Pakistan, China Seeking For Stability In Afghanistan

Recent discussions between Pakistan and China have concentrated on the idea of expanding the China-Pakistan Economic Corridor (CPEC) to also include Afghanistan. According to a formal statement, the two parties held discussions of mutual concern, including the political and security situation in Afghanistan, Pakistan’s and China’s humanitarian assistance to Afghanistan, and other topics. It is obvious that peaceful and stable Afghanistan would lead to regional development so both, Islamabad and China, noted that connected Afghanistan will also enhance regional trade. Geopolitical and economic concerns in Afghanistan are shared by Pakistan and China. Both had been released when the Taliban took control of the war-torn nation in August of last year. Both could be fine with the Taliban’s reign in Afghanistan, but their security considerations may prove challenging.

China and Pakistan have increased up their contacts with the Afghan interim Taliban government in previous months to look for opportunities to expand economic and humanitarian relations with the turmoil nation. China and Pakistan are two neighboring states which believe that if the unrest is not handled, it could lead to a large-scale migration of Afghan refugees and enable international terrorists to conduct cross-border operations on Afghan territory. CPEC is a component of China’s largest project, the “Belt and Road Initiative,” which aims to revive the nation’s ancient trading routes in the south-east Asian coastline nations.

Both parties underlined their strong support for one another’s policy objectives and top issues, as well as their commitment to deepen strategic communication, such as at the highest political level and through pragmatic cooperation. Fostering intercultural exchange, offering humanitarian aid, and boosting commerce and transportation capacity is also equally important. Now, India may have security concerns as a result of Pakistan and China’s consideration of expanding the China-Pakistan Economic Corridor (CPEC) to include Afghanistan. Taliban needs to cooperate as well to make things better and assure their engagement and security while China and Pakistan seek to bring stability in Afghanistan.




Understanding 2021 Inflationary Spiral in Pakistan

By Hira Shakeel

For the people of developing countries an increase in prices of basic goods, especially food items and fuel hike in comparison to the little or no increase in the wages has become a struggle for survival. This situation presents additional challenges for the daily wage earners and for the low-income households. The rate of inflation in Pakistan has edged up to a daunting double figure of 10.9%, which presents a gloomy picture for the poor. Pakistan Bureau of Statistics (PBS) recorded a price hike of 9% from 8.4% in September alone on consumer items. In 2018, the increase of inflation was recorded at 3.93%, but three years later this has increased to more than 10%.

Pakistan is a net importer of energy and relies on the exports of raw materials, especially from the agricultural sector. The fluctuation in the prices of the raw material in the international market affects the stability of the local market in Pakistan, making it more fragile. For years, modernizing and strengthening the agricultural base of the country has been neglected by the leaders. This neglect has proved detrimental, because although Pakistan is majorly an agricultural country, it has become a net food importer. Moreover, as Pakistan imports oil from abroad, the purchase weighs heavily on the import bill of the country. Any increase in the price of fuel globally, does not only lead to inflation in Pakistan but at the same time the exchange rate is pressurized downward which makes imports more expensive. This eventually leads to a trade deficit, i.e., when the country’s monetary value of imports surpasses the monetary value of exports.

Neglect of the agriculture sector coupled with the failure to address the domestic supply disruption, for instance, the unforeseen shortage of wheat and sugar, have contributed to the hike of prices. Although the claim of the government that prices of the products have been increasing globally since the spread of the pandemic in 2019 is not wrong. However, claiming to still have the lowest prices as compared to the regional countries is partially true. In comparison to India or Bangladesh the prices of petroleum might be lower in Pakistan but at the same time country’s even lower per capita income wipes out the advantage of these low prices.

Most of the basic goods, which includes food items such as sugar, rice, ghee, wheat, energy, telecom services, transportation, and clothing have seen a surge in prices. Any increase in the prices of electricity or fuel impacts the prices of three sectors in Pakistan, namely food, transportation, and housing.

The limited employment opportunities and the low wages have made it difficult for people to fulfill their basic needs. While the job opportunities are diminishing, the surge in prices is making it unbearable for the people. The living standard of a common man continues to depreciate due to higher inflation. A pro-poor policy does not mean an increase in the regressive nature of taxes, i.e., those taxes which is applicable to be paid by citizens regardless of their income. Further, the direct tax is mostly left unaccountable due to the negligence of the authorities as it remains undocumented.

Any increase indirect taxes means an increase in prices. This has a direct impact on a common man, as his purchasing power parity drops. When such a situation arises it eventually pushes a family towards lower standards of living, due to the constrained choices. At a societal level, an increase in direct taxes, leads to a hike in prices of common goods, consequently widening the gap between social classes. The purchasing power parity of an individual with a fixed income is most affected because there is no increase in their income.

