Sunday, 28 February 2016
Friday, 19 February 2016
Tuesday, 16 February 2016
April 30, 2015 8:36 pm
The phenomenon of continuous swing in the global political dynamics besides a shift in power among the major players of the world, the face of interstate relations keeps changing respectively. Given the fact, it is important that our understanding of the world should also evolve accordingly, and we are not stuck with a worldview that has no relevance to the evolving realities of a world in transition.
Global politics is always characterized with three tendencies; namely, cooperation, competition, and conflict. It is a continuous process where the state to state interactions through economic cooperation, regional conflict, intrastate wars, power struggle between two belligerents, alliance formation for countering common causes of security, pursuance of economic interests through bilateral, regional and multilateral relations are on the move and further complicated by the globalization of the world where every state at its best seeks the chances of maximizing its national interests through various available means.
In the globalized world the rapidly emerging economy of China, which has put the position of many states on a stake in a world where the competitive economies do not always guarantee benefits, but also bring up many challenges and conflicts between the developed and developing and between the rich and poor.
The recent visit of Chinese President Xi Jinping to Pakistan with a cooperation deal worth US$46 billion, focusing on a broad spectrum of cooperation addressing the core issues like energy, transport and infrastructural developments has a greater degree of impact on the lives of people on both sides.
The relationship of the two countries is not limited to the economic cooperation, but a time-tested relationship based on mutual trust, respect, regional cooperation, and assistance. Both leaders rightly proclaimed the Pak-China relations as a deep-rooted tree.
The relations of both countries have evolved from being strong strategic cooperation towards strategic partnership and bilateral commitment of cooperation in the fields of civil nuclear energy under IAEA safeguards by Pakistan’s engagement with the Nuclear Supplier Group (NSG) and its firm commitments and efforts for en route into the global non-proliferation regime.
Pakistan is highly committed to the disarmament and non-proliferation efforts of the international community under the IAEA, which is expressed by its firmly unilateral cessation of nuclear testing and with highly sophisticated security mechanism for ensuring security and the safety of the country’s strategic assets.
The Pakistan-China security interests are also professed to be firmly unified and the strategic partnership between two countries has a mutual time-tested trust having a deep support of political, institutional and popular sustain within the masses of both sides. Despite the unfriendly relations of both countries with India, China encourages and appreciates Pakistan’s eagerness for peaceful resolution of all of the outstanding issues with the neighboring countries just for the sake of a peaceful, stable, cooperative and prosperous region.
Apart from the bilateral cooperation, both countries have greater role in the peace-building and rehabilitation process of Afghanistan having realized the fact that peace and development in the region are mostly connected with the stability and peace in Afghanistan. The new Afghan regime under President Ghani is also desirous to use China’s increased role in bringing the Taliban to a negotiation tables for a peaceful political solution that could bring an end to the country’s long fought war against the Taliban.
Having said all this, China’s investment plans in Pakistan are envisioned by keeping in mind the overall regional infrastructural developments. Therefore, through the initiative of China-Pakistan Economic Corridor (CPEC) which include building a new road network along with a railway line, an airport, dry ports, neighbouring countries like Afghanistan and India could also benefit from this corridor by linking their countries with this network. Moreover, these plans also include New Silk Road linking the region with Europe through Central Asia which will not only benefit Pakistan and China but intends broader goals of regional peace, progress and prosperity to the whole region.
- Prospects of development: Pakistan’s Relations with Central Asia
- Secretive Sino-Pak Strategic Relationships
- Regional Engagements in Afghanistan
- China – Russia axis towards a global ascendancy
- Pakistan in the Asian Pacific Politics
May 18, 2015 9:06 pm
The growing influence of Asia Pacific in the making of new world system is an open truth by now. The region has been the centre of academic debates because of Sino-US eyeball-to-eyeball economic and covert military competition. More specifically, according to the International Institute of Strategic Studies (IISS), Asian countries have now begun to spend more on defense than European ones. According to SIPRI, China’s defense spending increased by 750%, from $18 billion to $188 billion dollars, from 1989 to 2013.
At the same time, Japan’s increasing assertion on its military profile, the shift of global politics towards Asia owing to the rise of China and India as second and third largest economies, India’s qualitative and quantitative development of its defense forces under the guise of Indo-US strategic partnership especially nuclear deal and “Pivot to Asia” policy of President Obama’s administration designed to ensure the preservation of America’s dominant position in Asia have enabled the region to serve as a strategic juncture in International geopolitical and geo-economical arena.
