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Saeed Afridi |

The story of Pakistan, since its very incidental inception, has been one of talking about the imminent realization of its potential and latent, sometime erroneously termed dormant, adeptness. Over the past seven decades this story has managed to accumulate legends, even myths, of its own. Every generation, even decade, has its own lore of a suitably sanitized individual who, had he or she been given the time or space, would have propelled Pakistan into the ranks of the global elite. Assassinating a Utopian certainty, Seoul mimicking five year plans, kings and dictators revering a befuddled socialist megalomaniac’s genius, a sanctimonious iron-will crumbling a superpower, world’s left idolizing a feudal Athena, a benevolent autocrat’s enlightened Tiresias vision and prosperity through the transaction venality of an aspirant Sheikh. Seven decades of Pakistan’s political myth making summarized in less than fifty words.

Every myth, however fabricated, is a reflection of the vicarious aspirations of some segment of Pakistan’s population. Every fallacy has its adherents, defenders and, worst still, aspirants.

That is not to say that none of these seven individuals had the opportunity, inclination or even the unadulterated desire to develop Pakistan into whatever they considered a great country or at least a rude imitation of whatever promised land they had sold, preached or propagandised to their voluntary or corralled cults. All seven decades presented these apotheosised individuals a critical juncture to come face to face with destiny; every one of them failed and did so miserably. From their Pacific-Patch of broken dreams rose only their myths. Every myth, however fabricated, is a reflection of the vicarious aspirations of some segment of Pakistan’s population. Every fallacy has its adherents, defenders and, worst still, aspirants.

Read more: Naval sailors attacked in Baluchistan: another attempt to slow down CPEC?

Why is any of this relevant to the China-Pakistan Economic Corridor (CPEC)? In time, this decade will most certainly be referred to as the decade of CPEC; the eighth myth is being fashioned as I write. Allow me the opportunity to de-mythologise the future CPEC and present the inevitable conclusion.

Pakistan : the second fiddle

NDRC began studies which eventually identified the need to develop six (6) distinct corridors for resource access and economic development to fuel China’s future growth. Gwadar-Kashghar is just one (1) corridor out of six (6); the southern link of what eventually became the Silk Road Economic Belt. 

First let’s state at the outset that CPEC will be established, it will prosper and will in decades to come become the economic Indus that leads to the confluence of Western and Central Asian regions, eventually connecting them to South Asia too. That said, before the rejoicing begins in Islamabad and Lahore, let’s also state categorically that despite CPEC’s enduring success, Pakistan will remain a minor economic serf, over shadowed, if not engulfed, by its three neighbouring economic and industrial giants. Why will CPEC provide two such contrasting and opposing futures? The answer to that and the summary of the entire history of CPEC is a story of two government institutions. The National Development and Reform Commission (NDRC) in China and Planning Commission in Pakistan; the tale of two commissions.

Read more: CPEC will not stir up Indo-Pak Trouble, says China

While drafting the 11th Five Year Plan NDRC’s task force had concluded that China’s rapid double digit growth would falter primarily due to China’s Achilles’ Heel; uninterrupted, sustainable and economically viable access to primary energy and mineral resources. Nothing represents this more than the oft quoted Malacca Dilemma. Resource consumption, the mainstay of China’s growth till then, had to be reformed nationally into resource conservation and then sustainable resource utilisation. Coastal resource access for China’s relatively under developed Central and Western regions was economically unviable and the ‘opening up’ of these regions required land based resource access beyond indigenous resource. NDRC began studies which eventually identified the need to develop six (6) distinct corridors for resource access and economic development to fuel China’s future growth. Gwadar-Kashghar is just one (1) corridor out of six (6); the southern link of what eventually became the Silk Road Economic Belt. 

The year 2013 is crucial to the understanding of why Pakistan and China will reap very different returns from CPEC. 2013 saw a change of guard in both China and Pakistan and paths of both commissions also diverged.

As part of the 11th Five Year Plan NDRC proposed the expansion of the West-East pipeline complex and China revamped its Central Asian multilateral organisation, CAREC.  In 2005, China and Pakistan’s “Trade & Energy Corridor” entered into the vocabulary at NDRC in China and Planning Commission in Pakistan. Thus, the tango between NDRC & Planning Commission began. By the time China’s 12th Five Year Plan saw daylight Planning Commission’s existing ‘National Trade Corridor Improvement Program’ (NTCIP) had been incorporated into CAREC corridors with an aim to complete by 2018. From 2008 till 2012 Pakistan and China “Trade & Energy Corridor” formed part of a comprehensive NDRC study which was shared with the Pakistan government in early 2013 for approval. So far, so very institutional; so far.

