China launched President Xi Xinping’s flagship project – One Belt One Road with an attendance from heads of state and representatives from 65 countries. One belt one road is the name given to a series of infrastructure, connectivity and investment projects spanning the continents of Asia, Europe and Africa. Countries outside these continents were also invited to form economic partnerships with the PRC. This articles focuses on the CPEC- the China Pakistan Economic corridor which is an important part of the OBOR and most relevant to South Asia.
“Let me make it very clear that CPEC is an economic undertaking open to all countries in the region. It has no geographical boundaries. It must not be politicized,” PM Nawaz Sharif said in his address at the plenary session of the Belt and Road Forum in Beijing. India refused to send an official delegation to Beijing to express displeasure at running CPEC through Gilgit-Baltistan. “No country can accept a project that ignores its core concerns on sovereignty and territorial integrity,” said Indian foreign ministry spokesman Gopal Baglay, adding that there were concerns about host countries taking on ‘unsustainable debt’. The statements reflected the difference in how both countries view the project.
What then is the essence of this project? China with surplus capital available wants to escape the middle-income gap as domestic demand plateaus with wages and living standards having increased economically. With the incoming CCP’s 100th year anniversary, China has decided to undertake a large scale foreign investment undertaking which will ensure that China stays at the forefront of globalization, international trade and economic growth. The Chinese President pledged an additional $113 billion to the entire OBOR initiative. This is Geo-economics at the cutting edge with China planning to back it up with political capital and human resource. Pakistan with a civilian government fighting off the Military and overseeing a deteriorating internal security situation and low levels of human development sees it as the political trump card to buttress its domestic standing. The Military on its part sees it as a top-down initiative which will help in buttressing a more top-down center-provincial relations and will strengthen Chinese involvement in the foreign affairs of Pakistan especially in reference to balancing India.
China has a history of maintaining political neutrality when it comes to India-Pakistan crises much to the annoyance of the Pakistan Army. She has compensated this with continued and resolute support to Pakistan during peace time. India therefore, needs to be aware of this fact while formulating policy. A two front collusion is unlikely in such a scenario because it is not in China’s interest and way of thinking to push a nuclear power into an existential survival corner. China understands that security is different from survival and a two-front situation against India is an undesirable outcome. China is self-aware of its superior capabilities and national power in balancing India while looking for a framework which can work in addendum to the Border peace and tranquility framework. China has been encouraging India to join the CPEC without making any substantial assurances to allay India’s sovereign concerns. The Corridor’s essential economic utility to Pakistan is desirable to regional stability but a rigorous committed diplomatic exercise will be required to allay India’s justified sovereignty concerns. This can be achieved if China nudges Pakistan to cut down on belligerence against India, but, since PoK is linked to J&K from a Pakistani perspective, this is unlikely to happen. Hence, India joining the corridor appears to be a non-starter as things stand. An option of renaming the corridor simply does not cut ice with the gravitas of the issue. At this point, the priority for India and China should be to not make it a thorny issue in the basket of issues with a rhetorical pressure on India to join.
Sino-Indian bilateral relationship is one of the standalone consequential relationships in the world. Areas of cooperation should be found away from contentious issues. New thinking on a framework requires increasing trade, business-to-business and people-to-people contacts over the coming decade on a bilateral basis. The larger part of the onus lies with China being the larger power. Domestic developments inside China and the middle income economic trap have been forcing China to substitute domestic demand driven growth with international trade and globalization. This involves aggressive reinvestment of surplus capital all over the world with OBOR. Such scale of economic investments is dependent on absorptive capacities of host countries, Chinese conditions and a relatively new feature of Chinese diplomacy- political intervention. India needs a combination of increased diplomatic presence, frequent political dialogue, priority countries of investment with more focused approach on influencing outcomes and distribution of benefits to local communities.
The issue of PoK is interesting itself. The piece of territory has seen a temporary rise in stock with talk of CPEC but forms a small part of the mega project. Ever since the granting of constitutional status to G-B, the region has sparked an important debate in its utility to China and whether it dilutes the broader Kashmir agenda of Pakistan. Previous Indian governments on their part had speculated on the need to match Chinese investments in PoK with Investments in J&K. But China has not gone into ‘a more meaningful dialogue’ with India on possible ways of mutual benefit from OBOR without compromising on the disputed nature of PoK. Pakistan is insisting that its position on Chinese investment in PoK is not in contradiction with its overall position on J&K. That is slightly odd since Pakistan has often argued that Indian developmental efforts in the J&K are attempts at circumventing a political solution per se. The Indian government thus sees an opportunity to invoke sovereignty and territorial integrity on this matter. But that is as far as the politics of the issue is concerned.
The strategic significance of PoK for India lies in the fact that it has long been a territory of armed conflict between India and Pakistan whether it is with regards to the LC situation, terrorist infiltration into India from Pakistan, the 1965 war (Operation Gibraltar and Operation Grand Slam) or as the militarized part of J&K. Chinese investment in the region is in contradiction with its position that the whole area of Kashmir is disputed. China dismissed the official Indian statement of an absence of ‘a meaningful dialogue’. In fact, she further implored what the phrase meant! This is surprising because ‘a meaningful dialogue’ was in fact carried out by India and China at time of the AIIB initiative. The substantive meaning of the phrase from the point of view of India meant that any Chinese investment in the region of Kashmir would require rigorous political discussion on the naming, nature, mechanism, implementation, joint management and mutual benefit between India and China. China chose to circumvent this important part of the process by getting into an agreement with Pakistan about CPEC in PoK. Thus, India was left with little choice but to invoke territorial disputes and unsustainable debt in order to opt out of OBOR.
By Prateek Kapil for CLAWS