11-26-2018, 11:51 PM
*** 27-Nov-18 World View -- Pakistan fails to get agreement from IMF for a bailout
This morning's key headlines from GenerationalDynamics.com
****
**** Pakistan fails to get agreement from IMF for a bailout
****
![[Image: g181126b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g181126b.jpg)
Pakistan's prime minister Imran Khan and China's Premier Li Keqiang in Beijing earlier this month, with Khan begging for aid. (Getty)
After two weeks of discussions early this month between Pakistan and
the International Monetary Fund (IMF), Pakistan failed to get
agreement on securing a bailout package that would save the country
from its balance of payments crisis. The talks ended inconclusively,
with agreement to meet again in January.
China has strongly encouraged the IMF to make a bailout loan available
to Pakistan. Last month, China's foreign ministry spokesman Lu Kang
said, "As a member of the IMF, China supports the organization in
making an objective evaluation of Pakistan based on professionalism
and earnestly helping it properly address the current difficulty."
However, the main area of disagreement with Pakistan stemmed from the
IMF's insistence that Pakistan fully disclose the terms of the loans
made by China to Pakistan for the China Pakistan Economic Corridor
(CPEC), which is part of China's Belt and Road Initiative (BRI). This
is a very sensitive subject for China. China's has made loans to
numerous countries across Asia and Africa, and China has insisted that
the terms of these loans be kept top secret. Outside observers
believe that China is engaging in "debt trap diplomacy," and exposing
the terms of these loans would reveal the amount of leverage that
China has on all these countries. In the case of Pakistan, even the
central bank doesn't know the terms of the loan.
As we recently reported, the terms of China's loan to the Maldives is
becoming public, thanks to a surprise election victory and change of
administrations. The new president, Ibrahim Mohamed Solih, asked
China's ambassador Zhang Lizhong how much the Maldives owed to China,
and he was handed an invoice for the shocking amount of $3.2 billion,
many times more than Maldives could afford. This figure was so
embarrassing to China that later denied that they denied that Zhang
ever gave that figure. ( "24-Nov-18 World View -- Maldives can't determine how much money it owes to China"
)
However, the IMF is demanding to know all the details of China's loans
to Pakistan before it will approve a bailout package. That's because
a lot of the bailout money would end up going to China to pay off the
CPEC investment. That's why China is so supportive of an IMF loan to
Pakistan. And since most of the IMF money comes from US taxpayers,
American taxpayers would be paying for China's infrastructure projects
in Pakistan.
Nikkei and Market Watch
****
**** Pakistan's link to the FATF financial blacklist
****
This week is the tenth anniversary of the horrific 3-day terrorist attack on Mumbai, India,
killing
126 people, injuring hundreds more, and gutting the Taj Mahal Palace
Hotel, a major landmark for all of India.
It later turned out that the perpetrators were Lashkar-e-Taiba (LeT),
a Pakistan-based terrorist group that was funded by Pakistan's
Inter-Services Intelligence (ISI) agency. LeT's leader in the
operation was Hafiz Saeed. Pakistan refused to condemn him or LeT,
but kept him under house arrest for several years, under international
pressure. Then in November 2017, Pakistan freed him with no trial and all charges dropped.
As he
left the court a free man, he was greeted by chanting crowds and rose
petals.
The relevance of this story to Pakistan's relationship with the IMF is
that the IMF will not provide funding to a country on the blacklist of
the Financial Action Task Force (FATF). The FATF is a 30 year old
international policy-making body concerned with money laundering and
financing of terrorism and proliferation of weapons of mass
destruction.
There are currently 11 countries on the FATF blacklist, including
Pakistan. According to the October 2018 update, Pakistan has
committed "to address its strategic counter-terrorist
financing-related deficiencies," and take numerous steps including
the following:
<QUOTE>"(1) demonstrating that TF [terror financing] risks
are properly identified, assessed, and that supervision is applied
on a risk-sensitive basis; ...
