Saturday, September 15, 2018

US-China Competition in Pakistan; CPEC's Future; RIP Kulsoom Nawaz

Are the United States and China really vying for influence in Pakistan as the American business publication Wall Street Journal claims? What is the big prize at stake? Does Pakistan hold the key to who wins the competition to claim the top spot as a global superpower?

How will the US-China competition affect Pakistan? Will Pakistan get IMF bailout or Chinese bailout? Will CPEC development slow down or accelerate? Will China invest in export oriented industries in Pakistan and buy more Pakistani products? How will PTI government led by Prime Minister Imran Khan handling the situation? Will they play their cards well to get maximum benefits for Pakistan?

What is the impact of Begum Kulsoom Nawaz's passing on Nawaz Sharif family? Is it more than a family's tragedy? What does it mean for Pakistani politics and Nawaz Sharif's future?

Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Sabahat Ashraf (iFaqeer) and Riaz Haq (www.riazhaq.com)

https://youtu.be/BQTixVzfmiE




Related Links:

Haq's Musings

South Asia Investor Review

Can Pakistan Avoid Recurring Balance of Payment Crisis?

Pakistan Economy Hobbled By Underinvestment

Pakistan's IT Exports Surging

China and US Battle For Influence in Pakistan

Pakistan-China-Russia Vs India-Japan-US

Chinese Yuan to Replace US $ as Reserve Currency?

Remittances From Overseas Pakistanis

Can Imran Khan Lead Pakistan to the Next Level?

China to Expand Manufacturing in Special Economic Zones

18 comments:

Riaz Haq said...

#Pakistan's army chief Gen Bajwa visits #Beijing after 'Silk Road' tension. He is most senior figure to visit staunch ally #China since the new government of Prime Minister Imran Khan took office in August. #CPEC #BRI https://www.reuters.com/article/us-pakistan-china-military/pakistans-army-chief-visits-beijing-after-silk-road-tension-idUSKCN1LW0PR

Pakistan has deepened ties with China in recent years as relations with the United States have frayed.

Bajwa may be hoping in Beijing to smooth out any Chinese alarm at comments last week by Pakistan’s commerce minister, Abdul Razak Dawood, who suggested suspending for a year projects in the China-Pakistan Economic Corridor (CPEC), the Pakistan leg of China’s Belt and Road Initiative that includes recreating the old Silk Road trading route.

Bajwa, the Chief of Army Staff (COAS), regularly holds meetings with world leaders due to the Pakistan armed forces’ outsize influence in the nuclear-armed nation, where the military controls security and dictates major foreign policy decisions.


“During the visit COAS will interact with various Chinese leaders including his counterpart,” Major General Asif Ghafoor, the military spokesman, tweeted late on Sunday.

Beijing has pledged to invest about $60 billion in Pakistan for infrastructure for the Belt and Road project.

Dawood, in an interview with the Financial Times, also suggested the CPEC contracts had been unfairly negotiated by the previous government and were too favorable to the Chinese. Later he said the comments were taken out of context, but did not dispute their veracity.

The critical comments were published just after China’s top diplomat, State Councillor and Foreign Minister Wang Yi, visited Pakistan and the two sides reaffirmed the mutual benefits of the Beijing-funded projects.

On Thursday, Pakistan’s government said it wanted CPEC to include more projects with a focus on socio-economic development, something which would align more with the populist agenda of Khan’s new administration.

Riaz Haq said...

Overseas Pakistanis sent home nearly $4 billion home in July and August, the first two months of FY 19.

https://dunyanews.tv/en/Business/456455-Pakistan-receives-$3.966bn-in-remittances-in-two-month

Riaz Haq said...

#ADB sees #Pakistan’s #economy slowing down in current fiscal year. #Manila-based lending agency forecasts #GDP growth rate to touch 4.8pc this year compared to 5.8pc in fiscal year ending in June 2018
https://www.dawn.com/news/1435256

Anticipating a one percentage point fall in the rate of growth and two percentage points rise in inflation during the current fiscal year, the Asian Development Bank has advised the newly elected government to address rising debt obligations, falling reserves and large twin deficits.

In its flagship Asian Development Outlook 2018 update, the Manila-based lending agency said the economy appeared slowing down and forecast GDP growth rate to touch 4.8 per cent this year, compared to 5.8pc in the fiscal year ending in June 2018.

It said Pakistan’s 5.8pc growth last fiscal was higher than the ADB forecast, but the outlook is clouded by a large budget deficit, a deteriorating current account deficit and falling foreign exchange reserves. “The growth forecast for Pakistan in 2019 is downgraded in light of a pressing need to deal with large budget and external imbalances,” it said.

Also, the ADB noted rate of inflation growing significantly to 6.5pc at the end of current fiscal against about 4.5pc last fiscal year.

The bank said Pakistan required mobilising substantial external financing to buy time for orderly reform to reduce the large external and domestic imbalances. Such resources can be acquired from bilateral and multilateral sources, the diaspora, or international capital markets. “The key challenges are to adopt the right reforms and achieve good outcomes to sustain public support,” the report noted.

The good thing is that Pakistan’s economy has time and again shown resilience and the capacity to bounce back, it said. Although formidable development challenges remain, the ADB expected the stability fostered by the smooth political transition and the new government’s strong commitment to focus on pockets of vulnerabilities and implement pro-job and socioeconomic development policies that will stimulate robust, sustainable growth in the years ahead, said ADB Country Director for Pakistan Xiaohong Yang.

