• Tue. Oct 19th, 2021

In Pakistan, CPEC could restart despite corruption scandal

ByDiane A. Gomez

May 7, 2021

After a series of setbacks, the China-Pakistan Economic Corridor, a multibillion-dollar assortment of infrastructure projects that forms the Pakistani component of Beijing’s Belt and Road Initiative, is on the verge of death. a resurgence. Where is it? Pakistani investigative news site last month FactFocus published a damning talk about Asim Bajwa, the head of a government body overseeing the CPEC. He claims that Bajwa’s family has developed a vast business empire overseas, without declaring many of these assets. The allegations come at an inconvenient time for Islamabad, just as he is trying to right the CPEC ship.

Launched in 2015, CPEC is a logical partnership for China and Pakistan, two close allies eager to cooperate on much-needed infrastructure projects in Pakistan, while contributing to China’s strategic goal of facilitating access to distant markets and expand its global footprint.

However, when Prime Minister Imran Khan and his Pakistani party Tehreek-e-Insaf took control in 2018, the Belt and Road initiative came under increasing criticism. global criticism for a lack of transparency, for overwhelming host countries with high debts and for questionable investment practices which included excessive use of imported Chinese labor.

Resistance to CPEC has emerged even in Pakistan, where public sentiment is strongly pro-Chinese and the media is pressured not to criticize the high-stakes initiative. There was particularly strong opposition from marginalized communities in underdeveloped areas of Sindh and Balochistan provinces. They feared that CPEC projects would displace residents and exploit valuable natural resources. Khan also inherited a severe debt crisis from the previous government, led by the Pakistan Muslim League-Nawaz party, which heightened concerns over Pakistan’s lack of fiscal capacity to handle Chinese loans.

In the first weeks of his tenure, in the summer of 2018, Khan’s government telegraphed its own concerns. In a revealing Financial Times interview, Prime Minister’s investment adviser Abdul Razak Dawood blamed the previous administration for negotiating unfairly advantageous terms for Chinese companies. “I think we should put everything on hold for a year so that we can pull ourselves together,” he said.

Razak later claimed he was quoted out of context, and other senior officials insisted that Islamabad was not delaying the project. However, the risks of Chinese investments became more evident in April, when a Pakistani government commission examining the high costs of electricity in Pakistan released an report highlighting how independent Chinese power generation projects have been mired in corruption.

That same month, the Center for Strategic and International Studies in Washington released a report showing that only about a quarter of the 122 announced CPEC projects– valued at $ 20 billion out of nearly $ 90 billion in total funding – had been completed.

And yet, despite all the bad press and setbacks, recent indoor and outdoor developments are breathing momentum into CPEC, positioning it for a resurgence. In October 2019, President Arif Alvi issued an ordinance establishing the CPEC Authority, a coordinating body to streamline the initiative’s policy-making process. Under the leadership of Bajwa, a recently retired lieutenant general, the CPEC Authority has enabled the powerful Pakistani army to exercise more control over the CPEC, which it fervently supports. The CPEC Authority may not democratize its projects, but by appointing the most qualified people to manage it and ensure that it stays on track, it can make CPEC more effective.

Following this institutional restart, the CPEC accelerated its operational plans. Chinese Ambassador to Pakistan announced a “second phase” of the program last fall, who started implementation in January, with an emphasis on special economic zones and agricultural investments. This summer, the two countries signed $ 11 billion in new agreements, including a $ 7 billion renovation of Pakistan’s colonial-era rail infrastructure. Pakistan’s recent success in containing its COVID-19 outbreak means that those responsible will have a large political bandwidth to build these projects and future ones.

Amid recent indications that the situation of the CPEC is improving, Pakistanthe government unsurprisingly sought to sweep a corruption scandal under the rug.

New geopolitical realities further fuel the resurgence of the CPEC. A fatal border standoff between China and India in June plunged relations between the two countries to their lowest level in decades, further prompting Beijing and Islamabad to redouble their efforts on a project fiercely opposed by New Delhi. Indeed, one of the new investments announced this summer concerns nearly 4 billion dollars of hydropower projects in Kashmir under Pakistani administration, a region claimed by India.

There are other potential opportunities to expand CPEC to other countries, although they are still far away. China reportedly close to signing strategic partnership with Iran this implies Chinese infrastructure assistance for Tehran. This raises the possibility that Beijing could help develop Iran’s strategic port of Chabahar in the Gulf of Oman, a project India had committed to until the escalation of US sanctions against Iran. question the role of New Delhi– and possibly link it to the port of Gwadar in Pakistan, a key CPEC initiative just 45 miles from Chabahar. In addition, the deepening of Islamabad’s relations with Turkey and Russia could get these countries to contribute to the project. Finally, the recently launched Afghan peace talks raise the possibility of a possible settlement allowing the CPEC to expand into a more stable Afghanistan.

Of course, the CPEC still faces major challenges. Recent attacks on Chinese interests in Pakistan, and one new alliance between violent Sindhi and Baloch nationalists opposed to the CPEC, underline the security risks. the Pakistani economy, despite some encouraging signs, remains highly stressed. Old issues like opacity, debt risks and questionable investment practices persist.

Then there are the allegations against Bajwa. The FactFocus report, written by Pakistani journalist Ahmad Noorani, alleges that Bajwa’s family oversees a business empire of 99 businesses in four countries, including the ownership of 133 Papa John’s pizzerias valued at nearly $ 40 million. He also claims that Bajwa said in an official statement in June – just weeks after being appointed to an additional post of Khan’s special assistant for information and dissemination – that neither he nor his wife had any assets. outside of Pakistan.

Bajwa denied the report’s allegations, calling them “baseless”, yet he recently announced his resignation from his post as Khan’s Special Assistant, while retaining his post at the CPEC Authority. However, in a notable twist, Khan rejected Bajwa’s resignation, and he continues to serve in both roles.

Amid recent indications that the CPEC situation is improving, Islamabad has unsurprisingly sought to brush the scandal under the rug. Khan’s government dismissed the allegations against Bajwa as propaganda and, in the words of a post on the ruling party’s official Twitter account, “a heinous plot against Pakistan”. Indeed, thanks to India’s deepening relations with Pakistan and China, Islamabad can conveniently – and, in the eyes of many Pakistanis, convincingly – declare that these allegations are nothing but an orchestrated plot. by India to undermine CPEC. Pakistan’s compliant media helped with little coverage of the allegations.

The government has other reasons for keeping the allegations out of public view: to protect the Pakistani military from responsibility for its economic empire and to ensure that the CPEC continues to be seen as sacrosanct in a country where it is. rarely publicly criticized.

Given the many well-documented cases of laxity and opacity in China’s overseas infrastructure investments, it is not good that the senior Pakistani official charged with overseeing CPEC’s investments is mired in a scandal of corruption. Optics are also problematic for Khan and his party, which has a strong anti-graft platform.

With all that is at stake, Islamabad can hardly afford to let an untimely distraction turn into a crisis in its own right. Pakistani leaders will therefore ensure that a troubled but critical infrastructure initiative maintains its new momentum.

Michael Kugelman is Deputy Director of the Asia Program and Senior Associate for South Asia at the Woodrow Wilson International Center for Scholars in Washington, DC

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