Tsingshan plans nickel smelter in Indonesia powered by renewables

World’s top nickel and stainless steel maker plans to build solar and wind facilities to power a 2,000MW smelter in eastern Indonesia within the next three to five years

by Tim Daiss

Chinese steel and nickel producer Tsingshan Holding Group, the world’s top nickel and stainless steel maker, plans to build a 2,000-megawatt ‘clean-energy’ facility in Indonesia within the next three to five years, while laying the groundwork for further green development, the Wenzhou-based company said last week.

It will build solar and wind power stations needed for the plant. As well as supporting facilities at its Tsingshan and Weda Bay industrial parks in Indonesia.

The plant will supply power for the company’s production of raw materials used in batteries for electric vehicles (EVs). Tsingshan wants its battery-materials operations to have net-zero carbon emissions. It already holds investments in Indonesia for battery-grade nickel chemicals production. It has been trying to expand its footprint in the new energy sector.

Earlier this year, the firm unveiled plans to make battery-grade nickel from material reserved for stainless steel. However, that process usually uses smelters that consume large amounts of coal for power generation. It is making Tuesday’s announcement even more important.

Tsingshan also announced plans to supply nickel matte. It is a main feedstock to produce nickel sulphate, to domestic cobalt smelter Huayou Cobalt and new energy materials producer CNGR. Last July, the group started trial nickel matte production with more than 75% content of the metal to meet increasing EV battery demand.

Chinese firms like Tsingshan have been stepping up their focus on EVs in China, the world’s largest car market, as Beijing promotes greener vehicles to help reduce high air pollution levels, particularly in its major urban centres.

EV MANUFACTURERS’ CATCH-22

EV car manufacturers, however, have been caught in a seemingly Catch-22 situation over its need for nickel. On the one hand, they need more nickel production for EV batteries. They also need to address the carbon footprint coming from production of the metal. 

Tesla Motors founder Elon Musk last July pressed miners to produce more nickel. The cost of batteries remained a large hurdle for the company’s growth. However, he is also pushing for cleaner nickel production at the same time. A call that some in the industry say may still be hard to come by.

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Musk said on a post-earnings call at the time. Tesla needs more nickel supply to support not only its increased auto manufacturing numbers. They also need it for larger vehicles and trucks.

While some analysts say that nickel is still in abundant supply, others claim supply could be stretched by the end of the decade. Nickel demand is expected to increase from 2.2 million metric tons to somewhere in the range of 3.5 million to 4 million metric tons by 2030.

“The current challenge is to nearly double supply while meeting environmental, social, and corporate governance (ESG) requirements.”

Nickel is crucial for EV battery efficiency. It makes batteries energy dense so cars can run further on just a single charge. It’s now widely viewed to be the second most expensive component of EV batteries. EVs, for their part, will comprise 58% of global passenger car sales in 2040. Compared with 10% by 2025, according to a Bloomberg NEF report.

SE ASIA TOPS NICKEL PRODUCTION

Indonesia passed the Philippines in 2018 to become the world’s largest nickel producer and could soon pass Canada and Australia combined. 

Indonesia had 13 operating nickel smelters with an input capacity of 24.52Mt by the start of 2020. And another 22 nickel mines are under development, government data shows, while Jakarta is trying to boost the sector. Indonesia holds about a quarter of all global nickel reserves. 

Meanwhile, several junior miners, such as Vancouver-based Giga Metals Corp and Canada Nickel Co are also planning to produce more environmentally friendly nickel. However, that may still not be enough ‘clean’ producers of nickel for EV makers in the long-term.

Indonesia to arm up with Rafale, F-15 fighter jets

Jakarta backs away from previous plan to buy Russian Su-35 air defense fighters under threat of US sanctions

By JOHN MCBETH

After a series of pandemic-defying trips across the world, Indonesian Defense Minister Prabowo Subianto appears to have settled on the French-made Rafale and an under-strength squadron of American F-15EX jet fighters to bolster Indonesia’s front-line air defenses, with deliveries expected over the next three years.

Along with the 36 Dassault Rafales and eight Boeing F-15s, the wish list also extends to three Lockheed Martin C-130J Super Hercules transport aircraft, three Airbus A330 tankers for aerial refuelling, six MQ-1 Predator drones and Italy’s Leonardo early-warning radar system. 

It could be Jakarta’s biggest-ever defense purchase if it goes through in its current form, but serious questions remain over whether debt-burdened Indonesia can afford the estimated $11 billion it will cost for the aircraft alone and the early availability of the F-15 variant, only two of which have been built so far.

Indonesia’s defense budget for 2021 stands at US$9.2 billion, an increase over the 2020 allocation that started out at $9.3 billion and dropped to $8.7 billion because of fiscal pressure from the pandemic. The 2021 spending includes $3 billion for military modernization.

Widodo’s first-term government had hoped to increase the defense budget to $20 billion by 2019, or 1.5% of gross domestic product (GDP), but that was predicated on 7% growth, not the average 5% the country has achieved over the last five years as it struggled to attract foreign investment.    

What the February 17 announcement does seem to have settled is that Indonesia has decided not to risk US sanctions with the $1.1 billion deal to buy a further 11 Sukhoi Su-35 air defense fighters to go with the 16 twin-engine Su-27 and Su-30 Russian jets it already has.

Then-US president Donald Trump signed off on the Countering America’s Adversaries Through Sanctions Act (CAATSA) in mid-2017, three years after the Barack Obama administration introduced the legislation to punish Russia for its invasion and annexation of Crimea from Ukraine.

If the deal is finalized, Indonesia will become the first East Asian country to operate the Rafale, a twin-engine, delta-winged multi-role aircraft introduced in 2001 and currently in service with the French air force and navy, Egypt, Qatar and, most recently, India. 

India paid $9.4 billion for its 36 aircraft, which began arriving last July amid tensions between India and China over the contested Ladakh region in the western Himalayas. New Delhi also wants to purchase 21 MiG-29s and 12 Su-30MKI fighters.

Washington has yet to respond to India’s request for a waiver from CAATSA for the aircraft, but senior Pentagon officials have made it clear that sanctions would be applied if New Delhi goes ahead with a plan to buy Russia’s self-propelled S-400 missile system in a deal worth $5.5 billion.

The Rafales will add a third logistical tail to the Indonesian Air Force, which apart from its fleet of Sukhoi fighters also has three squadrons of refurbished Lockheed F-16s, recently deployed on patrols over the southern reaches of the South China Sea where Chinese Coast Guard vessels have conducted past intrusions.

Concerns have mounted since China passed legislation authorizing its Coast Guard to use weapons against foreign ships that are considered to be intruding into its waters, a move that could also be aimed at enforcing its unlawful maritime claims inside Indonesia’s economic exclusion zone (EEZ) north of the Natuna islands.

Prabowo had previously shown interest in buying 15 second-hand Eurofighter Typhoon fighters offered by the Austrian Air Force, but despite the favorable price he has always said privately that he wants new-generation aircraft that will stand the test of time.

