Thayer Consultancy Background Brief:

ABN # 65 648 097 123

Thailand’s Kra Canal: The New
Great Game?
Carlyle A. Thayer
February 9, 2018

We have received reports that Thailand may be reconsidering a proposal to build a

canal across the isthmus of Kra to link the western Indian Ocean with the southern
South China Sea. We have also heard that China is lobbying Thailand to go ahead with
the project.
We request your assessment of the following: who will benefit from the canal? Whose
interests are affected? How will the canal impact on territorial disputes in the South
China Sea? How will the United States respond?
ANSWER: For as long as I have been involved in professional military education with
Thai military officers (1980s) the idea of a canal across southern Thailand invariably
comes up as an essay or paper topic.
Building the Kra canal would be a monumental project taking years if not a decade to
complete. It would involve extending the sea lanes across the Indian Ocean east across
southern Thailand to exit at the southern end of the South China Sea and link up with
north-south sea lanes. This would cut sailing time from two to six days for shipping
that otherwise would pass through one of three routes: the Malacca. Lombok and
Sunda straits. This assessment depends on how wide and deep the canal is.
The Kra canal would also divert sea traffic from the Straits of Malacca and Singapore.
Singapore would suffer the drop in traffic. Southern Vietnam could benefit as a port
could be built to take advantage of this new route. Thailand would benefit from the
fees shippers would pay to use the canal.
The passage via the Kra isthmus would by-pass areas where pirates have been active
but it would also cross land territory in southern Thailand where Muslim rebels are
waging an insurgency. Thailand would be cut in two physically.
History urges us to be cautious. Building a canal across the Kra isthmus has been a
long-time pipe dream that has never gotten off the ground. In the past cost was a
major consideration. The use of nuclear explosives was even suggested to gouge out
the shipping channel.
Today things have changed, China has the funding and could easily link this to its Belt
and Road Initiative. Strategically, a canal across the Kra isthmus would alleviate the
so-called “Malacca Dilemma” by which the U.S. could choke off this strait to Chinese
traffic in a crisis or conflict. Obviously, at the end of the day, China’s Belt and Road
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infrastructure initiative will give China increased influence in the states where the
infrastructure is built.
This could be the new “great game” with China marginalizing Singapore, a strong
supporter of the U.S.
FOLLOW UP
Q1. How will the construction of the Kra Canal be received by the United States? Will
the U.S. oppose this initiative?
ANSWER: The Trump Administration’s National Security Strategy (NSS) has been
critical of China and its infrastructure initiatives. The NSS argues these should meet
international standards and contribute to development. The NSS also goes on to state
that the US will support infrastructure projects through multilateral agencies such as
the World Bank. This sets up possible competition with China’s Belt and Road
Initiative.
U.S. business will be a happy with the Kra canal as it saves them transport costs.
The Trump Administration is likely to view the Kra canal as another example of China
using its money to influence the regional states and thus sway their decision-making.
Quite frankly, despite the fact that Thailand is a treaty ally, Washington must compete
with China for influence in Bangkok.
These assessments are predicated on the assumption that Thailand and its King will
approve this massive project.
Q2. How will the Kra Canal impact on disputes in the South China Sea? If China
constructs the canal will it be become more aggressive in asserting control over the
South China Sea? A canal across Thailand’s Kra isthmus will mean that shipping will
pass through waters near Vietnam’s Phu Quoc island. China also claims these waters
on its nine-dash line map. What impact will it have on China-Vietnam relations?
ANSWER: If China financed the Kra canal it would have a long-term presence in
southern Thailand and be able to influence the policies of the government in Bangkok.
Thailand likely would be in debt to China for a very long time.
The Kra canal project is incidental to China’s militarization and domination over the
South China Sea. China is unlikely to use the canal for military purposes when tensions
are raised or there is conflict. The naval base at Hainan is far more important. Chinese
aggressiveness in the South China Sea will depend on U.S. naval activities and China’s
calculation that it can get away with aggressive action without incurring too much risk.
The Paracels lie close to shipping lanes going north-south and vice versa. This will
include traffic passing through the Kra canal. China can use this as a pressure point if
necessary.
In the southern reaches of the South China Sea, international traffic separates to avoid
the Spratly waters with one route passing to the east of the Spratly islands and the
other route to the west of the Spratly islands. The eastern route passes by the
Philippines, The western route passes close to the Paracel islands.
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China will not interrupt or disturb the freedom of navigation of commercial vessels
because it has so much at stake itself. The Kra canal will be an extra bonus in the long
term because it should lower shipping costs and transit times.
The Kra canal will mean that international shipping will increase in density around the
waters near Phu Quoc. The threat to Vietnam will be minimal. Vietnam already has an
established presence there and it can place coastal missiles on Phu Quoc to ward off
a threat from China if necessary. In strategic terms Vietnam is operating on internal
lines of communication (its mainland shore and islands are near to each other) and
China will be operating on external lines of communication – Chinese naval ships do
not have ports close to Phu Quoc.
It is commercial shipping that will pass by Phu Quoc and China like all other seafaring
countries has an interest in keeping sea lanes secure and open.
China’s claims to the waters inside its nine-dotted lines are ambiguous. Phu Quoc is
located away from the Spratlys which are further north. China does not have artificial
militarized islands near Phu Quoc. Vietnam needs to be vigilant, however, especially if
China should press the Thais for a naval base on Thailand’s eastern seaboard.
The Kra canal should not negatively affect Vietnam. Ships transiting the canal will
reach Vietnam sooner or ships leaving Vietnam will get to the Indian Ocean quicker.
All other traffic would become part of regional connectivity linking trading nations
with both Southeast and Northeast Asia.

Suggested citation: Carlyle A. Thayer, “Thailand’s Kra Canal: The New Great Game?,”
Thayer Consultancy Background Brief, February 9, 2018. All background briefs are
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.