The 4.8pc growth prospect is linked to success of the government in obtaining finance and on the strength of an improved security and energy supply, continued investment in the CPEC and other initiatives, and recognition of the need to rein in deficits. “Challenges to maintaining the growth momentum are tighter monetary and fiscal policies to contain domestic demand, currency depreciation, and tension in the global trade environment,” the ADB noted.

On the supply side, water shortages in some areas are likely to keep agricultural production below target in fiscal 2019. Growth in manufacturing and services will likely be affected by fiscal and monetary tightening. On top of dealing with macroeconomic imbalances, the new government faced long-delayed decisions on raising tariffs to contain rapidly rising and potentially disruptive inter-company arrears in the energy sector — so called “circular debt” that exceeds PRs1.4 trillion, or 5pc of GDP.

Average annual inflation is projected to reach 6.5pc in fiscal year 2019 because of currency depreciation and elevated international oil prices. Inflation accelerated sharply for both food and other purchases in the first two months current year to 5.8pc from 3.2pc a year earlier. The SBP increased the policy rate by 100 bps to reach to 7.5pc in July 2018 in an effort to contain the inflation pressure and is likely to continue further as part of its monetary tightening.

The new government needs to move swiftly to put in place its macroeconomic policies including fiscal, monetary, tax, and trade reform policies to promote financial stability and growth. Pakistan needs to institute mechanisms to increase competitiveness, attract private sector investments, and strengthen the ease of doing business as well as Pakistan’s position in the global value chain, the ADB said.

Riaz Haq said...

#Pakistan, #Russia ink deal for feasibility study on $10b offshore #gas pipeline.The China-Pakistan Economic Corridor (#CPEC) has now entered the industrialization phase and needs gas for duty and tax-free Special Economic Zones (#SEZs). https://tribune.com.pk/story/1812965/2-pakistan-russia-ink-deal-feasibility-study-10b-offshore-pipeline/

Pakistan and Russia signed a deal on Thursday for conducting feasibility study on a planned $10-billion offshore gas pipeline, an idea coined by Moscow to capture the energy market of Pakistan.
Ministry of Energy (Petroleum Division) Additional Secretary Sher Afgan and Deputy Energy Minister of Russia Anatoly Yanovsky signed a memorandum of understanding (MoU) for undertaking the study.

Inter State Gas Systems (ISGS) Managing Director Mobin Saulat was also present at the ceremony. On the occasion, the two sides expressed interest in enhancing bilateral relations in the energy sector.
ISGS – a state-owned Pakistani company established to handle gas import projects which is already working on schemes like the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline – has been designated by Pakistan for executing the pipeline project along with Russia’s energy giant Gazprom.

Gazprom will conduct the feasibility study and bear its expenses in order to assess economic viability and cost of the project.

The China-Pakistan Economic Corridor (CPEC) has now entered the industrialisation phase and needs gas for duty and tax-free Special Economic Zones (SEZs). The offshore gas pipeline will meet energy needs of the industries being set up in the SEZs along the CPEC route.

According to officials, the pipeline will connect Pakistan and Russia and act as an energy corridor between the two countries.

“Strategically, it is a very important project as the two countries will come closer to each other,” an official said. “At the same time, Pakistan will gain access to the Russian market in order to boost its overall exports which remained stagnant during five-year tenure of the PML-N government.”

Russia has nominated Public Joint Stock Company Gazprom for implementation of the project. Pakistan’s cabinet has permitted the company to conduct the feasibility study at its own cost and risk.

Separately, ISGS is working on the $10-billion Tapi gas pipeline which will connect South and Central Asia. Construction work on the scheme in Pakistan is planned to start in March 2019.

These projects are termed game changer for Pakistan as they will not only lead to regional connectivity, but will also meet growing energy needs of the country.

Owing to a long-running tussle with Europe and the US over the annexation of Ukrainian region of Crimea, Russia is looking for alternative markets and wants to capitalise on increasing energy demand in South Asia.

Riaz Haq said...

392 km #Sukkur-#Multan section of #Peshawar-#Karachi Motorway to open for traffic August 04, 2019. 69% of total work has been completed. #Pakistan #CPEC #China https://pakobserver.net/multan-sukkur-motorway-project-to-be-completed-before-time/ via @pakobserver

The 392-kilometer Sukkur-Multan section of Peshawar-Karachi Motorway is likely to be opened for traffic by May next year, two months ahead of the given schedule of August 04, 2019, General Manager of the project, Arbab Ali said. ‘At present 69 percent of total work has been completed, out of which 392 kilometer roadbed and culvert passage, and other structures are about to be competed (99%). Up to now, all the bridges are near completion, and asphalt pavement works are advancing at full speed, and the building construction and ancillary works also being implemented actively,’ he said while talking to a group of media in Multan.
He said this section was part of the mega China Pakistan Economic Corridor (CPEC) project. He informed that on May 26 this year, a 33 km section (Multan-Shujaabad) in the north end of the project was inaugurated by then Prime Minister Shahid Khaqan Abbasi, however it could not be opened to traffic due to incomplete work of the section. ‘This section will be opened to traffic by March next year’. Pakistan’s PKM project starts from Karachi via Hyderabad, Sukkur, Multan, Islamabad, Lahore and other cities ends in Peshawar with a total length of 1,152 kilometers.
Sukkur-Multan has a design speed of 120 km per hour, and it is a two-way six-lane road with a contractual value of USD 2.889 billion (excluding $180 million tax exemption). The Export-Import Bank of China provides loan support, and China State Construction Company Limited (CSCEC) is responsible for construction on Engineering Procurement Construction (EPC) basis. With a contract period of 36 months (including design period of four months), the project officially started on August 5, 2016.
Meanwhile CEO of CSEC Mr Zong informed that majority of the investment by China was based on soft loan (with a markup rate of only 2.2%) while the rest was based on commercial loans. He said that in this project, a total of 101 bridges, 1503 structures, 11 interchanges, six service areas, five rest areas, and 22 toll plazas will be constructed. ‘The whole project is divided into seven sections, each of which is about 54-59 kilometers long and all seven sections are constructed simultaneously,’.—APP

Riaz Haq said...

