As Prime Minister Imran Khan returns from his trip to China, one thing is becoming glaringly clear: the Pakistani state is completely clueless regarding the larger objectives of the Belt and Road Initiative (BRI).
To say that the prime minister’s trip was successful would be a flat out lie at this stage. What happened in Beijing is a learning moment for the government of Pakistan that I fear will be forgotten.
The purpose of this article is not to simply point out the ineptness of our government but to analyse exactly what happened, what the problems are, the harsh realities and then detailing what needs to be done to address them.
Editorial: PM’s China visit
Since it took office, the Pakistan Tehreek-i-Insaf (PTI) has repeated that it will try to renegotiate existing China-Pakistan Economic Corridor (CPEC) contracts, as well as its terms and conditions.
It has also declared that it will demand that China realign CPEC to the government’s own goals and agenda. These claims have been popular with the educated support base of the PTI and even seemingly sensible people have bought into it.
But the problem with this is that, first and foremost, those in power fundamentally do not understand the conceptual framework of BRI, of which CPEC is a small portion.
BRI spans about 60 countries over multiple continents and covers about 70 per cent of the world’s population in its design.
CPEC is a mere tributary within that large network. BRI consists of three overland and three maritime routes.
So, in the larger scheme of things, Pakistan is just one of 60 countries China is working with to create potential for sustaining what President Xi Jinping refers to as the Chinese Dream.
Most BRI contracts are not between governments but instead between Chinese companies and state-owned enterprises (SOEs) to facilitate projects for the larger BRI initiative.
In that context, when the new government claims it will renegotiate contracts, as well as terms and conditions, it is forgetting to mention that it will have to do them with Chinese companies and SOEs, not with the Chinese government.
Secondly, because CPEC is an overland project, any arbitration that happens i.e. if the government were to try to renegotiate any contract in place, they will have to refer to the BRI court in Xi’an, which falls under Chinese law.
That means either the government must engage a law firm to represent it on each contract it wants to renegotiate or try to contest cases itself.
Worse still is the fact that the government has practically no idea what it wants to renegotiate in the first place.
That is the crux of the problem Pakistan faces: the state simply does not understand the conceptual basis of BRI or CPEC and, hence, cannot even define what it means.
What is BRI?
That raises questions no one seems to have addressed in discussions on this subject in Pakistan: what is the conceptual basis of BRI, and what is CPEC?
To understand BRI, one must go back to President Xi’s speech in 2013 where he laid out the idea of Community of Shared Destiny.
That is the basis of BRI.
This means that it is a framework under which willing partners enter the fold to help create a community that shares its destiny with China’s.
Therein lies what President Xi refers to as the Chinese Dream, which is essentially sustained growth for China through trade.
Thus, BRI is a framework to achieve the Chinese Dream via creating a community of countries that have tied their economic destiny to that of China. If China keeps doing well, so will everyone else in that community.
CPEC 2018 Summit: A policy for success
Through BRI, Beijing is attempting to sign up partners who are willing to hitch their futures with its own.
Through market access, trade relationships and adopting Chinese cultural as well as business norms, China is hoping to create a community where everyone wins.
And as China is doing the heavy lifting, it’s the senior partner and the countries that sign up for BRI are junior partners.
At no point are the Chinese taking over and running the show. They expect junior partners in this relationship to do their bit to get their rewards.
And what is CPEC?
In this structure, CPEC is a mere cog in a giant wheel.
CPEC consists of a series of bilateral agreements on projects. CPEC itself is nothing but an umbrella term used for projects that have the potential to feed into the larger BRI structure.
The problem is the government seems incapable of comprehending this. The way it has so far approached CPEC — and this includes the last government — is as if it is a credit line or a bailout package.
As if Pakistan will walk over to China and demand money, China will hand over cash and Pakistan can get back to wasting it.
That is not how CPEC works and that is what has happened now that PM Khan has gone to China.
Reporting from Chinese media has painted a completely different picture to the one presented by Pakistani media and the government mouthpieces.
The prime minister arrived in Beijing assuming he was there to talk tough, get a better deal and more money, but was taken aback when the Chinese firmly told him off by demanding Pakistan to fix its own problems and provide governance to its people instead of asking China to do so.
