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When you see Russia get into existential war over Ukraine, or Israel bomb Syria or India battle with Pakistan or Bangladesh, it is not because of some whim. It has a historical and geographical context. That is critical to understand for analyzing geopolitics.
Dive into the shadowy world of the Deep State—its hidden structures, powerful networks, and the far-reaching impact on global events and control.
As we speak, Pakistan is hurtling towards bankruptcy. Its situation is so precarious that even if someone tries to help, one cannot. One needs to understand Pakistani psyche and the national mindset clearly.
In the last 4 years, a whopping $36 billion have been taken as loans by Pakistan. This was done to repay the maturing debt and keep the foreign reserves seeming respectable. Just the Interest payments in the last 4 years have been $50 billion while the defense budget was $30 billion. So the country paid twice the amount for interest – NOT principal – payments than the money used for defense budget. By June 2017, the external debt was $79.2 billion.
Further, Pakistan’s trade deficit is now at a record $30 billion in 2017 (up 42% from the same period last year). Now, to put this more clearly – the Exports have come down to just $18.5 billion, while the Imports have gone up 21% to 48.5 billion. Since the industry is in a bad shape locally, so much is being imported – from small things to cars.
Despite the lowest prices for Oil, today the imports in Pakistan are 2.5 times their exports. This is the first time in its history that such a lop-sided situation has occurred despite the low oil prices!
The situation is so bad, that for the first time, Bangladesh – an offshoot of Pakistan – has more exports than Pakistan itself! In fact Pakistan’s Exports are mere 64% of those by Bangladesh! Not just that, for the first time this year the Per Capita GDP in Bangladesh was higher than that of Pakistan! A country with hardly any industry or any infrastructure when it got its independence from Pakistan, Bangladesh has come a long way!
As the industries keep closing one by one due to bad political and security situation as well as expensive and debilitating power situation, the exports are projected to fall even more dramatically in the future decade! Meanwhile, having become addicted to imported products, the country cannot survive without a high import bill! And, this is when you even take the high cost of Oil & Gas out.
Take the example of Cars Industry. While India went for manufacturing in the country for the parts and also of the cars themselves, Pakistan was happy getting imports (at lower duties) or getting car parts for assembly within the country. Today, the industry is dominated by Honda, Toyota and Suzuki. Suzuki still sells very old models – Mehran, Bolan, and Ravi. Without any real automotive safety standards or model upgrade policies, the industry has become the dumping ground for old models which are obsolete and useless anywhere else. There was a time when Pakistanis would laugh at the old Ambassadors and Fiat cars when they had the imports of the latest cars from the world. What they never understood was that India’s old and bad cars were still being manufactured in India, while Pakistan was merely importing. When Suzuki came in with Maruti, a revolution started and India became the hub for car manufacturing over the decades after that. India’s contribution in the global car industry is such that the iconic Jaguar Land Rover PLC is a wholly own subsidiary of India’s Tata Motors.
On the other hand, Mahindra Tractors are not just taking on John Deere – another iconic brand – IN US but also creating thousands of jobs! The automotive plants in India are cranking out cars at the highest productivity levels – when you compare the other units of the same global car manufacturers globally.
Multinational automotive plants in India rank among the top across the world in terms of their productivity and quality. Top auto MNCs like Hyundai, Toyota and Suzuki rank their Indian production facilities right on top of their global pecking order. Despite fighting it out with factories in much larger markets – including the US and China – some of these plants fare better cranking out cars at upwards of 98-99% efficiency.
Things are changing around in the neighborhood.
Meanwhile not only has
Pakistan entered into a space where it cannot pay its external loans, while it is picking up more loans to repay the interest of the old ones – Pakistani Government also has in the last almost 4 years also mortgaged many national assets to pick money.
Jinnah International Airport Karachi in Karachi for example has been used as collateral for raisiing money via Sukuk bonds (Islamic bonds)
The Karachi airport hasn’t been mortgaged just once. Here are all the instances where it has been used as collateral:
These amounts were received from local and international institutions and investors.
Not just Pakistan’s main airport – but its highways and motorways have also been mortgaged! The Islamabad-Chakwal section of the Islamabad-Lahore (M2) motorway was mortgaged for $1 bn to foreign investors! In 2014, another $1 bn was raised from mortgaging of Hafizabad-Lahore section of the M2 motorway using, yes, the Sukuk bonds! Rauf Klasra has been exposing these deals which are done behind the scenes. Needless to say, more highways are on the table for being mortgaged as well!
