Daily Current Affiars 21.09.2018: China-Pakistan Economic Corridor

China-Pakistan Economic Corridor

Overview: Pakistan has invited Saudi Arabia to join the CPEC as the third “strategic partner”. Saudi participation in this mega project will ensure huge investment in Pakistan through this platform. 

Behind the scene:

Saudi Arabia has a history of bailing out Pakistan financially. In 2014, six months after Pakistan obtained its last IMF bailout, Saudi Arabia loaned it $1.5 billion that the government used to strengthen its rupee currency. 

Know the CPEC:

• The CPEC is the flagship project of the multi-billion dollar Belt and Road Initiative (BRI), a pet project of Chinese President Xi Jinping, aimed at enhancing Beijing’s influence around the world through China-funded infrastructure projects.
• The 3,000 km-long China–Pakistan Economic Corridor (CPEC) consisting of highways, railways, and pipelines is the latest irritant in the India–China relationship.
• CPEC eventually aims at linking the city of Gwadar in South Western Pakistan to China’s North Western region Xinjiang through a vast network of highways and railways.
• The proposed project will be financed by heavily-subsidised loans, that will be disbursed to the Government of Pakistan by Chinese banking giants such as Exim Bank of China, China Development Bank, and the Industrial and Commercial Bank of China.

India's Concern:

Many experts are not favouring of India supporting CPEC. This is so because any Indian participation would inextricably be linked to the country’s legitimate claims on PoK.

• CPEC rests on a Chinese plan to secure and shorten its supply lines through Gwadar with an enhanced presence in the Indian Ocean. Hence, it is widely believed that upon CPEC’s fruition, an extensive Chinese presence will undermine India’s influence in the Indian Ocean.
• It is also being contended that if CPEC were to successfully transform the Pakistan economy that could be a “red rag” for India which will remain at the receiving end of a wealthier and stronger Pakistan.
• Besides, India shares a great deal of trust deficit with China and Pakistan and has a history of conflict with both. As a result, even though suggestions to re-approach the project pragmatically have been made, no advocate has overruled the principle strands of contention that continue to mar India’s equations with China and Pakistan.

What next:

Only by respecting the sovereignty of countries involved, can regional connectivity corridors fulfil their promise and avoid differences and discord. China is a country which is very sensitive on matters concerning its sovereignty. So it is expected that they would have some understanding of other people’s sensitivity about their sovereignty. Meanwhile, India must uphold its specific reservations on the project and draft a strategy to revert suitably in case CPEC is offered formally through official channels.