Terms and Conditions: Is the PTI renegotiating CPEC?

Like other foreign ministers meeting the new foreign minister at the start of the new government’s tenure, Chinese Foreign Minister Wang Yi also paid a visit and the main item on his agenda was the future of China-Pakistan Economic Corridor (CPEC). Beijing secured a public statement from the new government that CPEC, which is a joint multi-billion dollar project will remain a top priority.

The Chinese have been wary about the new government’s position on the CPEC in view of the stance Pakistan Tehrik-e-Insaf (PTI) had earlier taken during when the agreement was being finalised. On that occasion in January 2016, the Chinese, who strictly adhere to the policy of non-interference in internal matters of other countries, had issued a friendly advice to Pakistani political parties to “strengthen their communication and coordination on the matter” – in other words resolve the matter amicably.

Political discord at the time was over the route of the CPEC highways and was addressed, but discontent on how the project was being negotiated continued to simmer underneath the surface because dissent on this project was being strongly discouraged, to the extent that those who asked questions about it were labelled traitors to the country.

So when Mr Yi flew arrived in Islamabad, he was clear about what he wanted, and the strength of bilateral ties were of secondary concern. Little is known how the discussion played out behind the closed doors of the Foreign Ministry and Prime Minister’s Office. Certainly they would have been marked by cordiality, which is the hallmark of Pakistan-China interactions, but subsequent statements reveal that the government conveyed its concerns about certain aspects of the deal.

Everyone seems to be obsessed with the Financial Times story in which Adviser on Commerce Abdul Razak Dawood was quoted saying the government would “think through the CPEC — all of the benefits and the liabilities.” The reason cited by him was that the government believed that its predecessor had given the Chinese side an unfair advantage in the deal. “Chinese companies received tax breaks and have an undue advantage in Pakistan; this is one of the things we’re looking at because it is not fair that Pakistani companies should be disadvantaged,” Dawood said.

Yet, most of the sharp-eyed journalists missed that Mr Yi was advocating the CPEC at his joint presser. He would not have done so in normal circumstances. The Chinese simply do not conduct their diplomacy that way. He said the CPEC was not adding to Pakistan’s debt burden and that of the 22 on-going projects, 18 were being done through Chinese investment or aid and only four were being constructed through “concessional loans.”

In subsequent statements both Beijing and Islamabad noted that the future course of the CPEC would be “negotiated.” Chinese foreign ministry spokesman Geng Shuang said, “The two sides will enhance the building of the China-Pakistan Economic Corridor, and decide the future development path and the course for cooperation through negotiations in light of Pakistan’s next-stage socio-economic development priorities and the needs of its people.” Pakistani FO, meanwhile, talked about taking the CPEC forward “as per the needs and priorities of the government of Pakistan.”

The common strand is that there is an understanding on some negotiations and aligning the project according to the desires of the new government. The two sides had signed in November last year a long term plan which essentially meant that everything was settled as far as the future direction of the project was concerned. Therefore, a clarification is in order about what will be negotiated now.

Coming back to what was attributed to Dawood; a clarification was issued by the Ministry of Commerce that he was quoted out of context. The adviser may be trying to wriggle out of controversy, but what was attributed to him closely represented the thinking in the PTI on the project. One just needs to pick up a copy of the PTI manifesto and read its CPEC-related vision. The words may not be similar or as hard-hitting as quoted in FT story but the sense is more or less the same that Pakistan is not adequately getting its share of the deal. The PTI manifesto document reads: “Currently, Pakistan is not fully benefiting from CPEC-related investments due to insufficient transfer of knowledge and capabilities, lesser partnerships with local businesses and our high dependence on imports of goods and services from China.”

The document further stated: “We will ensure that local Pakistani businesses are fully involved in implementation of CPEC project and policy”.

Everyone looks convinced that CPEC, in principle, is a good project that can benefit both Pakistan and China, but the difference is on the terms on which it was negotiated. There could have been a better deal. This discontentment about the project is compounded by the shroud of secrecy that was thrown around the project by the previous government.

An open debate would have instilled confidence among the people that the project served their country’s interest. Those questions in the minds of millions cannot be brushed under the carpet by the media frenzy promoted by the state that the “CPEC is a game changer”. There are lot of questions about the cost of the capital and their impact on our debt burden, the bidding process for the projects, the quality of the imported machinery, the exact workings and scope of the project. Should we believe Mr Yi that the CPEC loans would not burden us further or IMF, whose estimates, given in the report on the First Post-Program Monitoring Discussions with Pakistan released in March 2018, show that Pakistan’s external financing needs are “expected to rise from US$21.5 billion (7.1 percent of GDP) in FY 2016/17 to around US$45 billion by FY 2022/23 (9.9 percent of GDP)”? The sole reason for this expected jump is said to be CPEC.

The writer is a freelance journalist based in Islamabad.

Email: mamoona.rubab@ipipk.org

Published in The Friday Times, September 13, 2018.

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