#CPEC has strategic implications for #China-#Pakistan, China-#India, India-#US, and US-China relations. #Washington's targeted support to Pakistan could prevent Pakistan’s dependence on China, mitigating some of the most negative effects https://carnegieendowment.org/2019/12/16/strategic-implications-of-china-pakistan-economic-corridor-pub-80611 via @CarnegieEndow

by JAMES SCHWEMLEIN

Great power politics is resurgent in South Asia today. China’s growing military ambition in the region is matched in financial terms by its Belt and Road Initiative, the largest and most advanced component of which is the China-Pakistan Economic Corridor. What remains unclear is how the United States should navigate the new dynamic. This report, which is based on research and consultations with experts worldwide, addresses the question of how the India-Pakistan rivalry will play into the emerging great power competition.

SUMMARY
China’s changing role in Pakistan offers an opportunity to examine China in a learning mode, in a challenging environment, and as an actor in the decades-long rivalry between Pakistan and India.
China’s long-term investments in the China-Pakistan Economic Corridor (CPEC) can be explained in at least three ways: to demonstrate China’s attractiveness as a partner; to prove that China’s development model can be exported; and to use Pakistan as an element of its strategic competition with the United States and India.
Pakistan’s hopes for CPEC are mitigated by China’s apparent lack of interest in establishing an overland transit corridor and counterterrorism concerns, which are likely to be a persistent liability in the years ahead.
There is a growing potential that China’s surge into Pakistan could increase the threat that Pakistan poses to India, particularly if China expands its military position there and if Pakistan does not curtail its use of militant proxies. The resulting dynamic could prove a further impetus toward deepening the U.S.-India partnership in the face of a common threat from China and Pakistan.
The ultimate success of China’s investments will continue to be threatened by political and economic instability in Pakistan and the country’s ongoing support for terrorism.
The United States could offer targeted support to help Pakistan determine how best to use Chinese infrastructure to grow its economy, which could contribute to improving and stabilizing Pakistan.

Riaz Haq said...

CPEC and Beyond: China and the US Fight For Influence In Pakistan
Beijing and Washington tussle to have their way with Islamabad’s foreign policy decisions.


https://thediplomat.com/2020/01/cpec-and-beyond-china-and-the-us-fight-for-influence-in-pakistan/



On Monday, the U.S. principal deputy assistant secretary of state for South and Central Asia, Alice Wells, in a statement said that a number of firms blacklisted by the World Bank had received contracts in the China-Pakistan Economic Corridor (CPEC).

In her renewed criticism, Wells, who is on a four-day visit to Pakistan, noted that the lack of transparency in the existing deals and the financial conditions imposed by China have increased Pakistan’s overall debt.

This not the first time that Wells has criticized the CPEC. In November last year, Wells warned that the Chinese loans are “going to hang over Pakistan’s economic development potential, hamstringing Prime Minister [Imran] Khan’s reform agenda.”

Broadly, CPEC has come under U.S. criticism due to its wider linkage to China’s global Belt and Road Initiative (BRI) Project. While Washington’s overt criticism of the project continues, it has also continued to insisted that Pakistan is a sovereign state that can make any trade deals that the country’s leadership finds suited to its interests. After Wells’ recent criticism of the project, U.S. Ambassador to Pakistan Paul W. Jones explained that Wells’ “remarks were meant to generate a debate.”

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it’s unlikely that Washington’s criticism of CPEC will wear out in the coming months or years. Arguably, policymakers in Pakistan are wary of Islamabad’s growing financial reliance on China but at the same time they have been unable to win any significant financial support from Washington. Khan’s government demanded a major review to CPEC projects when it came to power in 2018. However, to Khan’s frustration, Beijing was only willing to review projects that had not started yet. Reportedly, the matters were settled after Pakistan’s top military leadership intervened and assured China of Islamabad’s commitment.

Arguably, CPEC has emerged as the next battleground for the United States and China’s economic rivalry. Both countries’ warnings and counterwarnings are coming at a time when Pakistan is looking for financial assistance from both countries. Pakistan may not like China’s financial terms, but there is no other major investor willing to assist Islamabad at a time when the country is stuck in a major financial crisis.

Moreover, while the United States has assured Pakistan that it is greatly enhancing trade with the country, it’s unlikely that Islamabad will win Washington’s economic support at a level even close to Beijing’s financial commitments. However, it remains to be seen if Washington can allow Beijing to completely wipe out its ability to influence Pakistan’s policymakers.

It’s unlikely that Islamabad is going to be able to balance its relationship between China and the United States in the coming months or perhaps years as both countries compete for influence in Pakistan.

Riaz Haq said...

