China, US spar over CPEC

WASHINGTON/ISLAMABAD: The Trump administration on Thursday urged Pakistan to ask tough questions from China on the China Pakistan Economic Corridor (CPEC), as a top American diplomat launched a blistering attack on the multi-billion dollar project which the official claimed was going to take a toll on Islamabad’s economy.

“We hope Pakistanis will ask Beijing tough questions on debt, accountability, fairness and transparency... Ask the Chinese government why it is pursuing a development model in Pakistan that significantly deviates from what brought China its own economic success,” Principal Deputy Assistant Secretary of State for South and Central Asia Alice Wells said on Thursday in a major policy address.

“Why doesn’t the Pakistani public know the price for CPEC’s most expensive project, or how it’s being determined on debt?”

“What are the long-term effects in Pakistan of Chinese financing practices?" the top American diplomat asked in her remarks on China’s Belt and Road Initiative (BRI) in South and Central Asia, with emphasis on the CPEC.

In her speech at the Woodrow Wilson International Center for Scholars, Wells said the CPEC was amain initiative of the One Belt One Road project intending to bring Pakistan closer to China by addressing infrastructure needs, but potentially at an unsustainable cost to Pakistan.

“Together with non-CPEC Chinese debt payments, China's going to take a growing toll on the Pakistan economy, especially when the bulk of payments start to come up in the next four to six years. Even if the loan payments are deferred, they’re going to hang over Pakistan's economic development potential hamstringing Prime Minister Khan’s reform agenda,” Wells said.

Wells said, "Inflated pricing of power and development projects is not good for the Pakistani people. The CPEC almost always takes the form of burdensome loans or financing with Chinese state-owned enterprises and the Chinese government profiting. This is hardly the ‘peace and win-win cooperation’ OBOR is supposed to facilitate."

“China is a member of the G20, but has not implemented G20 infrastructure standards, or adopted Paris Club practices of greater concessions and grant aid,” she alleged. "Both of these actions would ensure greater transparency in lending practices as a part of CPEC," she said.

The CPEC, she said, relies primarily on Chinese workers and supplies rather than giving that business to Pakistan companies and workers. "Pakistanis — particularly enthusiastic youth — are more than able and willing to work on projects that will benefit their country," she asserted.

Wells said OBOR lacked transparent financing practices. Failure to repay can lead to unsustainable debt burdens, which can result in surrendering of assets and diminishing sovereignty. Chinese Ambassador to Pakistan Yao Jing has repeatedly characterised CPEC, a game changer for Pakistan.

"In fact, the ambassador said China wants to see its relationship with Pakistan serve as an example for its relations with other states," she said.

Making a few observations on cost, debt, transparency and jobs, Wells said according to Pakistani government statistics for each megawatt generated by a completed CPEC thermal energy project developers spent an estimated, USD 1.5 billion. In comparison, the cost per megawatt of building non CPEC thermal plant is half of that, or USD 750 million, she said.

What are the long-term effects in Pakistan of Chinese financing practices, and what are the burdens that have fallen on the new government to manage with now with an estimated USD 15 billion in debt to the Chinese government, and another USD 6.7 billion in Chinese commercial debt?

"Because it's clear, or needs to be clear that CPEC is not about aid," she said. Slamming China on transparency, Wells said lack of transparency could increase the cost and cost of corruption, resulting in an even heavier debt burden for Pakistan.

Instead of creating jobs in Pakistan, she said CPEC was bringing in Chinese workers who earn money in Pakistan, take the wages back to China, leaving very little in the local economy.

Meanwhile, defending the objections raised by the US Assistant Secretary of State Alice Wells to the CPEC projects, Chinese Ambassador in Pakistan Yao Jing Friday said China would never ask Pakistan to pay back its outstanding loans as was being done by the US and other western countries.

He was addressing the 5th CPEC Media Forum organised by the Pakistan China Institute (PCI) in collaboration with the Chinese Embassy in Islamabad.

About the allegation of higher tariff charged by the CPEC power projects, he asked where the Americans were when Pakistan had announced its upfront tariff policy in 2013. “Why they never participated in the construction projects?”

On the issue of corruption in the CPEC, he said the project was clean and he would advise the US colleagues against leveling such allegations without solid proof.

“The CPEC is supported by two governments and their leaderships and there’s no differences on any aspect of the project. A lot has already been achieved through the CPEC,” Yao Jing said.

