In an economically impoverished Pakistan, where politics is all about money, the $51 billion Chinese sponsored projects in the shape China-Pakistan Economic Corridor (CPEC) has fuelled acrimony amongst the nations.
This is the largest Chinese investment in another country. It is fifth of Pakistan’s gross domestic product (GDP), and it is more than twice the size of foreign direct investment (FDI) given to Pakistan since 2008. Pakistan’s big gain will be energy and infrastructure development.
It is a combination of projects with economic and security implications going far beyond the two direct participants, China and Pakistan. It has bearings over a much larger region. Iran has expressed interest in becoming part of the CPEC, and so has Afghanistan.
Initial euphoria aside, CPEC is beset by problems since the very beginning caused mainly by political acrimony in Pakistan, inept bureaucracy and civil-military divide.
Details of the CPEC are still shrouded in mystery. Leaked bits add to suspicion about the whole financial arrangement so much so that even the governor of State Bank of Pakistan said that he was not aware of exact terms of the agreement.
This inter-provincial bickering is of serious concern for the Chinese who want to stay clear of any political controversy. The Chinese reportedly keep nudging the Pakistan government to aim less for the political or electoral capital and do more to carry the smaller provinces along.
Unfortunately, the politicians remained in their typical political point-scoring mode against their opponents. The bureaucracy shows no seriousness, thus leaving the Pakistan Army to take institutional ownership of the CPEC as a sole organization on which the country and the Chinese can rely. The Chinese too have made it clear by their words and actions that they are more comfortable with the army taking on a higher profile and role in the CPEC.
Wary of dominating military influence, the government is withholding the terms of reference for military’s involvement and funds for raising the special security force for the Chinese personnel and installations. In a veiled warning at the delays, the Chinese Ambassador to Islamabad Mr. Sun Wei Dong recently said that ‘construction and safety of the CPEC will have to go side by side.’
The CPEC’s importance is enhanced because of Gwadar, the port Chinese built some years back and were handed its operations and management in 2013. In view of the robust military relationship between China and Pakistan and the unfolding strategic power play in the Indian Ocean, the ports add a huge security dimension to the CPEC. Along with the Ormara naval base 280 kilometers to its east, Gwadar provides Pakistan with relatively safe bases in case India – Pakistan hostilities break out again.
Gwadar’s location at the mouth of Straits of Hormuz, the biggest oil choke point in the world, provides China with several strategic advantages. Nearly 80 percent of China’s energy imports pass through the Indian Ocean, Malacca Straits, and the South China Sea, which during contentious times can cause serious supply dilemmas for China. With maritime trade at $5 trillion and rising fast an operational Gwadar and the CPEC arteries China cuts several thousand miles of an insecure route and gains tactical advantage over the US and India. Within China, connectivity through Gwadar provides an immediate boost to developmental prospects in China’s western region.
With Gwadar management now in the hands of Chinese, it is only a matter of time until the Chinese navy vessels will be able to dock at the port, thus having an edge over its adversaries around the region and beyond. Pakistan, given its own vulnerabilities, will be more than willing to extend facilities China might need to play on the global chessboard. And with Djibouti naval base on Bab al Mandeb in the Red Sea getting ready, the Chinese present a formidable challenge to the US and India – the other claimants to the Indian Ocean.
Pakistan has long eyed developing Gwadar as a bridgehead for commercial activity; soon after its purchase from Oman in 1958. It was during these days the late Shah of Iran, on a visit to Pakistan, offered to then President Ayub Khan the use of developed Iranian port like Abadan instead of pumping huge amounts of money into Gwadar. The rest is history. Some analysts point towards the construction of Karakuram Highway connecting China with Pakistan during the early 60’s as a pre-cursor to Gwadar as a part of a grand strategic purpose.
Iran, now recovering from years of damaging western sanctions, has expressed interest in becoming a part of CPEC. China’s interests converge with that of Iran. When Iran gas and oil pipelines can directly be connected with the CPEC arteries and supply energy to China, it will liberating from both from looming American threat and of supply disruptions on the sea.
Notwithstanding Pakistan’s internal political fissures since the military has taken the ownership of the project, the deal will ensure that the CPEC takes off from Gwadar – the “great monument of Pakistan-China friendship” to Xinjinag. This allows China a toehold in the Arabian Sea and reinforces Pakistan – China “iron friendship.”