China-Pakistan Economic Corridor: Implications And Options

The rapidly evolving, US$ 46 billion, 2442 km long, China–Pakistan Economic Corridor (CPEC) is essentially a group of infrastructure projects that will connect Kashgar in western China to the Arabian Sea port of Gwadar in Pakistan.

The corridor is part of furtherance of China’s desire to find a shorter, more direct, route to the Middle East, Central Asia, Africa and rest of the Western world. Currently it has to trade with these regions by sea through the very long route passing the Malacca strait. China has partly funded the infrastructure, and arranged cheap Chinese bank loans for Pakistan specific projects. CPEC is targeted to be completed by year 2030.

It includes creation of state-of-the-art road and rail network and electricity generation projects that will significantly boost the Pakistan economy, and also create nearly a million jobs. The project includes laying oil and gas pipelines, which could later link with Iran. Nearly 10,000 MW additional electricity is planned to be generated. The total value of the projects is close to 20% of current Pakistan GDP.

There will be direct and indirect benefits for every department of national building. Iran has also shown interest in joining to secure the Chinese oil and gas market and is ultimately willing to extend the Iran-Pakistan gas pipeline to China. With Chinese banks giving concessional long term loans to Pakistan government, this relationship would last for years to come. Pakistan calls it a ‘Game and Fate’ changer.

Due to the Geo-political nature and economic benefits, it is very important for both China and Pakistan that this corridor succeeds. Its security is thus of great concern. Xinjiang Uyghur Autonomous Region is the largest Chinese administrative division spanning over 1.6 million square kilometres. Xinjiang borders Mongolia, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan and India. The historical silk route passed through it. It has abundant oil and mineral reserves and it is currently China's largest natural gas-producing region.

Muslims form 58% of the province's population. There is an uprising for independence which has caused tension and ethnic strife. CPEC will exploit Uyghur resources and there is being opposed by them. Militants will pose a threat. Part of Jammu & Kashmir, Baltistan is a mountainous region in north Kashmir which is sandwiched between Gilgit, Xinjiang and Ladakh. Baltistan have been governed by Pakistan since 1948. In 1969 it became part of newly created Northern Areas. In August 2009 Pakistan created Gilgit–Baltistan autonomous region. Balti people are of Tibetan descent. Today majority of the population follows Islam. Known as the Little Tibet, public rage has been growing against Pakistan in the absence of civic rights and democracy. As the CPEC passes through the region it has implications.

Pakistan occupied Kashmir (PoK) is claimed by India as part of Jammu and Kashmir. Unlike India, PoK and Gilgit-Baltistan do not elect members to Pakistan's National assembly. Pakistan has been accused of human rights abuses, religious discrimination and systemic suppression of free speech. UNHCR has reported that a number of Islamist militant groups, including al-Qaeda, operate from Pakistani bases PoK. Inter-Services-Intelligence (ISI) is engaged in extensive surveillance, arbitrary arrests, torture, and murder of people. Credibility of 2011 elections in PoK has been questioned by all participants. Pakistan runs many Army and ISI supported terror camps in PoK. PoK remains unstable and terror infected. The CPEC passing through PoK would continue to face threats.

Sindh is the third largest province of Pakistan and second largest by population. Sindh also borders the Indian states of Gujarat and Rajasthan. Karachi is the provincial capital of Sindh and is Pakistan's largest city and financial hub. Sindh is known for its distinct culture strongly influenced by Sufism. Sindh also has Pakistan's highest percentage of Hindu residents. Karachi is Pakistan's most ethnically diverse city, with Muhajirs, or descendants of those who migrated to Pakistan from India in 1947, making up the majority of the population. The city has seen ethnic tensions boil over into violence on several occasions. After 1972 Language violence Sindhi language was declared the sole official language. In metropolitan cities Karachi and Hyderabad, the pro-India MQM (of Muhajirs) has a considerable support. Karachi which is home to India’s most wanted Dawood Ibrahim has seen years of ethnic tensions and terror attacks. Karachi has become a hotbed of militancy, targeted attacks, and sectarianism in recent years. Karachi is not only the financial capital; it is a key part of the CPEC. The region poses attendant risks to the project.

Balochistan is the largest province of Pakistan with capital at Quetta. To its north are the Federally Administered Tribal Areas and Afghanistan and Iran is to the West. Baloch and Pashtuns are the main communities. The Province is largely underdeveloped but dominated by natural resources included natural gas which supplies the entire country. Gwadar port now plays a significant role in the economic development of the province. In 1948 the Khan of Kalat, a state in Baloch area, agreed to join Pakistan under the condition that defence, currency, foreign relations, and finance would be controlled by the federal government, but that the province would remain otherwise autonomous. The enclave of Gwadar was then part of the Sultanate of Oman. In October 1955, the various princely States were merged.

