Don’t Take the Bait: Why Alarmism Over CPEC is Unjustified

Pakistan has called its relationship with China “sweeter than honey and stronger than steel.” Recently, the China Pakistan Economic Corridor (CPEC) has dominated the relationship between the two powers, totaling $62 billion of investment from Beijing. Aimed at increasing trade and building Pakistani infrastructure, CPEC is a series of development projects in Pakistan that includes the expansion of the Gwadar port, transportation corridors, and energy infrastructure. CPEC’s apparent convergence of Chinese and Pakistani interests has not fallen upon deaf ears; security experts in the U.S. and India have voiced concern over China’s interest in developing Pakistan.. But the impacts of CPEC are largely overstated, and the situation provides American policymakers a valuable opportunity to reevaluate their strategy in the region. Rather than succumb to alarmism and double down on American commitments to Pakistan to combat the threat of Chinese expansionism, US policymakers should approach CPEC with level heads and caution.


The dream of an economic corridor between China’s isolated Western provinces and Pakistan’s ports had been romanticized since the 1990s, but not agreed upon until 2015. The final agreement included upgrades to the Karakorum Highway that links Pakistan to China, major enhancements to Pakistan’s rail system, and large energy plants aimed at reducing Pakistan’s perpetual energy shortages.


Major players in the region, especially India, have met CPEC with a great deal of skepticism. Understandably, there is a worry that China’s is hiding its regional power aspirations behind the veil of economic development. CPEC cuts through Pakistan-occupied Kashmir, which prompted India to announce, “no country can accept a project that ignores its core concerns on sovereignty and territorial integrity.” In Delhi, many see CPEC as the collaboration between two regional rivals in order to establish a balance of power that excludes India.


India and the United States have worried about China’s influence in Pakistan. In the past, Pakistan’s collaboration with China manifested itself in weapons shipments, diplomatic cover, and even technical assistance by Beijing for Islamabad’s nuclear weapon’s program. Siegfried Wolf of the University of Heidelberg wrote that, “these new Chinese investments could boost Pakistan's economy but at the same time it will also create dependency…Islamabad will be expected to align its political decision making with Beijing's approach towards South Asia and beyond.” There are worries that the port in Gwadar will eventually be used to station Chinese marines, triggering the Indian fear that China is attempting to encircle the subcontinent in a “string of pearls.”


While there are areas of concern for the US and India, and China’s collaboration with Pakistan is serious, CPEC itself is unlikely to be game-changing. The supposed benefits to Pakistan from CPEC are almost certainly overstated; construction is already well behind schedule, and it is questionable that the Karakorum Highway can ever bear the massive amount of transit required to make CPEC economically profitable. Furthermore, the money for CPEC is largely financed by loans, and it is unclear if Pakistan will be in a position to pay them off. Recently, The Economist wrote that, “Unlike loans from the IMF or World Bank, some two-thirds of those taken out so far, for $28bn-worth of early projects, are on commercial terms, with interest high at around 7% a year. When these loans come due, argues Farooq Tirmizi, an emerging-markets analyst, Pakistan will need a bigger bail-out than ever before.”


CPEC and United States Aid- The Case for Less Aid


Since 9/11, the United States has given Pakistan over $20 billion in military and economic aid. Because of the centrality of aid in U.S. policy towards Pakistan, how the United States responds to CPEC must be framed in the context of the aid program.  


During the war on terror, the United States has flooded Pakistan with military aid, assuming that problems in the region stem from a lack of capacity to fight militants. In reality, Pakistan has demonstrated an unwillingness to crack down on insurgents, playing a “double game” of accepting American funds while quietly backing militants that undermine US interests. Although Pakistan claims to no longer support militant groups of any kind, the government has not acted against many armed groups that operate freely within its borders. At various times Pakistan has tolerated, supported, and even financed the Haqqani Network, the Taliban, Lashkar-e-Taiba, Hizbul Mujahadeen, and Jaish-e-Mohammed, among others.


Despite not cooperating with the U.S. military over counterinsurgency, the specter of a rising China has allowed Pakistan to continue securing American aid. In her book, Fighting to the End, Christine Fair writes that the “depiction of China as Pakistan’s all-weather friend has allowed Pakistan to wrest greater resources from the United States.” This rent seeking behavior has fostered the development of a bureaucracy within Pakistan geared towards constructing and deploying the narrative that China is Pakistan’s eternal ally which increases the likelihood of securing assistance from the US to combat Chinese influence. A lack of expertise and a desire to combat Chinese expansionism at every turn has left the U.S. government susceptible to Pakistani leverage over assistance.


Fears of Chinese cooperation with Pakistan are implicitly part of any discussion of CPEC. Pakistan’s rhetoric about Chinese friendship and cooperation being ‘stronger than steel’ presents CPEC as the beginning of a greater role for China in Pakistan. At the same, CPEC has been pedaled as the next step of Chinese expansionism in South Asia.


In reality, CPEC is unlikely to cause Pakistan to lose interest in U.S. aid. Pakistan is loaned, not given, money from CPEC, and potential economic gains will be felt in the far future, if at all. On the other hand, the United States never expects repayment for assistance, and includes weapons systems that the Pakistani military desperately needs. Pushing Washington away is especially prohibitive to Islamabad given recent positive developments in U.S.-India relations. Thus, the U.S. will remain an indispensable partner for Pakistan. Therefore, without real cause for alarm, giving more aid to Pakistan to make up for a perceived loss of influence due to CPEC would be a tactical mistake.


Even if American influence in Pakistan were threatened by CPEC, increasing military assistance to Pakistan in an attempt to counter Chinese regional expansion would likely be counterproductive. Patricia Sullivan of UNC conducted a review of US military assistance, concluding that, “increasing levels of U.S. military aid significantly reduce cooperative foreign policy behavior with the United States.” Simply put, the US carrot-based approach towards Pakistan does not work; deeply ingrained ties between the military and a culture of militancy makes cracking down on groups that Pakistan’s establishment has tolerated for decades unthinkable.  


Overreacting to CPEC by doubling down on aid to Pakistan would be a mistake. American money has never won Washington Islamabad’s loyalty, and CPEC is unlikely to fundamentally change the balance of power in the region. Instead, enforcing conditions on aid and investing in the development of friendlier regional partners would be more likely to preserve U.S. influence in the region. Recent steps taken by General Mattis to freeze aid over Pakistan’s support for the Haqqani Network are a good step, and may demonstrate the start of a more realistic approach towards Pakistan. Washington should be careful to not let the fear of encroaching Chinese influence lead America back into the futile effort of trying to buy the Pakistani military’s loyalty.