Friday, February 23, 2018

American Bid to Put Pakistan on FATF Watch-List Fails in Paris

Financial Action Task Force (FATF), the financial watchdog group for terror financing, has delayed any decision to put Pakistan on its watch list, according to its spokesperson Alexandra Wijmenga-Daniel.  This move was sponsored by the United States and its European allies.

The FATF statement released after the meeting that ended on February 23, 2018 identified the following nations as being on its watch list: Ethiopia, Iraq, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu and Yemen.

FATF Decision Delayed: 

It appears that the American bid failed at this month's FATF meeting. Pakistan's Chinese allies and Muslim friends among the Gulf Arabs and Turkey prevailed at the February 18-23 meeting in Paris, France. If US persists and Pakistan is placed on the FATF "grey list" at the June meeting, how will it impact Pakistan economy and the geopolitics of the region? Will it be good or bad for American interests in Afghanistan and Pakistan? Will it help or hurt China?

Effect on Pakistan:

Pakistan's economy will be hurt if it goes on the FATF watch-list.  It could increase support for radicals and strengthen the hands of anti-American extremists.

Being on the list will draw more scrutiny for all banking transactions involving Pakistani entities. This additional scrutiny may drive away some businesses and investors and hurt Pakistan's economy.

Risk-averse international banks, some of whom have already faced heavy fines by US regulators for transactions elsewhere, may decide to shy away from working with Pakistani banks. This will hurt Pakistan's international trade and worsen its current account deficits. It will increase the likelihood of debt default.

China, currently the biggest foreign investor in Pakistan, will continue to invest in the country. FATF decisions will have little impact on the execution of China-Pakistan Economic Corridor (CPEC).

Impact on the United States:

There's a history of the US ratcheting up pressure on Pakistan to do its bidding. The Obama administration in years 2012-15 helped put Pakistan on the FATF watch-list. President Obama also exerted other forms of pressure on Pakistan without results. Obama's tactics ended up further alienating Pakistanis and made Pakistan less cooperative with the United States. In 2011, Pakistan cut off US-NATO supply land routes through its territory to Afghanistan.

If history repeats itself and Pakistan does go back on the FATF watch-list under US pressure, the outcome this time is not likely to be any different than it was the last time. It will serve to further alienate Pakistan, and it will strengthen the hands of the hardliners.  It will make any resolution of the difficult Afghan problem even more difficult.

China's Interests:

China will likely be the biggest beneficiary of the US effort to put Pakistan on the FATF watch list. The Chinese will have the biggest slice of Pakistan's rapidly growing middle class consumer market. Chinese investors, traders and businessmen will have little competition from the West in the world's sixth most populous nation. Geopolitically, the US influence will dramatically diminish in the region. America's hopes of a favorable outcome in Afghanistan will not materialize.


American bid to put Pakistan on FATF terror financing watch-list failed in Paris. However, the Trump Administration's continuing efforts to do so may succeed at the June meeting.  If that were to happen, it will turn out to be pyrrhic victory. Pakistan will be hurt in the short term but the US policy of all sticks and no carrots will prove to be counterproductive in the long run. Washington will lose whatever little political capital and influence it still has left in Pakistan.  America's Afghan problem will become even more intractable without Pakistan's help. China will be the biggest beneficiary of America's folly.

Related Link:

Haq's Musings

Will Pakistan Yield to Trump's Pressure?

Checkered History of Pakistan-Afghan Ties

Pakistan Rising or Falling? Reality vs Perception

Steve Coll's Directorate S

CPEC Myths and Facts

CPEC Transforming Least Developed Regions of Pakistan

Pakistan-China-Russia vs India-Japan-US

Riaz Haq's Youtube Channel


Mayraj said...

European allies know real terror financing is in Gulf. And who is supporting most of the terrorists in Syria (directly and indirectly)?

I think Europe is also going to suffer for this. Growth favors Asia not aging Europe.

Z Basha Jr said...

Thats good news hearing from your sources.. from my source Bajwa sb is also closely monitoring the situation.. for June meeting documents presenting our case has already been initiated..

Anonymous said...

From Dawn:

The country spent three years on the grey list between 2012 and 2015, without the designation affecting its ability to float international bonds, borrow from multilateral bodies, receive or send remittances or conduct international trade. The status does little more than raising the compliance burden on counterparts, such as correspondent banks, dealing with entities within Pakistan’s financial system, and therefore attaches an additional cost to many external sector transactions.

Anonymous said...

Riaz Haq said...

Pakistan’s critical role in the New Cold War
M. K. Bhadrakumar - February 23, 2018

The Russian Ministry took pains to highlight Asif’s visit. A ‘working visit’ cuts out protocol frills and gets straight to transacting business. Yet, Moscow made an exception and issued a glowing ‘curtain-raiser’ to hail Asif’s arrival. There must have been strong reasons to do so. The regional backdrop is indeed tumultuous. The new Cold War is slouching toward the Hindu Kush and Central Asian steppes and Pakistan’s geography is regaining the criticality in strategic terms reminiscent of the 1980s.

Russia’s interest lies in boosting Pakistan’s grit and capacity to withstand US pressure. Interestingly, Lavrov and Asif also discussed Syria where the US has lately switched to an offensive mode against Russia. Again, Asif voiced Pakistan’s opposition to the sanctions against Russia.

