Zahid Shahab Ahmed. Journal of Contemporary China. Volume 28, Issue 117. May 2019.
Introduction
Since the beginning of bilateral ties in 1950, the China-Pakistan relationship has grown significantly. Known as Pakistan’s ‘all-weather friend’, bilateral economic cooperation has been advanced by the China-Pakistan Economic Corridor (CPEC) agreement, worth US$62 billion of Chinese investment in Pakistan. Due to its geo-economic and geopolitical importance, the CPEC is considered a ‘game changer’ by Beijing and Islamabad. However, since its initiation in 2015, the CPEC has also been a source of tension between centre and provincial governments in Pakistan. This paper analyses the impact of the CPEC on nation-building in Pakistan. In the light of nation-building theories, it further argues that the CPEC has provided Pakistan with much-needed opportunities to address inter-provincial and federal-provincial discord through dialogue and compromises.
China is one of the fastest growing economies, and its ‘Belt and Road Initiative (BRI)’ is an ambitious plan to expand connectivity via land and sea routes providing it with access to markets across Asia, Europe, and Africa. While some aspects of the idea are new, such as the continental sea route connectivity, the BRI is essentially about revising and upscaling the Ancient Silk Road between China and rest of the world, important to China for geo-economic and geopolitical motives. The BRI is a mega international project encompassing development of infrastructure and energy resources that are vital for both China and its partners. The estimated cost of the BRI is approximately US$2.1 trillion and it will affect the lives of about 80 percent of the global population. Considering China’s dominance in the region, it is not surprising that Asia is at the heart of the BRI, with a focus on more than 40 Asian countries. All members of the South Asian Association for Reginal Cooperation (SAARC) are included in the original BRI vision although India continues to decline Beijing’s invitations. Central to the BRI are six economic corridors, including the China-Pakistan Economic Corridor (CPEC), from South-Western China to Pakistan, worth US$62 billion.
The BRI and the CPEC as its flagship project have received the attention of scholars around the world. Geo-economic, geostrategic, and geopolitical implications of the CPEC have been highlighted in several papers. In addition, scholars have devoted some attention to Pakistan’s socio-economic development owing to an increase in the foreign direct investment (FDI) from China under the CPEC. The literature has, however, overlooked the interplay of Pakistan’s domestic politics and the CPEC, especially how central-versus-provincial disputes influence the development and implementation of the CPEC. It also overlooks the effect of CPEC on nation-building in Pakistan. While central-provincial disputes based on ethnocentric nationalism in Pakistan are not new, the CPEC has certainly ignited deep-rooted ethnic divides. There are visible positive and negative consequences. Negative impacts can be witnessed in the form of attacks on CPEC projects from ethno-nationalist elements from Balochistan and Sindh. A positive impact can be seen in the form of the federal government engaging in dialogues with all the provincial stakeholders to reach a consensus on equitable distribution of CPEC resources among the provinces. A major concern from provincial governments, especially from Balochistan and Khyber Pakhtunkhwa (KP), has been the size of their slice from the CPEC. Preliminary dialogues have led to some consensus on the CPEC and there appears to be a desired level of political will. Through an examination of multiple positions within Pakistan adopted on the CPEC, this paper presents an analysis of the impact of domestic politics on the CPEC and the impact of the CPEC on nation-building in Pakistan.
Beijing has been promoting the idea of sharing the dividends of its remarkable economic development with BRI partners. It also claims that its approach to aid and investment is different to that of global financial institutions, such as the World Bank, dominated by the West. Although China’s rapid economic development has benefited greatly from the current liberal international order, it has been highly selective in its engagement with the idea of Western-led liberal economy and liberal democracy. As Zhao notes, China has copied ‘successful elements of liberal economic policy’ but ‘rejected or modified the liberal aspects that would greatly reduce the role of the state’. Furthermore, China ‘has tried to strike a balance between economic growth and political stability and between a market-oriented economy and an authoritarian state to sustain its continued economic growth in its modernization efforts’. Given China’s large economy and its increasing level of aid contribution, trade and investment, its model of authoritarian government plus a market economy has gained traction and popularity, especially in parts of Asia, Africa and Latin America, as noted by Nye. Although China’s economic engagement with Africa has been criticised as ‘rogue aid’ (suggested to be securing China unfair commercial advantage, insensitive to the recipients’ priorities of economic development or re-indebting poor countries), studies suggest that China’s investment in Africa has helped spur economic growth.