In the longer run, a persistent situation like this can lead to a conflict within the country. According to a report issued by the UNDP, inflation has become a headache for almost every citizen in Pakistan except those 20 percent who own more than half of the country’s wealth. If inflation has become a challenge for the people, it presents a challenge for the government too.

Before suggesting what the government can do to control the prices, it is crucial to look at the origin of the challenge. Primarily, major industrial economies have been vulnerable due to COVID-19, but their recovery has been recorded much quicker than expected. This has increased the global consumption of energy and other commodities. Therefore, there has been a hike in fuel prices globally.

Additionally, the prices of products such as palm oil, wheat, sugar, and fertilizers have also increased. Eventually, when the products are shipped and land in Pakistan there is an additional cost, which makes these commodities expensive. Considering this global hike in prices and adding the issue of the deprecating Pakistani rupee against the dollar presents a two-fold challenge. This has a direct impact on the imports of Pakistan, thus the reason for the increase in prices. The strengthening of the rupee is not an easy task, because it is directly attached to the condition of the national economy and the inflow as well as the outflow of the foreign exchange.

In the case of Pakistan, the economic growth is slow and weak, plus the outflow of foreign exchange is much higher than the inflow, appreciating the value of the rupee is unlikely. Keeping the value of the rupee higher against the US dollar will have a huge impact on the economic condition of Pakistan because the meager foreign reserves that Pakistan has will be used for this purpose. The little foreign reserves that the State Bank of Pakistan has are important to meet the trade deficit of the country.

Much of the hike in prices is due to the reason that Pakistan is receiving aid from the international donor agencies on certain conditionalities, which require devaluation of the currency, cutting down on subsidies and welfare projects, and increasing prices. There is a serious need to amend the economic policies in the country and focus on strengthening the industrial and agricultural base of the country if the government wants to address the challenge of uncontrollable inflation. Secondly, at both district and level, the weak administrative mechanism has led to a hike in prices. It is due to their weakness that there is a gap between the wholesale price and retail price. However, to such challenges, there is no quick or immediate solution.

For swift action, the government can reduce the duties and taxes on the imported items but in the long run it can lead to a fiscal deficit. The only way that Pakistan can overcome its current economic challenges, is by focusing on increasing its exports which will increase the inflow of dollars in the country.  Besides increasing its exports, Pakistan can induce foreign direct investments (FDIs), and open more channels for securing remittances from Pakistanis in foreign countries. Until and unless, the government does not address the economic challenges, create more job opportunities, give subsidies to the local industries, and improve the purchasing power parity of its citizens, inflation will remain the biggest obstacle to Pakistan’s growth.




China’s Interests in Afghanistan: Post U.S. Military Withdrawal

By Zara Qurban

Since the withdrawal of the U.S. troops and its European allies after decades of war in April 2021, Afghanistan is entangled in the wickedest kind of security. Afghanistan’s commandeering by the Taliban after the U.S. military withdrawal has presented the regional States with many new emerging challenges. An abrupt withdrawal of the U.S. military from Afghanistan has created a huge power vacuum and neighboring States are extending helping hands to avert the possible fall of Afghanistan.
Countries such as Pakistan, Russia, India, Iran and Turkey have their own grounds to intervene but now the global are on China including re-evaluating its persistent ‘non-interference’ policy. China was against the invasion of the U.S. military and also opposed the abrupt withdrawal stating that it will leave Afghanistan in mayhem. China’s Foreign Ministry said “the recent abrupt U.S. announcement of complete withdrawal of forces from Afghanistan has led to a succession of explosive attacks throughout the country, worsening the security situation and threatening peace and stability as well as people’s life and safety.”
Many spectators are considering the exchange of dialogues between Chinese Foreign Minister Wang Yi and the Taliban leaders an attempt by China to exert more influence in the region. But, China does not look at Afghanistan from the lens of prospects, the Chinese influence and involvement, especially after the U.S. military withdrawal, is all about the management of threats. Another observation entails that Chinese political and economic interest in Afghanistan revolve around the wariness of Afghanistan becoming a safe haven for militant groups targeting China like the last time Taliban were in power.
Though Mullah Baradar and Wang Yi in Tianjin have been in contact for decades, the Taliban’s ideological agenda does not fit well with China. Andrew Small, Associate Senior Policy Fellow, states, “China certainly has substantial commercial and economic interests in the wider region, but they are minimal in Afghanistan itself. Its major investments there, the Aynak copper mine and the Amu Darya energy projects, have been in stasis for many years. There have been numerous discussions about Afghanistan’s involvement in the Belt and Road Initiative, including connections to the China-Pakistan Economic Corridor, but Beijing’s view has been that, in Afghanistan, stability has to precede serious new economic commitments.” Other than copper, Afghanistan has untouched mines of minerals such as cobalt, iron, mercury and lithium which are estimated to the value of about $1 trillion.
In order to maintain better political and economic relations with Afghanistan, China offered to rebuild the infrastructure “by funneling funds directly to the group through Pakistan.” As a result to continuous exchange of dialogues and China’s commitment of support in Afghanistan, the spokesman for the Taliban Political Office in Qatar established that they recognize China “as a friend of Afghanistan”, he also stated that Taliban and Afghanistan will no longer provide refuge or safe haven to Muslim Uyghurs. On one occasion the Chinese foreign minister said that Taliban are expected “to play an important role in the progress of peaceful reconciliation and reconstruction in Afghanistan.”
China’s policy towards Afghanistan is primarily based on the security implications resulting from the U.S. and Taliban peace agreement, which China believes in not going in the right direction. The disturbances, instability and radicalization will eventually seep through the borders into China. As per the researchers based in Afghanistan, “through military assistance, China helped Kabul build its military mountain brigade in the Wakhan Corridor near Afghanistan’s northern Badakhshan province with the primary goal of preventing infiltration by the Islamic State into China.” It is believed that Beijing will keep close bilateral ties with Afghanistan in order to tightly manage any spill over into China by engaging all its diplomatic energies because it fears that the success of Taliban might encourage militant groups to carry out terror activities. If the security situation becomes better in Afghanistan, China is likely to go forward with more investment plans and programs but it will be very cautious.










