From the Abraham Accords to South Asia: Realignment, Escalation, and the Risk of Strategic Spillover. Dr Shabir Choudhry

  From the Abraham Accords to South Asia: Realignment, Escalation, and the Risk of Strategic Spillover.

 Dr Shabir Choudhry

The current turbulence in the Middle East is not an isolated eruption of violence. It is the visible phase of a deeper structural transformation that began years ago with shifting alliances, normalisation agreements, and recalibrated power balances. The question now confronting policymakers is not merely whether the conflict will intensify within West Asia, but whether its consequences will extend into South Asia.

The concern is not about tanks moving across continents. It is about alliance systems, strategic compression, and geopolitical contagion.

1. The Transformation of Regional Architecture

The Abraham Accords marked more than diplomatic normalisation between Israel and certain Arab states. They represented the institutionalisation of a new security architecture in West Asia. Over the past decade:

• Israel deepened security and intelligence cooperation with the United States.
• The UAE and Bahrain formalised normalisation.
• Gulf states diversified relations toward China while maintaining U.S. security dependence.
• India strengthened defence and technological cooperation with Israel.
• Iran expanded its missile capabilities and proxy network as asymmetric deterrence.

What was once a fragmented regional system began evolving into overlapping security blocs.

The crucial shift occurred when normalisation moved from diplomacy to operational integration — particularly in air defence coordination and intelligence sharing. If Gulf states intercept projectiles aimed at Israel, normalisation becomes not merely political recognition but shared military infrastructure.

This practically mean defence alliance and reduces strategic ambiguity and increases bloc consolidation. It is clear when you have a defence alliance with one country there will be consequences if there is a serious tension or a war.

2. The Iran–Israel Threshold

For years, confrontation between Iran and Israel remained a shadow war — fought in Syria and Lebanon through cyber operations, assassinations, and proxies.

Recent escalations suggest a lowering of thresholds. Direct missile exchanges, public signalling, and overt retaliatory measures indicate that deterrence stability is under strain.

If sustained confrontation emerges, three immediate consequences follow:

1. Maritime insecurity in the Gulf and Red Sea.
2. Energy market volatility.
3. Increased U.S. military involvement.

But beyond these tactical effects lies a deeper systemic shift: the polarisation of the region into more rigid alignment structures.

And alignment structures rarely remain geographically confined.

3. India’s Position in the Emerging Order

India’s strategic partnership with Israel has grown significantly, encompassing missile systems, surveillance technologies, cybersecurity, and intelligence cooperation.

India also has strong ties with some Arab states, particularly with the UAE, which is openly standing with Israel. India maintains strong relations with other Arab States and expanding engagement, and the proposed India–Middle East–Europe economic corridor symbolises this emerging strategic connectivity.

However, it must be noted that India is not a direct party to the Middle Eastern conflict. Nevertheless, it is embedded within the broader alignment network that supports Israel’s security ecosystem, and recent agreements to further cement their relations.

This alters South Asian strategic perceptions — particularly in Pakistan — where Israel–India cooperation has long been viewed through a security lens.

4. Strategic Compression and Pakistan

Pakistan faces a uniquely delicate balancing environment:

• It cannot openly normalise with Israel without domestic upheaval.
• It relies economically on the Gulf states.
• It shares a sensitive border with Iran.
• It is strategically tied to China.
• It remains in long-term rivalry with India.

If the Middle East hardens into two visible blocs — a U.S.–Israel–Gulf alignment on one side and an Iran-centred axis on the other — Pakistan’s manoeuvring space narrows.

This is strategic compression. Compression does not automatically produce war. It produces vulnerability, internal strain, and increased exposure to external pressures.

Economic fragility compounds this risk. When regional polarisation increases, economically weaker states experience stress first — through energy shocks, remittance fluctuations, and political polarisation.

5. Potential Spillover Mechanisms into South Asia

Spillover is unlikely to occur through conventional military expansion. Instead, it may unfold through several indirect pathways:

A. Sectarian Polarisation. Heightened Iran–Israel confrontation could intensify sectarian narratives across South Asia, particularly in Pakistan and parts of India.

