MonitorsPublished on Sep 04, 2010
China has considerably increased its investments in Pakistan. Given Pakistan's fragile IMF dependent economy, the idea of an economic rationale behind the substantial Chinese investments seems far-fetched.
Significance of Chinese investments in Pakistan
< class="heading1">Analysis

China has considerably increased its investments in Pakistan. Given Pakistan's fragile IMF dependent economy, the idea of an economic rationale behind the substantial Chinese investments seems far-fetched. The Indian Ministry of External Affairs (MEA) has decided to investigate the issue of increasing Chinese presence and investments in Gilgit Baltistan.

The Chinese have had a historic presence in Pakistan. In the 1940's, Chinese-Muslims had fled to Karachi following unrest in that country. Since then, second and subsequent generations of Chinese have integrated into the Pakistani society even while continuing to speak Mandarin at home. In Lahore, Chinese-Muslims built a mosque called the Chini Masjid (Chinese Mosque).

Lately, there has been an increased influx of Chinese-Muslims coming to Pakistan with the number increasing from 3500 in 2007 to about 10,000 in 2009.This influx is associated with the growing number of developmental projects being undertaken by the Chinese in Pakistan. The two Governments have identified more than 50 new initiatives for joint collaboration and signed three dozen MoUs in 2009. As many as 767 development projects are to be carried out in Gilgit-Baltistan alone, with particular focus on the power sector to harness the huge hydro-power potential of the region.

Chinese Ambassador in Islambad, Lou Zhaohui, assured Pakistan of Beijing's commitment to complete the projects it has taken up. Despite the deteriorating law and order situation in the country, and concerns about links between separatist movements in China's Xinjiang Province and terrorist havens in Pakistan, Chinese interests in Pakistan continue to remain unaffected. Beijing earlier gave $1 billion in two tranchesto strengthen the $1.2-billion instalment from the International Monetary Fund (IMF) to boost Pakistan's foreign exchange reserves. According to Ambassador Lou, Pakistan was the only country to which China gave such a huge amount at such a low interest rate.

Important Chinese projects included the construction, maintenance and upgradation of the strategically significant Karakoram Highway. In 2006, a MoU was signed between the Pakistani Highway Administration and China's State-owned Assets Supervision and Administration Commission (SASAC) to upgrade the Karakoram Highway. The width of the highway was to be expanded from 10 m to 30 m, and to enhance its transportation capacity. The upgraded road was being constructed to accommodate heavy-laden vehicles and extreme weather conditions. However, owing to flooding and landslides in the Hunza Valley region, the highway has been closed since January 2010

The Karakoram rail link, which is first rail link across the Himalayas, runs nearly 700 km from Kashgar city in Xinjiang province to Havelian, near Rawalpindi in northern Pakistan, through the Khunjerab Pass. With the rail links, Beijing will be able to transport cargo from eastern China to the new Chinese-built Pakistani naval bases at Gwadar, Pasni and Ormara, just east of the Gulf, within 48 hours. China and Pakistan are also planning to link the Karakoram Highway to the southern port of Gwadar in Balochistan through the Chinese-aided Gwadar-Dalbandin railway, which extends up to Rawalpindi. As early as 2002 China gave a train' to Pakistan as an 'Independence Day gift'. The train was named 'Karakoram Express', and runs between Lahore and Karachi.

The Daimer Basha dam and other small-scale hydro projects in the region have also been taken up by Chinese companies. China stepped in when the World Bank refused to help finance the $8.5-billion project .It however wanted the status of the territory to be legitimized and legalized.. Incidentally in 2009, administrative reforms known as the Gilgit-Baltistan Empowerment and Self-Governance Order 2009, and granted legal status to Gilgit-Baltistan. Other reservoirs, including the Bunji dam in the Astore district, Neelum- Jhelum, Gomal Zam and Mangla dam height-increase,are also being carried out under Chinese auspices.

