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Still catching up, this time a short piece for Nikkei Asian Review in the wake of the attack in Karachi by Balochi separatists which murdered the Confucius Institute director and some of his staff.
Raffaello Pantucci is a senior fellow at the S. Rajaratnam School of International Studies in Singapore and author of “Sinostan: China’s Inadvertent Empire” (Oxford University Press, April 2022).
While Beijing would never admit it, the rise of Shehbaz Sharif as Pakistan’s new prime minister is a welcome development.
Sharif’s early and positive comments toward China, the fact his new Finance Minister Miftah Ismail made meeting officials from the Chinese Embassy his first formal encounter and the appointment of Ahsan Iqbal as minister responsible for the managing the China-Pakistan Economic Corridor were all clear signals that the new government wants a cooperative relationship with Beijing.
That chummy mood was shattered by a brutal suicide bombing on April 26 that was claimed by the Balochistan Liberation Army at Karachi University and which killed the director of the Confucius Institute, Beijing’s cultural promotion organization, as well as two Chinese staff and their Pakistani driver.
The suicide bombing was the latest in a series of attacks by separatists who are now targeting China because of Beijing’s heavy investment in Balochistan, which includes the much discussed Gwadar Port.
Balochi separatists have a history of targeting Chinese nationals in Pakistan, launching a number of dramatic attacks over the years that include targeting the Chinese consulate in Karachi, the Chinese-built Pearl Continental Hotel in Gwadar and the Karachi stock exchange.
In 2018, then-Balochi leader Aslam Baloch dispatched his eldest son as a suicide bomber to blow up a busload of Chinese engineers going to work in Balochistan. No one aside from the bomber was killed, but that attack kicked off a violent campaign that has now taken another dark twist.
The latest attack on the Confucius Institute, a soft but prominent target, crossed many red lines, the most conspicuous of which was the unprecedented use of a female suicide bomber. The fact she appears to have been a well-educated, middle-class woman who leaves behind two young children suggests how broad and attractive the Balochi narrative has now become.
Amid the scramble to better understand precisely who was behind the attack, there are hints that other militant groups may have played some sort of support role. And as is usually the case in this troubled region, many are looking for signs that outside powers might be manipulating the Balochi cause for their own ends.
The usual suspects for those conspiracy minded are India and the United States. Afghanistan used to be the third, but this is less likely given the Taliban government’s crackdowns on Balochi groups based in Afghanistan, groups the former Western-backed government seemed to tolerate, a major source of discord between Islamabad and Kabul.
The bigger point is that the Balochi separatist cause is continuing to gain traction inside Pakistan and is only getting worse, with militants getting more and more ambitious, and seemingly able to strike at will.
In January, a bomb was detonated at a crowded market in Lahore, killing three, and in February, a large detachment of militants took on two bases belonging to the Frontier Corps, the paramilitary force charged with maintaining law and order in Balochistan.
At least 20 militants and nine Pakistani soldiers were killed in fighting that went on for many hours, although Balochi groups said the casualty rates were much higher, claiming that nearly 200 Pakistanis were killed, with only 16 of theirs dead.
By targeting the Confucius Institute, Balochi militants are sending a clear signal to the many thousands of Chinese who live and work in Pakistan.
Because not all Chinese living and working in the region are linked to the China-Pakistan Economic Corridor, many of them live beyond the security perimeter that has been put around official CPEC projects. These people are now all clearly targets too, vastly expanding the number of people Pakistani authorities need to worry about protecting.
It is not clear what Beijing’s answer to all this will be. One option would be to deploy a Chinese military detachment. More likely is that China will step up military and intelligence aid, as well as increase their discrete security presence on the ground. Chinese private security contractors will doubtless start to appear more frequently.
But this is only a stopgap answer. China is clearly unhappy, and while they might be willing to absolve the new government for responsibility for this latest attack, the underlying problem is that Pakistan seems unable to bring the separatists under control.
If we continue to see attacks like this on Chinese nationals, it will become increasingly difficult for Beijing to send its people to work in the country. More importantly, the repeated targeting of Chinese nationals undermines the myth that Chinese investment in Pakistan is seen as benign on the ground. A much wider and more dangerous narrative that Beijing has little desire to take hold.
The truth is that across this wider region, China is increasingly becoming the most consequential player on the ground. This attracts allies and enemies alike and is a role that has responsibilities, as much as Beijing might want to shy away from them.
Islamabad clearly needs to take a different tack in Balochistan. Locals feel persecuted and see little opportunity in modern Pakistan. Stories of extrajudicial killings, disappearances and torture are common. Nor do locals see much direct benefit from Chinese investment.
Greater transparency and engagement are needed. Otherwise, the conflict will continue to metastasize and create problems with one of Islamabad’s most important partners on the world stage.
Still catching up on myself after my extended delinquency, here posting something about Pakistan in the wake of Shabhaz Sharif’s rise to power in the South China Morning Post. Think it still holds water reasonably well now, though I am not sure I quite see China seeing a field of friends across its border any more. Suspect it is more complicated than that, but then it always is. This coming week and the SCO Summit and President Xi’s visit to Kazakhstan and Uzbekistan is going to be a really interesting attempt to connect with something. Be interesting to see how it plays out.
– Shehbaz Sharif’s rise to power in Pakistan puts China in an advantageous position as its western neighbours all have governments friendly to Beijing.
– This also means China has a stake in the many problems that emanate from this region, though, and will be forced to take a more active role.
Illustration: Stephen Case, South China Morning Post
The election of Shahbaz Sharif as prime minister of Pakistan by legislators completes a series of events which place China in a favourable place in its Eurasian neighbourhood. Beijing now has a leader in Islamabad with whom it has had a successful relationship in the past.
China is also increasingly presenting itself as the closest partner to the new Taliban government in Kabul, and in Central Asia it faces a region where Russia – the other major power – is distracted by a disastrous war of its own choosing in Ukraine. China’s march of influence westward is continuing, but Beijing has still made no clear decision about what it will do with this influence.
When Nawaz Sharif – Shahbaz Sharif’s brother – was prime minister, the China-Pakistan Economic Corridor was jokingly called the “China-Punjab Economic Corridor” because many of the largest, juiciest investments appeared to be going to Nawaz Sharif’s home province of Punjab. At the time, the chief minister of Punjab was Shahbaz Sharif.
The reality is that the economic corridor’s investment has been fairly spread out around Pakistan, though completion rates seem better in Punjab and Sindh. However, it is worth noting that Punjab is Pakistan’s most populous region, so perhaps the focus of Chinese investment there is hardly surprising.
The tilt towards Punjab also reflected the fact that Beijing liked Shahbaz Sharif and found him a competent leader to engage with. Pakistan has a challenging political and economic environment, and in Punjab China found someone who could deliver.
Now Sharif has ascended to power after the tumultuous reign of former cricket star Imran Khan. While Beijing has been careful to avoid expressing a preference for one leader over another, China likes having decisive and effective leaders in charge.
