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Under the guise of friendship, China is looting Pakistan

Ali Salman Andani

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Pakistan and China define their friendship as “higher than the heights of the Himalayas and deeper than the depths of the Arabian Sea.” To make it even stronger, President Xi Jinping of China visited Pakistan in April 2015, with a multibillion-dollar investment plan — the China-Pakistan Economic Corridor (CPEC), the main plank of Xi’s Belt and Road Initiative (BRI).

China has always defined the BRI as a win-win situation, implying that both China and host countries would enjoy the resultant economic prosperity. The truth, however, is completely different.

Basically, “win-win” probably meant that China would “win twice.” Unfortunately, the CPEC has burdened Pakistan’s economy with a lot of debt and trade deficits, and pushed the country on to the brink of bankruptcy. As well, China did not provide Pakistan with industrial technology to help it boost exports, nor did it create many jobs in the country — because the project has mostly hired Chinese laborers.

Basically, ‘win-win’ probably meant that China would ‘win twice’

It was the burden of Chinese debt that forced Sri Lanka to hand over its Hambantota Port to China and a massive piece of land in Colombo to Chinese multinational corporations, in return for debt relief. The fear of a debt trap pushed Malaysian Prime Minister Mahathir Mohamad (pictured below) to halt the contract for China Communications Construction Company to build the East Coast Rail Link, thought to have cost the government around US$20 billion, along with a $2.5 billion agreement for an arm of a Chinese energy giant to construct gas pipelines. He had earlier suspended the projects, leading some analysts to believe that he wanted to renegotiate the terms during his China trip.

Story of a so-called friend

Honestly, you can’t call a country your friend when it forces you to buy its equipment and material to be used in its projects — a port, coal-fired power plants, roads and railways (the CPEC). And when this exercise severely shreds your dollar reserves and piles up government expenses, this so-called friend offers a helping hand in the form of billion-dollar debts — so that you can keep importing from it.

Ultimately, you find yourself in the middle of nowhere. Your people suffer; you arrange a funeral ceremony of your economy with just enough foreign reserves that you can barely afford imports of two months. Then the so-called friend offers you some more debt, so that you can buy necessary goods (or otherwise, your citizens will starve).

You say thanks to your so-called friend and move on in your life. Suddenly, you see your economy standing on the brink of an ultimate collapse. You knock your so-called friend’s door for help, but this time, you face a blatant “no.” Why? Because your so-called friend wants to improve its image in the eyes of the world powers — as they think that your so-called friend is using you like a tissue paper.

Hopelessly, you approach an international lender (the International Monetary Fund), which offers you some help on condition that you will have to make the economic deals with your so-called friend public. When that so-called friend becomes aware of the bank’s (IMF) conditions, it warns you, saying that the loan from the bank (IMF) should not affect our “so-called friendship.”

The curse of Xi Jinping’s ‘debt-trap diplomacy’

China has been accused by the West of leveraging huge loans it holds over less developed economies across the world in order to snatch their key assets and increase its military intervention.

From Pakistan to Montenegro, from Laos to Kyrgyzstan, many nations owe huge debts to China. Let us take the example of Sri Lanka. It owed more than $1 billion to China and unfortunately wasn’t able to service the debt; China reportedly forced it to hand over Hambantota Port on lease for 99 years.

In April this year, China approached Vanuatu to set up a military base, which owed Beijing about $250 million. Tonga also carries some big debts and is facing difficulties in servicing them. The prime minister of Tonga, Akilisi Pohiva, in August showed his concerns over China’s debt-trap diplomacy, saying Beijing was preparing to seize assets from his country.

China forces Pakistan to buy Chinese equipment for use in Chinese projects, shredding its reserves; then it extends Pakistan loans to cover the purchases, which increases the burden of debt on Pakistan’s economy

For Pakistan, the situation seems alarming. China forces it to buy Chinese equipment for use in Chinese projects, shredding its reserves; then it extends Pakistan loans to cover the purchases, which increases the burden of debt on Pakistan’s economy. Machinery imports alone from China in the first two years of the CPEC raised Pakistan’s current-account deficit by 50%.

