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The CPEC | Opinion | thenews.com.

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The China-Pakistan Economic Corridor (CPEC) has two main components: the corridor and the
projects. The corridor component is roughly $11 billion, or 25 percent of the total, and the projects
$34 billion, or 75 percent of the total. In international finance, foreign involvement comes in five
forms: loans, grants, concessional loans, foreign direct investment and project financing. Chinese
involvement under the CPEC is strictly project financing project financing that has neither clarity
nor transparency.

In the Karot Hydropower Project, the Chinese are charging an interest rate of Libor plus 4.5
percent during construction (around 5.5 percent in dollars terms). In the Sahiwal Coal Power
Project the Chinese demanded and got an internal rate of return of 27 percent. To be certain,
these are both awfully expensive propositions and the terms of the contract overwhelmingly favour
the Chinese not the Pakistanis.

In 2013, the $9 billion, 6,600MW Gadani Energy Park was launched with full fanfare. The project
has since been shelved (it lacked economic viability). The $360 million, 300MW, Gwadar Coal
Power Project has also been shelved.

The global economic machine comprises four financial powerhouses: the US, the EU, China and
Russia. The Russian economy, dependent on hydrocarbon reserves, is in trouble. Last year,
Russias GDP actually contracted by an alarming 4.6 percent because of low oil prices and
Western economic sanctions.

In 2015, Chinas economic growth was the weakest in the past 25 years. In January 2016, the Yuan
settled at a five-year low. In 2015, Chinas foreign exchange reserves plunged by a wholesome
$513 billion the first annual drop in the past 24 years.

The once booming Shanghai Stock Exchange has lost half of its value whipping off 12 trillion Yuan
or an equivalent of $1.8 trillion. The budget allocated to the Peoples Liberation Police is now
higher than the one allocated for the Peoples Liberation Army (meaning that the Chinese
leadership is more concerned about internal strife). To be certain, the Peoples Liberation Army
has little or no capacity to project military power over long distances.

Within the EU, theres the sovereign debt crisis, the immigration crisis, the Brexit referendum
(withdrawal of the UK from the EU) and Grexit (Greek withdrawal from the eurozone). The European
Union is falling apart.

Its still a unipolar world. The US has 4.4 percent of the global population and produces nearly 25
percent of global GDP. The US spends $596 billion on defence followed by China $215 billion,
Saudi Arabia $87 billion, Russia $66 billion, the UK $66 billion and India $51 billion.

The US is the topmost hegemonic power in the world. And the US is at the top of the economic
ladder. On top of the $596 billion defence budget theres emergency discretionary spending,
supplemental spending and stimulus spending that add up to an additional $150 billion. Defence-
related spending outside of the US Department of Defence comes up to at least $200 billion. Add
them all up and the US spends a colossal $950 billion on defence. In essence, of the 193 members
of the UN 192 collectively spend about the same as does the US on its own.

What is the American foreign policy? Three things: no ethics, no morality, all realism. It is about
achieving two objectives: first, to keep the US the topmost hegemonic power in the world with or
without the consent of others. Second, to keep the US at the top of the economic ladder, with or
without the consent of others. The USs current obsession is containment of China. And if India
continues to grow, the USs future crush will be containment of India.

For Pakistan, we need to undertake a strategic SWOT analysis of our strengths, weaknesses,
opportunities and threats. Our strength is our army and our geography. Our weaknesses are many
the economy and enemies both internal and external.

For Pakistan, Step with care and great tact. And remember that lifes a great balancing act. Just
never forget to be dexterous and deft. And never mix up your right foot with your left.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh

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