Khan was acceptable because he was seen as being the military’s man initially. He was also happy to be outspoken in his support for Beijing while China came under fire for what is happening in Xinjiang. But China has faced growing problems in Pakistan in the past few years as its interests and nationals are increasingly targeted by militants.
China has always been happy dealing with military men because of their ability to deliver on outcomes. Beijing was in many ways most content when former general Pervez Musharraf was in charge in Islamabad. A former commando, he tended to tackle problems headfirst and actively sought to make sure China was happy even when this caused him problems at home.
But Sharif is an excellent alternative from Beijing’s perspective. This completes a picture for Beijing where it is dealing with authorities across its western borders with whom it seems satisfied. In Kabul, Beijing has shown itself to be a powerful player in tightly embracing the Islamic Emirate of Afghanistan government.
In Central Asia, China has a series of leaders who are either willing to quietly engage to advance whatever goals it wants or are actively eager to cultivate a positive economic relationship. In Kazakhstan, it has a leader who studied and worked in China and speaks Mandarin. This is a highly advantageous environment for Beijing.
However, Central Asia is also a highly troubled region, as we have seen in the past 12 months with the collapse of the Republic of Afghanistan and the chaos in Kazakhstan at the beginning of the year. Also, non-state groups in the region increasingly see China as an adversary they are eager to focus on.
The China-Pakistan Economic Corridor continues to be a narrative focus for Balochistan separatists in Pakistan, while Islamic State Khorasan has referred to China as an adversary in its literature and deployed a suicide bomber last October in northern Afghanistan’s Kunduz province. At a less violent level, nationalists in Kyrgyzstan have expressed anger towards China and attacked Chinese nationals, while public polling across Central Asia often places China in a negative light.
Beijing thus faces a major dilemma on a shortening horizon. It can no longer claim to have only passive influence across its Eurasian borders or face hostile authorities in power. It now has governments in power across the board that seem eager to actively please China. This also means China increasingly has a stake in the many problems that emanate from this region.
As the power closest to the governments in both Kabul and Islamabad, China now has little excuse for not trying to mediate the tense relations that continue to exist between the two capitals. As one of the largest investors in and increasingly the largest trading partner with both Tajikistan and Kyrgyzstan, it will start to look odd if Beijing does not try to help the two smooth over their occasionally violent border relations.
Should further trouble erupt and Moscow is too preoccupied elsewhere to do something about it, Beijing will have to think about how it will manage the situation. Its currently passive approach might not always work out.
China is increasingly the most consequential actor in Eurasia, and it now has governments in power across the region who actively recognise that fact and are eager to please Beijing.
This both puts Beijing in a position of power but also one of great responsibility. It remains to be seen how China will rise to this challenge.
Raffaello Pantucci is a senior associate fellow at the Royal United Services Institute (RUSI) in London and a senior fellow at the S. Rajaratnam School of International Studies (RSIS) in Singapore.
Finally on this past few week’s blast, a piece for Foreign Policy which was actually set up before events in Afghanistan came to a head, but had to get pushed back a bit. It is also my first piece with my excellent RSIS colleague Basit, with whom I have a few projects in the pipeline. Undoubtedly more on this topic and with Basit to come. Suspect the China and regional terrorism axis of topicality is only going to grow as we go further forwards.
As awareness of Uyghur persecution increases and anger about Beijing’s investment projects simmers, Chinese citizens and businesses are likely to suffer.
Pakistani rangers stand in front of the Chinese consulate after an attack in Karachi on November 23, 2018. – At least two policemen were killed when unidentified gunmen stormed the Chinese consulate in the Pakistani port city of Karachi on November 23, officials said. (Photo by ASIF HASSAN / AFP) (Photo credit should read ASIF HASSAN/AFP via Getty Images)
With great power comes great responsibility, as the old Marvel comics maxim goes. But great power also attracts envy, anger, and enemies.
This is something that China is learning belatedly—and much to its chagrin—in Pakistan, where its investment projects are facing complications and its citizens and facilities are increasingly being targeted by local terrorist organizations, from jihadi groups like Tehrik-i-Taliban Pakistan (TTP) to ethnoseparatists in Balochistan and Sindh.
China has long been in the crosshairs of Pakistani militants. But lately the pace of attacks appears to be picking up. Last Friday saw the latest attempt, this time by the Balochistan Liberation Army (BLA) against Chinese transports in Gwadar. The group has repeatedly targeted high-profile Chinese targets in Pakistan, including the Chinese Consulate in Karachi in November 2018.
Reports diverge regarding the casualties of this latest attack, with the BLA claiming it killed six Chinese nationals and three security guards, while Chinese and Pakistani authorities claim one Chinese national was injured and two children were killed (the BLA claims the two children were killed by scattershot firing from Pakistani forces). Whatever the grim count, the attack is the fourth high-profile incident this year, and it also confirms the worrying trend of using suicide bombers, an innovation for the Balochi group.
Pakistan has become a microcosm of a larger reality that Beijing is going to have to contend with globally. As it becomes a global power on the world stage, it is going to attract the anger of terrorist organizations. Beijing’s willingness to engage with the Taliban may be an attempt to try to preempt such problems in the new Afghanistan, but history has shown this to be a risky gamble for Beijing.
China tried to strike an earlier pre-9/11 deal with the Taliban to get them to do something about Uyghur groups the Chinese had noticed gathering in Afghanistan, but it is unclear that the Taliban did anything about those groups.
The new deal Beijing and the Taliban are reported to have struck is likely not dissimilar to the previous one in its concerns, but now there is the additional question of the large number of Chinese nationals who can be found around the region, including various intrepid entrepreneurs in Kabul who may not adhere to the various sharia laws the Taliban will impose. Who will guarantee their safety? And none of this will help Beijing overcome the larger problem of the inevitable enemies you attract once you have superpower status.
The Gwadar attack last Friday followed the killing of nine Chinese engineers working on the Dasu hydroelectric power project in Pakistan’s Khyber Pakhtunkhwa province—an attack that remains formally unclaimed. Soon after that attack, two Chinese nationals were shot at and one wounded in Karachi by a different Baloch separatist group (the Baloch Liberation Front). In March, a Sindhi separatist group wounded a Chinese national in a gun assault, also in Karachi. This followed two similar incidents in December.
Most dramatically, China’s ambassador to Pakistan, Nong Rong, narrowly escaped an attack by the TTP in April at the Serena Hotel in Quetta. Responsibility for this grim roster of incidents comes from a growing range of actors, highlighting the escalating nature of the problem that China is facing in Pakistan.
The most effective of these attacks was the assault in Dasu. Chinese sources have attributed it to the East Turkestan Islamic Movement (ETIM)—a group whose existence is disputed and whose name is mostly used to refer to a group that calls itself the Turkistan Islamic Party (TIP)—acting in unison with the TTP. Both Pakistan and China also used the opportunity to cast blame on India—a perennial accusation thrown around terrorist attacks in Pakistan.
