Hussein Askary, Vice-Chairman of the Belt and Road Institute in Sweden
In part one of our reports from Beijing on the Third Belt and Road Forum (BRF), we reviewed the views of the Chinese side of the achievements of the past ten years of the Belt and Road Initiative (BRI) and the vision of its next ten years. In this part, we review the reaction by the leaders and representatives of the 152 nations and international organisations that have joined the BRI.
The most important point which was raised by the leaders present in Beijing is the synergy that they want to create between their national and regional economic development plans with the BRI and China’s plans. One such integration process is of the of the BRI with the Eurasian Economic Union (Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan), and the North South International Transport Corridor (Russia, Iran, and India). This was most clearly expressed by President of the Russia Federation Vladimir Putin.
Indicating that Russia and China and a majority of countries of the world share the striving for equal and mutually beneficial cooperation towards universal, sustainable and lasting economic progress based on respect for the civilisational diversity and the right of every state to its own development model, Putin said:
“The Belt and Road initiative is based on these fundamental principles and fits in very well with the integration processes that are ongoing in many regions. It also corresponds to the Russian ideas of creating an integration contour that will ensure the freedom of trade, investment and employment and will be complemented with interconnected infrastructure.”
He stressed that the BRI “rhymes with our idea of creating a greater Eurasian partnership” and the alignment of various integration processes, such as the Belt and Road Initiative, the Shanghai Cooperation Organisation (SCO), the Association of Southeast Asian Nations (ASEAN) and the Eurasian Economic Union (EAEU), which Russia is successfully developing with its post-Soviet partners.
In contrast to artificially engineered geopolitical theories of the war between the different transport and logistics corridors, Putin clarified how these different Eurasian corridors will be complementing each other. Putin said:
“I will mention some of our forward-looking plans we are already implementing, which harmoniously complement other infrastructure projects in Eurasia, including those that are being implemented within the framework of the Belt and Road Initiative. Taken together, they will allow us to create an integral transport and logistics network and to diversify freight traffic through more effective, reliable and safe transportation. For example, we are building the North-South international corridor in European Russia, which President Xi has mentioned. It will connect Russian ports on the Baltic and Arctic seas to ports in the Persian Gulf and the Indian Ocean. Seamless rail connectivity, as professionals say, will be ensured throughout this route, from Murmansk in the north of Russia to Bandar Abbas in Iran.”
Furthermore, Putine outlined other transport corridors such as the north-south transport artery which will run via the Urals region and Siberia. Explaining in detail what this corridor implies, he said:
“Its main elements are the modernisation of the central part of the Trans-Siberian Railway, including the West-Siberian Railway line running across several regions of Siberia, namely the Omsk, Novosibirsk, Kemerovo and Tomsk regions and the Altai Territory. The other elements are the construction of the Northern Latitudinal Railway, as we call it, towards the ports on the Arctic Ocean and the Yamal Peninsula in the north of the Krasnoyarsk Territory, and a new North Siberian Railway from the Khanty-Mansi Autonomous Area towards our largest railway network comprising the Trans-Siberian Railway and Baikal-Amur Mainline. At the same time, we are working jointly with our foreign partners to build railway lines from Central Siberia towards the south of the country, towards China, Mongolia and the ports of the Indian and Pacific oceans. Lastly, we are planning to build one more Arctic-South corridor in the Far East; we are currently preparing the necessary elements. It includes a railway line running from the Baikal-Amur Mainline to Yakutia, across the large Siberian rivers Lena and Amur, the Pacific Railway Line, the modernisation of motorways, and the creation of deepwater terminals in the eastern part of the Northern Sea Route.”
As for the strategic connection between East and West through the arctic region’s maritime routes, Putin said: “These north-south transport corridors in European Russia, Siberia and the Far East will allow us to directly connect the Northern Sea Route and to integrate it into major logistics hubs in the south of our continent on the Indian and Pacific oceans. As for the Northern Sea Route, Russia offered its partners the opportunity to actively use its transit potential. More than that, we are inviting all interested countries to get directly involved in its development, and we are ready to provide reliable icebreaker escort, communications, and supplies. As soon as next year, navigation for ice-class vessels along the entire length of the Northern Sea Route will become possible all year round.”
President of Kazakhstan, Kassym-Jomart Tokayev, who spoke in Mandarin to the surprise of many viewers, said in the opening ceremony:
“It is highly symbolic that ten years ago it was in Kazakhstan that you [President Xi] first outlined the far-reaching Belt and Road initiative, thus becoming its main driving force. Marking this important anniversary, today we can confidently say that your initiative has proved its relevance, has been recognized by the international community, and has turned into a grand project of global scale.”