Gwadar was purchased from Oman in October 1958 and became part of Balochistan in 1977. Baloch nationalist insurgencies took place in 1948, 1958–59, 1962–63 and 1973-77. A new stronger ongoing insurgency by autonomy-seeking Baloch groups began in 2003. Pakistan has been accusing India's Research and Analysis Wing (RAW) of support and engineering attacks including recent attacks at military bases in Sumangli and Khalid, and for subverting the CPEC agreement. 35th Khan of Kalat Amir Ahmed Suleman Daud (Baloch leader in exile) said that they are considering formation of a government in exile. He claimed that Pakistan is almost a failed state and is conducting military operation on the people of Balochistan out of frustration. He said that right from the north to the south CPEC is involved in disputed territories.

For years, land locked Afghanistan has dependent on Pakistan for trade and support. The relations have been very complex because of issues related to the Durand line, the on-going war in Afghanistan since 1978, and Pakistan support to different militant factions which were opposed to the government. Recent growing relations between India and Afghanistan have upset Pakistan. At 11% Afghanistan's economy is one of the fastest growing in the world. Also the Pakistan supported terrorists have started biting the hand that fed it for decades. According to polls most Afghans love Indians with high approval rating while they find Pakistanis bullies. Afghanistan quest for peace and efforts to strengthen the roots of democracy are supported by India. Since October 2011, Afghanistan and India has a strategic pact. The military assistance includes training of Afghan security personnel.

In December 2015, India donated three Mi-25 attack helicopters to counter the Taliban. India spent US$ 90 million to build the new Afghan parliament. On 4 June 2016, Prime Minister Narendra Modi and Afghanistan’s President Ashraf Ghani formally inaugurated the 42 MW, $290-million Salma dam. Afghanistan will also be able to capitalize opportunities when Indo-Iran Chabahar project, linking the port in Iran to Central Asia’s road and railway networks, is completed. This sudden Afghan closeness to India is of concern to Pakistan more so because a friendly Afghanistan gave defence of Depth to Pakistan.

Pakistan has long been accused as the fountain head of world terrorism especially for its activities in India and Afghanistan. Its tribal region along the border of Afghanistan are claimed to be a "haven for terrorists" and Pak government an active sponsor of terrorism. Several terrorist and criminal groups are "backed by senior officers in the Pakistan Army and ISI. They have been funding and equipping Al Qaeda, and the Taliban in Afghanistan. Pakistan has also assisted rebel forces in Kashmir. Disproportionate number of extremist schools (madrasas) funded by the Saudis operate in Pakistan. Pakistan's former ambassador to the U.S. Husain Haqqani has said Pakistan sponsors terrorism.

Former Pakistan President Pervez Musharraf has conceded that his forces trained militant groups to fight India in Kashmir. Pakistani spies in the ISI cultivated the Taliban after 2001 because Karzai’s government was dominated by non-Pashtuns, who were thought to favour India. ISI has been accused of the Indian Parliament attack, Mumbai bombings among many others. ISI has provided covert but well-documented support to al-Qaeda affiliate terrorist group Jaish-e-Mohammed. The US drones have been targeting extremist hideouts in the mountainous tribal region of Pakistan. Pakistan also supports Lashkar-e-Toiba, Jamaat-ud-Dawa and Sipah-e-Sahaba, the so-called Kashmiri freedom fighters. Osama Bin Laden, Zawahiri, Hafiz Saeed and Lakhvi are considered heroes in Pakistan. Taliban was created and trained to fight Russia.

There is direct evidence that the ISI knew of Bin Laden’s presence in Abbottabad, Pakistan. The Haqqani Network is the veritable arm of Pakistan's ISI and was blamed for assault on US embassy in Kabul in 2011. Pakistan has been snubbed for its double standards. The recent Bangladesh incidents were backed and financed by Pakistani officials. The Al-Qaeda supreme leader Osama Bin Laden having been captured and killed in Pakistan indicates the level of duplicity. Under these circumstances the security of CPEC has too many players to contend in Pakistan.

China has expressed concern that some separatist groups in Xinjiang may be collaborating with insurgents in Pakistan, and has expressed a desire to strengthen security. Also Baloch nationalists have opposed the large-scale development projects envisioned by CPEC, fearing that such developments in the province would eventually result in local residents "losing control" over natural resources. In August 2016, Quetta a key city on CPEC was struck by a suicide bombing killing 70 people. Currently nearly 10,000 Chinese are working in the CPEC, and their numbers are increasing. Pakistan plans to train around 12,000 security personnel to protect them.

