Finance Crunch in Pakistan, Door to Door Imran Khan
| Ashok Dixit - 08 Nov 2018

‘Big Brothers’ Saudi Arabia, China will want Pakistan to take hard steps after financial dole

 

By Ashok Dixit

New Delhi, Nov 8, 2018: Pakistan Prime Minister Imran Khan has concluded his maiden visits as head of government to Saudi Arabia (twice), the United Arab Emirates (once) and China (once) over the past 49 days. Riyadh, Abu Dhabi and Beijing can now be expected to closely monitor Islamabad’s next steps in overcoming its current economic tailspin.

Imran’s four-day official visit to China ended on November 6 (Monday) and was preceded by two visits to Saudi Arabia in September and October, and one to the UAE in September.

As South Asia’s second largest economy, Pakistan, has been in the throes of a back breaking Balance of Payments (BoP) crisis because of an import-export imbalance brought on supposedly by over spends on China-Pakistan Economic Corridor (CPEC) infrastructure projects.

Since assuming charge as Pakistan’s Prime Minister in the middle of August, Imran, a former national cricket team captain, has rejected taking another loan from the International Monetary Fund (IMF) (the last one being in 2013 for 6.6 billion dollars), preferring to approach “friendly countries” Saudi Arabia, the UAE and China for financial assistance.

Pakistan is on record as saying that to get over its existing financial quagmire it needs 12 billion dollars to plug its economic downward spiral caused by an ever widening Current Account Deficit (CAD) and depleting foreign exchange reserves.

Riyadh has agreed to deliver six billion dollars over the next three years to Islamabad – three billion dollars as direct BoP support and an additional three billion dollars as a deferred payment facility for oil imports.

The first tranche of financial help was announced on the sidelines of a global investment conference organised by Riyadh that was boycotted by several leaders over the controversial and horrendous murder and decapitation of dissident Saudi journalist Jamal Khashoggi inside the Saudi Arabian consulate by a 15-man Saudi hit squad in Istanbul, Turkey.

In China, as expected, the red carpet was rolled out for Imran post receiving a formal invitation to visit by his Chinese counterpart Li Keqiang.

Between November 2 and 6, he met with the top Chinese leadership, including President Xi Jinping, Vice-President Wang Qishan, Premier Li Keqiang and Chairman Li Zhanshu of the Standing Committee of the National People’s Congress, among others.

Both Beijing and Islamabad have been careful to orchestrate this visit as one that has successfully “further cemented the traditional friendship between the two brotherly neighbours and strengthened the all-dimension cooperation.”

Khan’s visit to Beijing yielded 15 agreements and or memoranda of understanding covering various areas of mutual interest. He was also provided the opportunity of addressing the first ever China International Import Expo (CIIE) in Shanghai.

According to analysts, the message going out to the international community was that Beijing and Islamabad have a time tested and pure relationship of complete harmony, and no differences over implementation of the CPEC projects.

On Tuesday, Pakistan Finance Minister Asad Umar, addressing the national media a day after the China visit said, “We have told you about the USD 12 billion dollar financing gap, of which USD 6 billion has come from Saudi Arabia,  and the rest has come from China. So, the immediate balance of payment crisis of Pakistan has ended. I want to make that clear in unequivocal terms. We do not have any balance of payment crisis now. ”

This was further corroborated by the Finance Ministry revealing that Pakistan’s finance, foreign, planning and development and commerce secretaries, besides the State Bank of Pakistan governor, will visit China this week to firm up processing modalities.

Foreign Minister Shah Mehmood Qureshi described the visit as productive.

“We are out of the woods,” he said, but adding rather ominously, “for now”.

He also rubbished perceptions that the Pakistan-China relationship would suffer under the incumbent Pakistan Tehreek-e-Insaf (PTI) government.