Infrastructure projects including Special Economic Zones in Punjab, development of the Thar coal mines in Sindh and other thermal and fertilizer plants are being carried out by the Chinese. There were allegations that Pakistani steel mills had signed a secret MoU with the Metallurgical Corporation of China for $2.2 billion. It later became a point of contention between Pakistan President Asif Ali Zardari and Prime Minister Yousaf Gillani as a confidant of the former was said to be the beneficiary from the tie-up. In February 2007, China Mobile acquired 100-per cent stake in Paktel and renamed the company China Mobile Pakistan. China Mobile has invested $1.66 b in Pakistan, creating 41,700 jobs in the country.

Pakistan's dependence on China is expected to increase much more because of the cross-sectoral investments. This would again allow Beijing to take up more infrastructural projects.

Once completed, the road and the rail links could serve to permanently negate any Indian access to friendly territory in Central Asia. It would also increase Chinese influence on west and south western borders of India. New Delhi must take steps to counter this strategy, to prevent the 'String of Pearls' from becoming a reality.

Akhilesh Variar is Research Assistant at Observer Research Foundation

< class="heading1">Country Reports

< class="heading12boldGeorgia">Lahore and Quetta blasts

Suicide-bombers targeted a Shia procession in Lahore, killing 31 people and injuring 281. The Tehrik-e-Taliban Pakistan (TTP) claimed responsibility for the killings. In a statement, the TTP spokesperson said that the incident was to avenge the death of Sunnis. After the blasts the situation worsened when people who had been part of the procession reacted violently and the riot police had to be employed to control the situation.

The attack occurred just as the country was trying to reconcile with the effect of the recent floods. Pakistan army's top brass conceded that some troops who had been fighting the extremist elements were diverted for flood relief.

Another blast in Quetta two days after the first incident killed 60 people and injured more than 100, with the target being another Shia procession expressing solidarity with Palestinian Muslims. The deteriorating law and order situation is adding woes to the already stretched state administrative mechanism.
Source: Dawn, September 03, 2010, Daily Times, September 03, 2010

< class="heading12boldGeorgia">Damage and assistance

The recent floods were estimated to have inflicted an economic loss of around $ 43 billion. About $200 million would be needed for relief and rehabilitation and $1 billion for repair of key infrastructure. The economy which had grown by 4.1 per cent last year was expected to grow by only 2.4 per cent this year, causing large-scale unemployment and livelihood problems.

The damaged sugar and textile industries could affect balance of payments and external resource stability. It was also said that inflation might touch 15-20 per cent due to supply constraints. In all, 30 per cent of the agricultural land and 10 per cent of the population have been affected.

In all, $ 953.7 million had been pledged by the donors, of which $142.47 million has been received so far. For their part, the International Monetary Fund (IMF) and the World Bank have announced emergency relief aid of $550 million and $ 1 billion, respectively. Both agencies have emphasised the importance of fiscal reforms. However, it was indicated that at the end of IMF's fifth assessment, another $1.7 billion would be released. The aid however amounts to only a fraction of the estimated losses.
Source: Dawn, September 02, 2010, Dawn, September 03, 2010

Sri Lanka
< class="heading12boldGeorgia">Cabinet approves constitutional changes

The Sri Lankan Cabinet approved the proposed amendments to the Constitution, removing the bar on a two-term President to contest for the high office. The Eighteenth Amendment, which is to be voted in Parliament on September 8, also seeks to abolish the Constitution Council of eminent persons entrusted with the job of choosing the heads of various independent commissions like the Election Commission and the National Police Commission.

It is being replaced by an Advisory Committee of five Parliament members, including the Speaker, Prime Minister and the Leader of the Opposition. The amendment clarifies the position that the Executive, and not an outside agency like the Constitution Council, will be the authority to choose the heads of the independent commissions. Under the proposed scheme, the Executive President will have to take note of the 'observations' mad by the Advisory Council before taking a decision.

According to the Government, the proposed amendment would also provide for the President to attend Parliament sessions at least once in every three months, and participate in discussions. Under the Sri Lankan scheme, the President, who is the Head of State, the Head of Government and the Cabinet, has retained the all-important Defence portfolio. Incumbent President Mahinda Rajapaksa has also retained the Finance portfolio. However, questions of being raised on the propriety of asking the Head of State to be present in Parliament to answer questions from members, and also face their flak.
Source: The Island, Colombo, August 31, 2010

< class="heading12boldGeorgia">UNP members to vote for change

At least four members of the Opposition United National Party (UNP) have indicated their decision to vote with the Government on the controversial constitutional amendments in Parliament. Indications are that more Opposition members may join them, separately, according to news reports.

