While China’s ominous investments in Sri Lanka and Pakistan
are grabbing headlines, China’s carrot and stick policy towards Thailand needs
considerable attention. Yet another ASEAN conference successfully concluded
last week at Manila and once again ASEAN (Association of South East Asian
Nations) countries failed to bring out anti-Beijing resolution. ASEAN’s meek
response to hegemonic China despite Beijing’s unremitting belligerence in South
China Sea (SCS) reflects the growing discord within the ASEAN economic
grouping. ASEAN which was painstakingly built as bulwark against China, is now
wilting under the torment of Chinese divisive tactics. Apparent fissures
inflicted by Chinese coercive economic diplomacy and muscle power of Beijing
has eroded the solidarity of ASEAN countries. Despite China’s penetrating
aggression, being the single largest trading partner and largest investor in
ASEAN countries, voices of protests within the group are seldom addressed. As
of now, China’s relations with ASEAN countries is rather complex. Each country
has a unique relation with China. Beijing managed wooed Cambodia and Laos with
massive infrastructure investments. Besides trade and investments, Sino-Burma
relations are leveraged by domestic insurgencies with Burmese militant groups
having safe havens in Chinese territories.
High-income group countries Brunei and Singapore are slowly trying to
reduce their dependence on China. Beijing’s relations with middle-income group
countries -Indonesia, Malaysia, Thailand and Vietnam are steered by increased
economic activity and infrastructure initiatives.
Thailand is the second-largest economy in ASEAN. But of late,
it is registering low levels of GDP growth and has history of buckling under
international financial crisis. Ever since Asian financial crisis of 1998-99,
Thai economy failed to regain its original momentum. Exports slid perceptibly,
manufacturing sector failed to bounce back. Thai economy is now thriving on
resurgent tourism and services sectors. By perpetually adopting “bamboo bending
with the wind” kind of diplomacy, Thailand uniquely maintained its sovereignty
and independence during the colonial and cold war era. Since 1945 Thailand
shifted its orientation towards US. Boisterous economic and strategic rise of China
has posed Thailand with a challenge of choosing between Washington and Beijing.
With US retreating from this part of the World and an assertive China looming
large over the region, Thailand was prompted to make a choice. China and
Thailand established diplomatic relations in 1975 which steadily expanded with
time. Though Thai military juntas had strong ties with Washington, America’s
receding presence in South East Asia prompted Thai establishment to shift allegiances.
Moreover, unlike other countries in the region, Thailand had no territorial
disputes with China and hence Thailand eagerly joined hands with China. Till
1999, American has been major weapons supplier for Thailand. Thai currency
plummeted during financial crisis as American purchases became more expensive.
Thailand began to look for other affordable options and eventually settled for
Chinese supplies setting stage for enhanced military engagement. Both countries
began joint military exercises in 2005 marking 30 years of diplomatic
relations. Since 2006, balancing of relations between China and US became
difficult for Thailand. By 2009, China replaced US as Thailand’s largest export
market and soon Chinese FDI dominated established investors from US, Japan and
Europe. Thailand also experienced a surge in Chinese tourists by 12%.
Thailand’s relations with US further weakened after the US
refused to recognize and endorse the military government following a coup in
2014. While the west was highly critical of military junta, China endorsed the
coup. Burdened by a stagnant economy, military generals offered several
concessions to China. Prime Minister Prayuth Chan-ocha approved purchase of
three submarines, 34 armored personnel carriers and 28 tanks worth $1billion
from China (1). Gradually military cooperation has become corner stone of
Sino-Thailand relations with Thailand’s boosted military spending after 2014
purchasing military hardware from China. In 2015, Thai and Chinese air forces
conducted first joint exercises, and navies participated in joint drill “Blue
Strike” in 2016. As US weaned away from Thailand to force military junta to
reinstate democratic government, China reinvigorated its relations with
Thailand. China eventually displaced Japan as Thailand’s largest investor in
2015. Cognizant of Thailand’s strategic location, which is dubbed as gateway to
South east Asia, China vigorously rallied to boost its economic, trade,
military with Thailand.
Thailand reciprocated China by repatriating Uighur militants
and political dissidents in 2015. But China was irked by Thailand’s inordinate
delay in approving the $5.5 billion high-speed rail project connecting China’s
southern province of Kunming with Laos and Bangkok, a regional connectivity
project under the BRI (Belt Road Initiative). Indicating its displeasure, China
abstained from inviting Prime Minister Prayuth for the BRI summit at Beijing.
Intimidated by diplomatic snub, Prayuth invoked the article 44, of Thai
constitution, to circumvent the legislative body (parliament) and expedited the
project. Through its “shame offensive tactics” China invariably compelled Thai
government to fall in line.
China buoyed by geopolitical ambitions, determined to emerge
as the regional superpower, unleashed quintessential tool of water diplomacy in
South East Asia. Beijing revved up engagement with countries Myanmar, Cambodia,
Laos and Thailand through which river Mekong flows. Mekong is dubbed as Amazon
of Asia. In 1995, Thailand, Cambodia, Laos and Vietnam signed the Mekong River
Commission (MRC) with Myanmar and China upstream countries as dialog partners. Interestingly,
China the upper riparian country of Mekong evaded from being part of MRC but
managed to have unparalleled control over the waters by constructing numerous
dams along the course of river in its territory. Statistical reports indicate
that China uses more than half of total waters of the river against 16% by the
lower four riparian countries. China has dubious strategies for Mekong river.
