Thailand's Kra Canal : A Game Changer
by
Adelaida Salikha
Published November 08, 2017 - 17:10 Jkt
The idea of developing Kra Canal, otherwise known as the Thai Canal or the Kra Isthmus Canal, through the narrow southern end of Thailand was actually proposed over 200 years ago
However, due to uncertain reasons of economic, political, investment or capital during those years, this proposed project was rejected and any further discussion or action terminated.
Now, it is reported recently that China and Thailand are planning to continue with this project for more practical reasons that cover economic, safety and trade.
Although this canal issue has widely been discussed by maritime players, such as policy makers, regulators, and shipping and port operators, it seems that the idea of developing the Kra Canal is most welcome due to the great savings in costs, higher levels of safety and shortened distance compared to the journey via the Strait of Malacca.
Seasia looks forward to the construction of this new development that is believed to certainly change the landscape of maritime transportation in the region, if not the world, herewith are information that we gathered for the readers.
Kra Canal to have huge security and social implications |
http://www.asiaone.com
According to the latest study conducted by the
Journal of Shipping and Trade, following are the 10 global implications resultant of the proposed Kra Canal:
1. The canal will provide an alternative route in lieu of the congested Strait of Malacca.
2. Voyage distances can be reduced by 1,200 km and voyage time by 2 to 5 days, thus allowing for higher vessel utilisation.
3. The estimated bunker savings for a 100,000 dwt oil tanker is $350,000 per trip.
4. Bulk shipments (e.g. oil tankers) that are chartered for direct shore to shore voyages will benefit the most.
5. Large container ships that must make frequent stops may not benefit as much - vessel capacity may not be sufficiently utilised when skipping ports in Southeast Asia.
6. Thailand may greatly benefit from the canal toll fees, port facility charges and development in the surrounding area.
7. Eighty percent of China’s oil goes through the Strait of Malacca; the Kra Canal may reduce shipping costs and reliance on the Strait and also minimise the threat of the blockade of the strait.
8. Singapore’s status as a maritime transhipment hub may be negatively affected with vessels bypassing the Malacca Strait altogether.
9. The ports in Hong Kong and China stand to gain from the traffic diverted from Singapore.The cost of using the canal will be a key factor.
10. The cost of using the canal will be a key factor.
The rail canal idea would see ships carried by rail across Thailand’s south.
Although many concerns raised among the shipping players and the environmentalists which include the issue of the capacity of the Strait of Malacca in that it is unable to accommodate more than 122,600 vessels per year, security (piracy) at the Strait of Malacca and the dredging and development activities in the surrounding area of the canal, there are still many other factors that motivate support for the development of the Kra Canal.
The realization of this gigantic infrastructure project is somehow also known as soon-to-be the Chinese Panama Canal.
As listed by
ShippingExchange, herewith are the reasons why:
1. Kra Canal is being developed since 1677!
Similar to Panama Canal, history of the Kra Canal is vast and holds a lot of value to Importers and Exporters located in the region of South China Sea and beyond.
The first time this idea cropped was as far back as 1677 when Thai King Narai asked the French engineer de Lamar to survey the possibility of building a channel to connect Songkhla with Marid aka Myanmar to cut short the time for traders.
2. Geography-wise, it is one of the toughest terrains to build a Canal
More fondly known as Kra Isthmus, the land bridge is shared by the countries of Thailand on the East and Myanmar on the West. Lying to the west of the Isthmus is the Andaman Sea, while the Gulf of Thailand falls on the East Side of the river.
The Isthmus of Panama also is also located very strategically, connecting the continents of North and South America.
3. A Game Changer for Southeast Asia
A canal located in the vicinity of Thailand could enable Larger Transport carriers to transport cargo via India, China and Japan instead of using the Strait of Malacca, thereby boosting the Thailand and Chinese Economy.
Currently, 94000 vessels pass each year through the Strait of Malacca, which is roughly equivalent to one-fourth of the World’s Traded Goods.
An estimated 15.2 million barrels of oil was passed through the Strait in 2011, which is largely controlled by western Countries.
The Panama Canal is currently of far greater strategic value to the United States with an estimated 15000 vessels passing through the canal every year. And up till 2009, 333.7 million tonnes had been transported via the Canal.
4. It could be one of the Greatest Engineering Feats of the 21st Century
The stakes are very high and while the infrastructure is well backed by the bulging Chinese Economy, there are many technological, environmental and political issues which have to be addressed.
The estimated cost is a whopping US$28-30 billion and will take 10-12 years to complete the entire project. An estimated 5000 people during the initial stages will have to be employed as well.
The Panama Canal also had to go through a tremendous amount of obstacles before it could be built. Ranging from French Ownership to the development of the Canal undertaken by the US, and Volatile Political Climates.
Kra Canal, the Panama Canal of China | shippingexchange.com
From the above points, the development of Kra Canal is as much as an economic decision, as it is a strategic one. It may also tip the balance of power in the hands of countries like India and China.
However, with ever mounting pressure on Thailand from other vested interests, the building of the canal may still take some time.
Currently, there is no estimation as to when can the project be completed.
