The Asian Great Game of Influence: Part 2 (Coco Islands, Project 141)

With the global focus now shifting to Asia and the Indo-Pacific, the Sino-Indian battle for Influence will reach its climax in Asia in the coming years. In this piece, we analyse the Indian Ocean Region, the recent developments of China in Myanmar's Coco Islands as well as the CIA Leaked Report of the Chinese Project 141 & what India can do to protect its interests.

Introduction

The Indian Ocean Region is tectonic when referring to China's growing footprint in the Indian Ocean Region. When speaking of getting hold of the Indian Ocean Region, it is pertinent that projects like CPEC come into play. The Projects in Africa & UAE, the situation in Sri Lanka & the situation in Myanmar are very significant. 

The American Strategic Community & their researchers came up with the concept of the "String of Pearls" which although sounds very fanciful means that a network of Chinese military and commercial facilities is being raised with time for the purpose of "salami slicing" India. The 2017 Chinese Projects in Djibouti, the Iran-China 25-Year Cooperation Agreement, the Debt Traps of China in Pakistan & Sri Lanka & now the recently revealed Project 141 clearly highlight a pattern that can very well confirm that string of pearls is very much a possible reality.

In this piece, as we see how much of it has happened & what can possibly happen, we also dive deep into what India can do, how it can do & what it has done.

The Rabbit Hole: China-Pakistan Economic Corridor

While most Pakistani strategic enthusiasts would eagerly highlight how big of a success the CPEC is, the fact of the matter is that CPEC has delivered more to China than Pakistan. The International Monetary Fund (IMF) has revealed that China holds roughly $30 billion of Pakistan's $126 billion in total external foreign debt, which is thrice the amount of IMF's debt ($ 7.8 billion) and exceeds its borrowings from the World Bank and Asian Development Bank combined.[1] And this is just the tip of the iceberg. The CPEC Projects have been riddled with corruption stemming from the CPEC Authority. Pakistan's Minister for Planning, Development and Special Initiatives Prof Ahsan Iqbal while speaking with journalists was quoted saying, "Not a single dollar has been invested in the CPEC" through the Authority.[2] 

While the Pakistani Media called CPEC a "game-changer" how, much game has the CPEC changed is a matter of contention.[3] More than the game, the control has changed it seems. In 2013, the Chinese state-owned China Overseas Port Holding Company was officially granted control of the port's operation, further consolidating Chinese influence over the Gwadar project & in 2021 Protests erupted against the Projects after illegal fishing became a threat to the locals' livelihoods by Chinese trawlers.[4] 

The Corruption in the CPEC need not be highlighted more noting that in 2017, the Chinese Government halted the release of funds effectively pausing three road projects.[5]  The charges of corruption and increasing resentment among the people also drove the Pakistani government to stop the road projects worth one-trillion Pakistani rupees. Following this development, Beijing was forced to work on new guidelines before the money was released.

Of the total $62 billion worth of CPEC projects, roughly $33 billion is expected to be invested in energy projects dominated by finances (80 per cent) from China.[6] In August 2020, the Pakistani Government set up a committee to audit the power sector and examine the high cost of electricity. The report showed that six China-funded power projects have given huge profits to firms from China as compared to existing market rates. According to the report, some of the power projects, where no bidding process was followed, are 237% more expensive than other similar projects in neighbouring countries like India. Similar wrongdoings were highlighted about two coal-based power plants also.[7] It has been reported that $2.5-2.6 billion in excess payments were made to Chinese firms.[8]

As per multiple reports, with accumulated interest of almost $5 billion per year, Pakistan would have to pay almost $200 billion over 20 years to China.[9] The Pakistani Government's Vision 2025 document has kept a target of 8% GDP Growth by 2025 & has stated that the completion of the energy projects by 2020 would be adding 2.5% Growth to the GDP. [10] But this Pakistani Fantasy falls flat in reality with energy project delays & cost overshooting by nearly doubling or tripling than the Original Figures. 

So, what has really been the success story of the CPEC? It has been the Chinese capability to leverage the Pakistani incapacity to repay with land & other influence. The so-called "investments" which happen to be loans & not FDI have trampled the Pakistani Economy. Pakistanis call it "concessionary loans" but the fact is a typical loan from Chinese institutions under the BRI entails an interest rate of 4.2 per cent and a repayment period of less than 10 years against this, a loan from an international donor consortium like the Development Assistance Committee of Organization for Economic Co-operation and Development, through which countries like Germany, France or Japan lend, carries an interest rate of 1.1 per cent and a repayment period of 28 years.[11]

With the Karachi Port Project going to China, the Chinese can now bypass the Strait of Malacca & through Pakistan have a better trade connection with the world. And Pakistani Governments in succession with the Military Establishment have decided to keep Pakistan up for sale. The Government would be mortgaging the country's major airports and road network and issuing Sukuk bonds keeping Islamabad Expressway, Islamabad-Peshawar Motorway, Pinid Bhattia-Lahore motorway section, and airports of Lahore, Islamabad and Multan as collateral. [12]

