On December 25, 2020, the Joint Working Group on International Cooperation on the China-Pakistan Economic Corridor (CPEC) met for the second time in Xinjiang Province, China. While the meeting focused on increasing momentum of CPEC projects, since the start of the Pakistan Tehreek-e-Insaaf (PTI) government, there have been speculations that the work on the much-touted project has slowed down. Both the PTI government and Pakistan Muslim League Nawaz (PML-N), the main opposition party, have traded barbs over the poor handling and mismanagement of several projects launched under the umbrella of CPEC. Although the PTI recently changed its CPEC policy and has attempted to revitalize projects and continue construction, the slowdown has not been completely undone due to several internal and external reasons. Looking ahead to 2021, CPEC’s slow progression may give the PML-N a base for vehement criticism, especially during this period of severe political instability in Pakistan.
The PTI’s early approach towards CPEC
There used to be a flurry of news stories, TV debates, and commentaries during PML-N’s era with almost daily statements from government officials projecting CPEC as a game-changer. The frequency of such news and debates dropped, however, when PTI was elected to power. The PTI government did not take political ownership of CPEC the way the PML-N government had in the past. This was likely because the PML-N government had negotiated, launched, and steered this project during the Nawaz Sharif administration.
Even before coming to power, Prime Minister Imran Khan, leader of the PTI, had accused the PML-N of corruption in the management of CPEC projects, especially financial mismanagement of a mass transit CPEC project in Multan. During its electoral campaign, the PTI vowed to audit and review all projects if it came to power. After PTI assumed office in 2018, it faced widespread criticism for the slowdown of construction on CPEC developments. One of the main reasons for the slowdown was the PTI’s efforts to secure a bailout package, the largest ever in Pakistan’s history, from the International Monetary Fund (IMF). To obtain the loan, Pakistan was required to share details of Chinese investments in Pakistan with the IMF. However, certain conditions attached to the IMF loan, such as fiscal consolidation, threatened to slow down CPEC projects and adversely impact China-Pakistan relations.The PTI’s pre- and post-election public criticisms of CPEC deals created ripples in the China-Pakistan friendship.
Imran Khan also constituted a nine-member committee to review all BRI contracts, and criticized the economic deal for being too expensive for Pakistan and unfairly favoring China. The Adviser to the Prime Minister on Commerce, Razzak Dawood, slammed the outgoing PML-N for incompetency in negotiating the deal and suggested placing “everything on hold for a year.” The PTI’s pre- and post-election public criticisms of CPEC deals created ripples in the China-Pakistan friendship.
The PTI’s Shift in CPEC Policy
A few months after the PTI assumed office, it was confronted with critical economic issues, especially the country’s shrinking Foreign Direct Investment (FDI). In 2018, Imran Khan traveled to Beijing to secure a bailout package but Beijing initially refused to help, likely due to the Imran Khan government’s criticisms of CPEC, leading Imran Khan to ask the IMF for assistance. These grave economic conditions contributed to PTI’s shift in its approach towards CPEC and China.
More recently, when Pakistan entered into a diplomatic row with its traditional ally Saudi Arabia—Saudi Arabia recalled USD $1 billion of a $3 billion loan and Pakistan faced a stoppage of a USD $3.2 billion oil credit—the PTI government was further propelled to divert its focus on expediting CPEC projects and strengthening China-Pakistan ties. In recent months, not only has Imran Khan become an admirer of CPEC, contrary to his earlier beliefs, but has called the corridor “a manifestation of [the] Pakistan-China friendship,” and has noted his intention to “complete it at any cost.” During the September signing ceremony of the Development Agreement of the Rashakai Special Zone, Khan called CPEC a regional network that could bring “connectivity up to Central Asia.” The PTI government has now collectively started praising CPEC and has objected to criticism against the project.
To expedite work and progress on CPEC projects, the government established the CPEC authority through the China-Pakistan Economic Corridor Authority Ordinance. The authority will have considerable autonomy and vast financial and administrative powers. It will also ensure that CPEC projects are completed without major bottlenecks. Further, the Pakistan Army, which has been providing security and all-out support to CPEC, has gained stewardship of the project and is set to take a formal role in administering development.
Despite last year’s reports on the launch of two hydroelectric projects in Pakistan-administered Kashmir worth USD $11 billion and a special economic zone in Faisalabad, the projects appear to be moving slowly. According to media reports, some of the contracts in the past were awarded to Chinese contractors without proper bidding thus enabling China to be the major beneficiary of the projects. Furthermore, reports that China showed reluctance in financing a USD $6.8 billion Main Line-1 (ML-1) railway project—that would upgrade the railway from Peshawar to Karachi and is currently the largest project under CPEC—at the one percent interest rate demanded by Islamabad furthered speculations.
Pakistan’s former Minister for Railways Shaikh Rashid Ahmad, however, announced in August that the project was well on course with China providing 90 percent of the financing. He further stated that the project will not only produce some 150,000 jobs but Pakistan will also “start implementing the project by the end of the year.” Reportedly, the chances of finalizing the agreement for ML-1 are low, despite both opposition and government considering the project strategically vital.The government seems to have realized the gravity of the situation and is trying to put CPEC back on track. It, however, struggles to snub the burgeoning perception that the CPEC is slowing down under its authority.
Progress on CPEC remains stagnant, as is made apparent by the delay in the 10th review meeting of CPEC’s Joint Cooperation Committee (JCC), initially scheduled for October 2020. Some of the joint working groups—bilateral forums that refine proposed projects for the JCC—could not meet on schedule, resulting in the delay of the JCC meeting for several weeks. The meeting that was scheduled to take place in the third week of November 2020 was also delayed.
The current slowdown could also be attributed to other reasons. For example, progress on CPEC projects receives less media attention than it used to. The October 2020 inauguration of the Orange Line Metro Train, the country’s first electricity-run mass transit project completed under the CPEC banner, was dismal. This could be because the project was initiated by former Chief Minister and PML-N President Shahbaz Sharif. Additionally, the onset of the pandemic could have impacted media coverage but reportedly did not affect the progress of CPEC projects in Pakistan. Statements from Chinese officials highlight that CPEC projects have remained unscathed despite the raging pandemic across the nation and are unlikely to be negatively impacted in 2021.
CPEC offers Pakistan an opportunity to revamp outdated infrastructure and boost economic activity in the country. Imran Khan’s initial opposition to CPEC has been replaced with a newfound enthusiasm to bring the projects up to pace. However, due to innumerable domestic challenges including the budding opposition alliance under the Pakistan Democratic Movement (PDM) and the devastating economic and social impacts of the pandemic, it will be tough to regain lost momentum. Pakistan People’s Party (PPP) Chairman Bilawal Bhutto recently accused Imran Khan of “trying to turn CPEC into a failed project.” Given this challenges-loaded field, a go-slow policy regarding CPEC could lead to irrecoverable damage for PTI and the country alike. The government seems to have realized the gravity of the situation and is trying to put CPEC back on track. It, however, struggles to snub the burgeoning perception that the CPEC is slowing down under its authority. Therefore, the government needs all stakeholders, including the opposition, on-board since the project is a lifeline for the underperforming economy of Pakistan. Rising political instability in Pakistan coupled with the second wave of the pandemic foretells PTI’s continued struggle with meeting CPEC deadlines into 2021.
Image 1: Waseem Abbas via Wikimedia Commons
Image 2: Pakistan PMO via Twitter