All of Balochistan will benefit
Now China has an open field, and it’ll expand its economic reach and our region has a part to play in it. CPEC is extraordinarily important for China, as the name suggests it is rightly an economic corridor
Former Finance Minister and advisor to PM on Finance and Revenue Dr Salman Shah had played a pivotal role in forming and executing economic policies during Musharraf’s regime. Dr Shah also has an extensive career in academia as he had taught at University of Michigan, Indiana University, University of Toronto, and Lahore University of Management Sciences.
Presently, he is CEO of Bridge Asia Financial Services which he founded back in 2009. DNA sat with Dr Salman Shah to know his take on all things CPEC.
Question: CPEC has become a political slogan the PML-N government using and abusing to gain maximum political mileage out of the multi-billion dollar project. Please help our readers understand the updated situation of implementation on the CPEC and related projects?
SS: We must not forget that to link Gwadar to China is nothing new, it is some 50 years old idea. Karakoram Highway too was constructed long ago. Gwadar Port itself was made during Musharraf’s regime. During Zardari’s government many projects were launched. What I mean to say is that every government had built up on it. It is a natural phenomenon and to give all credit to one government alone is wrong. Pak-China relationship is above politics and based on bipartisanship.
The world is undergoing a realignment and not only that China has become the second largest economy in the world but on purchasing power parity basis its economy stands right next to that of USA. With an economy that big, China has already become a superpower. After the fall of the Berlin war, America emerged as a sole superpower after 9/11 America attacked Afghanistan and Iraq, followed by turmoil in the Middle East. If we see from 2001 till now America is in a state of war. During this period China remained busy in economic growth. The American economy has hemorrhaged because their expenses on war on terror increased America’s foreign indebtedness to China. China also benefited from current account deficits of America. Obama wanted to confront China and pivot to the east. He failed, now Trump has reversed American focus inwards by promising to bring jobs back to America and focusing on infrastructure at home. Now China has an open field, and it’ll expand its economic reach and our region has a part to play in it. CPEC is extraordinarily important for China, as the name suggests it is rightly an economic corridor. From Karachi and Gwadar, China will reach Africa, Europe and Latin America. So, CPEC is a natural consequence of global events, emergence of China as a powerful economy and geographic location of Pakistan.
Q: How much in your view the CPEC is going to change the fate of the people of Pakistan once the CPEC becomes operational. Do you know how many industries and technology would be transferred to Pakistan under the CPEC?
SS: If we take it lightly and deal CPEC as ‘business as usual’, this mindset won’t work. Special initiatives are to be taken, dedicated institutions are to be formed. When we wanted to conserve water and generate power, we made WAPDA. We made dams and conserved water. Right now, we need institutes to oversee CPEC-related projects. I don’t see any targets on government’s part other than spending 46 billion rupees over multiple years on brick-and-mortar projects. We are missing on billions and billions of dollars because it is being badly-organised and work to consolidate the project is not carried on in a comprehensive manner. There is dire need to make the whole process transparent as only then it will change the fate of our people.
Q: Do you think concerns of KP and Sindh, regarding CPEC, will be addressed in the next meeting of Council of Common Interests (CCI) in December, as the prime minister has implied?
SS: See, whether with CPEC or without it, we have to connect every village and city with the rest of the country. CPEC has three North-South routes, and almost the same number of east-west routes. Once it will complete, you’ll easily travel from Gwadar to Karachi, from Karachi to Lahore, from Lahore to Peshawar, from Peshawar to Quetta, from Quetta to Gwadar in two or three days. Politics can wait. Government must not complete one route while work on other routes is stalled. Work must start on all routes together and they be built and completed side by side.
All of them are loans, one way or the other. $11-12 billion are for logistics like construction of roads, etc; these are loans. $30 billion are for the energy sector; majority of them are IPPs, their payments will be made through tariffs
I am aware that voices of dissent are being raised by provinces other than Punjab. Smaller provinces need to be satisfied, if there are concerns, those concerns need to be answered. Every province on its own must take initiative to make special economic zones, design regulations and reforms for viable industries. No one can stop them from doing it. All provinces must have a strategy clearly enunciating the benefits they can have. It is the duty of every chief minister to work on how his province will benefits once China open its markets. There must be a kind of competition among provinces that who can get most benefit from CPEC.
Q: The PM has directed Ahsan Iqbal and Ishaq Dar to address concerns of Sindh and KP ahead of the CCI. What can they possibly offer to the provinces to make them turn around by December, short of agreeing to their core demands?
SS: The concern is on progress of different routes. There are three routes, North, South and East. I think the progress on western corridor and central corridor must be better than eastern corridor. We must strive to bring forward backward regions of our country ahead. As a nation we have to do it, we need to do it. CPEC should be a project that unites Pakistan, not divide us. Let’s see how government irons out the differences.
Q: How much of the billions coming from China is grants and how much is loans? Also, by what quantum will CPEC affect Pakistan’s current outstanding debt?
SS: All of them are loans, one way or the other. $11-12 billion are for logistics like construction of roads, etc; these are loans. $30 billion are for the energy sector; majority of them are IPPs, their payments will be made through tariffs. Consumers will pay those tariffs, if they fail then the government has to pay. This in particular is dangerous. Firstly, these IPPs run on coal which will destroy our environment, secondly, they are expensive and have high tariffs. We need to replace coal power projects with hydel power projects. Further, $5-6 billion are coming for railways in the future, which too will be in the shape of loans. Basically, these loans are from government of China to government of Pakistan and I personally think will be beneficial for Pakistan. However, we need to make a strategy for the IPPs and avoid them. China already has great expertise in the hydel sector. About time that we take benefit from it.
Q: Security concerns, especially in and around Balochistan, have not exactly been settled completely, to say the least. Do you think that, despite official rhetoric, continuing terrorism can upset CPEC somewhere down the road?
SS: I don’t think that these security concerns will have any impact on CPEC. See, we are facing third generation warfare and India has a huge hand behind the unrest in Balochistan. Generally speaking, it is the best chance Balochistan has at progress and development. Huge investment is being made in airports, schools and buildings. Once the route is made all of Balochistan will benefit. There are a few people in opposition who want to sabotage CPEC, but I don’t think they can stop Pakistan and China from realising this project. Indian designs have been exposed. Now they are aiming for soft targets, common people have no part to play in it.
Q: It seems the Chinese have started becoming uneasy about the debate over the eastern versus western route going on in Pakistan? Is this true? Why has the government not been able to settle these differences so far?
SS: If the Chinese are frustrated, they are frustrated on lack of organisation and planning on the Pakistani side. The Chinese are sophisticated people, they don’t like to see any disruptions. They are a very well organised people who are apt at planning. Pakistan, however, is not playing its due role properly. We need to see CPEC as a strategy, not a project and market it in the entire world. We can bring investments from all over the world if we can convince it that they too can benefit from investing in Pakistan.
