China Pakistan economic corridor (CPEC)

CPEC
1.0 Introduction
2.0 Background
2.1 vision behind CPEC
3.0 challenges
3.1 Domestic challenges
a) Law and order
b) Political instability
c) Civil-military relations
d) Inter-provincial issues regarding CPEC
e) Balochistan factor
3.2 International challenges
a) India’s hostile attitude towards CPEC
b) Indo Afghan nexus.
c) Iran (chabahar port v/s Gwadar)
d) Involvement of big powers.
4.0 Prospects
a) Economic growth
b) Meeting the energy shortfall challenges/requirements
c) Infrastructure development
d) Foreign direct investment
e) Employment generation
f) Promotion of tourism
g) Regional connectivity
5.0 Suggestions:
a) Security measures
b) Political stability
c) Reconciliation process with Afghanistan
d) Transparency and openness to public and accountability
e) Addressing grievances of provinces
f) Stability in balochistan
6.0 conclusions

The China Pakistan economic corridor is an ambitious project that aims at changing the geo-economic dynamics of Pak-China relations and augmenting the trading activity in the region. It anticipates economic growth, meeting the energy shortfall requirements, employment generation, foreign direct investment, infrastructure development, promotion of tourism and others. The multi-billion project offers a long term investment in Pakistan involving the regional countries as well. However, the project is being challenged by domestic controversies and external opposition. In this scenario if these challenges are effectively tackled, it may lead to economic interdependence that would be climacteric for peace and economic development for the region.

The vision behind CPEC is to improve the lives of people of Pakistan and China by building economic cooperation, logistics and people to people contact for regional connectivity. Moreover, it includes integrated transport and IT system, communication channels, agricultural developments and poverty alleviation. Furthermore, it incorporates tourism, financial cooperation, Human Resource Development and others.
After the completion of the corridor, it will become a primary gateway for trade among China, Africa and the Middle East. It is expected that this corridor will help cut the 12000 kilometers route. There are myriads of benefits of CPEC , that are stimulating the hope for bright future of the corridor, the journey would not be without hurdles as there are several intrinsic and extrinsic challenges that are an impediment to the churning out of CPEC.
The first and foremost challenge domestically is an absence of rule of law. The basic purpose of rule of law is to provide security of life and free movement to people. "The World Justice Project" (WJP) analyzed more 113 countries and Pakistan has been ranked 106th in terms of rule of law experienced by the citizens, getting position on the above Afghanistan, Ethiopia, Zimbabwe, Cameroon, Egypt, Cambodia and Venezuela. Without rule of law sustained development remains an elusive goal; peace, investment, development are all linked with the values of law. Moreover, law and order situation is so inadequate in Pakistan that international as well as domestic investors are reluctant to invest in Pakistan.
“China Pakistan economic corridor (CPEC) only could become a game changer, if Pakistan succeeded in
Overcoming its security challenges"

• The former Diplomat Riaz Muhammad Khan-
  The second major threat to the CPEC project is political instability in the country that has become a serious problem in Pakistan. Political firmness is Pre-requisite for the economic growth and development of the country. Uncertainty is ahead of Pakistan political crisis. No Prime Minister could hold the office for 5 years since, after the independence 1947. Nawaz Sharif's disqualification could set up a spell of political instability in Pakistan. Resultantly security issues and political instability arise in Pakistan leading to military interference in the state affairs getting ground for a military coup. Thus political uncertainty unless not done away with, would continue to remain a challenge for the CPEC projects' implementation progresses.
  "CPEC all investment will be withdrawn if there is any Political turmoil in the country"
  -Ahsan Iqbal-
  The third major obstacle to implementation progress of CPEC is an institutional imbalance. Pakistan is a country where the military has ruled for around 35 years out of 70 years of her life. Throughout all the three martial law regimes, the constitution of Pakistan was abrogated, suspended or held in abeyance. Presently, the CPEC is facing tremendous security challenges. In order to guarantee a secure environment for the CPEC development, the military is expanding its power. This phenomenon significantly affects the civil military relations and civilian control over the military that is challenging the process of democratic transition. The need has arisen that the military should be kept aside from the interfering in the political matters of the country. So that the government might make policies for the in the way people want.
  The fourth serious challenge which CPEC is facing is inter-provincial grievances. It is alleged that Punjab gets lion's share in CPEC projects at the cost of other provinces. It fashioned rifts between the federal government and the provinces. The major conflict was "The route change" KPK government demurred that the Federal Government wants to build eastern route first which passes through the central Punjab, despite the fact that eastern route is longer than western route which would be more costlier. In this connection, Punjab province would get the most benefit, depriving other provinces their due share. China urged Pakistani leaders to resolve issues over CPEC project. Minister for inter-provincial co-ordination Riaz Pirzada said that CPEC is crucial for the country, it should not be made controversial by saying that the entire country and all the provinces would benefit from it, particularly backward areas of KPK and Baloachistan.

