World

The fuzzy math of the CPEC

Any inequity in CPEC's execution will detract from what should be the great equaliser for Pakistan’s political economy

Editorial June 18, 2015

Prime Minister Nawaz Sharif and Chinese President Xi Jinping inaugurate projects through video link in Islamabad on April 20, 2015. PHOTO: PID

Perhaps the single biggest thread that has run throughout the history of Pakistan is the inequitable distribution of resources by the federal government, a phenomenon that can be held responsible for many instances of civil strife in the country. And yet, the government seems bent upon not learning any lessons from history. Its attitude towards the allocation of resources to the various alignments of the China-Pakistan Economic Corridor (CPEC) is a case in point: less than 12 per cent of the infrastructure development spending for fiscal year 2016 has been allocated to the least developed parts of Pakistan — Khyber-Pakhtunkhwa (K-P) and Balochistan — while nearly 70 per cent will go to the most developed parts of Punjab and Sindh. Added to this is the government’s circular logic to defend the action, making matters worse.

Its first argument is that the area along the eastern route is the most developed and hence can be completed the fastest in order to meet China’s deadline for completion of at least one CPEC route. The work will no doubt be completed faster on this route, but when exactly does the government plan on rectifying the historical injustice of leaving the western provinces under-developed? If the argument is that Beijing’s funds must be allocated towards Beijing’s priorities, then what prevents Islamabad from using its own money towards building up infrastructure in K-P and Balochistan? If China is really providing so much money for the CPEC, then surely there must be room in the development budget to direct locally-raised taxpayer money to create a more balanced approach to the CPEC. The reality is something that the government does not want the people to know: most of the aid from China consists of commercial loans to private-sector Pakistani companies that are hiring Chinese firms to set up coal-fired power plants. Even the government aid consists mostly of loans. The CPEC is a worthwhile project, but any inequity will detract from what should be the great equaliser for Pakistan’s political economy.

Published in The Express Tribune, June 19^th, 2015.

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COMMENTS (13)

Tyggar | 9 years ago | Reply @Bewildered: Remember what did the UN say in case of J&K Do you understand what a non-binding resolution is? I bet your leaders don't tell you. That's why the world laughs at you. UN Non binding resolution.- That carries no legal weight, but is adopted for moral support. The moral support for plebiscite 60 years back is just not there any more, ever wonder why there has been no resolution on Kashmir for the last 30 years?

Tyggar | 9 years ago | Reply @Bewildered: The UN laughed at Nawaz Sharif when he brought up J&K last year

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abhi | 9 years ago | Reply China has sponsored many infrastructure in underdeveloped countries in past and none of these countries got any benefits from this activity. CPEC is going to be no different.

Tyggar | 9 years ago | Reply @Bewildered: As a rule, when your enemy finds something hurting and threatening, you should be assured of its usefulness. So that's why Pakistan supports terrorists

Sad but true | 9 years ago | Reply @Bewildered: If you know so much on CPEC, I suggest that you answer all of @Woz Ahmed quires. It will enlighten us of the true worth of the project to Pakistan.

Hella | 9 years ago | Reply @Bewildered, "As a rule, when your enemy finds something hurting and threatening, you should be assured of its usefulness. " So all that India has to do is oppose the project so that Pakistan goes ahead with it, even if it means financial ruin for Pakistan?

Bewildered | 9 years ago | Reply @Hari Om: "Indian territory illegally occupied by Pakistan and China. Second, ensuring that no investment contributes to the oppression of subjugated people in Balochistan, Pashtunistan and Sindh." LOL. Why don't you go running to UN for freeing the subjugated people of "Balochistan, Pashtunistan, and Sindh" as you did in case of J&K, as see what reply do you get from the world. Remember what did the UN say in case of J&K, that it is a disputed territory and not an Indian territory.

Hari Om | 9 years ago | Reply @Bewildered: You misread Indian opposition to CPEC. India’s opposition to CPEC is limited to two things. First, ensuring that no investment takes place on Indian territory illegally occupied by Pakistan and China. Second, ensuring that no investment contributes to the oppression of subjugated people in Balochistan, Pashtunistan and Sindh. Beyond this Pakistan and P.R. China are welcome to do whatsoever they wish under CPEC and indeed the more usurious the conditions imposed by China on Pakistan, the better {wink}.

Bewildered | 9 years ago | Reply As a rule, when your enemy finds something hurting and threatening, you should be assured of its usefulness. Check the wrath of Indian commentators expressed in their comments posted on ET pages against China and CPEC project. They now candidly talk about separating Baluchistan and occupying GB if Pakistan doesn't abandon CPEC project. Also check the Indian government's reaction and the Modis strong protest against CPEC in his recent visit to China. This is the big picture, and the only thing a Pakistani needs to be assured of the project's worth. Please don't try to create confusion about CPEC by bringing in other non-related, nonetheless important, issues.

RAVI | 9 years ago | Reply @Woz Ahmed: Similar problems are facing the indian power sector dominated by State govt electricity boards. Due to years of write-offs and subsidized electricity, private power which is slowly getting available, has no buyers to due higher price and no guarantee of payments. Power will be availble but no buyers, Direct selling to consumers might be worked out but will need deft political management. Pakistan should manage its power plants itself. foreign players asking for guaranteed returns will create more problems than solutions. Pakistan can ask Chinese garment manufacturers to set shop along the corridor and export from Pakistan.

Shashi | 9 years ago | Reply Woz Ahmed has articulated precisely what I had posted in response to AVM(r) Shezhad Chaudhary's over-the-top gushing column on the CPEC. As expected, my post didn't clear the moderators' scrutiny. Possibly truth from the east is considered propaganda which is why Pakistan continues to live in denial or worse.....in delusions. Nicely analysed, Ahmed Sa'ab!!

Tyggar | 9 years ago | Reply Like Pakistan has circular debt, China gives circular aid

Woz Ahmed | 9 years ago | Reply Sirs what a brilliant and unexpected editorial. CPEC could be a game changer for Pakistan, but the terms are critical, rumours state on the $35 billion investment in power the Chinese want 18% IRR, some say 30%, based on 18% that is nearly $7 billion a year in repatriated profits. The end of load shedding is forcast to add 2% to our GDP , so less than $5 billion a year. Not trifling sums. Several months on none of us are the wiser as to true costs, as far as I can tell there is no competitive bidding. We lose $ billions in power theft and transmission losses and pay $billions in power subsidies, so ramping up power with no reform will be frightening. Let us not forget we have sufficient power generation compared to demand ! There is no transparency and no clear plan. We desperately need investment and stability. Our children and grandchildren will either thank us or curse us for the CPEC, on the basis of Africa's experience with Chinese 'investment' and the opaqueness of the whole deal , I know which way I am leaning. I hope I am wrong.

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