CPEC - Watch-out ! No Free lunch

Train to China

THERE is a fear lurking in the shadows of CPEC that a time will soon come when the Chinese will start dictating terms and priorities rather than negotiating them. As an increasing number of Chinese enterprises acquire stakes in Pakistan’s economy, and as the government takes out more and more loans from Chinese state-owned banks for balance of payments support, the space to negotiate and protect our own interests diminishes. Perhaps we have seen a glimpse of what this entails in the recent discussions around the financing arrangements for the $8bn project for the Peshawar-Karachi railway line, when the Chinese insisted they would not share the project with the Asian Development Bank and wanted to implement it on their own. According to Ahsan Iqbal, the minister for planning and development, who oversaw the negotiations, the Chinese “strongly argued that two-sourced financing would create problems and the project would suffer”. So the government gave in to the ‘strongly argued’ position.

If the merits of single-source financing for this project had been evident, it would not have been double-sourced to begin with — and would certainly not have to be ‘strongly argued’ by anyone. Whatever the merits of the two options, the fact that the Chinese were able to push for full control of the project, and prevail, shows that the power of the government to stand its own ground in any engagement is weakening. This is worrisome because the long-term plan for CPEC envisages far greater entry of Chinese capital, both private and state-owned, into almost every sector of Pakistan’s economy, than what most people realise. The amount of leverage that the Chinese will acquire over Pakistan in the years to come will grow exponentially, and there will be many more moments when positions that are ‘strongly argued’ will need to be equally strongly negotiated in order to protect our own enterprises and economic priorities.

So, naturally, all eyes are watching carefully to see how the early phase of this massive undertaking rolls out. The government needs to do more to assure nervous minds that Pakistan’s interests will be strongly pursued as well, and where necessary, the engagement can be halted if it is not perceived to be putting Pakistan’s interests first. Thus far, that assurance has been absent, and we are moving forward with little to no public awareness about what exactly we are getting entangled in. One way for the government to reassure the country that the growing engagement will safeguard Pakistan’s interests is to make the long-term plan public, especially now that we are told it has been finalised. Putting public approval behind itself is the best way for the government to strengthen its own negotiating position. Let CPEC be the train to prosperity for both countries, and let them ride it together.

Published in Dawn, April 30th, 2017

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