Introduction
OBOR is a US$ 1 trillion plan with an estimated economic
multiplier of 2.5. Since the plan was announced three years ago, only 5% of
this budget has been spent. There are as many plans as interested countries and
China is talking to all of them. 10,000 articles have been written on the
subject, but NDRC has retained only 100! Nothing is decided yet, and may
analysts tend to see OBOR as a geopolitical “carrot and stick”, something
similar to “Marshall Plan”.
China is not investing only in African infrastructure but it
transfers manufacturing activity there. By the end of 2015: 128 industrial
projects in Nigeria, 80 in Ethiopia, 77 in South Africa, 48 in Tanzania and 44
in Ghana. It seems developing Africa is much easier than developing China’s own
northwestern territories.
With investments in Australia (Darwin) and a continuing
interest in the Nicaraguan canal, China will soon be looking at the Pacific
Ocean, expanding OBOR to a global, “around-the-world” network, in competition
to TPP. What are the prospects of the Panama Canal, in view also of competition
from the Suez Canal? To my view, not very promising.
Russia is squeezed from both sides: USA/NATO from the west /
China-Eurasia-OBOR from the east. Russia’s response: its own ‘OBOR’: The
North-South Transport Corridor.
Both Russia and China intend to develop their own currencies
into reserve, clearing ones, away from the dollar and a crisis-prone, risky and
overburdened western financial system. China in particular has created a
currency clearing house in Qatar while Russia has an “oil for goods” deal with
Iran. The latter country too has recently entered into a “rail for oil” barter
deal with Turkey.
Conclusions
-The 21st century is the century of Eurasia.
-Eurasian Infrastructure investment plans amount to 8
trillion dollars.
-“Accessibility” (and not ports) is the bottleneck to trade.
-Investors (WB, EBRD, AIIB, etc.) abound, but attention and
coordination are required.
(Lack of ‘discussion’ and coordination (e.g. within AIIB)
are India’s objections to OBOR).
-Infrastructure investments have long gestation periods,
while short-term debts accumulate dangerously.
-OECD forecasts show that the supply of infrastructure
outstrips trade demand.
-Infrastructure investments should not be the outcome of
geopolitical and security games.
-The debt of the developing world is a cause for concern.
-China’s NPLs correspond to 25% of the country’s GDP.
-Western banking is still precarious.
-A new economic ‘meltdown’ is not out of the question; this
needs to be avoided at all costs.