International Assessment

A Critical Assessment of China’s Interests in Afghanistan: Post U.S. Military Withdrawal

By Zara Qurban

Since the withdrawal of the U.S. troops and its European allies after decades of war in April 2021, Afghanistan is entangled in the wickedest kind of security. Afghanistan’s commandeering by the Taliban after the U.S. military withdrawal has presented the regional States with many new emerging challenges. An abrupt withdrawal of the U.S. military from Afghanistan has created a huge power vacuum and neighboring States are extending helping hands to avert the possible fall of Afghanistan.

Countries such as Pakistan, Russia, India, Iran, and Turkey have their own grounds to intervene but now the global is on China including re-evaluating its persistent ‘non-interference’ policy. China was against the invasion of the U.S. military and also opposed the abrupt withdrawal stating that it will leave Afghanistan in the mayhem. China’s Foreign Ministry said, “the recent abrupt U.S. announcement of complete withdrawal of forces from Afghanistan has led to a succession of explosive attacks throughout the country, worsening the security situation and threatening peace and stability as well as people’s life and safety.”

Many spectators are considering the exchange of dialogues between Chinese Foreign Minister Wang Yi and the Taliban leaders an attempt by China to exert more influence in the region. But, China does not look at Afghanistan from the lens of prospects, the Chinese influence and involvement, especially after the U.S. military withdrawal, is all about the management of threats. Another observation entails that Chinese political and economic interest in Afghanistan revolve around the wariness of Afghanistan becoming a safe haven for militant groups targeting China like the last time Taliban were in power.

Though Mullah Baradar and Wang Yi in Tianjin have been in contact for decades, the Taliban’s ideological agenda does not fit well with China. Andrew Small, Associate Senior Policy Fellow, states, “China certainly has substantial commercial and economic interests in the wider region, but they are minimal in Afghanistan itself. Its major investments there, the Aynak copper mine and the Amu Darya energy projects, have been in stasis for many years. There have been numerous discussions about Afghanistan’s involvement in the Belt and Road Initiative, including connections to the China-Pakistan Economic Corridor, but Beijing’s view has been that, in Afghanistan, stability has to precede serious new economic commitments.” Other than copper, Afghanistan has untouched mines of minerals such as cobalt, iron, mercury, and lithium which are estimated to a value of about $1 trillion. In order to maintain better political and economic relations with Afghanistan, China offered to rebuild the infrastructure “by funneling funds directly to the group through Pakistan.” As a result to continuous exchange of dialogues and China’s commitment of support in Afghanistan, the spokesman for the Taliban Political Office in Qatar established that they recognize China “as a friend of Afghanistan”, he also stated that the Taliban and Afghanistan will no longer provide refuge or safe haven to Muslim Uyghurs. On one occasion the Chinese foreign minister said that the Taliban are expected “to play an important role in the progress of peaceful reconciliation and reconstruction in Afghanistan.” China’s policy towards Afghanistan is primarily based on the security implications resulting from the U.S. and Taliban peace agreement, which China believes in not going in the right direction. The disturbances, instability, and radicalization will eventually seep through the borders into China. As per the researchers based in Afghanistan, “through military assistance, China helped Kabul build its military mountain brigade in the Wakhan Corridor near Afghanistan’s northern Badakhshan province with the primary goal of preventing infiltration by the Islamic State into China.” It is believed that Beijing will keep close bilateral ties with Afghanistan in order to tightly manage any spillover into China by engaging all its diplomatic energies because it fears that the success of the Taliban might encourage militant groups to carry out terror activities. If the security situation becomes better in Afghanistan, China is likely to go forward with more investment plans and programs but it will be very cautious.

