Sunday, March 5, 2017

China - Pakistan Economic Corridor - The ever growing power of China

Adam Pal
The China Pakistan Economic Corridor, or CPEC, has become the cornerstone of the state policy of Pakistan in recent years and all the politics and economics of the ruling class revolve around this project. The rulers are claiming that this corridor will bring prosperity and advancement in the country and that soon rivers of milk and honey will start flowing.
However, all the issues of unemployment, poverty, education and healthcare are drowned in this propaganda and the corridor is being presented as a panacea for all the problems facing the country. Any terrorist activity or corruption scandal is presented as a conspiracy against this corridor.
Influenced by this propaganda, all the other political parties, from nationalists and "leftists" to the Islamic fundamentalists, are prostrating themselves before Chinese investment and praising the long lasting friendship between two countries. This friendship, commonly referred to as being “higher than the Himalayas and deeper than the deepest oceans”, is now transforming into a much more concrete relationship. From the Nationalists to the ex-Stalinists, we have politicians praising this friendship, while at the same time they are all falling into line to receive their cut of the contracts and kick-backs that wil be part of these huge investments.
Port of Gwadar
Initially announced as a project of $46 billion by the Chinese president Xi Jinping during his visit to Pakistan in 2014, the figure has now soared to $57 billion. The stated aim of this project is to link the Gwadar port in the south of Pakistan to the north of the country and on to the western Chinese province of Xinjiang through a network of roads and railway lines.
Through this shorter route, the aim is to guarantee that Chinese goods will have easier access to the Middle East and beyond. Currently these goods have to travel a distance of around ten thousand miles from the South China Sea through the Strait of Malacca to reach the Gulf. But with this new route the journey would be reduced to only 3600 miles to central china and 2300 miles to Western China. This is less than half of the current distance.
With the new route, goods from China would reach Pakistan’s border in the Himalayas and from their would travel on the roads or railway lines being built for this purpose and would eventually reach Gwadar port in the south of the country. Gwadar port is located near the Strait of Hormuz in the Indian Ocean. According to plans, this route could also be used to transport oil to China in the future.
A famous road from the Chinese border to the plains of Pakistan, called the Karakoram Highway (KKH), passing through the Karakoram mountain range already existed, but it is now being widened for this project. The road is sometimes referred to as the “eighth wonder of the world” due to its very high altitude of 4,693 meters - in fact it is one of the highest roads in the world - and the difficult terrain which it passes through. Passengers travelling frequently on this road have said that even after upgrading it would be unfit for utilization by such heavy traffic for which huge claims are being made.
Apart from KKH, a large number of new roads is being built linking it to the Gwadar port. Most of these roads have to pass through the most backward province of Balochistan where an insurgency has been going on against the Pakistani State for many years and where Baloch nationalists are waging an armed struggle against the Pakistan Army. This is just one of the issues facing this project, as this huge investment by the Chinese has changed the whole balance of forces in the South Asian region.
What is CPEC?
Road" (OBOR) project of the Chinese government on which more than $1 trillion will be spent to build roads and infrastructural projects around the globe. In this project, roads and pipelines will be built to connect China with other parts in the region and beyond. A part of OBOR is the “String of Pearls” in which fifteen ports will be built in the Indian Ocean for the strategic and economic interests of the Chinese ruling class. Most of the financing will be provided by the Chinese banks. With this investment, the western regions of China will also be developed and industrial zones will be built to boost the economy of these regions.
The Xinjiang province of China borders on eight countries including Pakistan, India, Afghanistan, Russia, Mongolia and other central Asian states. With this project a network of railway lines and roads is being built to connect the province with other countries of the region. Also, this backward province of China will be developed to build huge industrial zones so that Chinese companies can export their goods from there to other bordering countries and beyond. Billions of dollars are also being spent to improve the infrastructure of this province with new roads and railways lines. Already huge energy projects have been built here to fuel the new industries.
Apart from building new industries in this province, other Chinese manufacturers in eastern China will be able to access the markets of the Middle East and North Africa much more quickly through CPEC, while imports of raw materials from these regions will also reach China in less time. Moreover, China will have an alternative to the existing trade route through the South China Sea and in case of any trouble or blockades there its trade will not be choked.
