China-Pakistan Economic Corridor -Challenges

and Prospects
Outlines:
1. Introduction
2. Background:
Strategic importance of Pakistan in general and Gwadar in particular
One Belt, One Road Strategy
3. Project initiation in 2015
4. Challenges:
Domestic: 1. Security situation

2. Political Instability

3. Civil-military relations

4. Inter-provincial grievances
International: 1. India
2. Afghanistan and their Nexus
3. Gulf states
4. Iran (Chabhar port vs Gwadar)
5. American strategy to Contain China

5. Opportunities:
Pakistan: 1. Economic Boost
2. Development
China: 1. Shortest route
2. Safe passage (South China Sea)
Region: 1. Regional Economic integration

2. Transit trade facility to CARs

6. Suggestion: 1. Security measures

2. Border management
3. Political Stability
4. Regional Cooperation
7. Conclusion:
China Pakistan Economic Corridor (CPEC) has a potential to bring regional economic
integration and cooperation. It is a win-win situation for both China and Pakistan as they are the
primary beneficiaries of the project. It has a capacity to cater to the needs of the landlocked
Central Asian States. Moreover, it will provide safe and shortest route to the fastest growing
Chinese economy. It will also stimulate the economy of our country. The new emerging power
dynamics pose serious challenges to the CPEC. If these challenges are effectively tackled, it may
lead to economic interdependence which could be a milestone for peace and economic
development for the region.

Pakistan has a key strategic importance in the region. From Eastern side, arch-rival India is
situated. India is the largest democracy and the biggest emerging market in the world. From
western side of the border is Afghanistan that is one of the most troubled zones in the world. War
is ongoing there since 9/11. China, the second largest economy and the most dominant all over
the global markets, is from northern side. Iran is also in the global spotlight due to its nuclear
program and its bitter rivalry with the US, Israel and the Gulf Arab states. Moreover, 21st
century is called the Asian century. This continent has become a pivotal to global politics.
Besides, Strait of Hormuz from where worlds one-third oil passes through lies near the Gwadar
port. Therefore, Pakistan is situated at the crossroads of oil and gas-rich countries and the largest
economies.

Chinese president Xi Jinping announced One Belt, One Road policy in 2013. It is a long term
transnational strategy to connect Asia, Africa and Europe through a network of highways,
railways and ports. China took this initiative to access markets as china is the second largest
economy and the emerging superpower. One Belt, One Road policy consists of mainly two
parts. One is New Silk Road and the other is Maritime Silk Road. This strategy is inspired
from the ancient Silk Route. In past, Chinese Silk was transported to European Markets from
one country to another. So, the China-Pakistan Economic Corridor is part of One Belt, One
Road policy.

Due to Gwadars strategic importance, the CPEC was under consideration since long. Ex-
president Pervaz Musharaf proposed this project during his tenure, though it could not be
materialized owing to the deteriorating law and order situation of the country. During PPPs
government, Singapore was handling the Gwadar port. The then President Asif Zardari took the
initiative and cancelled the contract with Singapore that was dealing with the development of the
port.
After cancellation of contract, it was signed with China. In 2013 Chinese Premier Li Keqiang
visited Pakistan. Both the countries signed Memorandum of understanding (MoU) and Gawdar
ports development and operations were handed over to china.

2015 was a landmark period for the history of the two countries. Chinese President Xi Jinping
made a historic visit to Pakistan in April of the same year. During his visit, Pakistan and China
signed 51 Memoranda of understanding (MoUs) of 46 billion dollars. It is the largest ever
Foreign Direct investment (FDI) in the country. It encompasses building of huge infrastructure
development, roads, restructuring of railways, energy projects, etc. CPEC will begin from
Gwadars deep sea port to Kashgar, Chinese Xinjiang province.

Since the beginning of the idea of CPEC, it faced multiple challenges. Domestically, poor
security situation is one of the biggest challenges of the country. Terrorism engulfed the region
after 9/11. Suicide bombings and targeted killings were routine. Situation went from bad to
worse. Fear gripped the entire country. Hardly, a city was immune from this menace. The
sensitive installations like Karachi Airport, Mehran Base, Army Headquarters (GHQ), etc. were
attacked. Attack on Army Public School (APS), Peshawar was the extreme of brutality where
146 innocent school children were martyred. Moreover, many notable personalities like Benazir
Bhutto, KPKs senior minister Bashir Bilour, Interior Minister of Punjab Shuja Khanzada
became victim of this scourge. Security is much better now than the past. However, still
managing security remains a challenge. Mainstream media reported that there is 70% decrease
in terrorism related incidents as compared to pre-2014 situation. Unfortunately, on October 24,
2016, terrorist carried out attack on Police Training School in Queeta in which more than 60
people were killed. It indicates, despite military operations and relative peace, security
challenges persist.

