Damned if you do: China avoids involvement in Pakistan's contentious hydropower project
Both China and the US offered assistance, but funding isn't forthcoming
China's US$45 billion push into Pakistan is skirting one of the Indian subcontinent's most dangerous flashpoints.
The proposed 4,500-megawatt Diamer Bhasha hydropower plant in Kashmir would eliminate about half of Pakistan's power shortfall and irrigate more than a million hectares of parched farmland. While both the US and China have promised to help Pakistan find private investors for the dam, they've resisted putting up the cash themselves.
China's reluctance shows that its push to finance infrastructure across Asia hardly amounts to a blank cheque. It also keeps leaders in Beijing away from a project in a disputed area that has triggered three wars between Pakistan and India, where tensions over shared waters are rising.
"China is doing a smart thing by putting money up for smaller projects with better returns," said Priyanka Singh, an associate fellow at the New Delhi-based Institute for Defence Studies and Analyses, who has published papers on the Diamer Bhasha project. "China has made its calculations and concluded that it doesn't directly serve its interests."
China is unlikely to fund Diamer Bhasha because it doesn't want to get involved in a water dispute between India and Pakistan, said a senior Chinese water resources official, who declined to be identified because the information isn't public.
Electricity projects account for about half of a proposed US$45 billion economic corridor that would provide another route for China to export goods to Europe and import oil from the Middle East. The dam is opposed by the government in Delhi.
India and Pakistan have fought for almost seven decades for control of Kashmir, a region nestled in the foothills of the Himalayas, the source of water for a quarter of the world's population. But melting glaciers and poor water management are stoking a crisis that threatens to intensify tensions between the nuclear-armed neighbours.
The 1960 Indus Water Treaty intended to defuse tensions by clearly delineating how India and Pakistan would share the resource, but times have changed.
If water pressures become extreme, India may violate the treaty to store water. In a worst-case scenario, anti-India groups in Pakistan could use a shortage as a pretext for launching a strike on India, prompting retaliation.
If that happens, the situation on the subcontinent could decline rapidly.
Pakistan sees the project as an answer to many of its problems. If it were built, the plant would singlehandedly boost the energy-starved nation's power capacity by 20 per cent, enough for 41 million people. It could also provide irrigation for 1.6 million hectares.