The Russian statements have become highly critical of the US regional strategies in the Afghanistan-Pakistan region. Moscow has concluded that the US is determined to keep an open-ended military presence in the region. On the other hand, Russia is being kept at arm’s length from the Afghan problem. Instead, Washington is directly engaging the Central Asian states, bypassing Russia, including at the military level. Clearly, Washington is working hard to undermine Moscow’s leadership role in the region in the fight against terrorism and to challenge Russia’s notion of being the provider of security to the former Soviet republics neighboring Afghanistan.

Given the experience in Syria (where the US is covertly encouraging the ISIS and al-Qaeda affiliates to make the going tough for the Russia and to create new facts on the ground that weaken Syria’s unity), Moscow is increasingly weary of the US intentions vis-à-vis the ISIS in Afghanistan. To be sure, the growing presence of the ISIS in the northern and eastern regions of Afghanistan facing the Central Asian region deeply worries Russia. Moscow has repeatedly hinted that US could be facilitating the transfer of ISIS fighters from Syria and Iraq to Afghanistan.

Read more: India’s flirtation with the ‘war talk’ has Nuclear war clouds hovering…

But the Americans move on, ignoring the Russian barbs. The pattern in Syria is repeating. Lavrov brought up the US-ISIS nexus in the discussions with Asif. The Russian side has floated the idea that the Regional Anti-Terrorist Structure of the Shanghai Cooperation Organization can be put to use “to develop practical measures to curtail ISIS influence in Afghanistan and prevent it from spreading to Central Asia.”

From Lavrov’s remarks following the talks with Asif, it appears that the SCO summit, which is scheduled to be held in Qingdao (China) in July, may make some moves/initiatives on the Afghan problem. Last year Russia injected a new lease of life into the SCO-Afghanistan Contact Group. China will be hosting the next meeting of the Contact Group. The fact is that with the admission of Pakistan and India as full members, SCO now represents all key neighbors of Afghanistan.

We advocate a regional approach towards resolving the situation in the Islamic Republic of Afghanistan. We expect participants in the Moscow format of consultations on the Afghan issue and the SCO-Afghanistan Contact Group to work productively.

At the media briefing after the talks with Asif, Lavrov outlined that Russia and Pakistan have common ground in regard of the Afghan situation. The Pakistani Foreign Ministry readout stated that the two ministers “agreed to closely coordinate in all Afghanistan-related processes for a regional solution of the Afghan conflict.”

Riaz Haq said...

#Pakistan's #exports increase by 11.11% in 7 months of Fiscal 2017-18 - Xinhua |

Pakistani export surged by 11.11 percent during first seven months of the current fiscal year ranging from July 2017 to June 2018 as compared to exports during the same period of the preceding year, according to Pakistan Bureau of Statistics.

The country's exports rose to 12.966 billion U.S. dollars during July 2017 to January 2018 against the exports worth of 11.67 billion U.S. dollars during the same period of the fiscal year 2016-17, according to trade data released by the Pakistan Bureau of Statistics on Friday.

While on the year-on-year basis, Pakistan's exports rose to 1.971 billion U.S. dollars in January 2018 against 1.775 billion U.S. dollars in January 2017 thus registering an increase of 11.04 percent.

However, on monthly basis, the country's exports decreased by 0.3 percent during the month of January 2018 against the same period last years.

The country's imports increased by 14.2 percent in January 2018, thus further expanding the trade deficit to 23.97 percent.

On the other hand, the imports into the country also witnessed an increase of 18.92 percent as it jumped to 34.512 billion U.S. dollars during July 2017 to January 2018 from 29.021 billion U.S. dollars in the same period of previous year.

During the first seven months of the fiscal year, the trade deficit expanded by 24.18 percent to 21.546 billion U.S. dollars as compared to the deficit of 17.351 billion U.S. dollars in the corresponding period of last year.

According to the data, increase in imports was mainly due to the import of heavy machinery and other raw material for industrial and energy sector projects, which are likely to have a long-term positive impact on national economy.

Riaz Haq said...

#Pakistan receives $1.639b in overseas diaspora #remittances, up 10.1% in January 2018.

Pakistan received remittances amounting to $1.639 billion in January 2017, 10.1% higher compared with $1.488 billion in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP) on Monday.

Overall, overseas Pakistani workers remitted $11.383 billion in the first seven months (July to January) of fiscal year 2018, up 3.55% compared with $10.993 billion received during the same period of the preceding year.

Remittances play a major role in stabilising Pakistan’s external sector, as they make up almost half the import bill and cover the deficit in the trade of goods account. Nevertheless, in recent times, they have come under pressure due to a global economic slowdown on the back of low crude oil prices.

Perturbed by the widening current account deficit, the government finally allowed the rupee to lose over 5% against the dollar in the second week of December 2017.

The development is positive for overseas Pakistanis as their families are going to get more rupees against the same amount of foreign currency they remit every month. This may also increase the flow of remittances in the coming months as it encourages overseas workers to remit more.

Country-wise breakdown

In January 2018, Pakistan received $235 million in remittances from the UK, which is 30% higher than $181 million that the country received in the same month of the previous year. In the first seven months (Jul-Jan) of fiscal year 2017-18, remittances coming from the UK jumped by 24% to $1.585 billion from $1.278 billion in the same period of last year.

The value of the UK pound has gained at least 8% against the rupee in the last few months. This is the highest jump shown by any major foreign currency against the rupee in the open market.

