Developing Connectivity Infrastructure as the Second Domain of cooperation in QUAD’s Framework
The formation of the Quadrilateral Security Dialogue (QUAD) was a response to the geopolitical rise of China with its increased aggressiveness and the resulting threat perception to maritime security and the rules-based liberal world order. Since its inception QUAD has been mainly working towards building cooperation in the security arena, with a shared vision for a ‘free and open Indo-Pacific’. Although QUAD first took shape in 2007 with the Japanese Prime Minister Shinzo Abe taking the lead, it had initial hiccups such as Australia’s early exit to not antagonize China given its huge economic dependency with Beijing.
In that sense, even India wasn’t ready to portray QUAD as an instrument to contain China then. 1 The other reason is China under the leadership of Hu Jintao was still focused more on the broad modernization strategy of ‘reform and opening’ (gaige kaifang) much in common with Deng Xiaoping’s ‘hide your strength and bide your time’ policy.2 It was mainly after Xi- Jinping’s ascendance to power in 2012-13 that China started stepping out of its own shadow of being reluctant to assume big geopolitical burdens. Especially after Xi-Jinping announced the ambitious Belt and Road Initiative (BRI) in late 2013, both China and the other major world powers started looking at each other in a manner that was very different from earlier. In the next few years Beijing’s aggressiveness in the South China Sea region, in the Himalayas, and the larger Indo-Pacific kept on increasing and so did its disregard for international law that got proved in the case of international tribunal’s ruling in favor of the Philippines in 2016. All this increased the threat perception to the long-held liberal international order, thus, in 2017 the U.S., Japan, India, and Australia decided to revive the quadrilateral alliance to counter China militarily and diplomatically in the Indo-Pacific region. Since its inception, QUAD members have taken many initiatives on the security aspects at bilateral, trilateral, and even collectively. Joint annual naval exercises such as the Malabar exercise have become QUAD’s impressive show of strength and synergy.
Infrastructure investment as an economic statecraft
The year 2013-14 proved to be a turning point in Asia’s infrastructure investments field. In late 2013, Xi Jinping proposed a grand vision of constructing a web of road, rail, ports, pipelines, and digital infrastructure to connect China with the rest of the world, 360 degrees. This mega initiative has multiple components like ‘Silk Road Economic Belt’, a ‘Maritime Silk Road Initiative’, and ‘Ice Silk Road’. This project was initially termed “One Belt, One Road” and later renamed the ‘Belt and Road Initiative’ (BRI). In the year 2016, China supported multilateral development initiative Asian Infrastructure Investment Bank (AIIB) came into existence and is by far the biggest financial supporter for BRI projects.
Although to date China has not officially come out with a statement about the budget committed to BRI, it is predicted that it would cost at least $1 trillion to $8 trillion3 to fulfill this fuzzy infrastructure gambit. Once BRI fairly gets executed, it will build a connectivity system in which many countries of Southeast Asia, South Asia, Central Asia, and East Asia will become the spokes connected to the main hub in China. This will have far-reaching economic and strategic global consequences that would replace the existing liberal international order with Beijing-centric international order. Through BRI, China is using investments in connectivity infrastructure as economic statecraft to set the foundation for future geopolitical and geo economical leadership.
Why QUAD needs an infrastructural arm?
Many countries especially in the developing world need investments in the infrastructure sector very badly for improving the economics and trade activities. In 2017 it was estimated by Asian Development Bank (ADB) that a total of about $26 trillion would be needed to meet Asia’s infrastructure needs by 2030. 4 It is this gap in infrastructure funding, that China through its BRI, is trying to fill (although not completely) and thereby creating a new economic and strategic system with China as its hub. Lampton, Ho, and Kuik argue that “Beijing’s proposal to build a regional and global connectivity network is effectively a move to tie the strategic ‘backyards’ of many other powers into China’s own network.” 5 Recent estimates indicate that China may take over the U.S. as the world’s largest economy by 2028.6 and this would bring a drastic change in geopolitics and geo-economics. Once China replaces the U.S. as the world’s top economy, it will accelerate its efforts to “sway other countries and boost its influence through infrastructure development and investment.”7 At the same time there is a growing sense of fear of the Chinese debt trap and thus many countries in the Indo-Pacific are willing to diversify foreign investments in their connectivity agenda.
However, it appears that the QUAD members’ (barring Japan) response to China’s usage of infrastructure development as economic statecraft is not sufficient. Especially the U.S. has overlooked the fact that China is not only posing a security threat but also playing a long-term strategic infrastructure game. Thus, before it is too late QUAD members must act towards building a comprehensive connectivity infrastructure alliance that provides an alternative to the developing world’s infrastructural needs.
