How Will Imran Khan’s Ouster As Pakistan President Affect China’s CPEC Belt & Road Project And South Asian Security?

Posted by

Pakistan needs continuity but the potential for regional meddling is very real

By Chris Devonshire-Ellis

It has been a while coming, but Imran Khan, Pakistan’s Prime Minister has finally been ejected from office by the countries Supreme Court after refusing to allow a vote of no confidence in the Parliament, where political defections had left his party, the Tehreek-e-Insaf in a minority position.

It leaves Pakistan in a position of some status quo until new elections can be held, which probably cannot take place until the autumn. There is also the possibility of a military coup, although an interim Government lead by the opposition party leader has now been sworn in. Khan has stated that the United States had created pressures and ‘threatened him’, a situation that Beijing made reference to just a couple of weeks ago, warning that ‘external powers’ where trying to create difficulties, and that Pakistan’s rightful global place was as a contributing South Asian power rather than as a ‘foreign proxy’. Washington has denied the claims, while at the same time ‘expressing serious concern’ about Pakistan’s closeness with Moscow. Khan notoriously visited Russian President Putin on the day the Ukraine crisis began and has subsequently said ‘Pakistan needs to make its own foreign policy’.

That period of limbo will have significant regional implications and can be expected to lead to unrest, especially within neighboring Afghanistan, a situation that can easily impact the entire Central Asian region and seriously impact the remaining Europe-Asia supply chains. There are real risks here. I analyze these as follows:

Afghanistan

China’s Foreign Minister Wang Yi was in Kabul just two weeks ago where the Taliban asked for assistance and expansion of the Belt & Road Initiative – and in particular the China-Pakistan Economic Corridor (CPEC) aspect of that to be extended into Afghanistan. That proposal, while welcomed by Beijing is however dependent upon security issues – and especially with Pakistan. Khan had been relatively agreeable to the Taliban, although terrorist activities have been on the increase in Pakistan’s North-West, a situation that has created stresses between Khan’s Government and the powerful military.

Russia

Pakistan is in huge need of energy as in the wake of CPEC infrastructure, it needs energy access to properly industrialize. Iran becomes a component in this as had it been allowed a nuclear power industry, it would have sold excess energy to Pakistan, but in then light of US sanctions has not materialized and has had the effect of causing stresses between Washington and Islamabad.

Russia instead has stepped in and has signed contracts with Pakistan to build the “North-South” gas pipeline, to transport liquefied natural gas from Pakistan’s southern Karachi port city to Pakistan’s north. “We need a gas pipeline to transport LNG from south to north. That’ll become almost essential for us in the next two or three years” Khan has said. The MoU to do so was signed off in March, just as Russian troops began moving into Ukraine, one reasons why Islamabad has refused to condemn Russia’s invasion of Ukraine despite public pressure from the West. Khan said he “regretted” the Ukraine conflict but wanted to remain neutral. While Pakistan produces gas, in recent years it has also started importing from the Gulf as energy demands rise. Russian officials were due to visit Islamabad to finalize the deal for the Pakistan Stream pipeline following Khan’s Moscow visit, that will now have to be shelved until the political situation becomes clearer. Should the pipeline proceed, it is to be built by a consortium of Russian companies and is estimated to cost more than US$2 billion. Pakistan has been critical of US energy policy included the latest surge of oil & gas prices, which have affected Pakistan “very negatively” leading to Islamabad calling for Washington to unlock alternate energy sources, Khan has said. Energy makes up about a quarter of Pakistan’s import bill – and is vital to industrialize China’s CPEC investments. Quite simply, without additional energy supplies, Pakistan cannot power up new factories, and the BRI infrastructure put in place to allow these developments will be wasted.

Central Asian Security

This could destabilize Pakistan and render any potential BRI and CPEC expansion into Afghanistan redundant. That in turn can be expected to lead to further regional security problems for the rest of Central Asia, which if goes badly will drag Pakistan, India, Russia, and China – all primary regional partners in the Shanghai Cooperation Organisation into an on-going conflict in Afghanistan, especially if the United States decides to covertly fund the Taliban (as they did during the Russian occupation of the country). Such a conflict would also massively hinder Russian attempts to rebuild European supply chains into Central and South Asia.

An increase in Afghanistan security problems would also divert significant development resources away from newly ascending regional manufacturing, export, and transit players such as Uzbekistan, Turkmenistan, and Iran and have a substantial impact on the viability of the entire CPEC project in limiting Pakistani export manufacturing capability to be purely a feeder for China and ASEAN, rather than Central Asia and to Europe.