Taming the Pariahs: The Iran-China Deal & Chinese Activities in Mynmar's Coco Islands

China making Iran another Pakistan would be a nightmare come true for the Indian Establishment. While this nightmare does seem far away it is very much possible. Iran is expected to become the newest member of the Shanghai Cooperation Organisation in the July SCO Summit held with India as its Chair. Iran signed the 25-Year Cooperation with China in March 2021 whose details remain confidential to this date. The Iranian Government also with the help of Chinese Mediation managed to sign the Irann-Saudi Deal on 10th March, 2023. As per data previously obtained by The New York Times, China is to invest US$400 billion in Iran's economy over 25 years time period in exchange for a steady and heavily-discounted supply of oil from Iran.[13]


There is evidence that Signals Intelligence (SIGINT) capabilities are being strengthened on Myanmar’s Coco Islands, which is 55 kilometres north of India’s tri-service base located at the Andaman and Nicobar (A&C) Islands. The Tatmadaw has vehemently denied that it is assisting the Chinese, but the latest satellite imagery released by Maxar shows that the military regime is expanding the size of the Coco Islands base by extending the length of the runway and establishing a stronger SIGINT architecture.[14]


Officially, a spokesperson for the military junta’s ruling State Administration Council has dismissed Indian concerns that Naypidaw is permitting the deployment of foreign troops, or more specifically Chinese forces, as part of its infrastructure expansion on the Coco Islands.[15] Notwithstanding Naypidaw’s rejection of Indian concerns, it has no independent strategic or security rationale to boost the Coco Islands’ SIGINT installations, except to respond to the incentives given by Beijing.


China has been a dependable and dedicated ally of the Tatmadaw throughout all of its repressive measures. An example of China’s indirect tacit support for this coup can be noted in its decision to block a UN Security Council joint statement condemning the military coup in Myanmar in February using its veto powers.[16] China also continues to defend Myanmar’s Rohingya atrocities in the United Nations Security Council alongside Russia.[17] Myanmar has continued to support China on issues regarding Tibet, Xinjiang, Hong Kong and Taiwan.[18]

The Coco Islands had been relatively calm with no major activity as the Myanmar Junta & the successive governments had been busy quelling the internal turmoil. However, these sudden constructions do raise important questions. While the questions are fairly good, sometimes history as well can answer them. A Report says that the Coco Islands were allegedly leased to the People's Republic of China from 1994.[19]

Project 141: The UAE Bid of China

Leaked ‘Top Secret’ intelligence documents accessed by The Washington Post last month raise concern over the construction of a suspected Chinese military facility at a port near Abu Dhabi, the Khalifa port. The Chinese People's Liberation Army plans to employ ‘Project 141’ to establish a worldwide network of military outposts in Equatorial Guinea, Djibouti, UAE, Cambodia, and Mozambique. As per the documents, two of these outposts are currently under construction, one is operational, and the remaining two are awaiting approval.

After the US intelligence agencies discovered the evidence of ongoing construction at Khalifa Port, which they suspected to be a secret Chinese military facility in the United Arab Emirates, Washington intervened to stop the construction work. Under pressure, the construction was stopped, however, China has resumed the construction. [20]

These Developments do come at a time when the Middle East and Gulf continue to strengthen ties with Beijing. In this regional shift, the UAE, as well as others such as Saudi Arabia, have increasingly been acting in contradiction to American foreign policy interests, even to the point of directly snubbing US concerns concerning issues such as ties with China and Russia, the refusal to support Ukraine, and the insistence on imposing cuts on oil production.

Conclusion: What India can do.

India while has successfully preserved its own interests during the Russia-Ukraine war, the art of diplomacy has to work now as a concrete force. UAE's movement towards Beijing will make New Delhi very uncomfortable. The current global situation demands India to go the "India Way" as S. Jaishankar says. The scenario has evolved from seeing India as a cheerleader to witnessing India as a partner. It's a significant shift & India as a pole in the International Landscape does have consequences for the world which can greatly help India. India's a part of the Quad grouping as well as the SCO at the same time & this does highlight India's multi-alignment. 

Starting with Sri Lanka, everything has been done the way it should've been done. India concluded a USD 400 million agreement with Sri Lanka to help preserve the country's forex reserves, a USD 1 billion credit line for essential goods, a USD 500 million credit line for fuel, and a USD 55 million credit line for fertiliser have been extended to Sri Lanka. [21] On the other hand, China remains Sri Lanka's Largest Creditor & has the Hambantota International Port on lease for 99 years. It is operated by the Chinese State-Owned China Merchants Port Holdings. But one can say one thing for sure, it is foolish to mourn for that what is lost as it is imperative to secure what may be lost. One cannot certainly say that Hambantota International Port is lost, but it is very very imperative to ensure that no more such important assets go the Beijing Way.

