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Another Massive Dispute Brewing Between India-China-Pakistan Over Diamer-Bhasha Dam?

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Adding fuel to fire in the already tense relations between India and China, Pakistan has signed a billion-dollar contract with a Chinese state-run firm to construct Diamer-Bhasha dam in the contentious region of Pakistan controlled Kashmir.

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The contract signed earlier this month for the Diamer-Bhasha dam is worth about 442 billion Pakistan rupees ($2.75 billion) and is a joint venture between Chinese state-run firm, China Power which holds 70% of the accord while the remaining 30% is held by Pakistan’s Frontier Works Organisation (FWO).

Expected to be complete by 2028, the dam is estimated to be the tallest roller compact concrete (RCC) dam in the world

India Objects To Diamer-Bhasha Dam

Located in Gilgit-Baltistan, the project is a part of the China-Pakistan Economic Corridor (CPEC) which is further linked to Chinese Premier Xi Jinping’s signature Belt and Road Initiative (BRI).

India has long opposed the BRI due to territorial disputes as the CPEC passes through the Pakistan controlled Kashmir, which India claims to be a sovereign part of its territory.

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The latest move by Pakistan over Diamer-Bhasha Dam has been widely condemned by India. “We have consistently conveyed our protest and shared concerns with both China and Pakistan on all such projects in the Indian territories under Pakistan’s illegal occupation,” said Anurag Srivastava, from the Indian Ministry of External Affairs.

He maintained that “Our position is consistent and clear that the entire territory of the Union Territories of Jammu and Kashmir and Ladakh have been, are and will continue to be an integral and inalienable part of India.”

While Beijing’s openly dismissed India’s concerns and defended its decision to continue the monstrous project by conveying that “China’s position on the issue of Kashmir is consistent. China and Pakistan conduct economic cooperation to promote economic development and improve the well-being of the local people.”

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Michael Kugelman, deputy director of the Asia program at the Wilson Center in Washington D.C., told media that India has always opposed the BRI and “that certainly hasn’t stopped Pakistan and China.” “The same applies to the dam,” he continued.

Pakistan’s Approach To Diamer-Bhasha Dam

Experts believe that the cost of the Diamer-Bhasha dam is extravagantly high for Pakistan to pay. “There’s no indication that Islamabad has thought through how it will cover these immense costs,” Kugelman comments on the funding issue.

“In view of the lenders’ resistance, it was decided about four years ago to divide the multi-purpose project into two major components — Rs650bn (PKR) worth of dam project to be constructed with the public sector funds and Rs750bn (PKR) worth of power project most probably to be developed in independent power producer (IPP) mode at a later stage,” reported the Dawn.

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However, Pakistan PM, Imran Khan’s aim to crowdfund such a large sum was termed unrealistic and was said that “if it succeeded it would be the largest crowdfunding effort in history — shattering the current Kickstarter record 700 times over.”

Since the World Bank and the Asian Development Bank had already turned down the funding requests in  2016, Kugelman suggests that “[Islamabad] will have few other funding options, it won’t have much leverage with China in terms of the structuring of a potential loan.”

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India-China Economic Romance Cannot End With A Mere Border Clash – Experts

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India and China have been at each other’s throat for more than a month now. Aside from the military confrontation in Ladakh, India has also moved to disengage from China economically.

While the move has got the support from the majority of Indians, Cui Hui’ao of the China Global Television Network (CGTN) writes that disengaging from China might not be a choice for India and that economic de-coupling is driven politically by Narendra Modi.

As reported by Eurasian Times consistently during last month, the feud between India and China has been a rollercoaster ride. From military buildup, deadly clashes to de-escalation and eventual withdrawal, the clash of the two Asiatic giants has seen it all.

Cui writes that apart from the military confrontation, India has retaliated in the economic sphere, referring to the decision by the Indian government to ban 59 Chinese application including TikTok, WeChat and ShareIt and the call to boycott Chinese products.