Currently, Kazakhstan accounts for about 85 per cent of all land transit traffic from China to Europe. Attaching great importance to the development of the transit of goods industry, over the past 15 years we have allocated over $35 billion for this purpose. “We have launched such major infrastructure projects as the Kazakh-Chinese logistics centre in Lianyungang, the Khorgos dry port, the Western Europe-Western China transit highway, and the railway corridor from China to Iran. At the same time, we do not stop at what we have achieved,” said Tokayev. He announced plans to lay 1,300 kilometres of new railway tracks within three years, open a third railway checkpoint on the border with China and build new dry ports at Bakhty and Kalzhat. “These are real examples of Kazakhstan’s major economic projects being paired with the global Chinese initiative”, he said. Furthermore, Tokayev announced that two intergovernmental agreements on the development of the Trans-Caspian route (Middle Corridor) have been signed between Kazakhstan and China.
“For more effective coordination of our efforts, I propose to create a Partnership network of major strategic ports, logistics centres and postal hubs”, said Tokayev adding that Kazakhstan is “interested in establishing joint production of transport ships and containers, and is ready to become a reliable air bridge and a convenient harbour for the world’s leading airlines, ensuring a steady flow of passengers and cargo.”
Next Phase of BRI: Industrialization
Industrialization will be an important factor in the growth of the BRI, as many nations, especially in Africa and Ibero-America are urging industrial nations and China in particular to invest in industrial projects that add value to the raw materials existing in their lands. For example, countries that have been exporters of raw rare earth metals like lithium are looking to build battery factories in their countries to raise the value of their natural resources domestically. This is is also the case of many other minerals. In oil and gas rich countries, China and its partners like Saudi Arabia are building advanced petrochemical industries to provide industrial grade materials to the world market.
Outgoing Argentine President Alberto Fernandez addressed the opening ceremony too. “For us who respect multilateralism, the BRI showcases a mechanism for inter-country relations that does not compete with existing regional structures, but aligns with them and leverages their advantages,” he said. Regarding cooperation, Fernandez mentioned that China is participating in Argentina’s energy transformation by funding and constructing hydropower stations, wind farms, and photovoltaic parks. The dam complex built in Patagonia, Argentina, represents an investment of nearly 5 billion U.S. dollars. This is a project that generates clean and renewable energy, which will mean a significant improvement in Argentina’s energy matrix.
The Argentine president expressed his hope to strengthen cooperation with China to enhance the value-added processing of Argentina’s lithium resources, thereby bolstering Argentina’s export capabilities, enriching its production profile, and, notably, promoting the creation of quality, high-paying employment opportunities.
The Prime Minister of Ethiopia, Abiy Ahmad, in his speech expressed his strong support for the process of industrialization becoming a pillar of the BRI in Africa in the coming years. Ethiopia has established several industrial zones with Chinese investments where textile, leather, and even automobile production is thriving.
“The BRI will continue to be an integral part of Africa’s quest for integration economic diversification, enhanced cross-border trade, digital economy, energy security, and green development,” said Abiy. He made three proposals for integration of Ethiopia and Africa into the BRI partnership. He said: “Firstly our partnership and cooperation should continue to adopt the most effective financing solutions for sustainable development; secondly we should deepen cooperation in agriculture and Agri businesses by modernizing the sector and enabling technology transfers to enable food sovereignty; lastly we must intensify industry centres’ development cooperation. China’s industrial and technological experience in this regard is an inspiration to the developing world including Ethiopia.”
Financial coordination for development: Inga Dam case
Financial coordination, which is one of the five pillars of the BRI, will also see a boost. Given the many financial and economic crises that have engulfed the developing nations in recent years, the issue of financing infrastructure and industrialization has become a major obstacle. Therefore, there is a need for innovative methods in this field. China has played a central role in the creation of financial institutions dedicated to development financing such as the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB), who will most likely back up BRI projects. However, there is need for other players in this field. For example, the Gulf Cooperation Council (GCC) members’ sovereign wealth funds boast of reserves amounting to about US$ 4 trillion. An important portion of this wealth is looking to secure investment opportunities. BRI infrastructure and agro-industrial projects are a suitable harbour for such win-win investments. With Saudi Arabia, the United Arab Emirates, besides Egypt, Iran, Ethiopia and Argentina joining the BRICS Plus in 2024, new potential financial resources will be added to the NDB capabilities. Financial coordination was one of the main points raised by President Xi in his speech at the China-GCC Summit in December 2022. More innovative financial services and institutions (banks) are to be expected in the immediate period as de-dollarization continues and accelerates.
