OBOR And Development Opportunities

Dr. Narad Bharadwaj

With the signing of the One Belt One Road (OBOR) framework agreement by Nepal on May 12, 2017, the Nepalese nation has taken a giant stride toward true globalisation embodied by China’s grand vision of reinventing the ancient Silk Road as a modern means of connectivity.

The formalisation of the preliminary agreement in the form of MoU signed by Nepal’s Foreign Secretary Shanker Dash Bairagi and Chinese Ambassador Yo Hong has ended a long suspense regarding Nepal’s  response to China’s proposal for partnership in this mega-global project.

Policy departure

Apart from being a major policy departure for Nepal in the field of foreign trade and trans-border connectivity, this agreement also takes this country on a journey into an un-trodden territory replete with abundant possibilities and pitfalls.

At a time when OBOR dominates the theme of political and economic discourse in Asia, Nepal’s decision to accept partnership with the OBOR initiative is likely to introduce a new dynamics in the geo-politics of South Asia.  This can be inferred from the existence of competitive development ideologies which vie for attention and acceptance. 

As China  moves forward with a bright vision of a prosperous 21st century world rich in connectivity and cooperation, small and poor countries of  Asia are also gradually waking up to an unfolding possibility of benefiting from China’s prosperity and its global outreach.

 For a country like Nepal, whose economy is tethered for decades with the Indian economy, any attempt at diversification of cross-border trade and connectivity is destined to meet with certain degree of resistance from the south. The relative situation of undeveloped infrastructures on the northern border also makes many people feel reluctant about going whole hog with the project.

However, there are ample reasons to believe that Nepal’s partnership in the OBOR initiative will definitely put this land-locked Himalayan country at the receiving end of the benefit accruing from the expansion of economy along the emerging growth corridors.

 Without truly global view, the schematic framework of OBOR looks too enormous to be realistic. But the massive funding resources and banking mechanisms which China has been creating to support it and the initial benefits this project has started to yield, shows that it is not an unachievable dream.

The massive chunk of economy and population this project envisions to cover is something that was not attempted in the past human history.

 The OBOR project has two parallel destinations. One is to reach Europe by creating a belt of cooperation extending from China to Europe passing through Central Asia, Middle East and Russia. The other is to create Maritime Silk Road linking the Mediterranean through South East Asia and Middle East.

The OBOR project is so huge that it covers 55 per cent of global GDP, 70 per cent of global population and 75 per cent of the world energy resources. In addition to this, it envisions to involve 65 nations including the South Asian countries strengthening the infrastructures for expanding modern logistics and energy generation.

One of the most attractive parts of the OBOR project is the seriousness with which China is implementing it with an objective of restoring the glory of China, and at the same time reconstructing the history of the ancient Silk Road helping create the condition of prosperity for those countries which are part of the project.

The OBOR project is now at the early stage of implementation. But it has already caught imagination of the world as a unique initiative for the prosperity and empowerment of a vast number of countries reeling under poverty and backwardness. The scale of its success can be judged by the fact that OBOR related enterprises have already started to pay 9 billion dollars tax to the concerned governments. It has generated employment for 70,000 people and has signed 4,000 engineering related projects.

The OBOR project is an attempt to recreate history on the basis of the ancient knowledge on achieving prosperous and civilised life by broadening collaborative global culture and weakening the instinct of rivalry and negation.

China has a history of developing a strong and profitable network of external market as early as 130 BC when Han Dynasty was in its ascendancy.  It had led the world in crafting economic boom, increase employment and chart out a path of collective prosperity even then.

At present, China has shown the determination to revive the historical experience of success through OBOR. The grand plan which it has unveiled to invest 1 trillion dollars in infrastructure along OBOR corridors is a great opportunity for countries which are desperate to break free from underdevelopment, poverty and dependence.

A debate is going on in Nepal on whether OBOR holds prospects for freeing us from the cycle of poverty and the stranglehold of India-locked reality.

 These concerns are genuine in view of our decades of vain hopes on India’s assistance in attaining prosperity, gaining free transit to sea and preferential trade arrangements.

 But our hopes of development were dashed several times despite the existence of relative advantage of easy geographical terrain along the Nepal-India border in comparison with the geographical landscape in the north.

Despite the scale of challenges, China is proposing to create an economic corridor between Central and South Asia by developing trans-Himalayan connectivity. India is reluctant to buy the idea and is advocating a policy of looking east. Nepal’s geo-political reality is such that it can only look either to the north or to the south. We looked only to the south for more than 50 years, but our socio-economic reality remained unchanged.

Now a historical opportunity has emerged to look to the north through our partnership with OBOR which offers a host of opportunities to change our social economic reality by expanding trans-Himalayan connectivity.

There are a number of factors that offer a possibility for a new economic resurgence in the trans- Himalayan region.

 One is the railway connectivity which China is rapidly expanding with an objective of connecting Central Asia with South and South East Asia. Now The Qinghai-Tibetan Railway has reached Shigatse, and it is scheduled to reach Keorung by 2020. With Nepal’s agreement to accept partnership with OBOR, a legal basis has appeared to extend it to Rasuwagadi.

Even if the Chinese railway connects only with Nepal’s border taking  some more years to reach Kathmandu, it will go a long way to end Nepal’s dependence on India by offering a quicker and less expensive alternative of  transportation.

The second reason why Nepal will benefit from OBOR is that the connectivity project which China has been pushing through also includes opening trans-Himalayan highways and establishing trans- border economic zones.

 Development of trans-border economic zones is not the need of Nepal only, it is the urgency of provincial government of Tibetan Autonomous Region also. China’s geo-strategic considerations also require it to develop its south-western reason bordering Nepal.

 Without trans-border connectivity with Nepal, Tibet’s economic transformation will not only be difficult but will also be more resource intensive. In this way connectivity is mutual imperative for both Nepal and China.

The third factor is that India’s north-east and north-western regions bordering Nepal, Sikkim and Bhutan have remained perpetually impoverished for reason of poor connectivity and relative distance from the seas. Nepal’s connectivity with China will also unleash the forces of economic transformation of this region irrespective of whether India participates in OBOR or not.

Effect of climate change

The fourth factor is that the growing affect of climate change in the Himalayan region are as challenging for China as they are for India. India cannot remain aloof from the human-induced  phenomena in trans-Himalayan region in view of the fact that it will be the country to receive the full force of adverse climatic conditions.

It is, therefore, in the interest of Nepal to sincerely participate in OBOR and to motivate both the economic giants of Asia to closely engage with each other in helping it to develop the southern slope of the Himalayas as an ecologically stable, economically prosperous and geo-strategically invulnerable region.

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