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Is CPEC detrimental for Indo-Pak ties?

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News Analysis |

The multi-billion dollar China-Pakistan Economic Corridor (CPEC) will deepen China’s already formidable presence in the South Asian nation, and “aggravate” tension between India and Pakistan, a US think-tank stated. The report is one of the latest to comment on the future impact of the game changer project.

“CPEC will deepen China’s already formidable presence in the country and clearly aggravate India-Pakistan tensions. In addition, real questions persist about Pakistan’s ability to finance its share of new energy investment,” Michael Kugelman, deputy director and senior associate for the South Asia Program at the Wilson Center said in a report.

With the supply of raw material from China becoming easier, Pakistan will be suitably placed to become a regional market leader in these sectors – mainly at the cost of Indian export volumes.

“Stability in Pakistan’s security situation and economic performance is increasingly in critical interest for Beijing because it is a precondition for CPEC’s success. Given New Delhi’s strenuous opposition, CPEC will exacerbate India-Pakistan tensions,” Kugelman wrote.

Kugelman was also apprehensive of the impact CPEC would have for the US. CPEC cements the already deep presence of Washington’s top strategic competitor in a region where the US has a much lighter footprint, he said.

“The project also generates additional obstacles for the Indian efforts to access markets and natural gas reserves in Central Asia — a region that India cannot reach directly by land because Pakistan denies its transit rights on Pakistani soil,” he said.

Read more: US is not against CPEC: An Indian view?

According to Kugelman, the similarity between the narrative of Beijing and Islamabad was due to its stakes in the project. As per the report, CPEC is in some ways a test case of the Belt and Road Initiative (BRI) because it includes some of the initiative’s first projects to become fully operational.

With the logistics of cost and transit time coming down, Pakistani exports can potentially gain an international market, posing serious competition to Indian firms and handicraft manufacturers that rely largely on overseas consumers.

“Privately, however, China worries about the security risks to CPEC, even as terrorist violence has subsided in Pakistan since 2014, when the Pakistani military launched a major counterterrorism offensive,” the report said, adding that many of the attacks that have taken place since then have occurred along or on envisioned CPEC routes in Baluchistan.

Separatist sub-nationalist terrorists have targeted energy infrastructure in the province for a number of years and remain an active threat. There was also the threat of organized crime to CPEC projects in Punjab. One such outfit, known as the Chotu Gang, abducted 12 Chinese engineers working on a highway project in Punjab back in 2005.

CPEC has emerged as a new point of contention in the already tumultuous Indo-Pak relations. The ties between the two nations have been wracked by tensions since Independence due to the Indian occupation of Kashmir.

The highly anticipated $54 billion economic corridor in Pakistan that connects the Xinjiang region in western China with the southern Pakistan port of Gwadar is gradually rolling off operations, with the Chinese cargo being loaded onto the merchant vessels docked at the port.

Read more: Why is India doing propaganda against CPEC?

With a whopping $11 billion investment in rail and road infrastructure and $33 billion in energy and power generation projects – largely financed by Chinese state-owned institutions – this project is being seen as one of the biggest investments made by China. It’s a project that could usher in a new era of economic development in Pakistan.

The highly anticipated $54 billion economic corridor in Pakistan that connects the Xinjiang region in western China with the southern Pakistan port of Gwadar is gradually rolling off operations.

India has initially raised objections on the route of the CPEC project which runs through Gilgit Baltistan, a territory that it claims as its own. However, Indian paranoia seems to stem from other reasons. According to a report released by the Stockholm International Peace Research Institute – a Swedish-based think-tank – India’s opposition to CPEC reflects a concern over the internationalisation of the Kashmir dispute and the growing influence of China in the Indian Ocean.

Another reason of Indian opposition is economical. CPEC can potentially change Pakistan into a formidable challenger of India on the economic front. The development of commercial towns adjoining the corridor and better rail and road connectivity enabling the movement of a skilled workforce from rural areas to the urban centers can help Pakistan emerge as a key destination for contract-manufacturing-outsourcing for the West.

This is more probable at a time when India is becoming costlier and Bangladesh has performed poorly on quality and regulatory standards. With the logistics of cost and transit time coming down, Pakistani exports can potentially gain an international market, posing serious competition to Indian firms and handicraft manufacturers that rely largely on overseas consumers.

Read more: Are Indian fears about CPEC related to Kashmir issue?

Pakistani exports, mainly in the textile and construction material industry, compete directly with those of India in the US and UAE – two of the top three trading partners of both countries. With the supply of raw material from China becoming easier, Pakistan will be suitably placed to become a regional market leader in these sectors – mainly at the cost of Indian export volumes.

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