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Through the lens of conflict

One glance through the geopolitical lens and we can see how the Russian invasion of Ukraine transmutes the entire geo-economic landscape at a global level. Even though it is very likely that the conflict will culminate to a stalemate over table talks, the ramifications this impasse could have over China’s Belt & Road Initiative (BRI) are not only far reaching but dire.

From a neo-realistic point of view, one can reasonably infer that the magnitude of the Russo-Ukraine conflict will not only envelop the economic world with tremors but that the aftershocks of this dispute will reach the BRI and in essence CPEC and Pakistan as well.

Being at the epicenter of a plethora of global economic activities, the BRI might find itself washed up on dire straits at the European front after the situation in Russia and Ukraine diffuses. Encompassing 140 countries, the aftermath of the conflict could put a dent in the economic prowess of China and other countries. For China, the expansive flat Russian land serves as a viable route into the prosperous European markets.

Russia and its immediate neighbours might have wished for the proper deployment of the New Eurasian Land Bridge – an infrastructure based connectivity initiative mainly by railway – but Russia’s aggression towards its neighbours has thwarted its progression and has made this a pipedream for the entire Eurasian region. This also traps China and its BRI in limbo and could stick out as a proverbial sore thumb for the Chinese economy.

This railway corridor, dubbed as the ‘iron silk route’ is a highly sought after project for the BRI. The railway system had seen a massive overhaul in terms of the amount of goods being transported over the years. From a meager eight billion dollars to almost 75 billion dollars in 2021, the value of goods through this rail system has greatly skyrocketed. However, the problem is that most of the railway routes traverse their way through Russia. And with Russia on the cusp of being bamboozled with a plethora of sanctions, the ‘Iron Silk Road’ might get devoured by the ‘rust’ of Russian aggression. While transit through the sanctioned Russian railways is possible, the actual problem lies with the logistic companies that have halted all BRI-related trade through Russian land.

The onslaught of sanctions imposed on the Russians by the West will likely drive China to focus on developing CPEC at even greater pace as with Russia facing many sanctions, the only way for China to enter European markets easily will be either through CPEC and the Central Asia West Asia (CAWA) corridor. CPEC on the one hand can connect Iran and Turkey and by adjunct, Europe through both road and rail. Moreover, the CAWA corridor would provide the flow of trade via Central Asia, the Caspian Sea region and even Iran.

Therefore, Sino-Iranian relations can be seen ameliorated by the Sino-Iranian 25 year agreement, which will further strengthen the CAWA corridor. The central role that Iran is playing in trade can also be seen to further solidify as Iran could provide unsanctioned oil and gas to the EU, something that Russia had been providing for all these years. Russia’s actions might make Iran an economic powerhouse if its fossil fuels start reaching Europe. This could also leave the Russian government handicapped, as the ‘energy card’ the Russians have been playing will slowly lose its geopolitical influence and further sanctions on Moscow will become more likely.

Even though a handful of Western intellectuals are of the view that Russia’s situation currently may become the bone of contention for China when it comes to trading with the EU, last year the trade between China and Europe consisted of about 800 billion dollars and trade with Russia and Europe came to 200 billion dollars. On paper, these are huge numbers and in reality the lack of Sino-European trade actually makes up a bigger blow to Europe as well.

Even though China may be a strategic partner of Russia, it hasn’t forsaken Ukraine either. Ukraine has been a part of the BRI since 2013 and therefore has become its biggest trading and economic partner. A big chunk of Ukraine’s exports actually go to China, making the latter a huge market for Ukrainian goods. China has also been quick to send financial and humanitarian aid to Ukraine in the wake of this conflict. This comes to show that China is eager to somehow regain its footing in this forsaken region.

The BRI is without a shadow of doubt the biggest geo-economic initiative in the world, even trumping the G7’s Build Back Better World (B3W), Japan’s QII and even the US led Blue Dot Network. Therefore, there is a huge chance that many Western powers might want unrest in the Eurasian region, Central Asia and even South Asia which would place a dent in the economic might of China and pave the way for the economic initiatives of the Western powers to dethrone BRI as the number one economic powerhouse in the world.

That said, even though it may seem that China has hit a dead wall with the whole Russo-Ukraine conflict, the country actually has other ways to keep its economic might from solidifying even more. Moreover, it’s not long until the situation in Russia and Ukraine will come to a peaceful end and China might find new ways to make both Russia and Ukraine important aspects of its economy as the Chinese are firm believers in diplomacy and getting things done peacefully.

Salis Malik, "Through the lens of conflict," The News. 2022-04-09.
Keywords: Economics , Economic initiatives , Economic powerhouse , Economic partner , Trade , Exports , Markets , Ukraine , China , CPEC , BRI , CAWA