He said the multibillion project had provided jobs to 70,000 Pakistani nationals. PCI Chairman Mushahid Hussain Sayed said the allegation of corruption in the CPEC projects was uncalled for, as the NAB had scrutinized each and everything of the past rulers but found nothing.

He said Pakistan’s 91 percent loans and other foreign liabilities had nothing to do with the CPEC, so the project could not be held responsible for any debt trap. He came down hard on the latest US stance against the CPEC and said it was a vehicle and platform for interaction and information sharing.

Mushahid said he was shocked to read the propaganda and incitement uttered by Alice Wells against the CPEC but they must keep in mind that the CPEC was supported by two governments and their leaderships.

“The CPEC is the top priority of our leadership,” he maintained. He said there were no differences on any aspect of the CPEC related issues between the two countries.

He said the US and western countries had placed stringent conditions during the IMF negotiations and China had nothing to do with such things. “China would never ask Pakistan to pay back its loans,” he further said.

He said the US was the biggest loan taker in the world, while China was extending aid that was meant for economic development. He recalled that China provided all-out assistance to Pakistan during earthquakes and floods.

“We believe in trade, not aid,” he said, adding that the next phase of the CPEC would focus on industrial cooperation. On the allegation of higher power tariff being charged by projects under the CPEC, he said Power China and Huaneng Group had made investments in Pakistan and completed Port Qasim Power Plant and Sahiwal Power Plant.

Pakistan’s Central Power Purchasing Agency (CPPA) regularly puts the electricity prices of 131 configurable thermal power units in numerical order from high to low, and purchases electricity according to the price.

In the June 2019 ranking, Port Qasim Power Plant and Sahiwal Power Plant ranked at 127th and 125th from the bottom respectively. “If the United States really cares about power shortage in Pakistan, why there have been no American companies coming to Pakistan to build power plants?” he asked.

About labour and employment, more than 75,000 jobs have been created directly for the Pakistani people. He said under the CPEC plan from 2015 to 2030, it has been estimated that 2.3 million job opportunities would be created. Mushahid said he would not talk about the cost of ML-1 project because it was not yet finalised.

More than 100 small and medium-sized enterprises from Pakistan have participated in the construction of the CPEC, providing hundreds of thousands of jobs. Mushahid said the CPEC was flagship of Belt and Road Initiative (BRI) of Chinese President XI Jinping.

He said Pakistanis were grateful to China for making commitment to invest $60 billion under the CPEC framework because it reposed vote of confidence when no western ally or even Muslim brothers were ready to invest in Pakistan.

There are some challenges as well because the country will have to move fast in days and months ahead, he said, adding that the US alleged corruption in CPEC and reminded the US that they had used $1 trillion in the war on terror in Afghanistan, while the US Inspector General in a report found rampant corruption with their involvement.

He said the US also decided to launch $60 billion on pattern of Belt and Road Initiative undertaken by China five years ago. Under CPEC-1, he said China helped Pakistan to construct Heavy Mechanical Complex (HMC), Heavy Industries, Taxila, JF-17, submarines and Al-Khalid tank during decade of 60s, 70s and 80s.

Leader of the House in the Senate Shibli Faraz said the CPEC possessed significant importance for Afghanistan, Central Asian Republics, Iran and Gulf region. Gwadar, he said, was the top priority of the incumbent regime.

“Chinese nationals who are working here are our national heroes,” he added. CPEC Media Forum President Hafiz Tahir Khalil said the media could play an important role in promoting the CPEC.

Tahir reminded that he along with renowned poet Ahmed Faraz visited China in 1974 as part of a delegation led by Begum Nusrat Bhutto and afterwards China made phenomenal transformation.

Hameed Haroon, Chief Executive of Dawn Media Group, said there was a need to re-orient ourselves to maximise benefits from the CPEC. Fakhar Imam MNA from the ruling party said China played key role in convening the UN Security Council meeting on the Indian Occupied Kashmir.

He proposed inclusion of science and technology and agriculture universities of international standard with the hiring of Chinese professors as part of the CPEC. Renowned anchorperson of GeoO TV Saleem Safi said China had never dictated so it was the most liked country in Pakistan, while the US always tried to dictate us so it was the most hated one in Pakistan.

On this occasion, five Pakistani journalists were given the CPEC Award including Jang columnist and anchor Geo TV Saleem Safi, Mehtab Haider (The News), Mian Abrar, Javed Akhtar and Yasir Khan.