Indian military modernisation: catalyst for doctrinal shift

Its military modernisation could motivate India to transform its ‘No First Use’
doctrine into ‘First Use’ with respect to employing its nuclear and other strategic
valued capabilities. There are indicators to support the claim. The Indian side which
was known for the Nehruvian doctrine of peace and tranquillity is currently on
course of Modi doctrine of regional domination and barbarism by developing
offensive military capabilities and will to use them.
The test of Anti-Satellite (ASAT) capability, procurement of S-400 Ballistic Missile
Defence (BMD) system, close to finalisation deal of Rafale state-of-the art aircraft
and Modi’s claim of developing ‘Mother of All Bombs’ in one of his recent election
campaign speech, indicate the Indian strategic offensive designs.
Peace in South Asian strategic calculus is based on nuclear deterrence. Mutual
assured destruction restricted the two rivals, India and Pakistan, to refrain from any
military misadventure due to the fear of mutual annihilation. Indian armed forces
are world’s 4th-strongest vis-à-vis Pakistani armed forces which are ranked 13th
strongest military in the world. The Indian side is looking for an opportunity to
eliminate Pakistan’s deterrence capability. With a hardline Bharatiya Janata Party
(BJP) government in power, all of India’s efforts are aimed to remove Pakistan’s
nuclear deterrence.
India, with the help of its ally the US and other friendly states, has chosen the path
of seeking deterrence in its favour so as to corner Pakistan’s deterrence value by
adopting coercive valued deterrence approach i.e. ‘Deterrence by Denial followed
by Deterrence by Punishment’. Deterrence by denial is likely to be aimed at
harming Pakistan’s space vision of 2047, and ‘Deterrence by Punishment’ approach
is to make potential adversary believe that any offensive action could result in
unimaginable destruction. ‘Mother of all bombs’ is a case in point. India claimed its
ASAT capability is defensive in nature, but in actuality it is coercive in nature for
obvious reasons.
The term ‘mother of all bombs’ was famously used during the US operations against
Afghan Taliban fighters’ hideouts in Tora Bora, Afghanistan. Modi’s use of the term
in the context of Pakistan indicates two things. One, either manufacturing or
building a huge stockpile of conventional bombs, or two, building more and more
destructive kinds of nuclear bombs. Whatever it is, any such capability will likely
undermine Pakistan-India balance of deterrence.

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However, there is a likelihood of the balance of terror losing its validity. A few such
indicators are listed here. First, attainment of ASAT capability makes India capable
of compromising Pakistan’s strategic intelligence, guidance and communication
satellites much needed to accurately engage Indian counter-force or counter-value
targets. Two, India’s recently-acquired BMD systems including S-400, albeit too
marginal to be worrisome to Pakistan due to short distances, could devalue
Pakistan’s missile-based deterrence. Three, the 2018 year book released by the
Stockholm International Peace Research Institute, a Sweden-based independent
resource on global security, mentioned India as being the global leader for
importing arms and ammunition. India had 12 % of global share of arms import vis-
à-vis Pakistan which had a share of only 2.8%. Such an asymmetry in even
conventional weapons ratio vis-à-vis Pakistan besides edge in deterrence valued
strategic capabilities, provides India with a favourable strategic environment to
coerce Pakistan from both deterrence by denial and deterrence by punishment
approaches.
Indian military calculation is based on the assumption that if they undermine
Pakistan’s nuclear deterrence it could give them a free hand to achieve their long-
cherished strategic and political ends. Great power status leading to a superpower
status by acquiring a permanent seat in the United Nations Security Council,
regional hegemony, economic dominance and above all muting Pakistan’s political
and diplomatic support for Kashmiri freedom fighters, are a few of the Indian
ambitions.
The Indian military modernisation, both qualitatively and quantitatively, is an
alarming development for regional peace in particular and for global peace in
general. Enhanced military capabilities through unprecedented US support have
given a false sense of power to the Indian political and military hierarchy. This
complacent sense of superior military might is likely to transform the Indian
doctrine of ‘No First Use’ into ‘First Use’ by employing ‘Pre-emptive’ strikes with
relatively less fear of retaliation due to ASAT, BMD and superior conventional
weapons. Modi has publicly admitted that India doesn’t buy Pakistani deterrence
and nukes are not to be used as fireworks in Diwali but they are meant to be used
for their very purpose. Besides, India has long been sponsoring terrorism inside
Pakistan. The recent wave of terrorist incidents in K-P and Balochistan illustrates
Ajit Doval’s Low Intensity Conflict strategy being put into action. The international
community’s silence on the issue is inexplicable.

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The Indian approach of having peace through a position of strength is not going to
bring dividends in South Asia as in this region and in its immediate neighbourhood
there are three nuclear-armed states. The BJP has successfully whipped up hatred
against Pakistan especially during the current election campaign. Hatred against
Pakistan at the level of the masses is alarming as it might bring to and end peace
initiatives like Track-II diplomacy. Another alarming development is the offer of
‘nuclear radiations proof’ shelters by an Indian housing project to its customers
besides other residential amenities. This demonstrates the Indian public’s docile
acceptance of the use of nuclear weapons in any future Indo-Pak war.
Pakistan has emphasised that it faces existential threat from India and thus cannot
remain oblivious to the Indian military modernisation. The apparent doctrinal shifts
across its eastern borders are alarming. Pakistan reserves the right to take
appropriate measures to maintain the balance of power in the region.
By Dr Ahmed Saeed Minhas

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 Terrorism: a bitter truth
The Prime Minister of Pakistan was unfairly blasted by the opposition leader for his
views on terrorist groups using Pakistani soil, on the eve of his recent visit to Iran.
The Pakistani PM was assuring Iranian President Hassan Rouhani about Pakistan
taking decisive actions against any militant groups that were responsible for
harming the cordial relations between the two countries. These sensible gestures
should have been welcomed as there is no denying the fact that the issue of cross-
border terrorism has been creating misunderstanding between the two nations. In
the same communiqué, peace in Afghanistan was stated to be beneficial for
Pakistan and Iran. Prime Minister Imran Khan, more or less, expressed the same
views recently in a rally at Tharparkar by publicly pledging that his government
would not let any armed groups function in the country amid intensifying
crackdown on Islamist groups and their leaders. One can disagree with many of his
other policy measures, but not the bitter truth he has so clearly expressed.
Unfortunately, both the major opposition parties — the Pakistan Muslim League
and the Pakistan Peoples Party — as well as other groups, exhibiting the
opportunistic legacy of Pakistani politics, in a chorus termed the announcement
against the national security of Pakistan and tried to dub him a security risk. Playing
the religion card, whipping up religious sentiments and exploiting threat to national
security for point scoring against each other, castigating others as a security risk,
traitor and infidel while sidelining the main issue of violent extremism,
radicalisation and terrorism is the bane of Pakistani politics. Two wrongs do not
make a right. The bombardment of allegations criticising the PM as inept in
diplomacy was so lethal that he and his ministers rather taking a bold stance were
forced to retreat, apologetically issuing a clarification that the PM’s statement had
been taken out of context.
Pakistan, in general, and Khyber-Pakhtunkhwa (K-P) in particular, have been
experiencing horrors of terrorism in all possible forms for quite some time.
Terrorism is one such problem which is not only taking a heavy toll of socio-political
life but also denting our economy in a big way.
The daredevil attacks on office buildings of law-enforcement agencies and murders
of numerous senior officers had not only shaken common citizens but has also
harmed an already-fragile economy. Horrors of terrorism, coupled with
insurgencies in Swat, parts of Peshawar, and whole of the tribal areas earned us

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the perception of ‘ungoverned spaces’, ‘most dangerous place on earth” and
“Pakistan a hard country”.
No wonder we are finding our economic growth slipping away and foreign direct
investment drying up. It appears that by pursuing focus on a mere security
paradigm, we have missed the long-term economic growth bus. Amidst those
gigantic challenges and pessimism, leaders with courage of conviction convert
challenges into opportunities by providing amends for the past mistakes and
adopting a cautious approach for the future.
We need to be candid in accepting that during the Afghan jihad in the 1980s of this
radicalisation, tribal areas saw the climax where Jihadi elements from all over the
world descended. In that era, Jihadi groups played an important role in furthering
the government’s influence in the international community. However, while
bringing short-term dividends, the long-term consequences of this Afghan policy
proved catastrophic as not only Kalashnikovs and heroin culture gained currency in
K-P with the uncontrolled influx of Afghan refugees, but the Jihadi discourse also
turned the tribal areas and K-P into breeding grounds for extremism and terrorism.
As the strategic outlook, towards international Jihadism, of the US and Europe
changed into a post-9/11 one, our own strategic priorities got disarrayed and we
failed to readjust to the changed realities of the new world terrorism. At this point,
we began noticing a clear schism developing at the societal level. Due to earlier
policies, the extremist elements in society had seized the opportunity and became
more organised and powerful. The state’s control of these Jihadi organisations
began to weaken as they derived their ideological inspiration from the Taliban
head, Mullah Omar. While Jihadi outfits were getting strengthened with every
passing day, Pakistan had no coherent policy at the state level. Having lost the writ
and suffering enormously while the militants were on the rampage looking down
the plains of Swabi and Islamabad across the Indus, the state realised the gravity of
the situation and launched operations in Malakand rolling back the militants.
Despite rollback of insurgencies over there, the graph of terrorism did not decline
culminating in the gory and bloody attack on the Army Public School in Peshawar
and a Karachi airbase.
Those incidents necessitated unfolding of the National Action Plan, thus accepting
the reality of home-grown terrorism. Kinetic action of the state has of course
brought some salutary effects upon incidence of terrorism, but the core problem
persists. The upshot of the discussion is that we need to develop a comprehensive

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strategy that addresses both short-term actions that are needed to cure the
existing situation and long-term actions that are needed to prevent occurrence of
the problem. This requires accepting the bitter truth without mincing words and
putting our own house in order which will make us tall among the community of
nations.
By Syed Akhtar Ali Shah

6
 A neutral policy on Afghanistan?
In a policy statement on the challenge of peace in Afghanistan issued on April 25,
Pakistan’s Prime Minister made it clear: “The so-called offensives are condemnable
and will undermine the peace process. It is not right to seek an edge in dialogue
through coercion.” Ever since the Taliban asserted that they would launch ‘spring
offensive’, the United Nations and other powers are suggesting them not to resort
to such type of an activity which will not only derail the possible peace talks in Doha
but will also jeopardise the much-awaited US exit from Afghanistan.
In order to exert more pressure on the Taliban for ceasefire and negotiating with
the Kabul regime, the US, Russia and China, in a joint declaration issued in Moscow
on April 27, urged the parties involved to reach consensus in order to end armed
conflict in the country.
Can Pakistan adopt a neutral policy on Afghanistan? Will New Delhi not take
advantage of the situation if Islamabad pursues a policy of neutrality amidst the
new phase of conflict and power struggle in Afghanistan following the American
withdrawal from the war-torn country? Has Pakistan learned lessons of its past
“interventionist” role and policy on Afghanistan and now wants to keep its “hands
off” from the world’s most difficult country? These are the questions which have
been raised from time to time as far as the past, present and future of Pakistan’s
unpredictable western neighbour is concerned.
The peace process suffered a recent setback when the Taliban refused to accept a
delegation from Afghanistan composed of around 250 participants representing a
cross-section of society. It means intolerant, inward and parochial approach of the
Taliban which was responsible for the collapse of their regime after 9/11 is still
being pursued. By not becoming a part of the Afghan political process, the Taliban
jeopardised hopes for peace. The opening of Afghan parliament and the holding of
Loya Jirga boycotted by the Taliban and various Afghan opposition groups further
exposed internal contradictions in the state and society of Afghanistan.
Certainly Afghanistan is at a crossroads as the “conflict fatigue” tends to remind
the warring parties including the Taliban, the US-led foreign forces and the Kabul
regime to mend fences and give peace a chance in the beleaguered country. The
statement of our PM which has been welcomed by the US envoy on Afghanistan,
Zalmay Khalilzad, also maintained: “Now, after a long wait, the Afghan peace
process presents a historic opportunity for peace in the region and Pakistan is fully

7
supporting the process including the next logical step of intra-Afghan dialogue
wherein Afghans will themselves decide upon the future of their country.” The
approach is optimistic though, ground realities in Afghanistan are quite different
which militate against Pakistan’s resolve to maintain neutrality while dealing with
conflicts among the various Afghan factions.
Three major realities question the “neutrality” on Afghanistan expressed by the
Pakistan’s PM in his recent statement.
First, Pakistan will have to take a position if the Taliban continue with their violent
attacks against both combatants and non-combatants causing enormous physical
casualties. While the PM has expressed his resentment over the Taliban’s ‘spring
offensive’, the US and Afghan forces continue to launch relentless ground and air
attacks against the insurgents. The Taliban’s refusal to have ceasefire with their
opponents is another manifestation of a stalemate in the Afghan peace process. In
this scenario, Pakistan will have to provide support to those Afghan groups who are
fed up with decades of civil war and want to have peace in their country. From any
standpoint, Pakistan is the only neighbour of Afghanistan which has suffered
enormously in the last four decades, first because of the Soviet military
intervention followed by the outbreak of armed conflicts among various
Mujahedeen groups and then in the post-9/11 attack led by the US. Henceforth,
Pakistan cannot and should not remain oblivious to the changing internal dynamics
of Afghanistan and needs to play an assertive role regardless of those who leave no
opportunity to assail Pakistan’s policy on Afghanistan.
Second, Pakistan cannot remain neutral in Afghanistan when other foreign players
like India and Iran continue to play their influential political, economic and security
role. Leaving the ground open while remaining neutral will not go in favour of
Pakistan’s national security interests. The reality of foreign policy reminds us a basic
fact that neutrality cannot be attributed as a sign of weakness. However, it doesn’t
mean that Pakistan should follow a policy which it pursued after the Soviet military
withdrawal in February 1989 by pitting one Afghan group against another. Pakistan
paid a heavy price of its “interventionist policy” in Afghanistan during the late 1980s
and 1990s to the extent that “anti-Pakistan” sentiments deepened in Kabul. Instead
of tilting in favour of the Taliban or the Kabul regime, Pakistan needs to support
those forces in Afghanistan who are mindful of the pain and sufferings of their
country more at the hands of their own people than external forces. Pakistan must
encourage and promote genuine Afghan leadership to emerge which should break

8
the decades-old monopoly of Afghan political parties and warlords close to power
and the Taliban groups. A third force in Afghanistan is the need of the hour which
is above violence, terrorism, corruption and nepotism. It is certainly in Pakistan’s
interest to facilitate the third force in Afghanistan because unless there is peace
and stability in that country, Pakistan will continue to suffer because of violence,
chaos and disorder in Afghanistan.
Finally, neutrality in Afghanistan would prove to be counter-productive as Pakistan
would not be able to prevent forces which intend to destabilise Balochistan and
other parts of the country by using the Afghan soil. After all, Pakistan has supported
millions of Afghan refugees for decades and it is the right time that it needs to have
an edge vis-à-vis other players in Afghanistan by using the instruments of “soft
power” like diplomacy, trade, education, science and technology. A pro-Pakistan
constituency in Afghanistan, regardless of ethnic and political variations, is the
need of the hour. Therefore, Pakistan must seize the opportunity for peace and
make sure that hostile forces are neutralised by seeking better engagement with
the people of its western neighbour. Certainly, Afghanistan is a difficult country and
is 200 years older than Pakistan as it was in 1747 when Ahmad Shah Abdali
integrated various Afghan tribes and laid the foundation of the Kingdom of
Afghanistan. Unfortunately, despite its 272-year-old history, Afghanistan has not
been able to emerge as a nation-state mainly because of its tribal and backward
social system.
Pakistan’s strategic and security interests in Afghanistan cannot be denied because
for the last four decades, it has borne the brunt of armed conflicts, foreign
interventions and the influx of millions of Afghan refugees resulting in the
proliferation of drugs and weapons and sectarian violence in the country. Many of
the terrorist attacks in Pakistan were planned in and coordinated from Afghanistan
and it is not correct to argue that in the recent past Islamabad has been involved in
destabilising its western neighbour. From time to time, Kabul also raises the so-
called Durand Line issue and has been critical of Pakistan’s policy to prevent
incursions across the borders through fencing, thus making the task of mending
fences with Islamabad difficult. By Dr Moonis Ahmar

9
 The media’s code of silence on Kashmir
The Indian media boasts an illustrious history. Born during the freedom struggle
against the British colonial rule, it quickly mastered the rules of the game, working
around the stiff curbs and acute sensitivities of the colonial masters. If the
Independence movement saw popular newspapers provide intellectual leadership
and direction to the country, the post-independence era saw them really thrive,
mirroring the aspirations and dreams of a young nation. Except for the dark
interregnum of Indira Gandhi’s Emergency when, in the words of Lal Krishna
Advani, it chose to crawl when told to bend, Indian media has been fiercely
independent and free-spirited. Never shying away from speaking truth to power, it
has jealously guarded its freedom under successive governments.
My former newspaper, the 'Indian Express', has by far been the most fearless of
them all, perpetually defying the government of the day with its brilliant reportage,
incisive commentary and groundbreaking investigative stories. Celebrated for
bringing down governments with some of its brilliant and famous exposes, the
Express chose to defiantly print blank sheets in place of editorial and news columns
when told to submit them to government scrutiny during Emergency years.
I wonder what happens to this celebrated independent streak of Indian media
when dealing with the conundrum called Kashmir. Except for few courageous
voices, most journalists lose their mojo, as it were, as they obsequiously toe the
official narrative and adapt themselves to the line of the security state and
demands of nationalism.
The broadcast or electronic media is even more hopeless. While issues of human
rights violations and humanitarian suffering elsewhere in the country are promptly
reported and played out a zillion times in 24/7 media, they are swallowed up by a
cold silence of indifference and apathy when similar things happen in Kashmir.
Worse still, they are portrayed as a Pakistani plot to sow seeds of strife in Kashmir
and tear it away from the unwilling hands of mother India.
If only Indian journalists were able to see Kashmir not as a piece of territory with a
predominantly Muslim majority, claimed and obsessed over by our pesky Western
neighbour, but as a people of flesh and blood very much human like us, would we
still be so indifferent and insensitive to their predicament and the appalling
humanitarian tragedy that is Kashmir?
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In 2011, the State Human Rights Commission of Jammu and Kashmir released a
report documenting more than 2,000 unidentified bodies in 30-40 odd mass graves
and essentially verified other similar reports from local organizations, most notably
the International People’s Tribunal of Human Rights and Justice in Indian
Administered Kashmir. DNA testing subsequently confirmed that these bodies
belonged to Kashmiris. And we are not even talking about the hundreds of rapes
and thousands of routine staged encounters and humiliation that Kashmiris go
through on a daily basis at the hands of security forces at ubiquitous checkpoints.
Do you know that between 1989 and 2011 alone there have been more than 8,000
documented disappearances and at least 80,000 Kashmiri deaths? Then there are
those thousands of 'half widows' who do not know whether to wait for their
missing husbands or mourn them.
Even through the off and on 'dialogue' that New Delhi has held over the years with
Kashmiri separatists, these extrajudicial killings and other methods of persuasion
have never stopped. In the presence of draconian laws like AFSPA, which allows the
security forces to get away with murder in conflict zones, what do you expect? Even
otherwise, AFSPA or no AFSPA, Kashmir is a special case and ‘occasional violations’
by troops are seemingly understandable and something that we in the media have
learnt to live with. This even after the Supreme Court in 2016 came down heavily
on the abuse of AFSPA by security forces and the practice of ‘fake encounters’. The
top court blew apart the concept of immunity for the armed forces saying there is
no such thing as “absolute immunity” and that the security forces could be tried by
normal criminal courts for “use of unwarranted and excessive force to kill a person
even in a disturbed area.”
Wani was barely 16 when he was first apprehended in 2010 along with his friend in
Tral and brutally assaulted by the troops. His young brother was subsequently killed
by the troops, giving birth to the legend of the man who is now being painted by
the media as the poster boy of the Kashmir jihad. Young Kashmiris like militant
commander Burhan Wani who was killed in a staged encounter are forced to take
up arms, not just for what they call ‘azadi’ but also for freedom from fear and daily
humiliation at the hands of the men in khaki.
Unfortunately, no lessons have been learnt from 2010 when Kashmir was last
rocked by violent protests or many such repeated bouts of violence, unrest and
mindless killings. It has been a familiar pattern over the years. All it takes is a small
incident or provocation, real or imagined, to light the fuse and blow up the powder

11
keg of frustration and all-pervasive anger. Yet few of us in and outside the media
are prepared to listen to the Kashmiri side of the story and understand why so many
of them are ready to brave bullets, throwing away lives full of promise. What will it
take for all those in authority to heed the SC warning that “the rule of law applies
even in disturbed areas and even when dealing with the enemy”?
To most Indians, especially the neo-rich and upwardly-mobile middle classes and
the self-anointed protectors of national interest in the media, Kashmir is an integral
and inalienable part of India. Period. The Kashmiris, their angst and aspirations,
long and documented history of a free existence and all the fine promises that were
made to them by independent India’s leadership at the time of accession be
damned! It hardly matters what the Kashmiris want even if this has been their
homeland. It is we who will decide what they should want and deserve. As Jhuma
Sen argues, “New Delhi has been the self-appointed arbitrator in determining
Kashmiri aspirations and claims to freedom.”
And the Indian media and establishment dutifully follow the same unwritten policy,
telling Kashmiris ad nauseam what they should want and get. “The policy of
denying Kashmiris the right to articulate what they want has been successfully
carried forward by Indian media, where a prime time debate on Kashmir after every
periodic unrest usually includes everyone but a Kashmiri with the anchor
repeatedly thundering: “But what do they want?”
Why do you think the Kashmiris – five generations of them since 1931, the year of
the first revolt against the Maharaja – have been fighting and dying for all these
years? All that the Kashmiris want is the same inalienable rights that you and I
enjoy. I know this is not something that is palatable to the majority of proud and
patriotic Indians, especially under the current dispensation that endlessly dreams
of Akhand Bharat, extending from Afghanistan to Burma. Kashmir will continue to
bleed as long as we do not accept that the Kashmiris deserve the same rights,
freedom, and dignity that we so love and cherish.
By:Aijaz Zaka Syed

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 A roadmap for strong diplomacy
International diplomacy is an enduring exercise of doing politics without being
dubbed political about the immediate interests of one’s own country. From an
academic perspective, diplomacy looks more like an abstract idea of international
relations but in practice it is a set of concrete steps, roles and actions enacted
through a formal institutional mechanism. Institutions are rational entities which
are designed to establish universal principles and standards to govern the roles and
actions of individuals.
In the case of international diplomacy, state institutions define the overarching
guiding principles and policy framework for diplomats and statesmen which in turn
defines the fundamentals of diplomatic engagement withthe international
community. That is why a change of governments and their diplomatic
functionaries does not affect the major contours of foreign policy and priorities of
international diplomacy of a state.
The foreign policy framework of a state is founded on institutional priorities which
also reflects the nature of the power structure of a state. The institutions of a
democratic state will define the larger public interest as the primary objective of
international diplomacy, barring global economic empires. For instance, the
Scandinavian states have always pursued an inclusive, welfare-oriented and non-
expansionist international diplomacy for these are the only social democratic states
in the unipolar neo-liberal world. Contrary to this, the US follows a belligerent,
expansionist and exclusionary approach in its global diplomatic engagements.
China’s foreign policy has been driven by an introverted, business-oriented,
pragmatic and nonviolent economic expansion as the key principles to protect and
promote the national interest.
Countries ruled by military dictators have always followed a docile and subservient
international diplomatic approach because they lack political legitimacy in the
international community. Contrary to our perception of strong men, military
dictators usually work as proxies of international powers to prolong their rule,
which is why they position their diplomatic standing as power brokers. That is why
undemocratic countries have always had weak and subservient foreign policies to
appease the global powers which helps consolidate their control over domestic
politics. Countries like Saudi Arabia and Pakistan are examples of following
subservient international diplomacy. In real, a strong state is not one which has
strong institutions for the citizens. 'Strong men' always use international diplomacy
13
for personal aggrandizement and glorification of the powers that be rather than
promoting the public interest.
Diplomacy is not about boasting about what you are good at, it is more about
packaging your weaknesses as potential strengths. Diplomacy is not about
hypocrisy, it is about engaging the world for the benefit of your people who have
chosen you to represent them. Beneath all those big theories of international
diplomacy, there lies a simple cross-cutting fact – all diplomacy is geared to make
your political entity inevitable for others. It is not that easy to assert the position of
political inevitability as a poor nation in the global political community. But good
leaders always find strategic ways to establish the inevitable position in the global
system.
Nobody is interested to know how many trees you can plant in your country as a
political leader because it does not make you an inevitable global player, it only
shows you as an introvert nation. It also effects your international political standing
because strategic gains are not output driven. There is a huge difference between
running an output-driven organization and governing a nation of 207 million
people. Even if you are hell-bent to enumerate your internal political achievements
on an international forum then you must not get the facts wrong. Why should I
work with you if you are full of self-propelling propositions? What is my stake and
why should I waste my time pursuing your agenda? This is what happens among all
material relations until they enter into a bizarre spiritual domain. Even those
spiritual domains do not live longer unless they are buttressed by the concrete and
material reasons of affiliation.
When we deal with international relations, diplomacy becomes a means of
cementing together national political priorities and objectives of the foreign policy.
A good foreign policy is always a reflection of national priorities, citizens’
aspirations and the long-term goal of nation-building in a volatile international
environment. On international policy forums, if a head of government submits to a
unilateral diplomatic narrative he/she tends to lose opportunity to offer a
comparative edge to the global leadership.
For decades, the Pakistani leadership failed to create a positive diplomatic impact
on the thinking of the international community vis-à-vis its key strategic national
goals including the Kashmir dispute, war on terror, international trade and nuclear
non-proliferation etc. One of the most visible diplomatic failures of Pakistan is the
inability of its leadership to make a convincing political case to address the Kashmir

14
dispute in line with the resolutions of the UN. The failure partly stems from the
confusion and lack of commitment to address the complexity of this dispute to the
satisfaction of its own people.
The protracted conflict between India and Pakistan continues to shape the political,
economic and security paradigm, and a mutually exclusive diplomatic narrative
over the Kashmir dispute. For the Indian federation, the domino effect of losing
Kashmir through a plebiscite may lead to national disintegration in addition to
weakening the political control of the right-wing BJP. For the secular Congress
Party, giving away Kashmir on religious grounds is a challenge for Indian secularism
while for the BJP a burning Kashmir provides political millage by whipping up the
anti-Muslim sentiments of its voters. Whoever comes to power in India as a result
of the current general elections, the Kashmir dispute is not going to find any
political breakthrough. The secular foundations of constitutional democracy in
India are under threat with the rise of Hindutva, which is also reflected in the
country's belligerent international diplomacy towards its neighbours.
Pakistan has not raised the Kashmir dispute on international forums beyond some
sporadic protests and petitions or some diplomatic platitudes in the UN General
Assembly sessions. The plebiscite in Kashmir does not necessarily mean accession
to Pakistan or India as the people of Kashmir can opt for an independent state.
Another question that one may want to ask is: what is the status of Gilgit-Baltistan
in Pakistan as 80 percent people in Gilgit-Baltistan do not consider themselves as
part of the Kashmir dispute? In the wake of the forthcoming CPEC investments, it
is vital that the status of Gilgit-Baltistan is determined either by decoupling the
region from Kashmir or by giving it provisional autonomous status till the resolution
of the Kashmir issue. Both India and Pakistan must come up with a set of options
for resolving the Kashmir issue.
On other diplomatic issues too, Pakistan has not effectively been communicating
its national priorities to the international community perhaps because they have
not been fully defined yet. The constant state of political uncertainty, slow pace
and reversals in the journey of the democratic transition, and continued
dependence on international financial institutions, have multiplied the challenges
faced by Pakistan.
By: Amir Hussain

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 Geopolitics and the BRI
The second Summit on China’s Belt and Road Initiative (BRI), held in Beijing from
April 26 to 27 and attended by several world leaders from more than 150 countries,
provided an opportunity to showcase China’s mega project aimed at promoting
global growth and prosperity.
But critics, led by the US, used the occasion to castigate the BRI as a manifestation
of China’s “geo-political ambitions” that would force developing countries into a
“debt trap”. At the heart of this controversy is whether the BRI is a benign Chinese
endeavour to promote greater international connectivity for shared economic
development or a tool to dominate Asian, African and Latin American countries.
This issue is of paramount importance for Pakistan since CPEC is the flagship project
of the BRI and an example to be emulated by other developing countries.
Therefore, the BRI needs to be placed in its true context.
Unveiled by President Xi in 2013, “as a foreign policy priority”, the BRI seeks to
“revive and reinvigorate the ancient Silk Roads that connected China with Eurasia.
To actualise this initiative, China set up development oriented financial institutions
and planning mechanisms to accelerate the construction of infrastructure
connecting China with neighbouring regions and build a “Silk Road Economic Belt
and a Maritime Silk road to form a new pattern of all-around opportunities”.
The China Development Bank alone earmarked nearly one trillion US dollars by
2015 for over 900 projects involving transportation, infrastructure and energy. The
Chinese Export-Import Bank pledged financing for more than 1,000 projects in 49
countries as part of the BRI. The total Chinese financial outlay is estimated at about
three trillion dollars. Today over 80 countries are directly part of this initiative while
scores of others, including several members of the EU, are also involved. These
countries spread from and across Asia, Europe, Africa and Latin America — a total
of around 63 per cent of the world’s population with a collective total of over 21
trillion dollars of global output.
Guided by China’s policy of “harmonious rise” to superpower status and “win-win
cooperation” with partnering countries, President Xi has maintained that
“exchange will replace estrangement”; “mutual learning will replace clashes” and
“coexistence will replace a sense of superiority”. More pointedly Chinese Foreign
Minister Wang Yi stated that “the BRI is not a geo-political tool but a platform for
cooperation”.