For Pakistan initially it was announced that $11 billion would be invested on roads and related infrastructure, while $35 billion have been allocated for energy projects to produce electricity. Now an additional $11 billion has been announced to build new railway lines. Some of the projects called "Early Harvest" will be operational within a year or two while others will take a few more years to complete.
Gwadar, which used to be a small isolated beautiful and serene village on the coast of the Arabian Sea far away from the urban centers, is now being transformed into a modern city. A huge modern airport is being built by the Chinese, along with infrastructure that can support operations at this port for around 300 to 400 million tons of cargo per year. Industries are planned here that will be able to export goods using this modern facility.
It is estimated that 700,000 new jobs will be created in Pakistan through this project. Real Estate business is flourishing and housing colonies are being built displacing local fishermen. A huge naval base is also being built to protect this route. Gwadar is also being linked with other parts of the country and with China through this network of roads which is also having a deep cultural, political and social impact in whole area and beyond.
Cost of the CPEC
The loan of $11 billion for CPEC, which has been allocated for roads, will have a composite interest rate of 1.6 percent and has to be returned in twenty five years, while the $35 billion allocated for energy projects to produce electricity, mostly using coal, will have an interest rate of 4.95 percent and has to be returned in ten years. A 1.74 percent LIBOR and 4.5 percent spread also needs to be added to these loans. According to rough estimates, with these interest rates, Pakistan will have to pay back $3.94 billion on the principal amount while $1.908 billion will be paid in interest every year, i.e. $5.858 billion per year. This is equal to two percent of GDP. Now further investments of $11 billion have also been announced which will be for railway lines and related infrastructure. This means that Pakistan's economy is taking on a serious burden once the repayments start.
Just like all Chinese investments across the world, the real contracts and interest rates are hidden from the public and their burden on the people will only be felt when they will start biting them. New reports are constantly coming out about a change in the rates. According to some reports, out of $35 billion allocated for energy projects $15.5 billion will be invested through private firms, mostly Chinese, rather than governments. The interest rate for these loans financed by Exim Bank of China can be up to 6 percent.
Also, the government of Pakistan is bound to buying electricity from all these projects for at least thirty years whether it needs it or not. The tariff for electricity from these projects is being fixed at an astronomical price and is a lot more expensive than the international standards or than the electricity already being produced in the country.
The people of Pakistan have already been suffering from the contracts with private owners of Independent Power Producers (IPPs) in previous decades, with Japanese, American and other companies taking over, after which electricity became extremely expensive and is also not available most of the time.
These contracts were part of the privatization process in which power production was privatized two decades ago. Due to massive corruption in these contracts, the masses have to face power cuts of ten to fifteen hours every day even in the summer when the temperature soars to above fifty degree centigrade. Many IPPs don't even produce electricity but the government has to pay them for their installed capacity. Hundreds of thousands of small and medium sized industrial units have been closed and millions of workers have been laid off across the country due to this lack of electric power supplies. This has also further benefitted China, whose cheap goods have flooded the markets in Pakistan shutting down even more industries here over the last two decades.
Now with these new contracts, tainted with massive corruption, the remaining infrastructure of the electricity network will rapidly deteriorate and electricity will become a thing of the past for millions of poor people of the country. A clear example is a joint power project at Nandipur where millions of dollars have been spent in the last few years and many inaugurations have been celebrated but not a single unit of electricity has been produced yet. This is a living example of the joint corruption of the Chinese and Pakistani rulers. Similarly, for a solar power project built by the Chinese the tariff for electricity produced is fixed at Rs. 17 per unit while the international standard is Rs. 4 per unit. This speaks a lot about the corruption in all these projects which is just the tip of the iceberg.
China is also using these projects to dump its coal in Pakistan. Most of these power plants are obliged to buy coal from China despite Pakistan having huge resources of its own coal. A special railway line has also been upgraded to bring Chinese coal from the port of Karachi to one of these plants in Sahiwal. This will have serious environmental consequences for Pakistan. Already the situation is quite bleak here and people have to suffer smog in many urban centers due to air pollution. Most of the water supplied to homes is unsuitable for drinking and has high levels of arsenic. With these new projects, the environmental conditions will further deteriorate bringing new health hazards and sickness to the suffering masses.
