Pakistan opts out of CPEC's $14-bn PoK dam project

17 November 2017

In signs that China will not be able to push further with massive infrastructure projects even in Pakistan, Islamabad has requested Beijing to withdraw a high-cost dam project in Occupied Kashmir from the China Pakistan Economic Corridor (CPEC).

Pakistan unexpectedly withdrew a request to include the strategic $14-billion Diamer-Bhasha dam in the Gilgit-Baltistan area of PoK from the CPEC earlier this week.

While this may alter the cost projections for CPEC, Chinese experts deny any damage to ties with Islamabad or the multi-billion-dollar economic corridor project as a whole.

Chinese experts say bilateral ties with Pakistan have deep roots and that there are multiple channels of engagement between the two countries so that the status of one project will not impact bilateral relations.

On the contrary, Chinese experts say the fact that Pakistan could withdraw a project from the CPEC shows that the CPEC works on mutual consultation.

The CPEC, the flagship project under President Xi Jinping's Belt and Road Initiative (BRI), involves connecting China with the rest of Asia and Africa and beyond through complex network of road, rail and sea routes.

While China-Pakistan ties look intact, at least for the present, the huge finances involved in the projects that do more good to Chinese firms than countries where these projects are being implemented, is a cause of worry for the host countries.

Experts dismissed any talk of rift in the ''iron-clad'' alliance. ''I don't think that China's strict conditions on the dam will affect China and Pakistan's economic relations because China-Pakistan relations have lasted for a long time,''  Shi Zhiqin, executive dean of the One Belt, One Road Strategic Institute in Beijing told Hindustan Times, adding that the two countries cooperate in many areas. 

''The development should not be a big issue. China and Pakistan have many channels (to communicate,'' said Hu Shisheng , director of the Institute of South and Southeast Asian and Oceania Studies at the China Institutes of Contemporary International Relations, told the paper.

Hu added that CPEC is based on consultation between the countries involved, adding that China is a ''responsible country'' despite its close ties with Pakistan.

''I think that Pakistan dropped the PoK dam project in CPEC mainly it could not raise the money from World Bank and other institutions because of objections raised by India. So, perhaps, this will impact Pakistan-India ties (and not China-Pakistan relations,'' said Wang Dehua from the Shanghai Municipal Centre for International Studies.

India has repeatedly objected to the CPEC as it runs through Pakistan-occupied Kashmir, saying it's a sovereignty issue.

Pakistan's Water and Power Development Authority (Wapda) chairman Muzammil Hussain told the parliament's Public Accounts Committee this week that the Chinese conditions for financing the dam were ''not doable and against our interests''.

Briefing the parliamentary panel on the status of the much-delayed mega project, he said the Chinese conditions included taking ownership of the project, operation and maintenance costs, and providing security for the Diamer-Bhasha project by pledging another operational dam.

''These conditions were unacceptable. Therefore, Prime Minister Shahid Khaqan Abbasi approved a summary to finance the dam from the country's own resources,'' he was quoted as saying.

Of course, it's not the end of the road for China's involvement in the particular project and it could yet help Pakistan with the finances.

''Of course it remains to be seen whether China can help Pakistan raise the money from other banking services,'' said Wang.

Chinese diplomats are believed to be sorting out the issue while Beijing authorities ensured that it was not discussed in the official media.

 search domain-b