Fifth major challenge towards implementation of CPEC is the unrest in balochistan province. Due to the fact that Gwadar port is located in province of balochistan the ongoing insurgency in the provinces poses crucial challenges to the success of CPEC project. Consequently, the benefits of CPEC investment can be accurately measured if its impact on terrorism can be calculated.

Apart from domestic challenges, CPEC project implementation is facing several international challenges as well.
The first and foremost external challenge to the corridor is India’s belligerent attitude towards CPEC. Indian felonious demand is that Gilgit Baltistan is a disputed territory, therefore; route of CPEC passing through that territory is unjustified (illegal). Another considerable concern within India is that she sees Gwadar a deep-sea port as a part of China's “string of pearls” basis that extends from its eastern coast to the Arabian Sea. China is also developing ports in Sri-Lanka and Bangladesh.( that are considered a potential military challenge to India). India perceives that in future China can block sea access to India by burgeoning such ports. Consequently, India is unhappy with the development of CPEC and trying to sabotage CPEC by playing its card in Balochistan. The Recent arrest of Indian agent Kulbhushan Jadev testifies the involvement of India in Balochistan in particular and in Pakistan in general.
The second challenge to the success of CPEC is Indo-Afghan nexus. Internal instability in Afghanistan remained unruly for Pakistan. The roots of almost all terrorist related activities are traced back to Afghanistan. Besides, India is making military bases in Afghanistan from where it carries out terrorist activities.
“RAW is operating from Afghanistan to sabotage CPEC”
General Zubair Hayat
This Indo-Afghan nexus is causing problems because of “Durand Line” that is a porous border.

