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One Belt, One Road: a new framework for building an Egyptian-Chinese partnership

Mohamed Fayez Farahat , Friday 22 Jan 2016
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The One Belt, One Road (OBOR) initiative announced by Chinese President Xi Jinping in September 2013, is undoubtedly one of the biggest and most important projects proposed in the history of humanity.

The initiative’s importance lies in the fact that it includes several features that substantially distinguish it from the type of initiatives and projects that the West has usually proposed over the past decades, whether politically, economically, or culturally.

The success of this initiative will hinge on several conditions which the Chinese government and governments of developing countries must be aware of.

Also, positive cooperation in order to create the needed local and regional environments to overcome the challenges facing transforming this initiative into an economic and developmental reality. The responsibility for facing these challenges is shouldered by China, along with its regional partners in the initiative, which opens the door for a key Egyptian role in OBOR.

Based on my view of developments in Egyptian-Chinese relations and my interaction with several colleagues in Chinese research centres and universities, I have several recommendations which I hope will be beneficial to decision makers in Egypt and China to develop these relations and elevate them to the desired levels by both sides. Also, to ensure the success of this important initiative that we hope will be the start of a new chapter in South-South cooperation in general, and Egyptian-Chinese relations especially.

General outline of OBOR

As I mentioned above, OBOR has several features distinguishing it from other initiatives and projects by the West in previous decades, which either ended in nothing or projects that unevenly distribute revenues from global economic and financial transactions in favour of economically developed countries.

The first feature is that the initiative is based on a concept that goes beyond the traditional and narrow definition of geography of regional cooperation projects. This means it is not based on absolute geographic and geo-political definitions limited to a specific geographic region.

On the contrary, from the beginning the initiative has been based on a broad geographic expanse that allows the inclusion of the largest number of countries that differ politically, economically, and culturally, as well as the largest number of geographic regions (East Asia, Southeast Asia, South Asia, Central Asia, Middle East, North Africa, and South Europe).

The importance of this feature is that it primarily allows the largest number of developing countries to benefit from the initiative. Also, it liberates OBOR from possible misconceptions by Western countries as a Chinese scheme aimed against the West, especially since it incorporates South Europe in the initiative.

Second, the initiative is based on a strong link between trade and development, which brings us back to the experience of developing countries in projects that expand inter-regional trade. In the second half of the 20th Century, there were many projects promoting regional integration and liberalisation of trade in developing countries (especially in the Middle East, Africa, and South Asia).

However, they were not able to achieve their declared goals, especially regarding expanding regional trade among partner economies for several reasons. These include the fact that liberalising trade was not accompanied or preceded by restructuring these economies in a manner that guarantees the liberalisation process by creating products and services that can actually be exchanged between these economies.

Thus, regional initiatives failed to expand regional trade in regions of developing countries that had aimed to expand inter-regional trade, because they were not linked to real policies and projects.

Accordingly, OBOR is important because it is more than an initiative to facilitate and expand trade among regions and countries by removing financial obstacles for this trade and reducing cost, but rather because it includes developmental dimensions through key projects to develop infrastructure and provide necessary funding for these projects.

Thus, OBOR holds possible economic benefits for developing countries because it includes developmental project along with trade.

Third, the initiative includes several keys to success since it is promoted by a world power with a strong economy that still presents itself as a developing country. This eliminates fears that are commonly linked to many initiatives proposed by Western countries, which primarily aim to bolster Western dominance of the world order and domination of the markets of developing countries to ensure their economic dependence on major capitalist economies.

This is true of political and economic initiatives. These Western initiatives and projects did not provide any real gains for developing countries (for example, several Western initiatives on the New Middle East or the Greater Middle East or the Broader Middle East; and the European Free Trade Zone with GCC countries).

On the other hand, China's OBOR was met with quick positive response from more than 60 countries, which indicates there is a lot of positivity towards the initiative by a large number of developing countries across the globe.

The initiative also includes Chinese funding for proposed projects through the creation of the Silk Road Fund, as well as infrastructure projects for railroads, trans-border highways and seaports such as the Xinjian-Madrid Rail Line – which will reduce the time of transporting trade by land between the two countries from 45 to 21 days. Also, the China-Pakistan economic corridor and Bangladesh-China-India-Myanmar corridor.

Fourth, the initiative is based on existing bilateral and regional structures, such as the Shangahi Regional Cooperation Organisation, Eurasian Economic Community, and ASEAN, as well as other existing regional frameworks that are relevant to the initiative.

With the exception of several Chinese domestic institutions that were recently created to encourage the initiative, such as Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB), the initiative does not require the creation of new trans-regional institutions or entities.

This is important because it does not place any bureaucratic restrictions on the initiative, and allows for flexibility in managing it. Not needing to create a regional umbrella entity for the initiative prevents any misconceptions that may develop in various regions that the initiative is a platform for Chinese influence or dominance of these regions.

Finally, this outlook complies with Asian culture and traditions of building regional and trans-regional frameworks based on open regionalism and flexible institutionalism, as seen in APEC and the Indian Ocean Rim Association for Regional Cooperation (IORARC), and developments in ASEAN.

Key requisites for the success of OBOR

Although the above key features of the initiative are important, one must not ignore several challenges facing it, or fundamental requisites to make it successful and an effective project that generates mutual gains for all involved.