What Would #US-#Pakistan War Look Like?
One word: Hell! #India could help with runways for US warplanes. US would assume some #Pakistani #nuclear weapons would survive sustained air campaign to destroy them & then used against #American forces or targets. https://nationalinterest.org/blog/buzz/what-would-hypothetical-us-pakistan-war-look-141072

In the U.S. television series Homeland, the United States and Pakistan are brought to the brink of war. In real life, the two countries are allies, albeit strained ones at that, and many Americans believe Islamabad often actively works against Washington’s interests. If the relationship turned poisonous, how would the United States prosecute a war against Pakistan?
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A U.S. war with Pakistan would be extremely difficult to wage and fraught with difficulty. It would also be forced to proceed under the assumption that some Pakistani nuclear weapons would survive a sustained effort to destroy them, to be used against U.S. forces or targets in some way later in the campaign. This is the sort of uncertainty that can veto military action and makes a war between Washington and Islamabad an absolute conflict of last resort.

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Of course, there is one regional power that can provide everything the U.S. needs, including local air bases and a large army, navy, and air force, already positioned in the theater with well-sketched battle plans: India. India could help with an air campaign, providing runways for U.S. fighter bombers to operate from, or even contribute its own airpower. Indian ground forces have a far shorter route to Islamabad and overmatch Pakistani forces on the ground.-----------


In order to proceed, let’s sketch out two war scenarios. In one, we’ll assume that the United States is pursuing an air-only campaign, in order to punish the country or strip it of some vital capability—nuclear weapons being a prime example. In the second scenario, the United States seeks to topple the country’s government entirely, including the occupation of the capital, Islamabad.
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An air campaign against Pakistan would be slower and more fraught with difficulty than past campaigns. Pakistan’s Air Force has nearly four hundred fighters, including American F-16 Fighting Falcons, and would need to be quickly destroyed. U.S. Navy and Air Force aircraft could see their first significant air to air combat since the 1991 Persian Gulf War.

An all-out invasion of Pakistan would be much more difficult, bordering on impractical. An invasion would require securing the city of Karachi, a coastal city of 14 million, then a march upcountry of approximately 700 miles. Securing Karachi alone would be an immense effort dwarfing efforts to secure Baghdad in the late 2000s, one that required more than 100,000 U.S. troops and the cooperation of local militias.

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Another power that could join such a conflict is China. China and Pakistan enjoy warm relations, and the rhetoric between the two countries suggests a relationship nearing that of a mutual defense pact. But it isn’t, and it’s not clear that China would risk direct conflict with the United States if Pakistan in some way overreached. China might, on the assumption that a U.S. puppet state in neighboring Pakistan would diminish China’s power and influence abroad. It’s worth remembering that the last time Chinese forces fought Americans was after the U.S.-led United Nations forces advanced into a state neighboring Beijing.

Riaz Haq said...

How #UnitedStates Should Deal With #China in #Pakistan. #US would be better off grappling with complexity of the challenge posed by China’s growing influence especially in the context of #India-Pakistan regional stability. #CPEC https://carnegieendowment.org/2020/04/08/how-united-states-should-deal-with-china-in-pakistan-pub-81456 via @MarkeyDaniel

U.S. policymakers are correct to sense that under CPEC’s surface lies a degree of frustration, uncertainty, and reduced ambition in both Islamabad and Beijing. Even if Trump administration officials only aim to give voice to concerns quietly shared by many Pakistanis, however, Washington’s approach has been too heavy-handed, tone deaf to the political and diplomatic exigencies facing Pakistan’s civilian and military leaders.

Moving forward, Washington’s policy should take two ground realities into account. First, Pakistani leaders—like those across Asia—have no particular desire to take a side in the brewing geopolitical competition between the United States and China. Self-interested more than ideological, they would prefer to extract benefits from both Beijing and Washington, even to play them off of each other. Moreover, many Pakistanis tend to question U.S. motivations, doubting Washington’s noble, liberal rhetoric about freedom and assuming those words mask ulterior aims, from safeguarding commercial and security interests to practicing outright imperialism. To be sure, Chinese rhetoric about noninterference in the sovereign affairs of other states strains credulity for many Pakistanis, but in the aftermath of a terribly fraught two decades of dealing with the United States, Washington’s claims of beneficence ring equally hollow.

Second, U.S. policymakers should keep in mind that CPEC is only one slice of the China-Pakistan relationship. Moreover, different infrastructure projects are likely to have different political consequences. Rather than framing the U.S. policy response as a narrow competition over the commercial and economic issues of “cost, debt, transparency, and jobs,” U.S. policymakers should train their focus on three broader aspects of China’s relationship with Pakistan.

The first and most immediate concern should be with respect to China’s impact on regional stability, especially between India and Pakistan, but also in the context of U.S. plans for a complete military withdrawal from Afghanistan. Second, now and for the foreseeable future, Washington should come up with more effective ways to compete with Beijing’s growing political influence, including its role in strengthening repressive, illiberal governance in Pakistan. Third, over the long run, the United States will want to weigh the geopolitical implications of the China-Pakistan defense partnership, including how China’s presence in Pakistan will better enable it to project military power into South Asia and the Middle East.

REGIONAL STABILITY
Over the past year, India and Pakistan have again reached the brink of war. Another India-Pakistan military crisis may be brewing this summer. Even as Trump administration officials perceive China as a global competitor, they would also be smart to appreciate Beijing’s role as a potential diplomatic partner when it comes to restraining India and Pakistan from war. If tensions in China-U.S. relations inhibit cooperation in the midst of a South Asian crisis, all sides will lose.

