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Special Economic Zones and CPEC

Qura tul ain Hafeez

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Economic Expansion, high prices and inflation are the issues on which one can talk for hours. The scarcity of resources, energy crises and lack of industrial modernization are the challenges which Pakistan has been facing for past many decades. Despite the advantages of geographical setting, the country could not sufficiently expand its economy until 20thcentury. However, the China-Pakistan Economic Corridor (CPEC) has brought with it various infrastructural, energy, and industrial projects that show smooth progress in these sectors. One of the most significant developments is the establishment of Special Economic Zones (SEZs) under the Long Term Plan (LTP) of CPEC.SEZ is a physically protected area with definite geographic boundaries under which the investors and the developers enjoy duty free benefits and streamlined procedures, set up by the government.  After the successful completion of the Early Harvest Program (EHP), the governments of China and Pakistan aspire to complete the Long Term Plan (LTP) of CPEC. As a key route to success, the LTP has been divided into three phases and the work on the first phase has already started. SEZs are on the first priority list of the first Phase of LTP. While utilizing the strategic location of Pakistan and the rich resources, the SEZ will contribute a framework for Pakistan’s domestic industries, and local economy.

The government has planned to establish nine Special Economic Zones (SEZs) in all the four provinces, federal areas and Gilgit-Baltistan under the framework of CPEC, which would be completed in a period of three years. Pakistan has conducted feasibilities of 5 SEZs which focuses only on the infrastructure. The three prioritized SEZs to be completed in the first phase of LTP are M3 Industrial City in Faisalabad, Punjab, Chinese SEZ Dhabeji, Sindh and Hattar SEZ in KP province. While the remaining six sites include Rashakai Economic Zone, M-1 Noshera, Bostan Industrial Zone District Pishin, AllamaIqbal Industrial City, Moqpondass SEZ in Gilgit-Baltistan, ICT Model Industrial Zone Islamabad, Development of Industrial Park on Pakistan Steel Mills Land at port Qasim near Karachi, Special Economic Zone at Mirpur AJK, Mohmand Marble city.

Although, there are general misunderstandings regarding the industrial ramifications of the SEZ’s under CPEC due to large number of Chinese firms and the exemption in the tax rates offered to them. However, the LTP of CPEC shows that these SEZ’s will offer the country with a great opportunity to accelerate industrialization because they are beneficial for all the international and domestic investors. So far in the history, SEZs have been the reason of economic boost in countries around the globe. Now this is a matter of concern that either these SEZs will make Pakistan a center of economic modernization and trade ventures or not. The economist and financial experts are optimistic about Pakistan’s emergence as one of the fast growing and promising global economy.

While stepping towards the era of industrialization, Pakistan faces a number of issues that have so far refrain the industries to understand their growth potential. Some of the chief hindrances to investment in Pakistan include poor security; non-availability of infrastructure and power crises, rent-seeking regulators, and cumbersome tax administration, etc. among many others.

Likewise the entrepreneurs in Pakistan have certain reservation with the incentives proposed by the government and SEZs for the investors and enterprises including ten-year exemption from all taxes on imported capital goods and exemption from tax on income accruable from development and operations in SEZs for a period of ten years. Although these incentives will be beneficial for the foreign investors at large but at the same time it will provide Pakistani enterprises with the opportunity to collaborate with the Chinese firms and launch joint ventures of mutual interests and benefits. This will be further beneficial for the annual Gross Domestic Product (GDP) growth of Pakistan. Moreover it will bring Foreign Direct Investment (FDI) in the country thus generating the foreign revenue.

Subsequently it is significant to keep in mind that in Pakistan there are certain security and political factors due to which the SEZ’s may face challenges. Hence forth to conquer these challenges provincial harmony among all the provinces and mutual consensus between the public sector and private sector is needed. SEZs under CPEC will be a life-time opportunity for Pakistani companies to work together with Chinese companies for the development of export-oriented manufacturing industries. Therefore, Pakistan should increase its products in the Chinese market and raise the ratio of its export while decreasing the trade deficit by lowering the imports.

Qura tul ain Hafeez has done M Phil in international relations from Quaid-I Azam University Islamabad. She is currently working as a Research Associate at Strategic Vision Institute Islamabad. She can be reached at Quraathashmi[at]gmail.com

South Asia

US geopolitical interests offer Iran sanctions loophole amid mounting tension

Dr. James M. Dorsey

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The Indian-backed Iranian port of Chabahar has emerged as a major loophole in a tightening military and economic noose and ever harsher US sanctions that President Donald J. Trump, reluctant to be sucked into yet another war, sees as the best way to either force Tehran to its knees or achieve regime change.