The 4.5 generation Rafale always appeared to be on his radar, however, due in small part to his affinity for France. A French speaker, the retired special forces general spent his early years in Europe, where family members once came across him standing in front of the mirror pretending to be president Charles de Gaulle.

The history of the proposed sale appears to go back to 2017 when the two countries signed a letter of intent to increase defense cooperation, but it was Prabowo’s two meetings with French Defence Minister Florence Parly, last October and in January, that appeared to lay the groundwork for the deal.

Armed with a range of air-to-air and air-ground missiles and advanced French-developed avionics, the 4.5 generation Rafale has a maximum speed of 2,200 kilometers an hour and a combat range of 1,850 kilometers. It can be used in air superiority, interdiction, ground attack or anti-ship roles.  

Prabowo had initially hoped to also acquire Lockheed’s stealthy F-35 Joint Strike Fighter, but was persuaded to accept the latest version of the F-15, which only now is entering service with the US Air Force to fill a gap left by cuts in the F-22 Raptor program.

Then US defence secretary Mark Esper reportedly told Prabowo on a visit to Washington last October that Indonesia would have to wait at least a decade for the delivery of the F-35s because of a long waiting list of buyers, including  Japan, South Korea and Singapore as the only Asian customers.

While it is the first time the US has sold the F-15 in 20 years, Saudi Arabia and Qatar have continued to fund upgrades worth $5 billion over the intervening years to a point where the EX variant is very different from its predecessors.

Military experts point to its more powerful twin engines, updated cockpit systems and sensors, data fusion capabilities and an ability to carry 29,500 pounds of ordnance over 2,200 kilometers as examples of the improvements to the purpose-built air superiority fighter.

They also note that the F-35 is far more expensive to operate and more problematic to repair compared with the F-15EX, which has a reputed 20,000-hour lifespan and, according to some sources, may cost half as much as the F-35 to operate.

That would present a major challenge to Indonesia. It already has difficulties maintaining the army’s eight sophisticated AH-64 Apache attack helicopters, which have been barely visible since they were delivered nearly three years ago.

Claims by Indonesian officials that six of the new F-15s will be ready for delivery in 2022 appear to be overly ambitious when the US Air Force and Air National Guard will get priority in replacing up to 144 aging F-15C/Ds that are reaching the end of their service years.

Each jet has a fly away price of $87.7 million, but the avionics and weapons systems are expected to add as much as $40 million to its overall cost. The experts also note that some of America’s cutting-edge technology is banned for export to countries like Indonesia.

The acquisition of the mobile Leonardo interdiction radar system will help to bolster Indonesia’s air defenses and, if positioned at a high elevation on frontier islands like Natuna Besar and Sebatik, could conceivably cover more than 500 kilometers of both air and sea, far beyond its EEZ.  

Known as unmanned aerial combat vehicles (UACVs), the Predators are a surprise addition to the shopping list, but Indonesia has been operating unarmed Chinese, Israeli and French-made surveillance drones for three years.

Indonesia’s Agency for the Assessment and Application of Technology is also developing the country’s first armed Black Eagle drone, which will carry a home-built 2.75 folding fin aerial rocket already used by attack helicopters and jet fighters.

Deployed extensively across Afghanistan, Pakistan and the Middle East, the Predator’s precision-guided Hellfire missiles have killed thousands of Al Qaeda and Islamic State militants since they were introduced in the wake of the 9/11 attacks.

The US Air Force replaced it with the heavier, more capable MQ-9 Reaper in 2018, but it remains in service with the Italian, Turkish and Moroccan air forces and would probably be based at Pontianak, West Kalimantan, the main drone base on the edge of the South China Sea.

Race is on for Indonesia’s untapped rare earths

Tin mining tailings could contain commercial quantities of rare earths both US and China would be keen to tap

By JOHN MCBETH

JAKARTA – Rare earth, the experts like to say, is neither rare nor is it earth. But given its use in everything from smartphones to high-tech aerospace and defense systems, a potential buried treasure from the past may soon become the next big thing in Indonesian mining.

Indonesia appears to have only modest proven amounts of the v valuable minerals, but much of what it does have is locked away in the rock waste, or tailings, left over from centuries of tin mining on the islands of Bangka and Belitung, south of Singapore.

Although preliminary studies show state-owned PT Tambang Timah’s tin sands contain 13 of the 17 chemical elements in the periodic table present in rare earths, it will take further investigation to determine whether it is present in commercial quantities.

If it is, that would make Indonesia a player in an industry that is fast becoming a new trade war flashpoint between the United States and China because of its strategic significance for numerous civilian and military technologies, including both laser and precision-guided missiles.

China currently controls 80% of the world’s trade in rare earths and could conceivably  block US access in retaliation for any future Washington sanctions on Chinese-made goods.  

With proven reserves of 327,500 tons, Timah still produces about 30,000 tons of tin a year from an offshore-onshore concession covering 512,369 hectares; other private firms add 40,000 tons, making Indonesia the world’s largest tin producer. 

Rare earths also occur in Aceh, Jambi and Riau’s Singkep Island and in West Kalimantan, where they are associated with rich deposits of bauxite, the feedstock for a US$695 million alumina smelter the Chinese are building north of Pontianak, the province capital.

Historically, most rare earths have been produced as by-products from tin, copper and gold mining, but were not considered worth processing and have invariably ended up in stockpiles, as is the case with Tambang Timah.   

With the US distracted by internal problems, the only outside interest so far in Indonesia’s potential has inevitably come from China, which has 55 million tonnes of rare earth reserves, by far the largest in the world.

But in looking for investors elsewhere, such as the US and Australia, the government is anxious to develop domestic expertise in the complex seven-stage process of refining monazite and xenotime, the two minerals that house REE elements.

Where the US may have an edge over China is in handling radioactive thorium, which is released in the course of the processing and must be treated with extreme care, even if it doesn’t produce uranium’s dangerous gamma rays. 

Laboratory results indicate Timah’s tailings contain significant quantities of neodymium and praseodymium, which in combination with iron and boron are used to produce high-power magnets for electric motors and military guidance and control systems.

Indonesia already possesses 80% of the mineralsrare earths included, needed to manufacture lithium batteries, part of the government’s policy of venturing into electric vehicles as a way of creating a future industrial base built around its vast natural resources.

Neodymium is responsible for most rare earth demand, with a market value of $11.3 billion in 2017. Demand is currently outstripping supply by about 2-3,000 tons a year, but that gap will widen as more lithium battery-powered electric vehicles appear on the world’s roads.

Future prospects depend on the government enacting policy and regulation and in initiating incentives for downstream and upstream industry, according to Fadli Rahman, co-author of a 2014 Colorado School of Mines paper on Indonesia’s rare earth potential.

“If the Indonesian government remains passive and unassertive to the viable options, the rare earths will merely remain rare to Indonesians for the foreseeable future,” said Rahman, now state oil company Pertamina’s youngest commissioner.

With estimated reserves of only 13 million tons, the US is waking up to the fact that China’s domination of the increasingly strategic material leaves it vulnerable.

At one point, neodymium was even on the Donald Trump administration’s list of tariffs it placed on Chinese imports in 2018 before it was quietly removed, an indication of how important it has become to the US economy.

