New times, Similar woes
Pakistan’s most recent debt and balance of payment crises have come to highlight yet again the continuing fragility of its economic and financial situation. Even despite a considerably improved security situation and a significant rise in its GDP growth rate, Pakistan’s current account deficit over the last fiscal year has neared the $16bn mark reducing its Forex reserves by nearly 40pc. This will likely further exacerbate public debt, which currently stands at a staggering 70% of GDP. Add to that the political upheaval of the current election season; the past few year’s narrative of Pakistan emerging as a key developing market stands in all out jeopardy, as investors both at home and abroad watch with increasing trepidation.
This bodes ominously for the widely publicized China Pakistan Economic Corridor (CPEC), which has over the last few years dominated economic discourse within the country. Having become increasingly intertwined within Pakistan’ politico-economic framework, CPEC’s detractors and supporters both at home and abroad have hotly debated whether CPEC itself is the cause, or remedy to much of the country’s economic and financial troubles.
Warnings of an impending Debt trap
For instance, the widening current account deficit over the last few years has been continually attributed to the huge import costs of machinery and related building materials for CPEC projects currently underway. This was highlighted by the government as necessary given their stance that importing such capital goods was essential to the long-term restructuring and development of the country. This was also the reason used to justify the rampant borrowing undertaken by the government. By issuing sovereign bonds and taking on expensive commercial loans, the government in effect borrowed more in its attempt to curtail dwindling Forex reserves; reserves that were, and are still crucially needed to meet the ever widening current account deficit.
In a similar vein, critics both in and outside of Pakistan have pointed out the potential of CPEC turning into a ‘debt trap’ for a structurally and financially weak Pakistan. Parallels are often drawn against the Sri Lankan experience of having China fund and build the Hambantota sea port only to have it included as part of a debt-for-equity swap, when low revenues and high liabilities left it unfeasible for the Sri Lankan government to own and operate it. The massive liabilities being incurred on behalf of CPEC projects are often compared to this example.
This is especially true considering Pakistan’s increasing reliance on both public and private Chinese banks for financing CPEC related projects. This over-reliance on Chinese funding has in fact extended beyond CPEC projects with the Chinese government repeatedly offering small bailouts to the Pakistani government. The most recent one being the $1 billion emergency loan released at the end of June to help cover Pakistan’s unsustainable import bill for the next few months. Thus as CPEC’s detractors have pointed out, there is certainly a growing dependency on Chinese funds that can in turn be used as leverage against Pakistan on the geo-political front.
Age-old cycles of debt induced poverty
On the other hand, despite criticisms identifying CPEC as a potential threat to Pakistan’s politico-economic autonomy, it is extremely difficult to argue that the Pakistani economy would be any better off without CPEC. Owing to deep seeded politics and decades old economic structural failings, Pakistan has been unable to mount the sort of economic turnaround seen in the other post-colonial yet newly industrialized Nations of Asia. This is in spite of the comparisons tinged with nostalgic ‘what ifs’, which are often drawn against the economies of the East Asian tigers and even China for that matter.
Yet, there has been little if any effort to emulate the export led growth strategies of the above countries backed by a strong industrial and manufacturing sector. In fact, both exports and manufacturing have instead declined over the last few years, serving as the most glaring examples of the Pakistani economy’s structural failings. Moving beyond short term measures of financing the deficit through loans and bailout programs, expanding the country’s exports is in fact the only viable and sustainable solution to the country’s widening Current Account deficit.
This is in contrast to prevailing policy measures that have continued to relinquish the country’s politico-economic autonomy to its creditors. The only difference being that policy makers, in light of deteriorating relations with the US over the last few years, have preferred to slowly substitute China for the Bretton Woods institutions as its major source of credit. As has been for decades, the economy’s reliance on external funding remains the same even in light of dramatic shifts in the global political economy.
Still, even amidst mounting public debt and new credit lines from Chinese sources, Chinese officials stationed in Islamabad have gone to great lengths to point out that, out of the $19 billion used to finance CPEC projects so far, only 31.6% has comprised of loans to the government in the form of preferential buyer credit. The rest of the financing has been doled out in the form of aid, interest free loans and loans secured by private investors from commercial banks, all of which are mostly outside of Pakistan’s debt servicing obligations. Taking into account both ongoing and completed early harvest projects, the same officials have placed the overall burden of CPEC projects at around 10% of the country’s overall debt servicing obligations. They too point out that the primary factor behind Pakistan’s worsening fiscal and external accounts is more due to its economy’s inherent structural limitations and challenges; the same challenges that have plagued Pakistan and the surrounding region for decades. They argue that it is overcoming these very limitations and challenges that CPEC as a part of the overall vision of the Belt & Road initiative aims to address over the long run in a holistic, sustainable manner.
