What is India doing with cpec

China is driving economic corridor through Pakistan

Much of China's gigantic initiative for a "New Silk Road", which has recently been renamed the "Road and Belt Initiative" (BRI), may still be vague and sound like a dream of the future. But at least a The route of the multi-branched project, namely the one that leads from southwest China through Pakistan to the Indian Ocean, is taking on ever more concrete forms. China plans to invest the equivalent of around 57 billion US dollars in this so-called Sino-Pakistani economic corridor (CPEC).

Three agreements, which Pakistan and China signed shortly before the Beijing Silk Road Summit, indicate China's priority in the economic corridor, namely trade and the transportation of goods. Around 500 million US dollars are to flow into the modern transport links of the port city of Gwadar by air and land and into the construction of the Havelian goods transshipment point north of Islamabad.

In November 2016, the first containers from Xinjiang, China, arrived in the port of Gwadar for loading

security questions

Three projects - one motive: China wants to use the port of Gwadar, which it already owns, for the transport of goods to and from its western regions. To this end, the eastern of the various routes of the economic corridor through Pakistan will be expanded first, not least because it is considered to be the safest route by comparison. (see infographic)

Two recent attacks have shown that the western route through the Balochistan Province is particularly dangerous. 13 Pakistani road workers were murdered by unknown persons. China does not want to be deterred by the security problem: On the one hand, the Pakistani army has set up a special force to protect Chinese workers and experts; on the other hand, various safety precautions are also to be part of the CPEC project.

The various planned overland routes within the economic corridor

China and the "Malacca Problem"

South Asia expert Christian Wagner from the Berlin Foundation for Science and Politics (SWP) explains China's strategy to DW: "China is primarily about access to the Indian Ocean. They want to diversify the access routes to China. The Chinese leadership has For years the so-called 'Malacca problem' has been complaining that the whole Chinese sea trade runs through the Strait of Malacca in Southeast Asia, which can be blocked relatively easily in the event of a crisis. The "Belt and Road" Initiative is intended to find new sales channels Europe will be created, excess capacities of the Chinese economy will be outsourced and a diversification of the transport routes to China will be achieved. "

In addition to expanding trade connections via Gwadar, CPEC is primarily concerned with three other investment areas: First, the construction and modernization of around 20 power plants in the country plagued by chronic power outages. Above all, coal power is used - using the huge deposits in south-east Pakistan - and, to a lesser extent, renewable energies. 33 billion of the approximately 57 billion US dollars alone are to flow into power plant construction. Secondly, road and rail connections are to be created, on which, thirdly, special economic zones are to be established, with investments, among other things, in the cement and textile industries.

But the Chinese planners are also focusing on agriculture, as the Pakistani newspaper "Dawn" recently reported. The entire value chain from seeds to fertilizers and pesticides to processing, storage and distribution should be open to Chinese investors in Pakistani agribusiness - a sector about which almost nothing has officially been made public.

Massive expansion of coal power is intended to resolve the permanent electricity crisis

What are the bottom line benefits for Pakistan?

The question from a Pakistani point of view is: What is getting around for the country in the Chinese investment plan? According to economists, Pakistan would have to show sustained growth of around six percent over five years for the population to take a noticeable step out of poverty. Hopes cling to China to achieve such growth.

But the whole thing is a "gigantic bet on the future," says Christian Wagner, referring to the example of Sri Lanka: "China has invested massively there in recent years, which has now driven Sri Lanka's debt to breathtaking heights. And that's exactly why There is of course now also clear criticism in Pakistan because they do not know whether the hoped-for economic gains that are expected from the corridor will be sufficient to meet the financial obligations towards China. "

Wagner points out that the Chinese do not grant the loans on special terms. And reports in the Pakistani press that the government has promised Chinese investors returns on equity of over 20 percent. "That has to be generated somewhere in Pakistan, of course, by the Pakistani consumer in the form of higher electricity and energy prices." At the same time, it is hoped that Pakistan will create jobs. "Here you will have to wait until such economic zones are in operation to see what employment effects will result," says Wagner. "I would assume that the project will certainly have positive effects, also for the benefit of Pakistan."

Even if individual rebel groups like here in Balochistan lay down their weapons with media coverage, violent attacks will continue to accompany the project

Deliberate lack of transparency

Khurram Husain of the Pakistani newspaper "Dawn" also believes it is entirely possible that Pakistan, especially the unproductive agricultural sector, can benefit from the planned Chinese investments. But he was critical of DW about the lack of transparency surrounding the project: "The Pakistani government is apparently accommodating the Chinese side's request not to disclose any too detailed information about the project."

Consideration for China can also be seen in the framework conditions, says Husain: "I agree with the assessment that special conditions have been created with a view to Chinese investors, especially in the energy sector. Here fair bidding competition was excluded and a number of preferential treatments were given especially for Chinese investors created. "

Joint appearance at the BRICS summit in India in October 2016 - But at China's Silk Road summit in mid-May, the Indian Modi gave the Chinese Xi a basket

Harsh criticism from India

From the Indian side in particular, the scenario of Pakistan as a future Chinese province or a Chinese vassal state is being painted on the wall. Not surprisingly, because Pakistan's traditional military and political ties to China, which have now been reinforced by the corridor, naturally fuel the mistrust of rival India. India had refused to participate in the Silk Road summit in Beijing. Reason: The northern part of the corridor leads through the Pakistani part of Kashmir, which is also claimed by India. The foreign policy advisor to Prime Minister Narendra Modi, Ram Madhavs, explained the Indian position to the Reuters news agency as follows: "No country compromises on questions of national sovereignty in order to gain economic and trade advantages." As evidence, Madhav refers to China, which does not hesitate to threaten other countries, no matter how remote questions of its national sovereignty are at stake.

Anti-Indian protests in Pakistani Kashmir - can China's investments help ease the situation?

Settlement of the Kashmir conflict as a side effect?

In the Kashmir conflict between Pakistan and India, of all things, the Chinese economic corridor could make it easier to find a solution in the long term, says South Asia expert Wagner. Because China is interested in security and a stabilization of the status quo - aöso in a generally recognized division of Kashmir into a Pakistani and an Indian part. Pakistan, on the other hand, insists that the Kashmir issue must be resolved with international participation.

If the Chinese investments in Pakistani Kashmir are implemented and also benefit the local population, this would reinforce their desire that their previous region of Gilgit-Baltistan be upgraded to a province in the Pakistani state, explains Wagner. "The moment Pakistan makes its part of Kashmir a province in the Pakistani state, it is basically following the same policy as the Indian government. This would mean that Pakistan would give up its international stance on the Kashmir issue and that would be the Kashmir conflict de facto settled at international level. "