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The New Silk Roads reach the next level

The New Silk Roads reach the next level

By Pepe Escobar and posted by agreement with the author.

The Beijing leadership seems to be aware that transparency is key for the global success of BRI, which is now supported by over 120 states and territories

The Belt and Road Forum in Beijing was a graphic demonstration of how tactical adjustments are essential to enhance the appeal of a complex overall strategy. Talk about a turbo-charged 4.0 version of the legendary Deng Xiaoping maxim “crossing the river while feeling the stones.”

For all the somewhat straitjacket approach of Chinese official pronouncements, President Xi Jinping stressed a sort of “three musts” for the advance of the New Silk Roads, or Belt and Road Initiative (BRI) – debt sustainability, protection of the environment (or “green growth”), and no tolerance for corruption.

Add to that a growing battle against trade protectionism, more bilateral free-trade deals, more financing or investments, cooperation on third-party markets, and even a plan to sell Silk Road bonds.

In his keynote speech, Xi stressed how multilateral cooperation on “six corridors and six channels serving multiple countries and ports” is all go. He was referring to BRI’s six major connectivity corridors spanning Eurasia – and the fact that BRI is still in its planning stage; implementation actually starts in 2021.

The devil, of course, is in the details on multiple Chinese promises – further opening-up of the Chinese market to foreign investment; the possibility of majority equity in more industrial sectors; no more imposed technology transfers; more protection of intellectual property rights; and last but not least, no devaluation of the yuan.

And yet Beijing is learning fast. The final joint communique, emphasizing governance as much as economic development, was signed by Xi and 37 heads of state – from Italy, Greece and Portugal to Singapore and Thailand, not to mention new members such as Luxembourg, Peru, Cyprus and Yemen.

BRI is now supported by no less than 126 states and territories, plus a host of international organizations. This is the new, truthful, realistic face of the “international community” – way bigger, diversified and more representative than the G20.

The Beijing leadership seems to be aware that transparency is key for the global success of BRI. On the opening day of the forum, Finance Minister Liu Kun presented a 15-page debt sustainability framework based on similar standards applied by the Bretton Woods system – the IMF and the World Bank.

And the governor of the People’s Bank of China (PBOC), Yi Gang, stressed how long-term debt sustainability should be evaluated in relation to better infrastructure, better productivity, raising standards of living and reducing poverty. The PBOC has financed as much as $440 billion in BRI projects so far.

It’s all about Russia-China

Supported by vast infrastructure-building know-how and cutting-edge technology, Beijing is willing to renegotiate virtually everything BRI-related, from bank loans to overall project costs, from Malaysia and Thailand high-speed rail to the finer points of the flagship China-Pakistan Economic Corridor (CPEC), from physical infrastructure to the Digital Silk Road.

So much for US media hysteria over toxic “debt-trap diplomacy”.

Moreover, the West, as usual, ignored what was the absolutely key takeaway of the BRI forum: the deepening, on all fronts, of the Russia-China strategic partnership. It’s all here, in President Putin’s speech.

Russia’s President Vladimir Putin speaks during a press conference on the sidelines of the final day of the Belt and Road Forum in Beijing on April 27, 2019. Photo: Sergei Ilnitsky / AFP

Putin emphasized “harmonious and sustainable economic development and economic growth throughout the Eurasian space.” He noted how BRI “rhymes with Russia’s idea to establish a Greater Eurasian Partnership, a project designed to ‘integrate integration frameworks’, and therefore to promote a closer alignment of various bilateral and multilateral integration processes that are currently underway in Eurasia.”

I have reported extensively on the crucial BRI-Greater Eurasia symbiosis. And this was exactly the focus of the discussion when Putin met Xi on the sidelines of the forum. The Chinese Foreign Ministry vigorously stressed how Xi asked Putin to merge Eurasian Economic Union’s (EAEU) infrastructure projects with BRI.

What should be expected from the in-progress BRI-EAEU merger, which also includes the economic arm of the Shanghai Cooperation Organization (SCO) as well as ASEAN, is a massive, concerted Eurasian integration push. 

