The fate of China Pakistan Economic Corridor (CPEC) has been a question of great intrigue lately. Before and during the pandemic, the mega project has experienced some slow-downs and renegotiations, which by some has been dubbed as diminishing enthusiasm and by others as efforts at recalibration. There are also enquiries into the intersection of politics, strategy and economy regarding CPEC as the key component of the Belt and Road Initiative (BRI).
This article will analyse the evaluations of hitherto progress of the mega project and its future prospects. For this purpose, three recent studies will be majorly referred to: (1) “Returning to the Shadows: China, Pakistan and the Fate of CPEC”, a report by Andrew Small, a senior Trans-Atlantic fellow at The German Marshall Fund of the United States, (2) “Review Report: CPEC, a Transformation in Motion”, a piece responding to Small’s report by Dr. Rabia Akhtar, Head of the Department at the School of Integrated Social Sciences, University of Lahore, and (3) “Flattening the Eastern Hemisphere Through BRI: The Geopolitics of Capitalism”, a report by Rida Fatima, a researcher associated with the Center for Global and Strategic Studies.
Andrew Small envisions the change of pace and scale of the CPEC as the exhaustion of the grandiose transformative intentions of the project. Small’s apprehensions are plausible due to a number of reasons. While the international financial institutions paint a gloomy picture, the worsening economic landscape of Pakistan has made it further difficult for the country to pursue an ambitious developmental project fuelled by foreign capital. However, the circular debt problem of Pakistan cannot be attributed to the Chinese loans alone. But the absence of requisite reforms in power sector particularly, and in developmental governance infrastructure generally, make it difficult to carry out efficient debt servicing, undertake upward social mobility drive, and embark upon the promised industrialisation and technology/knowledge transfer. This also dents the greater ambitions of regional connectivity and empowerment of new value chains, considering that the CPEC being the flagship project, largely impacts the fate of the whole BRI. There can be no successful BRI without a successful CPEC.
Understanding the CPEC only through the traditional civil-military lens is also not very tenable. Pakistan is not the only country where the realms of politics, governance and strategy overlap.
Small also argues that the lingering civil-military tensions in Pakistan have made the mega-project revert back to the realm of security. In his view, the initial civilian dominion over the implementation of the CPEC has been replaced by the Chinese acceptance of a greater military role. This, in his report, is argued in view of the appointment of a retired Pakistan Army general as the head of CPEC Authority, and silencing of the critical politicians, including the ministers of the incumbent government of Pakistan Tehreek-e-Insaf. The peaceful rise of China and its financial diplomacy are seen as a healthy alternative to what is often deemed as the West’s antagonist and conflict-oriented ways of political and financial interventions, and imperialist models of development and aid infrastructure, that empowered security-development nexuses and dictatorships in the developing world. This assumption is used to assert that the CPEC was initiated as more of a financial and developmental regime rather than a political and strategic one. At the same time, understanding the CPEC only through the traditional civil-military lens is also not very tenable. Pakistan is not the only country where the realms of politics, governance and strategy overlap. For instance in the United States (US) “Former military personnel make up about 20 percent of the State Department Foreign Service, according to the department’s Bureau of Human Resources. The State currently employs more than 7,100 veterans both as contractors and as federal employees, about 3,200 of them as members of the Foreign Service”. Therefore, it should not be something alarming in itself. Given the geo-political situation in the region, and strategic realities within the country, security will remain a key factor in the development and evolution of the CPEC. But keeping in view Small’s observations, one can find weight in the argument that due to internal political tensions, China has given into the requirements of the security establishment of Pakistan, and responded to them not by “recasting the political and economic nature of the CPEC”, but by changing the pace and scale of the project i.e. reducing the quantum of ambitions. In addition to military’s role, changing economic realities, domestic scepticisms and renegotiations of the agreements should also be seen as contributors to this.
Dr. Rabia Akhtar, however is of the view that the CPEC is “significant and transformative regardless of its scale”. To her, the change of pace and scale is not the exhaustion of ambition, but a logical and rational effort at recalibration and renegotiation, which is a right of every sovereign nation. This is a very credible argument also, because there is a dire need of recalibrations in the CPEC. These recalibrations are being undertaken with a view to try and fix the problems with the implementation of the project, rather than to reduce the scope and ambition of change. The cost reduction of the ML-1 railways project is a significant example in this regard. The Central Development Working Party (CDWP) in June this year, reduced the cost of the project by around $2 billion without reducing the scope of the project. This renegotiation, on one hand provides an opportunity to recalibrate the regime with regards to changing economic and financial landscapes, whereas on the other it opens avenues for reforms. This one example highlights the exploits of discrepancies, corruption and malpractice, that a badly negotiated agreement, that involved an extra-ordinary inflow of funds, was about to be embarked upon. These renegotiations are improving the efficiency of the CPEC, and not necessarily reducing the transformative intentions attached with it.