Political instability is another important challenge which our country is facing. Since its
inception, instability continued in a new born country due to the absence of the constitution. First
constitution was promulgated after 9 years. The constitutions of 1956 and 1962 were abrogated
by military dictators soon after the promulgation. After the death of Liaquat Ali Khan, in a short
span of time from 1951 to 1958, six prime ministers were dismissed and installed one after the
other. Benazir Bhuttos and Nawaz Sharifs first and second tenure met the same fate. Thus, the
frequent change of governments without completing the tenure of five years weakened the
country politically. But, last PPP government completed its five years. It paved the way for
successful democratic transition.

Frequent martial laws weakened the political setup. Martial laws started soon after the
independence. Iskander Mirza imposed first martial law on October 7, 1958 and Ayub Khan,
Yahya Khan, Zia-ul-Haq and Musharaf followed suit. Pakistan is ruled almost half of its 69 years
by these military dictators who ruled the country according to their own whims.
Civil-military relations heavily influence the domestic politics. Because of the repeated martial
laws, there exists a civil-military imbalance unlike in other popular democracies. The
government enjoys nominal power in the domains of foreign and defense policies with reference
to India, Afghanistan and America. Former Foreign Minister Hina Rabbani Khar admitted in Al-
Jazeerahs program Head to Head, military has a larger role in the country. Military occupied
that space partly due to the inability of the politicians to manage the political affairs effectively.
Ayub Khan while serving army chief of the country was appointed defense minister as well. It
is a rare possibility in successful democracies. Besides, in the decades of 1950s and 1980s,
ruling party and the opposition indulged in the politics of leg pulling. It weakened the institutions
and paved the way for military interference. Imbalanced civil-military relations created a
mistrust between the two important pillars of the state. In spite of that gulf, situation is better
than it was in the past.

Inter-provincial grievances are one of the serious challenges which CPEC is facing. It is alleged
that the ruling party at the centre is trying to maximize benefits for Punjab province at the cost of
other provinces. It created rifts between the federal government and the provinces. Major bone of
contention was the route change. KPK government protested that the federal government
wants to work on the eastern route which passes through Central Punjab. It is a longer than
the western route. However, the proposed route is the wester route which passes through
KPK. It added further to the inter-provincial mistrust. According to the daily Dawn, Chinese
government urged the Pakistani leaders to sort out the differences. Chinese ambassador to
Pakistan Sun Weidong met the leaders of the main stream parties in this regard. Thus, Prime
Ministers Nawaz Sharif convened an APC (All Parties Conference) where inter-provincial
grievances were addressed. Provinces were assured that there is no change in the proposed
routes. Moreover, provinces would enjoy the equal fruits of CPEC. However, Skepticism is not
entirely eliminated.

Apart from domestic, international challenges are also hindering the progress of CPEC. Since
partition, India left no stone unturned to hurt Pakistan. Both the countries fought wars in 1965,
1971 and 1999. In 1971, India supported Mukhti Bahini and fought alongside the rebels.
Resultantly, Pakistan was dismembered. It was confessed by Indian Prime Minister Modi during
his visit to Bangladesh that it was Indian support which helped the creation of Bangladesh. In
the same fashion, India is trying to subvert CPEC. Army Chief General Raheel Sharif during his
visit to the victims of the Civil hospital Queeta blast said, attacks in Baluchistan are the
activities to undermine CPEC. Indian illegitimate demand is Gilgit-Baltistan is a disputed
territory. Therefore, CPECs route passing through it is illegal. Prime Minister Modi
authenticated the doubts in his address at Lal Qila, Delhi, Baloch leaders thanked him for his
support. It was a reference to rebel leaders who are in self-exile. Moreover, Print Media
reported, Modi expressed his concerns about CPEC with China that were disregarded by
Chinese leadership. India is apparently not happy with that development. Arrest of Indian agent
Kulbushan Jhadev testified to the fact of Indian involvement in Balochistan in particular and in
Pakistan in general.
Afghanistan, our western neighbor, remains a problem due to its internal instability. Besides,
Afghanistan claims sovereignty over the region of the Durand line region. However, that claim
has no credence. That is an integral part of Pakistan. Even though, the people of that region are
as happy as ever with Pakistan. Afghanistan always tacitly supported anti-Pakistan activities. The
roots of almost all terrorism related activities are traced to Afghanistan.

