Was UN Security Council Statement a Warning by China to Pakistan for its Saudi love?

Last updated on Feb 22, 2019

Posted on Feb 22, 2019

Sometimes, what happened is important.  But why it happened so is critical. The one question that everyone ought be researching and asking should be – how and why did China allow the UN Security Council statement to go ahead?  Let us go back in time a bit to start our investigation.

In September 2018, after Chinese foreign minister Wang Yi’s visit to Islamabad, Prime Minister Imran Khan’s advisor Abdul Razak Dawood had remarked in frustration over the bad deal that China had meted out to Pakistan

“The previous government did a bad job negotiating with China on CPEC – they didn’t do their homework correctly and didn’t negotiate correctly so they gave away a lot,” Mr Abdul Razak Dawood, the Pakistani member of Cabinet responsible for commerce, textiles, industry and investment, told FT.
“Chinese companies received tax breaks, many breaks and have an undue advantage in Pakistan; this is one of the things we’re looking at because it’s not fair that Pakistan companies should be disadvantaged,” he said.
Pakistan’s new Prime Minister Imran Khan has established a nine-member committee to evaluate CPEC projects, FT said. It is scheduled to meet for the first time this week and will “think through CPEC – all of the benefits and the liabilities”, said Mr Dawood, who sits on the new committee.

The remark had to be played down.

However, the picture on Gwadar, despite Pakistani bravado, was becoming clear to everyone.  For example:

  • For the next 40 years, 91% of all revenue generated from Gwadar would go to China, and only 9% would go to Gwadar Port Authority.
  • As part of China-Pakistan Economic Corridor (CPEC), Pakistan is building a city to house half a million Chinese in a  Chinese-only gated zone
  • Misgivings were strong on both sides, as Pakistan deferred tax concessions to Chinese operators of Gwadar Port and its free zone as Beijing complained that Pakistan was not honoring the 23-year tax holiday for the port

This chart shows what was perceived to be the investment timeline for CPEC.

CPEC CHinese Investment

And the main anchors and analysts on TV had been dinging the CPEC deal.

As Pakistan was reeling on the economic brink with no help in sight, Saudis parked $3 billion at a rate of 3.18% in the Pakistani Central Bank (State Bank of Pakistan).  Operative word here being parked.  It is not given as a grant, it cannot be used, it cannot be spent.  It is just to shore up the reserves.

Saudis also signed an MoU to invest $10 billion in an oil refinery at the Gwadar port.  Looks great right?

Except that the port and the revenue from the port is primarily owned by the Chinese.  And they had their own plans of having a petrochemicals unit (see the investment graph above for “Bao Steel Park and Petrochemicals.”

Worse thing was that the Pakistanis did not even inform the Chinese of the discussions with Saudis on the whole investment deal for the oil refinery.

Asad Umar, the Pakistani finance minister, has admitted China was not informed about the prospective Saudi investment at Gwadar, the CPEC’s crowning glory. It was merely told that Pakistan planned to involve unspecified third-party investors, an idea China has always been open to because of the broader objectives of the belt and road plan.

As a result, China got snubbed by Pakistan as it sided with the Saudis and give them the foothold in Gwadar in return for the Saudis providing Pakistan with oil on a deferred-payment basis, as that would release the pressure on Pakistan’s foreign exchange reserves.

This whole deal with the Saudis did not go down well with the Chinese.

China doesn’t like Saudi Arabia’s encroachment in Pakistan, said Mohan Malik, a professor at Daniel K. Inouye Asia-Pacific Center for Security Studies in Hawaii. But he also added that “Beijing cannot be averse to sharing the burden of propping up Pakistan with Saudi Arabia at a time of dwindling economic assistance from the United States.”
There is also concern over Chinese companies being blocked out by Saudi in Gwadar. “[Saudi oil refinery] might elbow out Chinese energy companies from similar endeavors, undermining China’s own economic gains from BRI,” said Luke Patey, senior research fellow of the Oxford Institute for Energy Studies at the University of Oxford.

Now publicly, the Chinese have said that they have no issues.  But the double game that Pakistan is playing is not something that Chinese had bargained for.  For example, on February 12, Pakistan’s Communication Minister Murad Saeed had accused of corruption in the largest investment operation in Punjab – the Sukkur-Multan Motorway.

Federal Minister for Communications and postal Services Murad Saeed said Tuesday that Sukkur-Multan Motorway project was awarded without bidding and tendering but former minister for planning and Pakistan Muslim League-Nawaz leader Ahsan Iqbal instead of responding to the documented proofs of corruption against him, was trying to hide behind China-Pakistan Economic Corridor.

This shocked the Chinese, who released their statement on this.

China State Construction Engineering Corp (CSCEC) said that it is extremely “shocked” by the recent “groundless allegations” made public through media against the Sukkur-Multan Motorway project in Pakistan in which it had participated.
The company’s clarification came after several Pakistani government officials were accused of misappropriating funds worth up to Rs70 billion ($500 million) in the Sukkur-Multan Motorway project, according to a report in Pakistan Today on February 8.

You see, the Pakistanis are playing their double-game here.  They are trying to bring in the Saudis and push out the Chinese in importance when it comes to Gwadar.

UN Security Council Statement on Pulwama: Why did China agree?

As we have said that this statement by the UN Security Council was unprecedented as it mentioned Jaish-e-Mohammad.  What the media is now saying is that the statement was delayed by a week.

Just enough for the visit of Saudi Crown prince to South Asia to finish.

The Pakistanis are playing Saudis against the Chinese.  That fact was clear already when the Chinese were not even informed about the deal.  But as the slow and sudden developments happen where the Chinese are seen as villains or at least siding with villains in Pakistan, the bon-homie seems to be disappearing between Pakistan and China.

The Saudi visit changed a lot of things in the neighborhood.  Not only was the Saudis visit used to attack Iran (thus sucking up to their visitors as Pakistan struck their chief Shia rival), it was also used to snub the Chinese.

And, the Chinese, after taking care of its interests in Pakistan, gave a little jolt to their “all-weather” friend perhaps by letting go of their opposition to the whole statement in the UN Security Council.

As much as the UN Security Council statement gives India the leverage in its fight against Pakistan, it also should be seen as a warning by China to Pakistan.  That China can wait for it to do things right by the Chinese, but if Pakistan gets too out of line, there will be serious ramifications for its future!

But as Pakistan once again puts all its eggs in the Sunni Islam basket, it can see some interesting times ahead!

So, basically, this may have nothing to do with terrorism at all in case of China!

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