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China–Pakistan Economic Corridor : News & Discussions

Discussion in 'South Asia & SAARC' started by Agent_47, Nov 16, 2016.

  1. VCheng

    VCheng RIDER GEO STRATEGIC ANALYST

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    Every society has its problems as no one is perfect. It is how those problems are dealt with that is the key.
     
  2. AbRaj

    AbRaj Captain FULL MEMBER

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    I mean I have seen him in a lot of debates with these evil Hindus. How could one sit beside the these (evil Hindu) and talk with them ,if he had so much of hate for them "Evil Hindus"
     
  3. VCheng

    VCheng RIDER GEO STRATEGIC ANALYST

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    Hatred is only a refined by-product of ignorance, so both together explain the pathologies on display very well.
     
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  4. AbRaj

    AbRaj Captain FULL MEMBER

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    Yeah well good for a country if this hate helps it to keep alive and united.
    We are almost accustomed to it.
    Sir BTW what is you're view of TNT(two nation theory). Isn't it the same insecurity and hate we are seeing today?
    To me its more or less same thing otherwise they should have tried to live with us like others
     
  5. VCheng

    VCheng RIDER GEO STRATEGIC ANALYST

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    We can discuss TNT in another thread (pun intended). :D
     
  6. AbRaj

    AbRaj Captain FULL MEMBER

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    Sure:mrgreen:
    We are off topic
     
  7. Grevion

    Grevion Think Tank TROLL ELITE MEMBER

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    This thread on CPEC is really underrated. How come we only have 4 pages of discussion on the biggest economic activity ever on mother earth.:mrgreen: We seriously need to up the ante....we need constant updates on the projects and their financial viability..... Ahem ahem....i mean financial success stories.
    Are you up for it @VCheng
     
  8. VCheng

    VCheng RIDER GEO STRATEGIC ANALYST

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    I am up for anything, but I thought we were above being mere puppets of state policy (and remember what puppets have shoved up their rears) in this forum :D

    CPEC will be a success as a military logistics channel, but the center of world trade it will never be.
     
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  9. Grevion

    Grevion Think Tank TROLL ELITE MEMBER

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    Way to shatter young man's dream V.:(
    I thought it will be the next Suiz Canal of the world connecting Arctic to the Arabian.
     
  10. VCheng

    VCheng RIDER GEO STRATEGIC ANALYST

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    That line earned me a thread ban too. Truth hurts, apparently. :D
     
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  11. Grevion

    Grevion Think Tank TROLL ELITE MEMBER

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    I got a week ban for just uttering "Thank You". Although it wasn't a very right place and time to say that.:mrgreen:
     
  12. VCheng

    VCheng RIDER GEO STRATEGIC ANALYST

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    Oh come now, there is complete freedom to choose whatever style of green colored goggles you may wish to choose - complete freedom - to see the benefits of CPEC. :D

    For those of us who insist on using their own faculties to see, not so much. From Gawadar Port to Sost Dry port and all points in between, CPEC is another commercial venture for Military Inc. in the making, with security paid for by the hapless consumers. The nation pays the costs, the military reaps the benefits. Nice gig!
     
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  13. Grevion

    Grevion Think Tank TROLL ELITE MEMBER

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    Well i simply said - thank you China! on the babar 3 "submarine" launch thread and now i am banned. I wonder why.....after all it is good manners to thank your friends.... Isn't it??:):angel:

    Oh yes..it's not the nation that has a military to feed instead it's their military who has a nation to feed.
     
