The debt ridden government of Pakistan has diverted CPEC funds to other projects. The dragon has given 62 billion dollars for the development of the China Pakistan Economic Corridor but given the fact that Pakistan is on the verge of defaulting on payments the funds seem to have been diverted toward other projects. The country has 8 billion dollars of foreign exchange left to support only 2 months of imports. This is despite the loan of of 2.5, 1, and 1 billion dollars by China, UAE and Saudi Arabia respectively. The Belt and Road Initiative (BRI) summit in Beijing is scheduled next month and allegations of fund diversion will not go well between both countries.
According to reports, Pakistan has diverted 2,400 crore rupees (171.6 billion dollars) to fund projects identified by local legislators. Imran Khan’s government wants to please the powerful legislators of the country to save his government. “The government committed theft by spending Rs 2,400 crore out of Rs 2,700 crore meant for BRI on other development projects,” said opposition leader Maulana Fazl-ur-Rehman.
Before this, a fight between Lahore and Karachi had erupted on the allocation of funds for the China Pakistan Economic Corridor (CPEC) projects. Before the election of Imran Khan, the Lahore based Punjabi business lobby was stronger because the former Prime Minister Nawaz Sharif represented the interests of Lahore’s business elites. In fact, his family itself is part of the Lahore business lobby. However, the election of Imran Khan on the highest decision making chair has changed the equations, Karachi’s business lobby supported Khan in the elections and now it is asserting itself in policy making.
The Sharif government awarded many CPEC contracts to Lahore’s businessmen who were operating in joint venture with Chinese companies. With the election of Imran Khan, Karachi’s lobby wants their share in the pie. Karachi-based businessman, Abdul RazakDawood who is also an Advisor for Commerce, Textile, Industry & Production, and Investment to the prime minster had raised question on CPEC deal and allocation of projects. “The previous government did a bad job negotiating with China on CPEC – they didn’t do their homework correctly and didn’t negotiate correctly, so they gave away a lot. Chinese companies received tax breaks, many breaks and have an undue advantage in Pakistan; this is one of the things we’re looking at, because it’s not fair that Pakistan companies should be disadvantaged,” said Dawood in an interview. His criticism of the CPRC deal and project allocation is significant because he is considered to be very influential in the present government. In fact, Pakistan’s current finance minister, Asad Umar is the previous CEO of Engro Corp which is owned by Dawood’s family.
Dawood has also criticized the CPEC saying that it has little benefit for the economy of Pakistan. Imran Khan included many new sectors such as agriculture as part of the CPEC project. China is very concerned about the security and success of CPEC. Many countries like Malaysia, Sri Lanka either scrapped OBOR projects or renegotiating the deal. China wants to present CPEC as a poster boy and therefore the project’s success is very necessary. The security of CPEC and Chinese workers was the reason behind China’s decision to veto the UN’s resolution to designate Masood Azhar, the mastermind of the Pulwama attack and the 2001 Parliament attack as a global terrorist.
