China Blocking Foreign Funding to Blame for Arunachal’s Backward Economy: CM Khandu

The chief minister said the state had no option but to turn to the armed forces as a consumer base to help elevate the local economy.

New Delhi: Arunachal Pradesh chief minister Pema Khandu has blamed China for continuously blocking foreign funding to the state, which he said has led to its economic backwardness. The BJP leader said that bereft of options, he may turn to the large deployment of army and paramilitary forces in the border state as a consumer base to help elevate the local economy.

Speaking at the 10th Maitri Divas this past week in Tawang – Khandu’s hometown which borders China – he said he would soon meet Union defence minister Nirmala Sitharaman in New Delhi. The purpose would be to work out a way for the central security forces, comprising over two lakh personnel, to become a market for local produce. Khandu said, “This will enable the local farmers and businessmen to find a huge market within Arunachal and also overcome the middlemen menace in selling their produce.”

According to local news reports, the chief minister said:

“Arunachal is the lone state facing such a fund blockade which is taking a toll on its economy, but it can be overcome by taking advantage of the huge presence of Indian Armed Forces and central paramilitary forces in the state. The state has the presence of over two lakh military personnel and paramilitary forces, which can be thought of as a huge market for selling local produce and goods.”

Maitri Divas, organised on November 28, is an annual occasion that marks the friendly relationship between the armed forces and the local people of the Tawang region. The first Divas was started by Khandu’s father and the then chief minister, Dorjee Khandu in 2004 in Gangkhar village of Tawang sub-division.

The chief minister’s public statement is not without reason though. The issue caught the attention of world media in 2009 when China succeeded in postponing a $60 million loan from the Asian Development Bank (ADB) for a watershed development project in Arunachal. The postponement was carried out on the ground that it had an unresolved border dispute with that Indian state and wouldn’t prefer any third-party interference in it. China claims about 90,000 square kilometres of Arunachal Pradesh as its territory.

Also read: Chinese Troops Briefly Cross Border Into Arunachal Pradesh: Officials

The Chinese opposition to the ADB loan had turned into a diplomatic row between the two governments. The then Manmohan Singh government, however, succeeded in getting an approval from the ADB for Arunachal, but it didn’t stop China from trying to woo Japan to come to its aid to block the funding of the Manila-based financial institution.

The ADB had to add a disclaimer in its approval documents stating that it had no position on territorial disputes. According to the cables sent from the Beijing embassy of the United States, made public by Wikileaks in 2011, the country director of ADB China, Robert Wihtol told US officials in September 2009 that the project in Arunachal which China had objected to, had “caused problems for the ADB in China.”

Speaking at parliament about the status of the Arunachal project in July 2009, the then external affairs minister S.M. Krishna reportedly said:

“China did not endorse the Country Partnership Strategy (CPS) 2009-12 for India at the Board of ADB on the ground that the proposed India CPS involved technical assistance funding for the Flood and River Erosion Management Project in Arunachal Pradesh, which China claims is its territory.”

He said, India, however, told ADB and all member countries including the US, Japan, Australia, Canada, Indonesia, Korea, Malaysia, the Philippines, Germany and Italy that the CPS was not a political document and it did not make any judgement as to the legal status of any territory. “China’s objection on political grounds is a clear violation of ADB’s charter, which prohibits the bank from evaluating any proposal on grounds other than economic,” Krishna told the Rajya Sabha.

Also read: In Official Testimony to MPs, Government Revealed Full Story of Doklam

However, in June 2017, the ADB shifted its stand by expressing its willingness to fund infrastructure projects in the northeast, including Sikkim which borders China. It was widely looked at as a continuation of a statement issued in February that year by the then Japanese ambassador to India, Kenji Hiramatsu, stating his government’s interest in developing infrastructure in northeast India.

In September 2017, Japan, during the visit of its prime minister, Shinzo Abe, to New Delhi, announced a joint statement with India to set up an Act East Forum and referred to plans to develop road connectivity and electricity in the northeastern states. Though the statement didn’t mention Arunachal or Sikkim, the Chinese foreign ministry spokesperson, Hua Chunying, issued a press statement opposing it.

Aside from the ADB, the Indian government, in 2013, also dropped Arunachal and Sikkim from a loan proposal to the World Bank to reportedly avoid running into Chinese objections over it. The loan was sought to strengthen the transmission and distribution of electricity in all the northeast states.

The Wire has tried to contact Khandu, but has, thus far, been unable to get a response.