CPEC's future in doubt over critical monetary, security and capacity issues

Differences are reportedly developing between Pakistan and China over which of these two countries will eventually stand to benefit strategically from the USD 60 billion China-Pakistan Economic Corridor (CPEC) project in the long run.

An article published by The Diplomat has suggested that existing critical monetary, security, and capacity issues could hamper the CPEC's future, as both Islamabad and Beijing are repeatedly and consistently flagging their concerns, doubts and frustrations about project-related lacunae.

From the Pakistani side, there is a very anxious concern that the tough monetary and security conditions that China is seeking to impose on it, could leave the country in a worrisome and profound pit of debt.

According to the article, "there is a deepening urgency in Islamabad to say "No" to Beijing's habit of finding its want with all deals that certainly undermine Pakistan's interests."

Pakistan's decision to withdraw the USD 14-billion Diamer-Bhasha Dam from the CPEC ambit citing Beijing's strict monetary conditions as being against its national interests is an example of this.

Umair Jamal, the author of the article, warns, "Practically, Islamabad's emerging economic model is becoming dependent on China...Over the last few years, Pakistan (has) approached economic collapse on several occasions with China offering life-saving support to the country's economy..If Beijing continues to push with its aggressive monetary conditions, it's likely that in the coming years, Islamabad may cancel more projects which do not bode well for the overall commercial viability of the project (CPEC)."

He quotes observers as warning that Beijing's strict monetary conditions and lack of transparency in projects funded by it; have landed the future of Pakistan's whole economy in a tight spot.

From China's point of view, Jamal says there are economic and security concerns.

Economically, China is unlikely to make any trade or monetary concessions to Pakistan that involve Beijing losing financial benefits in such mega infrastructure deals such as the CPEC. It has been aggressive in pushing Pakistan into accepting conditions that offer it more leverage than the latter.

From the issue of security, Beijing is worried about the presence of several jihadist groups in Pakistan, and is pushing Pakistan into take action to prevent them being a direct threat to its regional economic plans and financial investments in Pakistan.

China has indirectly told Pakistan that it may have to review its very vocal support for the latter on security issues at the global level and financially arm twist if Islamabad fails to neutralise this surging and violent jihadist influence.

During the recently held BRICS summit, China, in an unprecedented shift from its previous policy of taking up strategic dialogues with Pakistan behind closed doors, agreed with the rest of the member states in issuing a joint statement, stating that a number of militant groups allegedly based in Pakistan remain a "regional security concern."

China would also not want to annoy India, as both have high value bilateral economic and strategic commitments with each other.

The article, quoting experts like Michael Kugelman, deputy director of the South Asia program at the Woodrow Wilson Center, and Seth Oldmixon, a public affairs consultant and the founder of Liberty South Asia, suggests that "China and Pakistan will work out arrangements that ensure a critical mass of projects to be carried out in their entirety, as there's too much at stake for both countries for it to be any other way.