The China-Pakistan Economic Corridor (CPEC): An Analysis of Potential Threats and Challenges - BY: Mehmood Hussain

image Abstract
The “One Belt, One Road” term refers to “The Maritime Silk Road and the Silk Road Economic Belt”. This mega initiative announced by Chinese president Xi Jiping in September 2013 during his official state visit to Kazakhstan. Pakistan is most important pillar of this Chinese initiative. Under the OBOR framework, several corridors will be built in future. Whereas, with the development of OBOR, regional economies will be boost up to $2.5 trillion and more than 4.4 billion population will get benefits across 65 countries. The Silk Road Economic Belt will link China, Central Asia, Russia, and Europe through the Persian Gulf and South East Asia and Indian Ocean. However The China-Pakistan Economic Corridor will be built to connect the Pakistan's Port Gawadar with Chinese city of Kashagir in autonomous province Xinjiang. The CPEC project is a game changer for the region and particularly China and Pakistan, through the development of Roads, Railways, Oil and Gas Pipe Lines. Thus the project brings wealth and prosperity across the region, particularly in Pakistan. But on the other hand, Pakistan is facing serious threats from terrorism and extremism since 2001. The most unstable part is Baluchistan, where Gawadar Port is located. The Port Gawadar has geo economic importance for China and Pakistan for their longer term interests. The port will handle all the cargo which will flow from China to Persian Gulf and Africa. Contrary port will provide a safer and shortest route to Chinese energy supplies through logistic route across Pakistan. The Baluchistan province is most vulnerable than other areas of the country. Terrorist and separatists are operating across the province. This paper is an attempt to enlighten the prospects of China-Pakistan Economic Corridor (CPEC) and potential challenges and threats to this mega project. The paper will divided in four parts. And in first part, we will discuss the bilateral relations of China-Pakistan, in second part we will shed light on Gawadar Port. Later two parts will discuss the China-Pakistan Economic Corridor and Insurgency in across the country. We will also analyze the government efforts to curb terrorism and separatism across the country. In the end we will conclude the benefits for both China and Pakistan through the CPEC.

Key Words: China, Pakistan, OBOR, CPEC, Gawadar Port, Terrorism, Separatism

China-Pakistan Relations
Pakistan gained its independence on 14th August 1947 after the disintegration of British Empire from Indian Subcontinent. While on the other hand China regains its sovereignty on 1st October 1949 with the victory of Communist Party of China. Both countries started officially their diplomatic relations on 21st May 1951. During the decade of 1960s relations of both countries remains normal. But during the cold war relations were stronger in military and defence production fields. With the end of cold war relations came on low level, because China improved its relations with India which will seriously effects on Sino-Pakistan entente. With the beginning of 21st century both countries transformed their relations from military cooperation to economic and trade cooperation. China increased investment in Pakistan and both countries signed Free Trade Agreement (FTA) in 2006.

Gawadar Port
Gawadar a deep sea warm water port located about 460 kilo meters west of Karachi at the mouth of Strait of Hormuz, whereas the kingdom of Oman is situated at least 380 km northeast and Iran is situated 75 km east of Gawadar. The Port of Gawadar has significant geo strategic and geo economic importance for China. It is located at the choke point of world’s energy supply route. Gawadar port will provide shortest route to China for its energy supplies and goods from Persian Gulf to Africa and from China to rest of the globe. Gawadar Port will connect Chinese city of Kashiger in Muslim province Xinjiang. China’s eastern seaboard is 3500 km away from the city of kashiger in western China, whereas the distance of Gawadar port from city of Kashiger is only 1500 kilometers. Gawadar port will reduce the time and cost for Chinese oil supplies and public goods.

