Home / Pakistan Focus Analysis / China-Pakistan Economic Corridor: Sidestepping Obstacles

China-Pakistan Economic Corridor: Sidestepping Obstacles

Prime Minister has invited heads of all political parties, on May 13 for  a briefing on the China-Pakistan Economic Corridor (CPEC). This is indeed a timely action. Earlier Planning & Development Minister Ahsan Iqbal attempted to quash the impression that the government is rerouting the CPEC. In a policy statement in the National Assembly, the minister stated that  there was no plan to change the Eastern route and all three alignments of roads – Western, Eastern and Central – shall be constructed simultaneously: “The corridor will be completed by 2016 and will mainly benefit Balochistan and Khyber-Pakhtunkhwa.” Minister asked the  MPs: “Does anyone possess the original plan? If yes, then can anyone show us what changes have been introduced in the original plan?”

The Eastern route passes through Gilgit-Baltistan, Khyber-Pakhtunkhwa, Islamabad, Punjab, and Sindh and will link to the Gwadar port through the East Bay Expressway along the Makran coastline. This route circumvents the restive areas of Balochistan and K-P, and is aimed at ensuring security for Chinese convoys. Balochistan and the rest of K-P is included in the Western route. Minister cautioned parliamentarians against raising objections over the project, as their criticism could deter the investors. The CPEC is a mesh of communication networks comprising a world-class seaport, commercial sea lanes, an airport, highways, railways, fiber optic cables as well as oil and gas pipelines.

Likewise China has brushed aside India’s concerns over the CPEC being built through Azad Jammu and Kashmir as a “cliche”, a former Chinese diplomat said India being a “big country” should be “broad minded…Narrow mindedness will only lead to bad consequences”.  Former Chinese Ambassador to Pakistan Zhang Chunxiang said in Beijing while interacting with local and foreign media during the session arranged by All China Journalists Association. Earlier, ahead of Chinese President Xi Jinping’s visit to Pakistan, Chinese Assistant Foreign Minister Liu Jianchao had said the project is between China and Pakistan. “So I do not think that the Indian side should be over concerned about that.”

A word from former president Asif Ali Zardari that the political parties had a consensus that they will not do anything that could derail the Chinese investment in the country is quite reassuring. In this context, cardinal point is peace in Balochistan. National leadership will have to keep a special vigil on all direct and indirect attempts to create wedge between people and leadership of Balochistan and the federal government. Such attempts could be foreign seeded or of domestic origin. It is premature to assume anything, but recent gruesome murder of Director T2F, Sabeen Mahmud, while she was returning after holding a Balochistan related event featuring some controversial speakers, like Ma’ma Qadeer Baloch, could be such an attempt. Prime Minster has acted promptly to order an investigation into this case, and hopefully facts would be made public.

China’s investment plan in Pakistan with a special focus on development of infrastructure is a part of Chin’s overall initiative for Asia in general and South Asia in particular. China is also working for another regional connectivity plan to link with India, Bangladesh and Myanmar.  China has a lot to gain from its economic corridor arrangement with Pakistan; its centuries’ old vision of reaching the warm waters through the shortest route is coming to fruition—through peaceful ways. So it’s a win-win situation for both. This region has great potential and China is eager to have close cooperation with all countries of the region. Chinese concept of “Roads and Belts” will benefit entire South Asia, Central Asia, West Asia and East Asia.

China’s emerging role in Afghanistan in unison with Pakistan, and its announcement of $46 billion investment in Pakistan, have created panic in Indian policy making circle. “China’s footprint to our west will continue to grow bigger as it seeks access to the waters of the Arabian Sea through Pakistan, the energy resources of Iran and the mineral resources of Afghanistan,” said Vikram Sood, an Indian strategist. Now India is bracing up for a sort of counter-corridor—India-Iran-Afghanistan corridor. This undue criticism and alarm is despite the fact that China is opening up all sectors of its economy to all countries of Asia; and India is very much a beneficiary.

Pakistan has, in recent years, felt constantly slighted by the world. United States President Barack Obama avoided visiting Pakistan during both his trips to India. But by virtue of its strategic location, it is difficult to keep Pakistan away from the dynamics of global geopolitics. Sensing the opportunity, China has earnestly set out to compensate Pakistan for the US tilt towards India. Huge Chinese investment pales a string ridden American assistance package to Pakistan of $7.5 billion that began in 2010, under the infamous Kerry-Lugar-Barman Act. However, it is important to understand that Beijing is not interested in supplanting the United States from the region; rather it prefers to see the US maintain its support for Pakistan. Moreover, Pakistan also does not see China as a substitute of the United States. Chinese investment programme focuses on ambitious projects that shall transform global trade flow patterns and extend China’s global influence, notwithstanding the military dominance of the US.

