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CPEC on the pivot

Updated December 13, 2018

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The writer is a member of staff.
The writer is a member of staff.

THE forthcoming Joint Cooperation Committee (JCC) meetings, scheduled to be held in Beijing from Dec 20, will be a big test for the new PTI government. I say ‘new’ because in the world of the China-Pakistan corridor, they are still newcomers, the earlier trip to Beijing notwithstanding.

Pakistan’s plate will be heavy, and already it is weighed down by concerns emanating from Quetta that Balochistan and the so-called western route have been left behind as the rest of the CPEC projects power ahead. There is merit to these concerns and they deserve careful attention as the government prepares its agenda for the consultations.

Already, bigger tests are emerging. The biggest one is to discover to what extent Pakistan remains in the driving seat. The biggest project in the whole enterprise — one that was repeatedly described as “strategically important” — was the ML1 railroad upgradation. Yet the two governments have been unable to agree on the terms thus far. The project won Ecnec approval in April 2017 and its framework agreement was signed the following month during Nawaz Sharif’s visit to Beijing for the OBOR Forum.

But the project has been stuck ever since, with multiple rounds of talks, running through the 7th JCC last November, and even an attempt during the Beijing trip recently taken by Prime Minister Imran Khan and his cabinet in which they tried to get it restarted. The sticking point has been cost, which is stated on the CPEC website as $8.2 billion. After his return from Beijing, Railways Minister Sheikh Rashid claimed to have brought that figure down to $6.2bn, though it wasn’t clear how. Most likely through a further reduction in the maximum speed that the line is able to support, which currently is supposed to be 160 kilometres per hour for passenger traffic and 120km per hour for cargo on a dual track running from Karachi to Peshawar. Eventually, the project envisages a line running north from Havelian, through the mountains, and into China, as well as a line from Gwadar, through Basima to Sukkur. Those stages of the project though are still “envisioned” — nothing more.

The PTI government came to power promising to bring transparency to Pakistan’s dealings with China.

In fact, the ML1 project is the single largest element in the CPEC bouquet, and is a bit of a test case as to what the whole project is really all about. The Chinese do not seem to be budging on the financing terms, and within the government of Pakistan, there are sticking points about which government department will actually bear the full cost. Railways and the federal government are locked in a debate over who really has the liability on this.

Beyond the ML1, which may well be the last of the great CPEC projects, as the corridor prepares to pivot towards its second phase, there are the Special Economic Zones, their attendant infrastructure and utility provision, as well as the policy framework to attract Chinese investment. There is the task of bringing the China-Pakistan Free Trade Agreement to a conclusion while incorporating concerns of local industry (there is a wide gap on this front at the moment).

Each of these requires very special and careful attention, as well as skillful negotiating to ensure Pakistan’s interests are not compromised. How far down the road we are already is difficult to determine, but the fact is that behind all the rhetoric of brotherhood and friendship, interests are being tightly secured by the Chinese side. As an example, when the ML1 project was first discussed in the JCC forum, the representative from the China Transportation Group specifically brought up the cost of infrastructure projects and asked whether or not a public-private partnership might be possible.

To this he was told by the then chairman of the National Highway Authority that Pakistan has a build-operate-transfer policy and welcomed Chinese firms being part of any public-private partnership. This was in August 2013, in the first JCC meeting, when CPEC was just an idea. But, thus far, a private sector partnership has not been finalised, and there appears little interest in a BOT arrangement.

The PTI government came to power promising to bring transparency to Pakistan’s dealings with China. They promised to review all agreements because they sounded like they were convinced the projects are riddled with wrongdoing and cost inflation. Lahore’s Orange Line Metro was a particular target of this ire.

Now comes the time to redeem this pledge. Already, the PTI government has climbed down from its pledge to place all CPEC agreements before parliament, or to even review them with the aim of bringing about any changes. In his public remarks, Finance Minister Asad Umar now claims that the details are all indeed public, and points to the power sector project details that are on Nepra’s website, and the loan agreements that he says have been fully shared with the IMF.

The real test, however, is in the JCC and the agreements to follow. The previous government developed a modus operandi when making public remarks about CPEC or any Chinese agreement. They would talk about it in flowery language and keep to highly general remarks, then move quickly to describing the relationship between China and Pakistan as a brotherly one, marked with deep and timeless love.

The forthcoming JCC will provide a pivot for CPEC, when it graduates out of the project-based shape it had during the early harvest years to the grander, more sweeping enterprise that has been imagined under its Long Term Plan. If Asad Umar and Khusro Bakhtiar end up sounding just like Ahsan Iqbal in the days to come, we will know who is the in the driving seat of this relationship.

Securing Pakistan’s interests is what this party campaigned heavily on. They even ran advertisements visualising what a Pakistan that upholds its dignity and stands by its interests would look like. Now comes the time to deliver on that promise.

The writer is a member of staff.

khurram.husain@gmail.com

Twitter: @khurramhusain

Published in Dawn, December 13th, 2018