Analysts believe, apart from other factors, that the increase in the value of any particular foreign currency encourages overseas Pakistanis to send back more money.

Similarly, an increase was also noted in remittances coming from the US as the country received $224 million in January 2018, up 28% compared with $175 million in the same month last year.

Overall, remittances from the US in the first seven months of current fiscal year increased by 11% to $1.50 billion from $1.347 billion. Pakistan received $352 million from the UAE, up 9% compared with $323 million from the same month of the last year.

Rising oil prices herald end of honeymoon for Pakistan’s economy

Remittances from the GCC countries (other than the UAE and Saudi Arabia) stood unchanged at $186 million in January 2018 compared with the same month in 2017.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries (combined) during January 2018 also increased to $154 million in January 2018, up 29.4% compared with $119 million received in January 2017.

Overseas Pakistanis living in the European Union (EU) sent back $56 million in January 2018, up 75% compared with $32 million in the same month of last year.

Saudi Arabia left behind

Remittances from Saudi Arabia – the most important source of remittances for Pakistan – are showing declining trends in recent months.

Remittances from Gulf countries, which have historically accounted for the largest share annually, dropped drastically due to a sharp fall in crude oil prices that hurt the region’s economies.

Pakistan received remittances of $384 million from Saudi Arabia in January 2018, down 11.5% compared with $434 million in the same month of 2017.

Riaz Haq said...

View from #India: "#FATF has failed to nail #Pakistan" … via @dailyo_

It was widely speculated that with US, France, Britain and Germany supporting such a move, Pakistan would not escape inclusion. Until the end there was confusion because of mixed signals emanating from FATF deliberations. Pakistan has apparently been given three months more for taking steps as set out by the FATF to clean up its system.

Pakistan was on FATF’s grey list from 2012 to 2015. Why it was felt in 2015 that Pakistan had done enough to fulfil FATF’s criteria to justify removal is unclear when in actual fact Islamabad has even thereafter continued to use terrorism to achieve its political objectives in India and Afghanistan.

Riaz Haq said...

China expresses support for Pakistan’s anti-terrorism efforts
Source:Xinhua Published: 2018/2/27 22:43:39

China on Tuesday expressed support for Pakistan's fight against terrorism, urging the international community to view the country's anti-terrorism efforts in an objective and impartial way.

The government and people of Pakistan have contributed and sacrificed a lot in their fight against terrorism and made great efforts in ground operations as well as combating terrorism in the financial sector, said Foreign Ministry spokesperson Lu Kang at a routine press conference.

He called on the international community not to criticize Pakistan with prejudice.

Lu's comments came after some countries persuaded members of the Financial Action Task Force last week to place Pakistan on the "grey list" of nations with inadequate efforts to control terror financing.

China, as an all-weather strategic cooperation partner of Pakistan, will continue to strengthen communication and coordination with Pakistan in anti-terrorism cooperation, Lu said.

Riaz Haq said...

Pakistan can achieve economic revival as transshipment hub for trade with China
By Hu Weijia Source:Global Times Published: 2018/2/27 22:18:40

Pakistan's economic woes have worsened five months before national polls, according to a report by Bloomberg. China will likely be willing to offer more assistance to help its neighbor improve economic conditions, but the question is how to find an effective way.

Pakistan's trade deficits are hitting records while its foreign exchange reserves continue to fall, Bloomberg reported. Pakistan's economy is facing chronic problems for many reasons, but the fact that Pakistan's GDP grew 5.3 percent in fiscal 2017 - the fastest pace in a decade - can't be ignored.

The two countries will move ahead with the China-Pakistan Economic Corridor (CPEC), which has become a driving force for Pakistan's economic growth. The question is how its investment-driven growth can be transformed into internal momentum for economic expansion.

While the first phase of the CPEC concentrated on infrastructure projects, the second part should focus on setting up special economic zones and establishing mutual connectivity to support economic integration.

Pakistan's strategic location is a major attraction for companies to invest in and obtain lucrative returns. Now, the nation must give full play to its advantages.

The most important maritime trade route that China has now is through the South China Sea and the Strait of Malacca. The CPEC is designed to connect Gwadar Port in Southwest Pakistan with China's inland areas, offering another route for Chinese importers and exporters.

Improvements in Pakistan's trade-related sectors, such as warehousing, logistics, integrated services and e-commerce, can turn the nation into a new transshipment point for exports to China. Efforts to upgrade the bilateral free trade agreement will also help realize economic potential.

Trade and financial deficits have long been seen by some observers as the thorniest issues faced by the South Asian country. Making Pakistan a new transshipment point will help the nation boost exports and slash its trade deficit with China. This situation may also help Pakistan conserve its foreign exchange reserves.

China is expected to continue to encourage outbound investment, but investors should also be reminded to exercise caution. The CPEC is one of the flagship projects in China's Belt and Road initiative. The Chinese government should give more guidance to companies with an eye to the South Asian country to reduce the risk of inefficient investment.

Riaz Haq said...

Trump’s diplomacy is all about the ultimatum. That could spell disaster.

Jackson Diehl Deputy Editorial Page Editor

President Trump’s supporters expected he would bring a new, business-seasoned negotiating style to U.S. diplomacy. What we’ve seen in the past month is something rather different: the art of the ultimatum.

