The Karachi propeller plane, four times a week, whips up a cloud of dust as it lands on a dry runway. Passengers cross the tarmac in the scorching sun and enter an arrival terminal that is not much larger than a tractor-trailer. Soldiers with AK-47 are waiting outside. This is Gwadar, a remote piece of land on Pakistan's southwest coast. The port is the last stop on a planned $ 62 billion corridor that connects China's westernmost inland province to the Arabian Sea. This is the crown jewel of President Xi Jinping's belt and street initiative, which is designed to build infrastructure and influence around the world.
Originally, a seaport, roads, railways, pipelines, dozens of factories and Pakistan's largest airport were planned. But almost seven years after the China-Pakistan economic corridor was established, there is little evidence that this vision will be realized. The site of the new airport, which should have been completed using Chinese funds more than three years ago, is a fenced area of scrub and dark sand. Mica spots in the dirt are the only things that glitter. The factories still need to be built on a stretch of beach along the bay south of the airport. And the traffic in Gwadar's tiny harbor with three berths is sparse. A Pakistani Navy frigate is the only ship recently docked during a visit, and there are no signs of the only scheduled weekly cargo flight from Karachi.
According to government statements, less than a third of the announced CPEC projects have been completed, totaling approximately $ 19 billion. Pakistan is largely to blame. It has repeatedly failed to build because it ran out of money; Last year, the International Monetary Fund received a $ 6 billion bailout, the 13th since the late 1980s. Two successive prime ministers have been detained for allegations of corruption. And the Baluch Liberation Army's wish for its own home in the Baluchistan province, in which Gwadar is located, has made life there uneasy. In May, militants stormed the city's only luxury hotel, shot into the white marble lobby and killed five people.
Setbacks in Gwadar indicate major problems along the belt and the road. China is reducing its ambitions not only in Pakistan, but around the world. Economic growth has slowed to its lowest level in three decades, inflation is rising and the country is feeling the effects of a trade war with the United States. The picture becomes even darker than a coronavirus epidemic originating from central China is at risk of delays and cuts. "China's biggest constraint now is its own economy," said Jonathan Hillman, a senior fellow at the Center for Strategic and International Studies in Washington.
In a number of countries, projects were canceled, scaled down or examined. Malaysia renegotiated the terms for China's rail link construction and scrapped planned $ 3 billion pipelines. In Kenya, a court suspended the construction of a $ 2 billion power plant financed by China last year. And in Sri Lanka, new leaders said they wanted to regain control of a Hambantota port that had been leased to a Chinese company for 99 years when the previous government was unable to repay a loan. This acquisition raised concerns in many belt and street countries that China's size is associated with the risk of relinquishing critical infrastructure. And concerns about the price of debt to China have increased. At least eight nations, including Pakistan, are at high risk of debt problems, according to the Washington-based Center for Global Development.
All of this could, according to a September McKennie law firm report, save hundreds of billions of the estimated $ 1 trillion in planned belt and road spending. While the value of signed projects rose last year, data from the Chinese Department of Commerce shows that actual spending in 2019 was $ 75 billion, after falling 14% the previous year. Total spending since early 2014, shortly after President Xi announced the initiative, was $ 337 billion in November 2019, government figures show, far behind China's ambitious goals.
Pakistan could be a harbinger of major problems, says Hillman, who heads Reconnecting Asia, a project that tracks Belt and Road progress. "In general, the rest of the belt and road seem to run there," he says. "It is not dead in the water, but I am skeptical that China will be able to achieve what it has set out to do."
Gwadar is shaped like a barbell that dangles from the Pakistani coast. A strip of sandbar and rocks, which are less than 1 km wide at their narrowest point, connects with a rocky outcrop on which the luxurious Hotel Zaver Pearl-Continental rests like a fortress. The city of 140,000 residents is closer to the Iranian border than Karachi, a 10-hour drive, in an area so remote that it was part of the Sultanate of Oman until 1958.
Getting around is a challenge. Foreign visitors must be accompanied by an entourage of 10 Pakistani soldiers in platform trucks. In the deep-water port on the east side of the barbell, there is little sign of trade on a hot October day. The only cargo ship that calls Gwadar and is operated by the Chinese Cosco Shipping Holdings Co., supplies building materials and sometimes leaves with seafood. Occasionally it doesn't matter at all. A manager who answers Cosco's phone in Karachi, where the weekly run begins, says the line is operational, but it is up to the captain to stop in Gwadar or go straight to Oman. The captain recently had a cold and didn't want to stop, says the manager.
However, Naseer Khan Kashani, chairman of the Gwadar Port Authority, claims that everything is fine. Cosco was frustrated with problems with a web-based customs system, but it has been resolved, he says, and is sitting in his office in the port. He refuses to provide freight volume figures. "Everything will be fine," says Kashani. "The trading volume will increase enormously."
