Article authored by Tridivesh Singh Maini on "On CPEC, India Should Be Tough but Not Rigid" - IPP Review

April 04, 2017 | Prof. Tridivesh Singh Maini

Over the past year, India’s ties with China have witnessed a downward spiral despite New Delhi’s earnest efforts towards improving the relationship. Some of the key reasons for the relationship going downhill are: China’s steadfast opposition to India’s entry into the Nuclear Suppliers Group; Beijing’s decision to block a resolution at the UN which would designate the Jaish-E-Mohammed chief Masood Azhar as a terrorist; and of course, the ambitious China-Pakistan Economic Corridor (CPEC) project.

Chinese President Xi Jinping’s meeting with Indian Prime Minister Narendra Modi on the sidelines of the BRICS Summit in Goa in November 2016, and Indian Foreign Secretary S. Jaishankar’s recent visit to China in connection with the bilateral strategic dialogue, have played positive roles in reducing tensions. China’s reactions to the Dalai Lama’s visit to Arunachal Pradesh, and India’s decision to construct a railway line to Tawang, have both evoked strong responses from China.
 
India’s key challenge is to come up with a rational response to CPEC, and not allow any one strand to influence its approach towards this rather ambitious project, which seeks to connect Kashgar in Xinjiang with Gwadar in Balochistan. CPEC is an important component of China’s One Belt One Road (OBOR) strategy and has been dubbed by many as a gamechanger for the Pakistani economy.
 
What Have Been India’s Key Responses to CPEC?
 
Initially, the Indian government was guarded in its response to CPEC. India did lodge a protest against the project, since it passed through the disputed territory of Gilgit and Baltistan, which is referred to by India as Pakistan Occupied Kashmir (POK). During his recent visit to China and on a number of other occasions, India’s Foreign Secretary has raised this issue. PM Modi has also expressed India’s concerns regarding CPEC during his meetings with President Xi, including their meeting on the sidelines of the BRICS Summit in October 2016.
 
While New Delhi may be skeptical, sections within the Indian strategic community fervently believe that India does not have the capacity to stop the project, and hence should not be averse to joining it. Alok Ranjan in an Occasional Paper for the Institute of China Studies, “The China-Pakistan Economic Corridor: India’s options” (May 2015), has argued that India should seek to utilize some of its existing land crossings, including the Wagah-Attari border, for enhancing not just bilateral economic activity, but also for creating economic corridors which can in turn become part of the broader CPEC project. Interestingly, Beijing has alluded to the same on more than one occasion. Chinese Ambassador Le Yucheng, during a visit to the border town of Amritsar in Punjab, India in March 2015, had spoken about extending the project into India via the Wagah-Attari trade route.
 
Recently, the Chief Minister of Jammu and Kashmir, Mehbooba Mufti Sayeed, also spoke in favor of India joining CPEC. Sayeed, who is the President of the People’s Democratic Party (PDP) and is an ally of the BJP, said: “Jammu and Kashmir could become a corridor of economic activity in the region, and the country could take huge benefit of the economic activities going on across the Line of Control. Why can’t we be partners in economic growth and share the benefits of projects like the CPEC?”
 
To assume that there is any one monolithic view with regard to CPEC in India, or a straitjacketed approach, is thus naïve. However, with the ever-increasing tensions between India and Pakistan, as well as the strains with Beijing since the past year, India’s participation in CPEC seems a pipe dream, at least in the near future, for the following reasons:
 
First, as discussed earlier, CPEC passes through disputed territory, and China has been pressurizing Pakistan to include Gilgit and Baltistan as Pakistan’s fifth province. This is unacceptable to India, since Gilgit and Baltistan borders the disputed territory of POK.
 
Second, India-Pakistan ties have worsened over the past year, with Islamabad lending support to separatist elements in Kashmir and not taking adequate action against terrorist groups which specifically target India.
 
Third, Pakistan itself has not granted India Most Favored Nation (MFN) status, even though there has been talk of the same since 2013. India had granted Pakistan MFN status in 1996.
 
Finally, Pakistan has refused to make India part of the Afghanistan-Pakistan Trade and Transit Agreement (APTTA). Currently, Afghan goods can enter India through the Wagah border, but trucks are not allowed to enter the Indian check point at Attari. India cannot export goods to Afghanistan via the Wagah border.
 
Criticism within Pakistan
 
It would be pertinent to point out that it is not just India, but a number of domestic constituencies in Pakistan as well which oppose CPEC, and a number of analysts feel that CPEC only benefits China. Khurram Hussain in an article, “CPEC enclaves” (March 9, 2017) for Dawn points out that only Chinese investors are allowed in the Special Economic Zones:
 
“Perhaps it would be a better idea to allow access to investors of all types to these Special Economic Zones and, if that is not the case, the government should explain why they thought it was a good idea to sign agreements for special zones to which only Chinese investors will have access. How is this expected to help Pakistan?”
 
