Zero scope for repeating past mistakes in present economic battles
From its infancy, Quaid-i-Azam’s Pakistan has been trapped in a liar’s paradox: A lot is professed to have been achieved, yet the country keeps sinking lower and lower into conundrums. Policies constantly drag out irrational outcomes, and the jury is still out whether these outcomes are deliberate or accidental. After all, governments are of the people, by the people and for the people. But what is obvious is that we ignore the market-driven approach to the improvement of the national economy and want someone else to do our homework.
For the longest time, we’ve looked to the West for solutions. Yet with the obvious success of the Chinese model for economic growth, it’s time to accept that the West is not the ultimate authority on the right approach. We should take with a grain of salt western views on CPEC, with its infrastructure financing/investment, debt traps and delayed results, regardless who is to blame for those. CPEC was designed as a modern version of the greatest trade corridor in history, the Silk Road, and its full impact is oftentimes hard to grasp.
Likewise, the West either misunderstands or intentionally misinterprets CPEC’s framework program, the Belt and Road Initiative (BRI). While BRI was designed to deliver economic benefits for China, partner countries are expected to benefit from infrastructure development. If a partner country fails to capitalise on the new infrastructure and the access to the Chinese economy, it’s not surprising if it falls into a debt trap.
Sri Lanka is a textbook example of BRI’s misuse where the Sri Lankan government designed projects that were not financially viable. After all, if your PSDP envisions a program and it goes wrong, you cannot label it a trap by the lending country. Interestingly, most of the stories also forget that China is only the third largest lender to Sri Lanka. The largest lenders, the USA and Japan, also have their economic strings programmed into the Sri Lankan system. Yet, in walking the Chinese, their lending is labelled deceptive.
Pakistan is on the verge of a similar predicament. The West sought to control the economy; the establishment was trying to lap-dance. CPEC entered our economy at a critical time as a much-needed expansion tool. Claiming that public energy, transportation and infrastructure are wrong areas to finance is nothing short of deliberate misinformation.
Now, whoever came to my door with a relief package and told me to withdraw incentives in Special Economic Zones, sell profitable state assets, reduce incentives for new investment in SIFC, curb agricultural subsidies, and increase taxation on the salaried class, is simply mocking me. Yet I have no choice but to fall for this scheme again, along with its secretive contracts and associated policies driven by political motives.
The West will continue to do our homework, even as we keep sinking into its debt traps (and rightfully so, as we are offering it to walk all over us). But we’re also at the crossroads with the Chinese. So far, we haven’t been able to capitalise on the increased access to China’s economy under CPEC. It is a tough rope to walk on, and may soon become a noose around our neck. The BRI project tenure is nearing its end; we are entering the last five years of what was designed as a four-phase program – yet we are just starting Phase 2.
The Chinese are offering some guidance, but it is up to us to do our homework. The Planning Commission must undertake a major restructuring to implement a very strong market-access initiative within the remaining time frame for Pakistan to join China’s supply chains. The Planning Commission must develop a comprehensive and elaborate wing to engage the 764 Chambers of Commerce, Industries, Mining & Commodities of PRC. It is a manageable task, but it requires vision and leadership.
The Chinese will accomplish their goals with us or without us. It is up to us to grasp their paradigm and capitalise on the opportunities it creates. Whoever harnesses this paradigm for our country’s benefit, will go down in Pakistan’s history as the nation’s saviour.
