China-Programme/Stiftung Asienhaus, chinadialogue (Eds.) Silk road bottom-up: Regional perspectives on the Belt and Road Initiative China-ProgrammImpressum Titel: Silk road bottom-up: Regional perspectives on the Belt and Road Initiative Edited by: China-Programme/Stiftung Asienhaus Hohenzollernring 52 50672 Cologne, Germany Conception, coordination and editing: Nora Sausmikat Editorial cooperation: Christopher Davy, Vivien Markert, Gisa Dang, Courtney Tenz, Lena Marie Hufnagel, Frederik Schmitz Supported by MISEREOR The authors are responsible for the content. Concept and Design: Chanika Ronczka Typesetting, lithography and printing: Klartext Medienwerkstatt GmbH, Essen (k-mw.de) Coverphoto: Free Seide in der Seuk 5 (FreeImages/Cecilia Reifschneider) Price: 5,00 Euro Orders: Stiftung Asienhaus, Vertrieb, Hohenzollernring 52, 50672 Cologne E-Mail: vertriebasienhaus.de | Tel.: 0221-7116121-13 | Fax: 0221-716121-10 All rights reserved © Stiftung Asienhaus, Cologne, Germany 2017 Reprinting in any form or any means only permitted when citing authors, editors and publisher. This brochure is published under the licence of Creative-Commons-Lizenz 4.0 (CC BY-SA 4.0) ISBN 978-3-933341-76-0 2 China-Programme/Stiftung Asienhaus, chinadialogue (Eds.) Silk road bottom-up: Regional perspectives on the Belt and Road Initiative 1 Foreword links: Foreword Asia and, above all, China is playing a major role in implementing development and sustainability goals, as well as working towards global climate protection. And thanks to Chinas efforts to carve out a more active international role, thousands of scholars, practitioners and NGOs, as well as politicians and think tanks, are now engaged in research on the Belt and Road Initia- tive (BRI), also known as 一带一路 (Yídài Yílù) or One Belt, One Road (OBOR). Of course, the BRI is still in the making and also difficult to understand given its breadth, ambition and bun- dling of bilateral and regional treaties and agreements. Nonetheless, it is clear that the initiative is challenging existing regional dynamics by tying Europe, the Middle East and Africa closer to Asia, and especially to China. Through the initiative, China is expanding its existing alliances with emerging countries, for example through the BRICS and Shanghai Organization, and also con- necting Asia, Africa and Europe more closely to its vision of a land “belt” and sea “road”. The complex network of infrastructure projects and new economic zones that is emerging is designed to open up market access and investment opportunities in South East Asia, South Asia and Central Asia, and to promote trade and cooperation with the EU. The purpose of the BRI project of the Stiftung Asien- haus is to examine the effects of this initiative on the development perspectives of participating countries. Our first report was in German and offered an initial analysis of important sections of the “new Silk Road”, focusing in particular on the economic corridors. It also considered the financial architecture of the BRI and its possible impacts on Europe. This second report takes a different approach, mov- ing the focus on to regional voices and the effect of the new Silk road on particular regions, peoples, and the environment. We look at the social, political, and ecological impacts of the enormous investments being made under BRI. Where possible, the voices of local communities that are being affected by investments have been privileged. Together with partner chinadialogue, we want to elaborate the opportunities and challenges of the initiative, and the impact it is having on the envi- ronment, social stability and international relations. Thereby we hope to feed into the discourse on devel- opment policy, including Chinas development strat- egy, which is seeing China expand its role as a global development partner and also donor. The effects of this are varied and require critical monitoring and 2 Forewordcommentary by Chinese, Asian, and European civil society. It is also worth noting that we faced enormous diffi- culties “collecting” regional voices for inclusion in this publication, especially in the core BRI countries. It is of great concern to us that in many places, civil society were often too frightened to engage. Therefore, some important voices are missing here, but we hope their concerns will be voiced in other ways. In 2008, the Chinese government popularised the slo- gan “One world, one dream” which could also be understood as a vision to fight climate change and other global problems together. In 2013, the slogan changed to the “China dream”. Silk Road bottom-up speaks to the regional “dreams” of Chinas neighbours, with infrastructure again a new magic term for believ- ing in a particular development paradigm. After China started its BRI, the World Bank funded the Global Infra- structure Facility (GIF). Many others followed. The