Sunday, January 14, 2018

Pakistan Economy is the World's Third Fastest Growing Among Top 25 Economies

Pakistan is now the world's third fastest growing economy among the world's top 25 economies with PPP GDP of over one trillion US dollars, according to  the International Monetary Fund (IMF). IMF has recently raised the country's 2018 growth forecast to 5.6%.
Courtesy:  Ashraf Hameedi, Highforest Capital
Pakistan 3rd Fastest Among Top 25: 

Spectator Index has ranked India first with 7.3% growth, followed by China (6.5%), Pakistan (5.6%), Indonesia (5.3%) and Turkey (3.7%) among the world's 25 largest economies in terms of PPP GDP.

Earlier in October 2017, the International Monetary Fund (IMF) forecast Pakistan's economy to grow at 6.3% CAGR over 2017-2022.

World Bank: 

The World Bank sees Pakistan's GDP to grow 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also highlights the issue to growing trade deficit and current account gap that could lead to yet another balance of payments crisis for Pakistan requiring another IMF bailout.

Source: World Bank Group
Pakistan GDP Growth: 

Here's an excerpt of the January 2018 World Bank report titled "Global Economic Prospects" as it relates to Pakistan:

"In Pakistan, growth continued to accelerate in FY2016/17 (July-June) to 5.3 percent, somewhat below the government’s target of 5.7 percent as industrial sector growth was slower than expected. Activity was strong in construction and services, and there was a recovery in agricultural production with a return of normal monsoon rains. In the first half of FY2017/18, activity has continued to expand, driven by robust domestic demand supported by strong credit growth and investment projects related to the China-Pakistan Economic Corridor. Meanwhile, the current account deficit widened to 4.1 percent of GDP compared to 1.7 percent last year, amid weak exports and buoyant imports."

Growing External Account Imbalance: 

The report correctly points out the problem of growing current account deficit that could turn into a balance of payments crisis unless the trade deficits are brought under control. Recent trends in the last three months do offer some hope with December 2017 exports up 15% while imports increased 10%. Exports in November increased 12.3%.

Along with double digit increase in exports in the last two months, Pakistan received remittances amounting to $1.724 billion in December 2017, 8.72% higher compared with $1.585 billion the country received in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP), as reported by Express Tribune.

Summary:

Pakistan is the third fastest growing economy among the top 25 economies in terms of purchasing power parity.  Pakistan's economic growth is continuing to accelerate amid rising rising investments led by China-Pakistan Economic Corridor related infrastructure and energy related projects.  The IMF sees Pakistan economy growing at 5.6% while the World Bank forecasts it to grow by 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also calls attention to the expanding current account gap as a matter of concern that must be taken seriously by the government to avoid yet another return to the International Monetary Fund (IMF).

Related Links:

Haq's Musings

CPEC is Transforming Least Developed Parts of Pakistan

Per Capita Income in "Failed State" of  Pakistan Rose 22% in 5 Years

Credit Suisse Wealth Report 2017

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor

Thursday, January 11, 2018

World Bank: Pakistan Outperforming Emerging Economies Average

The World Bank sees Pakistan's GDP to grow 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also highlights the issue to growing trade deficit and current account gap that could lead to yet another balance of payments crisis for Pakistan requiring another IMF bailout.

Source: World Bank Group
Pakistan GDP Growth: 

Here's an excerpt of the January 2018 World Bank report titled "Global Economic Prospects" as it relates to Pakistan:

"In Pakistan, growth continued to accelerate in FY2016/17 (July-June) to 5.3 percent, somewhat below the government’s target of 5.7 percent as industrial sector growth was slower than expected. Activity was strong in construction and services, and there was a recovery in agricultural production with a return of normal monsoon rains. In the first half of FY2017/18, activity has continued to expand, driven by robust domestic demand supported by strong credit growth and investment projects related to the China-Pakistan Economic Corridor. Meanwhile, the current account deficit widened to 4.1 percent of GDP compared to 1.7 percent last year, amid weak exports and buoyant imports."

Growing External Account Imbalance: 

The report correctly points out the problem of growing current account deficit that could turn into a balance of payments crisis unless the trade deficits are brought under control. Recent trends in the last three months do offer some hope with December 2017 exports up 15% while imports increased 10%. Exports in November increased 12.3%.