B. Proxy Activation. Militant or ideological networks may seek to exploit Middle Eastern tensions to mobilise or establish symbolic linkages.

C. Diplomatic Repositioning

India could leverage deeper integration with the Middle East to strengthen its strategic partnerships, potentially altering the regional balance of power vis-à-vis Pakistan.

D. Energy and Economic Shockwaves

South Asian economies are heavily dependent on Gulf energy supplies and remittances. Prolonged instability would generate inflationary and fiscal pressures.

E. Great Power Overlay

China, the United States, and Russia all maintain strategic interests spanning both West and South Asia. Escalation in one theatre increases friction in the other.

6. Scenarios for the Coming Years. Three trajectories appear plausible:

Scenario 1: Contained Escalation

Limited but repeated exchanges between Iran and Israel, controlled through deterrence signalling. Spillover remains economic and rhetorical.

Scenario 2: Sustained Regional Polarisation

Gulf states integrate more deeply into Israeli security systems. Iran intensifies asymmetric responses. South Asia experiences indirect political and ideological turbulence.

Scenario 3: System-Level Confrontation

Direct prolonged Iran–Israel conflict draws in major powers. Energy markets destabilise. South Asian states are forced into clearer alignment positions. Internal instability risks increase.

The third scenario remains less probable but cannot be dismissed.

7. Could It Get Worse? Yes — particularly if:

• Lebanon becomes a sustained battlefield.
• Gulf states transition from defensive coordination to overt alliance commitments.
• Iran’s strategic patience erodes.
• The United States deepens visible military involvement.

At that stage, the conflict would shift from event-driven escalation to alignment-driven confrontation.

Alignment conflicts travel through economic systems, ideological networks, and power balances.

8. Conclusion: A Shrinking Neutral Space

The central risk is not immediate war between West and South Asia. The central risk is the shrinking of neutral strategic space.

As alliances consolidate and polarisation intensifies, mid-level powers and fragile states face harder choices. Strategic autonomy becomes more difficult to maintain.

South Asia is not insulated from West Asia’s transformation. It is economically connected, strategically entangled, and politically sensitive to its shifts.

Whether the current crisis stabilises or expands will depend on deterrence management, economic resilience, and the capacity of regional actors to avoid binary bloc politics.

If those mechanisms fail, the ripple effects will not stop at the Arabian Sea.

Dr Shabir Choudhry is a London-based political analyst, author, and expert on South Asian affairs, with a focus on Pakistan, Afghanistan, and Kashmir.

Email: drshabirchoudhry@gmail.com

CPEC: Debt Trap Diplomacy or a Mismanaged Opportunity?

 CPEC: Debt Trap Diplomacy or a Mismanaged Opportunity?

It is no secret that CPEC has failed to achieve its set goals on time. But is China to blame – or Pakistan itself?

By Syed Muhammad Saad Zaidi and Waleed Sami

September 20, 2025

 

During the second Pakistan-China B2B Investment Conference, held on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Tianjin, Pakistan’s Prime Minister Pakistan Shehbaz Sharif formally announced the launch of China-Pakistan Economic Corridor (CPEC) Phase 2, also known as CPEC 2.0.

CPEC has been a cornerstone of China-Pakistan relations for more than a decade. For Beijing, it was a strategic gamble to avoid the infamous Malacca dilemma; for Pakistan, it was considered an economic “game changer.” Thus, both Beijing and Islamabad viewed CPEC as a win-win initiative. However, the West, led by the United States, labeled CPEC as an example of “debt trap diplomacy,” portraying China as an exploitative power, hiding its geopolitical goals under the guise of infrastructure diplomacy. 

It is no secret that CPEC was unable to achieve its set goals as per the timeline at the time of its inception. However, it would be wrong to point to a supposed “debt trap” as the primary reason. As CPEC is entering into the second phase, it is critical to understand Beijing’s development finance model vis-à-vis CPEC’s first phase and Islamabad’s management of CPEC finance. Only then we can truly understand China’s role in Pakistan, whether as an exploitative or benevolent power. 

