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South Asia

Chinese engineer’s disappearance takes on geopolitical significance

Dr. James M. Dorsey

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Thirty-six-year-old Chinese engineer Pingzhi Liu went missing almost a month ago. It took Pakistani authorities three weeks to classify Mr. Liu’s disappearance as a likely kidnapping that could have significant political and economic consequences.

Identifying the mysterious disappearance as a kidnapping is not only embarrassing because Mr. Liu was one of thousands of Chinese nationals working in Pakistan that are guarded by a specially created 15,000-man Pakistani military unit.

It is also awkward because it coincides with apparent Chinese questioning of aspects of the $56-billion China Pakistan Economic Corridor (CPEC), a crown jewel of China’s Belt and Road initiative, and increasingly strained relations between Pakistan and the United States.

Mr. Liu was accorded military protection even though his project, the Karot Hydropower Plant, located near the Pakistani capital of Islamabad, is not part of CPEC. Karot was the first project financed by China’s state-owned $40 billion Silk Road Fund, established in 2014 by President Xi Jinping to foster increased investment in Eurasia.

Mr. Liu went missing on December 20 while on night duty. He was last seen walking out of a tunnel at around 3.30am while talking on his phone. No claim for his potential kidnapping or ransom has been made.

The fact that Mr. Liu was working on a project in Punjab rather than Balochistan, a troubled region with a history of attacks on Chinese personnel, has set alarm bells off.

China last month warned its nationals in Pakistan, a country plagued by religious and ethnic militancy, of plans for a series of imminent terrorist attacks on Chinese targets

“It is understood that terrorists plan in the near term to launch a series of attacks against Chinese organisations and personnel in Pakistan,” the Chinese embassy in Pakistan said in a statement on its website.

The embassy warned all “Chinese-invested organisations and Chinese citizens to increase security awareness, strengthen internal precautions, reduce trips outside as much as possible, and avoid crowded public spaces”.

Police have twice detained for interrogation Chinese and Pakistani workers associated with the Karot project. They are also introducing security and vetting measures for Pakistani nationals working with Chinese personnel.

If proven to be a kidnapping, Mr. Liu’s disappearance could not have come at a more awkward moment. China has signalled that it is considering freezing further CPEC-related investment until the country’s domestic situation stabilizes. China is believed to have so far invested $29 billion of the $56 billion committed.

“Political events in Pakistan have sent China in a watchful mood… I am concerned if we continue to throw surprises to the outside world, then anyone can be forced to rethink their economic investments,” Pakistan’s chief CPEC negotiator, Ahsan Iqbal, told Pakistani daily The News.

China had earlier decided to redevelop criteria for the funding of CPEC-related infrastructure projects in an apparent effort to enhance the Pakistani military’s stake in the country’s economy at a time that the armed forces are flexing their political muscle.

The Chinese decision that reportedly led to the suspension of funding for three major road projects valued at a total of $850 million – the upgrading of the Dera Ismail Khan-Zhob motorway and the Karakorum highway as well as construction of a 110-kilometre road linking Khuzdar and Basima – suggested that Beijing was not averse to exploiting its massive investment in the Belt and Road to shape the political environment in key countries in its authoritarian mould.

The possible investment freeze threw into doubt China’s reliability as Pakistan’s all-weather friend at the very moment that the Trump administration announced that it was cutting almost all security aid to Pakistan, believed to total more than $1 billion, until it deals with militant networks operating on its soil.

Pakistan, in response and in advance of a visit by a United Nations Security Council team to evaluate Pakistani compliance with its resolutions, has sought to crack down on the fundraising and political activities of Muhammad Hafez Saeed, an internationally designated terrorist accused of having masterminded the 2008 attacks in Mumbai.

Pakistan’s predicament could worsen if Mr. Trump, who has targeted Pakistan in blunt tweets in the past month, decides to tighten the screws beyond cutting aid by taking further punitive action such as sanctioning Pakistani military officials, revoking Pakistan’s non-NATO ally status; increasing drone strikes beyond Pakistan’s tribal areas; designating Pakistan as a state sponsor of terror, and/or pressuring international financial institutions to blacklist Pakistan.

