Fifty-one memorandums of understanding (MoUs) with an estimated initial investment of 46 billion dollars were signed in April 2015 during Chinese President Xi’s visit to Pakistan when Nawaz Sharif was Prime Minister; and since then the China Pakistan Economic Corridor (CPEC) remains the main engine of growth for the beleaguered country’s economy.
Unfortunately, while China has worked with the three Pakistani governments peacefully, some are troubling, reflecting their continued commitment to CPEC – defined domestically as China’s initiative to upgrade / strengthen Pakistan’s lacking infrastructure – as well as an essential component of the President. Xi. Belt Initiative Road (BRI), those who lead the three governments have not been very open in recognizing the contributions of their predecessors.
Former Pakistani President Asif Ali Zardari in the first week of January 2017, claimed that the Pakistan People’s Party was “the pioneer of CPEC’s multi-billion dollar idea and it doesn’t matter who takes credit for the project by advertising in the media.” This was confirmed by Lijian Zhao, Deputy Chief of Mission and Minister Counselor at the Chinese Embassy, Islamabad, in a seminar at the end of June 2018 entitled CPEC & Role of Media – Separating Facts from Misconceptions. And was reconfirmed by China’s Ambassador to Pakistan Yao Jing in September 2020 when he asked the former President to inquire about his health by publicly admitting that former President Zardari was the founder of CPEC. This was not recognized by Nawaz Sharif or any of his cabinet members during the prime minister’s term (2013-17); and despite the ongoing cooperation of the two national parties under the umbrella of the Pakistan Democratic Movement (PDM) today there has been no statement from any PML-N leader acknowledging the role played by Asif Ali Zardari in the launch of the CPEC.
On 25 May 2017 Nawaz Sharif during a speech at the BRI forum in Beijing highlighted the relevance of CPEC to our economy in a nutshell: “We strive to leverage geography for economic prosperity, we also try to build a peaceful, connected and caring environment…. CPEC is owned and maintained. by the whole of Pakistan ”- a sentiment that was not shared by Imran Khan at the time.
Before taking the oath in August 2018 when the country’s Prime Minister Imran Khan opposed the CPEC project for various reasons ranging from maintaining that road routes were approved and special economic zone locations accidentally passed through poor areas and regretting a lack of social focus (health, education). The following month Prime Minister’s Advisor for Trade Razzak Dawood in an interview with the Financial Times stated that all the $ 57 billion CPEC project could qualify for a hold in a review to be conducted under the Prime Minister’s order, adding that “I think we should put it all down. postponed for a year, so we can act together… maybe we can extend CPEC for another five years…. Chinese companies receive tax breaks, many breaks and have undue advantages in Pakistan; this is one of the things we are concerned about because it is unfair for Pakistani companies to lose out. “Pakistan’s stock market fell 0.4 percent in response to this statement and Dawood was forced to retract his statement a day later.
Such openly expressed sentiment led to Prime Minister Khan receiving a warm welcome during his first visit to China in November 2018, prompting the opposition to maintain that the new leadership’s unwise statements about CPEC, and offers to Saudi Arabia and the UAE (as well as others) to join the CPEC project created by Prime Minister Khan following promised assistance by Saudi Arabia ($ 3 billion loan and $ 3.2 million deferred oil facility) and UAE ($ 3 billion promised but $ 1 billion disbursed to date) , didn’t go down well in China.
In 2019, the Prime Minister fully understands the importance of the CPEC project for our economic development, no doubt realizing that China – public and private sector – is at odds with other foreign private companies / governments, willing to invest billions of dollars in Pakistan. . On 12 May 2019, Imran Khan’s new economic team leaders – Dr Hafeez Sheikh and Dr Reza Baqir – signed Pakistan’s 23rd International Monetary Fund (IMF) program with a guarantee (the first time in our long history to run an IMF program) to ensure that loans obtained from China, Saudi Arabia and
The UAE will not be withdrawn for the duration of the program because, “financial support from Pakistan’s international partner will be essential to support the adjustment efforts of the authorities and ensure that medium-term program objectives can be achieved” – the usual assumption in previous IMF loans was when a country was in the program. Fund, soft funding becomes available from other multilateral / bilateral. China has not only fulfilled its promise but has also fulfilled a shortfall due to Saudi Arabia’s (two billion dollars to date) withdrawal of loans although some concerns over our ability to repay have reportedly emerged.
