CPEC Phase II: What’s in it for Pakistan?

Arooj Naveed

With China Pakistan Economic Corridor (CPEC) entering Phase II, what future prospects and hindrances are there for Pakistan? 

So far, if one analyzes CPEC, under Phase I, the following projects have been carried out.The Dawood Wind Farm (50 MW), Quaid e Azam Solar Park (300 MW), Bahawalpur, Engro Thar Coal Power Plants (4×300 MW), China Pakistan Faqeer Primary School, Gwadar, Three Gorges Second Wind Power Project & Three Gorges Third Wind Power Project (50 MW), Coal Power Plant (2×660MW), Hub, Balochistan, Pakistan Jhimpir UEP Wind Farm (100 MW) , Multan-Sukkur Motorway M5 and China Power Hub Generation Company (CPHGC), China Red Cross Society’s Emergency Care Center, Gawadar, Sahiwal Coal Power Plant (2×660MW), Port Qasim Coal Power Plant (2×660MW) and 820-kilometers Cross Border Optic Fiber Project.

Having Phase I of CPEC coming almost towards its completion, there are many challenges and opportunities for Pakistan.

• The development of Special Economic Zones (SEZ’s):  It is expected that the country will develop Special Economic Zones (SEZ’s), relocating industries of China into Pakistan, transferring  technology, creating jobs and increasing exports of the country to the world and China. Additionally, important investment in social welfare sector is also to be focused. CPEC’s second phase is to boost industrial output and create 575, 000 jobs in the country. Allama Iqbal Industrial City, was inaugurated by Prime Minister Imran Khan on 3^rd January, 2020 as CPEC’s first SEZ. Pakistan Vision 2025 outlines implementation of these nine economic zones, all over the country, putting industrial development on forefront.  
• Completion of projects in times of a global pandemic : CPEC, in its Phase II has picked up momentum, even in the challenging times of Covid-19. Having followed the Standard Operating Procedures (SOP’s) provided by the government, work on projects of CPEC, continue. One major project, worth $ 11 billion, which includes two mega hydel projects and talks on securing financial grounds worth $7.2 billion for ML-1 railway project are solid evidence of smooth progress. The Western Route — Motorway route of  Burhan towards Dera Ismail Khan (DIK) – is also near completion and the road project of DIK towards Zhob has also been taken up to the level of Joint Coordination Committee (JCC)- which is CPEC’s highest forum. Initiation of Hoshab-Awaran road is also in progress.
• Fencing and security: The question of protection from terrorism, which was considered as one of the hindrance’s for CPEC is also being addressed. The current government of PTI has shown seriousness in this regard by deciding to fence borders with Iran and Afghanistan. The 900 km border between Pakistan and Iran is being fenced, after the decision taken by Islamabad to fence Pak-Afghan border, in order to secure CPEC against external threat and to also ensure internal security. Its early completion is expected. This decision will not only help secure the region but will also create a beneficial and safe environment for employees of Chinese companies working in Pakistan. 
• Strengthening Institutional working? China’s Consul General, Li Bijian, from Karachi asserts“The problem is on Pakistan’s side.” While the government of Pakistan Tehreek-e- Insaf (PTI) still struggles to find the right and acceptable procedure for taking its federating units on board, appointment of Lt Gen Asim Bajwa as the chairman of China-Pakistan Economic Corridor (CPEC) Authority is likely to strengthen institutional working. The federal secretary for planning, Zafar Hasan defending the establishment of this autonomous authority states that empowerment and financial independence would allow for better coordination, streamlining all matters concerning the department, ministries and the lower tiers in CPEC projects.
• Growing American opposition to the Belt and Road Initiative (BRI)? While there are growing promises through Phase II of CPEC, there are pessimistic people who believe that Pakistan’s financial problems together with America’s adverse narrative on Belt and Road Initiative (BRI), in which CPEC is an imperative part, will probably hamper progress on the corridor. A development consultant in Islamabad supports this argument stating that “Growing American opposition to BRI in the wake of ongoing tensions with China and Pakistan’s financial issues could frustrate the plans to put CPEC on a fast track in 2020.” Nevertheless, there are others who maintain that the game-changing project will not be affected through narratives, as the fate of this multibillion-dollar project depends on political decisions by Pakistan and China.
• Pakistan’s Internal Governance and issues of coordination: With Pakistan having defined its new economic policy, focused on achieving its promised reforms, its goals do not align with reporting given in the parliament and to the public. It was argued by Sherry Rehman that the challenges of the country with respect to management of CPEC are predominantly internal; related to issues of transparency, coordination between the center and provinces along with the capacity of the state on the subject of managing finances. The government should ensure that it sets for itself clear targets, concerning inclusive planning at different level; grassroot, federal and provincial levels.  Being a democratic country, having multiple ethnic groups, speaking various languages, even the smallest of the indecision and gaps in communication can lead to a backlash among all sectors of governance. In Gawadar, for example, not having consulted local fishermen for building terminals, displacement and livelihoods became a major source of tension, causing failure in connecting with downstream institutions.

Having fenced its border’s with Iran and Afghanistan, questions on security are likely to be addressed to a great extent. The battle of narrative is also in no way likely to affect the project, nor is the global pandemic, as its fate rests on China and Pakistan and how effectively we follow the SOP’s. However, future prospect’s on CPEC will largely depend on how well-coordinated and transparent is Pakistan’s internal strategy, with a focus on, as in the words of Sherry Rehman , reducing the opacity of CPEC finance.”