Now Pakistan is facing a severe foreign-currency shortfall, especially the US dollar holdings of its central bank, which have dropped to $8.4 billion, barely enough to pay for two months of imports. The trade deficit is skyrocketing; in the fiscal year ending last June, exports were $23.22 billion while imports exceeded $60 billion. Indeed, its public-sector debt stands at $75.3 billion — 27% of Pakistan’s gross domestic product.

Islamabad needed an urgent cash injection for its suffering economy, for imports and clearing debts. It is not that Pakistan didn’t ask China or Saudi Arabia to bail it out. Even Saudi Arabia agreed to invest in the CPEC in the form of an oil refinery in Gwadar, but China had concerns, as Saudi Arabia is a major non-NATO ally of the United States and any involvement of the Saudis in CPEC would indirectly mean allowing US intervention. Economic deals between Beijing and Islamabad related to the multibillion-dollar “debt trap” that is CPEC have been kept behind an opaque sheet of “we trust each other” from Day 1.

The United States, on every occasion, has accused China of predatory lending practices and ruining small economies. In my opinion, China had to portray itself as “sincere and unselfish” and therefore, it was a blatant “no” from Xi for another bailout for Pakistan. Or, it may also be that Pakistani Prime Minister Imran Khan’s government is aware of the dark realities of China’s Belt and Road Initiative.

Coming out of a fool’s paradise

As The News reported on October 1, Pakistani Railway Minister Sheikh Rashid Ahmad (pictured above) said the estimated cost of expansion and reconstruction of ML-1 (Main Line-1 that runs from Peshawar to Karachi) under the CPEC had been brought down to $6.2 billion from $8.2 billion. “Pakistan is a poor country that cannot afford [the] huge burden of the loans,” Rashid told a news conference in Lahore. “Therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion.”

Remember that Financial Times report?

“The previous government did a bad job negotiating with China on CPEC — they didn’t do their homework correctly and didn’t negotiate correctly, so they gave away a lot,” Abdul Razak Dawood, the Pakistani cabinet member responsible for commerce, textiles, industry and investment, told the FT.

“I think we should put everything on hold for a year so we can get our act together,” he added. “Chinese companies received tax breaks, many breaks, and have an undue advantage in Pakistan; this is one of the things we’re looking at because it’s not fair that Pakistani companies should be disadvantaged.”

What Dawood said clearly shows that Imran Khan’s government is skeptical about China’s intentions behind pouring billions of dollars into Pakistan.

Between China’s warning and IMF’s conditions

Imran Khan is known for the slogans he raised during his election campaign, that if Pakistanis would give him a chance to form the government, he would break the country’s addiction to begging the West for dollars whenever it finds itself in a financial crisis. On October 8, Khan forgot his lofty claims and allowed Finance Minister Asad Umar to announce that Pakistan would seek a hefty loan from the IMF. It will be the country’s 13th bailout from the IMF since the 1980s.

And for sure, it will face strict conditions imposed by the Fund. It may force the Khan-led government to privatize steel mills and Pakistan International Airlines. And this would result in tens of thousands of jobs being lost, which will come with countrywide protests against Khan’s party, Pakistan Tehreek-e-Insaf. Before the announcement, the dollar in Pakistan was trading at 125 rupees to $1 — after that, the rupee has been devalued to 135 per US dollar.

The rupee’s depreciation has increased Pakistan’s debt by $6.75 billion, thus contributing to some more economic woes for the nation. Just after Asad Umar announced the government’s decision to seek a bailout package from the IMF on the night of October 8 came a substantial single-day stock-market loss by more than 1,300 points — losing almost 270 billion rupees ($2 billion) of its capitalization.

The government has failed to restore investor confidence, and thus the selling spree has continued.

As a result, the index dropped below 37,000 points. The IMF’s projection that the inflation rate might hit 14% by June 2019 further intensified the situation.

