10 The EconomistJuly 22nd 2017
SPECIAL REPORT
INDIA AND PAKISTAN21tional party. Provincial identities remain strong, and years of in-
terference by the deep state, including three periods of direct mil-
itary rule, have stunted the country’s political evolution.
“Democracy is all about conflict, so to make it work you need me-
diating institutions,” says Ayesha Jalal, a historian at Tufts Uni-
versity. “This is where Pakistan is truly lacking.” The country re-
mains a collection of provinces speaking different languages, in
theory united byIslam but in fact held together by the army.
This means that Pakistan is unlikely to change. Its economy
will continue to underperform and its society will remain con-
servative. The rich will continue to hide behind high walls.
“There may be green shoots, but they are not green enough or nu-
merous enough to last,” concludes an experienced Pakistani
journalist. No wonder that many of his countrymen are placing
high hopes on the great dragon peering down from the north. 7MOVE OVER, DUBAI. Some day soon, cruise ships will dis-
gorge frolicking pensioners not by the palm-fringed Persian
Gulf but on the balmy Pakistan Riviera. From the muddydelta of
the Indus to the barren Baloch coast, a twinkling constellation of
attractions is set to rise: luxury hotels, water parks, golf courses,
health spas, yacht harbours, night clubs, the works. To top it all,
this “vacation product” will be developed in such a way that “Is-
lamic culture, historical culture, folk culture and marine culture
shall all be integrated.”
Or so promises a prospectus, drafted for the Chinese gov-
ernment by the China Development Bank, that sets out a de-
tailed vision of the China-Pakistan Economic Corridor (CPEC).
Billed as a flagship of China’s $900bn One Belt, One Road initia-
tive to build an Asia-wide infrastructure system tying China
more firmly to its markets, CPECpromises to inject some $60bn
of Chinese investment into Pakistan. More than half is ear-
marked for power generation, but there is plenty left over for
roads, seaports, airports, fibre-optic cables, cement factories,
agro-industry and tourism.
For a country that has struggled to nudge its capital-invest-
ment ratio to 15% ofGDP—compared with around 30% for India
and 28% for Bangladesh in recent years—this gush of Chinese
money comes as a godsend. Not only does it promise to energise
the economy and fix such problems as chronic power shortages;
it represents a strategic insurance policy against India. China has
long been Pakistan’s chief arms supplier, and has quietly provid-
ed diplomatic cover and technical aid for its nuclear programme.
As Chinese officials are fond of saying, China is an “all-weather
friend”—unlike America, which has lavished some $78bn in eco-
nomic and military aid on Pakistan since independence, but per-
iodically gets stingy when Islamabad fails to curb terrorists.
Yet when Dawn, a Karachi daily, published excerpts from
the CPECplan in May, many Pakistanis were perturbed by what
they read. Among other things, the plan envisages a big role in
Pakistan’s agriculture for the Xinjiang Production and Construc-
tion Corps (XPCC), an arm of China’s defence ministry that since
the 1950s has spearheaded the settlement of Han Chinese in the
western border region. It is administratively autonomous, run-ning whole cities as well asgiant farms and industries, and is re-
sponsible for about 3m people, organised in army-style units.
Military training comes in handy when Xinjiang’s Muslim Turk-
ic-speaking Uighur natives grow restless. “There is a hue and cry
here when some town in Switzerland limitsthe size of minarets,
but not a peep when China bans Muslim names, or limits the
length of beards in Xinjiang,” notes a Pakistani journalist.Mega megawatts
With solar power now cheaper than coal and gas, ques-
tions have been raised about China’s gung-ho investment in tra-
ditional thermal plants. Two 1,100MWnuclear reactors that Chi-
nese engineers are building west of Karachi have raised
environmental concerns. The giant seaside complex is just 30km
from the centre of one of the world’s biggest and most densely
populated cities. This particular reactor design has never been
built on such a scale, and the power plants happen to sit atop the
Makran Trench, a major faultline prone to severe earthquakes. In
November 1945 a tsunami struck the coast nearby, washing away
4,000 people.
Factory owners are already complaining that a free-trade
deal with China signed in 2007 has made their goods uncompet-
itive, and now economists fear that Pakistan may be mortgaging
its future to Chinese finance. Other recipients of Chinese aid,
such as Sri Lanka, have found themselves struggling to service
their debts. “Whether those billions come in loans orFDI, the
outflow will start within four or five years of the inflow,” says
Kaiser Bengali, a Karachi-based development economist. “It’s a
blueprint as clear ascan be for colonisation.”
Pakistani officials scoff at such qualms. The document
leaked byDawndates from 2015 and has since been revised, says
Ahsan Iqbal, the planning minister; and the Karachi nuclear
power station is being built to stringent safety standards. “Those
clubs and casinos are not happening,” says Miftah Ismail, the in-
vestment minister. “And we are notjust going to hand over land
to the Chinese.”
India views China’s spreading footprints next door with
dismay. Officials put on a brave face. The Chinese are naive, say
some, and will end up getting stung by Pakistan’s generals just as
the Americans did. Others hope that once China discovers how
far Pakistan’sdeep state is entwined with Islamist radical groups,
it will show less patience than the Americans.
Privately, however, Indian officials worry that Pakistan’s
new patron may play the same role as America once inadver-
tently did, or as Pakistan’s nuclear deterrent still does: to allowChinaOne Lifebelt, One Road
A leg-up from Pakistan’s all-weather friendLand route
“One Belt”China-
PakistanSea route
“One Road”
Malacca
StraitINDIAN OCEANSouth
China
SeaBeijingTehranMombasaKolkataMumbaiKarachiSingaporeColomboDjiboutiGuangzhouChongqingFuzhouXi’anUrumqi
KashgarDubai GwadarIstanbul BishkekHI
MA
LAYASArabian
SeaSuez
CanalEconomic corridors as planned by ChinaLandChina-Pakistan
SeaSources: Reuters; Digital Silk
Road Project; Project Cargo
Network; The Economist 1,500 km