By Yasmeen Aftab Ali
Pakistan’s external debt in the second quarter of 2018 spiked from 91761 USD Million to 95097 USD Million reportedly. In light of Khashoggi’s brutal murder, many sections of the Pakistani society were of the view that the Prime Minister should have refused to attend the Future Investment Initiative Conference in Riyadh.
There are two sides to the question of his attending the said event. The first is moral. There is no question that the murder taking place at the Saudi Consulate in Istanbul defies all human values. On a question of principles a lot is at stake. The other side is the economic crisis being faced by Pakistan; a legacy inherited by PTI government from PML N years of governance. Undermining human values and sacrificing them at the altar of economic gains is not a good choice. However, independent decisions based on moral high grounds can be only taken by nations which are economically independent. Nations with economy in a bad state have to swallow their pride. A bitter pill to swallow but the reality cannot be ignored.
Whether or not IMF comes to Pakistan’s rescue is debatable. If it does, to what degree is another question. Pakistan was allowed a bailout package by IMF of $6.2-billion in 2013. This is roughly 425% of the total quota allocated to Pakistan. Pakistan at this point in time still owes $6 billion to the IMF. This means exactly that Pakistan has drawn 214% of its quota. So even if IMF allows the balance quota of package to Pakistan after excluding funds owed, it will diminish the quantum of funds released.
The Khan’s visit to the sugar daddy paid off. A sum of $6 billion has been promised to Pakistan as assistance in cash and oil for a period of one year as deferred payments. This allows space to Pakistan to resolve issues of finances required to pull the beleaguered economy on its feet. This could still make it inevitable for Pakistan to accept stringent rules by IMF if it wants yet another bailout. There is after all nothing as a free lunch!
The important point that will need the attention of Khan’s government is what Saudi Arab will expect from Pakistan in lieu of their help. Notwithstanding the fact that they had in 2014 awarded a grant of $1.5 billion to Pakistan, one must not forget that there are no “friends” in international relations. There are only interests. This and relationships between nations can change over time with changing geo-political circumstances. “Saudi Arabia is also unwilling to continue giving cash first and making requests later – something it has done as a friend of Pakistan in the past. Its current leader, Crown Prince Mohammed bin Salman Al-Saud, wants Pakistan to shed ambiguity and stand by the Kingdom against Iran, in addition to providing troops or other material support for the Saudi war effort in Yemen,” writes Hussain Haqqani in his piece in The Print. (11th October 2018)
In a news piece by Asia Times, quoting diplomatic sources, it stated that Riyadh desired Khan to support the Saudi-led Islamic-led Counter- Terrorism Coalition. (August 24, 2018)
Pakistan cannot afford to march with the Summer Soldiers. Beware dear ‘sunshine patriots’, of opening a pit full of worms. Pakistan has its plate full of its share of problems. Homegrown terrorism, sponsored terrorism, an untenable border between her and Afghanistan, a hostile neighbor, and its army engaged in a war within its borders that needs to be fought with single minded focus. This is just the tip of the iceberg. Khan’s government will have to keep the diplomatic balls juggling in the air to buy time. After that, to juggle them more and buy more time. It will require great statesmanship to steer Pakistan through dangerous waters.
Op-Ed Columnist and defense analyst Brigadier ® Imran Malik says, “PM Imran had a four pronged strategy to deal with the economic situation. He planned to get help from the KSA, the UAE, PRC and then approach the IMF for the remainder of the monetary space he required to turn Pakistan’s economy around.
First stop KSA: the Saudis have really been more than benevolent this time around by placing US$3Billion as BOP support with Pakistan and allowing deferred payments for oil for upto US$3 Billion per year for 3 years. It is like a gust of badly needed oxygen for a near comatose patient/economy. This will mean availability of US $ 6 Billion for the first year and at least a cushion of US $3 billion for the next 2 years. This nullifies to some considerable extent the leverage that the IMF and the US would have held over Pakistan. It is the first major success for PM Imran to at least create workable circumstances for his economic team to turn Pakistan’s economy around. The icing on the cake is KSA’s willingness to establish an oil refinery in Pakistan, invest in mineral development and invest in other fields as well. As a coopted third member of the CPEC, KSA can really give a boost to Pakistan’s development and economy.
Next stop, the UAE: The UAE has been rather reticent and laid back and not so forthcoming in bailing Pakistan out, this time around. Apart from the strides and inroads made by the Indians there, our Gwadar Port as an alternative to Dubai is perhaps playing a very major role in its refusal to come forth. Trans- shipment operations at Gwadar may take away a lot of business from Dubai. With the CPEC and BRI acquiring physical dimensions Dubai is likely to lose out on a lot of trade and thus importance.
Next stop China: For China the success of the CPEC is vital. Not only is it the flagship project of the BRI but also a test case for its attempt to engage the world in an economic partnership/web. The success of the CPEC acquires even further importance with the background of what transpired in Sri Lanka and Malaysia. Therefore, China will not allow Pakistan to slide into an economic quagmire which directly affects the liability if the CPEC and thus the BRI. So once IK visits China they will probably agree to some of the areas of emphasis [agriculture, socio economic sectors, SEZs etc.] that he points out, might also provide some economic relief in terms of bilateral trade, loans etc.
Last stop IMF: Khan’s approach to the IMF will thus hopefully become less stressful. With the amount required reduced, the conditions of the IMF as well as the US will water down. The balance required may be asked from the IMF which may be anywhere up to US $ 6 Billion. Pakistan will recover and with good prudent economic management will prosper for sure.”
At the end of the day, it will depend upon the mix of astute handling of different players and subsequent implementation of positive actions needed by the Khan government to turn around the economy.
The writer is a lawyer, academic and political analyst. She has authored a book titled ‘A Comparative Analysis of Media & Media Laws in Pakistan.’ She can be contacted at: firstname.lastname@example.org and tweets at @yasmeen_9