Sure, Trump’s team has been bargaining with Mexico and Canada over trade, with China over North Korea, and with Russia over Syria and Ukraine. But the most striking thing about the president’s diplomacy so far in 2018 has been the public demands he has placed on European allies, Pakistan and the Palestinians. He has told the Europeans, and Congress, that he will withdraw from the nuclear deal with Iran unless they agree to a “new supplemental agreement” by the middle of May. He pledged to cut off aid to the Palestinians unless they agree to participate in the peace talks he wants to sponsor. And he has already frozen aid to Pakistan for giving “safe haven to the terrorists we hunt in Afghanistan.”

Perhaps, for Trump, this is simply another way to bargain. If so, the fallout from the president’s would-be diktats suggests it’s not working.

Take Pakistan. Trump’s first tweet of the year blindsided Islamabad with this broadside: “The United States has foolishly given Pakistan more than 33 billion dollars in aid over the past 15 years, and they have given us nothing but lies & deceit.” Days later the administration announced it was suspending nearly all security aid, up to $1.3 billion annually, while saying it could be restored if Pakistan took steps against the Taliban and other terrorists. In other words: Meet U.S. demands or forfeit the funds.

Pakistani officials predictably rejected the public challenge, saying they didn’t need the money and anyway could probably get it from China. Then they shut down the Pakistan operations of Radio Free Europe, which broadcasts in the Pashto language used on both sides of the border between Pakistan and Afghanistan, saying it served a “hostile intelligence agency’s agenda.”

Then, on Jan. 20, came a deadly assault on the Intercontinental Hotel in Kabul, which killed at least 22, including several Americans, and bore all the hallmarks of the Haqqani network, the Taliban faction that Pakistan’s military intelligence agency is accused of supporting, if not directing. If Trump’s tweet was meant to intimidate, it appears to have spectacularly backfired.

Next come the Palestinians, who predictably took umbrage when Trump recognized Jerusalem as the capital of Israel. Palestinian Authority leaders refused to meet with Vice President Pence when he visited the region and said they would not consider the peace plan the White House has been working on. That prompted Trump to announce that aid to the Palestinians would be cut off “unless they sit down and negotiate peace.” Half the $125 million in expected U.S. aid to the U.N. refu­gee agency for Palestinians has already been withheld.

To punish Trump for that ultimatum, the Palestinians need only sit tight. The withdrawal of U.S. aid is the last thing Israel wants — it would cause the collapse of the West Bank Palestinian security forces that in recent years have worked closely with Israel to prevent terrorist attacks. Israeli military forces might have to redeploy in Palestinian areas they now avoid. In short, if Trump follows through, he’ll do less damage to the Palestinians than to Israel, the ally he thinks he’s appeasing.

Riaz Haq said...

Trump’s diplomacy is all about the ultimatum. That could spell disaster.

Jackson Diehl Deputy Editorial Page Editor

The most costly Trump diktat, however, concerns the Iran nuclear deal. In a statement stuffed with bullying rhetoric, Trump demanded on Jan. 12 that Europeans and Congress agree within 120 days to a rewrite of the 2015 accord that would impose new conditions on Iran and reverse sunset provisions — without bothering to negotiate with Tehran. European diplomats and a handful of senatorsare duly seeking to finesse something that would appear to address Trump’s demands without actually infringing on the pact — a nearly impossible task.

If they fail, which is likely, Trump will have the choice of failing to deliver on his threat or reimposing U.S. sanctions on Iran. The latter would trigger an international crisis for which the United States would be universally blamed and open the way for Iran to resume the large-scale production of enriched uranium — something it is now prevented from doing.

All these disruptions might make sense if Trump had a plan for what happens after he blows up the status quo. Does he have a strategy up his sleeve for coercing Pakistan? Does he know how the West Bank will be secured if the Palestinian Authority collapses? Does he have a new way to stop Iran from building a nuclear weapon?

He doesn’t. The worst thing about Trump’s ultimatums is that there is nothing behind them. In foreign policy, that’s an invitation to disaster.

Riaz Haq said...

Limits of diplomacy

Appearing in the wake of the recent 30th anniversary of the Iranian hostage release and the momentous events now taking place in Egypt and in other parts of the Arab world, the author claims to see a better way to conduct our diplomacy in the 21st century.–Ed.

Congress and Foreign Affairs
It seems superfluous to ask whether there are limits to what diplomacy can achieve. Yet in light of recent history it is worthwhile to ask this and related questions. It might be better to ask how we can reform traditional diplomacy to meet today’s challenges. Can U.S. diplomacy reach into the deepest cultural recesses of other societies and influence the popular imagination in positive ways? Should this be a goal of diplomacy? Let us look at a few examples.

On January 20, 1981 fifty-two American diplomats were released from captivity in Iran at the very moment that President Ronald Reagan recited the Oath of Office during his Inauguration in Washington, DC. They had been seized by Iranian revolutionaries on November 4, 1979 and held hostage for 444 days with the approval and collusion of the newly ascendant regime under the leadership of Ayatollah Ruhollah Khomeini in violation of international diplomatic agreements and protocols. Khomeini had long been an enemy of Iran’s Shah and of the United States.

On January 27, 1981 President Ronald Reagan welcomed the American diplomats in a ceremony at the White House that I attended. I had served as a diplomat in Tehran from early 1972 to mid 1974 after having studied Farsi at the Foreign Service Institute. During my years in Iran I had traveled widely, lived with an Iranian family, attended many different cultural events, and met students at several universities in Tehran, Isfahan, and Shiraz. I had come to know the people in Iran as culturally and ethnically diverse. And yet all of them lived under the autocratic rule of the Shah and his small group of advisors and military and police generals. And most knew the Shah was our ally.