The first requisite is the need to promote a strong and clear conviction by the governments and people of partner countries that the initiative is not a trade project primarily, and does not aim to expand China's foreign trade and ensure its dominance of foreign markets in these target regions that increase trade deficits in favour of China.

Along with the important developmental factor in this initiative, it must be linked to strong policies that eliminate any concerns of this kind, and balances the developmental component of OBOR and expand it, while reducing the cost of economic and trade transactions which is not a good enough reason to expand trade.

Neither is it a good enough reason for fair distribution of trade revenues among participating countries. What is needed is to increase the share of all parties in intra-trade, which in the end would lead to a more even distribution of growth revenues in trade among participating countries in general, and with China especially.

The second requisite is that an initiative of this size is linked to expanding and increasing China's soft power, especially in Central Asia and the Middle East, since Central Asia may be concerned that the initiative and its projects are no more than a Chinese tool to win the conflict with Russia and the West over influence in the region.

Second, Western influence and the soft power of the West there remains stronger compared to China's, despite the noticeable ebb since 9/11 and subsequent policies.

Meanwhile, the Arab Spring further added to this retreat and proved the failure of all Western initiatives to parachute democracy from overseas, either through soft or economic means, or direct military action as seen in Iraq (and Afghanistan). This means OBOR should move in parallel with Chinese policies to promote and support China's soft power in the regions benefiting from the initiative.

This could be a key requisite for the success of the initiative's development projects. The importance of promoting China's soft power is based on the nature of the historic Silk Road, which was an axis for interaction among civilisations and cultures, as well as being a trade route. This is especially true of OBOR.

Promoting China's soft power requires China to increase unconditional developmental aid to friendly developing countries, especially regional heavyweights. It also requires boosting cultural ties through scientific and cultural exchanges, as well as assisting developing countries in improving their development models based on their local environment, etc.

The third requisite is the need to combat terrorism, especially in light of the widespread presence of extremist terrorist organisations in South and Central Asia, as well as the Middle East. We cannot talk about real sustained development through OBOR without stamping out these groups that are a real challenge for stability in these regions.

Ending terrorism requires an entirely different approach than the one adopted by the West, which since 9/11 justified the strategy of military intervention and invasion to rebuild some South Asian and Middle East countries (Afghanistan and Iraq) as the ideal means – from their perspective – to annihilate terrorist groups in the region and installing democracy in these two regions.

The West's rationale is that failed and fragile states and totalitarian regimes are the main reason behind terrorism, but practical experience of occupation in these two countries has proven that occupation has clearly failed in achieving any of the goals that were declared as justification for military intervention and invasion – whether it was rebuilding the state or promoting democracy or eliminating terrorist groups.

To the contrary, occupation has caused Al-Qaeda to expand beyond its hotbeds (Afghanistan and Pakistan's northwestern border), and established branches in Iraq, the Arab Peninsula and North Africa, and more dangerous offshoots were born (Islamic State).
Thus, the Western approach to combating terrorism will not lead to real elimination of terrorism, which makes it important for China to develop a vision and an effective role in cooperation with key countries in the regions of South Asia and the Middle East, most prominently Egypt.

The above features and requisites of OBOR are an important foundation for an Egyptian-Chinese partnership, as part of this key initiative.

This is not only based on Egypt's status as a regional heavyweight in the Middle East that cannot be ignored, a growing economy, and a distinguished geographic location that provides a great opportunity for building a complementary relationship between the Suez Canal and the initiative, but also because of the important role Egypt can play in providing the prerequisites for the initiative to succeed.

Whether regarding combating terrorism and creating the necessary safe environment and guaranteeing stability in the Middle East, or enhancing China's soft power in the region and the global order. These all require building Egyptian-Chinese understandings.

Mohamed Fayez Farahat is head of the Asian studies programme at Al-Ahram Center for Political and Strategic Studies

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Prof dr el namaki
23-01-2016 06:15pm
13-
2+
Strategies not tactics
Appreciate the analysis and share the views expressed by Neo. Let us recall however that OBOR is a strategic initiative that should be matched by strategic moves from the Egyptian side. Cooperation projects announced so far are tactical and not strategic. Serious search for strategic synergy between Egypt and Chinese global economic policy as a whole , including OBOR, must be seriously done. OBOR is an element into a mosaic of Chinese global repositioning strategies and this should be realized while drawing a response.
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Neo
22-01-2016 04:31pm
6-
3+
No free lunch
Mr. Farahat is right; the OBOR is a welcomed development by the developing countries. However, there are 3 challenges for Egypt: (1) China is charting this course not to help the developing countries but its own export and workforce; they don’t just give the funds or technology and go away; they bring in hundreds of thousands of Chinese workers and products to consume the investments. (2) Egypt’s 20 million real unemployed won’t benefit from this cooperation, the benefits go to the trading elite who stands to capture all the profits at the expense of local jobs, just like all Chinese investments in Africa and Latin America. (3) Egypt GDP will only see artificial jump; for every $1 b of Chinese investment/loans $900m goes back as Import of material and services, rendering any GDP growth mute. This not knocking the OBOR but the structural deficiency of the Egyptian economy, and hence the limited benefits from international cooperation until and unless we fix our economy.
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