After these plants become operational the paying back of debt will begin, which has to be made regularly every fortnight. All these payments have to be made in US dollars, and this is why this burden is prone to increase if the Pakistani rupee is devalued against the dollar in any circumstance.
Pakistan already has external debt of nearly $75 billion from the IMF, World Bank, Asian Development Bank and others, for which almost fifty percent of the budget is allocated every year to pay back this debt with interest. With a Debt to GDP ratio already at 67.4 percent, these new loans will plunge the economy to new depths.
With these new loans, the Pakistani economy, which is already near bankruptcy, will be pushed the the edge of the abyss. Apart from these high interest rates, Pakistan has also guaranteed a profit of 34.5 percent to the investor companies on equity. In energy projects the debt to equity ratio is mostly 75 percent debt and only 25 percent equity, which has guaranteed profit by the government of Pakistan.
Along with the civilian rulers, the military top brass are also doing their best to get their cut from this loot and plunder. A special force of up to fifteen thousand men is being raised for the security of the CPEC route. The cost of running this force was not included in the overall cost of CPEC and the Chinese demanded that the Pakistani government bear the cost itself. This meant the government has had to allocate huge funds separately from the already allocated defense budget which eats up the biggest chunk of the annual budget after debt servicing. the government was delaying this fund, which apparently was one of the reasons behind the tensions between civilian and military rulers last year. At last in a meeting between the finance minister and the previous Army chief on 21 September it was decided that a new tax of one percent would be levied on electricity consumers to bear the cost of security for CPEC. As a result, electricity will be more expensive for the common people. On top of the security costs will be added the toll tax received from those travelling on roads related to CPEC.
Worries of Default!
This whole situation has already alarmed serious strategists of capitalism and they are warning the Pakistani government to beware of the problems that will arise from such huge loans.
In its articles the Financial Times has warned the Chinese government many times about the risks involved in these investments. The IMF has also warned Pakistan about the "looming bill of CPEC" and the risks involved. Along with the fragile situation of the Pakistani economy, these financial institutions are worried about the growing influence of the Chinese ruling class in the financial markets of the world. In the past, US backed financial institutions, such as the IMF and World Bank, dictated terms and conditions to countries like Pakistan and the rulers of such countries had to go begging from these institutions in any crisis. They had no other option but to obey their masters, who could also punish these rulers for not carrying out their dictates. But with the Chinese now providing huge sums of money to these rulers, the authority of the IMF and World Bank will be undermined and the Chinese ruling class will emerge as another imperialist power in the region alongside the Americans.
This explains why the Americans tried their best to deny China more authority in the affairs of the World Bank and IMF when they demanded it. But now China has established the Asian Infrastructure Investment Bank (AIIB) which will finance most of the projects of OBOR. Along with that, the New Development Bank (the ex-BRICS Development Bank), has also been established. Exim Bank of China and China Development Bank are also lending huge amounts of money for CPEC and other infrastructural projects around the world. This has brought about a direct confrontation between the already existing imperialist institutions of the world.
Another allegation of the IMF is that the Chinese are spending carelessly, which can lead to a default of fragile economies like Pakistan, eventually putting their own huge loans at risk. The Financial Times has repeatedly warned China that Pakistan's economy is not worthy of such huge investments and it is a big risk. They have cited the example of Venezuela where China invested more than $65 billion to secure oil supplies for a long time. But a sharp slump in oil prices has brought all this investment near to a default and now Venezuela is neither in a position to pay its debt, nor are its oil reserves worth that money. But the Chinese ruling class is ignoring all these warnings related to CPEC and has continued with this project with all the risks involved.
The IMF has also warned Pakistan that its current account deficit will swell to unprecedented levels once the repayment of debt starts and it will be unable to pay such huge debts.
Apart from this, industrialists in Pakistan are also alarmed at this project and have expressed their serious concerns. For them CPEC means an avalanche of cheap Chinese goods into Pakistan with which they cannot compete. Also, the Pakistani State is too weak and impotent to impose high customs duties on Chinese goods. Even if they impose duty it is very easy to bypass due to rampant corruption among all kinds of officials. According to Haroon Akhtar, adviser to the Ministry of Finance, smuggled goods worth $9 billion reach Pakistan every year. Already Chinese textiles are being sold in Pakistani markets. That is a big blow to the Pakistani textile industry which is the backbone of Pakistani industry and exports. Pakistani industrialists will have to compete with their Chinese counterparts not only inside Pakistan but also in the markets of the Middle East and North Africa, where Chinese goods would be available much more easily. Apart from textiles, China has an overcapacity of steel and other major products and their onslaught in the Pakistani market will be a death knell for the local industry.