Putin could not have been more specific. “The Eurasian Union…has already signed a free-trade agreement with Vietnam and a provisional agreement with Iran, paving the way to the creation of a free-trade area. The preparation of similar instruments with Singapore and Serbia is nearing completion, and talks are underway with Israel, Egypt and India. We cooperate actively with the Shanghai Cooperation Organization and the Association of Southeast Asian Nations.”

All the pieces fall into place

Addressing the forum, Putin added another enticing dimension, with the China-driven Maritime Silk Road possibly joining the Russia-driven Northern Sea Route, “a global and competitive route connecting northeastern, eastern and southeastern Asia with Europe” will emerge. Once again, Eurasia integration in practice.

And then there are the other key Eurasian hubs, Iran and Pakistan.

After Tehran and Islamabad clinched a deal for joint border patrol on both sides of Balochistan, the next logical step would be closer BRI-related integration from Southwest Asia to South Asia.

Pakistan’s Prime Minister Imran Khan was a key participant in the forum, explaining the expansion that will transform Gwadar from a tiny fishing village to a global port and CPEC terminal that will link the Pacific via the Indian Ocean to the Mediterranean. Imran confirmed that Turkey had also been invited to be part of CPEC.

Many pieces are slowly falling into place across the immensely complex Eurasian integration chessboard. A key vector now depends on China being able to develop, refine and project soft power.

BRI, apart from its status of being the one and only 21st-century global development project, is also a global PR exercise. Compared to childish US geopolitical demonization, Beijing’s game is not that hard – just learn how to appropriately sell the ultimate geoeconomic paradigm shift to International Community 2.0.

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19 Comments

  1. Pepe/Saker..it is great to get these updates!

    Uncle Sam is about as enthusiastic on this giant initiative as he is about the possibility of peace and cooperation breaking out in the Koreas. They will take the opportunity to throw every spanner they can lay their hands into the works. Of course, this development is inevitable now and the US is fast running out of spanners.

    With the ongoing pathetically childish and destructive antics of Trump and his team of thugs, he is very busy hastening the retreat of his vassal countries in their support of his foreign policy, and of course, greatly accelerating de-dollarization. The hegemon’s days are indeed numbered…bring it on.

    Here’s to cheers, beers…oh and of course popcorn!
    Col

    PS Saker…hope you are looking after your health and making some progress.

    • Col…’the farmer from NZ’
      Yes, it is indeed as you have written. By now there is no doubt that Euro-Asia is the future political and economic powerhouse, with Russia and China being the backbone. The US, of course, will try to subvert this, as can be seen by US threats against North Korea and Iran, and by provoking a conflict between Pakistan and India.

      The chief problem with the US is it’s inability to accept reality, still living in the past. That’s what makes the situation dangerous, the US being tempted to do something very foolish. We shall see what it will do.

  2. BRAVO!! Great update.

    As Pepe says, implementation actually starts in 2021, and 2021 promises to be the most (predictable) interesting year in centuries.

    2021 is the anniversary of Mao’s founding of the CCP, it fulfills Deng’s Reform and Opening and marks the beginning of Xis program–which runs through 2049 (and turns China into a high-tech version of Finland).

    2021 will be replete with scientific and technological achievements and it will reach a level of social achievement and human rights never seen before, anywhere: every Chinese will have a home, a job, plenty of food, education, safe streets, health- and old age care. 

    in 2021 500,000,000 urban Chinese will have more net worth and disposable income than the average American, their mothers and infants will be less likely to die in childbirth, their children will graduate from high school three years ahead of American kids.

    Before 2021 there will be more drug addicts, suicides and executions, more homeless, poor, hungry and imprisoned people in America than in China.

  3. no wonder we had a major “terrorist” attack in Sri lanka. Colombo is supposed to be a major porn for BRI. Amazing how it happened right around the time of the BRI conference but Im sure thats just coincidence.

  4. I’m conflicted about BRI. On the one hand, it’s doing a beautiful job of quietly easing the Anglozionst empire towards history’s rubbish bins – “a consummation devoutly to be wished”. But on the other hand, the other absolutely crucial idea seems to be getting completely ignored: that all this economic explosion and the oxymoronic idea of ‘sustainable, green’ growth has literally no chance to survive the global reality of Peak Everything, and the non-negotiable, non-avoidable new era of the Long Descent away from hitech industrial ‘civilisation’ (already begun, btw).