Of Grand visions and dreams
Coming back to Pakistan’ gaping debt crisis in relation to CPEC, it is unlikely that debt under CPEC has played a major role in bringing the economy to its present position. Despite being a slave to geo-political tensions, Pakistan’s economy has suffered more from years of mismanagement and structural failings that have moved beyond the security dynamics of the South Asian region.
What CPEC instead does, is offer in concrete terms, a viable chance for the country to prioritize its economy as the basis for its power and influence within the region, in the same way China has done at a global level. It offers perhaps the only realistic chance for Pakistan to move beyond its Agrarian focus and develop a robust manufacturing sector to help add greater value to its exports. By successfully leveraging the massive investments in energy, transport and communications infrastructure as well as the financial opportunities under corresponding SEZs, Pakistan can use CPEC as an opportunity to break free of its present structural limitations that have so far reinforced the ensuing cycles of debt and poverty.
This however, is only possible if the underlying, decades-old problems of the present debt crisis are correctly identified and remedied in accordance with a sustainable long-term approach. While all of this is unlikely to materialize overnight, policymakers and administrators overseeing CPEC need to re-prioritize the development of long-term sources of revenue, as opposed to the short-term sources of credit that have come to characterize CPEC in day to day politico-economic discourse. If not, then the entire CPEC initiative is reduced to being just another excuse to borrow more funds to keep the economy afloat. This serves neither Pakistani nor Chinese interests in the long run.
Afghanistan and the Quest for Democracy Promotion: Symptoms of Post-Cold War Malaise
The U.S. withdrawal from Afghanistan should be the first step in a reduced American overseas force posture. Democracy promotion in the form of perpetual force deployment and endless military engagements has resoundingly failed to deliver tangible benefits for the United States. Those who celebrated in the wake of the USSR’s collapse as an unqualified vindication of liberal democracy ignored the role of strategic overextension and deteriorating domestic affairs in the latter. The unipolar U.S. moment was bound to be ephemeral, and should have been used to reevaluate and refocus strategic goals in order to ensure we avoid the same fate of our ideological counterpart.
Instead, the United States dispensed with any notions of humility and allowed democratic peace theory to continue guiding its foreign policy decision-making. Even though it is true that democracies are less likely to engage in military confrontations with one another, only hubris could have led us to believe we could universally create this sufficient condition. Afghanistan is a definitive rebuke to the notion that we can simply will the circumstances for democratic peace—on our own terms and with no compromise—into existence.
Luckily, there is still time to readjust the country’s strategic calculus and begin allocating its limited resources in a less myopic manner. Following through with withdrawal could be a starting point for a new trend of U.S. restraint. The most logical region of the world to address next would be its position in Europe. Relative European weakness at the end of World War 2 threatened the balance of power on the continent as the specter of Soviet Communism crept its way West. With Russia a shell of the Marxist empire, there is no logical reason for the United States to maintain its current outsized military presence in Europe; indeed, the EU collectively holds a GDP 11 times the size of Russia’s, has 3 ½ times the population size, and spends 4 times as much on defense.
The United States should demand that European allies adopt a share of their own defense that is more commensurate with this fact. The decision of the previous U.S. administration to remove 12,000 troops due to Germany’s inability to meet NATO spending targets was a good step. The current administration could continue to capitalize on this trend and set more targets for troop withdrawals. Withdrawal will also signal to countries that use political tension with Moscow to decrease their saber rattling. This includes Eastern European NATO members, as well as countries like Ukraine and Georgia. It must be made explicit to the latter two that they cannot engage in bellicose political brinkmanship, and then hope to simply rely on U.S. led NATO to come to their defense should the situation escalate. It may seem counterintuitive, but this may very well result in a more stable European security environment, at least in regard to its posture towards Russia.
This will also reverberate back into the European political arena, as there will be less incentive for inflating the Russian threat. Moscow acts strategically in accordance with its limited national security interests, anticipating Western responses and reactions. Clear signaling that the United States and NATO do not have the goal of encircling Russia and rendering it strategically inert will only serve to increase U.S.-Russian relations, as well as European-Russian relations. This will free up U.S. resources for more pressing national security interests such as preparing for strategic and economic competition with China. It will also decrease the incentive for closer Russian-Sino cooperation.