Similar to the reported positive impacts of China’s investment in Africa, the analysis in this paper builds on theoretical approaches of nation-building to examine the impact of the CPEC on internal political stability in Pakistan. Dominant scholarship on nation-building often uses the term interchangeably with state-building. There are however scholars who distinguish between the two, mainly in terms of their scope and objectives. Goldsmith, for example, defines nation-building as ‘the establishment of a common national identity within a given geographical area, based on shared language and culture’. Nation-building, as Hopp and Kloke-Lesche maintain, goes beyond the mere establishment of effective institutions and infrastructure; it is ‘an autonomous [and endogenous] process of the development of a nation’, in which external actors play a limited role, for example through sharing financial resources and funding but not through leading nation-building processes. In this sense, state-building is seen as a ‘central characteristic’ of nation-building, defined by the Organisation for Economic Cooperation and Development as ‘an endogenous process to enhance capacity, institutions and legitimacy of the state driven by state-society relations’. While the literature largely undermines the role of external actors, the present paper argues that external actors can play a significant role in nation-building—examined through a case study of the CPEC. Building on this definition of sate-building, a 2009 policy paper by the UK Department for International Development further added that ‘in all contexts, state-building is principally about strengthening the relationship between the state and society, and developing effective ways to mediate this relationship’. State-building is ‘founded on political processes to negotiate state-society relations and power relationships among elites and social groups’. These processes, as Ingram elaborates,
determine the character of the engagement between citizens and the state, and the extent to which states are able to effectively negotiate and respond to societal expectations without recourse to violence. Where there is a mismatch between expectations and performance, it can result in political tensions that may play out in instability or lead to a renegotiation of the political settlement.
An important debate in state-building frameworks is the debate over the scope of state activities and the strength of state power and institutional capacity. The former refers to the ‘different functions and goals taken on by government’, and the latter refers to ‘the ability of states to plan and execute policies, and to enforce laws cleanly and transparently’. Regarding the former, Ghani and Lockhart, for instance, stress that a 21st-century state should, at minimum, be capable of performing 10 specific functions. The World Bank provides a somewhat similar list of state functions, divided into three categories that range from ‘minimal’ to ‘intermediate’ to ‘activist’. Others, however, combine the scope and strength of the state to focus on ‘essential capabilities which the state must have to survive; and expected capabilities which citizens look to the state to provide, and which shore up its legitimacy’. Maintenance of security, establishment and maintenance of the rule of law, and collection of revenue to finance state functions have been identified as the state’s ‘essential capabilities’; while development and facilitation of the conditions for economic growth and the provision of basic service delivery and livelihood security have been identified as the state’s ‘expected capabilities’. While having a state with strong institutional capacity and extensive scope, like those of Western European states, is the ideal, the state-building literature stresses that building state strength (institutional capacity) should be given priority over the scope (functions) of the state. On the whole the literature does not devote much attention to the interplay between a country’s foreign policy and domestic politics. There is a general agreement that ‘international politics and domestic politics affect each other’ and that certain key features, such as war, trade and ideologies, do shape political developments. States should therefore pay equal attention to domestic and international pressure groups, which for Pakistan in the case of the CPEC are its provincial governments and Beijing.
This paper begins with an overview of the CPEC, followed by a detailed analysis of the impact of the CPEC on nation-building in Pakistan. A range of factors are analysed to understand the causes and consequences of ethno-nationalism and domestic politics in relation to the CPEC. It is important to mention that the analysis is limited to relevant domestic dynamics and thus a variety of external factors, such as India’s opposition to the CPEC, have not been examined. As CPEC projects are in the initial stages of development, their exact impact on local communities cannot be conclusively examined, yet, this paper will highlight some developing trends. Furthermore, the various policy implications in addressing CPEC-related disputes in Pakistan are examined.
An Overview of the CPEC
The broad narrative on China-Pakistan relations presents it as an all-weather friendship, a view supported by statements by the top leadership of both countries. Not just China’s view, there is also a widespread understanding in Pakistan that through the CPEC China is ‘helping’ a friend in need. Beijing’s main narrative around BRI/CPEC is one of China sharing the dividends of its development with immediate neighbours and friends. The understanding that China is helping a friend in crisis derives from the damage Pakistan’s economy has borne since the beginning of the ‘War on Terror’ in 2001. According to Pakistan’s Board of Investment, FDI in the country declined from US$3.7 billion during 2008-09 to US$0.82 billion during 2011-12. The CPEC has opened doors for a regular supply of FDI. According to a report from the State Bank of Pakistan, FDI inflows increased by 5 percent to US$2.41 billion during 2016-17 compared to US$2.30 billion during 2015-16. Holding the top spot for FDI inflows to Pakistan, this increase is mainly attributed to Chinese investment.
Since the initiation of diplomatic relations in 1956, the bilateral relationship has been constantly evolving. The CPEC is considered by policymakers from both countries as an evolution of friendship that transcends economic relations into cooperation in security matters. Bilateral commercial and trade links were established in 1963 but a free trade agreement between China and Pakistan was only signed in 2006 and implemented in 2007. This is despite the fact that the two countries were already collaborating on building infrastructure, for example, the Karakorum Highway (KKH) linking China’s Kashgar with Pakistan’s Gilgit-Baltistan (GB). The KKH was damaged following the floods and landslides of 2010 and Beijing provided Pakistan with financial support to rebuild and upgrade the highway during 2011-12. Pakistan already has a widespread domestic network of roads that connects KKH with the federal capital and KP, Punjab, and Sindh. Kashgar is a major city in China’s Xinjiang Uyghur Autonomous Region which is seen as ‘the pivot of Eurasia’, connecting China with Mongolia, Kyrgyzstan, Russia, Kazakhstan, India, Pakistan, Afghanistan, and Tajikistan. Thus, greater connectivity with Xinjiang is likely to open multiple trade possibilities for China and Pakistan.
