This week China and Pakistan reaffirmed their commitment to the multi-billion-dollar China-Pakistan Economic Corridor (CPEC), with Beijing reportedly agreeing to take a closer look at some of the agreements finalized by the Nawaz Sharif-led Pakistan Muslim League (Nawaz) government.
Their statement came in response to an article in the Financial Times, which quoted an interview with Abdul Razak Dawood, the adviser to the Pakistan prime minister on commerce, textile, industry, and investment. Taking his cue from Malaysia, Dawood had hinted that the Pakistani government would revisit some CPEC agreements. The paper had quoted him saying that the CPEC operation would be put on hold for a year or two, and that during this period its terms and conditions would be renegotiated.
Dawood reportedly said the tenure of the project would be extended for a further five years to ease pressure on dwindling foreign exchange resources. He accused the former Sharif government of not negotiating conscientiously, by giving Chinese companies unprecedented tax breaks.
On Monday, Dawood claimed the newspaper had quoted him out of context and that parts of his interview were irrelevant. But with sentiments regarding CPEC running high, Dawood’s clarification failed to pacify the opposition parties.
“How can a Commerce minister decide the fate of CPEC project, which is a game-changer for the Pakistan economy? The sovereign agreements between the two countries are binding on the government to follow,” Pakistan Muslim League-Nawaz (PML-N) Senator Mushahidullah Khan told Asia Times. He claimed such decisions could not be made by the cabinet and that Parliament was the right forum to discuss the issue. The PML(N), he maintained, would take a tough stand on changes proposed for the CPEC.
Chinese Foreign Minister Wang Yi, who was in Islamabad on a three-day visit last week, held meetings with Prime Minister Imran Khan, Army Chief Gen Qamar Javed Bajwa and Foreign Minister Shah Mahmood Qureshi. Sources in the Pakistan Foreign Office said the Chinese side was anxious to know what Islamabad was going to do with the $62 billion worth of infrastructure development projects launched under Belt and Road Initiative (BRI). They said the Pakistani side emphasized transparency, continuity, and efficiency, and assured China that the CPEC would be the new government’s top priority.
Corruption accusations
The ruling Pakistan Tehreek-e-Insaf (PTI) party, which assumed power just last month, has often voiced suspicion of corruption and malpractice in the adoption of the CPEC by the former government. Last month, Finance Minister Asad Umar had said that “opaque terms” of the agreements would be laid before Parliament, as they did not contain confidential information.
PTI leaders also allege that the former government, and even their Chinese counterparts, did not do their homework diligently and concluded the agreements indiscreetly without deliberating on their viability and cost-effectiveness.
PTI Senator Nauman Wazir said: “90% of the load carried on the 2,700km long Gwadar-Kashgar Motorway will be Chinese cargo goods, while Pakistan will derive no direct benefit from this huge infrastructure project.” The former government had agreed to Chinese loans at 20 to 23% interest, along with an insurance cost for the project, he said, adding that revenue generated from the project was not quantified in any of the documents.
“I suggested that 5% of the invoice value of cargo be collected on Gwadar-Kashgar Motorway. I am not sure anyone negotiated this percentage with the Chinese side,” he said. Wazir said a 10-year projection of cashflow from the project was necessary to evaluate whether the revenue from it would meet its cost. This assessment, he said, was nowhere on record.
Wazir pointed out that from Kashgar to Havellian, a two-lane road was built, but the motorway changed to four-lanes from Baseema onwards. This was inexplicable, he said, as a four-lane road was needed at that bottleneck. “No study was carried out to ascertain the load of traffic and capacity of the road. It is the most hopeless mega-project, in which a reliable database is neither available in Pakistan nor in China.”
The ruling party’s concerns about malpractice in mega projects hold water. Last year, Senator Wazir asked the Senate Standing Committee on Communications to probe irregularities in the contract for the 392km Multan-Sukkur motorway. He alleged the deal was awarded on inflated rates, causing the exchequer a loss of more than US$1.1 billion. Similarly, last November, China put two road projects on hold in troubled Baluchistan province and another in Gilgit-Baltistan with an estimated cost of $8.1 billion, due to corruption and malpractice.
The general perception is that CPEC was shaped by disproportionate benefits to local manufacturers and a bulging debt burden that upset the country’s balance of payments. “We will revisit the whole spectrum of the CPEC to make certain that the terms on which it was negotiated do not harm the interest of the country,” PTI Senator Mohsin Aziz said. CPEC-related agreements needed to be examined to bring transparency to the financial deals, he said.
