The US military suspended $300 million in aid to Pakistan.
Technically speaking, the US didn’t cut off actual “military aid” in the physical sense that it’s widely perceived to have done but blocked money that “was part of reimbursement for the loss of lives and financial losses that Pakistan suffered while leading the fight against terrorism”, according to a clarification by Pakistan’s new Foreign Minister. In any case, this hostile move is being done in order to advance several interconnected American objectives, the most public being to scapegoat Pakistan for the US’ failures in Afghanistan while the highest-level strategic one is to continue the US’ policy recalibration towards India as its preferred partner in South Asia.
The supposed pretext of Pakistan not doing enough to crack down on terrorist groups is disingenuous because the country doesn’t harbor such forces and has actually been victimized by them over the decades to the tune of over 60,000 martyrs. Nevertheless, the US attempts to weave a semi-“believable” narrative in this regard by pointing to the active cross-border Pashtun community on both sides of the Durand Line, implying that Taliban members simply cross over into Pakistan from Afghanistan in order to seek reprieve from American airstrikes. That’s also not necessarily the case either, and the situation is more complex than such a simplistic storyline would suggest.
No armed militants enter Pakistan through official border crossings, which are among the most secure in the world, though Islamabad can’t realistically screen each and every unarmed person arriving from Afghanistan for Taliban sympathies. As for those that might try to sneak into the country illegally, they’ve found that to be pretty difficult in recent years and it’ll eventually become impossible once the border fence with Afghanistan is completed. Therefore, the whole case that the US is trying to make about Pakistan supposedly “harboring terrorist groups” and “actively aiding” them is false from the get-go and designed to damage the country’s international reputation.
It’s not just for the sake of trying to harm Pakistan’s standing in the world and “virtue signaling” to its new Indian strategic partner that Washington is nastily disengaging from its erstwhile close relationship with Islamabad, but also because it may be preparing the narrative ground for sanctioning its former South Asian ally on supposed “terrorist” grounds that really have everything to do with obstructing CPEC. The US is building the perception that Pakistan is a “terrorist-infested” country in order to “legitimize” what might be a forthcoming comprehensive sanctions campaign against it similar to the one that it’s currently waging against Iran and which it recently began against Turkey.
Expanding the US’ existing economic warfare battlefield in the region to Pakistan would encompass the South Eurasian Rimland portion of the so-called “Greater Middle East” that forms the southern half of the Golden Ring of multipolar Great Powers, which would put severe pressure on this very promising 21st-century geopolitical construction, particularly as it relates to the possibility of imposing “secondary sanctions” against companies that use the Pakistani-transiting CPEC. The whole point is to decrease the economic appeal of this game-changing Silk Road corridor as part of the US’ “containment” strategy against Pakistan and China, though it might unintentionally catalyze the same transregional integrational processes that it’s trying to sabotage.
The post presented is the partial transcript of the CONTEXT COUNTDOWN radio program on Sputnik News, aired on Friday Sep 07, 2018:
DISCLAIMER: The author writes for this publication in a private capacity which is unrepresentative of anyone or any organization except for his own personal views. Nothing written by the author should ever be conflated with the editorial views or official positions of any other media outlet or institution.
Reposts are welcomed with the reference to ORIENTAL REVIEW.
This article doesn’t go back far enough to the time when the US actively recruited Al-Qaeda from Pakistan to fight against the Soviet troops in Afghanistan. When Brzezinski called for a ‘jihad’ against the godless Commies he was speaking to Pashtun tribes in Pakistan who he then armed, trained and financed to fight across the border. It would be interesting to hear more about who, what and how Pakistan supported that US-led war
The Future of Pakistan is Exports – Goods and ITES and the exports will be VIA the CPEC.That is the only viable option
The export strategy of Pakistan,should be based on export of water,labour,earth,defense and LDC benefits.Any other model will fail,as competitive nations,with deep pockets,will offer financial,fiscal and asset subsidies,to offset any advantage,that Pakistan,has w.r.t labour cost and geography (besides excellent logistics,and regulatory structures). dindooo hindoo
Setting up manufacturing capacities,to cater to the local Pakistani market and exporting the surplus,is not viable,as Pakistan does not have economies of scale (even to realise the geometric impact,of lower labour costs).Planning capacities on that model,leads to the DISASTER of the Indian NPAs,of 350-400 Billion USD,with exports dead,and the inability of Indians,to compete,with the PRC.
Export of Water – is export of animal proteins,exotic fruits and vegetables and agri to the GCC,EU and other parts of the world.Water from the skies or the earth,by rarefaction or condensation or precipitation,in the form of hail,rain or snow,is purely a function of geography, in a time span of a few decades.Over a period of 3-4000 years,some disasters can occur,like the disappearance of Saraswati (in Pakistan) or the diversion of rivers etc.