Source : Journal of Shipping Trade | ShippingExchange |
Kra Canal official website
https://seasia.co/2017/11/08/thailand-s-kra-canal-a-game-changer
Thailand the missing link in China’s Maritime Silk Road
In a policy shift, Thai PM Prayut Chan-ocha says state agencies will study the construction of a long-envisioned ocean-linking canal China craves for economic and security reasons
By
BENJAMIN ZAWACKI BANGKOK, NOVEMBER 9, 2018 11:32 AM (UTC+8)
Generic image of ships passing through a canal. Photo: Facebook
After demurring for years, Thai Prime Minister General Prayut Chan-ocha last week ordered national planning and security agencies to look into building a possible canal across the narrow Isthmus of Kra in the kingdom’s southern region.
The canal is a major focus of a book I published last year, in which I argue that China will eventually lead efforts on the long-envisioned but never realized construction.
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Indeed, the order came a month after China’s ambassador to Thailand confirmed the canal as part of his country’s Belt and Road Initiative (BRI), Beijing’s US$1 trillion flagship project for global economic expansion.
Although the BRI — including a “Maritime Silk Road” — is a logical undertaking for the most relentless economy in history, less discussed is its possible role under a concurrent security-driven policy.
Consistent with much of China’s economic outreach in South and Southeast Asia since the turn of the century, its Silk Road can also be seen as a geo-political project aimed at power projection. The benign rubric of development, integration, and “connectivity” — already challenged on the grounds of accompanying “debt traps” — is thus subject to further scrutiny from a security standpoint.
The Silk Road’s architects likely include military as well as market analysts, projecting not only economic returns but the People’s Liberation Army’s (PLA) ability to prevail in a regional conflict.
This accounts for the weakness of counter-arguments to a canal; namely that construction costs would outweigh the savings of time and money that a short-cut connecting the Gulf of Thailand and the Andaman Sea would provide.
Potential shipping route if a Thai canal is built. Map: Facebook
The past 15 years have seen a host of Beijing-backed projects yield less than stellar economic results, but whose main objective has been to expand China’s geo-political footprint in the region while checking those of the US, Japan, and Taiwan.
Such is the privilege of state-supported banking and industrial sectors, in which the Politburo’s (inter)national strategy can readily absorb tactical economic losses.
Nor are the economics any longer water-tight—or limited to China as a canal’s chief financier: Singapore would be the country most directly and adversely affected, as it sits atop the Malacca Strait, the very stretch of water a canal in Thailand would circumvent.
Through the Strait passes nearly half the world’s annual shipping fleet and two-thirds of its oil and liquefied natural gas. On a daily basis Malacca receives three times greater the oil traffic of the Suez Canal and 15 times that of Panama’s channel.
Considerable money has changed hands each time the Thai parliament has tabled a canal proposal, but Singapore would not win a bidding war of influence with the Chinese.
Why? Because no single nation is more dependent on the Malacca Strait than China, whose two-way share of trade and energy in the channel exceeds the global aggregate — the result of lacking direct littoral access to the Indian Ocean.
The world’s most populous nation and second largest economy is landlocked from the warm waters west of the Strait. And dependency is vulnerability in China’s case, given that the Strait is patrolled and policed by the US Navy’s Seventh Fleet.
To be sure, the fast-increasing number of cargo ships traversing the narrow passage, combined with their ever-growing girth, poses a common challenge. And for most regional countries America’s naval presence is not unwelcome.
But for a China seeking regional hegemony, the age-old “Malacca dilemma” demands a vested alternative to the Strait, and it is in that light that a Kra Canal—and the Silk Road more broadly—should be seen.
Eyes on the prize
While the BRI expands westward, China’s primary focus is to its east and south: a “first chain” of disputed islands and territorial claims in the South China Sea, both of which include and ultimately revolve around Taiwan.
Beijing has made it clear that it wants full and formal reunification with Taiwan by 2049, and that it will take the island by force “if necessary.” As prerequisite and preparation, it is likely to seize Japan’s Senkaku Islands at an earlier date, either via a “short, sharp war”, or in the manner it did the Philippines’ Scarborough Shoal in 2012.
That seizure featured an overwhelming convergence of “civilian” fishing boats backed by the Chinese Coast Guard in less a use of force than a fait accompli.
Fishing boats played a similar role during China’s mid-2014 confrontation over an oil rig it had positioned within Vietnam’s exclusive economic zone, and in the Philippines’ Spratly Islands in mid-2017, one of which was “claimed” by a Chinese fishing boat’s five-star red flag.
In a possible “dry run”, last year also saw some 260 fishing boats flood Japanese waters near the Senkakus, again flanked by six Coast Guard vessels. China fields the largest fishing fleet in the world, and four months ago placed its Coast Guard under the command of the People’s Liberation Army (PLA).
Its disputes with Vietnam and the Philippines, as well as with four other countries, stem from Beijing’s 2009 assertion that all territories within a “Nine-Dash Line” on a map of the South China Sea belong to it.
Although the map was drawn in 1948 and categorically dismissed as a basis for claims by The Hague’s Permanent Court of Arbitration in July 2016, its ramifications made Beijing’s contempt for the ruling a foregone conclusion: the map awards China 90% of the Sea and increases its overall geographic size by nearly 50%.
Since 2013—the same year the BRI was announced—China has constructed some 3,200 acres of artificial islands within the “nine dashes” of the map, some within the sovereign maritime territory of other states. Militarization of the islands commenced in 2015, with as much emphasis on controlling the skies as the sea.