More formally, Beijing seemed to widen the circle of blame during the Afghan Taliban’s two-day visit to China, with Chinese Foreign Minister Wang Yi demanding that the Taliban make a clean break from ETIM/TIP and take action against it in Afghanistan as ‘it was a direct threat to China’s national security.’
While not stated explicitly, the statement appeared to be a shot across the bow, suggesting a condition for Beijing’s recognition of the Taliban government as the group takes power in Afghanistan. Beijing has continued to focus on ETIM as a preeminent concern that could attempt to take root, potentially emanating from the instability that is likely to follow the Taliban’s takeover, and it is not clear how confident Beijing is in Taliban assurances about managing ETIM threats.
But the abrupt increase in terrorist attacks on Chinese nationals and projects in Pakistan underscores how anti-Chinese militancy is evolving against the backdrop of the U.S. withdrawal from Afghanistan.
China may be developing its relationship with the Taliban in part to mitigate these concerns, but the problem is much bigger than something Taliban leaders can control. Previously, the jihadi community was fairly ambivalent about China. Osama bin Laden was even quoted pre-9/11 saying that Beijing could be a strategic ally for the jihadi community given their collective antagonism toward the United States. But at the time, China was still seen as a developing country. Now it is the world’s second-largest economy and is increasingly becoming the most consequential actor in Afghanistan’s neighborhood. This changes the common perception of China and brings tension with it.
This tension is most clearly visible in Pakistan. Even though Beijing and Islamabad are close friends and strategic partners, Pakistan has consistently been the location of the highest number of terrorist attacks against Chinese nationals in any country.
This situation has the potential to get worse for Beijing. For the last two decades, the U.S. presence in Afghanistan kept the terrorist threat from that country in check, meaning China did not need to preoccupy itself too much with security challenges. With the U.S. exit, that security buffer is gone, as is the distraction of the great American Satan being present on Afghan soil.
China has sought to strengthen its direct defenses with Afghanistan through building bases and providing support to Tajik and Pakistani forces on either side of the Wakhan Corridor, alongside building its own direct bases in Tajikistan and bases for the former national Afghan government forces in Badakhshan (bases whose current status is unknown but presumably now under Taliban control).
This somewhat limited effort was being carried out when the United States was still there and providing definitive assurances to keep militant groups in check and even helping target anti-Chinese groups. In February 2018, the U.S. military targeted a series of camps in Badakhshan that were reportedly being used by the Taliban and ETIM.
The problem for China could get even worse. While the United States was at the receiving end of jihadi attacks for intervening in Afghanistan and for what was perceived as a broader anti-Muslim crusade as a result of the global war on terror, China is confronted with the ire of both the jihadi and the ethno-separatist groups in the region.
Sindhi and Baloch ethno-separatist groups perceive China as a neocolonial power usurping their resources and partnering with their primary adversary, the Pakistani state, to worsen their already abysmal socioeconomic condition. This was clearly articulated in the Baloch Liberation Front’s claim of responsibility for shooting at the Chinese nationals in Karachi: ‘In the garb of development projects, China is not only colluding with the Pakistani state in plundering the Baloch resources but assisting in the Baloch community’s persecution as well.’
Jihadi groups have been less focused in their anger toward China, continuing to see the United States and the West as their primary external adversaries. But at the same time, there is a palpable uptick in propaganda narratives directed toward China. This is often linked to Beijing’s persecution of the beleaguered Uyghur Muslim community in China’s Xinjiang region.
Rising ideologues like the mufti Abu Zar al-Burmi—originally from Myanmar—tie these narratives together. Since 2015, the firebrand orator Burmi has been framing China as the next neocolonial power after the U.S. pullout from Afghanistan. Burmi, for instance, told his followers in a statement, ‘Mujahideen should know that the coming enemy of the ummah is China, which is developing its weapons day after day to fight the Muslims.’ In another video, titled ‘Let’s Disturb China,’ he argues that after the ‘Taliban’s victory in Afghanistan our next target will be China.’
His anti-Chinese rhetoric, combining narratives of Chinese colonialism (in his native Myanmar as well as Xinjiang) with accounts of Muslim persecution, has drawn jihadi attention to Beijing. Echoes of these sentiments are also found among some Indonesian jihadi groups and among ultranationalists in Central Asia.
Xinjiang has long been a discussion point for the global jihadi community, but the community has never dedicated resources toward doing anything about it. While it is still unclear that this has changed, what is noticeable is that the narrative is sharpening and the Uyghur cause is no longer the marginal issue that it used to be. Uyghur fighters are regularly praised by other jihadi factions for their bravery in battle.
For a country like Pakistan, which shares a direct border with Xinjiang, it has been a political hot potato, with Prime Minister Imran Khan regularly championing and defending China’s treatment of its Muslim minority. This has extended to not offering protections to the Uyghur community that is resident in Pakistan and has fallen into China’s suspicious crosshairs. This merely adds to the anger against the Pakistani state that is felt from within the jihadi community. Nevertheless, attacking China in Xinjiang or elsewhere in the mainland is a tall order for these groups.
By contrast, the China-Pakistan Economic Corridor (CPEC)—a network of highways, railways, power projects, and other projects that will enter Pakistan’s Gilgit-Baltistan region from Xinjiang and culminate at Gwadar port—presents these groups with numerous opportunities to hurt Beijing as well as the Pakistani government. Chinese investment in Pakistan has become a sort of soft underbelly for Beijing.
In its next planned phase, CPEC will spread further across Pakistan. And beyond formal CPEC projects, there is a growing number of potential Chinese targets in the country through the thousands of individual travelers and entrepreneurs who take advantage of the smooth visa access into Pakistan to seek opportunities. This will vastly expand Pakistani terrorist groups’ potential Chinese targets and complicate Pakistani government efforts to provide protection. More Chinese and Pakistanis are likely to suffer.
The problem for Beijing is that Chinese targets in Pakistan (and Afghanistan and further afield) will become increasingly attractive. This is in part a product of China’s growing presence and alliance with an Islamabad government that has a plethora of enemies on the ground, but it’s also because of the growing prominence of China at the global level.
Terrorist groups ultimately seek to deliver a political message to draw attention their cause; spectacular acts of violence are the tool they use to accomplish this. Each attack helps with promoting their message, recruiting, fundraising, and more. By targeting China—now the world’s second-largest economy—jihadi, ethno-separatist, and other terrorist groups are all increasingly guaranteed this attention. China is discovering that becoming a great power also comes with great risks.
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.
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.
A new article for the South China Morning Post which seeks to offer a broader lens with which to consider the recent spate of terrorist incidents in South Asia. There is an interesting running theme of them all having global consequences, something that has now been made even more relevant by the death of Zakir Musa (AQIS head) and ISIS’s announcements of affiliates in Pakistan and India. Related to this story, spoke to the Wall Street Journal about the Sri Lanka attacks.