The Government, which was only six short of a two-thirds majority in the 225-member House at the conclusion of the parliamentary polls earlier this year, crossed the magic figure, effortlessly last week. Apart from an UNP member, Abdul Cader and two MPs from different parties of the Upcountry Tamils, the eight-member Sri Lanka Muslim Congress (SLMC) too has pledged its support to the amendment, taking the total to 154.

All of them were elected under the UNP symbol. At least three more full-fledged MPs belonging to the UNP have since come out openly in support of the amendments while a few others, including an Independent elected on the UNP symbol, are said to be weighing their options.

While the Opposition parties want the Government to hold a referendum over the constitutional amendments, the Supreme Court has since dispatched its advisory on the amendments to the President, after he sought the opinion of the higher judiciary in the matter.
Source: The Island, Colombo, September 4, 2010

< class="heading12boldGeorgia">China keen on road, rail links

Eyeing on improving greater connectivity with Bangladesh, China this week expressed keen interest in signing a Memorandum of Understanding (MoU) for establishing direct rail and road links between the two countries. Qin Guangrong, Governor of Yunnan Province of China, made the proposal on behalf of Chinese Government during his official visit to Bangladesh.

Under the proposal, direct rail and road links between China and Bangladesh will be established via Myanmar. China has promised to provide all possible support to Bangladesh in this regard.

Bangladesh is very keen on enhancing road links with China because it believes this will significantly boost the trade and commerce of the country.
Source: The Independent, August 30, 2010

< class="heading12boldGeorgia">Indian exports up

Bangladesh's exports to India have seen a 10 per cent growth since 2007, making it the highest importer of Bangladesh products in South Asia. According to a report of the Export Promotion Bureau of Bangladesh, total exports from the country to the rest of South Asia amounted to $431 m. India accounted for a high $ 305 m.

The exports to India included fertilisers and chemical products, raw jute and jute goods, frozen fish (mainly Hilsha), agro-based products, garments and finished leather. However, the country believes that its exports to India had been far short of its potential. To enhance export to India, Bangladesh has called for the removal of all tariff barriers by India.
Source: New Age, August 31, 2010

< class="heading12boldGeorgia">MoU for power projects

Indian public sector National Thermal Power Corporation (NTPC) and the Bangladesh Power Development Board (PDB) signed an agreement in New Delhi, for setting up two coal-fired power plants of 1320 MWeach under a joint venture in Bangladesh. The power plants will come up in Khulna and Chittagong.

The agreement flows from a pact signed in July, under which India would supply 250 MW of electricity in two years, and export power to India in future. The Asian Development Bank (ADB) has since approved a $100-m equivalent loan to Bangladesh for the cross-border electricity initiative, for installing transmission lines and related infrastructure.
Source: The Daily Star, August 31, 2010 / The Independent, September 1, 2010

< class="heading12boldGeorgia">Ruling party leader wants to snap talks

Ruling Maldivian Democratic Party (MDP) parliamentary group leader Moosa 'Reeko' Manik has called for ending cross-party peace talks with the Opposition Dhivehi Rayyithunge Party (DRP).

Moosa's appeal to MDP Chairperson Mariya Ahmed Didi and President Mohamed Nasheed to quit the peace talks were made following amendments presented by DRP to Parliament during its recent sittings that ended during the week.

Moosa claimed that Speaker of the Parliament Abdulla Shahid dismissed the sitting while MDP members were calling for the Bill to be sent back to committee.

The amendment that triggered uproar and the cancellation of the sitting was a proposal to prevent the courts from conducting trials related to activities of the former government. The amendment also obstructs the retrial of controversial cases, he claimed.
Source: Minivan News, September 2, 2010

< class="heading12boldGeorgia">99.41 per cent Muslim country

The Royal Islamic Strategic Research Centre (RISSC)'s report into the global state of Islam has described the Maldives as a 99.41 per cent Muslim country.

