WION Edit: Will CPEC inflict debt burden on Pakistan?

Delhi Published: Nov 27, 2019, 04.26 PM(IST)

File photo: China Pakistan Economic Corridor (CPEC). Photograph:( Zee News Network )

Story highlights

CPEC will give china a reliable path to expand its trade activities. It's a win-win for China, but what about Pakistan?

The story of CPEC is not binary. CPEC gives China huge opportunities to tap into markets that are hitherto-inaccessible. But for Pakistan, it's a debt trap. 

The CPEC is the premier project of the Belt and Road Initiative - the much-hyped BRI. It will give China influence in the Indian ocean and the Arabian sea through the Gwadar port.

It will give china a reliable path to expand its trade activities. It's a win-win for China, but what about Pakistan?

On WION Edit, that's the question we'll answer.

In December 2015, the State Bank of Pakistan said it had no idea how much money that the Chinese were committing on CPEC on debt as well as equity.

Then in 2018, that was the last year Pakistan's federal cabinet said the same, they admitted they had no idea on Chinese debt and equity. If CPEC is really the game-changer, then Pakistan doesn't know the rules of the game.

Their problem is quite simple, Pakistan is broke. Broke well before the CPEC projects have started to yield results. And make no mistake, China is not a country that indulges in charity. Whether Pakistan likes it or not, the financial gap will widen.

This burden will be bigger once CPEC payments start in the next four to six years. And that's why Pakistan wants to rope in other countries like Saudi Arabia and Iran to share the burden.

Here, I want to delve into the comments made by US Assistant Secretary of State for South Asia - Alice Wells. A few days ago, she said that CPEC is not China's aid or grant, but debt.

And the project entirely relies on China's raw materials and labour, not Pakistan's. Islamabad is just a happy host, unaware of the perils that this behemoth of a project brings.

Wells also confirmed some of Pakistan's worst fears. Even if China gives Pakistan a long leash to repay the loan, the debt burden will remain.
it will limit Pakistan's ability to spend on development or welfare.

If they ever think about those things, that is. So basically, China is holding Pakistan by the scruff of its neck. Yes, CPEC may help Pakistan address its energy shortage.

But at what cost? Even the Pakistanis don't know. They've clearly bitten more than they can chew. And countries across the world, which joined the BRI bandwagon are watching this nervously. Sri Lanka, Montenegro, Maldives, Djibouti - all sinking in Chinese debt. India is having the last laugh.

It refused to get on board despite immense pressure from China. India saw BRU for what it was and rightly called CPEC a violation of Indian sovereignty.

The China-Pakistan Economic Corridor runs through Gilgit-Baltistan - that's Pakistan occupied Kashmir - technically Indian territory.

And China must know this - connectivity cannot be a reason to undermine another country's sovereignty.

India has also raised concerns over china's military installations at the Gwadar port. CPEC is basically the Chinese version of the British East India Company - the first move of a coloniser.

China says, "If Pakistan is in need, China would never ask it to repay loans in time, unlike the IMF which is strict in its repayment system." This dragon has a forked tongue. We all know what china does when loans aren't paid on time - it occupies territory.

Hambantota in Sri Lanka. Djibouti in Africa.

(Disclaimer: WION Edit is the channel's take on the big events of the world)

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