The New Silk Road Is Not That Smooth

China’s Belt and Road Initiative will not achieve its goals.

In 2013, President Xi Jinping pledged $150 billion a year to sixty-eight countries that signed onto its ambitious Belt and Road Initiative (BRI). The BRI aims to create six economic corridors that will unite the amorphous region of “Eurasia,” ostensibly streamlining economic activity between Asia, Northern Africa and Europe. Pundits across the United States have sensationalized the BRI, parroting Chinese state media claims. “China Has A Grand Plan To Dominate World Trade,” harped CNN Money. Forbes expounded on how the Initiative will “open up unprecedented opportunities.” Even Fox News, rarely an institution to doubt American exceptionalism, posed the BRI as a threat to American leadership.

The Western media’s BRI bullishness arises because it takes China’s claims about the BRI seriously. President Xi has said that China will welcome other nations “aboard the express train of Chinese development” and the BRI seems to be his vehicle for that development. If that is true, then the BRI would reshape the geopolitical landscape of Eurasia and increase China’s leverage in the region at the United States’ expense. The Brookings Institute characterized US acknowledgement of the BRI as a major concession to China’s desire for increased leadership in Asia. But unfortunately for Xi, corruption and instability will prevent the BRI from fulfilling China’s promise.

Corruption

Any funds allocated in BRI projects must travel through a number of hands. The more hands that funds travel through, the more people there are who may choose to swipe a little for themselves. China’s centralized resource distribution allows money to flow from Beijing’s coffers and travel through various state owned enterprises (SOEs) and private corporations before affecting change. Such a method creates a feeding ground for corruption. Though Beijing postures against corruption, Xi’s anti-corruption activity has mostly been aimed at consolidating his own power. On the municipal and local levels, least touched by Xi’s anti-corruption scheme and most consequential for pricing infrastructure investments, BRI spending makes corruption straightforward and lucrative.

Even if Xi were to wave a magic wand and rid China’s bureaucracy of malicious economic intent, the problem extends outside of China’s borders as well. The BRI will require extraordinary coordination at different levels of governments across countries. Public choice theory dictates that any transfer of government payments brings with it “rent seeking” by one of the involved parties, meaning that groups attempt to maximize their own personal gain against the stated intent of the policy. In Kyrgyzstan, for instance, policymakers colluded with Chinese contractors to overprice and embezzle from projects. The Kyrgyzstani case shows that rent-seeking is a viable option for corrupt governments in countries that Chinese contractors operate in the absence of oversight. If public choice theory holds true, other opportunistic regimes will likely follow Kyrgyzstan’s lead.

Corruption detracts from the BRI’s goals in two ways. First, China is likely underestimating the necessary investment. Given how heavily China seems to lean on the BRI as a cornerstone of its foreign policy goals and economic role in the world, it may be willing to double down on investing in corrupt regimes and absorb the imposed costs to get the job done. But draining Chinese investment dollars without oversight will undoubtedly sour domestic attitudes toward the project. China may control its citizens’ access to information, but leaks and inter-party dissent have caused friction in the past. Some Chinese professors and intellectuals have already expressed criticisms of Xi and of his Initiative.

Second, the supposed beneficiaries of infrastructure projects may shy away from the BRI due to its association with indiscriminate corruption. Already, the pro-Sino candidate Mahinda Rajapaska in Sri Lanka, lost domestic favor because the Hambantota Port, funded by Chinese investments, was seen by the public as a vanity project to fill the coffers of corrupt officials. China’s approach to BRI investment has also exposed other countries’ citizens to potentially unpayable debts, which has sullied the BRI’s reputation. If China wants more buy-in on the BRI and an increase in its latent economic power, it will have to overcome the threat of corruption that is inherent to a massively ambitious infrastructure development.

Instability

The BRI’s most important corridor will go through Pakistan and link to Afghanistan. China is aware of the security risks involved in building a corridor in such an unstable region. Terrorist groups—the Taliban in particular—could meddle with infrastructure development and raise the costs of business, like how Boko Haram operated along Nigerian highways in 2013. As public goods, new infrastructural developments could also simply facilitate cooperation and expansion for terrorist groups. The Chinese government has a stake in preventing terrorist mobilization: in the past, terrorists have courted favor with the heavily discriminated and marginalized Uyghur community in the Xinjiang province.

The risk of terrorist confrontation in the Pakistani Corridor jeopardizes China’s geopolitical agenda. First, China risks entering into prolonged military engagements in a volatile part of the world, which will distract from the main objective: uniting Eurasia into a cohesive economic unit. One must look no farther than the American war in Afghanistan—and the United States’ foreign policy in the Middle East since 9/11 more broadly—to see the difficulty of fighting against an dispersed enemy on their home turf. There is little evidence to suggest that China can succeed where the United States has not.

Second, China may actually increase instability in provinces where it seeks to protect its investments. Again, the history of American intervention in the Middle East is revealing. The United States deployed private military contractors in Iraq to protect American-built infrastructure and American personnel during the second Iraq war. These contractors were not paid however, to uphold human rights, which they consistently abused. In the particularly horrific Nisour Square massacre, twenty civilians died in a massacre by Blackwater contractors supposedly acting to protect an American convoy. Even now, the United States suffers the consequences: the Islamic State used Blackwater in its propaganda to recruit fighters.

The deployment of private military contractors actively worsened America’s attempt at peace in Iraq by fomenting anti-American dissent. China’s security interest in the region mimic those of American contractors in Iraq. Even though the country is antipathetic to terrorism, it has not launched any sustained military campaign in Afghanistan or Pakistan. But, once SOE assets are placed in the region, they may have to deploy contractors to protect them. Infrastructural investment could also mark a long-term stationing of troops in Pakistan. China already is working on military bases in the country.

Even if China can temporarily relieve instability in the region, the BRI serves Chinese interests more than local ones and will thus breed hostility in the long run. China’s plan through the BRI is to increase regional dependence on Chinese exports to benefit its economic prominence. By swamping localities with Chinese goods, China risks wiping out major sources of employment and leaving locals socioeconomically detached from their accustomed lifestyles. When people lose access to legal means of income, especially at the whims of a foreign power, joining radical groups like the Taliban becomes an easier sell. The most important part of the BRI, then, could fall by the wayside due to security problems.

Conclusion

The Western media takes for granted that the BRI will succeed, which explains its anxiety about the likely consequences of its success. The evidence heretofore suggests that such sensationalization of the BRI as a legitimate threat to America’s role in the current international order is not well deserved. Even China’s tempered optimism about the project may be misguided. The likelihood of corruption and security headaches caps the BRI’s potential to help China curry more favor in Eurasia. Indeed, if the BRI falls flat, China will have to find another way to achieve the economic and political leadership that it covets.

The image featured with this article is used under the Creative Commons Attribution 4.0 International License. The original was taken by The Russian Presidential Press and Information Office and can be found here.