Mak­ing a suc­cess of CPEC

The Pak Banker - - FRONT PAGE -

Pak­istan and China have been great friends through­out. The two coun­tries have built great good­will over many decades. CPEC was sup­posed to ce­ment this re­la­tion­ship, by adding eco­nomic di­men­sions to the re­la­tion­ship. But now, there is an im­pres­sion that CPEC-re­lated con­sen­sus is erod­ing in Pak­istan. Though Islamabad still over­whelm­ingly backs the projects, crit­i­cal voices within PTI govern­ment have made them­selves heard.The elec­tion of the PTI - which had, on sev­eral oc­ca­sions in re­cent years when it was in the op­po­si­tion, raised con­cerns over trans­parency and fi­nanc­ing of CPEC projects - could be an op­por­tu­nity to ad­dress those con­cerns. The new govern­ment has, by de­fault, ac­quired some wig­gle room to re-ne­go­ti­ate projects that are in the pipe­line to max­i­mize eco­nomic gains for Pak­istan. Be­sides, more open­ness can quell sus­pi­cions of one-sided agree­ments.

The op­po­si­tion needs to act ma­turely on this is­sue. Hav­ing fi­nally found a talk­ing point that res­onates, the main op­po­si­tion party PML-N- which had ne­go­ti­ated CPEC's early-stage en­ergy and in­fra­struc­ture projects in their term - has come out all guns blaz­ing against the PTI. But there is no need to brand the sit­ting govern­ment as anti-China if the in­cum­bents feel that it is pru­dent to re­view pre­vi­ous agree­ments.Even be­fore con­cerns were raised in Pak­istan, the Chi­nese govern­ment had found it­self de­fend­ing against crit­i­cism from the West that Belt and Road Ini­tia­tive (BRI) projects were fu­el­ing in­debt­ed­ness in the re­cip­i­ent coun­tries. Now, dis­sat­is­fac­tion in Pak­istan - the lat­est grum­bling came from a prom­i­nent cab­i­net mem­ber, who is among the coun­try's top in­dus­tri­al­ists - has put Bei­jing in a tough spot.

There is a view that the new govern­ment has kicked up the dust over CPEC just to bal­ance re­la­tions with the US. If it is true, it would be akin to the diplo­matic see-saw Pak­istan has long de­ployed in its re­la­tions with China and the US - tilt­ing one way or the other, de­pend­ing on cir­cum­stances. Oth­ers sus­pect that the CPEC crit­i­cism is mainly due to the fact that new govern­ment can­not af­ford con­tin­ued Amer­i­can bel­liger­ence at a time when it may have to knock on the IMF door.What­ever the case may be, the new Pak­istani govern­ment has to walk a tightrope on this is­sue. It should be care­ful so as not to of­fend China. It seems that the Chi­nese govern­ment is it­self will­ing to have a fresh look at projects in Pak­istan. Crit­ics should wel­come such a re­view - whether it is con­ducted in the in­ter­est of trans­parency or to ra­tio­nal­ize the CPEC port­fo­lio to make projects more com­mer­cially and so­cioe­co­nom­i­cally vi­able.

China and Pak­istan both need to make CPEC a suc­cess. For strate­gic rea­sons, Bei­jing can­not sim­ply walk away from CPEC. The flag­ship's fail­ure could be a set­back for BRI, which is Pres­i­dent Xi's main for­eign legacy. For eco­nomic rea­sons, Pak­istan can­not af­ford to refuse Chi­nese loans for BOP sup­port and in­fra­struc­ture de­vel­op­ment. The new govern­ment must take steps to avoid CPEC be­com­ing a strain on Pak-China co­op­er­a­tion in other ar­eas. And for that, it must ne­go­ti­ate bet­ter this time.For trans­parency, there should be a greater em­pha­sis on the mon­i­tor­ing of projects as well as pre­qual­i­fi­ca­tion of sub­con­trac­tors that need to go with eval­u­a­tion stan­dards, and strin­gent qual­ity con­trols.

All projects should have key per­for­mance checks so con­trac­tors and in­vestors can be brought to task.An­other op­tion is pro­vid­ing in­cen­tives based on per­for­mance tar­gets, rather than dol­ing them out from get-go. The pri­vate sec­tor has com­plained that some Chi­nese firms are de­liv­er­ing poor qual­ity work and there is no stop­ping them from win­ning more bids in the fu­ture. An­other prob­lem is one of too many reg­u­la­tory bod­ies with a lack of co­or­di­na­tion be­tween them. All these is­sues need to be looked into.

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