China-Pakistan Economic Corridor (CPEC) and the US leverage in potential IMF bailout of Pakistan.
American business publication Wall Street Journal has produced a short video explaining how its staff sees what it describes as "US-China conflict brewing in Pakistan". What is at stake in the battle between China and the United States in Pakistan is the prize of global superpower status. Here are the key points it makes:
1. The US-China conflict brewing in Pakistan is about global dominance sought by the two great powers.
2. If China succeeds, it could become the new center of global trade. If the US wins, it could frustrate China's push to become a global power. The impact of it will be felt around the world for decades.
3. China has already surpassed the United States as the world's biggest exporter of goods and services.
4. The biggest project in China's Belt and Road Initiative (BRI) is China-Pakistan Economic Corridor (CPEC) in which China is investing heavily and providing massive loans.
5. China could use the infrastructure built in Pakistan under CPEC to gain access to the Indian Ocean and supplant the United States in Pakistan.
6. CPEC-related spending is sinking Pakistan deeper in debt to China. It could force Pakistan to seek $8 billion to $12 billion bailout by IMF where US is the biggest shareholder with veto power.
7. US does not want the IMF bailout money to be used to repay Chinese debt. Not bailing out Pakistan is not an option because it could cost US an important ally in the region.
8. US could, however, use IMF bailout to limit what Pakistan can borrow from China. Such a condition will achieve the US objective of significantly slowing down CPEC and BRI.
9. Pakistan's dilemma is that it needs both the infrastructure improvements financed by China and the IMF bailout to ease pressure on its dwindling foreign exchange reserves.
10. Whoever wins in Pakistan will become the number one global superpower.
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Here's the Wall Street Journal video:
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