Last year, China threatened to strengthen controls on rare earth exports to the US, one of the reasons why Washington recently formalized an existing partnership with Australia to develop new sources of critical minerals, including rare earth, cobalt and tungsten.

Australia, with 2.1 million tons, is one of a handful of countries possessing significant rare earth reserves. Others include Brazil (22 million tons), Russia (19 million), Vietnam (11 million) and India (3.1 million).

Vietnam, whose rare earth concentrations are along its northwestern border with China and the South China Sea coast, is reportedly keen on using two relatively common elements, cerium and lanthanum, to develop a clean energy capacity.  

The US began mining rare earth at southern California’s Mountain Pass mine in the 1960s, but since 2010 China has become the dominant player, producing 100,000 tons a year compared with the US output of 43,000 tons over the past two decades. 

An open-pit mine close to the Nevada border known as Mountain Pass was recently saved from a second bankruptcy by MP Materials, a company owned by a Chicago hedge fund. It remains the only rare earth mining and processing facility in the US. 

Most rare earth projects have proven to be uneconomic because of mining costs which can contribute 25-39% of the total expenditure for extracting from hard rock deposits. But Bangka-Belitung’s Monazite has the advantage of being in sand form and therefore does not require crushing and grinding.

In the end, thorium and how to deal with it remains a major impediment to the development of monazite deposits.

Indonesian nuclear advocate Bob Effendi, the local representative for American nuclear reactor design company ThorCon, asserts that safety concerns around the stockpiling of the radioactive waste is a “non-issue.”

But local geologists say it will need to be contained in stainless steel casks and stored in reinforced concrete buildings, possibly on a small uninhabited island, until such time as it is needed as fuel for a long-planned nuclear power station.

For decades now, part of the International Atomic Energy Agency’s (IAEA) mission has been to simply monitor the volume of monazite in Tambang Timah’s tailings, as it has done with similar mine waste around the world. 

In the meantime, nuclear power remains on Indonesia’s agenda, initially set down in a 2007 long-term national development planning law that envisaged an operating plant by 2024. 

In 2014, the Ministry of Mines and Energy regulation listed nuclear in the same category as other sources of renewable energy, but with the proviso that it should only be considered as a final option.

A second ministerial regulation in 2019 called for the drawing up of a concrete plan for the construction of a nuclear power station, followed by a presidential regulation earlier this year which listed it as a priority program for advanced studies.

Bangka-Belitung governor Erzaldi Rosman Djohan sent a letter to the Coordinating Ministry of Maritime Resources and Investment on August 3 supporting the construction of the nuclear plant in the southern Sumatran province.

But the Indonesian citizenry may first have to get over their innate fear of nuclear power, which has so far stymied plans going back to the New Order era for a station to be built on the Muria Peninsula in heavily-populated Central Java.

A member of President Joko Widodo’s National Economic and Industry Committee (KEIN), Effendi argues that a thorium-fuelled plant is not only immune to meltdown but is cheaper to build and produces less waste.

The former oilman also challenges the widely-held perception that Indonesia has limitless sources of energy, noting that coal and gas reserves are not finite and claiming that solar and wind potential is only 15% of what it is claimed to be.

Indonesians are not alone in their fear of anything nuclear-related. In Malaysia, the government faces public opposition to the Lynas Corporation’s facility near Kuantan, which processes rare earth oxides shipped from its Mt Weld concentration plant in West Australia.

With more low-level radioactive waste piling up at the plant, and the issue heading for Malaysia’s High Court, Lynas has now been forced to move the cracking and leeching part of the process to the outback mining center of Kalgoorlie-Boulder. 

Is Vietnam adopting a tough South China Sea posture?

By Xuan Loc Doan

Over the past month, some international news outlets have reported that Vietnam is pursuing a strong stance on the South China Sea. Yet a closer look at Hanoi’s overall position – as well as those of other countries and international entities – vis-à-vis the maritime issue shows that is not the case.

On December 30, Reuters reported that Vietnam was pushing for tough provisions in the code of conduct (COC) in the South China Sea that Southeast Asian nations and China are negotiating. More precisely, according to this report, Vietnam wants the pact to outlaw Beijing’s controversial actions in the disputed area in recent years, including the building of artificial islands and military activities such as missile deployments.

It also pushes for a ban on any new Air Defense Identification Zone (ADIZ) that China unilaterally announced over the East China Sea in 2013. It equally demands that disputing states clarify their maritime claims as per international law.

A day later, the South China Morning Post also claimed that Vietnam “takes [a] hard line” by making such demands. It described Hanoi’s request that “states clarify their maritime claims according to international law” as “an apparent attempt to shatter Beijing’s ‘nine-dash line,’ by which China claims and patrols much of the South China Sea.”

Last Friday, the Hong Kong-based newspaper ran an article headlined “Vietnam risks Beijing’s ire as it uses US freedom-of-navigation exercise to stake its claim in South China Sea.” That article referred to a freedom-of-navigation operation (FONOP) by USS McCampbell near the Paracel Islands on January 7 and remarks by a Vietnamese Foreign Ministry spokeswoman about it two days later.

Asked for her comments about the US guided-missile destroyer’s passage in a press briefing on January 9, Le Thi Thu Hang said Vietnam “has sufficient legal grounds and historical evidence testifying its sovereignty over the Hoang Sa [Paracel] and Trưong Sa [Spratly] archipelagoes in conformity with international law.”

She also stressed that as a member of the 1982 UN Convention on the Law of the Sea (UNCLOS) and a coastal state in the East Sea (Vietnamese name for the South China Sea), her country always respects the right to freedom of navigation and aviation in the area of other states in line with international law, especially the UNCLOS.

It could be that, as the SCMP’s article said, Beijing, which was angry about the USS McCampbell’s FONOP, was not pleased with the Vietnamese spokeswoman’s remarks and that Hanoi used the US military’s move to reaffirm its territorial claims in the area.

But Vietnam’s demands that states clarify their maritime claims, resolve their disputes and operate in the area in line with international law, notably UNCLOS, are not new.

In its own statements, joint declarations with its main partners – such as the United States, India, Japan, Australia, South Korea, Indonesia, Singapore, the United Kingdom and France – as well as talks with China, Vietnam has long and consistently maintained an international-law-based approach to the South China Sea issue.

For instance, in his keynote speech at the 2013 Shangri-La Dialogue, Nguyen Tan Dung, Vietnam’s then prime minister, urged China and members of the Association of Southeast Asian Nations (ASEAN) to “double efforts to formulate a COC that conforms to international law and in particular, the 1982 UNCLOS.” He also said: “As a coastal state, Vietnam reaffirms and defends its legitimate rights and interests in accordance with international law, especially the 1982 UNCLOS.”

Similarly, in a speech at the 38th Singapore Lecture three years later, Tran Dai Quang, its then president, who died a few months ago, clearly and firmly stated Vietnam’s “consistent position” vis-à-vis the South China Sea – that is “to remain resolute and persistent in the defense of national independence, sovereignty and territorial unity and integrity” and “to settle disputes by peaceful means through the political, diplomatic and legal process on the basis of international law, including [UNCLOS].”

