May 23, 2015

The Bull, Bear and the Dragon. CHALLENGES TO CPEC

Filed under: Uncategorized — sharafs @ 7:56 am
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ChinaWhile travelling in Europe, I utilize the widespread rail structure that affords an opportunity to traverse the beautiful countryside once battle field of two world wars and unending conflicts within Europe. Post-Cold War, East and West, Allies and Axis have put bad memories behind to lay an infrastructure of communication networks through land air and water channels for a bigger Eurozone. In this northern front, the only unstable spot is Crimea Where Russian interests have clashed. While NATO expands eastwards a mini Cold War on Russian underbelly continues.  Its tentacles spread to Iran, Syria and Afghanistan to what I call the Triangle of Instability.

But the Southern Front dominated by Muslim countries comprising kingdoms and dictatorships is a stark contrast. North Africa & Middle East and parts of West, Central and South Asia reflect poor governance, proliferation of contending Islamic ideologies and social conflict ridden in primordialism. Central Asia and Western China (closer to Karachi than Yellow Sea in China) despite huge potential remain land locked. Iran’s isolation and instability in Afghanistan Have acted as barriers. Western interests want China confined to the APEC Arcand not open new highways they will have difficulty controlling.

The entire region is manipulated through military imperialism whereby USA, West and Russia extend their influence through provision of a security blanket to their allies. The lessons of 1973 oil embargo are rooted deep in memory. This policy of geostrategic dominance of the predominantly Muslim world is actually the Long War implying a new name of the old containment.Western interests warrant that despite large hydro carbon potential and incalculable resources, the region must remains pliant and dependent or else it runs the risk of a hole in the containment ring built arduously over seven decades. The game is played within a matrix of vulnerability and indispensability within the mindset of Muslim rulers that ensures isolation of the people from their governments keeping instability alive and dependence going. As an intended dividend, it precludes the overland accessibility of CARS to sea lanes that lie on Pakistan’s coastlines.

Thriving on both sides of the divide, India has quietly worked on its Chabahar Initiative to provide Europe and Central Asia an alternative, if and when Iran gets out of isolation.  It can then skirt into Afghanistan as leverage against Pakistan and China. Due to economic leverage, Pakistan notwithstanding, it can engage China to extend the route through multiple entry points on Pakistan’s border. In contrast Pak-Iran pipeline hangs in limbo due to US pressure and leverage of oil cartels.

Within this interplay of power politics, Pakistan is desperate for independent spaces with a displayed capability of ineptness. These spaces are far and few. Given the knee jerk arguments for CPEC, it is clear that the homework lacks detail and is overwhelmed with ambition. At the same time Pakistan has to tread the path with extreme caution and political maturity to demonstrate the socio-economic advantages to the region and avoid making it a strategic faux pas. Pakistan’s first priority should be to put its own house in order and become self-dependent. Having remained tied to the US for over six decades it is daunting. A go alone policy will invite more problems. Effects are visible.

The history of Pakistan’s rulers at compliance and willingness to ignore homegrown potential to please allies and corporate cartels is a poor reflection of national resilience that cannot be rebooted with a jerk. Given bad governance, how would it exclusively undertake the onerous task of building and controlling a corridor infrastructure for China? The question does not imply an opposition to the concept but begs the brass tacks and politics of completing this project.

China aims to reach out to a shared world. Logically, to make it happen must also be a shared responsibility. Theoretically, the entire Indian Ocean Rim and Middle East will benefit from this project. Oil,gas, raw materials and finished goods will move upstream complemented by downstream flow of value added goods to international markets. If Pakistan stands to benefit beyond the trickle down, following questions need an answer.

1.     In this world of transnationalism and globalization have other countries of the region been co opted to share some layers of this cake? Unless these layers are co opted, the project will remain vulnerable to domestic instability, international interference and compromises under compellence.

2.     Or has Pakistan made arrangements with international manufacturers at building its own capacity at value addition. It seems the government has hastily lumped every Chinese project into CPEC. No bids have been invited from international bidders to set up industrial parks and cities astride the corridor and its feeders. The roadmap of how Pakistanis will benefit from this project is vague.

3.     If Middle Eastern oil stands to benefit from this project, why are Arabs quietly opposing this project and fanning dissent in Balochistan?Why is Karachi becoming more violent? Has Pakistan taken major oil suppliers like Saudi Arabia, Kuwait, UAE, Iraq and Iran into confidence; orhas China persuaded prospective suppliers to become part of the project?

4.     Some studies also call CPEC an energy corridor for flow of Iranian oil and gas to China and production of over 10,400 megawatts of energy to the national grid of Pakistan. Will Pakistan’s closet ally Saudi Arabia and major donor like USA approve this?

The transit relegates development of Pakistan’s huge oil and gas resources and exploitation of lignite coal in Thar. If these two resources are developed, Pakistan’s own capability in oil, gas and refinement of lignite would suffice for its domestic needs and energy starved western China. Other than burnt out imported coal fired plants, what are the plans to develop indigenous resources. Following Questions need an answer.

1.     Why is Pakistan willing to act as a mere conduit and not a major stakeholder in the energy sector?

2.     Why is the project being made unnecessarily Punjab Centric. Are these Punjabi or Indian interests?

3.     Why is the ratio of Hydro Power in 10,000 megawatts solow?

4.     What is the economic and environmental impact of coal fired power plants?

5.     In order to speed work, why the subject of Lignite as a hydrocarbon is not being shifted from a provincial to a federal subject?

6.     Why the government of Sindh is wasting precious time in awarding contracts for lignite refineries to technically capable companies.And what is the entire drama over gasification about?

7.     In due course, if oil and gas fields of Balochistan will become major suppliers, why a route from Kohlu to KPK is being relegated.

In addition, influence of international cartels cannot be ignored. Super tankers from Middle East will become redundant. Traffic in Straits of Malacca will reduce. Chinese vessels instead of skirting through ASEAN will get an alternate and shorter route to offload containers for transit by land. The entire logistics of Pacific and Indian Oceans will change. Will USA permit this Great escape from the APEC ARC?

Both China and Pakistan need to co opt other stake holders in the project. A go alone policy is treading impossibilities. Pakistani politicians forever vulnerable to self-interests will most likely succumb. Thinking only up to 2018 elections is amateurish. The project warrants at least two decades of stability. Pakistan’s policy makers, sans foreign and defence ministers will have to look into the minutest details and find the right solutions.

Brigadier (Retired) Samson Simon Sharaf is apolitical economist and a television anchorperson.

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