The journalist at CGTN writes that decoupling from China may be easier said than done for India. He says that India is not a manufacturing powerhouse, so in terms of bilateral trade, it actually buys much more from China than the other way around.

Cui analyses trade data to support the fact that New Delhi will find it difficult to reduce its dependence on Chinese imports. Between April 2019 and March 2020, India imported over 65 billion U.S. dollars’ worth of goods from China.

Cui is of the opinion that the coronavirus pandemic has hit the Indian economy hard and in fact, the disengagement is driven by politics rather than economics. He finds it difficult to accept that India’s disengagement from China would take place at a time when the Indian economy is projected to contract by 4.5% according to the International Monetary Fund (IMF).

Economic Disengagement Driven Politically 

Speaking to Cui, Cheng Xizhong, a visiting professor from Southwest University of Political Science and Law, says that the decision to de-couple from China economically is because of the domestic pressure on Prime Minister (PM) Narendra Modi.

‘’Since his second term began yet Indian economy is a mess. He has to find a way to shift the public attention elsewhere,” he said.

The author agrees with the point made by Cheng Xizhong and writes that pressure on the Indian PM Modi comes from multiple fronts, including his own supporters, businesses, and farmers union. But this time, the nationalistic voice is even louder.

Other experts interviewed by Chui agree that New Delhi would benefit more if it partnered with Beijing. Professor Cheng, a former Chinese military diplomat in South Asia, said that since India started its opening-up in the 1990s, its economic growth has been crippled by lack of high-quality infrastructure and it would wiser if India and China work together.

Similar views are shared by Indian economist Biswajit Dhar, who says that India’s decision to start producing domestically has to be strategic and it cannot take the decision to produce everything.”

While India and China disengage at the battlefront in Ladakh, the Indian government is looking for solutions to reduce its dependency on Chinese imports. PM Modi has encouraged all Indians to become self-reliant (Aatmanirbhar) by producing and purchasing indigenous goods and boost the Indian economy.

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Iran-India Chabahar Port Deal: Iran Kicks-Out India from Chabahar Rail Project citing funding delays

Iran-India Chabahar Port Deal: The railway project was meant to be part of India’s vow to the trilateral deal between India, Iran and Afghanistan to develop an alternate trade route to Afghanistan and Central Asia bypassing a hostile Pakistan.

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The Iran-India Chabahar port deal had run out fuel. Iran has reportedly expelled India from the Chabahar rail project according to a report by The Hindu.

According to the report – four years after India and Iran signed a deal to construct a rail line from Chabahar port to Zahedan, Tehran has decided to proceed with the project by itself citing delays from New Delhi.

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The report writes – The Iranian Transport and Urban Development Minister — Mohammad Eslami inaugurated the track-laying process for Chabahar-Zahedan line, which will be extended to Zaranj in Afghanistan. Iranian officials told The Hindu that the complete project would be finished by March 2022 and that Iranian Railways will proceed without India’s support, using nearly $400 million from the Iranian National Development Fund.

The railway project was meant to be part of India’s vow to the trilateral deal between India, Iran and Afghanistan to develop an alternate trade route to Afghanistan and Central Asia bypassing a hostile Pakistan.

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In May 2016, during PM Modi’s visit to Iran to sign the Chabahar pact President Rouhani and Afghan President Ashraf Ghani, IRCON had signed an MoU with the Iranian Rail Ministry. The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in a trilateral agreement between India, Iran and Afghanistan”.

However, according to the Hindu, despite several site visits by IRCON engineers, India never commenced the work, apparently due to worries that these could attract U.S. sanctions. The U.S. had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the U.S., said officials. India has already “zeroed out” its oil imports from Iran due to U.S. sanctions.

 

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Iran wanted India to accelerate the acquisition of heavy equipment and expedite work on a railway link to the Afghan border to boost the economic viability of the Chabahar port, according to experts.  As per earlier reports, – there was a written assurance from the US that will make it easier for banks to provide funds for the procurement of heavy equipment” said an expert.

