Pakistan’s inept handling of mega ‘China-Pakistan Economic Corridor’ project

Pakistan’s inept handling of mega ‘China-Pakistan Economic Corridor’ project

Chinese President Xi Jinping during his ever first visit (April 20-21, 2015) to Pakistan presented a ‘freebie’ worth US $46 billion worth Chinese investment in Pakistan for over 50 energy and infrastructural projects under China-Pakistan Economic Corridor (CPEC), a trans-regional project. For China, CPEC is a major tool for achieving its long awaited regional aspirations to have direct access to the hot waters of the Gulf and direct link with the South Asia and North Asia, through Gwadar (Baluchistan)-Kashgar by 2030.
China, however, at that juncture might not have envisaged the extent to which CPEC project would go through so many rough patches due to petty minded Pakistani politicians, Pakistan army’s unwanted interest, inefficient bureaucracy and inter provincial wrangling to grab major share of Chinese freebie. China believed that CPEC would benefit over three billion people with the enhanced connectivity by the year 2030, whereas in Pakistan the ruling Muslim League (N) was busy in ensuring that its Punjab province should get maximum benefit out of China’s unprecedented investment,which was roughly 20 per cent of Pakistan’s annual GDP.

The long-awaited visit of President Xi to Pakistan, which was earlier cancelled in September 2014 amid political chaos in Islamabad, was marred at the very outset due to Nawaz Sharif’s week control over his Cabinet colleagues. During the very first day of President Xi’s visit itself when China announced CPEC projects, Pakistan witnessed an unprecedented adverse political development exposing differences in Nawaz Shahrif’s cabinet over issue of providing security cover to Chinese engineers and technicians working in Pakistan under the CPEC projects.Interior Minister, Chaudhry Nisar Ali Khan boycotted President Xi’s visit and asserted his claim over providing security to the Chinese in Pakistan was an internal issue and Pakistan army should not be assigned this duty. However, as expected Pakistan Army outrightly rejected Chaudhry Nisar Ali’s claim and Pakistan President Mamnoon Hussain during one to one meeting (April 20, 2015) with President Xi informed the latter about formation of over 10,000 strong Special Security Division (SSD) under the Pakistan army with the sole objective of protecting Chinese working on Chinese projects in Pakistan.

Significantly, the SSD also included 5,000 army personnel from Pakistan army’s elite commando force called Special Services Group (SSG), specially trained for counter terrorism and security.

Before the CPEC project could see the light of the day, inter provincial bickering started to get maximum benefit out of CPEC. Smaller states like Baluchistan and Khyber-Pakhtunkhwa vehemently opposed Punjab (Pakistan) province maneuvers to extract maximum benefits at the cost of other smaller provinces, particularly in electricity and road projects and accused Nawaz Sharif government of deceitfulness in CPEC planning.

Baluchistan was also not happy over its share of CPEC projects and criticized the federal government for exploiting Baluchistan in the name of development. Even civil society of the Pakistan was critical of the federal government and termed the CPEC as ‘China-Punjab Economic Corridor” and lamented Nawaz Sharif government for favoring Punjab province by altering original CPEC road route and allocating projects to the Punjab province worth US$ 11 billion at the cost of other three provinces. Some opposition parties also criticized Nawaz Sharif government for setting up majority of electricity and energy projects in Punjab province to gain political mileage before 2018 general elections in the country.

A section of Pakistan’s parliamentarians was also not happy the way Nawaz Sharif government had allocated CPEC projects, directly and indirectly favoring Punjab province. Pakistan’s Upper House’s Senate Special Committee on CPEC expressed dissatisfaction (May 7, 2016, Islamabad) over the government’s secrecy on the progress made on the projects under CPEC and even criticized China for taking advantage under the garb of CPEC.

Senator Nauman Wazir Khattak of Pakistan Tehreek-e-Insaf (PTI) party alleged that Pakistan was being charged 8 per cent interest rate whereas international interest rate for energy rate was only 1.6 per cent. Senator Farahutllah Babbar of the Pakistan People’s Party (PPP) also alleged that Chinese banks were charging a higher interest rate on loans from Pakistan for the projects under CPEC.

