The China-Pakistan Economic Corridor (CPEC), a $62 billion China funded 'flagship project' within China's Belt and Road Initiative (BRI), is fast heading towards closure of 'early harvest' projects. With five energy projects commissioned and several more on course, these should help lift Pakistan's economic output.
The CPEC connects western China with Gwadar port on Pakistan's southern coastline in Baluchistan province. Along the Corridor route, the plan envisages connectivity thorough road and rail networks, power production units and Special Economic Zones (SEZ's).
CPEC, amongst all the BRI land and sea corridors, will set the tone for others. That is why China is dedicated to the goal of having the project completed in three phases by 2030. Involving only one country – Pakistan, the CPEC provides China with direct access to the Indian Ocean. The route shortens western China's distance to the Arabian Sea from 13,000 km to just 3,000 and cuts the transit time from 45 days to only 10.
Gwadar port is 400km from the Straits of Hormuz, the critical choke point in the Persian Gulf, through where the bulk of China's energy needs pass. Nearly 80 percent of China's imports pass through Straits of Malacca. Both of these straits make China extremely vulnerable in case tensions flare up around them. The CPEC with Gwadar at its terminal puts China at the doorstep of Hormuz and could eliminate the Malacca route completely.
Notwithstanding its grand vision and the speed at which the project has taken off, the CPEC continues to face multiple challenges. India, an early objector, sees the BRI initiative and more specifically the CPEC as China's attempt to circle India through this connectivity. Gwadar, Indian opinion-makers argue, is part of the 'string of pearls' ports that China is aiming to control around India. The 40-year management agreement over Gwadar and the lease for SEZ gives China a toehold into the Indian Ocean. And, on the global chessboard Gwadar allows China the possibility of a naval presence close to India's western coastline, which together with Pakistan's antipathy will become a challenge for India.
India also objects to its route that traverses the Gilgat-Baltistan region, part of erstwhile state of Jammu and Kashmir, contested by India and Pakistan. The Americans have echoed the Indian viewpoint. Both conveniently forget that under the 1960 World Bank facilitated Indus Water Treaty, Mangla Dam is located within this contested state and both contributed money for its construction. Why object now? Chinese Foreign Ministry spokesperson Hua Chunying reaffirmed that “[CPEC] is conducive to promoting the connectivity and shared prosperity of the whole region” and has repeatedly invited India to come on board.
Already the least connected region in the world, troubled relations within South Asia and perpetual war in Afghanistan is another challenge for the full realization of BRI/CPEC initiative. Pakistan seeks access to Central Asian markets, which Afghanistan denies in the absence of Pakistan's agreement to allow normal Afghanistan-India land trade. However, once the rewards start flowing, estranged neighbors may hold their differences in abeyance for shared benefits.
The CPEC faces an absence of trust between the federal government and Punjab on one side and Pakistan's smaller provinces on the other. The Chinese have worked both publically and privately to assuage the concerns of smaller provinces. Their nudge has definitely helped develop consensus on the route priority, location of power units and SEZs in favor of smaller provinces. With 'early harvest' projects on track it is important that other projects are completed on schedule by 2030. This will help stability in otherwise fractured inter-provincial relations in Pakistan.
Unrest in Pakistan's Baluchistan province, where Gwadar is located, which appeared to pose a major threat when the CPEC was launched, seems to have tapered off through a well-coordinated effort led by the army. Comprising of 43 percent of Pakistan's land but only 3 percent of its population, and rich in mineral resources, the Baluch people feel that their resources have been exploited by others. Their fears of being turned into a minority in the face of influx of outsiders remain real. Pakistan will need to do more to let the Baluch assume and feel a sense of ownership over a major enterprise like the CPEC, in which Gwadar is the key part. Short of the Baluch people's involvement, this latent discontent will remain a possible powder keg.
The impression that the CPEC benefits China more than Pakistan remains amongst opinion makers. Economists have questioned the wisdom of heavy loans raising Pakistan's debt to unsustainable levels. Pakistan faces the challenge of getting its act together and drawing maximum benefit from the CPEC, which will be enough to pay back loans and add to the country's GDP.
When the BRI was formally launched in 2017, there were only three significant holdovers – India, Japan and the United States. The U.S. was taken aback when some of its closest allies within NATO and Asia-Pacific rushed to join in. The project as it is conceived and is being developed creates shared benefits and no nation wants to be left out. These three countries are doing so at their own peril. In attempting to prevent the Chinese and thus the Asian Century they risk being on the wrong side of history.
