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In debt and out of favour, Pakistan is struggling to patch up relations with China

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Pakistani Prime Minister Shahbaz Sharif speaks to reporters in Islamabad, Pakistan, on June 14. Photo: Xinhua

After Saudi Arabia, China is the second country that every new Pakistani leader visits soon after taking charge. These inaugural trips are goodwill gestures that, in the past few years, have assumed added significance due Pakistan’s growing economic dependence on its close friends and allies.

Against this backdrop, the unusual delay in Prime Minister Shahbaz Sharif’s visit to China points to strained bilateral relations, even though China has announced another rollover of its US$2.3 billion loan to shore up Pakistan’s depleting forex reserves.

Since Sharif assumed office, the Pakistani army chief General Qamar Javed Bajwa has visited China, while Yang Jiechi, China’s top diplomat, visited Pakistan, both in an effort to reinvigorate ties.

So, what accounts for the delay in Sharif’s own visit to China? According to some officials, the Covid-19 lockdown in Beijing is to blame; Sharif is likely to visit as soon as restrictions are lifted. This is necessary, but not a sufficient explanation.

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China’s top diplomat Yang Jiechi (left) meets Pakistani Prime Minister Shahbaz Sharif in Islamabad on June 29. Photo: Xinhua

China-Pakistan ties have taken a downturn since the Majeed Brigade, the separatist Baloch Liberation Army (BLA)’s suicide squad, targeted and killed three Chinese nationals working at the University of Karachi’s Confucius Institute. In the past two years, attacks on Chinese nationals and projects have risen steadily in Balochistan province and in Karachi, Pakistan’s largest city, raising fears about their safety.

During his recent visit to China, General Bajwa promised to enhance the security of the China-Pakistan Economic Corridor (CPEC) and other infrastructure projects.

China has urged Pakistan to complete its investigation into the Karachi University attack and bring the perpetrators to justice. On July 5, Karachi police claimed to have arrested the attack mastermind, helping to break the BLA’s network in the city. However, Beijing expects Pakistan to do more.

Thanking Islamabad for the arrest, Chinese Foreign Ministry spokesman Zhao Lijian expressed hope that Pakistan would “continue to make every effort to seek the truth, severely punish the perpetrators, resolutely crack down on the terrorist organisations involved in the case and ensure the safety of Chinese personnel and institutions in Pakistan”.

Though the BLA has been banned by Pakistan’s interior ministry, China is pushing for the Majeed Brigade to be placed on the United Nations Security Council’s 1267 Terrorism Sanction List.

Unfortunately, the current state of China-Pakistan ties starkly resembles post-September 11 US-Pakistan ties, with terrorism at the top of the agenda and Islamabad being pressured to do more. China is also demanding financial compensation for the Karachi attack victims.

More importantly, Beijing has asked Islamabad to allow private Chinese companies to provide security to Chinese projects and nationals in Pakistan. This request has caused a deadlock as Pakistan is not ready to allow private security companies on its soil, believing it will reflect poorly on the country’s law enforcement capabilities.

Furthermore, Islamabad considers the move a precursor to the placing of a People Liberation Army unit on Pakistani soil, which would vindicate Western and Indian propaganda that the CPEC is a strategic project, not an economic one, and that China and Pakistan are teaming up for a two-front war against India.

Also looming over bilateral ties and Sharif’s China visit are the long overdue payments to China’s independent power producers (IPPs). Pakistan owes Rs300 billion (US$1.59 billion) to Chinese IPPs. The International Monetary Fund, from which Pakistan is seeking a bailout package, has objected to these fees.

The IMF urged Pakistan to renegotiate the Chinese IPPs’ terms of agreement under the country’s 1994 and 2002 power policies to bring their financial compensation on a par with other power providers in Pakistan.

In retaliation, the Chinese firms have threatened to stop their work in Pakistan. China maintains that the agreements with its IPPs were under the CPEC framework and any potential Pakistan-IMF deal should not affect them.

China has also not been very forthcoming to Sharif given the uncertainty surrounding the future of his government and the current lame-duck status of General Bajwa, who will retire in November. China will continue its wait-and-see policy while Sharif works overtime to address Chinese concerns. It will certainly be a while before China-Pakistan ties are back on track.

Abdul Basit is a research fellow at the S. Rajaratnam School of International Studies, Singapore