Pakistan: Govt report uncovers corruption in CPEC projects
An internal report of a committee formed by the Pakistani government in August 2019 has shed light on corruption and lack of transparency in the projects related to the China-Pakistan Economic corridor (CPEC). The report has uncovered Beijing’s real intentions behind the CPEC, often hailed as the symbol of Pakistan-China bonhomie. The CPEC’s final objective is said to be exploiting Pakistan’s shirking economy through the creation of corrupt elite and a friendly army establishment.
The CPEC was officially launched in 2013. It is a pilot project of China’s ‘Belt and Road Initiative’ (BRI). According to the World Bank, Beijing has invested more than $62 billion in infrastructure, energy projects and dams under various CPEC projects in Pakistan. The Chinese Communist Party (CCP) maintains that the CPEC will bring political stability and economic resilience as well as help Beijing secure its domestic energy supplies.
According to Chinese officials, the CPEC will create around 2.3 million jobs in Pakistan by 2030. Furthermore, the congenial relationship between the two countries under BRI’s quasi-alliance serves as a counter-weight to the growing US-India strategic cooperation in the region.
While Pakistan’s military establishment and civilian leaders have always looked to Beijing as their backer against India, the cost of this consistent support from Beijing has come with costs. Unlike the democracies of global south, China has always interacted with every nation to suit its own vested economic interests.
For these state-centric economic intentions and interests, Beijing has always tried to create social structures within dependent countries. These social structures in turn serve China-centric motives in security and economic self-aggrandisement. Through the CPEC, China created these social structures in the Pakistani army as well as in its supportive civilian government.
Imran Khan and CPEC
Praised as the country’s economic lifeline by the political leaders of Pakistan, the CEPC, since its inception, has been marred by allegations of corruption and high costs of investments. In 2017, the CPEC infrastructural projects faced grave criticism on corruption, forcing Beijing to stop funding for three major road projects.
The charges of corruption and increasing resentment among the people also drove the Pakistani government to stop the road projects worth one-trillion Pakistani rupees. Following this development, Beijing was forced to work on new guidelines before the money was released.
Against this backdrop, Imran Khan, now the Prime Minister, but then in the Opposition, and his party Tehreek-e-Insaf used the rising levels of corruption in the CPEC projects in their election campaigns. The Tehreek-e-Insaf and Imran Khan not only protested against the CPEC, but officially articulated their reservations to Chinese diplomats from 2016 onwards.
Soon after taking office, in August 201, Imran Khan and Tahreek-e-Insaf announced that all CPEC agreements would be reviewed to address the allegations of special concessions to Chinese companies and corruption. The most vocal among the members of Tahreek-e-Insaf was Commerce Minister Abdul Razak Dawood who suggested that Islamabad should suspend the CPEC.
However, after coming to power, Imran Khan and his party could do virtually nothing, because of many important reasons. First, the crumbling domestic economy of Pakistan has no alternative except depending excessively on China.
Second, Pakistan’s all-powerful military establishment, especially the current Chief of Army Staff (COAS), Gen Qamar Javed Bajwa’s soft corner for China. Gen Bajwa, the 16th COAS, has remained a loyal friend of China ever since he assumed office on 29 November 2016. He has also served Chinese interests well by assuring the security of Chinese workers, and the ongoing China-built infrastructure projects under the CPEC. The mutual bonhomie between China and the Pakistani military has seen considerable growth in the past decades.
Third, the CPEC has provided ample avenues for high-level corruption, on account of which, dissent has been blunted and criticism has been silenced with bribes. For example, the silence of Dawood, the most vocal critic of the CPEC and Chinese companies was just bought over, creating a win-win situation for both the political elites in Pakistan as well as for the Chinese government, at the expense of the common Pakistanis.
Imran Khan’s government awarded a contract of the Mohmand dam in the northern part of the country to Descon, a company founded by Dawood and China’s Gezhouba. The move led to a public outcry and the ground breaking ceremony for the dam construction had to be postponed twice.