Interestingly, Pakistan, being an important neutral player in quadrilateral initiative of democratic countries (Australia, India, Japan and the US) against China (Non-democratic) as well as due to its strategic geopolitical significance, possesses the rank of a pivot in Asian Pacific juncture of international politics.
Pakistan, however, faces a number of challenges to be able to cash this opportunity in this context. Socio-economic problems in Pakistan have not only given rise to non-traditional as well as traditional security threats to its national security but also decreased its capacity to deal with these issues in the recent past. Indeed, since its inception, there has been leadership crises in Pakistan coupled with fragile civil-military relations and fractured intra-party democratic values, which have been the front of all other issues that eventually lead to the weak foreign policy decisions.
On the opposite, fortunately, the upcoming picture is not very glimpse. As, first of all, the leadership change in China, India, Afghanistan and Pakistan changes the foreign policy directions of each state with the change of decision-making echelons. This changed behavior led to the initiation of cooperative bilateral relationships among South Asian countries and beyond the region as well. Sino-Pak relations are continually expanding in the positive direction.
Chinese President Xi Jinping’s visit to Pakistan enabled the two countries to reaffirm the importance that they attached to their strategic relationship and declare their intention to strengthen it further. They also signed a number of agreements and MOU’s aimed at implementing the China-Pakistan Economic Corridor (CPEC) and several other projects in energy, communication, and infrastructure sectors in Pakistan involving in all Chinese investment and financial support amounting to $46 billion. For Pakistan, it would be the forerunner of economic growth by bringing in the Chinese investment in infrastructure, communication, and energy sectors in Pakistan.
There has also been an improvement in Pakistan-Russian relations that have not been very good in the past. Similarly, elections in Afghanistan have positive implications on South and Central Asia, as nonviolent Afghanistan would augment the likelihood of development on Turkmenistan, Afghanistan, Pakistan, India (TAPI) and Central Asia-South Asia (CASA) projects. In addition, on the diplomatic front, the decision of Pakistan’s political and military establishment to tackle Yemen conflict diplomatically is a welcome decision.
Also, the qualitative development of armaments by Pakistan in the shape of surface-to-air missile FM-90 that has the capacity to engage aerial targets, together with cruise missiles, drones and air-to-surface guided missiles and is able to operate efficiently even under adverse electronic counter measures (ECM) environments is a rational response to India’s qualitative and quantitative improvement of military might that would, in one way or another, help in maintaining strategic equilibrium in the region. Last but not the least, the importance of Pakistan in successful operationalization of China’s new Maritime Silk Road strategy as well as on-going developmental work on Gwadar port has surely increased Pakistan credentials in the region.
Evidently, Pakistan’s leverage in global and regional politics is increasing day-by-day. Hence, it is equally important for United States to consider Pakistan’s apprehensions in regards to its nuclear deal with India. At the same time, Sino-Pak strategic relationship should not by secretive anymore. On the Pakistani part, it is also need of the hour for its decision-making elites to make foreign policy objective more explicit because failure in this would throw Pakistan in limbo if region undergoes even a minor conflict between existing and emerging major powers in future.
- Pak-China Strategic and Economic Cooperation: Challenges &…
- Secretive Sino-Pak Strategic Relationships
- Prospects of development: Pakistan’s Relations with Central Asia
- Efficacy of Nuclear Weapons for Pakistan’s National Security
- Future of Nuclear South Asia
October 30, 2015 1:32 pm
Pakistan issued $500 million worth of bonds with a maturity of 10-years at 8.25% in Eurobond market on 24th September 2015. This debt instrument has experienced extraordinary growth and is now floating in secondary market around 106.597 cents. Its value has increased by 7% after almost 35 days of its issuance which is considered to be surprising growth relative to other debt instruments in the secondary market. These $500 million Eurobonds have earned $33 million over face value in 30 days. Surprised?