At present, U.S. and Chinese officials appear to hold different views on how to assign responsibility (and blame) for tensions between New Delhi and Islamabad......

Riaz Haq said...

#Pakistan moves to save face as #coronavirus hits Belt and Road. "The world....will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital" #China #CPEC https://asia.nikkei.com/Spotlight/Belt-and-Road/Pakistan-moves-to-save-face-as-coronavirus-hits-Belt-and-Road2

The government of Pakistan has ordered the resumption of all infrastructure and energy projects that are part of China's Belt and Road Initiative, but experts believe the move is a matter of face-saving.

Work on the China-Pakistan Economic Corridor, a major piece of the Belt and Road, stopped when the novel coronavirus started to spread in Pakistan in February. According to Johns Hopkins University data, Pakistan has confirmed 9,216 cases as of Tuesday, including 192 deaths.

Naghmana Hashmi, Pakistan's ambassador in Beijing, told Pakistani media on Sunday that a number of mechanisms have been established to complete all corridor projects within the prescribed time frame. But analysts say restarting the projects at the height of the pandemic is meant to spare Beijing and Islamabad embarrassment.

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Amid the economic crisis, some have questioned the economic viability of Belt and Road projects. According to the Planning Commission of Pakistan, the country's top development planning body, Chinese skilled laborers are paid 1,300% more than Pakistani laborers for the Main Line 1 (ML-1) railway project, a discrepancy it says must be rationalized.

The commission has also asked Pakistan Railways to evaluate the impact of a huge Chinese loan of almost $9 billion for the ML-1, which is the single largest infrastructure project for the corridor in the country. Pakistan expects 90% of the funding for the ML-1 to come from the Chinese loan. The commission fears the terms may saddle the country with heavy debt if it is not looked into now.

On the other hand, there are bullish voices who say that resuming Belt and Road projects is worth the risk.

Hasaan Khawar, a public policy analyst based in Islamabad, believes the corridor's special economic zones can help Pakistan solve its economic woes. "The world is changing fast, and it will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital," Khawar said. He added that the corridor and the zones provide a ready framework for Pakistan to attract Chinese capital and should, therefore, be a priority for Pakistan.

Malik believes that the aftermath of the COVID-19 crisis will leave China better positioned as a global power and savior of a world in deep crisis. After this, the world will see a continuation and expansion of Belt and Road projects, he says.

Kugelman sees the corridor as the most concrete and active part of the Belt and Road and says its trajectory will be shaped to a great extent by how the corridor develops. He adds that if corridor projects are put on hold until the pandemic has ended, the Belt and Road as a whole could take a pause. If they move ahead, that portends more forward movement for the initiative in the near future, Kugelman says.

Riaz Haq said...

“Because technology is the key weapon in the fight for control of the industries of the future and in combating pandemics, the US private tech sector will become increasingly integrated into the national-security-industrial complex.”

https://www.theguardian.com/business/2020/apr/29/ten-reasons-why-greater-depression-for-the-2020s-is-inevitable-covid

Riaz Haq said...

#US urges #China to waive #Pakistan’s #debt. “At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan” #CPEC #PMLN #COVID https://tribune.com.pk/story/2225775/1-us-urges-china-waive-off-pakistans-debt-amid-covid-19-crisis/

The United States on Wednesday urged China either to wave off or renegotiate what it called “unsustainable and unfair” debt of Pakistan as it once again raised serious questions about the lack of transparency in the multibillion-dollar China-Pakistan Economic Corridor (CPEC).

“At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan,” said Alice Wells, the outgoing US Assistant Secretary of State for South and Central Asia.

“We hope China will join in either waving off debt or renegotiating these loans and creating a fair and transparent deal for Pakistani people,” Ambassador Wells said while addressing a farewell news briefing through a video link attended by journalists from South and Central Asia.
This was not the first time the US and Wells in particular publically questioned the viability of CPEC. Wells in the past also expressed similar views, declaring CPEC detrimental to Pakistan’s economy.

China always dismissed the US claims and instead challenged Washington to match its economic assistance to Pakistan.

Ambassador Wells, who is retiring this week, said the US supports CPEC and other development projects as long as they meet international standards, uphold environmental and labour standards.

“I enumerated my concerns and the United States government’s concerns over CPEC, over the lack of transparency involved in the project, over the unfair rates of profits that are guaranteed to Chinese state organisations to the distortions it caused in the Pakistani economy including by the massive imbalance in the trade Pakistan now has with China,” she argued.

Pakistan has been seeking debt relief from G20 countries to offset the negative fallout of coronavirus on its economy.

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The top US diplomat also spoke about President Trump’s South Asia strategy, which according to Wells, brought fundamental change in approach towards Pakistan.

She said that Trump’s strategy had made it clear that Pakistan had to take decisive action against terrorist and militant groups that supported conflict in Afghanistan.

The suspension of security assistance by President Trump in January 2018 was a demonstration of that resolve to hold Pakistan accountable for the alleged presence of terrorist groups on its soil, she added.

According to Wells, since then Pakistan had taken “constructive steps” to advance Afghan peace process. She said Ambassador Zalmay Khalilzad had developed “solid cooperation” with Pakistan civil and military leadership.

The US senior diplomat also praised Pakistan’s steps to eradicate threat posed by terrorist groups to regional stability.

“Pakistan is also taking initial steps towards curtailing other terrorist groups that threatened the region such as arresting and prosecuting Laskhar-e-Tayaba leader Hafza Saeed and beginning to dismantle terrorist financing structures.

