CPEC and the Saudis

Pakistan will be developing a trilateral investment framework within the ambit of the China-Pakistan Economic Corridor (CPEC) to allow other countries to invest in the country. This development was revealed by the information and planning ministers in a press conference on Tuesday. The ministers quelled the speculation that had been afloat that Saudi Arabia would be made part of the CPEC framework. They have instead clarified that any Saudi investments would be worked in through bilateral or trilateral agreements. The position that any Saudi investment should be covered by a bilateral treaty is logical, but the talk about trilateral treaties should raise more concerns. Third countries are not allowed a say in investments in sovereign states, so why should China have one over the nature of Saudi investment in Pakistan? There is a case for all foreign countries that are investing in a country to coordinate, but this is only relevant to joint projects. If China and Saudi Arabia are not proposing joint projects, then why must any Saudi investment come through a trilateral agreement within the CPEC framework?

Is the CPEC framework going to become an overarching grundnorm for investment in Pakistan? That sounds uncomfortably like the time when colonial powers would get a say over which other countries can trade within a colony. Perhaps those in charge at the moment have little experience with governance and are throwing up all the possibilities they can come up with. In the last two weeks, we have heard all kinds of concoctions from those in government: Saudi investment as part of CPEC, as a bilateral agreement, or as a trilateral agreement.

The first and third of these options are not ideal and it would be good if they can be ruled out – unless there is a serious concurrence of interests. For example, Saudi Arabia and China could come to an agreement that Pakistan will be the transit zone for Saudi oil to flow into China. But if Saudi Arabia is to set up an oil refinery in Gwadar, there is little sense in China being involved in any agreement – unless China has been offered some kind of first refusal clause on any other investments in Pakistan. The news that Railways Minister Shaikh Rashid is trying to bring down the cost of the Main Railway Line project under CPEC is one to watch. If successful, it would suggest that the PTI government will be able to assert Pakistan’s interests more boldly viz-a-viz China as CPEC progresses. It is important for Pakistan to be able to make decisions on its international agreements in a sovereign way. There will definitely be more developments on this soon.