Along with double digit increase in exports in the last two months, Pakistan received remittances amounting to $1.724 billion in December 2017, 8.72% higher compared with $1.585 billion the country received in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP), as reported by Express Tribune.

Summary:

Pakistan's economic growth is continuing to accelerate amid rising rising investments led by China-Pakistan Economic Corridor related infrastructure and energy related projects.  The World Bank sees Pakistan's GDP to grow 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also calls attention to the expanding current account gap as a matter of concern that must be taken seriously by the government to avoid yet another return to the International Monetary Fund (IMF).

Related Links:

Haq's Musings

CPEC is Transforming Least Developed Parts of Pakistan

Per Capita Income in "Failed State" of  Pakistan Rose 22% in 5 Years

Credit Suisse Wealth Report 2017

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor


Tuesday, January 9, 2018

CPEC is Transforming The Least Developed Parts of Pakistan

In a New York Times Op Ed titled "How Not to Engage With Pakistan",  ex US Ambassador to Pakistan Richard G. Olson says "Its (CPEC's) magnitude and its transformation of parts of Pakistan dwarf anything the United States has ever undertaken".  Olson goes on to warn the Trump Administration that "Without Pakistani cooperation, our (US) army in Afghanistan risks becoming a beached whale".

Among the parts of Pakistan being transformed by China Pakistan Economic Corridor (CPEC) are some of the least developed regions in Balochistan and Sindh, specifically Gwadar and Thar Desert. Here is more on these regions:

Gwadar Port City:

Gwadar is booming. It's being called the next Shenzhen by some and the next Hong Kong by others as an emerging new port city in the region to rival Dubai. Land prices in Gwadar are skyrocketing, according to media reports. Gwadar Airport air traffic growth of 73% was the fastest of all airports in Pakistan where overall air traffic grew by 23% last year, according to Anna Aero publication.  A new international airport is now being built in Gwadar to handle soaring passenger and cargo traffic.




In addition to building a major seaport that will eventually handle 300-400 million tons of cargo in a year, China has built a school, sent doctors and pledged about $500 million in grants for an airport, hospital, college and badly-needed water supply infrastructure for Gwadar, according to Reuters.

The Chinese grants include $230 million for a new international airport in Gwadar, one of the largest such disbursements China has made abroad, according to researchers and Pakistani officials.

New development work in Gwadar is expected to create as many as 20,000 jobs for the local population.

Thar Desert:

Thar, one of the least developed regions of Pakistan, is seeing unprecedented development activity in energy and infrastructure projects.  New roads, airports and buildings are being built along with coal mines and power plants as part of China-Pakistan Economic Corridor (CPEC). There are construction workers and machinery visible everywhere in the desert. Among the key beneficiaries of this boom are Thari Hindu women who are being employed by Sindh Engro Coal Mining Company (SECMC) as part of the plan to employ locals. Highlighted in recent news reports are two Hindu women in particular: Kiran Sadhwani, an engineer and Gulaban, a truck driver.

Kiran Sadhwani, a Thari Hindu Woman Engineer. Source: Express Tribune

Thar Population:

The region has a population of 1.6 million. Most of the residents are cattle herders. Majority of them are Hindus.  The area is home to 7 million cows, goats, sheep and camel. It provides more than half of the milk, meat and leather requirement of the province. Many residents live in poverty. They are vulnerable to recurring droughts.  About a quarter of them live where the coal mines are being developed, according to a report in The Wire.

Hindu Woman Truck Driver in Thar, Pakistan. Source: Reuters

Some of them are now being employed in development projects.  A recent report talked of an underground coal gasification pilot project near the town of Islamkot where "workers sourced from local communities rested their heads after long-hour shifts".

Hindu Woman Truck Driver in Thar, Pakistan. Source: Reuters 

In the first phase, Sindh Engro Coal Mining Company (SECMC) is relocating 5 villages that are located in block II.  SECMC is paying villagers for their homes and agricultural land.

SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, says his company "will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” according to thethirdpole.net He says that the company is paying villagers above market prices for their land – Rs. 185,000 ($ 1,900) per acre.

