In June 2015, barely two months after Chinese President Xi Jinping announced plans to invest $46bn to develop infrastructure and energy projects in Pakistan as part of the economic corridor, or CPEC, India’s Prime Minister Narendra Modi told China that it was “unacceptable”.
The ambitious project – part of China’s “One Belt and One Road” or new Silk Road project – is a series of roads, railways, pipelines, hydropower plants and other development projects, being built from the restive Xinjiang province in China to Gwadar in southwestern Pakistan.
The corridor, which came into operation last November, passes through Gilgit-Baltistan in Pakistan-administered Kashmir – a territory claimed by India. Both the South Asian neighbours claim the disputed Kashmir region in full, but control parts of it.
On January 17, speaking at a seminar in New Delhi, Prime Minister Narendra Modi said: “Only by respecting the sovereignty of countries involved, can regional connectivity corridors fulfill their promise and avoid differences and discord.”
That Modi was referring to the economic corridor was confirmed by his foreign secretary, Subrahmanyam Jaishankar, two days later. “We expect they respect other people’s sovereignty,” he said.
“The CPEC passes through a territory that we see as our territory. Surely people will understand what [the] Indian reaction is. There needs to be some reflection and I am sorry to say that we have not seen signs of that.”
Dismissing New Delhi’s concerns, Nafees Zakaria, a Pakistan foreign ministry spokesman, told Al Jazeera that the economic corridor is a “comprehensive and broad-based economic cooperation project”.
“The project will contribute to [the] economic development of the entire region and not only for Pakistan and China,” he said.
“It can be a catalyst for economic connectivity and integration in Central Asia, South Asia and West Asia. Objection by India or any other country to such an economic project is, therefore, beyond comprehension.”
The project promises to be an immense economic and strategic windfall for China and Pakistan.
By 2050, according to a report by PricewaterhouseCoopers, China is projected to become the world’s largest economy, with a GDP of $58.5 trillion, up from $5.7 trillion in 2010. The country’s GDP growth rate has declined in recent years, however, from 7.3 percent in 2014 to 6.7 percent in 2016.
The CPEC is anticipated to boost Pakistan’s economy, where the GDP is expected to grow by more than five percent by 2020, according to an IMF growth forecast. PricewaterhouseCoopers predicts that Pakistan’s GDP will reach $4.2 trillion by 2050 from the current $988bn.
The 3,200km-long corridor is intended to connect the world’s second largest economy, China, with the Middle East and Central Asia, reducing the alternative sea route distance – via the Malacca Strait – by 10,000km.
For Pakistan, the combined value of the CPEC’s infrastructure projects would be equivalent to 17 percent of Pakistan’s GDP in 2015, a report by Deloitte predicted. The report estimated that the economic corridor would create some 700,000 direct jobs between 2015 and 2030, and add up to 2.5 percent to the country’s growth rate.
The fact that the route passes through the disputed Kashmir region seems to have worried India, which has about half a million troops stationed in its part of the territory to quell more than two decades of armed rebellion.
“China is using Indian land area illegally occupied by Pakistan,” said Seshadri Chari, a national executive member of the ruling Hindu nationalist Bharatiya Janata Party.
Beijing has been willing to address India’s concerns, though. Hua Chunying, China’s foreign ministry spokeswoman, told the media that Beijing is committed to developing friendly and cooperative relations with others and that CPEC would not affect China’s position on Kashmir.
Suchitra Vijayan, a New York-based lawyer who has worked on India’s borderlands including Kashmir, told Al Jazeera: “India doesn’t want to internationalise the Kashmir issue, but with Pakistan, China, and CPEC coming in, it happens.”
Andrew Small, author of The China-Pakistan Axis: Asia’s New Geopolitics, does not believe that the offers to India to join CPEC will elicit a positive response in the near future. But he believes there is a view among a number of officials in China and Pakistan that, in the long-term, that door needs to be kept open.
Small told Al Jazeera that keeping the door open does not mean that India will become enthusiastic about CPEC but that “it will be neutrally disposed – seeing some potential security benefits if Pakistan’s economy is stabilised”.
According to a report released by the Stockholm International Peace Research Institute – a Swedish-based think-tank – India’s opposition to CPEC reflects a concern over the internationalisation of the Kashmir dispute and the growing influence of China in the Indian Ocean.
It says that there is considerable concern within India that China, which has been neutral on Kashmir since 1963, can no longer be so now that its economic and security interests in these territories are growing.
After the 1962 India-China war, Beijing sought to cultivate good relations with Islamabad, which has emerged as the biggest buyer of Chinese defence equipment in recent years.
New Delhi sees Gwadar – a deep-sea port located in Balochistan province – as part of China’s “String of Pearls” bases, that extends from its eastern coast to the Arabian Sea. China is also developing ports in Sri Lanka and Bangladesh that are considered a potential military challenge to India.
The Gwadar port, overlooking one of the world’s busiest shipping lanes in the Arabian Sea, has been leased to Beijing for 40 years. New Delhi fears that the port might become a Chinese naval outpost, thereby threatening India’s energy and economic security, as more than two thirds of India’s petroleum imports pass through the area.
Small says that India and Pakistan can expand their commercial interactions without resolving their larger conflict – a point echoed by a leading Kashmiri separatist leader Mirwaiz Umar Farooq.
He explains that India does not need to “join CPEC” anyway – in the future, it could maintain its formal objections to the initiative but still deepen trade relations with Pakistan, and in the process implicitly be utilising CPEC infrastructure, energy projects, industrial zones and more.
But Mihir Sharma, who is the author of Restart: The last chance for the Indian Economy, says that India’s relations with Pakistan are simply too unstable for the former’s primary land connectivity corridor to Central Asia, Russia and Europe, to run through the latter’s territory.
“The risk of the investment and of trade through that corridor, in both geo-strategic and economic terms, might be too high,” he said.
In May last year, India’s Prime Minister Modi travelled to Iran and announced a deal to develop Chabahar port, barely 75km from Gwadar. India announced an investment of $500m but the project has been repeatedly delayed.
India has committed close to $2bn in development aid to Afghanistan, and it maintains close military cooperation with Kabul as it seeks to reinforce its geostrategic interest in the region. Chabahar will provide India with land access to Afghanistan – something Pakistan has denied India for years.
Iran could use Chabahar – about 843 nautical miles from India’s commercial hub, Mumbai – to export more goods to India and the Asia Pacific region.
This would open more investment opportunities to Indian firms, which could gain a foothold in Iran, which is emerging from years of sanctions. There would alos be benefits for landlocked Afghanistan, which would get connected to the Gulf, Arabian Sea and Indian Ocean.
The Chabahar port will be linked to Zaranj city, in Nimruz province, Afghanistan, which is connected to a highway built by India in 2009.
Small says that Chabahar is typically billed as an alternative and a rival port to Gwadar, and a counter-play to CPEC, but he points out: “It’s still entirely possible that Chabahar and Gwadar would end up functioning as [a] network.”