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Business News/ Opinion / The vulnerability of the Chinese Corridor

The vulnerability of the Chinese Corridor

Game theory suggests India's dismay over the China-Pakistan Economic Corridor might be unfounded

Photo: AFPPremium
Photo: AFP

After the Uri attacks, Pakistan’s special Kashmir envoy Mushahid Hussain Syed declared that the US was a waning power, suggesting that Pakistan was seeking out other allies. The reference was to China, a country that has been courting Pakistan for several years through a number of means including assistance in its nuclear programme.

Of late, there has been much talk of the China-Pakistan Economic Corridor (CPEC) that stretches from the autonomous region of Xinjiang to the Gwadar port. This corridor—which includes road, rail and port infrastructure—is expected to allow China to avoid the vulnerable Indian Ocean route currently used to transport oil from the Gulf. It will also enable Pakistan to create an alternative to the US for patronage while bringing economic development in desperately poor regions including Pakistan Occupied Kashmir (PoK).

India has noted the development of the project with some dismay. Prime Minister Narendra Modi is believed to have brought up the issue of the economic corridor passing through PoK in his bilateral meeting with Chinese President Xi Jinping on the sidelines of the G20 summit in September. Game theory, a subject that came of age at the height of the cold war between the US and the Soviet Union, suggests our dismay might be unfounded.

In the early days, game theorists like Robert Aumann and Thomas Schelling thought deeply about the “disarmament dilemma", a version of the fabled prisoners’ dilemma. The story went that both the US and the Soviets had a choice of engaging in an arms race or channelling resources for economic development. Given the prevailing enmity, each country had a “dominant strategy" to stockpile weapons, i.e. they would prefer to build their arsenals whether or not the other country did so. As rational players, each would naturally follow its dominant strategy, resulting in a mutually crippling arms build-up, when both could have been better off by choosing economic development.

Much thought went into devising ways of avoiding the foreseen calamity. It was believed that the exchange of hostages, in the manner of the Roman Empire and Imperial China, might help. For example, children of one country could undertake their primary schooling in the other country, thus reducing the risk that either country would initiate a nuclear war. In a similar fashion, if both countries did not build defensive capability against nuclear weapons, then neither would attack.

In this manner of thinking, CPEC, being a valuable asset within easy striking distance of the Line of Control, is a hostage in India’s control that will deter cross-border militancy as such activity would put the billions of dollars of investment at risk from retaliatory strikes. On the other hand, with the Indian side of the border being poorly developed, Pakistan and China appear to have no matching aces up their sleeves.

However, this simple mental model must be subject to a number of caveats. First, the “hostage", i.e. the economic corridor, is valuable not just to Pakistan but also to China. Given the formidable threat posed by China, India will be constrained in its ability to effect harm, thereby limiting the value of the asset.

But the more important concern relates to the possible conflict in Pakistan between votaries of economic development and supporters of militancy. As a sign of things to come, on 24 October three armed men wearing suicide vests attacked a police academy in the area of the proposed CPEC in Quetta killing at least 61 and injuring another 110. Note that the corridor originates in Xinjiang, a Muslim-dominated province that has seen much unrest over the last few years. One can imagine that the militants will see economic development as a threat to their long-term sustainability and oppose it, or attempt to extract economic rents from the new infrastructure. This tendency would be heightened by the general trend of such projects displacing large numbers of people with hardly any recompense.

Further, while the relationship with China would provide Pakistan an alternative to funds from the US, it could undermine the strategy of using foreign money to fight terrorism in one part of the country, while simultaneously fomenting militancy in Kashmir. For Pakistan, the issue of Kashmir is an existential one, and represents a fight between two ideologies—the Indian one that believes that communities can coexist (a belief often at risk within India, as evidenced by recent data on communal tensions in Uttar Pradesh) and the Pakistani view that believes Muslims need a separate homeland. It is highly likely that Pakistan, divided between its politicians, armed forces and militants, would be unable to surrender its core ideology without a huge amount of internal strife.

While this may sound like good news for India, the prospect of greater instability in our neighbour should be deeply worrisome. There is even a risk of the disaffected youth of Jammu and Kashmir getting embroiled in this war.

And yet, the development of CPEC must be seen not just in isolation but in the light of China’s One Belt One Road project that includes the development of another road, the Bangladesh-China-India-Myanmar economic corridor that will stretch from Kolkata to Kunming in the Yunnan province. The development of this road, when seen in the light of the roadblocks likely to accompany CPEC, provides an avenue of opportunity that India must use to navigate the difficult geopolitical scenario. But that story, itself hostage to this column’s space constraint, must await another day.

Rohit Prasad is a professor at MDI, Gurgaon and author of Blood Red River. Game Sutra is a fortnightly column that uses the lens of game theory to examine matters big and small.

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Published: 03 Nov 2016, 01:40 AM IST
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