Summary:

Ex US Ambassador Richard Olson is absolutely right in his assessment that "(CPEC's) magnitude and its transformation of parts of Pakistan dwarf anything the United States has ever undertaken".  Olson goes on to warn the Trump Administration that "Without Pakistani cooperation, our (US) army in Afghanistan risks becoming a beached whale". The "magnitude" of CPEC and its "transformation" that Olson refers to is clearly visible in some of the least developed regions of Pakistan in Balochistan and Sindh provinces.  Gwadar port city and Thar desert are humming with unprecedented development activity fueled by billions of dollars of funds allocated by China and Pakistan.  

Related Links:










Sunday, January 7, 2018

Husain Haqqani's Influence in Trump White House

Do you know that Pakistan's ex Ambassador Husain Haqqani co-authored a paper in 2016 with current US National Security staffer Lisa Curtis calling for tough US policy against Pakistan?


Is it true that Trump's highly insulting and threatening New Year tweet against Pakistan reflects Husain Haqqani's old narrative in his 2013 book "Magnificent Delusions"?

Does Haqqani not argue in essence that Pakistanis are extraordinarily clever in deceiving the United States and its highly sophisticated policymakers who have been taken for a ride by Pakistanis for over 6 decades?

Why is Haqqani so determined to get a superpower to hurt the country where he was born, raised and educated? Is he not a modern day Benedict Arnold? Mir Jaffar? Mir Sadiq? Where's his loyalty? Where's his gratitude?

Azad Labon Ke Sath (ALKS) host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/lJuIlcHC6MI




Related Links:

Haq's Musings

Is Trump Taking Advice From Husain Haqqani?

Pakistan, China "Experts": Husain Haqqani, Minxin Pei and Gordon Chang

Profit Motives of Authors Bashing Pakistan

Tarek Fatah vs Riaz Haq on India, Pakistan and Muslims

Indian Sponsored Terror in Pakistan

700,000 Indian Soldiers Vs 10 Million Kashmiris

Gen Petraeus Debunks Allegations of Duplicity Against Pakistan

Blackberry Transcripts Sealed Haqqani's Fate in Memogate

Debunking Gall-Haqqani-Paul Narrative About Pakistan

Debunking Mr. Haqqani's Op Ed "Pakistan's Elusive Quest for Parity"

Doval Doctrine

Saturday, January 6, 2018

Trump's Troubles; Trump's Pakistan Tweet; 2018 Predictions

What are Pakistan's options after Trump's insulting tweet and US aid freeze? How much leverage does either side have over the other? How far will Trump go? How will Pakistan respond? Will Pakistan withhold all cooperation and cut off the crucial US Forces supply lines to Afghanistan through Pakistan? What do some of the analysts like Christine Fair, Ryan Crocker and Madiha Afzal are saying about it?

Courtesy Times of India

What does Michael Wolff say about Steve Bannon, Donald Trump and the Trump family in his book "Fire and Fury: Inside the Trump White House"? Are Jared Kushner and Donald Trump involved in "money laundering"? Was Don Jr's Tump Tower meeting with Russians "treasonous"? Is Ivanka Trump "dumb as a brick"? Will this lead to Special Counsel Robert Mueller indicting the Trump family on multiple charges relating to obstruction of justice and money laundering? Will President Trump be named as un-indicted co-conspirator in these indictments?

Chinese vs American Arms to Pakistan. Source: WSJ

What will happen in 2018? Will President Trump be named as an un-indicted co-conspirator by Robert Mueller in his obstruction of justice indictments of his close aides? Will Trump become even more erratic? Will Democrats take both houses of US legislature in 2018 elections? Will Trump be impeached? Will there be elections and new government in Pakistan? Who will be the winners and losers? Will there be a hung parliament and coalition government? Will India-Pakistan relations improve?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/djN-B4rw8Mk




Related Links:

Haq's Musings

Gen Petraeus Debunks Trump's Charge of "Lies and Deceit" Against Pakistan

Sec Robert Gates on Pakistan's "lies and deceit"

Is Trump Getting Advice on Pakistan Policy From Husain Haqqani?

Pakistan's Trump Card in Dealing With Trump

Trump's Russia Probe

Talk4Pak Youtube Channel

Riaz Haq's Youtube Channel

Friday, January 5, 2018

India's Ex Intelligence Officers Blame Kulbhushan Jadhav For Getting Caught in Pakistan

India's former RAW officers, including one ex chief, have blamed Indian spy Kulbhushan Jadhav, arrested by Pakistan in 2016, for getting caught in Pakistan as a "result of unprofessionalism", according to a report in India's "The Quint" owned and operated by a joint venture of Bloomberg News and Quintillion Media. The report that appeared briefly on The Quint website has since been removed, apparently under pressure from the Indian government.

