China’s Malacca dilemma

The Kra canal — renamed Thai Canal (Klong Thai) — is back in the news as a 49-member Thai committee of cross-party MPs set up in January this year is expected to submit its feasibility report shortly. The proposed canal would cut across the Kra Isthmus in southern Thailand connecting the Andaman Sea to the Gulf of Thailand/South China Sea and the Indian Ocean to the Pacific. Once constructed, it would allow international shipping to save about 1,200 km by avoiding the already congested Strait of Malacca.

Of the four proposals being considered, the preferred one is 9A, a 128 km route from Krabi province on the Andaman coast to Songkhla province on the Gulf of Thailand. The canal is expected to be 450 metres wide and 25 metres deep, accommodating large oil tankers. A special economic zone with infrastructure facilities is also proposed to be set that could potentially transform Thailand into a logistics hub.

The project is estimated to cost around $30 billion with a further $22 billion for the economic zone. It is expected to take about 10 years and will require a workforce of 30,000.

The idea, interestingly, is not new and was first proposed by Thai King Narai in the 17th century. It was then shelved due to lack of funds and technical expertise. Several subsequent attempts, including feasibility studies and technical solutions, to revive the project, came to naught.

What has changed now is the entry of China. China is lobbying extensively with Thailand to re-initiate the project using Thai front organisations consisting of former senior military personnel. For China, the proposed canal is of significant strategic interest. About 80 per cent of Chinese oil imports annually transit the Malacca Strait, which is thus China’s energy and trade lifeline as also the entry point for breaking out into the Indian Ocean and beyond. China would like to fund and control the Kra canal that would become the alternative route reducing its dependence on the Malacca choke point and save two to three days to enter the Indian Ocean. Former Chinese President Hu Jintao in 2003 coined the term ‘Malacca dilemma’, referring to Chinese concerns about the closure of the strait in a conflict situation in the Indo-Pacific.

While official confirmation is lacking, an MoU was signed in 2015 between a Chinese entity — China-Thailand Kra Infrastructure Investment and Development company and a Thai entity— Asia Union Group, headed by former Thai Premier Chavalit Yongchaiyudh to build the canal.

While the interests of China are obvious, the issues for Thailand are much more complex. There is a north and south ethnic-religious divide in Thailand with southern Thailand plagued with conflicts between Thai Buddhists and Thailand’s Malay Muslims harking back to the 1902 Thai annexation of the state of Patani. Thailand has been fighting an ethnic-religious insurgency since the 1980s. More than 7,000 lives have been lost since the separatist movement re-emerged in 2004.

With the facilitation of Malaysia, a peace process between the Thai government and Mara Patani (Patani Consultative Council), an umbrella organisation of Malay-Muslim separatist fronts launched a few years ago, has not made much progress. Moreover, the main militant group, Barisan Revolusi Nasional (BRN), has refused to join, thus detracting from the effectiveness of the process itself.

There is genuine apprehension in Thailand that the construction of the Kra canal would physically separate the southern provinces from the rest of the country and thus further entrench divisions, inflaming the fight for independence.

A linked security issue is that Chinese funding could mean erosion of sovereignty for Thailand. China has often been blamed for debt trapping the governments it has loaned money to for infrastructure projects and taking control of natural assets. Sri Lanka’s Hambantota port that China took control off in 2017 is a case in point. Djibouti is another. The Chinese modus operandi is to push for projects where only the Chinese state-owned enterprises can bid. Such tactics have also led to projects being expensive and unviable like the Mombasa-Nairobi railway line in Kenya built at a cost of $5.6 million per km — roughly four times the original estimate.

Apart from tourism and environmental concerns, another major issue for Thailand and the region is the potential friction within ASEAN, since there would be gains for Vietnam, Thailand and Cambodia while Singapore, Indonesia and Malaysia could stand to lose shipping business. Friction in ASEAN would suit China eminently.

Given the serious issues involved with the canal, Thailand is considering a land and rail bridge across the Kra Isthmus with deep sea ports on either side, instead of a canal. This would be a major setback for Chinese ambitions.

The US would also be looking askance at the canal project and at Thailand moving closer to China despite its alliance with the US. US-Thai relations had run into a rough patch after the 2014 military takeover in Thailand. Chinese funding of the canal would tighten its grip on Thailand, making it a long-term security partner, something that the US would be concerned about. Likewise, ease of Chinese navy entry into the Indian Ocean would heighten US security concerns. Finally, for the US, fissures within ASEAN due to the Kra canal would undermine its Indo-Pacific strategy. It is only a united ASEAN that can serve as a bulwark against China.

The canal could pose a threat to India’s long-term maritime security as it could lead to enhanced surveillance and quicker deployment of Chinese vessels in the Indian Ocean. India would have to offset such vulnerability through greater infrastructure upgrades in the Andaman and Nicobar islands, allowing it to increase its own naval and air power projection capabilities in the South China Sea.

Views are personal