infrastructure investments of the BRI carry two main risks. The first is environmental and social harms. The second is that developing countries will be loaded with debts. Rules-based interactions are needed to guide investments. In February 2017, the French Parlia- ment passed a law on due diligence of companies. It requires major French companies to identify and man- age risks to human rights, and not just to their own companies but within subsidiaries and supply chains. For the first time, due diligence obligations are fully anchored in a binding national law. Such milestones are hugely encouraging. We can build on them to demand similar initiatives in Germany and the EU. If BRI investments could happen under such a framework, sustainable and fair development would be more likely. Participation, the environment, and human rights are important cross-cutting issues, and a key question going forward is whether the BRI will allow opportunities for a self-determined sustainable development model for participating countries. Finally, we would like to thank all the authors that con- tributed to this publication, and to our interns Frederik Schmitz and Vivien Markert for their efforts to coordi- nate it. Without their support, the publication would not have come together so quickly and to such a high standard.Cologne, October 13 th , 2017 Dr. Nora Sausmikat (Stiftung Asienhaus) 3 ForewordContent links: Content Foreword 2 Introduction Sam Geall 6 The New Silk Road in Pakistan a Mercedes Benz for a Stone Age Man? Opportunities and challenges for the people of Gilgit-Baltistan Carmen Brandt9 Chinas Land Deals in Cambodia and the Impact of the New Silk Road Vivien Markert 12 Nepal Dreams of Railway linking China to India Ramesh Bhushal 16 Tibets Role in Chinas Belt and Road Tshering Chonzom Bhutia 20 Sri Lankas New Hong Kong Project Risky for All Sides Chinese firms are racing to build a vast port city to rival Dubai and Singapore Liu Qin 22 Struggling Port Forces Sri Lanka Closer to China New deal with Chinese investor will see more money poured into Hambantota port Uditha Jayasinghe 25 Maritime Silk Road: Whats in it for Vietnam? Perceptions by Vietnams Civil Society Tam Nguyen 29 How to Exchange a Port for a Dam Myanmar Shows the Way to Bargain within BRI Nora Sausmikat 33 Victims of Land Grab and Pollution Can Help Each Other People-to-people Exchange China-Myanmar Nora Sausmikat 35 The AIIB / World Bank Indonesian National Slum Upgrading Project Indonesian Legal Resource Center, WALHI, Institute for Policy Research and Advocacy (ELSAM), Ecological Justice, TuK, INDIES, Ulu Foundation 38 4 ContentThe Effects of the New Silk Road on Xinjiang and its Citizens Ramona Hägele, Linda Kramer 41 China-Backed Hydropower Project Could Disturb a Sensitive Siberian Ecosystem Eugene Simonov 44 BRI Investment in Arctic Natural Gas is Locking Russia in Hydrocarbon Development Mode Rivers without Boundaries 48 Conservationists advise Hanergy Solar Firm to Stop Threatening Free Flowing Rivers Eugene Simonov 49 Chinas Role in Turkeys Energy Future Temptation to invest in Turkeys coal sector will test President Xis commitment to climate leadership Arif Cem Gündoan, Dr Ethemcan Turhan 52 China is Driving a Boom in Brazilian Mining, but at What Cost? Giant iron ore mine in Brazilian Amazonian state of Pará is having big impacts on local ecology Milton Leal 56 Chinas “Ecological Civilisation” and the Belt and Road Initiative Two Faces of the Same Coin? Arianna Americo 60 The AIIB Reaches a New Milestone Korinna Horta 63 Chinas Infrastructure Financing Issues in Asia Civil Society Perspective and Demands for Responsible Investments Luz Julieta Ligthart 65 Authors 68 5 ContentMore than 2,000 years of trade along the Silk Route through Central Asia have “proved that countries with differences in race, belief and cultural background can absolutely share peace and development as long as they persist in unity and mutual trust, equality and mutual benefit, mutual tolerance and learning from each other, as well as cooperation and win-win outcomes. ” So said Chinese President Xi Jinping in Kazakhstan in late 2013, when for the first time he promoted the Belt and Road Initiative (BRI) to open new land and mari- time trade routes and infrastructure corridors across Central Asia, the Indian Ocean, and beyond. Like the Silk Road of old, the BRI is less a single corri- dor than a number of routes, including the China-In- dian Ocean-Africa-Mediterranean Sea Blue Economic Passage, China-Indochina Peninsula Economic Corri- dor, China-Pakistan Economic Corridor (CPEC) and the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC). It is driven by Chinas central government, and backed by significant investment, powerful provincial govern- ments and state-owned companies, but it also aligns with other regional ambitions, such as in the Master Plan on ASEAN