Aside, availing copious amounts of Mekong waters, obsessed with dam building
China clinched numerous hydroelectric dam construction projects. Thus, Chinese
companies besides enormously benefitting from infrastructure projects reaped
dollars by selling electricity to respective countries. Unmindful of environmental
concerns, China built several dams in all the four riparian countries despite
mounting protests from locals. Stalling of the humongous Myitsone dam in
Myanmar amidst growing protests by locals’ mirrors brewing anti-Chinese
sentiments towards China financed dams.
Apart from the financial benefits, China aspired to convert
the longest flowing river into largest shipping lane for Chinese trade. To
facilitate swift shipping cargo, China entered into agreement with Myanmar,
Laos and Thailand for blasting rocks and reefs in Mekong river in 2000.
Disregarding environmental concerns like changing of river course, destruction
of aquatic habitat and reefs, China carried out first phase of blasting in
2002. But was forced to stop in 2003 as reef blasting potentially aggravated
territorial dispute between Thailand and Laos. China’s dam building spree had
reduced catchment areas for fishing, reduced water flows to downstream
countries, caused displacement of several people and threatened their
livelihoods. Reports now indicate that intense damming of Mekong river made the
lower riparian countries flood-prone.
China’s renewed outreach towards Thailand’s military regime
can be ascribed to Beijing’s intentions of developing the isthmus of Kra in
Southern Thailand into an “international golden waterway”. Interestingly,
ambitious Chinese idea found semblance with plans of retired Thai military
generals, academicians, businessmen who revived the idea of building a long
canal across Southern Thailand connecting Pacific Ocean with Indian Ocean.
Indeed, Chinese military first elaborated on this idea in the Naval and
Merchant Ships magazine published by China’s largest ship building conglomerate
CSSC in late 2015 (2). For long China has been battling fears of choking of its
imports at the narrow Malacca Strait in an event of regional escalations by the
US. 80% of Chinese imports pass through this choke point. Dubbed as Malacca
Dilemma, China aspires to surmount the fears of blockade by the US by bypassing
the strait and routing its imports through narrow isthmus of Kra. Kra links the Gulf of Thailand with Andaman
Sea at same latitude as the island of Phuket. New reports indicate that China
is keen on building Kra Canal, 135-kilometer-long, 450-meter-wide and
26-meter-deep. The proposed Kra canal would be 800 km south of Bangkok and
200km north of Thailand- Malaysia border. China right now is seriously
contemplating on the incipient benefits of Kra canal over Malacca Straits which
is the World’s busiest route but infested with pirates. Kra Canal route can
reduce the travel time by two-three days or roughly 1200 kilometers.
As of now, Prime Minister Prayuth is opposed to proposal of
Kra canal actively supported by the influential grouping of military which
formed Thai Canal Association for Study and Development. It is working with
Peking University in carrying out feasibility studies which are funded by a
Chinese company. China is actively recruiting high power pro-Chinese Thai
groups to intensively campaign for garnering public support. With apprehensions
about the economic viability of Chinese investments looming large, sections of
Thai community want that the project be internationally-funded. The estimated
cost of canal development alone is $28 billion which is 8% of Thailand’s GDP
and related infrastructure and special economic zone in the surrounding region
would cost $22billion. Though the project can create 2.5 million jobs as
Chinese financed projects come with an attached clause of employing Chinese
personnel locals hardly stand a fair to make a living.
While the project can be a big boost to anemic Thai economy,
public support is paltry. Thailand venerates traditional life style and
strongly upholds ideas of environmental conservation. Besides, canal
construction will have far-reaching implications on the security and sovereignty
of Thailand as country will be divided into northern province with overwhelming
Buddhist population and Southern province dominated by Malay-Muslims. Canal
will create tensions among the ASEAN countries as Singapore might lose its
business, indispensability and economic advantage. Development of this mega
project will be replete with immense challenges and the hilly terrain of the
region can pose formidable obstacles during construction. Above, all the canal
will change the economic, financial and geopolitical arena of the region.
While the potential benefits of emerging as regional economic
hub can bring prosperity to Thailand but returns are not assured and
guaranteed. Unlike the Panama Canal or Suez Canal, Kra Canal has alternative
transit route and hence recovering cost of investments will be long drawn.
Also, unlike the OECD developmental assistance loans which have nominal
interest Chinese loans have higher interest rates. With China’s appetite for
resources sinking and economy showing signs of slowing down, shipping traffic
might be less revenues may not be on expected lines. In absence of robust returns from the Kra
canal Loan repayment will be an upheaval task for Thailand. Singapore is
internationally acclaimed smart transiting hub and to have preferential
advantage over Singapore the new port must offer better services. Else it might
lose the competitive advantage and go down history as yet another shining
example of Chinese debt trap diplomacy. Moreover, with growing risk of
conflicts between India and China, Kra Canal can become another region of
consternation. In a plausible war like scenario China may not be averse to
sending war ships through this canal towards Andaman and Nicobar Islands.
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