The sensitivity of the timing of Mr. Liu’s disappearance was heightened by the fact that some in Pakistan appear to doubt whether CPEC will be the magic wand for Pakistan’s economy and regional geopolitical position that Pakistani and Chinese leaders make it out to be.

Criticism of CPEC has focused on doubts about the financial viability of various projects, Pakistan’s ability to repay related debts, a lack of transparency, and assertions that Chinese nationals were usurping Pakistani jobs.

In a rare challenging of Chinese commercial terms Pakistan recently withdrew from a Chinese-funded dam-building project.

Pakistani Water and Power Development Authority chairman Muzammil Hussain charged that “Chinese conditions for financing the Diamer-Bhasha Dam were not doable and against our interests.” China and Pakistan were also at odds over ownership of the $14 billion, 4,500 megawatts (MW)-hydropower project on the Indus River in the country’s problematic region of Gilgit-Baltistan near disputed Kashmir.

Earlier, a State Bank of Pakistan study concluded that exports of marble to China, Pakistan’s foremost rough-hewn, freshly-excavated marble export market, and the re-export to Pakistan of Pakistani semi-processed marble was “hurting Pakistan’s marble industry to a significant extent.”

report by the Pakistani Senate, that has repeatedly criticized CPEC’s lack of transparency and Chinese commercial policies, concluded that China would for the next four decades get 91 percent of the revenues generated by the port of Gwadar.

The vanishing of Mr. Liu, if proven to be a criminally or politically motivated kidnapping, threatens in the current environment to put Pakistan between a rock and a hard place. Its relationship with its traditional ally, the United States, is on the rocks while its ties to China are proving to be more complex than Pakistani leaders had envisioned.

Amid domestic political instability, anti-government protests, and pressure to come clean in its getting a grip on militancy, Pakistani democracy may be saddled with the bill.

While neither the United States nor China can afford a complete rupture, neither has a clear strategy to help Pakistan stabilize. China’s solution appears to be tacitly supporting a greater role of the military in Pakistani politics – a formula that has in the past failed to produce results and is more part of the problem than part of the solution.

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

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South Asia

How the US withdrawal from the Iran nuclear deal affects India

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Authors: Tridivesh Singh Maini & Sandeep Sachdeva*

While India was guarded in it’s response to the withdrawal of US from the Iran Nuclear Deal, it surely realizes the implications of the US withdrawal. Iran is India’s third largest source of crude oil (after Iraq and Saudi Arabia) . Between April 2017 and January 2018, New Delhi imported well over 18 million tonnes of crude oil.

New Delhi has also invested in the development of the Chabahar Port Project, which will provide India, access to Afghanistan and Central Asia. This project is extremely important for India, since it will help in bypassing Pakistan, which has continuously kept India out of the Afghanistan Pakistan Transit Trade Agreement (APTTA). During Indian Prime Minister, Narendra Modi’s Iran visit in May 2016, India had signed an agreement, committing 500 Million USD for the development of Chabahar. During Modi’s visit,  a trilateral transport and transit partnership was also signed between India, Afghanistan and Iran.

In February 2018, during Iranian President Rouhani’s visit  to India, a lease agreement was signed between India and Iran. The lease agreement gave operational control of Phase 1 of Chabahar Port (Shahid Beheshti port) to India. The Modi, Hassan Rouhani Joint statement mentioned the need for making Chabahar part of INSTC project and PM Modi further emphasised that “We will support the construction of the Chabahar-Zahedan rail link, so that Chabahar gateway’s potential could be fully utilised.”

Here it would be pertinent to point out, that to enhance connectivity with Afghanistan, India has also set up an India Afghan Air Corridor, two flights are currently operational; one connecting Mumbai with Kabul, and another which connects Delhi with Kabul.