On top of this, Chinese contractors have taken most of the contracts for the construction of projects related to CPEC. This was an important part of the deal. They have also brought most of their employees from China which include most of the engineering and technical staff. Initially unskilled labor was being hired from Pakistan but now that also is being brought from China. On some projects prisoners from Chinese jails are working for which Chinese contractors pay only a small amount to the Chinese government. And Pakistan has to bear the increased cost of security for these prisoners. These prisoners live in horrible conditions and their working hours are unlimited. The only growing demand in Pakistan at present is for translators who are getting high wages, while Chinese language course centers have started to mushroom in the big cities. Already, the government has announced that soon the Chinese language will be part of the curriculum in government schools. This will be yet another language to be learnt for most students who already have to learn English, Arabic and Urdu while they speak their mother tongues in their daily routine.
Along with contractors and labour, most of the machinery and raw materials for these projects is also imported from China, mostly duty free, which has widened the deficits of Pakistan.
Pakistan is already the biggest importer of Chinese arms and more than 35 percent of the total arms exports of China go to Pakistan. With strengthening relations these imports will increase. In his visit to Pakistan in 2014 when the Chinese president announced a package for CPEC, a separate deal worth $10 billion was also reached, in which Pakistan announced to buy submarines and other arms from China. China is already working very closely to build a fighter jet JF17 and other arms with Pakistan. Pakistan has also bought frigates and other naval vessels from China recently. Before that Pakistan mostly relied on F16s and other weapons from the US, but the balance has shifted in recent years in favour of China.
These huge investments by the Chinese government have also encouraged Chinese companies which are investing huge amounts in various sectors of the economy. A Shanghai based consortium has bought a 40 percent share in the Pakistan Stock Exchange PSX for $85 million and will soon take charge of its management. The size of market capitalization of the PSX currently is around $100 billion but the Chinese aim to increase it in the coming period. New incentives such as CPEC bonds and derivatives will be introduced to attract investors from other countries including China.
Other Chinese companies are investing in areas ranging from telecoms to air lines and automobile manufacturing. Pakistan Steel, the largest government owned steel mill of the country, is also being privatized and being handed over to a Chinese company. From Chinese banks to food chains, everywhere the Chinese presence is growing in the country. Even special counters have been established for Chinese travellers at bus stands across the country. According to one estimate, Pakistan may issue 15 million visas to Chinese between now and 2020.
Strategic interests and regional balance of forces
However, many serious strategists are alarmed in Europe and the US and are discussing the implications of this project beyond the stated aims of just a trade route and economic interests. They see the rising influence of China in the Indian Ocean through this project which has already alarmed not only the US but also India. They can see that the stated aim of building this project for trade routes is just an eyewash and in fact China is building a naval base in Gwadar which will be followed by an army base. Already China has sent its few naval ships to Gwadar to protect the trade route and is planning to bring submarines to these shores as well. This is a direct challenge to the authority of US Imperialism in the region which already has a presence of a huge fleet in the Strait of Hormuz to protect their oil trade in this area. More than 40 percent of the total oil trade of the world passes through the Strait of Hormuz. All this has changed the balance of forces in the whole region in which the Chinese presence is rapidly growing.
After the lifting of sanctions on Iran by Obama, the relations between the Iranian mullah regime and the US imperialists took a new turn which was a blow not only to the imperialist interests of the Saudi and Israeli ruling classes but it also ushered in new alliances and rivalries. In this new alliance, the US imperialists have tried to counter the growing influence of the Chinese in the region and backed a deal between India and Iran to develop a port at Chabahar in Iran, just one hundred kilometers from Gwadar. Through this port, India would access markets in Iran, Afghanistan and Central Asian states without passing through Pakistan. Also, this would mean keeping check the Chinese controlled port of Gwadar. But Chinese investment and growth is much more rapid compared to any other project in the region and Gwadar port has become operational while others are just laying down the plans. Also after the arrival of Trump in the White House the tensions between the US and Iran have again flared up and Iran is once more closer to China than the US. In a recent visit to Iran by the Chinese Defence Minister new deals were signed worth billions of dollars in which Iran will buy submarines and other weapons from China. Also the strategic ties between two countries were also strengthened.
