Mint Explainer: Is Thailand’s proposed Kra Canal a strategic game changer

The proposed Thai Canal has been a subject of considerable discussion and analysis due to its potential impact on global trade routes. (File Photo: Bloomberg)
The proposed Thai Canal has been a subject of considerable discussion and analysis due to its potential impact on global trade routes. (File Photo: Bloomberg)


  • While the Thai Canal remains a proposal and is far from becoming a reality, its potential implications are far-reaching.

The proposed Thai Canal, often referred to as the Kra Canal, has been a subject of considerable discussion and analysis due to its potential impact on global trade routes. If realized, this canal would offer an alternative to the Straits of Malacca, a critical maritime passageway that currently serves as a conduit for a significant portion of global trade.

China, which heavily relies on the Malacca Straits for its maritime trade, has shown considerable interest in the project. An alternative route could diversify Beijing's options, reduce maritime traffic bottlenecks, and cut transit times and costs. 

Some analysts have, however, speculated that the creation of the canal could create problems for India. A look at this project.

What exactly is this project about?

The plan is to create a sea passage through the southern part of Thailand to link the Andaman Sea to the Gulf of Thailand. In doing so, the country will create a new route to ease the burden on the crowded Malacca Straits, which is nearby and through which a significant chunk of global trade passes. While the idea of creating such a canal has been around for decades, it received huge interest globally after China took an interest in the project.

What is China’s interest in the project?

The development of an alternative to the Malacca Straits would help China resolve what it calls its “Malacca Dilemma". Experts have argued that China’s reliance on the Malacca Straits for its supply of energy and trade render it vulnerable to military pressure by competitors, who may, among other things, blockade the Straits. Such a canal would also offer economic benefits since it would allow the faster flow of goods than the Malacca Strait, which is often crowded. Some have gone so far as to suggest that the canal could be used to encircle India in the Indian Ocean.

Is the hype around this project warranted?

The prospect of creating such a canal has been raised by a number of Thai government's for some time now. However, there are major challenges. First, the creation of a canal through Thailand’s landmass will come with major environmental repercussions. Second, the costs associated with the project are astronomical, with an estimated price tag of $55 billion. Further, as Shaun Cameron writes for the Lowy Institute, the Thai government seems to have given up on the idea of a canal. The current plan appears to be the building of two deep-water ports on opposite coasts of the country connected by highways. Thai politicians rejected a feasibility study on the building of a canal in 2022. It reflects an ambivalent attitude towards the project

Will it be successful?

Several experts have voiced their doubts. While the project has been a non-starter so far, the port-and-highway plan have also found few takers. “Unloading goods at one port, transporting them across the country by rail or road, and then uploading them at another port increases rather than reduces transportation costs. Moreover, at a time of global economic crisis, the initiative is unlikely to find any potential investors," writes Ian Storey, a noted Southeast Asia watcher.

Why are other countries uncomfortable with China's approach?

The proposed Kra Canal project has been met with varying degrees of concern and scrutiny from different countries, each assessing the initiative from their unique vantage point.

Singapore, for example, sees the canal as a potential threat to its dominant position in maritime trade. The Straits of Malacca is one of the world's busiest waterways, and a significant portion of that traffic passes through Singapore's ports.

India's concerns, however, extend beyond immediate economic and strategic considerations. Citing the examples of Sri Lanka's Hambantota port and Pakistan's Gwadar port — both of which were ceded to China under debt obligations — Indian authorities have expressed worries about what they describe as "debt diplomacy" from China. According to internal assessments of the project by Indian authorities, as cited by the Print, there is apprehension that the Kra Canal project could become a lever for China to gain control over the Kra Isthmus in exchange for alleviating debt, thus compromising Thailand's sovereignty and autonomy.

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