International Relations: May 2021 Current Affair Current Affairs Notes | EduRev

UPSC Mains: International Relations, Social Issues & others

UPSC : International Relations: May 2021 Current Affair Current Affairs Notes | EduRev

 Page 1


	
10	 																																																														
2.	INTERNATIONAL	RELATIONS	
2.1.	DEBT	TRAP	DIPLOMACY	
Why in News? 
Montenegro is struggling to pay off Chinese loan for a highway project, which has put the country in a dire 
financial situation. 
More on the News 
• In 2014, Montenegro signed an agreement to take out a $944 million loan from China's Exim Bank for the 
construction of a motorway that would link the port of Bar to the border with Serbia. 
o Presently, Montenegrin debt is around 65.9% of its GDP with China holding 25% of its public debt. 
• Several other countries such as Laos, Kyrgyzstan, Maldives etc. are presently facing debt distress owing 
sizable portion of the debt to China. This has raised concerns regarding use of debt trap diplomacy.  
• In 2018, a report by the Center for Global Development highlighted eight Belt and Road Initiative (BRI) 
recipient countries at a high risk of debt distress due to BRI loans. These countries included Djibouti, Laos, 
the Maldives, Mongolia, Montenegro, Pakistan, Kyrgyzstan, and Tajikistan.  
o They are highly prone to the mounting debt-to-GDP ratios beyond 50 percent, and around 40 percent of 
their external debt owed to China. 
About Debt Trap Diplomacy 
• The term was coined by Indian geo-strategist Brahma Chellaney in 2017. This type of diplomacy refers to 
offering projects/loans on terms that end up being too difficult for countries to repay, eventually compelling 
them to accept political or economic concessions. 
• It has been witnessed that developing nations are often lured by China's offer of cheap loans for 
transformative infrastructural projects, which require a considerable investment.  
Page 2


	
10	 																																																														
2.	INTERNATIONAL	RELATIONS	
2.1.	DEBT	TRAP	DIPLOMACY	
Why in News? 
Montenegro is struggling to pay off Chinese loan for a highway project, which has put the country in a dire 
financial situation. 
More on the News 
• In 2014, Montenegro signed an agreement to take out a $944 million loan from China's Exim Bank for the 
construction of a motorway that would link the port of Bar to the border with Serbia. 
o Presently, Montenegrin debt is around 65.9% of its GDP with China holding 25% of its public debt. 
• Several other countries such as Laos, Kyrgyzstan, Maldives etc. are presently facing debt distress owing 
sizable portion of the debt to China. This has raised concerns regarding use of debt trap diplomacy.  
• In 2018, a report by the Center for Global Development highlighted eight Belt and Road Initiative (BRI) 
recipient countries at a high risk of debt distress due to BRI loans. These countries included Djibouti, Laos, 
the Maldives, Mongolia, Montenegro, Pakistan, Kyrgyzstan, and Tajikistan.  
o They are highly prone to the mounting debt-to-GDP ratios beyond 50 percent, and around 40 percent of 
their external debt owed to China. 
About Debt Trap Diplomacy 
• The term was coined by Indian geo-strategist Brahma Chellaney in 2017. This type of diplomacy refers to 
offering projects/loans on terms that end up being too difficult for countries to repay, eventually compelling 
them to accept political or economic concessions. 
• It has been witnessed that developing nations are often lured by China's offer of cheap loans for 
transformative infrastructural projects, which require a considerable investment.  
	
