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OBOR and CPEC

Updated August 24, 2016

ANALYSING everything in its correct perspective is a great gift; the loss of perspective is akin to losing one’s way in a forest. Keeping perspective helps one walk on the straight and narrow path. Ordinary citizens normally give undeserved credit to their governments for their actions and decisions, assuming that they are the outcomes of careful considerations.

The word ‘minister’ (or wazir) conjures up the image of famed wazir, appointed to the courts of kings; the unmatched wisdom of their advice prevailing with their leaders. So what the huddle of wazirs, also known as the cabinet, decides is beyond any reproach. Governments sometimes have perspective and sometimes do not. But they have the enviable choice of presenting their case to their constituents with or without perspective. The toiling masses do not have the time to investigate further. Those with lives of ease do not care beyond massaging their baser selves. The intellectuals react depending on which side of the powers-that-be they are responding to.

China, no doubt, has remained a friend to Pakistan. It is their geopolitical compulsion as well as ours — there is no more to it. Countries’ relations are subject to change depending on the state of international affairs. During state visits, leaders describe their mutual relations in hyperbole but this is just to sound warm and sweet. The China-Pakistan Economic Corridor (CPEC) is one such example of a narrative fed to the people without any perspective.


China’s friendship is based on geopolitical compulsions.


Putting it into perspective, CPEC is part of China’s grand vision, known as the One Belt, One Road (OBOR) initiative. This vision extends from the Baltics in Europe to Southeast Asia and from China to Africa. Trace it on the map and the road traverses all the countries in between. It is not a physical road like the Silk Road, that historic trade route from China to Europe. That old Silk Road was not like Sher Shah Suri’s road from Peshawar to Kolkata, but caravans meandering on different routes from one caravanserai to another, carrying both goods and ideas. China has accumulated $3.2 trillion in foreign exchange. It can be used both for investment and to buy influence around the world.

This is what OBOR is about.

As an official policy, OBOR is overseen by China’s powerful National Development and Reform Commission and the ministries of foreign affairs and commerce, as sanctioned by the State Council, the nation’s chief administrative body. OBOR has become the ‘in’ thing to be associated with in China’s global economic strategy. As the word ‘road’ itself implies, projects (especially those involving construction of physical infrastructure) that facilitate commerce between China and the wider global community reflect the basic spirit of OBOR. The principal difference is that China’s belt-road is not based on aid or even FDI, but on loan financing. This underscores the importance, for creditors and debtors alike, to carefully factor in risks with OBOR projects.

The recipients of OBOR initiatives in Africa are Kenya, Tanzania and Zimbabwe. Eastern Europe presents the farthest geographic stretch of OBOR, and of China’s reach in historically more advanced capitalist economies. In Poland, a railway project was inaugurated in 2013. Hungary has become the first EU member-state to initiate a Chinese high-speed rail project under OBOR. Russia and China are collaborating on the massive Power of Siberia gas pipeline project. In Southeast Asia, one of the most recent OBOR rail projects to be launched is the high-speed railroad (costing $6 billion) connecting the Laotian capital of Vientiane to China. A rail project has also been completed in Indonesia.

Unsurprisingly, China has won the feasibility study for two other railway projects — Mumbai to New Delhi and New Delhi to Chennai.

Pakistan’s resource-starved government ogled at the offer of CPEC. It gloated over it as the one unmatched gift to Pakistan. Politics always overrule economics. The ruling party was, therefore, in a great hurry to negotiate these projects under secrecy, much to the chagrin of KP and Balochistan, as spending will now affect outcomes in the 2018 national elections. Despite the mad rush for project initiation and completion, it is widely understood that economic analyses for various projects have yet to be conducted. Lending under CPEC is short-term — it will have serious consequences for the current account when it is time to repay them in the not-too-distant future.

CPEC, a part of OBOR, offers great strategic advantage to China as it gains physical access to the Indian Ocean and closer proximity to Middle Eastern oil resources. Other OBOR projects around the world do not offer such advantages to China. This is a shrewd global strategic move. China’s global rivals will, of course, factor this in their countermoves.

The writer is a former federal secretary and minister.

raufkkhattak@gmail.com

Published in Dawn, August 24th, 2016