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Another Massive Dispute Brewing Between India-China-Pakistan Over Diamer-Bhasha Dam?

Adding fuel to fire in the already tense relations between India and China, Pakistan has signed a billion-dollar contract with a Chinese state-run firm to construct Diamer-Bhasha dam in the contentious region of Pakistan controlled Kashmir.

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The contract signed earlier this month for the Diamer-Bhasha dam is worth about 442 billion Pakistan rupees ($2.75 billion) and is a joint venture between Chinese state-run firm, China Power which holds 70% of the accord while the remaining 30% is held by Pakistan’s Frontier Works Organisation (FWO).

Expected to be complete by 2028, the dam is estimated to be the tallest roller compact concrete (RCC) dam in the world

India Objects To Diamer-Bhasha Dam

Located in Gilgit-Baltistan, the project is a part of the China-Pakistan Economic Corridor (CPEC) which is further linked to Chinese Premier Xi Jinping’s signature Belt and Road Initiative (BRI).

India has long opposed the BRI due to territorial disputes as the CPEC passes through the Pakistan controlled Kashmir, which India claims to be a sovereign part of its territory.

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The latest move by Pakistan over Diamer-Bhasha Dam has been widely condemned by India. “We have consistently conveyed our protest and shared concerns with both China and Pakistan on all such projects in the Indian territories under Pakistan’s illegal occupation,” said Anurag Srivastava, from the Indian Ministry of External Affairs.

He maintained that “Our position is consistent and clear that the entire territory of the Union Territories of Jammu and Kashmir and Ladakh have been, are and will continue to be an integral and inalienable part of India.”

While Beijing’s openly dismissed India’s concerns and defended its decision to continue the monstrous project by conveying that “China’s position on the issue of Kashmir is consistent. China and Pakistan conduct economic cooperation to promote economic development and improve the well-being of the local people.”

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Michael Kugelman, deputy director of the Asia program at the Wilson Center in Washington D.C., told media that India has always opposed the BRI and “that certainly hasn’t stopped Pakistan and China.” “The same applies to the dam,” he continued.

Pakistan’s Approach To Diamer-Bhasha Dam

Experts believe that the cost of the Diamer-Bhasha dam is extravagantly high for Pakistan to pay. “There’s no indication that Islamabad has thought through how it will cover these immense costs,” Kugelman comments on the funding issue.

“In view of the lenders’ resistance, it was decided about four years ago to divide the multi-purpose project into two major components — Rs650bn (PKR) worth of dam project to be constructed with the public sector funds and Rs750bn (PKR) worth of power project most probably to be developed in independent power producer (IPP) mode at a later stage,” reported the Dawn.

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However, Pakistan PM, Imran Khan’s aim to crowdfund such a large sum was termed unrealistic and was said that “if it succeeded it would be the largest crowdfunding effort in history — shattering the current Kickstarter record 700 times over.”

Since the World Bank and the Asian Development Bank had already turned down the funding requests in  2016, Kugelman suggests that “[Islamabad] will have few other funding options, it won’t have much leverage with China in terms of the structuring of a potential loan.”

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