While there is some dispute over its origins, predominantly the credit for the idea of greater geographical connectivity between China and Pakistan is given to General Pervez Musharraf who first suggested it to Chinese leadership. According to a former Chinese ambassador to Pakistan, Lu Shulin, ‘During my ambassadorship in Pakistan 13 year ago, President Musharraf once said, in a view of the important strategic location of connecting South, West, Central and East Asia … He then made the proposal of building China-Pakistan railway and building oil and gas pipelines … I think this was the beginning of a framework of CPEC’. The first bilateral discussions on the CPEC were held in 2013 and the project was initiated during Xi Jinping’s first visit to Pakistan in April 2015. The government of Pakistan provided an unprecedented welcome to Xi in which eight JF-17 Thunder fighter jets—jointly manufactured by the two countries—welcomed the plane carrying the Chinese president. Video recordings of the grand welcome were shared extensively, further demonstrating the value Pakistan attaches to its relationship with China. During the visit, Xi said, ‘I hope, through my visit, the two countries can consolidate the traditional friendship, deepen practical cooperation in all areas, [and] push the strategic cooperative partnership to a new high’. Through the CPEC, China has invested US$45.6 billion in Pakistan to lift the bilateral trade to US$150 billion. This investment is the largest in the history of Pakistan and is almost one-fifth of its GDP.
Prior to Xi’s visit, the Pak-China Economic Corridor Council was established on 9 April 2015 to monitor, evaluate and coordinate stakeholders from both countries. For a similar purpose, Nawaz Sharif also established the Prime Minister’s Delivery Unit. From the initial investment, US$12 billion was put aside for infrastructural projects, such as the 2000 miles Kashgar-Gwadar railway track, expanding the KKH, upgrading the Gwadar airport, building a 125-mile tunnel linking the countries, and improving the existing highways across Pakistan. Almost two-thirds of the funding (US$34 billion) has been dedicated to energy projects, for example, pipelines for supply of gas and oil to Kashgar, Iran-Pakistan gas pipeline, and building coal, wind, solar and hydropower projects across Pakistan. In total, the CPEC infrastructural development aims to build a 3200-kilometre long route. The creation of special economic zones (SEZs) depends on the success of energy and infrastructure projects. Since the first announcement, Chinese investment has grown to US$62 billion.
The work on energy projects has progressed steadily since 2015. The Sahiwal coal-fired power plant under China’s Huaneng Shandong Rui Group was completed in January 2017 when a freight train carrying 12,000 tonnes of coal arrived from Karachi at Sahiwal. The plant was inaugurated in May 2017. Built at the cost of US$1.6 billion, the plant consists of two units of 660MW each. As Sahiwal is an agricultural area, the government is conscious of the plant’s environmental costs. The local government of Sahiwal is on-board and has agreed to environmental protection measures, such as monitoring water usage by the plant. Nonetheless, as a coal-fired plant, this project has environmental costs in the form of air pollution. Critical of global environmental protection standards, China is not worried about the environmental damage of CPEC projects.
The allocation of funds for energy projects clearly suggests Chinese investment is largely for the development of energy resources to meet its own energy needs. The Gwadar Port is well placed owing to its position on the Arabian Sea with a distance of only 72 km from Iran and 320 km from the Cape al-Hadd in Oman. China exports most of its energy resources (i.e. oil and gas) from the Gulf Region through the Persian Gulf and the Strait of Malacca to its eastern ports but the Gwadar Port has shortened the trade route to its western regions by 12,900 km—a significant shortcut for saving time and resources. For example, imports and exports via Xinjiang rely on Chinese ports that are 4000-5000 km away on China’s eastern coastal areas.
The Gwadar Port is the lynchpin of the CPEC into which China has already invested a lot of time and energy, and demonstrated patience in operationalising the port. Senator Mushahid Hussain Syed (Chairman, CPEC Parliamentary Committee) said at a conference held in Islamabad, ‘If CPEC is the pivot and flagship of One Bet One Road then Gwadar is the centrepiece of [CPEC]’. There is a dominant viewpoint in Pakistan that China’s investment into the Gwadar Port will enhance China-Pakistan geostrategic ties. Similarly, according to Kalim, the construction of the Gwadar Port is crucial for Pakistan’s maritime security in the Indian Ocean and the Arabian Sea. Although the CPEC is an outcome of two-way negotiations, Pakistan had to work hard to make it happen after 2001 when the country became a frontline ally of the US in the global ‘War on Terror’. For Islamabad, China’s investment in Gwadar is more than geo-economics; it is about gaining economic and political benefits from the partnership with China to counterbalance India’s mounting influence in South Asia. Although the geopolitics of the BRI/CPEC is beyond the scope of this paper, as its focus is on internal dynamics, it is worth noting that Chaziza has discussed the geo-economic and geostrategic implications of China’s economic investment since the operationalisation of the Gwadar Port.
