Posts Tagged ‘Pakistan’

Finally, a short post for the Financial Times Beyond BRICS blog, trying to challenge some of the narrative that we see around the Belt and Road pushback that has become the dominant feature of the public conversation. It is happening, but being mischaracterised at the moment. To also separately catch up on media, spoke to NBC about the US-China clash and to Reuters about the recent attack on the Chinese consulate in Karachi by the Baluchistan Liberation Army (which was picked up a few places including in 普通话 for VOA Cantonese).

China’s Belt and Road hits problems but is still popular

US should not oppose the projects but offer alternative solutions
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Chinese construction project in Sri Lanka: countries that criticise the Belt and Road Initiative overlook the real need in developing nations for foreign investment © Bloomberg

There is a narrative of pushback against the Belt and Road Initiative, China’s programme to finance and build infrastructure in about 88 countries around the world. Coming against the backdrop of US-China confrontation, this evidence of pushback is being read as a collective response to Chinese leader Xi Jinping’s overarching foreign policy concept.

But this misses the detail of several deals in which the context is more one of renegotiation than cancellation. The fundamental logic of many of the BRI in developing countries neighbouring China remains intact. Such is the need for investment in these countries that Chinese proposals for new bridges, highways, railways, power stations and other crucial infrastructure remain alluring.

It is five years since Mr Xi’s pair of speeches in Astana and Jakarta launched the BRI. Since then, much of what China does outside China has become associated with the BRI. At one stage, this was true of much within China as well, where almost every region and institution sought to associate themselves to the leader’s big initiative.

Five years later, it can come as no surprise therefore that some of the projects that were brought under the broader BRI umbrella have encountered issues. One consultancy, the Washington-based RWR Advisory Group, has estimated this number to be around 14 per cent. This number does not seem too high when one considers the surge in project announcements that followed Mr Xi’s speeches in 2013.

It is also useful to dig into the detail of the projects that are being repeatedly highlighted as problematic. Three prominent cases are in Pakistan, Malaysia and Myanmar. But rather than revealing consistent flaws in the BRI’s design, each of these cases derive in part from a push by local governments to renegotiate some BRI projects.

With both Pakistan and Malaysia, an election appears to have precipitated the change. The election of Mahathir Mohamad as prime minister in Malaysia led to dramatic changes within the country, including a general re-accounting of some of the deals that had been signed under the former government with China.

The most prominent were a series of pipelines and the East Coast Rail Line. After a visit to Beijing, Mr Mahathir seemed to cancel them all, but subsequently, it has emerged that while the pipelines were put on hold until the country was able to deal with the “internal fiscal problems” he had inherited, the ECRL has instead entered a period of re-negotiation as both sides seek to keep the project moving.

Mr Mahathir’s public rhetoric has expressed concern about China, but he has also repeatedly stressed the importance of Chinese investment into Malaysia.

The case is similar with Pakistan, where the election of Imran Khan as prime minister led to a change in public rhetoric in Islamabad. Specifically, it has helped crystallise a series of complaints about the China-Pakistan Economic Corridor that had been rattling around the Pakistan government.

This was given a boost through public statements by Mike Pompeo, the US secretary of state, and a bipartisan letter from the US recommending confronting China over the BRI in general and CPEC in particular.

Yet, the reality is that this has not resulted in massive changes to CPEC. Pakistan’s balance of payments crisis has prompted a push by the new government to seek new loans or debt rescheduling between Saudi Arabia and China. Following his inaugural visit to Beijing, Mr Khan agreed to a joint statement in which the two countries “dismissed the growing negative propaganda against CPEC”.

They also announced the creation of a new working group “on social-economic development to assist with livelihood projects in Pakistan”.

In fact, the active pushback on CPEC projects took place before Mr Khan’s election, with the decision to reject a proposal to build the Diamer-Bhasha Dam taking place when Nawaz Sharif was still in power. This was widely touted as evidence that Pakistan was not simply going to take every infrastructure project that China wanted to do in the country.

