Source: Global Times    Published: 2016-8-14

Parag Khanna (Khanna), senior research fellow at the Center on Asia and Globalization at the Lee Kuan Yew School of Public Policy, National University of Singapore, has suggested in his new book Connectography that the China-proposed Belt and Road (B&R) initiative is promoting regional integration, which will help reshape the meaning of geography, steering the globe into a new form of integration and unification through supply chains. How can the B&R initiative achieve that? Global Times (GT) reporter Li Aixin recently talked with Khanna about these issues in an exclusive interview.

GT: What does the new form of integration and unification look like in your opinion? And why do you think the B&R initiative will play a vital role in it?

Khanna: A lot of people think about integration as governments fusing together, creating a new supra-national entity like the EU or the UN. That`s not what infrastructural integration looks like. Infrastructural integration is what I call functional integration. You don`t have to bring your governments together, you have to bring your utilities together.

Supply and demand are the most powerful forces in the world. Supply and demand are what connect China through infrastructure to its neighbors. So it will reshape geography, because geography is a friction, geography is a barrier, geography slows things down. But with functional integration with infrastructure, the things like B&R initiative and the Asian Infrastructure Investment Bank (AIIB), that friction will become less.

GT: What influence will the B&R initiative have on geopolitics?

Khanna: Geopolitics is the relationship between power and space. In geopolitics, power can take many forms. Infrastructural and economic reach is a kind of power. The AIIB and the projects of the B&R embody China`s infrastructural power and commercial power. So this institution, the more it extends, the more Chinese influence extends at the same time.

You cannot influence what you are not connected to. The US said Iran must not be connected, we will not trade with or invest in Iran. But other countries like Russia, Turkey, India and China, they will engage with Iran, they will trade with Iran. The more you connect to Iran, the more you will have influence in Iran. So geopolitics changes based upon degree of connectivity.

GT: What challenges do you think the B&R will face?

Khanna: There are two categories. There are post-Soviet countries, like Uzbekistan, Kazakhstan, Tajikistan, Kyrgyzstan, where infrastructure is very bad. In those countries there is very little rule of law, so when you do a contract or a project, you don`t know whether the deals will be cancelled or not. When I was here in June, Chinese President Xi Jinping was in Tashkent, Uzbekistan. Why was he there? Because you have to get government-to-government agreement support to make sure that this project will happen.

The other kind of countries are post-colonial countries like Pakistan and Afghanistan, which are very unstable politically. And the US has a strong influence in those countries. So the challenges are strategic and geopolitical in terms of diplomatic maneuvering. And then there are challenges of security. There are Chinese workers that have been kidnapped or killed, Chinese facilities that have been attacked. The bigger the project, the bigger the risk.

GT: How do you view some countries` doubts over the B&R initiative? What are their major concerns?

Khanna: There are concerns that this is a new institution, and it has no obligation to the existing Western institutions financially, or in terms of the governments.

The second objection is it can dictate the relations with these countries and there is no overall coordination like the UN or the Security Council. Then related to these concerns is about standards. These organizations try to impose very strong standards of project quality, human rights, labor standards and the environment. Maybe the AIIB will do it, maybe it will not. Then there are concerns about influence within the AIIB - China will dominate. It has 70 members, but only China will get to say yes or no in reality.

But the truth is that in all relationships and organizations, there is a cost-benefit calculation. More countries are saying they want to join, even US allies. If you don`t think you will gain, then you do not join. I think that is the reality on the ground.

GT: Are those obstacles you have mentioned long-term or short-term challenges for China?

Khanna: I think that winning over the global public opinion will be easy. The bank (AIIB) is delivering a public good - infrastructure. Infrastructure is something that benefits everyone and you cannot take it away. In that sense, it`s a positive thing, and most countries want it, need it and agree with it.

But actually public opinion doesn`t really matter. What matters is the results and effectiveness. The only important question is "does it work." The problem with existing institution like the World Bank or the UN is they don`t really work. So there is an opportunity here to create an organization that actually works.

I am optimistic in the long run. Many of the major projects (of the B&R initiative) will work. They will happen despite the obstacles, because they need them and China has a supply. Many obstacles will happen, but in the long run, the projects happen. Otherwise, how would we have today`s oil pipelines, gas pipelines, ports and ships and globalization? In the long run, globalization wins.

GT: According to your theory and prediction, how will Sino-US relations develop in the future?

Khanna: The most important thing about a relationship is that it has as many layers, as many issues as possible. The China-US relationship is about trade, defense, technology, resources, cyber, human rights. In a relationship like that, sometimes some of the issues are going badly, other issues are going well. But there is a balance.

My prediction is that even though there are tensions about the South China Sea, cyber, trade … there are tensions about the most important issues. But with each issue, there is a sense that you have to cooperate, to figure out how to solve it.

