RUTHFULLY YOURS

China will be in the back of many minds as India’s Prime Minister Narendra Modi prepares to meet US President Donald Trump in Washington. On the agenda are US drone sales to India, boosting intelligence, and military cooperation between New Delhi, Hanoi, and Tokyo — but perhaps most importantly, there is an initiative that could undermine Beijing’s pet foreign strategy, One Belt, One Road (OBOR).

In the past few days, the Indian press in fact beat the drums, arguing that the signing of the UN TIR Convention is a move to counter OBOR. The TIR system is the global customs transit system with the widest geographical coverage. As with other customs transit procedures, the TIR procedure enables goods to move under customs control across international borders without the payment of duties and taxes.

Actually India’s TIR will in no way challenge, at least for now, China’s OBOR. It covers only India, Bangladesh, Nepal, and Bhutan; it doesn’t stretch to dozens of countries like OBOR; and it is not backed by a new rich international financial institution with over 100 billion of dollars of capital, like the Asian Infrastructure Investment Bank (AIIB).

But the four countries’ trade and transportation agreement already creates a bloc with a population of about 1.4 billion, the same as or more than China’s. These people are younger than China’s aging population due to decades of one-child policy, the elite speak good English, they use British law and are full accustomed to international norms. All these elements are rare commodities in China.

All these points are in part or totally foiled by Modi’s dwindling enthusiasm for reforms of his internal market. Lack of infrastructure, excesses in bureaucracy, and poor progress in market liberalization have so far sapped international enthusiasm for the theoretically huge potential of the Indian economy. The declining GDP growth rate, which dropped below China’s in 2016 after a couple of years of surging ahead of it, is telling of all the problems facing Modi. Besides, the rivalry with Pakistan poses an objective barrier to India’s land route to Europe, bottling New Delhi in favor of Beijing in Eurasia.

On the other hand, the new TIR agreement could assist in breaking India’s internal barriers and help create a better unified market of goods and services.

From the Chinese point of view, the Indian press’ understanding of TIR as an instrument to counter OBOR could be a major blow and should spur some important rethinking in Beijing. India joining TIR to counter OBOR means basically two things: OBOR is a strategically important and good initiative, so much so that India is trying to imitate it. Its implementation, however, was very poor, because India, the world’s second-largest country in population, didn’t join it and now wants to set up its own version.

In other words, China, which is not the world’s most powerful country and moves in an international environment largely westernized, has to reconsider its management of OBOR. It can’t be a China-led initiative that de facto marginalizes the US, Japan, and India, and their international or regional structures. It can only be a Chinese idea that brings to the table, on equal footing, all concerned countries. Short of this, OBOR could easily turn into a dangerous trap for China.

For Europe and America, there are other lessons to learn. OBOR may hit snags or even fail, depending on future Chinese actions. But it has set in motion a wave of trade that will move with greater determination through the Eurasian continent. This is the megatrend that will be very hard to stop altogether, and it is bound to change the challenges America and Europe may think they are facing, as the Atlantic is no longer alone.