Kra Canal

The Kra Canal project, a proposal 120-kilometer mega canal cutting through the Isthmus of Kra in Thailand could have been a crucial strategic asset for China, allowing the Chinese navy to move freely and quickly between its newly constructed bases in the South China Sea and the Indian Ocean.

• The project was China’s response to putting an end to the Malacca dilemma by bypassing the Strait of Malacca, a narrow chokepoint between the Malay Peninsula and the Indonesian island of Sumatra that divides the Indian and Pacific Oceans.                                                               

Key Highlights of Kra Canal:

• Kra Canal project, if constructed, would allow China to bypass the Strait of Malacca
• Purchase of two Chinese submarines worth USD 724 million delayed
• China losing key allies in Indo-Pacific Region
• China’s Malacca dilemma continues to haunt it after Thailand announced it will scrap the Kra Canal project that Beijing wanted to build to bypass the Strait of Malacca. 
• The Indian Navy had deployed its frontline vessels along the Malacca Straits, a strategic chokepoint, after the Galwan Valley clash in Ladakh.
• This comes as a double blow to China amid a standoff with India. 
• The Thai government has also delayed the purchase of two Chinese submarines worth USD 724 million after facing intense pressure from its arch-rival Pheu Thai Party and the public.
• Thailand no longer wants the Kra Canal as it is turned out to be infeasible both economically and politically.
• According to a report in the Foreign Policy, there were concerns that the canal would undermine the independence of poor Southeast Asian countries like Myanmar and Cambodia, which have comparatively weak civil societies that are highly vulnerable to Chinese interference

China-Indo –pacific

• Apart from the cancellation of the canal, the Royal Thai Navy told the parliament’s budget committee to slash the submarine procurement funding to zero for this fiscal year with Prime Minister Prayuth Chan-ocha, who also holds the post of Defence Minister, telling the Navy to postpone the agreement until the fiscal year 2022.
• Thailand was planning to purchase two Yuan-class S26T submarines for 22.5 billion baht (USD 720 million) over seven years.
• These new developments might force China to introspect why it is losing key allies in the Indo-Pacific and why aggression, intimidation and coercion rarely work in bilateral relations. 

Benefits:

• The Kra canal is its financial viability : The route through the Kra canal will only result in a saving of 10 hours for merchant traffic, as compared to the Malacca Strait, the cost of fuel saved is likely to be only around $25,000, a fraction of the transit cost of over $500,000.  
• The savings in distance and time expected for the merchant marine: the total distance saved by routing maritime traffic through Kra Canal instead of transiting through the Malacca Strait is less than 500 kilometres. The distance is translated into actual transit time of merchant ships, the resultant saving in time is well under 10 hours. 

Challenges:

• The geo-strategic significance of the project, the assessment mentions that Thailand, located in Southeast Asia, has the South China Sea (SCS) to the East and Andaman Sea to the West. 
• There are presently three major Straits in the region: Malacca, Sunda and Lombok.
• The preponderance of maritime trade passes through Malacca Strait, which is the busiest in the world,” the assessment reads. “The proposed Kra canal, if constructed, would bifurcate Thailand’s Kra isthmus and directly connect the SCS and Andaman Sea, bypassing Malacca.”
• This project is likely to cause major environmental issues for Thailand, and would also negatively affect marine ecology and tourist sites (over 20 per cent of Thailand’s GDP is based on tourism).
• This project is likely to cause major environmental issues for Thailand, and would also negatively affect marine ecology and tourist sites (over 20 per cent of Thailand’s GDP is based on tourism).

 India should capitalise on the opportunity – bundled with its own set of challenges – that the Kra Canal offers and offer transhipment ports to vessels bound for either Malacca or Kra Canal. As of now, ships wait for their turn at Sri Lankan ports, earning Colombo precious foreign exchange as well as leverage.