Finally, there is the case of Kyaukpyu in Myanmar, a massive port project that is in some ways one of the precursors to the BRI, the Bangladesh-China-India-Myanmar BCIM Economic Corridor. Seeing how the international mood was shifting against Chinese investments, Naypyidaw appears to have taken advantage of the situation to renegotiate the port deal.

Part of a much bigger Chinese investment that includes Special Economic Zones and pipelines, the project is one that is clearly important to China. The re-negotiation ended up with the size of the project being cut back considerably (reportedly from $7.2bn to $1.3bn), with Chinese investor CITIC still the biggest single partner on the project holding a 70 per cent stake.

Reflecting the positive tenor of this negotiation, Myanmar officials in September signed an agreement in Beijing to create a China-Myanmar Economic Corridor. While this may appear to dilute the importance of a pre-existing Bangladesh-China-India-Myanmar corridor, it certainly does not suggest that Myanmar is vociferously turning against the BRI.

Doubtless, some of this re-negotiating is a product of each other. The press coverage to emerge from Hambantota in Sri Lanka and the reports that the country ultimately signed over a 99-year lease on the port to a Chinese firm, have all become something of a byword for BRI concerns. Leaders in capitals like Islamabad, Kuala Lumpur and Naypyidaw all saw an opportunity to push back on terms themselves.

It provided easy domestic wins, while also being something that they knew they were likely to win given China’s need for the BRI to be seen to be continuing to move forwards. For both the idea of scrapping BRI within their countries was never really on the table. The underlying logic and general trend of Chinese investment in these countries continues to hold.

What has accentuated the negative narrative in the public discourse has been Washington’s attempt to harness this pushback into its broader conflict with China. Donald Trump’s administration has led an increasingly aggressive bipartisan push against China in numerous different fields.

Yet fought on these terms, this is a losing battle for Washington. In many cases the countries in question are developing countries that need investment. As Chinese neighbours, there is a natural logic in them trying to tap the Chinese economic boom, and improving their regional connectivity.

A far more productive response can be found in Washington’s decision to super-charge the Overseas Private Investment Corporation, offering a funding boost for e-infrastructure investment in south-east Asia while encouraging other regional powers like Australia and Japan to focus their efforts on specific projects in developing countries currently considering BRI investment.

This is the sensible response to BRI, as it both understands the logic of the projects in these developing countries and offers a logical alternative that they can choose. This is a response that far more effectively captures the broader logic of re-negotiation that is visible across BRI countries.

Five years since the announcement of BRI, it has grown to become a synonym for China’s outward investment strategy and broader foreign policy. As is natural with any major effort like this in foreign policy by a big power, it is raising concerns in countries impacted along the way.

What is essential to understand is the logic of this pushback which is not part of a broader conspiracy, but rather a set of individual reactions that are taking place at the same time. Keeping this understanding in mind will enable the world to better respond to the BRI and China more generally, while also remembering that the broader vision is one that is appreciated in some parts of the world as much as it is feared in others.

The writer is director of international security studies at the Royal United Services Institute.

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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.

The lesson of the Pakistan suicide attack: China will have to pay a high price for its infrastructure plan

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.

 

Catching up again on posting with an old piece for the South China Morning Post, trying to address some of the rather vacuous commentary that exists around the Belt and Road Initiative. Don’t totally agree with the choice of title, but that was of course an editorial choice. Of course more on this to come, and please check out my other site China in Central Asia for my history of work on this. A few bigger projects coming on this topic next year.

