The tragedy of Pakistan is worse than you can imagine. This country wants to solve its economic problems at the expense of Afghanistan. It will never give up the Taliban and Afghanistan because it itself will be destroyed.
Author: Dariush Baghlani
Now that the whole world with Eastern Europe is involved in the Ukrainian war, it is necessary to think about the geopolitics of the geographical area called Afghanistan and study the situation in the region. So our first program is to look at the plight of Pakistan's economy.
Pakistan is currently running a current account deficit of billions of dollars. A current account deficit occurs when a country has more imports than exports. Naturally, if more is imported and then there is nothing to sell, there is a current account deficit, and the currency continues to depreciate. In an economy, the current account includes all expenditures and incomes of the economy, including imports and exports, goods and services in the national balance of payments. The current account balance is an important economic indicator for assessing the performance of one economy or the economy of one country.
Pakistan's imports grew by 26.8% to reach $53.8 billion in fiscal 2021. As a result of this increase, the trade deficit also increased by 41.5% compared to the same period last year. Therefore, the negative sign of the trade balance is 28.2 billion US dollars. The future outlook for Pakistan's economy looks bleak. The sharp rise in oil prices makes imported raw materials more expensive, and about 33% of Pakistan's imports are oil. Foreign exchange reserves are at their lowest point and covered only two months of imports in June 2022.
The Pakistan Bureau of Statistics reports that consumer prices rose by 13.8 percent in May this year. On average, by 2022, inflation will rise from 9 to 13%. In addition, over the past three years, the Pakistani rupee has lost almost 50% of its value against the US dollar, pushing up the cost of import services.
CPEC - The China-Pakistan Economic Corridor aims to develop and improve Pakistan's energy transportation infrastructure and expand economic cooperation between China and Pakistan. In fact, this project is one of six new commercial and infrastructure land corridors of the Silk Road, passing through the land center of Pakistan between the Kunjirap Pass at an approximate height of 4700 meters and the port city of Gwadar on the Arabian Sea. According to press reports, the volume of investments in this project is from 46 to 65 billion US dollars. CPEC was expected to create up to 700,000 new jobs between 2015 and 2030 and boost Pakistan's economy by 2.5%.
The CPEC was the starting point of Pakistan's romance with China, but this project has more strategic aspects for China because China's goal through this project is to expand its influence in Pakistan and throughout Central and South Asia, which can be seen as a land alternative to the Indian Ocean. This overland route could help China in its ability to counter Indian and US influence in the region. CPEC also connects the Indian Ocean with the port of Gwadar in Balochistan, the Arabian Sea with the Xinjiang region in Western China, and POK Kashmir.
But so far, nothing is happening in this project, if you remember, in November 2021 in Gwadar, Balochistan, there were protests and civil unrest against the presence of China, and the local population criticized the Pakistani government. Although China spent billions of dollars on the construction of the port city of Gwadar, then the locals came to the conclusion that the project did not bring them any benefit and did not improve their economic situation. The CPEC project has so far stalled completely and Pakistan's hope of receiving money from the project is still a distant dream. However, Pakistan is diplomatically isolated in the UN, due to its proximity and alliance with China and the hosting of many structures of terrorist groups, including the Taliban, which is actually created by Pakistan, the United States and England also play a role in this, but terrorist networks like The Taliban are the brainchild of Pakistan. Now the US interest in Pakistan has waned, although in the 80s and early 90s they used Pakistan against the intervention and occupation by the former Soviet Union of the geography called Afghanistan. But now Pakistan's dependence on China and the changing situation in the region have diminished the United States' past interest in Pakistan. This situation between the US and its previous mediator Pakistan may change as the crisis in Afghanistan and the region further develops.
Pakistan continues to be greylisted by the Financial Action Task Force (FATF).
Greylisted countries are under the supervision of the FATF, they are either assessed directly or supervised by the FSRB regional committees so that they can track and document their progress in combating money laundering or terrorist financing. If a country is on the gray list, it can still be subject to economic sanctions by organizations such as the International Monetary Fund or the World Bank, and in addition, this has a negative impact on trade and commerce in general. Of the 37 countries that make up the FATF, India has made no secret of its active role in placing Pakistan on the FATF's terrorism financing greylist.
Since 2018, Pakistan has been on the FATF Greylist, and because of this, it is very difficult for Pakistan to receive any financial assistance from the World Bank, the International Monetary Fund, and the European Union. Therefore, Pakistan has a lot of trouble getting money and its only economic hope is China. In recent years, the Chinese have provided Pakistan with loans, the specific amount and source of which they do not disclose. And in total it is about 27 billion US dollars, which includes 25% of all external loans of Pakistan. These loans were repaid to Pakistan by the Chinese from various sources, including $8.77 billion through three Chinese state-owned banks, $7 billion through China's SAFE (State Administration of Foreign Exchange), and various other sources. The last payment of $2.3 billion was made in June this year. Pakistan also asked for a loan from the International Monetary Fund, which put difficult conditions on Pakistan. On the one hand, Pakistan is in an economic crisis and is included in the FATF gray list, on the other hand, it has a serious economic dependence on China. Hence, the International Monetary Fund says that Pakistan is not allowed to pay back loans to China with the loans it receives from them.
We call it: "Dupa Pakistan" ("Dupa" in Afghanistan is said to someone who pays off his debt with another's debt and has nothing himself).
