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The China-Pakistan Economic Corridor – And The China-Pakistan Secret Deals
27 NOVEMBER 2019 Lindsay Hughes, Senior Research Analyst, Indo-Pacific Research Programme
During his visit to Pakistan in 2015, Chairman Xi signed an agreement with Islamabad to invest around US$46 billion ($67.8 billion) in the country. It was estimated that between $35 billion and $37 billion ($51.6 to $54.5 billion) would go towards addressing Pakistan’s electricity shortage. It was anticipated that the power generation facilities that were proposed to be built would, apart from alleviating the Pakistani industrial sector’s need for power, assist then-Prime Minister Nawaz Sharif, whose electoral promises included developing power projects to enable the industrial sector to work to its full potential. China proposed to build an oil and gas pipeline from Iran to its western Xinjiang province, along which the power generation and other facilities would be constructed. This became known as the China-Pakistan Economic Corridor, or CPEC, which would soon become the flagship of China’s Belt-Road Initiative. China would benefit, in turn, by reducing its dependence on the Strait of Malacca for its imports of energy products by acquiring more of those products from Iran, which would then flow through the CPEC pipelines into Xinjiang.
Comment
While on the face of it, the aid provided to build Pakistan’s energy infrastructure will be more than welcome in Islamabad, it does not look quite as appealing under closer examination. First, the aid provided will be used by Chinese construction firms using Chinese labour for the most part to construct the power plants for Chinese energy companies to own, operate and manage. The power generated will be sold to Pakistan. In essence, Beijing has perfected the diplomatic art of camouflaging the creation of business and employment opportunities in the cloak of developmental aid. There is little doubt that some Pakistani labour will be used to construct the power plants; the employment opportunities available to Pakistanis, however, are of the menial kind. Pakistan has, in short, not negotiated a very good deal for itself.
That was the general summation that Ambassador Alice Wells, the Principal Deputy Assistant Secretary of State for South and Central Asia at the US Department of State, made in a recent speech at The Wilson Centre in Washington. In her speech, which was described as “unusually specific”, the Ambassador made pointed reference to the issue of the costs that Pakistanis had to bear because of the terms under which China invested in Pakistan and constructed the CPEC. She noted that Pakistani government statistics show that it costs CPEC thermal energy plants around US$1.5 billion ($2.2 billion) to produce a megawatt of electricity, whereas it costs non-CPEC power plants around US$750 million ($1.1. billion) to produce the same amount.
She also pointed out that the CPEC’s single most expensive project, the Karachi-Peshawar railway, was initially announced at a cost of US$8.2 billion ($12.1 billion). In October 2018, the Railway Minister announced that that cost had been negotiated down to US$6.2 billion ($9.1 billion). That cost had risen to US$9 billion by October 2019.
She also pointed out the lack of transparency in CPEC and other projects. In 2018, she noted, a report produced by the Standing Committee on Finance, Revenue, Economic Affairs and Narcotics Control observed that Beijing had only allowed three Chinese organisations to tender for the construction of the Sukkur-Multan motorway. That project, too, was financed solely by a Chinese firm while the risk was borne entirely by the people of Pakistan.
She made an equally telling point when it came to job opportunities for Pakistanis, 64 per cent of whom are younger than 30 years. They are not given any jobs, in short, those being given to imported Chinese workers.
It may have been the Ambassador’s specificity that led the newly-appointed and pro-Beijing Minister or Planning, Asad Umar, to attempt to negate her speech. He said that Pakistan stood to benefit from Chinese investment. Having laid the base for infrastructure development in the first phase, he said, further development would soon take place. Referring to the Karachi-Peshawar railway, he said that Pakistan lacked an efficient rail network, which necessitated this line as a start. He also noted that the cost of that network was still being calculated. A statement published by the Ministry of Planning, Development and Reform also sought to refute Ambassador Wells’ speech, alleging that 90 per cent of the 81,121 workers on 12 CPEC projects are Pakistanis.
While there may no reason to doubt the Minister’s claims at this time, Pakistan’s political leaders have done very little to earn the public’s trust. The Dawn newspaper revealed in June 2017, for instance, that Pakistan had entered into a secret deal with China, according to which thousands of acres of agricultural land would be leased to Chinese organisations, at a time when Pakistan’s food security is at heightened risk, Chinese surveillance systems would be installed in major Pakistani cities and a fibre-optic backbone installed to assist Internet traffic and to disseminate Chinese culture. No mention has been made as to who controls data flows along that backbone, where the data will be stored, who has access to it and how it may be used. Given China’s insecurity and fears of Islamic violence, control of that backbone would be an invaluable asset; it would help the Chinese Communist Party influence the Pakistani people to a very large extent.
The “master plan” seeks to build in the telecommunications, household appliance and mining sectors, and to dominate the agricultural sector – ‘from one end of the supply chain all the way to the other’, as The Dawn report notes. The questions must be asked: why were the Pakistani people not informed about these agreements at the time? Why were they kept secret? Has the Pakistani government revealed all aspects of its deals with China to its citizens? Or does it continue to hide something?
