China Pakistan Economic Corridor: Re-Aligning Realities.docx

S. Kalyanaraman, "Rethinking India's approach towards Pakistan-occupied Kashmir," Institute for Defence Studies and Analyses, May 3, 2016, http://idsa.in/idsacomments/rethinking-indias-approach-towards-pakistan-occupied-kashmir_skalyanaraman_030516)


March 2017







China Pakistan Economic Corridor: Re-Aligning Realities

Haris Zargar









The article first appeared in The Mountain Valley magazine, and can be accessed here: http://mvkashmir.com/2017/03/21/china-pakistan-economic-corridor-re-aligning-realities/

Introduction:
What does the China-Pakistan Economic Corridor (CPEC) mean for Kashmir, and how does this bilateral venture between China and Pakistan alter the geo-economic alignment of South Asia? Why does India feel troubled, and oppose this undertaking? Not surprisingly, these questions have, so far, thrown wide-ranging suggestions and predictions most of which remain somewhat sketchy and provided little evaluation as to what the CPEC really entail. From being termed as a 'game changer' for Islamabad and Beijing, to being designated as 'unviable' - mostly by Indian experts - the ambitious undertaking has left analysts bewildered and scratching their head over its possible spillover, especially on the regional wars and conflicts like the Kashmir dispute. Interestingly and quite possibly, however, the mystery of unraveling the implications of the CPEC may well lay in the analysis of these narratives around this undertaking, and through the examination of the nature of renewed Sino-Pak engagement.