    Outside of a small minority of unwavering clear-seers, these – imperative – realities are being studiously ignored, in favour of the cretinous notions that growthforever on a finite planet is actually possible; and the further cretinous notion that this planet isn’t actually in an overshoot situation already, where any further attempts at growth simply makes everything worse, and actually have no chance of succeeding on anything more than the fairly short term.

    For a few more years now, or just maybe for a very few more decades, the rising stars of the China/Russia duopoly empires will be able to play a zero-sum game with the declining West. What we – Westerners – lose, they will gain. But after that, the Synergising Global Crises – climate disruption, ecological devastation and the Sixth Extinction, human population overshoot, the decline of the all-important forests – to name just a few of the whole array of planet-degrading SGCs – will put a stop to any more of these growth obsessions: of human numbers, of hyper-active economic growth, the whole kaboodle.

    And as for the Star Trek future – just forget it! Eat your eegabeeva, subsidy-leeching heart out, Elon! This is where we belong; this is where we’ll stay – for as long as we continue to survive extinction.

    You get the idea that Xi, Putin and friends are just vaguely apprised of these harsh, over-riding realities, from the way that they add on afterthoughts to their announced plans, concerning ‘green’ imperatives. But these utterly crucial matters are just treated as afterthoughts, aren’t they? And the SGCs are just not going to allow us to deal with them as late, optional extras. They are, in fact, the major dictators of the real shape of our near future on this planet. BRI doesn’t seem to me to be grappling with this harsh, absolutely-over-riding reality in any realistic way at all.

    So expect a conflict-ridden time, as the Az empire fights – literally – against its own decline and fall; and a time extending beyond that era, and already with us right now, when geophysical/ecological imperatives over-ride all our unrealistic human plans. The real medium-term future is Dark Age – if we’re lucky.

    Naturally, all the multitudes of humankind who are still deeply in thrall to the religious myth (in the old-fashioned Literate British English sense of that word) of ‘progress’ will not want to hear any of this, and will turn deaf ears to it – until Mam Gaia begins to slap them really seriously around their heads with her force majeure. By which time it will be somewhat late in the game.

    • You are absolutely correct, but I hold out some hope that China will be able to create an ‘ecological civilization’ ie one that can last into the future without destroying the planet’s biospheres. The Chinese have been working on this project for some time with co-operation coming from foreign experts in various ecological fields. I see them as the last, least worse, hope for humanity, because the Western neo-liberal Free Market Absolutist psychopaths are bent on using the ecological Holocaust to exterminate 90% or so of the planetary human population. No other explanation of their behaviour makes any sense.

      • Dream on Mulga, me old China …its entropy, entropy, they all got it entropy!

        It is not going to be a ‘Long Descent’ as Rhysiart suggests – but a precipitous drop. Analogously: imagine driving at night. The headlights show the road is clear – but the unseen road drops precipitously away. We won’t even see it coming. I’m sure you know what the ‘net energy cliff’ looks like? If not: a quick search will show the inverted parabola. We are somewhere between (an EROI of) 15-10 – on the inflexion point. Any massive infrastructure White Elephant’s like the dream-imaginal BRI will precipitate an exponentially steepening decline. Realistic options, with current technology, are rapidly fading. Capitalism is trying to ‘greenwash’ itself as a cuddly, compassionate, ‘clean’ fuel peddler. The decisions we make in the next decade decide the fate of humanity. BRI is an economic corridor and maritime Silk road to nowhere …fast.

        • @BigB, entropy rules, OK. But we have 100 to 200 years till we come to the cliff edge — the one we are driving toward right now; and what if we decide to change direction? It can be done.

          You yourself mentioned one highly probable way out (in a thread on OffG). There is another precipitous drop ahead but a good one: the steeply tumbling price of renewables vs hydrocarbon fuel (even though hydrocarbon and nuclear are receiving heavier subsidies because they are entrenched technologies). China is the largest manufacturer of solar panels, and I guess at current prices one can buy 1kw-3kw Chinese panels to run one’s air conditioner during summer (the biggest single drain on household electricity) and repay one’s investment in 5 years or less — without subsidies.