The third major challenge in CPEC implementation is Chabahar port. Iran in cooperation with India is developing chabahar port. India is investing billions of dollars in this project so as to neutralize the potential of Gwadar port and curtail CPEC. It is in completion to Gwadar. But President Ruhani said, “Chabahar is not in competition to Gwadar rather both will complement each other.”
Fourth major obstacle is involvement of big powers. Two major powers United States and Japan appear to be excessively uneasy with the fruition of multi-billion dollar project. The US is making different policies to contain China. America considers rising China threat to its global dominance. Thus America is creating hurdles for Gwadar port, besides America perceives that Gwadar port could be used for the military purpose in future. As a part of the containment policy, America signed “strategic and economic partnership” with India. American support to India for the nuclear supplier Group (NSG) is also part of that partnership. Their cooperation is not the only challenge for China but for also for Pakistan. On the other hand, Japan is stressed because with the consumption of CPEC the distance amongst China and its trading countries would reduce by as much as 9000 kilometers that will have deep impact on Japan’s exports.
Despite formidable municipal and international challenges the benefits and prospects of CPEC are extensive that are likely to come to fruition. If CPEC is appropriately coped, it from all counts will prove a game changer; this project has potential to transform economic growth. Besides, it gives hope of having regional cooperation, transit, trade, energy transformation and others.
Firstly, the Pak-China economic corridor will boost the economy of Pakistan. Pakistan is under heavy debt. According to Finance Minister Ishaq Dar, “current debt on Pakistan is 73 billion dollars.” A report released by a think-tank of South Asian Investors says, that the multi-billion dollar project is expected to boost the country’s GDP growth rate to 7.5% during the period 2015–2030. According to International ratings institution Moody’s report China-Pakistan Economic Corridor (CPEC), will increase industrial production and surge development work. CPEC is a 3,218-kilometer long route; the completion of the route will take several years, consisting of highways, railways and pipeline. Once China Pakistan Economic corridor is completed; it will open doors to immense economic opportunities not only to Pakistan but will physically connect China to its markets in Asia, Europe and beyond.
Secondly, the project will encounter the energy shortage necessities of Pakistan. An acute ongoing energy crisis is posing a serious dilemma for Pakistan. Available data of National Transmission and Despatch Company NTDC and K-Electric Limited (KEL) say that total installed electricity production capacity is 23,234 megawatts (MW). And the shortfall lies -between 5,000 MW and 6,000 MW. Secretary of Water and Power, Mohammad Younis Dagha said that under the China Pakistan economic corridor (CPEC) project, the Chinese companies will be investing $35 billion in 19 power projects which will produce 12,134 MW of electricity. According to K-Electric KEL and National Transmission and Despatch Company NTDC, by 2020 Pakistan will be able to produce 34,785MW of electricity.
Thirdly, CPEC is major driver of Foreign Direct Investment (FDI) in Pakistan. It has been a dry spell for Foreign Direct Investment (FDI) in Pakistan. Our country did not attract FDI in the wake of recent years. The country had received a meagre amount in 2015. Nonetheless, China Pakistan Economic Corridor (CPEC) became the major driving force in bringing FDI to Pakistan. According to the World Investment Report (WIR) 2017, the foreign direct investment in Pakistan has increased by 56 percent to over $2 billion. The confidence of investors has much improved, that resulted in a large amount of foreign investment in infrastructure industries, especially electricity generation and transport. Many examples can be quoted here for instance; Power Construction Corporation (China) and Al-Mirqab Capital (Qatar) have started to jointly invest in a power plant at Port Qasim, which is the second largest port in Pakistan.
Fourthly, the China Pakistan Economic Corridor (CPEC) will help Pakistan improve its infrastructure. Under the China Pakistan Economic Corridor (CPEC) banner, the work on several infrastructure and development projects is in progress. Besides Industrial zones, several power plants and road infrastructures are initiated in Pakistan. Moreover, motorway between Karachi and Lahore which is eleven hundred kilometers long, the Karachi-Peshawar main railway line which is one hundred and sixty kilometers long, Karakoram Highway between Rawalpindi and Chinese border would be reconstructed and pipelines which would transport oil and gas would help to boost the economy on a whole new level and would also help in controlling unemployment.
Fifthly, CPEC initiative would immensely help in growing employment opportunities. CPEC through employment generation would greatly help in addressing the grievances of unemployed youth. As stated by the associated press of Pakistan report Workforce grew by 2.0 per cent in 2016-17. According to the international labour organization, CPEC would bring 400000 jobs to the country. While the Applied Economic Research Centre has estimated that the mega initiative would provide around 700000 direct jobs between 2015 and 2030.
Sixthly, besides creating job opportunities China Pakistan Economic Corridor (CPEC) will have a huge impact on tourism. The investment in Gwadar port and other infrastructure projects through the China Pakistan economic corridor, tourism in the country is likely to increase in the coming years. CPEC will greatly help in increasing tourism especially in Gilgit Baltistan which would ultimately be favourable for the local public. Moreover, World Bank has pledged to sponsor tourism in Pakistan.
Seventhly, CPEC would act as a catalyst in regional connectivity. China imports 80% of oil and does more than 70 percent of trade through the South China Sea and the United States. CPEC would provide a land route to China. As these two countries are the primary beneficiaries of the project. Besides CPEC will most certainly benefit the entire region connected to Pakistan and China. Moreover, the CPEC will give China access to the Arabian Sea through Gwadar which will significantly promote Chinese trade with countries in the Middle East, Africa and many countries in Europe. Furthermore, CPEC will offer transit trade facility to the landlocked Afghanistan and the Central Asian States.
