CPEC & “Milbus”: Pakistan Army’s Economic Stakes in the Sino-Pak Corridor

By Prateek Joshi —

Gwadar Port in southern Pakistan. Gwadar will be the maritime outlet for the China Pakistan Economic Corridor. Source: Moign Khawaja's flickr photostream, used under a creative commons license.

Gwadar Port in southern Pakistan. Gwadar will be the maritime outlet for the China Pakistan Economic Corridor. Source: Moign Khawaja’s flickr photostream, used under a creative commons license.

In April 2015, Chinese president Xi Jinping’s visit to Pakistan and the announcement of the $46 billion China Pakistan Economic Corridor (CPEC) infused economic strength to the existing Sino-Pak geopolitical alignment. The corridor connecting Balochistan’s Gwadar port with Xinjiang’s Kashgar through multimodal infrastructure projects shall enable China’s landlocked western region direct access to the Persian Gulf via the Strait of Hormuz. There are two key geostrategic implications from the project. First, China-bound energy supplies and freight will be able to circumvent the longer Malacca Straits route and bypass the U.S. naval presence in Southeast Asia. Second, the corridor’s passage through Gilgit-Baltistan has formalized China’s recognition of the disputed region (claimed by India as a part of Kashmir) as a de facto Pakistani territory.

Pakistan Army general Raheel Shareef has asserted that Pakistan’s security forces were “ready to pay any price to turn CPEC into reality.” A Special Security Division consisting of over 15,000 troops has been raised to protect the CPEC projects. Besides the security related concerns which General Shareef often cites, the military has another reason to be motivated regarding the CPEC — its own economic interests in the corridor.

Notwithstanding the geostrategic importance of the region, the success of the CPEC hinges on the role of the Pakistan Army, whose part is not limited to provision of security to the corridor, but also in catering to its own economic interests. Ayesha Siddiqa’s “Military Inc.documents that the Pakistani military’s involvement in the nation’s economic affairs is not a new phenomenon. Siddiqa uses the term “milbus” (military business) to describe the Pakistani military-industrial complex. She identifies three levels at which the military’s economic ventures operate, the institutional level, the subsidiaries level, and the individual level. The institutional level comprises three key entities, all of which are involved in the CPEC project:

  1. Frontier Works Organization (FWO): Established in 1966 to construct the Karakoram Highway, it went on to execute international ventures and diversified into building railway lines, airfields, dams, and power projects. It is the “largest contractor for major public sector projects” and headed by a major-general rank officer.
  2. Special Communications Organization (SCO): Established in 1976 to develop telecommunication services in Azad Jammu & Kashmir and Gilgit-Baltistan and currently the largest telecom network/service provider in the region.
  3. National Logistics Cell (NLC): Deals with the provision of freight services, construction of dry ports and storage infrastructure, tolling services, and even building highways and bridges.

Given the nature of the projects CPEC includes, these three organizations are tailor-made to execute them. The FWO is at the helm of upgrading the road infrastructure; the NLC is managing the logistics facilities while the SCO is laying down new communication lines.

By July 2015, the FWO was reported to have completed 311 miles of the CPEC’s 540 mile long western route in a short time of less than 18 months. Work had already begun on infrastructure upgrades in anticipation of the upcoming corridor. On February 3, 2016, Prime Minister Nawaz Sharif inaugurated the 120 mile M-8 motorway or the Gwadar-Turbat-Hoshab road, constructed by the FWO, a vital artery which would connect the eastern, western and central routes of CPEC with Gwadar, serving all Gwadar bound traffic.

The NLC has been active in revamping the nation’s logistics facilities to gear up for the increased cargo and traffic movement the CPEC is expected to bring. In April 2016, a high level delegation from the NLC visited Germany to explore the feasibility of setting up truck assembly lines under a joint-venture project with leading companies, MAN and Mercedes. Speaking on the indispensability of the NLC in CPEC, Pakistan’s federal minister  of Planning, Development and Reforms, Ahsan Iqbal stated that “ progressive outlook and futuristic plans of National Logistic Cell (NLC) be specifically aligned in accordance with transportation needs of the China Pakistan Economic Corridor”.

In May, the ground breaking ceremony of the 509 mile long Pakistan-China optic fiber cable (to be laid between Rawalpindi and Khunjerab Pass) was held, which would provide 3G and 4G services to Gilgit-Baltistan, adding an alternate telecommunication route between Pakistan and China. SCO has been entrusted with the task of completing the project. Internet service in Gilgit-Baltistan is a monopoly of the SCO which has a 1,553 mile fiber optic cable network in the region. In absence of any other competitors, SCO’s authority over the latest fiber optic network will further increase the local population’s dependence on the organization (and indirectly the military) for communication services.

In addition to the institutionalized economic gains mentioned above, there will likely be windfalls to the individuals who control the military’s real estate holdings which happen to lie in the vicinity of the CPEC routes, given that the army is the largest landowner in Pakistan.

While it is the Prime Minister Nawaz Sharif who inaugurates CPEC’s key projects, it is the Pakistan Army which controls them. At present, the management of CPEC is under the Ministry of Planning, Development, and Reforms but reports have stated that the army has sought a formal role in the corridor’s management through a CPEC Development Authority. Commenting on this development, Minister Ahsan Iqbal expressed his reluctance stating that “setting up an authority will mean involving three-dozen more people in decision-making process.”

The CPEC shall definitely be constructed, not solely because the civilian leadership is playing a proactive role in it, but because it is in the military’s economic interests.

Mr. Prateek Joshi is a post graduate candidate in International Relations from South Asian University (a SAARC Nations project) in New Delhi, India. He has previously interned with Wikistrat and Observer Research Foundation.


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