In line with what Quang said in that lecture, in a Vietnam-Singapore joint statement issued at the end of his official visit to the city-state, both sides “emphasized the importance of resolving disputes peacefully, including full respect for legal and diplomatic processes, without resorting to the threat or use of force, in accordance with international law, including as reflected in the 1982 [UNCLOS].”

Vietnam’s joint statements with the US in 2013, 2015, 2016 and 2017 stated, more or less, the same posture. For instance, in the 2017 statement issued during US President Donald Trump’s Vietnam visit, the leaders of the two countries “underscored the strategic importance to the international community of free and open access to the South China Sea” and “the need to respect freedom of navigation and over-flight, and other lawful uses of the sea.”

They also “reaffirmed their shared commitment to the peaceful settlement of disputes in accordance with international law, including full respect for legal and diplomatic processes.”

In his talks with his Chinese counterpart Xi Jinping in Beijing in early 2017, Nguyen Phu Trong, general secretary of the Vietnamese Communist Party, also clearly “asserted Vietnam’s consistent stance of persistently dealing with the dispute in the East Sea by peaceful measures in compliance with international law, including the 1982 [UNCLOS], and with respect to diplomatic and legal processes.”

Such an approach is also supported by other countries and international bodies, such as the Group of Seven advanced economies, which repeatedly says its members “are committed to maintaining a rules-based order in the maritime domain based on the principles of international law, in particular as reflected in the [UNCLOS].”

Of Vietnam’s demands reported by Reuters, the stress that disputing states “clarify their maritime claims in according to international law” is, without doubt, the most fundamental one. All nations, strong and weak alike, should, if not must, make their claims, resolve their disputes and act in accordance with international law.

In his remarks at the G7 summit in Canada last June, Donald Tusk, president of the European Council, urged the member states (namely France, Germany, Italy, the UK, the US, Canada and Japan) to “demonstrate unity regarding the ongoing land reclamation and militarization in the South China Sea, as the international law must apply to all countries, big and small, on land and at sea.”

In this sense, Vietnam’s South China Sea posture is not tough at all. On the contrary, it’s very sensible, advisable and, as such, widely supported.

Yet for China, the provisions that its communist neighbor wants the COC to include – notably that “states clarify their maritime claims” in the 3.5-million-square-kilometer sea “according to international law” – are tough.

As the December 31 SCMP article said, they are “likely to prove unpalatable to Beijing.” This is because such propositions would invalidate the Asian giant’s controversial, if not illegal, claims and actions in the resources-rich and strategically vital waters.

As ruled by a UNCLOS tribunal in 2016, if it is based on international law, notably the 1982 Convention, China’s “nine-dash-line” claim would be unlawful. And as that infamous line was already declared illegal by the international tribunal, many, if not most, of China’s contentious actions within it, including its recent land reclamation and military buildup or a future ADIZ declaration, are illegal.

That said, it may be true that Vietnam is adopting a tougher posture than it was, and that would be understandable.

A few years ago, the Philippines and Vietnam were the two regional countries that were mostly critical of China’s behavior in the area. But since Rodrigo Duterte became the Philippines’ president in 2016, Manila has pursued an accommodating, if not defeatist, attitude toward Beijing.

The maverick leader is now seen as “China’s voice in ASEAN.” It’s no coincidence that China, which was previously very reluctant to negotiate the COC, has recently vowed to conclude it before 2021. Both the Duterte presidency and the Philippines’ term as the coordinator of the ASEAN-China dialogue end in that year.

Against this backdrop, Hanoi needs to voice its position robustly if it wants to “remain resolute and persistent in the defense of [Vietnam’s] national independence, sovereignty and territorial unity and integrity.” An effective – if not, the most plausible – way to achieve that goal is to internationalize the issue and call for an international-law-based approach to it, because international law and many other countries are on its side.

By calling claimant parties as well as other interested countries to act according to international law in the South China Sea, Hanoi is, intentionally or not, urging China to practice what Xi Jinping, its core leader, repeatedly and, indeed, beautifully, preaches on the world stage.

For instance, addressing the United Nations Office in Geneva in 2017, the Chinese president quoted “an ancient Chinese philosopher

[that]

said, ‘Law is the very foundation of governance’” and then lectured that all countries should “uphold the authority of the international rule of law … ensure equal and uniform application of international law and reject double standards and the practice of applying international law in a selective way.”

In that speech, titled “Work Together to Build a Community of Shared Future for Mankind,” Xi also vowed, “No matter how strong its economy grows, China will never seek hegemony, expansion or sphere of influence.”

Should Beijing apply all this to the South China Sea, the intractable maritime disputes would be easily and peacefully resolved.


Xuan Loc Doan Dr Xuan Loc Doan researches and writes on a number of areas. These include Vietnam’s domestic and foreign policy, ASEAN, EU, UK’s politics and international politics in the Asia-Pacific region.

How Vietnam lost and China won Cambodia

Forty years after the fall of the China-supported Khmer Rouge regime to Vietnam’s invading forces, Cambodia is now more clearly in Beijing’s than Hanoi’s orbit

By David Hutt, @davidhuttjourno

Forty years ago today, some 100,000 Vietnamese soldiers accompanied by almost 20,000 Cambodian defectors marched into Phnom Penh to overthrow the radical Maoist Khmer Rouge regime.

The invading forces found less than 100 survivors in the capital city. The Khmer Rouge, which came to power in 1975, had evacuated Phnom Penh, leaving buildings to decay and collapse.

In the countryside, where almost all Cambodians were sent as part of the Khmer Rouge’s “Year Zero” revolution, it was a Hobbesian nightmare. After less than four years in power, an estimated quarter of all Cambodians perished under the genocidal regime.

Only in November 2018 were two of the regime’s senior officials finally convicted of genocide, against the Cham and Vietnamese minorities.

January 7 is marked in Cambodia as either “Liberation Day” or “Victory Day”, and was once described by a former leader as the country’s “second birthday,” the first being its independence from French colonial rule in 1953.

It is also a date when Cambodia and Vietnam celebrate their seemingly intractable relationship. A new Vietnam-Cambodia Friendship Monument was inaugurated earlier this month in Cambodia’s northeastern Mondulkiri province, adding to the one that has stood tall in Phnom Penh since the 1980s.

On Saturday, senior-most officials of the Communist Party of Vietnam (CPV) marked their victory – the “Counter-offensive on the Southwestern border,” as it was called at the time in Hanoi – with a somber ceremony and a slew of new monuments to mark the anniversary.

Roughly 25,000 Vietnamese soldiers lost their lives in Cambodia between December 1978 and September 1989, when its military withdrew from the country under a UN-brokered peace accord. Up until the turn of the century, it was almost a cliché to talk about Cambodia’s “special relationship” with Vietnam, which had propped up the post-Khmer Rouge government throughout the 1980s.

Today, however, there are questions about the closeness of their special relations since China has more recently become Cambodia’s main provider of aid and investment, one of its largest trading partners and its closest ally.