More than 200 people were killed in a series of bomb blasts in Sri Lanka on Easter Sunday. Photo: Reuters
The Middle East traditionally has been seen as the cradle of terrorist threats that resonate globally; this year, however, has illustrated how a set of potential dangers exists in South Asia with the potential to ultimately wreak havoc around the world – crying out for closer monitoring.
Tensions have long been part of life in a region with a massive population, nuclear armed states, persistent geopolitical tensions, economic boom and large, globally scattered diaspora communities.
But three recent regional incidents have worrisome implications for global security: the Pulwama attack in February in India-administered Kashmir, the Easter terror attacks in Sri Lanka and the attack on the Pearl Continental Hotel in Gwadar, Pakistan.
All three events were local in expression and provenance but their consequences had global repercussions: dragging regional powers into national ethnic conflicts, international problems into local contexts and nearly bringing two nuclear armed states into conflict.
The most recent incident – the Gwadar attack – was part of a pattern of activity increasingly associated with Baluchi separatists who have sought to make China and the China – Pakistan Economic Corridor (CPEC) – a collection of infrastructure projects under construction throughout Pakistan with a particular footprint in Baluchistan – the targets of their ire.
These attacks have repeatedly struck Pakistanis working on what the group identifies as CPEC projects, but have also focused on Chinese engineers and workers coming into the country.
Most shockingly, in November they struck the Chinese consulate in Karachi, following on an earlier suicide attack against a busload of engineers by BLA leader Aslam Baloch’s son.
Slickly produced videos were released after the attacks showing the culprits articulating the logic of their assault through the lens of wanting to punish China for its usurping of Balochi land and interests through CPEC investments.
The bombed-out interior of a church in Negombo, Sri Lanka – just one of many attacks aimed at foreigners. Photo: Reuters
Some see acts such as this as the nefarious work of outside powers such as Iran, India or Afghanistan, acting to undermine Pakistan’s interests through a targeted attack, to scare off China.
Whatever the nature of any outside links, the reality is that the wellspring of these aggressive actions is local unhappiness that has made CPEC’s progenitor its principal target.
This is problematic for China within a Pakistani context, but more broadly also shows the dangers of investing heavily in fragile or conflict afflicted states, something China is doing increasingly under the auspices of the “Belt and Road Initiative”.
Terrorists targeted the Pearl Continental hotel in Gwadar, Pakistan in April. Photo: Reuters
China played a very different role in the fallout over the Pulawama attack, in which an angry young Kashmiri launched a suicide attack against a busload of Indian soldiers.
The latest in a string of attacks launched and claimed by terrorist groups with footprints in Pakistan, the attack led to retaliatory action by India, almost putting the two countries on the brink of war.
Regional diplomatic activity by Beijing, Washington, London and other important external actors, alongside tempered diplomatic rhetoric from both New Delhi and Islamabad, led to a standing down of tensions – but not before the two countries became engulfed in a border confrontation and two Indian fighter jets were shot down.
It was not the first time the terrorist group Jaish e Mohammed had almost brought India and Pakistan to war.
In 2001, the group was responsible for a terrorist attack on India’s parliament in the heart of Delhi that almost brought the countries to nuclear conflict. More recently they have been linked to repeated incidents in India-administered Kashmir.
Security forces inspect the remains of a vehicle after an attack in Kashmir. Photo: AFP
Again, there is no doubt that the group is able to draw on a deep wellspring of local disaffection, but it is also clear that there is some external link.
Yet at the same time, the consequences are potentially global in reach, with the power to bring two nuclear armed parties into conflict.
Finally, while all the details around the Easter attack in Sri Lanka are still coming into focus, a few elements are clear.
Most principally, the attack was aimed at foreigners in Sri Lanka in advance of a global terrorist ideology. It drew energy from a local Sri Lankan network whose anger and radicalisation had been increasing for some time.
The Chinese Consulate after a attack in Karachi, Pakistan in November. Photo: AP
The specific details of the links to Islamic State remain unclear, but the connections seem to stretch across South Asia (into both India and Bangladesh at least) and back to Syria and Iraq.
Thus, the consequences of the attack were global – doubtless damaging Sri Lanka’s burgeoning tourism industry, providing ISIS with a boost and bringing people’s attention once again to the region for negative reasons. ISIS has seemingly built on this local energy, announcing affiliates in both Pakinstan and India in the past weeks.
The consequences from these acts of terrorism were principally felt by the people of South Asia. Yet the actions sought to specifically to use local anger and problems to drag in global powers and actors.
While this is not new (the September 11 attacks were an earlier, shocking case in point) the growing scope of the problem is worth paying attention to.
We are now seeing a plurality of regional problems articulating themselves through the lens of international impact and targeting global interests. This suggests a set of threats and risks that require greater attention and management and are relevant for both regional and international powers, given the potential negative consequences of a large-scale attack.
Baluchi separatists have targeted the China-Pakistan Economic Corridor. Photo: Xinhua
The conflict between India and Pakistan is one potentially nuclear flashpoint but Baluchi nationalists have a footprint across the region and are targeting increasingly influential regional power China.
This development shows that local expressions of violent Islamist terrorism are not the only regional anger with wider reach.
South Asia has long been a locus of concern for international terrorism watchers. After the events of September 11, the world saw how groups based in the region could have global impact.
Powers internationally need to be careful that regional anger does not spiral out of control and ensure that local governments are being encouraged to effectively deal with the underlying causes of the displeasure.
This may seem like a bland recommendation, but given the potential consequences, it is an important one to respect.
Raffaello Pantucci is director of international security studies at the Royal United Services Institute in London
A couple of quick posts begin the year of separate pieces that emerged towards the end of last year. On a more geopolitical bent than some of my previous work, but reflects a broader trend in my work. First up is an interview that I did with the magazine Fortune in India about India’s views and response to the Belt and Road.
Raffaello Pantucci from the London-based think tank The Royal United Services Institute explains what India has got right and what it has got wrong about the initiative.
China’s ambitious Belt and Road Initiative (BRI) has created a stir around the world. Will this multi-country infrastructure and investment project, which conservative estimates put at around $1 trillion, transform the global power structure or will it trap numerous countries in debt leading to chaos? And what does it mean for India? In London, Hindol Sengupta spoke to Raffaello Pantucci, director of international security studies at The Royal United Services Institute, for some answers. Edited excerpts:
What do you think most people are getting wrong about the Belt and Road Initiative (BRI)?
What’s most missing in the discourse is often perspective from these countries (the countries through which the project runs) and which reflects their interests. We should be wary of superimposing our external interpretation or perception on them. For instance, this entire point about debt traps. Now there are issues about debt, but it is not really about China trying to trap these countries into debt. It is more about the capacities and issues within these countries. Two problems happen while analysing the BRI: one, people tend to think of it as one grand strategy as opposed to lots of things happening in diverse ways in lots of places; and [two], try to superimpose that view or superimpose the view of the bigger U.S.-China clash that is happening now onto this. But both are not quite correct. There are many nuances that get lost when we cut in that way.