A few weeks later, on 26 May 2019, Imran Khan together with Chinese Deputy Prime Minister Wang Qishan witnessed the signing of several MoUSs for cooperation in various sectors according to the official website and two projects started during PML-N’s tenure with progress updates identified: ( i) Matiari-Lahore 660kV HVDC transmission line project with an agreement signed between PPIB and China State Network in May 2018 which reached financial closure on 27 February 2019 with COD forecast in March 2021; and (ii) a 300 MW imported coal-based project in Gwadar with a No Objection Certificate issued by the Balochistan Environmental Protection Agency in August 2018 with groundbreaking on 4 November 2019. The three projects signed during Khan’s tenure highlighted include: (i ) Kohala Hydel project agreement signed on 25 June 2020; (ii) The 50 MW Cacho wind and 50 MW Western Energy projects – both in the LoI phase: and (iii) the Azad Pattan Hydel project agreement signed on 6 July 2020.
On 8 October 2019 President Alvi announced two regulations – one to regulate the authority of the CPEC, led by Lt. Gen. Asim Saleem Bajwa (retired) (former Ditjen ISPR 2012-16) on the eve of the Prime Minister’s second visit to China and, two, to grant tax concessions to Gwadar. and its free zone. The designation is seen as providing a comfort level of safety for Chinese staff involved in the CPEC project.
Prime Minister Khan then began to praise the success of the Chinese government in ending poverty and increasing agricultural output through reforms even though he somehow continued to support the right-wing formula for Pakistan, especially that the private sector should be allowed to create wealth and thus to start the economy. Addressing the Country Strategy Dialogue on Pakistan hosted by the World Economic Forum in November 2020, Imran Khan stated that “this is the first government in Pakistan since the 1960s that has stated that we want to make profits easier for the people. .. and investors. “This sentiment is in line with Imran Khan’s frequent criticism of the mafia (read collusion to set prices higher than market prices), smugglers and middlemen fix prices by promoting market imperfections. In this context it is hoped that the issuance of permits to selected private companies to import RLNG, with the aim of ensuring timely imports and increasing efficiency, not causing collusion.
The CPEC project has also been the target of considerable international criticism. Alice Wells, former Assistant Secretary of State for South and Central Asian Affairs, at a seminar in November 2019 pointed out that Pakistan’s debt had doubled due to CPEC. Geng Shuang (Chinese Foreign Ministry Spokesperson) dismissed these claims as “a repeat of the old slander against China, CPEC and BRI” as did Planning Minister Asad Umer who argued that Pakistan’s escalating debt crisis had nothing to do with China.
In 2019-20, 95.73 billion rupees were budgeted for the CPEC project (as co-funding) and while the Planning Commission claims to have released the entire budgeted amount, the actual disbursement was 57.44 billion or 60 percent of the total budgeted amount. In 2020-21 the government budgeted 77.33 billion rupees for the CPEC project (down almost 20 percent from the previous year) and in July-December 2020 it was issued 40 billion rupees even though the actual data disbursed was not yet available.
China as well as Middle Eastern countries including Saudi Arabia and the UAE are reluctant to announce the total amount and terms of investment / loans / grants to third countries including special incentives by recipient countries for promised inflows. Khan’s administration has been careless in highlighting the then-unfulfilled pledge of aid that fed CPEC critics, local and foreign alike.
One key lesson learned, therefore, is to share information with relevant documentation with opposition members in parliament – whether on camera or not – to ensure that the next government does not roll back the process to the detriment of the state. Pakistan has paid hundreds of millions of dollars in sentences in arbitration and courts for reneging on contracts signed by the previous government – the Broadsheet case is just the latest example.
Annoyingly, Prime Minister Imran Khan refuses to engage with the opposition but hopes that institutional measures seeking to share information are put in place to ensure that all agree to foreign, public or private sector contracts. Failure to do so could jeopardize his long-term pet projects including the Ravi City project and development on islands off the coast of Sindh.
Copyright Business Recorder, 2021