Thus,water captures the fertility and agro-ecoonomic opportunities and variety of Pakistani soil,and also,the geo-strategic location of Pakistan (w.r.t access to GCC,Ports,Cheapest Point of Purchase for UN/FAO/WHO procurements for Afghanistan etc.)
In Pakistan,Water is a Perpetual Resource,UNLIKE in India.In addition,many nations in the EU allow a COO certificate linked to a Geography,in that exporting nation, to give ADDITIONAL DUTY/SUBSIDY AND QUOTA BENEFITS. These are agriculture and agri-derivatives,like wine.Pakistan is the prime candidate, for the same,for exotic fruits etc., which have valuable and critical,downstream applications,in the EU.
Export of Earth – is export of minerals,which ALSO,includes industries like Cement (which is export of lime,limestone and coal).Once the Coal Fields of Pakistan,are tapped,then it would include sale of power,as the cheapest way to transport power,is at the speed of light,via a grid – especially,when the Grid is set up by other nations.
Pakistani Mineral Resources are almost perpetual,and in areas with very low density of population and ample water.Thus the scope for TOLERATING pollution is higher – and so,like in Nuke Power – if some latitude is granted w.r.t pollution,wastes,effluents,safety and environment – mining costs can crash exponentially.For a Perpetual reserve,with an exchange rate of Rs 160/USD,it is akin to burying US Dollars, 1000 meters in the earth,and starving on top of the earth.For a nation,with finite reserves (in the short term),there is an opportunity cost,of exports – in terms of the fact that,in 2023 (say),prices of several ores might be 2-5 times,current rates – and so,they can raise USD,from bankers,liening the mining reserves.
Export of Defense – In conjunction with the PRC and the PLA/PLN.PLAF,Pakistan can perfect the technique of customising and innovating Chinese Defense Technology,for their use,and exporting lower technologies or the excess capacities to Africa,Central Asia,LATAM,South America and the Middle East (excluding the quasi Nato nations).With Chines=se Financial Aid, extensive credits can be given.There are many nations in the world,which the PRC would NOT like to make defense exports to.
Export of Labour – Pakistan needs to be practical,to use low cost manufacturing technologies,which are labour intensive and require moderate power consumption,and some pollutive impact.Low Capital Costs,will lower the Operating and Financial Risk,and the skilled but CHEAPER labour cost,can be exported OUT.There would be several such technologies,several products and several markets.
LDC – Lastly,Pakistan has to maximise the LDC benefits,using Chinese Capital and SEZs – with an appropriate mix of Chinese Labour and Domestic Input Costs,in the SEZ units, so that the COO is Pakistan,and the LDC benefits are availed of.
SEZs – The SEZ policy of Pakistan has to be synthesised with the LDC gains,to ensure that the costs to the SEZ,are the lowest among all LDCs in the world.However,the Costs are not to be evaluated,as the Nominal Costs.So the land lease and other charges, payable by the SEZ to the Pakistani State, might not be the lowest – but on a NET differential Mode,w.r.t the Reduction in Logistics costs,to the Pakistani SEZ,it should be the LOWEST in the world. Once that is done,then as a thumb rule, to keep the laws simple, FREE EXIM needs to allowed and all Inputs (including Power etc.) should be sourcable,w/o caveats.So a SEZ should be able to set up a IPP/CPP/RPP,anywhere in Pakistan,with any fuel,with nil duty and taxes and the lowest wheeling and banking charges. dindooohindoo
Corporate Tax holidays should start AT THE CHOICE of the Investor,FROM THE YEAR after which the Brought forward losses,of the SEZ are exhausted.And the Tax holiday should be co-terminus,with that of the longest holiday,by any LDC.The period of limitation, for the Choice of initiating the holiday period,should be upto 5 years,from commercial operations.
Basically,even if Pakistan waives the Wheeling charges etc.,it does not matter,as the aim is to bring in the ANCHOR and other Investors in the SEZ. Thereafter,the principles of Self Preservation by the SEZs,and its units,will ensure that,the State will find ingenious ways to earn revenue – provided that,1st the ANCHOR comes in,and then, that the SEZ and the SEZ units,make money !
The Future of Pakistan is in Logistics Corridors and Exports.In Both these ventures the Future lies with Russia and China.For exports of Goods and Services – the future lies in CPEC
The export strategy of Pakistan,should be based on export of water,labour,earth,defense and LDC benefits.Any other model will fail,as competitive nations,with deep pockets,will offer financial,fiscal and asset subsidies,to offset any advantage,that Pakistan,has w.r.t labour cost and geography (besides excellent logistics,and regulatory structures). dindooo hindoo
Setting up manufacturing capacities,to cater to the local Pakistani market and exporting the surplus,is not viable,as Pakistan does not have economies of scale (even to realise the geometric impact,of lower labour costs).Planning capacities on that model,leads to the DISASTER of the Indian NPAs,of 350-400 Billion USD,with exports dead,and the inability of Indians,to compete,with the PRC.