Runways capable of accommodating fighter jets now exist on seven artificial islands in the Spratly Islands, complementing naval and aviation support facilities on Fiery Cross, Subi, and Mischief Reefs.
Six months ago, Chinese bombers with long-range and nuclear-strike capabilities landed for the first time on Woody Island in the Paracel Islands, which already featured surface-to-air missiles. These are essentially aircraft carriers that cannot be moved—which is the point.
Encroachment and militarization invite a response, and have already resulted in deadly maritime clashes with regional states and increased “freedom of navigation patrols” in the South China Sea by the US. Should China declare an aerial defense identification zone above the waters, a new front for confrontation would open.
A short conflict confined to the East China Sea might not require more forces and resources than Beijing has at its disposal along its eastern coast. But Chinese claims in the South China Sea extend as far afield as Indonesia and Malaysia, whose coasts define the narrow Strait of Malacca.
Now a democracy, Indonesia is historically close to the US, while recent months have seen Malaysia push back on both China’s maritime aggression and its Silk Road. For clashes occurring there to be decided swiftly, China could require ships or supplies from waters west of the Strait, even as its adversaries worked with Singapore and the Seventh Fleet to close the passage off.
Between the East China Sea and the South China Sea sits Taiwan, the crown jewel in the Middle Kingdom’s bid for regional hegemony. More likely than an escalation or expansion of violence elsewhere, is an outright military move by Beijing against Taiwan that triggers a wider conflict.
China would be powerless to forestall US involvement, already present and treaty-bound to defend Taiwan. But its occupation and militarization of the disputed islands north and south of Taiwan is designed precisely to deny their rightful claimants’ ability to assist. Taiwan would thus be “surrounded” by Chinese assets, allowing the PLA to move not only from mainland China but from all sides.
All quiet on the western front
Beijing would prefer a brief and decisive war but knows better – and its maritime Silk Road could potentially play a supporting role. For at the same time that it increases “connectivity” between and among the Andaman Sea, Bay of Bengal, Indian Ocean, and Arabian Sea, it connects those bodies with the contentious waters east of the Malacca Strait.
That is, it methodically and progressively addresses China’s “Malacca Dilemma.” In times of peace, this will contribute substantially to both Chinese and regional economic growth, serving container vessels, tankers and cargo planes from around the world.
But should conflict erupt over Taiwan, the South China Sea, or both, the Silk Road could also serve as a ready supply line and secondary locus for the surface ships, submarines and fighter jets of the PLA.
The BRI’s unspoken anchor was established in mid-2017 in Djibouti: China’s first overseas military base. Itself a projection of force, the base affords further deployment across the waters to which China is otherwise landlocked. The base also gives China (Djibouti’s top foreign investor) transit control of 10% of global annual oil exports.
Moving eastward, China’s military presence is less overt but undeniable, primarily via sales of arms and materiel and in forces sent to protect the Silk Road investment and coastal infrastructure—much of which is clearly “dual use” in nature if not intent.
Chinese President Xi Jinping reviews a military display of Chinese People’s Liberation Army (PLA) Navy in the South China Sea, April 12, 2018. Picture: Li Gang/Xinhua via Reuters
Beijing’s military relations with Pakistan, frequently at odds with the US and historically so with US ally India, have increased markedly in recent years. Not coincidentally, the coastal city of Gwadar is a major focus of Silk Road investment toward a China-Pakistan Economic Corridor and a deep-sea port.
Pakistan utilizes a host of Chinese surface warships and recently purchased eight submarines, four of which are to be built on-site by Chinese engineers.
In Bangladesh, China is similarly investing heavily in a major industrial park in the port city of Chittagong—where two Chinese guided-missile frigates and a supply ship docked in early 2016. This was followed by the delivery of two Chinese submarines later that year, whose crews were slated to include Chinese sailors for training purposes. In June 2018, the Bangladesh Air Force signed a contract for 23 Chinese training jets.
In between these nations and out at sea, an expanded airport in the Maldives and an expanded Colombo Harbor in Sri Lanka—where Chinese submarines twice docked in 2014—are being financed and built largely by Beijing.
Last year, after failing to repay its loan under the Silk Road scheme, Sri Lanka leased a 70% stake in its Hambantota air and seaport to China for 99 years. Despite assurances to the contrary, few believe that the island nation has seen the last of the Chinese PLA Navy.
Entering Southeast Asia via Myanmar, pipelines running the length of the country and linking China’s landlocked southwest with the Bay of Bengal, pre-date the BRI. They have been Beijing’s chief response to its “Malacca Dilemma” for two decades. Since 2016, Silk Road investment in a China-Myanmar Economic Corridor has aimed to bolster the pipelines with transportation links and a deep sea port at Kyaukpyu.
As with some of the ports elsewhere, political and/or legal limitations have been placed on China’s use of Kyaukpyu for military purposes. Yet, Chinese military links with Myanmar are deeper than anywhere in South Asia, and Kyaukpyu is its closest asset to the waters east of the divide created by peninsular Myanmar, Thailand, and Malaysia. Conflicts have a history of changing the rules, particularly those with stakes as high as those presented by Taiwan and the South China Sea.