The Long March to CPEC 2.0

CPEC, termed as the Belt and Road Initiative’s (BRI) flagship project, was formally launched in 2013. Initially, CPEC’s projects amounted to $46.5 billion; however, with time its scope was broadened and now total investment under CPEC has reached $62 billion. 

The initiative promised to give much-needed economic impetus to Pakistan but quickly entered uncharted waters and became mired in countless controversies. Thus CPEC has very few outcomes to showcase. 

As initially conceived, CPEC is divided into three phases: the short-term phase (2015-2020), the medium-term phase (2021-2025), and the long-term phase (2026-2030). The first phase, which focused on projects related to infrastructure, energy, and port development, was supposed to be completed in 2020, but it took five more years. In those five years, the second phase, whose purpose was to establish 33 special economic zones (SZEs), should have been concluded. Ironically, Pakistan’s prime minister has now announced the launch of this second phase in 2025’s third quarter – just a few months before it was supposed to be completed. 

This delay has cost Pakistan dearly. The overdue energy and infrastructure projects, cost overruns, and accusations of opaque contracts have cost the initiative its viability.

Challenges to CPEC

One of the main challenges to CPEC has been the political infighting in Pakistan. In 2015, when Pakistan Muslim League Nawaz (PML-N) was in power, it considered itself the chief architect of the initiative; meanwhile, the opposition party, Pakistan Tehreek-e-Insaf (PTI), accused the PML-N of corruption and inflated cost of projects. 

In 2018, the tables turned and the PTI came into the government. It attempted to reduce Pakistan’s financial risk by asking the Chinese side to review all the contracts, as the new government feared they were badly negotiated – either overly expensive or on terms excessively favoring China. However, Beijing was prepared to review only those projects that had not been started. 

 

In 2019, the PTI government engaged the International Monetary Fund (IMF) for a financial bailout to solve the balance of payment (BOP) crisis. For this bailout, Pakistan had to share details of CPEC with the IMF. Pakistan also had to agree with IMF conditions, like fiscal consolidation, that in practice required slowing down CPEC, which ultimately angered the Chinese. 

Ethnic and provincial tension also had a fair share in slowing down CPEC. In 2016, the PTI-led provincial government in Khyber Pakhtunkhwa (KP) received only 2 percent of the share in project allocations, despite demanding that the province should be eligible for nearly 13 percent. PTI politicians began to term CPEC as the “China-Punjab Economic Corridor,” promoting a narrative that Punjab was favored over KP and Balochistan in CPEC implementation. 

In Balochistan, the Baloch nationalist parties also criticized the federal government for prioritizing the eastern route (Punjab) over the western route (Balochistan), hindering the province’s opportunity for infrastructure development. 

Ethnic tensions have also translated into security challenges in both provinces in the form of the Balochistan Liberation Army (BLA) in Balochistan and the Tehreek-e-Taliban Pakistan (TTP) in KP. The BLA, a separatist terrorist organization, blames Beijing and Islamabad for unmet promises of development and local jobs, exploitation of provincial resources, and corruption. With this raison d’être, the BLA is attacking Chinese workers in Pakistan. From 2021 until late 2024, there were 14 attacks on CPEC, killing 20 Chinese citizens and injuring 34. Most of these attacks were claimed by the BLA. 

 

Similarly, in KP, the TTP is also targeting Chinese interests. Since the U.S. withdrawal from Afghanistan, the TTP has rapidly increased the number of attacks in Pakistan. It considers Pakistan an “infidel state” and opposes China due to its treatment of Uyghur Muslims in Xinjiang. To undermine both states, the TTP attacks Chinese national and strategic infrastructure in Pakistan. Its high profile targets included attacks on Chinese workers in KP in March 2024. Also, a suicide bomber was successful in killing five Chinese and a Pakistani national. Such incidents have raised questions on Chinese national and investment safety in Pakistan, further complicating the completion of CPEC. 