The year 2013 is crucial to the understanding of why Pakistan and China will reap very different returns from CPEC. 2013 saw a change of guard in both China and Pakistan and paths of both commissions also diverged.

Read more: Will CPEC negatively affect the social culture of Pakistan?

NDRC saw the official unveiling of the Silk Road Economic Belt (SREB). NDRC identified key neighbouring geographical areas (South East Asia, South Asia, West Asia and Central Asia) that would form part of its drive for the 13th Five Year Plan to be approved in 2016. The development of China’s North Eastern and North Western regions was to be linked with Central and West Asia, with Pakistan firmly set within this sphere. Over the next three (3) years NDRC’s efforts concentrated on formalising the pathway for what are now known as the ‘Five Links”. The first among these was policy coordination which aimed at streamlining economic development strategies in order to consolidate plans for regional development. CAREC saw greater integration of economic and trade activity through multi-level macro policy co-ordination. Internally NDRC orchestrated expansive regional devolution of economic decision-making powers to individual provinces and autonomous regions culminating in a comprehensive effort against graft, corruption and political mismanagement of provincial economic activity.

The mantra oft quoted was that greater economic development was predicated by the rule of law. Urbanisation of China’s Central and Western regions and the creation of networked sustainable smart city clusters within them was ruthlessly advocated by the NDRC. The second concentrated on industrial capacity building through consolidation of industrial state owned enterprises within China and expansion of their footprint in Central and West Asia in order to reduce trade-transport bottlenecks and increase Chinese exports to West Asia and central Asia.

Communication (optical cable networks) and Energy infrastructure was enhanced through technology focused investment in research to increase China’s competitive advantage in Central Asia. Student and entrepreneurial exchange programs were instituted to increase China’s penetration in the Central and West Asian markets.

Read more: “We can think about renaming CPEC” China offers India

The third instituted economic liberalisation of internal markets providing access to Central and West Asian countries to the Chinese market to boost their export and facilitate lower tariffs, bilateral trade agreements and cross regional industrial investment focusing on new generation technology, energy and bio-technology initiatives through dedicated economic and trade zones. Fourth saw enhanced financial cooperation using multilateral financial and regional institutions, such as the Shanghai Cooperation Organisation (SCO) and an eventual Infrastructure vehicle, the Asian Infrastructure and Investment Bank (AIIB). Chinese financial SOEs were reformed to reinvent them as commercial equity funds, facilitating the issuance of province specific bonds to spearhead key provincial projects and increase regional stakes in China’s internal markets. The fifth concentrated on putting in place government backed initiatives to enhance the technical and vocational capabilities and capacity of the population within the North Eastern and North Western Chinese regions to prepare a workforce and entrepreneurs that will be required to realise China’s economic advantage in Central Asia and West Asia and enhance China’s western region’s tourism potential.

While NDRC proposed and implemented the shift towards sustainable energy security for China while enhancing indigenous resource utilisation, Pakistan’s energy efforts had vanity flagship projects that were badly conceived and entirely unfeasible in terms of economic viability and sustained local resource utilisation; Gadani power park is perhaps the starkest example of this folly. Integrated communication networks are all but absent from Pakistan’s portfolio of efforts the only exceptions are the much publicised optical fibre connection, an entirely Chinese initiative, and the auction of licenses.

Throughout this exhaustive three year process the NDRC coordinated extensively with China’s Ministry of Foreign Affairs, Ministry of Commerce and the State Council to eventually unveil the comprehensive plan for the “Silk Road Economic Belt and 21st Century Maritime Silk Road” which was formally incorporated into the 13th Five Year Plan 2016-2020 and China’s long term goals and deliverables from CPEC gained clear shape.

In 2013 Pakistan saw the advent of a new government and the Planning Commission in Pakistan’s efforts to build upon the work it coordinated with NDRC over the previous eight (8) years began in earnest. Here the similarities ended. While NDRC orchestrated a holistic approach to culminate an eventual plan for CPEC, Pakistan’s new government began a much publicised effort to re-brand much of the ongoing CAREC projects, some nearing completion, into a ‘new’ initiative initiated by the new government.

