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China-Pakistan Economic Corridor (CPEC): Questions abound?; By Commodore R. S. Vasan IN (Retd.)

C3S Article no: 0049/2017

Discussions on both OBOR and the CPEC occupied center stage both in India and other parts of the world, in the run up to the mega summit which was held in Beijing from 14 May to 15th May 2017. There were no doubts that Beijing would go all out to show case this as a mega project that seeks to promote economy, connectivity and integration across continents. Some major players, all G8 members (except for Italy), and India did not participate in the summit. Major players such as US (last minute decision), Japan, Australia, UK etc., chose to send representatives/delegations.

Phenomenal efforts, back door diplomacy and cajoling has not been successful in getting India onboard which has serious concerns on sovereignty.India officially announced that it will not attend the BRI on issues of violation of sovereignty issues with the alignment of CPEC passing through areas under Pak Occupation.

Here are some of the salient of this mega project which need to be kept in the mind prior to examining the related issues of CPEC’s impact on economy, strategy, sovereignty and impact on Pakistan itself: –

  1. 3000 KM Network of Road, Rail, Pipeline and Optical Fibers.

  2. Linking Kashgar in Xinxiang with Gwadar port.

  3. China Is Providing $45.6 Billion and now adding more funds ($11.8 For Infrastructure, $33.8 Billion For Power Projects).

  4. 19 power projects under the CPEC with the capacity of 12,114 MW; out of which 3,960 MW from coal, 2,714 MW from hydro projects, 900 MW from solar projects and 4,260 MW from imported coal. Some breakdown at para 5 below.

  5. Hydropower projects (Karot on Jhelum to be completed by 2020 at a cost of 1.65 billion USD to produce 720 MW,Suki Kinari hydro power project  on Kunhar river to produce 870 MW in 2020, Port Qasim coal powered thermal plant to produce 1320 MWs by end of 2017, Zonergy Solar plants  to produce 900 MWs claimed to be the largest solar plant in the world in addition to  at least three wind powered projects.

  6. Motorways for enhancing connectivity between Karachi-Lahore and other cities along a 1,152 kilometer long highway.

  7. Realignment of strategic Karakorum highway as a 275 miillion USD project.

  8. Enhancing railway connectivity from Kashgar to Gwadar and other destinations.

  9. Gwadar City, and International airport projects.

  10. Gwadar port water treatment plans, hospital, free economic zone and technical /vocational institute.

  11. China Pak Joint Marine Research Centre, Joint Cotton Biotech Laboratory.

  12. Coal projects for Thar Block II for two power plants of 330 MW capacity each.

As per all the reports available billions of US Dollars being spent on the project on power projects, dams, roads, railway, agricultural experiments in large tracts of acquired land by China. However, it is important to note that despite all the money being spent on the CPEC, it is the means and not the end. The details and disposition of various power projects, rail road, Gwadar port project etc., is covered in the detailed diagram below (courtesy WSJ)

From the Indian point of reservations on the CPEC, the major issue in addition to not being consulted at any stage, is related to the alignment which passes through Gilgit Baltistan in Pak Occupied Kashmir. The status and future of GB itself has many questions. China has played hard to stress that it is an economic initiative and not linked to geo politics which is hard to swallow.  The Chinese are masters at double speak and forget that the same norms were not followed when it came to its objections to India’s assistance to Vietnam for off shore drilling which China claimed was disputed. At that time, it was not considered as a joint economic initiative with Vietnam. Also, the strong protests over the visit of the spiritual leader Dalai Lama to Tawang indicate that the Chinese are very sensitive to sovereignty issues. India has sent the right signals to say that India is as sensitive about the issue of Pak Occupied Kashmir (POK) where this unilateral initiative of linking Kashgar to Gwadar was launched.