          Russia likewise is pioneering a pathway out of our current ecological impasse, through its _governmental_ ban on GMO and Monsanto Roundup. Not to mention Putin’s scrupulous respect for international Law and Agreements (sometimes infuriating to his supporters who would like to see Russia throwing its weight around U$ $tyle). Make sensible Laws and stick to them — not hard, provided one has sensible Leaders like Putin, Assad, Nasr’Allah and the Iranian Ayatollahs with their Islamic Socialism. There used to be Christian Socialists in Britain, and Leaders like Attlee, MacMillan and Wilson who brought in sensible social-welfare Laws; they will come again, if we look for them.

          In France the Yellow Jerkins likewise show vigorous signs of a new mood among us “deplorables”: Macron Demission! We are fed up with being ruled by selfish, vacuous ZioCapitalist messenger boys (and girls). They must go.

          Global warming only began to stir 100 years ago, with the advent of cheap oil. Another 100 years may not be too short a time to reverse it — especially since, as you repeatedly remind us, the world will soon have to face up to the increasing entropy of oil extraction. In contrast, the entropy of sunshine is constant (on the human timescale); compared to the increasing entropy of carbon fuel extraction, this constancy of solar energy will soon translate into a “perceived monetary value” that the average punter can understand.

          • It’s not a matter of subside this or that. You cant replace oil or coal with wind and solar.
            That’s why China is building 30 nuclear reactors.

            This is be environmentally friendly for real!
            Nuclear energy =zero emissions

            • @Zico, yes, I forgot to mention that the Chinese are developing reactors which produce little or no plutonium hence less “entropic” degradation of the environment. All this is part of their “Green Growth” policy that Pepe mentions.

              But it also needs to be part of their drive against “Corruption” — no corruption of the Laws against Pollution. Corruption of the Law has been one of the factors which brought the West to our current unhappy prospect; perhaps the West ought to take a tip from the Chinese and begin our reforms by hanging a few prominent people for corruption. However, it will be difficult for us to that because of the principle laid down at the Nurenberg Trials: “Nobody [in the West] hangs bankers”.

            • Nuclear energy = Fukushima, Chernobyl, Three Mile Island, Sellafield, Hanford etc, plus intractable waste, nuclear proliferation and huge demands on water and massive CO2 emissions during mining for ores, construction of plants and operational support. The best nuclear is the huge fusion reactor we call the Sun.

        • You’re talking of the ‘Seneca’s Cliff’ idea of Ugo Bardi, Brenda, I believe. I concur, but remember that entropy can be defeated in the short and medium terms, otherwise we’d have no complexity in the universe and no Life on Earth. China has no alternative to increasing its power to defend itself from that Western aggression, driven by racism and the ‘Clash of Civilizations’ ideology, that has assailed the country since 1839. You’re correct to observe that capitalism is seeking to hide its responsibility for our predicament-it will go in the next few decades, and the only question is whether it takes us all with it.

    • Bravo Gwilym! Much needed words of sanity. The fascination with the ‘great game” tends to ignore the planetary crisis we are experiencing. But nature bats last, and will put an end to our hubristic games, giving us a severe spanking, and putting us to bed!

  5. The US is trying on as many fronts as possible to thwart and slow down this project. Expect them to continue and become even more desperate as the Chinese/Russian juggernaut rolls onwards.

  6. @Rhisiart Gwilym

    There will be plenty of low-carbon energy.

    If we use only U-235, that will last a few decades, so some people are worrying.

    However, the fast breeder reactor can use U-238; it is now proven technology. Russia’s BN-800 has been running successfully for 6 years, and China is building CFR-600, a pilot 600 MWe plant. As U-238 is over 140 times more abundant than U-235, the heavier isotope will last us several thousand years even if we only mine the land, and even if we don’t find new reserves.

    Japan has proven that Uranium can be recovered from the sea. With fast breeders, there is enough U-238 presently in the oceans to last millions of years, even at many times the world’s current energy expenditure.

    Rivers wash more Uranium into the sea; continental drift is constantly exposing fresh land. If we take these into account, there is enough uranium to last billions of years.