Internal Frictions
Since its creation in 1947, ethnicity-based divisions have been a major roadblock for nation-building in Pakistan. These divisions are further exacerbated by domestic politics and institutional structures. Each province represents a distinct ethnicity, so much so that the country’s name itself is an abbreviation based on its distinct ethnic/territorial realty, thus, ‘P’ for Punjab; ‘A’ for Afghan (i.e. Pashtuns); ‘K’ for Kashmir; ‘S’ for Sindh; and ‘Tan’ for Balochistan. Two major political parties largely represent ethnicity-based vote banks, the Punjabis of Punjab for the Pakistan Muslim League and the Sindhis of Sindh for the Pakistan Peoples Party (PPP). Due to demographics, Punjabis dominate with a population around 56 percent and 54 percent seats in the National Assembly, therefore, the country ‘has suffered from both real and perceived threats of Punjabi domination since independence’. A combination of demographic and structural factors are responsible for the domination of Punjabis in politics, military, and bureaucracy and have shaped the narrative of Punjab versus everyone else. According to Siddiqi, the majority-minority interface and the issue of proportional sharing of state resources between Punjabis and others is a major reason of socio-political upheavals in Pakistan. A political win in Punjab means dominance in the central government and this was the outcome of the 2013 elections when the Pakistan Muslim League-Nawaz (PML-N), a Punjabi-dominated party, won in Punjab and formed the government in the centre.
Leaving aside the experiences of other nations, the Pakistani leadership has not learned from the country’s own history. After a major breakup of the country in 1971 caused by the Bengali insurgency in East Pakistan—supported by India—the successive democratic and military governments have failed to resolve ethnic tensions. Following this disintegration, the Bhutto government ignored opportunities to unify the country and instead further divided it. This mobilised ethnic communities, especially Balochs, against the state. Nationalist elements from Sindh and Pakhtun populations have also protested against the ‘centralisation’ of power. Considering this visible ethno-nationalistic mistrust by provinces towards the federal leadership (Punjabis), it is not surprising to see different positions on CPEC projects involving multiple stakeholders. Before discussing the CPEC, it is important to understand the controversies around the Kalabagh Dam project to place things in perspective.
Pakistan faces a shortage of irrigation and drinking water and this problem continues to grow due to an ever-increasing demand spurred by rapid population growth. According to the 2017 census, the country is home to 207 million people and is largely dependent on water from the Indus River that flows into Pakistan from Jammu and Kashmir in India. While there are water disputes between India and Pakistan, the sharing of the Indus River is also a source of tension within Pakistan. Here it is important to recall the Kalabagh Dam project that could not take off due to the inter-provincial rivalry in Pakistan. Despite the crucial importance of the project for water and energy security, the Kalabagh Dam project is a clear manifestation of the ethnic politics in Pakistan. The idea for the project was first floated in the early 1950s and successive governments, especially that of Pervez Musharraf, endeavoured to gain national agreement but he could not and eventually, the project was declared unfeasible in 2008. Major resistance to the Kalabagh Dam came from Balochistan, KP, and Sindh, where the political leadership deemed the project would mainly benefit Punjab at the cost of water deprivation, ecosystem degradation, and human displacement in their own regions. Thus, when the CPEC became contentious due to the reservations of almost all stakeholders on the Punjabi dominance, the government urged provincial governments to refrain from turning the CPEC into the Kalabagh Dam project. Since 2015, Pakistan has witnessed major inter-provincial conflict due to the CPEC. Senator Mushahid Hussain indirectly pointed to local resistance to the CPEC, saying, ‘there is a need to identify and recognize the enemy within’. However, these developments demand analysis of the consequences of the CPEC and China’s involvement in Pakistan on the country’s fragile political situation.
The CPEC: Conflict or Cooperation?
Analysing the developments that have taken place in Pakistan in the context of the CPEC using the lens of nation-building, this section highlights the impact of internal friction on the development and implementation of the CPEC in Pakistan. It raises crucial questions with regards to the CPEC’s potential as an opportunity for conflict and cooperation.
