Pakistan signs new deals with China amid escalating tensions in the region

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Amid the escalating tensions between the Baloch insurgents and the Pakistani state and after the recent attack on the Pakistan Stock Exchange, Pakistan has signed a bilateral $11 billion project with China for the renovation and upgrade of its railway lines and the construction of a hydroelectric dam in Kashmir, a region at the heart of tensions with arch-rival India.

According to the details, China and Pakistan signed deals on 25 June and 6 July for the construction of a dam and the upgrade of Pakistan’s British-era dilapidated railway lines respectively. The two projects will collectively cost $11 billion – $3.9 billion for the dam and $7.2 billion for the railway lines. The deal was seemingly driven by a former lieutenant-general of the Pakistan army – Asim Saleem Bajwa.

Imran Khan’s government appointed Bajwa to head the China Pakistan Economic Corridor Authority, which oversees the $70 billion ongoing projects in Pakistan, including power plants and highways. Bajwa also joined Khan’s cabinet back in the April, which already housed a dozen or more army personnel, increasing the military’s clout throughout the Pakistani government.

Since its announcement in 2013 by President Xi Jinping, the Belt and Road initiative of China has expended a whopping $575 billion through energy plants, railways, roads, ports and other projects, according to the World Bank. Its progress has dwindled recently, following the accusations that China is luring struggling economies in debt traps to extort political and strategic gains out of them.

Bajwa denies these claims. In a recent tweet, he alleged that some ‘detractors’ are giving the ‘false impression’ that CPEC is slowing down. He said that the pace of work on the projects has been accelerating and that ‘phase-2’ will be launched soon – which has been done in the form of an $11 billion investment.

Pakistan army has already secured every single Beijing-funded project in Pakistan. From the mountains near the Chinese border in Gilgit Baltistan to the coastal areas of Gwadar in Balochistan– where CPEC is centred – Pakistani army holds sway. Its influence has been bolstered by 3 consecutive attacks on the China-related projects by the Baloch insurgents – in Pearl Continental Hotel in Gwadar, Chinese Consulate in Karachi and a Chinese bus in Dalbandain.

There is deepening concern over Pakistan’s ability to repay the Chinese loans. The Center for Global Development has listed Pakistan among the 8 nations that might face severe debt-sustainability problems due to the Belt and Road initiative. Pakistan must repay twice the amount it owes to the International Monetary Fund to China, according to IMF.

In the past week, the Pakistani government allowed a Chinese company to carry out its Copper and Gold mining in Saindak, without taking into consideration the ongoing insurgency in Balochistan. 

The Saindak Copper-Gold Project is centred in a town, Saindak, near the Chaghi district of Balochistan and is operating through the Pak-China cooperation. Initially, this project was leased to the Metallurgical Corporation of China Ltd. – now called Saindak Metals Ltd. – for 10 years. The project was extended in 2012 and 2017 and has now been extended for another 15 years, bringing the project length to 45 years. Experts say that Saindak houses 412 million tons of Gold and Copper. In the 2012-2017 period, Pakistan had earned $2 billion from Saindak.

Despite its copious natural resources, Balochistan is the poorest region in the territory. The Baloch insurgents are fighting the fifth wave of insurgency, which was instigated against the Pakistani state, which they denounce as ‘oppressive’ and ‘exploitative.’ The insurgents allege that the federal government and Punjab – the bastion of the Pakistani military – are deliberately looting Balochistan. The armed groups are vehemently opposing the Chinese ‘intrusion’ in the Baloch soil which, they think, is another agent of exploitation of the Balochistan’s resources.

With the announcement of CPEC in 2015, China wanted to extend its regional clout throughout South Asia and to contain its arch-rivals – India and the United States. It is thought that the land and oceanic routes of the CPEC would allow for the fluid movement of goods across the world, perpetuating China’s influence in the global trade. The initial cost of this project was estimated to be $46 billion but has increased almost twofold since then to $80+ billion.

The Baloch insurgents oppose the China-sponsored projects in Balochistan, denouncing them as ‘intrusive’ and ‘exploitative.’ A few weeks ago, the armed organization, Balochistan Liberation Army attacked the Pakistan Stock Exchange in Karachi, Pakistan’s financial hub. In a subsequent statement, BLA claimed responsibility for the attack and said that had aimed to target Pakistan’s economy and to thwart the increasing Chinese influence in Balochistan. BLA had also attacked the luxurious five-star hotel, the Pearl Continental, in Gwadar and the Chinese Consulate in Karachi.


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