Export of Water – is export of animal proteins,exotic fruits and vegetables and agri to the GCC,EU and other parts of the world.Water from the skies or the earth,by rarefaction or condensation or precipitation,in the form of hail,rain or snow,is purely a function of geography, in a time span of a few decades.Over a period of 3-4000 years,some disasters can occur,like the disappearance of Saraswati (in Pakistan) or the diversion of rivers etc.
Thus,water captures the fertility and agro-ecoonomic opportunities and variety of Pakistani soil,and also,the geo-strategic location of Pakistan (w.r.t access to GCC,Ports,Cheapest Point of Purchase for UN/FAO/WHO procurements for Afghanistan etc.)
In Pakistan,Water is a Perpetual Resource,UNLIKE in India.In addition,many nations in the EU allow a COO certificate linked to a Geography,in that exporting nation, to give ADDITIONAL DUTY/SUBSIDY AND QUOTA BENEFITS. These are agriculture and agri-derivatives,like wine.Pakistan is the prime candidate, for the same,for exotic fruits etc., which have valuable and critical,downstream applications,in the EU.
Export of Earth – is export of minerals,which ALSO,includes industries like Cement (which is export of lime,limestone and coal).Once the Coal Fields of Pakistan,are tapped,then it would include sale of power,as the cheapest way to transport power,is at the speed of light,via a grid – especially,when the Grid is set up by other nations.
Pakistani Mineral Resources are almost perpetual,and in areas with very low density of population and ample water.Thus the scope for TOLERATING pollution is higher – and so,like in Nuke Power – if some latitude is granted w.r.t pollution,wastes,effluents,safety and environment – mining costs can crash exponentially.For a Perpetual reserve,with an exchange rate of Rs 160/USD,it is akin to burying US Dollars, 1000 meters in the earth,and starving on top of the earth.For a nation,with finite reserves (in the short term),there is an opportunity cost,of exports – in terms of the fact that,in 2023 (say),prices of several ores might be 2-5 times,current rates – and so,they can raise USD,from bankers,liening the mining reserves.
Export of Defense – In conjunction with the PRC and the PLA/PLN.PLAF,Pakistan can perfect the technique of customising and innovating Chinese Defense Technology,for their use,and exporting lower technologies or the excess capacities to Africa,Central Asia,LATAM,South America and the Middle East (excluding the quasi Nato nations).With Chines=se Financial Aid, extensive credits can be given.There are many nations in the world,which the PRC would NOT like to make defense exports to.
Export of Labour – Pakistan needs to be practical,to use low cost manufacturing technologies,which are labour intensive and require moderate power consumption,and some pollutive impact.Low Capital Costs,will lower the Operating and Financial Risk,and the skilled but CHEAPER labour cost,can be exported OUT.There would be several such technologies,several products and several markets.
LDC – Lastly,Pakistan has to maximise the LDC benefits,using Chinese Capital and SEZs – with an appropriate mix of Chinese Labour and Domestic Input Costs,in the SEZ units, so that the COO is Pakistan,and the LDC benefits are availed of.
SEZs – The SEZ policy of Pakistan has to be synthesised with the LDC gains,to ensure that the costs to the SEZ,are the lowest among all LDCs in the world.However,the Costs are not to be evaluated,as the Nominal Costs.So the land lease and other charges, payable by the SEZ to the Pakistani State, might not be the lowest – but on a NET differential Mode,w.r.t the Reduction in Logistics costs,to the Pakistani SEZ,it should be the LOWEST in the world. Once that is done,then as a thumb rule, to keep the laws simple, FREE EXIM needs to allowed and all Inputs (including Power etc.) should be sourcable,w/o caveats.So a SEZ should be able to set up a IPP/CPP/RPP,anywhere in Pakistan,with any fuel,with nil duty and taxes and the lowest wheeling and banking charges. dindooohindoo
Corporate Tax holidays should start AT THE CHOICE of the Investor,FROM THE YEAR after which the Brought forward losses,of the SEZ are exhausted.And the Tax holiday should be co-terminus,with that of the longest holiday,by any LDC.The period of limitation, for the Choice of initiating the holiday period,should be upto 5 years,from commercial operations.
Basically,even if Pakistan waives the Wheeling charges etc.,it does not matter,as the aim is to bring in the ANCHOR and other Investors in the SEZ. Thereafter,the principles of Self Preservation by the SEZs,and its units,will ensure that,the State will find ingenious ways to earn revenue – provided that,1st the ANCHOR comes in,and then, that the SEZ and the SEZ units,make money !