What are the most interesting nuances in the Indian subcontinent that are being missed out in the BRI analysis?
On the India side, there is a tendency to think that India does see this as a big, hostile thing [in] its entirety, whereas I would say that the reality is in fact India can never sign up to the BRI project in its entirety because the China-Pakistan corridor cuts through disputed territory [Pakistan-held Kashmir]. But there are other elements in the vision like the Asian Infrastructure Investment Bank (AIIB), like investment into third locations, and like Chinese investment into India that the Indian government quite likes and would like to foster. In Pakistan, once again we talk about the China-Pakistan Economic Corridor (CPEC) as one overarching thing whereas, in reality, these are a number of smaller projects. And even the loans are of various kinds—some are loans given by Chinese banks to Chinese companies to complete projects, others are loans given to the Pakistani government as a concessionary rate, and then the Pakistani state hires companies on projects. We have a habit of treating these as one big block whereas actually these are a bunch of different projects being handled in different ways and with different kinds of reactions on the ground in Pakistan. In some regions, you see some tensions and local pushbacks on the ground in Pakistan like in parts of Balochistan; in some others, like in parts of Punjab, people are quite happy about these projects.
In this scenario, how do you look at the insurgent attack on the Chinese consulate in Karachi (in November 2018) for which Pakistan blamed India?
That incident did not surprise me in the least. If you track recent incidents in Pakistan, there have been more and more direct attacks on Chinese interests in Pakistan by militant groups. We recently had an incident where a bomber of the BLA (Balochistan Liberation Army) targeted a busload of Chinese engineers. The BLA has been very clear that they are targeting Chinese interests in the country. The accusations against India have a long history. The thing that worries me is that while it is impossible to say whether there is any merit to these accusations, what is certainly true is that there is a lot of anger in Balochistan, which has been there for a long time. What they have now realised is that attacking the Pakistani state hasn’t really delivered any results. They have realised that if we attack the foreigners we will get more attention internationally, and we are attacking the Pakistani state’s biggest ally; and that in itself might deliver some results for us. It is erroneous to blame this on India or Afghanistan, and it is impossible to know for sure if there are any elements from these countries lurking in the background, but what we can say for certain is that there is real anger in Balochistan, and it has now decided that targeting the Chinese gets some sort of a reaction.
If this flares up, what does it mean for CPEC?
The underlying logic of CPEC would remain and this will remain an irritant to that. If the Chinese put more pressure on the Pakistanis to stop this kind of attacks, you will see a much stronger crackdown on the Balochi groups by the Pakistani forces. CPEC remains important and within Pakistan, CPEC has become kind of synonymous with Pakistani national economic rejuvenation, and that’s important for the whole region. Chinese companies will have much greater security around their assets and they might struggle on sending large numbers of engineers to Pakistan if these sorts of attacks escalate. But China is big; they will still find some people to send and its unlikely that these kinds of attacks would bring some sort of a grinding halt to the CPEC. A major attack might mean that the Chinese might [have] some of their security forces on the ground, but largely they would want the Pakistanis to solve this.
What ramifications does China’s stringent actions on the Uighur Muslims—including ‘re-education camps’—in the Xinjiang region have on its ties with Central Asian countries, Pakistan and the BRI?
What has been depressing is the lack of response from the Muslim world on this issue. Whatever comments there have been has largely come from Western capitals, and some from Malaysia. This is mainly because those countries do not want to upset China. But there have been some tensions in Central Asian countries some of whose citizens live in China and who are getting caught up in these issues in the Xinjiang region. What we have seen is concern, for instance, in Kazakhstan, where people are worried about these measures in China making their influence felt in their own country. There is pressure from the people in some of these countries for their governments to bring up these issues with China. This is not what the governments want to do because they want economic ties with China. This friction will grow.
How will the BRI project impact India’s future relations with China and Pakistan?
Clearly, in the Indian strategy vision, China is the biggest threat they look out and see. You see this in all kinds of things, in the strategic military purchases of India, in the so-called ‘necklace of diamonds’, in its relationship with Japan and the U.S. But notwithstanding all of this, we still see India hesitate to let the relationship with the Chinese to blow up into a full-fledged confrontation. That’s why we haven’t seen the Quad [Quadrilateral Security Dialogue; the strategic coming together of the U.S., India, Japan and Australia] really live up to its expectations. This is because none of the countries want this to become very confrontational and seem like a great front against China. Because they realise that they have other business with China. The U.S. has been trying to push things towards a confrontational direction, but the other countries realise that they must engage with China, its rise is happening around their borders. It is a very complicated picture. The real question going forward is how India will accommodate China’s rise, but also that China must learn to handle India’s rise and take its concerns more seriously. They have historically really looked down on India and treated India in a really disparaging fashion. This has led to angry confrontations and a sense in India that it just not taken seriously enough. I think there is a rebalancing that will happen [between the two]. And if that happens successfully, it could be massively beneficial to both. But at the moment it seems to be that national pride in both countries means that they are butting against one another but if these two great powers can figure out a way to work together and how, their growth models would intertwine with another.
What is the low-hanging fruit that India and China can pick off to better their relationship?
The low-hanging fruit could be Afghanistan. If India and China could agree that they would partner in Afghanistan, you could see a real game changer on the ground in that country with hugely positive effects. The other is why does India and China have to see projects in the surrounding island countries as threats? Why not jointly build infrastructure projects using the AIIB or the BRICS Bank, which could again lead to cooperation.
Quite a bit of catch up posting to do. Been distracted with various projects, so going to do it all in one sweep this evening. First up is an article for the South China Morning Post looking at the threats to Chinese interests in Pakistan from separatist groups in the country.
China’s greatest security problem in strife-torn Pakistan is that it is increasingly becoming the focus of separatists’ attention, Raffaello Pantucci writes
PUBLISHED : Sunday, 26 August, 2018, 12:16pm
UPDATED : Sunday, 26 August, 2018, 9:54pm
The attempted suicide bombing against a bus carrying Chinese engineers in Dalbandin, Balochistan highlights the complexity of the security problems China faces in Pakistan.
The attack was a rare suicide bombing for the Balochistan Liberation Army and was specifically targeting China. It showed how Beijing is finding itself dragged into a clash whose answer lies in the resolution of fundamental issues within Pakistan.
In February this year, The Financial Times ran a story which claimed that Chinese officials had been negotiating for years with Baluchi separatists.
At around the same time, the Chinese ambassador to Islamabad gave an interview to BBC Urdu in which he proclaimed that Baluchi separatists “were not real Pakistanis” and did not pose a threat to the China-Pakistan Economic Corridor (CPEC).
The negotiations story was denied by senior Baluchi leaders as well as the Chinese Ministry of Foreign Affairs. BLA leader Aslam Baloch, whose son blew himself up at Dalbandin, dismissed the talks, stating: “Our people are [disappearing] every day. They are being killed. Their houses are being looted and burned. In such a situation, any dialogue with China is impossible. We reject such a proposal.”
