In the past few days, different political parties have once again voiced their concerns over CPEC. And in the absence of transparency, this hue and cry can only be expected to grow, even if give and take strategy by political masters is able to temporarily silence the critics and political rivals.
Speaking at the CFA award ceremony in Karachi day before yesterday, Ahsan Iqbal, the boss of Planning Commission, brushed aside the ongoing political noise as mere politicisation of the issue. He highlighted how out of the $35 billion worth of power sector investments coming under CPEC, $11.5 billion is going to be in Sindh, $7.1 billion in Balochistan and $6.9 billion in the Punjab.
He also maintained that the Pak-China working group needed to detail out the plans for industrial zones along the CPEC has not even been formed. And therefore all the hue and cry over the alleged Punjab-isation of industrial zones under CPEC is essentially rubbish aimed at gaining political scores.
But when BR Research asked whether transparency concerns raised by central bank governor Ashraf Wathra and members of the business community at large are also politicisation of the issue, Mr. Iqbal conveniently avoided the question.
What Mr. Iqbal needs to understand is that merely highlighting politically kosher elements as a reaction to criticism is not enough to achieve transparency. It is a time tested wisdom that it is not enough that justice is served; it must also be seen and perceived to be served. The same holds true for transparency, especially when it comes to a project the size of CPEC, and in an environment like that of Pakistan.
Mr. Iqbal understands quite too well that CPEC may well be the "most transformational" event in Pakistan's history. But he doesn't seem to appreciate that it is natural for everyone to want a piece of this (CPEC) pie.
In a country that has just begun to experience inter-provincial competition, and has had its fair share of inter-provincial economic grievances for most part of its history, it is even more natural for the players to vie - and indeed vociferously - for a pie of this gigantic size. Remember that China hasn't ever invested this big of a number, anywhere in the world (See BR Research column: Contextualising the $46bn Sino pledge, May 22, 2015).
Ergo, there cannot be too much transparency when it comes to the distributional aspects of CPEC. Yet the irony is that the Council of Common Interest is not even in this conversation. Neither is there apparently any move to create a pan-political or at least pan-governmental permanent oversight that can be acceptable to all.
At the start of his speech given at the CFA award ceremony, Mr. Iqbal quipped that "he doesn't know whether CPEC is an ordinary income or capital gain" - a joke especially catered to the audience that comprised of finance professionals. What this column fears that CPEC might become a quasi Dutch disease.
Mr. Iqbal highlighted how GDP growth in the military regime has come on the back of positive exogenous shocks after Pakistan became a puppet to geopolitical masters in those three military regimes. The blind reliance on those exogenous factors meant that military rulers didn't feel the need to reform governance in general and institutions in particular to let private sector grow.
In the same light, the Planning Commissions boss should also consider that it has been a year since this country achieved macro stability under IMF programme, but still there hasn't been enough spadework done to put the economy in growth gears, especially in so far as governance is concerned. The indifference to governance reforms then begs the question whether CPEC would be just another exogenous factor - the blind reliance on which will help bring GDP growth in the country, without feeling the need for reforms. The bottom-line is that CPEC needs transparency and second, that reliance on dollar inflows under CPEC should not mean that governance reforms are compromised by being blinded by easy, FDI-led GDP growth built on hollow economic structures.
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