For CPEC, Indo-Afghan nexus remains an arduous challenge. India in collusion with
Afghanistan is creating security problems for Pakistan. India has made a base in Afghanistan
from where it carries out terrorist activities. Former American Defense Secretary Chuck Hegel
admitted in a leaked video that India has financed to create problems for Pakistan.
Furthermore, the then Commander of the ISAF forces in Afghanistan General Stanley McCrystal
also advised his government to refrain India from interfering in Pakistan that afflicted American
interests in Afghanistan resultantly. This Indo-Afghanistan nexus is particularly troublesome
because of the porous border. Infiltration becomes easier since Pakistan shares the longest border
with Afghanistan.

In addition to that, Gulf States are also creating problems for CPEC. Oman and Arab Emirates
are particularly anxious about CPEC. Because once the Gwadar port starts operations, it will
minimize the importance of their ports. UAEs port which is the busiest port and it is mostly used
for transit trade. Due to the strategic significance of Gwadar port in the region, it will impact the
ports of Gulf States. Development of friendly ties between India and Gulf States are owing to
these converging interests. Prime Minister Modi recently visited to these states in this regard. It
was a rare occurrence. After many decades, an Indian Prime Minister visited the gulf
monarchies.

Iran is also a challenging factor. Iran in cooperation with India is developing Chabhar port. India
is investing around 20 billion dollars for the development of this port. It is in Seestan province of
Iran at a distance of 72 Kms from Gwadar. India is investing in this port so as to neutralize the
potential of Gwadar port. In fact, it is in competition to Gwadar. Indian objective is to connect
Chabhar with the landlocked Afghanistan and Central Asia. Furthermore, Indian agent
Kulbhushan admitted to have entered in Pakistan from Iran. Pakistan requested to Iranian
President Hassan Ruhani to keep a check on Indian conspiracies hatched in Iran against Pakistan.
India is investing in Chabhar to rival it to Gwadar. But, President Ruhani disregarded that Indian
perception and said, Chabhar is not in competition to Gwadar rather both will complement each
other.

In addition to that, America is aggressively pursuing the policy of Containment against China.
China has become the second largest economy and an emerging superpower. America considers
a rising China a threat to its global dominance. Gwadar port is part of New Silk route, America
is creating hurdles for the Gwadar port. Besides, America perceives Gwadar port could be used
for military purposes in future. As part of containment policy, America signed Strategic and
Economic partnership with Indian. America has also established India Rapid Response Cell
(IRRC) in Pentagon. That is a rare status enjoyed by any country. American support to India for
the Nuclear Suppliers Group (NSG) is also part of that partnership. Their cooperation poses
serious challenge not only for China but also for Pakistan.

If CPEC is properly managed, it will be a game changer for Pakistan. It is a largest ever foreign
direct investment in Pakistan. During President Xis visit to Pakistan, both the countries signed
agreements of 46 billion dollars. It will provide boost to Pakistans ailing economy. Pakistan is
under heavy debt. According to Finance Minister Ishaq Dar, current debt is 73 billion dollars.
Each year, a huge chunk of budget goes to debt servicing. In fiscal year 2016-17, debt servicing
was around 25% of the budget. Therefore, CPEC will help Pakistan to become economically
self-sufficient. According to rough estimates, CPEC will create 700, 000 direct jobs. Besides
that, millions of people will be benefiting from it.

It includes a range of development projects. Out of 46 billion dollars, around 35 billion dollars
are for the energy projects. The government is hopeful through that investment, they will be able
to add the required electricity to the national grid which will end the shortfall. Prime Minister
Nawaz Sharif in a public address assured, by the end of 2018, not only the load shedding will be
ended but also surplus will be available. Furthermore, CPEC includes restructuring of decades
old railways network keeping in view the modern standards. It also includes motorways,
highways, industrial zones, economic zones, airports, etc. throughout the country.

CPEC provides a shortest route to china. The distance from the traditional Chinese route which
passes through Indian Ocean, Strait of Malacca and South China Sea is around 13,000 Kms. On
the other side, distance between Gwadar to Kashgar, Xinjiang province is around 3,000 kms.
Therefore, CPEC provides easy access to China. It cuts down the travelling time from 45 days to
10 days. Freight charges would also be less than the traditional route.

Furthermore, CPEC is also a safe option for China. Shanghai port is not only far away but also
that route can hinder the smooth supply of fuel. Because of ongoing dispute in South China Sea
between China and South Korea, Japan, Malaysia, Vietnam, Brunei. Therefore, clashes might
occur in future and that route could be disturbed. Other than that, there is a constant presence of
American ships in South China Sea. America in cooperation with the rivals of China may trouble
China. TPP (Trans-Pacific Partnership) with these countries is pact of that strategy to counter the
growing Chinese dominance particularly economically. Therefore, CPEC is cheaper and secure
option for China for the long term goals.