Pakistan officially announced the construction of phase I of Gawadar Port in 2001. Three multipurpose berths were constructed along with port infrastructure and equipment’s for handling cargo. China warmly welcomes of Pakistani initiative and provides $198 million out of $248 million for the construction of first phase. Later total Chinese investment reached $1.6 billion for the construction of Gawadar port. In the month of December 2006, construction of phase I completed, and inaugurated by President of Pakistan General Pervez Musharraf on March 20, 2007. On February 1st 2007 a 40 years agreement were signed between Government of Pakistan and PSA international for the operations of Gawadar port. But the PSA international was unable to operate and invest funds according to agreement terms. Thus PSA international got the no objection certificate from the government of Pakistan and canceled the agreement in 2012.

A year later, on 18th February 2013 an agreement were signed for the handling of port operations between Government of Pakistan and a Chinese state run company China Overseas Port Holding Company (COPHC) for 40 years. The contract signing ceremony was held on February 18th, 2013 at Islamabad. Where Pakistani president Asif Ali Zardari and Chinese Ambassador Liu Jian, attended the ceremony.

Map of Gawadar Port
Source: Google

China-Pakistan Economic Corridor (CPEC)
The China-Pakistan Economic Corridor (CPEC) was first time anticipated by Chinese Premier Li Keqiang during his state visit to Pakistan in May 2013. Later on July 5, 2013 memorandum of Understanding (MOU) were signed between both countries during Prime Minister Nawaz sharif’s official visit to Beijing. Under the flagship of CPEC, two countries were agreed to build roads, railways, oil and gas pipe lines. The Pakistan’s Port of Gawadar will able to connect Chinese city of Kashiger in Xinjiang province through highways, railways, oil and gas pipe lines under the framework of CPEC. The total length of China-Pakistan Economic Corridor (CPEC) estimated up to 3,000 Kms. Shannon Tiezzi wrote an article in The Diplomat magazine, where she stated that China and Pakistan agreed to cooperate in four areas including Gawadar port, energy, transport infrastructure and industrial park under the umbrella of CPEC.

Finally the most important moment came when Chinese President Xi Jiping paid state visit to Pakistan in April 2015. During his visit, 51 MOU’s were signed between China and Pakistan worth of $46 billion. A Ministry of Planning Commission and Reforms source said that Projects worth of $ 28 billion will be immediately start under the framework of early harvest program, which are expected to be completed by the end of 2018. While remaining amount $17 billion, which are in pipeline and for the longer term projects will be completed within ten to fifteen years.

A London based scholar Mahwish Chowdhary wrote her article in Forbes magazine where she stated that the proposed projects will be completed within 2 to 3 years. She identified following projects under the framework of CPEC, up gradation of Karachi-Lahore-Peshawar railway line worth of $3.7 billion, development of four coal fired stations with a capacity of 1,980MW in Thar (Sindh) worth of $2.8 billion. Further Construction of two coal mining blocks in Thar (Sindh) cost of $2.2 billion. Construction of natural gas pipe line between Gawadar and Nawabshah, then Iran, worth of $2 billion. Development of coal fired generation plants at port Qasim Karachi with a cost of $2 billion. One hydropower project will be built in Karot worth of $1.6 billion. Building of solar power park in Bahawalpur worth of $1.2 billion. According to a report in South Asia Investor Review, that Frontier Works Organization, which is an administrative branch of Pakistan Army already, constructed the western part of CPEC. The FWO completed the construction of road from Gawadar to Panjgur with length of 502 kms out of 870 kms.

China-Pakistan Economic Corridor (CPEC) Proposed projects under Early Harvest Program
1. Karakorum Highway (Phase II) up gradation and reconstruction from Raikot to Islamabad via Mansehra.
2. Karachi-Lahore motorway; Multan-Sukkur Section
3. Up-gradation of ML1 and construction of Havelian Dry port.
4. Gawadar port project mainly includes Easy Bay Expressway, Gawadar International Airport, Construction of Breakwater, Dredging of Berthing areas and channels. Integrated development of Gawadar city/region and development of related infrastructure.
5. Orange Line Metro Train Project (Lahore)