Probe into energy projects
Pakistan is marred with energy crisis. Of the total $62 billion worth of CPEC projects, roughly $33 billion is expected to be invested in energy projects dominated by finances (80 percent) from China. However, the energy sector, especially the electricity sector, is in a massive crisis owing to decades of government apathy and negligence that has made Pakistan a highly energy insecure country.
To look into the problems, the government in last August set up a committee to audit the power sector and examine the high cost of electricity. The report showed that six China-funded power projects has given huge profits to firms from China as compared to existing market rates.
According to the report, some of the power projects, where no bidding process was followed, are 237 percent more expensive than other similar projects in neighbouring countries like India. Similar wrongdoings were highlighted about two coal-based power plants also.
It has been reported that $2.5-2.6 billion excess payments were made to Chinese firms. They have also revealed that projects have been awarded to Imran Khan’s sympathisers such as Abdul Razak Dawood and Nedeem Babar, who are among the top beneficiaries of these power sector scams. This audit report, however, was never made public by the government.
Pakistan has been facing increasing economic challenges after getting grey-listed by the Financial Action Task Force (FATF) since past one year. For example, from June 2019, Pakistan was once again placed under the FATF grey list, forcing Pakistan and Imran Khan to change their posture towards Beijing.
They both had to announce that the CPEC is Pakistan’s “top priority”. The announcement came when Yao Jing, China’s ambassador to Pakistan, announced that the first phase of the CPEC projects valued at $62 billion were either being completed or are near completion. He said the project was all set to move into its second phase. Only time will tell how much burden the people of Pakistan will have to face because of these CPEC projects.
Bangladesh: Global slowdown and Covid-19 hit nation hard
The upsurge of the Covid-19 pandemic is not only threatening the public health systems but also affecting the economy of the countries across the globe. Bangladesh, the impoverished South Asian nation, is not isolated from this global trend. In the past few years, the low-income country had made exceptional economic progress and was likely to become a middle-income country by 2021.
The country has maintained a steady growth of 6 percent for a decade. The outbreak of the Covid-19 disease tends to falter the economic progress of the country that was expected to attain 8.2 percent growth this year. The World Bank forecasted the country’s growth is now going to be around 2-3 percent only in 2020.
The government has declared an economic stimulus package to cope with the economic fallout of the Covid-19 disease. However, there are scepticisms about the ability of the country to sustain these measures in the long term without robust international support.
Causes for disruption
Bangladesh’s economic slowdown is due to not only domestic reasons. It is also because of its linkages with the global economy. The Lockdown, a measure practised globally to curb the spread of Covid-19, imposed on 26 March, halted the wheels of the domestic economy, with all economic activities remaining suspended. The exports too are impacted because of the drop in the global demand following the flaring up of the Covid-19 worldwide, and economic slowdown everywhere.
The readymade garment sector, the country’s principal product dominating 80 percent of exports, is the most affected sector. Lack of demands in countries like the United States, the United Kingdom, Germany, Italy, France and other nations impacted the exports badly.
Unfortunately, Bangladesh’s largest buyers are the countries in the European Union and the United States, and they are the worst affected by the Covid-19 pandemic. Nearly, US$6 billion worth of orders of readymade garment factories has been either cancelled or withheld by its international buyers due to falling in demands in the EU and the US.
Also, remittances, an important source of earning foreign exchanges, has been hit. In 2018, the country’s earning from remittances was $15.53 billion, comprising 5.64 percent of the GDP. A large section of expatriates, who are the contributors to the remittances, has returned after job losses in their host countries, mainly in the gulf who are facing a slump in their economy because of the falling prices of oil besides the Covid-19 pandemic.
From mid-April, the government has been slowly relaxing the lockdown. The easing off the lockdown has resulted in the resumption of some economic activities, bringing relief to some sectors like transport, which was badly impacted after the declaration of the lockdown in March. Still, the country’s struggle is far from over.
Given the nation’s interlinkages with the global economy, its economic revival is also dependent on the improvement of the global economy or atleast the economies of its trading partners. The lingering of the economic slowdown is going to increase unemployment and poverty in the country. In the readymade garment sector only, around 2 million workers are facing the threat of unemployment.
