When you sup with the Devil you’ll need a long spoon

When you fly out of Karachi bound for London or Frankfurt you can look down at the long arc of the Makran coast leading westward towards the Gulf of Hormuz. From 30,000 feet the ships at a breaker’s yard look like tiny little toys, driven up on the beach. The landscape is Martian; a brick red wilderness, baked by a fierce, unrelenting sun. It stretches away into the haze and then, suddenly, a truly remarkable sight comes into view – the port of Gwadar. 

Extending at right angles from the coast is a colossal geological formation; a giant letter “T” with a sweeping vertical topped by a great, five-hundred-foot-high rocky summit that rises from the sea like some enormous cruiser. The formation creates two anchorages or ports, one on each side of the sandy land bridge connecting the shore to the headland. However, and despite years of development, Gwadar remains an insignificant commercial facility – more promise than reality – but it has come to symbolize an infinitely larger undertaking – the China Pakistan Economic Corridor – which also provides a detailed insight into the perilous complexity of Pakistan itself

Understanding Pakistan

Pakistan lies between India and Afghanistan. It is bounded by the Himalayas in the north and the Indian Ocean in the south. It is a principally Sunni Muslim nation. When President Zia-ul-Haq was in office in the 1980s, at the time of the Soviet invasion of Afghanistan, he promoted an increasingly conservative and intolerant form of Islam, which became entrenched as the religious norm. This process, in turn, was compounded by the presence of extremist groups that had fled Afghanistan and sought refuge primarily in the tribal areas of northwestern Pakistan. Thus, Pakistani society is deeply fissured by religious antagonism and violence today. At the same time, while Pakistan is a nominal democracy, the army, and more specifically the branch of the army known as the Inter-Services Intelligence, plays a huge role in manipulating and shaping the political discourse in an effort to ensure the security of the state.

Pakistan’s demography is arguably a ticking time bomb placing additional pressures on the government. Roughly 54 percent of Pakistanis, for example, are 24 years of age or younger. The birth rate is 3.6 per woman (a standstill birth rate would be 2.1 children per woman). According to the United Nations, in 2024, Pakistan’s population stood at 245 million people, or six times the population of Canada squeezed into British Columbia, which is also slightly larger than Pakistan in square kilometres. Furthermore, Pakistan is scheduled to be the fifth largest nation in the world, by population, at the end of the century with just over 500 million people.

Pakistan and India – Rivals and Enemies

Pakistan and India, its near neighbour to the east, have been rivals and enemies almost from the moment in 1947 when the two states were created. They have fought bitter wars and continue to contest one another’s claims in the mountainous Kashmiri region. To make matters worse, they are both nuclear weapons states. The United States curried Pakistan’s support during the Soviet occupation of Afghanistan and thereafter when the Americans were fighting the Taliban, but Washington was increasingly uncertain about Pakistan’s reliability in this effort. Indeed, it was clear that Islamabad, the Pakistani capital, was working both sides of the street, despite their denials. This only made sense from the Pakistani perspective because the Americans, by the very nature of things, would move on eventually and Islamabad would be faced with the problem of its own violent and restive terrorist elements drawing fresh inspiration and support from the Taliban. Furthermore, there was the perennial problem of India trying to outflank Pakistan by building ties with Kabul. Indeed, Pakistani paranoia runs deep and Islamabad frequently sees the dark hand of Indian intelligence agencies at work whenever there are domestic terrorist incidents in Pakistan and vice versa.

Enter China

A year after taking office as president of the People’s Republic of China (PRC) in 2012, Xi Jinping articulated a vast and ambitious scheme which has come to be known as the Belt and Road Initiative (BRI). The BRI envisaged, at its simplest, a maritime route, linking the PRC via the Indian Ocean and the Mediterranean to western Europe and a terrestrial route – with road, rail, and pipeline links – connecting China via the “Stans” of Eurasia to eastern Europe. This was a bold and historically unprecedented initiative. China had never reached out to the rest of the globe like this before. It had always been content with its Middle Kingdom status and with lesser mortals making the pilgrimage to the Chinese capital to acknowledge the emperor’s superiority in all things. Now, as authors of the world’s most dynamic economy, the Chinese saw these routes as ways of not only promoting Chinese products, but of utilizing excess industrial capacity and propagandizing about the inevitability of a Chinese-led world order.

There were, of course, geostrategic considerations that needed to be addressed as well. One which weighed particularly heavily upon their minds was the “Malacca Dilemma”. About 80 percent of China’s energy needs came by sea and most of that came from the Persian Gulf region. Tankers leaving the Gulf made their way eastward across the Indian Ocean and then, on the approach to Singapore, were obliged to transit the narrow and shallow Malacca Strait. They could, of course, avoid the Malacca Strait by taking a longer and more circuitous route around or through the Indonesian archipelago, but the Malacca Strait was infinitely more convenient.

But a larger issue was the Malacca Strait would be very easy to blockade in the event of a Sino-US war. As a result, Chinese analysts studied the globe carefully and “voila” there was the solution – running a pipeline from Kashgar in Chinese Xinjiang – one of the transit hubs on the trans-Eurasian BRI over the Himalayas to Gwadar? This would cement the relationship between China and Pakistan (as “sweet as honey”, as Xi would call it), which was a geostrategic plus since Pakistan was an enemy of China’s enemy, India. Furthermore, tankers bearing oil and gas destined for China would only need to exit the Persian Gulf and sail a few hundred kilometres to Gwadar where they could offload their cargoes. That energy would find its way to western China and there would be no need to undertake a long and problematic sea voyage. 