Soon after the signing of the CPEC agreements in 2015, the provincial governments, excluding that of Punjab, and their political elites began criticising the PML-N-led government for lack of inclusion in the CPEC and for diverting China’s investment for infrastructural development into Punjab. The Pakistan Tehreek-i-Insaf (PTI), an opposition party led by Imran Khan, called for an All Parties Conference to discuss the CPEC and to achieve a consensus on the equitable sharing of resources. The government’s key representative for CPEC, Minister Ahsan Iqbal, emphasised at a conference on ‘National Harmony and Cohesion’ that the ‘CPEC would benefit all the provinces of Pakistan including [GB]’. Similar views were expressed by scholars who collaborate closely with the government, such as Ashfaq Hassan Khan (an Islamabad-based economist) who believes that ‘people of all provinces will benefit from the CPEC projects’. In the beginning, the government’s approach was defensive, therefore, Gul argues ‘the federal government [did not] properly handle the reservations of the KP and Balochistan governments’. The government, however, was willing to engage in dialogues with opposition parties, significantly calming the situation. At the All Parties Conference on 28 May 2015, an agreement was reached to first build the western route on a priority basis, linking Gwadar to Kashgar and passing through KP and Balochistan. The route that passes through underdeveloped areas of the country is the shortest route compared to the other two routes. The agreement on the CPEC routes provided a well-timed assurance to China that the key Pakistani stakeholders were on board to smoothly operationalise CPEC projects.
Despite the consensus, nationalist politicians have accused the government of violating the agreement. Senator Taj Haider, a Sindhi nationalist, accused the government of violating the CPEC route. Earlier, in 2016, PPP legislators had visited GB and condemned the Senate Special Committee on CPEC for not addressing the concerns of GB residents on the constitutional status of the region. There has been long-term demand from civil society and GB residents that the region should be declared a province. A clear warning was given to the central government that the people of GB would not allow any CPEC project unless the region’s constitutional status was determined. Considering these dynamics, a Chinese scholar said: ‘taking into consideration the fragility of the consensus [as a result of the All Parties Conference] and all the caveats that opposition parties still hold, we cannot say with surety that all the controversy with regard to the CPEC has come to a final conclusion’. The GB region and its stability are indispensable to the CPEC’s success because it connects major Pakistani trade routes with Kashgar. Ahmar, a Pakistani conflict resolution scholar, had also warned the government of the consequences of the domestic politicisation of the CPEC: ‘if such a mega-project becomes a victim of political wrangling between the government and the opposition, it will have a very adverse impact on foreign investment’. A likely impact if China pulls out its investment.
As a result of ethno-nationalist politics in Pakistan, concerns have been raised by leaders of minority ethnic groups in relation to the Punjabi dominance in deciding routes for the CPEC, especially in relation to special economic zones. As a dominant party in Sindh, the PPP has also voiced concerns on the neglect of the CPEC western route through Sindh. There is a consensus among all major political parties to sustain relations with China and to avoid politicisation of the CPEC, however, the project has not been immune to Pakistan’s ethno-nationalist domestic politics. PPP leaders have missed no opportunity to criticise PML-N in relation to the CPEC. In January 2018, the party’s chairperson, Bilawal Bhutto-Zardari, blamed the PML-N for turning CPEC into a controversial project. The criticism, however, is not purely linked to reservations on the CPEC or the dominance of Punjabis on the sharing of CPEC resources, there has long been a rivalry between Pakistan’s two mainstream parties, the PML-N and the PPP. The PPP’s opposition is also a reflection of the election build-up in Pakistan, as it has been more active in preparing ground targeting the PML-N for the 2018 general elections.
There have also been reservations from Baloch political leadership on the CPEC being Punjabi dominated and Punjab-centred. Due to perceptions of Punjabi control, some Baloch nationalists have labelled CPEC the ‘China-Punjab Economic Corridor’. While addressing a crowd at a stadium in Quetta, president of Balochistan National Party, Sardar Akhtar Mengal, said ‘there are a number of job opportunities created in Punjab in the wake of multiple projects [under CPEC] which include industries, railway lines, highways, power projects and other mega schemes, while Balochistan is craving for potable water, roads, electricity, education and health for the last 70 years’. According to Choudhry, Baloch nationalists feel that the CPEC will exploit the natural resources of the province. Natural resources in Balochistan, mainly natural gas, gold and copper, has an estimated worth of billions of dollars. According to an estimate, the region has US$500 billion worth of gold and copper. Another Baloch nationalist, Shahzain Bugti of the Jamhoori Watan Party, has questioned the benefits of the CPEC for Balochistan. Such anti-CPEC sentiments are not rare in Balochistan, as Dr Manan Baloch was a staunch critic of the CPEC.
While there has been a consensus among the majority on the CPEC routes and projects, separatist Baloch groups remain in disagreement. This is evident through regular attacks on workers engaged in CPEC projects, especially in Gwadar. By September 2016, around 44 Pakistanis working on CPEC had been killed. Factions against the CPEC are specifically targeting Chinese citizens in Pakistan; for example, in June 2017, two Chinese were kidnapped from Quetta, the provincial capital of Balochistan and killed by militants. As the most marginalised and least populated province in the country, Balochs fear that the CPEC would disturb the local demographics through the migration of non-Balochs to the area. The Balochistan Liberation Army (BLA) particularly disapproves of the CPEC’s wealth-distribution formula. As a marginalised region, Balochistan has lagged behind in human resource development and this is a reason that since the 1950s, skilled jobs in the provincial gas market have been taken up by non-Balochs. According to an estimate, the population of the Gwadar city, 70,000 in 2014, is constantly on the rise due to CPEC projects and the city will likely have a population over two million by 2036, with a majority of being a non-Baloch workforce from Pakistan and China. There are also reports of displacement of Balochs due to CPEC projects. According to an estimate, CPEC projects have caused the displacement of more than 2,500 families within Balochistan. These important local developments demand urgent attention of the state because such grievances may continue to fuel the Baloch insurgency.
