Trade, Not Aid, Is the Way to Persuade Pakistan to Buck China's Influence

Arif Rafiq

Last month, Alice Wells, the top U.S. diplomat for South Asia, delivered a scathing critique of the China-Pakistan Economic Corridor (CPEC)—the connectivity program valued at upwards of $62 billion linked to China’s Belt and Road Initiative or BRI.

What Wells offered was a polemic that presented two competing approaches to foreign aid and investment, focusing on what China has gotten wrong and what America has gotten right.

Wells rightly noted that CPEC, with its controlled-bidding processes and unclear contractual terms, falls short of offering the sustainability and transparency critical for developing countries like Pakistan to grow over the long term. And she correctly asserted that CPEC is not an exercise in Chinese philanthropy, given that infrastructure projects are mainly funded by loans and Chinese companies are earning handsome guaranteed profits by selling comparatively expensive electricity to the Pakistani grid. America, Wells claimed, provides an alternative development partnership model, pairing grant assistance with support for policy reforms aimed at attracting private sector investment.

But that is only half of the story. The U.S. civilian aid program in Pakistan is actually far from a success. And China is attempting to make corrections to its economic partnership with Pakistan that could position itself as an alternative to the Western aid model. As the U.S. development assistance portfolio in Pakistan shrinks, Washington risks losing influence in a strategic region if it continues to offer mere words in response to CPEC. The most effective way America can offer an alternative to CPEC is not by offering more aid, but through expanding trade, with an emphasis on Pakistan’s textiles and apparel industry.

America’s Aid Industrial Complex Has a Mixed Record in Pakistan

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