And there is yet another huge burden on the shoulders of Imran Khan and his cabinet — to disclose the nature, size and terms of the debt that Pakistan is bearing. Christine Lagarde, managing director of the IMF (pictured below), clearly said the Fund would expect “absolute transparency about the nature, size, and terms of the debt that is bearing on a particular country,” and although she did not explicitly mention China in her remarks, they were given directly in response to a question about Pakistan’s stockpile of Chinese debt.

The transparency must extend to “the extent and composition of that debt,” she added, regarding whether it was government-owned or by state-owned enterprises “or the like of it,” which presumably means it also includes private-sector debt.

If Pakistan gives access to all the hidden information related to CPEC deals to the IMF, it will end up hurting its fair-weather friend China. The State Bank of Pakistan is not aware of the details of the CPEC deals and therefore, it compiles its own debt-sustainability forecasts on the basis of the incomplete information available.

No one knows what China and Pakistan have possibly agreed on.

If Pakistan gives access to all the hidden information related to CPEC deals to the IMF, it will end up hurting its fair-weather friend China

What Chinese Foreign Ministry spokesman Lu Kang said at his press briefing in Beijing was shocking. On one hand, he endorsed Pakistan’s request to the IMF for financial assistance, but cautioned that the facility should not affect economic cooperation between Islamabad and Beijing, as Dawn reported.

Like a good friend of Pakistan, Lu could have endorsed the help that the IMF is offering to Pakistan — but the so-called “friend” cautioned Islamabad that the facility should not affect economic cooperation between the two countries. Already Pakistan’s stock exchange is suffering, and this statement will contribute to investor confidence being lost, as it would make investors more skeptical about the possible consequences of Pakistan disclosing the hidden deals of CPEC.

Friends don’t threaten each other, and China needs to understand that.

China should at least offer a helping hand to Pakistan in its truest sense. Rather than enmeshing it in a debt trap, it should invest in Pakistan’s magnificent renewable-energy potential, such as financing solar-power plants in Balochistan and Sindh provinces, so that the country can cut down expensive crude-oil import for electricity generation. And it should help the country boost its exports by providing it with advanced industrial machinery and technology, so that the country can obtain comparative advantage in the production of some high-valued items.

There is nothing wrong in taking help from a “friendly” nation for the sake of energy and transport sector development, but as the world works on the theory of realism and capitalism, there is nothing like a free lunch.

China is securing its interests in the multibillion-dollar CPEC — and currently even enjoying Pakistan’s piece of the cake.

Only after Pakistan begins to export more will it be able to acquire sufficient dollar reserves to fulfill its demands of energy and infrastructure on its own. Substantial macroeconomic changes have to be made so that it can produce, consume, save, expand and export efficiently.

Investment on research and development is needed. Barriers to enter and exit markets must be reduced. It will have to ask other countries (and not just friends) to make investments in its market. If the country properly explores its renewable-energy potential, it won’t need coal, gas or petroleum to fuel its power plants.

Author’s note: This article first appeared at DailyO (India Today)

Columnist, blogger and social activist. Studying Economics and International Relations. My writings on socioeconomic issues, foreign affairs and culture frequently get published in DAILY TIMES, ARY NEWS Blogs and DUNYA NEWS Blogs. Twitter: @an_alisalman

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South Asia

Pakistan a peace loving nation

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Muslims when meeting each other greet “Peace be upon you”. Islam is the religion of Peace and Love, Islamophobia is the creation of a few minds only. There is no doubt that there exists few criminals in every society, every religion, and every country, but such exceptions, may not be used to blame the whole nation, religion or country. Since its independence Pakistan has been promoting peace and stability around the world. Pakistan’s Peace-keeping missions have been playing important roles around the world to maintain peace in troubled areas. We are major contributor to Peace-Keeping Force and have been part of almost all of UN Peace-Missions, during the history of 7 decades. Pakistan is supportive of any efforts by any nation towards promotion or maintenance of peace.

Recently, UNGA’s Disarmament Committee adopted Pakistan’s resolutions with an overwhelming support, in New York on 9th November 2018. Three resolutions proposed by Pakistan were adopted by the UN General Assembly’s First Committee with an overwhelming support. The whole world supported Pakistan’s resolution while India was the only country to oppose them.