Pakistani provinces apart from Punjab have also expressed their reservations, and dubbed CPEC as a Punjabi project. At a meeting of the Senate Standing Committee on Communication, Committee Chairman Senator Daud Khan Achakzai went to the extent of saying, “It is, in fact, the China-Punjab Economic Corridor, because it will mainly benefit Punjab and not the other provinces.”
 
The first step India needs to take is to show greater urgency in the implementation of projects like Chabahar Port, and send the message that it has the ability to implement ambitious projects.
 
The ruling PML-N has always been accused of being biased towards Punjab, and while there are varying estimates of the number of CPEC projects to be allocated to each province, as of September 2016, well over half of the projects (176/330) were allocated to Punjab. Another interesting aspect of CPEC is that while China has refused to disclose the exact amount invested in the project, Islamabad from day one has bandied about the number, USD 46 billion.
 
Domestic opposition to the project does India no harm, as many of these constituencies have also pitched for better ties with India, and lesser dependence on China. Analysts who are against CPEC point to the example of neighbors which have borne the brunt of excessive dependence upon China, and others like Bangladesh which have sought to balance the relationship between both countries.
 
The above points in no way imply that India can stop CPEC. Neither should India expect any of its friendly countries to totally ignore CPEC. Recently, even Afghanistan, a friendly country, has lauded CPEC. Iran too has spoken about participation in CPEC, with Iranian Ambassador Mehdi Honardoost stating during the Oxbridge Lecture in Islamabad: “Iran is eager to join CPEC with its full capabilities, possibilities and abilities.” During PM Modi’s visit to Iran in May 2016, an agreement was signed to enhance trilateral connectivity, and India also signed an agreement for the development of Chabahar, which according to many is a counter to Gwadar. If Iran and Afghanistan are open to CPEC, they obviously do not view Chabahar as a zero-sum game.
 
It is not just neighbors but the international community too which is likely to welcome CPEC. Only recently, the United Nations Security Council mentioned the OBOR in a resolution: “strengthen the process of regional economic cooperation, including measures to facilitate regional connectivity, trade and transit, including through regional development initiatives such as the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (the Belt and Road) Initiative.”
 
The Need for a Pragmatic Approach
 
India has full rights to raise its objections at international forums, but this is no way implies that other countries, including friendly ones, will back India’s stand.
 
The first step India needs to take is to show greater urgency in the implementation of projects like Chabahar Port, and send the message that it has the ability to implement ambitious projects.
 
Second, differences over CPEC should not distract India from some of the possible benefits of OBOR, especially the BCIM (Bangladesh, China, India and Myanmar) Economic Corridor. In the past, India’s obsession with its Western border has prevented it from making progress on its Eastern side. India should make it clear to China however, that BCIM can only be a reality if it genuinely addresses New Delhi’s concerns not just pertaining to CPEC, but also terrorism emanating from Pakistan soil.
 
In the East, too, India should seek to strengthen further ties with Bangladesh. The USD 4.5 billion line of credit extended to Bangladesh, for connectivity and infrastructure related projects, during Bangladeshi Prime Minister Sheikh Hasina’s recent India visit is a positive sign, and shows that Bangladesh too has realized that while India’s financial aid may not be as large in ‘volume’ as that of China’s, the terms and conditions are far friendlier than those of Beijing.
 
Third, while it is true that under the leadership of President Xi, India has been hyphenated with Pakistan once again, India should make continuous efforts to de-hyphenate the relationship. India’s bilateral trade with China, which is estimated at USD 70 billion, albeit with the balance of trade being skewed in favor of China, is a strong reminder of how the relationship has moved ahead. One strong example of the growing India-China economic relationship is that India has emerged as amongst the largest markets for Xiaomi, which has sales of over USD 1 billion. Xiaomi has also emerged as the 2nd biggest smartphone brand in India, with a market share of 10 percent during the 4th quarter of 2016. A number of Indian states too are reaching out to partner with Chinese provinces.
 
In conclusion, New Delhi should ensure that strains with Islamabad and Beijing do not distract it from its larger goal of economic connectivity and economic growth on its Eastern as well as Western side. China however needs to realize that India cannot be blackmailed into joining CPEC. Beijing will need to make Islamabad fall in line and take action against terrorist groups. China would also do well to stop hyphenating New Delhi with Islamabad. While most South Asian countries are dependent upon China, they are no longer willing to be part of an “anti-India” club led by Islamabad.