The missing link
Even if China prevails between Djibouti and Myanmar, what even Kyaukpyu fails to deliver is direct maritime access to the Gulf of Thailand and beyond. Under Silk Road projects concurrently underway, China’s “Malacca Dilemma” can be substantially mitigated but not eliminated.
Enter Thailand, whose official status under the scheme has been uncertain from the start, but whose location makes it indispensable. When Thai Prime Minister General Prayut Chan-ocha was excluded from a BRI forum in Beijing last year, reportedly due to slow progress on a joint high-speed rail project connecting China and Thailand, conventional wisdom had his country as a peripheral, even expendable, part of the Silk Road.
In evidence to the contrary, Prayut felt compelled to respond with an equally bold move, using exceptional authority under Thailand’s constitution to override legal restrictions on the employment of Chinese engineers and declare a summary end to the project’s delays.
Whether continued setbacks signal ambivalence to China’s expansion or a more likely combination of corruption and incompetence, is unclear, but are of grave concern to Beijing either way.
The train is part of Beijing’s regional “connectivity” plan to link southwestern China to Thailand via Laos, and includes an eventual line down Thailand’s peninsula through Kuala Lumpur to Singapore.
While this extension would follow Thailand’s eastern rather than western shore, and so not afford another indirect link to the Andaman Sea, it would connect China to the Malacca Strait’s primary port and staunch US ally. As elsewhere, the Silk Road’s security element in Thailand is implicit but hard to miss, and follows 15 years of ever-deepening Sino-Thai “mil-to-mil” relations.
Another test concerns the Thai navy’s 2017 purchase of a Chinese submarine, with two more in the pipeline, whose construction recently got underway. Whether they are docked at the naval facility in Phang Nga on the Andaman Sea or at the Sattahip base on the Gulf of Thailand belies Bangkok’s uncertain standing between the two global powers.
Thai Prime Minister Prayut Chan-ocha (L) and Chinese President Xi Jinping reach to shake hands in a file photo. Photo: AFP/Pool
Beijing would strongly prefer the Gulf for its connectivity to contested eastern waters and to US assets: Sattahip has hosted American ships and subs since the Vietnam War and is a mere 18 kilometers from the U-Tapao airbase, a US “Cooperative Security Location.” Washington has registered its opposition privately.
Of chief concern is Thailand’s ability and reliability to deliver on the missing link, a canal across its narrow isthmus. Although the military will retain substantial political power through an appointed Senate, if not formally in elected office, polls scheduled for early 2019 are almost certain to render Thai governance even less decisive and efficient.
Prayut’s recent order for a review was in response to a proposal by the Thai Canal Association, whose leadership includes several retired generals and members of the influential Thai-Chinese Economic and Cultural Association.
A number of Chinese investors are in support of the project, and a company experienced in land reclamation and construction in the South China Sea has reportedly expressed interest.
For its part, the US has no official position on a Kra canal. It did not feature in Obama’s “pivot” to Asia, to which China’s BRI was a response, and thus far has not been part of Trump’s Free and Open Indo-Pacific strategy or the Senate’s Asia Reassurance Initiative Act, the latest volley.
Thailand is an American treaty ally via both the 1954 Manila Pact and 1962 Thanat-Rusk agreement, and was named a major non-NATO ally in 2003 for supporting US counterterrorism policies after 9/11. But for Beijing that is precisely the point: the Cold War ended almost three decades ago, the War on Terror has lost definition and direction, and allies change—especially those with a history of doing so.
A direct link between the Andaman Sea and the Gulf of Thailand, finally ending China’s “Malacca Dilemma”, will come down to economic pressure and geo-political ambition. While its BRI dutifully brings economic benefits across the continent through commerce and “connectivity”, China can be expected to remain patient, persistent and purposeful.
At the same time, should the next major conflict occur in Asia, part of the road leading there will have been paved in silk.
Benjamin Zawacki (@benjaminzawacki) is a Bangkok-based analyst and author of Thailand: Shifting Ground Between the US and a Rising China (Zed Books 2017)
http://www.atimes.com/article/thailand-the-missing-link-in-chinas-maritime-silk-road/
Thailand’s Kra Canal: Economic and Geopolitical Implications
July 17, 2018
2944
By: Pithaya Pookaman
For 330 years, visionaries have thought of dredging a great canal 150 km. across the Kra Isthmus in southern Thailand so that vessels sailing from the Indian Ocean to the Pacific could cut hundreds of kilometers off their voyage and avoid the Bugis pirates of Indonesia that for centuries have haunted the Strait of Malacca.
Economically it has never made sense – until now, as China’s burgeoning maritime traffic packs the 800 km Strait, a seagoing funnel that narrows to only 64 km near Singapore, with only a half dozen kilometers of that usable because of its shallow depth.
Accordingly, Beijing signed a Memorandum of Understanding on the canal project in Guangzhou in 2015 with the China-Thailand Kra Infrastructure Investment and Development Company and Asia Union Group. The Chinese envision the huge enterprise as a linchpin in its Belt and Road Initiative, a development strategy designed to link as many as 70 countries into a vast economic web with Beijing at the center, the land-based Silk Road meshing with the Maritime Silk Road, all focusing on connectivity and cooperation between the countries.