Hidden Cost of CPEC Phase 1

According to economist Ali Hasanain, an associate professor at Lahore University of Management Sciences, CPEC’s original sin was that a large number of its projects relied on foreign currencies, which ultimately clashed with Pakistan’s domestic-oriented exchange rate and industrial policies, narrowing the fiscal space for Islamabad. Currently, Pakistan owes more than $7.5 billion for setting up power plants and additional nearly $2 billion to Chinese energy producers in circular debt, or unpaid bills. 

Due to the delay in CPEC 2.0, Pakistan has been unable to establish the industrial base needed to transform into an export-driven economy and pay off its debts. Consequently, Pakistan had to seek more loans to pay past loans – resulting in a prolonged debt crisis. 

Out of $62 billion, $35 billion was spent on funding 21 power projects, making power the most expensive sector of CPEC. Ironically, China’s priority in CPEC was connectivity projects but Pakistan’s government wanted the initial financing to go toward the power sector. This move did help Pakistan meet its energy demands. According to the Economic Survey (2023-24), Pakistan almost doubled its domestic power capacity, increasing power production to 42,131 MW. However, this has further exacerbated the national debt crisis. The finance structure between Chinese Independent Power Producers (IPPs) and Pakistan’s government has a 75 percent debt-to-equity ratio, yet some IPPs enjoy guaranteed exorbitant returns of 27-34 percent on equity from the government. 

Pakistan’s government has earmarked 5 billion rupees per month (around $540 million) to go to Chinese IPPs, whether that electricity is consumed or not. To understand the difference, before the start of CPEC power projects in 2015, Pakistan’s capacity charges were 384 billion rupees, but they have mounted to 2,124 billion after addition of Chinese IPPs. 

This financial structure of guaranteed returns and the capacity charges adds to the circular debt in the power sector of Pakistan, which amounts to $15 billion. There have been repeated attempts to restructure the payment of this massive debt, but so far no official acceptance of the proposal from the Chinese side. 

Another reason for the circular debt in CPEC power plants is the poor planning of coal-based power plants such as Sahiwal, Port Qasim, and Hub. These plants depend upon imported coal from South Africa, Australia, and Indonesia. This both increases the cost of electricity for domestic consumption and drives up fuel import bills, which increases Pakistan’s BOP deficit. 

Moreover, CPEC Authority, created during the PTI’s tenure in a bid to speed up CPEC, released a report stating that “excess set-up costs of PKR 32.46 billion (approximately $204 million) was allowed to the two coal-based [Chinese] plants due to misrepresentation by sponsors regarding [deductions for] the ‘Interest During Construction’ (IDC) as well as non-consideration of earlier completion of plants.” In the case of the Sahiwal plant, the interest deduction was permitted for 48 months, even though the project was completed within 27-29 months. As a result, Pakistan has to pay a Return on Equity (RoE) of $27.4 million annually until the project life is over – a period of 30 years. 

 

Other than the power sector, Gwadar port has remained a major challenge in CPEC’s overall success. When it was conceived it was termed as CPEC’s “crown jewel,” as it would link western China with the Indian Ocean to escape the “Malacca dilemma.” However, it failed to live up to its potential. 

The first reason for its failure was on the technical side. The port is built with three berths only. In comparison, Karachi port has 33 berths. Gwadar handles just 3.2 percent of the containers that Karachi does.

The second flaw in its business model. A full 90 percent of its revenue goes to China and 10 percent to Pakistan, with nearly nothing for the provincial and local government. That has created a big rift between the locals and the state, exacerbating the ethnic and provincial tensions that already surrounded CPEC. 

CPEC Has Many Problems, But Is It a Debt Trap?

The concept of “debt trap diplomacy” refers to the deliberate lending of money, directly or indirectly, through economically unviable and unsustainable infrastructure projects, by an economic power to states with weak economies that are likely to default on their debts. This enables the lender to later convert the debt into geopolitical influence, securing its strategic interests, even at the cost of the borrower state’s national interest. 