There were a number of other advantages associated with a ‘Pakistan First’ strategy. Xi and his senior colleagues were particularly nervous about political and societal instability in Xinjiang where most of the residents are Muslim. They decided to neutralize the potential threat by establishing vast detention facilities and embarking on “re-education” programmes designed to ensure that Muslim culture was stripped away. Furthermore, the strengthening of Beijing’s ties with Islamabad would, hopefully, reduce the likelihood of any support from Pakistani Muslims reaching their co-religionists in Xinjiang. As it happened, the Pakistanis, despite their faith, would prove to be disturbingly complicit in ignoring China’s brutal ethnic cleansing policies.

Xi visited Islamabad in April 2015 and laid out a vast, ambitious and seductive development programme for Pakistan. It consisted of 51 projects designed to address the lamentably inadequate energy system, shortcomings in civilian and military infrastructure, and agriculture based on model farms. In addition, the Chinese focused on the road, rail and pipeline projects needed to link Gwadar to far off Kashgar. Those links transited what they called the POK or Pakistan Occupied Kashmir and this had the effect of legitimizing Islamabad’s claim to the long-disputed territory. Collectively, these undertakings, as mentioned, were known as the China-Pakistan Economic Corridor (CPEC) and constituted a vital subset of the huge, trans-continental BRI. The initial price tag was $40 billion USD and this sum would rise relentlessly to over $60 billion USD.

Originating in Gwadar, CPEC crossed the largest, poorest and least populated province of Pakistan, Balochistan. The Balochis had long campaigned for their independence and regarded incoming Chinese engineers and construction crews as colonizers and oppressors. Indeed, the Chinese had hardly done themselves any favours since most of the CPEC projects were also sole sourced and executed under opaque and secretive conditions. The Balochis could see almost nothing of advantage in all of this for themselves. Rather, they saw their tribal lands being taken over and the best jobs allocated to foreigners. It did not take long before anger and hostility turned to violence and on a number of occasions Chinese nationals were targeted in terrorist attacks. Not surprisingly, the Chinese grew more and more concerned about the levels of domestic violence – since separatist activities were only a part of a larger turbulent landscape of political and tribal unrest – and the Pakistanis were obliged to field a 15,000 security force to provide protection for Chinese workers.

Although Gwadar was supposed to be the jewel in the CPEC crown, progress was curiously slow. At the outset there had been talk about Gwadar becoming a major Pakistani naval base. Karachi was too close to the border with India and could be blockaded by the Indian Navy in the event of hostilities. Then again, the Pakistani Navy already had a base at Ormara, halfway between Karachi and Gwadar. If that were the case, why not institutionalize Chinese control over Gwadar? Afterall, the Chinese had developed a major installation in Djibouti, farther to the west near the Horn of Africa, and had already managed Gwadar port for many years as commercial agents. The Chinese, however, were not about to be drawn-in and almost a decade after Xi’s overture to the Pakistanis it is still not clear exactly what China’s intentions are. Meanwhile the port facilities remain modest to say the least; about five gantries and barely anything else. About two ships a week visit Gwadar – largely with CPEC materials and according to the website VesselFinder no ships, for example, are expected to arrive this February.

If CPEC seems to have entered a slow-motion phase it is also because the Chinese economy is no longer as vibrant as it once was and the Pakistani economy is in a shambles. Indeed, the BRI seems to have lost much of its lustre. The Chinese are constantly accused of engineering debt traps for needy but unwary African and Asian economies. Many analysts, for example, point to the pathetic state of the Sri Lankan economy where the hopelessly indebted national government was obliged to cede the port of Hambantota and surrounding lands to the Chinese on a 99-year lease. 

However, Pakistan’s financial situation is even worse. By 2018, Pakistan’s foreign exchange reserves had dwindled to the point where the nation could only cover 45 days of imports. The interest alone on the $62 billion CPEC loan had risen to $28 billion: an astronomical sum at the time. But what about other sources of funding? Why not turn to the Saudis and the UAE to see if they would be willing to assist? They were. But this only meant that the Pakistanis had more live grenades to juggle.

There was, of course, always the World Bank and the International Monetary Fund (IMF), the latter coming with a sting in its tail. The IMF had an agency called the Financial Action Task Force (FATF). The FATF was a terrorism financing and anti-money laundering watchdog. In short, it was garlic to werewolves; the very last thing that the Pakistanis, mired in corruption, wanted to confront. The IMF demanded complete transparency with respect to Chinese financing of CPEC. Among other things, the IMF was particularly concerned that Islamabad might use IMF monies to repay Chinese loans.

There is an old saying that when you sup with the devil you need a long spoon. In Islamabad’s case, the Pakistanis need many spoons. Their economy is a wreck. They are lurching from one financial crisis to another. The Chinese have gotten more from CPEC than the Pakistanis and the Chinese Communist Party has defied its Marxist-Leninist roots by becoming latter day imperialists. They seem, in some ways, to have lost heart with the Pakistani experiment, as if Pakistan is all too difficult.

Imran Khan, the charismatic firebrand who served as prime minister from 2018 to 2022 and fell out, suicidally, with the military is now in jail. In fact, the authorities have basically thrown away the key since they have recently added a further 14 years to his sentence. Ambitious CPEC plans to establish industrial parks and improve agriculture are still on the books but little has been accomplished. The north-south railway modernization scheme has ground to a halt and the port of Gwadar barely functions. Indeed, the government, in desperation, is contemplating the issuance of yuan-denominated “panda bonds” in an effort to raise a pepper-corn sum.
Colossal indebtedness now stares Islamabad in the face and Pakistan has become, for all intents and purposes, a vassal state. Yes, the relationship with China remains close but that’s because China is the only game in town.