“And as Pakistan’s commitment to the regional peace grown, we see initial growth in our relationship with Pakistan as well particularly in trade,” she further said.

Riaz Haq said...

EU Foreign Policy Chief Josep Borrell: “Analysts have long talked about the end of an American-led system and the arrival of an Asian century....This is now happening in front of our eyes” #US #China #Europe #America #Asia #COVIDー19 #Coronavirus https://www.newsweek.com/pressure-choose-sides-us-china-eu-diplomat-josep-borrell-coronavirus-warning-1506325

Pressure to choose sides between the U.S. and China is growing amid the arrival of an "Asian century," a top European diplomat said today.

Europe is facing an "existential crisis" sparked by the COVID-19 crisis, which could be a catalyst in the demise of an American-led system, according to Josep Borrell, a vice president of the European Commission branch of the European Union (EU).

The diplomat, who also serves as the EU's High Representative for Foreign Affairs and Security Policy, told virtual participants of the German Ambassadors' Conference 2020 that the pandemic could be considered a "great accelerator of history."

Borrell claimed that in the world that emerges Asia will be increasingly important, while noting that China is fast becoming "more powerful and assertive."


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"Analysts have long talked about the end of an American-led system and the arrival of an Asian century. This is now happening in front of our eyes," he said. "If the 21st century turns out to be an Asian century, as the 20th was an American one, the pandemic may well be remembered as the turning point of this process."

His comments were first reported by the Associated Press.

Tensions have spiked between the U.S. and China in recent years,, with tit-for-tat trade tariffs being slapped on goods by both countries. U.S. officials have also complained about national security concerns linked to Chinese tech firms, and 5G.

This month, president Donald Trump told Fox Business that he didn't want to speak with China's leader, Xi Jinping, and suggested the U.S. may cut ties.

"We could cut off the whole relationship," he told Fox host Maria Bartiromo. "Now if you did, what would happen? You would save 500 billion dollars."

In April, Trump said in a briefing that "serious investigations" were being conducted into China's handling of the ongoing COVID-19 pandemic, which ravaged America this year, causing more than 1.6 million infections and close to 98,000 deaths.

China has claimed its own virus infection and death rates have plunged, although official health statistics have been met with widespread scepticism.

"We are not happy with that whole situation because we believe it could have been stopped at the source, it could have been stopped quickly, and it wouldn't have spread all over the world. And we think that should have happened," Trump fumed.

Borrell said today that the need for multilateral cooperation has "never been greater" but raised concerns that leadership from the White House is lacking.

"This is the first major crisis in decades where the U.S. is not leading the international response," the EU diplomat said. "Maybe they don't care, but everywhere we look we see increasing rivalries, especially between the U.S. and China.

He added: "The pressure to choose sides is growing. As the EU, we should follow our own interests and values and avoid being instrumentalized by one or the other.
Borrell went on to say that U.S.-China rivalry is often having a "paralysing" effect on the multilateral system, fueling more arguments and vetoes than agreements.

According to the transcript, he said: "We need a more robust strategy for China, which also requires better relations with the rest of democratic Asia. That's why we must invest more in working with India, Japan, South Korea et cetera.

Riaz Haq said...

#US-#China #Tradewar sends Kearney #US Reshoring Index to record high. It compares US domestic manufacturing to imports with Manufacturing imports from 14 Asian nations including #Bangladesh, #India, #Pakistan. #Vietnam is biggest beneficiary. #COVID__19 https://apnews.com/PR%20Newswire/fc57a9d217e2fc9c38d311f322d13e64

US companies in 2019 sourced substantially fewer manufactured goods from 14 traditional Asian trading partners, apparently as a direct result of aggressive US government trade policies, according to the seventh annual Kearney US Reshoring Index.

The ongoing trade war sent the Reshoring Index to a record high in 2019.

The Reshoring Index compares US domestic manufacturing gross output to the level of manufacturing imports from 14 traditional Asian low-cost countries (LCCs): China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka, and Cambodia.

Kearney, the global management consulting firm that calculates the index, attributes much of the big 2019 shift to a 17 percent decline in US imports of manufactured goods from China, which has long been the leading choice for offshore production. Intriguingly, manufactured imports from Vietnam and Mexico both increased last year, evidence that US companies were starting to significantly adapt their sourcing strategies even before the COVID-19 crisis began disrupting global supply chains early in 2020.

Big Jump in Reshoring Index
In 2019, US manufacturing was steady while imports from the 14 Asian trading partners notably declined. Imports of manufactured goods from the 14 Asian LCCs shrunk to $757 billion from $816 billion in 2018—a 7.2 percent decrease—while US domestic manufacturing output was $6,271 billion in 2019, virtually unchanged from 2018.

Consequently, the US market imported just 12.1 cents worth of offshore production from the Asian LCCs for every $1 of domestic manufacturing gross output in 2019, nearly a full percentage point decrease in corresponding imports from the previous year.

The US Reshoring Index is expressed in basis points (1 percent change = 100 basis points). A positive index number indicates net reshoring. The precise 2019 Reshoring Index calculation is: 2018 import/domestic manufacturing ratio of 13.058 percent minus corresponding 2019 ratio of 12.077 percent = 0.98 change, or 98 bps. The resulting Reshoring Index of 98 is by far the highest yet registered. The previous index high was 11 bps in 2011. The index came in as low as -112 bps as recently as 2015.

