During the height of the Cold War, Pakistan received load of money as loans and grants from the US and Europe. But all that turned Pakistan as a consumer, not a producing nation. Upper crust of the society got used to affluence without equal work. Corruption, bank loans taken without intention to repay, tax evasion and unwillingness to pay for public utility services are some ailments afflicting Pakistan’s economy. It is doubtful if China or CPEC can stabilise Pakistan economically if the past is any indication. …writes Dr Sakaraiya Kareem
The China-Pakistan Economic Corridor (CPEC) should make Pakistan’s economic revival successful provided its government is able to develop informed consensus in favour of this project. Or this mega project can mar this country if the process of consensus building does not happen at all. The condition of informed consensus is tough or rather near impossible.
The civilian government does not seem to be fully aware of the CPEC project and its economic benefit to Pakistan. The military is more interested in the corridor’s strategic importance to Pakistan vis-a-vis India and the United States then its economic benefits. Politicians hide their half-baked knowledge of the project by mouthing slogans like “it is game changer” but avoiding discussions in the Parliament. Media cannot write what little it comes to know about the project. In Gilgit-Baltistan, newspapers, who write anything adverse on CPEC, are dealt under the Anti-Terrorism Act of 1997. Journalists who write such adverse stories are at once accused of being India’s agents.
So how can informed consensus be evolved in Pakistan about CPEC? The Brussels-based International Crisis Group (ICG) in one of its latest reports “China-Pakistan Economic Corridor: Opportunities and Risks” finds, on the basis of interviews, that informed consensus about this project is lacking countrywide. The project is going ahead, without thorough debate in Parliament and provincial assemblies.
The ICG’s Asia Report, released late last month, examines CPEC’s economic and development projects within Pakistan, discusses whether it will bring the broad economic revival that Pakistani leaders claim it will generate, and assesses its political and security costs for Pakistan. It analyses CPEC’s impact on domestic stability and security, particularly the potential for heightened tension between the Federation and federal units, between Islamabad and Gilgit-Baltistan and conflict dynamics within provinces. ICG says this report is based on interviews with officials, economists, politicians, security analysts, journalists, activists and other stake holders in Islamabad, Baluchistan, Punjab and Sindh conducted between November 2017 and January, 2018.
As China-Pakistan relations, fuelled by their mutual hostility towards India, began to move up in 1962 (the year of the Chinese aggression against India), China used the enmity with India to develop connectivity with Pakistan, while Pakistan was happy that there relations were a guarantee against India. History of China-Pakistan economic relations began with the build of the Karakorum Highway which connected Pakistan via Gilgit Baltistan’s Khunjerab Pass to China’s north-west province of Xining’s Kashgar prefecture.
Both China-Pakistan relations yielded few economic benefits to Pakistan. China has better economic relations with India which Pakistan considers as its enemy number one. Pakistan has been grooming massive trade deficit with China about 12 billion dollars in 2017.
But Pakistan shows a meekly surrendering attitude towards China. Pakistan signed a Free Trade Agreement (FTA) with China in 2006 disproportionately benefitting the latter. In addition to this Pakistan has a liberal import policy. Low duties and general sales tax keep down the prices of Chinese imports. As a result, Chinese goods flood Pakistan. But Pakistani goods find it difficult to enter Chinese market because of high Chinese tariffs. Islamabad is renegotiating this agreement. But the ICG quotes a prominent businessman as saying that it is like locking your door after everything has already been stolen. No less threat to Pakistan’s indigenous industry come to CPEC-related Special Economic Zones (SEZ) which are supposed to keep economic growth and job creation. The ICG says “information is scarce about how the zones will relate to the rest of the economy, which could slow other investments. For example (Pakistani) produces would be hesitant to establish factories or mills if a nearby CPEC Zone produces similar goods but with the benefit of tax, duty and other concessions”. In the absence of adequate information about the SEZs, Pakistan’s already feeble domestic industry will be competed out by Chinese manufactures, supported by a range of concessions.
The Long-Term Plan (2017-30) of CPEC, released in December 2017 defines the project as “a growth axis and development belt”. This plan, prepared in Beijing, hides more than what it reveals about the CPEC plan, the ICG quotes a senior journalist, investigating the CPEC, to say that “we still know very little about CPEC. The material that would tell us is still vigorously concealed”. It quotes another analyst as saying that “the launch of the detailed CPEC plan neither adds anything new to our understanding of the project nor helps remove the concerns of critics regarding the overall impact of the project”.
The Crisis Group holds Pakistan’s federal government largely responsible for this lack of transparency. It also blames parliamentarians for showing indifference. It acknowledges that individual parliamentarians have raised concern about inequitable distributions of CPEC projects resources. But all major opposition parties have supported the project but are reluctant to discuss it in Parliament. Without really understanding the CPEC project they call it a game changer with great zeal. The Crisis Group reveals: “Committee chairs and ranking members have failed to promote open debate or exercise oversight over one of Pakistan’s most ambitious economic and geostrategic undertakings”.
While politicians are not showing much concern, the Army has its own line. It sees CPEC as a counterforce to India and the United States even if the deals under the CPEC are unfair to Pakistan. But the Chinese are worried about the Pakistan Army’s support to jihadists. They are also unhappy with treatment given to disqualified Prime Minister Nawaz Sharif.
In this report, ICG repeatedly emphasises the need for debate about CPEC among all stakeholders. It appeals to the new government after the July 25 elections, to encourage this debate among business leaders civil society and locals affected, ensure that landowners receive fair compensation, encourage hiring local labour and allow space for dissent. That is reasonable appeal. But note the following points: (1) No political party in Pakistan, as reported in media, has touched CPEC in its election manifesto; (2) Chinese are not for such debates and (3) China and Pakistan have basically diverse interests in the CPEC. For the former it is an expansionist plan while for the latter it is limited to security insurance (against India) more than economic security.
It is doubtful if China or CPEC can stabilise Pakistan economically if the past is any indication. During the height of the Cold War, Pakistan received load of money as loans and grants from the US and Europe. But all that turned Pakistan as a consumer, not a producing nation. Upper crust of the society got used to affluence without equal work. Corruption, bank loans taken without intention to repay, tax evasion and unwillingness to pay for public utility services are some ailments afflicting Pakistan’s economy. If the CPEC cannot vanish these ailments, China, for the sake of its expansionist ambitions, will have to carry Pakistan on its back like the sea and the old man.