Alice Wells, the State Department’s assistant secretary for South and Central Asia, said during a meeting with Afghan foreign minister Salahuddin Rabbani that Chabahar had been exempted at Afghanistan’s request.

The State Department said earlier that the exemption was granted because it was related to “reconstruction assistance and economic development for Afghanistan, which includes the development and operation of Chabahar Port.”

US officials said privately that the exemption was also a nod to India that sees Chabahar as vital for the expansion of its trade with Afghanistan and Central Asian republics.

They said it was moreover an anti-dote to the Chinese backed port of Gwadar just 70 kilometres down the Arabian Sea coast in the troubled neighbouring Pakistani province of Balochistan.

That may be a long shot, certainly as long as India like much of the rest of the world is restricted by the US sanctions in its economic and commercial dealings with Iran.

The exemption comes however as Chinese security concerns in Balochistan as well as Pakistan at large are mounting.

China’s massive US$45 billion plus Belt and Road-related infrastructure investment in Pakistan with Gwadar and Balochistan at its core has become a prime target for nationalist insurgents that has officials in Beijing worried. It has also reinforced long-standing doubts in some circles in Beijing about the viability of the project.

Dubbed the China Pakistan Economic Corridor or CPEC, China sees the project, involving a network of roads, railways and pipelines that would link Gwadar to China’s troubled north-western province of Xinjiang as a key economic component of its brutal effort to Sincize the strategic region’s Turkic Muslim population.

“China, you came here (Balochistan) without our consent, supported our enemies, helped the Pakistani military in wiping our villages. But now it’s our time… Baloch Liberation Army (BLA) guarantees you that CPEC will fail miserably on the Baloch land. Balochistan will be a graveyard for your expansionist motives,” a commander of the BLA’s Majeed Brigade said in a video message released a week after militants stormed a hilltop, highly secured luxury hotel in Gwadar, killing five people.

The BLA claimed a month earlier responsibility for an attack on a convoy on a highway leading out of Gwadar in which 14 Pakistani military personnel died and an assault last year on the Chinese consulate in Karachi.

The attacks and threats have prompted Chinese sceptics of China’s massive investment in Pakistan to express their doubts more publicly.

“Gwadar wants to be in the shipping business, but it has failed to do so. Pakistan’s economy is not very good, and this port has become very wasteful … under these circumstances, including with the hotel attack, how can China conduct its business? The roads and traffic cannot even be maintained,” said Beijing-based military analyst Zhou Chenming.

While many in Pakistan believe that the BLA enjoys Iranian support and Iranians are convinced that Pakistan enables shadowy Islamic militants who have claimed responsibility for a rare suicide bombing in December in Chabahar and attacks on Revolutionary Guards elsewhere in the Iranian province of Sistan and Balochistan, fact of the matter is that both countries are vulnerable to Baloch insurgents.

The situation on both sides of the Iranian-Pakistani border is complicated by suspicions that the violence also has links to the rivalry between Iran and Saudi Arabia and that the Baloch provinces of Pakistan and Iran could become a stage for a proxy war.

Amid reports that China has reached out to Baloch nationalist leaders in exile, Pakistani security analyst Muhammad Amir Rana cautioned that the exiles may no longer be in control.

“The new leadership of the Baloch insurgency largely hails from the educated middle class with urban backgrounds and is not hiding in Europe; therefore, it does not face the sort of constraints that exiled Baloch leaders do vis-à-vis Iran,” Mr. Rana said.

Mr. Rana noted that Iran’s influence in Pakistani Balochistan was visible in oil smuggled across the border, Iranian products in grocery shops and the supply of electricity to the coastal strip of Makran that includes Gwadar.

“For Pakistan, the security cost of CPEC is increasing which could frustrate the Chinese as well as foreign and local investors,” Mr. Rana warned.

For now, China confronts a more serious challenge in Gwadar, Balochistan as well as other parts of Pakistan that are struggling with un-related incidents of political violence compared to India and Chabahar.

That could change if the Saudi Iranian component of the low level Baloch insurgency spins out of control with the escalating stand-off between the United States and Iran.

Iran appears to have pinned its hopes that Chabahar will be shielded from the impact of regional tensions on the perceived US geopolitical need to protect India’s interest in Afghanistan and Central Asia.

Said Pir Mohammad Mollazeh, an Iranian Afghanistan and Central Asia scholar: “US long-term geopolitical interests, due to the lack of relations with Iran, require India to maintain its position in the region and protect India as a partner in Central Asia… Chabahar port is considered to be a very important and strategic which is an opportunity for our country to enable Iran to reduce its sanctions by means of economic exchanges in Chabahar.”