Equally important, China provides protection to the ruling Cambodian People’s Party (CPP), installed to power by the Vietnamese in 1979, as Western criticism mounts and possible sanctions loom due to its recent lurch away from multi-party democracy.

“It’s clear that while Vietnam invaded Cambodia, it’s China that won Cambodia and now calls the shots,” says Sophal Ear, associate professor of diplomacy and world affairs at Occidental College at Los Angeles. “Hanoi looks at Phnom Penh wistfully, sometimes even with quite a bit of resentment; the client they created has broken away and married China.”

While Vietnam liberated Cambodia from its genocidal regime, it was self-defense, not altruism, that drove Vietnam’s intervention. Vietnam launched its full-scale invasion of Cambodia just 13 days before it entered Phnom Penh, a move motivated by years of small border incursions by Khmer Rouge forces.

Nonetheless, Vietnam paid a heavy price during the 1980s, as much of the international community opposed the new government it installed. The precursor to the CPP, which changed its name in 1991, was put in power by Vietnamese forces as the post-Khmer Rouge government on January 8, 1979.

Hun Sen, a former Khmer Rouge commander, was made prime minister in 1985, a position he has held since.

China, however, had backed the Khmer Rouge throughout its four-year rule and after, as it was reduced to launching minor incursions from its bases near the Thai border until the mid-1990s. So, too, did the US and some European nations consider the Khmer Rouge to be Cambodia’s legitimate government throughout most of the 1980s, motivated by Cold War politicking.

Today, Phnom Penh isn’t as keen to present this history in the moralistic, black-and-white terms as it did in the past.

A slick propaganda film about Hun Sen’s defection from the Khmer Rouge and his fight against the Khmer Rouge was broadcast on national television in January of last year. It didn’t once mention that China was the genocidal regime’s main backer.

Such historical contortion comes easy. China was “the root of everything that is evil” in Cambodia, Hun Sen famously said in the late 1980s. A decade later, however, he came to see China as Cambodia’s “most trustworthy friend”. Today, the mot juste for government officials is “ironclad friend.”

But where does all of this leave Vietnam? There are certain indications that relations between Cambodia and Vietnam are souring, chiefly because Beijing is now usurping the roles Hanoi once played in Cambodia. Fragments of this official discontent occasionally seep through closed door diplomatic meetings.

Soy Sopheap is a long-time political mediator for Hun Sen and a founder of the government’s most vocal mouthpiece, Fresh News. In June, he dedicated a segment of his chat show on BTV News, a news station owned by Hun Sen’s daughter Hun Mana, to railing angrily at Vietnamese businesses for holding lengthy land concessions in Cambodia. Significantly, complaints of China doing the same in Vietnam precipitated major protests across Vietnam that same month.

“We are never brave enough to speak out as we’re forever scared of Vietnam,” Sopheap stated on air, before lambasting the Vietnamese foreign minister, Pham Binh Minh, for “looking down” on Cambodia.

It is unlikely that someone of his stature would have been allowed to make such incendiary comments in Cambodia’s repressed media environment without the blessing of senior government officials.

A few months earlier, in March, Hun Sen was even more unequivocal. “I will question our friend Vietnam, whether they are actually loyal to me and Cambodia,” he said in a speech. It isn’t the first time that relations between the two nations have been called into question.

The Cambodia government has twice in recent years prevented the Association of Southeast Asian Nations (Asean), a regional bloc, from making strongly worded statements against Chinese expansionism in the South China Sea, features of which are strongly contested by Vietnam.

Whereas Malaysia and the Philippines have largely dropped their criticism of China’s action in the maritime area, Vietnam remains a constant and vocal critic. Its improving ties with the US, keen to limit China’s geopolitical power, have arguably emboldened Vietnam in its opposition.

It is possible, however, that Hun Sen’s comments were simply for his domestic audience, rather than revealing bilateral tiffs with Vietnam. They came amid a verbal attack on his veteran political opponent Sam Rainsy, the self-exiled leader of the banned Cambodia National Rescue Party (CNRP).

For decades, Sam Rainsy and senior CNRP officials have claimed Hun Sen is merely a “puppet” of Vietnam and is content to cede sovereignty to Hanoi.

They have also engaged in anti-Vietnamese rhetoric, inflaming such chauvinism that dates back to the 19th century. “Send the yuon immigrants back” was one of Sam Rainsy’s proposals before the 1998 general election, using a supposed racist slur against the Vietnamese.

But in his bid to paint Sam Rainsy as treasonous, part of the CPP’s narrative in justifying the CNRP’s court-ordered ban, Hun Sen made a volte-face by suggesting his opponent had secret meetings with Vietnam’s Ministry of Foreign Affairs in 2003, with the implication that Sam Rainsy is a Vietnamese sympathizer.

There were also reports last year of diplomatic displeasure in Hanoi with Cambodia’s political direction.

Alan Parkhouse, a veteran journalist and editor in Cambodia, wrote early last year in Asia Times that Politburo officials in Hanoi “expressed their displeasure behind closed doors during a November [2017] meeting in Vietnam, even going as far as telling Hun Sen to step down after July’s elections,” according to a Cambodian government insider.

The most obvious explanation for fraying relations is China. “After 1997, Hun Sen incrementally brought Cambodia from a balancing of Vietnam, China and the West to what Cambodia is today- an economic dependency of China,” says Paul Chambers, lecturer at the College of Asean Community Studies at Naresuan University, Thailand.

In this reading of events, it is only natural for Cambodia to somewhat lose interest in Vietnam since it has more to gain from China.

In an essay for the Southeast Asian Affairs journal published last year, Steven Heder, a research associate at London’s School of Oriental and African Studies, wrote that Vietnam-Cambodia relations are best understood through a party-to-party prism, rather than the traditional nation-to-nation viewpoint.

Both parties have enjoyed close relations for four decades. Many CPP officials studied in Vietnam in the 1980s and 1990s, and many still look to Hanoi for guidance in policy and governance.

On an important level, healthy relations between the two nations are maintained by close dealings between the Vietnamese People’s Army (VPA) and the Royal Cambodian Armed Forces (RCAF), effectively the CPP’s armed wing.

Almost all of the RCAF’s most senior staff are CPP officials, including the Prime Minister’s son Hun Manet, now one of the military’s most senior officials.

Vietnam’s military still also holds significant investments in the Cambodian economy. Metfone, Cambodia’s largest telecoms network operator, is owned by the Vietnamese military-owned Viettel Military Industry and Telecoms Group.

From a party-to-party viewpoint, Cambodia-Vietnam relations are not only maintained at the higher levels of governance, through the two ruling parties agreeing on many of the same things, but also through lower-level dealings, such as between military officials.

When Vietnamese Minister of Defense Ngo Xuan Lich visited Phnom Penh in late December, Hun Sen made a point to stress that dealings between the two militaries remain tight.

But party-to-party relations are also diverging. On the one hand, Vietnam’s repressive Communist Party would be alarmed if a democratic election in its neighbor saw a handover of power to an untrusted party – especially if that victor was the CNRP, given its historic anti-Vietnam stance.