Now Iran, along with Russia, has shown a keen interest in CPEC and has expressed its willingness to join this project which is welcomed by Pakistan. Already, Russian influence in Afghanistan is increasing despite the US presence and its puppet government in Kabul. In a recent summit in Moscow on Afghanistan, Pakistan was also invited and discussions were held to counter the growth of IS in Afghanistan.
Iran and Russia are already fighting a bloody war against US sponsored Islamic fundamentalist organizations in Syria, and in Afghanistan also they are both building ties with the Taliban to counter US influence. Pakistan is joining this new alliance to salvage its lost influence in Afghanistan to India. In the last few years the Americans have largely backed India in Afghanistan to keep out Pakistan. India is investing huge amounts of money in Afghanistan and diplomatic relations between the two countries have been strengthened in the last few years much to the chagrin of the Pakistani State. Although Russia and Iran have no rivalry with India they do want to counter US influence in the region. Whereas, Pakistan doesn’t want to displease America it does want to push India out of Afghanistan.
This has pushed the Americans to join hands with Gulbuddin Hekmatyar who is commonly known in Afghanistan and Pakistan as the "Butcher of Kabul". This long time stooge of ISI has been out of favour with the Americans since their invasion in 2001, but now he has again come to prominence in this new shift in the balance of forces. Also, a Chinese military presence inside Afghanistan has been suspected but officially denied by China. Charles Clover in the Financial Times reported on Sunday 26 February from Beijing,
"A mystery over recent sightings of Chinese military vehicles patrolling inside Afghanistan deepened last week as Beijing denied its troops were in Afghanistan but confirmed it was undertaking ‘joint counter-terrorism operations’ with Kabul." This whole situation is preparing the ground for a new bloodbath in Afghanistan and beyond.
In the meantime China has emerged as a key player in the whole situation. the Chinese presence in the Indian Ocean is not limited to Gwadar only, but it has also built a huge port in Hambantota in Sri Lanka and has now announced investments of more than $20 billion in Bangladesh. Just like CPEC they are keen to build the Bangladesh China India Myanmar (BCIM) Corridor . This is a project that will link Kunming in the Chinese province of Yunnan with Kolkata in India through a network of 2800 km of roads and railway lines passing through Bangladesh and Myanmar. Yunnan was also recently linked with Shanghai through a high speed railway line.
For this and other strategic interests, China needs better relations with India while on the other hand the Americans are also depending more and more on India for their influence in the region. This is leading to new conflicts in the Indian Ocean and beyond, in which China is eventually emerging as a strong player. China and India have a long history of rivalry and they went to war in 1962 over disputed territories in the Himalayas, which is still a basis for conflict. But today they are also part of BRICS and mutual trade between the two countries is around $70 billion per year. This shows that despite the rivalry between the ruling classes of two countries, they also have mutual interests. China supports the idea of India joining CPEC and using this corridor for trade but that is a far cry due to the rivalry between India and Pakistan.
With CPEC the Chinese ruling class has increased its influence over the Pakistani State and the Pakistani ruling class is indebted to them. With this influence they have also become a player in the conflict between India and Pakistan. Some Indian analysts have expressed concerns over this and have remarked that now China is also becoming a decisive party in the Kashmir dispute due to CPEC.
Chinese Imperialism
Most of the analysts and intellectuals in Pakistan, from left to right, are full of admiration for this investment and are predicting a period of development and prosperity in the country. Many nationalists, on the other hand, are protesting with the Chinese that they are ignoring their areas and the roads and railway lines being built are passing through the areas of other nationalities. They claim this will leave them poor and desolate. The underlying assumption for such claims is that this project will bring prosperity and that rivers of milk and honey will start flowing.
In reality this is a big illusion and rather than reducing poverty it will increase the misery and exploitation of the downtrodden masses of this country. If huge investments and infrastructural projects could have reduced poverty and misery under capitalism there should be no poor inside China. Hundreds of billions of dollars were invested by companies from all over the world and the Chinese economy attained a growth rate of more than ten percent for many years. But still millions and millions are living in extreme poverty and huge layers of the population struggles for one proper meal a day. If such investments could not eliminate poverty in China, how could this investment alleviate the people of Pakistan from it. All investments under capitalism are made to maximize profits through the exploitation of the resources.
