Infrastructural transformation in high-risk environments: The BRI’s impact on conflict states

Ever since its announcement in 2013, China’s “Belt and Road Initiative” (BRI) has attracted significant attention from international observers, covering its impact on fields ranging from economic integration to geopolitics. However, the peace and security implications of the BRI have seen comparatively little interest, despite the heavy concentration of BRI-related investments in highly fragile and conflict-prone environments.

The BRI’s top investment destinations include countries that have battled long-running insurgencies like Pakistan and Nigeria; Myanmar, which is experiencing a re-ignited civil war on multiple fronts; and a long list of other politically unstable or conflict-prone environments like Kazakhstan, Bangladesh, Kyrgyzstan, and Uganda. This is counterintuitive from a risk management viewpoint, as infrastructure investments have very long amortization periods and are highly vulnerable to wartime destruction as well as lesser political risks like expropriation or drastic revisions to existing contracts. These are precisely the conditions which have scared away other funders and left the “infrastructure gap” across developing areas of Asia and Africa which China is aiming to fill with the BRI. High exposure to conflict risks is also not something completely new to China, as its previous economic strategy of “going out” and acquiring the resources to feed its growing economy already led it to seek out high-risk niches in places like Sudan. However, the BRI has supercharged this trend and significantly raised the exposure of Chinese capital to conflict risks.

This influx of resources has also had a transformative impact on some of its destinations, where Chinese infrastructure projects have triggered high hopes of leading the way to development and modernity. At the same time, these projects have not been without controversy. This is frequently the result of existing political tensions in member countries that have led to very different assessments of Chinese economic agency in opposing camps, depending on which side China is seen as supporting, and where benefits from projects accrue. This can be seen from two examples, Pakistan and Myanmar, which we covered in our research on the BRI’s impact on conflict states.

Pakistan is the BRI’s top investment destination, and over 60 billion dollars have already been spent or earmarked for the “China-Pakistan Economic Corridor” (CPEC) connecting China to the Indian Ocean, with further ambitious plans to develop agriculture and tourism. Upon its announcement in 2013, CPEC was advertised as a “game changer” that would jumpstart Pakistan’s industrialization, allow all provinces to share in a Chinese-inspired modernity, and thus strengthen the country’s internal cohesion. All this activity is however unfolding in a nation riven by center-periphery tensions and high levels of violence, where Chinese projects have repeatedly been targeted in terrorist attacks. While CPEC is supported by a broad coalition of national-level elites, ethnic minorities and peripheral communities often have a very different perspective on it. Critics say that benefits like better connectivity and access to electricity have not yet materialized, while local citizens are subjected to drawbacks like expropriation, loss of livelihood, and heavy-handed security measures. CPEC has also affected the fragile relationship between Pakistani civil and military authorities, with the latter increasingly asserting control over its implementation. Finally, as in many other BRI member countries, the general lack of transparency surrounding projects and loan agreements has led to concerns that CPEC could lead to corruption and over-indebtedness.

In Myanmar, the BRI made considerable progress under the democratically elected National League for Democracy (NLD) government, despite pronounced local concerns over issues like land grabbing, environmental degradation and a lack of transparency over the content of agreements with China. Here, too, the model is to build an economic corridor to the Chinese border, which means traversing territory held by armed ethnic groups engaged in a protracted conflict with Myanmar’s central government. Where the NLD government was relatively successful in navigating these controversies and selling BRI participation to a skeptical domestic audience, the 2021 coup posed additional problems for China. Beijing’s history as the “economic lifeline” of previous junta governments put it immediately in the spotlight, with pro-democracy protesters suspecting it of backing and aiding the coup. Protesters set fire to a cluster of Chinese factories and have recently threatened similar attacks against the controversial Shwe pipeline. While the new junta government has apparently been willing to expedite the approval of new BRI projects, its total lack of legitimacy will not strengthen their acceptance by local communities.

A common pattern, observed across these and other examples, is that resistance against the BRI is often the result of planning that is responsive to national-level interests, but not the concerns of local communities. Elites and already-privileged groups have been successful in using the BRI to put long-held, ambitious national development plans in practice, and in many cases have also been able to realize personal benefits. At the same time, groups that are already economically disadvantaged and politically marginalized are at risk of being left further behind. In countries where long-running conflicts have eroded the legitimacy and trust enjoyed by central governments, the sudden influx of new resources under the BRI has re-ignited distribution conflicts. Notably, these problems are often not the result of a heavy-handed Chinese approach to implementing the BRI abroad, as the narrative of the BRI as a vehicle for geopolitical interests or “debt trap diplomacy” holds. Instead, they stem from an overreliance on a small, selected group of partners in member countries, usually drawn from the same groups that are influential in China itself: national-level leaders, central government institutions, state-aligned enterprises, and military elites. In countries riven by domestic conflicts and center-periphery tensions, these groups are far less able to command the necessary consensus around large-scale infrastructure projects with their huge financial, social, and environmental footprints.

All of this is not to say that the BRI’s impacts on conflict states should be seen as a net negative. With the BRI’s advent, Chinese capital has plugged a gap left by other international providers of infrastructure funding and development assistance. Infrastructure can play a crucial role in post-conflict reconstruction, and China’s high risk tolerance makes it a valuable source of funding in areas where few others dare to tread. The Chinese government has also shown a willingness to improve on the BRI’s governance, most notably in its commitment to a “Green BRI” and a strengthening of environmental impact assessments. This approach is still facing many challenges, but is ultimately rooted in Chinese self-interest and could be extended to a broader sustainability agenda that also covers social issues like land-grabbing.

A better risk assessment approach is also on the agenda of BRI planners, and numerous Chinese publications have already raised the issue of conflict risks. What remains to be seen is how these will be addressed. A tighter financial regulation and greater scrutiny of potential conflict impacts in project assessments would at least rein in some of the negative effects, but probably at the price of withdrawing from especially affected areas altogether. A more comprehensive approach would be to strengthen project governance and incorporate practices that have been developed by other infrastructure funders: better outreach to local communities, strengthening conflict sensitivity, improving project transparency, and providing more aid and CSR funding to offset adverse effects on local livelihoods.

Prevailing geopolitical analyses of the BRI have often led to its interpretation as a vehicle for Chinese influence and as something harmful to Western interests in third countries. However, by more closely examining the BRI’s implementation in conflict states, we can tell a far more complicated story of preferential treatments for local elites, projects that are negotiated amidst local controversies, and failures resulting from the absence of broader social buy-in. Achieving a better BRI implementation in conflict states should therefore be seen as being in the joint interest of Chinese, local, and international actors, and could provide a basis for more cooperation to achieve such outcomes.