11	 																																																																											
	
Practices undertaken by China that point towards their engagement in debt trap diplomacy 
• Financing non-viable projects: It has been alleged that Chinese funding is often made for non-viable projects 
without appropriate risk assessment. 
o For example, in 2014, Montenegro successfully concluded negotiations with Chinese partners to finance 
a highway project despite the fact that the project was deemed economically unviable by two feasibility 
studies. 
• Predatory Lending and Debt Distress: China has invested heavily in middle- and low-income developing 
countries which have history of debt sustainability problems, lack the fiscal capacity to directly finance 
infrastructure and are not commercially appealing for attracting investment. 
o For instance, China has invested in several infrastructure projects in African countries like Ethiopia, 
Nigeria etc. 
• Opaque lending practices: The Chinese government neither provides official data on its international 
lending, nor does it disclose details regarding the volume or the terms of the loans it provides and how the 
debt negotiations are adjudicated if the borrower cannot service its debts. 
• Lack of debt resolution assistance to borrowing countries: China does not subscribe to any guiding 
multilateral frameworks, set down by the International Monetary Fund or the World Bank, to define its 
approach to debt sustainability problems, choosing instead to deal with countries on a case-by-case basis. 
o Often it capitalises on fiscal mismanagement of borrower countries, centering negotiations on equity 
swaps rather than on other measures of alleviating debt. 
• Acquiring strategic assets: Infrastructural agreements with China often provide Chinese firms the right to 
access and control land and 
assets as collateral. Thus, China 
has acquired assets in several 
countries (see infographic), 
including those funded under 
BRI projects, as a part of Debt 
renegotiation process. 
o These acquired projects 
hold strategic importance 
beyond their economic 
use. For instance, 
Hambantota port in Sri 
Lanka can be used for 
increasing Chinese 
presence in the Indian 
Ocean Region.  
Page 3


	
10	 																																																														
2.	INTERNATIONAL	RELATIONS	
2.1.	DEBT	TRAP	DIPLOMACY	
Why in News? 
Montenegro is struggling to pay off Chinese loan for a highway project, which has put the country in a dire 
financial situation. 
More on the News 
• In 2014, Montenegro signed an agreement to take out a $944 million loan from China's Exim Bank for the 
construction of a motorway that would link the port of Bar to the border with Serbia. 
o Presently, Montenegrin debt is around 65.9% of its GDP with China holding 25% of its public debt. 
• Several other countries such as Laos, Kyrgyzstan, Maldives etc. are presently facing debt distress owing 
sizable portion of the debt to China. This has raised concerns regarding use of debt trap diplomacy.  
• In 2018, a report by the Center for Global Development highlighted eight Belt and Road Initiative (BRI) 
recipient countries at a high risk of debt distress due to BRI loans. These countries included Djibouti, Laos, 
the Maldives, Mongolia, Montenegro, Pakistan, Kyrgyzstan, and Tajikistan.  
o They are highly prone to the mounting debt-to-GDP ratios beyond 50 percent, and around 40 percent of 
their external debt owed to China. 
About Debt Trap Diplomacy 
• The term was coined by Indian geo-strategist Brahma Chellaney in 2017. This type of diplomacy refers to 
offering projects/loans on terms that end up being too difficult for countries to repay, eventually compelling 
them to accept political or economic concessions. 
• It has been witnessed that developing nations are often lured by China's offer of cheap loans for 
transformative infrastructural projects, which require a considerable investment.  
	