Understanding 2021 Inflationary Spiral in Pakistan

By Hira Shakeel

For the people of developing countries an increase in prices of basic goods, especially food items and fuel hike in comparison to the little or no increase in the wages has become a struggle for survival. This situation presents additional challenges for the daily wage earners and for the low-income households. The rate of inflation in Pakistan has edged up to a daunting double figure of 10.9%, which presents a gloomy picture for the poor. Pakistan Bureau of Statistics (PBS) recorded a price hike of 9% from 8.4% in September alone on consumer items. In 2018, the increase of inflation was recorded at 3.93%, but three years later this has increased to more than 10%. Pakistan is a net importer of energy and relies on the exports of raw materials, especially from the agricultural sector. The fluctuation in the prices of the raw material in the international market affects the stability of the local market in Pakistan, making it more fragile. For years, modernizing and strengthening the agricultural base of the country has been neglected by the leaders. This neglect has proved detrimental, because although Pakistan is majorly an agricultural country, it has become a net food importer. Moreover, as Pakistan imports oil from abroad, the purchase weighs heavily on the import bill of the country. Any increase in the price of fuel globally, does not only lead to inflation in Pakistan but at the same time the exchange rate is pressurized downward which makes imports more expensive. This eventually leads to a trade deficit, i.e., when the country’s monetary value of imports surpasses the monetary value of exports.

Neglect of the agriculture sector coupled with the failure to address the domestic supply disruption, for instance the unforeseen shortage of wheat and sugar, have contributed to the hike of prices. Although the claim of the government that prices of the products have been increasing globally since the spread of the pandemic in 2019 is not wrong. However, claiming to still have the lowest prices as compared to the regional countries is partially true. In comparison to India or Bangladesh the prices of petroleum might be lower in Pakistan but at the same time country’s even lower per capita income wipes out the advantage of these low prices.

Most of the basic goods, which includes food items such as sugar, rice, ghee, wheat, energy, telecom services, transportation and clothing have seen a surge in prices. Any increase in the prices of electricity or fuel, impacts the prices of three sectors in Pakistan, namely food, transportation and housing. The limited employment opportunities and the low wages have made it difficult for the people to fulfil their basic needs. While the job opportunities are diminishing, the surge in prices is making it unbearable for the people. The living standard of a common man continues to depreciate due to higher inflation. A pro-poor policy does not mean an increase in the regressive nature of taxes, i.e., those taxes which is applicable to be paid by citizens regardless of their income. Further, the direct tax is mostly left unaccountable due to the negligence of the authorities as it remains undocumented. Any increase in the direct taxes, means an increase in the prices. This has a direct impact on a common man, as his purchasing power parity drops. When such a situation arises it eventually pushes a family towards lower standards of living, due to the constrained choices. At a societal level, an increase in direct taxes, leads to a hike in prices of common goods, consequently widening the gap between social classes. The purchasing power parity of an individual with fixed income is most affected because there is no increase in their income. In the longer run, a persistent situation like this can lead to a conflict within the country. According to a report issued by the UNDP, inflation has become a headache for almost every citizen in Pakistan except those 20 percent who own more than half of the country’s wealth. If inflation has become a challenge for the people, it presents a challenge for the government too. Before suggesting what the government can do to control the prices, it is crucial to look at the origin of the challenge. Primarily, major industrial economies have been vulnerable due to COVID-19, but their recovery has been recorded much quicker than expected. This has increased global consumption of energy and other commodities. Therefore, there has been a hike in the fuel prices globally. Additionally, the prices of products such as palm oil, wheat, sugar, and fertilizers have also increased. Eventually when the products are shipped and land in Pakistan there is an additional cost, which makes these commodities expensive. Considering this global hike in prices and adding the issue of the deprecating Pakistani rupee against dollar presents a two-fold challenge. This has a direct impact on the imports of Pakistan, thus the reason for the increase in prices. The strengthening of the rupee is not an easy task, because it is directly attached to the condition of the national economy and the inflow as well as the outflow of the foreign exchange. In the case of Pakistan, the economic growth is slow and weak, plus the outflow of foreign exchange is much higher than the inflow, appreciating the value of rupee is unlikely. Keeping the value of rupee higher against the US dollar will have a huge impact on the economic condition of Pakistan because the meager foreign reserves that Pakistan has will be used for this purpose. The little foreign reserves that the State Bank of Pakistan has are important to meet the trade deficit of the country. Much of the hike in prices is due to the reason that Pakistan is receiving aid from the international donor agencies on certain conditionalities, which require devaluation of the currency, cutting down on subsidies and welfare projects and increasing prices. There is a serious need to amend the economic policies in the country and focus on strengthening the industrial and agricultural base of the country if the government wants to address the challenge of uncontrollable inflation. Secondly, at both district and level, the weak administrative mechanism has led to the hike in prices. It is due to their weakness that there is a gap between the wholesale price and retail price. However, to such challenges there is no quick or immediate solution. For swift action the government can reduce the duties and taxes on the imported items but in the longer run it can lead to fiscal deficit. The only way that Pakistan can overcome its current economic challenges, is by focusing on increasing its exports which will increase the inflow of dollar in the country. Besides increasing its exports, Pakistan can induce foreign direct investments (FDIs), and open more channels for securing remittances from Pakistanis in foreign countries. Until and unless, the government does not address the economic challenges, create more job opportunities, give subsidies to the local industries, and improve the purchasing power parity of its citizens, inflation will remain the biggest obstacle to Pakistan’s growth.