In fact, the resolutions highlight the importance of regional approaches to disarmament, which complement global disarmament efforts and stress the need to promote confidence building measures for enhancing regional and international peace and security. The resolution on conventional arms control was adopted by a large majority of 179 countries. India was the sole country to vote against the resolution.

Earlier, a big victory for Pakistan came, on November 1stwhen the Committee also adopted Pakistan’s resolution on assuring non-nuclear weapon states against the use or threat of use of nuclear weapons by 122 votes. The First Committee of the UN General Assembly which meets annually deals with disarmament, global challenges, and threats to peace that affect the international community and is mandated to seek solutions to global security challenges by considering all disarmament and international security matters within the scope of the UN Charter. Pakistan’s role in disarmament was admired and non-proliferation of uranium. We strongly condemn biological and chemical weapons and strictly adhere to UN decisions.

Pakistan is a responsible country and always exploring the opportunities of peace. Pakistan has always initiated the peace process with India and sincerely tried best to resolve all issues with India, including Jammu and Kashmir, by a peaceful dialogue. Pakistan respects UN, Respect UN mandate, Respect UN Charter, and wants others to do the same. It believes in diplomacy, and there is precedence that some of the more complicated issues around the world, has been resolved by diplomacy, then why not Pakistan-India issues be resolved by dialogue too.

We support the supremacy of UN and all nations must respect the UN. We always stand with the oppressed and raise voice for the victims. Our struggle for justice and righteousness is always admired. We keep on struggling for global peace and be part of any peace process around the world.

The Indian opposition to Pakistani resolution and persistent refusal to leave Kashmir has exposed the true Indian face. The recent International Amnesty report on Human Right violation in Kashmir was a big blow to India. Indian atrocities against its own minorities and lower caste Hindus is condemned widely. Indian opposition to the UN resolution on Palestine is also an example of India’s international position.

It is time that serious notice is taken by the UN, International Community and all conscious individuals to stand up for International Peace, Justice and Human Rights.  We all should keep on struggling for a better world for our next generation. We should be united for “Peace, Stability and Prosperity” for humanity globally.

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The Making of Modern Maldives: A Look at Maumoon Gayoom

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Authors: Srimal Fernando and Pooja Singh

Former Maldivian President Maumoon Gayoom occupies an important place in Maldivian political history largely because he guided this equatorial island nation to unprecedented levels of economic growth and also through tough times when democracy was challenged. Gayoom has a national as well as international reputation that made his name familiar to the rest of the South Asian countries. It was after his return from Nigeria’s Ahmadu Bello University as a lecturer, Gayoom commenced his political journey as a close aid of prime minister Ahmed Zaki in mid-70’s and later as a cabinet minister under Ibrahim Nasir. Gayoom’s leadership embarked on a more reformist approach in the first two terms during his presidency. He was able to take credit for the rise of the tourism sector and an increase in the fish productivity. In Male, as well as in the rest of the Maldivian islands, building of small fisheries harbors were accelerated under the rapid development programs initiated under his presidency. When one looks at the Maldivian foreign policy, Maumoon was credited as one of the key founders of the South Asian Association for Regional Cooperation (SAARC) in 1985. Hence, he raised global awareness on climate change on the international arena. In this context, especially the awareness on small island nations facing rise in sea water levels which affects the livelihood of the islanders was a key theme which brought international attention. On the development side, the Hulhulemale reclamation project and the upgrading of roads and other infrastructure initiatives that he implemented are highly credited for by the Maldivians. In fact, the people’s president who visits the islands regularly was named as “A Man for All Islands” by the famous author in his book about Gayoom’s biography.

Early in his administration, former president introduced socio-economic experiments in reawakening the islands. His administration accelerated the economic growth in the twenty Atolls from Northern Haa Atoll to Southern Seenu Atoll instilling a degree of optimism and enthusiasm among the Maldivians. Yet another economic achievement in the tourism sector was the increase of luxury resorts from two in 1978 to hundred by 2008. Gayoom’s career is most relevant due to his performance and for changing the country’s political system to a multi-party democratic system where the power is vested on the citizens.