11	 																																																																											
	
Practices undertaken by China that point towards their engagement in debt trap diplomacy 
• Financing non-viable projects: It has been alleged that Chinese funding is often made for non-viable projects 
without appropriate risk assessment. 
o For example, in 2014, Montenegro successfully concluded negotiations with Chinese partners to finance 
a highway project despite the fact that the project was deemed economically unviable by two feasibility 
studies. 
• Predatory Lending and Debt Distress: China has invested heavily in middle- and low-income developing 
countries which have history of debt sustainability problems, lack the fiscal capacity to directly finance 
infrastructure and are not commercially appealing for attracting investment. 
o For instance, China has invested in several infrastructure projects in African countries like Ethiopia, 
Nigeria etc. 
• Opaque lending practices: The Chinese government neither provides official data on its international 
lending, nor does it disclose details regarding the volume or the terms of the loans it provides and how the 
debt negotiations are adjudicated if the borrower cannot service its debts. 
• Lack of debt resolution assistance to borrowing countries: China does not subscribe to any guiding 
multilateral frameworks, set down by the International Monetary Fund or the World Bank, to define its 
approach to debt sustainability problems, choosing instead to deal with countries on a case-by-case basis. 
o Often it capitalises on fiscal mismanagement of borrower countries, centering negotiations on equity 
swaps rather than on other measures of alleviating debt. 
• Acquiring strategic assets: Infrastructural agreements with China often provide Chinese firms the right to 
access and control land and 
assets as collateral. Thus, China 
has acquired assets in several 
countries (see infographic), 
including those funded under 
BRI projects, as a part of Debt 
renegotiation process. 
o These acquired projects 
hold strategic importance 
beyond their economic 
use. For instance, 
Hambantota port in Sri 
Lanka can be used for 
increasing Chinese 
presence in the Indian 
Ocean Region.  
	
12	 																																																																													
• Domination of Chinese interests in projects: Almost all of China’s overseas lending is extended via Chinese 
state-owned entities and the recipients also tend to be state-owned enterprise. Moreover, Chinese workers 
make up a bulk of the labour force engaged at the infrastructural projects in foreign countries. 
• Use of non-subsidized and expensive credit to finance development projects:  In most cases the loans 
extended by China are non-concessional and costly.  
o This contrasts starkly with the infrastructure lending of advanced industrial countries who provide 
subsidized, concessional credits to finance underdeveloped economies. 
Reasons why countries have been vulnerable to debt traps 
• Infrastructure financing needs of middle and low income countries: Infrastructure investment is widely 
recognised as a crucial driver of economic and social development. However, middle and low-income 
developing countries lack the fiscal capacity to domestically finance infrastructure projects. 
o Countries participating in the BRI are lured by the promise of socio-economic transformation and 
development. 
• Lack of accessible funding: Countries find it difficult to fulfil conditionalities for accessing development 
assistance offered by multilateral lending agencies such as the IMF. Such conditionalities may include 
structural and governance reforms, targets for macroeconomic indicators, accounting and auditing systems 
etc. 
o Chinese loans are not as stringent in their requirements for safeguards and reforms 
• Governance issues: such as lack of adequate pre-project viability analysis, corruption, reckless propensity to 
borrow, fiscal mismanagement etc. has made it easier for China to push loans for even unviable projects.  
o For example, in Kyrgyzstan, former Prime ministers Sapar Isakov and Jantoro Satybaldiev have allegedly 
colluded with Chinese officials to embezzle funds earmarked for BRI projects.	 
Way Forward 
• Adequate risk assessment: Countries should conduct proper risk assessment and measure economic 
viability of infrastructure projects prior to signing agreements. 
• Sustainable Debt resolution and multilateral cooperation: China should cooperate with multilateral 
institutions to provide an estimate of debt levels of countries involved in BRI. 
o Also, it should follow internationally acceptable practices for sustainable debt resolution. 
o China can become a member of the Paris Club to help countries find sustainable solutions to raising 
debts. 
ü The Paris Club is an informal group of official creditors whose role is to find coordinated and 
sustainable solutions to the payment difficulties experienced by debtor countries.  
ü As debtor countries undertake reforms to stabilize and restore their macroeconomic and financial 
situation, Paris Club creditors provide an appropriate debt treatment. 
ü India is an ad hoc participant (not permanent member) of Paris club. 
Page 4


