NationalVolume 13 Issue # 20

The CPEC dynamic in Pakistan’s economy

Economic integration, spillover effect and complex interdependence have always remained quintessential topics in international relations and international politics. Ernst B. Hass illustrates in his theory of Neo Functionalism that integration and cooperation between two states results in cooperation with other states and it has “spillover” effect on other states. The cooperation could be in the form of politics, economy, culture, etc. Such spillover effect further affects other states creating regional economic integration and after that it reaches the point of supra regionalism with multiple states. Further, Joseph Nye also explained that use of soft power and economy creates an environment of integration for nations to enhance cooperation among states. Understanding these concepts always required staunch examples from Europe, US and other countries. In Pakistan, students quote the example of France and Europe, that not- withstanding two catastrophic world wars, France and Germany are packed into a complex integrated bonding now under the shelter of the EU. Similarly with the US and Canadian economic integration under the North American Free Trade Agreement (NAFTA). Well, now Pakistan would also be quoted as an example of economic integration in the academics of international relations and economics, after the arrival of the China- Pakistan Economic Corridor (CPEC).

CPEC being a game changer is altering the economic, geopolitical landscape of South Asia. It is China’s long enduring dream. The $60 billion project would change the living standards of the people in Pakistan. The employment of Ernst B. Hass Functionalism to CPEC explains that the spillover effect of CPEC from South Asia to Central Asia, the Middle East and Europe is giving life to Hass’ Neo Functionalism and Joseph Nye’s soft power. Critics also fault Hass on the grounds that the spillover effect of integration among states could compromise their sovereignty, but that’s not true; respecting other states’ sovereignty is the actual meaning and utilization of Neo Functionalism.

CPEC is a joint venture of Pakistan and China only aimed at economic integration and prosperity of the region. China has never breached Pakistan’s sovereignty and territorial integrity. It is a game changer in South Asia with 3,000 kms of the road and railway connecting Kasghar in northwestern China with the Gwadar port of Pakistan situated in Balochistan.  Similarly, Russia, Iran, Afghanistan, Turkey and Central Asian states also want to become stakeholders in CPEC. This project is also facing the criticism that under CPEC Chinese products would engulf Pakistan’s market and the latter’s products would take a hit. The recent Center for Advanced Defense Studies (C4ADS) criticized CPEC that it would increase the burden of debts on Pakistan imperiling the country’s long-term economic viability. The report is prepared by a Washington-based thinktank to secure Iran’s Chabahar port and contain China’s presence in South Asia. As business and economic prosperity is knocking at the doors of Pakistan, there are also some critics who want to sabotage this project.

Pakistan’s immediate neighbour has always acted as a stumbling block to the passage of CPEC as it passes through Azad Kashmir. India’s immediate aim is to promote Chabahar for Indo- Afghan trade. CPEC could shatter India’s hope of regional monopoly and usher Gwadar port as a key strategic and economic junction in South Asia. Simultaneously, Iran’s Foreign Minister Javed Zarif visited Pakistan on March 12, 2018, where he reiterated that “Iran is interested in joining CPEC and linking Chabahar port to Gwadar for promotion of regional economic prosperity.  Post-Trump’s decisions to shred the Iran nuclear deal and impose new economic sanctions on Iran, the chances are now high that Iran would turn towards CPEC, which would be another setback for India and its lobby. Kulbushan Jadhav, who was arrested form Balochistan, also confessed that he was spying in Pakistan and his mission was to sabotage CPEC. Having such prime evidences it is now clear that India wants to push Pakistan back and is in state of war through its non-coercive means.

The reality of CPEC in Pakistan is somehow different from illusions. “If completed as planned, CPEC’s productivity would be equivalent to 17% of Pakistan’s 2015 gross GDP, and as many as 700,000 jobs would be created. As a result, Pakistan could see economic growth of 2.5%. With the advent of CPEC and Chinese products in Pakistan, a new wave of economic opportunities is developing. Local entrepreneurship is going to be increased in Pakistan; with Chinese products and their use people have now a better living standard.

While talking about business and entrepreneurship, I met an entrepreneur who runs the business of a Chinese-based heavy bikes firm in Islamabad “Riders Zone”. While asking the same question as quoted by the Center for Advanced Defense Studies (C4ADS) about CPEC endangering the Pakistan economy, Shakeel Hussain, Managing Director of Riders Zone quoted that “Chinese products are available at low price in Pakistan and there is no threat to Pakistan’s economy. Chinese products have opened new horizons for business in Pakistan. He also added that with these Chinese heavy bikes his aim is to promote tourism in Pakistan.

In giving examples of products and business is the actual implementation of Hass’ Neo Functionalism, where one project is not integrating regions and states, but it is also having a spillover effect within Pakistan as well from small business to promoting the tourism industry in Pakistan. Pakistan needs an economic boost and CPEC is such a factor. This mega project has connected Pakistan to the rest of the world, with actual adaptation of Hass’s Functionalism theory at all levels.