Security has been a major concern for both China and Pakistan and such worries increase following any attack on CPEC projects. Even prior to the initiation of the CPEC in 2015, Beijing was concerned about the security situation in Pakistan. Following guarantees from the Pakistan Army that they would provide security, China agreed to initiate the CPEC. The government of Pakistan provides security through its army to Chinese engineers, technicians, and labour. At the signing of the CPEC agreements, Pakistan announced the creation of a special security division (SSD) of around 10,000 soldiers under a two-star general for the security of CPEC projects. In June 2015, Army Chief General Raheel Sharif, provided further assurances of fool-proof security to China’s Vice Minister for Security Dong Haizhou in June 2015, and Pakistan’s commitment has since increased to two SSDs. It is important to underline that General Sharif has been given the credit for major successes against terrorism through Operation Zarb-e-Azb, which started in December 2014. The operation led to a remarkable decline in violence across the country—a fact that was also reported in a US State Department report revealing a decline of 45 percent in terrorist attacks in 2015 compared to 2014. Pakistani analyst Imtiaz Gul argues that the improvement in security created a conducive environment for the CPEC as earlier ‘nobody was willing to invest in Pakistan’. Here it is important to highlight that the government of Pakistan funds the SSDs through provincial budgetary sacrifices and charging electricity consumers. In August 2017, the National Electric Power Regulatory Authority of Pakistan allowed all power producers to charge consumers for covering costs related to the security of 19 energy projects under the CPEC. Kaisar Bengali, former advisor to the Chief Minister of Balochistan, has questioned the federal government’s demand for 3 percent share from the provincial divisible pool.
Nation-building
Although upgraded security and security operations have reduced the effectiveness of terrorist and insurgent groups across the country, the government has not been able to address the root causes, such as socioeconomic marginalisation. Nonetheless, the CPEC is seen by scholars and policymakers as a step in the right direction to address the structural issues, especially poverty, in Balochistan. Scholars are of the view that employment opportunities and stability in the province would lead to overall development that could help counter Baloch insurgency. Nawaz Sharif stated that the CPEC would reduce poverty and unemployment. Similarly, a former Chinese diplomat argued, ‘poverty is the breeding ground of terrorism’ and economic development through the CPEC would help reduce terrorism. Which leads into the intangible benefits of the CPEC and how it, along with Chinese investment, effects nation-building in Pakistan.
Since the beginning of the CPEC in 2015, Beijing has been worried about Pakistani opposition to the CPEC. According to Gul, ‘The Chinese government got very upset with the lack of national consensus on CPEC-related projects’. This is important because China’s foreign policy is based on the principles of non-interference but in the case of CPEC there is an understanding in Beijing that it cannot sit on the side-lines as a silent observer. Beijing has urged Islamabad to resolve internal discord over the CPEC. Through its diplomats in Pakistan, Beijing has been dealing with some irritants, reflected in CPEC-specific meetings between the Chinese ambassador to Pakistan and a variety of people, including the army chief, naval chief, chief justice of Pakistan, the national security advisor, members of the Pak-China Parliamentary Group in Senate, and political leaders from PML-N, Pakistan Muslim League, PTI. The CPEC was the key agenda point in all these meetings, for example, the meeting between Imran Khan and then Chinese ambassador Sun Weidong took place at a time when PTI was all out criticising the CPEC. There is some appreciation in China of Pakistan’s different political system and the fragile political dynamics, Beijing, therefore, has been forthcoming in expanding the scope of the CPEC beyond its initial plans to include all regions of Pakistan, for example by implementing some development projects in the Federally Administered Tribal Areas. Beijing’s understanding of Pakistan’s problems could be because of its similar problems in some regions. Part of the vision behind the CPEC is to develop China’s western regions, which have lagged behind in comparison to development in the eastern parts of China. The CPEC is a major step towards developing Xinjiang, which Beijing views as crucial for stability in the Xinjiang Uyghur Autonomous Region. That is why Pakistan’s well-known scholar, Hassan Askari Rizvi, said, ‘The [CPEC] Project is going to be a positive turn-around both for Pakistan and the western region of China’.