Conscious of the huge investments and the risks involved in any project in Pakistan, China has been treading with measured caution. It has been talking to the many power centres separately. With the Civil government departments they have evolved the specific infrastructure and economic projects. They are in direct touch with Pakistan Army to create a security force for the CPEC. There are serious differences within the Pakistani establishment on this. Pakistan Army, without clearance of the government has announced the raising of a Special security Division (SSD) to protect the Chinese personnel working on the CPEC.

The civilian government apprehends expanding military influence on law enforcement agencies at the cost of civil authority. Security is a major concern for entire CPEC, which faces threats from both regional and extra-regional players. It is particularly problematic as those engaged with projects in Balochistan, have already lost 44 men, including 26 soldiers. Pakistan military which is known to have billionaire Generals wants to be part of the economic pie (loot). China will take no chances and will be part of any decision making. Chinese is likely to also position around 10,000 troops. With large number of projects under various ministries and in different regions, de facto China would have converted Pakistan into another Chinese region. That is nearest equivalent of the East India Company.

USA has dominated the Pak-Afghan region ever since the end of cold war and collapse of Soviet Union. The economic and military rise of China in the last decade has shifted USA’s focus to look east and Asia-Pacific has become the region of their future attention. Obama administration's 2012 "Pivot to East Asia" regional strategy was born out of this.

The Chinese expansionist designs in South China Sea and the CPEC are two areas that will give exponential economic advantage to China and therefore Chinese success in these two will undermine US position in the region. Pakistan had started moving closer to China after the 1962 Sino-Indian war sensing an enemy’s enemy could be a friend. However due to USA’s geo-political interests and economic might, it remained the main supplier of military aid to Pakistan.

After the 1992 Pressler amendment, unbridled US support and aid to Pakistan had faced a major cut. The ensuing uncertainty pushed Pakistan closer to China who helped it in setting up a military-industrial complex and build nuclear and missile capability. Nothing comes for free. Pakistan had earlier ceded 5,180 square kilometres of strategically important land to China in northern Kashmir. Similarly for CPEC Pakistan would have to allow large freedom of operations to the Chinese construction force and security agencies with-in Pakistan. CPEC success would mean a windfall for both China and Pakistan. Great economic strength will transform into military power. India has serious boundary disputes with both China and Pakistan. It is globally accepted that two could collude against India in a conflict forcing a two-front war. Success of CPEC thus has implications for India.

The CPEC will bring China and Pakistan militarily closer. CPEC also somewhat legitimises Pakistan’s ownership over disputed PoK. China will get a corridor to move its Armour and mechanised forces and threaten India in the plains of Panjab and Rajasthan. In the guise of securing CPEC, China can permanently position troops on Pakistan soil not too far from Indian border. India could thus exercise a pincer like threat. Pakistan could now more easily offer a treaty akin to the Indo-US LEMOA logistics exchange agreement to China. Gwadar could be a permanent Chinese Naval base and then threaten India’s maritime interests and energy supplies. China would thus be able to impose hegemony in whole of Asia and push India further into the American fold and its Asia-Pacific Pivot.

Notwithstanding the sudden surge of national fervour, and international condemnation after the Uri attacks, the options to be exercised by India have to be rational and in best long term national interest. CPEC’s main beneficiary is China which wants access to markets and energy.

It has cut Shanghai to Aden distance by half. Eastern China has also got better linked to its less developed Western provinces in the bargain. Pakistan is more like a conveyor belt for which China is paying rent through support for local development. India however sees the CPEC well beyond just economic activity and suspects their intent to strategically besiege India. India’s only viable objection is that the CPEC passes through disputed Gilgit-Baltistan regions. India cannot stop the CPEC project. India can at best impede it and increase the cost to Pakistan and China with the help of other countries like USA which are affected by rise of China.

China is not only an economic power house; it has become militarily very strong. After its strong stand in South China Sea opposing an international court ruling, it has sealed its powerful place on the world high table. India cannot expect support against China on CPEC even from USA. India’s trade with Pakistan is a very small percentage. Removing MFN status given to Pakistan over two decades back without reciprocation will hurt them little but will be a significant symbolic signal. As authorised in Indus Water Treaty (IWT), India has scope to utilize more water from western rivers for power generation and irrigation. However currently it does not have infrastructural means to do the same. Nor can it physically stop water. It could take over a decade to build infrastructure to store or divert water. So IWT cannot immediately be used as a weapon but work must start to divert water.


(Air Marshal Anil Chopra is a former fighter Pilot of the Indian Air Force who commanded a Mirage 2000 Squadron)

Part Two: here