16
The BRI grand design is unprecedented in scale but not unique. Such linkages have
been suggested before. In the aftermath of the Iraq invasion, American officials
spoke of their goal to “revive ancient ties between South and Central Asia…to
create new links in the areas of trade, transport, democracy, energy and
communications”.
Later, in 2011, then Secretary of State Hillary Clinton proposed creating a “new Silk
Road — an international network of economic and transit connections”. But these
proved to be mere statements of intent rather than substantive policies backed up
by financial commitments.
More recently, Trump’s Secretary of State Pompeo announced an enhanced US
regional role in the “Indo-Pacific” as “one of the greatest engines of the global
economy” for which he announced 113 million dollars in new initiatives, a
minuscule amount compared to China’s trillion dollars investments.
The reality is that a declining US, and under Trump an unreliable partner to boot,
does not carry the same influence as a rising China. Unable to compete in the global
marketplace, the US has resorted to building pressure against China.
Instead of accepting China (and Russia) as equal partners to evolve a new stable
international order, the US has resorted to building military alliances and trade
wars to contain and confront China. A key part of this strategy is to demonise China
as a “predatory state” that is using the BRI to entrap poor countries through
increasing their debt burden. American-dominated international financial
institutions like the IMF and the World Bank are being used to spread such
allegations.
But this canard has been exposed by objective Americans themselves. For example,
of the overall debt for African countries, estimated by the China-Africa Research
Initiative at Johns Hopkins University amounting to 143 billion dollars, the majority
of this debt is owed to non-Chinese lenders mainly Western banks.
The total debt of Latin American countries, according to the Global Development
Policy Centre, “financing from China alone did not appear to be driving borrowers
above the IMF’s debt sustainability threshold”. Similarly, the controversy
generated about Sri Lanka’s Hambantota Port which was allegedly surrendered to
China due to non-payable debts of 46 billion dollars, it was revealed that actually
only 10 per cent of the debt is owed to China. In short, according to these analysts,
as reported in The New York Times of April 27, “fears that China is deliberately
preying on countries in need are unfounded”.

17
Pakistan’s own example is a case in point. While Secretary Pompeo fulminated that
the US will not allow the IMF to bail out Pakistan so that it could pay off its Chinese
loans, the fact remains that over 80 per cent of Pakistan’s debt is owed to Western
lenders including the US and IMF, not to China.
Aside from the debt burden argument, the US has resorted to a massive
disinformation and destabilisation campaign within Pakistan through its proxies
and touts to mislead Pakistanis about CPEC. It has also enlisted its Indian acolytes
to oppose CPEC, by promoting terrorism through the BLA and the TTP, such as
attacks on Chinese workers and the Chinese Consulate in Karachi. In this effort, the
Gwadar port has also been projected as a Chinese naval base rather than what it
actually is — a commercial port for trading and trans-shipment purposes.
Undoubtedly, in any project the size of the BRI, there will be shortcomings which
President Xi acknowledged at the recent Summit, calling for transparency and zero
tolerance for corruption. But to argue that the BRI is a geo-political power grab by
China to challenge the US belies its real purpose and exposes America’s own
vulnerabilities in a changing world order.
By Zamir Akram

18
 Why Pakistan must welcome Masood Azhar’s UN ban
Masood Azhar, head of the banned Jaish-e-Muhammad, has finally been declared
a global terrorist by the UN Security Council’s Sanctions Committee under the
resolution 1267. The designation entails travel ban, assets freeze and arms
embargo on the JeM chief. Pakistan was quick to implement the UN decision and
issued directives to the authorities concerned to move ahead with all the
restrictions.
The case of Masood Azhar lingered on for 10 years at the UN. India first brought his
case before the sanctions committee in 2009. Other countries, including the US,
the UK and France, backed the Indian bid. But every time China, on behalf of
Pakistan, scuttled those efforts by placing a ‘technical hold’ on the resolution. But
when on April 29, P-3 or three permanent members of the UNSC namely the US,
the UK and France moved a fresh resolution in the sanctions committee, the deal
was already sealed. On May 1, the UN sanctions committee finally placed Masood
Azhar in the list of global terrorists. The breakthrough became possible only when
China eventually withdrew its objections to the move. India called it a ‘huge
diplomatic win’ while Pakistan took solace in the fact that Masood Azhar’s listing
came with references to Kashmir freedom struggle, the Pulwama attack and the
Pakistani state institutions omitted. The Foreign Office also explained that China
maintained technical hold on previous occasions because India wanted to equate
the Kashmir freedom struggle with terrorism and also tried to implicate Pakistani
state institutions.
Pakistan is insisting that it has taken the decision in its own national interest and
has nothing to do with any external pressure. This line is good but only for domestic
consumption. The outside perception is that Pakistan was left with no other option
but to accept the decision, given the relentless efforts by powerful countries. This,
unfortunately, has reinforced the perception that Pakistan acts against certain
militant groups only when it is under international pressure. The past record shows
the same. It was former military ruler Pervez Musharraf, who first buckled under
international pressure to launch a crackdown on militant organisations in the wake
of 2001 attack on the Indian parliament. The incident brought Pakistan and India
almost close to a war. The tensions only eased after the Musharraf regime agreed
to ban several militant outfits, including the JeM. But he had to face backlash from
those outfits as Musharraf in one of his recent TV interviews claimed that the JeM
was behind the assassination attempt on him in Rawalpindi. He also admitted that
19
he could not move against the JeM because until 2007 the group was used as proxy
to further Pakistan’s interest. It was because of this reason that Pakistan for long
has struggled to improve its anti-terror credentials despite paying huge sacrifices
both in terms of men and material. For example, Pakistan’s oft-repeated claim that
its fight against terror was not selective raised many questions when we opposed
the listing of Masood Azhar for a good 10 years.
But there appears to be a realisation now in Pakistan that the past policies are no
more tenable or beneficial for the country. Even Prime Minister Imran Khan publicly
conceded that those groups were created by Pakistan but now they have lost their
utility. There is a realisation within powerful quarters that Pakistan should gradually
phase out all those groups, which were once used by the state for strategic
interests.
Therefore, Pakistan should welcome the listing of Masood Azhar since the move is
perfectly aligned with Pakistan’s current stated policy that does not permit any
group or individual to use its soil for violence. The key to success, though, is that
irrespective of what the outside world says, Pakistan must continue its fight against
all elements which have now become its strategic liabilities.
By Kamran Yousaf

20
 Another Arab Spring
The Arab Spring is back in 2019, eight years after its first manifestation. The ruling
establishments as well as the youth drew important lessons from the experience of
2011. This time around Sudan became the epicentre of the new uprising. What
makes the 2019 Sudanese Spring different from the one in 2011 is the involvement
of outsiders, each with a deep interest in Sudan’s future. The monarchies of Saudi
Arabia and the United Arab Emirates are extremely apprehensive of a change in
Sudan that goes against their interests. They would like to see the military leaders
who are now in power not to lose control. Thus motivated, they have pledged to
provide the military transition team three billion dollars in immediate assistance.
The announcement of this support was made in Washington by the diplomatic
missions in that city representing the two governments. The support was split in
two parts. Five hundred million dollars would be provided to Sudan’s Central Bank
to help ease pressure on the Sudanese currency and improve the country’s financial
situation. The balance interestingly would be “dedicated to support the people of
Sudan through food, medicines, and fuel derivatives”. The larger part was to bribe
the people to vacate the streets. But the street was not impressed. The protesters,
who continued with their agitation, told Saudi Arabia and the UAE to stay out of
their country. “A soft landing for the old regime is being orchestrated by some
Middle Eastern powers so that they can keep their allies in power,” said Mohamed
Yusuf al Mustafa, the Head of the Sudanese Professional Association, which
orchestrated the street agitation.
The two monarchies, working together, shared a vision for the Middle East aimed
at countering Iranian influence, crushing political Islamist movements inspired by
groups such as the Muslim Brotherhood, and stop a democratic contagion that
could stir aspirations of their now-restive youths. According to Khalid Mustafa
Medani, the Chair of the Africa Studies Programme at McGill University who has
watched the developing situation in Sudan and has studied the outcome of the
2011 Spring, said the Sudanese “were well aware of that legacy. For many months,
they had discussed ways to avoid Egypt’s trajectory, in which a popular revolt in
2011 followed by elections ultimately resulted in a military coup and the arrival of
an authoritarian government backed by Saudi Arabia and the UAE. They were ready
for the Saudis to intervene in opposition to democracy. The consciousness was
already there.” Sudan’s old regime had helped the Saudi Kingdom in its war in
Yemen. The Sudanese at the request of the authorities in Riyadh had also involved
21
themselves. They had contributed foot soldiers to aid the Saudi-UAE coalition
fighting in the Yemen civil war. Lt Gen Abdel Fattah al Burhan, who was the head
of the transition team in Khartoum, had headed the office that recruited thousands
of troops who fought in Yemen.
But Saudi Arabia and the UAE were not the only Arab nations interested in Sudan’s
future. Egypt, the country’s neighbour on the north, had a deep interest in how the
situation in Sudan evolved. If the agitation succeeded in pushing the military out of
the government, it could set precedence in Egypt that would encourage the
country’s restive population to come out on the streets once again to bring about
political opening. Cairo’s interest went beyond the political; it was also concerned
by what the Sudanese being the upper riparian could do to the flow of water in the
Nile River. Qatar was another Arab nation that had interest in Sudan. It was
boycotted by the Saudis and the UAE for supporting Iran as well as the Muslim
Brotherhood in their efforts to bring about political change in the Arab world.
Mohammad al Yahya, a Saudi analyst who is the Editor of the Al Arabia English
website, believes that Saudi Arabia and the UAE saw a vital interest in ensuring that
instability caused by political transitions across the Arab world are not “exploited
by non-Arab actors”, referring specifically to Iran and Turkey and the possibility that
they would support political Islamist groups.
The United States also watched with some nervousness the developments in
Sudan. Makilala James, an official in the State Department, travelled to Khartoum
and met Gen Burhan and asked him that “the timeline should be as quick as
possible because the streets are demanding that we stand in support of the people
asking for that quick transition.” The protesters were not pleased with that
suggestion. “The EU and US want an electorate mandate, so they are pushing for
quick elections,” said Omer Eldigair, the Chairman of the opposition Sudanese
Congress Party. “But if you have elections right now, you give the power right back
to Bashir’s people — they are the only ones with an organised party structure. We
have been suppressed for decades. That is why we are asking for four years of
civilian-led transition.”
James of the State Department did not occupy a senior position; his involvement in
Sudan was indicative of the low priority assigned to the country by the Trump
administration. This troubled old Arab-Africa hands in the United States. One of
them, Payton Knopf who had served in Sudan during the presidency of George W
Bush, spoke with Declan Walsh of The New York Times. The correspondent wrote

22
a major story for his newspaper titled, “Amid US silence, gulf nations support the
military in Sudan’s revolution.” Knopf was worried about the way America was
dealing with sensitive places in Africa and the Middle East. “These are the most
significant geopolitical shifts in the Horn of Africa since the immediate post-Cold
War period,” he said. “Back then, the US shaped what that environment looked
like, for better or worse. Now there’s no evidence that the US is engaging with
changes of historical magnitude with remotely the same level of focus.” Much of
what the United States is currently doing in the Middle East is being dictated by
Israel. For Jerusalem especially under the hawkish Prime Minister Benjamin
Netanyahu who was elected recently to the fifth term, Iran is the real enemy. The
Arabs have been successfully tamed by the Jewish state.
Islamabad should also keep a close watch on developments in Sudan.
By Shahid Javed Burki

23
 Islamic presidential form of government
The country is abuzz with the talk of an Islamic presidential system with all the TV
channels and social media tuning to the topic and newspapers churning out articles
on the issue, denial of the Prime Minister notwithstanding. The views expressed by
the likes of Shah Farman, the Governor of Khyber- Pakhtunkhwa, on a TV channel
supporting the presidential form do not appear to be off-the-cuff remarks but
rather betray a well-schemed plan orchestrated by an oligarchy who had been
ruling the country in one way or the other.
Such ideas and debates are intentionally generated in order to gauge the pulse of
the public. Those masterminding the idea might have thought that Mr Imran Khan
was riding on a horse of popularity, therefore, the Constitution could be amended
through a referendum and be implemented. One possible object of floating such
an idea might be to get rid of the 18th Amendment and stuff the cabinet with non-
elected, handpicked individuals. But opposition to the idea has been so vociferous
and strong from all democratic and nationalist forces, particularly the smaller
provinces, that the schemers of the misadventure were taken aback.
Nothing is wrong or good about the presidential system itself as there are plenty of
arguments both for and against the system. But in Pakistan’s context, its historically
negative impact haunts us. The presidency in the history of Pakistan was the
product of the intrigues and martial law of General Ayub Khan in 1958. Sikandar
Mirza, the first president, got the taste of his own medicine and was soon shown
the door and had to live a life of ignominy in London. Fundamental rights were the
first casualty. The new presidential form of the constitution of Pakistan was tailored
to suit the personality of a dictator. What happened during the reign of the self-
proclaimed Asian Charles de Gaulle and self-appointed guardian of national
interests? Pakistan became the most trusted ally of the United States of America
by providing an airbase in Peshawar and becoming a partner in the sinister designs
to checkmate the Soviet Union under the Policy of Containment of John Foster
Dulles. His Operation Gibralter proved to be a disaster and led to the 1965 war.
Pakistan had to go to Tashkent of the same USSR against whom spy planes were
operating from the Peshawar base, to rescue its prestige under a Peace Agreement.
A crony industrial class of 22 families exploiting the labour of the working class
emerged amidst claims of robust economic growth. Ayub started celebrating the
so-called decade of development, being ignorant that the benefits of the economic
24
growth had not reached the common man. Oblivious of the surroundings, the
sentiments of the masses burst out and his tailor-made system could not stand the
gushing tide of the protest and came crashing down like a house of cards. The
malady of the story is that he even did not adhere to his own much-trumpeted
Presidential Constitution and handed over power to the commander-in-chief
General Yayha Khan who also became the president. Laced with all the powers, he
conducted elections but later on refused to accept the public mandate. The
culmination of all this was the end of united Pakistan; a blood-stained and shameful
chapter of our history.
Learning from the history of Pakistan, all the national leaders drew a new social
contract in the form of the Constitution of Pakistan, representing the aspirations of
the people of the country. Even successive military coups could not do away with
the 1973 Constitution which was only held in abeyance considering it sacrosanct as
it bridged all nationalities within the scheme of the federation. While maintaining
the outward features of the Constitution, those military rulers through the doctrine
of State Necessity and Successful Revolution concentrated all powers in the office
of President. And the final outcome was: suppression of fundamental rights, jihadi
culture, violent extremism, the rise of violent non-state actors and again entering
into alliances which we today consider inimical to our social and national interests.
What we are reaping today is the harvest of the seeds sown by different presidents
of Pakistan in the past.
If we accept for the sake of argument that the presidential system is the panacea for
all our ailments, then the question arises which type of a presidential system we want?
Today the US presidential system is considered to be the best. Will it be acceptable to
our planners? The US Constitution, based on a system of separation of powers and
checks and balances, gives immense powers to the states and the Senate. In order to
secure the interests of the states, the Senate enjoys far more powers if compared with
those of the Senate of Pakistan. Not only can the Senate impeach the President, but
all key appointments made by the President and the executive treaties need its
approval. The success of the constitutional system depends upon the observance of
due process of law, meaning thereby that all functionaries of the state derive the
authority either from the constitution or a statute. No room is envisaged for any
institution except in accordance with the law. In our country, any deviation from this
concept is detrimental to the stability of the country as well, and therefore must be
avoided at all costs. By Syed Akhtar Ali Shah

25
 US ownership dilemma and Afghan peace process
The sixth round of the ongoing US-led peace talks with the Afghan Taliban in Doha
has entered a crucial phase. Though security situation remains bleak in Afghanistan
amid intense fighting between the two warring sides, there is still a ray of hope that
the current round of talks will end up with an agreement on the issue of the
ceasefire and a timetable for the US to militarily withdraw from Afghanistan.
While the current US efforts to ensure durable peace in Afghanistan may not be
questioned, its approach remains a cause of concern, as on the one hand, it ignores
the core realities of the Afghan polity and the Afghan state and society on the other.
There is seemingly a lack of “sense of ownership” of the entire process by the US in
particular and the Afghan stakeholders in general, due to which the US efforts may
not deliver the anticipated results.
A glance at the whole Peace Process would reveal that the US ownership dilemma
is driven by its efforts towards meeting the ultimate objective of its troops’
withdrawal from Afghanistan. Washington’s war fatigue is quite evident and is
immensely affecting the peace process. In a rush to exit the war theatre at the
earliest, the US is paying little attention to the intricacies surrounding Afghan polity.
A three-layered analysis of the current US approach reveals that the sense of
ownership which the US had exhibited for the post-WWII reconstruction and
rehabilitation of Germany and Japan is clearly missing in the case of Afghanistan.
The US seems to be turning a blind eye towards some of the glaring challenges
which may ultimately result in failure of the said peace efforts in the war-ravaged
country.
First, there is little deliberation on what would be the shape of the Afghan
government structure after the US exit and the entry of the Taliban in the new
future Afghan setup. The US Special envoy, Zalmay Khalilzad, is currently
monopolizing peace through imposing a “regime change” which may have only a
short-term benefit. The Taliban have shown their dismay over the current Afghan
constitution and have clamored for a system that should be in synchronisation with
Shariah. Yet, how the current Afghan government and the people would react to
any such demand by the Taliban in the governance structure is yet to be seen.
Second, the US efforts to pull in the Taliban as a legitimate political actor in the
Afghan mainstream has the negative effect of delegitimising the current
government in Kabul. While it is true that peace is about making compromises,
however, compromising one political group at the expense of another will create
26
further internal schisms. Democracy in post-Bonn Afghanistan is yet to take strong
roots. In September this year, Afghanistan will hold the fourth presidential
elections. At such a crucial juncture when the country is facing a political transition,
the imposed entry of the Taliban without taking into confidence the National Unity
Government (NUG) will further complicate the internal political dynamics of the
country. Such practices in a post-conflict scenario may pave the way for political
fracturing and revival of the conflict.
Last but not least, there is no stocktaking on the part of the US viz challenges that
may emerge in any post-US exit strategy. How would the intra-Afghan dialogue
proceed given a plethora of complex power centers which are most of the times
working at cross-purposes with each other? There seems to be little efforts being
put at drawing out a road map to mitigate some of the expected challenges. Such
a peace which is led with the sole agenda of relieving the US only of its “war fatigue”
is going to serve the US interest only, and not of the Afghans – thus making the
ownership dilemma a core problem of the process.
By Dr Sadia Sulaiman

27
 As the IMF moves in
Within the last two weeks, the PM has removed the entire team responsible to
manage our economy. The country had barely absorbed the earth-shaking news of
the removal of the finance minister when came news of the sacking of two key
players – the SBP governor and the chairman FBR.
In any period, three key players in government being removed is an extraordinary
event and would shake the markets negatively. But the timing of these recent
changes is unprecedented – barely weeks before the budget and at the final stage
of IMF negotiations.
So, what is it that triggered these changes? There could be a host of reasons. There
is no doubt about the state of the economy which has taken a downturn for the
worst in the last nine months. Naturally, the PM would be a very worried man at
the state of the economy. Nothing has worked since the present government took
over in August. Every sector of the economy has suffered with no sight of recovery.
Just a glimpse of macro-economic situation shows us the slowest revenue growth
in 20 years; GDP growth expected to be around three percent, coming down from
5.8 percent in the last fiscal year; inflation almost doubling compared to last year;
and millions going below the poverty line in the last nine months. Moreover, there
are massive job losses; no growth in exports despite massive devaluation;
continuous decline in the stock market with billions of dollars going out of the
market; massive FDI decline; unprecedented rise in public debt; circular debt rising
from Rs1.1 trillion to approx Rs1.6 trillion in nine months; fiscal deficit expected to
remain over seven percent – one of the highest in our history; and, most
importantly, erosion of confidence among the key stakeholders and general public
about the present state of the economy and future direction.
With such a gloomy macro-economic situation, any PM would feel extremely
concerned. Having waited so many months and nothing coming together, the PM
was under extreme pressure to make necessary changes. Contrary to the promises
he made prior to the elections, Pakistan witnessed one of the worst economic
meltdowns in its history. The prime minister was under immense pressure to
deliver on his economic promises and the best way he could respond was to shift
the blame to other members of his economic team.
I am not sure the PM considered the significance of the timing while making the
changes in his economic team. Removing the chairman of the FBR in the second
last month of the fiscal year is unprecedented. With tax revenues falling abysmally
28
short of targets and with no chance of recovery, there were serious concerns about
the performance of the FBR team led by its chairman. Indeed, the PM had
expressed his dismay back in February when he announced that he would set up a
new FBR.
The case for the removal of the SBP governor is even worse. This is a three-year
tenure position during which time the government could not replace him. So
enough pressure must have been exerted for the governor to resign on his own.
The reasons coming out through unofficial sources say that the PM was not happy
with the governor’s management of the exchange policy. The government faced
serious criticism when the rupee tumbled against the dollar and the PM at that time
distanced himself from a possible decision to let the market determine its free fall.
The PM announced that he got news of the devaluation through TV channels. The
finance minister of the time, though, had publicly announced that he himself had
informed the PMof the decision a day before the massive devaluation. Clearly, the
PM was trying to put the blame on the SBP governor and the finance minister.
Whether the present government wants a free-float policy or wants to regulate the
exchange rate through intervention in the markets is not clear. The government
has vigorously defended the massive devaluation, saying it was necessary to do so
under the circumstances but the governor of the SBP has paid the price for not
doing enough to stem the fall of the rupee.
The new team has been announced. Till last week, the new governor was a paid
IMF employee serving as resident director, Egypt. What we have seen in Egypt is a
standard IMF prescription – massive devaluation and significant increase in energy
prices. Obviously, his proposals in Pakistan would be no different. However, we
would expect the new team to protect our national interests while negotiating with
the IMF. But it is rather difficult to imagine that the IMF/World Bank led team will
be able to protect Pakistani national interests.
The PM surely has come a long way – from claiming he'd commit suicide before
approaching the IMF to literally handing over the country's finances to the same
institution. He obviously had no idea when he was making all those statements
against the IMF (not just before the elections but even after assuming power. In his
address on August 19, he said it would be a matter of shame if he approached the
IMF). As for the new FBR chairman, there’s nothing to suggest that we will see a
major improvement in tax collection. Surely, we are going to miss the target by
close to Rs500 billion.

29
The PM will find it easy to put the blame on the former finance minister and former
FBR chairman. This is typical of this government since it has come into power. Any
inefficiency or non-performance is blamed on the PPP or PML-N governments.
From now on, the blame for poor economic management will be put on the team
that has just been replaced. The question is: when will the present government,
especially the prime minister, start owning its responsibility and being answerable
for non-delivery? The PM must realize that the honeymoon period is long gone and
people are running out of patience. It's time to perform.
By: Mohammad Zubair

30
 Forever refugees?
THE tragedy of the ongoing Palestinian dispossession has been played out in full
view of the world ever since the creation of Israel. In two big waves, 1948 and 1967,
the Palestinians were driven out of their land, with large segments becoming
refugees in neighbouring countries. The dream the diaspora had of returning to
their ancestral land began to fade as Israel expanded its oppressive sway over
Palestinian territory, grabbing more land through wars and then through building
illegal settlements on Arab lands, which is an ongoing exercise.
The total number of Palestinian refugees registered with the United Nations Relief
and Works Agency (UNWRA) stands at 5.3 million. Jordan hosts more than 2m
refugees, and has operated a largely Palestine-friendly policy in terms of giving
passports and citizenship rights to Palestinians, except for those from the Gaza
Strip. Syria has been hosting another 526,000 refugees, who enjoy all rights of the
local population, except citizenship. The UNRWA runs camps in Gaza and the West
Bank. Egypt and Iraq also host thousands of refugees.
Lebanon, the smallest of the countries, accepted more refugees in proportion to its
local population. It is here that the plight of the Palestinian refugees is the worst in
the region. With no access to citizenship since 1948, the bulk of Palestinians have
been destined to lead a squalid existence in refugee camps — the most (in)famous
ones being Sabra and Shatila which were the site of a horrific massacre of
Palestinians at the hands of Phalange militia with Israeli connivance during the civil
war.
With the first generation of refugees slowly dwindling, the second generation finds
itself limited to the circumscribed life of the camps with no promising future
prospects. Palestinians refugees do not have the same rights as other foreigners.
Palestinian refugees in Lebanon are barred from entering over 20 professions and
cannot buy property. They cannot even make changes to the makeshift structure
of the camps. One report by the American University of Beirut found that only 36
per cent of the Palestinian population was employed and only 6pc of Palestinian
youth were participating in university training schemes.
Though the total number of refugees registered with UNWRA in Lebanon is
somewhere in the region of 500,000, the actual figure is reckoned to be less —
between 200,000 and 300,000, according to various estimates, while there are
between 3,000 and 5,000 Palestinians refugees who are believed to have no
identification papers. This group is wholly dependent upon the charity of local
31
NGOs. There are also around 30,000 Palestine refugees from Syria who have fled
the civil war there.
A Lebanese-Palestinian dialogue committee has identified increasing migration
trends among Palestinians from refugee camps in Lebanon. Palestinians are so
depressed by their living conditions in the camps that they are desperate to migrate
to Ethiopia, and even go as far afield as Brazil, Bolivia and Uruguay.
In recent years, the plight of the Palestinians has been worsened by the withdrawal
of funding to UNWRA by President Donald Trump’s administration. This has placed
an enormous burden on the already scarce social services operated by UNWRA.
The funding cuts have seen essential services such as health and education being
drastically hit. The funding shortfall currently being met by the Gulf nations and
other countries may not last forever. This may be a factor in forcing Palestinian
refugees to seek a better life elsewhere.
The flight of the Palestinian population from the miserable camps, where the
dream of return is still entrenched, may reduce the count of refugees with
implications for the right-to-return debate. With a declining refugee population,
the issue of the return of displaced Palestinians may fade.
The UN resolution upholds the right of return of Palestinian refugees which has
been at the heart of the Arab-Israeli talks. As more and more Palestinians flee the
life of camps for the West, the dream of return may dim as the Palestinian diaspora
in Europe and the West is less likely to press its claims of right of return. However,
beyond the politics of return and dispossession, the tragedy of Palestine continues
to be enacted in the camps in neighbouring countries where many generations of
Palestinian are trapped in a dead-end life. The politics driving the larger cause of
the Palestinians adds to the destitution of the refugees triggered by funding cuts as
well as the withholding of citizenship and human rights for the refugees.
The writer, author of Patient Pakistan: Reforming and Fixing Healthcare for All in
the 21st Century, has worked on refugee projects in Lebanon and Syria.
By: Arif Azad

32
 Empowering whom?
The PTI government in Punjab has introduced a new local government system in
the province. The Punjab Local Government Act 2019 has replaced the Local
Government Act 2013. The Punjab Assembly has also passed the Punjab Panchayat
and Neighbourhood Council Act 2019 to introduce panchayat and neighbourhood
councils. Union and district councils have been abolished under the new system.
The new system will have two-tier local governments, completely separate from
each other. Panchayat councils will work independently from tehsil councils in the
rural areas and neighbourhood councils from municipal committees/corporations
in the urban areas.
The existing local governments in Punjab have been dissolved. Nearly 60,000 local
governments elected representatives in Punjab have been dismissed with one
stroke of the pen. The PTI government used its legal authority under the law made
by the previous PML-N government, but this action will not strengthen democratic
institutions and traditions in the country. This action might be legal but it is against
the spirit of democracy.
The decision to dissolve the local governments seems politically motivated, the
main aim being an end to the PML-N’s domination over local governments. The PTI
wants to strengthen its political position so it can win the local government
elections to take control of local governments.
The bureaucracy has already taken over local governments to run them for at least
a year. The provincial government will have one year to consolidate its political
position without an organised resistance in the form of PML-N-led local
governments. So the PTI can run local governments with selected bureaucrats of
its liking.
The PTI government rushed through the legislation without giving enough time to
MPAs and the civil society to debate the new bill. No proper consultations were
held with civil society organisations and existing elected representatives of the local
governments. The government in fact killed any meaningful discussion and debate
both inside and outside the assembly. This haste to avoid a proper public debate
surprised many who believed that the PTI would hold wider consultations as
promised by its leadership. The PTI government is working hard to prove that it is
not different from the other governments as far as democratic traditions and
norms are concerned.

