Pakistani woes likely to dominate Chinese vice president’s visit

By James M. Dorsey

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Security and the viability of China’s massive investment is likely to top Chinese Vice President Wang Qishan’s agenda when he lands this weekend in the Pakistani capital of Islamabad.

A series of violent attacks, including on Chinese targets, coupled with enhanced Saudi influence in Pakistan and mounting tension between the United States and Iran that could suck the South Asian state into regional conflict, will likely top the Chinese-Pakistani agenda.

Mr. Qishan’s talks take place as China cautiously debates the viability of the People’s Republic’s US$45 billion plus investment in massive transportation, communication and other infrastructure projects dubbed the China Pakistan Economic Corridor or CPEC, a crown jewel of Beijing’s Belt and Road initiative.

CPEC, linking Pakistan’s volatile Balochistan province to China’s troubled north-western province of Xinjiang, is central to the Belt and Road and a key economic component in China’s brutal effort to reshape the cultural, social and political outlook of the region’s Turkic Muslim population.

China has reportedly detained at least one million Turkic Muslims in re-education camps, the largest faith-based internment since Nazi Germany hoarded Jews into concentration camps.

Mr. Qishan’s talks with Pakistani leaders also come on the heels of a threat by the Baloch Liberation Army (BLA) that the region would become a “graveyard for China’s expansionist motives, this month’s BLA attack on a highly secured luxury hotel frequented by Chinese nationals in the Baloch port city of Gwadar, attacks on both sides of the Baloch-populated Pakistan-Iranian border, and sectarian violence in Balochistan and elsewhere in Pakistan.

The seemingly deteriorating security situation potentially has far-reaching economic consequences for Pakistan and could magnify the geopolitical fallout of a US military build-up in the Gulf sparked by alleged Iranian threats.

Pakistan is struggling to persuade the Financial Action Task Force (FATF), an international anti-money laundering and terrorism watchdog, to take it off its grey list at its next meeting in June.

Pakistan risks being blacklisted for its alleged poor enforcement, a move that could cost the cash-strapped South Asian state US$10 billion a year. Blacklisting could also negatively impact CPEC, making financial dealings with Pakistan more difficult.

Financial support by Arab Gulf states, with Saudi Arabia in the lead has alleviated Pakistan’s cash crunch in the short term. But together with pledges of some US$10 billion in Saudi investment in Balochistan, it has also raised the spectre of Pakistan being forced to compromise its effort to walk a tightrope between Saudi Arabia and Iran.

China’s state-run Xinhua news agency reported this week that Saudi Arabia starting July 1 would activate a deferred payment scheme for the sale of US$275 million a month or US$3.2 billion a year in petroleum products to Pakistan.

Chinese concerns that US Iranian tension could evolve into military action involve  fears that Pakistani neutrality in the Saudi-Iranian rivalry could be compromised by potentially stepped-up Baloch nationalist violence as well as possible efforts by allegedly Saudi-backed, Balochistan-based anti-Iranian, anti-Shiite militants to spur an insurgency on the Iranian side of the border.

Ironically, China, opposed to US sanctions on Iran and supportive of the 2015 international agreement that curbed Iran’s nuclear program, may have privately preferred inclusion of the Indian-backed Iranian port of Chabahar in the sanction regime.

The Trump administration has exempted Chabahar, a mere 70 kilometres down the Arabian Sea coast from Pakistan’s China-supported port of Gwadar, in an effort to facilitate reconstruction of Afghanistan, enhance Indian trade, and pre-empt Chinese dominance.

Chabahar has succeeded so far where Gwadar has failed. Afghanistan, according to prominent analyst Ahmed Rashid, has shifted its trade with India from Pakistan to Chabahar, sparking a drop in Afghan-Pakistani trade from US$5 billion a year to US$1.5 billion. “We have lost a captive market,” Mr. Rashid said.

Earlier, Beijing-based military analyst Zhou Chenming questioned the wisdom of China’s investment in Gwadar. “Gwadar wants to be in the shipping business, but it has failed to do so. Pakistan’s economy is not very good, and this port has become very wasteful … under these circumstances, including with the hotel attack, how can China conduct its business? The roads and traffic cannot even be maintained,” Mr. Zhou said.

As a result, the stakes for Mr. Qishan’s talks in Islamabad high. They range from ensuring that Pakistan does not become an international financial pariah to ensuring the safety and security of Chinese investment, preventing it from becoming a domestic Chinese issue, pre-empting Pakistan being dragged into Middle Eastern disputes, and guaranteeing that Islamabad remains silent about the crackdown in Xinjiang.

Underlying the multiple issues confronting Mr. Qishan and his Pakistani interlocutors is uncertainty about CPEC that goes beyond Beijing’s chattering circles.

Said Sushant Sareen of the Delhi-based Observer Research Foundation: “While CPEC might actually be a game-changer for Pakistan, nobody seems quite sure what the game really is…. There appears to be a disconnect between what the Chinese expect from CPEC and what their ‘iron brother Pakistan makes of this grand scheme.”

Dr. James M. Dorsey is a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, an adjunct senior research fellow at the National University of Singapore’s Middle East Institute and co-director of the University of Wuerzburg’s Institute of Fan Culture.