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South Asia

Pointless Colonial Massacres and Post-Colonial Wars and Killings on the Indian Subcontinent

Dr. Arshad M. Khan

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Two colonial mass killings from the twentieth century are always remembered:  The Qissa Khwani Bazaar massacre on April 23, 1930 in Peshawar (then India, now in Pakistan) was the result of peaceful demonstrations protesting the arrest of Khan Abdul Ghaffar Khan who had called for a nonviolent movement of ‘patience and righteousness.’  Authorities nervous at the size of the crowds called in the military.  The local Garhwal Rifles refused an order to fire.  A special city disturbance column and four armored cars were sent for;  they did not.  The number of dead vary with the source ranging from 20 to 400.  Whatever the figures, the incident legitimized the protest movement and creating a new Gandhi of the northwest in Ghaffar Khan. 

Pakistan since independence has had insurgencies — in the Northwest where Peshawar is located,in Baluchistan (ongoing) and, the worst of all in  its eastern half in 1971 that led to the birth of Bangladesh.  Estimates of casualties range from 300,000 to 3 million. 

This year is the centenary of the notorious Jallianwalla Bagh massacre in Amritsar.  April 13, 1919 was the day of Baisakhi, a major Sikh festival, so people had come to the holy city from surrounding Punjab villages and gathered to listen to speakers.  They were also unhappy with the deportation of independence leaders Dr. Saifuddinn Kitchlew and Dr. Satya Pal out of state to Dharamsala.  The protesters were mostly Sikh, the leaders being deported a Muslim and a Hindu, and India then secular in the minds of the people. 

Brig-General Reginald Dyer the local commander had banned all meetings.  To him the crowd gathering in the Bagh was a challenge to authority.  He took a contingent of Gurkha troops and proceeded forthwith to disperse what to him was an illegal assembly.  It is worth noting that Nepali Gurkhas are alien to the area, speak a different language, and look more like Tibetans.  The force took up positions on a raised bank at the main entrance and were ordered to fire on the unarmed crowd.  People tried to flee toward the other exits and in the stampede some were trampled.  Yet the firing continued for an incomprehensible ten whole minutes using up 1650 rounds and leaving hundreds dead and over a thousand wounded.

No respite for the Sikhs despite their anti-Muslim stance during the 1947 partition.  In 1984 following Indira Gandhi’s assassination by a Sikh bodyguard — itself a result of her military response killing Sikh religious zealots occupying the Amritsar Golden Temple — riots broke out.  An estimated 8000-17,000 Sikhs were killed in Delhi and Haryana.  The connivance of the Delhi police and the Congress party has long been suspected, and Human Rights Watch has complained of no prosecution for the killings.  Ditto for the perpetrators of the Muslim pogrom in Gujarat during Narendra Modi’s rule.

While the callousness of the Qissa Khwani Bazaar and Jallianwalla Bagh incidents horrifies, the number killed pales in comparison to what has happened since independence.  Within months of freedom, India invaded the independent principality of Hyderabad, allied to the British since the 18th century.  An estimated 200,000 people were killed and many fled to Pakistan.

It also invaded, occupied (1973) and then annexed Sikkim in 1975, a Himalayan foothill monarchy since 1642.  The suppressed independence movement in neighboring Assam and the Northeast and other ongoing insurgencies across at least a quarter of India continue. 

In Kashmir, a decades long struggle for some kind of autonomy has cost tens of thousands of lives.  Estimates vary from 40 to 80 thousand.  Some Indians have a conscience:  Long critical of India’s stance, the Booker Prize winning novelist and peace activist Arundhati Roy has called the Modi government ‘reckless’ in its policy there.

The Muslim minority in India appears to be intimidated and abused.  A recent feature story on Chamanganj, a Muslim neighborhood in Kanpur, illuminates the distress and discrimination experienced by Muslims.  The Congress candidate never visits; the BJP candidate shows up hoping to capture some votes but his party’s policy is notoriously anti-Muslim.

The violence against Christians is also on the rise.  Opendoorsusa.org reports over 12,000 incidents last year, while the number of churches attacked rose dramatically from 34 to 98.  It has now become the 10th most dangerous country in the world for Christians on the 2019 World Watch List.

A secular India, the pride of Indian independence leader and its first prime minister Jawaharlal Nehru, is under threat.  In its place, a muscular Hindu nationalist agenda enforced by goons from nationalist organizations has been labeled “saffron terror”.  The Hudson Institute called these attacks “not inchoate mob violence, triggered by … insult; rather they involved careful planning by organized Hindu extremists …”

The record is surprising yet evident:  Independent India has killed hundreds of times more people than the Dyer atrocity, and the present-day Indian subcontinent is becoming a noticeable contrast to the relatively secular country of 1919.  In India itself, the Modi government and its affiliates by encouraging Hindu nationalism must shoulder the blame. 