33
There are many flaws and contradictions in the new system. The decision to hold
the panchayat and neighbourhood council elections on a non-party basis shows
that we have not learn anything from past experiences. The decision of the Zia
dictatorship to hold non-party basis local bodies’ elections in 1979-1983 and then
the 1985 parliamentary elections promoted clanism and sectarianism in our
society.
Article 32 of the constitution ensures the participation of marginalised groups, such
as women, minorities, peasants and labour in local government elections. The
definition of labour and peasant is ambiguous and creates confusion. This reduces
the true representation of labour and peasants in the local governments.
The representation of women in the new system has been significantly reduced.
Women got 33 percent representation in the local government system introduced
by General (r) Musharaf in 2001. Thousands of councilors and community activists
emerged as a result of increased representation for women. That move encouraged
a new layer of women activists to participate in local government and politics.
The PML-N government reduced this representation in the last local government
system in 2013. Now this representation has been further reduced. And there will
also be no representation for the youth in the new system, since the PTI
government has abolished the youth seats introduced by the previous PML-N
government.
Article 140-A of the constitution, brought in by the 18th Amendment, states that
each province shall, by law, establish a local government system and devolve
political, administrative and financial responsibility and authority to the elected
representatives of the local governments. This means devolution of power from
the federal to the provincial and from the provincial to the local governments. In
the name of transparency, accountability, monitoring and sustainable
development, the provincial government enjoys much control over the local
governments. Technocrats and the bureaucracy have been given wider powers in
the running of local government. This is against the spirit of Article 140-A of the
constitution.
For instance, panchayat councils will be monitored by local boards, which will
consist of unelected and nominated people. The local boards will have the powers
to suspend or dissolve the panchayat councils. The provincial government will
continue to dictate the terms through the local government finance commission,
local government commission and local government boards. The unelected district

34
management will continue to enjoy powers at the district level as there will be no
elected local government in the district.
Delimitation and other administrative aspects of the new local government system
might take more than one year to complete. There might be a long-drawn legal
battle in the courts around the new system. The provincial government will
continue to run local government institutions through the bureaucracy more
happily. The change has come.
By: Khalid Bhatti

35
 Its all about globalization
The coming presidential election is not about Trump. It‘s about the nation state vs
globalization. If the democrats don‘t get that; they will surely loose no matter who
becomes their eventual candidate.
The recent rise of populist leaders and their nationalist agendas are surely the
inevitable political reaction to the neoliberalism of the last thirty years.
Globalization for globalization’s sake was an ideological vision of perfect markets
and the alleged growth of individual freedoms mutually supporting each other. It
didn’t turn out that way.
Global flows of capital, technology, and to some extent, labor proved far more
destabilizing for the majority of the planet who were less wealthy, less educated,
and less willing to let go of regional, national, and local ties and traditions. Global
elites, whether in the shadows or upfront in the limelight, were for far too long
oblivious to the disconnect between economic and, yes, cultural liberalization and
deregulation as opposed to the growing disquiet about these global trends among
the traditionally situated citizenry of the nation-state.
The global financial crises of the 90s were, as it turned out, but a foretaste of what
was to come. The “Great Recession” however was the ultimate comeuppance for
detrimental ideological bullying versus more realistic assessments arguing for a
more tempered globalization, one that would not exacerbate the living conditions
of people necessarily tied to the boundaries of the nation-state.
Thus, for all his negatives, Donald Trump gets it. He gets the fears, frustrations, and
animadversions of the vast multitudes of this planet who still inhabit and will
continue to inhabit nation-states. As a practical consequence of all this, he pursues
trade deals that favor the US, especially in relation to China. He gets, for example,
that Chinese undervaluing of their currency cannot be tolerated anymore. He
understands how politically explosive would be an agreement to end or at least
significantly curtail such manipulation while simultaneously strengthening the
national economic decision making powers of both countries as regards finance
and trade. Such a deal would not only energize his base but would expand it.
If in private and for a long time, Trump was both a practitioner and beneficiary of
neoliberal policies is not in question. For now, he presents and to a large extent
practices the politics of national determination in economic, political, and cultural
matters. He knows what the people want and what they fear most. In this sense,
Trump is not only populist but essentially expressing the democratic will of millions.
36
The problem is of course is that he seeks to regulate the inherent problems of
globalization in increasingly authoritarian and retrograde ways, while perhaps even
managing to unleash the forces of an irrational kind of protectionism. Globalization,
it should be remembered, has many faces: economic, technological, cultural, and
political. In many ways, particularly for national minorities and women it has
proven to be a net benefit and will likely continue to be so.
The question for the future (and for the Democrats) is not so much to extinguish
the prolific and polymorphous nature of globalization but how to tame it so that it
is more in harmony with the imperatives of democratic publics who are still, and
for the foreseeable future, will continue to be self-inscribed within the static
boundaries of nation-states. We must emphasize the good that is in globalization
while reducing the speed, impact, and range of its more destabilizing effects.
By: Dan Corjescu

37
 Modi man-goes and changing context
Narendra Modi recently gave an interview to an Indian film actor. The ostensible
purpose was to offer an apolitical look into the life of India’s premier. But since the
interview came right in the middle of the election season, it became a political
tragedy of errors. I would have called it a comedy if this was even remotely funny
anymore. One embarrassing moment came when the interviewer wanted to know
if the Prime Minister ate mangoes and if yes, how he preferred to eat them. In
South Asia, a common practice is to soften a mango by squeezing it, poke a hole
and suck the pulp with your mouth. For some reason, the interviewer avoided the
word commonly used for the process. But soon the clip was a butt of a million
online jokes and memes. Brave Indian journalist and talk show host Ravish Kumar
even dedicated an entire episode of his show, titled an ‘Apolitical Primetime Show’
to the incident.
With only two phases to go, Indian election process has opened an interesting
chapter. Modi who once seemed invincible can often be seen wincing on stage
when he chooses not to scowl. Of course, the arithmetic of Indian general election
is so complicated that in the absence of exit poll data, it is almost impossible to
predict the outcome. Caste, creed, colour, province, language and class all play
important part in the process. But if body language was an indicator, Modi’s
irritable manner would suggest that he was not winning and his public attacks on
his main rival Rahul Gandhi’s late father would imply that Gandhi was likely to be
the next premier. As the situation develops, more contenders have emerged:
Mamata Banerjee, the ever so brave and likable Chief Minister of Bengal; Chief
Minister of Telangana K Chandrashekar Rao (KCR); and Mayawati and Akhilesh
Yadav of UP. But the proverbial stab in the back came from Modi’s own cabinet
Minister Nitin Gadkari and his mentor RSS. Even before the election began, RSS
affiliates were openly discussing if Gadkari, a relatively better educated and richer
man, could replace Modi, in case of a weaker mandate. Since then Ram Madhav,
the BJP’s secretary general and an RSS ideologue, has already suggested that the
party may not get the required seats on its own.
So what happened? Despite Mr Modi’s valiant attempts to shift attention away
from his abysmal economic performance by setting Pakistan up as some kind of a
patsy, the widespread economic distress has dominated the voter’s mind. Not only
is Modi’s government awful in economics, some of its steps like demonetisation
and poorly calibrated goods and services tax border on being suicidal. The informal
38
sector and the small and medium enterprises have been destroyed. There is
incredible farmer distress, including in BJP-ruled states like UP, not just because of
low commodity prices or natural disasters but because of man-made ones like
letting cattle, mainly cows, roam free and destroy crops like pests. And unlike pests
you cannot do anything about it or within minutes cow vigilantes would be
breathing down your necks. It is a government which chooses to appoint a lawyer
as the finance minister of such a big economy and let one of the finest economic
minds of our times, Dr Raghuram Rajan, go from the post of the head of Reserve
Bank of India. If ineptness was not enough, corruption in Rafale deal seems to have
done it. Gandhi has seized the opportunity and introduced NYAY, a brilliant re-
monetisation campaign promise.
But it is the macroeconomic picture that is really frightening. When India decided
to open up its market back in 1990s, its sheer volume meant that foreign
investment would come. But a market is as good as its consumers. Herd instinct
brought a lot of foreign capital and credit to the country and a lot of it went to
wasteful projects. As a result, there is a teetering pile of non-performing assets
(NPAs) which threaten to collapse anytime taking much of the regional perhaps
global economy with it. And here is the kicker. India, since the end of the cold war
had made it a point of flirting with the West and China simultaneously. While it has
toyed with the idea of the new cold war between China and the US, to gain
maximum benefits from the West of course, it had always stopped short of taking
things to the breaking point knowing the true nature of the integrated world
economy. Modi’s defensive offence-in-chief Ajit Doval, being bereft of economic
insight, has taken the propaganda to a level where the new cold war seems a
distinct possibility. As new battle lines are being drawn, American liquidity has
returned to the US and China’s is back to its source, making India’s cash-starved
economy and unfolding NPA crisis more ominous. And the IMF could help but as its
India-born chief economist implied New Delhi would have to first stop lying about
its growth numbers. Meanwhile, too much of ill-directed political testosterone
threatens to demolish regional stability on its own.
In neighbouring Pakistan, there are two schools of thought that would want to see
Modi return to singhaassan. Those who genuinely believe that only a strongman in
New Delhi could build peace between the two countries. Sadly, they are not fully
appreciative of Modi government’s economic incompetence or its readiness to use
confrontation with Pakistan as a welcome diversion. The second group would like

39
to see India being burnt down to the ground by Modi. Not a wise course because
the sheer volume of Indian market means if it sinks it will most certainly take the
region with it.
What India needs right now is some serious damage control. Someone like Dr Rajan
as India’s next finance minister, who sees the problem, might be able to do the
trick. Actually, let me come out and say that he is the man best suited for the
position. The second step is an aggressive dismantling of the defensive offence
enterprise.
But what will happen to Pakistan, and China’s growing influence in the region?
Well, as I have been advocating for the past 20 years, change the context. Kautilya
has no place in this economic century. Shared economic equities can build new
alliances. It is where instead of being jealous neighbours, India and Pakistan can be
true allies. And India, China too. India, China, America, Russia, Japan, Pakistan, the
entire region and even the entire world can work in tandem. It is up to us to try.
India-Pakistan rivalry only brings out the worst in us. All we need to do is to come
to terms with each other’s existence. It can be done. Border disputes can also be
settled. And soon there will be no space left for the worst elements to thrive. There
is no dearth of challenges facing all of us. Time has come to take a chance on lasting
peace.
By Farrukh Khan Pitafi

40
 The hanging sword of FATF
A face-to-face meeting between Asia Pacific Group (APG) of the Financial Action
Task Force (FATF) and Pakistan is scheduled later this month, to be followed by the
Task Force undertaking its penultimate review of Pakistan’s progress early next
month. The sword of the FATF, it seems, will continue to hang over our heads until
after September this year when we would know our fate: whether we continue to
remain in the grey list or are taken out of it or consigned to the black list.
It is perhaps because of our entanglement with the FATF that the IMF was seen to
be dragging its feet on the matter of finalising a programme that we needed
urgently as our foreign exchange reserves of around nine billion dollars mobilised
through short-term loans from friendly countries have already disappeared.
What is extremely worrying is the very governing structure of the APG which is
exceptionally unfriendly. A very hostile US is the President of the FATF represented
by Marshall Billingslea, a serving Assistant Secretary of US Treasury who also heads
the office of Terrorist Financing Crimes. Australia which is part of the anti-China
(read Pakistan as well) Indo-Pacific alliance is the President of the APG and India
which has already vowed to isolate Pakistan economically is the Co-chair of the
APG. With such a formidable combination of hostile forces sitting on the review
panel, one cannot rule out the possibility of handing out a rigged judgment. The
only redeeming feature in the administrative set-up is China which sits on the FATF
as its Vice-President represented by Liu Xiangmin, Director General of the Legal
Department at the People’s Bank of China.
Equally worrisome is the fact that the European Commission (EC) has already
placed Pakistan in its list of inadequate jurisdiction on Anti-Money Laundering and
Counter Terror Financing regimes. If in such a situation we are pushed into the
‘black list’ by the FATF for no genuine fault of ours, it will unleash serious economic
and financial impact down the stream causing immense damage to Pakistan’s
economy.
The most obvious result would be the cost of doing a financial transaction through
established banking/ financial system, increased premium on Pakistani instruments
in the international capital markets, and the multilateral financing organisations
would add risk premiums to any money borrowed. Black listing will squeeze
Pakistan’s economy further and make it harder for the country to meet its
mounting foreign financing needs, including potential future borrowings from the
IMF. And if we remain in the ‘grey list’ it could lead to a downgrade in Pakistan’s
41
debt ratings, making it more difficult to tap into the international bond markets.
Further, it would lead to the downgrading of Pakistan’s financial viability.
The situation becomes all the more critical when seen in the context of the
country’s current economic data: exports $23 billion, imports $42 billion,
remittances $19 billion, fiscal deficit 6% of GDP, tax-to-GDP ratio 12% and inflation
8%.
And if this data is analysed against the projections of GDP growth rate by the three
major multilateral aid agencies, we seem to be falling off the cliff sooner than later.
According to World Economic Outlook report of the IMF, Pakistan’s GDP will grow
at 2.9% in FY 19 and 2.8% in FY20. Similar preojections have been made by the
World Bank and the Asian Development Bank.
This would mean Pakistan’s GDP currently estimated at $320 billion would shrink
by 2020 to around $280 billion which would mean our revenue collection ability
would decline further even with accelerated efforts to expand the tax base ending
next financial year with a fiscal deficit much larger than the current estimate of an
unsustainable 6%.
In the meanwhile, the indirect costs like increase in inflation, increase in the
discount rates, decline in industrial productivity, decline in exports, deterioration
in currency etc, and stagnant inflow of FDI will adversely impact the overall
economy.
By M Ziauddin

42
 Future of Pak-US relations
PAKISTAN’s long, close and turbulent relationship with the US has had a pervasive
impact on this country’s history. The last phase of that relationship, the ‘war on
terror’ alliance, ended in August 2017, when Donald Trump announced a punitive
policy towards Pakistan, suspending high-level contacts, freezing Coalition Support
Funds repayments and demanding Pakistan’s cooperation on Afghanistan.
Over the next 18 months, America’s initially coercive demands on Afghanistan
became progressively realistic, eventually asking Islamabad to help start direct talks
between the US and the Afghan Taliban.
Pakistan has delivered on this request. Several rounds of US-Taliban talks, held
mostly in Doha, have reportedly led to draft agreements for withdrawal of US
troops from Afghanistan and to prevent Afghanistan’s territory from being used as
a base for global terrorism in future. However, the Taliban have refused to talk to
what they call the ‘puppet’ government in Kabul or to accept a ceasefire until US
troop withdrawal is under way.
The US has not offered Pakistan any tangible concessions in exchange for its
assistance. Contrary to earlier assurances that Islamabad would have no
responsibility for the talks’ outcome, it is now asking that Pakistan play an
important role in achieving a successful conclusion of the ‘peace process’.
US demands have been extended to the eastern front. During and after the
Pulwama mini-crisis, US pressure was ratcheted up — directly and through the UN
and the FATF — to demand actions against the Lashkar-e-Taiba and Jaish-e-
Mohammad and the inclusion of JeM’s Maulana Azhar on the UN Security Council’s
‘terrorism’ list.
Islamabad has seen it in its own interest to comply with the demands to proscribe
the activities of the LeT and JeM. It has also continued its cooperation on
Afghanistan. However, this may not prove sufficient to restore friendly ties with the
US.
America’s new hostility towards Pakistan is due mostly to its emerging global rivalry
with China, in which India has been chosen as Washington’s strategic partner
whereas Pakistan is listed on China’s side of the power equation. The recently
announced US South Asia Policy is predicated on India’s regional domination.
If Pakistan is to establish an equitable relationship with the US, it will have to build
the capability to resist India-US military, financial and domestic pressure. To do so,

43
it needs strong and nationally-oriented governance and China’s unreserved
cooperation.
Pakistan is well placed to resist military pressure. The Pulwama mini-crisis
demonstrated two things: one, that Pakistan can defend itself by conventional
means; two, that nuclear deterrence worked once again to moderate military
behaviour on both sides. Yet, India is embarked on a major arms acquisition and
modernisation process which Pakistan will have to continue to neutralise if not
match. Most importantly, Pakistan must disabuse India of any presumption that,
under a US umbrella, it could ‘test’ Pakistan’s nuclear deterrence or resort to a pre-
emptive strike against Pakistan’s strategic assets. A Pakistani ‘second strike’
capability will eliminate this danger.
Pakistan’s financial defences are vulnerable. The nation needs to come together to
implement the politically difficult yet vital tax and other measures required to
ensure a sustained balance in the country’s fiscal and external accounts. For the
longer term, Pakistan should join the nascent efforts of China, Russia and some
other countries to construct alternate or supplementary arrangements to the US-
dominated financial system.
Likewise, Pakistan is not fully equipped to fight the ‘hybrid’ war being waged by
India and others in Balochistan, ex-Fata, sections of the media and politics to
destabilise the country domestically. Using all the tools of modern technology,
Pakistan must develop a sophisticated intelligence, counter-insurgency and
political action capability for defence.
‘Defensive’ measures do not imply systemic hostility with the US. There are vast
areas for mutually beneficial cooperation which can be promoted as long as the US
does not threaten Pakistan’s core interests and positions, especially its rejection of
Indian domination and support for Kashmiri self-determination.
Counterterrorism, regional arms control and global non-proliferation are identified
issues for continued cooperation.
Trade and investment are the most promising areas to build a future Pakistan-US
relationship. The US is Pakistan’s prime export market. Pakistani exports are held
back due to lack of competitive capacity. Pakistan’s current industrialization drive
should target production for exports to the huge US as well as Chinese and Asian
markets.
Similarly, even though US official assistance to Pakistan will be minimal and
conditional, Pakistan should make a concerted effort to invite US private

44
investment into the vast and untapped economic opportunities that exist in almost
every sector of the Pakistan economy, including the SEZs and the privatisation
programme. Apart from finance, such investment will bring advanced management
techniques and production technologies to Pakistan.
Pakistan and the US also agree that there are vast opportunities for regional
economic cooperation and integration, although their respective regional priorities
are not yet fully convergent.
Despite the new Cold War, the US may find it expedient to cooperate with China
and Pakistan to stabilise the Afghan economy in a post-settlement scenario,
including through Afghanistan’s integration into CPEC, and collaborative execution
of several agreed transnational projects, such as the TAPI and CASA-1000 ventures.
Pakistan’s revived relationship with Saudi Arabia and the UAE offers another
avenue for indirect economic Pakistan-US cooperation. Significantly, Saudi and UAE
investments in the energy and petrochemicals sectors, besides potentially building
Pakistan’s bridges with US corporates, will also link them, via oil and gas exports,
to China and Central Asia through Pakistan.
Hope resides in the possibility that the US will perceive the economic momentum
in Asia, unleashed by the Belt and Road Initiative and Asian economic integration,
as a strategic opportunity rather than a challenge. US participation could transform
the Belt and Road endeavour into a globally beneficial enterprise.
Indeed, faced by global threats of climate change, poverty and nuclear annihilation,
and offered the alternative of a cooperative, knowledge-driven future of growth
and prosperity, the US, China, Russia and other powers, including India, ultimately
would be wise to opt for ‘win-win’ cooperation rather than ‘lose-lose’
confrontation.
By: Munir Akram

45
 The growing US presence in Pakistan’s neighbourhood
For Pakistan, the arrival of the United States in its neighbourhood cannot be seen
as a happy development. Washington has a presence among four out of five
Pakistani neighbours. Some of what Washington is doing around Pakistan may pose
serious problems for Islamabad. In an earlier article, I explained why India-occupied
Kashmir, or IOK, needed to be treated as a full-fledged Pakistani neighbour. The
Line of Control (LoC), the boundary between Kashmir and Pakistan, is not an
international frontier, but it has a dynamic difference from the Pakistan-India
border. Even in IOK, the United States has played a role. Donald Trump, the
American President, has drawn close to Narendra Modi who is about to be
reelected as India’s prime minister for a second five-year term. There is no doubt
that the growing relations with the United States had a sanction for New Delhi’s
approach to Kashmir. Among other things, Modi is committing serious human
rights violations in the part of the state that India occupies. What is the likely impact
of that on South Asia is a story for another day. Today, I will concern myself with
Washington’s rapidly-deteriorating relations with Tehran.
There are two individuals in the US administration who are pushing their country
towards a possible all-out war with Iran. The first, of course, is President Trump. He
has a problem with Iran for two reasons. He is anti-Islam and anti-Muslim and sees
Iran as an aggressive promoter of the Islamic faith. The President is also under the
influence of Benjamin Netanyahu, recently elected to the fifth term as prime
minister of Israel. The Israeli leader has convinced the American President that Iran
presents an existential threat to the Jewish state. Israel has strong support in the
United States not only of the powerful Jewish community but also of the
Evangelical Christians whose interpretation of their scripture has the Jewish
command of all of Palestine as a way towards the second coming of Christ.
The other person responsible for the adoption by Washington of a hardline
approach towards Iran is the influence of the national security adviser, John Bolton.
Dexter Filkins of The New Yorker has a long Bolton profile in the magazine’s May 6
issue. In it, he tries to explain the long-cultivated hostility of Bolton towards Iran.
His office is a few steps away from President Trump’s Oval Office. He sees Trump
every morning before the President begins his day and every evening when he
retires to his private quarters. Filkins, when he went to interview Bolton for the
profile, saw on the wall of his office the framed executive order signed by Trump

46
that pulled the United States out of the nuclear deal negotiated with Iran by Barack
Obama in 2015. Bolton told Filkins that the day Trump signed that order was the
happiest in his long career in public service.
The tit-for-tat relationship between Iran and the United States took the two
countries to a near-war situation on Monday, May 6, when the Pentagon decided
to dispatch the Aircraft Carrier Abraham Lincoln escorted by a fleet of navy ships to
the Persian Gulf. The Pentagon issued a statement that cited “heightened Iranian
readiness to conduct offensive operations against US forces and our interests” as
the reason for moving ships closer to Iran. An agency spokesman said the carrier
deployment “ensured we have forces” in the region to “defend American
personnel”.
The navy move followed two earlier decisions. In one, Washington refused to grant
further extension to China, India, Japan and South Korea that had been allowed to
import oil from Iran when the United States reimposed sanctions on Iran. Iraq was
also treated as a special case as it was allowed to import energy from Iran in the
form of electricity. This was done after Washington withdrew from the Obama-era
nuclear deal with Iran. Under the 2015 arrangement, Iran shipped roughly 97% of
its nuclear fuel stockpile out of the country. With that done, experts didn’t believe
Iran had enough weapon-grade material on hand to make a nuclear bomb. By
closing the entire foreign market for Iranian oil, the United States aimed to produce
enough pressure on the Iranian economy that would bring people out on the street
and possibly cause regime change. That was all along the aim pursued by John
Bolton. In response, Iran said that it would protect itself from what it called
“economic terrorism”.
The second action resulted in placing Iran’s Revolutionary Guards Corps on the
State Department’s list of foreign terrorist organisations. This was the first time
that the terrorist designation was given to an arm of another nation’s government.
In response, President Hassan Rouhani of Iran declared all American forces in the
Middle East terrorists and labelled the United States government a state sponsor
of terrorism. In early 2019, Bolton declared that the 5,200 American troops that
remained in Iraq should stay there to “watch Iran”. There are no known attacks
against American troops in Iraq from armed groups known as Popular Mobilisation
Forces, some of which are linked to Iran. According to one account, “there are some
30 armed groups in Iraq that are now part of the Iraqi forces. Most of them were
formed to help fight the Islamic State when the Iraqi Army collapsed in 2014, and

47
some were trained and armed by Iran.” The fight against the ISIS also involved the
United States. For some time, the two countries were on the same side of the many
conflicts in the Middle East.
Every day brings new but adverse developments concerning America’s relations
with Iran. Secretary of State Mike Pompeo paid a visit to Iraq on April 6 and met
senior leaders of the country to ensure that Baghdad does not move fully into the
Iranian orbit. There was intelligence that Iran may be positioning missiles that could
be used against US forces in the region. This, in other words, is a crisis in
development. If it escalates, it will bring serious disturbance right in Pakistan’s
neighbourhood, hence posing awkward policy choices for Islamabad.
By Shahid Javed Burki

48
 Another conflict in the making?
The specter of a new conflict in the Middle East is haunting millions of people. This
is a region that has already witnessed unimaginable destruction because of the
reckless policies of imperial powers but it seems there is no respite for the people
of the region, who are suffering the tyrannical rule of monarchs backed by Western
powers on the one hand and throat-slitting jihadis on the other.
The region looks like a modern graveyard. Around 2.5 million perished in Iraq after
the illegal invasion by the sole superpower that advocates respect for international
law and global norms. The invasion took place after inhuman UN sanctions that
decimated 500,000 Iraqi children. The sanctions also crippled the economy of a
country that was relatively prosperous in the region during the decade of the 1970s
and 1980s. Despite the brutal dictatorship of Saddam Hussain, the living standard
was not as poor as it is today. A series of conflicts led to the destruction of a country
that was the bastion of learning in the Arab world in the past. The global imperial
powers not only destroyed Iraq but also ruthlessly robbed it of its historical
heritage; even the museums of the country were not spared from the greed of the
occupying powers that also plundered the wealth of the nation through their
predatory economic policies.
It was the Western powers that first patronized Saddam, pampering him during the
Iran-Iraq war and arming him to the teeth. It was they that encouraged him to
invade Kuwait, and then it was again they that carried out ruthless bombardment
in an attempt to dislodge a single tyrant. In the aftermath of the US invasion on
Iraq, their policies not only led to the physical destruction of Iraqi society but also
the social fabric of that nation. The occupying forces turned a blind eye as the
people of rival sects slaughtered each other. Right under the nose of the US, Isis
emerged in the war-torn country, and then gripped areas in Syria where it imposed
a brutal regime of terror. Other Al Qaeda-linked terror groups were also
encouraged to revolt against the secular Syrian dictator Bashar al-Assad. Tacit
support by the Western powers and overt backing by Arab monarchs for these
brigades of terror led to the killing of more than 500,000 Syrians and displacement
of around 11 million.
The footprints of these terrorists can be traced in several parts of the Middle East
and beyond. They are fighting in Libya, Egypt, even Afghanistan. The recent terror
attacks in Sri Lanka make it clear that this extremist threat cannot be snuffed out

