Guest Column

Regional Effort Needed to Resist China’s Renewed Push for Thai Canal

By Yan Naing 8 March 2022

The Thai Canal (previously known as the Kra Canal) refers to a proposed 135-km canal across southern Thailand that would connect the Gulf of Thailand with the Andaman Sea.

China has long envisaged constructing a canal across the Kra Isthmus housing Chinese port facilities and refineries, as part of its energy security strategy to build a “string of pearls” comprising a series of forward bases. Beijing hopes to save around 80 percent of the current cost of shipping energy imports through the Strait of Malacca by diverting them through the canal once it becomes operational. It continues to push for the construction of the Thai Canal through a web of supporters in the Thai armed forces, both serving and retired, as well as influential businessmen.

In January 2020, perhaps under Chinese pressure, the Thai government formed a 49-member ad-hoc parliamentary committee to study the feasibility of the Thai Canal project. The committee submitted its report to the Thai House for debate on Jan. 21, 2022, and put it up for a vote on Feb. 4. The House rejected the feasibility report with 143 MPs against, 121 in favor and 53 abstentions. Nonetheless, China is perhaps optimistic that the slim margin of defeat gives it enough maneuvering space to eventually push the project through.

Significantly, prior to the submission of the feasibility report to the House, China sent a high-ranking official who reports to senior military and Chinese Communist Party members as a special representative to Thailand, reportedly to revive pending Chinese projects, including a deal to provide three submarines to Thailand, and to push the canal project forward.

A map showing the proposed location of the Thai Canal between the Gulf of Thailand and the Andaman Sea.

If the project comes to fruition, it would be disastrous not only for Thailand but also for neighboring ASEAN countries. For Thailand the strategic costs are likely to outweigh the economic benefits. The project would physically divide the country, cutting off the restive south and exacerbating the volatile situation in the region. A water divide across the Thai landmass could result in Bangkok losing control over the southern provinces bordering Malaysia, which could fuel the Muslim separatist insurgency in the area. Thailand’s economy could also fall into a debt trap, as China would be keen to employ funds, men and material and ultimately wrest control of operations on the waterway, establishing its footprint in the commercial zone. Moreover, a canal passing through Thai territory open for international maritime traffic could significantly impinge upon Thailand’s sovereignty and give a boost to drug syndicates and related crimes, as well as terrorism.

The canal is also projected to have an adverse impact on southern Thailand’s environment and marine ecology, hurting revenue earnings from the lucrative tourism business and also its fishing industry. Further, it could adversely affect ASEAN unity due to the potential benefits to some countries and negative impacts on others. China may exploit this strain within ASEAN to individually single out countries and manipulate them bilaterally on existing contentious issues—such as competing claims in the South China Sea—to its advantage.

Above all, the economic viability of the project remains doubtful as the estimated cost of construction is US$28 billion plus another $30 billion for related infrastructure, which may not be recoverable through toll fees in a reasonable time period. Since the canal would shorten distances only up to 1,200 km (unlike the Suez Canal, which saves 7,000 km and the Panama Canal, which saves 13,000 km), the slower speed, need to queue up and toll payment may encourage ship owners to continue using the Strait of Malacca.

Against this backdrop, concerted efforts are needed by all regional countries, particularly ASEAN members and other stakeholders, to influence the Thai government and stop further development of the project due to the adverse implications for Thailand itself and the security concerns of ASEAN nations. Thailand needs to learn lessons from other countries that have been lured by China into supposedly lucrative economic infrastructure projects, only to be forced to cede their strategic assets because of nonpayment of debt when the infrastructure projects turned into “white elephants”.

Yan Naing is the pseudonym of a writer on Myanmar-China affairs.

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