talked about the game theoretic approach because it depends on the game there are games where both sides win and there are games if one side wins the other side loses and there's no reason to think BRI is a zero sum game which is what the Indian strategists seem to have taken it for and I think this win-win approach is something that we could work particularly when it talked we are talking about infrastructure which really is the basis for other economic activity exactly exactly thank you very much Rajat for being with us and we hope to get you into our discussions of this type and more my pleasure this is all the time we have for news click today do keep watching news click and the other discussions we hold