Transparency is a key feature of nation-building and deserves attention in this paper. The central government has been under pressure from the provinces to engage in dialogues to ensure transparency of the CPEC. Pakistan’s government has launched a website (www.cpec.gov.pk) and is very active on social media, sharing CPEC-specific information. While many CPEC projects are still facing criticism, dialogues among stakeholders have led to crucial agreements on the distribution of wealth to ensure that the marginalised provinces receive a greater share. In terms of the distribution of CPEC funds, US$7.1 billion has been allocated to Balochistan, US$6.9 to Punjab, US$11.5 to Sindh, and US$11.6 to KP. In relation to the spread of projects, 16 projects are in Balochistan, 13 in Sindh, 12 in Punjab and 8 in KP. The initial plan for SEZs was to setup eight in KP, seven each in Punjab and Balochistan, three in Sindh, and one each in Islamabad and GB. The plan changed after a visit of the chief ministers of all (four) provinces to Beijing in December 2016. As a result, it was decided there would be nine SEZs for each of the four provinces, four each for GB, and Azad Jammu and Kashmir (AJK), and two for the federal capital. This raised the number of SEZs from 27 to 46. From these figures, it is clear that Punjab and the Punjabi-led government of PML-N made compromises to give other stakeholders the share they deserve. It is a healthy sign that the government is attempting to address ethnically motivated grievances against Punjab. The author, therefore, differs from Akbar Zaidi’s view that the concerns of ethnic minorities would not be addressed in a country dominated by Punjabis.
In the literature on nation-building, there is a significant focus on state-society relations and political processes. In the context of the CPEC, it is important to examine how the government of Pakistan has managed to negotiate with provincial representatives. There are many who are unable to see beyond the ethnic lens to focus on positive aspects of the CPEC dialogues between the federal government and the provinces. At the invitation of President Xi, Nawaz Sharif travelled to Beijing for Belt and Road Forum in May 2017 with a high-level delegation including chief ministers of KP, Balochistan, Punjab, and Sindh. The government was however criticised for ignoring the representation of GB and AJK in the forum. Only a few days before the BRI forum, the name of GB’s chief minister was dropped from the list of the Pakistani delegation. There are reports suggesting that GB’s Chief Minister was not part of the delegation because China did not want the undue criticism from India as GB is part of the disputed Kashmir territory.
Despite the state’s efforts, there are still issues to be resolved and a need for greater transparency and continuous dialogue among the stakeholders. On the issue of CPEC loans, there are voices inside Pakistan questioning the government’s cost-benefit analysis done before project. This is in light of what happened to Sri Lanka, where the country’s external debts have increased from US$10.6 billion in 2006 to US$25.3 billion in 2016-13 percent of which is owed to China. Pakistan already has large external debts to the World Bank and the International Monetary Fund. With loans from China now, Pakistan may face a great difficulty repaying its debt. According to some estimates, the cost of the CPEC would be much higher than the Chinese investment of US$62 billion, Pakistan may end up paying US$90 billion over 30 years due to a 40 percent return on investment. The International Monetary Fund has warned Islamabad about its repayment obligations under the CPEC because Pakistan is already under the burden of US$75 billion in external debts. However, in an assessment by a former governor of the State Bank of Pakistan, the country may not face the direct burden of the CPEC repayments as a significant portion of loans is directly taken by Chinese companies with no obligation on the part of the government of Pakistan. Furthermore, infrastructural loans have a concessional interest rate of 2 percent over the period of 25 years and the overall burden of external debts could reach US$3.5 billion per annum. There are however questions on how much the local economy can gain through profits from infrastructural and energy projects. In a climate of ‘fake news’, it is important that the government regularly shares information on all aspects of the CPEC to avoid misunderstandings between policymakers at federal and provincial levels.
For long-term stability of the CPEC, the state should invest in building human resources as the internal migration of skilled labour could pose a threat by enhancing inter-ethnic tensions. Considering the significance of equality in nation-building, the state should ensure access to equal opportunities for all citizens irrespective of their ethnicity. The government, through the Pakistan Army, has already been working on developing human resources in Balochistan that may have an impact on stability in the region. There are several noteworthy developments, for example, the relaxation of the rules to increase the Baloch recruitment into the armed forces. It is important to mention that this is a pre-CPEC development as the first batch of 4,000 Balochs was inducted into the army in 2010 and since then the number has increased to 20,000. This is a meaningful step to address structural issues because Punjabis dominate the army, in 2007 Punjabis accounted for 71 percent of personnel. While recruitment in the armed forces is important, there is a need to invest in the development of human resources in other sectors that could pave the way for the employment of Balochs in the emerging job market. For that, it is crucial to focus on the education sector in Balochistan. Among the provinces, illiteracy is the highest in Balochistan at 71 percent. The government, with the army in the lead, is working on several projects, such as the one called ‘Every Child in Balochistan Must Go to School’ which may show results in a couple of years. To produce skilled labour that can benefit from the jobs created by the CPEC, it is important to ensure that Baloch youth are able to enrol into the country’s elite institutions. One such example is the preparatory classes conducted by the army that invites faculty members from the National University of Sciences and Technology (NUST) in Quetta. The key motivation is to increase the proportion of Baloch students in NUST. There is also a CPEC-specific initiative, a fully funded 3-year Diploma of Associate Engineers, which started with 10 Balochi students. Although some may question the expanded involvement of the army in civilian affairs, it is important to understand that the education sector in Balochistan is highly politicised and ineffective, partly due to the teachers’ union being under the influence of a local political party called the Pashtunkwa Milli Awami Party.