Map of China-Pakistan Economic Corridor (CPEC)
Source: Government of Pakistan, USAID

China-Pakistan Economic Corridor (CPEC) ongoing projects
Source: Ministry of Planning, Development & Reforms, Pakistan

China Pakistan Economic Corridor Routes
The CPEC is a mega project for both Pakistan and China; it will conclude the highways and railways to connect both countries. It will pass through most of Pakistan from Gawadar in Balochistan to Sindh then enter in Punjab later it will pass through Khyber Pakhtunkhwa and finally it will go through the Gilgit-Biltistan and will reach Kashigar City of Xinjiang. It is divided into two different parts, Eastern Alignment and Western Alignment.

Eastern Alignment
The eastern alignment will run through few areas of Balochistan and KPK provinces where the security situation is more volatile. The eastern alignment will start from Gawadar, then travel parallel to the Makran Coastal highway eastwards to Karachi, then it will pass through some parts of interior Sindh and will enter in Punjab province, later it reaches Islamabad. From Islamabad, it will extend to some parts of KPK province like Haripur, Abbottabad, Mansehra, and Hazara through Muzaffarabad it will enter in Gilgit Biltistan and finally will reach China through Karakorum highway.

Western Alignment
Western Alignment will start from Gawadar and pass through Khuzdar and Dera Bugti, later it will enter south Punjab and will reach at Dera Ismail Khan in KP. From D.I. Khan it will further extend to Islamabad and Abbottabad, and from there the route is same as in the eastern alignment.

Potential Security Threats and Challenges to CPEC
Pakistan faces potential security threats from Tehreek-e-Taliban Pakistan (TTP) and other militant groups in Khyber Pakhtunkhwa and the tribal areas, while nationalist insurgency in Baluchistan, ethnic and religious violence in Karachi (Sindh) and Punjab. The insecurity and militancy milieu can pose serious threats to the construction of China-Pakistan Economic Corridor. Below we will discuss the more volatile parts of the country where CPEC will go through.

The Pakistan’s province Baluchistan is populated with Baloch nationalists and other minority groups. Baloch nationalist desires Baluchistan as an independent state. During the past decades, due to lack of political will and Baluch militancy, government failed to provide basic necessities to local peoples. It is a dark fact that in past; Islamabad ignores the legitimate demands for building infrastructure and ignores to provide basic health and education facilities to local population. This fact made them fierce with the central government and they adopted armed struggle against government. Active militant groups are including, The Baluchistan Liberation Army and United Baloch Army within region.

Poverty is a route cause of Baluchistan insurgency. Baluchistan has been hit by both abject poverty and unemployment. In 2014, Sustainable Development Policy Institute published a report that 52 percent peoples are living in poverty in Baluchistan.

Baloch insurgents pose the key threat to Gawadar and the coastal belt. They carried out low intensity attacks on the CPEC linked installations and infrastructures and on workers. Karachi will link to gawadar with the 653 kilometers long Makran coastal highway. The most volatile parts are Gawadar, Makran coastal belt, Kech, Awaran, Khuzdar and Lasbela. Militants are also operating within Panjgur and Khuzdar. While these six districts are most important part of CPEC.

After 2001, armed insurgency increased within region and thousands of peoples were killed in several attacks. Militant groups also involved in killings of foreign workers who are engaged in construction works in Baluchistan. According to China daily source, from 2001 to 2008 more than 12 Chinese citizens were killed and 39 were injured in various working sites across the country. The responsibility of attacks claimed by Baluchistan Liberation Army and other militant groups. According to the review of terrorist attacks reports between 2007 to July 2014 suggests that Ketch and Khuzdar are most volatile districts in the region. Over 1,040 terrorist attacks took place in these above six districts between 2007 and July 2014. Security forces, civilians, political leaders, non-Baloch settlers, and workers, gas pipelines and power lines, railway tracks, and government installations and property are most targeted areas of militant attacks.