49
easily. A number of attacks in the Western world indicate that their sleeper cells
are also operating there.
So, the policies of wars, invasions and conflicts followed by the American and
Western ruling elites seem to have boomeranged on them but it seems they are
none the wiser and are now advocating for a confrontation with Iran. It is true that
the European countries are not siding with Washington over the issue of Iran the
way they did on other matters in the past but they are not offering a vigorous
opposition either. They listen to the anti-Tehran rhetoric of American officials with
great reverence and fail to summon enough courage to counter the baseless
allegations.
One could criticse Iran for many issues: treatment of minorities, gender inequality,
stifling of freedom of expression but when it comes to the nuclear deal, there is no
concrete evidence that Iran has violated it. The UN, the International Atomic Energy
Agency, the European Union and independent observers are all unanimous in their
assertion that Tehran has not violated the nuclear deal and that it is not likely to
develop lethal weapons after the deal.
But instead of countering this assertion, the US has sent a bomber task force,
including B-52 bombers besides approving the deployment of a Patriot missile
defence battery and another warship to the region. More lethal arms are making
their way to the Middle East. This sabre-rattling could be very catastrophic if other
world powers remain silent over the rising tension that has the potential to engulf
not only the region but other parts of the world as well. Any military confrontation
with Iran is likely to drag other states of the region and the world into the conflict.
Some fear it may even trigger a third world war.
What the US seems to ignore is that Iranian Supreme Leader Ali Khamenei
commands immense support and is revered by millions of Shias across the world.
American policies in the last 17 years ended up strengthening Iran, helping it
increase its influence. Washington dislodged the anti-Iran Taliban in Afghanistan
and toppled Saddam Hussein in Iraq. The racist policies of Israel against the
Palestinians and the blanket support of Washington for such sledgehammer tactics
have vindicated the Iranian position regarding the Zionist state and its American
backer. The imprudent policies of bankrolling terror groups in the name of
democracy also prompted secular Syrians to view theocratic Tehran as the
liberator. After all, it was Washington and its Arab allies that imposed the monster
of the Isis and it was Tehran and its allied militias that liberated the Syrian people

50
from the reign of terror unleashed by these fanatical groups. The same could be
said about the Iraqi people who are grateful to Tehran for pushing out these
brigands of fanatics out of their country. Houthi rebels and millions in Yemen also
consider Tehran as the saviour as the Western world turns a blind eye to the
ruthless bombardment in that country.
Iranian influence is not confined to Arab states only. The spiritual leader of Iran also
enjoys considerable support and is revered among the Shia community of
Afghanistan, Pakistan and India. So, any action against Iran will trigger a mass
support for the country on the one hand and may prompt Iran-sympathising militias
in Iraq, Lebanon and Syria to target US and Israeli interests. Targeting Israeli
interests will not only get support from the Arab masses but Muslims from all over
the world. So, any confrontation with Iran has the potential to escalate into a larger
conflict that may engulf several countries. Therefore, it is important that the EU,
Russia and China come up with a joint strategy to thwart Trump from triggering a
catastrophic confrontation.
On its part, Tehran should avoid carrying out any missile test and should also revisit
it policy of individual freedom for its citizens if it wants the world community to
speak up for it against an impending US provocation. Let us hope that sanity will
prevail.
By: Abdul Sattar

51
 The new IMF programme
The country has reached a staff-level agreement with the IMF for a three-year
programme. There were some last minute differences which were successfully
ironed out by the two sides. This had led to a delay of couple of days in the
announcement.
Pakistan has negotiated the programme from a position of weakness as it had
fruitlessly delayed the programme since the government came to office in August
last year. Before we reflect more on the current programme, it would be useful to
reflect on how the delay has made things more challenging for the government.
Doing a programme at the outset of its term would have given the government a
clean advantage that the economic mess it had inherited was not of its making and
that it had come to office with a clear thinking and commitment for putting the
economy back on track with the help of its development partners, most notably
the IMF. Furthermore, the new government was also seen across the world as one
that had come to power by defeating the two more powerful and internationally
recognized political parties. Development partners were keen to resume business
with the new political force headed by an international celebrity.
Contrary to the above line of thinking, the leaders of the new government found
themselves shackled by their political rhetoric at the campaign trail against
development partners and a misleading narrative against debt burden and debt-
led development. An ambivalence towards development partners, therefore, was
fashioned from the very beginning. Despite facing an acute balance of payments
(BOP) crisis, the economic managers shunned any enthusiastic engagement with
development partners. They were found inquiring from international financial
institutions (IFIs) the rate of interest on their loans and telling them that they would
compare it with private-sector lenders before making up their mind.
In an intriguing development, the government decided to seek temporary support
from friendly countries (Saudi Arabia, UAE and China) and touted it as a substitute
to approaching the IFIs. This support was quickly used up as the BOP and fiscal
deficit remained elevated.
When the government presented its first mini-budget in late September, it made
only peripheral changes to the budget originally presented by the outgoing
government in May. The mini-budget was a clear signal that the government was
not going to the IMF any time soon, for the budget adjustments were insufficient
to alter the course of economic direction set in motion by the outgoing
52
government. In another mini-budget in January, the government failed to make any
adjustments; rather it ended up giving tax concessions to business and individuals.
While all this was going on, halfhearted efforts were made to secure a Fund
programme. For the first time in the country’s history, a Fund programme mission
returned without reaching an agreement. There was considerable diversion of
views on the two sides. The breakdown, more than anything, reflected the
continuing wariness toward an IMF programme and the discipline it would impose.
More surprisingly, the government made a number of conflicting policy moves. The
applicable taxes on petroleum prices were frequently lowered either to reduce
these prices or keep them constant. Interest rates were increased rapidly without
realizing how costly it was for the budget. Exchange rate was adjusted sizeably
which jolted the markets. Although a modest reprieve in the current account
balance was achieved, the fiscal account was bleeding profusely: estimated at a
staggering 7.6 percent of GDP. The revenue performance showed a growth of only
two percent, worst in several decades. The drift in economic management finally
culminated in slow growth, which dipped to 3.3 percent, lowest in five years, and
rising poverty.
In this backdrop, when the moment came where the need for a new programme
was felt, there was already an accumulation of imbalances that required immediate
correction. A renewed effort was launched to reach an understanding with the
Fund. There was also a realization that the economic team was unable to make the
right decisions at critical junctures. During the middle of the negotiations with the
IMF, wide-ranging changes were brought into the economic team by appointing a
new minister (adviser), governor of the central bank and chairman of the revenue
board.
It is difficult to recall another moment in the country’s history in the last three
decades when it was so weakly placed in negotiating a Fund programme. Apart
from weak fundamentals, our credibility was at the lowest level. Under the
circumstances, conclusion of a programme is a welcome development as it would
give relief to the markets which have been extremely nervous for many months.
The size of the programme at $6 billion is somewhat modest, sufficient to service
the current level of outstanding IMF loans from the last programme. In a way, the
programme amounts to effectively rescheduling the debt owed to the IMF for a
longer maturity. Yet, it is still a significant support particularly as it opens the door
for other lenders (World Bank and ADB) to provide policy loans. Furthermore, the

53
programme would also help Pakistan access the international capital market where
additional maturities are due in November.
Few details are available at this stage regarding the key elements of the
programme. The announcement provides only the standard features typically
contained in a Fund programme. It is for three years, entailing 12 quarterly reviews
over a 39 months period. Fiscal adjustment, taxation, market based exchange rate,
limiting government’s borrowings from the SBP, containing credit expansion would
be the main elements of performance criteria. The structural policies would
encompass SBP operational autonomy, settlement of arrears in the energy sector,
cost recovery of energy services, FATF-related actions and focus on social spending.
It is easier to get a programme but difficult to carry it through. The real test would
be consistent performance under the programme till its conclusion.

54
 An economic charter
IT is not for the first time that we have gone to the IMF for a bailout. Even those
who are shouting ‘sellout!’ from the rooftops know full well that it was
unavoidable. Whether one likes it or not, the conditionalities are tied to the Fund’s
facility and the process of stabilisation is bound to be painful. But do we have any
choice in the matter? An economy in a shambles has to be fixed, and for that, tough
actions are needed.
A staff-level agreement has been reached between Pakistan and the IMF, though
the final nod is still awaited from the stakeholders and the details have not been
revealed thus far. But even so, one can say that it is probably going to be the
harshest IMF programme that Pakistan has ever embarked upon.
The conditionalities this time are not just economic; there are also strong political
overtones. The final approval is conditional on some upfront measures that the
government is required to take. There is a suggestion that the programme be linked
to clearance by the Financial Action Task Force.
Pakistan has the dubious distinction of going to the Fund more than a dozen times
but of completing only a few programmes — and that too partially. Every
government over the last three decades entered the IMF’s structural adjustment
programme but the state of the economy has gone from bad to worse.
While some of the IMF prescriptions would, indeed, hit us hard, many of the
adjustments and reforms that we have agreed to should have been undertaken
already. It is worth pondering why we are in a greater financial mess three years
after the completion of the last IMF programme. It is obvious that we never stick
to our commitments.
Now we are supposed to start all over again and under far more adverse conditions.
We didn’t need the IMF to tell us to widen our tax base, increase revenues, cut the
losses incurred by public-sector enterprises, and reduce public expenditure. The
government says it is serious in fulfilling its commitment to carry out structural
reforms. Haven’t we heard all this before? The PTI government’s several flip-flops
in its rule of nine months so far do not inspire much hope. The new economic team
may appear more experienced and professional but it is not enough to deal with
hard realities on the ground.
It is more about politics than the economy. It is the extractive institutions of the
state and the ruling elite that are the biggest impediment in the way of any

55
meaningful reform. These vested interests are too powerful for any government to
take on. As a result, it is mostly the middle class and poorer sections of the
population that bear the brunt of economic adjustments.
Making the rich and powerful pay their taxes will be the biggest challenge for the
government. The major resistance to any reform is likely to come from the ruling
elite that is not willing to give up its privileges. The government that came to power
on the promise of widening the tax net has not been able to meet even the revenue
target set in the last annual budget let alone increase the size of the kitty. The
shortfall is over Rs300 billion.
With the IMF programme, the government is now required to raise Rs700bn more
through new taxation and better recovery. Frequent changes at the top are not
likely to improve the performance of the Federal Board of Revenue. Even if some
steps are taken to reform the department it may not produce immediate results.
After castigating the tax amnesty launched by the previous government as
‘legitimising corruption’, the PTI has now introduced one of its own with more
sweeping concessions. This is yet another of many schemes being marketed in the
hope to bring the massive black economy into the mainstream. The previous
schemes under different governments have not been very successful in getting
people to declare their hidden wealth and bring them into the tax net. Let’s see
whether or not people respond to the incentive.
Perhaps the most daunting challenge for the government is to cut non-
development expenditure. Imran Khan’s austerity drive has not been able to make
any significant impact on the fiscal situation. While it is important to stop the
haemorrhaging of government-controlled enterprises, there is also a need to cut
expenditures across the board.
Although defence expenditure, that constitutes almost a fourth of the budget, is a
taboo subject, it does need to be discussed and reviewed. Surely security is
important — but so is the overall economy. An economy in perpetual crisis presents
the biggest security threat. Our sovereignty is already compromised with our
increasing external financial dependence. There is always room to cut out the fat
without jeopardising the security. Austerity drives must also be extended to the
armed forces.
It is apparent that the federal government alone cannot deal with the current
financial crisis. The situation has become much more complex after the 18th

56
Amendment gave greater financial and administrative autonomy to the provinces.
There is a need to build a political consensus to take the country out of the bog.
Political instability has been a major factor contributing to our economic and
financial plight. For a coalition government to take tough and unpopular decisions
and implement a reform agenda is extremely difficult. The IMF agreement will give
us some financial breathing space to manage the situation, but much more is
needed if we are to sail through the crisis and move towards growth.
It is imperative for the PTI government to take the opposition on board not only
with regard to the IMF programme but also for starting a consultative process with
the provincial governments. The government may not be able to achieve economic
stability without political stability. The present atmosphere of confrontation has
aggravated political uncertainty that has a direct bearing on the economy.
More importantly, Prime Minister Imran Khan needs to show statesmanship to
lower the political temperature. He should take up the offer put forward by former
prime minister Shahid Khaqan Abbasi to initiate an inter-party dialogue on a
‘charter of economy’.
By: Zahid Hussain

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 Gambling on the East
The phrase ‘It’s bad to be enemies of the US, worse to be its friend’, lies at the crux
of the Pakistani security establishment’s view of the US. Despite such a view, the
US has been Pakistan’s preferred partner especially when it comes to security and
military assistance.
Recently, however, that has started to shift. This is partly because of the cost of
alliance with the US in the War on Terror and persistent threats Pakistan faces in
terms of security and economic sanctions. This is also because of changes in the
global power parity — the rise of China and resurgence of Russia contesting the US
hegemony that has provided Pakistan an alternate.
Underneath this move is Pakistan’s ideological mindset based on its placement in
the global power index. In 70 years of its relations with the US, Pakistan has learnt
to use its position of weakness to exert power in relation to a stronger country like
the US.
This has been Pakistan’s key strategy with the US in the war in Afghanistan.
This American dependency on Pakistan allowed the Pakistani security
establishment to modernise Pakistan’s defences in terms of receiving new
technology and military trainings. While the US described this as Pakistan playing a
“double game” in the War on Terror; for Pakistan, this was the only game it could
play to ensure its survival in the war.
Another form of survival for Pakistan has been to join the new Eastern bloc that is
fighting the US hegemony. The opening up with Russia and intensifying relations
with China, therefore, is part of this strategy to ensure that the relations with the
US are balanced out. This was done by raising the Chinese stakes in the country. By
completely opening up Pakistan to the Chinese strategic and economic interest,
Pakistan has essentially taken the protection of China in the face of the American
threat. Similarly, by having joint military exercises with Russia and receiving
trainings from the Russian forces, Pakistan is diversifying its options, which is
unprecedented in its history.
Another key factor that is driving this shift in Pakistan’s foreign policy is how the
Pakistani security establishment views the emerging global order. For Pakistan, the
Chinese model of economic growth and Russian model of maintaining power
equilibrium with the US is inspiring.
For Pakistan it only makes sense to abandon the American ship that has been costly
to Pakistan and instead partner closely with the regional countries. There is further
58
motivation to do so because the US and India are forging closer alliance against
China, that gives Pakistan a deeper motivation to revise its foreign policy alliances
and rely on China and Russia for its security support.
There is also a very acute domestic angle to this tilt towards Russia and China.
Pakistan has been recently under tremendous pressure from the US on issue of
democracy, human rights, freedom of the press and support of militant activities in
the region. Pakistani security policy community views these pressures as part of the
US imperial project to keep Pakistan under its influence and hegemony. This
sentiment resonates across the military and intelligence institutions that view
American pressure on Pakistan on democracy and human rights as politically
charged and agenda laden.
In times to come, for Pakistan, the key is how it will do the balancing act with Russia
and China on the one end of the power bloc and the US and other Western
countries on the other side. The greater challenge, however, will be to maintain
domestic liberties, freedom and democracy at a time when there will be a little
reason to do so. It will be a Cold War all over again, hope it plays out differently for
Pakistan.
By Hussain Nadim

59
 Security calculations for durable Afghan peace
While the US is struggling hard to carve out a political solution to end the protracted
conflict in Afghanistan, the peace process continues to ignore some potential
security challenges. Afghanistan is a very fractured and fragile state and a small
step in the wrong direction may jeopardise the entire process. It is true that
ceasefire and counter-terrorism assurances are already on the table between the
US and the Taliban but the missing aspect is the fate of the Taliban as a movement,
whose majority is busy in fighting across Afghanistan and seem unconvinced of the
peace process. There is a need to deliberate the fate of local commanders and foot
soldiers along with the political future of their leaders in the ongoing peace process.
If overlooked, they may become a security challenge not only for Afghanistan but
for the whole region as well.
So far the Taliban leadership does not seem to have taken these local commanders
and fighters into confidence about the intricacies of the ongoing peace process.
That may well be a reason which is compelling the Taliban to demand a US
withdrawal before they could consider a truce with the Afghan government. It is an
alarming situation where the internal strife within the rank and file of the 60,000
battle-hardened Taliban could disintegrate the movement into various splinter
factions, thereby multiplying the security challenges.
Another possibility is that these armed Taliban fighters may intensify their criminal
activities which could be of trans-regional nature, just out of sheer frustration.
Crime-terror nexus has always remained a challenge in a fragile post-conflict
society like Afghanistan and it could become a Frankenstein monster when the
militant force is neither convinced of abandoning their armed struggle nor taken
into confidence regarding their future in case of a political deal between the US and
their leadership.
The situation becomes more alarming with the Taliban’s control over some of the
pre-existing structures of illegal economic activities, especially extortion,
kidnapping, drug and arms trafficking, and illegal road taxes being collected inside
Afghanistan with strong cross-border links. The Taliban are infamous for their
indulgence in all such activities to generate funds. The intra-Afghan trade routes
and cross-border trade routes connecting Torkhum and Chaman in Pakistan with
Kabul will require strict security. Otherwise these militants may assert their control
just as a pressure tactic.

60
These disgruntled Taliban fighters may even opt to cross border into the newly-
merged tribal districts of Khyber-Pakhtunkhwa (K-P) as they had done previously
when the US launched Operation Enduring Freedom (OEF) in 2001. Pakistan’s
former Fata has always remained a focal gathering point of militants being flushed
out of Afghanistan. Though the tribal borderland may not prove that easy a place
for the fleeing Taliban militants to regroup as it was back in 2001, it may create an
alarming security situation for Pakistan which is struggling to rehabilitate and
reconstruct the area.
A viable option before the US, Afghan government and the Taliban leadership can
be to deliberate the possibilities of integrating these fighters into the Afghan
National Defence and Security Forces (ANDSF) in a post-deal Afghanistan. However,
it will not be an easy task considering the fact that both the ANDSF and the Taliban
have remained a bitter foe and harbour enormous trust deficit towards each other.
It will be a challenging task for them to accept each other as partners and there is
a possibility that the Taliban may emerge as a parallel force challenging the position
of ANDSF.
Any peace deal which ignores these intricacies and complexities may not last very
long in Afghanistan. The Taliban do not comprise a few hand-picked leaders. By
ignoring the rank and file of the Taliban group, they may emerge as a peace spoiler.
It is wise if the negotiating parties could take these sensitivities into consideration
for ensuring a durable peace in the strive-torn Afghanistan.
By Dr Sadia Sulaiman

61
 Trump’s axe now falling on Palestine
The United States would announce new proposals or a blueprint next month for
resolving the long-standing dispute over Palestinian statehood. In part the move is
designed to build up support for President Trump as a leader who can take difficult
decisions and ones which reflect the aspirations of the predominant white majority
of the population.
The stage is set for the new Palestine initiative. In 2017, Mr Trump announced the
US government’s approval for recognition of Jerusalem as capital of Israel. Last
year, that is, in 2018 the US embassy was relocated to Jerusalem.
Following up on this unprecedented decision that sparked widespread protests in
the Arab Middle East, the President went on to recognise Israeli sovereignty over
the Golan Heights. Obviously the president was acting in the belief that a war-
shattered Syrian regime is in no position to galvanise support of the Arab nations
against the US move, reeling from the destructive consequences of war that has
disfigured the region.
The move to accept Israel’s sovereignty over the Golan heights was also meant to
help Netanyahu win another term as the Zionist state’s undisputed ruler.
Netanyahu had promised during his election campaign that he would annex the
Jewish settlements in the West Bank if he wins. If that happens the chances of any
peace would further recede.
Not only that, the noose is being tightened around the Palestinian Authority (PA).
The US has cut delivery of financial aid to the Palestinian Authority since last year.
The move is calculated to bring pressure to bear upon the PA to begin to show
flexibility and abandon its stance of defiance on the yet to be announced US
proposals.
The pressure on the Palestinian Authority is not coming only from the US. Israel has
also started squeezing the Palestinian government by withholding tax revenues.
Under an agreed formula, Israel collects taxes on goods imported for the West Bank
and Gaza strip. Such collections are then released to the PA for running its lopsided
administration.
Israel has now decided to deduct five per cent from the tax revenues that it would
release to the Palestinian Authority claiming that this sum is being dished out by
the Palestinian government to the families of those who were in Israeli jails and
have committed crimes against Israel and its citizens.

62
Mahmud Abbas has refused to accept the partial tax remittances from Israel. Abbas
claims the PA is entitled to all the money under interim peace deals.
The PA is in dire straits .The World Bank estimates the Palestinian financing gap
could exceed one billion dollars in 2019. That would further strain an economy that
has registered 52 per cent unemployment.
The Palestinian Authority’s main source of legitimacy is its capacity to provide
employment to a large number of desperate and impoverished citizens. But if the
PA is weakened as planned, the security situation would considerably worsen in the
West Bank and Gaza strip.
Israel knows but does not acknowledge that peace in Palestine has been achieved
largely because of the cooperation that Israeli security forces have received from
their Palestinian counterparts. For the last many years there has been no significant
act of terrorism within Israel because of the cooperation that has existed between
the two security forces.
If this were to change, the awful consequences of an escalating cycle of violence
could well be imagined.
President Trump believes economic sanctions which affect lives would force the
Palestinians to seek a compromise on terms the Israelis would offer. That is not
likely to happen.
To add to the woes of Palestinians, Trump’s adviser and son in law Jared Kushner,
who has close family ties with Benjamin Netanyahu, is in charge of the new
Palestine policy. President Mahmud Abbas has refused to deal at a political level
with the US administration since the US president recognised Jerusalem as Israeli
capital in 2017.
The ‘two-state solution’ that has been touted as the best insurance for durable
peace, does not seem to have been included in the proposals that Jared Kushner
and his team are going to present to the world in just a few weeks from now. In an
interview recently he confessed there would be no mention of ‘two states’ in the
new framework he is going to unfold.
It is surprising how a US government can repudiate with impunity all that the
previous administrations had adopted as the red lines that are not to be crossed.
For all their support to Israel, no previous administration had either dared to
recognise Jerusalem as Israeli capital, or accepted Tel Aviv’s occupation of Golan
Heights or acquiesced in Israel’s expansionist policy to go on creating more
settlements in order to bury deep the concept of a Palestinian state.

63
All this has happened because of the wars, turmoil and deepening polarisation in
the Arab Middle East. The US proposals, judging from the current mood in
Washington, would not change much as far as the core issues are concerned. It is
unlikely that the new policy would lead to any breakthrough on creating a
Palestinian state. The struggle for autonomy and freedom would continue.
By Rustam Shah Mohmand

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 If Modi loses Indian elections…
“He knows that he will lose the elections and that is why his face has turned pale.
Every day he is thinking about losing in Uttar Pradesh, Rajasthan, Delhi, Punjab,
Andhra Pradesh, Gujarat, Odisha and others,” says Mamata Banerjee, West Bengal
CM and Trinomial Congress chief, about Narendra Modi.
With only couple of days left for the release of Indian election results, it is the right
time to analyse a scenario that would emerge in case of Prime Minister Modi losing
Indian elections despite all his efforts ranging from Pakistan bashing to exploiting
Hindu religion for political purposes and pledging to absorb the occupied state of
Jammu & Kashmir into the Indian Union by ending its special status. The cover story
of a recent Times magazine edition also calls Modi as a divider of Indian nation,
raising a basic question: Can India bear another five years of BJP rule?
The BJP and other Hindu communal parties worked overtime to win what they
called ‘mother of all elections’. Stakes for the BJP — and its opponents too — were
quite high in the recently-concluded elections because a landslide victory for Hindu
fundamentalist and communal political party would have paved the way for
declaring India a Hindu state by removing 42nd amendment from the Indian
constitution which guarantees India as a secular and democratic state. For the anti-
BJP political parties and groups, it was their last chance to salvage their country
from the disease of intolerance, bigotry and hatred against religious minorities,
particularly Muslims. A second term for the BJP and its allies would mean an end of
India’s democratic and secular identity and the deepening of communal divide in
the country threatening the existence of India as a state.
Assuming if Modi loses general elections paving the way for the Congress-led
United Progressive Alliance (UPA) to form the government, will the BJP and its
communal allies like Shiv Sena, Sangh Parivar and Bajrang Dal give up their age-old
ambition to transform India into a Hindu state or will they continue with their
philosophy of Hinduisation of India? After all, it is not Modi, the Indian Prime
Minister, or Amit Shah, the BJP President, who are diehard Hindu nationalists, it is
in fact a diehard mindset in India which they represent and which wants to
“compensate for 1,000 years of foreign rule” in their country by reclaiming the
supremacy of Hindu religion in India.