It can also fulfill the needs of the regional states. It can provide transit trade facility to the
landlocked Afghanistan and Central Asian States. Sea trade is comparatively inexpensive than
the other modes of transportation. For that purpose, Gwadar port can facilitate to these
landlocked states. Pakistan offered CPEC access to Turkmenistan, Uzbekistan, Kyrgyzstan,
Tajikistan etc. They showed willingness to participate and benefit from the project. These states
can access to CPEC through Afghanistan. It will be beneficial to these Central Asian Republics
(CARs) and to Pakistan as well. CARs can get easy access while Pakistan will earn through
transit fee. Landlocked Afghanistan would also be benefitting from CPEC. Afghanistan can
access the port as well as earn transit charges from the goods moving to the Central Asian
Republics. It can also change the fate of Afghanistan.

This project will integrate the region economically and create interdependence. It will make the
region more connected and peaceful ultimately. In Europe, one country fought with another like
in World War I and II. That continent was a theatre of war in past. However, after the application
of theory of regional integration, European Coal and Steel Community was established which led
to the creation of European Union. The idea behind that was once the warring countries became
economically interdependent, it would compel the states to go for peace instead of war. Because,
stakes would be involved. In the same way, CPEC would forge economic interdependence that
will promote peace in the region.

For the smooth operationalization of CPEC, peace is imperative for the country. In spite of the
improved security, it remains a challenge for the long term. Terrorists still manage to carry out
attacks like the recent violence in Queeta. For achieving that objective, comprehensive National
Action Plan (NAP) was formulated to wipe out extremism and terrorism. It helped to tackle the
menace of terrorism. Today, there is a tremendous decrease in terrorism related incidents.
However, except few points of NAP, others remain unimplemented. There has always been a gap
between devising and implementation of strategy in our country. It is need of hour to review the
NAP and implement all of its 20 points.

Porous border with Afghanistan has always been a trouble for Pakistan. Terrorists after training
are launched through that border. Afghanistan does not recognize the Durand line region so the
western border remains unsealed. People move across the border even without visa. Effective
steps should be taken to manage border so that terrorists infiltration could be stopped inside the
country. Now, Pakistan has raised 29 wings in paramilitary forces for border security. This is the
first time border management has been considered seriously along with a workable plan.

In Pakistan, political stability remains an internal challenge. Political stability is important for the
success of CPEC. Because it is political decision-making which impacts the behavior of
institutions. For achieving political stability, the three pillars of state legislature, judiciary and
executive should work in harmony. Media should also play its vital role. Furthermore, all the
institutions should work within their domains. Political interference in institutional functioning
should be discouraged for internal stability.

Regional cooperation should be promoted. Relations with neighboring countries in particular

while with other countries like Russia in general should be improved keeping in view the
changing international political dynamics. Their participation and investment in CPEC should be
encouraged. That is also in the interests of the country. As maxim goes, we cannot choose
neighbors, but we choose friends. The geography cannot be altered. Thus, there is only option
that is the promotion of peaceful coexistence. Pakistan has to forge regional cooperation for
CPECs long term success. In order to achieve that objective, it is important to resolve long
standing issues particularly with India and Afghanistan. Comprehensive dialogue which started
with India should be carried forward on the basis of equality. Moreover, during Prime Minister
Nawaz Sharifs visit to Afghanistan in December 2015, he assured them, the respect for
sovereignty and Afghanistans enemies are Pakistans enemies. There is no denying there exists
mistrust between the two countries. However, Afghanistan should be apprised of economic
benefits. It is in dire need for economic development. Afghanistan can earn transit fee which will
improve its economy. Furthermore, as Iranian president Ruhani suggested, Chabhar is not in
competition with Gwadar, but both will complement each other. Recently, President Hassan
Ruhani while meeting with Prime Minister of Pakistan in New York showed willingness to
participate in CPEC. Therefore, promotion of regional cooperation is particularly important for
CPEC.

In the end, CPEC is an extraordinary project for Pakistan and China. It will uplift the economy of
Pakistan and cut down the distance for China from 13,000 Kms to 3,000 Kms. Moreover, it will
be a game changer for the entire region. The landlocked Afghanistan and Central Asian States
will get easy access to Gwadar port for trade purposes. However, it is very challenging task to
materialize the full potential of CPEC. Regional cooperation and connectivity will also help in
removing misgivings and pave the way for economic integration and peace resultantly. Thus,
CPEC is a testimony for China-Pakistan relations that are described as sweeter than honey,
higher than Himalayas and deeper than oceans. It is also a hope for the troubled region.