April 20, 2017 10:00 am JST
Richard Ghiasy

China-Pakistan corridor could help stabilize South Asia

Dialogue with India and Afghanistan needed to maximize regional benefits

Pakistan's Prime Minister Nawaz Sharif speaks at the inauguration of the China-Pakistan Economic Corridor port in Gwadar, Pakistan, on Nov. 13. © Reuters

So far in its two-year history the China-Pakistan Economic Corridor has fanned Indian-Pakistani rivalry and added to regional security tensions. But the $55 billion infrastructure and energy project, officially launched on April 20, 2015 (though some elements date back much further), does hold some potential to catalyze South Asian stability and economic integration.

For this to happen, India and Afghanistan need to have stakes in the success of CPEC, part of China's ambitious Belt and Road Initiative. However, there are several formidable challenges in the way.

Broadly speaking, CPEC in its current form is indicative of the hijacking of South Asian integration and stability by Indian-Pakistani rivalry. India follows CPEC developments with much geopolitical suspicion. One senior Indian official said in 2016 that the country "resolutely opposes" the project. Pakistan, meanwhile, claims India has moved beyond mere opposition to attempting to sabotage the whole endeavor.

Among India's complaints is that CPEC is not economically viable. New Delhi says the project therefore has two purposes: civilian-commercial development, and paving the way for an increased Chinese military presence in South Asia to besiege India. CPEC connects Pakistan to China's Xinjiang Special Administrative Region, which currently has limited market significance. But Beijing plans to turn the Xinjiang SAR into a regional economic axis.

New Delhi is also upset that CPEC runs through the disputed territory of Pakistan-administered Kashmir, feeling that China has not been sensitive to its vital interests there. Furthermore, India is displeased with the bilateral rather than regional nature of CPEC's vision and development. It feels that CPEC should develop in consultation with all regional stakeholders.

In its turn, China states that the nature of relations between India and Pakistan has inhibited any constructive trilateral or regional dialogue on CPEC, but invites India to join the process now that it has begun. China sees South Asia as an economically underdeveloped and conflict-sensitive region that has been stifled by Indian-Pakistani hostility. Beijing continues to reiterate that CPEC is a long-term vision, with commercial aims only -- certainly serving Chinese and Pakistani interests, but, over time, those of the region too.

Critical infrastructure

CPEC will see the construction of an estimated 3,000km-long network of new roads, railways and gas pipelines, as well as multiple power plants in Pakistan. Beijing anticipates that the endeavor will electrify and boost Pakistan's economy, connecting it more closely with China, and enabling Pakistan to become a major extra-regional trading center that would better connect the Middle East, South Asia, Southeast Asia, Central Asia and western China. Simultaneously, it could act as a critical alternative lifeline to China for overland imports of food and non-food products, and even energy.

In China's view, Pakistan's domestic electrification and connectivity is critical and needs to be tackled first, before moving on to address the country's links with its immediate regional neighbors, India and landlocked Afghanistan. Contrary to India's stance, Afghanistan is eager to participate in both the Belt and Road Initiative and CPEC.

In addition, China hopes that CPEC will gradually instill a more economically utilitarian mindset in Pakistan that will encourage Islamabad to shift economic development up its priority list, rather than politicizing trade and integration with India and Afghanistan at the expense of its own economic development. Over time, CPEC might help to change patterns of regional military rivalry into greater economic cooperation.

The regional security status quo is worrisome, and drivers of tension and conflict between Pakistan on the one hand and Afghanistan and India on the other are deep-rooted and complex to resolve. Can an external impetus such as CPEC be one of the possible remedies?

Undoubtedly, CPEC will, in some capacity, power and boost the Pakistani economy, but its impact will depend on the distribution of spoils and accompanying smart economic policies. This lies in the hands of Islamabad, rather than Beijing. Hard infrastructure without corresponding investment in institutional and human capital and a realistic economic development strategy will have limited value -- and thus CPEC's success is still very much up in the air.

India's anxieties about the increased Chinese military presence in South Asia are not far fetched. China's emerging naval base in Djibouti, aimed at securing transit in the Gulf of Aden, is one such example. As China becomes a more active global security actor, it is conceivable that it will initiate some form of security arrangement to protect its investments and transit in Pakistan. Yet, this could possibly be left to Pakistan to manage, as is the case currently. CPEC might not necessarily lead to what India dreads -- a full-fledged Chinese naval base in Pakistan's Gwadar port.

Security concerns

Nevertheless, Indian anxieties will only be reduced by gaining some level of connectivity with CPEC. And, in the interests of commercial viability, CPEC should connect with the Indian market. The Pakistani market, in its current state, is too limited to enable the country to become the major extra-regional trade hub that Beijing and Islamabad foresee.

Indian involvement in the corridor would also shorten Pakistan's land routes to the markets of Southeast Asia, as well as those in Central Asian that could be reached via Afghan territory. Given that Afghanistan's security situation severely limits connectivity, the latter is still a long way off.

Economically speaking, both India and Afghanistan also stand to gain from connecting with CPEC. If successful it will raise the standard of living in Pakistan, increase demand for regional goods and services, and facilitate greater exchange and transit between China and Pakistan on the one hand and Afghanistan and India on the other. Perhaps more importantly, this could lead to increased levels of societal, commercial and political trust.

Thus, CPEC could act as a catalyst and contribute to a gradual erosion of regional disputes and animosity. Otherwise, this dynamic will continue while Pakistan gains economic muscle and China makes regional inroads. If India wants to avoid this scenario it will need to consider making concessions, participate in the Belt and Road Initiative and connect with CPEC in some capacity. Things are often changed more effectively from the inside.

Concurrently, in the interests of regional stability and economic benefits, China and Pakistan need to find creative and constructive ways to connect India and Afghanistan with CPEC. It is not so much a matter of infrastructural connectivity as of political connectivity. Increased dialogue is a great way to start.

While Pakistan and China have made overtures to India to join CPEC, frequent and higher-level working groups will be needed to reduce tensions. Ideally, Beijing would initiate this process, permitting India and Afghanistan to voice concerns and interests, and stipulating how China and Pakistan intend to maximize the project's regional benefits, minimizing Indian (and Afghan) anxieties in the process.

If this is achieved, even to a limited degree, CPEC will have started to function as a unique regional binder.

Richard Ghiasy is a researcher at the Stockholm International Peace Research Institute's China and Global Security Program.

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