And while PM Khan oversaw the signing of 15 Memorandums of Understanding in different sectors, no specifics were presented in the joint communique at the end of the five-day visit where the prime minister essentially was dealing with his Chinese counterpart, Premier Li Keqiang, and his staff.
Expert view: Trading in the yuan
This is essentially a cold shoulder for Pakistan that should worry the country. The closest ally has cooled off on Pakistan and is asking it to get its house in order first before making tall claims.
To sum up, because the government did not comprehend the conceptual framework of BRI and CPEC, Pakistan is in a mess where even its closest ally has politely told them off.
As I described earlier, the government needs to sit and absorb the the idea behind BRI and CPEC. Once the government understands this, then comes the hard part of facing the harsh realities we are dealing with.
The first harsh reality is the nonsense myth that BRI is nothing without CPEC. That is false.
BRI is a massive initiative and CPEC, at best, is about 20 projects in different stages of completion among hundreds of projects.
Pakistan is not as important as it thinks. It has a convenient geographical location for China, but nothing more than that. There is nothing unique beyond its location that Pakistan can offer, and for that location, Chinese firms are willing to invest over $40 billion.
Chinese companies raise that money in their own country from institutions like the Silk Road Fund, Asian Infrastructure Investment Bank and the Export Import Bank based on guarantees provided with regards to project completion through contracts signed by the Pakistani government.
Pakistan owes that money to Chinese financial institutions and not the government — let’s be crystal clear about that. The Chinese government will also not waive that borrowing away because it is project-based debt financing.
Secondly, as the prime minister has been clearly told, China is not looking to adopt a country to run as its own.
Beijing is not running a charity service for countries being run badly. It is looking for partners to create a Community of Shared Destiny.
As explained above, China does play the role of senior partner who does the heavy lifting, but it clearly expects that junior partners will do their bit.
That means it expects them to create the right policy, facilitate Chinese business needs as well as provide guarantees for Chinese investment.
At no time does BRI become a charity fund for a delusional leader’s misguided electoral promises.
So far, the Pakistani government is failing to understand and fulfill its role as a junior partner.
There is no policy discussion, or even preparation, on how to use BRI framework for Pakistan’s benefit because the whole focus is on how much money is being debt-financed.
That is not how a junior partner needs to operate. Where Pakistan is falling short, then, is its responsibilities as a junior partner.
CPEC: Moving into agriculture
Since there seems to be practically no understanding of BRI and CPEC, Pakistan is unable to benefit from this exercise.
To counter this, the government needs to know that there will be no renegotiating existing CPEC projects. This myth needs to end now.
Additionally, China has no incentive to align its vision and goals for CPEC to those of Pakistan.
This is a delusional idea thought up as a political rhetoric device that is hurting Pakistan. People start believing delusions if you repeat them enough — and that is where we are at this stage.
More importantly, Pakistan needs to understand that BRI is a two-way street. It is not just things coming into Pakistan; it also means things can be sent out.
Through BRI, Pakistan can get market access to other countries — 59 in total — that are partners for BRI. That is a huge opportunity for Pakistani exporters and investors that is being ignored so far.
The land and maritime routes being developed can also be used by Pakistani companies to export their products and services to those within BRI.
For that to happen, Pakistan needs to discuss the visa facility granted to Pakistani tourists and businesses by the Chinese.
A topic like this would normally be top of the list in any discussions on a bilateral agreement, but for some reason, this is lacking so far.
Pakistani businesses and tourists have serious issues getting access to China, while Chinese tourists and businesses get visa on arrival in Pakistan.
This is basic, common sense stuff that is so far nowhere in any discussion.
Lastly, the government has to think beyond CPEC and understand how it can utilise BRI.
They must learn to look beyond their immediate surroundings and understand the potential of this grand project to truly benefit from it. For that, committees will not do.
The government should recruit people to specifically work on this and create a focused body that only deals with this.
Until that is done, no real policy can be developed, let alone implemented. This is where the leadership seems completely dumbfounded at this stage.
The points I have made throughout this article are essential for Pakistan to benefit from BRI and CPEC.
Starting from the conceptual understanding and then utilisation of the framework, those within the state machinery need to be informed before making statements about it.
Unless that happens, the prime minister can expect to get a cold shoulder and even straining ties with the one ally Pakistan has that has helped us through thick and thin.
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