None of this is that surprising, nor is it impossible that China (or Chinese entities) have been in contact with Baluchi groups.
Since the China-Pakistan Economic Corridor was announced, at least two publicised incidents have occurred in which Chinese nationals were almost killed by Baluchi separatists; other, similar occurrences likely have received less attention. Furthermore, many have taken place where Pakistanis have lost their lives.
In September 2016, the Pakistani government announced that at least 44 Pakistanis had lost their lives on CPEC projects. Since then, there have been many more reported incidents by the BLA specifically targeting CPEC projects – incidents they publicly link afterwards to CPEC –, leading mostly to the deaths of Pakistani guards or workers. Prior to the announcement of CPEC, at least seven Chinese workers had died at the hands of Baluchi separatists, as well as numerous Pakistanis.
And China’s problems have expanded beyond Balochistan. Since CPEC’s announcement, the targeting of Chinese interests and nationals by Sindh separatist groups has increased noticeably. After one bombing that injured a Chinese worker and his companion in May 2016 in Karachi, a note was found stating that “we will oppose every anti-Sindh project, including the China-Pakistan economic corridor”.
Just over a year later, a bomb detonated after a Chinese convoy passed in Port Qasim. A message issued soon afterwards declared: “Sindhudesh Revolutionary Army claims the responsibility of the bomb attacks on Chinese engineers in Karachi today and warns the Chinese that they should not become the part of any project in Sindh which may be against the national interest of Sindhis.”
In fact, the specific threat to China seems to emanate more from separatists than Islamists. It is true that since CPEC’s announcement, four Chinese nationals have lost their lives in Pakistan to violent Islamists, but it is not clear that China was a target in the incidents. In contrast, Baluchi or Sindhi groups loudly state that they are targeting China.
There are obvious reasons for this. For separatist groups, the Pakistani state is the ultimate enemy. As Islamabad’s closest friend, Beijing becomes a target by association. And the people of these regions do not feel like they are getting their piece of the CPEC bounty.
At a conference in Islamabad shortly before the election, I listened as representatives from Gwadar complained publicly (before numerous security officials) to a Chinese official sitting on a panel about the issues they were having accessing fresh water.
This example illustrates a problem that Beijing faces in Pakistan and can be found in other BRI countries as well. The problems of separatism and central government anger in Balochistan and Sindh are not new. Violence in the country is not new (and is in fact in decline), but China is increasingly becoming the focus of attention as the biggest outside player who is focusing on supporting the central state.
And while the Pakistani government can provide some support and security for Chinese nationals sent to deliver CPEC in the hope that the economic prosperity it may generate will help alleviate these issues in the longer term, this is only part of the answer.
The longer-term answer to the problems of separatism in these regions are to be found in political solutions: issues that infrastructure and mining investment will not resolve, and may in fact be exacerbating.
As Rehan Baloch stated in his message before he tried to murder a busload of Chinese engineers: “Through this act, I want to make China and its people realise [that] whosoever will try to meddle in Baloch issues without Baloch nation’s consent, will face the wrath of Baloch nation.”
Raffaello Pantucci is director of international security studies at the Royal United Services Institute (RUSI) in London.
Another slightly longer piece about China lands this time in Current History, ‘the oldest US publication devoted exclusively to world affairs’. This looks at China’s growing push into South Asia, and India’s increasingly tense response to it. Somewhat relevant but a bit late for this piece, a Chinese colleague recently described managing relations with India as ‘ticklish’ which struck me as quite apt. This topic is going to grow in significance as time goes on, and am sure will end up doing more about it. In the meantime, for those interested in similar topics, check out the China in Central Asia site. I have posted a version of the paper here, but do check out the Current History site as well for the rest of the excellent journal.
“Beijing’s miscalculations regarding India have created conflict with a regional power that has the capability and desire to disrupt China’s outward push.”
At a conference in China a few years ago, I watched as a Chinese expert gave a presentation laying out Beijing’s view of the military conflict that it faced in nearby seas. It was largely a story about the United States and East Asian competitors, and China’s aggressive assertions of ownership of islands in the South China Sea. At the end of the presentation, a former Indian officer raised his hand and indignantly asked why India had not been mentioned as a competitor.
In a moment of surprising candor, the Chinese expert responded that he did not include India because, from his perspective, it did not pose much of a threat to China. The answer riled the Indian participant, but it reflected a fundamental calculation that exists in Beijing about India. It is a calculation that could cause serious complications for China’s broader South Asian vision, and ultimately provoke a clash between the two Asian giants.
At stake is China’s Belt and Road Initiative (BRI), a much-discussed and puzzled-over concept. It has been variously described as a Chinese power grab; an attempt by China to promote its companies’ overseas interests and build infrastructure to suit its own interests; an effort by Beijing to claim leadership of the international order; or, by Beijing’s own account, a project to bind together a “community of common destiny.” But it is really best understood as an umbrella concept that acts as a central organising principle for China’s foreign policy.
The core of this scheme—building trade and economic corridors that emanate from China in every direction—strengthens China’s position in the global order and across the Eurasian landmass. The aim of these corridors is not only to help Chinese firms go out into the world and increase China’s trade connections. Most importantly, they will help China develop domestically.
Ostensibly, this is a benign concept. By improving trade and transportation links through investments in infrastructure, China is enhancing the global commons. Few would say that more eco- nomic connectivity and prosperity is a bad thing. But the reality is of course very different. China is advancing its own national interests, and is doing so by offering a one-size-fits-all policy—which means that it can appear to be proffering the same opportunity to European powers and Southeast Asian neighbors alike. While this is a perfectly understandable self-interested approach, Beijing has been blind to geopolitical problems that it is exacerbating and which may in the long term disrupt its entire strategy.
New piece for the Financial Times excellent Beyond BRICS blog, this time providing an evaluation of the links between the Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund and Xi Jinping’s ‘Belt and Road Initiative.’ A lot more on this general topic on my parallel China in Central Asia site. This aside, spoke to the Telegraph about the recent terror attack in Quetta, Pakistan.
There has been much speculation on the role of the Silk Road Fund (SRF) and Asian Infrastructure Investment Bank (AIIB) in China’s outward investment push.They are both instruments created by Beijing to provide economic firepower and bring international credibility to the ‘Belt and Road’ vision that has become President Xi Jinping’s keynote foreign policy concept. But in reality they have both undertaken a series of investments that, while substantial and linked to ‘Belt and Road’ countries, pale in size next to China’s overall outward investments.
While the AIIB has quite clearly been subsumed into the ‘Belt and Road’ project, the SRF has so far largely focused on commercial projects which are focused on profit rather than national strategy.