	
10	 																																																														
2.	INTERNATIONAL	RELATIONS	
2.1.	DEBT	TRAP	DIPLOMACY	
Why in News? 
Montenegro is struggling to pay off Chinese loan for a highway project, which has put the country in a dire 
financial situation. 
More on the News 
• In 2014, Montenegro signed an agreement to take out a $944 million loan from China's Exim Bank for the 
construction of a motorway that would link the port of Bar to the border with Serbia. 
o Presently, Montenegrin debt is around 65.9% of its GDP with China holding 25% of its public debt. 
• Several other countries such as Laos, Kyrgyzstan, Maldives etc. are presently facing debt distress owing 
sizable portion of the debt to China. This has raised concerns regarding use of debt trap diplomacy.  
• In 2018, a report by the Center for Global Development highlighted eight Belt and Road Initiative (BRI) 
recipient countries at a high risk of debt distress due to BRI loans. These countries included Djibouti, Laos, 
the Maldives, Mongolia, Montenegro, Pakistan, Kyrgyzstan, and Tajikistan.  
o They are highly prone to the mounting debt-to-GDP ratios beyond 50 percent, and around 40 percent of 
their external debt owed to China. 
About Debt Trap Diplomacy 
• The term was coined by Indian geo-strategist Brahma Chellaney in 2017. This type of diplomacy refers to 
offering projects/loans on terms that end up being too difficult for countries to repay, eventually compelling 
them to accept political or economic concessions. 
• It has been witnessed that developing nations are often lured by China's offer of cheap loans for 
transformative infrastructural projects, which require a considerable investment.  
	
11	 																																																																											
	
Practices undertaken by China that point towards their engagement in debt trap diplomacy 
• Financing non-viable projects: It has been alleged that Chinese funding is often made for non-viable projects 
without appropriate risk assessment. 
o For example, in 2014, Montenegro successfully concluded negotiations with Chinese partners to finance 
a highway project despite the fact that the project was deemed economically unviable by two feasibility 
studies. 
• Predatory Lending and Debt Distress: China has invested heavily in middle- and low-income developing 
countries which have history of debt sustainability problems, lack the fiscal capacity to directly finance 
infrastructure and are not commercially appealing for attracting investment. 
o For instance, China has invested in several infrastructure projects in African countries like Ethiopia, 
Nigeria etc. 
• Opaque lending practices: The Chinese government neither provides official data on its international 
lending, nor does it disclose details regarding the volume or the terms of the loans it provides and how the 
debt negotiations are adjudicated if the borrower cannot service its debts. 
• Lack of debt resolution assistance to borrowing countries: China does not subscribe to any guiding 
multilateral frameworks, set down by the International Monetary Fund or the World Bank, to define its 
approach to debt sustainability problems, choosing instead to deal with countries on a case-by-case basis. 
o Often it capitalises on fiscal mismanagement of borrower countries, centering negotiations on equity 
swaps rather than on other measures of alleviating debt. 
• Acquiring strategic assets: Infrastructural agreements with China often provide Chinese firms the right to 
access and control land and 
assets as collateral. Thus, China 
has acquired assets in several 
countries (see infographic), 
including those funded under 
BRI projects, as a part of Debt 
renegotiation process. 
o These acquired projects 
hold strategic importance 
beyond their economic 
use. For instance, 
Hambantota port in Sri 
Lanka can be used for 
increasing Chinese 
presence in the Indian 
Ocean Region.  
	