Also to catch up on some commentary, spoke to the Independent about UK’s historical offender management programme, to the Washington Post about leadership in terrorist groups, to Vox about vehicle terrorist attacks, to AFP about jihadi returnees from Syria, to the Daily Mail about equipment being used to monitor potential returnees, to Newsweek for a historical piece about the Paris attacks, to the National about terrorism trends, to Talk Radio about the Las Vegas shooting, to the Independent about the same incident, to the Washington Post after the recent New York attack, to the Wall Street Journal about terrorism in Germany, to Sky News about what social media companies are doing to counter terrorism, to the Times after minister Rory Stewart’s comments about jihadis dying in Syria, to the South China Morning Post about China’s activity in Syria and finally, to the Economist for this short video on returning foreign terrorist fighters.

Opinion: China can cope with any bumps along the way on ‘Belt and Road’ 

Beijing has long experience dealing with countries involved in its massive trade initiative and the idea that it’s not prepared for problems is misleading, writes Raffaello Pantucci

PUBLISHED : Saturday, 04 November, 2017, 3:32pm
UPDATED : Saturday, 04 November, 2017, 10:17pm
There is an increasingly tired narrative about how China’s encounters with problems in countries involved in its “Belt and Road Initiative” are evidence of potential bumps along the way.

Implicit within these statements is the idea that the project (as though the belt and road is a single project) is still being developed and conceptualised, and that these problems are something for down the road. The reality is that the initiative is already under way and China is already managing the problems it is encountering.

Announced in 2013, the initiative was Chinese President Xi Jinping’s way of stamping his name on something that was already under way. The story of Chinese investment in Central Asia goes back to the first days of the collapse of the Soviet Union. As the Chinese economy grew, it slowly spilt over its western borders, following the natural flow of regional trade. As trouble in China’s Xinjiang got out of hand, an approach of using heavy economic investment to improve the region only accelerated this flow. This became the root of the Silk Road Economic Belt.

Down in southern China, the 1999 Kunming Initiative aimed to foster greater connectivity for Yunnan province, all under the auspices of former president Jiang Zemin’s Great Western Development Strategy. This became the root of the Bangladesh-China-India-Myanmar Economic Corridor.

In Pakistan, as far back as 2002, former premier Zhu Rongji visited Pakistan to inaugurate work at the port in Gwadar.

Meanwhile ex-president Hu Jintao announced a surge in trade and investment with Pakistan in 2006. The bones of the China-Pakistan Economic Corridor had been laid out long before Premier Li Keqiang signed a memorandum of understanding in 2013. And none of this covers the port investments in Sri Lanka and other Southeast Asian ports that have long bothered India.

There is no doubt that the agglomeration of all of these projects under a single umbrella has turbocharged them. While previously projects somewhat sputtered along, the high-level attention that is accorded by becoming belt and road initiatives, plus the investments and companies that follow, have changed their dynamics. But the key point to remember is that something was already under way. This is not, for the most part, completely fresh and brand new investment. It builds on old ideas and in some cases on old contracts.

Consequently, it is incorrect to say that China is completely new to these countries and completely new to problems they may encounter. Kyrgyzstan, for example, has faced a few moments of domestic instability. Back in 2010, rioting in the wake of a contested election and fierce interethnic clashes led to the evacuation of Chinese traders working in border trading posts. The kidnapping and death of two Chinese engineers in the Gomal Zam Dam project in Pakistan in 2004 led to a cessation of work in the country. Suffice to say, the problems that China may encounter through investing in challenging periphery countries are not new.

What has changed, however, is the scope of China’s investments and the numbers of people and assets involved. This does change the dynamic somewhat, leaving China exposed in a way that it has not had to manage thus far.

While previously, having to worry about a few people in faraway lands was largely something that could be left to local actors, increasingly this is not the case. Not only are there far more people and assets to worry about, they are vocal and angry when they get in trouble. Voices get to Beijing and stoke fires of public anger suggesting China is unable to protect its citizens, notwithstanding the massive investments it has made in its security forces.

Additionally, Chinese citizens are increasingly obvious targets. Gone are the days when Chinese were overlooked as poor beggars eking out an existence. In China’s neighbourhood, they are increasingly the big investors (whether this is true or not) and this has consequences for their image overseas.