AIIB has so far made two sets of project announcements. The first were announced on June 24, 2016 and included a $165m loan for a power distribution project in Bangladesh, a $216.5m loan co-financed with the World Bank for a national slum upgrade in Indonesia, a $100m loan co-financed with the Asian Development Bank (ADB) and UK’s Department for International Development (DFID) to finance the Shorkot-Khanewal section of the M-4 motorway in Pakistan and a $27.5m loan for the Dushanbe-Uzbekistan Border Road Improvement Project in Tajikistan, co-financed with the European Bank for Reconstruction and Development (EBRD).
A second set were announced in September, including a $300m loan for Tarbela 5 hydropower project in Pakistan, co-financed by the World Bank and a $20m loan to finance a 225 MW power plant in Myanmar, a project which is set to possibly receive a further $58m from the International Finance Corporation (IFC) and $42.2m from the Asia Development Bank (ADB).
Of these projects, the only one that is uniquely funded by the AIIB is the power grid project in Bangladesh. All of the others are co-financed, or more accurately, the AIIB has bought into existing projects. Another significant detail is that with the exception of the Indonesian project, all of the projects are ones that can be captured under the broader ‘Belt and Road’ vision – which has three principal strands pushing out across Eurasia: China-Pakistan Economic Corridor (CPEC), Silk Road Economic Belt (SREB), and Bangladesh-China-India-Myanmar Economic Corridor (BCIM).
Of the $829m the bank has invested so far, $400m has been invested into projects which fit under CPEC, $27.5m into SREB, and $185m into projects which could fit under the BCIM.
In other words, almost 75 per cent of the AIIB’s first projects have been steered towards existing Chinese economic visions. And in many ways, the Indonesian project could also be captured under this banner, given the fact that Indonesia fits into the under-developed 21st Century Maritime Silk Road concept as well (and was the country in October 2016 that Xi announced the concept in the first place).
There is very little distance between the AIIB and Beijing’s ‘Belt and Road.’ And in fact, the parts of the ‘Belt and Road’ it is feeding are those parts which are going to ultimately have a resonance on China’s most under-developed regions that are the ultimate focus of the ‘Belt and Road.’ It is therefore hard, on the basis of its first projects, not to consider the bank as a tool of the ‘Belt and Road’ rather than a new independent financial institution advancing general regional development goals.
The Silk Road Fund is a more obvious tool than the AIIB. With a total capital of $40bn, the first $10bn was made up with money from the Chinese State Administration of Foreign Exchange (SAFE), which accounted for 65 per cent of the initial funds, Export-Import Bank (accounting for 15 per cent), China Development Bank (accounting for 5 per cent) and the China Investment Corporation (accounting for 15 per cent).
Established specifically to ‘promote common development and prosperity of China and the other countries and regions involved in the Belt and Road Initiative,’ the Fund is a commercial entity that is focused on projects that will generate returns.
Having laid out this logic, the Fund’s first investments have followed these principles, starting with an investment of $1.65bn in April 2015 to build the Karot hydropower project in North East Pakistan.
In September 2015 it announced it would purchase 9.9 per cent of the Russian Yamal liquefied gas field for $1.2bn, and more recently it was revealed it had explored putting almost $2bn into buying Glencore’s Vasilkovskoye gold mine in Kazakhstan.
It ultimately lost that deal to another pair of Chinese buyers. Outside these obvious ‘Belt and Road’ deals, the Fund has also invested in ChemChina to purchase Italian tire maker Pirelli, invested $100m into the China International Capital Corp (CICC) a state investment bank that prior to its initial public offering (IPO) in November 2015 was seen as taking losses internationally, and finally pledging some $300m to the IPO of China Energy Engineering Corp (CEEC) an international power plant construction firm.
To understand the ‘Belt and Road’ logic of the CEEC-Silk Road Fund investment, it is instructive to look at Mr Xi’s visit to Serbia in June 2016, seven months after the IPO announcement. Mr Xi was present at the signing of an MOU between the CEEC, the Silk Road Fund, China Environmental Energy Investment Ltd and the Serbian Ministry of Energy and Mining. The MoU laid the foundations for CEEC to undertake further energy projects in Serbia, joining already advanced CEEC projects in Lithuania and Bosnia-Herzegovina.
Taken as a whole, the Silk Road Fund is a heavier investor in ‘Belt and Road’ projects than AIIB. While the AIIB’s announced deals add up to $829m, the SRF’s amount to at least $3.25bn (not including the Pirelli deal, the exact numbers of which are not immediately available). In addition, the Fund has been reported as considering an investment of between €5-10bn into the European Fund for Strategic Investments, or the so-called Juncker Plan.
But all of this pales next to China’s overall outward investment numbers. The Ministry of Commerce announced outward investment last year at $145.67bn and EY, a consultancy, has predicted that this year’s total will surpass $170bn.
Taken against this background, the SRF and AIIB are clearly minnows. But they are minnows which have focused on national interest, something that highlights the degree to which the broader ‘Belt and Road’ is aimed at advancing national interest rather than being a benevolent vision for Eurasia.
It also illustrates to outsiders that to properly understand how to connect with the ‘Belt and Road’, there is a need to understand China’s broader international ambitions under the vision.
Raffaello Pantucci is director of international security studies at RUSI, a think tank based in London.
Another new piece for my institute’s in-house magazine, RUSI Newsbrief, this time looking at China-Pakistan and some of the problems that China has been experiencing in trying to implement its China-Pakistan Economic Corridor (CPEC) project. As ever, more on this topic to come and found on the China in Central Asia site.
China has invested millions into Pakistani infrastructure, but will internal political conflict in Pakistan prove to be the bane of the CPEC’s existence?
The China–Pakistan Economic Corridor (CPEC) has become one of the emblematic foreign policy initiatives of Chinese President Xi Jinping’s broader ‘Belt and Road’ vision. An ambitious and wide-ranging investment project, the CPEC offers Pakistan a way through a number of its biggest problems – including domestic power supply, lack of infrastructure, and parts of the country that are underdeveloped – while giving China strategic port access to the Indian Ocean and creating a corridor to external markets for the underdeveloped southern part of the Xinjiang Uighur Autonomous Region.
Yet earlier this year, the Chinese Embassy in Islamabad was put in the awkward position of having to formally distance itself from acrimonious internal political wrangling within Pakistan around the CPEC. In a pattern that is likely to repeat itself elsewhere as China continues to try to turn the ‘Belt and Road’ concept into a reality, Beijing is finding that it is unable to simply sidestep local entanglements and plead non-interference. Pakistan may prove to be a testing ground to see whether China can avoid local entanglements as the Xi administration seeks to advance its vision for a network of global trade corridors under the ‘Belt and Road’ rubric.
Although it was first announced in May 2013 during the visit of Chinese Premier Li Keqiang to Pakistan, the CPEC was the culmination of many years of steady Chinese investment in Pakistan. A month later, during his inaugural visit to Beijing, Pakistan’s newly elected prime minister, Nawaz Sharif, signed a Memorandum of Understanding formalising the CPEC project. Two years later, it was given a reported injection of $46 billion when President Xi made a reciprocal visit to Pakistan in April 2015.