Infrastructural initiatives from QUAD
At individual, bilateral and trilateral level QUAD members are engaged in various connectivity projects in the Indo-Pacific albeit not of BRI scale. Japan has a long history of promoting developmental activities in the region. To meet the challenge from China in connectivity projects, in 2015 Japan launched the concept of Partnership for Quality Infrastructure (PQI) with revised yen loan programs in collaboration with the Japan International Cooperation Agency, the Japan Bank for International Cooperation, and the ADB.8 At the same time, Japan also dropped its earlier requirement for sovereign debt guarantees on connectivity projects in host countries.
Japan is by far the major supporter of the East-West economic corridor in Mainland Southeast Asia that would connect the port cities of Vietnam with that of Myanmar. At a bilateral level, in September 2017, the prime ministers of India and Japan pledged to align India’s Act East policy with Japan’s Free and Open Indo-Pacific through ‘improving connectivity in the wider Indo-Pacific region.’9 After this, Tokyo was allowed to invest and assist in Northeast India’s infrastructure development and with this, Japan became the first country to get a permit to work in this strategic and isolated region of India. India and Japan have collaborated in the development of various connectivity projects that would economically connect South Asia with Southeast Asia. Similarly, Japan and India are working towards building the Asia Africa Growth Corridor (AAGC), an initiative that would provide an alternative to BRI. Similarly in 2014 Prime Minister Narendra Modi recalibrated India’s ‘Look East’ into the more action-oriented ‘Act East policy. In 2015 India announced a $1 billion line of credit to promote projects that help physical and digital connectivity with ASEAN.
In July 2018, Japan, Australia, and the U.S. announced a trilateral partnership to invest in projects that would improve the connectivity infrastructure and promote economic growth in the Indo-Pacific region. In 2018 during Australian Prime Minister Malcolm Turnbull’s visit to the U.S, he signed an MOU with US Overseas Private Investment Corporation (OPIC) to the advanced United States–Australia support for high-quality infrastructure investment in the Indo-Pacific region and encourage reforms to improve regulations, transparency, and local capital markets”.10 At the same time the U.S., through the Better Utilization of Investments Leading to Development (BUILD) Act of 2018 and the Infrastructure Development and Finance Cooperation (IDFC) is attempting ‘to better incentivize private-sector investment in emerging economies and provide strong alternatives to state-directed initiatives that come with hidden strings attached. 11
Nehginpao Kipgen and Mohanasakthivel argue that more than bilateral and trilateral efforts it is important for QUAD to work collectively in the infrastructure development in Indo-Pacific. Such an infrastructural alliance by democratic countries could also help in bringing more transparency and build sustainable projects.12At the group level, the four Quad countries - Australia, India, Japan, and the United States – are discussing a joint regional infrastructure project13 but this is yet to take a concrete shape.
Conclusion
To meet long-term global economic and strategic challenges it is important as well as urgent for the QUAD encourage cooperation in connectivity infrastructure along with existing cooperation in the security arena. After all, at the global level, China is playing a development card and largely inclusive game rather than just hard military tactics. QUAD members need to focus on building balanced connectivity in Indo-Pacific that unlike China-centric hub and spokes model focuses on building a system that increases points of interdependence in multiple directions. Thus in light of Beijing’s strategy to use infrastructure connectivity as economic statecraft, the necessity to make connectivity infrastructure a second domain in QUAD’s framework is going to be inevitable in the coming days.
Notes
2. Lampton, Ho, and Kuik. Rivers of Iron: Railroads and Chinese power in Southeast Asia, University of California Press, 2020.
3. https://www.csis.org/analysis/how-big-chinas-belt-and-road
4. https://www.adb.org/sites/default/files/publication/227496/special-report-infrastructure.pdf
5. Ibid, Lampton, Ho, and Kuik.Rivers of Iron
7. https://www.straitstimes.com/asia/east-asia/japan-caught-in-balancing-act-between-superpowers
8. Hong, Zhou. Chinese and Japanese infrastructure investment in Southeast Asia: from rivalry to cooperation? Discussion Papers, Institute of Developing Economies Japan External Trade Organisation(JETRO), 2018
10. https://au.usembassy.gov/white-house-statement-trump-turnbull-meeting-strengthens-alliance/
11. https://www.reuters.com/article/usa-congress-development/u-s-congress-eying-china-votes-to-overhaul-development-finance-idINKCN1ME08G?edition-redirect=in
13. https://www.eastwestcenter.org/publications/the-free-and-open-indo-pacific-strategy-and-uncertainties-india-japan
Pic Courtesy- Andy Li at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)