International think tanks and economic experts assume CPEC resource extraction

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WASHINGTON: Two think tanks of international repute and one economic expert has opined about China Pakistan Economic Corridor (CPEC) and pointed out its drawbacks.  In an article published by Medium.com, Farooq Tirmizi claims that this project is not an investment into Pakistan, but is structured as a resource extraction exercise.

Farooq Tirmizi, a US-based frontier and emerging market analyst has said that the majority of Chinese investment in Pakistan is self-proclaimed and is not benefitting the local economy. “China announces that it has invested in a project in Pakistan worth, let’s say USD 1 billion. That USD 1 billion, however, is required to mostly be spent on Chinese equipment, and labour, a significant portion of which is to be imported from China as well, with very little by way of supplies coming from the local economy,” Tirmizi said.

That said amount, therefore, never hits Pakistan’s economy as an investment, and goes from the Chinese government or state-owned company to a state-owned company within China to pay for equipment. Even the Chinese labour gets its salaries deposited into bank accounts within China.

“The money, in other words, stays completely within China and so never shows up as foreign investment into Pakistan”, said Tirmizi.

The analyst believes that the majority of people in Pakistan are willing to join hands with Washington rather having faith in Beijing. “If ever there was thought within Pakistan’s leadership — political, military, and business — that Beijing could replace Washington as the foreign capital with the most influence in Islamabad, that idea is now firmly dead. We just have not gotten around to telling China yet,” Tirmizi added.

The analyst also believes that there is a growing imbalance in trade between Pakistan and China. “Pakistan’s imports from China have dramatically increased since 2013 when CPEC was first announced. Prior to 2013, Pakistan’s imports from China had been rising because of the 2007 China-Pakistan Free Trade Agreement but had stabilized to around $6.6 billion a year. After 2013, the rise has been very steep,” the article added.

Since 2013, China’s net investment into Pakistan has been USD 2.5 billion, which is much higher than the USD 813 million China invested in Pakistan in the 10 years prior to 2013, but still a relatively small sum compared to the wild projections and promises that the Pakistani press and government wanted to believe when it was first announced.

EFSAS researcher

Meanwhile, Yoana Barakova, a research analyst ay European Foundation for South Asian Studies (EFSAS) in Amsterdam says that the much-publicised China Pakistan Economic Corridor (CPEC) will not only put Pakistan in China’s colossal debt-trap, but it will also render more than 10,000 people of Gilgit Baltistan jobless due to the massive influx of Chinese working hand.

The CPEC is a multi-billion dollar development project, with a planned network of roads, railways and energy projects linking China’s Xinjiang Uyghur Autonomous Region with Pakistan’s strategic Gwadar Port on the Arabian Sea. It enters Pakistan from Gilgit Baltistan, a disputed region which was part of an erstwhile princely state of Jammu and Kashmir.

According to the local population and international observers, Gilgit Baltistan is deprived of all fundamental human and civil rights and it has no representation in the National Assembly of Pakistan or any other national legislative body.

“Since the people of Gilgit Baltistan, through whose territory this illegal and in contravention of international law, the corridor passes, have had no say in CPEC projects, it means that Pakistan has virtually sold out the territory to China under the rubric of infrastructural development”, said Yoana.

 “The region is not only completely excluded from the high financial profits that a project like the CPEC would bring, but it will further inflict a number of negative environmental and ecological repercussions,” she further said.

SADF researcher:

Brussels based Dr Siegfried O. Wolf, Director of Research at South Asia Democratic Forum (SADF), has said that the CPEC is a project of, by, and for Pakistan’s elites which completely lacks local ownership.”Local communities got completely sidelined by the national decision-makers”, he said.

“As such it does not come as a surprise, that the locals have to share most of the social, economic as well as environmental costs but at the same time get deprived of their fair share of the expected/envisaged revenues,” Wolf said.

“Since the decisions regarding projects are exclusively done by the central government in coordination with China’s leadership, the CPEC projects do not address local demands and needs,” he added.

CPEC is a dream project of Chinese President Xi Jinping as it will provide China easy access to EU market. “China spends tremendous efforts and money in public diplomacy to influence the opinions in media, academia, business circles and among political decision-makers in BRI (Belt and Road Initiative) as well as in non-BRI countries. However, one can also state that there are an increasing number of critical voices and reports on the CPEC and other BRI projects, indicating that these Chinese influence measures are only partly successful and losing their efficiency,” Wolf further said.

“We will most likely witness a deterioration of the security situation due to an increase in growing militant resistance against the CPEC, as well as anti-Chinese activities conducted by domestic and international Jihadi groups in order to harm Beijing’s interests and assets abroad,” the researcher also said. 

“The subsequent growing militarisation of areas dedicated to CPEC projects will lead to an increase of human rights violations and further truncation of political rights, freedom of the press and free expression of opinion. In consequence, the CPEC is turning into another threat for democracy in Pakistan,” Wolf warned. (ANI)