Another milestone during his tenure was to expand the average income of Maldivians from US$ 377 in 1978 to US$3,654 in 2008. However, towards the end of his presidency, the first signs of irreconcilable difficulties with the Maldivian opposition led by Mohamed Nasheed, the leader of Maldivian Democratic Party (MDP) started emerging in 2000. The Maldivian pro-democracy movement started in Male in 2003 and then moved to other Islands. As a result, Maldives adopted a multi-party political system and in 2008. In the same year the presidential campaign came to a climax where in the second phase of the presidential elections, the confident president had felt a constant sense of uncertainty since most of the opposition presidential candidates supported Mohamed Nasheed, the leader of the Maldivian Democratic Party. Gayoom lost the election and Nasheed the opposition leader assumed presidency.  The courageous former president Gayoom transferred the presidential powers to the newly elected president smoothly.

In fact, the reformist former president Gayoom formed the Dhivehi Rayyithunge Party and later, he was one of the key founders of the Progressive Party of Maldives (PPM) where his half-brother, Yameen Abdul Gayoom shared powers within the party. Hence, Qasim Ibrahim, a former finance minister under Nasheed’s government and also close confidant of president Gayoom led the Jumhooree Party (JP) which combined with PPM in 2013 presidential elections.

Unfortunately, in 2012 the overthrow of president Nasheed one of New Delhi’s closest allies in South Asia shocked the diplomatic circles on both sides of Asia as well as in the west. It took more than five years for Gayoom’s PPM party under the presidency of Yameen to return to power. However, due to widespread corruption and authoritative rules under Yameen’s presidency, many of the opposition party members such as former Maldivian president Nasheed, Jumhooree Party leader Qasim Ibrahim and many other political leaders who opposed the undemocratic rule were prisoned through unlawful means.

During the darkest period of the Maldivian politics from 2017 to September 2018, the lone voice of the public opposition belonged to a few opposition leaders such as, Maumoon Abdul Gayoom, Ibrahim Mohamed Solih cannot be forgotten. In the same period, former president Gayoom, Nasheed and several opposition members created a united opposition to unseat president Yameen and his majority party rule through democratic non-violent means. One of the major reasons for this change by Gayoom in Yameen’s leadership was the widespread corruption and the authoritative rule. Finally, president Yameen prisoned former president Gayoom and his son, Faris Maumoon. This was one of the main reasons where large number of Gayoom supporters broke away from PPM led by president Yameen. This reason influenced the 23rd September 2018 presidential elections where opposition common candidate Ibrahim Solih saw a massive victory margin against president Yameen.

One could argue that, Gayoom, the president who guided Maldives to economic prosperity was the same charismatic leader who guided the South Asian Island nation towards democratic maturity. Maumoon Gayoom has been the most unpredictable political influencer in the modern political making of Maldives.

*Pooja Singh, a scholar of Masters in Diplomacy, Law, Business at Jindal School of International Affairs, India.

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INGO’s Nefarious Designs in the Garb of Development / Social Work

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In a developing country like Pakistan where governments have not paid due attention to raise the standard of living of the common people, initiatives by non-governmental and civil society have assumed special significance. Over the past many years, dozens of international non-governmental organizations (INGOs) have been performing the central role in promoting social welfare in the country. INGOs in Pakistan mostly work for utilizing the foreign funds they receive through the projects of foreign governments or Donor agencies. In the country like Pakistan where the government finds it challenging to deal with the many socio-economic problems faced by its populace, the role of INGOs in contributing to solve and support government policies to address these problems becomes vital. The INGOs have been working in Pakistan since late 1980s in the fields of education, medicine, social development, etc. They also operate as think tanks, survey teams, gallop polls agents and advisers to local administration to tackle social and education issues. It is widely believed that some of INGOs play nefarious role of weakening the ideological, social, political and economic foundations of Pakistan and creating split in the society. They even perform duties of spy agents for their masters and pass on ground intelligence and assessment regarding the societal trends and the exploitable vulnerabilities of deprived portion of society. Under the guise of development / social work, they often pretend themselves as the friends and well-wishers of the neglected classes, and silently keep on injecting poison by carrying out subversive activities to subvert the minds of down trodden class of society through stoking their socio-economic-ethnic and sectarian sensibilities.

