Risks and dis-advantages of C-PEC:

China recognizes that the security, political, and cultural risks and uncertainties facing the
economic corridor cannot be overlooked.

The first of these risks is terrorism, which has long affected Pakistan’s internal security and
stability. Although Pakistan has worked hard to strike at religious extremism and terrorist
activities, its problems with terrorism have not substantially improved in recent years. Because
the CPEC is so important to the Pakistani government, these projects’ construction sites and
engineering personnel may become targets for religious as well as nationalist extremists. Indeed,
there already have been numerous occasions when Chinese engineers working in Pakistan have
been attacked or even lost their lives. In May 2016, for instance, engineers in Karachi were
attacked by Sindh separatists. Fortunately, no Chinese personnel were wounded or killed. Then
in September, Baloch rebels killed at least two Chinese engineers and injured many others.
Moreover, several large-scale terrorist attacks in Balochistan have killed dozens of people, which
shows that the security situation in this province where China has key projects is far from ideal.

In recent years, violence had waned. There were no new projects, and the city seemed to have
settled into its own rhythm. But following the CPEC announcement, according to the News
International, a Pakistani English daily, Pakistan deployed a total of 17,177 security personnel
from the Army and other security forces to ensure the security of Chinese nationals. In the years
since, Gwadar has become something of a military cantonment. Army, police, and other law
enforcers mill about.

On May 11, the Pearl Continental in the heart of Gwadar came under fire. Situated on a
promontory overlooking the port and the Arabian Sea, the hotel is mammoth and a favorite of
foreign dignitaries. Security there is intense, and since it is near Gwadar’s port area there are
already plenty of military personnel in the area. Three armed attackers from the Balochistan
Liberation Army’s Majeed Brigade nevertheless managed to breach the defenses and open fire
on people inside. According to officials, five individuals—four hotel employees, including three
security guards, and a navy officer—lost their lives.

The security threat posed by terrorism remains ongoing, despite the economic benefits that the
CPEC can offer Pakistan. The corridor aims to enhance the well-being of people throughout the
country and bring long-term prosperity and stability. The Pakistani authorities, meanwhile, have
promised China they will do everything possible to ensure the safety of Chinese workers. This is
a feasible commitment in the short term. However, over time, it will become more difficult for
Pakistan to guarantee the security of the CPEC’s growing transportation networks, which will
require increasing investments of security personnel and material support. It will likely become
uncertain in the future whether Pakistan can maintain a strong enough military presence to
ensure the security of all these transportation routes.
 Pakistan’s domestic politics

Second, Pakistan’s domestic politics is also important to the CPEC’s success. The country’s
political system has never been particularly stable. Political power oscillates between military
and civilian leaders. General Pervez Musharraf’s resignation as president in 2008 ended the latest
period of military rule, and from that point onward, the military has been pushed from center
stage. In the 2013 election, the Pakistan People’s Party lost power after the Pakistan Muslim
League Nawaz defeated it. The successful completion of this election, as well as the smooth
transition of power that ensued, was the first time in Pakistan’s history that a civilian government
was able to serve out its entire term. This was a sign of improvement for Pakistan’s democracy.

New government and C-PEC:

Since 2015, Beijing has insisted that the China Pakistan Economic Corridor (CPEC), the
showcase project of
President Xi Jinping’s “Belt and Road Initiative”

, is purely an economic programme – as its name suggests.

Apparently, the new Pakistani administration of Prime Minister Imran Khan did not receive the
memo. In the space of a couple of weeks, it has taken two decisions which have cast the CPEC
as a bargaining chip in Pakistan’s complicated, ill-managed relationships with other key partners.

First, it has suddenly reduced the potential value of the CPEC programme to US$50 billion by
2030, down from US$62 billion. In one fell swoop, it decided to starve the western overland
route from Xinjiang to the Chinese-operated Arabian Sea port of Gwadar of funding.

Pakistan is also considering slashing its planned spending on a CPEC project to rehabilitate its
horribly outdated national railways network. Priced at about US$8 billion, it would constitute the
single largest project of the enormous programme.

These drastic measures are part of Khan’s urgent response to an unsustainable current account
deficit, which is currently at a record level, and severely depleted foreign exchange reserves. Viewed
from his perspective, these issues were brought about, in part, by the greedy enthusiasm of his ousted
predecessor, Nawaz Sharif, for the CPEC. Sharif failed to foresee the impact of massive inflows of
Chinese machinery on Pakistan’s external finances, which have been kept afloat – barely – by a series of
emergency Chinese loans and central bank deposits this year.

Economists are convinced Pakistan has little choice but to apply to the International Monetary
Fund (IMF) for a balance of payments bailout. Already, it is clear that any prospective bailout
would come at a steep political price. US secretary of state Mike Pompeo has vowed to ensure
that any American taxpayer money lent to Pakistan by the Bretton Woods institution would not
be used to settle its Chinese debts. Accordingly, the IMF mission to Islamabad pushed for greater
disclosure about CPEC project contracts.

This raises a poignant question: was the Khan administration’s decision to dump the western
CPEC route an attempt to persuade the US to soften its line on multilateral financial assistance?

The answer may lie across the border in Iran, the target of the sanctions-driven Middle East
agenda of US President Donald Trump.
CPEC’s western route offered China an opportunity to develop an overland belt and road
extension into Iran – a natural destination, given the considerable investments it made after the
2015 multilateral deal on Tehran’s nuclear programme.