Friday, August 14, 2015

The China Pakistan Economic Corridor and the lessons from the Suez and Panama Canals

The China Pakistan Economic Corridor ("CPEC") has been generating much optimism for Pakistan for a number of years. The recent impetus has given solid grounds for this great vision for the future.

However, we must also try and place the CPEC in some conceptual framework to make the best use of it and avoid any pitfalls.

In my opinion, the Suez and Panama Canals can provide relevant examples in this regard. Both like the CPEC are main routes for international trade and provide alternates to longer ‘available’ routes.

A bird’s eye view of the history of the Suez and Panama Canals brings out the following important points which may be relevant for the CPEC:

1. Any international corridor including the CPEC must be neutral to all the trading interests so as to avoid conflicts. As long as the Canals remained partisan, the conflicts continue to erupt thus setting back the economic benefits.

In addition to lowering the resistance to the CPEC, by making the CPEC, ‘nationality neutral’ and by bringing in the other regional players, Pakistan can avoid any slumps in any one economy which can be the case if we solely rely on the pacific giant. Example of Japan suggests that the manufacturing power houses have a sell by date and there is no guarantee that in twenty years time, export direction of manufactured goods will remain the same.

Furthermore, adding the other regional powers to the CPEC, will avoid the controversy of western or eastern routes within Pakistan. By bringing the countries in the east to the party, our eastern districts will benefit greatly. Similarly the western corridor will help in developing the underdeveloped western parts.

2. It is not to be taken for granted that CPEC will transform Pakistan into a higher level of existence or development. For instance, despite having the Suez and Panama Canals for many decades Egypt and Panama largely remain underdeveloped countries.

I would venture to suggest that to have long term transforming effects of the CPEC, we will need to develop our local human resource by investing in their education and other social services and making them economically benefit from the CPEC. Again the contrast between Egypt and Panama on the one hand and Japan on the other, makes it plain. The latter invested in people and despite being overtaken by China as manufacturing hub Japan has transformed it's society into a cosmopolitan and self-sustaining one.

To emphasise at the cost of repetition, Pakistan may be better off by investing any windfalls from the CPEC on lifting its citizen to a higher civilisational state. This is a gamble worth taking as it is the only guarantee of the long term positive legacy of the CPEC.

3. There will be competition to the CPEC just as Panama canal gave competition to the Suez Canal.  The window of opportunity may not be as long as we may imagine. Therefore, it is imperative that we get it right soon and from the very beginning. Already a lot of time has been wasted, and the hurried agreements signed by the PMLN regime are not the best bargains for Pakistan. If for instance, we had signed these agreements in 2006, when Pakistani economy was peaking, we could have had better deals.

Nonetheless, having signed the first agreements of the CPEC, Pakistan needs to market the project to other interests and get the deals in its favour for a change. 

The motivation for writing this article is merely to generate a debate with historical examples on the subject and to make 'CPEC plus' a transforming phase for Pakistani people and not merely a blip in the history which comes and goes, without touching the lives of the masses and leaving them as they ever have been.

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