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Extending CPEC

NEVER in Pakistan’s history has a project been peddled to the people as a game changer the way that the China-Pakistan Economic Corridor has been. The government is enthusiastic about the $60 billion worth of concrete carpeted highways, energy projects and special economic zones. Early harvest projects worth $19bn have been completed, and CPEC is now in its second phase, in which most of the projects will be based on a public-private partnership model.

For now, the projects in its first phase have failed to usher in the level of prosperity that was promised to the people. Therefore, it is imperative to ensure that CPEC projects are optimally utilised and, thus, there is a case to be made for enlarging its scope to neighbouring countries, particularly Afghanistan.

Pakistan and China have already invested huge capital on building the road infrastructure for CPEC. According to estimates, $11bn will be spent on the construction of roads and highways. However, Pakistan will not be able to accrue maximum economic benefits and ensure the financial sustainability of the infrastructure if it does not link CPEC to other countries in the region.

Moreover, Pakistan already had a road network – which may not have been as shiny as CPEC, but certainly helped to connect different parts of the country. A parallel road infrastructure might look good to the eyes, but it will not gain traction with the heavy transport sector since it also means more fuel and toll costs.

Linking the corridor to Afghanistan would be to Pakistan’s benefit.

The M2 motorway between Lahore and Islamabad is a good data point to understand how un-optimised highways can be detrimental to the economy. The motorway took more than seven years to build, with a total cost of approximately $1.2bn. Despite this, to date, the preferred route for trade transport is the GT Road, which saves fuel and toll costs for heavy transport. Even after more than 20 years of its construction, the motorway has not seen a massive increase in freight traffic; rather, it has only added to Pakistan’s foreign debt service obligations. In addition to increasing trade, regional connectivity will mitigate the risk of other deadweight projects like the M2 motorway.

Pakistan has recently announced that it will be developing trade points on the border it shares with Afghanistan. While this is a positive development, this initiative will only be fruitful if major highways and motorways are connected to these trade points. According to reports, Pakistan’s share in intra-regional trade has dipped to 7.4 per cent of its total overseas shipments, down from 12.2pc in 2011. Similarly, Pakistan’s regional imports have reduced to 4.7pc of its total global purchases from 7.4pc. Connecting CPEC to regional countries could be an incremental process, starting with Afghanistan. Despite its challenges, Afghanistan appears to be the most feasible country to extend CPEC.

Moreover, the destinies of Pakistan and Afghanistan are intertwined due to historical and cultural links. Without peace and stability in Afghanistan, Pakistan cannot achieve economic progress. With the US pulling out of the country, Afghanistan will need to diversify its economy, as the current $8.5bn aid from the West will also likely dry up.

Pakistan has already been involved in the construction of the highway from Torkham to Jalalabad. Further extending this highway till Kabul is the logical next step. China has also given indications that it will be open to investing in road infrastructure and energy projects if the Afghan Taliban are able to ink the peace deal with the Afghanistan government.

Another reason for extending CPEC to Afghan­istan is to boost the Gwadar port. Pakistan is struggling to get traction for the port in the international market. The development of the Gwadar port was slower than envisaged by Pakistan. So far, international freight companies prefer to dock their ships at the two ports in Karachi due to better infrastructure facilities. The Gwadar-Chaman highway would be a lucrative route for freight traffic and would significantly reduce the time it takes for freight to reach Afghanistan from Pakistan.

While there are multiple reasons for extending CPEC to Afghanistan, there are certain challenges before this can become a reality. One of the biggest challenges would be to get the necessary buy-in from all the relevant stakeholders in Afghanistan. Moreover, relations between China and the US, Pakistan and the US, and even India and Pakistan will be critical in connecting CPEC with Afghanistan.

At the end of the day, Pakistan will have to bring all stakeholders on board if it wants to enhance regional connectivity, which is beneficial to both Pakistan and Afghanistan.

The writer is a graduate of Middlebury Institute of International Studies and University of Oxford.

Published in Dawn, January 6th, 2021


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