Home Politics China’s CPEC Hurts Pakistan: Debunking The Myth

China’s CPEC Hurts Pakistan: Debunking The Myth

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Will China‘s $62 billion investment into Pakistan as part of CPEC benefit Islamabad or, on the contrary, make it “more unstable”? This seemingly absurd question, which was brought up by Bloomberg on Thursday, has Pakistanis, Chinese and Indians all fired up in the comment sections of news sites and on social media.

Bloomberg columnist Mihir Sharma, who is originally from India, wrote an opinion piece suggesting that China will repeat U.S. mistakes when it floods the Muslim country with investments. Of course India is the very country that opposes anything that has to do with CPEC and has even reportedly attempted to disrupt the multi-billion dollar project. Billions of dollars in investments, Mr. Sharma argues, could make Pakistan “more unstable.”

But how true is this notion? Is Mr. Sharma right when he says that CPEC will actually do more harm to Pakistan’s economy and politics than good?

Is CPEC a “blind optimism project of China?

China is the newest – and seemingly most reliable so far – investor in Pakistan, which is no stranger to receiving financial and other kind of aid from foreign powers. With a highly-lucrative project such as the China-Pakistan Economic Corridor, which is set to improve connectivity in the region and boost the economies of both Beijing and Islamabad, China is hoping to not only achieve a plethora of economic benefits but also significantly increase its key role in the region.

But Mr. Sharma argues that China is repeating the same mistakes that have plagued U.S. investments into Pakistan. Calling China’s hopes for Pakistan to serve as its bridge to Europe to Southeast Asia “blind optimism,” Mr. Sharma believes that this is the exact sort of “blind optimism” to which Pakistan’s American sponsors have “succumbed for decades.”

“If the Chinese aren’t careful, they, too, will find that their money has bought them little more than headaches,” Mr. Sharma insists.

Last month, China upped its investment into CPEC to $62 billion from the initial $46 billion investment in 2015. But China may be making a huge mistake when it increases its investment in Pakistan by a whopping 35% in just two years, argues Mr. Sharma. While there have been numerous research-proven benefits of CPEC for both Pakistan and China, the Bloomberg columnist believes that the political, economic and military situation in Islamabad could spiral out of control, and CPEC is to blame for the “more unstable” Pakistan.

CPEC benefits for Pakistan that even Indian experts can’t dispute

Mr. Sharma does recognize, however, several benefits that CPEC offers to Pakistan. Citing the irrefutable projections by the International Monetary Fund, Mr. Sharma points out that China’s billions of dollars will “ease Pakistan’s chronic supply-side constraints” and even alleviate the pressure put on its development budget.

The Bloomberg columnist also did not seem to overlook the benefits of CPEC for Pakistan’s cement sector, which has lately experienced significant growth thanks to investments from the Chinese government. The growth of sectors such as cement has also boosted the Karachi Stock Exchange, which became the best-performing stock exchange in the world in 2016.

“Real estate prices have increased, too,” Mr. Sharma points out before starting to question the credibility of numerous reports from Chinese and international experts. Such experts seem to agree that CPEC will promote a more stable Pakistan in addition to promoting stability and development in neighboring countries, all of whom except probably India are eager to benefit from it by becoming part of it.

CPEC benefits for Pakistan ignored by India experts

Mr. Sharma did ignore a wide array of other benefits that CPEC has to offer for Islamabad and its economy. Numerous analysts – both Chinese and international – agree with the predictions that Chinese investments into Pakistan will not only improve the state of Pakistan’s economy but also stabilize its politics and enhance its geopolitical role in the region.

Islamabad, which is set to become a hub of socio-economic activity between Asia, Central Asia and South Asia and serve as a vital connectivity bridge in the region, is furthermore set to transition from being a lower-middle-income country to an upper-middle-income country by 2025, according to the government’s outlook on foreign investments spurred by CPEC for the next decade.

While more than 50 countries around the world have reportedly expressed interest in investing in Islamabad to benefit from lucrative CPEC projects, the corridor is set to facilitate multi-sectoral economic cooperation in finance, trade, energy, and industry, which is a major factor for further improvement of Pakistan’s overall economy for years to come.

CPEC – and particularly China’s large investments – have opened the door for Pakistan to construct energy projects and other viable infrastructure – the things that the country has for decades been in desperate need of but lacked financial aid from the U.S. to construct.

Here’s why the claims of CPEC hurting Pakistan make no sense

Mr. Sharma also for some reason ignored the potential of CPEC to create 2 million direct and indirect employment opportunities. All these infrastructure, roads and highways have to be constructed by someone, as they do not just fall from the sky as China invests in the lucrative projects under CPEC in Pakistan. While this fact remains irrefutable – those projects under CPEC do require Pakistanis to build and then maintain them – the corridor has also allowed the country’s GDP to grow at a rapid and stronger rate.

As Pakistan’s GDP growth rate is expected to jump to 5.7% in 2017, spurred by China’s investments in CPEC, Islamabad is also securing emerging market status, as seen in reports from several major international credit rating agencies. If the above-mentioned CPEC benefits are not enough for one to conclude that Pakistan is indeed headed toward becoming a more stable country – largely thanks to China’s investments – let’s not forget one of the most important missions of the corridor.

