AIIB and CPEC

President-designate of Asian Infrastructure Investment Bank (AIIB), Jin Liqun, while speaking at a joint news conference with Federal Finance Minister Ishaq Dar, stated that China-Pakistan Economic Corridor (CPEC) will benefit not only Pakistan but the entire region. He went on to express the hope that India would also support it as it envisages enhancement of regional connectivity with obvious positive repercussions for the Indian economy as well.
The AIIB has been hailed by Asian countries, apart from Japan, as its primary objective is to support infrastructure development in a region that is massively deficient in infrastructure. India, with the second largest shareholding in the bank after China, is naturally regarded as a major player in its establishment. While ostensibly the objective of setting up AIIB was to provide financing to meet the continent's infrastructure needs, yet the opposition of the United States and Japan to its establishment tells a different story. As both China and India graduated from being eligible for concessional funding to only market-based loans, reflecting viable economies, they requested a greater say in the workings of existing multilaterals, including rotating stewardship of the World Bank (held by the US since its creation), the International Monetary Fund (held by Europe) and Asian Development Bank (held by Japan). This request was not granted which is considered to be an important factor in the establishment of the AIIB.
Jin Liqun's statement that the AIIB would be working closely with other multilaterals is meant to assuage their concerns and assure them that it would not be competing but rather complementing other multilaterals; or in other words, AIIB would be engaged in harmonising policies with other multilaterals as well as seeking not to duplicate efforts of other multilaterals and bilaterals.
China may have worked with India to establish the AIIB and in recent years has signed billions of dollars of trade treaties with India; however the two countries' foreign policy objectives are markedly different, especially with reference to Pakistan. Narendra Modi's India is virulently opposed to Pakistan and in this context the repeated violations on the Line of Control and the Working Boundary by Indian forces as well as refusal to reignite official talks on all contentious issues is ample reflection of the Modi administration's myopic view in its relations with Pakistan. The visible overture of friendship, by Modi towards Nawaz Sharif in inviting him to his inauguration, was the first and the last such overture and since then, relations between the two nuclear neighbours have worsened. Accusations are hurled at Pakistan by India at all fora, compelling the Pakistan government to finally conclude that unless saner elements are taking foreign policy decisions, confrontation with India would remain.
The CPEC, envisaging 33.8 billion dollar Chinese investment in the energy sector and 10.6 billion dollar in transport infrastructure, is acknowledged as a game-changer for Pakistan and the eighth mandated review of the 6.64 billion dollar Extended Fund Facility by the International Monetary Fund acknowledged that "CPEC has the potential to raise productivity and growth." India has quite openly expressed extreme reservations about the CPEC prompting Pakistani security agencies to maintain that recent terror attacks on Pakistani soil have been launched with Indian complicity with the objective of convincing the Chinese that their investment in CPEC is not safe and therefore is not likely to bear fruit. In this context, it is relevant to note that the Pakistani government as well as the establishment is taking appropriate mitigating measures to ensure the safety of Chinese nationals engaged in the CPEC. And it does not appear likely that either the Chinese or indeed the Pakistani officialdom is going to back down from the CPEC.
The CPEC has full support of a wide political spectrum and the likelihood of it being abandoned appears almost non-existent. India would be wise to acknowledge this and try to benefit from the regional connectivity that the CPEC offers that would in turn benefit India itself rather than supporting its myopic view.