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CPEC questions
UZAIR M. YOUNUS PUBLISHED JAN 03, 2016 01:45AM

IF there was one achievement of Prime Minister Nawaz

Sharifs government this year, it was the China-Pakistan
Economic Corridor. Counter-insurgency, relative
macroeconomic stability, and the survival of the
democratic set-up alongside a buoyant military
establishment pale in comparison to CPEC. Upwards of $45
billion are going to be pumped into the economy, much of
it in the underdeveloped regions of Balochistan and KP.
Gwadar is set to become a port worthy of its geopolitical
location. And over time, the Pakistani economy will forge a
tighter bond with a possible successor to the global
hegemon, the US. This is the strategy to propel Pakistans
economy forward. Or so we are told.
The problem with the CPEC agreement is that much of it is
secret and undisclosed. The State Bank governor recently
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bemoaned this fact, arguing that it is important for the

bank to know the structure of CPEC deals. That the man
responsible for ensuring the long-term macroeconomic
stability of the country is unaware of the details, and is
forced to argue his case in the press, is evidence of how
secret this deal is. This matters, not only because
transparency of government deals is fundamental to a
democratic republic, but also because the ultimate
structure of the deal determines its short- and long-term
benefits to Pakistani citizens.
In recent years, Pakistans external debt has ballooned to
over $65bn. Successive governments have been unable to
increase revenue collection, and failed to deal with
inefficiencies and corruption. Burgeoning deficits and lack
of foreign exchange reserves have forced governments to
plead for preferential trade status, soft loans, and IMF
bailouts. The result has been high levels of inflation,
stagnant real wages, and an overall decline in purchasing
power for the working class. But well-heeled political and
economic elites have witnessed an unprecedented increase
in their income and wealth.

Much of the CPEC agreement is undisclosed.

While sufficient details about CPEC are not available, the
experience of African and Latin American countries can
inform policymakers of the advantages and pitfalls of
increased Chinese investment in the economy. In both
regions, China has increased investment in large-scale
infrastructure projects. The focus of trade, however, has

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infrastructure projects. The focus of trade, however, has

been on extractives. This has exposed the economies in
both regions to the slowdown in China, causing dramatic
declines in investment and currency levels. The Brazilian
real has declined almost 30pc this year, as the slowdown in
China coupled with domestic political upheaval has caused
economic stagnation.
As part of increased Chinese investment, governments
have also agreed to give preferential treatment to Chinese
corporations and labour. This has limited growth
opportunities for local companies and employment,
thereby reducing the positive impact of the investment on
the masses. Lax oversight has led to poor quality of work in
some cases: in 2011, a 130-kilometre highway, constructed
by a Chinese corporation in Zambia, was swept away by
rainfall.
To ensure that Pakistan does not suffer, the government
must not only develop contingency plans, it must also be
more transparent about the deal itself. Questions have
already been raised about the proposed CPEC routes. Both
Balochistans and KPs political leadership have concerns
about the proposed routes and their impact on their local
economies. To ensure macroeconomic stability, economic

policymakers, both at the State Bank and outside, should

be provided details about the expected inflows and Sikh Ranger takes part
in beating retreat at
outflows of foreign currency, and the debt and equity
components of the deal.

Wagah

The last time a secret deal was signed with a superpower,

Pakistan was supporting another hegemon in its ultimate
victory against the Soviet Union. The ideology and
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victory against the Soviet
Union. The ideology and

weapons brought chaos that continues to haunt Pakistan.

As the country received billions of dollars to keep the
economic wheels turning, a toxic ideology permeated
society, dividing the nation and killing thousands of
innocent people.
The argument this time is that the deals being signed are
purely economic in nature and will bring jobs, foreign
capital, and economic growth to the country. That may be
true, and if it is, why the secrecy? Why is it that a top
policymaker, the man in charge of keeping the economic
system in order, is not aware of the dynamics of this deal?
Why is the equity and debt component of the corridor a
secret? Why are details around potential preferential
treatment for Chinese construction companies and
employees not being made public?
These are questions that Pakistanis must ask themselves
and those running this country. Last time around, the
country was ruled by a zealot who wanted to alter the
course of Pakistani society at all costs. Today, Pakistan is a
democracy, at least an imperfect one. Demanding an
answer is not only a right, but a moral and ethical
responsibility.
The writer is a graduate of the Fletcher School of Law and
Diplomacy, and works as a consultant in the US.
Published in Dawn, January 3rd, 2016

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The views expressed by this writer and commenters below do not necessarily reflect the views and
policies of the Dawn Media Group.

TODAY ON IMAGES
OOOO

Shehryar Restaurant a taste of

Rajasthan along the G.T. Road

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