European Supply Chains

With supply chains via Russia and Belarus cut off from the EU, the only other alternatives to transport goods from Asia to Europe are via maritime shipping via the Suez Canal route, or via increasingly influential multimodal routes via Kazakhstan overland to the Caspian Sea, or via India, Pakistan and Iran via the International North-South Transportation Corridor (INSTC) and nearby alternatives, which can run from Pakistan’s Gwadar Port, and Iran’s Chabahar Port via the INSTC soon-to-be-operational rail connectivity also to the Caspian, and then joining rail connections at Azerbaijan’s Baku through to Georgian and Turkish ports on the Black Sea, where they can access southern European ports in Bulgaria and Romania. That ‘southern’ route has already shown huge increases in trade since March. Were serious regional unrest to develop, these newly developed routes could become increasingly fragile, while the risk aspect of developing them further has undoubtedly increased.

The risks therefore are very real.

Alternative Pakistan Governments

Pakistan needs Government sustainability and coherence right now, not instability. However, it has a noisy democracy not always willing to take tough medicines for the longer-term benefit. There appear to be four choices:

An Interim Unity Government

The next Pakistani elections were not due to be held until October 2023. It is likely this will now be brought forward as Khan’s Government has lost its Parliamentary majority. Until these can be held, a coalition Government will effectively run Pakistan, with all major decisions deferred until elections can be organized. The new Prime Minister replacing Khan is Shehbaz Sharif, the leader of the opposition. The earliest new elections appear likely to occur is not until Autumn this year.

An Interim Military Government

Should matters start to get out of hand, the Pakistan military will assume control, as they have done several times in recent history. Pakistan has not been ruled by the military since 2008 but in the event of social unrest and political instability (Pakistan has nuclear weapons) would certainly step in again.

Tehreek-e-Insaf Return To Power

Imran Khan still has massive support, however, has been hampered by an under-performing economy, slow recovery from Covid and expensive infrastructure debts, largely from China, that have not yet turned into cash-flow business development opportunities. He has lost support within India (the Indian Prime Minister Narendra Modi is perceived as anti-Muslim, with Khan being openly critical) and with the United States (who he regards as ‘meddling’). These are possibly too significant obstacles to overcome despite his power base unless he can campaign vigorously enough and make concessions to once again form a coalition Government. This would probably be the preferred option for Beijing and Moscow, purely in terms of continuity, although the potential challenger, Shehbaz Sharif would also be an acceptable candidate.

Pakistan Muslim League In Power

The likely strongest party to challenge Khan, or at least be in a position to also form a coalition alternative is the Pakistan Muslim League (PML), a liberal-conservative party with Shehbaz Sharif, of the Sharif political dynasty as Chairman. The PML are long familiar with the intricacies of Pakistani and regional politics, and are known for supporting free markets, deregulation, lower taxes, and private ownership. Although the party historically supported social conservatism, in recent years, the party’s political ideology and platform has become more liberal on social and cultural issues. The PML tend to be more sympathetic with India and the United States, the latter of which may push for reduced Pakistani ties especially with Russia, and also with China. Much in this sphere of influence lies in what energy concessions the United States may be prepared to give – if any.

Summary

Geo-politically, Pakistan right now is an energy play – it is at a turning point in its national development and needs huge supplies of energy to maintain its growth trajectory towards industrialization. That one aspect is key to China’s CPEC either being a success or turning into a massive white element. To deliver that power, and frustrated with US policies concerning neighboring Iran, Pakistan has been turning instead to Qatar (now its largest trade partner), Russia, and Iran to some extent to supply it with the energy it needs. All these nations are at odds with Washington to one degree or another, meaning that any new Government has to walk a fine line between getting the energy it needs while keeping Washington off its back.

China has been very wary of US influence in Pakistan – it has a lot to lose – both in its CPEC ambitions and regional security. Russia, too, with its new Pivot to Asia would be cut off both West and East should civil unrest re-emerge in Afghanistan and spread again through Central Asia. Asia-European supply chains would also be seriously disrupted, tying the EU ever-closer to supply chains coming in from North America rather than Asia. The current Pakistan geopolitical issue should, if left alone, resolve itself whichever party eventually manages to secure a coalition government as both the main contenders have Pakistani development agendas. However, as Beijing has warned, there are plenty of windows and good commercial reasons for Washington to interfere within Pakistan’s politics. Both Beijing and Moscow will be paying huge attention to what happens next and try and continue the current development plans. However, the emerging risk with Khan’s departure is that this may not be sympatico with Washington’s foreign policy.

Related Reading

&nbsp

About Us

Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm assists British and Foreign Investment into Asia and has 28 offices throughout China, India, the ASEAN nations and Russia. For strategic and business intelligence concerning China’s Belt & Road Initiative please email silkroad@dezshira.com or visit us at www.dezshira.com

Leave a Reply

Your email address will not be published.