Perils to China-Pakistan's GCC economic corridor

Perils to China-Pakistan's GCC economic corridor
Comment: By 2025, trade between the GCC and China will completely shift via the Pakistan economic corridor, but this new partnership is already stirring tensions with India, writes Naveed Ahmad.
6 min read
02 Sep, 2016
Pakistan will become the main economic corridor for GCC-China trade [Getty]

On August 13, Indian Prime Minister Narendra Damodardas Modi lambasted Pakistan for its human rights violations in "Pakistan-occupied-Kashmir and Balochistan," vowing that Islamabad will be answerable to the international community for the atrocities committed.

Addressing India's Independence Day ceremony two days later, he stated, "From the ramparts of the Red Fort, I want to express my gratitude to some people - the people of Balochistan, Gilgit, and Pakistan-occupied Kashmir - for the way they wholeheartedly thanked me."

The back-to-back digs at Pakistan were interpreted by Pakistan and China as an expression of India's frustration over the logistical corridor Beijing has been building to connect its less developed western region, to the Arabian Sea, as western route for its trade.

The war of words has only intensified between Islamabad and Delhi while influential Chinese think-tanks have warned Modi's India of repercussions if it engages in a proxy war in Southern Pakistan. Just a week prior to Modi's outburst, 70 Pakistanis lost their lives in two coordinated terror attacks in Quetta, provincial capital of Balochistan province. Though an outlawed faction of Taliban claimed the responsibility, the government blamed an external hand in the terror act.

Islamabad's foreign ministry spokesman Nafees Zakaria said, "Indian intelligence agencies have remained involved in subversive activities in Pakistan especially in Balochistan and Karachi. Public opinion, too, largely saw the Quetta carnage as an attempt to subvert the China-Pakistan Economic Corridor (CPEC).

Over the past three weeks, the Chinese logistical corridor has been at the heart of high politics. On the one hand, India conveyed its disapproval to China concerning its construction, and on the other, Delhi signed landmark defense and logistical agreements with the United States. Meanwhile, Islamabad hosted top Chinese experts in a two-day high-profile conference to deliberate on various aspects of the economic bridge.

For the Gulf region alone, the significance of the China-Pakistan Economic Corridor cannot be overstated

China signed an assortment of infrastructure development agreements worth over $46 billion with Pakistan in 2015. The two strategic partners named the China-Pakistan Economic Corridor (CPEC). This is no Chinese Marshall Plan for Pakistan but a continuation of its grand strategy for the next century.

The economic superpower is not ready to take risks in the tense South China Sea with trade worth trillions of dollars. Pakistan, the first non-communist country to start aviation links in the 60s and then paving the way for US diplomatic czar Henry Kissinger's secret visit via its national airline, will help shorten the distance Chinese oil tankers and merchant ships have to travel to reach its key ports in South-East Asia by 10,000 kilometers.

In addition, the corridor will offer a much shorter route for trade between China and the GCC, Africa and Europe but also lessen risks involved in tense and crowded waters of Straits of Malacca region.

A geo-economic master-stroke

For the Gulf region alone, the significance of the China-Pakistan Economic Corridor cannot be overstated. China is currently the second largest trade partner of the GCC states. The GCC states are the largest source of hydrocarbons for China.

China has gradually become the world's largest energy consumer

The signing of a comprehensive Free Trade Agreement (FTA) between China and the GCC will expedite its prospects of overtaking the European Union as the region's top trading country. Meanwhile, Beijing is pursuing individual FTAs with the six Arab Gulf nations.

Since 1993, when demand exceeded its domestic oil supply, China has gradually become the world's largest energy consumer. Today, China consumes more than 25 percent of the global output.

By 2020, China will become the largest importer of GCC goods worth $160 billion while exporting goods worth $135 billion; a good chunk of commerce will start taking place via Pakistan. This trade will completely shift to the economic corridor in Pakistan by 2025.

Challenges ahead

The ambitious geo-economic leap is, however, threatened by India's unprecedented ambition to compete with China in terms of economic might and strategic influence. Over recent decades, the United States has pushed for Pakistan to grant India the "Most Favoured Nation" status while giving it excess for transit trade to Afghanistan and other Central Asian states.

The South Asian Free Trade Agreement was eclipsed by Pakistan and India's dispute over Jammu and Kashmir, and clash of interests in Afghanistan. With Pakistan joining hands with China, India not only sees Beijing's naval footprint on Arabian seaport of Gwadar increase - enhancing Islamabad's significance for the Middle East, Europe and Africa - but Delhi also sees itself denied the much sought-after access to Afghanistan and Eurasia.

Delhi also sees itself denied the much sought-after access to Afghanistan and Eurasia

While India not only maintains a secretive defense pact with Iran, it has also started to develop Tehran's Chabahar port for future exports to Afghanistan and Central Asia.

Pakistan's Balochistan region where Gwadar port is situated, has remained under-developed despite being extremely rich in minerals, and many of these resources are yet to be exploited. The sparsely populated region has witnessed low-intensity insurgency led by self-exiled Baloch leaders.

Islamabad alleges that Delhi's consulates in Pakistan - bordering regions of Iran and Afghanistan - are key providers of finances and training. Modi's statement was widely welcomed by the insurgents who hoped that India would not use their cause to blackmail Pakistan but would provide concrete support.

Pakistan is not only carrying out various infrastructural and human development projects but also conducting surgical military operations against what it calls "foreign funded miscreants".

China will be partnering with Pakistan ever more closely in fighting its internal security threats

Pakistan's border with Afghanistan and Iran, which has been nothing more than an imaginary line on the map, is being duly fenced, manned and equipped with a modern border management system. Pakistan is raising an exclusive security force to secure the logistical corridor from the southern coastal shores to the northern-most border with China.

After India's blunt remarks in support of Baloch militants and against the economic corridor, China will be partnering with Pakistan ever more closely in fighting its internal security threats.

The second serious threat to the economic corridor emanates from extremist militants, though this has now been largely isolated. The extensive military operation - Zarb-e-Azb - in the Afghanistan-bordering Waziristan region, is in its final stages. Terrorist incidents in the country have reduced to 90 percent across the country. Intelligence and security agencies are now going after the sleeper cells where extremists fleeing from military operations in Waziristan and Khyber regions might be hiding.

Since the Quetta carnage, Pakistan's National Action Plan (NAP) against terrorism has been under strict scrutiny. The military, instead of civilian bureaucracy, is now overseeing the implementation of the elaborate counter-terror strategy, which also addresses the challenges of indoctrination and financing.

While the military has largely implemented its part of the NAP, the civilian aspect of the strategy leaves much to be desired. Progress on integrating historically semi-autonomous tribal regions in Khyber-Pakhtunkhwa and Balochistan provinces has been marginal while capacity building of provincial police and other security agencies leave a lot to be desired. With a lack of political rights to alienated people and the presence of effective civilian law enforcing agencies, Taliban or other "miscreant" groups are able to resurge.

Though India cannot sustain its overt support for militancy in a sovereign country, Pakistan and China will have to pursue a policy of frantic diplomacy in order to keep the geo-economic corridor clear of controversies from the rivals.

Naveed Ahmad is a Doha-based investigative journalist and academic with special focus on diplomacy, security and energy issues. Follow him on Twitter: @naveed360

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.