The China Pakistan Economic Corridor (CPEC) has been scrapped. (File image)
In what can be seen as a blow to its ambitions, on August 19 Beijing approved Islamabad’s decision to scrap the China Pakistan Economic Corridor (CPEC) Authority. The $60-billion CPEC is part of China’s ambitious Belt and Road Initiative (BRI) to link the nations around the world through its road, rail and seaways. The CPEC has been marred with problems since its inception in 2013, particularly for India has the network passes through Indian territory occupied by its two neighbours.
Pakistan may have justified the decision to scrap the CPEC on the pretext of fast-tracking several projects, but that doesn’t hide the widening differences between the two all-weather friends over the project’s success. The slow pace of progress in addition to the rising resentment against Chinese projects and men stationed in Pakistan seem to have aided the decision. The scrapping of the CPEC authority can be seen as a reflection of the resentment and tough times ahead for the BRI elsewhere in the world.
When the BRI was launched with great fanfare by Chinese President Xi Jinping after he came to power in 2013, the CPEC was advertised as its flagship project. How come then it is getting embroiled in polemics? For quite some time, there has been vocal opposition to the CPEC-related projects in Balochistan. In particular, the local population is peeved at the hyper-marketed Gwadar Port, the lack of economic growth, and the absence of job opportunities.
Elsewhere too in Pakistan, the CPEC projects are facing tough times. After the Karachi attack on Chinese nationals in May, China is increasingly bitter about the multi-pronged attacks on its projects, and personnel. While Pakistan has deployed more than 15,000 military personnel in protecting the CPEC projects, China is less than confidant about these security assurances. Popular mood in Pakistan is increasingly tilting against the CPEC due to the high cost of loans, and the resultant debt-trap. An Asian Development Bank report in February recommended immediate structural reforms so as to unleash the potential of private sector along the CPEC pathway since the CPEC itself was not a sufficient condition to improve Pakistan’s economy.
Some policy changes on the CPEC, including the authority, were expected with the change of government in April. Apparently, the CPEC Authority was formed in 2019 to expedite different projects under the CPEC. Instead, it has been bogged down in controversies, corruption allegations, and wastage of resources. Within three years, it was perceived as a parallel power centre, challenging the authority of federal ministries.
Pakistan’s new government blamed the CPEC Authority for not bringing any investment during its existence. Many projects have not taken off in last three years, and some were being shelved. It is now debatable if all the projects as envisaged in the CPEC blueprint will take off.
What is true of CPEC in Pakistan, is also true of BRI offshoots elsewhere. For instance, only recently, Nepal decided to handover nearly $2.4 billion-worth of hydropower projects to India that were initially given to China. Some of these projects were part of the BRI.
The fact is that China is now perceived by many of its BRI partner countries as a neo-colonial power. The COVID-19 pandemic, and the ensuing economic slowdown has weakened Beijing’s economic prowess—but more damaging is that it has created a negative sentiments against China and its ways across many nations. China’s grand strategy of using the BRI as a pathway to alternative international economic order is now muted with more and more erstwhile partners walking away.
Problems aside, there are reasons to believe that China would still handhold the CPEC and not let it fail. First, Beijing has already invested a huge amount of money into several projects under the CPEC. A pull-out or even partial withdrawal may sound alarm bells in other BRI projects, and may widen doubts about China’s funding capacities.
Second, China perceives the CPEC essentially in strategic terms since this would allow the shortest land route to West Asia via Gwadar. The economics, at least in this case, gets subsumed under the rubric of larger strategic goals. The likes of Gwadar Port and other important projects under the CPEC may still run through the course. Third, Pakistan has been a close ally of China for decades. If the CPEC is allowed to suffocate, the so-called Sino-Pak axis would emerge as a farcical arrangement. China would surely want Pakistan to remain its brand ambassador to fashion out the BRI landscape in other countries.
Therefore, notwithstanding the manifold problems in the CPEC, China would try to run through all the projects planned out in different phases of the project. Whether that is possible along with vital domestic support in Pakistan, would be known only in due course.