NDB President, Dilma Rousseff, who attended the Third BRI Forum, had given a speech at the Johannesburg BRICS Summit in August, which is indicative of this matter. The case of financing the construction of the largest hydro-power project in the world, the Grand Inga Dam in the Democratic Republic of Congo, was raised, a project which will become a major test for the issue of financing infrastructure on a global level. Rousseff said in August:
“Today I want to talk about how the development of the African continent is strategically important for the global South; Africa is a continent that has been hurt by and bears the wounds of colonialism, unbridled exploitation and shameful slavery. Africa is where we come from, and the 21st century is the time to rescue it once for all. A new financial architecture is urgently needed to channel the resources needed to expand physical and digital infrastructure”.
She noted certain challenges, like using local currencies and other financial instruments yet to be created, that will be involved in setting up a new financial system, which will be more multilateral and inclusive. Another is “to increasingly allow joint projects between several countries to be carried out, as is the case with interregional infrastructure projects,” she said.
Rousseff picked the Grand Inga Dam as the most important example. She said:
“Here on the African continent, for example, we have the largest untapped hydroelectric potential on the planet, the Grand Inga Dam, which can guarantee renewable, continuous, basic, safe and affordable energy. It has three times the capacity of The Itaipu Dam in Brazil and twice the capacity of The Three Gorges Dam in China. The Grand Inga Dam is capable of serving as an energy source for an entire continent.”
She noted that this will be key to industrialization and adding value to the resources of the continent. She emphasized that there is a clear need to establish a new financing model to promote these renewable and efficient multinational projects, pointing at the fact that “multilateral platforms such as the Asian Infrastructure Investment Bank, the African Development Bank, the Islamic Development Bank and the NDB are strategic in the quest for a fairer and more inclusive rebalancing of the international financial order.”
Noting that the NDB’s priorities are “aligned with the African Union’s Agenda 2063”, she added that the NDB has the potential to be a leader in financing projects that address the most pressing challenges facing countries on the African continent. “I am confident that, together, we can realize this vision and mission,” she concluded.
China has shown interest in a wide range of power and water projects in different parts of Africa. The biggest such investment would be the first stage of the Grand Inga Dam. This stage called Inga III will generate 11 Gigawatt of electricity tripling the country’s power generation capacity. This $14 billion project was to be financed and carried out jointly by Three Gorges and Sinohydro from China and Spanish construction company ASC and EUROFINSA. However, the World Bank and the EU withdrew their support to the project in 2016, claiming that the DRC government had moved the project into a “different strategic direction” without explaining what that direction is.
Challenge to Europe
The contrast between the spirit of the BRI and level of ambition at the Third Belt and Road Forum in Beijing on the one hand, and other similar events organized in Europe or the U.S. on the other, could not be starker. The question of financing for development surfaced in Paris at the New Global Financial Pact Summit held on June 22 this year, including the example of the Grand Inga Dam itself.. African leaders called for reforming the global financial system to make development finance more efficient. But it seems that these calls fell on the deaf ears of the EU leaders. A frustrated President of South Africa, Cyril Ramaphosa, summed it up in the conclusion of the debate at the Summit. According to South African media reports, Ramaphosa called for the rich nations “to walk the talk when it comes to investing in infrastructure in Africa.” Ramaphosa said only if the West can reform the global financial systems and invest in infrastructure projects in Africa, will African nations believe the West is serious about the commitments they are making.
Raising the issue of the Inga Dam as an example, Ramaphosa said:
“As we rise from this, we should be able to say the Inga dam is now going to be developed into a power station. If you can do that, we as Africans will be convinced that these summits are really meaningful. We will now go home and say ‘you know what, it’s worthwhile going to these summits, coming to Europe and to listen to all the promises because they are willing to act on the promises’.”
Directing this challenge to French President Emmanuel Macron, he said:
“This is what, President Macron, I believe will be one of the important outcomes. The reform of the financial architecture as well as the practical infrastructure project that is going to add a lot of value.”
Ramaphosa reemphasized that generating electricity and building power stations through the Inga Dam is the most important, immediate issue to be addressed. “Let’s get that done and then we will be convinced that you are serious with the promises that you make,” said Ramaphosa. He concluded that nations that have money must put money into infrastructure projects.
No follow up on this question was made either by Macron or the EU leadership as was obvious from the less than exciting EU Global Gateway Forum organized a few days after the Beijing BRF. Our own analysis of the so-called alternatives to the BRI, like the G-7 Build Back Better World (B3W) and the EU’s Global Gateway, shows that these are political sloganeering attempts with not much substance. The real reason for the inability of the G-7 and the EU to raise any resources for infrastructure either at home or abroad is the bankruptcy of the trans-Atlantic financial and banking system. Without reforming that system, which has become a kind of gambling casino, Africa and the rest of the developing nations can expect no support for infrastructure development coming from the West in any meaningful way. Therefore, the alternatives presented in the BRF in Beijing and the BRICS remain the best chance for this kind of development financing.