This view is confirmed by Zhang Baozhong, chairman of China Overseas Ports Holding Co., which operates the port and free trade area of Gwadar. He dismisses the apparent inactivity with a wave of his hand and compares it to four years earlier when he arrived. Then there was only one flight a week to Gwadar with a handful of people. "My impression was that this place was completely neglected by the whole world," said Zhang. "I found this a mission impossible."
Now, he says, there has been $ 250 million in progress in renovating ports, including new cranes for unloading cargo, a business center, desalination facility, and sanitation. "This port is now becoming a hub in international shipping," he says. "Of course, the quantity is not large enough, but it will take time. By 2030, we believe that Gwadar will be a new economic center in Pakistan and will make the highest contribution to GDP in the Pakistani economy."
A free trade zone was established in Gwadar in 2015. According to official figures, nine or ten companies, including a Chinese steel manufacturer and a Pakistani manufacturer of edible oils, have registered. However, there is no evidence that factories are operating. Another 30 are scheduled for Phase II of the free zone, closer to the new airport, officials say, and $ 400 million has been invested to date. According to Zhang, twice as many companies have applied, including some from European countries. "It will be set up in the near future," says Kashani. "You talk about the CPEC slowing down but nothing slowing down."
According to the CPEC website, the zones still need critical infrastructure, including water and electricity. Construction of a $ 300 million megawatt plant began in November. It is operated with imported coal and is intended to reduce the frequency of power outages. According to Shahzeb Kakar, director general of the Gwadar Development Authority, acute water shortages with annual rainfall of less than 4 inches were alleviated by unusual rains in 2018 that temporarily filled reservoirs. He says the city will meet future needs by building desalination plants. A plan for a "Safe City" project with surveillance cameras could reduce the need for Gwadar to feel like it is under military occupation. "We have three basic problems: electricity, water and security," says Kakar. "All three problems have now been fixed. Things are moving in the right direction now."
Not everyone is so optimistic. Mariyam Suleman, the Gwadar-based editor of the Balochistan Review, says that people's lives in the region have not improved significantly after five years of planned developments. "Your neighborhoods are still without good infrastructure; there is a sewage problem; there is no electricity for a long time, especially in summer; and the water crisis has always been a problem," she says.
Even if Gwadar wasn't threatened with violence and had enough electricity and water to build and operate 40 factories, it didn't have enough people to work in them. The city's population, mainly fishermen and their families, is about a fifth of that of Washington. A proposal for a project called China-Pak Hills is for a residential complex with a "Hong Kong financial district" and luxury homes for 500,000 Chinese professionals who could move to Gwadar and supply workers by 2022 – an influx that would not sit well, according to Asad Sayeed , an economist from the collective for social science research in Karachi, either with separatists from Baluch or with the Pakistani government.
It is also hard to imagine how Gwadar would need Pakistan's largest airport with capacity for Airbus A300 jets and 30,000 tons of cargo a year. However, this is the plan for the 4,300-hectare area, delimited by a barbed wire fence on the outskirts of the city. The new airport, announced in 2014, is said to have been built by China Communications Construction Co., the largest belt and road project builder, with a $ 230 million loan from China and a grant from Oman. But construction never started. The following year, the Chinese government announced that it would convert the loan into a grant, and Pakistani officials said the airport would be completed in late 2016 and then by October 2017. Still nothing.
Last year, Prime Minister Imran Khan traveled to Gwadar and set off for a new airport site. A new CCCC contractor was also announced: a branch of the state-owned China Railway Engineering Corp., which was also to build schools and a hospital. Completion is now scheduled for 2022.
During a visit in October, a tractor started and drove through the empty, dusty piece of land for no apparent purpose. "They are doing as much as possible at the moment to show that it is still happening," says Andrew Small, author of the 2015 book "The China-Pakistan Axis" and senior fellow of the Washington-based German Marshall Fund. According to Small, the Khan's government is only trying to complete around $ 20 billion in CPEC projects that are already underway, mainly power plants, under the pressure of China. "The full version isn't really in the cards," he says. "It will land in a much more humble place than planned. It won't be a game changer."
The CPEC project was designed to reduce the oil and gas routes from the Middle East by thousands of kilometers to get to western China by land, instead of shipping thousands of kilometers through South Asia and Southeast Asia. Pakistan should receive 2.3 million jobs and increase its gross domestic product by 2.5 percentage points. The deal, negotiated by former Prime Minister Nawaz Sharif and touted in a 2017 communique by his successor Shahid Khaqan Abbasi after Sharif was detained for allegations of corruption, provided that the corridor would take shape by 2020. It has been described as a pilot project, a model for belt and street countries around the world.