Perhaps, despite Minister Umar’s protestations, Ambassador Wells does have a valid point.
http://www.futuredirections.org.au/...corridor-and-the-china-pakistan-secret-deals/
27 NOVEMBER 2019 Lindsay Hughes, Senior Research Analyst, Indo-Pacific Research Programme
During his visit to Pakistan in 2015, Chairman Xi signed an agreement with Islamabad to invest around US$46 billion ($67.8 billion) in the country. It was estimated that between $35 billion and $37 billion ($51.6 to $54.5 billion) would go towards addressing Pakistan’s electricity shortage. It was anticipated that the power generation facilities that were proposed to be built would, apart from alleviating the Pakistani industrial sector’s need for power, assist then-Prime Minister Nawaz Sharif, whose electoral promises included developing power projects to enable the industrial sector to work to its full potential. China proposed to build an oil and gas pipeline from Iran to its western Xinjiang province, along which the power generation and other facilities would be constructed. This became known as the China-Pakistan Economic Corridor, or CPEC, which would soon become the flagship of China’s Belt-Road Initiative. China would benefit, in turn, by reducing its dependence on the Strait of Malacca for its imports of energy products by acquiring more of those products from Iran, which would then flow through the CPEC pipelines into Xinjiang.
Comment
While on the face of it, the aid provided to build Pakistan’s energy infrastructure will be more than welcome in Islamabad, it does not look quite as appealing under closer examination. First, the aid provided will be used by Chinese construction firms using Chinese labour for the most part to construct the power plants for Chinese energy companies to own, operate and manage. The power generated will be sold to Pakistan. In essence, Beijing has perfected the diplomatic art of camouflaging the creation of business and employment opportunities in the cloak of developmental aid. There is little doubt that some Pakistani labour will be used to construct the power plants; the employment opportunities available to Pakistanis, however, are of the menial kind. Pakistan has, in short, not negotiated a very good deal for itself.
That was the general summation that Ambassador Alice Wells, the Principal Deputy Assistant Secretary of State for South and Central Asia at the US Department of State, made in a recent speech at The Wilson Centre in Washington. In her speech, which was described as “unusually specific”, the Ambassador made pointed reference to the issue of the costs that Pakistanis had to bear because of the terms under which China invested in Pakistan and constructed the CPEC. She noted that Pakistani government statistics show that it costs CPEC thermal energy plants around US$1.5 billion ($2.2 billion) to produce a megawatt of electricity, whereas it costs non-CPEC power plants around US$750 million ($1.1. billion) to produce the same amount.
She also pointed out that the CPEC’s single most expensive project, the Karachi-Peshawar railway, was initially announced at a cost of US$8.2 billion ($12.1 billion). In October 2018, the Railway Minister announced that that cost had been negotiated down to US$6.2 billion ($9.1 billion). That cost had risen to US$9 billion by October 2019.
She also pointed out the lack of transparency in CPEC and other projects. In 2018, she noted, a report produced by the Standing Committee on Finance, Revenue, Economic Affairs and Narcotics Control observed that Beijing had only allowed three Chinese organisations to tender for the construction of the Sukkur-Multan motorway. That project, too, was financed solely by a Chinese firm while the risk was borne entirely by the people of Pakistan.
She made an equally telling point when it came to job opportunities for Pakistanis, 64 per cent of whom are younger than 30 years. They are not given any jobs, in short, those being given to imported Chinese workers.
It may have been the Ambassador’s specificity that led the newly-appointed and pro-Beijing Minister or Planning, Asad Umar, to attempt to negate her speech. He said that Pakistan stood to benefit from Chinese investment. Having laid the base for infrastructure development in the first phase, he said, further development would soon take place. Referring to the Karachi-Peshawar railway, he said that Pakistan lacked an efficient rail network, which necessitated this line as a start. He also noted that the cost of that network was still being calculated. A statement published by the Ministry of Planning, Development and Reform also sought to refute Ambassador Wells’ speech, alleging that 90 per cent of the 81,121 workers on 12 CPEC projects are Pakistanis.
While there may no reason to doubt the Minister’s claims at this time, Pakistan’s political leaders have done very little to earn the public’s trust. The Dawn newspaper revealed in June 2017, for instance, that Pakistan had entered into a secret deal with China, according to which thousands of acres of agricultural land would be leased to Chinese organisations, at a time when Pakistan’s food security is at heightened risk, Chinese surveillance systems would be installed in major Pakistani cities and a fibre-optic backbone installed to assist Internet traffic and to disseminate Chinese culture. No mention has been made as to who controls data flows along that backbone, where the data will be stored, who has access to it and how it may be used. Given China’s insecurity and fears of Islamic violence, control of that backbone would be an invaluable asset; it would help the Chinese Communist Party influence the Pakistani people to a very large extent.
The “master plan” seeks to build in the telecommunications, household appliance and mining sectors, and to dominate the agricultural sector – ‘from one end of the supply chain all the way to the other’, as The Dawn report notes. The questions must be asked: why were the Pakistani people not informed about these agreements at the time? Why were they kept secret? Has the Pakistani government revealed all aspects of its deals with China to its citizens? Or does it continue to hide something?
Perhaps, despite Minister Umar’s protestations, Ambassador Wells does have a valid point.
http://www.futuredirections.org.au/...corridor-and-the-china-pakistan-secret-deals/
( I corrected your post for you )
