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CPEC: a game changer but for whom?

Ties between Pakistan and China haven’t just stood the test of time but have also been proverbial in many ways. Yet, it is imprudent to say that it emanates from altruism or the milk of human kindness. History bears testimony to the stark reality that in international relations self-interest has always remained supreme for survival in the international community. Therefore, instead of gloating with joy, we should seriously ponder and professionally appraise the imperatives of this investment, particularly because now a long-term plan for CPEC is also on the anvil.

Many experts consider CPEC as a complicated set of infrastructure investments, which will largely be paid by Pakistanis, in one form or the other, with cumulative interest rates going much higher than what is being projected. Serious scrutiny of the following is therefore in the national interest, lest we end up munching peanuts yet again:-

1. Real financial cost to Pakistan

2. Long-term social, economic and strategic implications

3. Expected benefits to each side

4. Utility of each project

Plans for a corridor from China to the Arabian Sea date back to the ’50s, but these took tangible shape in the last decade. Incidentally, I was posted as communications secretary at that time, which enabled me to see matters first-hand.

In early 2002, I led a delegation to Beijing to finalise the terms and conditions of the project. The contract was signed and sealed in a week. Upon my return, I was stunned to discover that even before the ink was dry on the contract, China Harbour Company had started working on the project. Every aspect of the project was meticulously planned and orchestrated by China, well in advance. It isn’t rocket science to conclude that for China it was an opportunity of the millennium. No wonder the port was completed ahead of schedule and strictly as per specifications.

My visit to Shanghai in 2004, representing Pakistan in ESCAP Conference, was even more revealing. On the last day of our departure, my wife and I were taken for a tour of old Shanghai. In a state of slight inebriation all three of the Chinese staff accompanying us shared their feelings on Gwadar. By giving access to the warm waters of the Arabian Sea, they said, three generations of China stood mortgaged to Pakistan.

If this was the mindset of young and educated Chinese surely the elders, who had dreamt for generations, must have been blown off their feet. We need to recognise that China has offered CPEC as a fulfillment of their lifelong dream and it is naïve for anyone to take credit for bringing this investment.

There are a few more hard facts to acknowledge and understand. The importance of CPEC to China can be gauged from the fact that it is included in their 13th five-year plan. The reasons are both financial and strategic as this will be a much shorter, safer and alternative route.

Analysts believe, strategically, CPEC is part of China’s vision to write the rules of the next era of globalisation. Furthermore, China imports 80 per cent of its energy needs through the Malacca straits and this route is also the main access to Europe, Africa and the Middle East. Recent muscle flexing by the US and India has sent jitters among Chinese quarters because they know that hostilities can paralyse their economy and the nightmare, known as “Malacca dilemma”, can become a reality. A less frequented sea route is through South China Sea but this is an unsafe and contentious route. As opposed to this, the Arabian Sea provides a vital and safe route for trade to the Pacific, Atlantic and the Gulf. Most importantly, from western China to Gwadar it is 3,000km and from the eastern ports it is 6,500km, while the sea route is 12,000km. Savings in time and money will be colossal besides safety of passage. Hence, for China this is a far greater game changer than for Pakistan.

Considering the importance of CPEC to China, it is crucial that every project they offer is secured keeping Pakistan first. The fate of Chinese investment in Sri Lanka and African countries can perhaps serve as a lesson.

According to experts, Pakistan will start the payback of the CPEC loan after 2020 and it will be a significant amount. But no one really knows the details and the real financial implications. Hence, it is absolutely necessary for experts to carry out a professional financial analysis of the project to present the true picture, in order to safeguard the vital stakes of the country.

On leaving the ministry in 2005, my specific recommendation to the government was to lease the Port to China for operations, in order to gain maximum advantage. Why the then prime minister gave it to a company from Singapore is still a mystery. The port never took off and we lost valuable time. Hence, to recognise the real dynamics of the Gwadar Port, one must recognise its financial and strategic implications in the regional and global backdrop. Neither the US nor the Gulf countries would like to see this port operational. While the reasons are compellingly economic for the neighbouring ports, they are more strategic for the West. One only needs to see the geographical positioning of Gwadar to realise how seriously it will impinge upon the economic interests of the ports situated further up the Straits of Hormuz and what strategic advantage it will give to China.

We should recognise and capitalise on these fundamentals to bargain from a position of strength instead of ecstatically crowing over CPEC. This is the moment to safeguard our interests and one of the solutions is to associate as many bordering countries in the project as possible, especially Russia. This way we won’t be dependent on a single country and also improve our relations with our neighbours.

Published in The Express Tribune, May 17th, 2017.

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