Modi losing elections will have four major implications as far as the political and
security environment of India is concerned. First, the penetration of ultra-

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nationalist elements in Indian state institutions ranging from bureaucracy to
judiciary and military may be halted. When the patronage of Modi and the BJP-led
Hindu communal organisations for Hindu nationalists will be withdrawn, the
process of Hindutva will suffer a serious jolt. However, can one expect a mindset
promoting religious intolerance for decades to diminish if the BJP is defeated in
Indian elections? Certainly, it will be a wishful thinking to expect communal forces
to abandon their quest for the Hinduisation of India so easily.
Second, if the Congress-led UPA government is installed in New Delhi with Rahul
Gandhi as Prime Minister, it would mean the victory of all those forces who want
to save India from becoming a fanatic and a fascist state. It would also mean a
triumph of the silent majority of India who never in the history of their country
supported those elements who commit violence and use religion for political
purposes. Modi’s defeat may not only reverse the process of ‘Hinduisation’ of India
but re-establish India’s image at the international level as democratic, secular and
an enlightened state. Critics, however, argue that there is not much difference
between the BJP and Congress as far as protecting religious minorities in India is
concerned. Although unlike the BJP, Congress is not overtly using ‘Hindu card’, but
over the last couple of years, Rahul Gandhi has shown his tilt towards Hindu
religious rituals like frequently going to temple and also taking a position in support
of banning cow slaughter in its ruled state of Madhya Pradesh. Yet, alienation of
religious minorities, particularly the Muslim community in India, may negatively
impact the BJP’s vote bank and the UPA may benefit from such a situation. Indian
Muslims may consider Congress as a lesser evil than the overt communalist BJP but
possesses serious misgivings vis-à-vis mainstream political parties who after
coming to power continue with the policy of discrimination and violence against
the beleaguered Muslim community.
Third, if Modi loses Indian elections, one can expect some betterment in the grim
and pathetic situation in the India-occupied Kashmir (IOK). Unlike the BJP which has
openly called for revoking articles 35-A and 370 of the Indian constitution which
call for granting special status to IOK, Congress has no such policy. In fact, Modi
often accuses Congress leadership, particularly its first prime minister Jawaharlal
Nehru, of creating an existential crisis in the occupied state by denying Indian
nationals the right to vote, buy property and permanently settle so as to ensure the
demographic status quo. For the BJP, articles 35-A and 370 are constitutional
impediments to absorbing IOK fully into the Indian Union. However, it is a stark

66
reality that both the articles were violated by successive Indian governments
including those belonging to Congress by withdrawing privileges like the disputed
state having its own president and prime minister. In fact, large-scale military
crackdown in the IOK, particularly in the Valley, reached its peak during the rule of
Congress. A thin difference between the policy of the BJP and Congress on Kashmir
is that the former outright wants to annex IOK whereas the latter calls for a political
settlement through dialogue instead of using power.
Whosoever comes to power in New Delhi after May 23, one thing is certain that
the BJP in its five-year rule has deepened Hindu nationalism so much so that it will
be difficult for a UPA government to reverse the process of Hindutva. To restore
secularism and religious tolerance in India which became a victim of the BJP’s tide
of Hinduism, the future government of India will have to ensure strict adherence
to the rule of law which means the police, security forces, bureaucracy and the
judiciary must not take sides in case of any violent communal act and must ensure
protection of religious minorities. In the last five years of the BJP rule, dozens of
acts of mob lynching of Muslims on account of cow slaughter not only claimed
many lives but also augmented the level of insecurity and fear among Indian
Muslims. Likewise, a non-BJP government at the centre will have to take several
damage-control measures in IOK like controlling the excessive use of force and
reducing the deployment of Indian military in the region. To regain the trust of the
Kashmiri Muslims will be a hard task because of years of excessive human rights
violations.
The foremost challenge of a non-BJP government in India will be to normalise its
relations with Pakistan and to resume the SAARC process which got jeopardised in
the wake of the Uri attack in September 2016 and the refusal of India to participate
in the 19th SAARC summit which was scheduled to be held in Islamabad. Modi’s
policy of trying to isolate Pakistan after the Uri incident by creating the drama of
surgical strikes affected India’s image and credibility the world over. During his five
years as Prime Minister, Modi and his allies did everything to malign Pakistan,
terrorise Indian Muslims and unleash the process of ethnic cleansing in IOK.
Reversing such policies, which became a part of societal and state narratives, would
be a gigantic task for a non-BJP government.
By Dr Moonis Ahmar
Surviving an IMF regime

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The deed is done, or will be shortly after the IMF board has approved the staff-level
agreement with the government of Pakistan for a structural adjustment
programme.
The programme identifies the objectives of budgetary and balance of payment
support. The government of Pakistan did not have sufficient dollars to meet its
needs and had to go to the IMF to borrow some. Reportedly, it might need an
additional twelve billion dollars in the next financial year to pay off its liabilities.
The benefit of entering an IMF programme will also bring some handy monetary
support from the World Bank and the Asian Development Bank to easing the
pressure on Pakistan’s desperate need for foreign exchange. In the next seven
years, Pakistan will need to pay out around $37 billion in payment of external dues
from accumulated loans by previous governments. Pakistan has an external debt
pile of around $100 billion, which is likely to increase, unless we either begin to
spend less for our current account needs or produce more to earn more dollars and
remain above the liability curve. Either end needs structural changes and
committed application of an economic plan. The IMF imposes one.
How did we end up here? We weren’t creating sufficient dollars through exports
nor receiving them from foreign investments. Nor were we frugal with our living
habits. Similarly, we didn’t create any local replacements to our routine imports
and kept spending precious dollars to buy them externally. CPEC brought some but
those were strictly project-based, not to be kept in the central bank to buoy its
reserves. We earned less than we spent and ended up in this crunch.
How did the previous governments camouflage this brewing calamity? They kept
on a borrowing binge till the hard-stop arrived. Even worse, they didn’t use the
money creatively. One way for the PTI would have been to keep pledging the family
silver to add to the debt pile but then an economy has only so much capacity to pay
back, and lenders are sensitive to the security of their money.
So, unless we changed our ways, Pakistan was already bankrupt. Soon people
would stop trading with us and bring our life to a standstill; we need oil, gas, edibles
(sadly) and some life-sustaining essentials from abroad. We would be a basket-case
country like Sudan or Somalia or Yemen and Libya. And, no, being a nuclear-capable
nation doesn’t count unless we were to lay out a garage-sale of those.
Under the PML-N, the last breathing space was squeezed out of this economy. As
we added debt, we frittered resource. Our foreign exchange reserves never grew
at the rate that we were borrowing. We returned some loans and built some

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infrastructure. But we also pumped precious dollars into the money market to
retain a valuation of the rupee which did not correspond to its true worth. That
helped retain a chimera – but the bubble finally burst.
The government also used the money to heavily subsidize the cost of electricity and
gas to consumers and to major industrial players who were mostly politically-
connected or cronies. So even as important segments of society and the people
were kept in good humour, it all came at a cost to the national exchequer. We
essentially ate up every penny in our kitty even as we ransomed our future
generations against heavily borrowed capacities. Under the PTI, it is time to pay
back our dues.
This is where the IMF comes in handy, but at a cost. The dignity of sovereignty is
the first to go. The IMF will now prescribe the life that you must live; the days of
binge spending are over, replaced with the austere. Those who lend first ensure
the security of their own money and keep you on a leash so that you return to them
their dues on time. Sometimes, they may also manipulate you into conforming to
a political purpose supporting major benefactors in the IFIs. The IMF decides what
is right for you and what you must prefer in the prescription. It is usually sedate
and deliberate, suppressing growth and constricting expansion, at best retaining
subsistence. That has a social and political cost. What faces economy leaders is thus
stark: how to grow in IMF-governed economies.
Economic gurus have a busy to-do list when looking at bridge financing through the
IMF and buying precious time to correct the distortions and anomalies that have
come to stare them in the face. This if indeed a government has the will and the
political courage to take on elite-interests – which in the first place are the reason
such distortions have found their way into fundamental policy conflicts. But a few
obvious ones to spur growth may just lose notice when an economy is so subsumed
by the strict application of an externally driven prescription.
Pakistan’s internal effort should not hinge only around stabilizing and correcting
the distortions but also in devising a strategy to grow, even if so infinitesimally,
enabling hope and promise. To begin with, an economy that has so significantly
shrunk in the last year or so – from around $320 billion to only $276 billion – will
need to be restored to its original size with some sound economic underpinning.
Two such sectors from the formal economy hold out promise of longer-term
growth, sufficiency and employment even as the IMF enforces a sullen disposition.
These are agriculture and small-medium enterprises (SMEs), very much within the

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skill-set of existing capabilities. More productive agriculture can engender value-
added industry with focused governmental direction and support impacting and
improving the stock of some sixty percent labour engaged in this activity. We can
ensure food sufficiency and with sufficient enterprise enable deletion of what
routinely gets imported at an exorbitant cost. The next three years should also see
an increased focus on water resource management and preservation as we
introduce our farmers to its more efficient use. Its appendage to agriculture is
critical – and by doing so we only enhance productivity in the agriculture sector.
The SMEs engaged by a similar governmental focus with supporting financial
arrangements can help deletion of basic technological needs of our still
conservative industry and be a useful vehicle for employment of local labour
needing minimal skills. This can benefit our rapidly growing job-market while
contributing to growth. The LSM will be slow to pick up and regain its eminence
because of its lumbering size and inertia; the SMEs thus could fill-in.
CPEC must retain its centrality as the third area of focus to enable growth and
development. The SEZs must be developed and equipped with the necessary
wherewithal to bring fruition to the real promise of CPEC. IT, if properly directed
and supported, can take some slack out of a depressed economy while earning
useful foreign exchange. It is also not an investment heavy undertaking.
If under an imposed economic regime we can do all that the IMF wants of us while
targeting growth through reform and development in chosen areas, we may just
have the making of some buoyancy as our independence and sovereignty is
returned to us in three years time. Macro stability must be accompanied by a
sustainable growth strategy.
By: Shahzad Chaudhry

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 Deterrence, hybrid warfare and Pakistan
Contemporary security situation in Pakistan’s neighbourhood point towards the
employment of hybrid warfare under a nuclear overhang. It is a known fact that
despite being in possession of nuclear weapons, major powers have avoided using
them for fear of large-scale destruction. Japan is the only country to have suffered
the devastation and destruction caused by nuclear weapons. Bernard Brodie, who
saw the nuclear weapons’ effect, writes in his book The Absolute Weapon: “Thus
far the chief purpose of our military establishment has been to win wars. From now
on, its chief purpose must be to avert them.”
Pakistan had to develop its nuclear weapons capability after the tragic event of
1971 and India tested its first nuclear device in 1974 by diverting the nuclear
technology provided for peaceful purposes. Ironically, it named the bomb as
‘Smiling Buddha’. Since then, Pakistan had been working to balance the threat
equation by first improving military hardware and training standards of its armed
forces, and then indigenously embarking upon the forced route to acquire nuclear
weapons technology. Pakistan attained nuclear deterrence in 1998 and that has
kept India away from fighting a major conventional war.
Pakistan has successfully checkmated all Indian offensive designs by plugging gaps
at all levels i.e. strategic, operational and tactical. Pakistan’s nuclear weapons
programme is for defence purposes. Being a responsible nuclear weapons state,
Pakistan considers these weapons as weapons for peace. But at the same time, it
cannot remain oblivious to the signalling from across its eastern borders. In May
2012, when Pakistan checkmated Indian Cold Start Doctrine by testing its low-yield,
short-range, nuclear-capable ‘Nasr missile’, the then Director General of Strategic
Plans Division Lt Gen (retd), Khalid Ahmed Kidwai, called the missile a ‘weapon of
peace’ that had consolidated Pakistan’s Full Spectrum Deterrence (FSD). For some
time now, the FSD achieved by Pakistan has been irritating the Indian military and
strategic community that views Pakistan as a hurdle in the way of achieving
hegemony in South Asia.
The regional peace ensured by Pakistan through FSD runs in conflict with India’s
expansionist designs. Aspiring to become the regional policeman – whatever way
possible – India cannot remain comfortable with the peace-oriented status quo in
the region. It currently enjoys the backing of the United States, which is using it as
a countervailing force against China. Both the US and India are well aware of the

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marriage of convenience between them. India knows full well that it needs to act
fast as the window of opportunity provided by the US may not remain open for
long; and as they say “there are no permanent enemies and friends in the world of
diplomacy”, it is quite possible for the US too to side with China and its allies as the
Belt and Road Initiative (BRI) – of which CPEC is a vital part – gets operational and
starts giving economic dividends. It goes without saying that the Indo-US-China
wrangling for power in the region has been orchestrated by the US itself and is
meant to wield as much strategic and politico-economic influence in the region as
possible.
India is thus left with the sole option of engaging Pakistan in hybrid warfare. This
new form of warfare is nothing but intelligent employment of kinetic and non-
kinetic warfare tools with relatively extra investment with regard to non-kinetic
tools. Hurting economy; forcing change of regime; creating problems for armed
forces; engineering inflation, unemployment, corruption; weakening state
institutions, sponsoring terrorism and sowing discord among the adversary, are
some of the important tools of hybrid warfare. In simpler terms, hybrid warfare is
a low-intensity conflict in which adversaries target each other’s fault lines.
Pakistan’s enemies are applying these tools. International writers speak highly of
Pakistan’s armed forces. Of course, they are one of the best fighting force in the
world. They are fully prepared to foil any Indian misadventure. Pakistan’s military
spokesman, Major General Asif Ghafoor, has already taken the nation into
confidence about the nature of hybrid warfare being employed by India and
Pakistan’s capability to counter it.
Alongside its valiant armed forces, the entire nation is ready to effectively respond
to the Indian tactic of hybrid warfare. The media has to play a significant role,
especially with regard to countering anti-state narratives from any quarter.
Corruption should be rejected at all levels. People should pay taxes without waiting
for others to take initiative so as to help the country get out of the clutches of
international lending institutions. People should prefer self-employment by
availing of the opportunities provided by the government rather than looking for
jobs in government institutions. Enemies of Pakistan must not forget that Pakistan
is one of the most resilient nations of the world which always remains united in the
face of external threats.
By Dr Ahmed Saeed Minhas

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 Don’t blame the IMF
THERE is little disagreement that Pakistan’s economy is in a disastrous state. Even
the prime minister and Pakistan’s last finance minister have acknowledged this
truth, publicly. In fact, the last elected politician to hold the job as finance minister
was fired precisely because the economy was in such a mess.
Not only is every key economic indicator in poor shape, all indications suggest that
things are going to get much, much worse. Pakistan’s economy is going to slow
down to levels not seen for more than a decade, with inflation and unemployment
both reaching proportions not seen for a decade. And this is just the beginning.
With the government having just signed onto yet another IMF programme, it is
important to emphasise the point, that it is not the IMF which is to blame for
Pakistan’s economic condition — not for the past nor for where we are now, and
also not for what is about to come. Rest assured, Pakistan’s economy is going to be
severely constrained over the next few years, with higher inflation, more
unemployment and lower growth, and with a far greater burden on working people
than what has been the case for many years. Yet, the IMF is not to be held
responsible for the state of Pakistan’s economy.
The entire responsibility for the wreck that is the Pakistani economy lies squarely
on the shoulders of Pakistan’s ruling and propertied elite, both civilian and in
uniform, since both have been and continue to hold power in and out of office.
There should be no ambiguity about apportioning blame and responsibility here,
and one needs to stop blaming the IMF for the mayhem created by this ruling elite.
It is not the IMF which has brought Pakistan’s economy to its knees, to rock bottom,
not the IMF which has forced Pakistan to beg for money from supposedly friendly
countries, and certainly not the IMF which has made the government of Pakistan
finally run to the IMF for loans. The ruling elite, those who hold office and those
who hold the strings of those who hold office, are all responsible for managing the
economy the way they have over the last few years and over the last decades. This
truth can be clearly explained by one simple economic policy measure and non-
measure.
From the Musharraf military dictatorship, to the elected governments of Benazir
Bhutto, Nawaz Sharif and Asif Zardari, and now to the Imran Khan government, all
have gone to the IMF seeking a ‘bailout’ and assistance to stop the country’s
deteriorating economic condition.

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Yet all these governments, along with their allies and vested interests, have been
the ones to have caused a situation where they have been forced to go to the IMF
in the first place. They only need the IMF because they fail and refuse to undertake
economic reforms since these would hurt their own interests. One key indicator
regarding the state of the economy is that of fiscal deficit, that of having greater,
unaffordable expenditure and lower revenue or having insufficient money to
spend.
If a government is not going to tax its rich, it will always be short of money to spend,
no matter how well intentioned and well meaning its social welfare programmes
may be. If it has high and increasing defence costs and has to pay back interest on
loans taken to pay for defence and other expenditures, it will always have a
shortfall of money because it refuses to tax the rich.
This is a circulatory argument: With no taxes on the rich and the elite, with the
particularity of Pakistan’s political economy based on essential defence
expenditures, and with a shortfall of revenue, there will only be more borrowing,
more debt, and so on. The beginning and end of the problem and its solution is
simply this: tax the Pakistani elite and the rich. What has the IMF got to do with this
gross negligence and failure of Pakistan’s ruling elite? Because the government
refuses to raise resources, it has to borrow from the IMF. The IMF is not responsible
for the budget deficit ending up near 7.5 per cent of GDP this year.
It must be remembered that it is not the IMF which has come begging to the
government of Imran Khan to borrow a pittance ie $6 billion; it is, in fact, the
numerous governments of Pakistan which have gone begging for money.
This is simply because we do not raise enough resources — taxes — to be able to
spend effectively, whether it is defence or development. If sufficient revenue were
raised, there would be no need to beg for money, but in a country where every
polio campaign, social welfare measure and women’s support programme are
funded by one donor or the other, only because the ruling elite refuses to tax itself,
going to the IMF becomes inevitable. But don’t blame the IMF for this.
Moreover, as a lender, the IMF is fully entitled to raise supposedly harsh
conditionalities, only because it wants to ensure that its loans are returned, with
interest. Banks, and even individuals, don’t lend unless they expect and get
assurances that their money will be returned, and need to know about a business
plan. As does the IMF, and it is fully entitled to do so. If you don’t like their

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conditionality, don’t borrow from them. Don’t blame the IMF for its stringent
demands.
Since the government has signed an agreement with the IMF, and as the economy
deteriorates noticeably over the next two to three years, we can expect those in
office and the rest of the elite to blame the IMF for Pakistan’s economic disaster.
Yet it is not the IMF that is to be held responsible, but our own elite, elected,
unelected, and those who continue to lead Pakistan down the IMF path, yet again.
Accountability must begin and end with our elite, not with the IMF.
By: S. Akbar Zaidi

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 No endgame in Afghanistan?
The United States and the Afghan Taliban recently held another round of talks in
Qatar as part of efforts to seek a peaceful end to the prolonged war in Afghanistan.
After the weeklong huddle in Doha with Taliban negotiators, US special
representative for Afghan reconciliation Zalmay Khalilzad reported “steady but
slow progress on aspects of the framework for ending the Afghan war”.
He conceded that the current pace of talks isn’t sufficient “when so much conflict
rages and innocent people die”. He noted: “We need more and faster progress. Our
proposal for all sides to reduce violence also remains on the table.”
The current talks focused on two main issues — time frame for the withdrawal of
US forces and firm guarantees by the Taliban that the Afghan soil will never be used
again by any terrorist outfits such as al Qaeda.
The sticking point, however, is the Taliban’s refusal to agree on a ceasefire and hold
direct talks with the Kabul administration. While the US insists no deal is possible
without cessation of violence and intra-Afghan dialogue, insurgents are adamant
that these issues would be dealt with once the foreign forces leave the country.
Hence, the stalemate continues.
What has further undermined the prospects of any peace deal is a statement by
Taliban Chief negotiator Sher Mohammad Abbas Stanekzai in which he asserted
that the US is on the verge of defeat.
According to Voice of America (VoA), he made this claim in an April 28 speech to
an “internal gathering” in Doha, Qatar, just two days before he led his team of
insurgent negotiators into fresh talks with US interlocutors.
In the speech, Stanekzai praised what he called the bravery of the Afghan nation
for defeating past British and Soviet invasions of their country and resisting the
current foreign military presence, referring to the US-led coalition, which is training
and advising pro-government forces in battles against the Taliban.
“God has helped us defeat three superpowers in the last century. The third
superpower that we are currently confronted with is also on the verge of defeat,
Insha’Allah (God willing). You will soon hear they also will withdraw [from
Afghanistan] either of their own accord or they will be forced out,” Stanekzai told
the gathering.
His statement reinforced fears that the Taliban may be only buying time under the
garb of negotiations with the US. In reality, the insurgents have already come to

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the conclusion that the US would leave Afghanistan sooner than later, something
that would raise prospects of their return to power.
Their assessment may not be wrong either given the fact that they survived even
when the US-led coalition had over 140,000 troops at its disposal in Afghanistan.
Currently, there are around 17,000 foreign troops including 14,000 Americans, who
are primarily engaged in training the Afghan forces. So, the Taliban are playing a
waiting game.
In this scenario can the US strike a peace deal with the Taliban or is it too late now?
The assertion of the Taliban leader suggests that they are not keen on striking a
peace deal with the US but even if there is one that would be certainly on the
Taliban’s term.
Pakistan, which is considered a key player in the Afghan peace process given its
proximity to Afghanistan, is skeptical about the prospects of the ongoing talks
leading to a breakthrough.
Islamabad thinks that Afghanistan in all likelihood is heading towards a ‘civil war’.
Its assessment is based on a number of factors, including deepening divide within
the Afghan society that is preventing intra-Afghan dialogue, considered essential
for any consensus peace deal.
In the present situation, according to Pakistan, Afghanistan is going nowhere but
towards further chaos. This view has also been echoed by former US defence chief
Robert Gates. Given this precarious situation, the hope for an Afghan endgame may
remain a distant dream.
By Kamran Yousaf

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 Pakistan and Turkey: heading in the same direction?
Ever since the founding of the modern state of Turkey by Mustafa Kamal Ataturk,
the country has ridden a political rollercoaster. Its problems are not different from
those faced by Pakistan – another Muslim-majority country that is looking for a way
to move towards political modernity. Like Pakistan, the role of the military in
politics remains undefined although President Recep Tayyip Erdogan seems to have
succeeded – at least for the moment – in pushing the armed forces to the
background. There is also the issue of the role of Islam in politics and in governance.
The founders of both the countries – Ataturk in Turkey and Muhammad Ali Jinnah
in Pakistan – wanted their nations to be modern political entities in which the will
of the people would prevail and there will be tolerance for those who followed
faiths different from those of the majority population. For the Turkish leader that
meant getting religion out of the way. The military helped in that endeavour.
In Pakistan it was the military, led by General Ziaul Haq, that took Pakistan towards
Islamisation. While the military in Turkey assigned itself the role of the protector of
the national ideology, that was not the case in Pakistan. This is for the simple reason
that Pakistan had not found an ideology to defend. As in Turkey, the military in
Pakistan claimed a significant share in the government’s budget to protect the
country’s borders. Then a new development happened which was not of Pakistan’s
making. It occurred because the Americans not wanting the Soviet Union to stay in
Afghanistan after it had invaded it in 1979 encouraged the formation of religious
militias. These were put into battle against the occupying Soviet forces and they
succeeded in pushing the invading forces out of Afghanistan. However, when
Moscow left, the Islamic militias did not disband. They found other wars to fight,
some of them inside the country. The Pakistani military agreeing with the
politicians who were in power decided to fight the militias but the war is not quite
yet won. The Turkish military has had to do the same and fight the Kurdish militias
in the eastern part of the country and also across the border in Syria.
However, Ataturk and his successors went too far in giving up Turkish culture and
religion. This resulted in a reaction inspired by Erdogan and his political party, the
Justice and Development Party, the AKP. The Turkish military opted for secularism
more firmly and resolutely than its Pakistani counterpart. There is also the
unresolved question of the appropriate distribution of political power. In Pakistan,
federalism as a principle of governance is more firmly established than in Turkey.

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Especially after the adoption of the 18th Amendment in Pakistan’s Constitution,
the country’s four provinces wield more power than ever before. In Turkey, large
municipalities such as Ankara and Istanbul wield political influence if not political
power. Their importance in the evolving political system is the source of the current
political crisis in Turkey.
The defeat of the AKP in the local elections of March 31, 2019 was seen as the limit
to which an important segment of the population was prepared to go to accept the
still-evolving political system favoured by Erdogan. Those who opposed the
president tried the traditional Turkish way – a military coup – but failed. They then
turned to the ballot box. In the election for the mayor of Istanbul, a city of 15 million
people, Ekrem Imamoglu, the Republican Party’s candidate, led Binali Yildirim, the
candidate of Erdogan’s AKP by 13,000 votes. Imamoglu entered the mayoral office
on April 6 but the AKP did not accept the result. Declaring that the election had
been stolen, the AKP applied to the High Election Council (HEC) for a recount.
Eleven judges sat on the board of the HEC, elected by the judges of the Supreme
Court and the State Council. In a news briefing, Yildirim compared the vote to
“rotten meat”. On May 6, the HEC by a vote of seven to four ordered a new election
in the city. The new contest is scheduled for June 23. The opposition is left with the
difficult decision of whether to take part in a new election or to boycott it. It has
chosen to fight, encouraged by the decision by several smaller parties to withdraw
from the race. That could tip the balance in a race that was decided the first time
by a razor-thin margin of less than 0.2 per cent of the total vote. The parties that
pulled out took a combined 2.6 per cent of the vote and their decision not to
contest could make a difference. “The stakes are high. The odds are against
Erdogan. This is a question about whether Erdogan is willing to pay a long-term
political price to take Istanbul,” said Ozgur Unluhisarcikli, the director of the
German Marshal Fund in Ankara, a policy institution.
In an interview with Carlotta Gall of The New York Times, Imamoglu described that
his 17 days in office as Istanbul’s mayor before the election that put him in office
stood annulled. There were dozens of cars at his disposal, millions budgeted for
officials’ homes and a city sinking in debt. The situation was not much different
from the one Imran Khan found when he took office in Islamabad. It was the politics
surrounding a contested election result that contributed to Khan’s political rise; the
same may happen in the case of Imamoglu.

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Another similarity between the two countries is the source of political power.
Before the arrival of Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) on the political
stage, non-military leaders drew their power from established political parties. This
was also the case in Turkey where Ataturk’s Republican Party held sway for a long
time. In Pakistan, dynastic politics combined with deep political roots landed power
in the laps of the Bhutto and Sharif families. Erdogan in Turkey and Imran Khan in
Pakistan broke this tradition. Both owe their political ascent to the support received
from the urban youth. Erdogan rose because of the work he did as the mayor of
Istanbul. Imran Khan’s distinguished cricketing career won him the devotion of the
young in the large cities of Pakistan, particularly in Lahore. The direction in which
the two countries travel will no doubt be watched in the politically-underdeveloped
Muslim world.
By Shahid Javed Burki

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 CPEC and industry relocation
Should we expect any Chinese industry to relocate to Pakistan under the China-
Pakistan Economic Corridor (CPEC)? And if it happens, which industries are likely to
benefit from such relocation?
Before we answer this question, it is important to understand why companies
relocate. An industry would relocate to another city or country if such relocation
entails a significant regulatory, locational or cost advantage. The locational
advantages include reduced transportation time due to proximity to raw materials
or market, market size or even better living conditions at the destination. The cost
advantages, on the other hand, include lower input costs, better employees or
overall lower cost of doing business, whereas the regulatory advantages may cover
tax breaks, policy incentives, less stringent controls, etc.
Let’s first discuss the location advantages. While CPEC will greatly reduce the travel
time from western China to the Indian Ocean, the shorter distances are mostly
relevant for only those Chinese enterprises which are located in the three western
provinces of Xinjiang, Tibet and Qinghai and are exporting to the Middle East and
North Africa. For others, using the sea route through eastern ports or the overland
route to Europe would make more sense. Moreover, except Xinjiang with exports
of more than $13 billion, exports from other two provinces are almost negligible.
But Pakistan itself is a very lucrative market with a growing middle class. The huge
potential of the local market has generated significant Chinese interest in
household appliances and automotive sectors. In fact, this interest predates CPEC
and included investments by Haier, Gree and Changhong.
It is, therefore, likely that this sector is going to see much more Chinese investment
in the next few years. Early interest and pipeline of potential investments by
Changan Automobile Limited to assemble and sell its cars in Pakistan, Jinbei Auto
to build a completely knocked down assembly and joint ventures by LIFAN and
Beijing Automobile Works further validate this notion.
Similarly, the locational advantages also support the case for agri business and food
processing industry which can form another potential candidate for Chinese
investment to serve the local industry as well to target the massive Chinese food
market.
Coming to the cost advantages, the garments and textile industry seems to be a
good choice for relocation. China is already facing a surge in production costs,
owing to appreciation of its currency, inflation, higher cost of raw materials, etc.
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Moreover, as Chinese labour is graduating from low-paying to high-paying jobs,
along with introduction of improved labour laws, the labour costs are also rising
sharply. The average labour cost of an operational hour in the coastal and inland
regions of China is thrice the cost in Vietnam and Pakistan and six times that of
Bangladesh.
These pressures are compelling Chinese manufacturers to look elsewhere to
relocate. For now the Chinese focus seems to be on Vietnam, Myanmar, Cambodia,
Indonesia and Bangladesh. But there is room for Pakistan to join the race as well.
Lastly come the regulatory factors. The sunset industries in China are being pushed
out due to overcapacity, rising production costs and environmental factors. These
include copper and aluminum smelting, cement, papermaking, textiles, iron and
steel, light engineering and low-end motors and machines. While smelting would
need abundant availability of inexpensive energy, some of the other sunset
industries can very well be relocated to Pakistan.
No wonder that the initial parleys with China and the earlier version of the long-
term plan mentioned textiles and garments, agri businesses, food processing,
mining, cement, light industrial products and transportation machinery and
household appliances as sectors that could potentially benefit from CPEC.
The focus for Chinese industry relocation is, therefore, quite clear and makes much
commercial sense. Now it’s for our policymakers and industry to make it happen.
By Hasaan Khawar