While relations between Beijing and Islamabad had always been close, it was mostly based on deep and reactive security co-operation – either in terms of Pakistan responding to China’s concerns about terrorism, or China backing Pakistan in its disputes with India. The announcement of the CPEC changed the relationship: it became supercharged as CPEC was presented as the answer to some of Pakistan’s most pressing problems. For example, the focus on the port of Gwadar in Pakistan’s restive Baluchistan offered the potential to economically revitalise one of the country’s long-troubled regions. At the same time, the emphasis on energy programmes (with investment worth almost $34.4 billion, according to Pakistan’s Ministry of Planning, Development and Reform, which would double Pakistan’s generating capacity) promised to address the country’s biggest shortages. This potential goes some way to explaining the often hyperbolic narratives surrounding CPEC in Pakistan.
Given these excessively high expectations, it might therefore be unsurprising that the project has not been plain sailing. This was not entirely unexpected, with senior officials in China openly expressing their concerns about security and the viability of the overall project from the very beginning. During a meeting in Beijing in August 2013, Lin Dajian, vice director-general of the Department of International Cooperation at the National Development and Reform Commission, the governmental body within China that is steering the CPEC, highlighted ‘the security issues and challenges that could impede the speed of [the] project’. What appears to have surprised China, however, is the degree of pushback and difficulty encountered within Pakistan at a political level.
This came to a head in January, when problems in two provincial Pakistani governments made headlines that even managed to drag in the local Chinese Embassy. The government of Khyber Pakhtunkhwa (KP) issued a threat through its chief minister, Pervez Khattak, who warned that ‘if the federal government does not address the reservations of KP about the [CPEC] project, then we will take an extreme step.’ Khattak’s concern appears to be that the KP government will not receive its fair share of the CPEC project.
At around the same time, stories emerged in the press that the government in Islamabad was exploring the possibility of changing the constitutional status of its northernmost province of Gilgit-Baltistan in response to Chinese concerns about its ability to build some CPEC routes through the disputed region – since China does not want to find itself spending money and sending people to work in areas whose ownership is legally unclear and therefore subject to aggressive contention or dispute. Claimed by India as part of Jammu and Kashmir, the region was traditionally referred to as ‘Northern Areas’ and controlled directly by Islamabad. In 2009, as part of a measure to turn it into a full province by Pakistan, the name was formally changed to ‘Gilgit-Baltistan’ and a legislative assembly was established. In January 2016 the government in Islamabad started to make noises again about taking this process further by recognising the region in the constitution and going some way towards integrating it into the country.
At present, Gilgit-Baltistan has an opaque status similar to that of other parts of the Kashmir region claimed by Pakistan. Islamabad continues to state that the parts of Kashmir it controls are in fact semi-autonomous and are therefore not formally integrated into the country; this is in line with its position that a referendum should be carried out across the entire region. By taking this step, however, Pakistan risked incurring anger in India as well as in Kashmir itself.
From the perspective of the neighbouring province of Azad Jammu Kashmir (AJK), the fear was that recognising as a separate province a region that had hitherto been treated as part of AJK might lead to India changing its position on the disputed territories. In addition, officials in Gilgit-Baltistan had their own concerns. They were worried that they were going to miss out on their piece of the CPEC pie.
These fierce regional rivalries were also rooted in Pakistani party politics. In KP, the provincial government is ruled by the opposition Pakistan Tehreek-e-Insaf (PTI), while in AJK the government is controlled by the largest opposition party, the Pakistan People’s Party (PPP). Pakistani commentators have long argued that both parties want to see the CPEC fail: if it succeeds on schedule, it will likely be a strong vote puller for Prime Minister Nawaz Sharif and his Pakistan Muslim League-Nawaz (PML-N) party. This is because the early parts of the CPEC will likely be most beneficial to the PML-N stronghold of Punjab province. Indeed, in November 2015 the leader of the PPP in the National Assembly, Syed Khursheed Shah, wrote to Sharif expressing concern that the project appeared too ‘Punjab-centric’.
All of these opposition parties, however, have been very careful not to alienate China through their complaints to the central government in Islamabad. They all praise China and the CPEC’s potential to change the country positively. In order to reinforce this point, in the wake of the public airing of the KP complaints, a senior delegation from PTI led by former foreign minister Shah Mehmood Qureshi visited the Chinese Embassy. The delegation’s stated aim was to give ‘an assurance to the ambassador that we don’t have any issue with China and we are in favour of the CPEC.’ He went on to say:
‘We also assured [the Chinese authorities] that we will not do any politics on this project and will support its completion … [but] we have reasonable doubts about the federal government. The PML-N government is not taking us into confidence on many issues.’
This led to the embassy issuing an unprecedented statement in which China distanced itself from the problems while calling for unity: ‘China hopes that the relevant parties in Pakistan could strengthen communication and coordination on the CPEC to create favourable conditions for the project.’ This message was reinforced at the regular Ministry of Foreign Affairs briefings in Beijing, where ministry spokesman Hong Lei insisted that ‘we stand ready to work with Pakistan to complete the projects under construction and make long-term plans to keep advancing the building of the Corridor.’
The escalation of these domestic political disputes to the halls of power in Beijing highlights how complicated negotiations around the CPEC have become. While Pakistani officials at every level seek to distance themselves from negative comments about China, it is nonetheless the case that Chinese activity in the country has been the immediate source of these problems. And these are not the only problems that China faces in Pakistan. Apart from militancy, either from violent Islamists or separatists, China has to confront the problems of its workers being kidnapped and its nationals becoming embroiled in local criminal networks.
Whilst unsurprising to most observers of Pakistan, these problems nonetheless illustrate a larger problem that China will increasingly face as it pushes its ‘Belt and Road’ vision out across the Eurasian continent. Making considerable financial investments and importing large numbers of Chinese nationals into a region does not eliminate tensions on the ground. In fact, large investments can exacerbate tensions. They can increase inequality, or, as appears to be the case in Pakistan, they can cause local political tensions. This undermines the argument that appears to underpin Chinese investment policy in both the third world and at home – that development will bring with it political stability.
In Pakistan in particular, China is increasingly going to find itself in difficult situations. China is investing in security in Pakistan at a number of different levels. Not only is it helping the country build its big ticket weapons systems such as aircraft and submarines, but it is also helping police forces to improve security on the ground. It is unclear whether these expenditures are included in the approximately $46 billion associated with the CPEC project, but China will find that the expenses on Pakistani police and army will be constant, and China may find itself having to foot the bill for as long as Pakistan continues to face instability at home.
The CPEC has the potential to be game-changing for Pakistan, but it is unlikely to solve all of the country’s ills or to be completed any time soon. For observers of the ‘Belt and Road’ vision, China’s experiences in Pakistan may offer a taster of what it will encounter elsewhere in the world as it seeks to implement President Xi’s ambitious foreign policy vision, a vision that he hopes will be his legacy.
Raffaello Pantucci 