Unless we remove our economy from the bottle in which we had managed to thrust it as we tried to cope with the harsh realities of independence surrounded by a hostile geography, Pakistan is likely to remain forever locked in a perpetual poverty trap. But we cannot un-bottle our economy unless we open our borders for trade and economic relations that separate us from our immediate neighbors—-India in the East, Afghanistan in the North-West and Iran in the West.
Even for the China-Pakistan Economic Corridor (CPEC) to become the game changer that we wish it to be, we need to accelerate the work on the project that had opened our far off mountainous borders in the North to Western China when in 2013 the Chinese President Xi Jinping announced the trillion dollars’ worth Belt and Road Initiative (BRI).
And with the coming on stream of the CPEC-related Gwadar Seaport, hopefully in a couple of years, our access to the sea in the South would be more than enough for catering to the heavy trade traffic flowing in and out from CPEC carrying goods to and from Western China. So far the small little seaport at Karachi where the turn-around time is far too long compared to Dubai and Mumbai ports was proving to be too inadequate for the trade traffic for a population of 200 million plus.
With Pakistan’s economy thus bottled up it was but logical for South Asia to remain for decades as one of the least integrated regions of the world in terms of trade, infrastructure, water and energy cooperation. On top of it, despite being one of the most impoverished regions of the world, the South Asian governments were spending a lot of money on defence, which naturally comes at the expense of human development.
Perhaps mindful of the poor state of connectivity and regional economic relations in South Asia, Prime Minister Imran Khan while inaugurating a two-day seminar, the Islamabad Security Dialogue, on March 17 said: “Without regional peace and improved trade ties with neighboring countries, Pakistan cannot capitalize on its geostrategic location.”
Adding, he said, peace in Afghanistan will change the entire outlook of South and Central Asia.
Praising China, the premier said Beijing has brought out 700 million people from below the poverty line. “We have to follow the Chinese model to eradicate poverty from our state,” he added.
Significantly, Pakistan’s Chief of the Army Staff (COAS) General Qamar Javed Bajwa in his key note address the next day assured the world that Pakistan was “ready to improve our environment by resolving all our outstanding issues with our neighbors through dialogue in a dignified and peaceful manner”.
More significantly, he promised to provide access to Afghanistan to export her goods to India under what he called a re-energized Afghan-Pakistan Transit Trade Agreement. This had remained denied for the last many decades because of what is vaguely but routinely called national interest.
Even more significantly, he pointed out that a stable Indo-Pak relation was a key to unlocking the untapped potential of South and Central Asia by ensuring connectivity between East and West Asia. This again was forbidden for the same reason - national interest.
“This potential, however, has forever remained hostage to disputes and issues between two nuclear neighbors. However, we feel that it is time to bury the past and move forward,” he added candidly.
Promising to revive Saarc, the COAS said: “Our efforts for peace in Afghanistan, responsible and mature behaviour in crisis situation with India manifest our desire to change the narrative of geo-political contestation into geo-economic integration.”
But for resumption of peace process, he said, India will have to create a conducive environment, particularly in the Indian Illegally Occupied Jammu & Kashmir (IIOJ&K) by which if he meant restoration of pre-August 5, 2019 position in the Indian Occupied Kashmir as a pre-condition for talks, then perhaps, going by India’s current mood, peace would continue to remain hostage to disputes and the region would remain wedded to its divisive past for many decades to come.
But if one were to take the PM’s advice and attempt to emulate the Chinese model and go about meeting the challenge of paradigm shift in our approach to trade and economic relations with India we must then keep our focus on geo-economics while continuing to maintain our claim on IIOJ&K as China did and wait for the right time to resolve the dispute through dialogue. China had kept its claims on Hong Kong and Taiwan on the back burner for the time being waiting for the right time to reclaim them. That is exactly how it happened in the case of Hong Kong. Beijing could have militarily recaptured HK any time in the 1970s of 80s but it waited until midnight 1, July 1997 when the United Kingdom returned Hong Kong to China as per the historic nineteenth century agreement between the two countries. This event ended 156 years of British colonial rule in Hong Kong. It happened because in the meanwhile China had become a global economic giant. Had China continued to remain stuck in the poverty-ridden nineteenth century, Britain would not have even bothered to dust up at the agreement.
In the case of Taiwan, the waiting continues. After it lost its UN seat in October 1971 to the Peoples’ Republic of China (PRC), the Republic of China (RoC) continues to exist under the military protection of the US which China has refrained from challenging hoping to reclaim it through peaceful means at the appropriate time allowing the RoC to take its own time in making up its mind.
How did China accomplish this economic miracle? Well, by using the rules of the game set up by the only imperialist power left in the world - the US. Back in 2000 Beijing was admitted to the World Trade Organization and within three years, a flood of exports produced by China’s low-wage workforce, drawn from 20% of the world’s population, began shutting down factories across America.
While Washington was fighting forever wars in Iraq and Afghanistan, Beijing was making itself into world’s workshop. It had amassed $4 trillion in foreign exchange which it began investing in an ambitious BRI. This has become a massive effort to economically integrate Africa, Asia and Europe by investing more than a trillion dollars –a sum 10 times larger than the US Marshall plan that rebuilt a war ravaged Europe after World War ll.
Beijing also established the Asian Infrastructure Investment Bank (AIIB) with an impressive $100 billion in capital. The bank currently has 103 members. More recently, China has formed the world’s largest trade bloc with 14 Asia- Pacific partners and, signed a financial services agreement with the European Union.
Such investments, almost none of a military nature, quickly fostered the formation of a transcontinental grip of railroads and gas pipelines extending from East Asia to Europe, the Pacific to Atlantic, all linked to Beijing. China has also acquired special access through loans and leases to more than 40 seaports encompassing the Straits of Malacca, across the Indian Ocean, around Africa, along Europe’s extended coastline from Piraeus, Greece to Zeebrugge, Belgium.
What is being suggested is Pakistan too can wait for the appropriate time to reclaim IIOJ&K while in the meantime, it focuses on geo-economics, especially by helping integrate the regional trade and economic linkages and connectivity.
To start with, we could offer India and Afghanistan a land route via Pakistan for engaging in bilateral trade and also let India use the route to reach Central Asia via Afghanistan and in return Pakistan also gets to establish trade and economic links with Central Asia and India and beyond in the East. This perhaps could tempt India to join the CPEC.
And the 25-year agreement recently signed between Iran and China could also attract Iran to the CPEC for the benefit of a vast region. The draft agreement has covered co-operation in areas from energy, petrochemicals and nuclear power to the high-tech and military sectors as well as maritime projects to promote Iran’s role in China’s Belt and Road Initiative.
China has enjoyed growing trade with Iran since the early 1990s and has been Iran’s most important commercial partner over the past decade partly as a result of US sanctions. Iran’s markets have been kept supplied with Chinese products from machinery and spare parts to clothing, toys and stationery despite toughened sanctions which remain in place under the Biden administration.
During the last Iranian year, which ended on March 20, the country’s total trade figure was $73bn, with China the top partner, according to the customs administration. Iran’s exports to China reached $8.9bn and imports from China stood at $9.7bn. These figures do not include considerable volumes of Chinese products reimported from other destinations.
Copyright Business Recorder, 2021
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