Indian hopes

For the time being, New Delhi has rested its hopes on the fact, that European countries are trying to keep the deal intact, and US will also not impose sanctions on allies, including India, for engaging with Iran. Defence Secretary James Mattis in a Congressional hearing held by the Senate Armed Services Committee, had categorically stated,  that the US should be careful with regard to imposing sanctions against allies, under Countering America’s Adversaries Through Sanctions Act (CAATSA).

Mattis said, that allies like India should be provided a national security waiver, against imposition of sanctions for the purchase of S-400 air defence missile system from Russia.

A number of US Congressmen and Senators too have echoed Mattis’ views saying that India is valuable ally and should be exempted from sanctions

What India needs to be cautious about

While India does have time to react to the sanctions re-imposed, and the fact that European countries are keen to keep the deal alive are important. Recent statements by the US National Security Advisor, John Bolton saying that Europe will not be immune from sanctions, and would ultimately fall in line needs to be closely watched.

Said Bolton in an interview with ABC’sThis Week:“Europeans are going to face the effective US sanctions — already are, really — because much of what they would like to sell to Iran involves US technology, for which the licenses will not be available.”

Bolton also stated, that these countries will ultimately realise that it is in their interest to go along with the US.

Earlier US Ambassador to Germany, Richard Grenell advised Germany to re-consider business ties with Iran:‘German companies doing business in Iran should wind down operations immediately”.

New Delhi needs to strike a balancing act between Iran and US, but it also needs to have a clear plan of action to deal with US sanctions against Iran. In the past few years, India has successfully managed to balance relations between Iran and US, and Iran and Israel. Given the recent sanctions and the hawkish approach of the Trump Administration, it may be tough.

China factor

In the meanwhile, New Delhi would be well advised to follow closely China’s reaction to the withdrawal of US from JCPOA. Iranian foreign minister Mohammad Javad Zarif visited three important countries Russia, China and Europe to save the JCPOA. Chinese Foreign Minister Wang Yi said “it was hard-earned  deal, and China will take an objective, fair and responsible attitude, keep communication and cooperation with all parties concerned, and continue to work to maintain the deal”.

The China factor doesn’t end here for India. Off late, ties between India and China have witnessed an improvement, during PM Modi’s recent China visit, it was decided. that both countries will undertake a joint project in Afghanistan. In recent months, there seem to be some indicators of lowering of tensions between New Delhi and Islamabad as well.  Could, Beijing get New Delhi and Islamabad to discuss the issue of  transit trade to Afghanistan?  An opinion piece, ‘Pakistan’s military reaches out to India’, published in RUSI (Royal United Services Institute) discusses the willingness of Pakistan to discuss this issue, but India had turned down the offer in October 2017. Maybe New Delhi, could explore this option, and Beijing could support such an effort.

Conclusion

In conclusion, New Delhi will need to handle the current situation with great dexterity, while US is an important strategic partner, India has also got an opportunity to send an unequivocal message to Washington, that its own interests are paramount, and it will not blindly follow any one camp. In spite of all the challenges and upheavals likely to result from Trump’s decision, this also provides a golden opportunity for re-shaping the narrative within South Asia.

*Sandeep Sachdeva, Independent Foreign Policy Analyst

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Ex-Pakistani Prime Minister puts Pakistani military and China on the spot

Dr. James M. Dorsey

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Ousted Pakistani prime minister Nawaz Sharif kicked up a storm when he earlier this month seemingly admitted that Pakistan had supported militants who attacked multiple targets in Mumbai in 2008, killing 166 people.

Mr. Sharif’s admission, which he has since tried to walk back, put a finger on Pakistan’s controversial policy of selective support of militant groups at a sensitive time. Pakistan is gearing up for elections that would secure its third consecutive handover of civilian political power.

Mr. Sharif’s remarks, moreover, stirred up a hornet’s nest because Pakistan is likely to next month be put on a watch list by the Financial Action Task Force (FATF), a global financial watchdog that monitors the funding of political violence and money laundering worldwide.