The Malacca Strait is estimated to reach saturation in 2024 when more than 140,000 vessels seek to pass through the narrow waterway, which can only accommodate 122,640 vessels per year. The vessels would therefore have to opt for longer alternative routes passing through the Straits of Sunda and Lombok further south unless a more feasible route through the Kra Isthmus is developed.
Moreover, the shallowness of the Malacca Straits presents a problem for the oil supertankers, which need a draft of 21.2 meters. The strait’s shallowness reduces the sea lane to only 4 kilometres in width, making passing ships vulnerable to maritime accidents, piracy and terrorism by religious fanatics. Another serious concern is the environmental impact from oil leaks from supertankers.
Given the near saturation of the Malacca Strait as well as potential security and environmental risks, it is therefore unavoidable that a viable alternative shipping route has to be found sooner than later. The Thai Canal would offer the shortest link between the Indian and the Pacific Oceans compared to other routes. It would reduce the travel time by about 700 km and two to six days depending on the route, substantially reducing the shipping cost.
One proposal is to build a canal from the ground up to accommodate large vessels. The ground would be first leveled and walls would then be built to eliminate the need to dig deep into the ground, greatly reducing construction time and costs. Two separate waterways would run parallel to facilitate navigation. The canal would take 10 years of complete at a cost of US$28 billion. A special economic zone would parallel the canal and a deep-sea port would be built in Thailand’s southern province.
In procuring enormous foreign investment for the canal project, in addition to the IMF and the World Bank, new monetary systems such as China’s Asian Infrastructure Investment Bank (AIIB) and the BRICS Bank, apart from international financial syndicates, are eager to lend.
Based on the foregoing, the rationale for the Thai Canal project is impeccable, save for the matters relating to the sources and method of funding. The reservations of the naysayers that the canal would separate Thailand’s southern provinces or impact Thailand’s sovereignty and security or cause environmental degradation are easily refutable and can be thrown out of the window. Conversely, the project would strengthen national security as the Thai naval forces do not have to pass through foreign territorial waters. It will also be a key stimulus for economic development in southern Thailand.
As China continues to expand its economic influence across the maritime domain, it proffers to fund mega infrastructure projects in developing Asian and African countries through China’s Ex-Im Bank and other financial institutions, one of which is AIIB. However, many recipient countries have begun to have apprehensions with China’s aggressive mercantilistic practices and to complain that they are often overburdened with the delays and unsustainable cost overruns, not to mention unfavourable conditions that do not benefit the host countries.
Such manipulative tactics have made many client countries suspicious of Chinese economic overtures.
As Asia Sentinel has reported in a series of stories, Pakistan, Sri Lanka, Maldives and other nations have found themselves in economic thrall to China that has been extended to political thrall. There is no better example than Thailand’s neighbor Cambodia, which in 2016 blocked an Association of Southeast Asian Nations resolution aimed at China’s growing hegemony over the entire South China Sea at China’s behest. Beijing is seeking to extend its hegemony to Africa as well
through loans and infrastructure projects.
It should be mentioned that a high rate of economic growth has enabled China to also devote a good part of its resources to military modernization in addition to its economic advances. Priority has now been shifted from maintaining territorial integrity to a more forward military posture that may pose existential threat to some of its Asian neighbors as well as the pre-eminence of the US military forces in the Pacific. With economic prowess and abundant resources, China has been able to project its regional dominance in both economic and military spheres as evidenced by the construction of a belt of military bases across Southeast Asia, including a two-mile runway and radar installation in the Spratly Islands which technically belong to the Philippines.
While the US under Trump presidency spins the ‘America First’ narrative and abandons Trans-Pacific Partnership (TPP), cash-rich China, with US$4 trillion in foreign reserves, pushes its own agenda by launching Regional Comprehensive Economic Partnership (RCEP), followed by the Belt and Road Initiative to pull its Asian neighbors into China’s orbit by its attractive offers of mega infrastructure investments consistent with its own design of Asia connectivity.
Thailand, under the military regime which is eager to gain international acceptability, has already been attracted by the Chinese funding of its high-speed railway projects as well as other projects and may be tempted by China’s offer to fund the Thai Canal project.
The much heralded “Asia pivot” under the Obama administration was never been matched by tangible action until the advent of the Trump administration, which has elected to face the threat of China’s military build-up in South China Sea and North Korean nuclear threat head-on, although the latter may be too little, too late.
China’s aggressive military posture could be a de facto fault line that would pit China against the US whereby the Malacca Straits could be a potential military choke point through which 80 percent of China’s oil has to pass. The Thai Canal, when in operation, would be another military choke point in such a military face-off.
As the Thai Canal would be built across Thailand and does not pass through other countries, it would naturally come under the sole jurisdiction of Thailand unless its sovereignty and neutrality are compromised by investment conditions set by international financiers. Any full feasibility study on the canal must therefore include a realistic cost-benefit analysis. In negotiating with foreign financial institutions, the Thai government must strive to maintain its economic independence and neutrality in geo-political sense.
With international condemnation and ‘soft sanctions’ by western countries weighing on the present military regime, which came to power by a military coup, the regime may not have maximum maneuvering room to strike a fair deal. Over-reliance on Chinese direct investment may put Thailand at a disadvantage.