It would make little diplomatic sense, then, for Vietnam’s Communist Party to oppose Hun Sen’s rule considering none of Vietnam’s neighbors – Cambodia, Laos and China – have ever had functioning democracies for at least the last half century.

On the other hand, however, the Vietnam is today keen to promote free-trade and mollify Western concerns about human rights and democracy in the region.

As such, it doesn’t want foreign governments poking their interventionist noses in regional affairs, certainly not lest they also begin to question what’s happening in Vietnam, too.

Its free trade agreement with the European Union, which could prove wonders for the Vietnamese economy, hangs in the balance because of human rights concerns.

But this was the exact result of CPP’s political crackdown and dissolution of the CNRP. The US has already imposed sanctions on some Cambodian officials, and promises more, while the European Union has taken steps to punitively withdraw Cambodia from a preferential trade deal.

Independent observers have not missed the diplomatic hypocrisy of punishing Cambodia but not Vietnam for its abysmal rights record.

But the question remains whether Cambodia is moving closer to China at the expense of Vietnam, or is the CPP moving closer to the Chinese Communist Party (CCP) at the expense of the Vietnam’s Communist Party? Beijing is now offering the same party-to-party exchanges and “soft power” roles that used to be exclusive to Hanoi.

More civil servants and ministry officials are traveling to China on visits to observe how politics operates there. Most ministries have signed bilateral agreements to boost joint cooperation. Beijing has also funded new think tanks in Cambodia, and is even paying for Cambodian journalists to visit China to study alongside their Chinese counterparts.

Thanks to scholarship programs, more than 1,000 Cambodians have now studied at Chinese universities, many of whom will go onto hold positions of influence. Most are likely to return imbued with China’s outlook on world affairs, in which Vietnam often plays the role of adversary, especially in regards to the South China Sea.

In December, China’s Foreign Minister Wang Yi pledged more support for youth exchanges programs when he met Hun Many, one of Hun Sen’s sons who serves as president of the Union of Youth Federations of Cambodia, a CPP-aligned organization.

Another explanation of shifts in party-to-party relations between Cambodia and Vietnam is the supremacy of Hun Sen over the CPP. Analysts say that CPP grandees, like the late Chea Sim, the party’s president between 1991 to 2015, were avowedly pro-Vietnam.

Interior Minister Sar Kheng is another senior CPP official who is said to still have very close ties to Hanoi, though his control over the party is certainly not as significant as Hun Sen’s. The death or fading influence of such pro-Vietnam officials has allowed the CPP to rethink its foreign relations, analysts say.

“At least since 2008, Hun Sen has held almost all the cards in the CPP. Hun Sen was initially balancing between Vietnam and China. His decision to move closer to China was backed by the CPP because Hun Sen effectively is the CPP,” says Chambers.

There are also clear changes in military-to-military relations as China’s armed forces form even closer relations with Cambodia’s – possibly making Vietnam’s military ties less important in the process.

The two sides now hold regular joint training exercises, dubbed “Golden Dragon”, and Beijing invites senior Cambodian defense officials on state visits. This has become even more important after Phnom Penh postponed, for an undisclosed time, joint training operations with the US military, which is forming increasingly closer ties to Vietnam’s armed forces.

In recent years, China has also pledged hundreds of millions of dollars to support Cambodia’s military, including an additional US$130 million it provided last year to the defense sector. China also pledged US$2.5 million last year to help clear unexploded ordnance left behind by the Khmer Rouge, a donor area that used to be provided mainly by the US and Japan.

In November, this journalist co-authored a report for Asia Times on rumors that China was lobbying to build a naval base in southwest Cambodia, and correctly predicted the issue would be raised by senior US officials, including Vice President Mike Pence, when they attended Asian conferences at the time.

Hun Sen and other senior Cambodian politicians have spent the last two months denying the allegation.

When he visited Vietnam in December, Hun Sen told his counterpart Nguyen Xuan Phuc that the report was “fake news, lying news and destructive news,” while repeating his oft-stated rebuttal that “the constitution of Cambodia does not allow any foreign military bases in the Kingdom.”

In the past two years alone, however, the CPP has shown its constitution to be easily malleable for its political and other purposes. As for the future of trilateral relations between Cambodia, Vietnam and China, it is likely to continue down the same path it has been moving in recent years.

Rhetorically, Cambodia will remain equidistant between its two allies. Vietnam will be heralded as Cambodia’s liberator and historic ally. China’s role in funding the Khmer Rouge will be torn from the CPP’s history book, as will almost all occasions when Hun Sen didn’t see Beijing as Cambodia’s “ironclad friend.”

But, in diplomatic reality, Vietnam will play second fiddle as China has much more to offer Cambodia 40 years after the fall of the Khmer Rouge regime Beijing once supported and Hanoi overthrew.

How the New Silk Roads are merging into Greater Eurasia

Russia is keen to push economic integration with parts of Asia and this fits in with China’s Belt and Road Initiative

By PEPE ESCOBAR

The concept of Greater Eurasia has been discussed at the highest levels of Russian academia and policy-making for some time. This week the policy was presented at the Council of Ministers and looks set to be enshrined, without fanfare, as the main guideline of Russian foreign policy for the foreseeable future.

President Putin is unconditionally engaged to make it a success. Already at the St Petersburg International Economic Forum in 2016, Putin referred to an emerging “Eurasian partnership”.

I was privileged over the past week to engage in excellent discussions in Moscow with some of the top Russian analysts and policymakers involved in advancing Greater Eurasia.

Three particularly stand out: Yaroslav Lissovolik, program director of the Valdai Discussion Club and an expert on the politics and economics of the Global South; Glenn Diesen, author of the seminal Russia’s Geoeconomic Strategy for a Greater Eurasia; and the legendary Professor Sergey Karaganov, dean of the Faculty of World Economy and International Affairs at the National Research University Higher School of Economics and honorary chairman of the Presidium of the Council on Foreign and Defense Policy, who received me in his office for an off-the-record conversation.

The framework for Great Eurasia has been dissected in detail by the indispensable Valdai Discussion Club, particularly on Rediscovering the Identity, the sixth part of a series called Toward the Great Ocean, published last September, and authored by an academic who’s who on the Russian Far East, led by Leonid Blyakher of the Pacific National University in Khabarovsk and coordinated by Karaganov, director of the project.

The conceptual heart of Greater Eurasia is Russia’s Turn to the East, or pivot to Asia, home of the economic and technological markets of the future. This implies Greater Eurasia proceeding in symbiosis with China’s New Silk Roads, or Belt and Road Initiative (BRI). And yet this advanced stage of the Russia-China strategic partnership does not mean Moscow will neglect its myriad close ties to Europe.

Russian Far East experts are very much aware of the “Eurocentrism of a considerable portion of Russian elites.” They know how almost the entire economic, demographic and ideological environment in Russia has been closely intertwined with Europe for three centuries. They recognize that Russia has borrowed Europe’s high culture and its system of military organization. But now, they argue, it’s time, as a great Eurasian power, to profit from “an original and self-sustained fusion of many civilizations”; Russia not just as a trade or connectivity point, but as a “civilizational bridge”.