The remarks also put China in a difficult position. China has been pressuring Pakistan to crack down on militants, particularly in the troubled province of Balochistan, the crown jewel in its Belt and Road-related $50 billion plus infrastructure investment in the China Pakistan Economic Corridor (CPEC).

Yet, at the same time, China has at Pakistan’s behest prevented the United Nations Security Council from declaring Masood Azhar, believed to have been responsible for an attack in 2016 on India’s Pathankot Air Force Station, as a globally designated terrorist.

The militants, dressed in Indian military uniforms fought a 14-hour battle against Indian security forces that only ended when the last attacker was killed. Mr. Azhar was briefly detained after the attack and has since gone underground.

Mr. Sharif’s made his remarks as China was building up its military infrastructure in Pakistan. The build-up is occurring against the backdrop of Pakistan risking being involuntarily sucked into potential attempts to destabilize Iran if Saudi Arabia/and or the United States were to use Balochistan as a staging ground.

In line with a standard practice in Pakistan that has repeatedly seen groups that are outlawed resurrecting themselves under new names, Lashkar-e-Taibe (LeT), the banned group believed to be responsible for the Mumbai attacks, and Jamaat-ud-Dawa, widely believed to be an LeT front, are  rebranding under a new name and as a political party, Milli Muslim League, that would compete in the forthcoming election.

The League is headed by Hafez Saaed, a former LeT leader, who was last year released from house arrest despite having been declared a designated global terrorist by the Security Council and the US Treasury, which put a $10 billion bounty on his head. China vetoed Mr. Saeed’s designation by the UN prior to the Mumbai attacks.

Activists, even though the party was last month designated by the US Treasury, are likely to run as independents in the election if the government maintains its rejection of the party’s registration.

So are operatives of Ahl-e-Sunnat-Wal-Jamaat, a front for Sipah-e-Sahaba Pakistan, a banned, virulently anti-Shiite group that long enjoyed support from Saudi Arabia and operates multiple militant madrassas or religious seminaries in Balochistan that have witnessed an injection of funds from the kingdom in the last two years.

“Militant organisations are active. Call them non-state actors, should we allow them to cross the border and kill 150 people in Mumbai? Explain it to me. Why can’t we complete the trial? It’s absolutely unacceptable. This is exactly what we are struggling for. President Putin has said it. President Xi has said it. We could have already been at seven per cent growth (in GDP), but we are not,” Mr. Sharif said, referring to stalled Mumbai attacks-related trials in a Rawalpindi anti-terrorism court.

Taking Mr. Sharif’s comments a step further, prominent journalist and author Ahmed Rashid asserted that “the deep state of Pakistan is supporting the banned outfits as it has done in the past. This game should be stopped, and the government should show its commitment and sincerity in disarming these groups and not to allow them to enter into politics.”

Former Pakistani strongman General Pervez Musharraf, in an apparent manifestation of links between the circles close to the military and hardliners, said prior to the designation by the US announced that he was discussing an alliance with Mr. Saeed’s league.

Speaking on Pakistani television, Mr. Musharraf pronounced himself “the greatest supporter of LeT… Because I have always been in favour of action in Kashmir and I have always been in favour of pressuring the Indian army in Kashmir,” Mr. Musharraf said.

Pakistan’s military and intelligence service are believed to favour integration of militants into the political process as a way of reducing violence and militancy in a country in which religious ultra-conservatism and intolerance has been woven into the fabric of branches of the state and significant segments of society.

Critics charge that integration is likely to fail in Pakistan. “Incorporating radical Islamist movements into formal political systems may have some benefits in theory… But the structural limitations in some Muslim countries with prominent radical groups make it unlikely that these groups will adopt such reforms, at least not anytime soon… While Islamabad wants to combat jihadist insurgents in Pakistan, it also wants to maintain influence over groups that are engaged in India and Afghanistan,” said Kamran Bokhari, a well-known scholar of violent extremism.

