When suspected militants killed nine Chinese nationals in a blast that sent a bus plunging into a high mountain ravine in northern Pakistan, it marked the latest in a rising string of attacks on Beijing’s Belt and Road Initiative (BRI) in the country.
The bus was carrying over 30 Chinese engineers to the site of the Dasu dam, a hydroelectric project being built as part of the BRI’s associated US$60 billion China-Pakistan Economic Corridor (CPEC).
As China seeks to lure Afghanistan’s Taliban into its BRI, rising security concerns and stalled progress on the CPEC in neighboring Pakistan raises doubts about Beijing’s grand plan for Central Asian connectivity.
China has recently dangled big-ticket infrastructure projects in recent meetings with representatives of the Taliban, coincident with the militant group’s seizure of ever-greater swathes of territory as US troops withdrawal from the war-torn country.
Taliban spokesman Suhail Shaheen recently referred to China as a “friend” of Afghanistan and expressed his hope China would invest in reconstruction work “as soon as possible.”
Beijing’s offer is contingent on the Taliban reining in Islamic militants groups who view China as an enemy, including ethnic Uighur groups bent on stirring instability in China’s Xinjiang region. It was unclear which militant group was behind the July 14 bus attack.
China’s offer would effectively seek to physically extend the CPEC to landlocked Afghanistan through trade-promoting roads and power supplies.
But Beijing’s overture to the Taliban overlooks the hard fact that the CPEC is increasingly dead in the water in Pakistan, with rising indications before today’s blast that both sides have cooled significantly on the ambitious scheme.
That’s in part due to rising concerns that Islamabad may default on certain CPEC-related debts, namely for power station developments, as well as Beijing’s rising security concerns as militant groups target Chinese engineers and their projects in restive Balochistan.
Both Islamabad and Beijing have recently proposed different measures to revive the stalled scheme. Pakistan recently announced the formation of a new 15-member Steering Committee packed with military, intelligence and other security agency officials to eliminate threats and obstacles to the CPEC’s execution.
The new committee, formally endorsed by the Prime Minister’s Office, arguably adds to the CPEC’s already bureaucratic tangle of existing related bodies, including the CPEC Authority, the Cabinet Committee on CPEC and the CPEC Joint Consultative Mechanism.
Moreover, Pakistan for the first time extended an olive branch to Baloch insurgents who have lately intensified their anti-China, anti-Pakistan offensives in Pakistan’s southwest province of Balochistan. Some suggest the intensified activity is a byproduct of the US troop withdrawal from Afghanistan.
Pakistan’s Cabinet later approved the proposal to engage ethnic Baloch rebels, with Prime Minister Imran Khan appointing Shahzain Bugti, a special assistant on reconciliation and harmony in Balochistan, to lead the talks.
It wasn’t immediately clear how the July 14 bus attack, which also killed two Pakistani military officials, will impact the initiative. No group took immediate credit for the lethal blast.
For its part, China has proposed that Pakistan’s political leadership become more directly involved in steering the CPEC, which is currently mostly managed by the military via senior retired officers. But analysts note greater political party involvement won’t necessarily push the stalled project forward.
Mushahid Hussain Syed, a Pakistani politician, chairperson of Senate Defense Committee and head of the Pakistan China Institute (PCI) think tank, notes that political parties and relevant local officials have been party to the CPEC’s Joint Consultative Mechanism (JCM) since it was first launched by Chinese Foreign Minister Wang Yi in Beijing in March 2019.
The JCM’s second session was held in August 2020 with representation drawn from across Pakistan’s political spectrum, yet no substantive agreements to push the project into a higher gear were agreed, Syed noted.
Earlier this year, the CPEC Authority informed Pakistan’s cabinet that China’s actual investment in 17 completed projects as of 2021 was a mere $13 billion. Another 21 projects worth an estimated $12 billion were still in the implementation process. Another $28 billion worth of projects is on the proverbial drawing board.
The CPEC was launched in 2015 with an initial investment target of about $46 billion, which gradually increased to $60 billion over time. It’s unclear why the CPEC Authority’s math arrives at only $53 billion of completed, ongoing and proposed CPEC projects.
Ahsan Iqbal Chaudhary, secretary-general of the Pakistan Muslim League-Nawaz (PML-N) and a former federal minister for planning, told Asia Times that government apathy is partly to blame for the slow progress.
“The Western route of the project had planned to be accomplished in the year, but it is still incomplete and may not be commissioned this year. Similarly, the framework agreement of Pakistan railways flagship project ML-1 was signed with Chinese authorities in 2017 and we were expecting its completion by the year 2021-22 but it was delayed inordinately,” he said.
That’s partly due to budgetary reasons, as Khan’s government recently exercised a 50% cut in so-called Public Sector Development Programs (PSDP). “Even the Special Economic Zones (SEZs) which should be up and working in 2020 are still devoid of infrastructure facilities. Not a single SEZ could start functioning anywhere in the country,” Ahsan said.
Other analysts note China’s CPEC could soon face competition from the Group of Seven (G7) announcement of its “Build Back a Better World (B3W)” infrastructure program, ostensibly a rival to China’s BRI.
Soon after the G7’s announcement on the B3W, Islamabad and Beijing started to evaluate ways to speed up CPEC activities. But that may be more rhetoric than reality as Islamabad is now clearly weighing its geo-economic options.
Significantly, Pakistan’s new federal budget announced in June allocated a mere $510 million for CPEC-related projects, an outlay that will limit the amount of foreign funding that the scheme may receive.
The budget represented both Pakistan’s contribution and Chinese-related loans, which by any measure won’t be nearly enough to complete CPEC projects now underway, not to mention those on the drawing board or new potential spokes connecting to Afghanistan.
The scant allocation, observers say, underscores the Khan government’s rising if not unspoken indifference and frustration with the CPEC.
Significantly, the budgetary scale-back comes as Beijing refuses to reschedule debts due for CPEC-related power projects that require Pakistan to pay for electricity that hasn’t been delivered via so-called take-or-pay contracts.
Top Pakistani officials have gone hat-in-hand to Beijing on at least two occasions seeking debt relief, both times to no avail, according to sources familiar with the situation.
Before the lethal bus attack, Beijing was playing down the bubbling debt conflict and overall lack of progress. China’s Ambassador to Pakistan Nong Rong said that the Communist Party of China values the exchange of ideas and cooperation with Pakistani political parties during a recent webinar hosted by the Pakistan-China Institute (PCI).
“We are ready to work with Pakistan’s political parties to make good use of the CPEC JCM and promote and strengthen exchanges of ideas, policies and people-to-people contacts to create a good political and public environment for the high-quality development of the CPEC,” he said.