Islamabad [Pakistan], October 24 : Pakistan has put 'blind trust' in China as the Belt and Road Initiative enters a new phase, according to Nikkei Asia.
During a visit to China's Belt and Road Forum last week, Pakistan's caretaker prime minister Anwaar-ul-Haq Kakar agreed on a number of agreements, but experts warned that financial constraints and security threats could still hinder the projects.
Kakar while meeting with Chinese President Xi Jinping called Pakistan's partnership with the world's No. 2 economy "made in heaven."
"We will always stand with China and trust you blindly," Kakar said.
The biggest move was an agreement to start work on the long-awaited Main Line 1 (ML-1) railway project, a plan to upgrade over 1,700 kilometres of track between Karachi and Peshawar. All told, the two sides signed 20 pacts and memoranda of understanding on a range of plans, according to Moin ul-Haq, Pakistan's envoy to Beijing, as per Nikkei Asia.
Other endeavours include a USD 1.5 billion investment by the United Energy Group of China to boost Pakistan's refinery capacity, along with a project to turn the Khunjerab Pass, a trade route between the neighbours that closes in winter due to snow, into an all-weather border.
Pakistan has been a focus of Beijing's Belt and Road Initiative through the USD 50 billion China-Pakistan Economic Corridor (CPEC). The latest agreements came after the Chinese government previously spurned proposals to expand cooperation amid concern over political and economic upheaval plaguing the South Asian country.
Last week, Chinese President Xi Jinping vowed to press ahead with the 10-year-old Belt and Road in general, emphasising "small yet smart" projects.
ML-1, however, is the single largest project in CPEC, although the two sides have agreed to reduce the cost to USD 6.7 billion from USD 9.9 billion. China is to lend 85 per cent of the money, with Pakistan financing the rest. The railway is to be built in three phases, scheduled over 16 years.
Despite the latest deal, experts are not holding their breath for ML-1.
Assistant professor of global studies at the University of Virginia Muhammad Tayyab Safdar does not see the work starting anytime soon. "This is not the first time that such agreements have been announced linked to the ML-1," he said. "The devil will be in the details."
For starters, local media reports said Pakistan will need the consent of the International Monetary Fund to provide a sovereign guarantee to China for the ML-1 loan. Islamabad's shrinking foreign reserves forced it to go to the IMF earlier this year for a USD 3 billion bailout to avoid a debt default, as per Nikkei Asia.
A lawyer with expertise in economics and taxation Ikram ul-Haq believes the railway is still subject to final adjustments of the design plans and loan arrangements. "Even USD 6.7 billion will be too expensive for Pakistan to fund, keeping in view the existing difficulties on external fronts and conditions imposed by the IMF," he told Nikkei Asia.
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