US troop withdrawal from Afghanistan increases threats to CPEC, to hurt Pakistan’s ailing economy further

Pakistan’s economy is in the doldrums thanks to the stagnant growth in the crucial industrial sector, rising inflation rates and falling exports. And when the county needs the wheels of economy get moving, the US’ decision to withdraw its troop from Afghanistan is going to deliver a big blow to Pakistan. The instability created inside Afghanistan would spill over into Pakistan, boosting local militant groups’ nuisance value and thus leading to security threats to the China- Pakistan Economic Corridor (CPEC), which was touted as a game-changer for Pakistan’s economy. And initial impact has already been seen even before the US began pulling out its troops. The attack on Chinese Ambassador Nong Rong by Tehreek e-Taliban Pakistan (TTP) a few days ago is a classic example of what lies ahead.

Most of the CPEC important projects including Gwadar port are located in the restive province of Baluchistan, which share border with Afghanistan and Iran. There have already been attacks on the CPEC projects and Chinese nationals in the past. The recent attack on Chinese Ambassador occurred in Quetta, which is capital of Baluchistan. The separatist forces in Baluchistan are resisting CPEC projects, which led to some fatal attacks on the Karachi Stock Exchange and state-run Oil & Gas Development Company in 2020. Khyber Pakhtunkhwa is another Pakistani province that shares its western border with Afghanistan. It has been a major area of terror activities for decades, and the federal government of Pakistan cannot really assert its control in the region. A major concern for Pakistan government is the cross-border infiltrations by the TTP, which has significant presence in Afghanistan too. The instability due to increased militant activities across Pakistan will certainly take its toll on the CPEC projects, which are already facing fund crunch.


Tehreek e-Taliban Pakistan, which has carried out hundreds of attacks inside Pakistan since its formation in 2007, see China as its opponent. China’s ill-treatment to Uygur Muslims in Xinjiang province is one of the major reasons for the TTP to wage a war against Chinese interests in Pakistan. “CPEC has not traditionally been a top target of TTP in Pakistan. But in recent months, anti-China rhetoric has surfaced in TTP propaganda, especially because of China's oppression of Uyghur Muslims," Michael Kugelman, the deputy director of the Asia Program at Wilson Centre, a nonpartisan policy forum.
 
Lowy Institute, an Australian think tank, warned that the CPEC will hit the roadblock if the TTP becomes proactive against Chinese interest in Pakistan. And the TTP threat looms large as the militant organisation will have sanctuaries established across the border in Afghanistan once the US troops leave the war-torn country. As the US plans to get out of Afghanistan by September 2020, the Taliban-infested country will fall into chaos, providing much needed atmosphere for the TTP to flourish. Following the complete withdrawal of the US forces, the TTP will be in the better position to attack the installations that are crucial for Pakistan’s economy, said Przemyslaw Lesinski, an Afghanistan expert at the War Studies Academy in Warsaw. "Some Chinese investments are located near the traditional areas of TTP's activities, so it makes them natural targets," he said.

Firefighting soon after the Quetta attack, China’s state-run newspaper Global Times said implementation of the CPEC would continue to happen. However, it acknowledged the mega project “faced terrorist threats” and thus sought to “revaluate it rationally”. Now, the US plans have certainly enhanced the risk of terror attacks on the CPEC projects manifold. And there are possible signs of Chinese getting anxious. Beijing has shown reluctance to clear a USD 6 billion loan for Mainline-I (ML-I) railway project, a CPEC component. Moreover, the coal power projects under CPEC has hit by a circular debt as Pakistan government could not arrange funds to pay off due payments.


Pakistan’s economy has stagnated and Chinese reluctance will worsen it further. Pakistan’s public debt has reached to whopping 87.2 percent of the GDP while 60 percent of country’s tax revenues goes into debt servicing. Moreover, the World Bank has forecasted Pakistan growth to be just 1.3 percent in the fiscal year ending June 2021. Now Pakistan government has requested China to restructure USD 2.8 billion loans. However, China has declined to reopen these loan deals. Now, terrorist organisation in Pakistan being expected to attack the CPEC projects, Beijing is likely to reconsider and reevaluate its plans to release funds. This will certainly hurt Pakistan’s economy and its prospects to lift the country out of financial troubles.