Media that is perceived to be heavily funded by USA, Israel and India, not only reinforce their subversive activities by supporting the cause of anti-state elements but also degrade the law enforcement agencies and the government in power. Some of INGOs have supposedly a big hand in the instability of Pakistan. Having achieved considerable success in FATA, KP and Karachi, their focus has now shifted to interior Sindh, GilgitBaltistan (GB) and AJK where ethnic emotions and their deprivations are being stirred. These INGOs are also active in private education institutions particularly the elite schools, colleges and universities where teachers and professors are not only being cultivated but minds of the students are poisoned as well. They promote secularism and liberalism to demonize Islam with view to distract the youth from the righteous path of Islam. Some of the INGOs were found having connections with Indian High Commission Islamabad while some attempted to collect the data during general elections possibly to influence the results.

It is notable that INGOs started pouring into Pakistan after 1988 when Pakistan became dependent upon IMF, World Bank and US aid to run the governmental affairs. The International Donor Agencies that are considered to be funded and used by intelligence agencies started funding in Pakistan in order to cultivate more people in the garb of economic and social development projects.  After 9/11, when the US sanctions under Pressler Amendment were lifted and foreign aid started to flow in, the rate of influx of INGOs increased. A big number came when $7.5 billion worth Kerry Lugar Bill was signed in 2009. The amount required to be spent on development, military and media was spread over years. Then Pakistan Ambassador in Washington Hussain Haqqani had played a role in inserting anti-military establishment clauses after the approval of the initial agreement. He is also said to be helped CIA in the induction of Black Water and CIA contractors, spies and INGOs into Pakistan between 2008 and 2011, which enabled CIA to deploy Raymond Davis and other operators and to launch the helicopters assault in Abbottabad on May 2, 2011. The INGOs were cleverly deployed in the restive combat zones under the garb of rehabilitating the affected people. During the natural disasters of 2005 and 2010, the influx of INGOs has increased manifold in the garb of humanitarian assistance.

The INGOs are operating in Pakistan unregistered for the last 30 years. They operated freely after obtaining NOCs, and without registering and notifying their areas of work, mandate and source of funding. Their shady activities were ignored due to American and Western media pressure. The last PML-N government decided to curb their activities of unregistered INGOs. A crackdown was launched in January 2015 after it was learnt that several of INGOs were engaged in anti-Pakistan agenda. 140 NGOs were operating in Punjab out of which 7 were reported to be involved in unlawful activities. In June 2015, the then Interior Minister ChNisar Ali stated that several INGOs were backed by USA, Israel and India. “There are several NGOs operating in Pakistan without any specific agenda. They were doing something which was against Pakistan’s interest.” He alleged that most of them were taking part in “anti-Pakistan” activities.

A new policy was framed in November 2015 by the Interior Ministry and all INGOs were asked to re-apply and get re-registered. Notices have been served to 18 INGOs whose registration has not been approved, and told to quit Pakistan within 60 days. They will be given a chance to re-apply after six months from their respective countries of origin. The said INGOs do indeed participate in very useful activities whenever they remain true to their mandate so it’s basically giving them half a year to replace their “hybrid war operatives” with the “useful humanitarian operatives”. As no proper law or system in Pakistan existed to ban these INGOs, therefore, the recent scrutiny will help Pakistan to adopt a comprehensive policy. It is added that Director Social Welfare has been directed to prepare the data bank of all NGOs in order to ensure their regular monitoring.  Categorization of NGOs is to be done through data bank. SOPs for registration of NGOs are also being streamlined and reviewed so that only clean and genuine organization could qualify for registration. It is mention that Pakistan is not the only country that has banned INGOs from working against its national interest. India, China and Russia are other examples in the region.

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