While commenting on negative media projection in India, Pakistan Foreign Office spokesperson responded coolly: “As regards the Chinese President’s visit to Pakistan, we conduct our relations with other countries on the basis of mutual interests. The Chinese engagement with Pakistan, and in this region, contributes to stability. We welcome China’s increased role in SAARC. No country has veto over bilateral relations between countries. Hence, we would not like to comment on the Indian media reports”.

President Ashraf Ghani is in India for two days. The two leaders will discuss final approval of a tripartite transit agreement involving India, Afghanistan and Iran centred on the Iranian port of Chabahar. India’s access to landlocked Afghanistan, and potentially on to Central Asia, Russia, and Europe, is either through Pakistan, or via Iran; route via Pakistan is the cheapest and shortest. Unlike his predecessor Hamid Karzai, Ghani has reached out to Pakistan to help negotiate a settlement with Taliban insurgents, and to China to add clout to the fragile peace process as well as to invest in the Afghan economy. China is also working with Pakistan for intra-Afghan reconciliation. This has heightened the realization in India about its down-slide in South Asian affairs.

“Indian officials strongly resist the idea that Pakistan should have veto power over its regional role,” said Alyssa Ayres, former US deputy assistant secretary of state for South Asia. “That sentiment has been magnified as China becomes more active in Afghanistan. India (also) does not want China to displace India’s influence in its own region.” India will keenly watch how this surge of Chinese investment shapes Pakistan’s economy. It is likely to employ all means at its disposal to impede the speed of these projects, and would also try to disrupt some of projects—especially Gwadar port project.

Despite efforts by three successive governments, 450 Kilometers stretch of road from Gwadar up northwards has not yet been constructed due to law and order situation. Ethnic Baloch rebels, who oppose Gwadar’s development, have in the past blown up numerous gas pipelines and trains and attacked Chinese engineers. The rebels want to scare off investors and developers who are working with the Pakistani government — such as the Chinese. They are being lavishly funded by India, they use Afghan soil as sanctuaries and launching pads. Suppression of rebellion by force has proven dicey.

The political process to resolve the issue need to be strengthened and fast tracked. Window of opportunity is not unlimited for the leadership and people of Balochistan. If the portion of the road planned for Balochistan does not come up within a reasonable timeframe, alternative routes may be followed; if so, the province’s benefits from the economic corridor shall stand significantly curtailed. At the same time, the federal government should embed people friendly schemes all along the corridor to so that common people become stake holders in the economic corridor related projects.

Success and long term sustainability of economic cooperation with China would largely depend on how effectively and speedily Pakistan can implement these projects and utilize new investment windows such as the Asian Infrastructure Investment Bank and the Silk Road Fund. It is all easier said than done, onus of creating conducive environment is on Pakistan. First and foremost is a diplomatic campaign to allay the fears of neighbouring countries that the economic corridor is against the interest of any third country. Second, approach Iran and UAE for joint management of three ports—Chabahar, Dubai and Gwadar. Third, strengthening the national consensus about advantages of the corridor. Fourth, taking the Baloch leadership and public on board so that province could benefit from the project. Notwithstanding the setting up of special security outfit for the corridor, ultimate key to sustainable security rests with the local population adjoining the corridor and its associated projects. Sustained economic cooperation with China is in the best national interest; and national leadership owes it to next generation.