Maritime Dimensions and Energy Security

On the issue of CPEC, one of the most important objectives of CPEC is to provide access to Gwadar which opens new route for China to reach Arabian Sea and the Persian Gulf. Chinese Overseas Ports Holding Company Ltd (COPHCL) holds about 2,000 acres of land on lease for 43 years near Gwadar. Additional maritime infrastructure is being developed. This will provide China with the options for insuring its energy security in the backdrop of the ‘Malacca dilemma’ faced by China. As/When there are issues about transit through the Malacca straits, China would like to have alternate routes over land for transporting oil/gas/petroleum products through CPEC and then on to the entry point in China from where it will reach the refineries, etc. The location close to the mouth of the Straits of Hormuz from where all the ships carrying energy products exit to meet the insatiable demands of the eastern economies including China and India opens economic, energy and strategic options for China. This is central to the discussions on the importance of CPEC to China’s energy security and the strategic objective of obtaining access to the western segment of Indian Ocean through the Arabian Sea. China as a major supplier of military hard ware to Pakistan is supplying naval vessels, submarines, aircraft and weapon systems. Pakistan according to recent studies is the largest importer of military hardware from China With the high level of collusion with Pakistan Navy and the military, the connectivity from Kashgar to Gwadar transforms the ability of the two countries to act in tandem to challenge the naval superiority enjoyed by India today.

Paradigm shift in Strategy

With the connectivity through Silk Road Economic Belt (SREB), the Karakorum highway, and the CPEC leading to the Arabian Sea, the traditional assumption of a two-front theory used by India in in its strategy has been challenged once for all. This connectivity over land and through the seas has the potential to create a single united front from the Arabian Sea to Arunachal Pradesh. China was kept out of the 1971 war operations to liberate Bangladesh by choosing December for the campaign which closed the mountain routes for troop deployment in the North. China therefore could not intervene effectively on behalf of Pakistan even if it wanted due to the considerations of accessibility.  India was also able to effectively enforce a blockade of west Pakistan by deploying its war vessels in the North Arabian Sea and achieving sea control.

Future conflicts with Pakistan will change all this due to the new connectivity parameters. China even if it does not directly join Pakistan in any future war has the option of continuously supplying all the military hardware that is required for sustaining the war effort.  The blockade in the traditional sense would not be an option as the alternate routes are open for Pakistan. Sea control missions by the Indian Navy even for limited period can become complicated by the presence of PLA-Navy surface and sub- surface units in the Arabian Sea even when it is not directly involved in the conflict.

The importance of shoring up the Maritime Power Potential (MPP)  is the need of the hour. The overall shortcomings of our Anti-submarine helicopters, shortages in underwater arsenal  need to be made good to face the  new threats posed by the alliance of our western and northern adversary

More Questions?

It is not that there is full support for the CPEC with in Pakistan. The opposition, the public and academia have become suspicious about the nature of agreements after the disclosure by Dawn on the Long-Term Plan (LTP). Lack of clarity about the loan terms and the capacity of Pakistan to repay the loans and whether this increased engagement will make Pakistan another de facto client  state of China is high in the public discourse. Thousands of acres of prime agricultural land will be given on lease for experimentation/agriculture by Chinese firms. These large tracts of agricultural land taken away from farmers on long term lease will be used to promote food security for China and use the surplus for supplying to the markets close by both with in Pakistan and outside. Apparently in the name of cultural relations, students in some of the areas are being compelled to learn Chinese language which has been resented by the locals. There are genuine fears by scholars and Academia about the possible negative impact on Pakistan as a nation.

While the Pakistani Government is fully committed to the CPEC, as discussed, questions have been raised about funding, feasibility, long term impact on the economy and other issues. There were recent reports that the quantum of the allocation for CPEC has gone up to $65 billion from $46 billion by about twenty five percent. During the summit, this sum has been further hiked to meet additional demands.The obvious question raised from some of the concerned economists in Pakistan is how will this be repaid by Pakistan. The example of Sri Lanka which owed some eight billion US Dollars was compelled to sell the operation of Hambanthota to Chinese companies to exercise full control over this port.The story is no different in Mattala, a civil airport that has hardly seen any traffic in recent years. The fear that this would be the pattern followed by China even in Pakistan has dented the enthusiasm displayed by the Government. In a recently concluded UN Economic and Social Commission for Asia and the Pacific Study (UNESCAP) has warned of financial risks in countries in south and central Asia. The United Nations has even gone to the extent of warning about the pitfalls of debt trap in South Asia through the Belt and Road Initiative. There are also issues of environmental impact particularly with the coal powered thermal plants. So, while China is committed to clean energy, it would move out polluting industries  and related technology to other countries such as Pakistan.  Chinese companies will also enjoy many tax and duty concessions which are not available to even Pakistani citizens.