The government rolled out around US$ 9 billion worth of fiscal stimulus packages, which is roughly 3 percent of its GDP. These packages were announced in two phases. On 26 March, Prime Minister Sheikh Hasina announced U$560 million worth of stimulus package for the export-oriented garment industries. The package offered an interest-free loan to factory owners for bearing the cost of running the factories. On 4 April, the second phase of the stimulus worth US$8.5 billion was declared and the range of inclusion of sectors was widened.
Nearly US$3.5 billion were allocated for industries and service sectors, while another US$ 2.53 billion were kept aside for small and medium scale industries. Additionally, the government also expanded its transfer programme to the vulnerable groups. It also subsidised the cost of food.
In order to accommodate the necessities of the time, some alternation in the monetary policies were also undertaken. These measures included delaying repayments for non-performing loans by six months, extending the time for paying the bill of entry on import-related letters of credit and lowering policy rates. Bangladesh Bank, the central bank, lowered repo rate from 6 percent to 5.25 percent, while the Cash Reserve Requirement was reduced from 5 percent to 3.5 percent.
The steps undertaken by the government are welcoming and aims to provide some immediate relief to the people. Most of the packages are liquidity support which will be disbursed through the bank. Economists of the country, however, are a bit apprehensive about the banks’ ability in efficiently implementing the measures because of the challenges facing the banking sectors. This include non-repayment of loans, weak management system, nepotism, etc. There are also apprehensions about the new loans further burdening the banking sector.
The government is looking towards the international organisations for support to tackle the economic challenges facing the country. The government has sought US$700 million from the International Monetary Fund for financing the stimulus packages. Already, some international organisations have responded positively to the government’s call. In April, the World Bank approved US$100 million for financing the government’s Covid-19 related responses. Similarly, the Asian Development Bank (ADB) has agreed to provide US$600 million to support various government programmes addressing the impact of Covid-19.
The present measures may help stabilise the economy for the time being, but these are short term. Since Covid-19 is likely to stay for a long time, at least till an effective vaccine is found, these steps do not seem sufficient to tackle the challenges in the long run. The government needs to develop a long-term strategy to deal with Covid-19. International organisations should come ahead to support the country and work out a framework that will not burden the country with debt, and assist the country in advancing the welfare schemes harmoniously.
Political rivals end feud
On 17 May 2020, political rivals, President Ashraf Ghani and former Chief Executive Abdullah Abdullah, signed a power-sharing agreement, effectively ending the feud that began after preliminary results of the September 2019 presidential elections announced Ghani as the winner. According to the agreement, Ghani will continue to remain the President, while Abdullah will take charge of the High Council for National Reconciliation, and lead the negotiations with the Taliban in future. The deal also provides for Abdullah to choose 50 percent of cabinet ministers in the unity government.
US reports Pak-Taliban nexus
A quarterly report submitted by the US Department of Defence to the Congress, based on intelligence provided by Operation Freedom’s Sentinel, which is the US mission in Afghanistan, states that Pakistan continues to harbour Taliban militants and affiliated groups. Citing the US Defence Intelligence Agency, the Pentagon report says that Pakistan’s strategic objectives in Afghanistan remain to counter Indian influence and mitigate the spill-over of instability in its own territory.
Cyclone helps power generation
The super cyclonic storm Amphan wreaked havoc in the coastal areas of Bangladesh and eastern India on 21 May. Bhutan also felt its mild impact with continuous rainfall, causing roadblocks and crop damages. The heavy downpour helped Mangdechhu hydroelectric plant (MHEP) to generate electricity, more than its capacity. Roadblocks along the Gyalposhing-Nganglam highway and at Reotala in Trongsa were reported. In Tsirang, it damaged maize fields belonging to six households. Monggar also reported of similar crop damage from Kengkhar. Also in Monggar, the strong wind blew off roofs of a household in Wangmakhar chiwog in Chali Gewog. It was restored later. Internet services in the country were disrupted as well.
Praise for Covid19 fight
Bhutan’s successful handling of the novel coronavirus has caught the attention of many countries and leaders with all praising the initiatives led by the King. The latest was in the House of Lords debates on May 18, where Baroness Buscombe, the Under-Secretary of State for Work and Pensions, United Kingdom, paid tribute to His Majesty The King and congratulated Bhutan’s effort to control the Covid-19 pandemic.