The phenomenon gained traction in global politics when China was accused of using debt traps as a foreign policy tool in BRI projects. According to this narrative, China was using unsustainable debt to force recipient states into giving sovereign concessions, such as the transfer of strategic assets. The infamous case of Sri Lanka’s Hambantota port is often cited as a classic example of China’s using debt trap diplomacy to seize strategic assets from a state. However, when objectively and critically analyzed, it becomes evident that Sri Lanka’s economic troubles stem largely from domestic mismanagement rather than China’s allegedly predatory lending practices. Most of Sri Lanka’s debt was not owed to China, but to international bond-holders.

Western critics have raised similar accusations of debt trap diplomacy regarding CPEC. To strengthen their case, they highlight and criticize a common misperception vis-à-vis CPEC, which is that the bulk of investments in CPEC projects is in the form of foreign direct investment (FDI) from China. In reality, FDI’s contribution to CPEC projects is negligible; the overwhelming majority of projects are funded through commercial loans. Approximately 95.2 percent of energy projects and 73 percent of transportation projects were financed via commercial loans from Chinese financial institutions. 

CPEC critics argue that if geopolitical differences arise between Pakistan and China, China’s benevolent behavior vis-à-vis Pakistan will diminish. Consequently, economic concessions such as debt rollovers or rescheduling will no longer be available. Given Pakistan’s precarious economic conditions, it may struggle to meet debt obligations on time. In such a situation, critics are of the view that China will strong-arm Pakistan to convert this debt into equity, with the result of China gaining control of key strategic assets, as it allegedly did in Sri Lanka.

Critics build a compelling case; however, as has been widely demonstrated in other cases, an objective analysis undermines the debt trap narrative. For one thing, China owns 20 percent of Pakistan’s external debt, whereas Western-influenced international financial institutions – such as the World Bank, the IMF and the Asian Development Bank – collectively own more than 40 percent of Pakistan’s debt. 

In addition, whether Chinese loans to Pakistan under CPEC are unsustainable is open to debate. Leading economists of Pakistan agree that if CPEC projects had been completed on time, Pakistan’s economy would be in a much stronger position – and able to easily repay all the loans. Thus, CPEC being an instrument of Chinese debt trap diplomacy is a myth. Instead, it was the delay in CPEC 2.0 – due to domestic factors in Pakistan itself – that prolonged the debt crisis and nearly disrupted the potential success of the initiative. 

https://thediplomat.com/2025/09/cpec-debt-trap-diplomacy-or-a-mismanaged-opportunity/

Basant: Culture, Season, and Shared Heritage.Don’t bring religion into this cultural tradition. Dr Shabir Choudhry,

 Basant: Culture, Season, and Shared Heritage.

Don’t bring religion into this cultural tradition.

Dr Shabir Choudhry, February 2026, London

A few weeks ago, the festival of Basant was celebrated in Lahore with enthusiasm and public participation. For many, it was a vibrant occasion marked by kite flying, colour, music, and community celebration. Economically, too, it benefited local traders, artisans, transport workers, and small businesses. Yet, despite these positive aspects, objections were raised by certain quarters who argued that Basant is part of the Sikh or non-Islamic tradition and therefore should not be celebrated by Muslims.

Such objections arise from a misunderstanding of history.

Historical Roots of Basant

Basant (from the Sanskrit Vasant, meaning spring) is not originally a religious festival. It is seasonal. It marks the arrival of spring — the end of winter’s harshness and the beginning of renewal, cultivation, and hope.

In undivided Punjab — including parts of what is today Pakistani Punjab and regions of Jammu and Kashmir — Basant was closely associated with the agricultural calendar. It coincided with the ripening of wheat crops and the promise of harvest. For farming communities, it symbolised:

• Renewal of life
• Prosperity
• Gratitude for nature’s bounty
• Communal harmony

Muslims, Sikhs, and Hindus alike celebrated it. The land did not discriminate — and neither did the seasons.

Lahore and the Cultural Evolution of Basant

Historically, Lahore became a centre of Basant celebrations during the Mughal period. There are accounts of Mughal emperors observing spring festivities. The festival evolved culturally over centuries and became associated with kite flying, music, and wearing yellow garments — symbolising mustard fields in bloom.

