Thailand’s Kra Canal project: Prospects and Challenges

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After years of being dismissed as a gigantic infrastructure proposition too difficult to build and drawing stiff opposition from countries like Singapore, Malaysia and Indonesia in particular, Thailand’s Kra phoenix has risen again. In 2015, Chinese and Thai officials are said to have signed the memorandum of understanding (MoU) for the canal project proposed to be built through the Kra Isthmus in Thailand. The recent revival of the idea to construct this US$28 billion project has set off a new wave of alarm bells among countries fearing the dominance of China in the region. The Kra canal is being seen as the Asian equivalent of the Suez Canal or the Panama Canal. The proposed 135 km canal would connect the Gulf of Thailand with the Andaman Sea across Southern Thailand providing an alternative to transit through the Malacca Straits, thereby reducing the distance by 1200 Nautical miles and the sailing time by 48 hours.

The construction of the Kra Isthmus Canal has been a pipedream for the international community for centuries. In 1677, on the insistence of the Thai King Narai, a French engineer Monsieur De Lamar was asked to conduct a survey of the waterway of Songkla to assess the possibility of connecting it to Marid (Burma). However, the idea was abandoned for being impractical. Thereafter, the proposal was advanced several times under King Rama I and King Rama IV but in vain. During King Rama V’s tenure, the possibility of constructing the Kra Canal was surveyed again by a French engineer credited with the construction of Suez Canal. However, the idea was dropped to avoid disappointing the British who had a strong presence in Malacca Strait. The project resurfaced several times during the 20th century but continued to meet the same fate due to fear of disrupting the international political stability, huge costs involved and environmental concerns.

The resurgence of the canal lately is largely a result of China’s Maritime Silk Road Initiative and the lobbying by the Thai Canal Association. Chinese interest in the Isthmus of Kra goes back to 2005 when it offered to finance the construction of the canal among several other infrastructure projects. In 2013, it was officially integrated into One Belt and One Road (OBOR) initiative, following which in 2015 there were several articles published in Chinese that discussed the feasibility of building the long imagined canal and deemed it as the “international golden waterway”. China would be one of the biggest beneficiaries if the proposed deep canal capable of transporting world’s biggest oil tankers, container ships and bulk tankers (directly from Thailand port to its final destination overseas bypassing transit through any third country) becomes a reality.

The Kra Canal project envisages two important deliverables – it is seen as a substitute to the Malacca Strait and aims to establish a Special Economic Zone (SEZ). The former addresses China’s aspirations of Kra Canal – centred on its desire to get a “controllable link” between the Pacific and Indian Oceans, circumventing the overtly crowded and piracy-prone Malacca Strait largely controlled by the west. The Straits of Malacca is the second most important transhipment chokepoint after Hormuz Strait that sends 12 million barrels of oil to pass

through the former each day.

The idea behind having an alternative shipping route is not only to cut both distance as well shipping time but also to reduce Beijing’s geopolitical vulnerability and overdependence – described by former Chinese President Hu Jintao as China’s Malacca Dilemma – should these straits get congested or blocked the world trade would come to a standstill. The new canal will also bring down the risks for shipping (Malacca Strait faces high risk of shipwrecks and piracy) in addition to easing the traffic-choked Malacca Strait.

The project is going to revitalize Thailand economy which is expected to gain from the SEZ to be established to enhance new industries and infrastructure in the region. It would also make Thailand the centre of gravity for trade between Pacific and Indian Ocean. However, it is still unclear whether Thailand will benefit from the created employment opportunities considering 30,000 Chinese workers will be employed in the construction.

The canal would facilitate increased sea shipments and trade among countries of Southeast Asia like Cambodia, Laos, Myanmar and Vietnam (CLMV) while reducing logistics costs for each of them. Another big winner is going to be Sri Lanka by virtue of its geographical position on the sea lanes of northern Indian Ocean, turning it into a new shipping and logistics hub. In case of India, Kra Canal poses as a mixed bag – on one hand it will enhance India’s pivot to East and its ability to project its naval power in the region while on the other hand it will increase China’s presence deeper into its backyard – the Andaman Sea and the eastern Indian Ocean.

Kra Canal may offer several other advantages. By virtue of being a man-made canal using state-of-the-art technology – it is seen as more practical and safer to navigate. Most importantly, the canal passes through only one country and thus, would come under the sovereignty of Thailand alone, avoiding any repercussions for international politics.

Apart from the economic dimension, the planned project has geopolitical ramifications in terms of opposition from countries that derive benefits from the Malacca Strait region and segments within Thailand that fear erosion of its sovereignty. Singapore, enormously dependent on the Straits of Malacca for its port and shipping industries, stands to lose around 30 percent of its shipping traffic given that the straits will be bypassed after the emergence of the new route. The alternative route will also significantly reduce the US Navy’s ability to project its power. Many in Thailand are upset at the idea of the proposed canal separating country’s four southernmost provinces from the rest of the country and that it will undermine its relations with Malaysia, Singapore and Indonesia who stand to lose the most from it. Thailand government is yet to give the project a green signal as it does not wish to displease its fellow ASEAN members and the US.

The construction of the canal is also believed to face engineering challenges such as the problems arising out of digging the long granite mountainous ridge (Tenasserim Hills) dominating the Malay Peninsula; the proposed canal would require 1.3 billion cubic yards of

earth to be removed which is three times the excavation required for the Suez Canal and Panama Canal increasing the cost of construction. Moreover, the proposed construction carries likely risks for Thailand’s environment (due to division of the isthmus impacting the flora and fauna of the region) as well as its tourism industry since the canal would run past some of its major tourist areas like Phuket and Krabi. Around forty percent of the public in Thailand expressed concerns regarding the project and its possible consequences for the political stability within the country.

With China continuing to advance its presence across the maritime domain, infrastructure projects such as the Kra Canal will continue to make headlines and influence the security architecture in the Indo-Pacific. However, the challenges pertaining to its construction and the adverse implications thereof continue to cast a shadow on its achievability.