Maldives is also one of eight countries at particular high risk due to continued Chinese lending, as stated in a report by the Center for Global Development (CGD).
The Belt and Road Initiative (BRI) or better known as “One Belt, One Road” project, was first announced by Chinese President Xi Jinping in 2013. China’s urge to make geo-political linkages with the rest of the world through infrastructure, investment and trade is the driving force behind this transnational mega economic framework . It should be advised with a rider that if there is no hidden agenda at work, BRI could play a transformatory role viz a viz participating countries through political,economic and cultural exchanges. However chequered history of Chinese economic transactions has casted a lingering doubt and concern over BRI’s ultimate aim.From the standpoint of geostrategic perspective, China’s connectivity development is perceived to be an extension of pursuit for global hegemony and disproportionate tactical influence.
One such contentious BRI project amidst this long list is the proposed railway link between China and Nepal. The railway line is envisaged to provide an all weather connectivity between Kathmandu and Shigatse, Tibet, crossing China–Nepal border at Gyirong–Rasuwa.Top speed of the train set is however limited to max 75 mi/h (120km/h) because of design constraints stemming from elevation perturbations and treacherous Himalayan terrain. Cutting across dry and barren Tibetan Plateau, project is slated to become world’s highest rail road, another miracle after first of its kind Quinghai-Tibet railway servicing the region. However not all seems hunky dory as various pitfalls/ controversies surround this beleaguered project, primarily those concerning passenger safety, technological challenges, ecological degradation, topicality and economic viability. Significantly, circumventing natural hazards in the catchment area of active Himalayan fold mountains and navigating practical issues like debt trap have further diminished the feasibility of this megalithic Railway ecosystem. Though the Chinese government has time and again enlisted several benefits in favour of the said project viz. incremental growth in trade and tourism, ease of mobility, safe economic travel, multi- billion dollar investment but still cons far outweigh the pros and are significantly more debilitating.
The gravest risk associated with Tibet -Nepal Rail link is likelihood of falling into debt trap.Debt-trap diplomacy is a theory to describe machinations of powerful lending countries or international institutions seeking to saddle borrowing nation with enormous debt upfront, so as to increase its leverage. Chinese shenanigans, time and again have deployed such diplomatic tools and instruments in correlation with other small developing countries.Major example is the Sri Lankan port of Hambantota. In this case, China pushed Sri Lanka into borrowing money at exorbitant rates from Chinese banks to finance project which had no prospect of commercial success whatsoever. Oppressive terms of operation and feeble revenues from the stressed project eventually pushed Sri Lanka into debt trap.Unable to service debt obligations, China demanded rights on port ownership as collateral, forcing Sri Lankan government to surrender control in favour of a Chinese firm for 99 years.Hence, Sri Lankan example should be taken as a cautionary tale for what might be in store of a fragile economy like that of Nepal.
Some other damning glimpses into the treacherous world of debt trap would be Maldives and Montenegro. In the case of Maldives, China had provided a debt of $1.4 billion which makes Maldives owe 78% of its external debt to China.Maldives is also one of eight countries at particular high risk due to continued Chinese lending, as stated in a report by the Center for Global Development (CGD).
However in case of Montenegro, China had surreptitiously included controversial clauses in bilateral agreement, directly contradicting the oft marketed benign nature of BRI. China loaned Montenegro €800 million to build a highway but one of the key provisions under the bilateral agreement states that ‘if Montenegro were to default on repayment, China would as collateral receive the right to access of Montenegrin land’ – directly alluding a strategy of seizing assets through financial chicanery.Hence,China’s ‘debt trap diplomacy’ is not a figment of imagination but a harsh reality!
To be concise, China’s debt trap policy mostly involves loading poor countries with debt, refusing to renegotiate oppressive terms and conditions and then when the gullible partner defaults, taking control of key infrastructure assets.By deploying such caustic diplomatic manoeuvres, China’s BRI has lapped up several unsustainable debt-for-infrastructure deals, which nevertheless are means to furthen China’s geostrategic interests.The proposed Nepal-Tibet railway that will link Kerung city in southern Tibet to Nepal’s capital Kathmandu, entering the country in Rasuwa district and eventually going on to India has all the markers and red flags of Chinese debt trap paradigm!
Significantly, locals have raised concerns about this mega project which will entail large scale land acquisition besides being laden with multiple socio-economic pitfalls. Locals have dubbed the project as “kagaj ko rail” (paper railway) and “sapana ko rail”(dream railway), highlighting the dark underbelly of this corrosive project. In addition to local dissatisfaction, tough and hazardous terrain,ridiculously high construction costs, large scale displacement and disruption of natural habitat, unviable cash flow projections, restrictive terms and conditions etc have only manifested diabolical nature of the said project. One prominent analysis report has enlisted “six extremes”: including topography, weather, hydrology and tectonics that will make the project extremely challenging. Moreover Railway systems world over are proven sunk costs, demanding massive capital investments right at the outset coupled with nagging high annual maintenance and operational costs for rolling stock as well as fixed assets. Due to these chronic difficulties and ridiculously low rate of returns (~2-4%) on public funds, Railway projects globally are planned judiciously over extended gestation periods, duly factoring in technological upgradation costs and wherewithal required for sustaining risk free operations.For this precise reason, dabbling with big ticket extravagant Railway projects is mostly undertaken by advanced economies with proven localisation and incubation of complex Railway technology. Sadly in the context of this Rail link, the critical factor which further compounds the unviability is lack of “heavy haul freight operations”, mainstay of any productive and viable Railway network. Bulk freight operations is technically untenable in this high gradient hazardous hill topography owing to challenges of traction power, rolling stock and interlocking.
Additionally, environmental and biodiversity issues also plague the said Nepal-China railway link because its alignment passes through two ecologically fragile national parks – Langtang and Shivapuri. Langtang boasts of endangered and vulnerable species like red panda and snow leopard, while Shivapuri – on the northern side of Kathmandu – is home to over 300 bird species and one third of the country’s total birds. Moreover anticipated growth of illegal wildlife smuggling along railway route is another major challenge.Yet as economic, political and technical issues dominate railway discussions, deploying environmental impact assessment models for a more nuanced appreciation of ecological factors is still not in the scheme of reckoning.
The total length of rail line is expected to be 136 kilometres, out of which 42 kilometres will pass through a tunnel. The project is expected to cost humongous three trillion Nepali rupees and a major part will be funded through long term debt. Investing such exorbitant sunk capital in high risk hazardous civil engineering experiment with no proven viability or serviceability is a sure recipe for disaster for nascent economies like Nepal.For Nepal to truly benefit from synergy of BRI framework, big ticket projects like this Rail link needs to be comprehensively evaluated with realistic cash flow projections and passenger turnout assessment besides considering possible socio-economic-ecological flash points. Nepali leaders should tread with utmost caution in this dangerous realms of technological intensive mega projects as scouting right public funding models is a major issue more so when the country is plagued with competing demands of sustainable human development.