Connectivity and President Jokowis vision of expanded maritime power in Indonesia. From a Chinese government perspective, it sits with a more assertive foreign policy, which challenges US maritime and naval hegemony in the western Pacific and Indian Ocean, and the traditional Russian sphere of influence in Eurasia. With the abandonment of the Trans Pacific Partnership (TPP) by the United States, and uncertainty around US security guarantees in the region, many countries are more likely to see opportu- nities for cooperation with China. In particular, countries are seeking Chinese support for infrastructure financing and construction that the Bretton Woods institutions or commercial lenders have not provided. In Thailand, for example, China has not only provided the technology for a 5.2 billion US Dollar high-speed railway linking the two countries, but also a group of retired Thai generals, businessmen and others with close links to China have revived plans to construct a 28 billion US Dollar, 135 kilometre canal across southern Thailand, linking the Indian and Pacific oceans. Another plan by Thai authorities enlists Chinese support to blast rocks and islets along a 1.6 kilometre stretch of the Mekong border with Laos, to enable larger cargo boats to travel from Yunnan province. In Myanmar, Chinese companies and banks have built and funded oil and gas pipelines from Yunnan province, in Southwest China, to Kyaukphyu on the Bay of Ben- gal, where there are now plans to develop a strategic deep sea port and a special economic zone. In Cambo- dia, China is funding a 9.6 billion US Dollar railway and port the countrys largest ever infrastructure project to date. In Sri Lanka, China is reclaiming land from the ocean to build a major port in Colombo and is also investing heavily in the transformation of the once-sleepy town of Hambantota into a major port and investment zone: Sri Lankas biggest ever foreign direct investment pro- ject, which has drawn protests from environmentalists and fishermen. Introduction Sam Geall links: Introduction 6 IntroductionAnd, as Arif Cem Gündoan and Ethemcan Turhan explain later in this report, Turkey is keen to see increased Chinese investment in its energy sector, with Hattat Holding and Chinas AVIC International having signed a 1.5 billion US Dollar deal to build a coal plant, and the government-linked Aaolu construction group agreeing to build power stations worth around one bil- lion US Dollar with Chinas Sinovel. China claims that green concerns are high on the agenda in its regional investment plans. Chinese Vice Minister of Environmental Protection, Zhao Yingmin, for example, has said that China and ASEAN should “work together to build the green Belt and Road” , and to promote “open-ended South-South environmental cooperation” . The Green Silk Road Fund, founded with 30 billion RMB of capital, seeks to invest in environ - mentally friendly projects. President Xi Jinping has also pledged 3.1 billion US Dol - lar for the countrys South-South Climate Cooperation Fund. This currently includes ten low-carbon devel- opment demonstration projects, 1,000 climate miti- gation and adaptation projects, and climate training programmes for 1,000 representatives from developing countries. However, the implementation plans for Chinas climate finance are still being finalised, and there are few clear guidelines or safeguards for Chinese enterprises or investors on the BRI. A number of large infrastructure projects pursued by Chinese companies abroad have attracted significant civil society opposition over weak environmental safeguards, limited local consultation, and disruption to land-use and livelihoods. From an environmental perspective, many of Chinas investments illustrate the risks that arise when mega- projects do not incorporate adequate safeguards such as habitat and fisheries destruction and popula- tion displacement, all well-documented consequences of Chinese dam-building in Southeast Asia but also the likelihood that these investments create inroads for energy-intensive industries from China, like coal, steel and cement, finding an “escape valve” for over- capacity by exporting capital and technology along the BRI, even as pollution regulations and an economic transition promote decarbonisation at home. According to a Boston University study, 66 percent of power sector lending from Chinese banks went into coal projects in 2016. Countries like Vietnam, Malay- sia and Indonesia, for example, may build significantly more coal-fired power in the coming years, often using Chinese technology and finance. China Development Bank is the biggest funder of coal power in Southeast Asia, where planned coal projects could lead to 70,000 premature pollution related deaths per year by 2030, according to research from Harvard University and Greenpeace International. Beyond energy and infrastruct