Terrorist attacks in Gwadar and neighboring districts (January 1, 2007-July 31, 2014)
Source: CPEC an assessment of potential threats and Constraints by Safdar Sial

Karachi and Sindh
The level of threat in Karachi is medium and very low in interior Sindh. Tehreek-e-Taliban Pakistan (TTP) and other militant groups, ethnic and extremist groups are operating in large numbers. Sometimes they are attacking on CPEC relating installations and security forces. The Karachi-Lahore motorway will be under the militant threats in Karachi areas. During the period from 2007 to July 2014, more than 962 terrorist attacks took place in interior Sindh. Whereas 889 terrorist attacks happened in Karachi, which is the economic hub of Pakistan. Militant groups are more active in this part of country.

Terrorist attacks in parts of Sindh where CPEC-linked projects will run (January 1, 2007-July
Source: CPEC an assessment of potential threats and Constraints by Safdar Sial

Punjab Province
The overall threat level is low in Punjab province particularly in Rawalpindi and Islamabad. Starting from 2007, Lahore, Islamabad and Rawalpindi faced maximum terrorist attacks. However terrorist attacks also monitored in other parts of the province, where CPEC will go through. Lashkar-e-Jhangvi and TTP are most challenging terrorist groups in Punjab. From 2007 to July 2014, Islamabad-Rawalpindi and Lahore are most vulnerable cities due to terrorist attacks.

Khyber Pakhtunkhwa and AJK
The level of threat to CPEC alignment is also low in Khyber Pakhtunkhwa because of the Hazara Division of KP is more secure and safer than other parts of the KP province. The most part of CPEC will go through Haripur, Abbottabad and Mansehra. These parts are safer than other parts of tribal areas. Provincial government has strong hold in these areas and putt all its energies to protect these parts. From 2007 to July 2014, there were more than 4,732 terrorist attacks took place in KP and only 52 attacks were occurred in Haripur, Abbottabad and Mansehra. The CPEC will go through Muzaffarabad, which is the part of Azad Jammu & Kashmir. MuzaffarAbad is relatively peaceful area than other parts of KP. Only 3 attacks took place in the city during the period from 2007 to July 2014.

Terrorist attacks in parts of Khyber Pakhtunkhwa where CPEC-linked projects will run (January 1, 2007-July 31, 2014)
Source: CPEC an assessment of potential threats and Constraints by Safdar Sial

Diamer and Gilgit Biltistan
The region was the home of sectarian violence in the past. Some high intensity terrorist attacks took place in recent years which reveals the TTP and other militant group’s involvement. However the absence of militant bases this part of CPEC will be safe and secure. Intelligence agencies revealed the information that in past the ETIM terrorists were active in this region with the collaboration of TTP. During the period from 2007 to July 2014 a total number of 74 attacks were reported, 71 were occurred in Diamer and Gilgit alone. 55 attacks were occurred in different sectarian groups and only 16 were carried by TTP and other militant organizations.

Terrorist attacks in parts of Gilgit-Baltistan where CPEC-linked projects will run (January 1, 2007-July 31, 2014)
Source: CPEC an assessment of potential threats and Constraints by Safdar Sial

Government Response to Militancy
Government actively response to these militant attacks. In late June 2013, government started Operation Zarb-e-Azab in tribal areas of Pakistan, later it extends its influence toward Karachi and Baluchistan province. Security forces are conducting operations against militant groups across the country. Same year government announced national action plan, under which security forces and intelligence agencies will conduct operations to curb terrorism across the country. Now the security situation is better than before 2013 in tribal areas, Khyber Pakhtunkhwa, Karachi, Punjab and Baluchistan province. As a result of operations, security forces regain strong control over the areas which were most volatile before operation. While on the other hand, government started some early harvest projects to improve living standard of peoples who are living across the most volatile parts. Later government announced to conduct dialogues with militant groups. Government further extends its efforts for rehabilitation programs for those who dropped the weapons and accepted the state laws. Recently PM Nawaz sharif ordered to build one division of special force for the Protection of CPEC installations and Chinese workers. From starting force will consist 12,000 highly trained officers and soldiers.

