In April, I gave the keynote address at the Daily Asian Age's forum, "Debt Trap Diplomacy and Regional Threat." In general, I pointed out some of the cautions Bangladesh should consider before taking on more Chinese Belt and Road debt.
In large part, the cautions were based on experiences of countries victimized by China's predatory lending practices and China's refusal to join with other lending nations in agreeing to methods for giving borrowing nations debt relief.
The address also looked at economic theory and practice to show the dangers of accumulating excessive debt and how it could slow or even reverse Bangladesh's economic growth and prosperity.
Some in the audience accused me of, being an American, telling Bangladesh what it could and could not do. As I said then (even before anyone raised the matter), the decision is up to the Bangladeshis--not the United States, China, or any other outsider.
In fact, I closed my address by suggesting that both of those nations are important to the Bangladeshi economy, and to "[a]pproach the US and China as an equal--not a vassal, debtor, or beggar! Set that fluidity in relationships as the context for future talks, and don't let Belt & Road undermine it."
Another reaction, however, has stayed with me. Audience members would acknowledge the dangers of accumulating the Chinese debt and the distress it has caused multiple nations, and then followed it with a challenge. "What does the United States offer as an alternative?"
Bangladeshis have no less a desire or right to develop their country--a sentiment I heartily endorse--but right now, with all its dangers, Belt and Road seems like the only game in town. I was so taken by this challenge that it has been the primary subject of my discussions on the matter ever since I returned home to the United States.
Bangladeshis do not have to settle for whatever predatory leavings China has for them. The United States has multiple public and private sources of funding, some in the form of loans, others in the form of outright grants.
Bangladesh would benefit from a direct and frank approach to my country with the same challenge that was presented to me: Bangladesh wants to develop. Bangladesh will develop. What alternative does the United States offer to China's Belt and Road program?
It's never a good idea to be too dependent on any one source or creditor, because it leaves your fate in their hands. A strategic development program would utilize the strength of multiple resources, most especially Bangladesh's biggest customer (the United States) and the country that sells it most goods (China).
Let the two geopolitical competitors compete to help Bangladesh develop. And in that regard, there is nothing inherently wrong with borrowing from any nation. The keys are the terms and how well thought out the transaction is, as any business leader would tell you.
First, get the most favorable interest rates possible. Don't do what Pakistan did. While other countries borrowed Chinese money at 2-2.5 percent interest, Pakistan was forced to pay five percent for its loan. Doesn't Bangladesh deserve to be given favorable rates?
Second, know how you will get the additional income to repay the loan. Sri Lanka, for instance, got into trouble because it used the money it borrowed for infrastructure improvements that did not generate any income. Get input from hard-headed business people, not just from politicians whose goals are primarily winning votes and, hopefully, non-tangible benefits like the people's happiness.
People in business understand that you do not borrow money without knowing how you will repay it. So, what projects seem right for this? Roads or other conveyances that can charge tolls and recoup outlays can be one.
Improved thoroughfares that will stimulate greater trade or less costly trade for Bangladesh are good, too, but only if you first make sure that the benefits will be there. Airport improvements generally do not produce sufficient income, but if additional airline fees or gate leases are secured first, they might work.
Third, take active and no-nonsense steps to prevent corruption. Montenegro was savaged by massive curruption in its Belt and Road project, but it is not the only country to suffer from such corruption. Corruption, too, saps income for repayment and increases the program's costs.
Given the pervasiveness of corruption in the Belt and Road programs, this has to be a top priority, and those leaders who spearhead the effort must be judged by results not their efforts. And, again, take on a small amount of debt from any one lender. Make them anxious to do more business with you, while you play coy about it.
Finally, there is another source of assistance that more and more countries are utilizing. Israel has done more to help developing nations achieve independence and both economic and agricultural excellence than nations with far greater economic resources. Countries from around the globe, many Muslim majority, testify to how Israel helped them, no strings attached.
Yet, Bangladesh is one of only eight Muslim majority countries (with a million or more people) that has no level of relations with Israel. Even the Palestinian Authority, despite its corruption and financial mess, is dependent on Israel as an employer for its people. Almost 15 percent of Palestinians who are employed, work in Israel.
All of the Gulf States have moved closer to Israel, as have leading Arab nations like Egypt. Bangladesh and Pakistan are the only Muslim nations outside the Middle East that do not have some level of interaction with Israel.
Besides Bangladesh, the only Muslim majority nations with a million or more people that refuse any contact are Algeria, Iran, Iraq, Lebanon (Hezbollahstan), Pakistan, Syria, and Yemen. That could change with the recent coup in Algeria, which would mean all Muslim majority nations in Africa, including the Maghreb, would have some interaction with Israel. Does that group of nations sound like the company to be kept by a "moderate" Bangladesh?
Ironically, while Israel has improved its standing vis-à-vis the Muslim world, your government's new best friend, China, has now become one of the most vicious anti-Muslim nations on the globe.
From force feeding Muslims pork to mass incarceration in high tech concentration camps, its program of Muslim suppression is controlled directly by the all-powerful Politburo. Teaming up with that lot makes a mockery of opening your constitution with Bismillah.
Ending its increasingly lonely feud with Israel--the fourth nation in the world to recognize Bangladeshi independence--also would allow Bangladesh to fulfill its foreign policy principle, "friendship to all malice to none" and get the greatest benefit for its own people. And it would give Bangladesh yet another source of support to prevent undue dependence on any one.
The writer is an American scholar and a geopolitical expert.
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