  14. AbRaj

    AbRaj Captain FULL MEMBER

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    That's hilariously true:lol::lol::lol:
     
  15. NS52

    NS52 MILITARY STRATEGIST

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    The very idea of war at times is not worth it. I am not a coward but rationally there are events taking place which will play an important part in downfall of Pakistan.
    CPEC is a 3,218 kilometer long route, to be built over next several years, consisting of highways, railways and pipelines. The actual estimated cost of the project is expected to be US$75 billion, out of which US$45 billion plus will ensure that the corridor becomes operational by 2020. The remaining investment will be spent on energy generation and infrastructure development.
    It is estimated that if all the planned projects are implemented, the value of those projects would exceed all foreign direct investment in Pakistan since 1970 and would be equivalent to 17% of Pakistan's 2015 gross domestic product.
    The project surrounded by all optimism yet cannot be totally perceived without apprehensions. Government of Pakistan (GoP) claims to revive Diamer-Bhasha dam on Indus River in Gilgit –Baltistan, in the second phase of CPEC, resulting in the production of 4500MW of electricity in addition to serving as a huge water reservoir for the country, which being authenticated by Asian Development Bank (ADB), Gilgit-Baltistan has the potential to produce nearly 50,000MW of energy. Just Bunji Dam, a run-of-the-river project that the ADB has invested in, has the capacity to generate up to 7,100MW electricity when completed. The question being raised in the mind of the commoners are when by building hydro projects Pakistan can safely import energy and will have enough to use it for its development also why construct an expensive 750km transmission line? There is also the fear that the CPEC may lead to widespread displacement of the locals. “Of the 73,000 square kilometers, cultivable land is just 1pc. If that is also swallowed by rich investors from outside, we will become a minority and economically subservient once there will be no farmland or orchards left to earn our livelihood from," Hunzai –a local businessman expressed concern while talking to Giligit Times.
    Not only by the local businessmen but serious concerns have been raised by various sectors and many political parties on the opaqueness regarding the project. “CPEC is not the problem. It has just highlighted the imbalance in provinces with the largest one, Punjab, being seen as favored specially as far as investments on road infrastructure are concerned and fueling bitterness among the rest of the three provinces,” repented Vaqar Zakaria, energy sector expert and managing director of environmental consultancy firm Hagler Bailley Pakistan. Justifying the parity it is clarified by GoP that of the US $46bn, between $35bn to $38bn were earmarked for the energy sector– of this, $11.6bnwill be invested in Khyber Pakhtunkhwa, $11.5bn in Sindh, $7.1bn in Baluchistan and $6.9bn in Punjab.12Repeated assurances of the Federal Government as to the parity of the project and that no province or region of the country would be discriminated in CPEC, doubts still remain as to its fair allocation.

    The CPEC deal grants the Chinese 40-year operation rights to the port. This is hugely significant for Beijing because it will allow China to ship some of its oil coming from the Persian Gulf to that port and pump it through the pipelines to western China. Accordingly, with a transport route some 6,000 miles shorter, China will be able to save billions in transport costs and saved time. Indeed, Pakistan in general and Gwadar in particular will be playing a critical role in China’s joint plans for a Silk Road Economic Belt and a Maritime Silk Road linking China to Europe and beyond.

    At the moment, Gwadar is being developed as a commercial port and not as a facility for the Chinese Navy—yet it could potentially be made into one in the future. Such a development would without any doubt exponentially increase Sino-Indian maritime competition in the Indian Ocean, in keeping with China’s first official defense white paper, published in early 2015, which makes quite clear that the “traditional mentality that land outweighs sea must be abandoned, and great importance has to be attached to managing the seas and oceans and protecting maritime rights and interests.”

    In a move that will strengthen the defense of Gwadar, Pakistan is negotiating with China the purchase of eight diesel-powered, conventionally armed attack submarines. This acquisition, which is reportedly part of the CPEC package, would be one of Pakistan’s biggest weapons purchases ever, at about $6 billion. Pakistan’s possession of such submarines, which are very quiet and lethal, would seriously complicate any Indian attempt in blockading Karachi or Gwadar. This sale would also further entrench China as Pakistan’s principal arms provider. In 2010 alone, Pakistan was the destination for 60 percent of China’s total arms sales.