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South Asia

The Durand Line Issue

Hareem Aqdas

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The Durand Line is a 2,200-kilometre debated border between Pakistan and Afghanistan. It was set up in 1893 between Sir Mortimer Durand, a British negotiator and respectful hireling of the British Raj, and Abdur Rahman Khan, the Afghan Amir, to settle the constrain of their individual circles of impact and make stride discretionary relations and exchange between the two nations. Afghanistan was considered by the British as a free state at the time, in spite of the fact that the British controlled its remote issues and discretionary relations. The single-page assertion, dated 12 November 1893, contains seven brief articles, counting a commitment not to work out obstructions past the Durand Line.

 A joint British-Afghan boundary overview took put beginning from 1894, covering a few 1,300 km of the border. Built up towards the near of the British-Russian “Great Game”, the coming about line set up Afghanistan as a buffer zone between British and Russian interface within the locale.

The line, as somewhat adjusted by the Anglo-Afghan Settlement of 1919, was acquired by Pakistan in 1947, taking after its independence. The forced Durand Line cuts through the Pashtun tribal ranges and assist south through the Balochistan locale, politically partitioning ethnic Pashtuns, as well as the Baloch and other ethnic bunches, who live on both sides of the border. It demarcates Khyber Pakhtunkhwa, Balochistan and Gilgit-Baltistan of northern and western Pakistan from the northeastern and southern areas of Afghanistan.

From a geopolitical and geostrategic viewpoint, it has been depicted as one of the foremost unsafe borders within the world. Although Pakistan recognized the Durand Line as an international border, it remains to a great extent unrecognized by Afghanistan. In 2017, in the midst of cross-border pressures, previous Afghan President Hamid Karzai said that Afghanistan will “never perceive” the Durand Line as the international border between the two countries.

The Durand line remains a bone of contention between the two nations and a primary reason why Afghanistan and Pakistan have yet failed to establish cordial relations. Afghanistan claims a chunk of the KPK and Balochistan provinces of Pakistan on the basis that it was acceded to Pakistan, though it was originally a part of Afghanistan, with people dwelling on each sides having the same culture, language and way of life etc.

What is very clear is that relations between the two states have been tinged with hostility ever since Pakistan became an independent state in 1947. There are mainly two interrelated, historical reasons for this: the problem of the “Durand Line” — the shared but disputed border of the two countries; and Afghan support for the “Pakhtoonistan” movement in Pakistan’s North West Frontier Province (NWFP)

The questions is answered by both nations with a bias towards their respective national interest in mind, both Pakistan and Afghanistan claiming areas divided by the Durand line as their legitimate part.

Major accusations of Afghanistan over the Durand line are: its legitimacy period has terminated; it was in the original agreement between the British and the Afghans claimed its validity only for 100 years, which has expired. Nevertheless, neither Afghan government, nor the foremost dynamic advocates of this see have ever displayed any plain instrument demonstrating their claim. Nor do we discover, upon looking at the pertinent archives, i.e. the Durand Line assertion and the rest of the records confirmed until 1896 by the individual committees for assurance and boundary of the British-Afghan border, any arrangement confining the term of the understanding to 100 year time. It is undoubtedly a riddle how this supposition might spread over the nation without being addressed at all.

Another claim of Afghanistan in the de-legitimizing the boarded is that the assertions relating to it collapsed when the British exchanged powers to Pakistan. The agreement was done with British India and not with Pakistan. This was a main reason that Afghanistan was one of the very few countries that opposed the addition of Pakistan in the UN- since it alleged it of illegally annexing Afghanistan’s territory.

One more accusation to not accept the boarder comes as the understandings were persuasively forced upon Afghanistan-it is ethically unmerited- is certainly an issue worth encourage talk and contention. In any case, whereas one may concede the dispute to be fair and genuine, it remains deficiently to refute the status of the Durand Line as an international border between Afghanistan and Pakistan. The Durand Line understanding of 1893 isn’t the sole point of reference in border assessment. At slightest other four assertions (of 1905, 1919, 1921 and 1930), which had the assent of both sides, must be counseled. Clearly, Afghanistan cannot claim that all of the afterward four assertions were concluded in a coercive environment, particularly the Kabul 1921 understanding for foundation of neighborly commercial relations, which not as it were marked but approved in 1922, and beneath which disobedience was traded by the agents of both states in Kabul.

The boarder is not rejected by any other party of the world except Afghanistan itself, making the Afghan case further weakened.

No matter how much Afghanistan retaliates over this matter, the Durand line is widely accepted as an international boarder and the afghan claim will likely not bear fruit. The Afghans should rather hold the British accountable for the “so said” unfair distribution and not Pakistan, since Pakistan did not decide into this matter at all but was a decision purely made between the Afghans and the British- rather battle the British towards their claim and not make this a political issue more than a legitimate claim.

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