Strengthening Pakistan’s Climate change policy

By: Saddam Tahir

Climate change is not only an environmental challenge; rather it has evolved into a security and developmental challenges over the years for countries across the globe. With changing climate scenarios, Pakistan’s development model needs to go through a paradigm shift, creating a second climate science arm. All economic planning and investments, out of necessity, need to be an exercise in planning and investment of climate adaptation, duly informed by institutions generating climate knowledge and providing climate services. Climate services can help the country pursue three tracks:

•           Climate adaptation

•           Disaster-risk reduction

•           Sustainable development

In the annual report for 2020, Global Climate Risk Index has placed Pakistan on the fifth position on the list of countries that are most vulnerable to climate change. According to the report from 1999 to 2018 Pakistan has experienced 152 extreme weather hazards, faced economic loss worth $3.8 billion and 9,989 people have died. Based on the statistics recorded by the think tank, report concluded that Pakistan’s vulnerability to climate change is intensifying. The report points out that Pakistan is “recurrently affected by catastrophes and continuously rank among the most affected countries both in the long-term index and in the index for the respective year”. Due to the geographical location, Pakistan has become most vulnerable to climate change and hence placed on the long-term index of the report. One of the co-author of the report David Eckstein registers in the report that “the entire region where Pakistan is located is prone to extreme weather events, in particular, heavy rainfalls e.g. during monsoon season, and floodings as a result.”

This year’s report is particularly relevant for Pakistan as climate change is fast “increasing variability in the water cycle, inducing a greater number of extreme weather events, reducing the predictability of water availability, and adversely affecting water quality”.

Three water-related issues are central to climate adaptation in Pakistan: a) Water stress, reflected in increasing uncertainty and scarcity. b) Hazards and disasters, reflected in floods, droughts, storms surges, and glacier lake outbursts. c) Water quality, reflected in the deteriorating quality of ground and surface water used for drinking, irrigation and industry. As the early warning systems continue to be underdeveloped and underutilized, the national meteorological and hydrological services remain weak. National public institutions mandated to provide hydrological information, therefore, lack the necessary capacities needed to provide climate services for water. The results are perilous: human, social and economic losses are continuously soaring as floods have globally increased by 134 per cent and droughts by 20pc in the last two decades. This gives Pakistan all the more reason to augment climate services. Despite international support and growing climate vulnerabilities, Pakistan has not developed its National Framework for Climate Services (NFCS). The presence of an NFCS will provide an institutional mechanism to coordinate, facilitate and enhance collaboration among national institutions to improve, jointly produce, deliver and use science-based climate projections and services. Some regional countries like China and India who developed robust national frameworks have successfully accessed global science and technology, as the GFCS seeks to build on continued improvements in climate forecasting to increase access to the best climate data. Planners, investors and vulnerable communities have the right to benefit from easy-to-use information so that they can plan and cope with projected trends and scenarios. Since Pakistan’s datasets on temperature, precipitation, soil moisture, snowfall in glacial areas, ocean conditions and winds are absent or inaccessible, policymakers are not always informed about long-term historical averages of these parameters or their risks. Development planners end up shooting in the dark by taking decisions without knowing long-term projections and trends. However, Pakistan’s leadership remains fully committed to addressing the concerns and threats of climate change. As multiple projects of reforestation took place in last few years to tackle the natural disasters.




