Is CPEC Headed In The Right Direction? An Analysis Of Sharif And Khan Governments

Is CPEC Headed In The Right Direction? An Analysis Of Sharif And Khan Governments
Ejaz Hussain analyses the controversies related to CPEC and the positive implication the project will have if its economic outreach is expanded.

China-Pakistan relations are based on time-tested strategic confidence developed over the past six decades. In this timeframe, the interaction between Beijing and Islamabad was mostly focused on strengthening technological, military and economic partnership. However, the scale of bilateral economic relations remained limited in the pre-CPEC (China-Pakistan Economic Corridor) period.

In the post-9/11 era, regional geopolitical alignments started shifting, as is evident from the improved India-US relations, to the detriment of Pakistan. Under the circumstances, China and Pakistan grew closer both strategically and, most importantly, economically.

Thus in the 2000s, the top leadership of the two countries deliberated the pros and cons of enhancing economic engagement in terms of introducing innovation in infrastructure development.

Though China and Pakistan had already collaborated in the construction of the Karakoram Highway (KKH) in the past, which provides an essential land-based link for the two, both the countries principally agreed to not only improve upon the KKH but also expand economic cooperation in related areas, such as port development.

In the context of China’s Belt and Road Initiative (BRI), the CPEC agreement was formalised by the governments of both the countries in 2015. Initially, multiple projects worth $46 billion in infrastructure development, energy, fibre optic and Gwadar port development were agreed upon by both sides. Therefore, the project was hailed as a ‘flagship’ project of BRI by the majority of stakeholders in China and Pakistan.

The Nawaz Sharif government, which formally inaugurated different CPEC projects, credited itself for not only consolidating bilateral relations but also attracting much-needed financial input to the country’s chequered economy. However, the opposition political parties and certain socio-ethnic forces thought differently.

Controversies Surrounding The Project

With the formal launch of CPEC, one of the major controversies was related to the so-called ‘routes’ alignment issue. The opposition political parties, especially those based in other provinces, such as Balochistan, criticised the Sharif-led federal and Punjab government for having provided special privileges to Punjab, specifically by diverting the originally proposed ‘western ‘route that was supposedly going to pass through Khyber Pakhtunkhwa (KP) and Balochistan.

The Awami National Party (ANP) from KP and the Pakhtunkhwa Milli Awami Party (PkMAP) from Balochistan channelised popular perception in political terms by urging the federal government for according due share to the ‘aggrieved’ communities. The development of road infrastructure in the northwestern areas of Pakistan was seen by such political forces as means to enhance intra/inter-provincial communication and commercial capacity as the transport businesses in Pakistan is mostly believed to be controlled by the Pashtuns.

Another bone of contention between the regions, especially Gilgit-Baltistan, the provinces and the federal stakeholders pertained to the allocation of CPEC funds. Pakistan Tehreek-e-Insaf (PTI) accused Pakistan Muslim League-Nawaz (PML-N) for expropriation in CPEC finances by over-allocating resources into the Punjab government’s Orange Line Train Project. Moreover, the political parties and social forces from Sindh, KP and Gilgit-Baltistan, also registered their resentment towards the so-called ‘Punjabisation’ of the project.

Last but not the least, the pro-climate organisations and activists raised environmental concerns for the federal and the Punjab government. In their view, the Punjab government had not only bypassed climate-related rules and regulations but also accorded little regard to centuries-old ‘archaeological’ heritage during the planned construction of the Lahore Orange Line train project.

Indeed, the matter was referred to the Lahore High Court (LHC) but the proceedings took time. In the meantime, the project got delayed.

Developing Consensus By Sharing Resources

CPEC did face its share of controversies, but the federal and the Punjab government led by PML-N adopted a pragmatist approach to deal with the ‘aggrieved’ parties and their constituencies. In order to assuage the non-Punjab regional and provincial grievances related to CPEC routes, the Sharif government sought a political solution in terms of generating consensus through the platform of the All Parties Conference (APC), where all political parties could sit together to discuss the controversial issues.

Nawaz Sharif was eventually able to win over the confidence of the regional and provincial political elite by agreeing to the original routes plan of CPEC. Indeed, the CPEC Long Term Plan, visualised by the PML-N government by the end of 2017, carried added emphasis on infrastructural and socioeconomic development of the otherwise ‘neglected’ regions and provinces, such as Balochistan. To understand CPEC comprehensively and from a bilateral perspective, the federal government also encouraged the provincial governments, especially the chief ministers, to visit China and learn about the latest developments that had materialised under the BRI.