Nonetheless, if Thailand were to incur a large public debt in constructing the Thai Canal, it is well advised that the project be undertaken by a government democratically elected by the people with the blessings of a fully-elected parliament, and not by a regime which has no accountability to the people.
Pithaya Pookaman is a retired Thai diplomat living in Bangkok. He is a regular contributor to Asia Sentinel.
https://www.asiasentinel.com/econ-business/thailand-kra-canal-economic-geopolitical-implications/
Resurgent interest in a Kra canal poses threat to Dawei project
Construction underway at the Dawei Special Economic Zone site. Photo: Mizzima
China is showing interest in reviving long-standing proposals for a deep-water canal through the narrowest part of Thailand’s long peninsula to link the Indian Ocean with the South China Sea.
It’s a move that, if implemented, could pose a threat to the viability of ambitious plans for a special economic zone at Dawei on Myanmar’s Andaman Sea coast. It also puts a question mark over the recently opened 800-kilometre pipeline that delivers crude oil from a terminal at Kyaukphyu in Rakhine State to China’s Yunnan Province.
The Isthmus of Kra narrows to about 27 miles (44 kilometres) wide south of the Thai coastal city of Chumphon, opposite the southernmost tip of Myanmar. A canal across the isthmus has been talked about for hundreds of years and has more recently been the subject of several feasibility studies. It has never gone beyond the drawing board, mainly because of cost and lack of international backers.
However, a Thai government-linked group, the National Committee for the Kra Canal Project, has dusted off the idea and together with a Thai-Chinese business association has been working on a feasibility study with researchers at the University of International Business and Economics in Beijing.
The canal idea was on the agenda at the 21st Century Maritime Silk Road Initiative, a two-day conference at Quanzhou in China’s southern Fujian Province in February.
China’s central government is busily promoting the establishment of two modern-day “silk roads” to emulate the ancient trans-Asia land trade route. A canal across Thailand would be of interest to China as an alternative, and safer, route for its growing volumes of crude oil imported from Africa and the Middle East.
At present about 60 percent of China’s crude imports have to pass through the narrow Strait of Malacca. Beijing has long had strategic concerns about having to rely on energy supplies shipped through the Strait, which is one of the main reasons why it built parallel crude oil and gas pipelines across Myanmar to Yunnan Province.
China’s concerns are underlined in a new study by the Maritime Institute of Malaysia that predicts the Strait will become heavily congested in the next ten years, with annual shipping traffic of up to 1400,000 vessels. That’s 18,000 vessels more than its capacity, said the institute, and would lead to costly shipping delays.
A pre-feasibility study by Thailand’s National Committee for the Kra Canal Project has estimated that it would cost about US$20 billion to build a canal. It would stimulate regional trade by reducing shipping times between the South China Sea and the Indian Ocean by at least two days, the deputy director of the economic section at Thai-Chinese Cultural and Economic Association, Pakdee Tanapura, told Bangkok newspapers.
There are several possible locations for a canal across Thailand, but it would have to be deep and wide enough to take the monster oil tankers known as very large crude carriers (VLCCs).
The pipeline across Myanmar has eased China’s energy security concerns but it still needs to rely heavily on crude shipped via the Malacca Strait.
The pipeline, built by the China National Petroleum Corporation, has a capacity of 440,000 barrels a day, which is small compared to the volumes being shipped through the Strait.
One VLCC can carry 2 million barrels.
The Quanchou conference at which a Kra canal was discussed was sponsored by China’s supreme State Council and the Chinese Academy of Social Sciences and attracted representatives from 30 countries, said state-run Xinhua news agency. It appears, though, that no conclusions on a canal were reached at the meeting.
The Thai-Chinese Cultural and Economic Association has proposed that ports at each end of a canal could become economic zones linked with import and export businesses. A large port and transhipment terminal for oil, gas, chemicals and other raw industrial commodities would compete with the much-delayed plans by Thailand for a port and industrial complex at Dawei.
Two new factors are now at play that could bring to reality the proposals to revive a canal project.
The first is that the military government that seized power in Thailand last May is making bold steps for big infrastructure projects to stimulate the economy. Bangkok has already commissioned China to build a high-speed railway system in Thailand.
The other factor is China’s interest in greater economic connectivity in Asia, which is a rationale behind its Maritime Silk Road concept. To support its development plans for the region Beijing recently established the Asian Infrastructure Investment Bank, which aims to imitate the Asian Development Bank but without Western constraints.
One of China’s proposals for a socalled Silk Road trade route would weave across central Asia to Europe and the other would seek to create a maritime trade route linking major ports in East Asia with other parts of the world.
The AIIB was established with 21 signatory countries in Shanghai last October and will have an initial capital of US$100 billion, half of which China has pledged. The signatories include India and the ten members of the Association of Southeast Asian Nations.
As China’s economy changes, Beijing is seeking major overseas projects for its state-owned enterprises.
PriceWaterhouseCoopers recently forecast that Asia will spend $5.3 trillion on infrastructure by 2025.
In addition to the AIIB, China recently launched a $40 billion infrastructure fund to promote regional development, focusing on the so-called Maritime Silk Road, reported the South China Morning Post.
