Realism at last
Financial Times has claimed in Sunday Report that Islamabad is set to review the deals concluded by the last PML-N government under the framework of China-Pakistan Economic Corridor (CPEC). According to the British newspaper top government functionaries said that Pakistan Tehrik-i-Insaf led government will look into the Belt and Road Initiative (BRI) and renegotiate the Free Trade Agreement (FTA) inked with China a decade earlier.
Prime Minister Imran Khan has constituted a nine member committee to evaluate CPEC—the most ambitious component of BRI. The $ 62 billion initiative include a grand revamp of Gawdar deep sea port, road-rail network and power plants worth $ 30 billion, most of which are coal based extremely health hazardous thermal power plants which will produce expensive electricity not afforded by the domestic and commercial consumers in case the new government decides to withdraw subsidy.
Abdul Razak Dawood, a member of the Committee, who is also Advisor to the Prime Minister on commerce, textiles and industry said, “The previous government did a bad job while negotiating with China on CPEC. They did not do their homework correctly.” The team will “think over thoroughly on CPEC—its benefits and liabilities.”The advisor to the Prime Minister disclosed that Chinese companies received undue advantage, adding, “It is one of the things we are looking at.”
Although greater part of the lack of transparency in CPEC rests on the shoulders of last PML-N government yet the Chinese government can not be exonerated a share of it. Why did the Chinese embassy used to come out with clarifications about the news and comments in the national press, debating the transparency issues? Did they think that PML-N and its self-serving leaders like Ahsan, Iqbal, Ishaq Dar, Nawaz Sharif and ShabazSharif will remain in power in Pakistan till 2030? If this was the case then it is sheer naivety. Did the Chinese leadership not read the mood and pulse of the people of Pakistan against corrupt practices of the ruling elite? Why this total disregard for 220 million people with more than 50 percent living below poverty line. Why was the stance of PTI on CPEC agreements and the one against FTA phase II not taken into account?
The Chinese Foreign Minister, Wang Yi has to dispel the wide spread impression about the terms of CPEC loans and has to say in a press conference that China is not saddling Pakistan with debt. He made an offer to renegotiate FTA, which is a major cause of Pakistan’s current account deficit of $ 18 billion. The trade deficit with China alone is $ 12 billion because of the concessions of zero import duty on 35 percent import tariff lines and the tariff and no-tariff restrictions slapped on imports from Pakistan in violation of WTO Free Trade Regime.
A sagacious suggestion has come from the advisor to the Prime Minister that “everything will be placed on hold” for a year till the government got “its act together.” He said, “Perhaps we can stretch the CPEC out for another five years.” The financial times report reveals that many government functionaries support the idea of extending debt terms and spreading projects over a long period of time in place of a blanket conclusion. However both the Finance Minister Asad Umer and Razak Dawood emphasised Islamabad would tread with caution over CPEC review to not offend Beijing.
Before the recent Financial Times report, an article published on July 22, the Wall Street Journal had quoted the Planning Commission Chief Economist as having said that China Should rescue Pakistan with interest free loans. Otherwise “for what do we have this friendship for?” The foreign office understood it as an unwise and unauthorized comment against CPEC and warned government functionaries in a statement on August 4 against making such candid comments. Barring public servants to speak out their mind in the larger interest of the country and its people may further raise transparency concerns as all the contracts under CPEC are shrouded in mystery.
The articles published in the international media regarding the terms on which loans have been given by China rightly questioned the ability of Pakistan’s economy to service these loans. The bare fact is that public debt has become unsustainable. The finance minister will hopefully honour his commitment of placing all CPEC agreements before parliament and the Long Term Plan negotiated with China in November 2017.