Rather than creating new jobs, CPEC will usher in the closure of thousands of industrial units which will not be able to compete with their Chinese rivals. The rulers are claiming that new industries will be built along the route of CPEC but this is just a hollow dream. Billions of rupees were spent to build a lavish motorway from Lahore to Islamabad two decades ago by the same rulers who promised that this road would usher in a new era of prosperity and industrial growth. But since that motorway was built industries near this area have closed down in huge numbers rather than growing. Also, poverty and misery has increased. Today if anyone comes off this road and visits the villages it passes near, he or she can witness people using thousands of years old donkey carts and other primitive methods to sustain life. Similarly, this new investment will not bring any change for millions already living a miserable life without healthcare, education and electricity; rather their sufferings will increase. The ruling class on the other hand will increase their wealth through loot and plunder of the resources.
Some are comparing all this with the East India Company which was a prelude to the British occupation of India in the 18th century. British Imperialists had a double character in this region. Where they exploited the huge resources of this land and filled their coffers with loot and plunder, they also had to build a basic infrastructure on a modern basis, for that they had to destroy Asiatic despotism and the primitiveness of this region and had to introduce the capitalist mode of production which was a huge step forward. Railway lines built by the British in 1850s in this region were the most advanced lines in the whole world at that time. Along with the railways, they had to build related industries to keep them running. Through this the proletariat in India was also born, the gravedigger of capitalism. Despite the limited character of this development and the distortions it brought to this region along with the brutal oppression of British imperialism, all this also had a progressive character at that time, which was expressed in a most profound way by Karl Marx in his brilliant writings on India.
But today Chinese investment cannot be compared with that of the British, nor can Chinese Imperialism be compared with that. It cannot even be compared with that of US imperialism which has plundered the wealth of this country since partition in 1947 and has tied the two hundred million people living here in countless chains of debt and interest. Although the Chinese Imperialists are investing a lot more as compared to the British East India Company and American backed Banks and financial institutions, its character is entirely different.
Chinese Imperialism is emerging in a period when Capitalism is facing a severe crisis all over the globe rather than an upswing. The banks and other institutions it is building for domination are facing a severe crisis of Capitalism at their birth. Compare that to the time when the IMF and the World Bank were set up, a time when there was a huge boom of Capitalism and new avenues were opening for them. Along with this, Chinese Imperialism is not based on a bourgeois revolution but on a counter-revolution in which the planned economy has gradually been dismantled. The introduction of capitalism in China has not been a step forward but a huge backward step from the planned economy established after the revolution of 1949. Although this planned economy was strangled by the bureaucratic clique at the top, still it led to revolutionary transformations of the whole society and was able to give employment and improve the lives of millions and millions living in China. But today Capitalism in China has destroyed all those gains and has thrown society backwards.
Considering this, we can see that Chinese investment cannot bring any progress for the people of Pakistan. It will only bring more misery and suffering. This will not create any new layers of proletariat or strengthen the existing one, rather it will destroy layers of the proletariat and some of the productive forces built over a period of more than one century. Along with that, huge corruption involved in all this investment means that only a very small part of these projects will be realized in the end. Most of these projects are in fact a dumping ground for obsolete and outdated Chinese machinery. The quality of roads and railway lines being built is also questionable and due to massive corruption by the contractors they have little chance of survival after their completion. Another serious question is about the completion of these projects. Most of the projects announced by the Chinese across the world have not been completed. Many railway lines and roads have been announced from Africa to Latin America, but just one or two have seen the light of the day. Most of them are just their on paper. With the crisis of the Chinese economy and its falling rate of growth, accompanied by the crisis in the world economy, the future of these projects is also not certain. Any big economic setback inside China or in the world economy can bring all this investment to a halt and can put the whole project in a dustbin.