Pakistan currently owes $112 billion, which is 40 percent of its GDP. Foreign loans can be obtained by the World Bank, the International Fund, and other countries, when a country is unable to pay its debt, it is in a debt crisis. In addition to external debt, there is also domestic debt, which is the government's obligation to pay domestic creditors. A country's public debt consists of domestic and foreign debt. In total, Pakistan's public debt is US$245 billion, which includes 83 percent of Pakistan's gross national product. China does not help Pakistan but gives loans or credits in exchange for trading ports that will belong to China for about a hundred years because China knows that Pakistan cannot repay loans or loans.
The United States of America began to provide financial assistance to Pakistan in 1947, and in return, Pakistan provided its services in the geopolitical sphere of the region through the ISI. For example, military training, logistical assistance, and equipment for the Mujahideen against the intervention and occupation of the former Soviet Union in the 70s, 80s, and 90s were carried out by Pakistani intelligence. Pakistan is said to have received between $100 and $120 billion from the United States alone since 1947. After Trump became President of the United States, US material assistance to Pakistan was officially terminated.
During the last century, especially after the Second World War, the United States of America has become a world military, economic and cultural power. After the collapse of the USSR, America used this situation to further increase its military influence, especially through the expansion of NATO's borders. This method of increasing militarization in the last century led to the formation of a network of military-industrial monopolies within the American government.
MILITARY-INDUSTRIAL COMPLEX (MIC)
Dwight Eisenhower, President of the United States and Commander-in-Chief of Allied Forces in Europe during World War II, was the first to point out in his farewell address (in 1961) the disturbing implications of the interaction between the powerful military establishment and the powerful military apparatus. He called the large military industry "a new experience for America" and warned government circles: "We must beware of the unauthorized influence of the military-industrial complex, intentional or unintentional. There is and will remain the possibility of a catastrophic increase in inadequate capacity.”
With the advent of Donald Rumsfeld in February 2001 to the post of head of the Pentagon, huge contracts worth billions of dollars were signed for the military industry. They were conducted secretly through Congress, where the Republicans had a majority of representatives on the four relevant committees. In 2002, the United States alone accounted for 43% of world military spending.
Global arms spending has skyrocketed and will exceed $2 trillion in 2021. The Institute for Peace Research reports that the United States leads the way in spending, with an investment of about $800 billion. The share of the United States in world military spending is about 38%. The United States spends almost as much on weapons as the top ten superpowers combined. Meanwhile, the United States share of global arms spending is down slightly, by one percent, from a year ago, as countries such as China and India have increased their share for years.
China comes in second with $293 billion and accounts for 14% of global arms spending. Russia's military spending increased by 2.9 percent compared to the same period last year and reached $65.9 billion. Defense spending is 4.1 percent of Russia's GDP. America's military spending alone in 2021 will account for more than 50 percent of Russia's entire economy or GDP.
The military-industrial complex is also fighting for the market and geography, the geography of Afghanistan is one such example.
Negotiations have been ongoing since 2017, with several Arab countries, Israel, and the United States coordinating their military efforts in the region and the Middle East. Could this lead to a regular military alliance?
According to media reports, the United States plays a key role in these negotiations. The project was adopted along the lines of the Democratic and Republican parties, and Breaking Defense magazine of strategy and technology reports that prominent representatives of both the Democratic and Republican parties welcome the move.
The Arab countries and Israel represent an interesting and influential market for the US and arms sales in the geopolitical field of the Middle East. With a multipolar world with a new combination, various interests are formed for survival and spheres of influence.
Since the US withdrawal from Saudi Arabia, their security has declined. According to reports published in various media outlets, there have been 375 cross-border attacks in Saudi Arabia, including by missiles and drones. Saudi proxy forces know that fighting forces recruited from Iraq, Pakistan, Afghanistan, and Syria are coming to Yemen.
According to former Prime Minister Imran Khan, Saudi Arabia is Pakistan's "greatest" friend. Regarding the conflicts between Iran-backed Yemen and Saudi Arabia, he added: “For this reason, the military conflict between Saudi Arabia and Iran is a disaster for Pakistan. We are doing everything possible so that relations between these two countries do not worsen. This region cannot bear another conflict.” Because Pakistan understands politics, it knows exactly when its interests are at stake and that in the case of Yemen, it should stay away from its best friend Saudi Arabia.
The population of Yemen is divided into two parts. The Sunni group is about 65%, and the Shiite group is 35%. The Houthis, who are Shiites, are backed by Iran and are fighting against Saudi forces in northern Yemen. These conflicts began in 2004 under the leadership of Hossein Badruddin al-Houthi and have continued to expand ever since.
The population of Yemen is divided into two parts. The Sunni group is about 65%, and the Shiite group is 35%. The Houthis, who are Shiites, are backed by Iran and are fighting against Saudi forces in northern Yemen. These conflicts began in 2004 under the leadership of Hossein Badruddin al-Houthi and have continued to expand ever since.
Pakistan sometimes criticizes Iran for helping the Baloch. Separatist militants have had a significant impact in orchestrating Indian and Iranian attacks against the Pakistani government in Balochistan that could destabilize the region. The Balochistan province of Pakistan is considered one of the largest provinces of this country and borders Iran's Sistan and Balochistan province.
Critics of the Pakistani government say that Balochistan is one of the poorest regions in the country, while the region has many mines. At the same time, China has made significant investments in the region as part of the Belt and Road Initiative, which Balochistans believe is the main beneficiary of those who do not belong to the region and are foreigners.
Last April, four people were killed in a terrorist attack in the city of Quetta at the hotel where the Chinese ambassador was staying. If a serious crisis develops in Pakistan, Balochistan will become one of the most important strategic points. Afghanistan also has a lot of underground riches, which Pakistan is fond of in relations with the superpowers. In the future, Pakistan has extensive plans to strengthen its economy, led by the Haqqani group.