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 Game of war
“Over these last few years, given the wars it has waged and the international
treaties it has arbitrarily reneged on, the U.S. government perfectly fits its own
definition of a rogue state.” – Arundhati Roy
You have the world’s largest military, you’re going to use it, right? Donald Trump
and his team, led by National Insecurity Advisor John Bolton, are playing rogue right
now with two countries not currently under US control, Iran and Venezuela.
For those who already know that war is not only hell but utterly futile, the raw
question hovering over these potential new exercises in mass murder transcends
the obvious question: How can they be stopped? The larger question begins with
the word “why” and then breaks into a thousand pieces.
Why is war the first and seemingly the only resort in so many national
disagreements? Why is our trillion-dollar annual military budget sacrosanct? Why
do we not learn from history that wars are based on lies? Why does the corporate
media always hop aboard the “next” war (whatever it is) with such enthusiasm,
with so little skepticism? Why does patriotism seem to require belief in an enemy?
Why do we still have nuclear weapons? Why (as journalist Colman McCarthy once
asked) are we violent but not illiterate?
Let’s take a look at bad, bad Iran. As CNN recently reported:
“National Security Adviser John Bolton said in a written statement Sunday that the
US is not seeking war with Iran, but was deploying the USS Abraham Lincoln Carrier
Strike Group as well as a bomber task force to the US Central Command region in
the Middle East ‘to send a clear and unmistakable message to the Iranian regime
that any attack on United States interests or on those of our allies will be met with
unrelenting force.’”
And Secretary of State Mike Pompeo, addressing the issue with disconcerting and
unintentional candor, told reporters, according to CNN, “What we’ve been trying
to do is to get Iran to behave like a normal nation.”
How would a “normal nation” respond to endless threats and sanctions? Sooner or
later it would hit back. Iranian Foreign Minister Javad Zarif, speaking recently in
New York, explained it thus: “The plot is to push Iran into taking action. And then
use that.”
Use it, in other words, as the excuse to go to war.
And going to war is a political game, a decision made or not made by a few
important individuals Bolton, Pompeo, Trump while the general public looks on
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either in support or outrage, but either way as spectators. This phenomenon
provokes an enormous, unasked “why?” Why is war a top-down directive rather
than a collective, public decision? But I guess the answer to that question is
obvious: We couldn’t go to war that wasn’t pre-orchestrated by a small group of
powerful individuals. All the public has to do is . . . pretty much, nothing.
Elham Pourtaher, an Iranian going to school in New York state, makes this plea for
heightened awareness: “US civil society needs to include more global perspectives
on the country’s foreign policy. US citizens must become more aware that their
votes have grave consequences beyond their country’s borders. . . . (Their) elected
administration’s foreign policy is a matter of life and death for the citizens of the
other countries, especially in the Middle East.”
She also notes that “the war has already begun. US sanctions are producing a level
of suffering comparable to that of wartime. Sanctions in fact are a war waged by
the United States against the Iranian working- and middle-classes.
These groups struggle to make ends meet as unemployment dramatically increases
even as the inflation rate skyrockets. The same people that the Trump
administration is pretending to want to set free are the ones that are hit hardest
by current US policies in the Middle East.”
By: Robert Koehler

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 Bolton’s war
The United States of America is no stranger to regime change in Iran.
In 1953, Operation Ajax saw the fall of the democratically-elected Mohammad
Mosaddegh. He was replaced by the authoritarian Mohammad Reza Pahlavi,
setting off a chain of events that would lead to the Iranian revolution in 1979 —
not the greatest chapter in US foreign policy by any means.
In contrast, the ‘Iran Nuclear Deal’ was a triumph of diplomacy that occurred during
the Obama presidency. The deal was simple: in return for Iran curbing its nuclear
ambitions, the US and its European allies would lift economic sanctions that were
hindering the Iranian economy from growing. By all accounts that are considered
fair and objective, Iran kept its word in the deal.
Then came Trump.
One year ago, Donald Trump withdrew the US from the Iran nuclear deal. A move
that was by itself quite problematic. But things got worse when he appointed John
Bolton as his national security adviser.
When it comes to Iran, Bolton makes Trump look sane.
Not a fan of subtlety, John Bolton has made it his mission to bring about regime
change in Iran and he is not hesitant in finding a reason that will allow him to do
so. In the words of John Bolton, Iran is the world’s biggest state sponsor of
terrorism; it is the biggest threat to America’s glorious ally, Israel; and, it the biggest
catalyst of unrest in the Middle East. All hyperbole that is probably a prerequisite
for joining the Trump administration. But Bolton’s belief in these claims puts the
US on a very dangerous path with regard to Iran. Despite Iran’s commitment to the
nuclear deal, Bolton has started tightening the screws on the Iranian economy by
reinstating sanctions on Iran. He has also spearheaded the pressure campaign on
Germany, Britain and France to do the same. More recently, the Trump
administration has forbidden a score of countries from buying oil from Iran.
All of this is being done to cripple the Iranian economy. Some analysts have
suggested that Bolton is doing so to trigger an uprising in Iran and realise his dream
of regime change. My opinion is that it is a way to force Iran to also withdraw from
the nuclear deal that it is now still a part of with three European nations. By
breaking away from the deal, Iran would be able to rekindle its nuclear ambitions.
Giving the US moral authority — the kind we have seen it use in the past to
disastrous results — for some sort of retaliation. It is entrapment 101.

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For a year, Iran refused to bite the bullet. But now, it has decided to send a signal
to the Europeans. It has stated that it may withdraw from the deal unless the
Europeans keep up their end of the bargain. This is not an unreasonable request;
all Iran wants to know is if there is hope left in the deal any more.
History has a strange way of repeating itself. Perhaps that is why people should be
more careful about learning from it. Not so long ago, we had another inept
president of the United States and a warmonger pulling his strings from behind the
scenes. The Bush-Cheney team that tore down Iraq over fictional weapons of mass
destruction. Cheney, like Bolton, thought the only way forward for Iraq was
through regime change. He, too, didn’t mind bending the rules (or firebombing
them) to achieve his goals.
The inability to learn from history is the lot of fools and megalomaniacs. John
Bolton appears to be both. Despite the Iraq war’s failure, despite its cost, despite
its existence as a glaring example of the futility of succeeding in a war to bring about
regime change in the Middle East — Bolton persists with his mission.
The events of last week must have given him much to smile about. Four commercial
tankers were reportedly sabotaged off the coast of the UAE. A strategic shipping
lane for about 40% of the world’s oil. Bolton has been quick to point fingers at Iran
for this. So eager is the Trump administration for some sort of war that it has leaked
plans that outline sending 120,000 troops to the Middle East.
The world cannot depend on the current US administration to make sensible
choices. With men like Trump and Bolton calling the shots, the lunatics run the
asylum. But the world can do its best to avert a war by playing its part. A part it
failed to play in the lead-up to the Iraq war.
First, European security officials have already begun casting doubt on American
intelligence regarding threats from Iran. These reports need to be aired more
openly and transparently. The world must know the truth from the lies that John
Bolton, like Dick Cheney, before him seek to use to justify a war. The US may not
have learned from history, but the world should. It should use those lessons to
second-guess every piece of intelligence the US shares with regard to the threat
from Iran. It needs to second-guess John Bolton.
European nations must now play their part. Those that are part of the nuclear deal
can prevent Iran from withdrawing. They can do so by showing Iran that they are
willing to keep their promises just like Iran has kept its. Iran wants assurances that
it is going to get what it rightly deserves out of the deal that it is a part of. Giving

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this to them would hardly be an action that would trigger a trade war between the
US and Europe.
It would be a complete failure of the international order that has been built if one
megalomaniac named John Bolton could manipulate a war so easily.
By Hassan Niazi

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 Trump’s warrior diplomacy
War is a serious and deadly business. Yet, speculation is rife in Washington about a
possible war with Iran without any mention of the horrendous consequences the
conflict might bring.
President Trump has moved from a position of ambivalence to one of a reluctant
warrior. Meanwhile his national security adviser, John Bolton has earned the
sobriquet of a “war whisperer” who thinks that Iran can only be tamed through a
US military adventure. Bolton and some others are reportedly pushing Trump
towards war.
Trump, who rose from the position of a wheeler-dealer New York businessman to
that of the global superpower’s president after his surprise victory in the 2016
American election, should normally be opting for a mercantile style of diplomacy,
geared to making deals rather than bludgeoning the other side. He has been
offering deals to the Afghan Taliban and North Korea’s Kim Jong-Un. However,
Trump has incrementally hardened his position on China and Iran. After initiating a
full-fledged war of tariffs with China, he is resorting to warrior diplomacy with Iran,
which can lead to unforeseen consequences.
To recap, Washington is rattled by Iran’s strong reaction to the latest US sanctions
accompanied by threats to reduce Iran’s oil exports to zero. In the war of words,
Tehran has warned Washington of the consequences of a (military) confrontation.
That enraged Trump sufficiently, leading him to promise “the official end of Iran”
in the case of war. Trump is known for changing his tactics and we can expect more
theatrics while hoping that he will rule out military conflict as a serious option.
Governments across the globe have been all ears to the ground to fathom which
way the American might is going to sway vis-a-vis Iran. Pakistan, as a direct
neighbour of Iran has every reason to be concerned over the sabre-rattling from
Washington and Tehran. The official reaction was expressed last Thursday when
the FO spokesman called upon the concerned parties to show restraint as a
miscalculation could lead to a large scale conflict. Foreign Minister Shah Mehmood
Qureshi has offered Pakistan’s facilitation to lower tensions while the Chinese
foreign minister has urged the US secretary of state to exercise restraint in the
rising tensions with Iran.
The situation has reached a worrying pass primarily due to President Trump’s
reversal of the US policies on Israel and Iran which were painstakingly crafted by

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his Democrat predecessor, Barack Obama. As a result, America follows an
unprecedented pro-Israel stance and has shamelessly withdrawn assistance to the
Palestinians. A year ago, the US withdrew from the Joint Comprehensive Plan of
Action agreement with Iran – despite requests from allies not to jeopardize the
plan, and to continue instead engaging with Iran.
All that seems so distant now as the Trump administration tightens the screw on
Iran’s economy to the delight of the Zionist state. It appears that Trump, who does
not miss any opportunity to demonstrate his devotion to Israel, is targeting the
Islamic regime in three ways. He wants to dissuade Tehran from resuming its
nuclear programme, put a halt to its missile programme and force Tehran to cut
down its support to Hamas and Hezbollah in order to weaken their capacity of
offering resistance to Israel.
An additional factor has come to strengthen Trump’s resolve to check Iran’s
growing power – the latter’s outreach and involvement in Yemen’s civil war. Iran’s
strong support to the Houthi rebels has led to the Saudis further consolidating their
defence ties with Washington.
The US has stepped up the economic sanctions on Iran, gradually restricting its oil
exports and banking relations with the rest of the world. The mood in Iran is sombre
as the US coercive diplomacy takes its toll by fuelling inflation and causing sharp
depreciation of Iran’s currency. Their only hope is that the Trump era may end after
the 2020 election and the next administration might be less belligerent toward the
Iranian regime.
A regime change in Iran is ostensibly what Bolton & Co aim at, and think that it can
be triggered by military action against the country. Or else, Bolton is advocating an
Iraq-style invasion to bring down the clerical regime. These provocations have
helped the government in Tehran to mobilize manifestations of support, creating
more difficulties for the moderates in Iran. As in the case of Iraq under Saddam
Hussain, it is not the regime but the ordinary people who are hardest hit by the
sanctions.
Some observers have pointed out that Iran’s actions over the last few years to
extend its influence in the region have upset the moderate Arab states under
monarchical rule. Iran has historic ties with Syria but the US invasion of Iraq and
military intervention in Syria helped Tehran make significant moves on the
geopolitical chessboard stretching from Iraq and Syria to Lebanon and Gaza and up

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to Yemen. The arc of growing Iranian involvement is perceived as a direct threat by
the Gulf monarchies.
These areas were once part of the Persian empire but efforts by Iran under a clerical
regime to strengthen their zone of influence will meet strong resistance from the
US and its Arab allies. The announcement by Iran to renounce some of its
commitments under the JCPOA has sent jitters down the regional players, including
Israel. The US has reacted by stepping up its military deployment in the area.
Reports of attacks on oil tankers in the Gulf and attempts to sabotage Saudi oil
pipelines have further heightened the fears of a conflict in the Gulf that would
endanger global oil supplies and lead to a sharp rise in petroleum prices.
By: M Saeed Khalid

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 Regime change redux?
At the time of writing, American warships and bombers are on their way to the
Persian Gulf. They will augment the sizeable US military presence already in the
region — on bases in Bahrain, Oman and Qatar. The ostensible purpose of this
unprecedented buildup, according to the Trump administration’s National Adviser,
John Bolton, is to respond to “troubling and escalating indications and warnings”
from Iran. He added ominously that “any attack on United States interests or on
those of our allies will be met with unrelenting force”. But behind this façade is the
inescapable possibility that the US is actually seeking to bring about regime change
in Iran — an objective that has been openly advocated by Trump and his team,
including Bolton and Secretary of State Mike Pompeo. Such a regime change redux
in Iran, however, would be even more destructive, including for the US, than the
disastrous outcomes of American regime change in Iraq, Libya or Syria.
During his election campaign, Trump had criticised the US involvement in foreign
conflicts, and as President, he has lately tried to disengage from Afghanistan and
Syria. But Trump has made no secret of his intentions to forcibly change two
elected governments — in Venezuela and Iran. Since crippling sanctions and
destabilisation have failed so far in both countries, now the “gun-boat diplomacy”
option is being applied against Iran. If this option also fails, which it most likely will,
then the direct use of force could become a realistic possibility, for which the
military capability is already being built up in the region.
While Trump’s critics accuse him of policy “incoherence” and confusion” —
rejecting foreign commitments while intervening in Iran — he actually has a clear
policy. It’s driven by his Islamophobic Christian Zionism and electoral need to
pander to the powerful America Israeli lobby. Consequently, Israeli Prime Minister
Netanyahu is Trump’s closet ally on whose demands the US Embassy has been
shifted from Tel Aviv to Jerusalem; the Iran nuclear deal (JCPOA) has been rejected;
crippling sanctions imposed on Iran and attempts being made for regime change in
Tehran. In fact, the current American military deployments are being made due to
Israeli intelligence claims that Iranian “proxies” and its navy are preparing to attack
US targets and those of its allies. It is also alleged by the Israelis that the recent
“sabotage” on Saudi tankers in the UAE and the missiles fired on US facilities in Iraq
was master-minded by Iranians.

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Similarly, to isolate Iran at the behest of Israel, Trump has played up Saudi concerns
about Iranian support for Shiite forces that allegedly threaten Saudi and UAE
interests, such as in Yemen, Bahrain, Syria and Lebanon. The US, of course, finds it
expedient to broaden the regional alliance by involving Saudi Arabia and the UAE,
apart from some other Arab countries. The fact that this helps Trump sell American
weapons worth billions to the GCC countries is a bonus.
While America pulled out of the JCPOA in May last year, other signatories, Russia,
China, Britain, France, Germany and the EU, are keen to save the deal. However,
Iran expects that despite the US pullout, the others will honour the arrangement
by trading with Iran and removing UN sanctions. So far this has not happened,
especially in the case of the three European powers and the EU, whose businesses
are concerned that, being part of the US-dominated international financial and
monetary systems, they would come under American sanctions themselves.
Similarly, countries like India and South Korea, dependent on Iranian oil supplies,
have been forced to renege on their contracts due to US sanctions.
Iran has now asked the remaining JCPOA signatories to take “concrete action”
otherwise there would be “consequences”. It has already stopped observing
certain aspects of the accord such as sending heavy water to other countries and
exchanging enriched uranium for natural uranium. A more serious step would be
to resume uranium enrichment — leading to the breakdown of the JCPOA.
America’s European allies have also refused to support the US allegations against
Iran while also opposing any regime change. The other major powers, Russia and
China, have rejected American claims, calling for restraint and dialogue. Most
countries are skeptical because of past American deception and fabrication of
evidence to “justify” the 2003 invasion of Iraq. These countries are also deeply
concerned that a heightened American military presence in the Gulf would
destabilise an already precarious environment, leading to an accidental or
unintentional conflict.
For now it seems the American-Israeli tactic is to goad Iran into a conflict or find an
“excuse” to start one. Bolton’s warning is ambiguous enough to find such a
“justification”. If that does not happen, Washington anticipates that its sanctions
would cripple the Iranian government to the point of collapse and lead to regime
change from within.
Despite America’s military preponderance, a war with Iran would be even more
disastrous than the one with Iraq. Iran’s size and population are much larger than

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Iraq. Tehran also has a larger arsenal of missiles and naval capabilities which could
be used to block the Strait of Hormuz in the Persian Gulf from where 40% of the
world’s oil passes through daily. Iran also has “proxies” from Lebanon to Yemen
who can cause extensive damage through asymmetric warfare to the interests of
the US and its allies. Israel would be particularly vulnerable to Hezbollah attacks
from Southern Lebanon.
In this deteriorating regional environment, Pakistan needs to be more proactive in
ensuring restraint and de-escalation by the US. It should clearly oppose any
attempt for regime change in Iran. Pakistan should also emphasise the need for
fully implementing the JCPOA and withdrawing sanctions on Iran as envisaged
under this accord. Pakistan would also need to continue balancing its relations with
Iran and Saudi Arabia since we have important relations with both. We should also
be cognisant of the negative domestic reaction to an attack on Iran.
By Zamir Akram

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 The Korean model
Pakistan’s economic conditions remain dire but there is hope. It is time it looks East
for inspiration. Had we looked East decades back we could have been a happier
country today. Much could be learnt from the successes of China, Malaysia,
Bangladesh and South Korea -- all of whom were unconventional in their policies.
A small window of opportunity may still be available to Pakistan before our
population monster devours us.
Let us focus on South Korea. Its GDP rose from $2.4 billion in 1961 to $1.5 trillion
in 2018. The per capita income surged from $94 to $30,000 during this period.
Amazingly, in 1961 Pakistan’s economy was better placed but today our GDP is a
paltry $350 billion and the per capita income about $1600 dollars. Empty rhetoric
and faulty reading of development dynamics were responsible for our failure. Tall
promises, bogus claims and loud speeches are no panacea for success; mature
understanding of the economic environment, strict discipline and hard work are.
At the time of partition of Korea along the 38 parallel, the South was poorer than
the communist North. After the Korean war ended in 1953, South Korea
experienced low economic growth with high corruption under then president
Syngman Rhee. The coup d’etat in 1961 by General Park Chung Hee which led to
20 years of military rule was mainly responsible for the economic miracle in South
Korea.
South Korea’s success story was built upon three ingredients. (The fourth factor
was sharing the heavy defence expenditure with the US).
First, the Koreans realized that economic progress depended upon human resource
development. Elementary education, scientific and technical training and
healthcare were given center stage. Second, a strict and authoritarian executive
within a stable economic environment spread over two decades was provided by
president Park Chung Hee. A premium was placed on achieving the industrial
objectives set and any deviation or slackness was quickly penalized. The crucial
policy change was that General Park substituted performance for cronyism. Such
strict adherence to policy is equally possible within a democratic framework.
Thirdly, state protection was provided for ‘infant industries’, based on import
substitution and export growth, subsidized credit and development of heavy
industries.
President Park decided early to focus on Heavy and Chemical Industries (HCI) which
turned out to be an overwhelming success. During 1950, the Korean net domestic
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savings were close to zero which rose to 20 percent of GDP by 1970 and to 35
percent in 1990. He believed in the primacy of state power with strong and
centralized management of the economy. His was an effective government under
the authoritarian Yashin constitution. An Economic Planning Board was created in
1961 under the deputy prime minister with wide powers and the best available
expertise was recruited.
General Park fully protected the ‘infant’ industries but only for a limited period and
on the condition that the protected industries must progressively become
competitive internationally. Subsidized loans and other facilities were provided and
the real interest rate for the development of select export enhancing and heavy
industries was reduced to a low of minus five percent or more. The qualifying
criteria for support was quality performance only unlike in Pakistan where the
textile, vehicle assembly and sugar industries remain stagnant and non-competitive
despite decades of state protection. Losing state concerns were sold or leased out
-- unlike PIA, Discos and the steel mills in Pakistan.
The neo-classical economists’ belief that import substitution policies never succeed
over time were proved wrong. The protection accorded to the export enhancing
and import substituting industries was conditional upon achieving the targets
assigned. Imports were eased on items used for developing export goods. Any laxity
or failure resulted in withholding state subsidies, bank credits and other protective
measures. ‘Sound’ firms routinely bought struggling ‘unsound’ firms which created
inbuilt economic efficiencies. Public enterprises grew at annual rates of up to 10
percent with their share rising to 9 percent in GDP. Banks were guaranteed against
loan defaults for selected industries.
The same businessmen, industrialists and politicians who were earlier held
responsible for corrupt practices and fraudulent transactions were directed to
invest in modern industries to avoid prosecution for their past misdeeds. Most of
them responded energetically to the offer and repatriated their money in the
development of the new Korea. This was how the first ‘chaebols’ like Samsung,
Daewoo, Goldstar and Hyundai emerged. They soon became household names for
class and competed successfully with the best products in the world. Hyundai for
instance became so adept in heavy industries that it remained profitable even
when there was a glut in ship building across the world. However, those ‘chaebols’
that performed poorly soon became bankrupt because they were unable to
compete efficiently and were taken over by the efficient performers.

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The repatriation of capital from abroad might be a pragmatic approach to follow in
Pakistan. Incentives should be offered to those with wealth stashed outside for
establishing modern industries in Pakistan. Such an arrangement would mean no
one would lose face while the economy would benefit enormously. A win-win for
all!
In 1968, after the World Bank rejected a proposal for building a steel plant in the
public sector the government developed POSCO (Pohang Iron Steel Company) and
placed it under a very capable and devoted senior military officer Gen Park Tae-
joon who operated it till 1992. However, corporate executives and generals who
failed to achieve excellence were soon cashiered. The steel production climbed to
nine million tons initially, rising further to 17 some decades later. (Some years back,
POSCO offered to lease/buy the Karachi Steel mills but was rebuffed by the
government of the day). Similarly, in Pakistan the World Bank declined to fund the
vital water-storing Diamer-Basha Dam and instead forced on us the low priority
Dasu dam.
The Koreans also proved that the concept of comparative advantage could be
turned around with dynamic state support. Much later, Bangladesh drove home
the same argument by outclassing established textile weaving and stitching
manufacturers through constant innovation and dexterity. Much earlier we saw
that without any comparative advantage Sialkot developed world-class sports
goods industries, almost by accident, due only to the skills of its artisans and the
dedication of sponsors.
Is there a lesson for Pakistan? Yes, looking East is more profitable than cringing
towards the West.
By: Shakil Durrani

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 US, Chinese Strength Suggests World May Have A Bipolar
Future – OpEd
At the recent Conference on Dialogue of Asian Civilizations in Beijing, Chinese
President Xi Jinping said: “We’re moving toward a multipolar world, economic
globalization, cultural diversity, social digitization.” For at least a decade, global
affairs experts have been talking about the global system shifting toward a
multipolar world, though the idea is much older. However, recent developments
suggest that perhaps the world is actually shifting to a new bipolar arrangement,
featuring Washington and Beijing.
International relations experts describe the Cold War as bipolar, with the world
largely divided between the US and the Soviet Union. Other countries were either
aligned with one of the superpowers or with the small non-aligned movement. The
Soviet Union’s collapse ushered in an era of unipolarity, with the US as the only
superpower.
In recent years, many global affairs professionals have assumed that the world is
shifting toward a multipolar period, characterized by multiple global and regional
powers, significant roles played by non-state actors, and a diffusion of economic,
military, diplomatic and cultural power to a broader number of countries around
the world. The US intelligence community (in publicly available documents),
consulting firms, think tanks, participants in the World Economic Forum, members
of academia, and now Xi have referred to the shift to a multipolar world.
I have also long assumed that the world is shifting to a multipolar system, but
recent global developments have led me to question this assumption. Now I
wonder whether the world is moving toward a new bipolar system.
There are good arguments to suggest that a multipolar system is emerging, largely
based on economic trends. Economic prosperity and power is spreading around the
world, with the fastest economic growth happening outside of Western countries.
The global middle class is growing, and most of that growth is outside the
traditional Western power centers. Research at the Brookings Institution finds that
“almost nine in 10 of the next billion middle-class consumers will be Asian,” spread
throughout China, India and other Asian countries. Some Europeans have
promoted the idea that a unified, enhanced EU would increase Europe’s overall
power in a multipolar world; indeed, a united EU, including the UK, has a level of
gross domestic product that is close to the US’ and exceeds China’s.
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Other arguments in support of a multipolar system reflect demographic shifts and
other modern global trends. The traditionally powerful states of the West are aging,
while young demographics and global population growth are focused in the Global
South. The world’s biggest cities are increasingly located in Africa and Asia. Trends
in technology and economics are eroding borders and state sovereignty. Non-state
actors — ranging from terrorist groups to multinational corporations — are
increasingly important players on the global stage. For a while, it appeared that the
“BRICs” (Brazil, Russia, India and China) would all gain in relative global power and
influence.
However, a close look at these ideas and recent developments suggests that the
global system might be shifting to a bipolar system based around Washington and
Beijing. If one excludes the EU as a unified entity, then the US and Chinese
economies are far larger than any other in the world. Europe, while possessing the
economic power to be a major world leader, is divided over Brexit, immigration,
the extent of EU powers and other issues. The other BRIC countries — Brazil, Russia
and India — are far behind and have yet not gained the type of influence expected
in a multipolar world. The US dollar remains the most critical currency in the world,
with no serious challenger. The power of the US economy and dollar is clear in the
effects of US sanctions on Iran and the failure of other countries to circumvent
those sanctions.
In terms of hard power, the US and China are again far ahead of the rest of the
world. They each spend far more on their militaries than any other country.
European leaders have chafed at Trump administration attitudes and actions —
ranging from G-7 summit tensions to the Iran nuclear deal — but have proven
ineffective at taking practical action to defend European interests. Russia has
shown that it can play a very effective disruptive role in world affairs through its
use of information warfare and strategic use of military power, but its economy
remains small relative to other world powers, and its population is also relatively
small and shrinking.
In the fundamental measurements of hard power, China and the US are in their
own league internationally. However, if the future is characterized by a US-China
bipolar system, it would be different from the Cold War era. Unlike the US and the
Soviet Union, the US and Chinese economies are deeply interlinked. China is a very
different country from the Soviet Union. New technologies, demographics,
economics and ideas shape today’s world differently than in the past. Perhaps

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there will be a form of a multipolar system characterized by some diffusion of
economic power mixed with forms of US and Chinese leadership.
The future of the global system — and whether it is multipolar or bipolar — has
critical implications for economics, politics, geopolitical alignments, the rules and
norms of the global system and more. While it may not be clear that the world is
moving toward a bipolar system, a multipolar system should no longer be assumed.
By Kerry Boyd Anderson*

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 Coordinating IMF terms
This article will not comment on the specifics of the current negotiations and terms
of the agreement with the IMF. Rather, it takes a longer view into trends that are
worth noting whenever governments in Pakistan negotiate with the IMF.
Economic management is further complicated due to lack of bureaucratic
coordination both vertically between the centre and provinces as well as
horizontally between different ministries and departments. We refer to some
literature (mainly Amjad 2015, in addition to Hasan 2015, Fasih Uddin 2011) in this
article.
It is worth keeping in mind that governments in Pakistan need to make space for
themselves, allowing the required flexibility to implement the structural reforms
that they agree with the IMF. They need to keep in mind alternative ways to achieve
those results, if needed.
Governments in Pakistan in general do not focus considerably on the repayment
plan when they are negotiating with the IMF, and instead focus on coming to an
agreement as a yardstick of ‘success’. Repayment of loan plans are not publicized
and often not thought through and there is a need to do so.
There is also a need to protect the national interests in the best possible way while
negotiating with the IMF. The IMF and other international financial institutions
have a strong pro-market orientation. They believe in the dictum that a private-
sector driven economy is the panacea for all fundamental problems. There is a need
to develop the private-sector led economy in a considered manner. However, the
consequences of privatizing everything must be carefully thought through.
Literature gives the example of the efforts to “unbundle” the Water and Power
Development Authority (Wapda) on the dictates of the IMF and the World Bank in
the past. Before this decision to take Wapda on the path of privatization, it was not
considered that it as an organization has built a reputation and knowledge capacity
on water/energy issues of Pakistan through its long work in the public sector for
three decades before this decision.
It might have been better to carefully look at options to expand its performance
rather than taking it towards the path of privatization. While it has not been fully
privatized, yet it now has an inefficient decentralized structure still largely
operating in the public sector. Pakistan’s water and energy sector is worse off due
to this decision which was taken following the privatization mantra in a dogmatic
manner.
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It is not only the governments in Pakistan that needs to learn lessons on how to
negotiate with the IMF. The IMF too needs to improve its learning curve while
negotiating with developing countries like Pakistan. There is a persistent imbalance
in the decision-making power of the IMF, with the US and advanced countries being
able to leverage disproportionate voting power and influence. The IMF attaches
harsh conditions for developing countries to pursue the neoliberal agenda. Despite
some partial changes in the IMF decision-making powers in the recent past, the
overall structure of hegemony of the Western countries remains intact.
Once the governments have negotiated a programme with the IMF, the next task
is to implement it and carry out those structural reforms that are in the best
interest of the country. There is a need for institutional and bureaucratic capacity
to undertake such reforms. There is ample lack of coordination in the civil service
of Pakistan. The lack of ability of the Ministry of Finance and the Planning
Commission in the Islamabad Secretariat to work with each other is given as an
example.
Once the reforms agenda has been decided, it is generally the responsibility of the
Ministry of Finance and the Economic Reforms Unit to implement it. The Minister
of Finance simply does not have the time to work on the details of the
implementation process in a cross-departmental manner. The concerned ministries
also resist the implementation of structural reforms as that often curtails their
discretionary powers.
One way to help this is to constitute a subcommittee of the Economic Coordination
Committee (ECC); the deputy chairperson of the Planning Commission should head
it, supplemented by representation from the provincial governments as well as the
private sector. The deputy chairperson should regularly update the ECC, headed by
the finance minister, on the progress on the implementation of reforms. The
finance minister in turn should report it back to the cabinet, headed by the prime
minister. Of course, the real challenge would be to entrench these structural
reforms in the organizational structure and functions of the concerned government
departments and line ministries.
There is also a need for much better coordination of the Ministry of Commerce with
other “production-related ministries”. There is a need to redefine the role of the
Planning Commission and considerably strengthen its coordination with the
planning departments in the provinces.