According to official reports from the Finance Minister and leaked documents from journalist Rauf Klasra the following motorways are already pledged to get loans:
The news about the above mentioned M2 motorway was also leaked by Rauf Klasra before official announcement.
Back in 2006, the government decided to pledge most of the national highways and some motorways in order to raise Rs. 6 billion. Islamabad-Peshawar Motorway (M-I), Faisalabad-Multan Motorway (M-4), Islamabad-Murree-Muzaffarabad Dual Carriageway (IMDC), Jacobabad Bypass, D.G.Khan-Rajanpur Highway, Okara Bypass and several other toll-yielding projects were set as security. A consortium of banks provided the loan for seven years.
Meanwhile, even Pakistan TV (PTV) – the official TV channel of Pakistan Government – and Radio Pakistan are also on the mortgage block.
In fact, the same Rauf Klasra, in a recent TV program also asserted that even the Central Bank of Pakistan – the State Bank of Pakistan – is also being “sold”!
What Rauf Klasra – the man who exposed (as was later vindicated by actual transactions) the deals on Jinnah airport and the highways – says should be scary for any Pakistani!
The exports have slowed down, the imports are rising like never before and the loans taken by the economy have been so much that the paying back is not almost impossible. Most of the national assets have been mortgaged beyond repair as well.
The money that used to come from Remittances and the grants from US are also going down. Trump administration has threatened to cut the funding for Pakistan. In fact most of the funding recently has been cut already!
In July, the Trump administration said it was suspending $300 million in aid originally obligated to reimburse Pakistan for counterterrorism operations near the Afghan border. The money is part of the $800 million Coalition Support Fund, which since 2002 has reimbursed Pakistan to the tune of $14 billion.
Washington has also previously cut arms supplies, which the Pakistani military has managed to weather by turning to China or other third parties for aircraft and weapons. In 2016, Congress blocked the sale of eight additional F-16s to Islamabad, citing the continuing support for the Taliban and Haqqani Network.
The largest remittances used to come from Saudi Arabia and the moneys from there have fallen substantially. Overall, the remittances have been falling as well.
Thousands of Pakistanis lost their jobs in Gulf countries, particularly Saudi Arabia, but the impact on remittances from the region does not appear significant. Remittances from Saudi Arabia in the seven months slipped 5.6pc, which does not reflect the impact of the revenue loss to the kingdom following a 60pc decline in oil prices.
With the moneys going out rising and those coming in falling rapidly, there is little chance that Pakistan will be able to pay its loan payments due soon.
Pakistan has to pay $11.5 billion within the next 18 months. Various international monetary institutions are owed different amounts from that sum. These are:
That is a set of repayments that have to be made under very trying circumstances. One needs to understand that even the world’s financing institutions are refusing loans to Pakistan now. For example, The World Bank had recently cancelled a $100 million loan to Pakistan for a natural gas efficiency project.
Also others like Asian Development Bank etc are also refusing more loans.
And we haven’t even discussed the CPEC deal as yet! For that, please read Is China-Pakistan Economic Corridor (CPEC) Bane or a Boon for Pakistan? – CPEC will further add more to the debt for Pakistan and add almost nothing to the local economy. For someone has little good happening, even the fact that the Chinese were investing $55 bn in their country (as loans!) is something to rejoice.
Not entirely. It has taken a lot of factors to bring the things for Pakistan to this state. There were certain avenues of moneys that come into Pakistan that have always saved Pakistan. Sometimes it was remittances. Sometimes the loans from the world financial institutions and sometimes grants from the US.
All the trips abroad by the Indian PM Modi were for many reasons. One of the reasons was of course to close the lifelines for Pakistan. Second, to ensure that Pakistan was indeed seen as a terror state that it is. And, in that context more and more countries push Pakistan to “do more” on the terrorism front.
This second part is important if you understand the basic and fundamental psyche of Pakistan. It is primarily a Punjabi mindset. Coming from a state of ego. Such is the megalomania of Pakistan – and the need to be seen as an equal of India (and as a competitor) that people in Pakistan can come up with the most ridiculous of rhetorical nonsense. In fact, in one TV program one of the anchors even went to the extent of suggesting that it was the sacrifice of Pakistan that India became the IT powerhouse! Such is the national vanity.
Every country is entitled to the pride in themselves. But it cannot be the mainstay and the basis of all things strategic. But every action of Pakistan has been based on an ego of feeling superior. Sadly even once serious commentators like Ejaz Haider and Moeed Pirzada have discussions to underline the important of “Narrative”. It is as if – if the narrative is put forth properly, then things will be fine. Little realizing that narrative without the ground reality means nothing!