About admin

Check Also

Dynamics of FATF listing

Pakistan Focus Analysis. Indo-US anti-Pakistan nexus is so very obvious, both have in-chorus expressed their joy on Pakistan’s placement on grey list. Indian Express has reported that “India, US are one in saying Pakistan deserved to be demoted to anti-terror funding group's 'grey list’”. "India welcomes the decision of the Financial Action Task Force (FATF) to place Pakistan in its Compliance Document (grey list) for ICRG [International Cooperation review Group] monitoring," said India's ministry of external affairs. And; "outstanding counterterrorism deficiencies consistently raised by the Financial Action Task Force and [Pakistan] needs to take actions, including on the raising and moving of funds of UN-designated terrorist groups, a top US official said to news agency PTI”. Decision is politically motivated and is part of American strategy to pressurise Pakistan to settle some other scores. Pakistan has been placed among the jurisdictions (states) with strategic deficiencies: Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen. FATF has called upon these states to complete implementation of the action plans expeditiously and within the proposed timeframes, vowing to closely monitor the implementation. It was also agreed in February Plenary that an Action Plan would be negotiated between Pakistan and FATF members by June. This has been done. The FATF has formally placed Pakistan on the grey list due to ‘strategic deficiencies’ in its anti-money laundering and terrorism financing regime. The decision came despite Pakistan had demonstrated reasonable progress in three out of four major areas of FATF concerns. Pakistan’s team led by Finance Minister apprised the plenary about measures that Pakistan had taken to stop money laundering and strangling the terror financing. In prevailing World Order, nothing works better than American pressures. During February plenary, the US and the UK went out of their way to by-pass the standard FATF procedures and jointly arm twist the FATF for nominating Pakistan for the grey list in June, regardless of its February-June period effort and progress; they were also joined by France and Germany. Pakistan has undertaken to work towards effective implementation of the Action Plan, while staying in the grey list. A similar situation took place in 2011 when Pakistan was included in the grey list and was taken out in 2015 after it successfully implemented the Action Plan. There were tall claims that Pakistan was unlikely to be placed on the grey list of the global financial watchdog as the country had made enough progress to meet international anti-money laundering and terror financing standards, such euphoric environment had been created before and during the previous FATF plenary meeting as well. There is a need to float realistic expectations before such international events. FATF identifies jurisdictions with strategic AML/CFT deficiencies in its two public documents: FATF Public Statement (call for action)– commonly known as black list—and Improving Global AML/CFT Compliance— nick named as grey list. It is an on-going process; these lists are updated three times a year. Interestingly, FATF does not use grey list/blacklist terminologies. The ICRG of the APG had identified four key areas of concerns: deficiencies in the supervision of Anti-Money Laundering (AML) and Counter Terrorism Financing regimes; cross-border illicit movement of currency by terrorist groups; progress on terrorism financing investigation and prosecution; and implementation of the United Nations Security Council resolutions 1267 and 1373, for curbing terror financing. ICRG report has shown that Pakistan did show progress on three out of four major areas of concerns. Cross-border smuggling of cash was the only major area where Pakistan admitted deficiencies. Maximum number of conditions – nine to be precise – take into account the concerns of the UNSC resolutions, followed by eight commitments to address concerns regarding terrorism financing prosecution, four are about curbing currency movement across the border and five recommendations relate to improvement in the supervision mechanisms of banks and companies. Pakistan has undertaken to demonstrate that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for terrorism financing. Remember Ayan Ali case? And who protected her? Carrier is enjoying quality life abroad. Pakistan has made a “high-level political commitment to work with the FATF and APG to strengthen its Anti-money Laundering (AML)/Countering Financing of Terrorism (CFT) regime and to address its strategic counter-terrorist financing-related deficiencies,” according to FATF announcement. The FATF said Pakistan will also be demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions. “It will be demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services.” During the intervening period Pakistan government did strenuous hard work to plug the gaps. Ambitious laws were enacted. Finance ministry improved institutional mechanisms for handling anti-money laundering and countering financing terrorism issues. Coordination between the State Bank, Banking institutions and law enforcement agencies had also been strengthened to curb money laundering and terror financing. Pakistan has recently addressed issues raised by the FATF through a tax amnesty scheme, while Securities and Exchange Commission has issued Anti-Money Laundering and Countering Financing of Terrorism Regulations (2018). National Security Committee has also reaffirmed its commitment to cooperate with the FATF. Through its Action Plan, Pakistan has demonstrated to the world that it was ready to go an extra mile to curb money laundering. Pakistan will have to deliver on the first goal by January next year and complete all the 26 actions by September 2019,” it is indeed a tight schedule. One wonders whether Pakistan has requisite mechanisms in place to implement and steer such an ambitious plan. An expert assessment has it that though Pakistan’s inclusion in the grey list may hurt its image in the international landscape, its economic impact will not be as severe as being portrayed. This is because when Pakistan was part of the grey list/blacklist (2008-2015), it successfully approached multilateral bodies, floated international bonds and had international trades. Hopefully Pakistan will be able to come out or grey list in September 2019, however it must follow consistent economic policies to remain out of such trouble spots. Caretaker government would do a great service by forming a national commission to identify and punish all those responsible for letting the things reverse back after Pakistan’s previous journey to blacklist was over.

Leave a Reply

Your email address will not be published. Required fields are marked *