RISSC is an independent research entity affiliated with the Royal Aal al-Bayt Institute for Islamic Thought, an international Islamic non-governmental institute headquartered in the capital of the Hashemite Kingdom of Jordan.

The calculation is a collation of research by Dr Houssain Kettani ? who identifies the Maldives as a 100 per-cent Muslim nation ? and the Pew Research Center, a Washington-based research body claiming to "promote a deeper understanding of issues at the intersection of religion and public affairs."

The PEW Research Center's Forum on Religion estimates that of the Maldives population of 395,921, a total of 389,586 are Muslims, equating to 98.4 per cent. The non-Muslim population was put at 6335. The RISSC report averages the two figures and arrives at 99.41 per cent Muslims and a non-Muslim population of 2335.
Source: Minivan News, September 1, 2010

< class="heading12boldGeorgia">India accused of muzzling press freedom

In Nepal, India-bashing continues to be the flavour of the season. After politicians warning India to stay off from their internal power-play and the fiasco over the dubious Machine Readable Passport (MRP) deal which was supposed to be signed up with an Indian company but was handed over to a French firm, it is the turn of media now to blame New Delhi for not granting them the freedom to report the way they liked. In the latest incident involving India, the Press Council of Nepal said that the Indian Embassy has infringed upon diplomatic norms, and has mocked at the notion of international press freedom.

The tirade against the Indian embassy doesn't stop only at that. Bishnu Hari Dhakal of Broadcasting Association of Nepal also claimed that the Indian embassy is indulged in undermining professional ethics of the Nepali media. The reason for such a malicious campaign against India is that India embassy has told Nepali media to exercise restraint in disseminating negative reports against Indian Joint Ventures (JVs) in Nepal. It is believed that Nepalese media bodies have hoped to get more revenue from Indian JV's. When they didn't, they started engaging in maligning the image of such Joint Ventures. Another incident of similar nature happened a few days back when the Kantipur Publications, better known for its anti-India views, accused New Delhi of holding back its newsprint in the Kolkata port on the pretext of customs inspection.
Source:, August 30, 2010

< class="heading12boldGeorgia">Sixth round of PM voting on September 5

Amidst the political hullabaloo in Nepal, the Constituent Assembly decided to hold the sixth round of voting to elect a new Prime Minister on September 5. The silver lining was that the Maoists Vice-Chairman, Dr. Baburam Bhattarai, had said that his party was ready to withdraw its candidate, if Nepali Congress (NC) reciprocated its move. However, NC refused to pull out of the prime ministerial race by stating that it was not ready to accept Maoists leadership despite the fact that a section of the party led by its acting president Sushil Koirala and Deputy Prime Minister Sujata Koirala were in favour of an all-party consensus government.

The Madhesi Janadhikar Forum (MJF), a major constituent of the Madhesi Alliance, too declared that this time they won't stay neutral during the voting but would vote for somebody to end the political crisis. They have still not opened up their cards. So it was impossible to tell, as to whom they would support. President Ram Baran Yadav also appealed to the fringe parties to increase their role in bringing about a rapproachment among the three major parties in the Constituent Assembly (CA) in Constitution-making and government-formation.
Source:, August 30, 2010

< class="heading12boldGeorgia">Debate over UNMIN intensifies

With the Nepalese Army (NA) opposing term-extension for the UN Mission in Nepal's (UNMIN), various political parties, including a section in the Nepali Congress, have come to the rescue, by advising the caretaker Prime Minister Madhav Kumar Nepal not to show haste in sending back the UNMIN. The UN should be taken into confidence before the government broached any such move, they have said.

The political parties have agreed that there was a need to reduce the mandate of the UN body by keeping the NA out of its supervision. An expert panel appointed by the caretaker Prime Minister has also advised that the term of the UNMIN, which is going to expire on September 15, should be extended for another six months but with a reduced mandate. However, only 16 of the 26 parties represented in Parliament participated at a meeting hosted by Prime Minister. Among the conspicuous absentee were the Maoists and MJF-Nepal, both of whom have been advocating extension of tenure for the UNMIN.
Source:, August 29, 2010

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