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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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PTI Government in Pakistan: To full-fill its promise on curbing Corruption

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Big achievements of PTI (Pakistan Tehreek-E-Insaf) Government in Pakistan. Corruption is an international phenomenon, especially among developing and underdeveloped countries. Corruption is a major hurdle in the fight against poverty and development. However, the beneficiary of corruption is still the developed world. The rulers from developing and underdeveloped world, transfer all their black money to developed countries and in the end, developed world enjoy out of their black money.

Pakistan, being a developing country, no exception to this curse. During the last few governments, it was very much visible. Either it was financial corruption of moral corruption, all are equally harmful to the country. Previous few governments, appointed corrupt and unqualified persons on key posts and used them as their front men in corruption.

Some of their front men were an evil genius and committed heinous crimes in such a technical manner that it is very difficult to find out evidence. Either it is fake accounts or various forms of money laundering or in the form of subsidies or government grants, commissions or kickbacks in projects or procurement, bribes or gift, all are the same but with different forms to harm the socio-economic of this country.

It was in the manifesto of PTI, and part of its slogan during the election campaign, to fight against corruption. Prime Minister Imran Khan in his speech on several occasions has promised with the nation that, he will fix all corrupt, irrespective of their status in the society. It is logical to start from the big fish and later on to common corrupt officials at junior levels.

Pakistan’s judiciary and the military are also on the same page and extending full support to the PTI government’s mission to eliminate corruption from this society once for all. The recent arrests are just the beginning of accountability and have to go on a long journey. May it take one term or even next term, but the accountability process must keep on going till the eradication of corruption completely.

Pakistan is under the heavy foreign-debt, worth US Dollars 100 billion approximately. Who took this huge loan? Have they worked out, how to pay back? Have they spent all the loans on the development of Pakistan? Why this loan has not been trickled down impact? Why this heavy loan could not improve Pakistan’s economy? How useful was this loan to common man of Pakistan? Why IMF could not improve the governance of Pakistan? Why IMF failed to improve performance of Pakistan? Why IMF could not give positive advice to Government of Pakistan? The lenders also need to be blamed for lending without any feasibility and failure of IMF packages offered to Pakistan during last one decade or so long. Why few families (rulers) become more rich and country become poorer?

If the sitting governments of that times have been borrowing without any planning or homework or without considering how to pay back, all of them must be held responsible for this heinous crime against the nation. Whether they are inside Pakistan or left the country, they must be arrested and brought back to face justice.

If only a few corrupt families are arrested and asked for the return of looted money, Pakistan can get rid of its major part of foreign-debt. We may not need any bailout package from the IMF or any help from any friendly country. All the looted money must be returned, all the illegal assets must be confiscated and suctioned out. All the recovered money must be used to pay back our foreign-debt.

There is no need to impose additional taxes and duties on the common man. Electricity, Fuel, Gas and consumer products may be kept on the original position. It is illogical that the common man, who is not responsible for the debt and still suffers due to the corruption of rulers.  It is desired, the previous rulers, who have pushed the country into economic chaos, should be held responsible and all damages need to be compensated by them only. There is no need to punish the whole nation for few criminals. Recovery from previous corrupt rulers is very much do-able and very much possible, above all very much desired. There are examples available in the world, how they recovered looted money from their big shots.  Saudi Arabia has done it well. China is a role model to be followed in this regard.  The Chinese government is willing to share its experience and expertise in fighting against corruption.

Our internal resources may be utilized fully to control corruption and recover all black money. Even if there is a need to introduce new legislation, the Government should not hesitate. Masses in Pakistan stands with Government on this issue. The government should move smartly in this direction with full strength and confidence. Public support is already there.  However, if the Government fails to accomplish this task, it may lose popularity.

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Gentlemen’s game or Propaganda? Cricket and the India-Pakistan Voices

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Can a sport be utilized as an effective propaganda tool? And if so, does it ideally mean that government intrusion is a necessity for its success? The answer to this question lies in the reflection of the cricket scenario in Asia. Although recognized as a gentlemen’s game, much can be said about its dichotomy as a weapon in the ever-growing war between India and Pakistan. Cricket propaganda has become a major trend over the past decade between the two countries as competition remains scarce with the political tensions and matches are seen as a great opportunity to reflect those political tensions. 

Recently, the tension between the two countries escalated with a suicide bombing attack sponsored by the terror group, Jaish-e-Mohammed in the Pulwama district of Jammu & Kashmir. This grave attack resulted in the death of 40 Central Reserve Police Force personnel, which in the opinion of the Indian government was an act of war leading them to raise the issue on the global platform. Surprising, one of the biggest acts of public response, with the usual backlash of the country’s rights over the Kashmir valley, was a call to abandon the upcoming match between the two countries following the start of the ICC cricket world cup. Although, the Modi government did conduct airstrikes against Pakistan, leading to a major confrontation between the two countries along the ‘line of control’ (the de facto border between the two countries), a large scale debate about whether India should abandon the game was a hotly debated topic in the country.

It is worth noticing that later the Board of Control for Cricket in India (BCCI), did hand over the matter to the Modi government, after which the decision was inclined towards the sportsmanship of the country, however, both the Indian cricket team and the BCCI were not ready to desert the will of the public that easily. Involved in an ODI series with Australia, the Indian team walked out wearing military caps as a sign of apparent solidarity with the troopers killed in the terrorist attack. Never before had Team India taken it upon themselves to spread such jingoistic propaganda on a global scale and make such overt statement. The rise of the protestors in Pakistan were met with official statements from the International body of Cricket (ICC), stating their approval as a means of “support” to the Indian team for a fund-raising effort for their fallen soldiers.  

