The Bay of Bengal is not going to be the same again. The China National Petroleum Corporation [CNPC] disclosed on Saturday that the China-Myanmar oil and natural gas pipelines are expected to be completed on May 30 and will become operational by June. The work pending is only on the Chinese side, whereas the work on the Myanmar side has been expeditiously completed.
The two pipelines would have immense geopolitical significance. The Xinhua news agency aptly described them as «China’s new strategic energy channels.» The 1100-kilometre long pipelines with annual capacity of 22 million tonnes of oil and 12 billion cubic meters of gas respectively will connect the port of Kyaukpyu on the Bay of Bengal with China’s Yunnan Province.
Quite obviously, China is now well placed to tap into the energy reserves in Myanmar and Bangladesh. It is repeating a pattern that is by now familiar to the Central Asian countries and Afghanistan – China finances and builds transportation routes leading to its hinterland and connects them to the upstream projects in neighboring regions.
The pipelines through Myanmar have an added strategic importance for Beijing. They will help China to reduce its heavy dependence on the Strait of Malacca for the transportation of energy. Around 80% of China’s energy imports are presently transported via Malacca Strait, which of course has grave strategic implications against the backdrop of the United States’ «rebalancing» in Asia and the maritime disputes in the South China Sea.
Beijing has not hidden its sense of unease that China’s energy security is vulnerable to the «choke point» of Malacca Strait, which is effectively under US control. President Hu Jintao once famously described the worrisome dependence as China’s «Malacca Dilemma». The new pipelines through Myanmar could reduce the dependence by about one-third.
The economics of the enterprise are equally significant. The new routes could cut down transportation distance for the African and Arabian oil shipments by 1200 kilometers. It gives a big boost to Beijing’s ambitious plans to develop China’s southern regions.
New Delhi will keenly assess the impending tectonic shift in the geopolitics of the Bay of Bengal. The Indian strategic thrust all along has been to keep the Bay of Bengal as its «sphere of influence». But in another 6 months, Bay of Bengal, which has many highly sensitive Indian defence installations, will begin to turn into a busy waterway for oil tankers plying between Myanmar and the Persian Gulf and Africa.
The spate of high-level visits by Indian officials to Myanmar in the recent period can be viewed against this backdrop. In fact, Defence Minister A.K.Antony has just begun an official visit to Myanmar. This follows the visit by External Affairs Minister Salman Khursheed.
Prime Minister Manmohan Singh’s path-breaking visit to Myanmar last year underscored the highest priority India attaches to relations with that country. New Delhi is invoking India’s ancient Buddhist heritage to build special bonds with Myanmar. While India has slipped down on the economic ladder and currently figures as only a measly number 9 or 10 in the order of Myanmar’s business partnerships, it hopes to be way up as that country’s cultural and spiritual partner in a way that the US or China cannot rival.
The common conception among Indian pundits has been that the Great Game in the Indian Ocean involves India and China at its epicenter with the US acting as a referee or moderator. But what emerges bears striking similarity to the big-power rivalries in Central Asia where many extra-regional powers have entered the fray. Indeed, the 5 «Stans» themselves are increasingly playing their own little games of hide-and-seek hoping to create space for themselves by tapping into the big-power rivalries – and often succeeding.
The point is, countries such as Myanmar or Sri Lanka are already adept at negotiating with the big powers to their best advantage. Thus, Russia is the latest big player to enter Bangladesh’s first circle of partnerships. If the US was hoping to get a grip on the exploitation of Bangladesh’s energy reserves – ConocoPhillips is exploring offshore Bangladesh in the Bay of Bengal – Russia promises to give it good competition. The focus of the recent visit of Prime Minister Sheikh Hasina to Moscow (first-ever visit by a Bangladesh leader to Moscow) was on energy and arms purchase. Moscow is putting big money on the table [http://www.itar-tass.com/en/c154/621744_print.html] both to finance its arms exports as well as to build Bangladesh’s first nuclear reactor.
Advantage to China, Russia
Equally, Russia is also asserting its presence in Myanmar. The Russian Foreign Minister Sergey Lavrov visited Myanmar last week and called for the complete dismantling of sanctions against that country. Do not be surprised if Russia makes offers to build a nuclear power plant in Myanmar or to sell weapons. Interestingly, Lavrov’s visit to Naypyidaw coincided with the visit of a team of US nuclear officials to negotiate a safeguards regime that allows inspection of Myanmar’s suspected atomic sites.
Meanwhile, Japan’s new Finance Minister Taro Aso also picked Myanmar for one of the first overseas trips by a member of Prime Minister Shinzo Abe’s cabinet that took office last month. Tokyo plans to provide Myanmar with a 50-billion yen ($574 million) loan by the end of March and to continue with previously announced plans to waive debt that it is owed.
Clearly, there is a beeline leading to Myanmar and the speed with which Beijing advanced the construction of the two pipelines should not come as surprise. Direct foreign investment into Myanmar increased by 40 percent last year to touch a record level of $3.99 billion. According to the Asian Development Bank forecasts, Myanmar’s gross domestic product may expand 6.3 percent this year after an estimated 6 percent gain in 2012. «Myanmar could become one of the next rising stars in Asia if it can successfully leverage its rich endowments,» the ADB forecast said.
China accounts for about half of the foreign investment Myanmar has attracted since 2008. But the equation is changing, although China’s influence in Naypyidaw remains formidable. In 2011, Myanmar abruptly halted work on the $3.6 billion Myitsone hydropower dam across the Irrawaddy River that was being built with China Power Investment Corp., on the ground that the project was against the «will of the people.» China Power viewed the development as «bewildering» but Beijing was determined not to feel disheartened. Meanwhile, the CNPC continued with its work on building the pipelines.
How does it all add up? Like in Central Asia, a multi-vector Great Game in the South Asian region is apparent, which devolves upon many processes such as the US’s «rebalancing», China’s assertiveness, Russia’s re-entry as a global power, Japan’s quest for economic revival, politics of energy security and so on.
The regional security scenario in the Indian Ocean is poised to transform phenomenally when these processes advance. Much is going to depend on the fate of the US-Russia «reset» and on how the US-China rivalries will play out in Asia in the coming period. However, a qualitative difference will be that unlike in the ASEAN region, the US has been historically an «outsider» in the South Asian region.
Except for Pakistan, South Asian countries kept away from building cold-war alliances with the US against the Soviet Union. Quite obviously, the US’ pressure tactics toward Pakistan, Sri Lanka or Bangladesh (and even Myanmar) in the most recent years failed to work.
Therefore, it is highly improbable that any of the South Asian countries will cooperate with the US’ containment strategy toward China (or Russia). Suffice to say, the advantage goes to China and Russia if they are interested in a «pivot» to South Asia… If only China and Russia can reconcile their divergent priorities within the Shanghai Cooperation Organization, the grouping could even emerge as a regional platform bringing together the countries of South Asia.