Pakistan, which has long been allied with China to counter India's regional weight, wanted help in developing its mineral-rich, but poorest and most troubled province. She also wanted to suppress separatists in the Baluchi Liberation Army, who not only attacked the Pearl Continental last year, but also killed four people in the Chinese consulate in Karachi in 2018. The militant group tried to stop plans that they believed would empower the Pakistani government. Take more resources from the region than help the residents. Further attacks in the past few months have killed more than a dozen Pakistani soldiers and security personnel.
China could have targets alongside better oil and gas routes. Western governments have long been concerned that belt and road spending will help China develop a so-called "pearl necklace" – ports that can be used by its navy, from the South China Sea to the Arabian Sea to Africa. Although China and Pakistan both reject military intentions, Gwadar could be a stopover on the way from Sri Lanka via the Maldives to Djibouti, where China set up its first military base in the Horn of Africa. China's plans for the Pakistan Corridor also include developments in Xinjiang Province, where attempts have been made to contain the unrest. The United Nations has estimated that 1 million Uighurs were held in camps that the Chinese government said were used for re-education and training.
If China's interests were purely economic, according to the economist Sayeed, this could have helped expand the port of Karachi, which is already connected to the highway from China, instead of building new roads through bleak, dusty, and dangerous Baluchistan ,
Regardless of their ambitions, China and Pakistan had to reduce them. Khan, the former cricketer who was elected on an anti-corruption platform in 2018 and criticized expensive infrastructure deals signed by previous governments with China, inherited an economic disaster. To fix the current account deficit, his government cut imports, devalued the rupee, cut spending, and raised taxes. GDP growth declined from 5.8% in 2018 to an estimated 2.4% last year as manufacturing saw double-digit declines and exports remained unchanged.
China, which has become the world's largest creditor, is once again concentrating on smaller projects that are tailored to the needs of the recipient countries. Winning hearts and minds has become more important than announcing gigantic airports. Instead, according to the guidelines issued by President Xi at the end of 2018, exchanges between people in the areas of education, science and technology, culture and tourism will help ensure that belt and road projects are "deeply rooted in people's hearts".
All of this aims to downplay the more strategic aspects of what China wanted to achieve, says Nadege Rolland, senior fellow at the National Bureau of Asian Research in Washington. "My guess is that there won't be any big splashes of money," she says. "The investments were just an incentive." China's primary goal is not "to build connectivity, but to increase Beijing's political and strategic influence".
This means that China may have got its money's worth even if belt and road spending is a third of what was originally forecast. It will expand its influence in countries that are potential suppliers of natural resources, as well as in future markets, and will gain allies in international areas such as the United Nations at a time when the United States is withdrawing.
In Pakistan, an oil refinery in Gwadar and a rail and oil pipeline to China are among the projects that have not yet been implemented. A highway that connects the new airport to Gwadar should have been completed by CCCC in 2018 for $ 168 million. It is now planned to open later this year. In October, dump trucks with piles of stones were parked near the edge of the existing road, but no work was done. The Chinese site manager says he is too busy to speak. His assistant explains that an interview is not necessary since all information about the work of CCCC can be found on the Internet.
During a visit to Beijing in October, Khan assured Chinese officials that the CPEC plans would continue. However, given Pakistan's maximum budget and austerity measures imposed by the International Monetary Fund, it is clear that there will be no major new projects and it is unclear how many of the current projects can be completed, says Hillman of CSIS. Nevertheless, during Khan's visit, both Pakistan and China agreed to "implement the CPEC quickly so that its growth potential can be fully exploited," said an official communique.
Complete realization can mean figuring out how much can be built to save the face, offer some benefit to both sides, and explain success. An update from the Pakistani ambassador to Beijing, released in the Chinese state media last year, states that eleven projects have been completed in the past five years and another eleven have been underway with total spending of $ 18.9 billion. It was said that another 20 were planned without providing amounts, details, or a time frame. The originally committed $ 62 billion is no longer mentioned.
In addition to Gwadar's development challenges, other parts of Pakistan such as Karachi have set up their own special economic zones. Even if the corridor to Gwadar could be expanded and security problems solved, there is only the Karakoram Highway, an inhospitable two-lane route through the treacherous mountains between China and Pakistan. It is vulnerable to landslides and threats of attack and still needs to be connected to roads leading to Gwadar, said Alyssa Ayres, senior fellow for India, Pakistan, and South Asia in Washington at the Council on Foreign Relations. "It's hard to imagine that this is a sustainable freight corridor," she says.
Hillman has come to a similar conclusion, albeit with more implications. "The Chinese regret making Pakistan the flagship," he says. "There is much more caution on all sides."
(This story was not edited by NDTV staff and is generated automatically from a syndicated feed.)