The Quint Story:

Indian Agent Kulbhushan Jadhav
The story quotes a former RAW chief as saying that the “proposal to recruit Jadhav for operations, whatever it’s worth, was ridiculous.”  However, the report said that "(Jadhav's) recruitment was approved by a joint secretary as the supervisory officer.  The RAW has a special unit which also undertakes parallel operations in certain crucial target countries for which it seeks out its own recruits".

Several experienced RAW hands told the Quint that the usual practice is to “have a Baloch or a Pakistani national” do the “intelligence gathering job for us", adding that it was “foolish for to set an Indian the task to obtain intelligence from a country as hostile as Pakistan.”

This is only the second story in the Indian media to acknowledge Jadhav's status as a covert RAW operative in Balochistan.

Karan Thapar's Questions: 

An earlier story by Indian journalist Karan Thapar pointed out several flaws in the Indian narrative claiming that Jadhav was an innocent Indian businessman kidnapped from Chabahar by Pakistani agents.

Writing for the Indian Express, Thapar debunked the entire official story from New Delhi  by raising the following probing questions:

1. Jadhav's Two Passports:

Thapar asks why does Jadhav have two passports, one in his own name and another in the name of Hussein Mubarak Patel?

According to The Indian Express, the second passport was originally issued in 2003 and renewed in 2014. The passport numbers are E6934766 and L9630722. When asked, the Ministry of External Affairs (MEA) spokesperson would only say that India needs access to Jadhav before he could answer. But why not check the records attached to the passport numbers? Surely they would tell a story?

Additionally, The Times of India claims that since 2007, Jadhav has rented a Bombay flat owned by his mother, Avanti, in the name of Hussein Mubarak Patel. Why would he use an alias to rent his own mother’s flat? Perhaps Jadhav changed his name after converting to Islam? But then, why did he deliberately retain a valid passport in his old name? Indeed, why did the government let him, unless he deceived them?

2. Abduction From Iran:

If Pakistan did abduct Jadhav, don’t we need to ask why, asks Thapar? Doesn’t that raise the question of what was so special about him that made them do this? After all, there are 4,000 Indians in Chabahar, Iran — and no one else has been abducted.

If Jadhav was indeed abducted from the Iranian soil, then why did India not pursue the matter with Iran, but, as the Indian foreign ministry spokesperson admitted, they don’t seem to have responded or, perhaps, even conducted an investigation yet. India seems to have accepted that. Odd, wouldn’t you say, asks Thapar?

3. Timing of Jadhav's Arrest:

Both The Indian Express and Asian Age suggest that Jadhav has links with the Pakistani drug baron Uzair Baloch who's also accused of terror in Pakistan.  Did Jadhav play dirty with him and get caught in a revenge trap set by the drug mafia? Given that Jadhav was arrested a month after Baloch was taken into custody by Pakistan, this could be part of the explanation?

4. Jadhav's Pursuit of RAW Employment:

The Indian Express has reported that between 2010 and 2012, Jadhav made three separate attempts to join the Research and Analysis Wing (RAW). The paper suggests he also tried to join the Technical Services Division. What more do we know about this? Even if the media doesn’t, surely the government does? A. S. Dulat, a distinguished former chief of RAW, has unhesitatingly said Jadhav could be a spy. As he put it, if he (Dulat) was in the government, he would hardly admit it.

Summary: 

The Quint story and Karan Thapar's article dismantle the false narrative that the Indian and western media have been pushing since Kulbhushan Jadhav's arrest in Balochistan in March, 2016.  These reports are beginning to essentially confirm that Jadhav's confession on orchestrating murderous attacks in Pakistan is factual.

Here's Kulbhushan Jadhav's video confession:

https://www.youtube.com/watch?v=nVp62OinTeU




Related Links:

Haq's Musings

Karan Thapar Dismantles Official Indian Narrative on Kulbhushan Jadhav

Why is India Sponsoring Terror in Pakistan? 

Indian Agent Kubhushan Yadav's Confession

Has Modi Stepped Up India's Covert War in Pakistan?