World Bank aid
World Bank has committed to providing $ 14.8 million to help Bhutan carry out comprehensive reforms to manage climate and disasters risks, including disease outbreaks. Finance Minister Manga Tshering and WB’s acting country representative Tenzin Lhaden signed the agreement in Thimphu.This agreement is a development policy financing with Catastrophe Deferred Drawdown Option (Cat DDO).
At least 12 persons lost their lives and thousands were displaced after cyclone Amphan swept the south-western part of the country. Amphan, one of fiercest of the cyclones in the Bay of Bengal, hit the country at the speed of 150km per hour causing widespread devastation. Nearly, 2.20 lakh houses have been damaged, standing corps on the 1.75 lakh hectares of land was destroyed and millions of tress uprooted. Prime Minister Sheikh Hasina has directed officials to take prompt measures for relief and rehabilitation of the people affected by the cyclone.
Xi calls PM
Chinese President Xi Jinping made a call to Prime Minister Sheikh Hasina and pledged to continue his country’s support to fight the Covid19 pandemic that made a surge in the country. During the telephonic discussion, the Chinese leader stressed on the deepening cooperation between the two countries and mentioned joint expansion of the Belt Road Initiative (BRI), a mega-infrastructure project with a strategic underpinning. Prime Minister Hasina welcomed Xi’s offer of support and observed that this will be valuable for controlling and preventing the Covid-9 virus. Additionally, the Prime Minister said that Bangladesh will work with China to jointly construct the BRI projects and also promote strategic cooperative partnership.
Amphan hits eastern States
A devastating cyclone, Amphan, has severely hit the two eastern States of West Bengal and Odhisa on 20 May, causing tremendous destruction to life and property. All forms of communication, electricity and water supplies have been severely affected due to the disaster. Apprehending the disaster, the state governments had evacuated tens of thousands of people living in vulnerable areas to safety. Prime Minister Narendra Modi conducted an aerial survey of the the states on 22 May and announced an interim relief of Rs 1,000 crore for West Bengal and Rs 500 crore for Odhisa. He also announced compensation to the families of the deceased and those seriously injured from the Prime Minister’s Relief Fund.
Call for all-party consultations
On 22 May, a host of opposition parties held an online joint meeting, the first of its kind since the parliamentary polls last year regarding the Coronavirus situation in the country. At the meeting, chaired by UPA Chairperson and Congress President Sonia Gandhi, participants described the Centre’s handling of the situation, especially that pertaining to the vulnerable sections as inept. The parties suggested significant policy recommendations for the government to cope up with the situation and urged the government to consult all parties for the key decisions, especially through parliamentary committees in order to ensure greater accountability and transparency during the crisis.
Backing for India
In a nuanced approach at a virtual meeting of the Organisation of Islamic Countries (OIC), Maldives has described statements that point the finger of blame towards a specific country in creating Islamophobic environments as side-stepping the actual issue at hand. “A culture of hatred, prejudice, and racism is becoming alarmingly apparent in the world today,” the statement said adding, that Maldives had taken a firm stance against xenophobia and racism, including Islamophobia as part of such agendas. Coming in the wake of Pakistan’s anti-India statement on the treatment of Muslims in the country, the Maldivian statement, without naming any country, is seen as a solid backing for India. At the same time, the Maldivian statement also condemned Israeli violations of the human rights of Palestinians and the activities impeding the efforts to establish two independent nations as the world battles against Covid19.
Primary schools may open in July
According to Education Ministry, the Myanmar government has been planning to reopen basic education schools in the middle of July, an official from the Education Ministry. Myanmar’s academic year starts in June after three-month summer holidays from March to June, but this year’s term will start a month later. In cooperation with the Ministry of Health and Sports, the Ministry of Education has been carrying out preventive measures against COVID-19 at basic education schools and parents are asked to help their children cope with epidemic preventive measures at home.
