Making CPEC inclusive and sustainable

Updated March 13, 2017

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The CPEC project has the potential to change the country’s economy. However, viewed in the current global rejection of elite economics, some areas need to be addressed so its impact benefits a broader segment of our society.

Ecological: One estimate often heard is that of 7,000 long haul container trucks passing, every day, through ecologically sensitive areas, such as those of Gilgit Baltistan. These will spew an estimated annual 36.5m tonnes of CO2 into the atmosphere, equal to 25pc of Pakistan’s current overall emissions.

Many experts think that unless managed, these emissions will melt the GB glaciers and make the area a high altitude desert, have an adversely affect the locals’ health and disrupt tourist traffic.

The trucks will also widely disturb water patterns in the rest of the country and impact agriculture.

Containing this problem will require mandating emission control standards and shifting to hybrid and electric power. Doing so will unlock entrepreneurial opportunities as locals can setup micro-hydel stations to service electric vehicles, repowering stations in the GB and KP areas and similar mini solar powered repowering stations in Punjab and Balochistan.

Furthermore, factories in the economic zone will add even more CO2 than that emitted by transport vehicles. The country could avail carbon credits, seek foreign assistance, and setup a regional market for trading carbon credits.

Employment: The project will account for massive employment in the transportation and logistics sector (potentially more than 50,000 truck drivers). It will also employ many skilled workers in factories.

However, it is logical to assume, unless planned otherwise, most of the skilled work will go to the Chinese. They will likely relegate to Pakistan, less exciting employment opportunities of cheap unskilled and part time labour.

Operating in Pakistan, unskilled labourers cannot even expect the increment they get in GCC countries.

It is imperative that the true value of this project, to the Chinese economy and global trade, be understood so that we can agreeably negotiate our fair share of benefits in line with our role in the project.


Unless properly managed the project will not benefit the country as inclusively as people expect


Loans used to fund energy and infrastructure projects for the CPEC should have a stipulation safeguarding Pakistani skilled employment. Such a requirement should not be that difficult to negotiate as the project’s manufacturing and value addition benefits should also reaped by the country.

One of the major criticisms of western development organisations was that most of the aid provided by them was ultimately given back to their own consultants and contractors. Not much attention was given to the transfer of skills that would help locals develop the ability to sustain projects in a changing and dynamic world.

Only recently have they begun taking steps in the right direction. The Chinese have an opportunity to address this issue from the inception and benefit from the goodwill created in the long term.

Economic impact: A game changing project like the CPEC should not be negotiated in secrecy.

Ideally each chamber of commerce, and the elected representatives of each affected region, should study the project’s role and develop an understanding of what their region’s due share of benefits are for the right of way provided and as compensation for ecological and other adverse impacts.

These need to be addressed by the government on merit and in accordance with project economics.

The project should sponsor social uplift programmes that educate locals on how to benefit from the improved transportation and logistics in their region and the new opportunities for locally owned businesses (refuel stations, workshops, hospitals, food outlets).

Citizens need to develop their own activist groups and watchdog mechanisms while the media needs to play its part to ensure that economic opportunities flow in a way beneficial to communities rather than individuals.

As often happens in Pakistan, if things are left as they are, few business families will abuse their access to information and benefit themselves or their kin from the opportunities available.

Others are in danger of being left behind unless they stand up, ask for greater transparency in what’s being negotiated and take the time to understand and demand their fair share of opportunity based on merit.

Economic zones are another case in point. Without competent foresight and negotiations, these zones can be used by Chinese entrepreneurs to setup and operate their factories without paying taxes to Pakistan, with most of the skilled employment going to their own countrymen.

The few opportunities that come will make a select few families richer. This is not a far off scenario — there are plenty of global examples of acceleration in economies that have left the majority behind. The reasons behind the Trump phenomenon and Brexit are lessons we need to learn from.

Let’s be clear — the CPEC is a wonderful project. We are excited about the energy and transport infrastructure it will build. But unless properly managed it will not benefit this country as inclusively as people are expecting.

A good perspective is perhaps attained in the Khyber Pass highway that links Peshawar to Kabul, or the Chaman highway that links Iran trade with Pakistan. One has to go along the major trade highway routes where they will find many communities that are still lagging behind the rest of the country.

Long term sustainability: The last 70 years of US hegemony in this part of the world has proved one thing: if operating in this area is important to a foreign power, it does not pay to exclusively focus on the elites to further your interests. You need to involve communities at the grassroots otherwise you generate hostility of the masses.

All nations operate according to their own interests and it is wrong to assume that they will act as a proxy for your interests, saving you from your own mistakes. Even USAID was beginning to focus on this under the Obama administration.

China with its populist history should understand that although it is easier and less expensive to work with the ‘elite’, the long term price of that is the resentment caused in those left behind.

China currently has the ability to use its lead position in the project to ensure that some of the areas of cooperation are handled in an inclusive manner and not just with a few families.

This will strengthen our relationship for the next century in a sustainable manner which is in the long term interest of both countries.

The author is the president of Islamabad Consulting

zqazilbash@gmail.com

Published in Dawn, Economic & Business, March 13th, 2017