They are now wealthy and attractive targets, both in terms of their economic value, but also in that they are increasingly the representatives of the big power that is supporting a government that may be unpopular for various reasons. All of this makes them targets for angry locals keen to protest against the state, or criminal and terrorist elements who are looking for opportunities.

There is no doubt that China is going to encounter bumps as it paves, mines and develops the belt and road projects. But these problems are not new, in much the same way as the investments themselves are building on deep conceptual and financial foundations that have come before them. The belt and road is not so much a coming concept as a current reality.

Understanding the specific nature of each branch is going to be the important determinant that people should be focusing on to understand how and whether the belt and road is worth engaging with.

It is also how China is going to comprehend how it is going to mitigate the risks that it is already managing better.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute in London

A very short piece for an excellent Central Asian regional newsletter called the Conway Bulletin looking at Pakistan and India possibly joining the SCO.

SCO Expansion Should Not Threaten the West

Expanding the Shanghai Cooperation Organisation (SCO) will strain its functions but could boost trade and relations between Central Asia and South Asia, writes Raffaello Pantucci.

The Shanghai Cooperation Organization (SCO) has achieved remarkably little in its decade plus life.

Established formally in 2001, it grew out of a regional grouping aimed at seeking to define China’s borders with the former Soviet Union. Over time, it has expanded beyond its immediate neighbourhood to include countries as distant at Belarus and Sri Lanka as ‘dialogue partners’.

The current push to welcome both India and Pakistan is likely to further test the organisation’s already limited capability. The practical implications for Central Asia are unlikely to be dramatic, though in the longer term it may help bind Central and South Asia closer together and foster a greater sense of community across the Eurasian heartland.
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In practical terms, the SCO has always been a fairly limited organisation. Seen initially by Russia as a way of controlling Chinese activity in Central Asia, for Beijing it has provided a useful umbrella under which to pursue their stealthy expansion in the region. For Central Asian powers, it provided another format in which to engage their larger neighbours. While the primary thrust of its activity has been in the security space, China has regularly sought to push it in an economic direction.

Yet, at the same time, all of the countries involved have largely pursued their own national interests through other pathways. The most recent demonstration was the establishment by
Beijing of the Quadrilateral Cooperation and Coordination Mechanism (QCCM). Focused on
managing the security threats from Afghanistan, the QCCM in many ways replicates a function which one would have expected the SCO to deliver.

The addition of Pakistan and India to the grouping is unlikely to change this dynamic.

All of the nations involved in the SCO will continue to function through their own bilateral and other multilateral engagements. But it will offer another forum in which India and Pakistan are obliged to interact and will also help further tie Central and South Asia together. These ties have been growing for some time. Kazakhstan has expressed an interest in participating in the China- Pakistan Economic Corridor (CPEC) and Indian President Narendra Modi visited Central Asia last year.

If India and Pakistan join the SCO, it will further help tie them together.

Raffaello Pantucci is director of International Security Studies at the London-based Royal United Service Institute (RUSI).

Catching up on some old posting again, combination of being busy and some technical difficulties causing issues with updating. This is a piece for The Diplomat in the wake of the SCO Summit in Tashkent which passed with very little attention.

Is SCO Expansion a Good Thing?

Whilst the brotherhood of European Union countries has shrunk by one, the community of Shanghai Cooperation Organization (SCO) states grew by two. Whilst it is by no means confirmed that India and Pakistan are full members of the regional security organization, their membership is all but assured as long as they are able to ratify the relevant documents through their national processes. The more existential question is whether this membership is going to transform the SCO in the same way that British exit from the EU is likely to transform the EU. As with the EU referendum, no one really knows, but it seems equally likely that the end result will be negative.