The seizure of American diplomats in Iran hit Americans like a sudden tornado sweeping across the prairie. Few of us knew where Iran was or what our diplomats were doing there. Yet, television news reports showing them being led blindfolded from the U.S. embassy under armed guards sent a shockwave through the public consciousness. How could this be happening to our diplomats? How could the United States have allowed a group of student revolutionaries to enter the diplomatic compound and assault our embassy and its diplomats? Where were the Marines? All kinds of questions flowed through the news media during the days and weeks after the seizure of our diplomats. President Jimmy Carter and his advisors had few definitive answers. They expressed hope that a misunderstanding had occurred and that our diplomats would soon be released. They continued to work towards this goal for months without success and then on until the final moments of his time in office.

It soon became obvious that the U.S. government had misjudged Iranian sentiments regarding its actions towards revolutionary Iran and in support of the deposed Shah of Iran. Why? What had we missed? There had been warnings from our embassy in Tehran earlier in the year that if the Shah were allowed into the United States for any reason, popular emotions in Iran could explode. These warnings were weighed in White House circles and found to be less worrisome than the need to extend humanitarian help to an ailing Iranian ruler.1

In the Sunday, January 23, 2011 edition of the Washington Post’s Outlook section former ABC-TV “Nightline” chief Ted Koppel wrote a comment about the hostage crisis in which he opined that the Iranian revolutionaries learned how to manipulate U.S. journalists and TV media and, through them, exert pressure on American public opinion and against the Carter administration. Koppel was able to build much of his reputation on his nightly reporting about the hostage crisis.

Riaz Haq said...

"All Diplomacy is the continuation of War by other means."
by Ziks511 / July 30, 2013 11:08 PM PDT
20th Century, Chou En Lai, now Zhou Enlai. Zhou either only gets 1/4 marks, or no marks at all and demerits for plagiarism.

The original comes from von Clausewitz, On War.

War is the continuation of Diplomacy by other means.
19th Century.

Peace is that state which exists before Nations know who they want to invade, or the time during which they are preparing to do so.

Riaz Haq said...

Hopes Are Still High In Pakistan Equities
Mar. 9.18 | About: Global X (PAK)
Bader Al Hussain
Bader Al Hussain
Growth, long-term horizon, research analyst, long/short equity

FATF decision related to Pakistan has only increased monitoring of international transactions.

Only concern is regarding the structural problem of negative balance of payments.

Investor having a long perspective must consider this ETF.

There has been apprehension among foreign investors regarding the impact of FATF (Financial Action Task Force) decision on Pakistan equity market. Since Pakistan's inclusion in the grey list, one can observe such sentiments in the range bound activity of the market.

This aspect was also highlighted by IMF. IMF, in its recent report, has also recommended to strengthen the anti-money laundering and counterterrorism financing regimes.

The decision of FATF to include Pakistan stems from the inability of the country to act against the proscribed organisations that are designated as terrorist by the UN. However, given the public's resentment over government's laxity towards such organisation, it is just a matter of time before effective action is taken.

Further, it is to be noted that Pakistan was included in FATF's grey list during 2012 and 2015. The country was removed after it passed anti-money laundering act. In my view, given the seriousness of the measures that are underway, Pakistan would be able to satisfy the reservations conveyed by FATF within three months.

The macroeconomic impetuses to the PAK still remain, and the reasons are:

Valuations are intact.
CPEC is on the track as early harvest projects have started to come online.
IMF has maintained the forecast of the GDP growth for the next year at 5.6%, which is the highest in the decade.
Foreign investment is on the rise, especially in automobile sector. The details of FDI are shown below.
Senate elections were conducted with the usual hue and cry.
The political landscape is calm and smooth transition is expected.
Inflation is curbed at the average level of 4%.

Riaz Haq said...

#Pakistan total #remittances from #Diaspora up 3.4% in 8 months over last fiscal year, down 14% from #Saudi Arabia

Pakistan received remittances amounting to $1.639 billion in February 2018, up 2.32% compared with $1.417 billion in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP).

Overall, overseas Pakistani workers remitted $12.834 billion in the first eight months (July to February) of fiscal year 2018, up 3.4% compared with $12.411 billion received during the same period of the preceding year.

Remittances play a major role in stabilising Pakistan’s external sector as it largely covers the deficit in the trade of goods account. Nevertheless, in recent times, they have come under pressure due to a global economic slowdown on the back of low crude oil prices.

Country-wise breakdown

In February 2018, Pakistan received $201 million in remittances from the UK, which is 17.5% higher than $171 million that the country received in the same month of the previous year.

Remittances increase 8.72%, amount to $1.724b in Dec

In the first eight months (Jul-Feb) of fiscal year 2017-18, remittances coming from the UK jumped by 23% to $1.786 billion from $1.449 billion in the same period of last year.

The value of the UK pound has gained over 6% against the rupee in the last few months. This is one of the highest jumps shown by any major foreign currency against the rupee in the open market.

Analysts believe, apart from other factors, the increase in the value of any particular foreign currency encourages overseas Pakistanis to send back more money.

Similarly, an increase was also noted in remittances coming from the US as the country received $207 million in February 2018, up 16% compared with $178 million in the same month last year.