Political Implications
Along with changing the balance of forces in the whole region, this huge Chinese investment has brought out all the contradictions in the Pakistani State and society. Pakistan is already an impoverished country with a huge majority of the population living in extreme poverty and backwardness, while the ruling class continuously loot and plunder the resources of the country and has transferred this looted wealth to safe havens in Europe and US. From sponsoring and nurturing Islamic fundamentalists and suicide bombers to the heroin trade in the whole world, huge sections of the Pakistani State are involved in all kinds of illicit economy. But over time various sections of the State and armed forces have worked independently of each other and are constantly at war over the control of this loot and plunder. It is a common observation here that the Pakistani State is at a war with itself and different factions of the State continuously attack each other through their proxies and struggle to increase their share of the pie. Whether it is a rift between civilian and military rulers or different political parties backed by different sections of the establishment or between different factions of the armed forces and spying agencies, these conflicts are deepening with every passing day. With this huge investment every faction of the State wants a bigger share and wants to beat the others one in a many faceted internecine war.
Initially the deal was struck by Chinese President Xi Jinping and the Prime Minister of Pakistan Nawaz Sharif. Sharif's name has already appeared in the Panama leaks in which he and his family appear involved in corruption of billions of dollars in their previous stints in power. This present deal is also not without kickbacks and huge commissions for which the Chinese rulers are notorious in the world. Other sections of the state have also pressed the Sharifs for more and more of a share. Other political parties which were not ruling at the center but were in government in the provinces have been complaining about the flaws in the project and have raised their concerns over the transparency of the deals. But now the Chinese have also announced infrastructural projects with these provincial governments and now they seem satisfied and are also singing the praises of Chinese friendship. Many nationalists were also raising concerns about the Punjabi ruling class diverting funds to their province and leaving them behind. They have been claiming that of the two routes of CPEC, the eastern route which passes through the Punjab is being built more rapidly, whereas the work on the Western route which passes through other provinces is slow. But this concern now also seems to have been addressed. Army generals were concerned about the security of the route and now they also seem content with the task of raising a new force for security. But despite all this, new contradictions seem to be arising all the time.
The biggest concern is of the Balochi nationalists who are fighting a war of independence from the Pakistani State. They raise the genuine issue about the loot and plunder of the natural resources of Balochistan by the Pakistani and Chinese State, which has increased the wealth of the ruling classes but has only brought more misery and pain for the people living in Balochistan. They are also concerned about the demographic changes with this project. As more and more people will come to work in Gwadar and other related projects, they fear this will leave the Balochis in a minority in their own homeland. They want the State to protect their rights, something it has failed to do in the last seventy years. Some nationalist leaders have been bought off by the state and they are part of the coalition government in Quetta and Islamabad, while others are waiting their turn in the next government. Those involved in guerilla struggle against the Army have either been crushed by the brutal military operations or they have compromised and betrayed. Some are looking towards the Americans, Indians or other imperialist powers, to help them wage a war against this State oppression backed by the Chinese. In this process the lives of thousands of young courageous fighters have been lost who came out to fight against this injustice and oppression, but due to the wrong methods of guerrilla warfare and the rotten ideology of nationalism they have become victims either of State repression or the internal bloody conflagration of various nationalist groups.
Along with the nationalist struggle, religious fundamentalists have a base in Balochistan and the whole country. Islamic fundamentalism is spreading its poison in Baloch areas now, which used to be a secular society for many centuries. Saudis are funnelling in huge sums of money to sponsor religious fundamentalist organizations to counter Iranian influence in Balochistan, while in response the Iranian mullah regime is sponsoring its own terrorist outfits to counter these attacks. All these conflicts, along with the centuries old tribal conflicts in Balochistan, crisscross each other to make the situation much worse.
Apart from Balochistan, another area where CPEC is having a deep impact is Gilgit Baltistan on the Chinese border. The people of this area are already facing the environmental consequences of this project. There have been mass protests and complete shutdowns against the brutal exploitation of the Pakistani and Chinese governments after which the State launched a witch hunt against political activists who are now being targeted. All these protests and strikes took place outside the control of any established political party or religious leadership. In fact, the people have rejected all of them and have come out throwing off all sectarian, linguistic and nationalist prejudices.
