The Government of Guyana has welcomed with open arms, China’s Belt and Road Initiative (BRI) which is focused on infrastructure development in various regions around the world. But one of Guyana’s strategic partners, the United States of America, views the BRI.
With much suspicion due to the consequences of both its failures and successes. In fact, the US Congress is expected to examine a report on China’s influence in the Caribbean and Latin American Region as well as the controversial BRI.
Some critics argue that US policymakers are only opposed to BRI because it can be used as an excuse by China to establish military bases in countries where the USA has an established presence, thereby weakening its power.
But the Center for Global Policy is of the view that the US may have legitimate reasons for being opposed to BRI. Specifically, Paul Haenle from the Carnegie–Tsinghua Center for Global Policy recently examined the outlook from the United States on the BRI.
Haenle said that too often, Belt and Road projects have been prone to corruption while severely lacking in economic sustainability, regulatory transparency, and good governance.
Together, the 53-year-old said, these deficits lead to projects that threaten sovereignty, export sub-standard norms, and practices, and cause concerns over the initiative’s geostrategic implications.
The political adviser said that these sentiments have been spelled out in a number of speeches delivered by senior members of U.S. President Donald Trump’s administration, including Vice President Mike Pence and Secretary of State Mike Pompeo.
The Consultant said that if China does nothing to address them, it will be difficult for third-party countries like the United States to view the BRI with anything but suspicion, rather than as an opportunity for collaboration.
Debt & Sustainability
Haenle said that a major factor in this is the debate surrounding the claims that China engages in debt-trap diplomacy through the BRI, ensnaring developing countries with debt-dependence and then translating that dependence into geopolitical influence.
The Center for Global Development classifies eight countries as having a “particular risk of debt distress” as a result of their involvement in China’s BRI.
It was noted that China’s actions in Sri Lanka, Pakistan, and Malaysia are central to the debt trap debates. Speaking on this matter, Haenle noted that China acquired ninety-nine years of operating rights for the Hambantota Port in southern Sri Lanka after costs for the project spiraled out of control, forcing the government to give up control of the port in return for a Chinese bailout.
In Pakistan, Haenle noted that a financial crisis has fuelled opposition to projects from the China-Pakistan Economic Corridor (CPEC), a major spur of the Belt and Road. He said that the debt-trap argument gained further credence after Malaysian Prime Minister, Mahathir Mohamed cancelled $23 billion in BRI projects and warned countries against falling prey to “a new version of colonialism.”
The official said, “Even for those not inclined to view the BRI as a Trojan horse for Chinese influence or a reincarnation of nineteenth-century-style imperialism, this sustainability gap is a major cause for concern regarding Belt and Road projects. China argues that countries that cannot assume the debt burden of large-scale infrastructure projects should not accept such projects in the first place.”
He continued, “However, Chinese companies also have a responsibility to conduct appropriate risk and business viability studies ahead of time to ensure recipient countries are likely to repay their debt obligations and are capable of doing so. Given the complex business and political climates of many developing countries where these projects take place, the difficulty in conducting the thorough analysis needed is often amplified.”
Haenle added, “Even with the most scrupulous preparation, no project’s success can be fully guaranteed, but the rising number of countries reporting major debt struggles related to BRI projects indicate a need for Chinese companies to strengthen their project implementation process. Part of improving this surrounds increasing project transparency.”
Transparency & Foreign Participation
Haenle noted that the lack of transparency surrounding the initiative has been one of the largest sources of U.S. objections to the BRI’s implementation. He said that opacity makes it difficult for foreign firms to become involved in BRI-related projects until they are already in motion, and it may also create fertile conditions for corruption.
He said that these concerns are not specific to the BRI and are also reflected in the broader ongoing U.S.-China trade and economic disputes over fairness and reciprocity for U.S. firms operating in China.
The Consultant said, “China continues to encourage outside investment to help overcome the massive deficit of funding needed to complete its vision, but there is a disconnect between those looking to participate and actual opportunities. Low standards, difficulties competing in the procurement and bidding process, and riskiness of investments are further obstacles to joining.
The confluence of complications lends credence to existing perceptions that Belt and Road is a ‘made in China, made for China’ initiative, as Brian Hook, the State Department Director of Policy Planning, described it.”
Haenle noted that lack of transparency feeds into concerns that BRI projects may encourage poor governance and act as a magnet for corruption.
In this regard, he contended that many of the countries along the Belt and Road already rank among the world’s most corrupt, per Transparency International.
He said that the opaque nature of BRI projects makes them a highly fertile environment for embezzlement and mismanagement. Under such conditions, he said that political leaders in BRI countries may view Chinese-backed projects as a win-win.
“Leaders get to claim that they are bringing development while also embezzling funds through kickbacks and shady financial transactions,” expressed the political adviser. He said, too, that indeed, there have already been several high-profile examples of BRI-related corruption.
In Kyrgyzstan, Haenle pointed out for example that the failure of a Chinese-built power plant has led to the arrest of two former prime ministers accused of receiving kickbacks from the Chinese company in charge of construction.
As long as opacity is the norm in BRI projects, Haenle stressed that it will be difficult for the United States and other like-minded countries to view the initiative in a positive light.
“Not only does it foster corruption and exacerbate the debt woes of developing countries, but the lack of transparency also fuels suspicions that Belt and Road work as a Trojan horse for Chinese influence. China religiously repeats that it ‘has no geopolitical calculations’ for the BRI. However, the initiative’s scale means that it necessarily has geopolitical implications.”
In this regard, Haenle highlighted that the BRI’s Digital Silk Road component has served as a conduit for the export of Chinese privacy and surveillance technology. This includes the use of facial recognition software in Zimbabwe, social credit–like systems in Venezuela, cyber-security laws in Uganda and Tanzania, and a great firewall in Russia.
He said, too, that a number of BRI projects are in strategic locations that suggest a geopolitical calculation.
“The Strait of Malacca, a high-traffic trade route that has been a source of tension between Malaysia and neighbouring Singapore, has three BRI ports planned that will provide direct access to the route.
Although all ports are planned for commercial rather than military uses, the strategic implications of Chinese-funded ports in all of these disputed locations are enough to worry some that China’s presence in the region will grow beyond commercial ports alone.”
When the foregoing points are considered, Haenle said that China’s claims of ‘win-win cooperation’ and a ‘community of common destiny’ with BRI seem disingenuous at best, and at worst, a cover to hide the true intentions of the initiative.