Imran Khan's Predicament
US aid cut has hit Pakistan badly. Can the new Prime Minister rescue Pakistan?
In a major diplomatic statement after becoming the Prime Minister of Pakistan, Imran Khan stated that Pakistan will not become part of a war of any other country in future. This statement comes against the backdrop of Trump Administration suspending $300 million of aid from Coalition Support Fund to Pakistan and US Secretary of State Mike Pompeo literally cautioning IMF against any future bailout to Pakistan at a time when Pakistan Government is desperately seeking a $12 billion bailout package from IMF. Further, USA's tightening of financial screws on Pakistan coincides with Trump Administration giving India Strategic Trade Authorisation-1 or STA -1 status thereby paving way for more export of high-tech equipment to India while also granting special concessions under CAATSA for purchasing S-400 Triumf air defence systems from Russia. This perhaps hurts Pakistan even more.
Imran Khan's predicament started the very day he became the Prime Minister of Pakistan. After the initial euphoria and honeymoon phase got over, he realised the mess and the throne of thorns he has inherited. With a forex reserve of less than $10 billion, reported trade deficit of $33.9 billion, primarily because of massive surge in import of construction materials and other goods from China, a near $18 billion Current Account Deficit (CAD), a falling rupee coupled with an unenviable placement in grey list of Financial Action Task Force (FATF), miniscule inward FDI and a CPEC pact with China synonymous to a debt trap, Imran Khan could not have asked for worse.
Pakistan immediately needs $ 3 billion to honour many of the debt service obligations on which it is already running behind schedule. But Mike Pompeo's warning to IMF coupled with Pakistan's placement in FATF makes it all the more challenging for IMF to bail out Pakistan this time, something it has done a dozen times in the last 40 years without Pakistan ever showing any resolve to pursue the needful reforms to become financially more resilient as an economy. On the contrary, CPEC is on the verge of making Pakistan even more crippled. Pompeo's warning to IMF is precisely because of the stand of Trump Administration that it does not want American taxpayers' money given to IMF to be used by Pakistan to do debt servicing to China.
While one understands the frustration of Imran Khan given the sheer mess he inherited, the moot question is whether his statement has credence or not. Incidentally in August 2018 when the National Defence Authorisation Act for 2019 (NDAA-19) was passed in the US Congress, it was made clear that the total Coalition Support Fund that would henceforth be given to Pakistan would be capped at $150 million a year, a jaw-dropping 80 per cent reduction from what was authorised previous year. Incidentally, the NDAA-19 also specifies that the US no more expects Pakistan to take any kind of military actions against the Haqqani Network or Lashkar-e-Taiba (LeT) and thus, the issue of reimbursement for military operations against the aforesaid terror organisations simply does not arise anymore. Therefore, even though Imran Khan may thump his chest to impress his constituency that he sticks to his anti-American stand and that he would be charting a new path for Pakistan, deep inside he knows that Trump's beamer has already checkmated Pakistan and how much this cut in aid hurts and bleeds Pakistan's already fragile economy.
The reason for this new approach initiated by Trump Administration has its reference in January 2018 tweet where he stated in no uncertain terms that for 15 years the US gave Pakistan $33 billion in aid and in return 'they have given us nothing but lies & deceit, thinking of our leaders as fools'. He had also stated 'They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!'.
A retrospective analysis would reveal that during Obama Administration, under the Enhanced Partnership with Pakistan Act of 2009, US Congress authorised granting of up to $1.5 billion in non-military aid to Pakistan. Therefore, how the Trump Administration's new policy hits Pakistan is now evident. There is no prize for guessing how Pakistan for 15 years siphoned a significant portion of that $33 billion aid for other nefarious activities even while pretending to be an ally of US.
Pakistan's running with hare and hunting with the hound strategy started way back in November 2001 with the most infamous Kunduz airlift through which they evacuated thousands of top commanders of Taliban and Al Qaeda from the city of Kunduz to safe havens in Pakistan just before US forces could reach there. Their appeasement of Haqqani Network as well as mentoring, funding, incubating and protecting terror groups like LeT, also does not surprise anyone anymore.
What upsets Pakistan is that the edifice of easy money flow based on the bluff of being an ally in the war against terrorism, and thus a deserving candidate for never-ending funds, is finally collapsing and that too at a time when the country is on the brink of a financial collapse. Anti-Americanism may still thrive in Pakistan and Imran Khan may still play the victim card, but it was time someone pulled the rug below their feet and expose their bluff. In reality, Pakistan was never an ally in the war on terror. It always remained the cradle that kept nurturing serpents of global terrorism even when some of them turned on their masters like Frankenstein.
(The views expressed are strictly personal)
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