The United States (US) on November 21 warned Pakistan that the China-Pakistan Economic Corridor (CPEC) would push the country deeper into an already stifling debt burden, foster corruption and repatriate jobs and profits to China, reports Dawn. In a speech, described as “unusually specific” by the international media, the top US diplomat for South Asia, Alice Wells, warned that the multi-billion-dollar project would take a toll on Pakistan’s economy at the time of repayments and dividend in the coming years. Assistant Secretary Alice Wells explained that CPEC was not an aid to Pakistan but a form of financing that guarantees profits for Chinese state-owned enterprises, with little benefits for Islamabad.
Addressing a gathering of diplomats, scholars and journalists at a Washington think tank, the Wilson Center, Alice Wells also quoted specific examples from the project. Alice Wells said multibillion-dollar project will take a toll on Pakistan’s economy at the time of repayments. “CPEC’s most expensive single project is upgrading the railway from Karachi to Peshawar. When the project was initially announced, the price was set at USD 8.2 billion,” she said. “In October of 2018, Pakistan’s railways minister announced that they had negotiated the price down to USD 6.2 billion, a saving of two billion. And he explained Pakistan is a poor country. We cannot afford this huge burden of these loans.” “But recent media reports claim the price is now risen to USD 9 billion,” she added. “So, why doesn’t the Pakistani public know the price for CPEC’s most expensive project or how it’s being determined?”
The US diplomat also underlined the long-term effects in Pakistan of China’s “financing practices” and urged Islamabad to examine “the burdens that are falling on the new government to manage with now an estimated USD 15 billion debt to the Chinese Government and USD 6.7 billion in Chinese commercial debt”. Ms Wells also emphasised the need for Pakistan to know that China was providing loans, not grants, as the United States. “It’s clear or needs to be clear that CPEC is not about aid. This is almost always the form of loans or other forms of financing, often non-concessional with sovereign guarantees or guaranteed profits for Chinese state-own enterprises that are repatriated to China,” she added.