One Belt, One Road (OROB) and the CPEC:
In an era of transnational interdependence, economic corridors are critical instrument of regional partnership and development. Such corridors are aimed at invigorating economic activities through the establishment of industries, social facilities in conjecture with enhancing telecommunication infrastructure, energy pipelines and tourism activities along the corridors.
First conceived in 2014 on similar lines, the CPEC is an extension to China's proposed 'Silk Road Economic Belt and the 21st-century Maritime Silk Road' also known as 'One Belt, One Road' that envisages rebuilding the erstwhile 'silk-route', and aims at developing China's connectivity across the Eurasia. In April 2015, Beijing and Islamabad signed the landmark agreement under which China proposed to invest an estimated 51 billion USD to built Pakistan's energy and transportation infrastructure. Set to complete by 2030, the CPEC is a 3,000-km-long transportation corridor connecting Kashgar in China's Xinjiang to Gwadar in Pakistan. Beijing's investments will also include the construction of an optical fiber cable between the two nations. Interestingly, one of the least publicized aspects of this arrangement is Islamabad's purchase of eight diesel-powered attack submarines.
Analysts note that the undertaking has strategic and economic significance for China, while for Pakistan the massive foreign investment is a much-needed respite for its derailed economic situation and security. Noted China expert, Andrew Small emphasizes that Beijing's alliance with Islamabad operated largely within a South-Asian security context, mainly to counter-balance India at the expense of providing Pakistan diplomatic and military capabilities. "This shared strategic framework, and the ensuing cooperation on sensitive military and intelligence issues, has resulted in an unusual level of trust between the two sides. Although the relationship expanded well beyond its original India-centric rationale, it has still been underpinned and conditioned by this guiding logic."
This strategic equation, however, now seems significantly ameliorated with many suggesting that the CPEC marks a transition in China's partnership with Pakistan. Some observers argue that the undertaking is a reflection of intensified and expanded bilateral cooperation at a time of rising Chinese geopolitical ambition, and Beijing's persistent concerns about Pakistan's security and development. Micheal Kugelman, who is a senior associate at Washington's Woodrow Wilson Centre, asserts that China is not funding the CPEC out of emotion or 'Charity for Pakistan'; rather it is in Beijing's critical harmony with its geostrategic goals. Highlighting these ambitions, former Indian Diplomat M K Bhadrakumar notes that Islamabad is becoming China's gateway to the world energy market, which in geopolitical terms has profound implications. The Sino-Pakistan relationship, he argues, is assuming a centrality in Chinese foreign policies that it never would have reached historically.
As such, not surprisingly, this invigorated geo-economic and military partnership between Pakistan and China through the CPEC has drawn opposition from India, which perceives the project detrimental to its geostrategic ambitions. Chinese scholar Alvin Cheng-Hin Lim argues that Delhi shall remain a geostrategic threat to the CPEC. Other analysts also believe that the proposed project would further complicate the China-India relations in wake of India's attempts to blockade Karachi or Gwadar in Indian Ocean, and China becoming Pakistan's principal arms provider.
India's Dilemma's, Opposition and Strategy:
Unlike most countries in South and Central Asia, India has expressed its displeasure over the CPEC, conveying to Beijing that the project was 'unacceptable' since it passed through Pakistan-administered Kashmir. The CPEC has seemingly created paranoia in Delhi, which sees the project as a threat to its sovereignty, and a major strategic challenge to its 'hegemonic' ambitions in the Indian Ocean, Arabian Sea and the Persian Gulf. According to some observers, India fears that the growing Sino-Pak cooperation as an attempt to contain India's clout as a regional power, and it perceives projects like the CPEC as an effort by Beijing to further its expansionist agenda and to achieve a strategic encirclement of India.
One of the major arguments used against the economic viability of the CPEC is the ability of Pakistan to pay the Chinese loans given under CPEC investments at higher interest rates. Using the European Recovery Plan or famously known as the Marshal plan that also involved the US extending lines of credit and assistance for Western European economies, Indian analyst Arun Mohan Sukumar argues that financial viability is not necessarily the sole determinant of the CPEC's future, but Beijing's strategic relationship with Islamabad, and its continuing quest to underwrite strategic parity between India and Pakistan in South Asia, would contribute to the CPEC's longevity.
Pertinently, India faces rising energy demand compelling Delhi to pursue a robust energy security strategy, and Central Asian nations remain critical to meet its energy needs. However, with Pakistan refusing to allow India a direct transit to the Central Asian energy resources, and now the CPEC providing a direct land route for Islamabad to the CARs, India feels left out in this rising energy scheme, and thus remains visibly troubled over the project. India had initiated its 'Connect Central Asia' policy in 2012 to counter the growing Sino-Pak influence in the region and sought to engage Iran and Afghanistan. Since international sanctions against Iran were lifted, India's cooperation with Tehran increased with Delhi investing to develop the Chabahar port. While, this potentially allows India and Tehran to circumvent Pakistan by opening a route to landlocked Afghanistan where it has developed security and economic ties. However, Iranian ambassador Mehdi Honerdoost disclosed that Chabahar was initially offered to Pakistan and China, but those latter were 'disinterested' in the project, adding that the port was not being developed as a rival to Gwadar. Tehran further suggested that it is interested in Chabahar because this port would help the country develop its poor Sunni-dominated Sistan province; improve its infrastructure; and exploit India's growing markets.
India has also continued its robust engagement with post-Taliban Afghanistan, with the aim of increasing its strategic depth in the country, and to undermine Pakistan's ability to block Delhi's access to Central Asia. India remains the fifth largest bilateral donor to Afghanistan after the US, UK, Japan, and Germany. Such investments have been only viewed as an attempt by Delhi to counter Sino-Pak's increasing role in the war-torn country. Despite such robust engagements both Tehran and Kabul has expressed its interest to join the CPEC. This swiftly prompted India to engage the Gulf States, particularly the UAE. The UAE has apparently joined the Indian's anti-CPEC bandwagon, since the Dubai port faces the prospect of losing up to an estimated 70 per cent business to Gwadar. India and UAE have created an infrastructure investment fund that aims to support India in building its infrastructure. In turn, the UAE will facilitate the participation of Indian companies in infrastructure development within the Emirate state. But how does this alliance provide any tangible prospects, or substantive geo-economic results in wake of growing Sino-Pak economic and military cooperation remains unclear.