Eurobonds issued by government of Pakistan have made someone rich overnight and seems like investors are standing in a queue to buy Pakistani bonds to get rich. Treasury bonds of other countries under 10-years maturity are floating in secondary market not more than 2%-3% interest rate. Although the interest rate of bonds have fallen down from 8.25% to 7.25% but it is still too high for an indebted country like Pakistan to pay for. The appreciation in the price of Eurobonds is because of 1% decrease in the annual yield rate resulting in $33 million profit to investors.
Previously, Government of Pakistan sold $2 billion worth of Eurobonds with $1 billion for 10 years maturity at 8.25% (which is 556 BPS above benchmark rate of 10-years US Treasury bonds) and rest of $1 billion for 5 years maturity at fixed 7.25% (which is 558 BPS above benchmark 5-years US Treasury rate) in international debt market back in April 2014. The government actually targeted $500 million worth of Eurobonds but got bids worth $6 billion and restricted to raising $2 billion; which according to government have shown interest of foreign investors in economy of Pakistan. These bonds are recently floating around 104.883 cents which is still higher than that of its issued price but lower than its last year’s record high of 110 cents.
Pakistan government has done three big international borrowing transactions in almost a year; two of them are discussed above and the third one is $1 billion worth of Sukuk bonds with 5-years maturity and borrowed at interest rate of 6.75%. Sukuk bonds are Islamic bonds backed by collateral and Government of Pakistan has pledged Islamabad-Lahore motorway for 5-years and that’s why interest rate is lower than that of Eurobonds transaction of $2 billion. Sukuk bonds were issued to restore lost trust of international investors after OGDCL transaction failed. Government is also planning to sell its shares in HBL, UBL, PIA, and PPL. Government of Pakistan has reported $20 billion in foreign reserves then why it is jumping into selling spree of national assets?
On 23 December, 2012 International Monetary Fund decided 0% interest on the loans of poor countries. Pakistan is repeatedly borrowing from national and international lenders to keep its economy going and has more than $67 billion of external debt to pay to different lenders and yet too excited to show the world that it is richer than the rich countries in the world. In comparison, Nigeria has issued bonds in secondary market at 7%, Egypt has issued its debt instruments at 6%, and interest rate of Middle East and other African countries is around 2.8%. Whereas, interest rate on 10-years US Treasury security is 2.05% as per 27th October 2015. Now imagine the difference between the annual yield rates of debt securities of US (trillion dollar economy) and Pakistan (billion dollar economy) 2.05% and 8.25% respectively and think about the health of both economies. We can totally mark the difference between trader’s government and democratic government. No doubt behaviors say it all.
Pakistan promised IMF to make reforms in energy sector to be able to borrow at 2-3% interest rate but failed to make any progress and that’s why Pakistan made a smashing entry to international debt market at interest rate as high as 8.25%.
Government officials say they have to repay maturing (2016) bond of same value issued in 2006 by then government. Question is why Pakistan isn’t generating revenue as a state? Why Pakistan has to borrow more to repay the maturing debt? Above all, the amounts of debt we are obtaining from different sources should be spent on jobs, education, cheap production of electricity, elimination of corruption, expansion of irrigation system, building of big dams, and state owned factories. Only this way Pakistan as a state can generate revenues and will be able to pay off its debts on its own. Borrowing more to pay the maturing debts will lead to debt trap that Greece is facing. Alarmingly, 47% of what Pakistan will generate as revenue will be used in debt payment.
We should be worried about Pakistan going into debt trap just like Greece. Greece has to borrow to pay for its previous loans and it is repeating this strategy for years. Pakistan is still better off paying its debts in time but this strategy would not work for long. We really need to mobilize our national assets to start generating profits so that we can be in a better position to pay off our debts from revenues rather than to borrow more to pay off previous debts. Pakistan is a money starved country but continuous borrowing isn’t the solution. Solution is progressive economic reforms, exploration of natural resources, and elimination of energy crises which is murdering our industries and hindering development.
Thursday, 11 February 2016
The Civil Society Policy Forum (CSPF) for the International Monetary Fund /World Bank 2016 Spring Meetings wil convene in Washington DC from Monday, April 11 to Friday, April 15, 2016. This is an important opportunity for Civil Society Organizations (CSOs) to engage with World Bank and IMF staff, their peers, and government delegations on a wide range of topics.
CSO representatives are invited to submit proposals for policy sessions on social and economic development topics. More information and guidelines, including a link to the session proposal form can be found here. Deadline for submissions will be February 26, 2016.
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