Africa deserves better
The total Grand Inga series of seven dams has the potential of generating 40 GW of clean and renewable energy, which will make it the largest hydropower project in Africa and the world. The whole Congo River potential is about 100 GW. Africa’s hydropower potential is estimated to be around 340 GW, of which only 11% are exploited. This is one of the central projects of the Century for Africa, which this author included in the book “Extending the New Silk Road To West Asia and Africa” (2017), which is a blueprint for pulling Africa from the clutches of poverty and ushering in the age of modernization and industrialization.
Other mega projects include the Trans-African Highway and high-speed rail network connecting all the capitals and regions of Africa with a modern transport network; Transaqua, the project to revive the drying up Lake Chad by transfer of water from the eastern DRC tributaries of the Congo River through a 2000 km canal; building a trans-African river and lake multi-modular navigation system; Greening the deserts of the Sahel; building clusters of new high-temperature modular nuclear power plants, a space program; and revolutionizing agriculture in the continent.
This level of investment is what is required, and it will become an interesting challenge for not only the nations that have joined the BRI but also for Europe and the U.S. to pool all resources, financial and technical, to achieve this win-win goal and the 2063 African Agenda.
Conclusion
What the BRI has achieved in the first 10 years is the creation of a sound platform of bilateral and multilateral cooperation transcending political, social, and cultural differences. The first 10 years of the BRI witnessed a large-scale investment in building infrastructure in developing nations. The “Global South” and developing sector nations will remain as a focus of the continued building of the BRI. Infrastructure is a necessary pre-requisite for economic development and poverty eradication, China will continue to work with its partners to enhance physical and trade connectivity such as building railways, roads, ports, and airports. As the world’s number one nation in construction and engineering, China will continue to deliver this kind of expertise.
The focus in the next ten years will be to increase the process of industrialization and environmental conservation to go hand in hand. “Small but smart” projects with direct impact on the livelihood of the people will be prioritized. Capacity building, education, vocational training, and exchanges will be of great importance.
Green growth will be a major aspect of the BRI development. China has shown the way in this respect, balancing between economic growth through industrialization and conserving the environment. In the field of renewable energy, China has been the uncontested leader. China is also a world leader in green technology, such as desert control and afforestation which is of great importance for many nations facing desertification and drought.
Digitalization, AI, and digital trade infrastructure will increase in importance in the coming ten years. Therefore investment in the infrastructure for this high-tech process will increase dramatically, such as 5G networks, regional and transcontinental optic fibre cable construction and satellite-steered communication. Another area of extreme importance for building modern economies is the integration of space exploration and remote sensing technologies with economic activities all over the planet. President Xi Jinping highlighted this aspect of cooperation in his speech to the China-Gulf Cooperation Council Summit in December 2022, where he proposed deeper cooperation in space exploration and related technologies.
Industrialization will be an important factor in the growth of the BRI, as many nations, especially in Africa and Ibero-America are urging industrial nations and specially China to invest in industrial projects that add value to the raw materials existing in their lands.
Capacity building, education, scientific exchanges, and technology transfer will be a key element in the growth of the BRI as well as the equitable and common growth of all nations, especially in the Global South.
Agriculture will also be an area of enhanced cooperation. The recent food crisis triggered by the shortage of both grains and fertilizers due to the war in Ukraine, has forced many developing nations into designing strategies to ensure food security and boost the self-sufficiency as much as possible. Therefore, agricultural machinery, biotechnology, fertilizer production, irrigation techniques, and raising the technological and skill level of farming societies will be a growth area. China is a leading country in this field of agricultural cooperation, but this will leap from mere assistance to joint investments. Agricultural industries like packaging, conserving, and marketing will also become a growing activity. The fact that China is opening up its domestic consumer market through dual circulation, is a major opportunity for global food producers. China has also prioritized African nations by lowering and even removing tariffs on food exports from these countries to China, creating a major boost in this area.
Financial coordination will also see a boost. Given the many financial and economic crises that have engulfed the developing nations in recent years, the issue of financing infrastructure and industrialization has become a major obstacle. Therefore, there is need for innovative methods in this field. China has played a central role in the creation of financial institutions dedicated to development financing such as the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB), which will most likely back up BRI projects. However, there is still need for other players in this field who will step up their involvement.
In general, the first ten years of the BRI paved the way by creating a platform for cooperation, experimenting, and overcoming many challenges and obstacles. The next ten years of the BRI will utilize this relatively seamless structure that has been created to augment the benefits for all BRI partners.