CPEC and USA Conflicting Interests | By Dr Mehmood Ul Hassan Khan

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CPEC and USA Conflicting Interests

SINCE its inception, the United States of America has been annoyed with the China-Pakistan Economic Corridor (CPEC).

In this connection, time and again the successive US Establishments conveyed their perpetual displeasure and dissatisfaction about emerging economic ties between Pakistan and China.

It has been engaged in a comprehensive hidden war against CPEC in which unfortunately even puppetry local media, pseudo intellectuals, greedy NOGs, politicians and so-called economists played a very negative role to tarnish CPEC.

The US coercive diplomacy, looming sword of FATF, delayed sanctioning of IMF/World Bank loans and last but not the least, track-II diplomacy schemes and gestures all indicated US conflicting interests towards CPEC.

In this connection, the Government of Pakistan has been trying its level best to break the US shackle but the same could not be achieved yet because of numerous overlapping socio-economic compulsions, geopolitical shortcomings and geostrategic hurdles.

To counter these unending propaganda campaigns of the US and the Western media both Pakistan and China have been consulting each other to move forward and initiate CPEC Phase-II in the country.

Most recently, Chinese President Xi Jiping made a telephone call to Prime Minister Imran Khan and thoroughly discussed matters relating to CPEC, Afghanistan, COVID-19 and reviewed the entire gamut of bilateral strategic cooperative partnership and discussed the regional and international situation.

During the conversation, Premier Khan lauded the successful, timely and high-quality implementation of the CPEC projects and welcomed Chinese investment in the CPEC special economic zones.

He further said that early start of work on the ML-1 railway project would complement Pakistan’s geo-economic vision for national and regional development.

The two leaders agreed to strengthen Pakistan-China cooperation in relevant areas and promote CPEC’s green development as a high quality demonstration of the Belt and Road Initiative including the full realisation of the potential offered by the Phase-II of the China-Pakistan Free Trade Agreement.

Nevertheless, Pakistan has now directly accused the US and India of sabotaging the multibillion-dollar China-Pakistan Economic Corridor (CPEC) project, the economic lifeline of Pakistan. For the first time Islamabad has openly and bluntly blamed the US for scapegoating CPEC.

Special Assistant to Prime Minister on CPEC Affairs Khalid Mansoor, at a seminar organised by the Institute of Business Administration (IBA) in Karachi blamed the US for terming it a “debt trap” for Pakistan.

Furthermore, New Delhi, an arch-rival of Beijing and Islamabad, has also opposed the project, which is part of Beijing’s ambitious Belt and Road Initiative (BRI), viewing it as against its strategic interests in the region. It appears that the United States supported by India is hostile to CPEC, he added.

He upheld that Pakistan would not forgo any of its benefits. He assured that attempts to dilute Beijing’s strategic influence in the region would not succeed.

He clarified that CPEC did not have any hidden political agenda but still the US and Europe have doubts against it.

He was of the view that Islamabad was the seventh largest recipient of Chinese overseas development financing with 71 projects worth USD 27.3 billion currently underway as part of the CPEC.

Conversely, many Western think tanks and writers have termed the CPEC an economic trap that has already resulted in bloated public debt levels and disproportionately high Chinese influence in Pakistan’s economy.

Mr Mansoor said Islamabad sought the expansion of the CPEC to Afghanistan and has discussed the possibility of Taliban-led Afghanistan joining the multibillion-dollar economic corridor.

He said there has been “deep interest” in developing economic connectivity between Afghanistan and Pakistan and with other neighbouring countries, including Iran. He referred to fake news and “negative propaganda” about the viability of CPEC and the pace of its progress.

“In terms of its scope, Phase II of CPEC is going to be an order of magnitude bigger than Phase I.”

In addition to this, according to Chairman of the National Assembly’s Parliamentary Committee on China-Pakistan Economic Corridor (CPEC), interestingly, the government has convinced Chinese companies engaged in various power projects to receive capacity payments in instalments instead of full amounts, as it would be convenient for it to clear pending dues.

He acknowledged that there are some issues prevailing in various CPEC and non-CPEC projects. One of the major issues is the capacity payments liable to be paid by the government to the Chinese companies.

And the government wants companies to receive payments in instalments since it is not possible to clear these payments fully.

He said the government was heading in the right direction to resolve all issues, including the capacity payments, amicably as it has succeeded in developing consensus with Chinese in this regard.

Now Pakistan has paid over Rs26 billion in interest cost to China for using a $4.5 billion Chinese trade finance facility to repay maturing debt in the last fiscal year. The State Bank of Pakistan (SBP) on Friday released its annual financial statement for fiscal year 2020-21 that ended on June 30.

The report revealed that the SBP fully tapped the $4.5 billion, or 30 billion Yuan, trade finance facility available under the China-Pakistan currency swap arrangement. It added that Rs26.1 billion interest was charged on the outstanding balance at agreed rates.

According to the SBP, the bilateral currency swap value increased from Rs476.6 billion in the preceding year to Rs748.5 billion by June this year – an increase of Rs272 billion in a single year,  Pakistan largely utilised the Chinese trade finance facility to repay foreign debt and keep its gross foreign currency reserves at comfortable levels.

To conclude, rapidly changing geopolitical and geostrategic scenarios in and around the region are casting their shadows on the macro-economy of Pakistan.

Moreover, the US sponsored and schemed anti-China “Chain Reaction Theory (CRT)” is at its peak in Asia Pacific, South Sea, and other parts of the world.

World is moving towards greater socio-economic integration and greater regional connectivity whereas US withdrawal from Kabul made it vulnerable.

Now US global hegemony is at stake due to which it has been re-consolidating old strategic partnerships and also in search of new allies in the region to maintain status quo and consequently contain China.

In this regard, Pak-China strategic partnership acts like a crucial balancing act in the region. China’s emerging and dominating role in Afghanistan is a strategic shock to US regional interests.

Further strengthening of bilateral relations, diversification of CPEC projects, revised energy mix, initiation of Phase-II, close agricultural liaison, massive industrialization, social development, health, tourism, education and last but not the least, cooperation in innovations and artificial intelligence is the way forward to deter US influence.

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