Existing and ongoing projects saw renewed agreements and memoranda facilitating their rebranding and repackaging under CPEC. Almost overnight nearly all of them became the brainchild of the new prime minister’s vision. Medium and long term goals, so exhaustively pursued by NDRC in Western China, were reassessed with an eye for completion within the next election cycle. NTCIP saw amendments to re-focus along the new government’s electoral heartland.

Read more: CPEC’s vulnerabilities: Can Pakistan carve a way out?

Over the course of the following two years, rather than work with the Ministry of Commerce, Senate, Parliament and Foreign Office, the Planning Commission seemed bogged down in a row over real and perceived changes to the physical route of CPEC in its various NTCIP and CAREC renditions. No exercise similar to NDRC’s ‘Five Links’ was conceived, let alone undertaken. No effective work was performed on proposals to streamline of divergent agricultural, industrial and trade policies in order to address regional disparity and inequality within Pakistan.

Beyond the completion of existing CAREC projects, mainly by the military’s construction vehicle the Frontier Works Organisation (FWO), very little effort was made to tie in regional trade with Pakistan’s western neighbours. The devolution of economic decision making, so diligently pursued a communist China, and the tackling of localised graft and corruption was all but absent in Pakistan’s schema. Reconfiguration of concerted urbanisation plans for Pakistan’s underdeveloped Western provinces targeting the creation of smart city clusters with effective liberalised internal market structures have not yet seen the light of day. Planning Commission’s entire effort in industrial capacity building is focused on the promised provision of industrial real estate with tax incentives. Neither were there efforts made for the consolidation of key primary economic industries to prepare them for the inevitable competition they would face from Chinese entrants, disproportionally larger than their Pakistani equivalents, sometimes even collectively.

Read more: CPEC: Is the sovereignty of Pakistan being compromised?

With CPEC energy infrastructure rivalling the West-East Pipeline complex, there were no proposals to consolidate downstream and midstream energy companies to prepare for competition from some of the largest private companies in the world. While NDRC proposed and implemented the shift towards sustainable energy security for China while enhancing indigenous resource utilisation, Pakistan’s energy efforts had vanity flagship projects that were badly conceived and entirely unfeasible in terms of economic viability and sustained local resource utilisation; Gadani power park is perhaps the starkest example of this folly.

Integrated communication networks are all but absent from Pakistan’s portfolio of efforts the only exceptions are the much publicised optical fibre connection, an entirely Chinese initiative, and the auction of licenses. Pakistan has seen absolutely no progress in the liberalisation of internal markets and despite the passing of three years no mechanisms are yet in place, or proposed, to incentivise, capture and formalise latent wealth and capital within city-regions along the future CPEC routes. No city or district based investments funds have graced the Pakistan Stock Exchange, one that is repeatedly cited for its ever rising index. SOEs have not been provided independent boards and made market competitive and no real effort has been constituted to monetise state assets that are at best underutilised and at worst dormant.

Despite the fact that many lawmakers and politicians from the opposition parties were participants in the NTCIP and CAREC corridor discussions with China over the past near-decade, government utilised the commission, chiefly through the office of its Chairman, to hint at and then defend amended work schedules, financial allocations and re-prioritised projects.

No cities have been earmarked, let alone begin their transformation, into innovative clusters of new technology industrial zones, be that information systems, bio-technology or energy technology. Despite historic rises in government debt, both foreign and domestic, no efforts were made to institute regional bond markets to fund district based infrastructure and energy projects to seed regional industrial growth. Pakistan is yet to see any efforts on the enhancement of its current workforce in technical and vocational skills that would be required to compete with Chinese rivals in the near future, let alone capture the large pool of unutilised labour of inevitable financial migrants that Pakistan’s current private sector can neither absorb nor has any real incentive to do so.

What however the Planning Commission has managed to do over the three years is to increase disharmony over the proposed project among the federating units of the country. Despite the fact that many lawmakers and politicians from the opposition parties were participants in the NTCIP and CAREC corridor discussions with China over the past near-decade, government utilised the commission, chiefly through the office of its Chairman, to hint at and then defend amended work schedules, financial allocations and re-prioritised projects.

Read more: CPEC: Pakistan’s economic development or China’s Imperialism

More publicity , less preparation

While NDRC was busy maximising the potential benefits of the trade corridor, Planning Commission of Pakistan was being used as a political tool for a heavily funded media campaign highlighting the ‘vision’ of Pakistan’s executive in a seemingly successful election campaign for 2018.