That mission is to ensure uninterrupted supply of electricity in Pakistan, something leaders in the country have attempted to improve for years – with and without U.S. financial aid. However, they have never quite managed to prevent cuts of the electricity supply, a factor that not only creates major setbacks in various sectors of the nation’s economy but also promotes instability among the populace.

But these things are set to change with China’s investments coming into Pakistan for CPEC, as the Pakistani government is expected to add 2,500 megawatts of power to the national grid system this year alone. In fact, as much as $34 billion of the entire CPEC investment by China has been allocated to electricity production and distribution.

Improved economy breeds a more stable political situation in the country, which is why Mr. Sharma’s claims that CPEC creates a less stable Pakistan make little to no sense.

Is Balochistan an obstacle to Pakistan’s prosperity?

Mr. Sharma points out two major issues with CPEC, saying that they could create a less stable Pakistan. The first issue, Mr. Sharma points out, is Pakistan’s troubled domestic politics. Saying that CPEC has “become tangled in an internal tug-of-war,” the Bloomberg columnist cites reports of Balochistan protesters slamming the corridor for trying to benefit only richer provinces such as Punjab and Sindh.

While CPEC was originally planned to run mostly through the province of Balochistan, and the province’s residents have complained that the corridor’s path has changed dramatically and that the Pakistani government is trying to run projects mostly through Punjab, the province that is the political stronghold of Prime Minister Nawaz Sharif.

Balochistan issue is not a problem for CPEC anymore

While Mr. Sharma argues that by attempting to bypass Balochistan, the Pakistani government will create a big headache for itself and thus cause instability in the country, he has a point when he says that Baloch locals are “more than capable of violently disrupting work on the corridor.” If China fails to hear the complaints from Balochistan, Pakistan “will end up more unstable, not less,” Mr. Sharma points out.

On Friday, Sharif tried to dispel the doubts of the Baloch people by declaring their province to become the “biggest beneficiary” of CPEC. In his meeting with Balochistan Chief Minister Sardar Sanaullah Khan Zehri, the two reportedly reached a consensus that Balochistan will in fact greatly benefit from CPEC and that there are no plans to bypass the province for the benefit of other provinces. The Pakistani Prime Minister also informed Khan Zehri about the progress of various projects in Balochistan under the corridor.

The Balochistan issue could really become a visible obstacle on a path for Pakistan to become a more stable country, but the Pakistani government’s consensus with Baloch leaders seems to scrap the issue altogether. It must be noted that Mr. Sharma could just not be aware of the talks between Baloch leaders and Sharif, as his opinion piece for Bloomberg had been published the day before the meeting.

Is CPEC an excuse for Pakistan to boost its military?

The second lesson China had to learn from U.S. mistakes during Washington’s decades-long sponsorship of Pakistan is the large role the Pakistani army plays in the country’s state, economy and even society, the author points out.

Mr. Sharma argues that decades of U.S. financial support for the Pakistani government have only further bolstered the country’s army power, even though not all of the financial aid was meant to wind up further boosting the army’s might. Besides allocating many foreign investments to intentionally bolster the army’s power – both with and without the investors’ consent – the author also seemingly accuses the Pakistani army of using CPEC and Chinese investors as an excuse to add more military personnel.

While the Chinese clearly recognize the importance of protecting the corridor at all cost, the Pakistani military may be taking advantage of it, Mr. Sharma believes, citing the Pakistan’s army chief’s visit to Beijing last month. At the time, the army chief “cited the task of securing the corridor as an excuse to raise an entire new division of nine battalions and six civil wings,” according to the columist.

CPEC can resolve the Kashmir dispute, making Pakistan more stable

While it’s an irrefutable fact that the army plays a vital role in Pakistan, the author does not seem to mention where the importance of the nation’s military stems from, which is the Kashmir dispute between Pakistan and Mr. Sharma’s homeland of India. In fact, the author does not mention Kashmir at all in his lengthy opinion piece penned for Bloomberg.

One can argue that Pakistan sees the need to bolster and maintain its military might just in case the long-standing Kashmir issue, over which New Delhi and Islamabad have fought three brutal and exhausting wars, turns into an all-out military confrontation resulting in a fourth war over the disputed region.

By creating a peaceful environment through economic integration, CPEC has the potential to resolve the Kashmir dispute, something that would, without any doubt, promote a more stable Pakistan. In order to achieve peace and stability in Kashmir, New Delhi and Islamabad would have to cooperate together, but so far, India has been reluctant to accept Pakistan’s offer to join the multi-billion dollar project.

But India’s acceptance of Pakistan’s offer and joining CPEC “can become boon for improving the condition of people of Kashmir,” according to Muhammad Adil Sivia, a research associate for the Strategic Vision Institute (SVI). The economic development of Kashmir spurred by CPEC can help “create right conditions for resolution of Kashmir dispute,” Mr. Sivia argues, adding that the corridor offers a unique opportunity for the demilitarization of Kashmir.

By resolving the Kashmir dispute, both India and Pakistan can become more stable; and the stability in New Delhi and Islamabad, in turn, promotes a more stable South Asia.

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Polina Tikhonova

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