SCO expansion has been a source of great trepidation for member states for some time. Previous efforts at expansion had stalled for various reasons. Iran was kept out both for practical reasons: it was under UN sanction in contravention to the rules. But realpolitik also played a role: the larger member states did not want to so openly join former President Ahmadinejad’s aggressive anti-Western alliance. Afghanistan was always kept at near arms length, reflecting some member states’ desires to bring the state in, whilst others preferred to maintain their relations at a bilateral level. And the question of India and Pakistan always seemed to be balanced by the two big powers (China and Russia) who each wanted one of the two in, whilst the Chinese generally grew concerned that an expanded group would lose coherence.

In the end, China appears to have lost this struggle, obliged to both accept its close ally Pakistan as well as expanding a regional organization whose utility it was already questioning. Whilst to outside observers, the SCO was the primary vehicle of regional engagement, in reality, Beijing was undertaking a consistent level of bilateral engagement on the sidelines of SCO meetings. Every SCO Summit was accompanied by bilateral engagements, and by all accounts, it was at these engagements that all serious business was done. Previous Chinese efforts to push the SCO in new directions stalled, including Beijing-led efforts to create an SCO Development Bank, an SCO free trade area, or other economic initiatives.

Most recently, China had shown the degree to which it was losing interest in the SCO as a vehicle for regional multilateral security engagement when PLA Chief of Staff Fang Fenghui raised the notion of a regional sub-grouping of China, Afghanistan, Tajikistan, and Pakistan as a vehicle for engagement on regional security questions. Whilst it is not clear that this proposal was a new regional concept as opposed to a potential relevant meeting grouping, its expression reflects a Chinese willingness to look beyond the SCO to resolve regional security questions and highlighting their skepticism toward the organization.

This is in many ways a shame. The SCO, for all its failings, is an organization that might offer some solutions for a fractured region. Central Asia is a part of the world that is beset with border disputes at a very senior level that impede the most basic cross-border trade. The SCO is one of the few organizations that guarantees relevant leaders are obliged to meet with their counterparts on a regular basis on neutral ground. The hope for some was that by bringing Pakistan and India into this format, it would similarly force them to engage in another forum on a regular basis.

In reality, however, SCO expansion is likely to produce little such impact. But it has potentially highlighted a reality in international affairs. Whilst people are keen to leave multilateral organizations in the first world, they appear keen to continue to join them in the developing world. Notwithstanding protestations of national strength and independence by SCO member states, the reality is that they are all 25 years young this year and keen members of an organization that they may not adore, but one in which they have had a resonant voice from the beginning. From an outsider perspective, some of the practices that are advanced through the SCO are questionable at best, but seen from inside they are comprehensible measures that address fundamental questions of national security. This clarity of purpose is what gives the organization its attractiveness, cutting through the nebulous normative concepts that drive European security projects.

But as the EU has learned to its detriment, expansion and new members do not always lead to a positive outcome. It can also lead to a context in which individual member states dictate agendas and steer narratives away from hoped for goals. And it is here that sentiment for expansion for the SCO lies: somewhere between timid optimism and catastrophic exuberant expansionism. The SCO was already having difficulty crafting an identity and practical ideology with six member states, let alone with eight. Going forwards it is likely to continue to drift onward, meandering through the seas of time with no clear port in sight.

Raffaello Pantucci is Director of International Security Studies at the Royal United Services Institute (RUSI)

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-Pakistan: With Great Investment Comes Some Responsibility

chinese_and_pakistani_guards

Raffaello Pantucci

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.

This is a slightly longer freeflowing piece for an old site I used to contribute to fairly regularly called The Interpreter, the blog for a great Australian think tank called the Lowy Institute. Was based off some reflections from some recent travel I got to do to China, Pakistan and Uzbekistan. I’ve been lucky with the piece getting some traction, including some nice tweets, Casey Michel quoting it in his piece about China’s energy relations with the region and the Australian Business Spectator magazine republishing it. Thanks Sam for publishing it, and goes without saying a lot more on this theme and style to come!