Benefits for Pakistan
Pakistan is facing serious energy short falls from last decade. With the completion of energy projects under the banner of CPEC more than 10,800 Megawatts electricity power will be added to the national grid. Whereas roads and railways are the key component in the economic development of a country. Pakistan is facing serious threats of terrorism and extremism from last decade. Pakistan put all its energies to combat terrorism. But with the lack of funds Pakistan was unable to build new roads and railway networks. Under the CPEC framework roads, railways, oil and gas pipe lines will be built across the country. Even small cities and villages will connect with the main lines of logistics networks. These links will bring the developments in the connectivity of roads and railways infrastructure. Peoples will get benefits from new networks and will be able to bring their goods in the markets of major cities across the country.

At present time industry in Pakistan is not producing enough goods for the consumption of country’s demand. Pakistan and China proposed 29 industrial parks and 21 mineral zones across the country. After the construction of industrial parks and mineral zones Pakistan will be able to produce the goods for its public demand. Young and educated peoples will get more benefits through getting jobs in new industrial parks and mineral zones. .The CPEC and industrial parks will bring up the peoples from the poverty line and will bring a new look to country’s economic market. Pakistan will be able to export more public goods and related material in international markets. Through the CPEC bilateral trade between Pakistan and China will exceeds. Thus the China-Pakistan Economic Corridor will be a fate changer for the government and peoples of Pakistan.

Benefits for China
China is emerging power in twenty first century and its economy is growing at the rate of near 10 percent every year. While on the other hand, China is the largest oil importer from Persian Gulf and Africa. China built Gawadar port and got operational rights for 40 years. The CPEC is a grand Chinese strategy to get entry in Indian Ocean and Persian Gulf. Gawadar port will connect through roads, railways, oil and gas pipe lines with the Chinese City of Kashagir in Xinjiang.

Now Chinese energy supplies pass through Strait of Malacca, which is most dangerous strait in the world. Currently Chinese energy supplies are taking 2 to 3 months with a distance of 16,000 Kms to reach Shanghai Port. But Gawadar Port has only 3,000 kms distance to reach Kashiger City of Xinjiang. Thus Gawadar port route is the shortest and safer route with cheapest expenses for Chinese energy supplies and public goods. If China will use CPEC for its 50% oil supplies it will save around $6 million every day, almost $2 billion each year.
Gawadar port also has strategic importance for China. Through the Gawadar port, China will be able to monitor U.S and Indian naval activities in the Indian Ocean and Persian Gulf. Furthermore China-Pakistan Economic Corridor will benefit China for its longer term interests in Indian Ocean. Through the CPEC, China replaced U.S as a largest foreign investor in Pakistan. Pakistani peoples view China as their all weather and time tested friend.

The China-Pakistan Economic Corridor is a game changer project for both Pakistan and China. Through the CPEC, Pakistan will be able to overcome its energy short falls. New railway and roads infrastructure will be built by China and Pakistan which will reduce the time and cost for ordinary citizens. While on the other hand through new industrial complex and economic zones, economy will get a new dimension. Poverty ratio will alleviate across the country and young and energetic population will get jobs in their home country. Pakistan will overcome on terrorism and separatism through economic and social leverage. Local Balochs will get more benefits and jobs at their home destination. Which will change their fate and ideology and they will become more patriotic and Pakistani than Balochi.

On the other hand, China will be able to get entry in Indian Ocean and Persian Gulf through the Gawadar Port and CPEC. Gawadar port will provide safer, shorter and cheapest route for Chinese energy supplies and public goods. China will able to reduce the ethnic violence within its own Xinjiang region. Because economic activities will increase across the region and peoples will get more economic benefits. Thus, Gawadar port and CPEC will change the fate of both China and Pakistan.

Posted on May 26, 16 | 12:50 am