Moreover, as an outcome of the 6th Joint Cooperation Committee (JCC) meeting held in Beijing in December 2016 between the Chinese and Pakistani authorities, nine Special Economic Zones (SEZs) were proposed. Sindh and Gilgit-Baltistan were to host one SEZs in principle. Importantly, the KP government, while showing interest in CPEC, started purchasing land for the construction of SEZ. Moreover, work on the Gwadar Port was also expedited under the Sharif government.

In November 2016, the port partly became functional for cargo shipments. Historically, Balochistan has stood on the lower rung of socioeconomic development due to various reasons, including the Baloch insurgency that hindered developmental programmes in certain districts of the province. Also, the local landed elite along with the provincial bureaucracy secured their interests rather than considering the larger interests of the masses who lacked basic facilities such as health care and quality education.

With the introduction of CPEC to the southwest Pakistan, infrastructure development has picked up speed along with proposed construction of Gwadar airport and power plants. One can expect significant improvement in transportation, communication and inter-provincial industrial cooperation for the local population. Besides, the Sharif government also vowed to take the climate concerns into consideration. Indeed, the verdict of LHC in connection with the suspension of the Orange Line train project is a case in point.

Thus, what can be deduced from the foregoing is that the PML-N government adopted a pragmatic approach to negotiate with the critical forces on CPEC. It engaged the nationalist political parties and social forces in a rational dialogue to seek a consensual solution to the highlighted grievances. Consequently, the CPEC Long Term Plan was a step in the right direction. Also, exposure to the broader contours of BRI to the provincial elite also served as a catalyst for the effective realisation of CPEC.

Therefore, it is argued the Sharif government was able to neutralise the negative effects of the above-mentioned CPEC ‘controversies’ and placed the mega project at the core of China-Pakistan economic cooperation. Interestingly, after the July 2018 general election in Pakistan, the PML-N could not form a government in the centre or in Punjab. Rather, it was Imran Khan’s PTI that was able to form its government at the federal and the provincial level, except in Sindh where Asif Ali Zardari-led Pakistan People’s Party (PPP) formed the government. Whereas, the Sharifs had effectively managed anti-CPEC politics in the remainder of their tenure, the Khan government, from the very outset, generated a new controversy over CPEC. The following sections of the article analyses it in detail.

Imran Khan Government And CPEC

Pakistan held its 11th general elections in July 2018 in which PTI won a considerable number of seats to form the government at the centre as well as in two provinces.

Before the elections, the PTI’s social and electoral campaign was pretty much focused on the eradication of ‘corruption’ and improving the economy. Since management of the economy seemed to be the government’s topmost priority, it appointed an industrialist, Abdul Razak Dawood, as advisor for commerce, textiles, industry and production and investment (CTI&PI), commonly referred to as a commerce advisor. His appointment came after a shakeup in the finance ministry which failed to control the downward economic spiral. Having assumed charge, Dawood took a critical view of CPEC. The following section analyses it in detail.

Controversy Continues

As discussed earlier in the article, in the years before PTI came into power, the mega project was viewed by certain political and social forces skeptically. However, due to the timely and efficient management on the part of the Sharif government all CPEC ‘controversies’ were neutralised.

Moreover, such controversies were generated by the opposition political parties and/or pro-climate groups, and not by the PML-N government. However, the case of the Khan government was very interesting in the sense that it was the government itself that generated a serious controversy on CPEC. On September 10, 2018, the Financial Times (London) published a report on CPEC in which it quoted the Khan government’s Commerce Advisor Dawood, who said:

“[C]hinese companies received tax breaks, many breaks and have an undue advantage in Pakistan; this is one of the things we’re looking at because it’s not fair that Pakistani companies should be at a disadvantage… I think we should put everything on hold for a year so we can get our act together…Perhaps we can stretch CPEC out over another five years or so.”

As highlighted above, Dawood’s take on CPEC was not only critical of CPEC’s terms and conditions negotiated by the previous PML-N government, it raised concerns not just within Pakistan, especially among anti-PTI parties, but also in Chinese political circles. Before the implications of such a statement by a member of the cabinet is discussed further, it is pertinent to explain what led to the pronouncement of such a policy course ostensibly on the part of the Khan government.

