Pakistan has placed “blind trust” in China as the Belt and Road Initiative enters a new phase, according to Nikkei Asia.
During a visit to China’s Belt and Road Forum last week, Pakistan’s caretaker prime minister Anwaar-ul-Haq Kakar agreed on several deals, but experts warned that financial constraints and security threats could still hamper the projects.
Kakar, while meeting Chinese President Xi Jinping, described Pakistan’s partnership with the world’s No. 2 economy as “made in heaven.”
“We will always stand by China and blindly trust you,” Kakar said.
The biggest step was the agreement to start work on the long-awaited Main Line 1 (ML-1) railway project, a plan to modernize more than 1,700 kilometers of track between Karachi and Peshawar. According to Moin ul-Haq, Pakistan’s envoy to Beijing, according to Nikkei Asia, the two sides have signed 20 pacts and memorandums of understanding on several plans.
Other efforts include a $1.5 billion investment by the United Energy Group of China to boost Pakistan’s refinery capacity, along with a project to convert the Khunjerab Pass, a trade route between the neighbors that closes in winter due to snow, to all-weather operations. fringe.
Pakistan is the focus of Beijing’s Belt and Road initiative through the US$50 billion China-Pakistan Economic Corridor (CPEC). The latest deals come after the Chinese government earlier rejected proposals to expand cooperation amid concerns about the political and economic upheavals plaguing the South Asian country.
Last week, Chinese President Xi Jinping pledged to push ahead with the 10-year-old Belt and Road Initiative in general, emphasizing “small but smart” projects.
However, ML-1 is the single largest project in CPEC, although the two sides have agreed to reduce the cost to $6.7 billion from $9.9 billion. China is to lend 85 percent of the money, with Pakistan financing the rest. The railway is to be built in three phases, planned for 16 years.
Despite the latest deal, ML-1 experts aren’t holding their breath.
University of Virginia professor of global studies Muhammad Tayyab Safdar doesn’t see the work starting anytime soon. “This is not the first time such deals have been announced involving the ML-1,” he said. “The devil will be in the details.
To begin with, local media reports said that Pakistan would need approval from the International Monetary Fund to provide China with a sovereign guarantee for the ML-1 loan. Islamabad’s dwindling foreign reserves forced it to ask the IMF for $3 billion in aid earlier this year to avoid a debt default, according to Nikkei Asia.
Ikram ul-Haq, a lawyer with expertise in economics and taxation, believes that the railway is still undergoing final adjustments to plans and loan agreements. “Even US$6.7 billion will be too expensive for Pakistan to finance, considering the existing difficulties on external fronts and the conditions imposed by the IMF,” he told Nikkei Asia.
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