The China-Pakistan Economic Corridor (CPEC) 2.0: An opportunity for Climate Diplomacy or a Debt-Trap for Pakistan?

China-Pakistan Economic Corridor (CPEC) is one of the most ambitious and popular projects of Pakistan. It is a part of China s’ Belt and Road Initiative (BRI), was introduced in 2013 and it promised to transform Pakistan into a regional trade hub, boost its economy and fix long stand infrastructure issues. After ten years CPEC stands at a turning point with its potential which is still very much alive, but it is not without challenges. Along with hopes there are many arguments and controversies associated with this game changer project. After its first phase, now CPEC 2.0 is back but not without questions; i.e. where it stands today? what it will mean for Pakistan? and where it might be headed?

What has been done in the last 10 Years of CPEC Project?

China-Pakistan Economic Corridor (CPEC) has completed a decade of some mixed achievements. It has undoubtedly made some big achievements in Pakistan s’ economic landscape, energy security and infrastructure for example Karachi to Lahore Motorway, the expansion of Gwadar Port, special economic zones and Pakistan’s first solar power plant which improved connectivity and the addition of megawatts to power grid which has helped Pakistan to tackle the issue of electricity shortage. These kinds of developments highlight the potential of project to create some positive changes.

Alongside developments it made, there are concerns also. The heavy focus of coal-fired power plants during its 1^st phase has raised some alarming questions about the environmental protection especially in a country which is in the list of most vulnerable countries to climate change issues. While the CPEC 2.0 s’ focus on renewable energy projects is a step in the right direction but still it is not clear if Pakistan will be able to achieve its clean energy target by 2030. Another big concern is the uneven distribution of the benefits of this project because it is prioritizing some regions like Gwadar while some regions feel left behind.

CPEC and Geopolitics

The strategic importance of this project has attracted the attention of global powers but not always in the positive way. For Pakistan the corridor offers a great opportunity to deepen its ties with China and position itself as a key trade player in the region. Especially the development of Gwadar Port has the potential to turn Pakistan s’ southwestern region into an economic gateway. But this geopolitical importance also brings external pressures. For example, India strongly opposes CPEC seeing it as a threat to its interests and has even supported separatist movements in Balochistan where Gwadar port is located. Meanwhile Pakistan s’ growing relations with China has complicated its ties with the other global powers, making its foreign policy a bit more of a balancing act.

Internal Challenges

CPEC is not only facing external challenges but also facing the significant internal challenges as well. Despite potential projects and partnerships, the political instability, governance issues and lack of institutional capacity in the country has slowed down the progress. For example, the energy sector of Pakistan is burdened by a massive circular debt which is projected to be reach by $25 billion by 2025. These kinds of deeply rooted issues cannot be solved by CPEC alone and they continue to hamper the full realization of the potential of the project. Balochistan which is a home to Gwadar port adds another complex layer in the challenges. Many of the local residents feel that with development of CPEC they are being marginalized and they fear that this development will lead to demographic changes which they do not want. This in turn contributed to the ongoing conflicts that threaten the security of CPEC. Addressing these concerns of local communities and engaging them through inclusive policies will be important for the long-term success of CPEC.

CPEC 2.0: A New Hope for Pakistan?

This new phase of CPEC which is called CPEC 2.0 represents a fresh opportunity for Pakistan. It shifts the focus from infrastructure building to improving the socio-economic conditions of the people of Pakistan. Following key priorities should be the main focus for phase CPEC 2.0:

Human Capital Development: Pakistan lags behind in education and workforce participation as compared to its regional neighbours. Training programs and skill development initiatives are needed to ensure the people of Pakistan can benefit from the jobs and opportunities that will arise from special economic zones.

Rural Connectivity: Rural areas of Pakistan feel left behind from these projects so expanding the road network to connect the rural areas with key economic hubs is essential for ensuring that all parts of country get benefit from CPEC. If the rural and urban divide will continue then many regions will miss opportunities created by these massive projects.

Institutional Reforms: In order to make this mega project successful, then Pakistan must improve its political stability, governance and regulatory environment first. Attracting foreign investments and ensuring smooth execution of the projects is only going to happen if there are strong institutions in place to support these efforts.

Conclusion

CPEC is actually neither a perfect solution as its supporters hopes for or nor it is a debt trap as its critics claim. For Pakistan the key to success lies in using CPEC as an opportunity for broader economic reforms and institutional improvements. If Pakistan wants to fully benefit from CPEC Pakistan must prioritize its own national interests and long-term sustainable development as these geopolitical tensions regarding the projects are not going to disappear anytime soon. As CPEC is now moving into its second decade, it is the time for it to evolve from a project which is focused on infrastructure to the one that enhances growth and regional cooperation. This is a chance for Pakistan to modernize its economy and improve lives of its people. Whether it will fall short or succeed depends on the decisions Pakistan makes today. If managed effectively it can unlock new avenues for Pakistan in global climate diplomacy and economic development.