“The perception that some people here tried to give that the government was not paying attention to our relationship with China. There is nothing to it. I can say that our relations with China are not just great, but could get even better than before. This visit helped us in moving our relationship towards an economic partnership. We have always had good strategic relations so our aim [this time] was to figure how to advance the economic footprint,” Qureshi said.

In the run up to Imran’s visit to Beijing and Shanghai, Chinese intelligentsia and businessmen refused to accept that the ongoing CPEC projects were draining the Pakistan economy of much needed resources.

One editorial quoted Sun Hongqi, Advisor to Chinese President Xi Jinping on Pakistan affairs, as saying all Beijing was doing and continues to do is to be an “all weather friend” to Islamabad.

A former Chinese diplomat who served in Pakistan, An Qiguang, was quoted in the same opinion piece, as saying that as the CPEC projects develop, more Pakistanis would be employed after prescribed training.

There was also talk in the public domain of Imran expressing his determination to ask China to make a “significant shift” in CPEC-related projects.

Has that sort of arrangement/understanding been achieved behind closed doors between the two leaderships is a matter of conjecture and speculation. The coming months may possibly reveal more status quo ante and less of changes that could surprise.

The value of Pakistan’s imports from China last year was USD 14.5 billion, while export value was pegged at a paltry USD 2 billion, both in goods and services.

One editorial maintains that Imran Khan and his 75-member trade delegation have been politely and firmly told that they must stop making “tall claims” in the public domain and get their own house in order instead of asking China to deliver on appropriate governance models.

Islamabad has effectively told that consistent decrying of the over USD 60 billion worth of CPEC projects cannot be the way forward. Rather, the need of the hour is for Pakistan’s private sector to be proactive and for the PTI/Imran Khan-led government to only essay a catalysing role.

One expert said, “Structural reforms, organisational reforms, policy reforms and even a change of mindset are the need of the hour,” and Imran must use his current popularity with the masses to make difficult and unpopular reform-oriented decisions.

Where does India stand in this trilateral axis?

Everyone is aware that this is an election year in India and that no major decisions or changes can be expected to be taken politically or diplomatically. Talks (Up front and Track II), meetings and visits will continue.  

Some experts believe that a visible thawing has taken place in the India-China geopolitical narrative post last year’s military squaring off in the Doklam region, while others opine that the New Delhi-Beijing relationship is direction-less and stormy, and that there is an urgent need for a strategic reassessment, and not allow this relationship to flounder and remain the sole preserve of diplomats and experts on China.

Prime Minister Imran Khan has said that while his initial friendly overtures to New Delhi have been responded to with suspicion and distrust, he will make a fresh attempt after the 2019 general elections in India.

Will India buy his contention that peace will help both countries and their respective leaderships to divert their resources towards sub-continental human development and away from the ongoing arms race is anyone’s guess?

In so far as China is concerned, Pakistan has to think beyond the CPEC and utilise the Belt Road Initiative (BRI) to its own advantage and benefit.

    

The writer Ashok Dixit is a senior journalist with 24 years of rich cross-editorial functional experience in covering and reporting on developments in South Asia. He had been associated with ANI as a Senior Editor for more than two decades. He can be contacted at  ashok.dixit26@gmail.com) Photo Courtesy - The Straight Times / VOA News

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of Indian Observer Post and Indian Observer Post does not assume any responsibility or liability for the same.

Tags:

New Delhi; Pakistan Prime Minister; PM Imran Khan; Saudi Arabia; United Arab Emirates; China; Riyadh; Abu Dhabi; Beijing; Islamabad; Imran’s visit to China; Imran’s visit to Saudi Arabia; UAE; South Asia’s second largest economy; Pakistan; China-Pakistan Economic Corridor (CPEC);International Monetary Fund (IMF) President Xi Jinping; Vice-President Wang Qishan; Premier Li Keqiang; Chairman Li Zhanshu;  National People’s Congress; India-Pakistan Dialogue; BRI; Terrorism from Pakistan;


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