Business Recorder
Is CPEC a modern East India Co?

Is CPEC a modern East India Co?

Earlier this week the Financial Times’ Big Read on CPEC carried the following quote. “The head of a large investment company in Pakistan said: We have to be careful if we don’t want this to turn into a repeat of the East India Company.” Who knows what history books that investment boss and many other fear mongers are reading, but nothing could be further from the truth.

First, as William Dalrymple notes, the rapid rise of East India Company became possible due to the quick fall of the Mughal Empire, after Nadir Shah and other raiders hit hard on Mughals and their finances.

Pakistan today may be a ‘failing state’ by some accounts. There may be a disease of doing business, corruption, violence against minorities and women, law and order concerns, etcetera. But it is not as if the state or the whole country is disintegrating. If anything, there has been noticeable success in the war against terrorism, whereas elected representatives have withstood some shocks, even if after losing a few key posts such as foreign policy. The citizenry too can be said to be far more engaged (though far from ideal) than what was the case during the disintegration of the Mughal Empire. And in the 21st century, the role of citizens matters.

Second, the East India Company grew from a motley crew of 35 employees to a 250-staff firm backed by nearly 250,000 Indian and British soldiers who took control of the entire subcontinent. Once in control they tortured, plundered and looted the local populace and their resources. That’s clearly not the case with CPEC; nor can the CPEC be expected to lead Chinese soldiers into the Pakistan’s land in the future in a similar fashion. Disagreements over the role of army and the history of martial law in this country are one thing; but it’s not as if the Pakistan army is chewing lollipop sticks.

The East India fear mongers should also bear in mind China’s ‘Three No-s’ as a part of her OBOR policy:

That China will not interfere in the internal affairs of other nations; that she does not seek to increase it’s so called ‘sphere of influence’; and that she does not strive for hegemony or dominance. These no-s have a historical precedence. China has been the world’s leading civilization in five of the last seven thousand years of recorded history. And never has it been hegemonic ala European colonizers. Need one also remind that China has made pronounced investments in Africa over the last ten years, and to date there haven’t been reports of Africa being colonized by the Chinese.

Fear mongers may now quip that their East India argument is only metaphorical in terms of the influence the Chinese may have on Pakistan’s economic policy. Well even in that case, China will only have an ‘influence’ on policy rather than ‘making’ the policy itself as was the case with East India clerks. In that vein, the fear mongers, who mostly come from the Anglo-Saxon world or local rent seekers, should put their money where their mouth is, and pour investments in the country.

From Anglo-Saxon investors to Japanese automakers, from local textile barons to stock brokers and industrialists from an array of business sectors, nearly all and sundry have been influencing the country’s economic policy for as long as one can remember. Be it getting an SRO at a cost of few million rupees or be it lobbying or the use of street power to get a tax cut or other policy change, both local businesses and foreign investors have had their fair share of influence over economic policy at the cost of general public interest.

This should not be read as if this column is justifying unnecessary, non-transparent business influence over economic policies at the cost of public interest. But just to make a point that it is only now that the mother of all of funds – the OBOR funds – is coming to town; both local rent-seekers and non-Sino foreign investors have started showing concerns about economic sovereignty of the country. That’s tantamount to demanding ‘heads I win; tails you lose.’

Being the biggest player in the region, China will call the shots. Let there be little doubt about it. The OBOR initiative, of which CPEC is the pet project, is no joke. It involves countries that span 55 percent of the world’s GDP, 70 percent of the world’s population and 75 percent of energy resources across Asia and Europe.

The last time the world saw such a massive flow of funds was in the Marshal Plan. But even by conservative estimates, OBOR outlay is almost double the size (relative to GDP) of Marshal Plan, though of course just as the East India argument, comparisons with Marshal Plan are unfounded. (See BR Research column: One Belt, One Road, One Research, published March 1, 2017).

Ergo, instead of wasting time over making rhetoric statements like ‘CPEC will be another East India Company’, the business community would do well to do their own research to come up with pointed problems, possible scenarios and their solutions. So far we have seen little of that.

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