“The Kra Canal across an isthmus in southern Thailand, whose construction, funded by Chinese, may begin soon, will draw the Maritime Silk Road closer …reducing the significance of the Malacca Strait,” said Artyom Lukin a professor at the School of Regional and International Studies in Vladivostok, writing in The Diplomat about China’s growing regional influence.
Mr Pakdee has said there would no security concerns over the canal because it would be within one country. However, there is a simmering Muslim separatist insurgency in the far south of Thailand, where a canal has been proposed on the edge of the four provinces bordering Malaysia. This predominantly Thai Muslim region has suffered from a hit-and-run insurgency that has claimed more than 5,000 lives since 2004. Any decision by the Beijing-led AIIB must take this problem into account in deciding whether – and where – to back a canal development.
Previous surges of interest in a canal across the Isthmus of Kra suggest the proposal would be unlikely to proceed further than a feasibility study, except that this time Beijing’s new objectives of pulling East Asia together through major infrastructure developments could make a difference.
As long as China needs to continue importing vast quantities of crude oil from the Middle East and Africa, the Malacca Strait will continue to provide Beijing with a headache. The Kra canal might just be the panacea.
http://www.mizzima.com/business-features/resurgent-interest-kra-canal-poses-threat-dawei-project
The real threat to S'pore – construction of Thai's Kra Canal financed by China
By
The Independent
-
October 2, 2016
By: 永久浪客/Forever Vagabond
The Kra Canal or the Thai Canal refers to a proposal for a canal to cut through the southern isthmus of Thailand, connecting the Gulf of Thailand with the Andaman Sea. It would provide an alternative to transit through the Strait of Malacca and shorten transit for shipments of oil to East Asian countries like Japan and China by 1,200 km, saving much time. China refers to it as part of its 21st century maritime Silk Road.
China is keen on the Kra Canal project partly for strategic reasons. Presently,
80% of China’s oil from the Middle East and Africa passes through the Straits of Malacca. China has long recognized that in a potential conflict with other rivals, particularly with the US, the Strait of Malacca could easily be blockaded, cutting-off its oil lifeline. Former Chinese President Hu Jintao even coined a term for this, calling it China’s “Malacca Dilemma”.
History of Kra Canal
The
idea to shorten shipping time and distance through the proposed Kra Canal is not new. It was proposed as early as in 1677 when Thai King Narai asked the French engineer de Lamar to survey the possibility of building a waterway to connect Songkhla with Marid (now Myanmar), but the idea was discarded as impractical with the technology of that time.
In 1793, the idea resurfaced. The younger brother of King Chakri suggested it would make it easier to protect the west coast with military ships. In the early 19th century, the British East India Company became interested in a canal. After Burma became a British colony in 1863, an exploration was undertaken with Victoria Point (Kawthaung) opposite the Kra estuary as its southernmost point, again with negative result. In 1882, the constructor of the Suez canal, Ferdinand de Lesseps, visited the area, but the Thai king did not allow him to investigate in detail.
In 1897, Thailand and the British empire agreed not to build a canal so as to maintain the importance of Singapore as a shipping hub, since by that time, Singapore was already prospering as an international hub with great importance to the British.
In the 20th century the idea resurfaced with various proposals to build the canal but did not go far due to various constraints including technology and cost constraints as well as indecisive political leadership of Thailand.
China shows Thailand the money
In the last decade, China has now become the potential game changer who can possibly turn Kra Canal proposal into reality in the 21st century. It has the money, technology and strong political leadership and will to support the project if it wants to.
Last year, news emerged that China and Thailand have signed an MOU to advance the Kra Canal project. On 15 May 2015, the MOU was signed by the China-Thailand Kra Infrastructure Investment and Development company (中泰克拉基礎設施投資開發有限公司) and Asia Union Group in Guangzhou. According to the news reports, the Kra Canal project will take a decade to complete and incur a cost of US$28 billion.
But 4 days later on 19 May, it was reported that both Chinese and Thai governments denied there was any official agreement between the 2 governments to build the canal.
A
statement by the Chinese embassy in Thailand said that China has not taken part in any study or cooperation on the matter. It later clarified that the organisations who signed the MOU have no links to the Chinese government. Separately, Xinhua news agency traced the announcement of the canal project to another Chinese firm Longhao, which declined comment when contacted.
Dr Zhao Hong, an expert on China-Asean relations from the Institute of Southeast Asian Studies, told the media that China would not embark on such a project lightly, given the political and bilateral implications.
“China will have to consider the feedback from countries such as Singapore, which it has friendly ties with, given the impact that the Kra canal might have,” he said at the time when news of the MOU emerged. But Dr Zhao added that China might be open to private companies studying the feasibility of such a project, but will not directly back it for now.
It was said that the the chairman of Asia Union Group, the Thai party which signed the MOU, is former Thai premier Chavalit Yongchaiyudh, a long-time supporter of the Kra Canal.
Thai PM: Kra Canal project should be looked into by future democratic governments
In Jan this year, the Thai PM
reiterated again that the Kra Canal project is not on his government agenda. His announcement came after a member of the King’s Privy Council, Thanin Kraivichien, wrote an open letter to the government advocating for the canal’s construction.Thanin was the 14th PM of Thailand between October 1976 and October 1977. His call is part of a growing chorus of Kra Canal proponents in Thailand’s political and business communities that started talking openly last year after several Chinese firms expressed interest in funding and constructing the canal.