2019 Insurgents
US trade policies also appear to be changing trade dynamics among and between the various countries exporting manufactured goods to the US. While US manufacturing imports from China declined, imports from the other Asian LCC countries increased by $31 billion in 2019. Similarly, manufacturing imports from Mexico rose $13 billion.

“Much of China’s loss was Vietnam’s gain,” said Patrick Van den Bossche, Kearney partner and co-author of the study. “Of the $31 billion in US imports that shifted from China to other Asian LCCs, almost half (46 percent) was absorbed by Vietnam, which exported $14 billion more manufactured goods to the US in 2019 than it did in 2018.”

“The door for these insurgents was clearly opened by ongoing US–China trade disputes, as their gains were mainly in product categories impacted by tariffs,” observed Yuri Castano, Kearney manager and co-author of the study. “Apparently, the trade war jolted US companies to start rethinking and reshaping their supply networks.”

Costs, risk and resilience
“2020 dawned with a disruption of a new order of magnitude―COVID-19,” noted Brooks Levering, Kearney partner and co-author of the study. “We anticipate that the harsh lessons of this crisis will compel companies to go much further in rethinking their sourcing strategies― indeed, their entire supply chains.”

Riaz Haq said...

#China announces $178.2 billion #military budget. Premier Li dropped the use of the word “peaceful” when talking of reunification with #Taiwan. #US Def Sec Mark Esper reaffirmed that his country would stand by Taiwan #Asia #geopolitics #India #Pakistan https://www.defensenews.com/global/asia-pacific/2020/05/22/china-announces-1782-billion-military-budget/#.Xsx7vSEvR8A.twitter

China has announced a 6.6 percent growth in its defense budget for this year, its lowest rate of increase for almost three decades.

The growth in China’s defense budget would see spending rise from $167 billion last year to $178.2 billion, an increase of about $11 billion. The country has the second-largest defense budget in the world, behind only the United States.

Despite the growth of China’s defense budget being at its lowest, in percentage terms, since the early 1990s, the 6.6 percent figure only represents a slightly lower figure than the 7-7.5 percent growth many analysts estimated before the pandemic. In real dollar terms, the $11 billion increase in defense spending is the fifth-highest increase ever for the country.

It also shows that China is determined that the People’s Liberation Army, or PLA, will remain insulated as much as possible from the negative economic effects of the COVID-19 pandemic, which resulted in China’s economy shrinking by 6.8 percent in the first quarter of 2020 compared to the same time last year.

Chinese Premier Li Keqiang said as much during his speech Friday at the opening of the annual gathering of its largely rubber stamp parliament. He pledged that the PLA would not be worse off.

“We will deepen reforms in national defense and the military, increase our logistic and equipment support capacity, and promote innovative development of defense-related science and technology,” he told legislators at the opening of the National People’s Congress, which kicked off Friday at the Great Hall of the People in China’s capital, Beijing.

Li also touched on the issue of Taiwan during his speech, reiterating that China would “resolutely oppose and deter any separatist activities seeking Taiwan independence.” He also called on the Taiwanese people to “join the mainland in opposing Taiwanese independence and to promote reunification."

China views Taiwan as a breakaway province, with the self-governing island off its coast having formed its own government in 1949 when Nationalist forces fled there following defeat at the hands of Communists during China’s civil war.

Perhaps tellingly, Li dropped the use of the word “peaceful” when talking of reunification with Taiwan, a departure from decades of using it as the standard expression Chinese leaders used when addressing parliament and mentioning Taiwan. Although China has never renounced the possible use of force for reunification efforts.

Li’s call for reunification came as U.S. Defense Secretary Mark Esper reaffirmed that the country would stand by Taiwan. Speaking on Hugh Hewitt’s radio show, Esper said the U.S. would “certainly live up to our commitments to Taiwan,” noting that it is also bound by the Taiwan Relations Act enacted by Congress, which pledges to supply Taiwan with weapons it needs for its defense.

Accordingly, the U.S. State Department announced Thursday that it has approved the sale of an additional 18 heavyweight submarine torpedoes to Taiwan for $180 million. The Mk 46 Mod 6 Advanced Technology torpedoes will equip Taiwan’s submarine fleet, and the approval follows another for 48 similar weapons in 2017.

Taiwan has reported that Chinese military activity around the island continues unabated throughout the ongoing pandemic, with Chinese naval vessels and military aircraft regularly operating in international airspace and waters around Taiwan.

China calls the movements routine training exercises. However, the island’s government sees these moves as part of an intimidation campaign against Taiwan and regularly publicizes PLA ship and aircraft movements in its vicinity.

Riaz Haq said...

#Pakistan factor behind #India-#China stand-off in #Ladakh. “There appears to have been a strategic shift in Chinese thinking after India abrogated Sections of Article 370 last year... Pakistan has become exceptionally important to China.." #CPEC The Hindu https://www.thehindu.com/news/national/pakistan-factor-behind-india-china-stand-off-in-ladakh/article31676271.ece


China’s heightened concerns over Aksai Chin and the China-Pakistan Economic Corridor (CPEC), which is routed, in part, through Gilgit-Baltistan, may have set the backdrop for the ongoing stand-off between Indian and Chinese troops in Ladakh.

“There appears to have been a strategic shift in Chinese thinking after India abrogated Sections of Article 370 last year and created the Union Territories of Jammu and Kashmir and Ladakh. India has always claimed Aksai Chin, but the issue appears to have been re-interpreted in China after the special status of Jammu and Kashmir was revoked,” says P. Stobdan, former ambassador to Kyrgyzstan, who specialises in trans-Himalayan studies.