    China’s economic and military involvement in Pakistan began in the wake of the short 1962 Sino-Indian war, when Pakistan felt that the US had been too quick to sell arms to India without getting any concessions from the Indians on the Kashmir issue. That is when Pakistan started to look elsewhere for international support, notably to China. But the bilateral Pakistan-China relationship really took off during the 1965 Indo-Pakistan war when the US terminated all military aid to Pakistan (and India), while China openly sided with Pakistan and threatened military action against India. Although China’s support for Pakistan during the 1971 Indo-Pakistan war was lukewarm at best, the relationship nevertheless continued to grow in the 1970s, especially in the wake of India’s 1974 underground nuclear test. In the 1980s, China’s relationship with Pakistan deepened with its significant financial support for the Pakistan-based, anti-Soviet Afghan fighters, the mujahedin. In the 1990s, the bilateral military relationship significantly deepened, especially in the field of nuclear weapons and missiles. Today, among other things, China and Pakistan jointly manufacture the JF-17 fighter jet, which will eventually become the Pakistan Air Force’s main combat aircraft.

    This steadily developing bilateral relationship has been intensified by the effective end of major Western, and in particular American, military presence in Afghanistan at the end of 2014. Beijing has quickly seized this opportunity to bolster its long-term economic and strategic interests in Pakistan, making it more than ever the critical land bridge in the development of China’s Silk Road. Accordingly, Chinese leaders have been willing to invest substantially in the development of Pakistan’s decrepit infrastructure, particularly in its roads and energy sector.

    Beijing knows that because of Pakistan’s domestic instability, the CPEC is a huge gamble. But if the project does not come to complete fruition—and there are a number of reasons why it may not—the bilateral relationship will nevertheless be more solid. And if the CPEC does meet all its targets, then China will have opened a cornucopia of advantages, including a link to its already very significant economic interests in neighboring Afghanistan, particularly in copper and oil.

    The election of President Ashraf Ghani in Afghanistan in September 2014 has also influenced the timing of the Pakistan proposal. Since the departure of President Hamid Karzai from the political scene, Afghanistan has turned away from India and has instead embraced China and Pakistan. Significantly, the first capital that the new president of Afghanistan visited was Beijing, not Washington, let alone New Delhi. Under Karzai, who had very poor relations with Pakistan, Afghanistan was drawn more and more into India’s orbit. By the time he left office, Afghanistan had signed the Bilateral Security Agreement with New Delhi, Afghan military cadets were being trained in India, and India was about to provide weapons for the Afghan National Security Forces. To Karzai’s deep chagrin, Ghani put a stop to all these India-friendly activities and instead turned to Islamabad and Beijing.

    This was an intelligent and pragmatic move that made much more sense geostrategically than looking to India for protection. By snuggling up to Islamabad, Kabul is putting pressure on Pakistan to crack down on the Taliban and their allies, who are far from a spent force in Afghanistan. Put differently, Ghani is calling Islamabad’s bluff about its repeated declarations that the Pakistan military would pursue all terrorists without exception or compromise. Ghani knows that Beijing, too, will be putting pressure on Pakistani leaders to deliver on that promise because terrorism, a lot of it originating from Pakistan, is now an issue also affecting China.

    While obviously not publicly stated, the third reason for the CPEC project is to counter the US-Indian rapprochement, which has accelerated since Narendra Modi was elected as prime minister of India last year. It was a process that had already begun under President Bush, who had stated back in 2005 that the US wanted to help India become a great power. But now it has become more insistent. During his visit to India in January 2015, President Obama finalized the July 2005 US-India nuclear deal and renewed the 10-year military cooperation agreement of 2005. Defense Secretary Ashton Carter also signed a defense framework agreement during his visit to New Delhi in June 2015. Much of this rapprochement between the United States and India is driven by China’s aggressive behavior in the South and East China Seas. And this latest Chinese venture in Pakistan will no doubt fuel concerns about China’s military intentions in the Indian Ocean.

    In addition to the enormous construction, logistical, bureaucratic, and manpower challenges, the China-Pakistan Economic Corridor will require the two countries to address two significant security challenges. One is the activity of insurgents in Baluchistan, the large southwestern province where Gwadar is located, and the other is the continued presence of the Taliban and their allies in the country’s northwest. China will demand forceful action on both fronts.

