India Battling China for Influence

The Chinese may get the big field of gas the Indians wanted and use Burma as a shortcut to ship Middle East oil to southwest China, but India continues to woo the Naypyidaw generals—and in a Jekyll and Hyde fashion.

New Delhi is claiming credit for organizing UN special envoy Ibrahim Gambari’s next visit to Burma, and will welcome  Burmese military chiefs at its international arms fair beginning on Saturday. 

Some observers might think that’s a contradiction, but not in the eyes of the leaders of the biggest democracy in the world.

In April, the junta's No. 2, Gen Maung Aye, will be a VIP at the formal signing of a much-coveted US $120 million business deal between the two countries.

New Delhi has wriggled and twisted to ensure it secures the special contract to redevelop Burma’s dilapidated west coast port of Sittwe, along with new transport links up to the border of the Indian northeast state of Mizoram.

India was originally going to get operational control of Sittwe port in return for renovating the former British rice export centre, but the junta changed its mind—after Chinese objections, say insiders.

Rather than let the deal go, New Delhi will now sign what’s being termed a BTU agreement—build, transfer and use.
Under the deal, the Indians will still be able to use Sittwe as an export-import junction for its northeast. But with the Chinese set to run a gas pipeline beside the port from the nearby offshore Shwe field, Beijing would not want a third country in charge of port operations.

“This deal has not been easy, as with most negotiations with the prevaricating generals, but the Indian government has been dogged to the point of fawning to clinch it,” said independent energy industries consultant Collin Reynolds in Bangkok.
“This is because it is critical to plans for developing India’s isolated and troublesome northeast states.”

Those states—Assam, Mizoram, Tripura, Manipur, Nagaland, Meghalaya and Arunachal Pradesh –are populated with 35 million mostly non-Indian indigenous tribes many of whom have long resented New Delhi control and harbor extremists who seek independence. Some of the armed separatists cross the border into Burma to thwart Indian army pursuit.

Ironically, these northeast territories were annexed by the British during the expansionary heyday of the 19th century British empire as a buffer against marauding Burmese before the British also invaded Burma.

The deal Maung Aye is expected to sign in New Delhi includes widening and deepening the Kaladan River that flows from Mizoram to Sittwe to accommodate cargo vessels. A parallel road is also planned.

New Delhi’s decision to ignore US and European Union calls to support a trade boycott and the political isolation of the Burmese government to force reform is paying off, just like it is for China.

The Indian energy company Essar is to begin exploratory drilling for gas and oil at two Burmese sites. One is onshore near Sittwe in Arakan State. The other, ironically, is in the Shwe field in the Bay of Bengal where two other Indian companies— onGC and GAIL—have been frustrated by the Chinese.

Having discovered and developed 5.6 trillion feet of recoverable gas (184 billion cubic meters) in two other Shwe sections along with the South Koreans, China successful negotiated with the generals to buy the much-coveted fuel.

“It has hurt the India government to produce gas for the Chinese, but the Indians cannot afford not to play along even though Essar might experience the same fate,” said Reynolds.

Arakan State is poised to experience increased development in the next few years as India and China scramble for energy and to use the territory as a conduit to their landlocked regions.