Ex India Spy Documents Successful RAW Ops in Pakistan

London Police Document Confirms MQM-RAW Connection Testimony

China-Pakistan Economic Corridor

Ajit Doval Lecture on "How to Tackle Pakistan" 

Chabahar Port

Wednesday, January 3, 2018

General Petraeus Rejects Trump's Charges of "Lies and Deceit" Against Pakistan

General David Petraeus, former CIA director and commander and US Forces in Afghanistan, has rejected  President Donald Trump's charges of "lies and deceit" against Pakistan.  He did so back in late 2016. Here's a brief excerpt of what he said:

"I looked very very hard then (as US commander in Afghanistan) and again as CIA director at the nature of the relationship between the various (militant) groups in FATA and Baluchistan and the Pakistan Army and the ISI and I was never convinced of what certain journalists have alleged (about ISI support of militant groups in FATA).... I have talked to them (journalists) asked them what their sources are and I have not been able to come to grips with that based on what I know from these different positions (as US commander and CIA director)".

Here's a short video clip of it:

https://youtu.be/01ghm5V3Wn4





Here's a longer blog post I wrote about it back in November, 2016 after Petraeus spoke at the Royal United Services Institute (RUSI) in London:


General David Petraeus, former CIA director and commander of US troops in Afghanistan, has said there is no evidence of Pakistan playing a double game and supporting terrorists in Afghanistan. Petraeus' remarks are now particularly significant given the fact that he is on a short list of President-Elect Donald Trump's nominees for Secretary of State.  He was answering a question posed to him at a presentation at Royal United Services Institute (RUSI), a British security think tank based in London.

Is Pakistan Duplicitous?

The question was asked by a female Afghan Ph.D. student at the end of remarks by the general on "Security Challenges Facing the Next US Administration". Here's the question:

"General you have stated that democracies can not win long wars (General Petraeus interrupted and said he did not say that and added "in fact I take issue with that" as the student continued). Afghanistan is now US's longest war. What stops the US to win the long war..whether Pakistan intelligence is the cause of the long war? Why does the US not take action against the Pakistan ISI which continues killing and supporting terrorists?"

General David H. Petraeus's response:

Here's part of Gen Petraeus' response: "I looked very very hard then (as US commander in Afghanistan) and again as CIA director at the nature of the relationship between the various (militant) groups in FATA and Baluchistan and the Pakistan Army and the ISI and I was never convinced of what certain journalists have alleged (about ISI support of militant groups in FATA).... I have talked to them (journalists) asked them what their sources are and I have not been able to come to grips with that based on what I know from these different positions (as US commander and CIA director)".

Gen Petraeus did acknowledge that "there's communication between the ISI and various militant groups in FATA and Balochistan (Haqqanis, Taliban, Islamic Movement of Uzbekistan, etc) but some of it you'd do anyway as an intelligence service." He added that "there may be some degree of accommodation that is forced on them (Pakistanis) because of the limits of their (Pakistan's) forces."

US-Pakistan Ties:

On the question of the nature of US-Pakistan relations and Washington's influence in Islamabad, General Petraeus said:

"Some people say Pakistan is a frenemy...it is just very very difficult to pin down (blame on Pakistan) and it's even more difficult to figure out how to exert leverage that in a meaningful way resolves the issue.  There was a period when we cut off all assistance and ties (to Pakistan) and held up F-16s that we were supposed to deliver for a while and that did not help our influence there (in Pakistan). It's a very very tough situation and it may be among the top two or three challenges for the new administration right up there with Syria".

General Petraeus acknowledged Pakistan's cooperation and sacrifices in fighting terror in the following words:

“Pakistan Army suffered casualties and had limited Intelligence, Surveillance & Reconnaissance (ISR) capabilities though the US did try to help and there existed enormous amount of cooperation between the two militaries. However, the unfortunate episodes of Raymond Davis and publications of book by Bob Woodward and WikiLeaks did impact negatively on this cooperation”.

Summary:

General David H. Petraeus has thoroughly debunked intense and ongoing media propaganda campaign of allegations of duplicity against Pakistan Army and ISI. He has also ruled out cutting ties with Pakistan as an option. His recommendations have now assumed added significance because he is now on a short list of President-Elect Trump's nominees for secretary of state.

