China's Malacca Dilemma

The Tribune     7th September 2020     Save    

Context: The proposed Kra Canal has been in the news attracting significant geopolitical interventions; while it has some advantages, it is threatened by increased power play in the Indo-Pacific and Indian Ocean Region (IOR).

Significance of Kra Canal:

  • Connects the Andaman Sea to the Gulf of Thailand: Once constructed, it would allow international shipping to save about 1,200 km by avoiding the already congested Strait of Malacca.
  • Push for a logistics hub: A special economic zone with infrastructure facilities is also proposed to be set that could potentially transform Thailand into a logistics hub.
    • The project is estimated to cost around $30 billion with a further $22 billion for the economic zone.

Significance of the project for China:

  • Avoiding Malacca Dilemma: Chinese concerns about the closure of the strait in a conflict situation in the Indo-Pacific.
    • About 80% of Chinese oil imports annually transit the Malacca Straits,
    • China would like to fund and control the Kra canal that would become the alternative route reducing its dependence on the Malacca chokepoint

Issues with the building of the canal

  • Threatening to entrench divisions: Presence of north and south ethnic-religious divide in Thailand with southern Thailand plagued with conflicts between Thai Buddhists and Thailand’s Malay Muslims.
    • Construction of the Kra canal would physically separate the southern provinces from the rest of the country
  • Impact of Sovereignty of Thailand: Chinese funding could mean erosion of sovereignty for Thailand.
    • China has often been blamed for debt trapping the governments it has loaned money for infrastructure projects and taking control of natural assets.
      • Sri Lanka’s Hambantota port that China took control off in 2017 is a case in point.
    • Chinese modus operandi is to push for projects where only the Chinese state-owned enterprises can bid, leading to projects being expensive and unviable
      • For, E.g. the Mombasa-Nairobi railway line in Kenya built at the cost of $5.6 million per km — roughly four times the original estimate.
  • Tourism and Environmental Concerns
  • Potential friction within ASEAN: Since there would be gains for Vietnam, Thailand and Cambodia while Singapore, Indonesia and Malaysia could stand to lose shipping business.
    • Friction in ASEAN will suit China eminently.
  • United States’ concerns: 
    • Chinese funding would tighten the grip on Thailand, making it a long-term security partner.
    • Chinese Navy entering into the India Ocean would heighten US security concerns.
    • Fissures in the ASEAN would undermine Indo-Pacific strategy.
  • Implications for India:
    • The Canal pose a threat to long-term maritime security as it could lead to enhanced surveillance and quicker deployment of Chinese vessels in the IOR.

Setback for Chinese Ambitions: Given the serious issues involved with the canal, Thailand is considering a land and rail bridge across the Kra Isthmus with deep seaports on either side, instead of a canal.

Way Forward:

  • Ensuring united ASEAN: as it can act as a bulwark against China.
  • Greater infrastructure upgrades in the Andaman and Nicobar Islands: allowing it to increase its own naval and air power projection capabilities in the South China Sea.