Does the US want to fight a war with the Philippines against China in the South China Sea? No. The US made a statement last month and said they want to see a bilateral dialogue between Philippine President Rodrigo Duterte and Chinese government to settle the South China Sea dispute. The US wants to patrol the waters to demonstrate that this should be international waters, but does not want to fight.

In terms of trade, it wants China to reduce subsidies, it does not want to have a trade war. So you debate it, argue it, have a lawsuit at the World Trade Organization. You do a lot of things, but you do not escalate too far.

GT: You said that the US does not want a war against China in the South China Sea, but the case is so hyped up there. What`s your take?

Khanna: I think it`s too bad that it is so hyped up, because now there is no more room to talk about facts or solutions. The biggest problem is that when everything is so nationalistic, then it`s very difficult to compromise.

The truth is there are very simple compromises that are possible. But it requires the issue to be less political and less nationalistic. For example, the oil companies of China, Vietnam, the Philippines, Indonesia … form one consortium, create one common company for the South China Sea, just for that area. If you all agree which company extracts from which areas, and it all goes and sells on the market, and you share the profits.

China can still claim the islands in terms of law, but shares them in terms of commerce. You do not have to give up the political claims. But you can share it commercially. That will reduce the tension.

GT: An article by the Financial Times argues that TPP, which is often considered as a competitor to the AIIB, is dying, because neither of the two US presidential candidates support the trade deal. What is your view on this?

Khanna: It is unfortunate that neither Hillary nor Trump supports it. That is their mistake.

If you want Asian countries to reduce subsidies, to lower tariffs, to open their economies, to reform state-owned enterprises, you have to have an agreement with them. You cannot influence what you are not connected to.

If the US does not pass the agreement, then of course other countries will not either. But other countries are not waiting for the US to pass TPP to pursue relevant trade agreements. For example, Asian countries are trading more with South America, then there is the AIIB and Regional Comprehensive Economic Partnership (RCEP) in Asia, whether or not TPP happens, other countries will do their own liberalization. All of these things will actually happen eventually at different speeds.

A lot of people think it`s "one versus the other," "TPP versus AIIB," that`s false. It`s like the Cold War. Economics does not work in that way at all. Trade is addictive. You get more, the more agreements you are in. I have made a chart of countries that want to be in TPP, RCEP, and the countries that are in the AIIB and ASEAN Economic Community. And there are 12 or 15 countries that are in the middle. How can it be either this side or that side? In economics you can have both sides.

GT: In your book, you have mentioned that B&R initiative works better than US rebalance to Asia-Pacific strategy. Could you please elaborate on it?

Khanna: This is territorial and geopolitical (issue), not economic. There are different geographies. In the Pacific maritime geography, that is what pivot to Asia is trying to establish or re-establish American image. But it`s a question of patience.

My belief is that there should be a naval cooperation agreement between the US, Japan, China, Australia and major maritime powers to protect the South China Sea, the most important trade waterway in the world.

For B&R initiative, it`s different geography - Eurasia. The US is on the Pacific Ocean, but the US is not on Eurasia, it`s literally on the other side of the planet. The US was militarily occupying Afghanistan, Iraq, to some extent influencing Pakistan, but it`s pulling out of those countries. Therefore, its influence will go down, because its expenditures spent in those countries was mostly military, not infrastructure, not projects. If the US pulls back from those countries, then China will come in stronger and it will gain more influence. So there it is a zero-sum.

GT: You said in your book that infrastructure is as important as security in today`s world. Why?

Khanna: Historically, we think the security is the most important good. Since WWII, the US has provided global security, global stability, global order, alliances, reassurance, protection. But today not every country wants the US to provide security. Sometimes they want to provide themselves, sometimes they want to build their own alliances. Look at India. India has very good relationship with the US and Russia, and it is trying to have a very good relationship with China and Japan. It does not want the US to provide global security.

If other major countries do not want the US to be the No. 1 provider of global security, then it is no longer a global public good provided by one country.

Security is also not the only the most important thing. Development is, wealth is, prosperity is, connectivity is, infrastructure is. Most countries in the world are very poor and do not have infrastructure. But the US has not provided such public good for anybody. China is the NO.1 provider of the global public good of infrastructure in the whole world. It was for a long time before AIIB. That is why the way in which China is a superpower is different from the way in which the US is a superpower.

The projects for B&R initiative are being announced very regularly. I think this is a very good thing to move at this pace. I think it is also important to make sure that you help companies in Tajikistan to build its own power plant, teach them how to run it after it`s done. The spirit of building capacity for others will build a lot of goodwill.

China wants to be perceived as a superpower as a fair power, a sharing power, a peaceful rising power. If China wants to do that, Asia must be stable. That means China must keep Asia stable. There are certain instabilities in the South China Sea. It`s everyone`s fault. But the image of China, the perception of China, the reputation of China will depend on solving the East China Sea and South China Sea disputes peacefully.