Ideally, this would cascade into a reevaluation of U.S. strategic postures in other regions as well, such as Southeastern Asia and the broader Middle East. The former is another area in which the United States could reduce its force presence and incentivize increased defense spending by allies. A decreased U.S. presence would also message to China that the United States does not inherently oppose Beijing as a threat. It should, however, be made explicit that aggression towards a U.S. treaty ally would be met with an asymmetric response, but that does not mean that increased tensions with China need to be the status quo. In the Middle East, large scale U.S. military withdrawal in exchange for a primarily diplomatic mission to the region could also serve to decrease one of the major sources of terrorist recruitment.
An interventionist foreign policy was perpetuated as the product of learning the wrong lessons from U.S. victory in the Cold War. A communist doctrine of proselytizing to the alienated masses with axiomatic dogmas and theological certainties failed not because of the weakness of its scripture (which would require a much different, longer article), but because its millenarian quest for world revolution led the Soviet empire to overextend itself beyond its economic means. Behind the façade of military might, the domestic population grew increasingly disillusioned and dissatisfied. Unfortunately, there are alarming parallels with the current domestic situation in the United States today.
Refusing to remain mired in Afghanistan could be an important catalyst in beginning to reevaluate U.S. foreign policy. If Washington focuses its resources on limited goals that prioritize key national security interests, it can better tend to the state of its own republican government and society. It might not be as romantic as crusading for democracy, but it could be essential in preserving the Union.
What, in fact, is India’s stand on Kashmir?
At the UNGA, India’s first secretary Sneha Dubey said the entire Union Territories of Jammu & Kashmir and Ladakh “were, are and will always be an integral and inalienable part of India. She added, “Pakistan’s attempts to internationalise the Kashmir issue have gained no traction from the international community and the Member States, who maintain that Kashmir is a bilateral matter between the two countries (Pakistan is ‘arsonist’ disguising itself as ‘fire-fighter’: India at UNGA, the Hindu September 25, 2021).
It is difficult to make head or tail of India’s stand on Kashmir. India considers the whole of the disputed state of Jammu and Kashmir as its integral part. Yet, at the same time, admits it to be a bilateral matter still to be resolved between India and Pakistan.
What bars Pakistan from agitating the Kashmir dispute at international forums?
India presumes that the Simla accord debars Pakistan from “internationalizing” the Kashmir dispute. That’s not so. Avtar Singh Bhasin (India and Pakistan: Neighbours at Odd) is of the view that though Pakistan lost the war in East Pakistan, it won at Simla.
Bhasin says, `At the end, Bhutto the “dramatist” carried the day at Simla. The Agreement signed in Simla did no more than call for `respecting the Line of Control emerging from the ceasefire of 17 December 1971. As the Foreign Secretary TN Kaul [of India] said at briefing of the heads of foreign mission in New Delhi on 4 July 1972, the recognition of the new ceasefire line ended the United Nations’ Military Observers’ Group on India and Pakistan (UNMOGIP) role in Kashmir, created specifically for the supervision of the UN sponsored ceasefire line of 1949, since that line existed no more. Having said that India once again faltered for not asking the UN to withdraw its team from Kashmir, or withdrawing its own recognition to it and its privileges (Document No. 0712 in Bhasin’s India-Pakistan Relations 1947-207).
Following Simla Accord (1972), India, in frustration, stopped reporting ceasefire skirmishes to the UN. But, Pakistan has been consistently reporting all such violations to the UN. India feigns it does not recognise the UNMOGIP. But, then it provides logistic support to the UMOGIP on its side of the LOC.
India keeps harassing the UNMOGIP vehicles occasionally. Not long ago, three members of the UNMOGIP had a close call along the LoC in Azad Jammu and Kashmir after Indian troops shot at and injured two locals who were briefing them on the situation after ceasefire violations.
India even asked UNMOGIP to vacate 1/AB, Purina Lila Road, Connaught Place, from where it has been functioning since 1949.
Bhasin says (p.257-259), `The Pakistan Radio broadcasts and…commentators took special pains to highlight …the fact: (i) That India have accepted Kashmir to be a disputed territory and Pakistan a party to the dispute. (ii) That the UNSC resolutions had not been nullified and contrarily (iii) Kashmir remained the core issue between the two countries and that there could not be permanent peace without a just solution based on the principle of self-determination for the people of Kashmir. And Pakistan was right in its assessment. It lost the war won the peace. At the end India was left askance at its own wisdom’.
Obviously, if the UNSC resolutions are intact, then Pakistan has the right to raise the Kashmir dispute at international forums.
