Jeff Schubert, an Australian visiting professor at Moscow's Higher School of Economics joins the program.
Jeff starts off the program by describing what CPEC is: "It's a program to develop Pakistan's infrastructure facilities and give China, particular China's western provinces, Xinjiang in particular, access to the Arabian Sea or more broadly the Indian Ocean." Jeff sees CPEC as being not only for exports out of China but for imports, particular of energy into China. The Chinese are clearly worried that in the case of a military confrontation the usual import route for oil through the Malacca Straights could be blocked.
There are various opinions, Jeff says, as to whether CPEC will actually facilitate another way for China to import oil. "The border regions between Pakistan and China are very mountainous, and prone to earthquakes, and very cold. Various people are now saying that oil cannot be pumped from the port of Gwadar on the Arabian Sea, through CPEC into China, or it will be very difficult. The Chinese are very good at coming up with infrastructure solutions and if they spend enough money, it can be done. The alternative is to use rail transport, which may bring in about a quarter of a million barrels a day whereas China imports around 9 million barrels per day….In a situation, however, where other avenues are blocked, this could be very useful."
CPEC at the moment is at a very early stage of development, a pipeline has not yet been built. A discussion ensues as to why China doesn't invest in constructing a pipeline from the Middle East, through Iraq, Iran and Afghanistan into China. Jeff explains that Chinese-Pakistan relations are good, making Pakistan a safe choice. "The alternative is a multi-country project. If China wants to import oil from Iran, it will need to go through possibly Afghanistan, but what is more likely, is through places like Kazakhstan, and even the Chinese imports of gas from Turkmenistan go through Kazakhstan." A direct West-East route at the moment is politically too difficult it seems.
To the question will the One Belt One Road project will bring Central Asian countries together?, possibly facilitating the construction of an East-West pipeline across the bottom of Asia, so to speak. Jeff says: "In theory, it makes sense, but whereas Russia wants the Eurasian Economic Union to be the main Central Asian partner of China, the Chinese prefer to do this on a bilateral basis. So, the Chinese have done quite a few deals with Kazakhstan….Kazakhstan is very important, because any energy imports from Turkmenistan or even Iran go through Kazakhstan. And Kazakhstan itself is becoming a very significant supplier of energy, gas as well as oil, to China. So the pipelines going from Turkmenistan and also Iran go through Kazakhstan and thus avoid the very high mountainous earthquake-prone regions. But once again, I think the Chinese will decide that Kazakhstan is not quite as reliable as Pakistan…"
CPEC could be a huge opportunity for Pakistan in terms of inward investment. Jeff comments: "That is the expressed intention, and many Pakistanis have taken that view and welcomed it. There is some fear that the debts that Pakistan racks up to China will be too great, but basically, Pakistan has been plagued by energy shortages, and no government has really been able to get the electricity system working properly, and so there are often power cuts. So, one area of cooperation is the construction of power stations, the other is Special Economic Zones for Chinese entities to do business. The third is the creation of a transportation infrastructure includes roads railways and possible a pipeline…"
Jeff sees the time when China can import millions of barrels of oil via CPEC as being about 15 or 20 years off, so these are very early days, although the planning process and time frames are different when one is talking about China. "Many aspects are already operating. Gwadar port is already operating, but oil is now imported to China via CPEC by road rather than rail." This might not necessarily be a bad thing given the gradients of the terrain.
Gwadar could potentially become a Chinese port, "the agreement now is that the port is only for commercial vessels, but obviously the Chinese have in mind naval vessels as well….the problem for India is that they realise that Pakistan has nuclear weapons, and is very close. I don't think India is going to do anything like attack Gwadar or blockade it. The Indian strategy is to develop better relationships with Iran, Iran is a developing a new port called Chabahar which would allow India to access Central Asia via Iran…" This is somewhat surprising given Iran's present relationship with the United States.
As far as Afghanistan goes, Jeff says that the US is increasingly blaming Pakistan for American failure in Afghanistan, and the Americans have been trying to encourage the Indians to take a greater role in Afghanistan. "But how does India get into Afghanistan — through Pakistan, which really is an ironic situation. So, they are not talking about India taking an increasing military role, but they are talking about increased training, increase general support… my own view is that US policy on Afghanistan is very confused. They want to leave but they don't know how to. One of their ideas is to get India involved, and India is in a way happy to do that because India feels Pakistan promotes the Taliban as a possible way to get at India in the future."
An interesting discussion follows regarding the societal make up of Pakistan, and it becomes clear that Pakistan is a very complex country, with many different political, economic and religious stakeholders.
Clearly, CPEC is a fascinating project, however the project is complex, and as it now begins to come on line, it will change the face of Asia. This is only one of the many major infrastructure projects taking place in Asia, which the West has perhaps failed to give due attention to as we are constantly distracted by local political and military issues.
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