Overall, remittances from the US in the first eight months of current fiscal year increased by 12% to $1.712 billion from $1.525 billion.

Pakistan received $332 million in February 2018 from the UAE, up 3.75% compared with $320 million from the same month of the last year.

Remittances from the GCC countries (other than UAE and Saudi Arabia) declined by 11% to $149 million in February 2018, compared with $168 million in the same month in 2017.

Whereas, remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries (combined) during February 2018 increased to $163 million, up 13% compared with $144 million received in February 2017.

Pew Research Center report: The flow of remittances in and out of Pakistan

Overseas Pakistanis living in the European Union (EU) sent back $49 million in February 2018, up 53% compared with $32 million in the same month of last year.

Saudi Arabia left behind

Remittances from Saudi Arabia – the most important source of remittances for Pakistan – have shown declining trends in recent months.

Remittances from Gulf countries, which have historically accounted for the largest share annually, dropped drastically due to a sharp fall in crude oil prices that hurt the region’s economies.

Pakistan received remittances of $348 million from Saudi Arabia in February 2018, down 14% compared with $404 million in the same month of 2017.

Riaz Haq said...

#Pakistan may raise $2.5 billion as in new #bond sale to boost #dollar reserves … via @business

March 13, 2018, 6:22 AM PDT Updated on March 13, 2018, 9:05 PM PDT
Junior finance minister says Islamabad studying all options
Pakistan’s foreign reserves have dwindled in past year
Pakistan’s Minister of State for Finance Rana Afzal Khan said the government may raise the “same” amount of funds from global debt markets as it did at a $2.5 billion sale in November.

A final decision hasn’t been taken yet and the government is studying all options, Khan said in an interview on the sidelines of a conference in the capital, Islamabad, on Tuesday. Pakistan aims to issue bonds or Islamic-compliant sukuk before elections in July as it looks to boost dwindling foreign-exchange reserves and continues to invest in infrastructure projects, Khan told Bloomberg last month in Karachi.

Pakistan last issued dollar debt four months ago shore up its deteriorating finances. The country has been hit by political instability in the past year and its economy is showing increasing signs of vulnerability. Pakistan’s current account and trade deficits have widened as exports lag regional peers, while foreign-exchange reserves have dropped 27 percent to $12.3 billion in the past year.

“It will help cool off immediate pressure, more than a billion dollars a month is being depleted in reserves,’’ said Shahid Ali Habib, chief executive officer at Karachi-based brokerage Arif Habib Ltd. “It would have been better to raise a larger amount last time.”

The World Bank estimated in October that $17 billion of external financing -- or 5 percent to 6 percent of gross domestic product -- is needed in the current financial year through June for Pakistan to bridge its debt payments and current account deficit. Some analysts also believe the nation may need another International Monetary Fund bailout, which would be its 13th since 1988.

The IMF said last week said Pakistan faces continual “erosion” and its widening external and fiscal imbalances mean that “risks to Pakistan’s medium-term capacity to repay the fund have increased” since completion of a three-year $6.6 billion bailout program that ended in Sept. 2016. Pakistan’s current-account deficit could reach 4.8 percent of GDP in the year ending June, according to the IMF.

Miftah Ismail, Pakistan’s de-facto finance minister, said in an interview last week that Islamabad isn’t considering going back to the IMF, but is considering issuing Chinese currency bonds. The ruling party, whose leaders face multiple legal and corruption charges, will be loath to go back to the IMF so soon after the last program ended as it would indicate economic mismanagement.

Investors have also been cautious on Pakistan after the Supreme Court in July barred former Prime Minister Nawaz Sharif from office following a probe into his family finances. Pakistan’s benchmark stock index was the worst performer globally last year, though it has seen a measured rebound since.

Riaz Haq said...

Times of India report:

Bolton - a former US ambassador to the UN - believes that Pakistan, a nuclear weapons state, is perpetually teetering on the brink of embracing Islamic extremism and terror. And pushing it too hard could well lead to it becoming "a terrorist country with nuclear weapons", or as Bolton described it last August to, "Iran or North Korea on steroids".

"'s clear the President wants to pressure Pakistan more. Well, I agree with that, and I think Obama didn't pressure them enough... But there's a real problem with simply saying, 'By God, we're going to squeeze Pakistan until they finally push the Taliban, the Haqqani network, Gulbuddin Hekmati out of the privileged sanctuaries they've had in Pakistan, push them back into Afghanistan, and stop supplying them, stop giving them weapons, stop giving them money' ", said Bolton to Breitbart.
Bolton said the problem with such an approach is that it might lead to a situation where anti-US sentiment fuels popular support for Islamist radicals and the Taliban.
"If you push too hard, this government in Pakistan is fragile. It has been since the partition of British India ...The military in Pakistan itself is at risk, increasingly, of being infiltrated through the officer ranks by radical Islamists. Many people believe the intelligence services unit already is heavily dominated by Islamists," he explained.
If radicals take over the Pakistan government completely, it's "the ultimate risk" said Bolton.
"...if Pakistani Taliban or other radicals took control of that country, it wouldn't just be another base to launch terrorist operations against us or Western Europe. It would be a terrorist country with nuclear weapons, so it would be Iran or North Korea on steroids right now," he warned.
Too much pressure on Pakistan could backfire, Bolton wrote last August in The Wall Street Journal.
"Putting too much pressure on Pakistan risks further destabilizing the already volatile country, tipping it into the hands of domestic radical Islamicists, who grow stronger by the day. In this unstable environment, blunt pressure by the U.S.—and, by inference, India — could backfire," said the the now NSA in a column for the Journal.
Here's where China can step in and should be pressured to, the new NSA said.
"China's influence is, in some ways, greater than ours" in Pakistan because "there wouldn't be a Pakistani nuclear weapons program without China."
China is the key to keeping the house of cards from collapsing in Pakistan, Bolton said in his Journal column from August.
"If American pressure were enough to compel Pakistan to act decisively against the terrorists within its borders, that would have happened long ago. What President Trump needs is a China component to his nascent South Asia policy, holding Beijing accountable for the misdeeds that helped create the current strategic danger," wrote Bolton.