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While working with the current bureaucratic setup, there are adequate systems
and procedures in place that could result in much better economic performance
and management, if they are followed in letter and spirit.
The overall lesson is that, while the private-sector led economy principle might be
applicable in general, yet it is crucial that structural reforms to the economy must
be guided by the national agenda of development, vision of the way forward, and
a serious assessment of economic situation rather than blindly following the
neoliberal ideology of the Washington Consensus.
By: Foqia Sadiq Khan

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 Pak-India trajectory
PRIME Minister Narendra Modi has been re-elected. So what next for Pakistan-
India relations? Will the neighbours start talking again? Certainly. But will their
dialogue amount to anything? I am afraid not. The irony is that whether or not India
and Pakistan are talking their relationship changes little, as if it has been inoculated
against friendship since infancy.
The shadow of history has darkened the two countries’ view of each other. The
burden of the past continues to oppress the present making the relationship
resistant to change. What makes change still harder are their foreign policies,
resting on conflicting identities and national purposes and moving in colliding
orbits. Each has remained an indelible fixture of the other’s domestic politics,
compromising the will to change.
Modi’s hard line on Pakistan is not exceptional. This has been the default position
of most Indian leaders. The difference is Modi’s perceptions are beating to the
rhythm of global sentiments towards Pakistan especially in the West that have
turned negative. Modi’s negativity towards Pakistan is an asset in his relations with
the US on which his foreign policy pivots. And at home he has played up the
militancy issue to harden the existing public attitudes towards Pakistan, from which
he derives political mileage and support for his brutal repression in India-held
Kashmir.
Relationships change when countries have a compulsion and incentive to seek
change. Between India and Pakistan, one or the other stimulus has always been
missing. When either sought better ties the other was not ready. That is how the
1999 bus diplomacy and 2001 Agra summit failed, and the Manmohan Singh-Pervez
Musharraf back channel lost its way. On rare occasions when both sides were
inclined to look for change, like Modi and Nawaz Sharif, non-state actors struck.
Given its economic challenges, Pakistan has stronger compulsions to seek better
relations but like India wants the normalisation to be free of cost. Neither is ready
to give the critical concessions the other demands. They have not only magnified
each other as a threat but also exaggerated their own capability to deal with it.
India feels that by virtue of its size and military and economic power it is intrinsically
qualified to seek hegemony in the region. Pakistan rejects such a normalisation —
particularly a normalisation minus Kashmir. That is why the relationship cannot
improve as it lacks consensus on the terms of engagement.

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Meanwhile, Modi feels the benefits of alienating Pakistan exceed those of
conciliation. But the policy has run its course. Frustrated that despite its power and
influence, India cannot manage Pakistan, he decided on military action after
Pulwama. But it did not quite work because of Pakistan’s successful response. The
military option has the risk of escalation or becoming a regular pattern thus losing
its effectiveness.
That leaves dialogue as the only option. But the problem is, it is one thing to have
a dialogue and quite another to institute a dialogue process that would require an
understanding on fundamental issues. And understanding is hard to come by,
especially as the relationship is no longer just about Pakistan and India. India’s
Pakistan policy is an adjunct to its China policy and a footnote in its relationship
with Washington. And India is a subset of Washington’s China policy and relations
with Pakistan.
No meaningful change is expected from India unless some or all of the following
happen: there is progress in Pakistan’s fight against militant organisations; Modi’s
repression in Kashmir fails; Afghanistan stabilises along with visible improvement
in Pakistan’s economy; and US-China relations head for a dangerous escalation
forcing India to reassess its ties with Washington. These are big ifs for the future.
Meanwhile normalisation of Pakistan-India ties will remain subordinate to Modi’s
global and regional ambitions, his Kashmir policy, and domestic politics. A resumed
dialogue may achieve little more than some improvement in atmospherics, and a
partial resumption of people-to-people contact, and progress on Kartarpur, all
vulnerable to the next incident.
Ultimately, for durable peace and prosperity to come to South Asia what is required
is the emergence of strong leaders in Pakistan and India and a paradigm shift in
domestic politics, national policies and the mindset of the people, possibly led by
the next generation. Only a different Pakistan and India can be friends one day.
Steve Cohen in Shooting for a Century fears India Pakistan rivalry could possibly last
for a ‘century’, in cricket terminology. A forbidding thought indeed.

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 Towards CPEC 3.0
THE Belt and Road Initiative has attracted praise and critique since its inception in
2013. The response is not unnatural for the transnational endeavour could mobilise
an investment of $1.3 trillion by 2027 and will potentially change the geo-
economics of partner countries and regions. It remains to be seen, however, if BRI’s
architects will follow in the footsteps of Western hegemons or seek mutually
beneficial partnerships.
The West, led by the US, is becoming more wary of China’s bolstering economic
muscle with every passing day. The country has faced more intense scrutiny since
2015 when it announced ‘Made in China 2025’, a plan to spearhead high-tech
industrial development. Beijing presents it as an effort to circumvent the middle-
income trap, but Western countries accuse it of mercantilism and subsidising
Chinese firms heavily for a competitive edge over their Western rivals.
On the political front, Western strategists equate BRI with debt-trap diplomacy to
sow the seeds of distrust. The accusation is ironically levelled by the architects and
custodians of the Bretton Woods system. Besides, it emanates from a policy to limit
China from playing an assertive role in the developing world, which may undermine
the West’s contemporary dominance. Pakistan — the host of BRI’s crown jewel, the
China-Pakistan Economic Corridor — has strategic ties with China, which both
countries are striving to deepen further. Our analysts argue CPEC is a historic
opportunity for Pakistan to leapfrog into the 21st century.
In this backdrop, it’s barely noted that the corridor is now a test case for Beijing too
to demonstrate its ability of becoming a trusted partner for the Global South. It is
nonetheless incumbent on the Pakistani government to remain cognisant of
channelling the benefits of CPEC towards our youth and poorer population. No
matter how sincerely Beijing pursues CPEC, we cannot discount the fact that its
own economic interests, not inherently exploitative though, would hold supreme,
and we must realise that sooner rather than later.
As President Xi presses ahead with his flagship initiative and presents BRI as a
common development goal, our decision-makers should aim to nurture a long-term
partnership that yields equitable dividends. This necessitates an understanding of
the needs of our economy for today and for tomorrow and prioritising the areas
that hold all-out benefits. Likewise, Beijing must pursue economic ties with

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Islamabad based on the principles of transparency and shared prosperity,
regardless of our much weaker economic might.
Despite some politicking regarding CPEC’s initial priorities, it was carefully crafted
because the provision of energy and transport infrastructure is a prerequisite for
economic advancement. The second phase prioritises agriculture, digital
connectivity, industry, tourism etc. As this economic integration accelerates, future
collaboration, CPEC 3.0, should be manoeuvred towards high-tech sectors —
namely telecom, electric mobility and renewables, where China is an emerging
global leader — to optimise CPEC’s benefits.
In the telecom industry, China’s Huawei has become a leading equipment supplier
and is among the world’s most innovative companies with nearly 88,000 patents as
of December 2018. Analysts believe it is set to lead the world in the rollout of the
future’s most promising, and critical, technology: fifth-generation (5G) mobile
telecom infrastructure. As of April 2019, Huawei had signed more than 40 5G
contracts globally, proving that the firm can commercialise its solutions faster than
its Western and Asian rivals.
Many Chinese tech giants are already present in Pakistan. Since digital connectivity
and infrastructure are essential for tomorrow’s economies, future cooperation in
this area should form a major pillar of CPEC. Regardless of the US government’s
fierce opposition, Chinese tech giants will be at the forefront of advancements in
the telecom industry. Therefore, B2B partnerships could help Pakistan’s budding
ICT sector to develop capacities by engaging with Chinese partners. Meanwhile,
Chinese firms can target the vast untapped potential of Pakistani market.
Concerned chiefly about its soaring dependence on imported fuels and worsening
urban pollution — challenges we can relate with — the Chinese government
implemented several corrective measures. Since taking the reins in 2013, President
Xi has stressed the need for sustainability more than his predecessors. Resultantly,
China is a leader in the renewables industry and the largest market for electric
vehicles (EVs). According to Wood Mackenzie, a consultancy, by December 2018
China had 181 gigawatt of wind and 175GW of solar PV capacity — a whopping
one-third of installations worldwide.
Although Western original equipment manufacturers (OEMs) dominate the global
wind turbine value chain, Chinese PV suppliers are rivalled by none, albeit facing
anti-dumping duties by many countries. Chinese turbine OEMs have struggled to
lure investors outside their domestic market, but thanks to CPEC, they hold a 30pc

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share in Pakistan’s nascent wind energy market. Chinese turbine OEMs are willing
to localise production for future installations, which can lay the foundation for tech
transfer — yet another incentive that sets renewables apart from thermal power.
China leads the world in emerging trends in e-mobility. It has over 200 million
electric two-wheelers and recorded sales of 1m EVs in 2018 — more than the rest
of the world combined. According to McKinsey, a consultancy, the success of
Chinese OEMs is more pronounced in the e-bus segment — of the 97,000 urban
buses sold in China in 2018, 87,000 were electric.
Beijing has a goal that one-fifth of vehicles sold in China by 2025 should be electric,
which will catalyse exponential growth in EV sales and help Chinese manufacturers
consolidate their strengths. Advancements in these sectors will create further
synergies. For instance, 5G connectivity is necessary to commercialise autonomous
EVs and robo-taxis, which will rely on artificial intelligence and fuelled (ideally)
through renewables.
This is not to suggest that China will help us become an important player in these
futuristic technologies. That thought is far-fetched. Nevertheless, by aiding
Islamabad in these areas to address the economic and environmental challenges it
faces, Beijing will vindicate President Xi’s stated vision of BRI and legitimise its
leadership in the developing world. Or else we must tone down the enthusiasm
that encircles CPEC and reassess the allocation of our scarce institutional resources
for better outcomes.
By: Sohaib R. Malik

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 When the giants fight, the world suffers
It always appeared to be an uneasy truce between the globe’s two largest economies,
trading nations and trade partners. It was on the cards that US President Donald
Trump, who believes that the most effective way to grind down Beijing’s global
ambitions is to land a blow on the mainspring of its strength – exports – will run out
of patience and slap fresh punitive tariffs on imports from China.
This he did on May 14, some five and a half months into the truce, by more than
doubling customs duties on $200 billion worth of Chinese products. Beijing retaliated
by announcing to escalate tariffs on American imports valuing $60 billion.
So far the Trump administration has imposed additional tariffs on $450 billion worth
of Chinese products. In 2018, the total US imports from China amounted to $540
billion. Thus in terms of value, more than 82 percent of Chinese products entering the
US are subject to additional tariffs. Likewise, China has slapped tariffs on American
goods valuing $110 billion. In 2018, the total imports of China from the US amounted
to $120 billion, which means 92 percent of American exports to China are facing higher
duties.
Not only that, with Washington putting the curbs on Huawei by requiring US-based
firms to seek government approval for trading with the Chinese smartphone maker,
the trade war has assumed a new dimension – non-tariff barriers (NTBs). The decision
has been occasioned by concerns that Beijing may use Huawei for surveillance. Huawei
may be an independent enterprise, but it’s a potent symbol of China’s growing
technological prowess. So it was only a matter of time that it would be hammered by
the White House.
Opinion is divided over who the tariff war will sting more: China or the US. The burden
of increased tariffs will be borne by consumers in each country in the form of higher
prices. However, the Trump administration is confident that a spike in tariffs on
Chinese goods will wind down their demand in their single largest market and thus
create a hole in the Asian giant’s overall export basket as well give a leg-up to domestic
manufacturing.
Since China is an export driven economy, a considerable fall in exports will put the
brakes on its economic growth. This may force Beijing to accede to the long-standing
Washington demand to correct the alleged distortions in its trade and investment
regimes, such as currency manipulations to keep the yuan undervalued, heavy
subsidization of domestic businesses, making it obligatory on foreign companies to
transfer technology to their Chinese counterparts, and violation of intellectual
property rights (IPRs).
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On the flip side, such unfair trade practices have underpinned much of China’s
competitive advantage and its spectacular export performance over the years.
Therefore, once these distortions are removed, the domestic enterprises will by and
large be hard pressed to compete with those from developed nations, particularly the
US.
While it’s a toss-up whether the tariff war will make Washington or Beijing worse off,
there’s little doubt that the stand-off between the world’s two most powerful nations
will cast its pall over the global economy as well as the multilateral trading system.
Economists steeped in neoclassical or liberal tradition argue that since as a rule
inefficient industries are the ones that need protection, tariff escalation makes the
importing country worse off. It also dials down the welfare of consumers, who have to
purchase more expensive or lower quality domestic products than they would
otherwise. This argument, however, does not fully apply to mega economies, such as
the US and China, which account for a substantial share in global imports. By cutting
back on their purchases, they can bring down the international price of a product.
Hence, tariff increase by a large economy tends to depress world prices and lower
output.
Countries like Pakistan, which rely on a handful of products to generate export
revenue, are hit harder. As per IMF projections made in April, global economic growth
will slow down to 3.3 percent in 2019, compared with 3.6 percent in 2018. The
resumption and intensification of the Sino-US trade war coupled with escalating
tensions in the oil-rich Middle East makes even this modest projection optimistic.
In the trade war, China has quite a few aces up its sleeve other than tariff hike. China,
for instance, can devalue its currency to offset the tariff escalation-induced fall in
competitiveness of its exports to the US. Over the years, Washington has accused
Beijing of maintaining an undervalued yuan with a view to racking up exports and
discouraging imports. In recent years, the yuan has been allowed to appreciate – albeit
not by much – to boost consumers’ purchasing power. Possible yuan depreciation will
adversely affect not only the US but all other trading partners of China as well. These
countries will find it exceedingly difficult to compete with Chinese products both at
home and abroad. One option for such countries will be to devalue their currencies,
which may lead to a zero-sum currency war.
As Pakistan’s recent experience brings out, currency depreciation dials down
purchasing power and is thus inflationary. Not only that, depreciation makes imported
capital equipment costlier, which may lower productivity and thus put the skids under
economic growth and expansion of international trade. Such a situation will be more

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painful for economies like Pakistan, which are already enmeshed in an unenviable
combination of low growth and high inflation.
The trade war has put the relevance of the World Trade Organization (WTO) under
question. If countries or blocs can impose punitive tariffs on each other’s imports in
tit-for-tat moves, the existence or extirpation of the multilateral organization, which
sets the rules for international trade, hardly matters.
WTO agreements confer certain rights and obligations on members with regard to
both general rules or principles, which together define what members are entitled to
do and what they cannot do, and specific commitments which each member has
undertaken, such as tariff reductions and elimination of quantitative restrictions.
As the WTO is a rule-based system, the members can impose additional tariffs on
imports over and above their commitments, only subject to following a due process.
The WTO body of agreements spells out the special circumstances in which additional
tariffs can be imposed, together with the procedure which must be followed. Resort
to retaliatory tariffs is in principle prohibited.
The US decision to levy punitive tariffs up to 25 percent on import of aluminium and
steel from China, EU, Canada, and some other countries, which represented the first
shot in the trade war, was based on national security reasons. However, neither that
act nor the subsequent moves followed the prescribed procedure. Likewise, China has
been accused by the US of intellectual property rights (IPR) violation. But instead of
challenging the alleged IPR violations in the WTO, the US penalized Chinese imports
on its own.
The response of US trading partners has also been equally arbitrary and no less
unlawful. Instead of taking the US to the WTO and waiting for adjudication by
independent panels, they have proceeded unilaterally. These developments indicate
that powerful countries can set aside the relevant rules and institutions without much
ado.
Rule-making as well as rule-breaking is an act of power and a strategy for domination.
In the international context, when a country openly flouts the agreed rules, it sends
out the message that it is powerful enough not to care about the laid down
mechanism. It also lends credence to the impression that inter-state relations are
characterized by anarchy, where a combination of economic and military firepower is
the only limit on what a country can do.
By: Hussain H Zaidi

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India’s Naval Ambitions And Strategic Stability Of South Asia –
OpEd
For a long time, India has held the ambition of becoming one of the greatest
military powers in the world. For this purpose, India spends significant amounts of
money to modernize its armed forces including its land, air and naval forces. Since
the last few years India’s major focus has been to convert its existing navy into a
‘blue-water’ navy.
The possession of submarine ships is one of the most important requirements for
projecting power as a blue water navy. The Indian navy’s submarine fleet comprises
of the indigenously developed nuclear-powered ballistic missile submarine (SSBN)
INS Arihant, four French origin Scorpene class submarines built in India and Akula
class submarines leased from Russia.
On 6th May 2019, the Indian navy launched yet another Scorpene class submarine
termed as the INS Vela to further enhance its maritime capabilities. This submarine
is the fourth of six overall units that will be delivered to the navy through a transfer
of technology (made in India Initiative) agreement (Project 75) with France. The
Scorpene class INS Vela has the capability to stay submerged for a week which
makes it difficult for it to be tracked by its adversaries. This class also has the
capability of undertaking several types of mission such as anti-surface warfare, anti-
submarine warfare, area surveillance and intelligence gathering operations.
The INS Vela has top-end stealth features which include acoustic silencing
techniques, low radiated noise levels and the capability to launch a potentially
decisive attack on an adversary by using precision guided weapons. Furthermore,
the Scorpene class is also equipped with Weapons Launching Tubes (WLT) that can
carry weapons on board that can be efficiently reloaded at sea. With these
capabilities, India aims to considerably improve its war fighting capabilities and to
project power as a blue water navy across the Indian Ocean Region (IOR).
With the induction of Scorpene class submarine, India has two objectives. The first
is to that to pressurize Pakistan under its regional hegemonic designs. The second
is to become a great power by increasing its naval presence in the region while
staying at par with China’s extensive naval power.
The Feb-March 2019 short lived military engagement between India and Pakistan
has however raised significant questions regarding India’s power projection
capabilities vis-a-vis Pakistan. On 5th March 2019, Pakistan navy detected and
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prevented an Indian submarine from infiltrating Pakistan’s maritime borders. This
clearly showed Pakistan’s capability to thwart any surprise Indian naval intrusions
into Pakistan, despite the billions spent by India on its military upgrades. Hence,
even though, Pakistan’s naval fleet may lack in numbers vis-à-vis India, Pakistan has
an efficient naval defense and surveillance system, whose capabilities are evident
from this recent episode.
A naval force with a larger submarine fleet can create serious challenges for its
adversary, but in this case, the detection of the Indian Scorpene class submarine
raised glaring questions regarding India’s self-purported capability to ambitiously
dominate the Indian Ocean.
India still retains a powerful desire to build up a naval force capable of fulfilling its
strategic goal of emerging as a major global player. However, it has also so far
focused more on increasing its fleet of submarines rather than improving their
efficiency. Based on the historical enmity between India and Pakistan, South Asia
has witnessed growing insecurity because of these trends.
As a result, Pakistan’s major security threats are largely from its eastern neighbor.
Keeping in view of this prevailing security environment, India’s growing naval
spending and extensive build up are adversely affecting the strategic balance of the
region. While Pakistan has been successfully able to deter India’s hegemonic
designs, it is becoming increasingly difficult to directly compete with India’s blue
water ambitions in the long-run with its relatively stagnant economy.
In order to overcome these challenges that may be posed by Indian naval
advancements in the future, Pakistan can develop closer ties with Russia and China
to enhance its early warning and maritime defense capabilities. Pakistan has always
acted as a responsible nuclear power and has tried to maintain its strategic balance
with India without indulging into an arms race. This however, is becoming
increasingly difficult for Pakistan to maintain without the support of outside
powers, particularly within the changing dynamics of the Indian Ocean Region.

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 Why the fear?
With the failure to defeat Pakistan militarily in the conventional war domain, India
has been focusing attention on hybrid warfare which includes subversion,
terrorism, support for separatist groups, heightening ethnic and sectarian tensions,
connecting Pakistani state to social unrest and terrorism in India, using
international organisations like the APG, FATF, IMF and World Bank to deny support
and create hurdles in the way of Pakistan’s economic development. Militarily,
cross-border firing and adopting threatening military deployments are intended to
keep Pakistan on tenterhooks, thereby incurring needless expenditure on forced
deployments. Diplomatically, trying to isolate Pakistan by falsely raising issues of
terrorism action and financing originating from there. Indian military and political
leaders have on numerous occasions expressed the intent and strategy to weaken
Pakistan internally and internationally. In short, India has done more to harm
Pakistan than the opposite. Yet it gets away with everything while branding
Pakistan as a state sponsoring terrorism.
The failure of the Indian Air Force (IAF) operations on February 26 and the success
of the ones conducted by the Pakistan Air Force (PAF) on 27th heaped a lot of
embarrassment on the Indian government and its air force while leaving them with
apparently no options to strike back at Pakistan without taking undue risks.
Consequently, their fall-back position to ameliorate the situation has had two
elements: one, to shift emphasis on hybrid, non-military warfare; and two, to
spread the impression of victory through falsehood on the media and
spokespersons. They seem to have succeeded in both domains. Terrorist activities
in Pakistan have seen a significant rise in the number of events as well as their
violence, as incidents — to cite the main ones — in Lahore Data Darbar, coastal
highway at Ormara, Pearl Continental Hotel at Gwadar and Quetta markets have
demonstrated.
There has currently been no internal dispute within Pakistan at the moment
between the state and militant groups in Balochistan. There is only partisan, non-
violent political cacophony in the provincial and federal legislatures which certainly
is not the cause of increased terrorist activities. If anything, the peculiarly-governed
Provincial and Federal Tribal Areas, i.e. Pata and Fata, have been successfully
merged with the rest of the country to grant their people rights equal to other
citizens. Their mainstreaming augurs well for national integration and cohesion
even though the Pashtun Tahaffuz Movement (PTM) is the red herring liable to be
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exploited by anyone, especially India. It’s so strange that an incident at Uri or
Pulwama provokes a storm of condemnation globally and the earlier mentioned
incidents in Pakistan invoke no reaction or notice. Foreign countries and their
leaders may have vested economic and political interests in supporting the Indian
falsehoods but what is astounding is that our Foreign Minister, speaking in the
National Assembly on May 13, just alluded to ‘inimical forces’ behind these terrorist
actions. Why can’t we name them? Is there a mystery to it? The ruling party and
Foreign Office spokespersons adopt a stance that they are acting responsibly and
would not like to blame some country without evidence. India doesn’t wait for
evidence to link the Uri or Pulwama incidents to the state of Pakistan. If we don’t
have the evidence, we should try to find them or is it that we don’t want to present
the same because we want to purportedly protect the sources of evidence? We
seem to be worried about peripheral issues while we are ready to ignore the core
ones. The fact is that the Indian leadership has threatened to ‘teach Pakistan a
lesson’ and they are actually doing it while Pakistan doesn’t do anything and yet
volunteers to deny responsibility. This is a very strange game being played. Why
the fear?
What needs to be done is to identify elements of Indian hybrid warfare and the
consequent actions carried out in Pakistan through Indian collaborators and
mercenaries. Compile a list of terrorism and subversion incidents and develop their
link to India. RAW’s involvement should be exposed. This information should be
presented to the United Nations, global leaders and international media.
Whenever India suffers a setback, the internal strife in Pakistan increases. This is
not co-incidental. Even a section of our media is complicit in this dirty game. It also
blames our own security and intelligence establishment for failure rather than
pointing a finger at the RAW-NDS combine. All our neighbours, except China,
exercise freedom to blame Pakistan whenever and however they want. They don’t
hesitate to do this or try to find the evidence to support their blame game, while
we avoid naming our tormentors and perpetrators of terrorism against us. This
needs to change and change quickly. As a minimum, our electronic and print media
must highlight Indian contribution to strife in Pakistan, and statements must
emanate from political and military leadership at regular intervals. Just
condemning and expressing sadness at the loss of life resulting from these terrorist
activities is neither sufficient nor helpful. By Kaleem Saadat

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 Changing the dynamics of Pakistan-India relations
The landslide victory of Prime Minister Narendra Modi was a clear reaffirmation
that promotion of Hindu nationalist politics had worked. This factor seemed so
overwhelming that the voters ignored the central plank of his 2014 elections that
rested on creating new jobs and improving national security. The voters must have
also realised that Congress and its allies were no alternative as their past
performance and present quality of leadership indicates. More importantly, as
astute watchers of Indian politics have noted that the campaign strategy of PM
Modi to reach to the broad masses by attending to their very basic needs — such
as building toilets on a mass scale, providing easy loans and promoting housing
schemes — conveyed commitment and gave a message of hope to the poor. He
equally tried to pamper the corporate world and business leaders by offering them
opportunities of high investment returns and security. Not long ago the Election
Commission of India was looked up to for utmost neutrality and fairness. This time
many were blaming it for ignoring the BJP receiving financial support that crossed
limits of propriety.
Prime Minister Imran Khan congratulated his Indian counterpart through a tweet
that was reciprocated and was followed up by a phone call. The questions on every
one’s mind: Will Modi, who has won with a heavy mandate, be more
accommodating and a less divisive PM than he was in his first term? Is his policy
toward Pakistan going to be any different or about the same? Will PM Imran Khan’s
repeated gestures of goodwill carry weightage and what are the major factors that
would determine India’s attitude toward Pakistan?
A major plank of PM Modi’s election canvassing was based on targeting Pakistan
and wooing the extremist Hindu groups. In terms of performance, unemployment
in India has risen steeply, the farmers are complaining that their incomes have
fallen and industrial production has taken a fall. To sidetrack these major failings,
Modi focused on security, Hindu nationalism and Pakistan bashing.
For Pakistan’s leadership the great challenge is how to relate to the politically
powerful and rejuvenated Modi. After all, he is the same PM who had recently
boasted of having ordered an aerial attack on Pakistan. It is a different matter that
it was an embarrassing failure of the Indian military, but for the general public,
perception is more important than reality. Despite the unpleasant past, the path