When the 11th Five Year Plan was being formulated much of Central and Western landscape was under the near unchallenged rule of ‘the party’, personified by the periodically local political official, in essence no better economically or politically than the oft lamented interiors of Punjab and Sindh.

While China’s NDRC has been preoccupied with this holistic approach, Pakistan’s Planning Commission has been the conduit for a government stuck in its favourite fallacy of development equals borrowing to build infrastructure. It is not public infrastructure that feeds into urbanisation, but roads, bridges and railway-tracks. The aim here is not networking industrial basins or reducing the logistical contingent of service provision costs; that would be sensible even if unwarranted. Pakistan does not do urbanisation, it however is masterful in urban sprawl. Here to the contrast in the two approaches speaks to the eventual results of CPEC.

NDRC saw the urbanisation of China’s Central and Western population as the great potential, latent to date, that required channelling. When the 11th Five Year Plan was being formulated much of Central and Western landscape was under the near unchallenged rule of ‘the party’, personified by the periodically local political official, in essence no better economically or politically than the oft lamented interiors of Punjab and Sindh. When the 13th Five Year Plan was being inked, swathes of this largely rural middle-kingdom had been dragged into the late 20th century with increased urbanisation, industrialisation and an exceptional rise in human development factor. It must be said that in terms of genuine political freedom there has been little to show for both in China’s western regions or in Pakistan’s interiors of Sindh and Punjab.

Read more: CPEC and Pakistan’s road to development: Can India sabotage the plan?

China’s aim for the Central and Western region is the creation of a network of city-clusters through ‘people-centric’ urbanisation that delivers sustainable prosperity and enhanced standard of living which ties economic progress into industrial production driven by innovative research and entrepreneurship. This entire sentence is an anathema in Pakistan. This is not because the various ideas and aims stated in this sentence are alien to Pakistanis or have never been stated ‘categorically’ by the few remaining independent thinkers in Pakistan. Similar ideas and aims, along with a possible road map to achieve them, was presented by the very government department that today seems unable even to unequivocally state what geographical route the much celebrated CPEC corridor would take.

CPEC will be beneficial for Pakistan and for China but the rewards that China will reap will be exponentially disproportionate than what will fall in Pakistan’s lap.

The very Planning Commission of Pakistan that worked on and produced a near seminal document titled the Framework for Economic Growth (FEG) has today been reduced to the bumbling propaganda arm of his majesty the Prime Minister’s ‘vision’ which seems so expansively visionary that it is impossible to articulate laconically.   

To conclude, CPEC will be beneficial for Pakistan and for China but the rewards that China will reap will be exponentially disproportionate than what will fall in Pakistan’s lap. CPEC will help China boost its regional trade and provide market to its SOEs as well as private companies while Pakistan companies will vie for limited joint ventures and agencies that has the potential to reduce them to either subsidiaries in all but name or, worse, mere brokerage houses for financial extraction from Pakistan’s economy.

Read more: Making a success story out of CPEC: Certain, probable, or doubtful?

Chinese energy companies will successfully increase their footprint and gain a relatively economical point of access to fend off the spectre of their state’s Malacca Dilemma while Pakistani companies will ride their coat tails due to a lack of industrial consolidation, available skilled workforce and adequate monetisation of Pakistan’s latent economy. China’s western regions will see an exponential increase in their economic growth that might rival the early growth of the coastal region, going some way to bridging the gap and inequality. The incidental growth that Pakistan sees will be enough to populate the power-point presentations, so adored by Pakistan’s civil service, showing how the Prime Minister’s brainchild, his vision, has led to an additional 2% or 3% growth. That is, in a way, quite an appropriate note to end on.

CPEC’s economic propulsion will manifest itself as a duality. For China it will become ‘real’ while for Pakistan it will remain a ‘vision’.

The writer is a former management consultant focusing on the Energy Industry and writes on Energy Security and the politics of Energy Resources. He is conducting research related to role of Central Asia’s energy resources in China’s Energy Security at the University of Westminster, UK. The views expressed in this article are the author’s own and do not necessarily reflect Global Village Space’s editorial policy.

Saeed Afridi is a former management consultant focusing on the Energy Industry and writes on Energy Security and the Politics of Energy Resources. He is conducting research related to the role of Central Asia’s energy resources in China’s Energy Security at the University of Westminster, UK.

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