The CPEC: the Indian angle

Joining CPEC has become the oft repeated foreign policy mantras by Pakistans civilian leadership. It is another thing that hardly a few know what exactly it means and how will it pan out from the economic standpoint. A few weeks ago, Pakistani military leadership joined its civilian peers in handing out invitations to join the CPEC. Only this time, it came as a surprise because the invitation was given to none other than Pakistans arch-enemy, India. Also common to this invitation, however, was the absence of any clear economic understanding of how and why would India join CPEC.

In May 2016, the Islamabad-based Institute of Strategic Studies published a book titled CPEC: a game changer, which carried a chapter by former diplomat Malik Mohammad Ashraf, who wrote on CPEC: analysing the Indian factor.

Ashraf noted that China has also invited India to join the project; acknowledging Indias historical importance in the trade route. However, India has been reluctant in responding to this idea. In fact, Indian opposition to this initiative stems more from the fact that Pakistan would be the biggest beneficiary of the CPEC in the region and might become an economic success in South Asia, wrote Ashraf highlighting the Indian meddling in Balochistan and a host of other terrorist incidents.

These security-tainted sentiments echoed across many corridors back then, and echo still now. The latest comes from the Stockholm International Peace Research Institute (SIPRI). In its latest report titled The Silk Road Economic Belt, the institute argues that the CPEC has raised political temperatures between India and Pakistan.

India strictly opposes CPEC, and while the Belt is not a harbinger of new conflict, it has so far intensified historic competition over influence in South Asia. Furthermore, at this stage, the Belt has little potential to help thaw relations between Pakistan and Afghanistan, but there may be prospects for this over the medium to long term, the report said.

According to the report, analysts in India have increasingly begun to see CPEC as a geopolitical ploy and as a security project. This has been partially fed by assumptions that CPEC is not commercially viable and has strong strategic drivers.

These assumptions are obviously not well grounded; the recent pace of work highlighted in BR Researchs columns and recent series of Gwadar interviews, and changing development paradigms in China (with focus on western China) provide sufficient economic reasons for existence and maintenance of the CPEC.

SIPRIs report flags Indias claims that China has never reached out to India in regard to CPEC by genuinely inviting and engaging it with a defined role. This brings us back to the question posed at the start of this column: how and why, economically speaking, should India join the CPEC.

A country can join any trade and investment corridor via three possible ways: (a) using the port/s if they provide shorter or cheaper access; (b) investing in export processing and other economic zones to gain various forms of efficiencies; (c) using the corridor as a transit route.

In this light, the possibility of India joining the CPEC appears limited in at least the short-to-medium-term. The ports in Gwadar and Karachi or even Keti Bandar are too far from economic hubs of Indian Punjab. Businesses in Indian Punjab might as well use ports in the Indian Gujrat, being at shorter distance. Second, expecting that the powers that be, would allow Indian firms to invest in export processing and other economic zones as a way of joining the CPEC is no more than a pipedream.

The only way India can join the CPEC in the medium term is perhaps by way of the transit route to Afghanistan and Iran; only that the CPEC is envisaged as a north-south corridor rather than an east-west corridor. However, if SIPRIs report is any guide, China also anticipates CPEC to bring economic benefits that will gradually motivate Pakistan to support Afghanistans path to peace and stability. China seeks for Pakistan to utilize the sway it is believed to hold over the Afghan Taliban more constructively. After all, China desires a stable and economically developed neighbourhood that fuels the Chinese economic engine (and CPEC), rather than impeding it.

Seen in that light, the CPEC may be extended to an east-west corridor as well. The question is whether Pakistans establishment would want it to happen. Perhaps yes, if NLC is given the east-west transit trade business. That way there will be a good business incentive with an inherent provision of security, since it is the NLC that is managing the business. Besides, if China really wants east-west corridor, it may eventually have its way, given its iron-friendship with Pakistani military. The bigger question is whether India would want to join the CPEC, given that it would imply a de-facto acceptance of what Indias perceives as illegal occupation of Gilgit-Baltistan region by Pakistan.