India’s shifting stands on Kashmir
At heart, the wily Jawaharlal Lal Nehru never cared a fig for the disputed state’s constituent assembly, Indian parliament or the UN. This truth is interspersed in Avtar Singh Basin’s 10-volume documentary study (2012) of India-Pakistan Relations 1947-2007. It contains 3649 official documents, accessed from archives of India’s external-affairs ministry. These papers gave new perspectives on Nehru’s vacillating state of perfidious mind concerning the Kashmir dispute. In his 2018 book (published after six years of his earlier work), India, Pakistan: Neighbours at Odds (Bloomsbury India, New Delhi, 2018), Bhasin discusses Nehru’s perfidy on Kashmir in Chapter 5 titled Kashmir, India’s Constitution and Nehru’s Vacillation (pages 51-64). The book is based on Selected Works of Jawaharlal (SWJ) Nehru and author’s own compendium of documents on India-Pak relations. Let us lay bare a few of Nehru’s somersaults
Nehru disowns Kashmir assembly’s “accession”, owns Security Council resolutions
Initially, Nehru banked on so-called Instrument of Accession and its authentication by `Constituent Assembly. Yet, in a volte-face he reiterated in New Delhi on November3, 1951 that `we have made it perfectly clear before the Security Council that the Kashmir Constituent Assembly does not [insofar] as we are concerned come in the way of a decision by the Security Council, or the United Nations’(SWJ: Volume 4: page 292, Bhasin p.228). Again, at a press conference on June 11, 1951, he was asked `if the proposed constituent assembly of Kashmir “decides in favour of acceding to Pakistan, what will be the position?”’ he reiterated, `We have made it perfectly clear that the Constituent Assembly of Kashmir was not meant to decide finally any such question , and it is not in the way of any decision which may ultimate flow from the Security Council proceedings’ (SWJ: Volume 15:, Part II, page 394. Bhasin page 56). He re-emphasised his view once again at a press conference in New Delhi On November 3, 1951.
Nehru does not label Pakistan an aggressor at the UN
And then labels it so in Parliament
He never labeled Pakistan an aggressor at the UN. Yet, he told parliament on March 1, 1954 `that “aggression” took place in Kashmir six and a half years ago with dire consequences. Nevertheless the United States have thus far not condemned it and we are asked not to press this point in the interest of peace (Bhasin pp. 55-56).
Nehru disowns the Security Council as just a non-binding mediator
On July 24 1952, Nehru said, `Unless the Security Council functioned under some other Sections of the Charter, it cannot take a decision which is binding upon us unless we agree to it. They are functioning as mediators and a mediator means getting people to agree (SWJ, Volume 19, page 241. Bhasin page 56).
Security Council re-owned
Bhasin points out (page 57 op. cit.) `At the same press conference on 24 July, 1952 when asked what the necessity of plebiscite was now that he had got the Constituent Assembly [approval], he replied “Maybe theoretically you may be right. But we have given them [UN] an assurance and we stand by it (SWJ: Volume 19, pp. 240-241. Bhasin, p. 57, Bhasin pages 256-257).
Pakistan’s recourse to the UN is India’s Achilles Heel. So it is as India’s stand on disputed Kashmir is a rigmarole of inconsistent myths.
To avoid internationalization of the Kashmir issue, India’s own former foreign secretary Jagat Singh Mehta offered proposals (rebranded by Pervez Musharraf’s) to soften the LOC in exchange for non-internationalisation of the Kashmir dispute for 10 years. Mehta presented his ideas in an article, ‘Resolving Kashmir in the International Context of the 1990s’.
India had no consistent stand on Kashmir. There was a time when Sardar Patel presented Kashmir to Pakistan in exchange for Hyderabad and Junagadh. Reportedly, the offer was declined as Pakistan’s prime minister Liaquat Ali Khan thought it could retain not only Kashmir but also Junagadh and Hyderabad. Jawaharlal Nehru approached the United Nations’ for mediation. He kept harping his commitment to the plebiscite.
It is eerie that the whole architecture of India’s stand on Kashmir is erected on the mythical `instrument of accession’ and its endorsement by the disputed state’s assembly, Accession documents are un-registered with the UN. The Simla Accord text makes crystal clear reference to the UN charter.
Let India know that a state that flouts international treaties is a rogue state: pacta sunt servanda, treaties are to be observed and are binding on parties. Self-determination is not only a political but also a legal right in disputed lands. Sans talks with Pakistan, and UN or third-party mediation, what else is India’s recipe for imprisoned Kashmiris? A nuclear Armageddon or divine intervention?
Afghanistan may face famine because of anti-Taliban sanctions
Afghanistan may face a food crisis under the Taliban (outlawed in Russia) rule because this movement is under sanctions of both individual states and the United Nations, Andrei Kortunov, Director General of the Russian International Affairs Council, told TASS on Monday.