It is not as if US did not understand where Pakistan was and how the establishment, media and the so-called intellectuals lie from their teeth! In fact, the former US NSA once said on Bill Maher show that Pakistanis are pathological liars.
The world knows. That Pakistanis have come to a state where even they don’t know when they lie anymore. Despite the ground reality – that every terror event in the world is somehow linked to Pakistan for the last two decades – and that many things have started from there – it is incredible that the ONLY thing even intelligent and serious people (over 95% of the anchors on Pakistan TV talk like juveniles mostly with absolutely no facts to back their assertions!) like Haider and Pirzada are only interested in “Narrative”!
From the utterly ridiculous argument of how the “US abandoned Afghanistan and Pakistan” and so the terrorism/Al Qaeda/ Taliban happened which was something that was in any case created by the US to how the world, specifically the UN has abandoned the Kashmiris and is not pushing for plebiscite (often pronounced by most Pakistanis as Plebsite!) – the victimhood burden is always borne by Pakistanis with pride! And all this is spectacularly born of complete lies and falsehoods! Not one Pakistani who speaks has ever read the UN resolutions on Kashmir and nor do they know a thing on the history of Afghanistan during the 80s and the 90s. They only know what their intelligence has taught them based on mere fictional accounts which do not add up. You can watch the video below to see how a “Fullbright scholar” from Pakistan made an utter fool of himself in front of Christine Fair, who gave him some lesson in geopolitics and his own nation’s history.
For those who want serious and detailed account of Pak-Afghan history and the rise of Jehad – please read How Pakistan set up Jihad and Terror in Afghanistan and Used it Globally
When the self pity and victimhood mentality is so prevalent, coupled with the aggression of hitting well beyond’s one’s weight – always in a sense of vengeance, then when someone says “do more on terror” while your internal narrative is that “we are already doing more than anyone in the world” – because we are killing terrorists that we define as so – the next step is always chaos.
Thus when the chorus of “do more” started in the world – from Obama to Trump administration. What’s more – even UAE joined hands with India to send the same message that State-based terrorism needs to end (a warning to Pakistan obviously).
So miffed has been the Pakistani establishment – and it can be seen clearly by the extremely aggressive stances of the ISI backed TV anchors’ rhetoric – that it actually said the unthinkable. That they will stop talking to US.
A “well-placed source” said that Pakistan may immediately discontinue talks with the United States of America officials who are set to visit the country this month if they insist it to “do more against terror”, reports a Pakistani newspaper.
This led to a very frosty welcome for Rex Tillerson in Pakistan. An extremely stupid and bad move, given that it is Trump at the helm in the US and not some other diplomatic President. You rebuff US and he will go after you!
You see how the whole relationship and situation for Pakistan is spiralling out of control.
Pakistani establishment creates its own rhetoric despite its promiscuity with terror and Jehad and then gets pissed with the world if they don’t believe a word of that – because NONE of it is true! That so many are being killed in Pakistan is because (1) Pakistani establishment kills its own criminals whom they can use as canon fodder and call them terrorists, and (2) terror act victims are not just any Pakistanis – they are mostly Ahmediyas and Shias. So yes, they are Pakistanis but they die because the establishment wants them dead anyways!
So the whole drama of “we are victims of terror” as well, is a disingenuous and unscrupulous nonsense! Anyone who goes deeper into their claim even one inch below the surface knows the truth!
When one is drenched in terrorism, and is miffed why its “Narrative” is not CREATIVE enough to help fool the world enough, even by serious people, then something is fundamentally wrong with the national character. In such a society, there is little hope of a U-turn!
Modi did not invent the mindset of the Pakistanis. He, however, in all probability used it against the Pakistanis. Now, with the remittances down (as Gulf countries lay off Pakistanis) and grants from the US closed, the exports spiralling down while imports are inelastic – because of unchanging lifestyles – Pakistan is indeed headed for complete bankruptcy.
Nawaz Sharif and Pakistan’s government simply helped the whole ride towards bankruptcy by completely mismanaging the country and its financing, which even though the Pakistani Army may have wanted to reverse but couldn’t. Because of the Kerry-Lugar bill, which put them away from the main governance seat. And their own need for flush money that the US sent. After all, they are also folks who have a lot of expenses with no many avenues for earnings.
Featured Image: Flickr/Addel Anwar-Old Beggar
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