In late 2018, the US had approved a waiver for Chabahar and the construction of a railway line from the port to the Afghan border from sanctions under the Iran Freedom and Counter-Proliferation Act of 2012. However, banks had been reluctant to provide loans for buying heavy equipment due to US sanctions.

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Iranian President Hassan Rouhani had earlier raised the Chabahar-Zahedan rail link at a meeting with Indian external affairs minister S Jaishankar in Tehran and asked India to expedite work on it to “benefit regional trade relations”. During that visit, India and Iran had agreed to boost Chabahar’s economic viability, including steps such as providing higher subsidies to merchant shipping using the port.

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Modi unleashed the Indian Army against China while Congress kept a tight grip – Experts

India and China saw the worst face off in the last 45 years on the border. After the troops of the two neighbouring countries clashed on the LAC in the Galwan valley leaving 20 Indian troops dead and an unknown number of Chinese casualties

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After the India-China clash last month that killed 20 Indian soldiers in a border skirmish, several anti-China protests erupted around the country. Protestors burned effigies of Chinese President Xi Jinping and called for an “economic war” against China.

Analysts have said that Indian Prime Minister Narendra Modi’s aggressive approach fits the mood of the public but it doesn’t go as far as wanting a full-blown war with its nuclear-armed, economically mighter neighbour.

As reported earlier by EurAsian Times, India and China saw the worst face off in the last 45 years on the border. After the troops of the two neighbouring countries clashed on the LAC in the Galwan valley leaving 20 Indian troops dead and an unknown number of Chinese casualties.

The efforts to defuse border tensions were somewhat resolved after a telephonic conversation between India’s National Security Advisor Ajit Doval and China’s Foreign Minister Wang Yi and through other diplomatic channels.

PM Narendra Modi paid a surprise visit to troops near the Line of Actual Control (LAC) where he made a veiled comment on China saying “age of expansionism is over”. “History is witness that expansionist forces have either lost or were forced to turn back,” Modi said addressing soldiers in Ladakh’s Nimo.

“Modi would not let the nationalist fervour lead India into a war with China. He wants to use this nationalist sentiment, but he is also scared of the blowback it might cause,” said Liu Zongyi, secretary-general of the South Asia and China Centre at the Shanghai Institutes for International Studies.

Analysts have also argued that after the Bhartiya Janta Party (BJP) came to power, Modi has given a freer rein to the army since taking power in 2014. According to S. Kondapalli, a professor of Chinese studies at Jawaharlal Nehru University, the Congress party sought better relations with China after the brief border war in late 1962, which meant keeping the military on a tight leash.

“Congress was always very persuasive and would ask the military not to do this or that along the border because it would aggrieve China,” Kondapalli said.

Sumit Ganguly, a professor of political science at Indiana University explained that Modi and the BJP represent a Hindu-centric ideology, away from the secular and pluralistic nationalism that defined the country for more than half a century.

In August of last year, India revoked the special status of Jammu and Kashmir which had granted the northern Muslim-majority province a significant autonomy. Ganguly said the BJP’s Hindu-centric nationalism influences India’s approach to the issue with China because the contested border is in Kashmir.

He further said that Modi and the BJP justified the removal of Jammu and Kashmir’s special status by pointing to separatist Muslim insurgents in the region supported by neighbouring rival Pakistan.

Ganguly argued that because of the large Muslim minority in India, and Pakistan was created as a homeland for Muslims, it is easy to whip up a degree of nationalist fervour by painting Muslims as fifth columnists of Pakistan.

“Whereas with China, it’s much more difficult to whip up a similar kind of nationalism because the Chinese community in India is so minuscule, but that doesn’t mean Modi isn’t trying,” he said.

“China’s military power is nearly four times that of India. Even after the deaths of the Indian soldiers on June 15, Kondapalli said the BJP had never thought of taking the dispute into anything beyond the defence of a few kilometres of land along the border with China.

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