Monday, January 16, 2017

With Enough Shovels: The Kra Canal, Revisited

Recent comments by a Sri Lankan minister dredge up new speculation

On January 12, Sri Lanka's Minister of Ports and Shipping Arjuna Ranatunga, while attending a religious event, made some interesting comments to reporters about recent protests against plans to develop the Hambantota Port, and what might "really" be motivating them. He said that "there is speculation that a major country in the South Asia region would lose businesses to Sri Lanka when construction of a canal with the Chinese funds in Thailand is completed and that country may be behind the opposition to the development of the southern port."

Ranatunga was, of course, referring to the Kra Canal, or Thai Canal Project, an almost perennial dream of a succession of mercantilist players in the region's history. The current players envision a canal through the Isthmus as the all-important Bail attaching a "String of Pearls," or Maritime Silk Road, to the Jeweled Pendant of China's Mercantilist Necklace, the South China Sea.

A canal through Thailand would certainly make shipping through the region faster than with current routes through the Malacca and Makassar Straits. If done right, it would expedite energy delivery to the region's industrial leaders. It would also change the structure of influence over that traffic, as we've written about before.

Nevertheless, the historical, technical and financial obstacles remain the same. When we last wrote about the Kra project, Thailand's Junta was ambivalent about it, and this time last year they confirmed yet again that it was a back burner item. While some Thai business interests support the project, others have long regarded an alternative idea for a deep-water port and industrial zone just across the border in Myanmar as a better and more feasible solution in the long term.

Myanmar is currently undergoing political and economic changes, that depending upon the outcomes, represent a significant development opportunity in and for the region. A Kra Canal could bypass much of that. Singapore also has a lot to lose from the changes should such a project finally materialize.

Minister Ranatunga's comments, however, were almost certainly directed towards India. That nation has significant geopolitical concerns about increasing Chinese influence in the Indian Ocean, which would be a natural consequence of both the Kra Canal and the development of Hambantota under Chinese leadership.

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