Pullout impossible
A highly-placed source in the Finance Ministry said the Imran Khan government wanted to re-evaluate some of the CPEC deals but due to acute economic problems, it could not pull out from the costly projects the way Malaysia did. “We need approximately $10 to 12 billion by mid-December to fulfill international commitments and bridge the fiscal deficit,” he said. But he claimed that the government initiative to collect funds from expatriate Pakistanis for construction of dams would help build the country’s foreign exchange reserves.
Meanwhile, Muhammad Ishaq, a leading importer and one-time director of the Khyber Pakhtunkhwa Board of Investment & Trade told Asia Times: “CPEC will soon be like Atlas’ burden for Pakistan to carry.” China would get the lion’s share of benefit, he said, as the former government had agreed to a one-sided deal and the economy was on the verge of collapse.
“The hefty share in revenue from the port [of Gwadar] and [tax-]free economic zone is not the only issue which will deal a severe blow to the economy. The government also allowed contractors and sub-contractors associated with China Overseas Port Holding Company an exemption from income and sales taxes, and federal excise duties, for a period of 20 years, besides a 40-year tax holiday granted for imports of equipment, material, plant, appliances, and accessories for the port and special economic zone,” he said.
The massive Belt and Road Initiative has run into trouble all across Asia, with Malaysia, Sri Lanka and Myanmar also feeling the pinch from the often onerous terms in projects under the scheme. Sri Lanka was unable to repay Chinese loans related to the Hambantota port and forced to give control of the port to China in an equity swap. Colombo allocates a large share of its revenue to service debts while China has won a strategic presence in the Indian Ocean. Some critics have called this “debt entrapment”.
Last month Prime Minister Mahathir Mohamad flew to Beijing to discuss Malaysia’s withdrawal from $23 billion worth of infrastructure projects including the East Coast Rail Link and the Trans-Sabah Gas Pipeline. These were also part of the Belt and Road scheme. Mahathir said his country could not afford the loans agreed to by his predecessor Najib and must minimize its debts.
Now, Pakistan faces an even bigger challenge.
Aditya Shitty, whatever the contract or its implications…….. Your issue is being a dalit. Now you haven’t figured out what to do about it, that’s why you post about China and Pakistan? Is that it?
Srinivasa Nanduri you have had so called independence for barely 70 years…….ziyada bukvaas karnay ya bhonknay key zaroorat naheen. Apnee auqaat main rwh kar baat kar……..keep in mind your background and your lower caste.
Abbas sahb ASA…..iss Indian jesay chootiya ko ye baatain samajh naheen aanee……lol. These are all lower caste motherfukkers…..in ka koi bhala naheen. They will live and die as slaves. This is their destiny. Gundee qaum the quicker its disposed off the better we’d all be. Ye saaray haramzaday murr jain to behtar hae….for all of us. Unwanted vermin.
Shri Nanduri ji, Namaste
There are only two Islamic Republics, Pakistan and Iran. When both are mum about Uighars, but you Indians are howling, I smell fish (or rat). If you are trying to pit Pakistan or Muslims against China (or Shia against Sunni lol) you will fail.
Me hating Hindus and Sunnis? lol. Both me and my brother married women outside our sects, and had children with them. Shia-Sunni difference are political, like Democrats and Republicans in the US, or Tories and Labour in England. Of course we expect both to hold their views dearly. Why not. But these differences are reconcilable.
However, this is not possible with you our neighbours. Your differences are racial. No high caste light skinned will ever dare marry a low caste darkie. Permanent damnation.
And Shia-Sunni differences may even be necessary. Shias produce leaders, and Sunni good managers, and both are needed for growth and development. Pakistan’s 1-4 mix is as ideal as you can get. So our diversity is our strength, yours a weakness.
Pakistanis are far-sighted. We allied ourselves with USA when defeating your guiding star, the USSR, was the goal of the free world. Now we align with China because Globalization and Free Trade is the new goal of humanity. Our Prophet was a trader, and Islam is a religion of trade, as trade unconditionally leads to peace.
We love China because they love free trade, And 1,400 years ago our Prophet said good things about her too. After 40 years of failure with USSR, what is your justification in going to bed with a dying America? Is it only because you both have racist societies where lighter skinned rule the rest?
We Muslims tried for 800 years to beat the Indian-ness out of you, and failed. Then Christians tried for 200 years to civilize you and failed too. You still hate each other, and still defecate in the open like animals. What more can we do. For the last 3500 years you have been marching from death to death being enslaved by others. Who will be next? US or China? Take a pick.
