Pakistan: The China Crossroads

The China Pakistan Economic Corridor will act as an economic force-multiplier for South Asia with India a major beneficiary connecting it across the land bridge of Pakistan with Central Asia and the Middle East.

Posted on 04/26/15
By Ikram Sehgal | Via ViewsWeek
(Image via Pakistan China Institute)
(Image via Pakistan China Institute)

Pakistan’s geo-strategic crossroads location connecting China with South Asia, the Middle East and Central Asia was confirmed by the signing of agreements pertaining to the China-Pakistan Economic Corridor (CPEC) during the visit of Chinese President Xi Jinping to Islamabad.  Envisaging construction of roads, rails and power plants, nearly US$ 35 billion (of the US$46 million) is earmarked for the energy sector alone in the next 10-15 years.  Concurrent private sector investment may likely dwarf this amount many times over.  According to the FT, “China will draw on its massive foreign exchange reserves to impact US$ 62 billion into state-owned policy banks, China Development Bank, Export-Import Bank of China, and Agricultural Development Bank, supporting ambitious “New Silk Road” plans to build infrastructure linking foreign markets, deepening US unease about its waning influence in the region. China had earlier obtained enormous diplomatic success in getting 50 countries to back the Asia Infra-structure Investment Bank (AIIB).

 

A veteran of the Pakistan Desk at the Pentagon said that the 2009-2012 USAID package of US$ 7.5 billion failed to make a strategic impact on Pakistan. Interviewed by the New York Times, David Sidney called the package a dramatic failure, the resources being scattered too thinly with no practical or strategic advantage. Designed to deliver a strategic result deterring terrorism it had failed to do so, whereas the Chinese had come up with a much larger financial commitment focused on a specific area with a signature concentration on infrastructure development over a decade long commitment. The US investment in Afghanistan fighting the “war against terrorism” was far more, US$ 100 billion plus over the last 10-12 years keeping the country from falling apart economically, politically and militarily.

 

The generous US and western aid, along with aid from Japan and China, stabilized Afghanistan, hope for the future coming only recently after the 2014 Afghanistan Presidential elections in the person of a visionary but pragmatic leader Ashraf Ghani. Rapprochement with Pakistan, the centerpiece of his program to restore peace in Afghanistan, has meant increased cooperation on the ground between Pakistan and Afghan armed forces.  Reduction of the trust deficit was underscored by General Sher Mohammad Karimi, the Afghan Chief of Staff, becoming the first foreign dignitary in Pakistan’s history to address a graduating class of the Pakistan Military Academy (PMA) parade at Kakul. Six Afghan army cadets are currently undergoing training at the PMA.

 

Meeting the Services Chiefs, Xi Jinping eulogized Pakistan’s remarkably successful offensive against militants in North Waziristan effectively, following up clearing militants from Swat and other areas of FATA, crucial for bringing peace in the area. He promised all-out support for Pakistan in its military endeavors to bring stability to the region, the joint military co-production of JF-17 Thunder, tanks etc being visible signs of that.  The US has been every generous to Pakistan helping Pakistan in overcoming grave financial and economic crisis, however military aid came with “do-more” admonitions ad nauseam. This is not US fault, they were receiving advice against “trusting” Pakistan by Pakistan’s own Ambassador in the US, Husain Haqqani. During nearly two terms as Pakistan’s representative, Haqqani was publicly stating things quite different from what he was telling the Americans in confidence. Why blame the US if their “worst fears” are stoked by Pakistan’s own man in Washington? Criticizing the US decision to sell almost US$ 1 billion in US-made attack helicopters, missiles and other equipment for Pakistan’s armed forces, Haqqani’s latest diatribe in the Wall Street Journal (WSJ) says this will fuel the conflict in South Asia, menacing India and perceived “domestic enemies” instead of targeting Islamic Jihadists. In his infinite wisdom, former Chief Justice Iftikhar Chaudhry allowed Haqqani to exit Pakistan despite everyone and his uncle knowing that despite his solemn promise to return he would use his freedom to target the country whose interest he had sworn to uphold.  Coincidence that both Haqqani and Iftikhar Chaudhry hate the Army?  Should one expect some condemnation by PPP’s Asif Zardari?

 

Running about 3000 kilometers from Kashgar in Sinkiang province to Gwadar, the China-Pakistan Economic Corridor (CPEC), expected to be completed by 2030, is a force-multiplier.  Fifty-one Agreements are earmarked for US$ 28 billion early harvest projects, US$ 17 billion plus are in the pipeline. Bloomberg Business (April 1, 2015) says, “the move represents a shift towards greater economic cooperation between China and Pakistan, which had close security ties and common disputes with neighboring India.  The corridor would give China access to the India Ocean and lead to investments that would help ease power shortages hindering economic growth in Pakistan”.    CPEC will connect economic agents centered on economic hubs and nodes along a defined geography where economic resources and actors are concentrated, says ADB, linking supply and demand side of markets. With most financial resources being deployed in the next six years, “most benefits will not become apparent immediately, but would materialize by 2017, or even 2018. “Moody’s Investor Service” says some benefits from CPEC’s construction will likely begin accruing earlier.   Moreover western countries will also invest in the resultant economic boom, investors never shy away from the sight of gold whatever their ideological inclinations.

 

Increasing our capacity to absorb the economic, political and military largesse that the “China Crossroads” will bring us, we must also reduce our capacity for corruption.  The CPEC must benefit the impoverished people of Pakistan, not those who siphon off money in suitcases to buy property around London’s Hyde Park or in Dubai’s Palm Island. We should request President Xi Jinping to tell us how he is targeting the hitherto “untouchable” corrupt high and mighty making them accountable, some of them have been shot after a short trial.

 

Mushahid Hussain says regional integration of “greater South Asia” which includes China, Iran and Afghanistan, will stretch all the way to Myanmar. Given rapprochement with India on Kashmir, CPEC will act as an economic force-multiplier for South Asia with India a major beneficiary connecting it across the land bridge of Pakistan with Central Asia and the Middle East.    With the US-Iran nuclear deal in the offing, US sanctions will likely be lifted, paving the way for Iran-Pakistan-India (IPI) gas pipeline, with energy boosting manufacturing across the energy-short region drastically changing the economic landscape. Providing cheap labor and the shortest secure land opening to the markets that the Chinese are looking for, likely Chinese factories re-locating along the CPEC in clusters of economic zones will add to our economic boom.

 

 

For China and Pakistan the CPEC factor is positive both ways, the strategic force-multiplier impact of the “China-Crossroads” is immeasurable to both countries.

 

The writer is a leading defense and political analyst of Pakistan. He can be contacted at ikram.sehgal@wpplsms.com

 

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