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“CPEC alone is a huge opportunity to put on the table”

Andrew Small on what Pakistan and China are going to gain from the multi billion dollar economic corridor

“CPEC alone is a huge opportunity to put on the table”

Andrew Small is a fellow on the German Marshall Fund of the United States’ Asia Program, and the author of The China-Pakistan Axis: Asia’s New Geopolitics. Excerpts from his interview follow:

The News on Sunday: How do you look at the China-Pakistan Economic Corridor (CPEC) in the backdrop of China’s plans for the region? What could be the possible foreign policy and economic benefits of this for China?

Andrew Small: CPEC has to be seen in the context of Beijing’s broader Belt and Road scheme of Silk Road initiatives. Personally initiated and driven by Xi Jinping, they are motivated by a long list of factors that stem from China’s immediate economic and strategic challenges. They include: outsourcing excess industrial capacity, building new markets, developing new drivers of growth in China’s western provinces, diversifying transportation routes away from exclusive reliance on vulnerable “choke points”, and stabilising China’s western periphery in the context of a worsening terrorist threat. Pakistan is uniquely placed. It has an expansive list of projects ready to move forward, sufficient trust for the two sides to work together on such an ambitious plan, ports that can serve both economic and military purposes, and an economy with significant growth potential where Chinese firms have privileged access. But Beijing’s other objective is to use the corridor to help build stability in Pakistan and the wider region. It is supposed to act as a force of economic attraction, an incentive for restraint, a job-creator, a source of government revenue and various other benefits. If it succeeds, it would make Pakistan a far stronger and more capable partner for China.

TNS: This is the biggest ever investment to have come Pakistan’s way, a major part of which is going to be spent on power plants. Some people say it could be a real game changer for Pakistan. What is your opinion?

AS: The potential certainly exists. Many of the proposed projects will not succeed but even if a reasonable proportion comes off, the impact would be very significant, and there are already a host of plans that go well beyond the list agreed upon during Xi’s visit last year. There are major implementation challenges, of course, but the political will on both sides is there, and there’s a willingness on China’s part to push on past obstacles that have slowed or derailed similar initiatives in the past. It is not easy for either side. China has undertaken projects of this nature at home before, but never really anything quite like it overseas, so both sides are figuring out how to work together effectively and what they can really deliver. I think there will be lots of headaches in the short-term but I’m relatively optimistic that there will be some tangible things to show for it in the medium-term.

TNS: China-Pakistan relations have been understood in the context of shared mistrust of India. But alongside CPEC, one sees a push for cooperation in the region, including between Pakistan and India, and in the quadrilateral talks on Afghanistan. Is there a larger plan for the region and how much of this push is coming from China?

AS: China is certainly encouraging Pakistan to ensure that troubles with its neighbours don’t derail all of these ambitious plans. Beijing has weighed in very actively on Afghanistan. Its diplomatic role in the quadrilateral talks and elsewhere is indicative of the fact that it has more significant strategic interests there than it did in the past — which it expects Pakistan to take into account.

More discreetly, China has expressed its views on Indo-Pak relations, which it would like to see improved. After being India-centric for so long, China is nowadays looking to Pakistan to play a role that looks west rather than just to South Asia — dealing with terrorist threats, stabilising Afghanistan, transportation connections through to the Indian Ocean and the Middle East.

But none of this would work if the impetus was coming from Beijing alone and the Pakistani civilian government and army were not aligned with these plans. There are other important dynamics at play too, including the drawdown of the US military presence, and the Pakistani army’s changing threat perceptions about Afghanistan. Key actors, including Raheel Sharif, Nawaz Sharif, Modi and Ghani are approaching various issues differently from their predecessors. China is acting as a catalyst and CPEC alone is a huge opportunity to put on the table, but there are many other factors at play.

Related article: A question of human resource capacity for CPEC project

TNS: Pakistan is a complicated country with unique problems and then there have been strong irritants in Pak-China relations like the East Turkestan Islamic Movement said to have been located in North Waziristan. With the progress on CPEC, has China in your view ignored the irritants or is it convinced the projects would have a stabilising effect on the country?

AS: China is under no illusions about the security challenges — as one sees from its insistence on such an expansive protection force for the projects. But some of the tensions over ETIM have been mitigated by the Zarb-e-Azb operation, which largely displaced them from North Waziristan. It’s certainly also the case that Pakistan’s “unique problems” are one of the reasons that China is making such a serious effort to bolster the Pakistani economy.

TNS: Gwadar is at the heart of this corridor. What exactly are the Chinese planning for the port? Is it going to be a commercial port or naval base or both?

AS: None of the formal plans for the port involve anything beyond the commercial but over the longer term, its value as a naval facility is certainly in the minds of China’s military planners. It will be of far greater use for port calls and so on if the infrastructure around Gwadar is better developed and if the city itself functions more normally. The commercial investments will facilitate that. If they don’t come off, China is likely to prefer to use other ports, such as Karachi, for naval purposes.

TNS: Pakistanis have welcomed all previous Chinese investments. This is the first time there are serious concerns from the provinces on route, etc, and by a section of the intellectual elite about lack of transparency. They think the benefits of CPEC are over-assumed and very little will translate in actual terms for Pakistan. What is your sense?

AS: The scheme is very large and very ambitious, so it is unsurprising that some provinces want to ensure that they get as much benefit as possible. None of China’s previous investments were on this scale so there simply wasn’t as much to fight over. The government should have done more to ensure that the provinces were kept on board, and that the national consensus behind CPEC was maintained. That needs to be fixed.

China will not be happy to be the subject of sustained political battles. There is also more that can still be done for the sake of transparency — publishing far more of the details of the projects and aggregating the information on financing, for instance. At the same time, many of the projects are in flux and the sheer number is challenging for the state to manage. Even within the government, I think it’s difficult to get a total overview.

There will be more concerns that emerge in future too: are sufficient jobs being created, and what is the social impact of these schemes at a local level? Nonetheless, a year ago, the big question was still whether China was willing to make these investments at all — a year later, the fact that the big fights are over transparency and which provinces will benefit is already an indication of progress. And China needs to demonstrate success with these investments. Not just for Pakistan’s sake but for the entire Belt and Road scheme, under which it’s a flagship project. I would be surprised if that failed to translate at least into some valuable infrastructure.

TNS: Any thoughts on how will the Corridor impact the restive province of Balochistan and vice versa?

AS: It’s still too early to tell. At this stage, it could break either way — there may be economic benefits from the port and infrastructure connections but ensuring local consent will require some of them to be very tangible and immediate. And there will be opponents, even then. It’s probably still the biggest question mark over the most ambitious versions of CPEC.

Nonetheless, I think the Chinese are prepared for a situation in which the Balochistan projects do not succeed or are of limited commercial utility. Although the corridor is often seen as hinging on lines on a map from Xinjiang to Gwadar, it’s really just a large-scale investment package. If those investments only come off properly in other provinces, CPEC can still have a substantial economic impact, even if it would then look rather less like a “corridor”.

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