Senators Daud Khan Achakzai of National Awami Party (NAP) and Usman Khan Kakar of Pashtoonkhwa Milli Awami Party (PMAP) criticized the Nawaz Sharif government for turning CPEC into ‘Punjab-China’ corridor and preferring 20 per cent of the country (Punjab province) over rest of the 80 per cent.

Even the Pakistan army wanted a formal role in the execution and administration of CPEC, which was not accepted by the Nawaz Sharif government. Pakistani army chief General Sharif on several occasions had expressed his concern over politics and delay in CPEC projects and was worried over just and timely implementation of projects as well as involving ‘Punjabi Politics’.

General Sharif was unhappy with civilian government’s handling CPEC to the extent that even he had suggested formation of a full time CPEC Authority to be headed by a Chairman and assisted by director generals, to implement and oversea projects.

However, Nawaz Sharif did not agree with Gen. Sharif and instead constituted (May 1, 2015) a special Prime Minister’s Delivery Unit (PMDU) to monitor projects under CPEC, which is being supervised by his daughter and heir apparent Maryam Nawaz. The only favour army got was appointment of Maj. Gen. (Retd) Dr. Zahir Shah, as Project Director of CPEC.

Meanwhile, General Sharif during his visit to Beijing (May 17, 2016) met Chinese Prime Minister Li Keqiang and reaffirmed Pakistan’s commitment to work closely to complete CPEC and discussed security measure for CPEC with his Chinese counterpart and the Chinese military leadership.

Significantly, even Ashraf Mahmood Wathra, Governor of State Bank of Pakistan, which is the central bank of the country, had expressed (December 10, 2015) some apprehensions over CPEC project. He demanded transparency in CPEC projects and disclosed that even he did not know that out of US$ 46 billion, how much was debt, equity and in cash, respectively.

Moreover, Atif Bajwa, CEO of Pakistan’s private leading bank disclosed (March 18, 2016, Karachi) that Pakistani banks were insufficiently capitalized for CPEC projects in the local currency financing for CPEC projects in Pakistan. Some Pakistani economists and International Monitory Fund (IMF) have also expressed apprehensions of Pakistan’s plans to complete 40 per cent of work on infrastructure projects under CPEC in 2017 and the remaining in 2018 worth US$ 11 billion due to certain economic constraints including Pakistan’s tight fiscal space, drop in government and public investments and budget deficits.

China is equally concerned about delay in CPEC projects due to inter provincial politics and Nawaz Sharif government’s clumsy handling of this mega project. Chinese Embassy in Islamabad in an unprecedented diplomatic move in January 2016 took notice of smaller province’s accusing Nawaz Sharif government of favoring the Punjab (Pakistan) province and called upon the politicians of Pakistan to resolve their differences over the CPEC for timely completion of the projects.

Consequently, even Prime Minister had to assure (May 12, 2016, Islamabad) a high level Chinese delegation led by the Member of the Political Bureau of Communist Party of China Zhang Chunxian about Pakistan’s commitment to timely completion of all projects under CPEC. Nawaz Sharif, also informed Zhang Chunxian that he was monitoring the progress on projects under the CPEC on daily basis.

The Ambassador of China to Pakistan, Sun Weidong had delivered (May 1, 2016) a letter from President Xi to Nawaz Sharif and reaffirmed China’s commitment for early execution of all projects under CPEC. Meanwhile, a high level delegation of China State Construction Engineering Corporation led by its President Zheng Xue Xuan visited Pakistan and also met (Lahore, May, 2016) Punjab Chief Minister Shahbaz Sharif and discussed progress on CPEC projects.

China, must have realized that though it has invested a huge investment in Pakistan to achieve its goal of securing direct access to the Arabian Sea and adjunct Asia, this goal may not be easy to be achieved due to Pakistan’s callous attitude towards smaller provinces like Baluchistan and Khyber-Pakhtunkhwa and Pakistan army’s intentions to extract some profitable projects to please its brass.