It was never exclusively “Sikh.” Nor was it exclusively “Hindu.” Nor was it exclusively “Muslim.” It was Punjabi.

Agriculture and Shared Civilisation

In the rural areas of Punjab and parts of Jammu and Kashmir, Basant signalled the season when wheat crops entered their final stages before harvest. It was a moment of cautious optimism. A good crop meant survival, stability, and dignity.

Communities that lived side by side for centuries naturally developed shared cultural expressions. These expressions were rooted in land, climate, and livelihood — not in sectarian theology.

To reinterpret such festivals through a purely religious lens is to misunderstand the nature of agrarian civilisation.

The Problem of Religious Reinterpretation

It is unfortunate that in recent decades, some voices have attempted to redefine Basant as belonging to a particular religious identity. This reflects a broader trend in South Asia where cultural practices are increasingly filtered through rigid ideological frameworks.

When culture is reduced to religious ownership, shared heritage becomes contested territory.

This is historically inaccurate and socially harmful.

Islamic civilisation itself has historically accommodated diverse cultural expressions as long as they did not violate core ethical principles. Seasonal celebrations, poetry, music, and communal gatherings have existed throughout Muslim societies in various forms.

The real question is not:

“Who first celebrated Basant?”

The real question is:

“Does celebrating the arrival of spring contradict moral or religious values?”

If the answer is no, then opposition based solely on identity politics becomes difficult to justify.

Culture vs. Sectarian Ownership

In undivided Punjab, Basant was part of a civilisational rhythm — not a sectarian statement. Attempts to attach a narrow religious label to it ignore centuries of shared history.

To give Basant a religious flavour now is to impose present-day anxieties upon a historically plural cultural practice.

Communities flourish when they are confident enough to celebrate their regional heritage without fear.

It is possible to remain a committed Muslim while also acknowledging that:

• The soil we inhabit has layered histories.
• The seasons we experience are shared.
• Cultural continuity strengthens social cohesion.

A Broader Reflection

The debate over Basant is not merely about kite flying. It reflects a larger question facing South Asian societies:

Will culture be defined by inclusivity and shared memory, or by exclusivist interpretation?

Historically, Punjab’s strength lay in its cultural synthesis — poetry, agriculture, music, and shared festivals. When culture becomes fragmented along rigid lines, society loses part of its collective inheritance.

Basant belongs to the land. And the land belongs to all who cultivate it.

Drshabirchoudhry@gmail.com

 

Kazakhstan and Pakistan Mining Investment in Gilgit Baltistan: A Legal and Strategic Explainer Dr Shabir Choudhry, February 2026, London.

 Kazakhstan and Pakistan Mining Investment in Gilgit Baltistan: A Legal and Strategic Explainer

Dr Shabir Choudhry, February 2026, London.

What is being proposed?

·       A Kazakh company, Elaman Group, has announced an initial investment of approximately USD 20 million in placer gold mining in Gilgit-Baltistan (GB).

 

·       The proposal emerged following high-level Pakistan–Kazakhstan diplomatic engagements and meetings with Pakistan’s Board of Investment.

• The project is presented as a commercial mining venture, with the possibility of future expansion.

Why is this not just a commercial deal?

This investment raises constitutional, legal, and international implications, primarily because:

·       Gilgit-Baltistan is legally and constitutionally part of the erstwhile state of Jammu and Kashmir, and not a province under Pakistan’s 1973 Constitution.

 

·       Its governance is based on executive orders and subordinate legislation, and not full constitutional incorporation.

 

·       Mining agreements in such territories carry higher legal and political risk, both domestically and internationally.

Who controls mineral resources under Pakistan’s legal framework?

• Under Article 142 of the Constitution, legislative authority over hard minerals (gold, copper, gemstones) ordinarily rests with provinces.

 

• Oil and gas are jointly owned by the federation and provinces under Article 172(3), but hard minerals are not.