Riaz Haq said...

New Jurisdiction subject to monitoring
FATF has identified Pakistan as a jurisdiction with strategic AML/CFT deficiencies. The country has developed an action plan with the FATF to address the most serious deficiencies. The FATF welcomed the high level political commitment of Pakistan to their action plan.

Monitoring Iran’s actions to address deficiencies in its AML/CFT measures
In June 2016, the FATF welcomed Iran’s high-level political commitment to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Given that Iran provided that political commitment and the relevant steps it has taken, the FATF decided in February 2018 to continue the suspension of counter-measures.

Since November 2017, Iran has established a cash declaration regime and introduced draft amendments to its AML and CFT laws. However, Iran’s action plan has expired with a majority of the action items remaining incomplete. Iran should fully address its remaining action items, including by: (1) adequately criminalising terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; (2) identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; (3) ensuring an adequate and enforceable customer due diligence regime; (4) ensuring the full independence of the Financial Intelligence Unit and requiring the submission of STRs for attempted transactions; (5) demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; (6) ratifying and implementing the Palermo and TF Conventions and clarifying the capability to provide mutual legal assistance; (7) ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information; (8) establishing a broader range of penalties for violations of the ML offense; and (9) ensuring adequate legislation and procedures to provide for confiscation of property of corresponding value.

The FATF is disappointed with Iran’s failure to implement its action plan to address its significant AML/CFT deficiencies. Given the Iranian government’s continued efforts to finalize and pass amendments to its AML and CFT laws, the FATF decided at its meeting this week to continue the suspension of counter-measures. The FATF urgently expects Iran to proceed swiftly in the reform path to ensure that it addresses all of the remaining items in its Action Plan by completing and implementing the necessary AML/CFT reforms, in particular enacting the necessary legislation. We expect Iran to enact amendments to its AML and CFT laws and ratify the Palermo and TF Conventions in full compliance with the FATF Standards by October 2018, otherwise, the FATF will decide upon appropriate and necessary actions at that time.

Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19.

Riaz Haq said...

#Pakistan to stay off the #FATF black list. #India's motion with FATF to blacklist Pak defeated by #China, #Malaysia and #Turkey as the minimum 3 countries required.

Prime Minister Imran Khan telephoned Malaysian Prime Minister Datuk Seri Dr Mahathir Mohamad in London Saturday to thank Malaysia for its support of Pakistan’s bid to avoid being blacklisted by the Financial Action Task Force (FATF).

Dr Mahathir, who is in the United Kingdom for a three-day working visit, took the six-minute call at the Malaysian High Commission.

Malaysia’s support was seen as crucial in helping to stop Pakistan from being blacklisted after India had put forth a motion with FATF to blacklist the country for money-laundering activities linked to terrorism. With Malaysia’s backing, Pakistan now has the support of three nations.
After taking the call from Imran, Dr Mahathir told the Malaysian media present at the High Commission that Malaysia showed its support to Pakistan as the country has upped its war against money laundering. “We decided based on the rule of law. Not due to animosity.

We admit that money laundering is a major problem and it is happening because of the borderless world that allows free flow of capital,” he said, adding there was no point blacklisting any particular nation.

He also pointed out that the free flow of capital has affected other countries as well, including Malaysia, where capitalists have invested huge amounts of money in the share markets pushing up share prices. “At the end of the day, they sell their shares for a profit and take back their capital and their earnings at the expense of the countries they invested in,” he said.

Dr Mahathir also touched on the irony of trade wars, where the world promoted trade on one hand and on the other imposed sanctions. “In the end many innocent nations such as Malaysia are also affected. Hence, though we have no problem with Iran, we cannot trade with the country because of the sanctions. The trade war with China is also affecting us,” he said.

Meanwhile, after Dr Mahathir took the phone call from Imran, Foreign Minister Datuk Saifuddin Abdullah told reporters that with Malaysia’s support, Pakistan has three nations behind it, with the other two being China and Turkey, and hence it could no longer be blacklisted.

Riaz Haq said...

Why #India's #Pakistan policy needs a rethink. #India’s campaign to get Pakistan placed on the ‘black list’ of Financial Action Task Force (#FATF) has failed. Pakistan is unlikely to be ever placed on the black list. #Modi #Hindutva via @economictimes

First, nobody wants Pakistan to implode under the burden of its non-performance, largely for geopolitical reasons, but also because Pakistan has demonstrated a renewed willingness to address its economic and social problems.

Second, western powers are competing with the Eurasian alliance of China and Russia to retain influence in Afghanistan and Pakistan. And third, India’s case against Pakistan is increasingly viewed as having become weaker thanks to the many controversial decisions of the Narendra Modi administration that have a direct or indirect bearing on the bilateral relationship.

