Monday, December 11, 2017

A grim reminder for Pakistan how it is sliding into the Chinese debt trap

https://m.economictimes.com/news/international/world-news/a-grim-reminder-for-pakistan-how-it-is-sliding-into-the-chinese-debt-trap/articleshow/62022335.cms?utm_expid=.0_OyxuZnTFSZGUuoEBqhFQ.0&utm_referrer=https://www.google.co.in/



By ET Online | Dec 11, 2017, 04.48 PM IST

NEW DELHI: Pakistan has now got ample signs to realise that its so-called "all-weather friend" China is after all not a trustworthy ally but a crude expansionist force.

China has projected its One Belt One Road (OBOR) project as a global ideal that will spread economic benefits to less-developed countries. China-Pakistan Economic Corridor (CPEC) will be a significant part of OBOR, a network through South Asia, the Middle East, Africa and Europe by building land and sea links. But CPEC, it is slowly coming to light, is a Chinese exploitative ploy to grab assets in Pakistan.

China's strategy to grab land and assets in smaller, less-developed countries is simple: it gives them loans on high rates for infrastructural projects, gets equity into projects, and when the country is unable to repay the loan, it gets ownership of the project.

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Sri Lanka fell into this Chinese debt trap a few days ago, when it formally handed over the southern sea port of Hambantota to China on a 99-year lease. With this, Sri Lanka has started to repay the Chinese loans. Last year, then finance minister Ravi Karunanayake had said that Sri Lanka owed China $8 billion. Unable to repay loans advanced by China on extortionary rates, Sri Lanka had to lose a vital asset which has a serious strategic importance as the port gives China a foothold in the Indian Ocean. Opposition leaders have described the lease as a sell out. A free-trade deal China signed with Maldivesrecently carries the tell-tale mark of China's exploitative strategy to colonise small countries.

A few weeks ago, Pakistan had to turn down China's offer of assistance for the $14-billion Diamer-Bhasha Dam. Pakistan has asked China to take the project out of the $60 billion China-Pakistan Economic Corridor (CPEC)—a part of OBOR—and allow it to build the dam on its own.

The step was an indication that Pakistan was slowly realising the risks with doing business with China on expensive loans. Many experts have already warned that CPEC is China's colonial ploy to create a permanent foothold in Pakistan. Even political parties have started raising voices against the Chinese projects, wondering if they would really benefit Pakistan.

After criticism of CPEC by politicians as well as economists, China is now wary of dealing with the Pakistan government and wants Pakistani military to step in. According to reports, Beijing's new guidelines overseeing the release of funds to Pakistan as part of CPEC may stipulate greater involvement of the Pakistan army.

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The funding of three major road projects in Pakistan was expected to be finalised during the Joint Working Group (JWG) meeting held on November 20, but the Pakistan government was informed that the existing procedure for release of funds had been abolished and new guidelines would be issued from Beijing under which new modus operandi for release of the funds would be described.

China's grab of Sri Lankan Hambantota port after Sri Lanka found itself unable to repay expensive Chinese loans is a lesson for Pakistan. As politicians and economists as well as general public and local businesses raise red flags over CPEC, China may not be able to replay its Sri Lankan game in Pakistan

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