During its five years in power, Pakistan’s erstwhile federal government, led by the PML-N, didn’t disclose the terms and conditions of Chinese investment made under CPEC.
Even parliament wasn’t allowed to engage in debates about whether this is a loan or an investment. Nowhere in the world are loans considered to be a form of investment. But parliament and the people in Pakistan were kept in the dark until it was recently revealed that Pakistan has to repay loans worth at least $5 billion to China.
The global media didn’t pay attention to Chinese investments in Africa and South East Asia until recently when details about these investments surfaced in Sri Lanka and Malaysia. African countries, by and large, viewed Chinese investment in infrastructural projects as a welcome step as China was a new entrant in the global domain and, therefore, wasn’t seen as colonising power.
The notion of colonisation in the modern economy is entirely different as it no longer includes creating a physical presence, exerting political control, and extracting natural and financial resources. But the essence and goal of capitalism remains same: to establish financial control and extract both financial and natural resources.
Speaking at a discussion in Washington, American scholar Christina Fair said CPEC is an attempt to colonise Pakistan to enrich China. She expressed fears that if the US doesn’t bail Pakistan out, China would take control of Gwadar Port because Pakistan is unable to borrow money from the IMF and other donor institutions to pay off its immediate loan liabilities.
Successive governments have been unwilling to admit that we are living under a deadly debt cycle. Foreign debt has reached a level where we are unable to pay back our loans through our own resources. The country is heavily dependent on borrowing to pay back loans. The two most recent bailouts from the IMF over the last 10 years have clearly proved this fact. But we keep denying these realities and subjecting ourselves to exercise restrictions: shallow austerity measures for domestic consumption that don’t reflect good optics.
Since he began his political career, Imran Khan has idealised the Malaysian economy and Mahathir Mohamad’s political courage to defy Western financial power in the 1997 financial crisis. Mahathir had also refused to take bailout package and blamed George Soros for the East Asian financial crisis. Mahathir Mohamad has once again assumed power on the basis of demonstrating an open opposition to the Chinese domination of their economy, fearing that Chinese loans for a fast-track rail system will impose an economic burden on Malaysia and push it towards a debt trap.
Can Pakistan’s newly-appointed the Economic Advisory Council use the examples presented by Malaysia and Sri Lanka to gauge how Chinese loans created new problems with long-term implications, laying the foundations for greater dependence on the foreign economy?
Malaysia, an economy that is struggling under a debt of $250 billion and is unable to ink loan deals with China, has shown the courage to pay $136 million as a cancellation penalty. How will a country like Pakistan be able to pay back its loans? Economists haven’t even found a correlation between infrastructure and growth, which goes against the assumption held by many in the country that building infrastructure will enable growth.
The problem with the Economic Advisory Council is that it doesn’t include people like Akbar Zaidi, Shahid Kardar and Qaiser Bengali who have been critical of Pakistan’s economic direction and policies. The council lacks experts on public policy who have focused on underdevelopment from the perspective of social policy. Most of the members of the council have served in the previous government and have failed to make a difference. Their only courage lies in suggesting that state enterprises ought to be privatised, which won’t produce any solutions. The PTI will use the same approach of appointing a select few to head these enterprises – a strategy that has failed in the past.
Will the PTI-led government revisit CPEC-related projects and allow an open debate in parliament on projects proposed under CPEC? Will it ask if we even need all these projects given our socioeconomic problems? Will the PTI-led federal government ask why we can’t come up with our own homegrown solutions for unemployment, energy shortages, infrastructural needs, illiteracy and poverty when we have so many economic experts?
Pakistan doesn’t need to accept the criticism on CPEC that emanates from Washington-based experts. But can’t these perspectives provide us an opportunity to question our own perceptions regarding CPEC-related projects? Do we really need all these projects? Will roads, faster railway tracks, and endless coal-fired projects serve our economic interests?
There is not much that Asad Umar can do to address the inherent problems that plague the financial health of our economy. Last week, the finance minister told the Senate that Pakistan borrowed $70 billion and paid back $49 billion foreign debt over the past five year. What he didn’t mention was that the country has yet to pay back debt of over $90 billion?
Pakistan is running out of options. Projects that add an extra burden on our economy, and don’t require its current nature and production capacity will only lead us towards bankruptcy. Instead of viewing the critics of CPEC as the country’s enemies, the PTI should, at the very least, listen to them.