Unequivocally this project will economically integrate the region and create interdependence. CPEC has a great potential to bring progress prosperity and stability in the region. The China-Pakistan Economic Corridor CPEC is harvesting greater attention around the world where more and more state leaders are inclined to be part of this multi-billion dollar project. Despite Inevitable prospects of the corridor, there are certainly formidable threats and challenges to suppress the success of the CPEC. But some carefully adopted steps would guarantee the promising success of the CPEC.
First, China Pakistan economic corridor is facing several security related threats. As stated by official militants are trying to disrupt the construction of an “economic corridor” and have killed 44 workers since 2014. Pakistan launched different operations to curb the terrorist activities. Overall security in pakistan has improved in past few years. Despite the fact terrorists still manage to carry out attacks. The recent spate of terrorist bomb blasts in quetta, balochistan and sehwan are evident to that. Hence to provide security to workers along CPEC pakistan needs more vibarant security measures to ensure Peace for smooth operationalization of CPEC.
Moreover Political stability is imperative for the success of CPEC. Political stability is a must for the development and progress. It is political decision making which impacts the behavior of the institutions. Hence, all the institutions may work within their domain. So that political instability could be curtailed. Considerable research suggests that political events and economic growth are interconnected.
Additionally, despite an avalanche of data available on CPEC initiative Government officials as claimed by Government officials, Lack of transparency and accountability still remained one of a greater issue for CPEC completion. Economists and diplomats said that the nation could not reap benefits associated with the corridor by hiding information from the public. Fairness and straightforwardness demand a standing of neutrality on CPEC till the terms and conditions are disclosed, without which one cannot arrive at an objective assessment of whether it could be possibly beneficial for the country. Many economists have questioned the CPEC project’s lack of transparency and accountability. Secrecy and the lack of information have severely impeded a proper cost-benefit analysis of the project. Moreover, there is no transparency on issues such as cost efficiency, economic feasibility and viability. Environmental concerns are likely to be ignored that could lead to serious economic and environmental issues later on. Greater transparency will lead to lesser suspicions and greater interest on the part of local and foreign investors.
“CPEC agreement is sensitive and cannot be disclosed.”
Ahsan Iqbal.
Moreover, for Pakistan peace and stability in Afghanistan is in its best interest as the success of economic corridor project of China and Pakistan is greatly dependent on the peace and stability in Afghanistan. Secretary Ministry of Defence Production Lieutenant General Syed Mohammad Owais said that that the unrest in Afghanistan was deliberate, adding Afghanistan is regarded as "the heart of South Asia" and if there is peace in that country, there will be peace in the entire region. Furthermore, the Porous border with Afghanistan has always been a trouble for Pakistan. Terrorists often find sanctuaries in Afghanistan by crossing Durand line region. Therefore Pakistan needs to take Afghanistan into confidence and affective steps can be be taken to manage border so that terrorists’ infiltration could be stopped inside the country.
Subsequently, for CPEC to thrive, addressing grievances of provinces is crucial. Balochistan National Party (BNP) chief Akhtar Mengal has called the China-Pakistan Economic Corridor CPEC exploitative if it does not equally benefit all the provinces, particularly Balochistan. Political experts and economists have unanimously asked the federal government to address the grievances and concerns of smaller provinces regarding CPEC on a priority basis as delay might give room to anti-state elements to exploit the situation to their advantage. Consequently addressing concerns and grievances of all the provinces is essential. Their reservations must be understood since they are some of the greater challenges standing in the way for the implementation of the highly-celebrated CPEC.
Lastly, peaceful Balochistan is very much important for the success of CPEC. Balochistan, after a perturbed peace of almost three decades, is constantly witnessing the violent insurgency. The province has been in turmoil for the past several years. Under development of the province had resulted in creating internal and external fault lines which were further exploited by the dissident nationalists as well as external powers. The Baloch nationalists are very much against to the development of Gwadar Sea Port. Consequently, Government can address the grievances of Balochistan residents
CPEC is the framework of regional connectivity which is a well thought out framework that will escort great economic/trade activity in the region and will reshape many economic policies in the coming years. For Pakistan, it is a catalyst for change and for China, it is meant to showcase its comprehensive economic reach to the regions for its successful culmination of ‘One Belt, One Road’ policy.
Even though the project faces many challenges, which include, the absence of rule of law, political instability, western interference in domestic affairs, perpetual political instability, and lack of impartial accountability institutions. However, the prospects it presents are also massive which include, economic boost, energy transformation, infrastructure development, employment generation, regional connectivity and others. Moreover, coupled with these opportunities Pakistan and China will get the maximum extract of this joint step of China Pakistan economic corridor.