Here's the video of General Petraeus at RUSI. His remarks on Pakistan are in the last 8 minutes of the video:

Brief 1-minute clip:

https://www.youtube.com/watch?v=01ghm5V3Wn4




Complete Video of  Presentation by Gen Petraeus:

https://youtu.be/4vxSwUrY1E0




Related Links:

Haq's Musings

Husain Haqqani vs Riaz Haq on India vs Pakistan

Impact of Trump's Top Picks on Pakistan

Husain Haqqani Advising Trump on Pakistan Policy?

Gall-Haqqani-Paul Narrative on Pakistan

Pakistan-China-Russia vs India-US-Japan

Robert Gates' Straight Talk on Pakistan's "Lies and Deceit"

Riaz Haq's YouTube Channel

Tuesday, January 2, 2018

Ex US Defense Secretary Robert Gates on Pakistan's "Lies and Deceit"

President Donald Trump's first new year tweet in 2018 accused Pakistan of "nothing but lies and deceit". This is not new.  Back in 2011, then Secretary of Defense Robert Gates in a US Senate Hearing was asked by Senator Patrick Leahy about Pakistan's "lies" to the United States.

Here's how the exchange went:

SENATOR PATRICK LEAHY: How long do we support governments that lie to us? When do we say enough is enough?

SEC ROBERT GATES: Well, first of all, I would say, based on 27 years in CIA and four and a half years in this job, most governments lie to each other. That's the way business gets done.

LEAHY: Do they also arrest the people that help us when they say they're allies?

GATES: Sometimes.

LEAHY: Not often.

GATES: And -- and sometimes they send people to spy on us, and they're our close allies. So...

LEAHY: And we give aid to them.

GATES: ... that's the real world that we deal with.


Is the United States always truthful with all its allies? Is President Donald Trump a paragon of virtue when it comes to telling the truth?

Here's a video clip of Def Sec Robert Gates' testimony at the United States Senate:

https://youtu.be/7_eJy8JRJ5o




Related Links:

Haq's Musings

Trump's Godfather Doctrine

Will Pakistan Yield to Trump's Pressure?

What is the Haqqani Network?

Why is India Sponsoring Terror in Pakistan?

Mullah Mansoor Akhtar Killing in US Drone Strike

Gen Petraeus Debunks Charges of Pakistani Duplicity

Husain Haqqani vs Riaz Haq on India vs Pakistan

Impact of Trump's Top Picks on Pakistan

Husain Haqqani Advising Trump on Pakistan Policy?

Gall-Haqqani-Paul Narrative on Pakistan

Pakistan-China-Russia vs India-US-Japan

Robert Gates' Straight Talk on Pakistan

Monday, January 1, 2018

Trump's Godfather Doctrine: New Year's First Tweet Warning Pakistan

President Donald Trump began year 2018 with his very first tweet insulting and threatening Pakistan. Is this a continuing manifestation of what American foreign policy experts John Hulsman and Wes Mitchell call "The Godfather Doctrine"? Is Trump prepared to reject the US-created post World War II international institutional  framework? Is he ready to abandon diplomatic route and act unilaterally against a whole range of nations, including Pakistan, refusing to kowtow? Does he think threats and intimidation will work with other nations? Is Trump willing to make a transactional arrangement with Pakistan? Let's examine possible answers to these questions.


Post World War II International Order:

After winning the second world war, the United States led the creation of a new rules-based architecture that heavily favored the United States above all other nations. International institutions such as the United Nations (UN) and its various agencies, International Monetary Fund (IMF), World Bank, World Trade Organization (WTO) and others to exercise power.

President Trump and his friends like Steve Bannon appear to be rejecting the value of this international framework created and sustained by his predecessors. Their preference is for transactional rather than strategic relationships with long-time US allies such as the Western Europeans and the Pakistanis.

Trump's Bilateral/Transactional Model:

Trump, a real estate developer, sees other nations like he saw his business partners, financiers and customers. Each deal is a transaction that must stand on its own. There's no such thing as "long term" or "strategic". Trump is willing to use intimidation and threats to try to get his way just as the Godfather movie character "Vito Corleone" tried. But he is rejecting renewing and using US-built international framework to deal with issues diplomatically.

Parallels with Vito Corleone:

As a superpower in relative decline like the Godfather in the movie, the United States faces a situation similar to the one Vito Corleone's sons Michael and Sonny and adopted son Tom Hagen, the consiglieri, faced right after the unexpected attack on the feared but aging Vito Corleone at the peak of his power that he built by an institutional framework that rewarded policemen, politicians, judges and competing crime bosses in New York City.