In Pashtoonkhwa some protests have taken place over this issue, but these have been very small and mostly organized by local nationalist organizations. They were unable to address the issue on a class basis to build a genuine movement around. Some have joined this campaign simply to get a cut in the contracts and loot and plunder out of this project. As this project becomes operational and the trade route is established, more and more opposition will come to the surface. However, the most important thing in the whole situation is the growing influence of the Chinese ruling class in the affairs of Pakistan. During the Cold War, Pakistan was in the American camp while India was in the Soviet camp. During the dollar jihad against the Soviet Union in Afghanistan, American influence grew rapidly in Pakistan. After the 2001 invasion of Afghanistan by Allied forces, Pakistan played an important role as an ally. But during the withdrawal of American forces from Afghanistan in 2014 these relations were at the lowest ebb. The Americans were always doubtful of the role of ISI and its sponsorship of the Taliban and wanted them to do more for the money they were getting to fight the war against terrorism. In all these years the Americans were decisively involved in the important decisions not only about politics but about the military establishment as well. But now the authority of the Chinese is growing in these matters. Last month the Chinese stopped a resolution for the second time in the UN Security Council backed by India and the US to ban a Pakistani Islamic fundamentalist Masood Azhar, head of the terrorist organization Jaish e Muhammad. This annoyed India and they have started negotiations with China over this issue. Also, China has pushed Pakistan to place under house arrest Hafiz Saeed, one of the most wanted terrorists by the CIA and India. Hafiz Saeed is head of a terrorist organization Lashkar-e-Tayyiba (now Jamat-ud-Dawa) that claims to be fighting for the liberation of Indian occupied Kashmir. He is also allegedly involved in planning the terrorist attacks in Mumbai in 2008 in which 166 people were killed. This clearly shows that in the coming period the Chinese will have more and more influence in important decisions of the Pakistani State where it will come in conflict with the American and Saudi authorities at some point. CPEC is also bringing out contradictions in the bordering Chinese province of Xinjiang where the majority of the population is Muslim and have a Uighur nationality. The majority of this population is living in extreme poverty and this project is unable to alleviate them out of their miserable conditions. The Chinese state is brutally clamping down on all kinds of dissent there. Islamic fundamentalism is also raising its ugly head, which gives an excuse to the ruling class to attack the masses much more brutally.
Which way forward?
Lenin said that capitalism is horror without end. Here the situation is quite clear. Despite billions of dollars of investment the masses continue to suffer and their miseries compound with every passing day. No political party is putting forward a class line to organize the movement around this issue, and in one way or another praise their imperialist masters for being so benevolent as to invest in their country. But sooner rather than later the real face of these rulers will be exposed and the masses will be able to see the real impact of these projects. A resistance will emerge out of it.
The important thing is to organize opposition on a class basis. For the first time in the thousands of years of history of this region the working class in China and Pakistan will have contact with each other on a mass level. Thousands of Chinese workers are working in Pakistan who also bring with them their revolutionary traditions of struggle and resistance. With every passing day, the fate of the working class of Pakistan will be linked with that of China. This is the only progressive element in this whole project.
In China, already thousands of strikes are taking place and they are increasing with time. Workers are coming out against the brutal exploitation of the ruling class in big numbers. With the slowing of the Chinese economy and the imminent crisis of the world economy looming, this process will accelerate to unprecedented levels. Upheavals in the labor movement in China will be felt all across the world. This will also have a huge impact in Pakistan.
The only way forward is to build class solidarity among the working classes of China, India, Pakistan and whole region, and to build a genuine organization to overthrow this rotten capitalism. A socialist revolution in Pakistan will have to fight not only against the ruling class of Pakistan, but also the imperialist powers of China, America and others. The ruling class of India will also be terrified at such a situation and will try to strangle it out of fear of it spreading inside India. The only way forward for the working class will be to go beyond the artificial borders that separate the workers and are used by the ruling classes to sow hatred and bigotry among the masses on a nationalist basis.
Capitalism cannot be reformed; it cannot bring prosperity under any circumstances. The only way to get rid of this misery is to overthrow it through a socialist revolution. Socialist revolution would create a voluntary socialist federation of the whole region and abolishing all the borders and national frontiers. That will be a victory of the working class not of any one country but of the whole world. That will bring prosperity, plenty and happiness for the masses that have been living in deprivation and destitution for centuries. That will free them from the chains of Imperialism and the rule of Capital. That will be the way to end all oppression, wars and brutal killings of innocents all over the planet. That will be the beginning of a new world free of all kinds of exploitation.

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