The news is in: Pakistan has just been taken over

China’s strategy of economic colonisation of its regional neighbours has just been laid bare

Gwadar Port in Balochistan … in southern Pakistan, rather

… A restaurant owner is visited by representatives of a certain organisation that wishes to invest in his business. This is an offer he cannot refuse. Soon the “investors” are there every day, walking out sides of meat and crates of wine and liquor through the back door while the owner frets and worries about his vanishing profits. Eventually, when there is nothing left to take, the investors burn down the premises for the insurance money. Hence the old joke: “Sorry to hear about the fire, Lenny.” “Shh! Tomorrow.”

Well, it appears a “restaurant” that we might call “The Taste of Lahore”, or something similar, perhaps “The Karachi Grill” or “Memories of Rawalpindi”, has just been invested in by a certain powerful organisation. Let’s see whether anything is being walked out the back door, and whether there are any suspicious jerry cans of gasoline stacked in the alley out back.

We all know by now about China’s charitable and selfless “Belt and Road Intitiative” (BRI), the Silk Road du jour that is to unite the eastern side of the globe in prosperity and economic brotherhood. Apparently it’s a $10 trillion too-hot-to-miss opportunity (“The $10 Trillion Investment Plan to Integrate the Eurasian Supercontinent”).

Who could afford to turn it down?

Certainly not the Pakistanis, or should I say certain Pakistanis. I’ve written before about the generous Chi-Coms (I use this term purposely to exclude ordinary Chinese citizens suffering at the hands of their one-party State). The Chi-Coms are apparently interested only in amity, and are happy to advance huge sums of money to their regional neighbours, enabling them to complete major infrastructure projects that will allow these countries to share in the forthcoming bonanza of wealth the BRI promises. But it seems (gasp!) that the Chi-Coms are also happy (beaming, nodding) to place their neighbours deep in debt at ruinous rates of interest and scandalously unequal terms of trade.

But that’s just me being negative, I’m sure. Or at least I thought it was until last week, when the actual terms of China’s development investment in the massive Gwadar port were published. Or perhaps one should rather say that the details were at last wrenched from the reluctant grasp of the politicians and bureaucrats of “The Taste of Lahore” who had secretly agreed them with the Chi-Coms.

It apparently led to uproar in the toothless Pakistani parliament.

The “China Overseas Port Holding Company” (COPHC—but the good old Communist Party of China, or CPC, to you and me) will take a massive 91% share in gross revenues from Gwadar port, in southern Pakistan (soon to be in independent Balochistan, but let’s not go there just now …). It will also take 85% from the surrounding “free zone,” under a 40-year deal finalized by Pakistani authorities (those certain Pakistanis), reveals F M Shakil writing in the Asia Times. And why not, since if the port wasn’t there, neither would  the economic development in the surrounding area, correcto?

Of course it would be indelicate to ask the related question: that if Pakistan had not allowed in the Chinese, there would be no Gwadar port and a much skinnier BRI, so why not a fairer split more nearly approaching 50/50? Ah—not with this kind of organisation, remember?

The problem for Pakistan was that it grabbed—sorry, accepted—$16 bilion in loans from the Chi-Coms to develop the port, as part of the (total $56 billion Chi-Com-funded) China-Pakistan Economic Corridor (CPEC), the northern section of which runs illegally through Indian territory and is pretty much doomed long-term—but let’s not go there just now …

Being suddenly so fabulously deep in debt to the Chinese, and with a shrinking, terrorist-led “economy”, Pakistan was in a pretty weak bargaining position, which is maybe why in addition to giving up 90% of the profits from Gwadar, Pakistan is also paying a 16% coupon on those $16 billions. That’s some mighty expensive credit card, right there.

Minister for Maritime Affairs Mir Hasil Bizenjo, speaking in the Pakistan Senate, described, or finally came clean about, how the Chi-Coms will operate the port for the next forty years. It’s called a build-operate-transfer (BOT) agreement. Basically it makes Gwador and its environs a patch of Chinese sovereign territory in south Pakistan. Then, when all the plant is worked out and in need of overhaul and renewal four decades down the road, at last authority and financial responsibility will revert to Pakistan. If Pakistan can afford it … and if not, I daresay some typically generous terms will be on offer from the Chi-Coms once again.

It’s just beautiful—if you are Chinese; if you’re Pakistani, not so much.

Senate chairman Raza Rabbani finally “bowed to pressure from lawmakers and directed the Senate Standing Committee on CEPC to look into whether Pakistan’s national interests are undermined by financial obligations entered into via the agreement with China,” says Shakil. I wonder if they’ll find anything. Presumably the signatories to the Chi-Com deal are all, already, perfectly well rewarded and protected.

One also wonders whether under-the-table deals such as this one are being replicated in other needy neighbour territories where the Chi-Coms can walk in shaking wads of “free” (i.e. ruinously expensive) cash around. Think of all those ports, airports and railroads that countries of Asia will be on the hook for in this enormous move of industral/political colonisation and invasion.

Incidentally, Vladimir Putin is looking kindly on an offer by the Chi-Coms to “invest” in Russian roads. In this case I wouldn’t be worried that the Chinese are going to come out on top. Putin must surely be wondering what they could do if Russia sooner or later reneges on the terms of the deal. Will the Chi-Coms come and take their roads back? They would no doubt be welcome to try, heh heh.

Meanwhile in benighted Pakistan, whose future (what with Trump in the Whitehouse) looks daily more cadaverous, it also turns out that the COPHC has been granted immunity from income and sales taxes relating to Gwador for 20 years, and double that time period for “imports of equipment, material, plant, appliances and accessories for port and special economic zone.”

It really is nothing less than a licence for the Chinese to print money at Pakistan’s expense. Poor Pakistan. Actually, no: it’s hard to have any sympathy, to be honest.

Pakistan and China: India’s strategic challenge in 2017

Examining the tactics India can use to turn the tables on its less-than-all-powerful tormentors

Look at a map of South Asia. I’ve said before that China’s unappealing wingmen are Pakistan and North Korea but luckily North Korea has shown no interest in India, lying as it does to the far east of the Middle Kingdom. China, though, right on top of India, is a threatening presence, while also shaking a fist at all the other countries in its neighbourhood, such as Vietnam and the Phillipines, as the People’s Republic throws its weight around the region. Pakistan is its enthusiastic henchman where India is concerned.

China’s strategy for regional –hemispheric? – domination consists of several elements. Forget for now its economy: nearly all growth in China today and tomorrow is debt-fuelled and will deplete wealth in the long run (Michael Pettis has done the calculations here). In fact it’s exactly because China’s real economic growth is grinding to a halt and its debt load reaching nose-bleed levels that expansion and power must now be projected by additional, alternative means.

Continue reading “Pakistan and China: India’s strategic challenge in 2017”

Turning the screw on Pakistan

Modi and Doval ensure that Pakistan’s villainy is at last being internationalised.

If India seems to have an unusual affinity with Israel – they increasingly share trade and technology links and so on – it might partly be because their recent histories are oddly similar.

Both had the experience of declaring statehood as secular democracies at roughly the same time (India in 1947, Israel in 1948).

Then, immediately afterwards, both were attacked by Islamic neighbours: India by Pakistan; Israel by Egypt, Jordan, Syria and whoever else had a hammer. Israel was again attacked by Muslim neighbours in 1967 (the Six-Day War) and yet again in 1973 (the Yom Kippur War). Stridently Islamic Pakistan attacked India again in 1965 and yet again in 1971.

Continue reading “Turning the screw on Pakistan”