The bungling of Reko Diq

As a consequence of a series of bungled moves and decisions by successive governments in Balochistan, Pakistan is possibly going to face a bill for $11.45 billion to settle claims in the Reko Diq mining case. International courts are hearing cases relating to corrupt practices and inefficiency and Pakistan is now in a legal thicket that is going to be hard to escape from. All was revealed by the Public Accounts Committee (PAC) on Thursday 18th January. The PAC raised questions about the way in which provincial governments allowed, against previously concluded agreements, a change of ownership between one Australian company to two others between 1998 and 2006. The original agreement, known as the Chagai Hills Joint Venture Exploration Agreement, had no clause allowing such a move and is the start of a chain of events that has led today to potentially severe financial penalties.

The multiple cases being heard internationally are of considerable complexity, and any attempt to pursue accountability is going to be exceedingly difficult and ultimately probably pointless. It would involve the investigation of hundreds if not thousands who were involved over the last 20 years, but it is possible in broader terms to pinpoint where the failures lie — corrupt practices and inefficiencies in the governments of Balochistan that have now to accept a collective responsibility.

Pakistan has fared poorly in recent years when it comes to decisions in its favour when cases have gone to arbitration, and Reko Diq has gone against us. The International Court for Settlement of Investment Disputes has ruled that Pakistan has breached the Bilateral Investment Treaty of 1998 between Pakistan and Australia, upholding the claim by Tethyan Copper Company lodged in 2012. Final verdicts will be delivered later in the year. Quite apart from any financial penalty there are other less visible losses incurred — like an erosion of investor confidence when it comes to large-scale capital and infrastructure projects. The Chinese are going to be studying the intricacies of the case carefully, the more so because of the prominence of Balochistan in the western arm of the China-Pakistan Economic Corridor.

Published in The Express Tribune, January 20th, 2018.

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