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Pakistan in Debt Trap – Modern Diplomacy

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Recent
criticism of the China Pakistan Economic Corridor (CPEC) project by the United
States, has understandably drawn attention within Pakistan, as well as outside
the region. US,for long has been critical of the Belt and Road Initiative (BRI)
in general, and some of the BRI projects in South Asia – especially the CPEC
project. A report by the Centre for Global Development (CGD, Washington DC)
published in 2018 argued, that the BRI project will lead to a situation where
borrowings, by countries which have signed up for the project, will build up to
a degree where debts become unsustainable (this situation has been dubbed as
‘debt trap’). Pakistan was identified as one of the 8 countries, which may land
up in a  ‘debt trap’ (the only other South Asian country
was Maldives). Beijing and Islamabad have on more than one occasion,
reacted strongly to criticism of the project and rubbished claims that
Pakistan’s debts are unsunstainable.

Apart from
the US, India too has been critical of the CPEC project. The main objection of
India, to the CPEC project has been the fact, that it passes through the
disputed territory of Gilgit and Baltistan.

US
skepticism with regard to CPEC.

If one were
to look at recent US criticism of CPEC, Alice Wells Principal Deputy Assistant Secretary of
State for South and Central Asia, first criticized the project for the
clear lack of transparency, as well as not being economically sustainable in November 2019, during the course of an interaction
at the Woodrow Wilson Centre, Washington DC. Wells, reiterated her criticism of
CPEC, during her visit to Pakistan in January 2020. The Senior State Department
Official, also made the point, that a number of firms, which had been
blacklisted by the World Bank, had been awarded contracts through
CPEC.

The
Pakistan PM, Imran Khan and other senior politicians, reacted
strongly to  Wells criticism arguing,
that the project would play a crucial role in the country’s economic progress. It
would be pertinent to point out, that there are a number of lobbies in
Pakistan, which while being critical of the US, have for long being questioning
the long term implications of the Pakistan-China economic relationship in
general, and the lack of transparency with regard to the CPEC project in
particular. This includes, both strategic commentators, and sections of the
business community and even a section of the political class
The main criticisms of the project are; doubts with regard to the economic
sustainability of the project, and the fact that certain provinces are reaping the benefits of
the project, while others such as Balochistan and Khyber Pakhtunkhwa (KPK) have
been left out . It would be pertinent to point out, that Imran Khan when in
opposition, had himself put forward his misgivings with regard to the project.
Even senior members of his Cabinet had spoken about the need for renegotiating
the terms and conditions of CPEC. Beijing did not take kindly to such remarks
and since then Imran Khan and his colleagues have been cautious and gone the
extra mile in defending the CPEC project.

Alice Wells recent criticism has once again brought to the fore important
issues with regard to CPEC.An article in Dawn titled ‘Alice’s mis (adventures)’begins by questioning Washington’s dealings with Pakistan, and it’s
patronage of military regimes. The article also makes the point, that if US aid
has not been utilized properly, America is to be blamed for following a myopic
and transactional approach towards Pakistan, where the interests of the
Pakistani people have been ignored. It then examines in detail, the lack of
transparency of the CPEC Project, and how the structure, terms and conditions
of Chinese loans could prove to be a challenge in the long run.

Most
significantly, Wells’ remarks have once again raised the question of how
Pakistan needs to approach its outside relations with Great Powers, especially
US and China and how it can balance ties. The article in Dawn states:

‘Islamabad must
realise, that it doesn’t belong in the boxing ring among two global
heavyweights and should refrain from reacting irresponsibly’.

This is important, because in recent years after
Washington-Islamabad ties have gone downhill, many in Pakistan, especially the
establishment, have virtually put all Pakistan’s eggs in the Chinese basket. As
mentioned earlier, this has not gone down well with members of Pakistan’s
intelligentsia as well as polity who believe that the country needs to have an
independent foreign policy.

Finally, while no one has really sought to look at
CPEC as a facilitator of regional connectivity in South Asia. A number of
analysts and commentators have spoken on more than one occasion about the need
for getting South Asian neighbors on board. The Imran Khan government too has
been seeking to bring neighbors, including Iran on board the CPEC project (it has dubbed the arrangement as
CPEC+1), but there has been no real discussion with regard to India being part
of the project (oblique references have been made to India joining the project,
though New Delhi has flatly refused such proposals). Interestingly, even on the
Indian side, it has been argued that Indian participation in CPEC, which could
give a boost to trilateral
cooperation
. This has been dismissed, and may seem unlikely in
the short run given the tensions between both countries (While New Delhi
officially has on more than one occasion, put forth its objections to CPEC, and
unequivocally stated, that it will not join the project, there are those who
believe that over a longer term this may be possible)

Conclusion

While Alice
Wells views with regard to Pakistan-China economic ties or the CPEC project
maybe one sided, her skepticism with regard to the long term implications of
the project have once again generated an interesting debate, not just with
regard to the project itself, but Pakistan’s foreign policy, as well as the
strategic and economic dimensions of CPEC in the context of South Asia. It
remains to be seen, whether Pakistani policy makers understand the need for
greater transparency with regard to the project and to address misgivings of
domestic stakeholders. It is also important for strategic commentators and
economists, not just in Pakistan, but all those interested in South Asia, to
examine the possibility of CPEC as a tool for economic cooperation and
connectivity, and not as a source of conflict. This may seem impossible in the
nearer term, but with the changing geo-political and economic dynamics in the
region, it can not be ruled out over the long term.

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