Wilson’s Word

One-Belt-One-Road-zipperVANUATU has done what WW and others hoped they wouldn’t and signed up with China’s One-Belt, One Road initiative (OBOR). Many people have asked WW what is the belt and road thing. Well, OBOR is an umbrella term for a series of Chinese funded infrastructure projects that aim to link China, the rest of Asia, and Europe. At a cost of $1 trillion, spread over sixty-eight countries, it is thought to be the largest infrastructure project ever.

There are three main parts of the project. The ‘belt’ is a series of overland transport improvements that branch out from China into Central Asia, Pakistan and Southeast Asia. The ‘road’ is a series of port developments in the Indian Ocean. These projects are then often accompanied by further infrastructure projects such as stadiums and airports.

China’s motives for OBOR can be divided into economic, diplomatic, and political. By cutting travel times between China and Europe, and stimulating economic development, OBOR aims to maintain China’s exporting strength. In addition, China hopes that these infrastructure projects can soak up some of their excess capacity in basic manufacturing industries (such as steel and concrete).

With the US retreating under President Trump, China is keen to score a diplomatic victory by bringing Asia into its sphere of influence. Howard French, of Columbia University, pointed to Xi Jinping profiting off nationalism by reasserting China on the world stage after centuries of humiliation. It is no surprise that Mr. Xi, whose presidency has been defined by this narrative, is its chief planner and promoter.

The diplomatic success of OBOR is dependent on whether it can bring lasting benefits to the recipient countries. The Asian Development Bank calculated that Asia needs to invest $1.7 trillion in infrastructure per year to maintain its growth momentum. However, most of this figure is made up of basic infrastructure needs in developing countries (such as sewers, power lines, and basic road and rail connections). Flashy international airports, deep water ports and four-lane highways are less essential to needs of a developing country.

Take Kazakhstan, a centre piece of OBOR and where it was announced in 2013. Before OBOR, it was a poor country, led by a tyrant and heavily dependent on oil and gas exports. Now, it is still a poor country, led by a tyrant and heavily dependent on oil and gas exports, but with a better train line.

The ‘New Silk Road’ suffers from misleading branding. As Peter Frankopan, author of The Silk Roads, pointed out, the extravagant wealth of old Silk Road cities like Samarkand, Bukhara and Kashgar was based on the fact that intermediary traders were able to charge a high markup on the goods they moved because of the risk and difficulty of the journey. The dividend to Kazakhstan of moving goods by a cheap and efficient train is much, much smaller.

Kazakhstan is a relative success story for OBOR. Sri Lanka, on the other hand, is an example of the danger to countries who open their arms to Chinese financing. China financed and built a large complex around Hambantota, in southern Sri Lanka, which included a $1.5bn deep water port, a $200m international airport and a 35,000 seat cricket stadium.

This is no 21st century Marshall Plan, however. The project, like most in the OBOR scheme, was financed by Chinese state-owned banks. The recipient countries tend to have a bad credit rating, so when China offered them cheap credit, they were eager to accept. However this can result in countries with poor credit ratings having dangerously high levels of debt. In the case of Sri Lanka, being overburdened by debt meant they were forced to hand over their deep water port to China in a debt write-off agreement.

White elephant... the Chinese-built port in Sri Lanka.
White elephant… the Chinese-built port in Sri Lanka.

Sri Lanka is unlikely to harbour any diplomatic goodwill to China, and other countries will see it as a reason to be apprehensive. Sri Lanka was not helped by the fact that the port development created little revenue – the airport has been dubbed the ‘world’s emptiest international airport’.

China seems to be exporting its ability to make poor investment decisions, which should worry developing countries. The underlying reason for this is its command economy. Researchers from Oxford University led by Atif Ansar have found that around half of Chinese infrastructure investments destroy, rather than create, value, by moving funds that could have been more productive into unnecessary infrastructure. The fact that private Chinese banks are increasingly apprehensive about projects, whilst state-owned banks carry on regardless, is indicative of the poor quality of potential projects, according to the Lowy Institute, an Australian think-tank.

What now being a part of OBOR really means for Vanuatu is not clear yet, but WW feels that given Manus Island in PNG is to become a joint Australian- US military base, then the idea of a Chinese base in Vanuatu is still in the melting pot despite all the denials.

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Police on street in Port Vila. Picture: DFAT

THERE were more offerings from Australia to Vanuatu this week and most of it pertained to improving our police training and law and order infrastructure, which is most welcome indeed. But WW was concerned about the plan to supply a ‘new Defense Advisor to Vanuatu’. What do we need with one of those and who are we supposed to be defending ourselves against exactly?

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Ralph_statementWW’s first reaction to the news from the Foreign Minister Ralph Regenvanu’s statement on Thursday that Vanuatu was considering suing fossil fuel companies globally was one of glee. Way to go Ralph, many of us shouted.

It was somewhat tempered when some wiser heads reminded us that more than 80 per cent of our national power is from fossil fuels and it might be wise to clean up our own backyard before we sue the neighbours. Ouch, that’s hit the plan for a big six.

pump-vs-plug-electricity fossil fuelBut it brings WW back to his long term groan about the power and rip off abilities of monopolies such as UNELCO and Pacific Petroleum. WW knows that the Salwai Government, which had monopolies on its to do list after being elected, has legal advice that to break the UNELCO contract would cost nearly as much as we owe the Chinese.

Ralph’s speech on this subject was erudite, compelling, statesmanlike and should appeal to all right thinking people. But without the Government being able to somehow create a major shift in the thinking and operation of UNELCO, it simply remains a classic case of people who live in glass houses should not throw stones.

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THE issue of dog licenses has reared its ugly head in Port Vila again and WW can tell you exactly how it will play out. The people who can afford the VT2300 dog registration fee are the people who already keep their dogs off the streets after 9pm and under control, but they will be targeted by council officers simply because they can afford to pay. Those that let their dogs roam freely and noisily will not be targeted because they would cry poor.  End result will be status quo because the dogs that are running amok after 9pm will still be disturbing the peace because their owners couldn’t care less about anyone else. PVMC’s coffers will be somewhat fuller, but not for the right reasons.

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WELL, it seems we have re-wound the clock and politics is back where it was three or four years ago. Is there a genuine Motion of No Confidence; who really signed it and will they stick to it; did a few sign it in the hope of a better deal and then received one anyway with the government, so that they changed their minds. Only a vote will tell. WW cannot see why a vote cannot be taken on a sitting day of Parliament… for one thing it saves money as the pollies are already there.

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And that’s Wilson’s Word quill-pen-wilsons_word

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