12	 																																																																													
• Domination of Chinese interests in projects: Almost all of China’s overseas lending is extended via Chinese 
state-owned entities and the recipients also tend to be state-owned enterprise. Moreover, Chinese workers 
make up a bulk of the labour force engaged at the infrastructural projects in foreign countries. 
• Use of non-subsidized and expensive credit to finance development projects:  In most cases the loans 
extended by China are non-concessional and costly.  
o This contrasts starkly with the infrastructure lending of advanced industrial countries who provide 
subsidized, concessional credits to finance underdeveloped economies. 
Reasons why countries have been vulnerable to debt traps 
• Infrastructure financing needs of middle and low income countries: Infrastructure investment is widely 
recognised as a crucial driver of economic and social development. However, middle and low-income 
developing countries lack the fiscal capacity to domestically finance infrastructure projects. 
o Countries participating in the BRI are lured by the promise of socio-economic transformation and 
development. 
• Lack of accessible funding: Countries find it difficult to fulfil conditionalities for accessing development 
assistance offered by multilateral lending agencies such as the IMF. Such conditionalities may include 
structural and governance reforms, targets for macroeconomic indicators, accounting and auditing systems 
etc. 
o Chinese loans are not as stringent in their requirements for safeguards and reforms 
• Governance issues: such as lack of adequate pre-project viability analysis, corruption, reckless propensity to 
borrow, fiscal mismanagement etc. has made it easier for China to push loans for even unviable projects.  
o For example, in Kyrgyzstan, former Prime ministers Sapar Isakov and Jantoro Satybaldiev have allegedly 
colluded with Chinese officials to embezzle funds earmarked for BRI projects.	 
Way Forward 
• Adequate risk assessment: Countries should conduct proper risk assessment and measure economic 
viability of infrastructure projects prior to signing agreements. 
• Sustainable Debt resolution and multilateral cooperation: China should cooperate with multilateral 
institutions to provide an estimate of debt levels of countries involved in BRI. 
o Also, it should follow internationally acceptable practices for sustainable debt resolution. 
o China can become a member of the Paris Club to help countries find sustainable solutions to raising 
debts. 
ü The Paris Club is an informal group of official creditors whose role is to find coordinated and 
sustainable solutions to the payment difficulties experienced by debtor countries.  
ü As debtor countries undertake reforms to stabilize and restore their macroeconomic and financial 
situation, Paris Club creditors provide an appropriate debt treatment. 
ü India is an ad hoc participant (not permanent member) of Paris club. 
	
13	 																																																																					
• Other alternatives for infrastructure financing: The international community should expand alternatives to 
Chinese infrastructure financing to fulfil infrastructure deficiencies in Low and middle income countries. 
 
Other Global initiatives for Infrastructure financing  
• Blue Dot Network: The initiative gathers financial institutions from the US (U.S. International Development Finance 
Corporation), Japan (Japan Bank for International Cooperation) and Australia (Department of Foreign Affairs and 
Trade), it will work as a certification body that will evaluate infrastructure construction projects in the Indo Pacific 
region. 
• Coalition for Disaster Resilient Infrastructure (CDRI): It is a partnership of national governments, UN agencies and 
programmes, multilateral development banks and financing mechanisms, the private sector, and knowledge 
institutions that aims to promote the resilience of new and existing infrastructure systems to climate and disaster 
risks in support of sustainable development. 
• Asia-Africa Growth Corridor: The Asia-Africa Growth Corridor (AAGC) is an economic partnership agreement between 
India and Japan. It intends to improve infrastructure and digital connectivity in Africa within Indo-Japan collaboration. 
• European Union’s new connectivity strategy: In September 2018, the EU adopted a joint communication on 
'Connecting Europe and Asia – Building blocks for an EU strategy'. The strategy proposes that the EU engage with 
its Asian partners through a sustainable, comprehensive and rules-based approach to connectivity, exploiting existing 
and planned EU networks. 
• Trans-European Transport Network (TEN-T) policy: It addresses the implementation and development of a Europe-
wide network of railway lines, roads, inland waterways, maritime shipping routes, ports, airports and railroad 
terminals. 
• Global Infrastructure Facility (GIF): It is an initiative of G20 countries. It is a global collaboration platform that 
integrates efforts to boost private investment in sustainable, quality infrastructure projects in developing countries 
and emerging markets. 
• Build Back Better World (B3W) Partnership: Launched by G7, It is a new global infrastructure partnership led by 
major democracies to help narrow the over 40 trillion Dollar infrastructure need in the developing world, which has 
been exacerbated by the COVID-19 pandemic. 
2.2.	INDIA’S	TIBET	POLICY	
Why in News? 
China has completed construction of a 
strategically significant highway in 
Tibet, enabling greater access to 
remote areas along the disputed 
border with Arunachal Pradesh in 
India. 
More about News 
• The highway passing through the 
world’s deepest canyon along the 
Brahmaputra River connects 
Nyingchi to Medog county that 
borders Arunachal Pradesh, 
reducing distance between two 
from 346 km to 180 km and 
cutting travel time by eight hours.  
• China is also working on a 
strategically important railway link to Tibet.  Satellite images have shown village built in area seen by India 
as part of Arunachal.  
• The civilian settlements, along with the new infrastructure connectivity, are seen as aimed at bolstering 
China’s control over the border areas.	 
Page 5


