Senator Dr Mushahid Hussain in a recent interview said that the US has come out openly against CPEC and the Iran-Pakistan gas pipeline — during the IMF visit for Staff-Level Agreement this month. He also mentioned Pakistan having military clashes with Iran and Afghanistan in the past couple of months.
This brings the question to mind of the cost a nation must pay for entering a deal with the IMF. One should be clear in the head that the IMF is but an instrument of US foreign policy, a fact that is clearly demonstrated in the case of Pakistan. According to some studies, not only do the IMF agreements limit national sovereignty by imposing specific conditions on states, these programmes also reduce growth while countries are under the programme.
While IMF’s stated purpose is to provide members with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity, practice shows the contrary. Every time our government has entered the IMF deal, there is requirement of increasing energy tariffs, imposition of more taxes, further devaluation of the Pakistani rupee and hikes in interest rates. This February was the same, immediately after the bailout programme, tariffs and energy prices skyrocketed and by March there was record inflation in the country. According to data, transport prices shot up 54.94%, food inflation jumped 47.15%, clothing and footwear prices climbed 21.93%, while housing, water and electricity costs rose 17.49%. And the same is expected to double up after this new agreement.
Common sense tells us that increase in energy and transport costs will push industries to the brink; raised interest rates will discourage investors to start new ventures; and inflation will push the common people from spending, except on the essentials, squeezing profits of local industries. And the problem is that all this austerity for the people and businesses of the country will by no means put the country on the road to growth and prosperity. Rather it will further push Pakistan to look towards the IMF, as it finds itself, like always, further indebted and instable at the end of every IMF programme.
Over and above all this the IMF mission, in 2018, reportedly asked for sharing details related to Chinese financial assistance. The IMF also links its conditionalities with ensuring funds from friends like UAE and Saudi Arabia. Such conditions mean that IMF is not only imposing dire austerity measures that would ensure a reverse-growth of the economy, it is all over, full-circumference, on the country’s foreign policy.
That is why it is suggested that every time you read IMF, think US. This time too, the IMF made Pakistan fall back from CPEC-related commitments; it also made the country back out on commitments with Turkmenistan for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project; and the US is now openly stating that it is against the Iran-Pakistan gas pipeline too, so that project can go to the backburner too. On the other hand, the government has directed authorities to ensure foolproof security for workers of the Reko Diq Gold and Copper Mining Project, a project that was previously stalled because of litigations. Interestingly, the project will go to Australian-based TCC and Canada-based Barrick Gold. The mines hold 5.6 billion tons of minerals with at least 1,000 tons of gold and cooper each.
Imagine, on the one hand UN Chief Antonio Guterres linking the Belt and Road Initiative with UN’s Sustainable Development Goals, comparing it with ‘global public goods and win-win cooperation’; the World Economic Outlook projecting China as one of the rare states that will show a substantial growth in 2024; whereas on the other hand, IMF trying to cut Pakistan off CPEC and other regional connectivity projects. Imagine, if CPEC goes through, Pakistan would become an artery for the trade movement of the world’s largest economy, multiplying opportunity for the locals; and if the IP Gas and TAPI go forward, how much cheap gas would enter the country, ushering economic growth. Imagine also that at a time when central banks of all states are buying gold because of the fear that the ‘dollar’ is doomed to collapse soon, at the very same time Pakistan is willingly handing over its mine of gold to US allies.
So, what is Pakistan doing when it runs for IMF, it goes against its vital long-term interests, it goes against its regional integration, it goes against our peaceful existence in our neighborhood. The IMF is doing what Donald Trump, the former President, failed to do in its trade war against China. It is doing what the US failed to do in Afghanistan with all its NATO power i.e. isolate and control Afghanistan, and put itself in a position where it could pit India against Pakistan. And it is happening when the failed US diplomacy has been unable to stop the Middle East and Southeast Asia from drifting away towards China, trying to cut out Pakistan from its natural trajectories into an unnatural allegiant of the US.
And our ever-going political instability under our unreliable democratic process certainly has a role to play in all this. However undemocratic it may sound, but Putin’s start of a 5th term in Russia and Xi’s 3rd term in China give a hint on why these states are dominating global politics and economics because stable, reliable, long-term policies cannot be sustained in a torn-out political system wherein leadership of the country changes faster than the ink dries.
Perhaps Realist John Mearsheimer is right then — the world is an anarchic system, states are in intense competition against each other, there is no global watchman upon whom one can rely on for justice, every state is for itself! But where would states that are not loyal to their own progress and relative strength fall is the definitions of realism. Perhaps this is realism 2.0, where states can be so weak that its leaders, in complete hopelessness in their self-reliance and self-sustenance, willingly sacrifice their sovereignties and their common sense at the alters of dubious institutions, just to get the benefits of easy-coming loans. Is this weakness a feebleness of the heart or is this another global conspiracy?
Published in The Express Tribune, March 29th, 2024.
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Pakistan — a victim of geopolitics
68
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29.03.2024
Senator Dr Mushahid Hussain in a recent interview said that the US has come out openly against CPEC and the Iran-Pakistan gas pipeline — during the IMF visit for Staff-Level Agreement this month. He also mentioned Pakistan having military clashes with Iran and Afghanistan in the past couple of months.
This brings the question to mind of the cost a nation must pay for entering a deal with the IMF. One should be clear in the head that the IMF is but an instrument of US foreign policy, a fact that is clearly demonstrated in the case of Pakistan. According to some studies, not only do the IMF agreements limit national sovereignty by imposing specific conditions on states, these programmes also reduce growth while countries are under the programme.
While IMF’s stated purpose is to provide members with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity, practice shows the contrary. Every time our government has entered the IMF deal, there is requirement of increasing energy tariffs, imposition of more taxes, further devaluation of the Pakistani rupee and hikes in interest rates. This February was the same, immediately after the bailout programme, tariffs and energy prices skyrocketed and by March there was record inflation in the country. According to data, transport prices shot up 54.94%, food inflation jumped 47.15%, clothing and footwear prices climbed 21.93%, while housing, water and electricity costs rose 17.49%. And the same is expected to double up after this new agreement.
Common sense tells us that........
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