Legacy of Genghis Khan 

What my conversations, especially with Lissovolik, Diesen and Karaganov, have revealed is something absolutely groundbreaking – and virtually ignored across the West; Russia is aiming to establish a new paradigm not only in geopolitics and geoeconomics, but also on a cultural and ideological level.

Conditions are certainly ripe for it. Northeast Asia is immersed in a power vacuum. The Trump administration’s priority – as well as the US National Security Strategy’s – is containment of China. Both Japan and South Korea, slowly but surely, are getting closer to Russia.

Culturally, retracing Russia’s past, Greater Eurasia analysts may puzzle misinformed Western eyes. ‘Towards the Great Ocean’, the Valdai report supervised by Karaganov, notes the influence of Byzantium, which “preserved classical culture and made it embrace the best of the Orient culture at a time when Europe was sinking into the Dark Ages.” Byzantium inspired Russia to adopt Orthodox Christianity.

It also stresses the role of the Mongols over Russia’s political system. “The political traditions of most Asian countries are based on the legacy of the Mongols. Arguably, both Russia and China are rooted in Genghis Khan’s empire,” it says.

If the current Russian political system may be deemed authoritarian – or, as claimed in Paris and Berlin, an exponent of “illiberalism” – top Russian academics argue that a market economy protected by lean, mean military power performs way more efficiently than crisis-ridden Western liberal democracy.

As China heads West in myriad forms, Greater Eurasia and the Belt and Road Initiative are bound to merge. Eurasia is crisscrossed by mighty mountain ranges such as the Pamirs and deserts like the Taklamakan and the Karakum. The best ground route runs via Russia or via Kazakhstan to Russia. In crucial soft power terms, Russian remains the lingua franca in Mongolia, Central Asia and the Caucasus.

And that leads us to the utmost importance of an upgraded Trans-Siberian railway – Eurasia’s current connectivity core. In parallel, the transportation systems of the Central Asian “stans” are closely integrated with the Russian network of roads; all that is bound to be enhanced in the near future by Chinese-built high-speed rail.

Iran and Turkey are conducting their own versions of a pivot to Asia. A free-trade agreement between Iran and the Eurasia Economic Union (EAEU) was approved in early December. Iran and India are also bound to strike a free-trade agreement. Iran is a big player in the International North-South Transport Corridor (INSTC), which is essential in driving closer economic integration between Russia and India.

The Caspian Sea, after a recent deal between its five littoral states, is re-emerging as a major trading post in Central Eurasia. Russia and Iran are involved in a joint project to build a gas pipeline to India.

Kazakhstan shows how Greater Eurasia and BRI are complementary; Astana is both a member of BRI and the EAEU. The same applies to gateway Vladivostok, Eurasia’s entry point for both South Korea and Japan, as well as Russia’s entry point to Northeast Asia.

Ultimately, Russia’s regional aim is to connect China’s northern provinces with Eurasia via the Trans-Siberian and the Chinese Eastern Railway – with Chita in China and Khabarovsk in Russia totally inter-connected.

And all across the spectrum, Moscow aims at maximizing return on the crown jewels of the Russian Far East; agriculture, water resources, minerals, lumber, oil and gas. Construction of liquefied natural gas (LNG) plants in Yamal vastly benefits China, Japan and South Korea.

Community spirit

Eurasianism, as initially conceptualized in the early 20th century by the geographer PN Savitsky, the geopolitician GV Vernadsky and the cultural historian VN Ilyn, among others, regarded Russian culture as a unique, complex combination of East and West, and the Russian people as belonging to “a fully original Eurasian community”.

That certainly still applies. But as Valdai Club analysts argue, the upgraded concept of Greater Eurasia “is not targeted against Europe or the West”; it aims to include at least a significant part of the EU.

The Chinese leadership describes BRI not only as connectivity corridors, but also as a “community”. Russians use a similar term applied to Greater Eurasia; sobornost (“community spirit”).

As Alexander Lukin of the Higher School of Economics and an expert on the SCO has constantly stressed, including in his book China and Russia: The New Rapprochement, this is all about the interconnection of Greater Eurasia, BRI, EAEU, SCO, INSTC, BRICS, BRICS Plus and ASEAN.

The cream of the crop of Russian intellectuals – at the Valdai Club and the Higher School of Economics – as well as top Chinese analysts, are in sync. Karaganov himself constantly reiterates that the concept of Greater Eurasia was arrived at, “jointly and officially”, by the Russia-China partnership; “a common space for economic, logistic and information cooperation, peace and security from Shanghai to Lisbon and New Delhi to Murmansk”.

The concept of Greater Eurasia is, of course, a work in progress. What my conversations in Moscow revealed is its extraordinary ambition; positioning Russia as a key geoeconomic and geopolitical crossroads linking the economic systems of North Eurasia, Central and Southwest Asia.

As Diesen notes, Russia and China have become inevitable allies because of their “shared objective of restructuring global value-chains and developing a multipolar world”. It’s no wonder Beijing’s drive to develop state-of-the-art national technological platforms is provoking so much anger in Washington. And in terms of the big picture, it makes perfect sense for BRI to be harmonized with Russia’s economic connectivity drive for Greater Eurasia.

That’s irreversible. The dogs of demonization, containment, sanctions and even war may bark all they want, but the Eurasia integration caravan keeps moving along.

A man, a plan, a canal…Thailand?

Ex-top brass appeal to new King Vajiralongkorn to bless building the long-envisioned Kra canal; China is keen to start digging

General Saiyud Kerdphol, the military engineer of Thailand’s winning Cold War-era anticommunism campaign, believes now is the time to build the Kra canal – a long-envisioned channel through the country’s southern isthmus that would connect the Indian and Pacific Oceans and dramatically shorten East-West shipping routes.

And for the massive infrastructure undertaking to finally break ground after centuries of pondering, the nonagenarian former supreme commander believes the monumental decision cannot be taken by any government and thus must be conceived and graced as “the king’s canal.”

“This cannot be done if it’s not the king’s project,” says Saiyud, who in an interview with Asia Times recalls meeting with the previous monarch in the 1980s when British motor company Rolls-Royce briefly had interest in the canal. “The government will never be firm enough to make a decision because they know they can’t control corruption.”

To be sure, Thailand is no closer to digging the Kra canal today than when it was first considered by King Narai in 1677. The scheme has been resurrected in various forms several times since, only to founder on political rocks and security concerns, including existential trepidation of physically dividing the nation in two.

The incumbent ruling junta, while grasping for new economic transformation strategies, has shown no interest in the canal. That’s due to perceived security risks in sight of a raging separatist Muslim insurgency in the kingdom’s southern reaches and the likely criticism that would arise from taking such a big decision as an unelected government.

But with the recent transition from deceased King Bhumibol Adulyadej to King Maha Vajiralongkorn, now known as Rama X, the canal’s ex-top brass backers hope the new monarch with a military background will give the scheme royal consideration, in the name of national peace and development.