Three plausible factors could have come into play. First, since the PTI had already based its political and electoral campaign on ‘corruption’ committed by the Sharifs, once in office, the PTI government (sub)consciously continued with the same mindset, where in order to sustain popular legitimacy, it held the PML-N government responsible for the ills Pakistan was suffering from.

Indeed, Prime Minister Imran Khan himself cashed on the disqualification of Nawaz Sharif while bracketing Pakistan’s poor economic performance with the previous Sharif government which did massive corruption in the former’s view. Therefore, from this logic, it seems plausible on the part of the Khan government to perceive corrupt practices of the PML-N government in the determination of the terms and conditions of CPEC. Ironically, the mentioned advisor to the prime minister could not provide verifiable data in this respect.

Secondly, Dawood is a businessman and industrialist himself, and he would have placed his personal economic interest above the national interest by trying to create possible space for the renegotiations of some, if not all, CPEC projects. The foregoing indeed proved to be the case as within months of his anti-CPEC rhetoric, Dawood’s company Descon was able to obtain contract worth Rs300 billion for the construction of Mohmand Dam in (formerly) Federally Administered Tribal Areas (FATA). Thirdly, despite the prevalence of the preceding verbale, overall the Khan government lacked the experience for policy articulation, implementation and, importantly, continuation. In other words, the Khan government miserably failed to fathom the strategic depth of China-Pakistan relations and instead of adopting a reasonable discourse no matter what the disagreement was, it simply relied on foreign media to express its discontent. This move obviously carried the potential to affect the CPEC as well as BRI negatively.

Correcting Course

China-Pakistan relations are unique in the sense that it is not just the civil government that is a stakeholder, but the military leadership is also fully invested in the entire process along with the corporate media that thrives on account of its coverage of CPEC. Thus, within hours of Dawood’s CPEC statement, the local media got excited in highlighting the contents and implications of such a policy course. Indeed, the overwhelming thrust of the media coverage compelled the said advisor to clarify his stance on the CPEC within no time. Moreover, certain other members of the Khan cabinet also softened the situation at home.

Along with the media measures taken to cool down the negativity of Dawood’s pronouncement, the Khan government attempted to handle the matter diplomatically as well. In this respect, the visit by the Chief of Army Staff, General Qamar Javed Bajwa to China within a week of Dawood’s interview carried immense significance.

Being a strong stakeholder in politics and the state, the Pakistani military has viewed the country’s relations with China in military-strategic terms since the mid-1960s. The two countries have also interacted technologically. Post-9/11, the economic dimension has been factored into the trajectory of bilateral relations.

Another opportunity came in November 2018 when Prime Minister Imran Khan visited China himself to participate in the China International Import Expo (CIIE). Khan met with his Chinese counterparts and tried to clear away the negativity espoused by his commerce and industry adviser (Hussain, 2018). Though Khan could not convince the Chinese government to bail out his government with the much touted two billion concessional loans, the visit overall, was seen positively, at least, by the Pakistani side.

Moreover, Khan made his second visit to China in April 2019 to take part in China’s Second Belt and Road Forum (BRF). The BRF proved an effective platform for the Khan-led delegation to discuss the contours of CPEC under the BRI framework. The two sides engaged each other meaningfully with the result that they signed various Memorandums of Understanding (MoUs) to expand cooperation in economic terms. With respect to CPEC, the two governments agreed to construct Rashakai Special Economic Zone (SEZ) on a priority basis.

In view of the foregoing, three broader conclusions can be drawn in terms of policy formulation. One, it is likely, though at a low scale, that an inexperienced (civil) government official, if not the entire government, may fumble at handling a sensitive project like CPEC in the future. Two, the Pakistani military is highly expected to come forth to get any intriguing issue resolved through bilateral deliberations. Three, given the factor of durability in China-Pakistan relations, the broader contours of bilateral relations would get further consolidated and the CPEC has the potential to add economic incentives into the already established military-strategic domain. Finally, it is in the mutual interest of both China and Pakistan to seek mutually acceptable means to resolve any creeping issue in the foreseeable future.

Also, the two sides ought to gradually expand economic outreach of the CPEC within the South Asian region and beyond. Indeed, if India and Afghanistan are somehow encouraged to join CPEC, it will carry positive implications for regional peace and stability.

The writer has a PhD in civil-military relations from Heidelberg University. He is DAAD, FDDI and Fulbright fellow and taches at Iqra University, Islamabad. @ejazbhatty