Mini-Marshall plan or economic corridor?

Govt's focus on completing the eastern route may make immediate economic sense, but its long-term potential is limited

Retired Lieutenant General Abdul Qadir, minister for states and frontier regions, has promised a “mini-Marshall plan” to the people of Fata once the military operation ends later this year. His government, however, is giving confusing signals about a maxi-Marshall plan for the development of Fata, Khyber-Pakhtunkhwa (K-P) and Balochistan — the Kashghar-Gwadar economic corridor. And all but one party has threatened to turn the allegedly changed project into another Kalabagh. The planning minister denies any change. Where then is the problem? Traditionally, the Chinese side stays clear of Pakistan’s internal political controversies. Its interest in the project is, however, obvious. It extends its economic outreach in general and opens up laggard western regions to the world. The equity argument to bring these regions on a par with others ends at Khunjerab. Beyond Khunjerab, hard economics takes over. As the principal investor, the Chinese side would look for the quickest and the most cost-effective route to Gwadar. It is also necessary to make this sleepy port functional. Security costs may also have been factored in. As a recipient with minimal choices, this is what the government seems to be doing by filling the gaps in the Havelian-Islamabad-Lahore-Multan-Sukkur-Ratodero-Khuzdar-Gwadar route. Four ‘early harvest’ projects — land acquisition and shifting of utilities for the Karachi-Lahore motorway, construction of the Lahore-Abdul Hakim-Khanewal section, construction of the Multan-Sukkur section and construction of the Raikot-Havelian-Islamabad section — were included in the Public Sector Development Programme of 2014-15. The last two are largely financed by Chinese credit. Earlier this month, a delegation visited China to fast-track these projects.



No one knows which was the original route. The opposition claims that it passed through southern K-P, Zhob and Quetta. This is the shortest but the costliest route in terms of time and money. What was the opposition doing when the projects related to the eastern route were made part of the development budget? Waking up to the change now rather than debating it in the budget session reflects politicians proverbial lack of interest in economic matters. This late realisation and insistence on the most difficult route might endanger the entire Pakistan-China Economic Corridor project, which includes a focus on energy and economic zones and not just transit trade. In terms of cost, economic advantage and future opportunities, the middle ground is occupied by the route connecting Abbottabad, Mianwali, D I Khan, D G Khan, Ratodero, Khuzdar, Turbat and Gwadar. The route fulfils the original dream of the Indus Highway as an alternative artery. It connects the backward districts of all the provinces and is linked to Fata, Quetta and Zhob. Proximity to Central Asia, Afghanistan and Iran brings the concept of the economic corridor into full bloom. The time to exploit the full potential of Gwadar will also be reduced.

When all but one opposition party meets, as is being reported in the press, the one deemed to promote the cause of just one province, it is hoped that the development of Pakistan will be the main consideration. The current focus of the government on completing the eastern route may make immediate economic sense, but its long-term potential is limited. The Chinese fully understand that the opening up of new areas pushes the frontiers of economic opportunity further, while diminishing returns set in quickly from investment in relatively developed areas. So the equity argument does not end at the Chinese border. It extends to Pakistan also but without sacrificing the economic advantage. There could be no better Marshall plan than this connectivity.

Published in The Express Tribune, February 20^th,  2015.

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