Saiyud suggests the canal could herald “a new era of civilization” during Vajiralongkorn’s reign and bring peace through hearts-and-minds development to the conflict-ridden Deep South. The new king has taken special interest in the Muslim majority region, leading some to wonder if he may prioritize achieving peace in the region as part of his legacy.

It’s not altogether clear if the previous king shared concerns about physically dividing the kingdom, though staunch royalists note the canal would necessarily be wider than the Chao Phraya River, the nation’s main north-south waterway that travels through Bangkok and by the royal Grand Palace, viewed by many as the spiritual heart of the nation.

The Thai Canal Association (TCA), a group of influential former top brass soldiers advocating for the project, recently rechristened the canal from “Kra” to “Thai” to indicate it would be built for all Thais, in line with Bhumibol’s view that the decision should be made by the people.

TCA points to a recent local Songkhla University poll that apparently showed 74% of residents in 14 southern provinces agreed with building the canal.

The project’s skeptics, on the other hand, believe the latest drive-to-build aims ultimately to win rich feasibility study contracts “for the boys”, with scant prospects of actually implementing any proposed grand plan. The canal would cost anywhere between US$20-US$30 billion depending on the chosen route, and likely take a decade to dig.

While it’s unclear if any formal representations have been made to the monarch, the canal does have one rich and powerful new backer: China.

Beijing’s newly appointed ambassador to Bangkok, Lyu Jian, has said in recent high-level meetings that China envisions the Thai canal as part of its US$1 trillion ‘One Belt One Road’ (Obor) global infrastructure initiative, according to Thai government officials and advisors briefed on the discussions.

While China aims to link the initiative with the junta’s Eastern Economic Corridor industrial, logistical and real estate development plan, including via a long-stalled high-speed rail line connecting the two nations via Laos that broke symbolic ground in December, it is apparently the first-time Beijing has actively promoted the canal as part of the Obor program.

Until now, Beijing has publicly distanced itself from private Chinese companies which have engaged Thai trade groups to probe the project’s potential. That includes a memorandum of understanding entered by the China-Thailand Kra Infrastructure and Development Company and Asia Union Group to study the canal signed in Guangzhou in May 2015.

China’s Embassy in Bangkok did not respond to Asia Times’ written request for its current official position on the canal.

If China is involved, past financial and engineering obstacles – a previous consortium toyed with the notion of using nuclear explosions to excavate the channel – are likely no longer stumbling blocks, according to Pakdee Tanapura, a long-time advocate for building the canal and ranking TCA member.

Pakdee said Longhao Co Ltd, a Chinese construction company involved in recent land reclamation and island-building in the South China Sea, has expressed interest in the canal. Its plan would entail the construction of two man-made islands for facilities on either side of the canal’s entry points at the Gulf of Thailand and Andaman Sea, according to Pakdee.

Other Hong Kong and Macau-based construction firms have also expressed interest in meetings with known palace emissaries, according to a diplomat monitoring the security dimensions of the canal. Beijing has put Hong Kong and Macau companies forward due to their global experience and comparatively polished executives, the envoy says.

The canal would save approximately 1,200 kilometers from current East-West shipping routes that currently must travel through the congested Malacca Strait, the world’s busiest maritime area where an estimated 84,000 ships and around 30% of global trade currently passes each year.

The World Bank has projected that volume could increase to over 140,000 per year in the next decade, while the narrow strait currently has the capacity to handle 122,000 ships. Much of that transport passes by or stops over for supplies and fuel in Singapore, the wealthy city-state that would seemingly have the most to lose from an alternative East-West shipping route.

Jinsong Zhao, a maritime expert at state-led Shanghai Jiao Tong University, suggests the canal could put Thailand at the center of a “third revolution” of fast-transport global trade, where e-commerce driven sales require ever quicker door-to-door delivery of goods that is limited in the region due to the long shipping route through the Malacca Strait.

“To my Thai friends: Don’t waste your time, don’t delay this project,” Jinsong implored at a conference on the canal held last September in Bangkok. “We have technology, we have capacity, we have money, we are happy to help. It’s good for Thailand, Asia and the whole world.” He said if Thailand waited another 20 years, it would be “fatal” to winning China’s support.

That may or may not be true. As much as 80% of China’s fuel imports currently pass through the Malacca Strait, a maritime bottleneck running between Malaysia and Indonesia that strategic analysts say the US Navy could readily block in any conflict scenario by leveraging its strategic access to nearby Singapore.

Beijing’s interest in a Thai canal comes amid uncertainty at Obor-invested ports envisioned – at least in part – as strategic hedges to its Malacca vulnerability, including facilities in Sri Lanka, Pakistan and Myanmar’s now violence-wracked western Rakhine state, through which China has built oil and gas pipelines to fuel its landlocked southern hinterlands.

If built, the Thai canal would necessarily shift Asia’s maritime strategic dynamics by bypassing Malacca, one of the US’ chief strategic advantages vis-à-vis China at sea. One US official who communicated with Asia Times was skeptical the canal would be built any time soon, even with China’s apparent interest and potential financial support.

Another independent analyst with a US military background in the region and aware of the Pentagon’s recent strategic thinking said that even if the Thai canal was built, it would merely mean that the US Navy would have two strategic chokepoints, rather than just one, to block in a potential conflict with China.

Saiyud says he believes the US, which showed interest in the canal in an era when China was a minor maritime player, could ultimately support the canal for the logistical benefits to regional trade and as a long-time ally committed to Thailand’s economic development and prosperity. Thai-US bilateral relations have waned, however, under junta rule.

While fully engaged with Beijing, the canal’s Thai advocates are also keen to build a multinational coalition of backers and funders to prevent any one country, namely China, from having inordinate leverage over the channel and its related port facilities. “It must be a Thai company to lead and not look too Chinese,” says military statesman Saiyud.

Other advocates point to the recent multilateral funding for expansion of the Panama Canal, with support from Germany, Spain, South Korea, US, Argentina and Mexico, among others, as a financial model. They note the project would require new airports, communication networks and other modern infrastructure that would allow several nations to participate.

That’s sparked certain multinational interest. Last September’s TCA-organized conference held in Bangkok was supported by the European Association for Business and Commerce and sponsored by Hong Kong construction company Grand Dragon. A follow-up event on February 1 in Phuket will be staged in collaboration with the Thailand chambers of commerce of Australia, France, Germany, Netherlands and US.

Finance Minister Somkid Jatusripitak was scheduled to make opening remarks at last September’s canal event, but was held back at the last minute by the Prime Minister. As the junta’s political troubles mount and with an uncertain democratic transition on the horizon, such a monumental undertaking isn’t likely to win government support any time soon.

“We’re no closer today [to building the canal] than we were 340 years ago,” said General Pongthep Thesprateep, TCA’s chairman and secretary general of top royal advisor Prem Tinsulanonda’s Statesman Foundation, in an interview with Asia Times. “But for the people and the country, it’s a good time to start.”

Source: http://www.atimes.com/article/man-plan-canal-thailand/?utm_source=The+Daily+Report&utm_campaign=986de26588-EMAIL_CAMPAIGN_2018_01_25&utm_medium=email&utm_term=0_1f8bca137f-986de26588-21552319