A Game Changer

Southasia - - COMMENT -

It seems New Delhi has missed the op­por­tu­nity for eco­nomic in­te­gra­tion with South Asia and has al­lowed China to take the ad­van­tage. The re­cently an­nounced China-Pak­istan Eco­nomic Cor­ri­dor - CPEC – could turn out to be a ver­i­ta­ble megapro­ject. It is de­signed to connect Gwadar Port in south­west­ern Pak­istan to China’s north­west­ern au­ton­o­mous re­gion of Xin­jiang, via a net­work of high­ways, rail­ways and pipe­lines. No won­der, the eco­nomic cor­ri­dor is con­sid­ered cen­tral to China-Pak­istan re­la­tions. It will cover about 3,000 km be­tween Gwadar and Kash­gar, with a con­struc­tion cost es­ti­mated at around $46 bil­lion. The cor­ri­dor is an ex­ten­sion of China’s pro­posed 21st cen­tury Silk Road ini­tia­tive and is the big­gest over­seas in­vest­ment by China an­nounced yet. It is ex­pected to be a strate­gic game changer for Pak­istan.

Pak­istan's econ­omy is cur­rently ham­strung by the fail­ure of suc­ces­sive gov­ern­ments to get to grips with the lack of in­fra­struc­ture. With a pop­u­la­tion fast ap­proach­ing 200 mil­lion, the coun­try’s econ­omy is los­ing up to six per­cent of GDP just be­cause of a lack of power and in­fra­struc­ture bot­tle­necks. Now Bei­jing has un­veiled plans to in­vest ex­ten­sively in the world's sixth-most pop­u­lous coun­try through its ‘One-Belt-One-Road’ project that will ul­ti­mately connect in­ner China with the Mid­dle East and Europe. The cor­ri­dor will put Pak­istan in a much bet­ter eco­nomic sit­u­a­tion and make it a more pow­er­ful en­tity in the re­gion - a prospect that has neg­a­tive con­no­ta­tions for In­dia though the In­dian en­voy in Pak­istan has said that his coun­try is not per­turbed by the forth­com­ing China-Pak­istan eco­nomic co­op­er­a­tion. How­ever, seen in the larger per­spec­tive, the eco­nomic cor­ri­dor should be giv­ing sleep­less nights to the In­dian lead­er­ship as it is likely to cre­ate a new eco­nomic en­tity in the Ara­bian Sea re­gion in the form of a more sta­ble Pak­istan. The eco­nomic cor­ri­dor will pro­vide Pak­istan with a trans­port net­work, an ad­vanced telecom­mu­ni­ca­tion link and an en­ergy in­fra­struc­ture. China and Pak­istan hope the mas­sive in­vest­ment will boost the grow­ing ties be­tween Pak­istan and China and open trade routes for West­ern China, pro­vid­ing it di­rect ac­cess to the re­source-rich Mid­dle East, by­pass­ing longer lo­gis­ti­cal routes through the Strait of Malacca.

The deal in­cludes $622 mil­lion for Gwadar Port. Un­der the agree­ment, $15.5 bil­lion worth of coal, wind, so­lar and hy­dro en­ergy projects will add 10,400 megawatts of en­ergy to the na­tional grid in Pak­istan. The project also in­cludes a $44 mil­lion fi­bre op­tic ca­ble and var­i­ous coal, nu­clear and re­new­able en­ergy projects. The cor­ri­dor will ex­pand the num­ber of trade routes be­tween China and the Mid­dle East and Africa. The first phase of the project in­volves devel­op­ment of Gwadar Port and con­struc­tion of an in­ter­na­tional air­port. This should be done by 2017. The Karako­ram High­way con­nect­ing the two coun­tries will also be widened, while the rail net­work be­tween Karachi and Pe­shawar will be up­graded. The project re­ceived a ma­jor boost when con­trol of Gwadar Port was trans­ferred to China's state-owned China Over­seas Ports Hold­ing in Fe­bru­ary 2013. Built by Chi­nese work­ers and opened in 2007, Gwadar is un­der­go­ing a ma­jor ex­pan­sion to turn it into a full-fledged deep-wa­ter com­mer­cial port. With the devel­op­ment of the cor­ri­dor Cen­tral Asia, tra­di­tion­ally an eco­nom­i­cally closed re­gion ow­ing to its geog­ra­phy and lack of in­fra­struc­ture, will have greater ac­cess to the sea and to the global trade net­work.

Sev­eral dif­fer­ent facets will be uti­lized for the fi­nanc­ing of the project. Both sides will in­crease co­op­er­a­tion, to jointly pro­vide fi­nanc­ing sup­port but it re­mains to be seen whether the AIIB or the Silk Road Fund will be used. The com­ple­tion of Gwadar will cre­ate a strate­gic nexus be­tween Pak­istan, China and Cen­tral Asia, gen­er­at­ing bil­lions in rev­enue and pro­vid­ing shorter land routes. It would pro­vide links from the Caspian Sea to the Strait of Hor­muz and Gwadar will then com­pete with other Persian Gulf ports. The United States has shown its wari­ness of Chi­nese strate­gic ac­cess to the Ara­bian Sea and its pres­ence in the re­gion and this could also spell trou­ble for the project and the re­gion. In­dia may have its own apprehensions in this re­gard. It has al­ready in­vested in the Port of Chaba­har in Iran, through which it will try to gain ac­cess into land­locked Afghanistan and Cen­tral Asia, by­pass­ing Pak­istan. The com­ing years are cer­tainly bound to bring a lot of devel­op­ment – and ex­cite­ment to the re­gion.

Syed Jawaid Iqbal

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