The One Belt One Road (OBOR) program of China has seen financing of infrastructure projects right across Asia. However, the world’s second-largest economy is the one that does all the deciding – which countries get funding and when.
However, a cautionary tale is being offered by Pakistan.
China – Pakistan Economic Corridor (CPEC) is the name of the project that is Central to China’s role in Pakistan in terms of the former’s infrastructure schemes in the later. It is worth about $60 billion and includes a host of land and sea projects. However, last week Pakistan newspaper Dawn reported that three major roads which form an integral part of the corridor have been denied funding by the administration of Chinese President Xi-Jinping. The report said that after China releases “new guidelines,” the finding would resume.
Analysts said that reflection of the unilateral management style of China is exemplified by the new – if true.
“What Beijing giveth, Beijing can also taketh away,” Ian Bremmer, president and founder of political consultancy Eurasia Group, wrote in a recent note. Unlike the Asian Infrastructure Investment Bank, another China-led program, Belt and Road projects “aren’t transparent or consensus driven,” he said.
“The nature of Chinese economic decision- making has the potential to cause significant downside risks for those countries that become most dependent on the Belt Road initiative,” he said. there can be weighty consequences for those countries that happen to suddenly drop out of China’s good list.
A number of Pakistani towns are planned to be linked by the three roads planned to be constructed for nearly $1 billion.
The situation was described as “a temporary punitive step to affirm control” by the European Foundation for South Asian Studies, an Amsterdam-based think tank, which added that stopping funding for the projects is “China’s way of conveying a diplomatic yet strong message to the Pakistanis: We will pay, but only on our terms.”
Beijing is concerned about security and the internal divisions within the Pakistan polity.
“Pakistani ministries charged with carrying out the projects have incurred delays because of infighting … Concerns that the project bypasses Pakistan’s poorer regions and will mainly benefit the financially-strong province of Punjab has made politicians argue,” the think tank said.
The think tank said: “A closer involvement of the military on political issues would have desirable impacts for China as the Chinese consider the Pakistan army as the epicenter of power in Pakistan and view its involvement with this project as a guarantee of its success”, while referring to the possibility that China might desire army control over the infrastructure projects for security reasons.
Xi’s concerns could also be due to the never ending political problems in Pakistan and the over all weak economic conditions there.
“It’s also possible that China’s rethinking its investment given Pakistan’s overall poor economic trajectory and a lack of change in policy direction from the Pakistani government to make Beijing feel like it’s going to turn around,” Bremmer said
(Adapted from CNBC)