Making Sense of the CPEC Controversy

Making Sense of the CPEC Controversy

Rafiullah Kakar

The controversy around the China-Pakistan Economic Corridor (CPEC) seems far from subsiding. In recent developments, political parties from Khyber-Pakhtunkhwa (K-P) and Balochistan have upped the ante and have accused the ruling party of ignoring the smaller provinces in the multi-billion dollar project. In an attempt to make sense of the concerns advanced by representatives from Balochistan and K-P, I am going to examine the position taken by the federal government in a series of articles.

The CPEC is a multi-route corridor that will be completed in multiple phases over a period of 15 years. As per the decision of the May 28, 2015, APC, the western route of the corridor passing through the relatively lesser-developed provinces of Balochistan and K-P is being built on a priority basis. To judge whether the federal government has actually prioritized the building of the western route or not, let’s develop a simple test and check if its claims about having prioritized this route pass the test. According to the test, the western route shall be considered prioritized if it meets the following conditions:

1) The quality of infrastructure of the western route should be better or at least similar to that of the eastern route. For this to happen, the government must have allocated the required financial resources to the route.

2) Ideally, the western route should be constructed first so that it can become functional before the other two routes. If circumstances are not ideal, as is often the case, then it should become operational at least simultaneously with the other routes. Timing is central to economic planning and development. The question of ‘which-route-to-take-first’ is very important and is likely to play a key role in shaping the subsequent path of development.

3) At least half of the proposed industrial parks and economic zones and other supporting components of the corridor, including energy projects, railway tracks, and gas pipelines should be located along the western route.

Now let’s examine if the western route fulfills the criteria enumerated above.

The western route is a two-lane road whereas the eastern route is a high-speed six-lane modern motorway with controlled-access design. The pavement design of the eastern route is markedly superior to that of the western route. The latter can’t withstand loaded trucks. The superiority of the eastern route is not surprising given the government’s preferential funding for it. The allocation pattern of federal development funding clearly suggests that the eastern route is the government’s priority. In the 2015-16 federal PSDP, the government has allocated only Rs20 billion to the western route while earmarking a handsome Rs110 billion to the eastern alignment. Out of the Rs20 billion, approximately Rs5 billion have been allocated for the Gwadar-Turbat-Hoshab (M8) and Hoshab-Panjgur-Besima (N85) sections, which constitute the common route shared by all three alignments. In strictly technical terms, therefore, the funds earmarked for the western route in the 2015-16 federal PSDP are approximately Rs15 billion, of which not even a penny comes from the approximately $11 billion CPEC loans taken on for infrastructure development. As of December 31, 2015, only Rs1.6 billion of the Rs15 billion have been released.

Coming to the second pillar of the test, the two-lane road along the western alignment is likely to be completed by the end of 2018 whereas the six-lane motorway along the eastern alignment will be completed by the end of 2017. Lastly, the eastern route passes through the relatively developed parts of the country and is in geographical proximity of major urban centres, energy production sites and growth zones. Railway tracks and LNG pipelines will run parallel to it. As far as industrial parks are concerned, let’s hope they will be equally distributed among the three routes.

Given the huge contrast in the infrastructural quality and spatial proximity of the two routes, the eastern route is destined to effectively become the primary route, the government rhetoric about having prioritised the western route notwithstanding. The two-lane western route, if completed by 2018, will remain an auxiliary route at best. The reality is that the government had decided to change the corridor route in late 2013 or early 2014. This is proven by the 2014-15 federal PSDP in which the government had earmarked Rs49 billion for the CPEC, all of which was to be spent on the eastern route. When confronted with mounting political pressure in 2015, the federal government allocated a nominal amount for the western route in the 2015-16 PSDP.

Now let us come to the government’s claims that the revenue generated from the motorway on the eastern route will be used to upgrade the western route to become a four-lane and ultimately a six-lane motorway. Railway tracks will be laid from Gwadar to Peshawar passing through Quetta and DI Khan.

First, there are no credible guarantees that these commitments will be duly honored, especially given the long time horizon — 15 years — it involves. If history is any indication, complacency will creep in and the urgency and motivation, if any, to upgrade the western route will wane once the eastern route becomes functional. The federal government will keep fabricating excuses to delay the up gradation of the western route. Fiscal constraints and political crises of one or the other type will continue giving it plausible cover. Protesting voices from smaller provinces will be coerced into silence by appeals to ‘patriotism’ and ‘India’s malicious designs over the project’.