Best wishes
Baba ye batoa ye champion of Islam, chini, East turkistan mein ugygur muslman ka kya Kar rahien hai . Aur Islam ka parcham lehraney Wala Pakistan ya aur koi Muslim mumalik is pay kyun baat nahin Kar raha Hain?
Aap Shia lagtey ho, Sunni muslman ki sunnat ke barey mein aapney pehle bhi bahut he controversial things likha Hain.
You seemed to have biased views about every thing with one constant, hate Indian Hindus, Sunni Muslims and love china.
Ok may god.bless you with good mental health.
Dont club India with debt ridden terror sinkhole called Pakistan. India is a 3 trillion dollars economy and not Pakistan.
Yashad Rizvi, we bow to some one or we make some one bow to us, I can’t understand why your ass is on fire?
Syed Fazal Abbas, hahahahaha, sir, rather they must suck their front, because they have gone gay recently through a supreme court verdict.
Ahson Aftab, bilkul ye tu ussi or charra his hy kafi time sy isko mn dekh raha hun. Aur isko aur iss k jeson ko hum L pe charray rakhna hy.
Ahson Aftab , excellent slap!
See, a barbaric extremist Hindu on a high dose of cow piss uttering an absolute none sense! Cow calf, I suggest you not only to read the article but be in your senses( that you can come to with a controlled doses of cow piss) to comprehend the simple English written in it also. When you are done with it , then come to comment on the same. The simplest thing you can’t grasp that party didn’t support Imran khan on some matter, then what’s wrong to toe with the idea of the party? In democracy, no one can impose his will against the wishes of the people. So, it’s completely none sense to affiliate it to any other propaganda. And once Mian Arif himself has twitted that he has no problem with his removal, and that he is still available to serve Pakistan, then the filthy propagandists must shut their mouths. It’s so very simple!
Mark naiyo+ Aditya shitty , Please take the controlled doses of cow piss to avoid babbling absurdities.
CIA & MI6 puppets are the ones who spread disinformation & then blame it on Russians
UK is worried for Chinese investment all around the globe & this is why FT wrote an article based on disinformation.
It is good to discuss matters openly instead of keeping them under cover. This wont affect CPEC at all; it might even enhance public confidence in an already strong economic relationship which is a reflection of the all-weather friendiship between the two brotherly countries.
All this anti BRI, anti China chatter is being pumped by those who oppose it. It also means that the BRI/ CPEC is trucking along on track.
Poor writer, what a brainwashed moron. China builds and improves lives, the British and Americans destroy and ruin lives.
Aditya Shitty, none of your business.
The writer seems to have graduated from a Western institute of learning, and displays all the signs of a knowledge that within 100 years has reduced the West from master of the globe to a geriatric childless ward unwelcome on 9/10 of the globe, and run by unpopular directionless leaders.
Why? The West can only think of money. But Asia thinks of larger visions.
For 2000 years 300BC-1700AD China and India each produced 1/3 of world wealth, the rest (Europe, ME, Africa) the remaining 1/3. The rise of Corporate Capitalist West was a fluke of history, stupidity of the Kaliphate that sitting smack in middle of Silk Road decimated trade with application of oppressive Tariffs as Trump does today.
Today, there is little Asia can learn from the dying Corporate Capitalist West. All the major innovations of the past 50 years – Pull supply chain system, Total Quality, JIT, Keizan, Kanban, FMS, Robotics, AI, have been Asian. They have increased quality immensely and reduced production costs to a fraction of that in the West. And these are all culture-specific, and it is precisely the inability of the CCW to implement them that has led to its industrial meltdown.
BRI and CPEC are less about money, or profits, more about world peace and Dialogue of Civilization – Mohammedan Islam and Confucius China and Socratic West.
Islam is the natural religion of the era of trade. Mohammed AS was a trader. His fight in Mecca was with Big Business Umayyads, Bankers banu Abbas, and trade monopolist infidel and yehud, the same battle lines as today. In China, Xi, and his BRI, Pakistan has unwittingly found a great indirect champion of Islam that promotes trade. CPEC and BRI are about Mohammedan Islam, and there is no price tag on that, this misguided Westernized writer take note.
20 to 30% interest rates for the loans are a lie. If anything, why don’t US and EU banks offer low interest rates loans to Pakistan and India? Chines loans are typically slightly lower than prevailing market rates.
The current fiscal problems of Pakistan and India are mainly due to rising oil prices which are in turn due to US sanctions on Iran.