The announcement that China would also work on two major dams namely Bunji and Basha dams with projected capacity of 7100 MWs and 4500 Mws respectively in Gilgit Baltistan in PoK is again disconcerting and must be viewed in the context of the Indus River Water Treaty which itself has been questioned in India.The mega plans have been termed as Himalayan blunder of immense proportions. There is a raging debate about the unequal nature of this treaty that has given more than fair share of the river to Pakistan at the cost of India’s own states. The two mega projects have many serious issues related to displacement of large number of local population numbering about 28,000. There are already protests in Gilgit Baltistan about the impact of these two dams which are diverting the water largely to meet the requirements of Punjab.

According to media reports in Dawn and the statement of the officials concerned 15,000 personnel would be employed as part of the Special Security Division (SSD) and Maritime Security Force (MSF) to protect projects under the CPEC. Both need to work under the Interior ministry according to the Chairman of the CPEC. There are also reports that there would be special forces to protect Chinese interests in Gwadar and Djibouti where it is building naval support facilities. There are no doubts that soon PLA Navy units will soon be patrolling Gwadar and the Makarancoast in tandem with Pakistan Navy which will become the junior partner of PLA Navy.

Inferences and Way Ahead

It can be inferred that the Chinese are very keen to ensure that the CPEC succeeds as it has phenomenal benefits for China which obtains access to Arabian Sea and in the process of connecting from Kashgar to Gwadar has many thermal, hydro power, agricultural, connectivity projects that will change the landscape along CPEC. However, observers in Pakistan and elsewhere continue to question the ability of Pakistan to absorb this kind of investments without falling in to a debt trap. The imminent danger of countries in South Asia falling in debt trap  has been analysed in Economic  Times. There have been many complaints raised by the opposition accusing the Government of not being transparent.

CPEC has serious ramifications for Pakistan and has the potential of China subjugating Pakistan economically and strategically mainly to serve China’s national interests. Pakistan will find it increasingly difficult to shape its own course due to the increasing dependence on China.

Strategically, it has serious implications for India at many levels. First and the foremost concern is about the utter disregard by China in using Pak occupied territory to further its own economic and strategic objectives. This will continue to be major source of bitterness in India China relations.

Second, the plans for building mega dams again in the Pak Occupied land will transform the hydro dynamics of the region in the context of ever increasing water shortages.  India will need to seriously re-examine the Indus Water Treaty with a view to utilize at least its legitimate share while working towards abrogating the IWT which only benefits Pakistan.

Third, the access to Gwadar and the deployment of PLA-N units would be a game changer in the Arabian Sea. The joint operations by the Pakistan Navy and the Chinese Navy will challenge the Indian Navy in the whole of Arabian Sea. As and when China has the ability and the confidence to operate its own aircraft carriers beyond its shores, in the coming decades, there would be no surprise if one of the Carrier with its support elements operate between Djibouti and Gwadar for promoting the maritime interests of China.

As far as India is concerned, while it has stayed away from OBOR and the CPEC on grounds of sovereignty and apprehensions about the Chinese designs in India’s neighbourhood, India will have to work hard to arrive at alternate options and engage with willing partners such as USA, Japan, certain European nations, countries in the Middle east, African countries who appear disillusioned with the Chinese way of working.There have been reports of the New Silk Route (NSR) which was proposed some seven years ago in Chennai and the time is ripe for working on the contours of the NSR. The NSR has the potential of being a game changer and also overcome the limitations if any of not joining the OBOR.

The launching of the Asia Africa Growth Corridor on 26th May 2017 , a joint India Japan initiative at Gujarat during the African Development Bank meeting is good news as it serves many objectives in the Indo Pacific area and also serve as counter to OBOR.  According to the documents released the four main issues being addressed are development and cooperation, projects, quality infrastructure and institutional connectivity, capacity and skill enhancement and people ­to ­people partnerships.

India also must fast track its work on Chahbahar which provides the trade corridors to Afghanistan and CAR through Iran. It is important to not stall this project by coming under pressure by USA. Japan has expressed its willingness to work with India in Chahbahar and in many of the other projects in Sri Lanka and India cannot afford to lose any time on these opportunities which will consolidate its own position as a regional power of substance.

[Commodore RS Vasan IN (Retd) is the Regional Director NMF at Chennai and the Director C3S. The views expressed here are his own and do not reflect the official policy or position of the NMF, C3S, the Indian Navy or the Government of India. He can be reached at rsvasan2010@gmail.com]

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