Responding to Thanin’s call for the project, the Thai PM said the Kra Canal project should be looked into by democratic governments in the future, meaning to say Thailand has not ruled out the construction of Kra Canal completely. And in the case of Thailand, changes to its government occur frequently like the changing of clothes.
China getting angry with Singapore
In the last couple of months, China is increasingly angered by PM Lee’s move to side with the US over the South China Seas issue, even though Singapore has no claims over any of the territories there.
It all started 2 months ago when PM Lee was invited to the White House and was hosted to a rare White House state dinner on 2 Aug(
http://theindependent.sg/pm-lees-speech-at-white-house-state-dinner-angers-china). During his toast, PM Lee welcomed the US to adopt a strategy to “rebalance” the Asia Pacific and went on to call President Obama as the “America’s first Pacific President”.
China immediately responded through their Global Times. “Lee Hsien Loong addressed Obama as the American ‘first Pacific President’. Such flattery (‘戴高帽’) given to Obama directly does not concern us (‘倒也没啥’),” the Global Times’ article said. “The key is he praised the American strategy to ‘re-balance Asia-Pacific’ and publicised that all Southeast Asian countries welcome such American ‘balancing’. Because the ‘rebalance Asia-Pacific’ strategy is pointed at China to a large extent, Lee Hsien Loong is clearly taking side already.”
“If Singapore completely becomes an American ‘pawn’ (‘马前卒’) and loses any of its resilience to move between US and China, its influence will be considerably reduced. Its value to the US will also be greatly discounted,” it added.
The article went on to say that China has its limit in tolerance. It said, “Singapore should not push it (‘新加坡不能太过分’). It cannot play the role of taking the initiative to help US and South East Asian countries to go against China over South China Sea matters. It cannot help American ‘rebalancing Asia-Pacific’ strategy, which is directed at China’s internal affairs, by ‘adding oil and vinegar’ (‘添油加醋’), thereby enabling US to provide an excuse to suppress China’s strategic space as well as providing support to US.”
“Singapore can go and please the Americans, but it needs to do their utmost to avoid harming China’s interests. It needs to be clear and open about its latter attitude,” it cautioned. Singapore’s balancing act should be to help China and US to avoid confrontation as its main objective, and not taking side so as to increase the mistrust between China and US, it said..
The article gave the example of Singapore allowing US to deploy its P-8 reconnaissance aircraft to Singapore, which from the view of the Chinese, increases the tension in South China Sea, and thereby, increasing the mistrust between the 2 big countries.
“Singapore needs more wisdom (‘新加坡需要更多的智慧’),” the article concluded.
PLA General: We must strike back at Singapore
And yesterday, SCMP reported that a PLA General had called for Beijing to impose sanctions and to retaliate against Singapore so as to “pay the price for seriously damaging China’s interests” (
http://theindependent.sg/pla-general-we-must-strike-back-at-singapore).
The General’s remarks came after a recent spat between Global Times and Singapore Ambassador Loh. On 21 Sep, Global Times carried an article saying that Singapore had raised the issue of the disputed South China Sea at the Non-Aligned Movement (NAM) Summit held in Venezuela on 18 Sep. It added that Singapore had “insisted” to include an international tribunal’s ruling on the waterway, which was in favour of the Philippines, in the summit’s final document.
Singapore’s ambassador to China, Stanley Loh, rejected this and wrote an open letter stating that the news report was “false and unfounded”. Mr Loh said the move to include the international ruling in NAM’s final document was a collective act by the members of the ASEAN. But the editor-in-chief of Global Times came out to stand by his paper’s report.
Then, the Chinese government also came out in support of Global Times, not buying Ambassador Loh’s arguments. When a Chinese foreign ministry spokesman was asked about the tiff between Global Times and Singapore, he blamed an unspecified “individual nation” for insisting on including South China Sea issues in the NAM document.
Xu Liping, senior researcher on Southeast Asia studies at the Chinese Academy of Social Sciences,
said China expected Singapore to be a neutral mediator between China and the countries of Asean, and did not want to see disputes over the South China Sea raised in a multilateral platform like the NAM Summit. And that was why China was so angry over Singapore’s active moves in broaching such a sensitive topic, he said.
“If Singapore does not adjust its policies, I am afraid the bilateral relations will deteriorate,” Xu added. “Singapore should think twice about its security cooperation especially with the United States, and strike a better balance between China and US.”
“2-headed snake”
On Thursday, the overseas edition of People’s Daily also published an online commentary, saying Singapore “has obviously taken sides over South China Sea issues, while emphasising it does not”. In other words, China is accusing the Singapore government of saying one thing but doing another – a hypocrite.
Online, the Chinese netizens condemned Singapore as a “2-headed snake”. One of them
wrote:
(Translation: China should quickly embark on the Kra Canal project and turn Singapore back into a third world country. This is the best present to give to a “2-headed snake”.)
If the Kra Canal truly becomes a reality, ships would certainly consider by-passing the Strait of Malacca and Singapore altogether, making the Singapore’s all-important geographical location redundant. We may truly become a third world country after all.
http://theindependent.sg/the-real-threat-to-spore-construction-of-thais-kra-canal-financed-by-china/