	
10	 																																																														
2.	INTERNATIONAL	RELATIONS	
2.1.	DEBT	TRAP	DIPLOMACY	
Why in News? 
Montenegro is struggling to pay off Chinese loan for a highway project, which has put the country in a dire 
financial situation. 
More on the News 
• In 2014, Montenegro signed an agreement to take out a $944 million loan from China's Exim Bank for the 
construction of a motorway that would link the port of Bar to the border with Serbia. 
o Presently, Montenegrin debt is around 65.9% of its GDP with China holding 25% of its public debt. 
• Several other countries such as Laos, Kyrgyzstan, Maldives etc. are presently facing debt distress owing 
sizable portion of the debt to China. This has raised concerns regarding use of debt trap diplomacy.  
• In 2018, a report by the Center for Global Development highlighted eight Belt and Road Initiative (BRI) 
recipient countries at a high risk of debt distress due to BRI loans. These countries included Djibouti, Laos, 
the Maldives, Mongolia, Montenegro, Pakistan, Kyrgyzstan, and Tajikistan.  
o They are highly prone to the mounting debt-to-GDP ratios beyond 50 percent, and around 40 percent of 
their external debt owed to China. 
About Debt Trap Diplomacy 
• The term was coined by Indian geo-strategist Brahma Chellaney in 2017. This type of diplomacy refers to 
offering projects/loans on terms that end up being too difficult for countries to repay, eventually compelling 
them to accept political or economic concessions. 
• It has been witnessed that developing nations are often lured by China's offer of cheap loans for 
transformative infrastructural projects, which require a considerable investment.  
	
11	 																																																																											
	
Practices undertaken by China that point towards their engagement in debt trap diplomacy 
• Financing non-viable projects: It has been alleged that Chinese funding is often made for non-viable projects 
without appropriate risk assessment. 
o For example, in 2014, Montenegro successfully concluded negotiations with Chinese partners to finance 
a highway project despite the fact that the project was deemed economically unviable by two feasibility 
studies. 
• Predatory Lending and Debt Distress: China has invested heavily in middle- and low-income developing 
countries which have history of debt sustainability problems, lack the fiscal capacity to directly finance 
infrastructure and are not commercially appealing for attracting investment. 
o For instance, China has invested in several infrastructure projects in African countries like Ethiopia, 
Nigeria etc. 
• Opaque lending practices: The Chinese government neither provides official data on its international 
lending, nor does it disclose details regarding the volume or the terms of the loans it provides and how the 
debt negotiations are adjudicated if the borrower cannot service its debts. 
• Lack of debt resolution assistance to borrowing countries: China does not subscribe to any guiding 
multilateral frameworks, set down by the International Monetary Fund or the World Bank, to define its 
approach to debt sustainability problems, choosing instead to deal with countries on a case-by-case basis. 
o Often it capitalises on fiscal mismanagement of borrower countries, centering negotiations on equity 
swaps rather than on other measures of alleviating debt. 
• Acquiring strategic assets: Infrastructural agreements with China often provide Chinese firms the right to 
access and control land and 
assets as collateral. Thus, China 
has acquired assets in several 
countries (see infographic), 
including those funded under 
BRI projects, as a part of Debt 
renegotiation process. 
o These acquired projects 
hold strategic importance 
beyond their economic 
use. For instance, 
Hambantota port in Sri 
Lanka can be used for 
increasing Chinese 
presence in the Indian 
Ocean Region.  
	
