G Parthasarathy

Imran Khan’s growing debt headache

G Parthasarathy | Updated on June 08, 2021

A file photo of Gwadar Port where China has significant interests Reuters   -  REUTERS

Pakistan is now buffeted by its debt entanglement with China and the US pull out from Afghanistan

The advent of summer in Jammu and Kashmir normally heralds the arrival of the tourist season. It also leads to the increasing sound of gunfire as armed and trained terrorists are infiltrated by the Pakistan army across the Line of Control.

Contrary to the past, the Kashmir Valley could well see a substantively better security situation this summer. The roots for this change go back to an announcement made by the Directors General of Military Operations of India and Pakistan, Lt. Gen Paramjit Singh Sangha and Major General Nauman Zakaria, after their discussions on February 22. The DGMOs announced on February 25 that the two countries had agreed to observe a cease-fire on the Line of Control.

Tensions across the Line of Control had escalated after the announcement of the radical Constitutional amendment on Jammu and Kashmir of August 5, 2019. This effectively ended the “special status” of the State. The February 25 announcement caught politicians of all hues in J&K by surprise. The clampdown that followed made it clear that the government meant business. Ladakh was separated from the Kashmir Valley and made a Union Territory.

Not surprisingly, both separatist and mainstream Kashmiri politicians started throwing tantrums. Most senior political leaders were placed under detention. Many of them have been released. Two senior civil servants Girish Chandra Murmu and Radha Krishna Mathur were made Lieutenant Governors of J&K and Ladakh. Both are said to have performed creditably in dealing with the rampant, prevailing corruption.

The Modi government has dealt with the international reaction firmly and fairly. There have been the usual allegations of human rights abuses and excesses by the law and order machinery. Nobody has taken these allegations seriously, except perhaps, politically motivated television channels, like Qatar’s Al Jazeera and news networks in Pakistan.

It must, however, be acknowledged, that the authorities in Srinagar could have acted more imaginatively in opening out the Internet, much earlier. They appeared to show little sensitivity for hardships they were imposing on business, industry, routine government functioning, and students, in Jammu, the Kashmir Valley, and Ladakh.

Pakistan embarked on a worldwide propaganda barrage against India, immediately following the amendment of Article 370 of the Constitution, Prime Minister Imran Khan and his loquacious Foreign Minister, Shah Mahmoud Qureishi, spearheaded the effort.

Not surprisingly, they found virtually every door they knocked at, closed. Efforts to get the issue raised in the UN and other international forums failed. More importantly, apart from the usual suspects like Turkey and Pakistan’s “all weather friend” China, Imran Khan and Qureishi drew a blank in their effort to gain support for Pakistan in multilateral conferences and meetings. Crucially, the Pakistan leadership is finding it difficult to organise demonstrations, or unrest in the Kashmir Valley.

After getting his Commerce Minister to raise the urgent issue of import of cotton, sorely needed by Pakistan’s textile industry, from India, Imran Khan immediately conspired to get the decision reversed by the Cabinet.

It became clear that Imran Khan was facing pressures from the army and his own Cabinet colleagues to promote economic cooperation and pull back from confrontation with India on Jammu and Kashmir. Imran Khan wants, and remains determined, to keep relations with India under a cloud of tensions and uncertainty.

Pakistan’s woes

Pakistan faces two major challenges at present — debt rescheduling, and uncertainty on, and across, its borders with Afghanistan. It has an abysmally low rate of savings, varying between 5.4 and 8.4 per cent. This is combined with growing external debt of $115.7 billion. Moreover, this external debt is piling up, thanks to the much touted $65-billion China-Pakistan Economic Corridor.

While the power sector in Pakistan now has a surplus, the country is being compelled to seek rescheduling of $22 billion in outstanding debts for Chinese built power projects. Pakistan is, moreover, borrowing from commercial banks in China to repay old loans from Saudi Arabia and others.

As repayment liabilities to China spiral out of control, questions are being asked about how Pakistan can repay these debts for the much talked about ‘Belt and Road Project’, built with Chinese investment. Sri Lanka faced serious repayment problems on its Hambantota Port Project. There was hardly any revenue from the Port, which was handed over to China by the Sri Lanka government, as it could not repay the Chinese loans.

China has reportedly resorted to the same process, in its construction activities in Africa. China already exercises significant control over the Gwadar Port and Naval Base it has built in Baluchistan. It is building the roads from its borders through Gilgit-Baltistan to Gwadar. China appears to have become an expert in the ‘Build, Operate and Takeover’ formula for projects in places like Pakistan.

Silver lining

The one redeeming feature in India’s present relationship with Pakistan has been the obviously quiet, different, and so far successful manner, in which the security establishments of the two countries are cooperating, in an atmosphere free from cross-border terrorism. This is happening at a time when Pakistan’s Army Chief General Bajwa has concluded that the use of terrorism presently, would be counterproductive.

Moreover, the Army Chief also seems to be taking over greater control of relations with important countries like the US and Saudi Arabia, apart from the policy on Afghanistan, as the Americans prepare to leave the country, in a hurry.

Determined not to hand over control of foreign and security policies to Bajwa, Imran Khan has appointed Moeed Yusuf his own protégé, who normally lives in the US and has no great standing in Pakistan, as his National Security Adviser (NSA).

The NSA, who many Indians know and have met in ‘Track 2’ meetings, is pleasant and well informed. He would, however, carry little or no clout with Pakistan’s Diplomatic and Military Establishment. New Delhi would, no doubt, work out the modalities for serious interactions with Pakistan.

Pakistan’s priorities are going to be focussed on reviving the economy. That is going to be a Herculean task given the problems and shortcomings the country faces on its balance of payments, ballooning budget deficits, and debt repayments. Its primary focus will remain on maintaining peace and some form of control on the Taliban.

None of these tasks appears doable. India should move towards getting credible guarantees on terrorism. Doubts about Pakistan’s promises on terrorism will remain. The emerging situation in Afghanistan, as the American shadow recedes, will become the primary focus of world attention.

The writer is a former High Commissioner to Pakistan

Published on June 07, 2021

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