One has to understand that no developmental project has ever existed without the company of both geo-politics or geo-strategy, and geo-economics. The world in which development has to take place is always a highly politicised, yet strategized space.
Dr. Akhtar further responds to Small’s report by asserting that the CPEC should not necessarily be seen as a “factor in the wider rivalry of Washington and Beijing” as suggested by the report. She asserts that Pakistan’s relations with the United States are evidently improving, keeping in view the Afghan Peace Process and willingness to welcome the US-backed financial initiatives as expressed by some officials. One may argue that the Afghan Peace Process is a temporary convergence of interests, and might not bear prospects for the longer term, and there is no denying that the US does perceive an amount of antagonism attached with the CPEC. But efforts can be seen from both China and Pakistan, to not let the mega project be a bone of contention in their relations with the US. In her view China also does not envision the CPEC as a project purely pertaining to strategy, as she quotes China’s efforts to rename the project to accommodate India. Therefore, instead of involving in a zero-sum game, Pakistan opts to keep healthy relations with every potential ally and friendly nation. Based on these observations, Dr. Akhtar asserts that it is not fair to let the geo-economy of the project be dominated by the perspectives of geo-politics. She also refutes the argument regarding the securitisation of the CPEC by drawing attention to the fact that the head of the CPEC authority is a retired general nevertheless i.e. currently civilian. This point can however be deemed a little insulated from the current political environment in Pakistan. Small’s observations may be influenced by the “age-old analyses of civil-military tensions” in the country, but one cannot simply deny the prevailing friction among the military and parliamentary forces.
The major purpose of incorporating the third study i.e. by Rida Fatima, is to put in perspective the conflicting dichotomy of geo-politics and geo-economics, recurred in the two previously discussed studies. Small’s analysis, although stressing the need for efficient implementation of the CPEC, fixates on the geo-strategic aspect. This fixation is ubiquitous in western academia which majorly leads to allusions to “Chinese debt-trap diplomacy”, and consolidation of China’s strategic goals via development of sea-ports as strategic sites in the Indian Ocean Region (IOR). On the other hand, the pro-BRI factions stress the need to pay more attention to the geo-economic side of the saga, as suggested by Dr. Akhtar. While there can be no overlooking both the arguments, what we get from Fatima’s report is that one has to understand that no developmental project has ever existed without the company of both geo-politics or geo-strategy, and geo-economics. The world in which development has to take place is always a highly politicised, yet strategized space.
While it is necessary to renegotiate the agreements and undertake a comprehensive reforms agenda, it is also important to analyse if the debt-stricken country can withstand the delays in the CPEC. Let alone CPEC 2.0, the Early Harvest Projects of the CPEC have already anchored such a gargantuan infrastructure – particularly in the power sector – that if the recalibrations delay growth and industrial output, Pakistan will keep plunging into even worse debt crises.
As cumulatively argued in this article, the change of pace and scale is neither the exhaustion of transformative intentions, nor mere recalibrations. While it is necessary to renegotiate the agreements and undertake a comprehensive reforms agenda, it is also important to analyse if the debt-stricken country can withstand the delays in the CPEC. Let alone CPEC 2.0, the Early Harvest Projects of the CPEC have already anchored such a gargantuan infrastructure – particularly in the power sector – that if the recalibrations delay growth and industrial output, Pakistan will keep plunging into even worse debt crises. The government believes that the requisite reforms in the power sector would take at least seven years. What needs to be pondered upon at this juncture is the question whether the country would be able to industrialise enough to keep hold of the benefits it has achieved so far. If it really takes seven years to eradicate economic losses, malpractice, power theft and costly electricity, Pakistan might not be able to yield the promised economic growth, hence rendered unable to create more jobs and keep the existing ones.
In light of this, what this article suggests is that an integrated attempt at analysis of politics, strategy and economy can provide a better understanding as to what difficulties the CPEC faces in the presence of existing governance infrastructure in Pakistan, which was built for a different kind of development, coming from a different culture, trumpeting the greatness of a different power centre i.e. West (Britain and the US). For this purpose, of course both China and Pakistan need to adhere to heightened standards of transparency, to effectively cater to the international, regional, and domestic scepticisms wrapping the mega development regime of the CPEC. Furthermore, a single top-down approach to policy making should be discouraged. Until and unless all the parties and stakeholders have a sufficient say in the policy making frameworks regarding the CPEC, it is next to impossible to achieve the envisioned standards of integration, connectivity, upward social mobility, and economic affluence. This objective entails an active engagement between the political elite, academia, civil society stakeholders and the citizenry. For this, what needs to be understood is that the habitants and natives of the sites where developmental projects are being installed should be considered as one of the major stakeholders to the CPEC. Gwadar fishermen and Sahiwal Coal Power Plant Protesters are two examples. The grievances of the political, territorial, and environmental nature ought to be sufficiently addressed. Without this, a comprehensive understanding of the current and future challenges to the CPEC, is unachievable. And last but not the least, academics and analysts ought to find a balance between critique and euphoria, and pessimism and optimism.