Raffaello Pantucci

Have been slow in posting and also been slow in production of late. A few longer projects that have been working on which should land soon. And a few shorter ones which are just taking a while to land. For the time being, here is my latest for local newspaper the Straits Times, looking at China-Pakistan relations.

The rising costs of China’s Pakistan project

Last month, the obscure Sindhudesh Revolutionary Army (SRA) claimed a pair of attacks against Chinese businessmen going about their affairs in the Pakistani port city of Karachi. A bomb was detonated near a restaurateur, while a businessman and his interpreter were shot at as they looked around a car showroom.

The random attacks were not surprising, with the group being one of a number that have targeted the growing Chinese population in Pakistan, but the decision to attack so brazenly in Pakistan’s largest city showed the group’s growing ambition.

Touted as the jewel in the crown of Chinese President Xi Jinping’s Belt and Road Initiative, Pakistan is increasingly emblematic of the problems China faces as it invests in its periphery.

Announced shortly before Mr Xi’s speech in September 2013, when he inaugurated the Belt and Road concept, the China-Pakistan Economic Corridor (CPEC) was quickly wrapped into the broader concept and elevated within the broader vision.

The idea was to create a web of economic links, trade and projects between China and Pakistan that would build on the historical relationship between the “iron brothers”.

But this proximity has brought China problems in many different forms. There have been historical concerns of militant Uighurs using Pakistan as a base to target China, though these seem much reduced now. Currently, the most prominent, direct security threat is illustrated through the attacks on Chinese businessmen in Karachi. The growing Chinese footprint has created a new range of potential targets for local militants.

In some cases, the perpetrators are internationally minded terrorists affiliated with Al-Qaeda or the Islamic State in Iraq and Syria who are eager to strike at foreigners to draw more attention to their cause.

LOCAL MILITANT ATTACKS

But more frequently, the danger in Pakistan comes from local separatist militants who are angry at the government, and see Chinese support as justification for targeting Chinese nationals.

The SRA is one such group. Focused on the liberation struggle of the Sindhi people, the group is active in the Sindh region of Pakistan where Karachi is located. Last July, the SRA announced a partnership with the Baloch Raji Ajoi Sangar, a grouping of organisations from neighbouring Baluchistan province.

Both the Baluchi and Sindhi groups have repeatedly targeted Chinese nationals and interests in the country – including, in the Baluchi group’s case, ambitious targets like the Chinese consulate in Karachi, the Karachi Stock Exchange, busloads of Chinese engineers and the Pearl Continental Hotel.

The attack on the hotel in May 2019 which left five people dead particularly highlighted local anger at Chinese investment. The hotel, which was established to cater to the business community that was expected to be drawn to the region, was built near the port in Gwadar, Baluchistan, a project that was first proposed during a 2001 visit to Pakistan by then Chinese Premier Zhu Rongji.

Between 2007 and 2013, the port was run by Singapore’s PSA Corp, though it relinquished the contract to a Chinese operator, having concluded that the security situation was too difficult.

Since then, the project has become the focus of discussion for armchair strategists who see it as a key point in an alternative route for Chinese access to the warm waters of the Gulf, bypassing the crowded Malacca Strait.

In reality, Gwadar is a huge underused port whose practical use is questionable even to Pakistan. Disconnected from major trading routes, adjacent to the already well-connected and thriving port of Karachi, Gwadar appears to be a white elephant, which China finds itself having to support nevertheless, given the investment and effort that has been put into it. The security situation has always been complicated, leading most recently to a discussion about trying to build a wall around the site.

These complications come not only from the fact that the much-discussed investment has not materialised in the way that was expected, but also from the fact that locals do not feel like they are getting any value from the port.

In fact, groups like the Baloch Raji Ajoi Sangar see the port as an expression of the predatory Pakistani state, supported by China, merely stealing from their territory once again.

Pakistan has long been aware of this security problem and has sought to address it through mobilising thousands of soldiers to protect Chinese nationals or projects within the country. Yet, this has not stopped repeated attacks and rising rhetoric from separatist groups in the country, making China an adversary on a par with the Pakistani state.

SUNK COSTS, RISING DEBTS

The clash is one that has become entangled with larger South Asian rows, with accusations that India is fuelling the separatists’ fight against China in Pakistan, further showing how Beijing is getting dragged into toxic local dynamics.

It is not the only way in which China now finds itself ever more deeply embroiled in Pakistan. Last month, as Pakistan faced a payments crisis after Saudi Arabia called in its debts, Beijing came to Islamabad’s rescue offering a US$1.5 billion (S$2 billion) extension to a currency swap deal. Pakistan was then able to use this to pay off the Saudi debt, but it merely strengthened China’s place as Pakistan’s largest creditor.

With reports of CPEC investments going into tens of billions of dollars, Beijing is finding itself holding large amounts of debt in a country struggling with payments and security issues.

Meanwhile, the pace of CPEC projects has slowed down, reflecting hesitation by companies as well as local managerial problems.

Furthermore, growing pressure from the United States on Pakistan has raised questions among some in Beijing about Islamabad’s commitment to the relationship, while escalating tensions with India have only made it harder to get Pakistan to focus on its immediate problems.

Part of Beijing’s answer came last October, when a new ambassador was deployed. He was not chosen from the cadre of officers from the Chinese Ministry of Foreign Affairs who are focused on South Asia, but was instead a party official from Guangxi. The decision reflects a desire by China to see a strong party hand steering the relationship forward on the ground.

The Pakistani side has reciprocated by growing the number of military officers in prominent roles managing the CPEC. Beijing has always preferred the reliability of the Pakistani military – often referred to as the backbone of the China-Pakistan relationship – to Islamabad’s feckless political class.

But the problem is that this places a massive infrastructural and economic undertaking on military officers. These are competent men in many ways, but not those usually responsible for complex economic projects.

And there is only so much soldiers can do even on security matters. On Jan 3, ISIS militants abducted and killed 11 Shi’ite coal miners in Quetta, capital of Baluchistan. Even though the Chinese were not the targets this time, the deadly attack has cast a further shadow and highlighted sectarian tensions in a Pakistani province where Chinese nationals and CPEC projects have been repeatedly targeted.

Another sign that relations between the “iron brothers” are not well: The annual bilateral meeting of the CPEC’s top decision-making body, the Joint Cooperation Committee (which brings together key Pakistani planners with their Chinese counterparts), has been postponed again after the last one in November 2019. Although the delays were initially attributed to Covid-19, the more recent setbacks are reportedly linked to disagreements over Chinese financing and delays in getting the special economic zones up and running.

Covid-19, however, did not appear to hinder China’s defence minister from visiting Pakistan last month to sign a memorandum of understanding between the two countries to counter a similar agreement signed between the US and India.

The CPEC is regularly referred to as the keynote project of the Belt and Road Initiative.

But as seen in the problems China is experiencing, it is shaping up to be a warning sign of what happens when Beijing invests heavily in countries with histories of ethnic and religious strife and insurgencies. Local corruption, instability and less-than-effective workforces can all create situations where large volumes of money get absorbed with little immediate return.

While this matters little in boom times, it becomes more questionable when budgets tighten. As Western countries have found, the expansion of one’s geopolitical footprint comes at a price.

Raffaello Pantucci is a senior fellow at the S. Rajaratnam School of International Studies and has a forthcoming book looking at China’s relations with Central Asia that draws on almost a decade’s worth of travel and research across the region.