    Baluchistan has been in the throes of a low-level insurgency since the early part of this century. Chinese workers and other non-Baluch have increasingly been the targets of Baluch insurgents opposed to large development projects. For example, three Chinese engineers were killed by a car bomb at Gwadar in May 2004. Also, the insurgents regularly sabotage oil and gas pipelines. In addition to the several Baluch insurgent groups that seek greater autonomy from Islamabad, there is also a very active terrorist group, Lashkar-e-Jhangvi, which targets principally, but not solely, Pakistani Shiites, especially the Hazaras. The group sometimes works with ethnic Baluch groups in coordinating attacks.

    China shelved several Gwadar-related projects a few years back because of security concerns. Presumably Beijing has decided to go ahead now because it believes the Pakistan security forces will be able to contain these insurgents. Confirming Islamabad’s determination to prevent future attacks, the Pakistani government has promised to provide 10,000 troops, including 5,000 trained specifically in counterterrorism, to protect Chinese workers. And although there will be a lot of pressure on Islamabad to ensure that new pipelines are safe from sabotage—now that they will be transporting oil and gas to China—this will not be an easy task.

    The second security challenge, the semi-autonomous Federally Administered Tribal Areas (FATA) in the northwest along the border with Afghanistan, will be even more difficult to address because of the number of disparate actors present and their differing political agendas. There are three broad groups hiding in that frontier region: the Afghan Taliban, the Pakistani Taliban, and all the non-locals, which include the Muslim Uighurs from China’s western Xinjiang Province. The Chinese leaders have been putting pressure on Pakistan to ruthlessly pursue all these groups, in particular the Uighurs of the al-Qaeda–linked separatist East Turkestan Islamic Movement (ETIM).

    Many of the ETIM fighters fled to Pakistan along with other al-Qaeda and Taliban fighters following the ouster of the Taliban from power in Kabul in 2001. While the actual number of Uighur operatives in the tribal areas is probably not very high, they have managed to launch raids into Xinjiang Province from those lawless areas. This has deeply upset the Chinese leaders, and they have indicated their displeasure very publicly, especially after the deadly attack in the western city of Kashgar (future destination of those new pipelines) in July 2011. In the wake of these attacks, Beijing is reportedly interested in establishing bases either in FATA, which border Afghanistan in the northwest, or in the Federally Administered Northern Areas (FANA) to the east, which border Xinjiang Province. This straw in the wind has drawn the close attention of an already edgy India, which is uncomfortable with the alleged presence of 7,000–11,000 Chinese soldiers in FANA.

    In the wake of a terrorist attack on Karachi’s international airport in June 2014, Islamabad ended its unsuccessful negotiations with the Pakistani Taliban, and ordered its armed forces to launch a military operation in North Waziristan and later in the Khyber Agency in FATA. Reportedly, Beijing—like Washington—had been pushing for this course of action. While the Pakistani military has successfully hunted down many of the terrorists, including the members of the ETIM, many of them have found refuge across the border in Afghanistan. Nevertheless, the year-long operation, which has brought the total number of Pakistani troops in FATA to some 200,000, has managed to degrade, disperse, and disrupt the terrorists’ capabilities and networks.

    Importantly, following the horrendous terrorist attack on a school in Peshawar that killed 148 people, principally children, in December 2014, the military has repeatedly stated that it was targeting all terrorist groups. Presumably, this means that the military no longer differentiates between the “good” Taliban, who do not attack the Pakistani state and who could potentially be useful to have as a bargaining chip in Afghanistan, and the “bad” Taliban, who attack everyone, including Pakistani targets.

    Reportedly, Pakistan’s economy loses up to 6 percent of GDP because of power and infrastructure bottlenecks. That well over 1,000 people died in Karachi alone in June because of the lack of electricity to power air conditioners is an indication of how dire the energy situation is in Pakistan.

