Questions on CPEC

Has there been a fruitful line of inquiry regarding the China-Pakistan Economic Corridor (CPEC)? This largely depends on the questions with which one initiates the inquiry.

Will CPEC be a game-changer for Pakistan? This drawing-room question is particularly useless to begin with. With so much uncertainty and so many variables beyond human control, no one except a clairvoyant can predict this with any confidence. It is just as pointless – if not downright silly – to take sides. There is not enough information available for one side to convince the other on the basis of analysis. Believers will continue to believe and sceptics will continue to doubt for reasons which have little to do with the intricacies of the initiative.

The following questions pertaining to the details of the deal are more useful: Under what conditions are the various components of the initiative being negotiated? What are the financial obligations and terms of repayment? What tax concessions are being offered? What are the revenue and capital cost projections of the various components? Who will bear the operating and maintenance costs?

Citizens responsible for the debt liabilities have a right to demand this information and expect it to be provided. What are the reasons for the secrecy? What is there to hide? The numbers that are filtering out in dribs and drabs on guaranteed rates of return are not particularly reassuring. The mere fact that information is not being fully shared is a major cause for doubt. People are naturally apprehensive in the absence of transparency.

It is good that the government has set up a CPEC website (https://cpec.gov.pk/). But at this time, it is only a list of projects with costs and timelines. The terms of financing and revenue projections are missing. In addition, the website suffers from an information overload. For example, it includes the Karachi Circular Railway, the Peshawar Mass Transit, the Quetta Mass Transit and the Lahore Orange Line Metro Train projects.

These are all plausible projects with individual justifications and may all involve Chinese funding. But what do they have to do with the corridor? It appears that various stakeholders are being appeased by including their pet projects under the CPEC umbrella.

The case with the power projects listed on the website is similar. Each might be justified but why is a wind farm in Bhambore lumped under CPEC? Wouldn’t it make more sense to treat them as independent projects with separate feasibility studies, as is the norm? The indiscriminate lumping together of everything happening in the country is another red flag regarding the coherence of the initiative.

It would help to strip out the core corridor investments and share details of their financing and cost-benefit projections. It is reasonable to expect that, barring unforeseen events, a functioning corridor would be beneficial for China. But what will be in it for Pakistan except collecting a toll on the transit trade? How much toll collection is being projected? What will Pakistan be exporting via the corridor given its grossly uncompetitive economy? Why would industrial estates succeed along the isolated corridor when they have failed in major locations like Peshawar and Quetta? How many permanent jobs are expected to be created? These are legitimate questions that need to be answered in order to build consensus and take citizens into confidence.

It is not enough for the government to expect the public to trust its judgement because governments in Pakistan have done nothing to earn that trust. Neither international agencies nor Pakistani citizens believe that successive governments have been forthcoming about facts. Such behaviour is not unique to Pakistan. After all, Bush and Blair lied to their citizens to invade Iraq.

In the absence of honest answers, those without vested interests in deal-making can only point to historical precedents and past evidence. Let’s consider the example of one of the most significant trade corridors of recent times: the Suez Canal. Was it a game-changer for the people of Egypt? Or, let’s take the examples of game-changers for Pakistan that were promised in the past – such as Thar Coal, Saindak and Reko Diq. Incidentally, all these projects were also based on Chinese involvement. Why did they not reap the desired impact? They certainly changed the game for those involved in the multiple transactions for the projects. But did they bring any benefits for the people of Pakistan or even the locals who lived near the project sites?

The attempt to turn such questioning into issues of patriotism or of maligning our best friends strengthens the impression that all is not aboveboard. These are the standard tactics of those who wish to divert discussion from facts and stifle inquiries through intimidation. Under normal circumstances, citizens would be within their rights to examine the track record of Chinese investments in other countries like Sri Lanka (Google Hambantota) or prior deals with Pakistan such as the railway locomotives. In all such cases, the Chinese are not to blame – ‘buyers beware’ is rule of the market. The concern is with those negotiating the deals on our behalf and the question remains the same: Do you trust them? If so, on what basis?

Given the lack of transparency and the historical evidence, the following outcomes appear likely: For better or for worse, the CPEC momentum is unstoppable. It will be beneficial for the Chinese economy. It will generate toll revenues for Pakistan which may be more or less than the operating costs depending upon contractual terms, much as for the Lahore-Islamabad motorway.

Without inclusiveness, the economic gains of CPEC might be outweighed by political stresses. The corridor will definitely change the fortunes of a few thousand individuals in Pakistan. It is unlikely to be a game-changer for the Pakistani people – just as the Suez Canal did not alter the fate of the Egyptians. On the other hand, this could be the mother of all miracles. Let us bow our heads and pray while the untethered camel wanders into Kashgar.

The writer is a fellow at the Consortium for Development Policy Research in Lahore.