Thailand steps back from Kra Canal project

Thailand is currently exploring land transport alternatives to a proposed 96-km canal through the Kra Isthmus, dampening China's hopes of finding a strategic alternative to the Strait of Malacca.

Last week, Bloomberg reported that Thailand is now considering building two deep-water ports, one on each side of the isthmus, and then connecting the two by road and rail.

For dry goods, this arrangement could cut the sea journey between East Asia and the Bay of Bengal by about two to three days, but it would not be a shortcut for military vessels.

“Using an alternative route through Thailand would reduce transportation time by more than two days, which is very valuable for businesses,” Transport Minister Saksiam Chidchob said in an interview with Bloomberg.

The Strait of Malacca is one of the world's most important strategic chokepoints for shipping.

More than 200 merchant ships pass through it every day, including oil tankers that supply China's growing demand for imported petroleum.

An oil pipeline between Myanmar and Yunnan province carries about 200,000 barrels a day from a receiving port on the Bay of Bengal to refineries in Kunming, but it supplies only a small fraction of China's import volume of 9 million barrels a day.

Most of this supply comes from producers in the Middle East, Africa and Russia, and must pass through the Strait of Malacca to reach refining centers on China's east coast.

This busy passage creates a strategic vulnerability, as the strait's navigable channel is narrow – and in the event of conflict, it could be subject to a blockade.

Former Chinese President Hu Jintao called this problem the "Malacca dilemma."

A canal crossing the Kra Isthmus would bypass this choke point.

The idea dates back to the 17th century and has taken many different forms and paths over the years.

The latest proposal would stretch for about 96 km and cost around 25 billion euros to build.

It would present its own strategic vulnerability: the proposed waterway would physically divide central Thailand from its southern provinces, where a separatist insurgency has simmered for decades.

China's close involvement in the financing and construction of the canal has also raised questions about the possibility of increased foreign influence in domestic affairs.

On a practical level, economists have also questioned whether the canal could generate enough revenue in royalties to repay the massive cost of construction.

In 2018, Thailand's prime minister ordered the government to conduct a feasibility study for the canal, but Minister Chidchob's recent comments have been widely interpreted as a step back from those plans.

Shortly after Chidchob's interview, the Thai government also announced its decision to delay an unpopular $724 million deal to purchase two Chinese-built submarines.

Thailand agreed to purchase a total of three units in 2017, and the first is already under construction for delivery in 2024.

The delay affects the second and third ships.

The Kra Canal project is creating enormous tensions between Thailand, China and the United States.

Aside from the economic benefit for China, the canal would change the strategic dynamics of Asia by bypassing the Strait of Malacca, one of the United States' main strategic advantages vis-à-vis China at sea.

Source: maritime-executive.com