Indian Defence Review

In the latest series of setbacks to the China Pakistan Economic Corridor (CPEC), the Standing Committee of the National Assembly of Pakistan ordered an inquiry into affairs of China Overseas Ports Holding Company-Pakistan (COPHC-Pakistan), which is building and operating the Gwadar Port as it had been operating without a valid security clearance[1].

The heavily touted project of the Belt and Road initiative (BRI) has been in the news for the wrong reasons over the last few months. Advertised as the game changer for Pakistan, fears of Chinese hegemony are slowly leading to cracks in the project. The cancellation of Diamer-Basha Dam project was the first major setback. The increasing cost and ownership concerns by the Chinese company had led to cancellation of the project. The next retrograde step was the Chinese concerns of corruption as it stopped its funding tothree road projects of the 210-km-long Dera Ismail Khan-Zhob Road, the 110-km-long Khuzdar-Basima Road and the 136-km long Karakoram Highway (KKH) from Raikot to Thakot in November 2017[2].

The third issue was the insistence of Chinese authorities on using Yuan as the trading currency in Gwadar. Though the case was not accepted as it would have seriously impacted Pakistan’s economic sovereignty, Pakistan Central Bank allowed yuan to be used for bilateral trade and investment activities replacing the US dollar and moving Pakistan yet another step closer to becoming an extended Chinese outpost. Also, directing its financial institutions to trade in yuan and neglect prevalent global practices may further alienate Pakistan regionally and globally besides getting tightened in the vicious Chinese debt grip.

There has been increasing opposition to CPEC within Pakistan due to fears of forcible land grab/ displacement in guise of requirement of land for CPEC projects. The Baluchistan Liberation Front (BLF), an insurgent group fighting for independent Baluchistan has carried out several attacks against the Pakistan Army which has been providing security to CPEC workers. The balochis resent the corridor as an intrusion which subverts their rights over local resources[3].

They also fear increase in human rights violations by Pakistan Army due to forcible eviction and destruction of their villages and homes. A report published in the Pakistani newspaper Dawnon 20 February 2018 had claimed that Chinese authorities were in talks with Balochi leaders to protect the CPEC within Baluchistan. It indicates Chinese belligerence in bypassing the Pakistani authorities and direct interference in Pakistan’s internal affairs. The Pakistani acceptance shows its willingness to pay obeisance to its Chinese masters. Chinese peacekeepers are guarding its oilfields and planned railway line in South Sudan. It may not be far when PLA soldiers are stationed within Pakistan to guard CPEC should any major terrorist action take place targeting Chinese workers.

Similarly, opposition to CPEC has also been growing in Sindh province. Given the sectarian divide within Pakistan, Sindhis view CPEC as a conspiracy by the Punjabi dominated Army and Politico combination to strengthen their hold over the province. Sindh will account for majority of $33.8 billion energy projects besides the development of Lahore-Karachi highway and two railway projects; Karachi-Peshawar high speed rail link and Hyderabad-Multan-Havelian Dry Port. The development of Thar coal fields and rail-road projects will lead to acquisition of large tracts of land in Sindh besides displacing large number of people. Given the opposition to projects, the progress of work will lead to human rights violations within Sindh in the coming months.

Pakistan’s economy has been struggling and urgently needs the infusion of funds, especially Chinese yuan. The major FDI flow from US and UK has dwindled since 2013-14 and the Chinese are slowly bridging the gap. Given its current account deficit at nearly 5.5 percent of its GDP, Chinese investment is a potential life saver. With growing isolation at world level due to increased support to terrorism, funding from wealthy donor countries is a suspect. That may be the primary reason for Pakistan approaching China and Saudi Arabia instead of IMF to seek financial bailouts[4]. Pakistan has sought $ 15-16 billion besides oil import from Saudi Arabia on deferred payment mechanism to keep its economy afloat.

The opposition to the corridor in Sindh and Baluchistan and low generation of jobs coupled with all projects being executed by Chinese firms may be a reminder that Pakistan is heading the Sri-Lankan way of debt trap. Pakistan badly needs the CPEC to be a success, even more than China. Hence, displacement of communities, forcible eviction and transfer of land may become a survival necessity. Given its precarious economy, made more vulnerable due to proposed FATF restrictions, the very survival of Pakistan’s economy may hinge on CPEC’s timely completion. Handing over reins of Gwadar and other infrastructure projects within Pakistan may seem to be a small price to pay for its economic survival and becoming a Chinese client state.