12	 																																																																													
• Domination of Chinese interests in projects: Almost all of China’s overseas lending is extended via Chinese 
state-owned entities and the recipients also tend to be state-owned enterprise. Moreover, Chinese workers 
make up a bulk of the labour force engaged at the infrastructural projects in foreign countries. 
• Use of non-subsidized and expensive credit to finance development projects:  In most cases the loans 
extended by China are non-concessional and costly.  
o This contrasts starkly with the infrastructure lending of advanced industrial countries who provide 
subsidized, concessional credits to finance underdeveloped economies. 
Reasons why countries have been vulnerable to debt traps 
• Infrastructure financing needs of middle and low income countries: Infrastructure investment is widely 
recognised as a crucial driver of economic and social development. However, middle and low-income 
developing countries lack the fiscal capacity to domestically finance infrastructure projects. 
o Countries participating in the BRI are lured by the promise of socio-economic transformation and 
development. 
• Lack of accessible funding: Countries find it difficult to fulfil conditionalities for accessing development 
assistance offered by multilateral lending agencies such as the IMF. Such conditionalities may include 
structural and governance reforms, targets for macroeconomic indicators, accounting and auditing systems 
etc. 
o Chinese loans are not as stringent in their requirements for safeguards and reforms 
• Governance issues: such as lack of adequate pre-project viability analysis, corruption, reckless propensity to 
borrow, fiscal mismanagement etc. has made it easier for China to push loans for even unviable projects.  
o For example, in Kyrgyzstan, former Prime ministers Sapar Isakov and Jantoro Satybaldiev have allegedly 
colluded with Chinese officials to embezzle funds earmarked for BRI projects.	 
Way Forward 
• Adequate risk assessment: Countries should conduct proper risk assessment and measure economic 
viability of infrastructure projects prior to signing agreements. 
• Sustainable Debt resolution and multilateral cooperation: China should cooperate with multilateral 
institutions to provide an estimate of debt levels of countries involved in BRI. 
o Also, it should follow internationally acceptable practices for sustainable debt resolution. 
o China can become a member of the Paris Club to help countries find sustainable solutions to raising 
debts. 
ü The Paris Club is an informal group of official creditors whose role is to find coordinated and 
sustainable solutions to the payment difficulties experienced by debtor countries.  
ü As debtor countries undertake reforms to stabilize and restore their macroeconomic and financial 
situation, Paris Club creditors provide an appropriate debt treatment. 
ü India is an ad hoc participant (not permanent member) of Paris club. 
	
13	 																																																																					
• Other alternatives for infrastructure financing: The international community should expand alternatives to 
Chinese infrastructure financing to fulfil infrastructure deficiencies in Low and middle income countries. 
 