Citing the example of a militant Egyptian group that formed a political party to participate in elections, Mr. Bokhari argued that “though such groups remain opposed to democracy in theory, they are willing to participate in electoral politics to enhance their influence over the state. Extremist groups thus become incorporated into existing institutions and try to push radical changes from within the system.”

Chinese ambiguity about Pakistani policy goes beyond shielding Mr. Azhar from being designated. A Chinese-Pakistani draft plan last year identified as risks to CPEC “Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention” as well as security. “The security situation is the worst in recent years,” the plan said.

Security has since improved substantially in significant parts of Pakistan. The question, however, is whether integration of militants into the political process would stabilize Pakistani politics in the absence of a concerted effort to counter mounting ultra-conservative religious fervour in the country. It may be too early to judge, but so far the answer has to be no.

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South Asia

Analyzing CPEC Summit 2018

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China-Pakistan Economic Corridor (CPEC) is the flagship project of China’s Belt and Road initiative, prioritized by both the Governments of China and Pakistan to build a China-Pakistan community of shared destinies. The strategic partnership under the CPEC envisages number of projects among which Energy Security, Infrastructural Development , Connectivity, Trade,  Industrial   Parks,   Agricultural Development , Poverty Alleviation and , Tourism are highly prioritized. Recently the CPEC summit 2018 was held in Karachi on April 23, 2018 to discuss the importance of CPEC and to analyze updates about the progress and development of this project. Perhaps this was the first such event of its kind in which   representative from all the provinces participated. The summit not only discussed the progress and development of the CPEC but deliberated upon the issue of regional connectivity as the key component of the CPEC. On recalling the last five years’ journey of CPEC up till now, one can infer that indeed CPEC is a chain of connectivity not only within Pakistan but across the region as well. The summit also concluded that Pakistan and China are planning to extend CPEC towards Afghanistan as CPEC is not only about economic growth, but also about community building.

Analyzing the outcome of this summit, one discovers that under CPEC, the country has completed two power projects in Sindh, while another is on its way towards completion. CPEC has resulted in the optimal utilization of two commercial ports and the opening of Keti Bunder. Along with this, the development of commercial ports is also in line with the CPEC plan. The project pledges provincial harmony and timely cooperation and facilitation in this regard.  As far as the electric power is concerned currently930 megawatts of wind energy is produced in Sindh alone for the national grid. Moreover a large chunk of electric power comes from those three Projects which are part of early-harvest program. In addition to this some 300MW is generated through wind power projects and would be part of the grid once the projects are completed in October 2018.

Following this progress rate CPEC is economically beneficial for all the provinces of Pakistan. KPK is contributing nearly 15pc of Pakistan’s natural gas output. In hydropower, KP has the potential of producing 30,000MW of energy. The two hydropower projects located at Chitral are also part of the CPEC framework.

Moreover another important aspect which was analyzed in this CPEC Summit 2018 is the idea of a separate ministry for logistic and transport so that this massive demand for the logistic and transport can be well managed.  Once this separate ministry is formed, the work will be done in the shortest possible time thus resulting in faster growth. Businessmen, stakeholders and industrialist also showed their interests in promoting business through CPEC.  Surely there is a need for joint ventures between local and Chinese companies to enhance Pakistan’s industrial base and productivity.

Eventually once the CPEC project is completed Pakistan will become a hub for transshipment trade. Most of Pakistan’s posts- through which trade is being carried out, are complaint to Transports Internationaux Routiers (TIR) or International Road Transports. Therefore there is no issue of compliance or connectivity under TIR. It will be easier to import goods and products in other countries thus developing more options for Trade and investment through CPEC.

The initial Phase of CPEC projects of the early harvest program are completed. Now the second phase the long term plan of the CPEC has been started that focuses on industrial activity and agriculture which would be completed by 2025.  Currently work on the Long term Plan is under way, after that in order to take its final shape in 2030 CPEC would be completed and people to people contact will develop, thus resulting in shared trade communities.

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