For China's ensuring Pakistan economic and security stability has become imperative, if Beijing has to expand its transportation, maritime and geostrategic connectivity across the Indian Ocean, Arabian Sea and Persian Gulf, and all the way into Middle Eastern and African markets. Pakistan has become pivotal for Chinese geo-economic and military expansion against the US interest, just like Western Europe had become for the Americans to check the Communist Eastern Europe and Russia in post-second world war era. In this emerging scenario, Pakistan's economic prospects are likely to grow both domestically and internationally through its geo-economic integration with Middle and Central Asian states. An economically belligerent Pakistan will not only be militarily assertive that would be detrimental to India's territorial and regional ambitions, but can isolate India through geo-economic segregation with China's backing. The resurgent Pakistan can then force India to join the negotiation table over various conflicts including solving the Kashmir dispute.
Kashmir: CPEC's spillover effect?
Kashmir remains a critical component of the CPEC project since the corridor's alignment passes directly through Pakistan's Gilgit-Baltistan (GB) region, part of disputed Jammu and Kashmir claimed in whole by both New Delhi and Islamabad. The region is considered as the main access point in to Pakistan from China through Xinjiang. Despite the CPEC planned to pass through the region, there are no proposed hydropower scheme, economic zone, or infrastructure development plan under the project due to the impending dispute.
Stuck in a legal stalemate, the Pakistan government chose not invite any representative from the region for any meetings on the multi-dollar project. This legal vacuum raised apprehensions both within Pakistan and China that if the constitutional cover is not granted to GB, it could cause serious troubles to the CPEC project. There have been growing demands within Pakistan to grant the constitutional status to the region with even China insisting on grant the constitutional status to GB region so as to provide it a legal cover for its investments under CPEC. However, providing GB a provincial status remains a tough choice for Islamabad, as there are concerns within Pakistan that India may use the pretext to validate its claim on the Kashmir region, under Delhi's control, through similar constitutional process.
Highlighting that it is a question of India's sovereignty, New Delhi has continuously raked up the issue with both Pakistan and China, stating that CPEC project in the GB region was unacceptable. Former Indian Chief of staff and Indian analyst Gen (retd) NC Vij argues that India concerns are not merely because the CPEC is seen as an encircling strategy, but also since Chinese involvement and investments in GB and AJK disturbs the status quo by making a material and substantive change in a territory over which India has a solid claim. To counter what they see as China's geostrategic advancements through its CPEC, some Indian policymakers have recommended the military takeover of GB and the rest of Pakistan administered Kashmir. By capturing the contentious territory, Delhi they argue can establish "a direct land link to Afghanistan and thence to the Central Asian Republics, both of which are increasingly falling into the Chinese sphere of economic and political influence."
In such scenario, some Chinese analysts believe that Beijing would find itself dangerously entangled in a likely nuclear exchange between the two neighbors in case a fighting breaks out over Kashmir, and may prompt it to act. If Beijing perceives the current legal and constitutional limbo regarding GB as an obstacle to its economic ambitions, it may seek to force a resolution on the dispute. As such building of infrastructure remains a strategic military asset for the PLA, which can be used to support troop movements all the way up to the Afghan border or towards the LoC in wake of any security threat rising in the proximity of corridor. It must be understood that in the security paradigm, the construction of economic gateways are not merely viewed as the development of transportation infrastructure for goods supply, but is also regarded as a critical part of a nation's military and geo-economic logistics. The Sino-Pak engagement over the CPEC, in this framework, also revolves around four common sectors that include economic cooperation, energy, security and geostrategic interests. The Sino-Pak economic and military engagement between Beijing and, thus, also allow Islamabad to consolidate its position in GB and AJK, and becomes detrimental to the territorial claims of New Delhi.
Pertinently, there was a political belief within the Indian polity and policymakers that with India's economy growth, Pakistan would be compelled by business and commercial logic to engage with India, and that any trade strategy will follow a North-South alignment towards India. It had allowed India gain a greater advantage over Islamabad for the best part of previous two decades. However, by embracing the east-west corridor through CPEC, Pakistan is not just abandoning its north-south trade alignment but also turning its back on the subcontinent and on South Asia. It sees itself as culturally in West Asia and strategically as located within the Chinese politico-economic zone. This means that irrespective of how impressively India's economy grows in the coming decades, not only Pakistan but also the Central Asian states will not be interested in a South Asian economic linkage or integration.
In this context, Kashmir has also historically found itself aligned with countries on its western and northern geographical borders towards China, Afghanistan and Tajikistan. However, with the existing borders effectively forcing it to shun this geo-economic alignment for the past seven decades, and pushing it to follow a North-South alignment towards India, the region will seemingly not yield any significant economic benefits in wake of closed and impervious natural border. Nonetheless, there is also a belief among some scholars that the CPEC can inversely act as a bridge between Pakistan administered Kashmir and India administered Kashmir, and can have a spill over effect on the fragile economies of these two conflict-ridden zones. But, this prospect is massively entangled with the India-Pakistan relations.
Mostly importantly, the CPEC seem to have altered the geopolitical and geo-economic realignment in South Asia, with most nations in the region reassessing their current bilateral and multilateral relationships. The project seem to have set in motion process of connecting different Asian regions into a singular transnational entity that potentially increases their mutual dependence, this form of economic cooperation has the prospect of defusing impending conflicts, promoting regional integration and enhancing security. However, it is important to underline that the CPEC is principally an economic initiative, which cannot be a complete substitute for social, political and diplomatic processes. Using the project as a tool to bring social and political stability also remains a far-fetched idea.
With Beijing taking a central role in addressing Islamabad's security challenges both internally and externally. Apart from providing Pakistan with latest military technology and arms, Beijing has constantly backed Islamabad diplomatically at international forums. China has appeared steadfast to ensure that the CPEC is completed, which has reassured Islamabad. The prospect may allow the US to make a swift exit form the region. This geopolitical standing will effectively leave out India from an emerging geopolitical alliance with China, Pakistan and Russia as its principal drivers. India is effectively left with two options: Hope its predictions that the CPEC projects become nonviable to sustain the interest of Chinese investors in the long run comes true, or remain a fence watcher as the new geopolitics reality unravels. The latter seems more likely.