Secondly, even if the credible commitment problem is somehow resolved, the up-gradation of the western route at a later stage is unlikely to alter the position of the eastern route as the primary route of the corridor. The western route will at best play second fiddle to the eastern one. Once the eastern route with its superior infrastructure and geographical proximity to the developed and prosperous urban centers takes the lead as a result of the initial preferential treatment it has received from the federal government, it is likely to stay ahead of the competing routes because of positive feedbacks and increasing returns to scale. Over time, development choices will be constrained within a progressively narrower range of possibilities that will tend to preserve the status quo. This is known as path-dependence, which among other things, partially explains the persistence of regional disparities. Nevertheless, the concept does not rule out the possibility of breaking out and establishing new paths, especially in the beginning of a process. The CPEC offered the government the formative moment to break out and create new paths of economic development by prioritising its under-developed regions. Unfortunately, the ruling elite have not taken advantage of this opportunity.

Published in The Express Tribune, January 22nd,  2016.

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Courtesy: The Express Tribune




President Trump’s Visit to India: Pakistan’s Diplomatic Success on Indian Soil

The United States of America and India have come a long way from being crestfallen to being fully cooperative with each other on strategic concerns and matters. While the association between two States became sore amid India’s nuclear ambitions in 1998, Bill Clinton, former president of USA, revitalized the ties in 2000 and since then the strategic and economic ties have only gotten sturdier.  Fast forward to 2019, as per Indian Ministry of External Affairs, India was anticipated to acquire $18 billion worth of arsenal from USA along with bilateral military exercises. USA based Indian diaspora has also been very active in promoting India’s interests and popularity. Indians are also among the richest immigrant communities in the USA. Despite the fact that India is the US’s largest trading partner, they do business of about $142 billion a year. The USA filed a lawsuit in the World Trade Organization against India and called it a source for US’s trade deficit by subsidizing exports.

On February 24th of 2020, US President Donald Trump addressed the Indian audience in Ahmedabad during visiting India to meet with Indian Prime Minister Narendra Modi. While being on stage President Trump proclaimed to be all set to sell arsenal, energy and “best and most feared” military equipment of worth whopping $3 billion to India. While making all the statements that Indian media, political leadership and audience wanted to hear, President Trump made a comment that sent a chill down their spines. President Trump, while standing on Indian stage placed on Indian soil, said that the USA is now enjoying good relations with Pakistan and all the efforts made by Pakistan are paying off well in progressing towards a new beginning, harmony, stability and reduced tensions. President Trump did not just stop there, he went on and said that the Trump administration is working very closely and positively with Pakistan to decrease the risk of militancy along the border.

President Trump’s statements praising Pakistan for its efforts on Indian soil were not well received by Indian media and leadership. As Pakistani media, leadership and Pakistan’s Foreign Minister Shah Mehmood Qureshi highlighted that the importance of these statements cannot be denied, Indian media went frenzy and kept bringing up the past references of terror attacks to keep the reputation of Modi government intact. The statements in favor of Pakistan made the Modi government concerned to the level where PM Modi refused to hold an unscripted press conference to avoid any more controversy which might have further killed the euphoria of Indian audience. The reference of having good relations with Pakistan at a public meeting with PM Modi cannot be accidental on part of American president and US’s soft policy towards Pakistan qualifies to be an irritant for India in pursuit of having great strategic partnership with the USA.

Among all the commendations for the Modi government, President Trump was unsuccessful in mentioning his remarks over the protest happening in India over its Citizenship Amendment Act and religious persecution of Muslims minority in India. Meanwhile, Pakistan’s media and political leadership is thrilled to have received an acknowledgment for their efforts, whereas Indian media has tried it best to curb the idea that Pakistan is a partner in bringing and maintaining. President Trump’s acknowledgment of Pakistan’s efforts is not only a manifestation of Pakistan’s successful foreign policy but also have given legitimacy to Pakistan’s and its citizens sacrifices worldwide. The praising statements have given a blow to India’s hoax narrative that Pakistan is the problem, rather Pakistan is a part of solution in peace process which is clearly reflected by Pakistan’s active participation in US-Taliban peace talks.




China calls on US and North Korea to have talks as soon as possible

China’s foreign minister Wang Yi called on the United States and North Korea on Thursday to have talks as soon as possible.

He said that peace must prevail, amid signs of easing tension over North Korea’s nuclear and missile threats.

Wang made the comments during a news briefing as part of the annual meeting of China’s parliament.

