Gwadar, the CPEC and Hambatota


Malik Muhammad Ashraf

The writer is a freelance contributor.

Notwithstanding the fact that the CPEC is a nationally owned mega-economic undertaking with the potential to change the economic profile of the whole region, more so that of Pakistan, a sustained campaign to belittle its importance continues unabated.

Some columnists have tried to equate Gwadar and the CPEC with the Hambantota deep seaport in Sri Lanka and other infrastructure projects built there. These columnists feel that Sri Lanka has been pushed into a debt trap – paying 95.4 percent of all its revenues on debt servicing – since Hambantota and all the infrastructure built there were massive investments that failed to generate the desired profits. According to them, Pakistan might also face the same situation if the CPEC does not prove to be a game-changer. The other contention is that the Gwadar Port, like Hambantota, is based on political considerations rather than on economic necessity and that the leadership in Pakistan is trying to gain political mileage by terming the CPEC a victory of their vision.

My view is that proponents of the foregoing assumptions have tried to over simplify things to prove their point. Drawing parallels between success and failure stories of two countries with different political setups, circumstances, geo-strategic importance and economic realities is always misleading. While it is true that the former Sri Lankan ruler Rajapakasa did it for political reasons as Hambantota was his home town, in the case of the CPEC the Chinese conceived the idea and Pakistan chose to become a partner in view of its potential.

Rajapakasa was the one who took the plunge for the development of an international airport, a cricket stadium and a deep seaport at Hambantota and sought assistance from China, which agreed to advance loans on soft terms in return for using the port as part of its maritime route.

Unlike Hambantota, the CPEC project is spread all over the country and the Gwadar Port provides an ideal outlet for the landlocked countries of Central Asia which have expressed their willingness to use this port. Similarly, Russia has also evinced interest in reaching out to the world through this port. Being the architect of the CPEC, China is also surely going to benefit from the venture and Pakistan’s agreement to be part of it has also taken the relations between the two countries to a new level.

Pakistan joined the CPEC due to purely economic considerations. It was facing a debilitating economic nosedive and a nagging energy crisis. It badly needed heavy foreign investments in infrastructure and energy projects not only to revive the economy but also to put it on the path of a sustained economic growth. The CPEC is one of the components of the ‘One Belt One Road’ Chinese initiative and the Pakistan government made the right decision to join this mega-economic undertaking.

The assumption that the CPEC will exponentially increase our debt burden is also divorced from reality. The total cost of the CPEC project has gone up to $51 billion after the Chinese government announced provision of $5 billion to upgrade the railway line from Peshawar to Karachi. Around $11 billion to be spent on infrastructure development has been loaned to Pakistan at 1.6 percent interest rate – which is low considering the rate of interest on loans advanced by the World Bank is 5-8.5 percent. The biggest chunk of $34 billion pertains to energy projects which are direct foreign investments.

Besides energy projects, the CPEC consists of road and rail networks and optic fiber traversing through the entire length of the country. When it becomes operational by 2018, the infrastructure will generate tremendous economic activity and adequate revenues to repay all the loans and also contribute to the national income in a major way. The energy projects under the CPEC are being implemented on top priority basis and nobody can dispute their role in the industrial development of the country and creation of jobs for locals in all the provinces.

The CPEC linkage with Central Asian countries will make Pakistan a hub of economic activity for the entire region. The investment at Hambantota never had such potential and dimensions. Infrastructure, particularly road networks and other means of communication, is a pivotal ingredient for nudging economic development. The example of the KKH Highway is before us.

No other regional country was part of the Hambantota initiative whereas almost 26 countries are involved in the ‘One Belt One Road’ vision of China. Furthermore, Iran, Turkey and a number of European countries also wish to join the CPEC in view of its economic potential and regional connectivity. Russia was also working on a similar Eurasian economic union and was in the process of holding discussions with China to merge the two projects.

The detractors of Gwadar and the CPEC while drawing parallels between these projects and Hambantota forgot to mention another very important development in Sri Lanka which led to Hambantota becoming inoperative. Rajpakasa was defeated in the presidential elections in January 2015. According to many international observers, his defeat was orchestrated by the former Sri Lankan president Chandrika Kumaratunga with US support, paving the way for the installation of a pro-US regime in the country under Sirisina. The government of Sirisina suspended all projects undertaken by Rajapakasa, including building the harbour, an international airport at Hambantota and the Colombo port city. Thus Sri Lanka was caught in the dynamics of global politics at the peril of its own economic viability.

The CPEC is a trans-regional initiative based on the concept of shared economic prosperity whereas Hambantota was exclusively a Sri Lankan venture. There is absolutely no parallel between Gwadar, the CPEC and Hambantota.

One wonders how could columnists miss all these dissimilarities and realities that put the CPEC at a different plank from Hambantota. How could they draw parallels between two projects with so many different dimensions and potential?courtesy