    Beijing is keenly aware that Pakistan’s domestic problems make it a problematic ally and partner. However, China also knows that, unless something is done to very significantly assist Pakistan, this nuclear-armed country of 200 million could collapse as a functioning state in the near future. Beijing knows it would not be spared if such a nightmare scenario ever became reality. So, in addition to its potential economic benefits, the CPEC represents China’s best hope against regional chaos.

    For CPEC to move forward, China will undoubtedly require that the Pakistani military continue to relentlessly hunt down the Taliban and all its ideological fellow travelers, including in particular the ETIM, in the tribal areas. Pakistan should undoubtedly have its own reasons for wanting this as well, having suffered some 50,000 dead and billions in lost revenue as a result of terrorist activity. The degrading of the Taliban et al. in the tribal areas would also hurt the Afghan Taliban’s ability to wreak havoc in Afghanistan, allowing the government to get on with the job of reconstruction after 30 years of war. If such a process does not occur, the Taliban will dominate Kabul and the ETIM would have a friendly rear base from which to potentially launch attacks into Xinjiang Province. This is why China hosted exploratory peace talks between the Taliban and the Kabul government, with Pakistani army intelligence present, in Urumqi, the capital of Xinjiang, in May.

    But if the new economic corridor succeeds there will be losers as well as winners. Although India is protesting about CPEC because some of the infrastructure traverses contested Pakistan-administered Kashmir, it’s not making too much of a fuss about Gwadar, not just yet. That could change quickly, however, if Gwadar becomes a full-fledged facility for the Chinese Navy.

    Nor would the US see its national interests served by such an upgrade, which would effectively make Beijing a two-ocean power. The big question for Washington is how will this huge Chinese investment affect the Obama administration’s “rebalancing” of American assets to the Asia-Pacific. Initially, it will probably be minimal, given that Washington’s “pivot” is really focused on the western Pacific and the South China Sea rather than South Asia and the Indian Ocean. However, if Gwadar does develop into a Chinese naval facility in the future, Washington will need to recalibrate its response accordingly, as this would have a direct bearing on China’s ability to deploy naval assets in the Indian Ocean.

    The China-Pakistan Economic Corridor (CPEC) has two main components: the corridor and the projects. The corridor component is roughly $11 billion, or 25 percent of the total, and the projects $34 billion, or 75 percent of the total. In international finance, foreign involvement comes in five forms: loans, grants, concessional loans, foreign direct investment and project financing. Chinese involvement under the CPEC is strictly project financing – project financing that has neither clarity nor transparency.

    In the Karot Hydropower Project, the Chinese are charging an interest rate of Libor plus 4.5 percent during construction (around 5.5 percent in dollars terms). In the Sahiwal Coal Power Project the Chinese demanded – and got – an internal rate of return of 27 percent. To be certain, these are both awfully expensive propositions and the terms of the contract overwhelmingly favour the Chinese – not the Pakistanis.

    In 2013, the $9 billion, 6,600MW Gadani Energy Park was launched with full fanfare. The project has since been shelved (it lacked economic viability). The $360 million, 300MW, Gwadar Coal Power Project has also been shelved.

    The global economic machine comprises four financial powerhouses: the US, the EU, China and Russia. The Russian economy, dependent on hydrocarbon reserves, is in trouble. Last year, Russia’s GDP actually contracted by an alarming 4.6 percent because of low oil prices and Western economic sanctions.

    In 2015, China’s economic growth was the weakest in the past 25 years. In January 2016, the Yuan settled at a five-year low. In 2015, China’s foreign exchange reserves plunged by a wholesome $513 billion – the first annual drop in the past 24 years.

    The once booming Shanghai Stock Exchange has lost half of its value whipping off 12 trillion Yuan or an equivalent of $1.8 trillion. The budget allocated to the Peoples’ Liberation Police is now higher than the one allocated for the Peoples’ Liberation Army (meaning that the Chinese leadership is more concerned about internal strife). To be certain, the Peoples’ Liberation Army has little or no capacity to project military power over long distances.
     
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