Trade talks with China
The Myanmar Embassy in Beijing is in dialogue with the Chinese government from 20 May to ensure that trucks carrying perishable goods from Myanmar reach China in a timely manner to help exporters reduce their losses. More than 500 trucks carrying perishable goods are stuck at the border every day, which causes some of the fruits and vegetables to spoil. According to Muse town traffic police only about 500 trucks can cross the Chinese border each day, so the town uses a token system to avoid traffic congestion. These restrictions are in place owing to the COVID scare.
Bill to amend national emblem
The release of the new political map of the country has resulted in the submission of a bill at the Parliament Secretariat to change the old emblem. This would require an amendment in the Constitution and the government has been looking into the matter with utmost importance. Recently, Minister of for Law Justice and Parliamentary Affairs, Shivamaya Tumbahangphe registered the bill, after conclusive consent from the Cabinet. The new map is claimed to be based on the Treaty of Sugauli (1816).
Transmission line completed
The transmission line from Dana to Kusma, a part of the Kaligandaki Corridor (220 kV), is also complete, giving the country immense boost for its hydropower technology. This would be connected to the Mistri River Hydropower project (42 MW). This project has been supported immensely by the Nepal government, the Asian Development Bank and the Nepal Electricity Authority (NEA). It would inevitably bring in a big boost to the country’s economy.
Conditional proposal to India
The government of Pakistan has indicated that peace talks can be started with India if New Delhi revokes its 5 August decision and reinstate Jammu & Kashmir’s special status under Articles 35-A and 370. According to Dr Moeed Yusuf, Special Assistant to the Prime Minister on National Security, the Kashmir conflict can be resolved under the resolutions of the UN Security Council (UNSC). Speaking at an event organised by the ‘Organization for Kashmir Coalition (OKC)’ in London, he criticised New Delhi’s policies and highlighted what he claimed was the oppression of Kashmiris in the wake of Covid19. He also alleged that New Delhi has killed more 33 Kashmiris in fake encounters.
Medical aid for US
Even though Pakistan is still battling the rising number of coronavirus cases, it has donated personal protective equipment (PPE) to the US. The medical aid to the US was carried by Pakistan Air Forces C-130 plane that landed in at the Andrews Air Base in Washington DC, and was received by Assistant Secretary of Defence David Halloway in the presence of Pakistani envoy Asad Majeed Khan. Mike Pompeo, Secretary of State, thanked Islamabad for the PPE and surgical masks and called the aid, “a symbol of US-Pakistan solidarity in the fight against Covid19.
US statement ‘irresponsible’
In a strong reaction to the US Principal Deputy Assistant Secretary of State, Allice Wells, for her criticism of the BRI-CPEC projects, he Chinese embassy in Islamabad called her statement “irresponsible”. The embassy dubbed her speech baseless and another “doomed attempt to defame Sino-Pak relations” and the CPEC. Allice Wells, who is attached to the Bureau of South and Central Asian Affairs at the US State Department, in her official media engagement on May 21, criticised Beijing and its predatory loans through BRI, claiming that the China-Pakistan Economic Corridor (CPEC) lacked transparency and unfair profits for Chinese companies. She praised Pakistan for its cooperation in Afghanistan.
SC hears poll-date case
Even as the nation continues to fight the Covid19 pandemic, a five-Judge Bench of the Supreme Court has commenced hearing on a batch of petitions, seeking directions for President Gotabhaya Rajapaksa to reconvene the dissolved Parliament, to meet with constitutional provisions, and for the Elections Commission, to put off polls for a new Parliament, beyond the rescheduled 20 June deadline. Through the week, the EC argued that it cannot conduct the polls on 20 June and may fix a new date in consultation with all the political parties. Speaking for the President, government lawyers argued that the nation’s health authorities having said that the pandemic-spread will not affect polling, the EC cannot but stick to the rescheduled 20 June date fixed by it. They also said, once dissolved, Parliament cannot be reconvened by the President, as the Constitution did not permit it. The hearing is set to continue.
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Afghanistan: Shubhangi Pandey
Bangladesh: Joyeeta Bhattacharjee
Bhutan: Mihir Bhonsale
India: Ambar Kumar Ghosh
Maldives & Sri Lanka: N Sathiya Moorthy
Myanmar: Sreeparna Banerjee
Nepal: Sohini Nayak
Pakistan: Ayjaz Wani