“A food crisis and famine in Afghanistan are not ruled out. Indeed, Afghanistan is now on life support, with assistance mostly coming from international development institutes, as well as from the United Nations, the European Union, and the United States, i.e. from Western sources and institutes close to the West,” he said. “The Taliban is under international sanctions, not only unilateral US and EU sanctions, but also under UN sanctions. That is why, in formal terms, the Taliban coming to power may mean that these sanctions could be expanded to the entire country, and it will entail serious food problems. Food deliveries from the World Food Program and other international organizations may be at risk.”
According to the expert, statistics from recent years show that annual assistance to Afghanistan amounts to about five billion US dollars, but this sum is not enough to satisfy the needs of the country’s population. “It is believed that a minimal sum needed by Afghanistan to maintain basic social institutions to avoid hunger in certain regions stands at one billion US dollars a month, i.e. 12 billion a year,” Kortunov noted. “Some say that twice as much is needed, taking into account that population growth in Afghanistan is among the world’s highest and life expectancy is among the lowest. And around half of Afghan children under five are undernourished.”
He noted that despite the fact that the issue of further food supplies to Afghanistan is not settled, some countries, for instance, China, continue to help Afghanistan but a consolidated position of the international community is needed to prevent a food and humanitarian crisis. “A common position of the international community is needed and it should be committed to paper in corresponding resolutions of the United Nations Security Council, which should provide for reservations concerning food assistance in any case,” he added.
However, in his words, the key question is who will control the distribution of humanitarian and food assistance inside the country. “There were such precedents when countries and regimes under sanctions were granted reservations and received food assistance. But a logical question arises about who will control the distribution of this assistance. This has always been a stumbling block for programs of assistance to Syria, as the West claimed that if everything is left to Damascus’ discretion, assistance will be distributed in the interests of [President Bashar] Assad and his inner circle rather than in the interests of the Syrian people. It is not ruled out that the same position will be taken in respect of the Taliban,” Kortunov went on to say. “It means that the international community will be ready to provide food assistance but on condition that unimpeded access will be granted to the areas in need and everything will not be handed over to the Taliban who will decide about whom to help.”
After the US announced the end of its operation in Afghanistan and the beginning of its troop withdrawal, the Taliban launched an offensive against Afghan government forces. On August 15, Taliban militants swept into Kabul without encountering any resistance, establishing full control over the country’s capital within a few hours. Afghanistan’s President Ashraf Ghani said he had stepped down to prevent any bloodshed and subsequently fled the country. US troops left Afghanistan on August 31.
From our partner RIAC
Study of Diversity Shows Scale of Opportunity in Media and Entertainment Industries
The World Economic Forum’s Power of Media Initiative has compiled a first-of-its-kind compilation of the state of diversity and representation...
Afghanistan and the Quest for Democracy Promotion: Symptoms of Post-Cold War Malaise
The U.S. withdrawal from Afghanistan should be the first step in a reduced American overseas force posture. Democracy promotion in...
UAE-Israel relations risk being built on questionable assumptions
A year of diplomatic relations between the United Arab Emirates and Israel has proven to be mutually beneficial. The question...
Afghanistan and Beginning of the Decline of American Power
Has America’s disgraceful withdrawal from Afghanistan spoiled its global standing? The pictures of retreating American soldiers at Kabul International Airport...
North Korea’s Nuclear Shadow: A Worrisome Expansion
Abstract: The nuclear news from North Korea remains clear and threatening. Ignoring both political warnings and legal prohibitions, Kim Jong...
Russia’s Blueprint For Success in the Middle East
As a tradition in the modern world the Middle East remains unstable. Continuous political turbulence in the region extinguishes all...
India’s view of “terrorism: at the UNGA?
At the recent United Nations’ general Assembly session, India was furious at mention of Kashmir by Pakistan’s prime minister Imran...
Africa4 days ago
Money seized from Equatorial Guinea VP Goes into Vaccine
Development4 days ago
Demand for Circular Economy Solutions Prompts Business and Government Changes
Urban Development4 days ago
WEF Launches Toolbox of Solutions to Accelerate Decarbonization in Cities
Southeast Asia3 days ago
The Indo-Pacific Conundrum: Why U.S. Plans Are Destined to Fail
Defense3 days ago
Eastern seas after Afghanistan: UK and Australia come to the rescue of the U.S. in a clumsy way
Southeast Asia3 days ago
AUKUS: A Sequela of World War II and US Withdrawal from Afghanistan
Americas4 days ago
Interpreting the Biden Doctrine: The View From Moscow
Middle East3 days ago
Turkish Geopolitics and the Kabul Airport Saga