Similarly, in an act of nationalistic fervor, the BCCI decided to get Pakistan banned from the upcoming world-cup prior to its commencement but was severely backlashed by the International Cricket Council (ICC), to keep politics away from the sanctity of the game. Although BCCI was unsuccessful in passing an unrealistic degree of order, given their large scale influence on the International body, it was clear that cricket had become an additional weapon of mass destruction and means of propaganda between the two countries.

So has the situation become better now? Recently, an Ad-war following the start of the world cup has emerged between the two countries, given their highly anticipated upcoming clash on the 16th of June. Ahead of the Sunday clash-guaranteed to put both the nations at a standstill- Star Sport’s Mauka ad ( loosely translated to a chance of winning) has captured the attention of the Indian fans, as the video has garnered over 2.5 million views after it was published on 10th June 2019. This video currently stands as a reprise an extension of the “Patakhe kab podhenge” campaign (clumsily translated to “When will be get to burn crackers”), wherein a Pakistani fan never gets a chance to burn his crackers as Pakistan is always defeated by India on a world cup stage, as indicated by the records as well. However, the new Mauka ad seems to recognize the importance of June 16th as Father’s day and does not fail to interject the role of India as a father in comparison Pakistan, as a means of cheeky humor which received large scale reaction from the Pakistani fans.

As a means of response, a Pakistani news channel Jazz Tv published a video with a character impersonating Wing Commander Abhinandan Varthaman, the Indian air force pilot who was captured, briefly held and then released under the pretense of the Geneva Convention. The character is seen sporting the pilot’s handlebar mustache with a fake South Indian accent and is dressed in the Indian team jersey, following which an interrogator asks him to give back the teacup he has been holding, as a means to denote how the cup belongs to Pakistan. This video was met with the usual support from the Pakistani fans and deemed ‘racist’ by the Indian fans, accounting to the portrayal of the esteemed pilot with a fake southern accent. Although, tension has been running high between the countries for some time now, both the nations have resorted to extending their tensions to the cricket pitch as well, ensuring large scale traction for their upcoming matches.

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Modi’s Operandi

Syed Nasir Hassan

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Same old Modi puts himself in throne again but with different mandate this time. This time he came with much force and appeared more vigilant. Sweeping an electoral win with more than 300 seats out of 543 and restricting Indian National Congress to mere 52 seats. This clearly shows that India gave priority to nationalism over any other set of idea. Prior to previous electoral year i.e. 2014,Modi lured with promises of social and economic reforms and upheaval. Which sunk badly as some of the predicaments are still in the society. From being miserable in improving the job sector that gave rise to unemployment rate to the inducing grieves to the farmers, Modi bagged some failures as well in his previous tenure.

Whereas this time bait was the Hindu nationalistic sentiments, which Mr. Modi and his members of the den enjoyed the feast by winning the election. By using hate mandate, Modi successfully maneuvered himself and his party in to the realms of Delhi. Before elections, his unfortunate adventurous voyage with its neighbor and rival Pakistan made a lucid chance to portray himself as heroic figure. Modi flaunted anger and hate towards its immediate neighbor. It profited him in shape of getting a majority in the lower house of the Indian political saga. Hate sentiments were provoked and inducted in common minds. Question herby rises that how Hindu nationalism can or will transform India?

During previous reign of Mr. Modi, clear social and religious divisions were drawn onto the Indian society. This was mechanized in recent elections as well by promoting nationalism or more likely Hinduism. One of the tactics that was opted by BJP and Modi is persuasion of fears of Indian society and Hindu ideology and presenting himself as the only savior. Modi portrayed himself as the only option for Hindu caste to save Hindu ideology from external threats.

Modi has always been fond of shifting Indian secular discourse towards a Hindu nationalist sermon. His previous tenure and the plight minorities faced during that time testifies his aims. Now he has been elected for another five years. This time he has secured almost 56% of the lower house that clearly means that Mr. Modi will have to face no hurdle in his way towards passing a legislation.

Media and Modi has always been close aides to each other. This nexus was also prominent in the recent elections as Social and Electronic media, both were eminent in glaring Modi-ism. It ultimately cultivated his ideology in the minds of a common viewer hence reflecting it in the election results. His election campaign was given more coverage than any other thing on TV. The election soap series continued feeding the people of the India. Without any doubt, there have been immense flow of monetary funds in the veins on Indian media during the election time.

Modi’s Bharatya Jantya Party or BJP’s Modi have already drawn a plan to be executed in the society. Selection of candidates that were given tickets and won were some of the most extremist in nature. Shakshi Mahraj, a newly elected member of parliament on BJP’s seat already has more than 30 criminal cases against him. Another newly elected BJP’s Member of Parliament, Pragya Singh Thakur remarked Mahatma Gandhi’s assassin as “a patriot”. Not only this, selections for new cabinet members clearly indicated where Mr. Modi would be leading Indian society. Amit Shah who is also a president of BJP has ironically been selected as India’s Home Minister. There is a clear chance thatnew reforms might be religion centric rather than being focused on governance. BJP will clearly exhibit the Hindu ideology in governance that would further raise concerns for the minorities in India.

The Indian future and the question of Indian minorities seems bleak. Modi created a narrative on abhorrence and nationalism, he won elections on this mandate but now he has to defend it and every word of hatred that came out of his mouth may be realized through his actions. It puts Indian society in a dismal situation.

It is arduous to analyze that how large populous has voted in favor of hate mandate prompted by Modi. But there is a chance that Indian society might be falling prey to reverse psychology. It indulged itself so deep and intense in criticizing and accusing its neighbor, Pakistan, for being extremist and conservative society that it itself is becoming one.

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