The elaborate international alliances and institutions that US has built over 60 years ago, such as UN Security Council, NATO, World Bank, OECD, WTO, IMF, IAEA etc, through which America exercises tremendous power and control, are being weakened by Donald Trump, and my guess is that these alliances and institutions will not survive as they are today. There will be a major realignment of nations, as the powerful new players, particularly China and Russia and other emerging powers such as India and Pakistan, demand greater say in world affairs.

US-Pakistan Transactional Relationship:

How can US and Pakistan negotiate an end to the current impasse if the Trump administration decides to cut whatever little aid Pakistan receives from the United States?  Pakistan could demand significant fees for the use of Pakistani territory by the United States to supply its troops. If the US refuses, Pakistan could simply cut off the NATO supply route as it did back in 2011 after the Salala incident.

Summary:

Trump appears to be opting for the "Godfather Doctrine" to make offers that he mistakenly believes no one can refuse. He rejects the the renewal or use of the US-sponsored international institutional framework.  Given the transactional nature of the relationships the Trump administration seeks, what would a transaction look like between President Donald Trump and Prime Minister Shahid Khaqan Abbasi? It could be in the form of Pakistan continuing to allow the use of its airspace and land routes to supply US troops in Afghanistan for substantial fees that could add up to more than the US aid to Pakistan today. If the US balks at it, Pakistan could simply cut off US supply routes as it did back in 2011 after the Salala incident.

Here's a discussion related to this subject:

https://youtu.be/HRG45PAHpWw



Related Links:

Haq's Musings

What is the Haqqani Network?

Why is India Sponsoring Terror in Pakistan?

Mullah Mansoor Akhtar Killing in US Drone Strike

Gen Petraeus Debunks Charges of Pakistani Duplicity

Husain Haqqani vs Riaz Haq on India vs Pakistan

Impact of Trump's Top Picks on Pakistan

Husain Haqqani Advising Trump on Pakistan Policy?

Gall-Haqqani-Paul Narrative on Pakistan

Pakistan-China-Russia vs India-US-Japan

Robert Gates' Straight Talk on Pakistan

Sunday, December 31, 2017

Per Capita Income in "Failed State" of Pakistan Up 22% in 2012-2017

Per capita income in Pakistan, often described as a "failed state",  grew 22% from 2012 to 2017, according to data from international sources. This is remarkable given major security challenges and particularly bad press the country has had to deal with during this period.  Also remarkable is the fact that the share of income of the poorest 20% has grown faster than other economies in Asia.

Pakistan GDP PPP Per Capita. Source: World Bank

Per Capita Incomes in Large Economies:

China PPP per capita income grew the fastest at 48%, followed by India 43%, Turkey 32%, Indonesia 23%, Pakistan 22%, United Kingdom, United States and Japan 15%,  Germany and Canada 13%, France 11%, Saudi Arabia 10%, Greece 9.5%, Russia and Italy 8%,  Nigeria 7.5% and Brazil 0%.

In the 5 year period 2001 to 2006 prior to the outbreak of the current wave of terrorism, Pakistan per capita income grew 36%, much faster than the 22% in the last 5 years. This is indicative of Pakistan's potential for faster economic growth if the security situation continues to improve over the next 5 years.

The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region.

Retail Sales Growth:

Rising incomes of Pakistanis are reflected in the retail sales growth which is ranked the fastest in the world.  The market is forecast to expand 8.2% a year through 2016-2021 as disposable income has doubled since 2010, according to research group Euromonitor International as reported by Bloomberg News. The size of the middle class is estimated to surpass that of the U.K. and Italy in the forecast period, it said.

Retail Sales Growth. Source: Bloomberg

Income Share Change in Asia's Poorest Quintile: 

The countries where people in the poorest income quintile have increased their share of total income include Kyrgyzstan (from 2.5 per cent to 7.7), the Russian Federation (4.4 per cent to 6.5), Kazakhstan (7.5 per cent to 9.5) and Pakistan (8.1 per cent to 9.6).  India's bottom income quintile has seen its share of income drop from 9% to 7.8%.