While India does get endorsements from governments around the world for its genuine concern about cross-border terrorism, most sign up as an act of courtesy, and in the interests of their business in India.

Riaz Haq said...

Bright side of the moon. #Pakistani state is finally, really, actually, seriously fighting to eradicate monsters it had spawned decades ago for national security. They had become a huge liability for #Pakistan in every sense. #TLP #Taliban #militants #FATF

AWAY from the gloom of governance, there exist some genuine reasons to smile. Here are 10 happy ones:

— The Pakistani state is finally, really, actually, seriously fighting to eradicate monsters it had spawned decades ago for national security objectives. Regardless of whether they served any purpose or not, they had become a huge liability for the country in every sense of the word. The state was, sadly, the last to realise it. Or was the realisation forced upon it? In any case, the battle to put the demon/genie back in the bottle started some years — perhaps after the APS tragedy — and was speeded up after the FATF threat of blacklisting. Gone are the days when duplicity was a policy tool employed to maximum effect in order to deflect criticism, divert pressure and distract local and global opinion. Today, it seems, the state strategy is on the same page as state belief.

— This is a remarkable turnaround. Within a surprisingly short span of four years, terrorism has been contained to a degree where it is no more a central threat to life. The state has also effectively cracked down on terror funding (courtesy FATF pressure) and even the social network that nourished extremist ideologies is now feeling the pressure. How many countries in the world can claim to have defeated terrorism of such magnitude in under five years?

Today, it seems, the state strategy is on the same page as state belief.

— FATF is a threat and a blessing. If Pakistan is blacklisted, we are in serious trouble. The IMF programme will come to an end, remittances will be severely affected, foreign investment will start drying up and the economy will nosedive. But it is also a blessing because the threat has forced the state to realise the folly of its orientation and take measures against terror funding and money laundering (including legislation) that it would not have done so swiftly. FATF will decide next month if Pakistan is to be blacklisted or taken off the grey list. It could also decide to keep Pakistan on the grey list for longer. The state has in the meantime undertaken reforms that will help us tremendously in forging a new direction for the future by jettisoning the baggage we have been lugging along for decades.

— For once, we are seen as the sane voice on the subcontinent. While Modi’s India has plunged into an orgy of communal violence, bigotry and state-sponsored, sanctioned and legislated religious persecution — and while its civil and military leadership spews provocative and dangerously escalatory threats towards Pakistan — we are the ones urging caution, sense, and dialogue in return. India is suddenly seen as the bratty, immature, unstable, and flabby teenage thug while Pakistan is the sensible, reasonable and mature adult that wants to stop the teenager from becoming a menace to society and ending up harming himself and everyone else.

— Remember Balakot? India bombing our trees and wreaking vengeance on a crow? Remember the red faces in New Delhi? Then our response and how PAF hunted down two Indian aircraft? And Abhinandan and his chai and our gracious gesture of releasing him unconditionally? In those few days, Pakistan displayed many traits that should uplift our spirits: giving Indian military arrogance a bloody nose, finding new heroes among our armed forces, revelling in our prime minister being a much taller statesman than his Indian counterpart, treating a prisoner humanely while India wallowed in hate, and telling an anxious world that our restraint against Indian aggression should not be taken for granted. The danger for conflict is very real today, but the last engagement has given us confidence that we as a nation really needed.

Riaz Haq said...

Bright side of the moon. #Pakistani state is finally, really, actually, seriously fighting to eradicate monsters it had spawned decades ago for national security. They had become a huge liability for #Pakistan in every sense. #TLP #Taliban #militants #FATF

— Academic and literary festivals are growing in scale and ambition every year. These events are attracting a galaxy of international women and men of accomplishment to Pakistan and allowing the best and the brightest in the country to gather on a platform and produce fantastic discussions, debates and dialogues. The ThinkFest 2020 held in Lahore last weekend was one such event that had a huge impact not just on our domestic landscape but outside our borders too (full disclosure: I was a participant on discussion panels). The ThinkFest has become a venue for deep policy discussion that generates ideas which are hugely beneficial for state and society. Citizens of all ages mingle with authors, academics, specialists and policymakers in an arena that stimulates healthy exchange of ideas and opinions. The organisers of the festival struggle with funding and sponsorships despite the attention such events attract. The state should support such festivals (and all others that accentuate the world of ideas) so they can scale up and become magnets for positive regional and international attention for Pakistan.

— Tourism is finally centre stage in our policy. Long neglected due to lack of vision, international tourism can put Pakistan on the global map where we can counter the negative stereotype built over decades. Prime Minister Imran Khan may have mishandled many big ticket items but on tourism he deserves all the credit. Single-handedly he has pushed this into mainstream policy and in such a short time the sector is waking up to its tremendous potential. Thumbs up.

— Infrastructure for inter-city travel is world-class. As work on motorways gathers pace, it is not long before you would breakfast in Lahore and reach Karachi by road in time for dinner. Economic benefits will not lag behind.

— Increased governmental and social awareness for more vulnerable and underprivileged segments of society is a welcome trend that is translating into policy. If sustained, this will prod us in the correct direction.

So cheer up. Things are bad, no doubt. And yet there are visible silver linings. May they increase with each passing moment.

The writer is Dawn’s resident editor in Islamabad.

Twitter: @Fahdhusain