Coming to Maldives & Africa, India needs to step up its engagement with Africa. Inviting African Leaders to Defense Expos is one thing, but engagement has to be country specific. For too long has the Indian Government seen Europe as a whole not realising the identical distinction which lies there. And the same can be said about India-Africa Relations. Indian Engagement has to be on the lines of Indian Engagement in the Maldives. While Maldives has its own Anti-India lobby, the lobby is mostly supported by Opposition Political Parties, the Social Media Accounts that initially started the campaign linked with ISIS & Chinese as well as American Intelligence where the Chinese Disinformation's hand is significantly more than the Americans.[22] The gambles of the "India Out" campaign supported by local Maldivian Domestic Outlets also highlight the disinformation of India's annexation of and distorted facts about India’s integration of Sikkim, Operation Cactus in 1989, and the 2018 Indian chopper withdrawal debacle from the Maldives.[23]

Speaking of Pakistan, it is more of a lost cause. The only optimistic news from those quarters is the maintenance of the Ceasefire agreement of February 2021. Pakistan is embroiled in its own Internal dramatics/ While traditionally seen by the Indian Strategic Community as otherwise, for India, an unstable Pakistan is way better than a stable Pakistan. A stable Pakistan is always proactive in its K2 (Khalistan & Kashmir) ambitions which have evidently failed & are on a major decline but the fact of the matter is many security personnel have been lost. Even though the Unstable Country continues its Low-Intensity Conflict (LIC), India knows how to answer, but any answers be it of the recent Poonch Attack should only come after India's G20 Presidency's Over noting that G20's Tourism Summit is in Srinagar this Year & all the Pakistani efforts are to cancel it or embarrass India by forcing it to revoke Pakistani Foreign Minister's Invite to the event. A response has to be given, but it has to be thoughtfully crafted & it must be calibrated, 

And Lastly speaking of the Middle East, the dynamics are shifting. MBS's Vision 2030 has made Saudi shift drastically in West Asia. With the possible re-entry of Syrian Assad back into the Arabian fold foreseeable, it is best to monitor the developments while engaging more with West Asia where possible. UAE & Iran are two partners which India need not lose to the Chinese. Indian Diplomacy if treads carefully, the India Way is well within its reach.

Endnotes:

1. "Defaulting Pakistan takes the steam out of CPEC", ANI, 28th February 2023.
2. "CPEC failed to bring any investments in Pakistan", The Print, 20th August 2022
3. "Pakistan media hails Chinese investments as 'game-changer'", The Economic Times, 21st April 2021
4. Shah Meer Baloch, "Protests in Pakistan erupt against China’s Belt and Road plan", The Guardian, 20th August 2022
5. "China temporarily stops funding for 3 major CPEC road projects in Pakistan over corruption", Business Today, 5th December 2017.
6. Ayjaz Wani, "Pakistan: Govt report uncovers corruption in CPEC projects", Observer Research Foundation, 27th May 2020.
7. Dipanjan Roy Chaudhury, "Pakistan’s internal report indicts China for corruption in CPEC power sector", The Economic Times, 20th May 2020
   
   "
8. Ayjaz Wani, "Pakistan: Govt report uncovers corruption in CPEC projects", Observer Research Foundation, 27th May 2020.
9. Amit Ranjan, "Is Pakistan Hurtling Towards a Debt Trap With a String of Hydropower Projects With China?", The Wire, 21st July 2020.
10. Faisal Mehmood Mirza, Nishat Fatima b, Kafait Ullah, "Impact of China-Pakistan economic corridor on Pakistan's future energy consumption and energy saving potential: Evidence from sectoral time series analysis", Science Direct, 15th May 2019
11. "China snares Pakistan in BRI debt trap with high-interest rates, stiff repayment terms, lack of transparency", ANI, 24th March 2023
12. "Pakistan govt decides to mortgage major govt assets to issue sukuk-bonds", Geo News, 23rd June 2021.
13. Fassihi, Farnaz; Myers, Steven Lee," Defying U.S., China and Iran Near Trade and Military Partnership", The New York Times, 12th November 2020
14. "New military infrastructure discovered in Myanmar’s Great Coco Island close to Andamans", Indian Military Review, 31st March 2023
15. "India confronted Myanmar about Chinese Spy post on a remote island", Times of India, 7th April 2023
16. "Myanmar coup: China blocks UN condemnation as protest grows" BBC, 3rd February 2021.
17. Dwaipayan Sinha, "The Myanmar Coup – The Tatmadaw And China", Diplomatist, 26th March 2021.
18. ibid
19. Pike, John, "Coco Island", Federation of American Scientists, 26th November 1997.
20. "China resumes construction of a military base in UAE, defying US objections", Middle East Monitor, 30th April 2023 
21. "India extends aid worth USD 3.9 billion to help Sri Lanka face of economic crisis", ANI, 14th January 2023
22. "Understanding the India Out Campaign In Maldives", Observer Research Foundation, 7th October 2022
23. ibid