Gilgit-Baltistan’s position is legally distinct:

It is governed under the Gilgit-Baltistan Order 2018.

·       Local mining activity is regulated under the Gilgit-Baltistan Mining Concession Rules 2016, derived from the 1948 Mining Act.

 

·       Laws passed by the Pakistani Parliament do not automatically apply to Gilgit Baltistan unless formally adopted by the GB government.

 

·       Even when the GB Government formally adopt any law passed by Pakistan, it is not legal because the Assembly is just a puppet and does not have a legal or moral value.

What role does the federal government play?

What Pakistan can do:

• Facilitate foreign investment via:
• Board of Investment
• Ministry of Foreign Affairs
• Ministry of Commerce
• State Bank of Pakistan

Sign bilateral investment treaties (BITs).

Provide access to international arbitration frameworks such as ICSID, which is a World Bank–affiliated international arbitration body created in 1966 to resolve disputes between foreign investors and states.

Its full name is the International Centre for Settlement of Investment Disputes, which was established under the ICSID Convention (1965). Its Headquarters is in Washington, D.C, and Pakistan is a signatory member.

However:

·       Licensing, royalties, leases, environmental approvals, and local benefits are administratively tied to GB authorities.

 

·       Any ambiguity between federal facilitation and local jurisdiction creates legal vulnerability.

Why does Gilgit-Baltistan’s disputed status matter?

·       Gilgit-Baltistan is internationally linked to the unresolved Jammu and Kashmir dispute.

 

·       Long-term mineral concessions without safeguards may:

• Be challenged internationally,
• Create complications in arbitration,
• Undermine Pakistan’s stated legal position on Kashmir.
• Best practice requires inclusion of a Non-Prejudicial Clause, clarifying that:
• The investment is administrative and economic,
• It does not affect the final constitutional or international status of the territory.

Key legal risks if clarity is not ensured

• Unclear ownership of minerals
• Ambiguous revenue-sharing formulas
• Disputes over royalties and taxation
• Environmental litigation
• International arbitration exposure
• Local resistance due to a lack of consultation or benefit-sharing

Comparison with the Reko Diq Case: Lessons Unlearned?

What happened at Reko Diq?

• A mining agreement was signed without sufficient legal coherence between:
• Federal authorities
• Provincial (Balochistan) jurisdiction

Pakistan faced ICSID arbitration.

• The result was:
• A multi-billion-dollar damages award,
• Years of litigation,
• Severe reputational and financial cost.

Key similarities with the Gilgit-Baltistan case

• Foreign investor protection under BITs
• Strategic mineral resources
• Complex centre–local jurisdiction issues
• Weak early-stage legal structuring
• Potential exposure to international arbitration

Key differences

• Balochistan is a constitutional province; Gilgit-Baltistan is not.
• GB’s legal position is more fragile, not less.
• Any adverse ruling involving GB may have:
• Wider international implications,
• Kashmir-related political consequences.

Core lesson from Reko Diq

The problem was not foreign investment — it was legal incoherence, institutional conflict, and premature commitments.

If similar mistakes are repeated in Gilgit-Baltistan:

• The legal consequences could be more severe,
• The political fallout could be broader,
• And the space for corrective action could be narrower.

What should be done before finalising any agreement?

Develop a bespoke Mineral Legal Framework for Gilgit-Baltistan.

Ensure:

·       Clear ownership rules

·       Transparent royalty and revenue-sharing

·       Local employment guarantees

·       Environmental safeguards

·       Technology transfer clauses

·       Explicit dispute-resolution mechanisms

·       A Non-Prejudicial Clause on Territorial Status

·       Secure formal adoption by the GB legislative assembly

• Only then proceed with long-term international contracts

Conclusion

Foreign investment in Gilgit-Baltistan’s mineral sector is not inherently problematic, but the legal ambiguity is.

Without coherence between:

• Islamabad government facilitation,
• GB government,
• Constitutional limitations,
• And international obligations,

Even well-intentioned investments risk becoming future liabilities — as Pakistan has already learned the hard way. END.