    Thorium is 3 to 4 times as abundant as Uranium. (But Thorium isn’t soluble, so very little of it is in the sea, unlike Uranium.)

    So there will be plenty of low-carbon energy for a very long time, even if solar and wind should prove impractical at global scale, and even if we never master fusion. I am not concerned with energy shortages; my biggest worry is that we could blow ourselves up.

    • Cyril, it has been calculated, more than once, that the planet’s solar and wind resources are many times more than required to power humanity in perpetuity. Nuclear is expensive, dangerous and unnecessary. Then there is tidal, stored hydro, ocean currents, high altitude wind, geothermal etc. And, most required, is to downsize the human population, slowly and humanely, to one or two billion, rewild the plant by reforesting it, and live at peace with the rest of Life on Earth.

      • Perhaps wind and solar will be enough. Opinions differ, likely depending on what one believes is an adequate standard of living. I consider nuclear energy to be “insurance”, in case the renewables aren’t enough. Incidentally, the fast-neutron breeder reactors, like the Russian BN-800, produce only one percent as much waste as existing nuclear reactors, and this waste is far less nasty. So thanks to Russia’s fast-breeder breakthrough, the energy problem might be solved.

  7. Such Malthusian pessimism…

    A hole through a mountain only needs to be made once, it never really “wears out”, yet pays dividends, in reduced transport costs over centuries. Goods transported on the backs of pack animals being transfered onto wagons with roller bearings and wheels on steel rails dramatically drops the amount of energy required to move the goods along these rail corridors. Being able to move them at about 250 km per hour is absolutely amazing.

    Engineers are dramatically reducing weights of products, using less materials, building stronger composites that better handle compression and tension forces. We no longer use solid materials for many applications but torsion boxes that have the same functionality with about one tenth the mass. We have only begun going down this path.

    No one seems to be looking at the EROI for the technical evolution of transported products and materials. It is often cheaper to re-engineer products than to invest the same capital in extraction of more energy.

    The biggest consumer of “fossil fuels” are aircraft. Each generation of aircraft has been more fuel efficient by a considerable margin over the previous generation. We are seeing the phase-out of Boeing 747 Jumbos. They have been replaced by twin engine designs that have much more power than four of the Jumbo’s engines. Modern engines easily run one hundred hours or more every ten days, flying passengers mostly trouble-free, greatly expanding fuel efficiency and reducing maintenance.

    Products are simulated in software prior to building prototypes (Sukhoi SU-35), greatly saving energy and materials along the way. Fiascos such as the Boeing 737 Max or the F-35 aircraft are not likely to be repeated in future where billions have been squandered. There will be significant changes in political, economic and technical environments for developing new products that will lead to drastic improvements in investment returns (energy being but one aspect).

    Some products will be produced at the place of consumption, such as with 3D printing of objects. There will be no need to ship desired items, nor to maintain an inventory, they will be produced just-in-time at the desired location.

    We do not even know how to calculate and compare the EROI on such competing investments at this time. The implementation of these techniques was started long ago and is accelerating. It greatly compliments any infrastructure investments such as the BRI.

    The largest single user of energy in the world today is the US Navy. A successful BRI will dramatically influence geopolitics making much of the current military strategies of the US Navy obsolete (carrier battle groups).

    I am sure there will be new more creative ways of killing each other than bombing or shooting at each other. Hacking a Tesla, locking the doors and windows then asphyxiating (no poison, radioactivity or blood-spilling required) the occupants will be a much more energy efficient form of murder and mayhem. The boffins at the CIA and other agencies are surely already on to such “environmentally friendly” ideas.

    Other advances in pricing, such as a “carbon tax” based on the amount of weight you are transporting will influence consumption. Imagine you want to go far away on vacation, and you can save one hundred dollars on your next flight if you lose five kilos beforehand… This may have a secondary impact of reduced doctor visits (less car traffic, congestion parking searching and energy consumption) as you will have a larger percentage of the population living a healthier lifestyle.

    Now that I think about it I better get in shape for my next trip to Russia (Natalie is meeting me in Moscow next Sunday). With such pricing I could then bring her more Gruyère cheese…

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