China-Pakistan Economic Corridor (CPEC) promises not only unprecedented dividends for development and progress of the two partner nations, but it is destined to be the most effective instrument yet for regional connectivity and integration as well.
The corridor – while not merely a passage – assumes pivotal significance for regional connectivity and cooperation as it comes on the back of China’s mammoth – in size, scale and scope – global connectivity strategy, i.e., Belt and Road Initiative (BRI). The ‘Belt’ is Silk Road Economic Belt (SREB) which aims at building road and rail linkages from China, through Central Eurasia, towards Eastern Europe and beyond. The ‘Road’ denotes 21st Century Maritime Silk Road (MSR), starting from China’s eastern and southern coasts and economic zones and heading towards South Asia, West Asia, Africa and Europe, through South China Sea, the Malacca Strait and the so-called Indian Ocean.
CPEC links the ‘Belt’ in the north and the ‘Road’ in the south, and thus becomes the most important feature of the whole strategy, although several other corridors are also part of BRI.
It is an undeniable fact that China is now the economic powerhouse of the world, not the US and EU as was the case in the second half of 20th Century, and Beijing is looking for establishing new global value chains, searching for new avenues of investment and aiming to tap wider markets. CPEC, undoubtedly, becomes significant in this whole scheme of things.
While many countries of the region as well as many developed nations of the ‘Global North’ have expressed interest in getting involved in and becoming a part of CPEC, both Pakistan and China have also made it clear that CPEC is by no means exclusive, and the main promise of such a corridor is to create a win-win situation for the entire region.
Here is how it may happen:
Central Asian Republics: CPEC provides unparalleled opening for the landlocked Central Asian Republics (CARs). Pakistan, China, Kazakhstan and Kyrgyzstan have signed a quadrilateral ‘Traffic in Transit’ agreement since 1995 to facilitate transit traffic between these four nations, aiming at increased linkages and enhanced commercial cooperation. For past over two decades, however, the agreement is yet to see its effective implementation.
Tajikistan is presently not part of this transit traffic arrangement but Pakistan, China, Afghanistan and Tajikistan have since August 2016 initiated another four-nation cooperation mechanism – to collaborate in the fight against terrorism. The point in highlighting these arrangements is that the institutional basis for enhanced commercial cooperation through CPEC, between CARs, China and Pakistan, already exists since long which is further strengthened after Pakistan (along with India) assuming formal membership of the Shanghai Cooperation Organization (SCO). SCO is working on its own set of initiates for enhanced commercial linkages between its members, multilaterally.
Thus, CPEC provides a catalyzing force to jump-start cooperation. These CARs – especially their areas adjoining China, which incidentally happen to be major population centers in case of Kazakhstan, Kyrgyzstan and Tajikistan – can benefit from easy access to Pakistani ports through CPEC.
Afghanistan: Despite some issues in smooth flow of trade between Pakistan and Afghanistan, the former remains the largest trading partner of the latter.Sino-Afghan trade is also on the upswing and prospects for enhanced Chinese investment into the war-torn country are becoming brighter. Beijing is already a major investor in various sectors of Afghan economy, specially mining. In this background, CPEC infrastructure would only spur economic activity along Pak-Afghan border, and will provide impetus for Pak-Afghan as well as Afghan-China trade and commerce.
Besides, road linkages with China would be quite hard to be built through this peculiar terrain. A cargo train from China did reach Afghanistan after a long journey through CARs, but had to go back empty through the same route, due to security concerns of the transit providing state Uzbekistan. Hence, CPEC remains the most feasible route for China-Afghanistan trade as well. In addition, CPEC and Gwadar port provide Afghanistan easy and effective access to the rest of the world, despite the availability of India-backed Iranian Chabahar port as an alternative.
Iran: The news that President Rouhani of Iran expressed his interest to Pakistani Prime Minister Nawaz Sharif – in their meeting in New York, in September 2016, on the sidelines of the United Nations General Assembly session – to get involved in CPEC, was taken with great interest in Pakistan.Thereafter, Iranian diplomats and officials have also expressed their country’s interest. Yes American sanctions have been and remain an issue to be dealt with but a number of countries of the region have found ways to work with Iran despite these sanctions. The size and scope of Iran-China commercial and investment linkages, despite US sanctions, also necessitate cooperation in and through CPEC.
The western route of CPEC in Pakistan’s Balochistan will practically be aligned along Pak-Iran border. It is positive to note that making Gwadar and Chabahar two complementing ports is now on the agenda of both the countries. In this backdrop, Iran emerges as one of the key future partners for Pakistan and China, in CPEC. The Corridor also provides an opportunity for Iran to reach out to CARs’ eastern territories, and let us not lose sight of CPEC becoming an energy transportation route between Iran and China, a long-term goal of both the producer and the buyer.
Russia: We have also witnessed several expressions of interest by Russian leadership, officials and diplomats intending to become involved in this mega initiative, in energy and other infrastructure projects. In recent years, Pakistan and Russia have moved ahead with mutual arrangements in strategic, political and commercial arenas promising a new wave of potentially large scale collaborative projects. The opportunities for utilization of CPEC for mutual benefit are bound to increase.
GCC Countries: It is very well known fact that China imports bulk of its crude oil requirements from the countries of Gulf Cooperation Council (GCC), which have to traverse a long way through Sea Lines of Communication (SLOC), reaching China’s south and east before it is then transported through land routes to China’s central and western, relatively less developed parts. CPEC provides the shortest route to transport oil from GCC countries – as is the case with Iran’s oil – towards China’s western and center; regions.
Not only the transportation of oil (and gas), but robust trade and investment relations between China and GCC countries – which are bound to increase further in the wake of GCC countries’ maneuvers to diversify their oil-dependent economies – also enhance the potential role of CPEC as a possible avenue between these two sides.
India – the Opportunity and the Challenge: It is needless to stress that after China, India is a very fast developing large-sized economy of the world, not only this region. India also needs energy, at a fast growing demand, from Iran as well as CARs – in addition to GCC countries, which are at present the main suppliers. India is also looking for access to Afghanistan and CARs, and the fastest as well as most feasible routes pass through the territory of Pakistan.
CPEC infrastructure will provide India with potential linkages to Afghanistan, CARs, and China’s Xinjiang, much better than any other possible route. Pakistan has repeatedly signaled that CPEC provides an opportunity for Islamabad and New Delhi to join hands. Nonetheless, it also goes without saying that smooth transport linkages between Pakistan and India, and through Pakistan for India, face the obstacle of overall relationship between the two countries.
While Pakistan and India’s case is a particular one, connectivity overall in the entire region is being hampered by, and will continue to face the challenges of various forms and manifestations of instability in addition to terrain, technological and financial constraints.
However, would not be wrong to say that despite these challenges, CPEC provides a very favorable route of regional connectivity and resultantly enhanced economic cooperation as well as wide-spread people-to-people linkages in the region encompassing South, West and Central Asia.