Mr. Stobdan added that the CPEC — China’s strategic pathway to the Indian Ocean — which passes through Gilgit-Baltistan — has emerged as an entirely new factor, reinforcing and clubbing the already strong security relationship between China and Pakistan. “Pakistan has become exceptionally important to China as CPEC — which gives access to Gwadar port and helps Beijing reduce its vulnerability on the Americans who dominate Malacca Strait — is the gateway governing China’s international trade. The CPEC has imparted game-changing strategic ballast to the Sino-Pak relationship.”

The CPEC is “too big to fail,” as China has already staked its prestige in the enterprise, which has been showcased as the flagship of the Beijing-led Belt and Road Initiative (BRI).

The CPEC plan was robustly challenged in the aftermath of the August 5 change in the status quo in Jammu and Kashmir, which covers Pakistan-occupied Kashmir (PoK), including Gilgit-Baltistan, on the corridor’s route. Speaking in the Lok Sabha on August 6 last year, Home Minister Amit Shah unambiguously nailed India’s claims over PoK and Aksai Chin.

“Kashmir is an integral part of India, there is no doubt over it. When I talk about Jammu and Kashmir, Pakistan-occupied Kashmir and Aksai Chin are included in it,” he said. For the record, Mr. Shah was echoing a February 1994 unanimous Parliament resolution that categorically stated that Jammu and Kashmir was an integral part of India, and that Pakistan must vacate parts of the State under its occupation. Besides, a Parliament resolution passed on November 14, 1962, commits India to recover Aksai Chin and other areas of J&K occupied/annexed by China.

Riaz Haq said...

Pakistan Drifting Away From US Towards China: Defence Analyst

http://www.businessworld.in/article/Pakistan-drifting-away-from-US-towards-China-Defence-analyst/07-09-2020-317631/

Amid the drastic change in US-Pakistan's relationship, China is the only hope for Pakistan for economic assistance, especially in the aftermath of the pandemic, said Ayesha Siddiqa, a defence analyst and South Asian politics scholar.
Speaking during an interview with The News International, Siddiqa said amid the fast-changing world dynamics wherein the coalition among the United States, India and Saudi Arabia gains strength, "Pakistan is drifting away from the US towards a potential alliance between China, Russia and perhaps Iran."
"The nature of US-Pakistan relations is changing drastically. Even though it has played a vital role in the US-Taliban negotiations, no one expects the continuation of American financial assistance to Pakistan. Islamabad joined the American alliance against the Taliban after 9/11," Siddiqa said.
"While the dominant narrative popularised by Islamabad was that it was forced into alignment, governments stuck to the narrow prism of extracting financial resources from the US, which also meant delivering reluctantly. The foreign policy debate in Pakistan is silent about our own responsibility in supporting the Taliban or keeping Osama bin Laden. Ultimately, the relationship collapsed at a point of overselling of our capabilities with limited capacity to deliver," she added.
The US-Pakistan relation has continued to be on a downhill as the latter has failed to take strong action against the terrorist groups emanating from its soil.
Due to the deteriorating ties, Siddiqa said, "China appears to be the only option. It may be Pakistan's only hope for economic assistance, especially in the aftermath of the pandemic... In the wake of the fast-changing world dynamics, as the coalition among the United States, India and Saudi Arabia gains strength, Pakistan is drifting away from the US towards a potential alliance between China, Russia and perhaps Iran."
She, however, noted that there are a lot of issues that still need to be worked out between these countries and Pakistan can benefit only "if it can do its homework and go beyond the idea of extracting limited benefits."
"There is an expectation that Pakistan and Iran will come close as a result of both being part of BRI, especially if Beijing and Tehran sign an agreement that is being talked about. Right now, we don't know if the agreement will get signed, but even if it does, I am not sure that we are domestically talking about the competition between Iran and Pakistan that will happen naturally. It was there even when both neighbours were once part of an American alignment," she said.
She further stated that Pakistan needs to improve its relations with its neighbours including India, Iran and Afghanistan.
While commenting on Pakistan's defence and foreign policy, Siddiqa said, "Pakistan's defence and foreign policy community lacks independent thinking and diversity of viewpoints. Over the years, alternative voices have been silenced. I was talking to a diplomat, who said that during her two postings to the country between 2016 and now, many people that she would talk to are no longer in the country. The security community that we have now comprising faculty at the known public sector universities and think tanks only preach to the choir by communicating dominant narratives of the establishment back to them through their reports. It is interesting to note that most of the think tanks are located on the Grand Trunk Road with little input from other parts of the country." (ANI)

Riaz Haq said...

In an interview with Pakistani journalist Israr Kasana that was published on YouTube on June 3, 2020, (Indian Defense Analyst) Pravin (Sawhney) asserted that "Pakistan has never lost (to India) in any war, be it 1965 or 1971 or any other." "If Pakistan had lost, there would be no line-of-control or ceasefire line on the ground," he added. Here's more from that interview:

"If Pakistan had lost we (India) would have erased the LOC...why do I say that? I have explained it in my book. Pakistan has been strong in the western sector. It's a myth that Pakistan is weak, a myth that Pakistan itself perpetrates...India says we (India) are strong when in fact it is not.....CPEC is extremely important...China will share a lot of military capability with Pakistan....China shares platforms and assures unlimited supply of spare parts which is crucial in war...China and Pakistan do frequent joint military exercises...to assure interoperability."



https://www.riazhaq.com/2020/09/defense-of-pakistan-day-has-pakistan.html