Almost 30 heads of state will gather in Beijing this weekend for the “Belt and Road” Forum, the annual conference about the Chinese mega-project to build highways and railroads to the farthest parts of the Eurasian land mass. By some measures, it’s China’s biggest diplomatic event of the year. But the United States and many of its allies will send junior delegations — and India will be conspicuously absent. This reflects caution, if not outright apprehension, about the overall Belt and Road Initiative, and in particular the $50 billion “flagship” portion called the China-Pakistan Economic Corridor, or CPEC.
While CPEC reveals China’s model for geopolitical influence, U.S. policymakers need not overreact nor feel compelled to counter it. There are essentially two possible outcomes: success or failure. Either could advance or create opportunities for the United States.
The apprehension turns on worries that CPEC may increase support of Pakistan’s civil nuclear program, help China expand its naval presence in the Indian Ocean, and generally undermine south Asian stability by emboldening Islamabad to aggressive behavior or even fostering a “quiet cold war” in India-China relations.
Another concern is that CPEC may provide cover for building up Pakistan’s dual-use seaport of Gwadar to support Chinese naval operations. Yet astute analysts point out that China remains a long way from fulfilling such power-projection ambitions, and that its lines of communication to the Indian Ocean can be held at risk by the U.S. and Indian navies. Moreover, a base at Gwadar would not solve China’s Strait of Malacca dilemma, as it remains vulnerable to a blockade or land chokepoints that could be threatened; facilitate much in the way of anti-access and area-denial efforts; nor allow the stalking of Indian second-strike nuclear submarines.
But if CPEC succeeds — that is, helps Pakistan meet its energy, commerce, and economic growth projections — the resulting prosperity will help Islamabad face challenges such as a youth bulge, climate change, unemployment, radicalization, and the need to upgrade social services. It will also show, for the first time in a country that associates better economic stewardship with military dictatorship, that serious economic growth can happen under civilian leaders. All this would increase Pakistan’s stability, increasing in turn the prospects for a stable region, a core U.S. interest.
And while some worry that CPEC investments will embolden Pakistan, this kind of international economic engagement may incentivize more risk-averse and responsible behavior. CPEC-related growth depends on foreign investors who may shy away from a country where terrorist organizations operate and cross-border conflicts routinely flare up. One of the quietest periods along the disputed Line of Control — 2004 to 2007 — coincided with Pakistan’s highest economic growth rates in three decades. Some even credit Pakistan’s recent house arrest of Lashkar-e-Taiba leader Hafiz Saeed to threats by the Financial Action Task Force that would have exposed major deficiencies on terror financing and sent worrying signals to the markets.
Finally, deeper investments in Pakistan would increase China’s influence but also its exposure and sensitivity to risky behavior by Islamabad. If thousands of Chinese workers living in and traveling to Pakistan are exposed to terrorist threats, it could finally motivate Beijing to press Islamabad to demobilize such groups. One hint of this was last fall’s leaked account of Chinese leaders beginning to question their Pakistani counterparts on the prudence of providing cover for the Jaish-e-Mohammad group.
A secondary effect of CPEC success is that it could motivate India to compete more actively for regional influence. It might, for example, catalyze reforms to defense budgeting, procurement, and joint operations. It could also propel greater cooperation with smaller neighbors and greater U.S.-India cooperation through foundational agreements and joint patrols with the U.S. Navy. These Indian responses would advance our Asia strategy by enhancing geopolitical pluralism and balancing Chinese influence.
And what if CPEC fails — that is, does not live up to “much-hyped” expectations of economic gains for Pakistan and strategic returns for China? This still presents certain opportunities for the United States.
CPEC is fundamentally a bundle of loans, the most recent of which sent $1.2 billion to Pakistan to prevent a foreign-exchange crisis. Failure may ensnare Pakistan in the “China debt trap,” unable to repay loans and forced to hand over equity. The resulting friction could render Pakistan more cooperative with the United States. Beyond Pakistan, other small and medium-sized states could become warier of Chinese investment. This in turn would make India and Japan more competitive as an alternative regional source of development.
Chances are CPEC will result in both some success and shortcomings. If approached in a dispassionate manner and deftly managed by American strategists and diplomats, any of the outcomes can be turned to U.S. advantage.