November 16, 2016
Why is the China-Pakistan Economic Corridor such a challenge to India? Conventional wisdom has it that India is worried about CPEC at its two ends: Gwadar, where the Chinese are building a maritime presence, and Pakistan-occupied segments of the former kingdom of Jammu & Kashmir, where Pakistani and Chinese territorial and military frontiers are merging.
However, there is a deeper issue, one that has hitherto underpinned India’s long-term Pakistan strategy. The very fundamentals of that strategy are now under question. Indeed, CPEC is rewriting the economic geography and regional integrity of the subcontinent in a manner that will require more than a tactical, episodic response.
Historically and across the world, trade routes have tended to flow from north to south. There have been exceptions, such as when Britain/northern Europe became an economic power and a significant consumer of commodities, and trade routes moved south to north. Yet, for the most part that trajectory has been maintained.
This is no coincidence. Most of the world’s people live in the northern hemisphere and trade has tended to seek a route to the sea (to the south) to explore new markets. So it has been in the Indian subcontinent too, for centuries and millennia. Trade routes came down from Central Asia to modern Pakistan, into contemporary northern India, before finding their way to peninsular India.
Partition interrupted this perennial free trade zone (before we knew what the expression meant). Economically this hurt India, especially north India, and cut it off from markets such as Afghanistan. It hurt Pakistan even more and left it trapped and locked out of its natural trading hinterland. More than the political act of Partition – a fact of history nobody seriously wants to change – it was the trade walls that came up on the Radcliffe Line that negatively affected the destiny of the subcontinent.
As India opened up its economy in 1991, this absence of sufficient economic osmosis with its neighbours emerged as a paradox. Every prime minister since then, irrespective of party and whatever his individual instincts and political beliefs, came to accept that as India’s economy grew, Pakistan would be compelled by business and commercial logic to engage with India.
This could be a product of enlightenment or self-interest, internal pressure or global currents: but it would happen. It would make Pakistan, depending on where it was placed, India’s Canada or India’s Mexico. The persuasiveness of the north-south trade route could not be rejected forever.
CPEC alters that supposition. It replaces Pakistan’s dependence on a north-south trade corridor with its bet on an east-west corridor, from Kashgar (Xinjiang province) to Gwadar. This trade route is fairly unprecedented and is an expression of a new economic and strategic geography that China wants to define.
Admittedly CPEC is not quite the “corridor of opportunities” that its advocates contend. Many of its projects are financially unviable. The power plants it is building will require tariffs that are unsustainable for most Pakistanis. CPEC follows a familiar pattern of Chinese investments in South Asian countries – including for instance Hambantota port, the white elephant Sri Lanka has been saddled with.
In this model much of Chinese “investment” is actually a loan that the host nation has to repay. The bulk of Chinese money goes not to locals but is transferred from a state-owned Chinese bank or credit institution to a state-run or state-associated Chinese infrastructure company that executes the project using Chinese workers. Project costs are gold plated to account for both bribes for local elites (generals in Rawalpindi or politicians in Punjab and Balochistan) as well as to ensure windfall gains for the Chinese.
By all accounts, CPEC is going down this path as well. Having said that, its strategic importance for China is greater than usual. This is because of the access it allows western China to the Indian Ocean, as an alternative to the Straits of Malacca. It also gives China a presence and for all purposes a colony that will allow it room for immediate military and political influence in India’s neighbourhood and in West Asia.
Whether CPEC’s power plants eventually light up homes in rural Punjab or not, the fact is Pakistan’s political and military elite has willingly signed on to this Chinese strategic blueprint. As in the case of another superpower in the past, it has happily sacrificed its country’s realisable, long-term interests for personal benefit and in the service of an external benefactor.
By embracing the east-west corridor (CPEC) Pakistan is not just abandoning its obvious north-south trade alignment but in effect turning its back on the subcontinent and on South Asia. It sees itself as culturally in West Asia and strategically as located within the Chinese politico-economic zone. This means that irrespective of how quickly or impressively India’s economy may expand in the coming decades, Pakistan is not interested in a linkage let alone integration. New Delhi’s assumption that this was a long-term inevitability no longer holds.
How does India respond? It can wage a political and diplomatic battle to make CPEC un-implementable. This is possible but not probable.
A harder school in the Indian establishment believes that if the subcontinent is no more the unit of reckoning for Pakistan, then India’s interest in recognising and preserving shared tangible legacies, including natural and water resources, should correspondingly decline. Expect more on that in the coming days.
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