Courtesy: CNBC




China’s Constructive Role in Asia

Sultan M. Hali

CHINESE President Xi Jinping has made positive overtures for peace in the region as well as peace in the world. His meetings with US President Barrack Obama and British Prime Minister David Cameron as well as the other world leaders have been a one-point agenda: to shed rivalry and join forces to establish world peace. President Xi Jinping’s proposal has been devoid of rhetoric and based on genuine concern for the uplift of the less developed countries, which have been caught in the crosshairs of superpower contentions.
Believing that charity begins from home, China has endeavored to settle its disputes with its neighbors amicably through dialogue. Taiwan, which is a breakaway province of China and is expected to rejoin mainland China sooner than later, has never faced physical antagonism or threats from China. Instead, China is maintaining trade, tourism, and economic ties. The recent meeting between Chinese President Xi Jinping and Taiwan’s President Ma Ying-jeou on the
sidelines of a state visit by President Xi to Singapore, was an epoch making event. China’s reaching out to Taiwan speaks volumes for its policies of ‘live and let live’ and reunification of Taiwan and China.
In the near past, the unprovoked incursion of a US Naval warship in the territorial waters of China adjacent to the disputed Spratly Islands, did not raise tempers in Beijing, instead the US and Chinese navies held high-level talks and agreed to maintain dialogue and follow protocols to avoid clashes. US chief of naval operations Admiral John Richardson and his Chinese counterpart, Admiral Wu Shengli, during their meeting agreed on the need to stick to protocols established under the Code for Unplanned Encounters at Sea and confirmed that the scheduled port visits by US and Chinese ships and planned visits to China by senior US Navy officers will remain on track.
With the display of such maturity, South Asia, which unfortunately has become a hotbed of conflict and tension, necessitates sagacious counseling by peace loving China. Notwithstanding the strategic cooperative Sino-Pak partnership, one would expect China to take a neutral stand and urge India to accede to international and regional overtures for Indo-Pak peace talks. Both India and Pakistan are nuclear weapons equipped states and any armed conflict between them will spark the flashpoint which will be disastrous for the entire region. The world has stood by and observed China’s peaceful rise to development. India, which is also desirous of achieving the same level of development as China, has unfortunately adopted the path of confrontation with its neighbors. Such a jingoistic and belligerent attitude is not only contrary to principles of humanity but will also prove counterproductive towards India’s aspirations for prosperity, besides stunting the growth of its neighbors.
India’s industrial development and its energy requirements including the peaceful use of nuclear resources are understandable. US has favored India with a civil nuclear energy deal, while denying Pakistan the same. Were it not for China, to have extended its support to Pakistan and expand its civil nuclear co-operation under IAEA safeguards, Pakistan would have been suffering even worse energy shortage. China understands and appreciates that Pakistan is a proponent of peaceful use of nuclear technology and supports objectives of nuclear non-proliferation and safety and security of its nuclear assets. While China is investing heavily in economic development of its neighbors through its One Belt One Road (OBOR) project and China-Pakistan Economic Corridor (CPEC), and the establishment of the Asian Infrastructure Investment Bank (AIIB), it is simultaneously reaching out even to India to support it in its development projects despite Indian animosity towards China.
In this milieu, where China understands and appreciates the multiple security challenges in South Asia and envisions a common, co-operative, comprehensive and sustainable security framework for the region, it is hoped that China also takes cognizance of South Asia’s two major challenges. These challenges are firstly in the form of India’s unprecedented and unwarranted quest for weapons and secondly conflict resolution.
An inclusive, non-discriminatory and criteria based approach needs to be adopted to treat regional states like Pakistan and India. This, however, is easier said than done. While Pakistan envisions a peaceful neighborhood, India is reluctant to improve relations with Pakistan. It has made it a state policy to avoid engaging Pakistan in peace talks. Even the four point proposal for structural dialogues submitted by Pakistan has been rejected by India. Under the circumstances,
calling on the sagacity of Chinese leadership and in view of China’s constructive role in South Asia and East Asia, it would not be out of place to solicit Chinese support for urging India for a dialogue for peace with Pakistan.
In the post 9/11 era India and the US have edged closer to each other. They enjoy a strategic partnership and despite India’s sovereignty, pride and independence, India is open to suggestions and recommendations of its well wishers. As China and Pakistan enjoy a deep rooted strategic partnership, India and the US too have developed close links. To ensure world peace, avoid an accidental Indo-Pak nuclear conflict, both China and the US can play a positive role. The US can urge India to sit at the negotiations table with Pakistan and resolve their outstanding issues including the core issue of Kashmir. Pakistan will need little prodding and would engage diplomatically with India willingly.

 It is understandable that India is averse to third party role in conflict resolution but friends and allies can support peace talks without intervening directly. Sometimes a bit of cajoling and a slight nudge can do wonders. If the US and China can sink their differences and instead of competing with each other, resolve to support peace initiatives, Pakistan and India are prime candidates for such an undertaking. It is strongly recommended that the major powers of today the US and China, which are also major economic giants, can make concerted efforts for ensuring political stability in the region by resuming composite dialogue and resolving disputes between Pakistan and India.
—The writer is retired PAF Group Captain and a TV talk show host.

Courtesy to Pakistan Observer