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pursued by PM Imran Khan to engage in right earnestness is correct and has the
support of major political parties and the military.
The pertinent question is what are the determining factors on the basis of which
our future relationship would rest? Modi being voted back to power by an
increased majority reaffirmed the apprehension that the character of Indian
politics and social structure has undergone a radical transformation. To put it
bluntly, India is now a full-fledged unapologetic Hindu state with no pretentions of
being secular. In this is woven a strong element of Indian and Hindu nationalism
merging as the dominant component of Indian politics. And these policies are in
conflict with the secular democracy that India in the past professed and took pride
in. It would be interesting to see how social and political scientist and historians
would view this development. A simplistic analysis would probably express the
inevitability of this phenomenon once India was partitioned on the basis of a
religious divide.
What are likely to be its implications for the minorities of India especially the
Muslims that are already the most oppressed class is to be seen. And linked with
this is how the Babri mosque court verdict would play out. Another much larger
question is if this victory would embolden Modi to fulfil his election manifesto of
revoking the Article 370 of the Indian Constitution and thereby changing the
character of Kashmir. For this, the BJP will need a two-thirds majority in Rajia Sabha
and a four-year wait. With the Valley already in full revolt, any such move would
only exacerbate the situation posing greater hardship for beleaguered Kashmiris, a
new challenge for the Muslims of India and the Pakistan-India relations.
The gross violations of human rights in Kashmir remain a serious impediment to
developing mutual confidence between the two countries. This clearly will remain
a restraining factor unless Modi seriously revisits his Kashmir policy.
India’s hostile attitude towards CPEC also weighs against lifting pressure on
Pakistan. This too will have to change.
Pakistan has also tried to ensure that the UN-banned organisations are kept in strict
check. This measure would not only restore the confidence of the international
community but also strengthen democratic norms within the country while
providing no grounds to India for pushing Pakistan on the defensive with its
attendant drawbacks. Action against militant groups is an essential prerequisite of
the Financial Action Task Force (FATF) for Pakistan’s removal from the grey list.
Effective action against these entities did facilitate the recently hard-bargained IMF

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staff agreement as well. Pakistan’s security establishment is fully aware of that and
is taking appropriate measures to ensure maximum compliance.
The United States would support improvement in Pakistan-India relations provided
Pakistan’s military would persuade the Taliban leadership to come to an
honourable settlement with the US on Afghanistan. China has always encouraged
Pakistan to engage with India and recalibrate the support of anti-India militant
groups to gain its confidence and that of the international community.
Undoubtedly, the past history of Pakistan-India relations is a major impediment to
building mutual trust. But this is what leadership is all about, to face the challenge
and make genuine efforts at changing the course and dynamics of these relations
for the larger good of its people. Furthermore, if India seriously aspires to play a
major regional and global role it has to relate to Pakistan more positively and show
greater consideration toward the other south Asian countries. Pakistan too has its
obligations as a responsible member of South Asia that it is expected to faithfully
comply with.
By Talat Masood

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 Economic policy: where they went wrong
This fiscal year, July 2018 to June 2019, is proving to be the worst for our economy
in decades. A year that filled many young Pakistanis with hope due to the start of
the PTI’s government, has turned into an ‘annus horribilis’, a betrayal of hope, with
inflation, devaluation, debts and deficits. How did we manage to so quickly turn our
economic fortunes downwards and spread so much despair?
When the PTI came to power, the economy was humming along fine, except for an
increasing current account deficit that had to be controlled in the next two to three
years. I think the current government made four major mistakes in its handling of
the economy, which led to a reduction in our national income, expressed in dollars,
by ten percent.
First was the unnecessary and myopic disparagement of the Pakistani economy and
destruction of consumer and investor sentiments. From prime minister to ministers
it was routine to say that Pakistan was near default or bankruptcy, that government
finances were in tatters and that all our people – except the angels in the ruling
party – were corrupt, that all institutions were useless and venal, and that but for
the arrival of our saviour Imran Khan himself, we were doomed.
This predictably killed consumer and business confidence and we saw a decline in
(local and foreign) investment and commercial lending to the government. From a
GDP growth of 5.8 percent we nose dived to a growth rate of perhaps 3 percent.
New investment and new jobs opportunities came to a halt.
Consumer confidence in the economy is a leading economic indicator and to
destroy consumer confidence just to denigrate the previous PML-N government is
really the cardinal sin of this government. But a combination of immaturity and
contempt for political opposition meant that the PTI didn’t think about the harm it
was doing to the Pakistani economy just to badmouth the PML-N.
The next mistake was the decision to not enter into a programme with the IMF
early on, and try and opt for a home-grown solution. This neem-hakeem remedy
led to Pakistan rapidly increasing power and gas tariffs, raising interest rates and
drastically devaluing the currency. However, because the government had already
scared off business investments in Pakistan, and due to the raising of utility tariffs,
industrial activity declined perceptibly during the year. This made not just tax
collection but import substitution difficult too, therefore not allowing the
government to substantially reduce imports in spite of the heavy devaluation. And

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because 40 percent of Pakistani exports are outside the five protected sectors, and
their input prices had increased considerably, exports didn’t go up at all. The result
is that we still have a relatively high current account deficit but we have doubled
the inflation and cut growth to less than half.
How useful the current government’s economic strategy was can be seen from the
fact that, while our economy has decreased from $313 billion to $280 billion, our
imports have only fallen from around $5 to $4.6 billion per month, meaning that
our imports have actually grown from 19.2 percent to 19.6 percent of GDP! Even
our current account deficit has only improved by about one percent of GDP. The
people of Pakistan can legitimately ask the PTI what sort of economic policy it is
pursuing, in which to reduce current account deficit by one percent it reduces
Pakistanis’ income by ten percent.
What’s worse is that while we pursued this confused economic policy, we
exhausted the goodwill (and dollar deposits) of our friends, particularly China, so
that by the time we went to the IMF we really had no option left than to agree to
what seem to be the most harsh and contractionary demands.
The third mistake is the huge budget deficit the government is running this year.
The PTI’s economic team perhaps believed its own rhetoric, thinking that running
the government was easy and that there was a pot of gold placed somewhere that
was easy to obtain. That you can run governments by selling used cars and
buffaloes and collecting donations. But making speeches atop a container are
easier than actually governing a country. Once you start running the government
you realise that there are many legitimate demands on the government’s funds –
and resources are few. Running the country is a balancing act. The ruling party
neither understood the need for this balancing act nor was prepared for it. Hence
this year we are going to run a record budget deficit of 7.5 percent of GDP.
A budget surplus – the government taking in more revenue than it is spending –
means that the government is saving money. (For the record, Pakistan’s first budget
had a small surplus. Prime Minister Liaquat Ali Khan didn’t use colonial
misgovernance as an excuse to run a deficit.) Conversely, a deficit means that the
government is dis-saving or borrowing. If the government is borrowing then
someone has to lend this money to it. This could come from private savings, but
since private savings in Pakistan are already less than private investments, the
private sector in Pakistan is also a net browser.

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Thus government borrowing (along with private net borrowings) has to come from
foreign sources. And that happens when foreigners supply (on credit) more goods
to Pakistan than we supply to them. (Since the government has to borrow in dollars
to pay for our net imports, this means that all net imports are foreigners lending
money to us). This therefore means that budget and trade deficits are linked, and
indeed trade deficit will increase in response to the government’s budget deficit.
For the government to try to limit the trade deficit and at the same time run the
largest budget deficit made no economic sense – the two policies are contradictory.
No government can logically claim to reduce current account deficit by running a
large budget deficit.
A budget deficit this year of 7.5 percent of GDP (last year’s PML-N deficit was 6.6
percent and for three prior years less than six percent each) means that not much
improvement can be had on the trade deficit front. So all this devaluation and raise
in interest rates is going to be in vain. And this third mistake almost single-handedly
made sure that the PTI’s economic plan would fail.
Now we come to the fourth mistake. This mistake can perhaps be reversed but not
without cost. This is the monetisation of debt, or printing of money. The more
money the government prints, the less the value of the income you receive. This is
a direct way of bringing in inflation and making people poorer. After years of
lectures about how competent its team is, and how its leaders have the mettle to
make the right decisions under pressure, for the PTI government to print money
really is a negation of any compact they had with the people or any sense of
fiduciary duty they had towards Pakistan.
With all these strategic mistakes under our belt, we are about to embark on a new
round of belt tightening. Let’s hope the next fiscal year is better than the current
one.
By: Miftah Ismail

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 A democracy in danger
The BJP-led coalition of Narendra Modi trounced opponents with a landslide vote
share of 45%. Modi’s victory moves India away from secularism to an expansionist
authoritarian Hindu polity, especially if the BJP belligerently manoeuvres on Ram
Mandir, the Uniform Civil Code and alters the 42nd Constitutional Amendment
(guaranteeing secularism) stirring minority unrest. Muslim, Christian, Parsi, Dalit
and Adivasi constitutional safeguards are on a sharp knife’s edge of uncertainty.
Modi’s victory did not enrich democracy but imperilled it. The BJP institutionalised
rigging and corruption through electoral bonds. Two million electronic voting
machines “vanished” between manufacturers and the Election Commission (now a
BJP political appendage) prior to votes being cast. It is sheer naïveté to assume that
the Samajwadi Paty and the Bahujan Samaj Party failed to perform in UP and other
northern states.
The BJP’s victory importantly vindicates Jinnah’s visionary two-nation theory. In a
majoritarian 80% Hindu-dominated country, the fate of the Muslims and minorities
dangles on a Damoclean sword as they are lynched for chewing beef and dating
Hindus. Jinnah’s two-nation theory is a dynamic ongoing debate. Had the
referendum sought by UN Security Council Resolution 47 been implemented, had
Pakistan not fallen prey to hostilities from her neighbour, had India been at peace
with herself by ceasing communal vitriol, had Delhi not been pitting Iran against
Pakistan, the two-nation theory could be a historical triumph. However, it will gain
relevance in 2019.
The BJP’s re-election is a departure from Gandhi-Nehruvian inclusion as opposed
to exclusionary bigotry by Modi and Amit Shah. Money, mainstream media’s war
hysteria, Pakistan-bashing, a haunting radicalisation of Hindu society, the power of
propaganda, opposition’s disunity, institutional collapse, the global rise of the
personality cult (Trump, Orban, Netanyahu), fatigue with family-based, dynastic
politics and the global rise of far-right populism catapulted the BJP at the ballot
box.
Modi oversaw the 2002 anti-Muslim Gujarat pogrom, glorifies Godse over Gandhi,
botches up elementary physics with cloud radar theory, boasts of humble origins
yet curries favours with corrupt billionaires, labels himself a Chowkidar (watchman)
yet imperils the lives of millions of minorities.
If you deem Modi 1.0 to be heavy-handed, you have not seen anything yet. A newly
elected Modi 2.0 will retain a regressive grip on institutions; further politicise the
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military and judiciary. Anti-minority lynching is not from the fringes. The BJP is now
the party of Pragya Thakur and Yogi Adityanath — one is a charged terrorist, the
other a firebrand Hindutva hardliner. Pakistan, meanwhile, clamped down on Hafiz
Saeed during the 2018 elections.
Modi’s worming his way back to power bears far-reaching implications for Pakistan.
Modi’s decision not to invite Prime Minister Imran Khan to his oath-taking
ceremony on May 30 is a missed opportunity and an omen of things to come.
However, even if Modi 2.0 extends olive branches to Pakistan by restoring the
WTO’s Most-Favoured Nation (MFN) trade status, resume visa services or opens up
to dialogue on Kashmir, all of it is still going to be sabotaged by a hardcore RSS, VHP
and RAW who keep pulling Modi’s strings to hawkish hilts. Recent ice-melting
between Sushma Swaraj and FM Shah Mahmood Qureshi at the Shanghai
Cooperation Organisation (SCO) in Bishkek are only tokenistic gestures.
An electorally-emboldened BJP is likelier to de-hyphenate Saarc (South Asian
Association for Regional Cooperation) from Pakistan, obstruct the Belt and Road
Initiative (BRI), specifically the China-Pakistan Economic Corridor (CPEC) and treat
Pakistan as a sub-set of China.
India might raise a spoiler’s role in Afghanistan: for three decades Delhi has
thwarted Islamabad’s endeavours to stabilise Afghanistan, and allied with Kabul by
bankrolling the nefarious TTP, BLA, BLF, IS-KP (South Asia) especially in Kandahar
and Nangarhar fermenting terror within Pakistan. The BJP sought to undercut a
potential Taliban-inclusive government and derail the Qatar talks. This destabilises
Pakistani forces east of the Durand Line — accentuating a need to further secure
the Pak-Afghan border. Absent a sustainable peace accord, Afghanistan could
break down into a civil war like in the 1990s.
Modi presides over economic growth at 7%, as economic power differentials
between Pakistan (3% growth) and India widen, with Pakistan’s GDP at $300 billion
versus India’s $3 trillion, Delhi could weaponise trade tariffs as geopolitical
ammunition. The BJP can misuse such economic heft to lure Washington, alienate
non-aligned capitals by denting Pakistan’s interests at international fora like the
Nuclear Supplier’s Group, the World Bank, IMF, UN, Saarc, the WTO and the
Financial Action Task Forced (FATF) despite crackdown against Masood Azhar.
The BJP is likely to intensify proxy terrorism, especially in G-B, K-P and targeting
Gwadar Port (like the recent PC attack) in a blood-soaked Balochistan where just

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on May 24, post-Modi’s election, a bomb blast in Pashtunabad’s Rehmania mosque
in Quetta marked the fifth terror attack in a month.
India’s RAW routinely utilises Chabahar Port’s “cells and assets” to stoke sectarian
terror in Balochistan. As for Chabahar, Iranian Foreign Minister Javad Zarif
proposed to Army Chief General Qamar Bajwa that Iran is ready to connect Gwadar
Port with Chabahar for regional trade, creating a railroad from Iran to the Northern
Corridor via Turkmenistan, Kazakhstan, Azerbaijan, Russia and Turkey — promising
new marketing opportunities for Pakistan.
Modi 2.0 is likely to exploit Pakistan’s physical and digital fault lines such as water
diversion from the Eastern rivers away from Pakistan, to further weakening the
rupee via currency manipulation or assisting false currency smuggling to cyber-
attacks (BJP’s cyber-cell is ineptly active) birthing instability in regional capital and
online markets.
India’s foreign policy of ‘multi-alignment’ unravels itself with the Delhi-US strategic
alliance marked by an anti-Russian military pivot. Modi is likely to ditch Moscow as
it did Iran after sanctions, hinder Beijing and leverage the current US-Chinese trade
tensions to boost bilateral trade with DC.
During the dogfight over Kashmiri skies in February 2019, a nuclear war between
Pakistan and India was averted. Due to the Balakot blunder, Modi, inadvertently,
“internationalised” the Kashmir issue by illegal over-reach. Pakistan’s shooting
down Indian jets, PM Imran Khan’s release of the captured pilot Abhinandan and
COAS Qamar Bajwa’s Delhi outreach generated global goodwill. Yet realistically
Modi is unlikely to resolve the Kashmiri issue. Intimately aligned with Western Asia
is the stability of South Asia which can only be guaranteed if Modi’s administration
revises its IOK policy of Kashmiri suppression. As the global gaze increasingly
mounts on Kashmir, as a nuclear South Asia hovers on the precipice, the time for
peace was yesterday.
Islamabad must utilise Modi’s victory as a historic challenge to prepare for any
eventuality, combining both hard and soft power. A strategically appropriate Shaheen II
missile test launch at the exact moment of Modi’s victory was a well-timed “hard-power”
message balanced with PM Imran Khan’s congratulatory tweet to Modi exhibiting
diplomatic “soft power”.
Success in international relations is contingent upon locating and leveraging the optimal
space between hard and soft power. By Ozer Khalid

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 30-5-2019
IMF and the new team
Since assuming office last August, the government had been dithering on a decision
to go the IMF despite calls and advice from various quarters to enter into an IMF
programme immediately.
The reason the government repeatedly gave for the delay was that it wanted to
ideally avoid the IMF altogether or at least wait till it could negotiate with the IMF
from a position of strength in order to avoid harsh terms. Ironically, since last
August, the government has actually implemented a lot of the harsh measures
which it claimed it was trying to avoid – energy price increases, devaluation, policy
rate hikes. The government’s indecision on the IMF created a state of limbo for
businesses, investors and creditors alike. The IMF question hung like a dark cloud
over the economy for most of the current fiscal year which played a key role in the
significant slowdown of economic activity.
Nine months later, an IMF programme has finally been agreed. However, the
government has actually negotiated with the IMF from a considerably weaker
position compared to last August. During the PTI’s tenure so far, growth has halved,
inflation has nearly doubled and the fiscal deficit at the close of this fiscal year is
expected to be higher than in any year under the previous government.
Even the State Bank’s foreign exchange reserves are actually lower now ($8 billion
on May 17) than when the PTI came to power ($9.8 billion in August, 2018) despite
significant amounts borrowed by the current government from friendly countries.
The current government’s economic mismanagement and inability to make timely
decisions has caused a foreign exchange liquidity challenge to turn into an
economic crisis. So much for waiting nine months to negotiate from a position of
strength.
Then there’s the perplexing matter of the drastic changes to the economic team
during the final stages of negotiations with the IMF. As the head and poster boy of
the PTI’s economic team, Asad Umar had been under growing pressure since the
turn of the new year due to worsening economic conditions. But even his strongest
critics were confounded by the timing of his removal. If a decision to remove him
had already been made, it should have been implemented either before his visit to
Washington (where he met the IMF regarding the bailout package and attended
the IMF-World Bank Spring Meetings) or after the finalization of the IMF
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programme and the budget. To remove him right after his return from Washington
DC and just before the IMF staff mission’s visit to Islamabad for final negotiations
defied logic.
As it happened, the final round of negotiations were headed by the current advisor
to the PM on finance, who had only been a few days into his new role when the
IMF staff mission landed in Islamabad. If that wasn’t bad enough, the government
decided to replace the governor of the State Bank and the chairman of the FBR
right in the middle of the final negotiations with the IMF in Islamabad. Such hasty
and ill-timed removals and appointments, coupled with the rapid deterioration of
the economic indicators over the past nine months, further weakened the
government’s negotiating position and resulted in a seemingly sub-optimal IMF
agreement for Pakistan. Add it all up and it only seems natural to conclude that
Pakistan would have been significantly better off entering an IMF programme back
in August rather than now.
Since the government is refusing to be forthcoming regarding the terms of the
programme, all we have to go with so far is a press release from the IMF. More
details will emerge when the government presents the budget and, subsequently,
once the IMF releases the detailed report after approval by its executive board.
One of the main things in the press release is a commitment that the government’s
budget for the forthcoming fiscal year will aim for a primary deficit of 0.6 percent
of GDP. In order to achieve that, the government will have to increase tax revenues
by at least Rs1 trillion, which would be an around 25 percent increase from the tax
revenue figure expected at the close of the current financial year. How the
government plans to achieve that with even slower GDP growth expected next
year, and in light of the expected record tax target miss this year, is anyone’s guess.
The mention of “continuing anti-money laundering and combating the financing of
terrorism efforts” in the press release has also raised a few alarm bells. There are
concerns that the agreement may contain benchmarks linked to Pakistan’s
progress in the FATF reviews – which would be unprecedented.
The agreement has failed so far to bring the hoped-for certainty and stability to the
markets. The IMF press release indicates a commitment for a “market-determined
exchange rate” which seems to have been the primary cause behind the rupee’s
steep depreciation of 10 rupees against the dollar in just nine days after the
issuance of the press release. Even the announcement that the prime minister had
formed a body to control the rupee devaluation did nothing to stem the rupee’s

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decline. There have been various reports of dollar shortages in the open market.
The announcement of a market-determined exchange rate has given rise to the
fear of further fall of the rupee, which has caused a race to hoard dollars. If the
government fails to deal with this situation and regain the confidence of the
markets, there is a real risk of a full-blown self-fulfilling currency crisis.
The finance advisor flew over to Karachi to hold meetings with businessmen,
traders and stockbrokers in order to allay concerns but it didn’t go to plan. While
speaking to the media in Karachi, he made it a point to forcefully emphasise that
the IMF had not talked about the NFC (National Finance Commission) and that it
won’t do so in the future either.
The only problem with that is that he was totally factually wrong. The IMF’s press
release categorically states: “To improve fiscal management the authorities will
engage provincial governments on exploring options to rebalance current
arrangements in the context of the forthcoming National Financial Commission”.
Mistakes like these will only damage market confidence and further erode the
government’s credibility. The KSE-100 dropped 1,550 points in the five days after
the issuance of IMF’s press release.
It is now clear that within the first year of government, the PTI’s economic vision,
if there ever was one, has collapsed. Plan A has failed and the management of the
economy has been handed to a team of technocrats – some new, some old – for
damage control. So far it doesn’t seem to be working. The previous PML-N
government had managed to complete all 12 steps of the IMF programme whilst
consistently increasing the growth rate, controlling inflation and raising
development spending. Imran Khan needs his new economic team to achieve the
same.
Sacking his star man was an admission of failure, and replacing him with Hafeez
Sheikh is a big political gamble. Having previously been a member of both
Musharraf and Zardari’s governments, Hafeez Sheikh is hardly Mr Naya Pakistan.
Be that as it may, Imran Khan’s success or failure now hinges upon the performance
of Hafeez Sheikh. Who would’ve thought that a year ago? Certainly not the PTI.
By: Bilal Azhar Kayani

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 America’s dangerous game against Iran
The recent offensive posture of the United Sates against Iran, focusing on the age-
old theory of ‘regime change’, reflects a dangerous American game in the region.
Reports about the deployment of American aircraft carrier and B52 bombers mean
sharp escalation of the conflict between the US and Iran. Attack on Saudi oil tankers
and its oil pipeline is another manifestation of how the crisis in the Gulf may lead
to the outbreak of armed conflict in the region.
The cover story of The Economist issue of May 11-17 states, “The drum of war is
beating again. John Bolton, the National Security Adviser, says any attack on
America or its allies will be met with unrelenting force. President Hassan Rouhani
says Iran will no longer abide by the terms of the deal signed with America and
other world powers, whereby it agreed to strict limits on its nuclear programme in
return for economic relief.” While US President Donald Trump is not in favour of an
all-out confrontation with Tehran, National Security Adviser John Bolton and
Secretary of State Mike Pompeo subscribe to the theory of ‘regime change’ in Iran
by pursuing a two-pronged strategy: first isolating Iran and then exerting military
pressure on it.
Can one deny the fact that the road to war is very easy but the road from war to
peace is an uphill task? The examples of Afghanistan, Iraq, Syria, Yemen and Libya
in the recent past prove the bitter fact that the lives of common people are
destroyed when foreign powers along with their local allies launch ground and air
attacks and raze buildings and infrastructure in cities and towns. If the US, Israel
and some Arab Gulf countries want to target Iran paving the way for ‘regime
change’, their wishful thinking will turn the entire Middle East into a war zone. Why
the US withdrew from the nuclear deal reached between Iran, five permanent
UNSC members and Germany and how its withdrawal has impacted the Joint
Comprehensive Plan of Action (JCPOA)? Why the European Union, along with
Britain, France and Germany are unable to withstand American pressure on re-
imposing sanctions against Tehran? Will the present escalation in the Iran-US
conflict transform into a major international crisis and plunge the Persian Gulf
region into a perpetual state of conflict and chaos? So far despite repeated
provocations of the US in the form of sanctions and deployment of its offensive
naval military force in the Gulf, Iran has acted with restraint. Only Russia and China
are supporting Iran while the rest of the members of the nuclear deal have let it

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down, as pointed out by the Iranian foreign minister during his recent visit to
Beijing. This is something that needs to be taken seriously.
Three factors shape the current Iran-US standoff. First, despite President Trump’s
clarification that his country wouldn’t like to go to war with Iran, hawks in his team,
particularly John Bolton, want to augment economic and military pressure on
Tehran so that the Iranian government crumble and is replaced by a pro-American
regime. Unfortunately, such an approach which is devoid of prudence will further
toughen the position of hardliners in the Iranian clergy vis-à-vis the moderate
President, Hassan Rouhani, who was a great supporter of reaching a nuclear deal
with the US under the framework of JCPOA. With the designation of the Islamic
Revolutionary Guards of Iran as a terrorist organisation, hardliners in Tehran and
Qom feel vindicated in their resolve that one cannot trust the US because since the
overthrow of the Shah’s rule in February 1979, it remained bent upon destabilising
the successive governments in the Islamic Republic. The 2015 Iran nuclear deal
reached during the tenure of Barack Obama had provided an opportunity for
Washington to engage Tehran in nuclear non-proliferation by easing sanctions
against it, but the Trump administration’s withdrawal from the deal last year and
re-imposition of sanctions took things back to square one. Israel and Saudi Arabia,
along with conservative Arab Gulf countries, convinced the US to revoke the deal
with Iran for different reasons — Israel because of what it calls Iranian assistance
to terrorist groups in Lebanon, Gaza and Syria while Saudi Arabia because of its
competition with Iran on the supply of oil.
Second, there has been this dangerous practice of bypassing the UNSC and
imposing sanctions against various countries since the end of the Cold War and the
transformation of world order from bipolar to unipolar. Under Chapter VII of the
Charter of the UN, it is the Security Council which has a right to impose sanctions
in cases of aggression, unauthorised use of force and violation of the UN charter,
but what has been going on for the last couple of decades is the unilateral
imposition of sanctions by the US. The US sanctions against Iran following its
withdrawal from the nuclear deal is without UN authorisation, and thus
illegitimate. Such a dangerous precedent has made a mockery of the UN,
threatening to cause anarchy in the global order.
Third, in the course of American policies of Iran ‘bashing’ and ‘regime change’
through use of acts of brinkmanship and coercion, there is absolutely no mention
of Israel. The real threat to the Middle East is not from Iran but from Israel which

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has occupied Arab lands of Golan Heights and West Bank; besieged the Gaza Strip;
and illegally shifted its capital from Tel Aviv to occupied East Jerusalem.
The so-called US-Arab alliance against Iran has benefited Israel and it has
augmented its ruthless and inhuman military attacks against the Palestinians in
Gaza and the occupied West Bank. Unless, Arab states take firm measures against
Israel for its illegal occupation of Arab lands, including Muslims second holiest site
Al Aqsa Mosque in East Jerusalem, the US will continue to use such Arab states
against Iran.
The US decision to close and curtail its diplomatic presence in Iraq, which is
perceived to be an ally of Iran, is another evidence of the US contingency plans to
deepen its pressure on Iran. Will Iran sustain American pressure in the form of
sanctions, deployment of the US naval-military buildup and tightening of
diplomatic isolation? As a result of the re-imposition of American sanctions against
Iran following its withdrawal from 2015 nuclear deal, Iran’s economic predicament
has worsened. The value of Iranian currency against the American dollar has
sharply declined; and inflation, price hike and unemployment have assumed
alarming proportions. And if Europe comes under American pressure to impose
sanctions against Iran, its economy may suffer further. That is what the US, Israel
and their Arab allies want: to damage the Iranian economy to an extent that people
revolt against the regime. As long as Arab priorities are misplaced and they consider
Iran as a threat instead of Israel, there is no likelihood of the resolution of the
Palestinian issue and establishment of peace in the Middle East.
If Iran withdraws from the 2015 nuclear deal, the responsibility would lie with the
US because of its warmongering behaviour. Like North Korea, Iran will also
withdraw from the Nuclear Non-Proliferation Treaty (NPT) of 1968 and neither the
US nor other P-5 members can then prevent Tehran from transforming its nuclear
ambitions into a reality. In such a scenario, the West may have to deal with another
Islamic bomb.
By Dr Moonis Ahmar

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