Other Global initiatives for Infrastructure financing  
• Blue Dot Network: The initiative gathers financial institutions from the US (U.S. International Development Finance 
Corporation), Japan (Japan Bank for International Cooperation) and Australia (Department of Foreign Affairs and 
Trade), it will work as a certification body that will evaluate infrastructure construction projects in the Indo Pacific 
region. 
• Coalition for Disaster Resilient Infrastructure (CDRI): It is a partnership of national governments, UN agencies and 
programmes, multilateral development banks and financing mechanisms, the private sector, and knowledge 
institutions that aims to promote the resilience of new and existing infrastructure systems to climate and disaster 
risks in support of sustainable development. 
• Asia-Africa Growth Corridor: The Asia-Africa Growth Corridor (AAGC) is an economic partnership agreement between 
India and Japan. It intends to improve infrastructure and digital connectivity in Africa within Indo-Japan collaboration. 
• European Union’s new connectivity strategy: In September 2018, the EU adopted a joint communication on 
'Connecting Europe and Asia – Building blocks for an EU strategy'. The strategy proposes that the EU engage with 
its Asian partners through a sustainable, comprehensive and rules-based approach to connectivity, exploiting existing 
and planned EU networks. 
• Trans-European Transport Network (TEN-T) policy: It addresses the implementation and development of a Europe-
wide network of railway lines, roads, inland waterways, maritime shipping routes, ports, airports and railroad 
terminals. 
• Global Infrastructure Facility (GIF): It is an initiative of G20 countries. It is a global collaboration platform that 
integrates efforts to boost private investment in sustainable, quality infrastructure projects in developing countries 
and emerging markets. 
• Build Back Better World (B3W) Partnership: Launched by G7, It is a new global infrastructure partnership led by 
major democracies to help narrow the over 40 trillion Dollar infrastructure need in the developing world, which has 
been exacerbated by the COVID-19 pandemic. 
2.2.	INDIA’S	TIBET	POLICY	
Why in News? 
China has completed construction of a 
strategically significant highway in 
Tibet, enabling greater access to 
remote areas along the disputed 
border with Arunachal Pradesh in 
India. 
More about News 
• The highway passing through the 
world’s deepest canyon along the 
Brahmaputra River connects 
Nyingchi to Medog county that 
borders Arunachal Pradesh, 
reducing distance between two 
from 346 km to 180 km and 
cutting travel time by eight hours.  
• China is also working on a 
strategically important railway link to Tibet.  Satellite images have shown village built in area seen by India 
as part of Arunachal.  
• The civilian settlements, along with the new infrastructure connectivity, are seen as aimed at bolstering 
China’s control over the border areas.	 
	
14	 																																																																												
Tibet Autonomous Region 
• Shortly after the Chinese occupation of Tibet in the 
1950’s, China carved up Tibet into a number of 
pieces. The piece that they call the Tibet Autonomous 
Region (TAR) is about half of the Tibetan Plateau.  
• TAR is one of the five autonomous areas in China at 
the provincial level where regional ethnic autonomy 
is exercised. 
• Various experts say China continues to violate human 
rights in Tibet, accusing it of political and religious 
repression. China denies any abuses. 
 
Significance of Tibet 	
Tibet is the world’s highest and largest plateau, covering an area of 2.5 million square kilometres, with 
an average elevation of more than 4,000 metres thrusting up above sea level. Such a landmass 
naturally constitutes a formidable buffer or 
barrier for any power operating beyond Tibet. 
Specifically, its importance for China and India 
are:	
Significance for China 
• Geostrategic and Geopolitical: China sees Tibet 
as a strategic passage to extend China’s 
geopolitical ambition in South Asia. Mao had said 
that Tibet is the palm of China and Ladakh, 
Nepal, Sikkim, Bhutan and Arunachal Pradesh are 
its fingers. Also, it marks China’s western edge and is a vital link between China and south and central Asia.  
• Water source: Often dubbed as ‘Asia’s Water Tower’, Tibet’s glaciers feed Asia’s great rivers, the 
Brahmaputra, Mekong, Yangtze, Indus, Yellow and Salween. Mineral water from the plateau has become 
one of the region’s first commercially tapped resources. 
• Internal stability: As part of China’s Western Development Campaign to reduce the wealth gap between 
China’s impoverished western hinterlands and 
rich eastern seaboard, China has invested 
billions in Tibet’s development. 
• Mineral resources: China’s biggest copper 
deposit is at Tibet’s Yulong copper mine. Tibet 
also has large iron, lead, zinc, and cadmium 
deposits, minerals China needs to feed its 
booming economy. Geologists believe that 
Tibet also possess significant crude oil and 
natural gas reserves. 
• Tourism potential: The Shangri La 
Circle includes the triangular border areas of 
Tibet, Sichuan and Yunnan. It has already 
been listed as a key national tourist 
development area and has become a popular 
destination for domestic and foreign tourists. 
Significance for India 
• Geostrategic: Strategically, the Tibetans were 
the first line of the defence for India. 
Read More
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