Considering ongoing disagreements on the CPEC, it is important that the government make the Council of Common Interests (CCI) functional in a true sense. The CCI was formed following the 1973 Constitution and works under the Ministry of Inter-Provincial Coordination, but it has largely remained non-functional. Between its creation in 1975 until December 2017, only 33 meetings of the council were held. In August 2017, the government made a controversial move to reconstitute the CCI by eliminating two federal ministers from KP and Balochistan. This decision led to an undue dominance of Punjab and PML-N with four ministers from Punjab and six overall belonging to the party. It is the CCI’s mandate to ensure equitable distribution of resources among the provinces and it is empowered by the constitution to discuss and make decisions on development planning and coordination between the federal and provincial governments. Even prior to the signing of the CPEC agreements, CCI meetings had been irregular. Often the government’s approach has been reactionary and the meeting in March 2015—held after nine months of the previous CCI meeting—was called by the prime minister amidst serious objections from provinces on the allocation of natural resources, such as water, and the provincial budgets. In the view of Faisal, ‘supervision of CPEC-related projects and their implementation by CCI will strengthen the constitutional body’. It is time to first reconstitute the CCI to have more equal representation from all provinces and then to offer it much-needed financial and human resources. Such reforms could help in nation-building that places emphasis on enhancing capacity and legitimacy of the state. The government lacks institutional capacity to effectively address federal-provincial differences but the CCI could help address such challenges.
Based on the arguments presented in this paper, it is clear that the CPEC continues to be a source of friction between provincial governments, opposition parties, and the federal government. While some reservations on CPEC routes and wealth distribution have been addressed through dialogues, there continues to be a politicisation of the CPEC, which is disturbing for both Beijing and Islamabad. In the case of the differences over the CPEC, it is clear that it has provided provincial governments with opportunities to openly discuss their concerns and bargain for a better deal. The initiation of dialogues has certainly helped to address the differences in a peaceful manner instead of the federal government having to react to nation-wide demonstrations. As argued in this paper, the controversies over the CPEC have initiated a much-needed national dialogue in Pakistan that may play some role in addressing the country’s historic ethnic divisions, such as the grievances of ethnic minorities against Punjabi domination. However, for that to happen, the state needs to empower institutions, such as the CCI, and ensure equal representation of ethnic and religious minorities within these institutions to create mechanisms for dialogue. Such processes will ultimately help the state to gain legitimacy by building a nation. In addition, from all this Beijing can draw key lessons on: (1) understanding and respecting local socio-political dynamics; and (2) keeping plans flexible to adjust as per local dynamics and demands.
Conclusion
Ever since its independence from the British Empire in 1947, Pakistan has been facing the socio-economic and political impacts of deep-rooted ethnic divide. The division is worsened by the fact that Punjabis comprise almost half of the country’s population and the ethno-politics is dominated by two parties that largely represent the two biggest ethnicities, i.e. the PML-N for Punjabis and the PPP for Sindhis. These dynamics have influenced the implementation of the CPEC, for example in the form of the reservations of those provincial governments dominated by minority ethnic groups on the control of the CPEC by the Punjabi-dominated PML-N. The situation demanded dialogue, compromises, and consensus that the state has so far managed by addressing concerns of major stakeholders, such as the governments of KP, and Sindh, however, there are still reservations from GB and Balochistan. The latter faces insurgency from local insurgents upset by the migration of non-Balochs taking jobs in Balochistan.
Creating a common national identity, institution-building, transparency, and limited external intervention are some key features of nation-building. As argued in this paper, all these have been reflected, albeit to varying degrees, in the context of the CPEC in Pakistan. The ethnic division is deep-rooted and reflected through trust deficits between leaders of Punjab and other provinces, such as Sindh, KP, and Balochistan, however, more transparency and justice can pave the way for promoting a collective ‘Pakistani’ identity that is shared by all citizens. The equitable sharing of CPEC investment and outputs, for example, SEZs, is a healthy sign but the government needs to ensure that more spaces are created for other provinces in decision-making, such as in the CCI. Increased dominance of Punjab and PML-N will create hiccups for the CPEC, a project that is not only crucial for the country’s development but also to meet its geo-economic and geopolitical agendas.
While the literature on nation-building defines it as a highly complex and locally led process, the role of China has been significant since the start of the CPEC in 2015. This role has been manifested through some pressure from Beijing on Islamabad, flexibility to expand the original scope of the CPEC, and China’s regular engagement with Pakistan’s political leaders through meetings in China and across Pakistan. The cumulative effect of local and external interventions has led to open discussions on inter-provincial relations and disagreements in Pakistan. This is however merely the beginning and the state needs to develop a long-term vision and mechanism to build a nation in Pakistan. As the CPEC is not a short-term project, the government needs to ensure long-term measures for the federal-provincial coordination and consensus, and for this purpose, the role of the CCI is very important.