Bottom Quintile Income Share Change. Source: UNESCAP Statistical Yearbook

Although more people in China have lifted themselves out of poverty than any other country in the world, the poorest quintile in that country now accounts for a lower percentage of total income (4.7 per cent) than in the early 1990s (8.0 per cent). The same unfortunate trend is observed for a number of other countries, including in Indonesia (from 9.4 per cent to 7.6) and in the Lao People’s Democratic Republic (from 9.3 per cent to 7.6).

Credit Suisse Wealth Report 2017:

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

World Bank Update on Pakistan: 

A November 2016 World Bank report says that Pakistan has successfully translated economic growth into the well-being of its poorest citizens. It says "Pakistan’s recent growth has been accompanied by a staggering fall in poverty".

Rising incomes of the poorest 20% in Pakistan since 2002 have enabled them to enhance their living standards by improving their diets and acquiring television sets, refrigerators, motorcycles, flush toilets, and better housing.

Another recent report titled "From Wealth to Well Being" by Boston Consulting Group (BCG) also found that Pakistan does better than India and China in translating GDP growth to citizens' well-being.

One particular metric BCG report uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75.

Big Poverty Decline Since 2002:

Using the old national poverty line of $1.90 (ICP 2011 PPP) , set in 2001, the percentage of people living in poverty fell from 34.7 percent in FY02 to 9.3 percent in FY14—a fall of more than 75 percent. Much of the socioeconomic progress reported by the World Bank since 2000 has occurred during President Musharraf's years in office from 2000-2007. It has dramatically slowed or stagnated since 2010.

Source: World Bank Report Nov 2016

Using the new 2016 poverty line of $3.50 (ICP 2011 PPP),  29.5 percent of Pakistanis as poor (using the latest available data from FY14). By back casting this line, the poverty rate in FY02 would have been about 64.3 percent.

Pakistan's new poverty line sets a minimum consumption threshold of Rs. 3,030 or $105 (ICP 2011 PPP) per person per month or $3.50 (ICP 2011 PPP) per person per day. This translates to between Rs. 18,000 and Rs. 21,000 per month for a household at the poverty line, allowing nearly 30% of the population or close to 60 million people to be targeted for pro-poor and inclusive development policies—thus setting a much higher bar for inclusive development.

Multi-dimensional Poverty Decline:

UNDP report released in June 2016 said Pakistan’s MPI (Multi-dimensional poverty index) showed a strong decline, with national poverty rates falling from 55% to 39% from 2004 to 2015. MPI goes beyond just income poverty.

The Multidimensional Poverty Index uses a broader concept of poverty than income and wealth alone. It reflects the deprivations people experience with respect to health, education and standard of living, and is thus a more detailed way of understanding and alleviating poverty. Since its development by OPHI and UNDP in 2010, many countries, including Pakistan, have adopted this methodology as an official poverty estimate, complementing consumption or income-based poverty figures.

Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.



First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.



Housing quality in the bottom quintile also showed an improvement. The number of homes constructed with bricks or blocks increased while mud (katcha) homes decreased. Homes with a flush toilet almost doubled in the bottom quintile, from about 24 percent in FY02 to 49 percent in FY14.

Dietary Improvements for the Poorest 20% in Pakistan:

Decline in poverty led to an increase in dietary diversity for all income groups.

For the poorest, the share of expenditure devoted to milk and milk products, chicken, eggs and fish rose, as did the share devoted to vegetables and fruits.

In contrast, the share of cereals and pulses, which provide the cheapest calories, declined steadily between FY02 and FY14. Because foods like chicken, eggs, vegetables, fruits, and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption also increased the amount that people spent per calorie over time.

For the poorest quintile, expenditure per calorie increased by over 18 percent between FY02 and FY14. Overall, this analysis confirms that the decline in poverty exhibited by the 2001 poverty line is quite credible, and that Pakistan has done remarkably well overall in reducing monetary poverty based on the metric it set some 15 years ago, says the World Bank.

Summary:

Per capita income in Pakistan, often described as a "failed state",  grew 22% from 2012 to 2017, according to data from international sources. This is remarkable given the particularly bad press the country has received during this period.  Also remarkable is the fact that the share of income of the poorest 20% has also grown faster than other economies in Asia.  In spite of the country's many challenges on multiple fronts, it has successfully translated its GDP growth into the well-being of its poorest citizens. The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990, according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region. "Pakistan’s recent growth has been accompanied by a staggering fall in poverty", says a November 2016 World Bank report.  An earlier report by Boston Consulting Group reached a similar conclusion.

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2017

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor