Wednesday, 11 April 2018

CPEC- a relation of dependence. Dr Shabir Choudhry

CPEC- a relation of dependence. Dr Shabir Choudhry  
London      11 April 2018   

Can there be a business relationship between the poor and the rich based on justice and equality? Can there be a partnership between weak and strong. Can weak and poor dictate terms of business or relationship?

Answer to all the above is no. In any case, indication of future relationship between China and Pakistan was exhibited by Chinese engineers and other members of staff in heart of Pakistan in Punjab province on Tuesday 3 April 2018. These Chinese are responsible for the construction of M4 Motorway, which links Bahawalpur to Faisalabad.

The Chinese thrashed the Pakistani Policemen who are especially recruited to protect these Chinese employees. The angry Chinese jumped on their vehicles and also disconnected power supply of the police camp. They also stopped work and ‘abandoned heavy machinery and vehicles on various roads in the area’, blocking roads.
These Policemen have responsibility to protect lives of these Chinese; and not to satisfy their sexual needs. The Chinese wanted to go to ‘Red light area’ to satisfy their sexual urge. When the Security Chief refused the permission to leave the camp because of the threat to their lives, the Chinese resorted to violence. The policemen were beaten up in their own country by these foreigners.
According to the media reports, this was not the first incident of its kind. These ‘Chinese nationals associated with the Chinese army and trained in martial arts had attacked and injured police personnel deployed for their security’. 1
The Pakistani officials did not take any action against this hooliganism of these Chinese, as they did not want to annoy the Chinese. Instead, they reprimanded the police by suspending seven of them ‘for not restraining themselves from a clash’. In other words the Pakistani policemen did not stand idle with their guards lowered in submission; and with their eyes looking down.
Can anyone imagine Pakistani engineers or other technical staff going to China or some other country to work on a project, and beat up their policemen; and get away with it? What does this incident tell about the relationship on the ground and arrogance of these Chinese?

When you see Pakistani diplomats and politicians with suite and tie and big smile on their face after meeting their Chinese counterparts; don’t think they had easy time in the meeting. They are trained to put up a brave face and sell this narrative that they had a brilliant meeting. Fact, however, is a big smile indicates big problems and tough time in the meeting.

The Chinese employees were not diplomats. They could not hide their anger; and they did in public exactly what they thought these Pakistani policemen deserved.

I strongly condemn this arrogance of Chinese employees, and degrading treatment. Some people emphasise that, in view of the Chinese, their relationship with Pakistan is that of a master and a slave; and master, especially in the third world countries feel they have a God - given right to punish and humiliate their subjects.

East India Company and East China Company
Many writers compare the CPEC with East India Company, which came to India for trading purposes. What the East India Company did to India and Indians after they got some foothold in India is a long and tragic story. Some people call the CPEC, East China Company, as they feel their aim is similar to that of the East India Company. Some Pakistani writers feel that the process of colonialism started by East India Company has not ended yet. Afzal Sayal writes:
‘The departure of colonial powers was nothing but a deception and merely a change of masters. After seven decades of so-called freedom, the natives of this land are still being ruled in the same exploitative manner….One of the biggest tragedies that befell Pakistan right after its inception was that those who were supposed to guard the country on the borders, ruled the nation and seized the executive and policymaking’. 2
Like many others, this Pakistani writer, Afzal Sayal, complains about lack of transparency; and feels all important decisions are made by the Chinese leadership. He thinks the Pakistanis are ‘only the spectators of this project, and not equal stakeholders. Is it not enough to suggest that we are being enslaved’? 3
Afzal Sayal thinks if Pakistan has to make an economic progress then they have to adopt a ‘Middle Eastern model’, whereby local citizens must be involved with industrial or business enterprises who must be 51% shareholder of the projects. Similarly, if a foreign firm wants to purchase a piece of land, they must find a local partner with 51% share. The company’s workforce must include 50% of the local people. If this is not done, then he asserts, ‘no one can stop Pakistan from becoming a new Palestine’. 4
Back to IMF or in the lap of China
It was last, year when Nawaz Sharif was still Prime Minister of Pakistan, in my book, Is CPEC - Economic Corridor or a Strategic Game Plan, I wrote:

The Sharif Government is having difficult time in office because of allegations of corruption and estranged civil military relationship is politically not in a position to go back to the IMF. According to the news, the ruling party Member confirmed that the government is reluctant to go to the IMF before the General elections.
Sad thing is it was only last year that the government returned the IMF debt which was borrowed in 2013, and boasted that they have broken the begging bowl of the IMF. For some reason, the IMF loan is ‘politically volatile’; and the government is reluctant to seek more help with that broken ‘begging bowl’. 5
I also wrote that the N League government will hold out; and let the caretaker government deal with the loans and matters related to the IMF because of political issues. Situation got worse than I and many others expected, and the government is forced to make urgent arrangements to avert the crises.

Pakistan achieved a growth rate of 5.3% during fiscal year 2016-17,  which is highest in a decade, but it was short of the government’s target of 5.7%. The government’s economic target for 2017-18 is 6% and many economist analysts believe that the economy will continue its growth, although it may not achieve the set target.
On 4th April 2018, the IMF expressed its serious concern ‘over Pakistan’s weakening macroeconomic situation, including widening external and fiscal imbalances.’

The IMF Executive Board expressed its concern over the country’s deteriorating economic situation; and believed that deficit was set to hit 5.5% of the GDP, almost 505 billion rupees. Due to improved power supply and the CPEC related investment, the economy is expected to grow by 5.6% during the fiscal year of 2017/18.

After decision of the Financial Action Task Force to put Pakistan back on the ‘grey list’, the IMF suggested a number of actions to be taken to enhance anti money laundering and counter terror actions. Also, the government was urged to improve its governance and to strengthen social safety nets, and create business climate. How effectively Pakistani state deals with these matters will determine future course of Pakistan’s economic recovery.

In Pakistan, national interest has always been secondary to the political and personal interests, although they always portray that everything they do is in the ‘national interest’.

Pakistani government is advised not to approach the IMF for more funds to pay back instalments of existing loans because politically it will be suicidal. Apart from that, there is understanding that the IMF will create hurdles in the progress of the CPEC projects. Recently, a source of Ministry of Finance revealed that:
“An IMF package would put the China-Pakistan Economic Corridor (CPEC) – a $60-billion lifeline – at stake because the IMF does not approve of the project in view of the poor health of the economy.” 6

Punjab’s President of the Pakistan Tehrek e Insaf, and Imran Khan’s Chief Political Advisor, Ejaz Ahmed Chaudhry, while talking to the Asia Times, said:
“If I am not wrong the country had to repay foreign loans worth 6 billion US dollars by the 31st of March this year, which it could not do due to the external account deficit and fast depleting foreign exchange reserves”. 7

The current shortfall is over 14 billion US dollars. It is expected that China will pay additional $8 billion. If China doesn’t pay, then Pakistan will have to approach the IMF, and which will jeopardise the progress of the CPEC projects. In other words, for safety of the CPEC and its various projects, China has no choice but to provide more cash to Pakistan that the country can pay instalments on the loans.

Apart from China, Saudi Arabia has also been approached for more funds and supply of oil on loan, which Saudi Arabia has done in the past to support Pakistan. In this context, one can understand why Pakistan hastily, and without much consideration to the geo political situation, despatched Pakistan army to Saudi Arabia, probably to be used against the Muslims of Yemen.

Dr Farrukh Saleem, a Pakistani economist and financial analyst who lives in Islamabad said:
‘Pakistan need $ 15-16 billion worth of support, but the World Bank, Islamic Development Bank and bilateral credit from a consortium of donors would raise more than $ 9 billion. We will be left with a shortfall of around $ 7-8 billion to bridge either through grants and assistance from friendly countries or from the IMF. He further said, ‘Pakistan’s economy was passing through a difficult period’. 8

In order to ease pressure on Pakistan’s foreign exchange reserves, it was proposed by Pakistan that on the CPEC related bills, Pakistan should be allowed to settle accounts by paying in the local currency. In this regard, both countries have signed a ‘swap agreement’. China is doing everything possible to save the CPEC and get Pakistan out of economic mess, but question arises for how long China will continue to do this, if Pakistanis are not really concerned about the health of the economy; and which direction is the country heading.
There is saying, Allah helps those who help themselves. The question is, for how China will help Pakistan if the leaders and the establishment of Pakistan doesn’t want to help Pakistan to get out of problems. Those Pakistanis who say ‘70 years are only a short period in nations life’ are fooling people that they don’t look at their bad deeds. We know there are nations which got independence after Pakistan, and they are far ahead of Pakistan. Sadly, Pakistan is fast moving in the opposite direction.

Why I oppose the CPEC

Sadly, Pakistani ruling elite seem to be more interested in corruption, promotion of extremism, violence, intolerance and strengthening of non-state actors and terrorism. Also, they want to strengthen their military arsenal by development of nuclear warheads and improving missile system, rather than putting their economic and internal house in order. Public welfare, health, education, equality rights of women and minorities etc are not their priorities. They also don’t seem to be too concerned to improve their international image, as same old and heavily criticised policies are being sold with different labels.
Whether Pakistan makes any profit out of the CPEC related projects or not, they will have to start paying back $3.2 billion per annum from 2019 onwards. This amount will increase to $ 5 billion per annum by 2022. 9

This astounding amount could be a gigantic challenge on the Pakistani economy, especially if the CPEC projects do not yield the projected benefits. Fundamental question is, has Pakistan economy the potential to repay $5 billion US dollars per annum on top of the other repayments? Many Pakistani economic experts question ability of the Pakistani economy to face all the challenges and meet the economic targets.

I was discussing economic problems of Pakistan and how this will affect Pakistani Administered Kashmir and Gilgit Baltistan with my friend and a political leader Abbas Butt. After I gave him a briefing on the growing problems and political instability of Pakistan, he said:

“Doctors Sahab don’t worry, Pakistanis know how to fool other countries, and how to borrow money from others. This is something they have successfully done since 1947. They have mastered the art of borrowing and still complain that not enough is given to them. In worst case scenario, after failing to repay the CPEC loans they will give some more land from Gilgit Baltistan and Balochistan to the Chinese and the loans will be settled”. 10

People, and Pakistani agencies criticise me for opposing the CPEC. They also make unfounded and illogical accusations against me. My opposition to the CPEC has more than one dimension. I don’t oppose it because it will make Pakistan strong; and will empower the people of Pakistan. On the contrary, I oppose the CPEC because it will create enormous problems for Pakistan, for people of Pakistan, for people of Pakistani Administered Kashmir, for people of Gilgit Baltistan and for the entire region.

If Pakistani economy is in tatters, won’t that affect people of Pakistan. I will not be happy if innocent people of Pakistan suffer as a result of wrong policies of their rulers. Their wrong policies already resulted in breakaway of East Pakistan, and death of nearly 3 million people and imprisonment of nearly 90 thousand army personnel of Pakistan. These wrong policies have also brought havoc to the remaining Pakistan, which ultimately affects us, people of the former Princely State of Jammu and Kashmir.

People need to understand that what wrong happens in Mumbai and New Delhi does not affect us on this side of the divide; but what wrong happens in Rawalpindi and in Lahore does affect us, and affect us badly. We people of Gilgit Baltistan and so called Azad Kashmir are controlled by Pakistan, and all the bad things of Pakistan surely affects us. When the recent exchange rate changed in Pakistan, resulting in more inflation, and drop in value of rupees, don’t you think it affected all of us?

Moreover, a weak Pakistan will result in more instability, more extremism, more violence, more intolerance, more terrorism and reduced space for moderates and civil society; how on earth is that going to help me and my people in Gilgit Baltistan and so called Azad Kashmir who are already deprived of fundamental human rights?

Because of terrorism Pakistan launched National Action Plan, didn’t that affect us in so called Azad Kashmir and in Gilgit Baltistan? A stronger and prosperous Pakistan will be at peace with all neighbours; and will be less inclined to promote extremism, violence, intolerance and non - state actors.

Apart from that, if Pakistan defaults, and instability and fear reins, there are chances that Pakistan may, once again, hand over our territory to China as they did in 1963. Readers need to be reminded that in 1963, Pakistan handed over around 2000 Kilometres of territory from Gilgit Baltistan to China that China can link with Aqsai Chin which they conquered in 1962 in a war with India.

Already, Pakistan has leased out to China thousands of acres from Gilgit Baltistan; and China is extracting very valuable minerals which belong to us. These are our natural resources and no country has a right to loot and plunder our resources.

If, after knowing all that, I remain quiet, then I am not a loyal son of the soil. I am not a well - wisher of people of Pakistan; and I am not a concerned citizen of South Asia. I believe, we all have to live as good neighbours in South Asia. We cannot afford to continue to live in constant fear. We have to abandon this policy of confrontation and promote peace and understanding in South Asia.


Like many neighbours, India and Pakistan also have unresolved disputes. However, unlike many other neighbours, relationship between India and Pakistan are getting from bad to worse with added bitterness and hatred. There are people on both sides which want to ensure that there is no peace between India and Pakistan; and for this purpose, they want to erect very high walls of hatred and intolerance.

China and India have unresolved disputes and they have had military clashes too; but one does not see hatred and intolerance between them as there is between India and Pakistan.  

At present, arch rivals - India and Pakistan do a direct trade of $2 billion dollars only. According to the World Bank, if India and Pakistan had cordial relations, and they ease visa restrictions then they have potential of taking their bilateral trade up to $30 billion, which will surely help their economies and bring prosperity. 11

Instead of easing the tension and creating conducive environment for peace and harmony, both sides ‘indulge in the shameful practice of harassing each other’s diplomats’. Both India and Pakistan are only harming their national interests. They need to learn from China, which despite disputes with India and America trade with each other. China’s trade with India is around $85 billions.

Despite lofty claims and extremely high praises, trade between Pakistan and China is still hovering around $ 20 billion US dollars. As pointed above, China’s trade with India is around $85 billion. This shows three things:

1/ Trade can continue despite outstanding disputes.

2/ India is China’s major trading partner.

3/ China would not like to harm its national interest – trade with India for the sake of Pakistan.

Pakistan needs to care for its national interests, which is not best served by becoming a proxy of other countries; or by constant confrontation with its neighbours. It is high time that the Pakistani policy makers examine their policies; and abandon old policies of confrontation.

The CPEC may give some infrastructure and provide dams and power supply to Pakistan, but in the long run, it will prove to be catastrophic for Pakistan. The Pakistani economy does not have the capacity to pay back the CPEC debts and meet other outstanding financial commitments.

In any case, the CPEC is a project of two unequal partners. Pakistan will always be a junior partner parading on the instructions and demands of the senior partner. With time, the Pakistani people and the ruling elite will understand that they are in a quagmire, from which it will become difficult to escape without some external help.

With time Pakistan’s dependence on China will increase. The ruling elite will realise that they are more dependent on China, then they were with America and Saudi Arabia. With time their dependence on China will increase, making the country more vulnerable and almost a colony of China.

Education Minister of Sindh, Jam Mehtab Hussain Dahar said, “Pakistan’s economy is going to collapse like that of Greece’s in the next 10 years”.

He said this, while addressing the inauguration ceremony of a conference, titled ‘International Conference on Transforming Economic Development: Policies and Strategies’. The Conference was organised by the Applied
Economics Research Centre (AERC) at the ICCBS, Karachi University. He further said:
“Pakistan has been divided into haves and have-nots classes”. 12

Another Pakistan academic Professor Dr Samina Khalil, Director of Applied Economics Research Centre said:

‘Pakistan is heading towards a social and economic hurricane that will cause great damage. The economic hurricane will sweep away much of the current economy and Pakistan’s assumptions about the future’. 13

Another Pakistani economist Dr. Nadeem-ul-Haq said:
“[A]part from the danger of becoming a colony, the project may undermine [Pakistan’s] sovereignty as its foreign policy, especially with India… will be dictated by China.”
Senator Tahir Mashhadi, Chairman of the Senate Standing Committee on Planning and Development said: “Another East India Company is in the offing; national interests are not being protected. We are proud of the friendship between Pakistan and China, but the interests of the state should come first”. 14
All the above exhibit bitter facts about the CPEC, which the Pakistani political and military elite does not want people to know. As a true nationalist of Jammu and Kashmir; and well - wisher of Pakistani people, it is my duty to present facts as I see them. It is their right to accept them or reject them; at least, they cannot complain that no one caution them.

Writer is a renowned writer and author of many books. He is also a senior leader of UKPNP and Chairman South Asia Watch, London.
Email:       Twitter:  @Drshabir
1.  Also there are videos of the incident on social media which have gone viral.
2.   The East China Company, Daily Times, April 6th 2018.
3.   ibid
4.   ibid
5.   Is CPEC- Economic Corridor or a Strategic Game Plan, page 55
6.   Pakistan seeks bailout from China and Saudis, rather than IMF, by FM Shakil
8.   Ibid
10.                 Abbas Butt is an accountant and Chairman of Kashmir National Party.
11.                 Destiny-dodging days, by Khaled Ahmed Published in Daily Times, April 3rd 2018.
12.                 The Express Tribune, November 23rd, 2016.
13.                 Ibid
14.                 ‘CPEC could become another East India Company’ Dawn, October 18th, 2016

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