(4) demonstrating that authorities are identifying cash couriers
and enforcing controls on illicit movement of currency and
understanding the risk of cash couriers being used for TF; ...
(8) demonstrating effective implementation of targeted financial
sanctions (supported by a comprehensive legal obligation) against
all 1267 and 1373 designated terrorists and those acting for or on
their behalf, including preventing the raising and moving of
funds, identifying and freezing assets (movable and immovable),
and prohibiting access to funds and financial
services."<END QUOTE>
In June, Pakistan agreed to tighten its compliance with anti-money
laundering laws and counter-terror funding. In view of Pakistan's
previous sponsoring of terrorist organizations targeting India and
Afghanistan, it's not surprising that Pakistan has no particular
desire to fulfill that commitment, even though the IMF will not
provide funding for a country on the FATF blacklist.
Finance Minister Asad Umar specifically addressed this question last
week and responded:
<QUOTE>"The government is neither in a hurry to sign a deal
with the IMF nor will it come under any pressure to take any
decision which burdens the country’s economy and its
people."<END QUOTE>
The IMF has other requirements as well: raise taxes, raise electricity
prices, tighten monetary policies and allow a further depreciation in
the value of the rupee currency. Asia Times and Pakistan Today and The News (Pakistan) and Financial Action Task Force (FATF)
****
**** Pakistan turns to its 'friends' for aid
****
Last month, Pakistan's prime minister Imran Khan leveraged the bizarre
death of Washington Post journalist Jamal Khashoggi in the Saudi
Arabian embassy in Istanbul to obtain $6 billion in aid from Saudi
Arabia. ( "25-Oct-18 World View -- Pakistan's 'desperate' Imran Khan attends Saudi investment summit amid Khashoggi crisis"
)
However, even with that aid, Pakistan still needs an additional $12-15
billion in aid to survive the next year. Imran Khan has paid visits
to both United Arab Emirates (UAE) and Qatar, but apparently returned
empty-handed from both visits.
So Pakistan has turned to its "all-weather friend," China, whose
friendship is "higher than mountains, deeper than oceans, stronger
than steel, sweeter than honey, and dearer than eyesight."
Khan visited China early this month, expecting a generous bailout
package from China. But to everyone's surprise, China flatly refused.
Perhaps China feels that its refusal will force the IMF to provide a
bailout, and then, as described earlier, the US taxpayer will be
paying China for CPEC, something that would delight the Chinese who
would be getting sweet revenge for unfair deals forced on China after
the Opium Wars in the 1800s.
So that brings us back to the IMF demands -- make the details of
China's loans to Pakistan public, and put procedures in place to end
terror financing. It remains to be seen whether Pakistan is even
capable of meeting these demands, or if it even wants to. Dawn (Pakistan) and Lowy Institute (Australia) and Pakistan Today and and Bloomberg (24-Oct)
Related Articles
KEYS: Generational Dynamics, Pakistan, Imran Khan,
International Monetary Fund, IMF, China, Lu Kang,
China Pakistan Economic Corridor, CPEC,
Belt and Road Initiative, BRI,
Maldives Ibrahim Mohamed Solih, Zhang Lizhong,
India, Lashkar-e-Taiba, LeT, Hafiz Saeed,
Inter-Services Intelligence, ISI, Asad Umar,
Financial Action Task Force, FATF,
Saudi Arabia, Jamal Khashoggi, Qatar,
United Arab Emirates, UAE
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- Pakistan fails to get agreement from IMF for a bailout
- Pakistan's link to the FATF financial blacklist
- Pakistan turns to its 'friends' for aid
****
**** Pakistan fails to get agreement from IMF for a bailout
****
Pakistan's prime minister Imran Khan and China's Premier Li Keqiang in Beijing earlier this month, with Khan begging for aid. (Getty)
After two weeks of discussions early this month between Pakistan and
the International Monetary Fund (IMF), Pakistan failed to get
agreement on securing a bailout package that would save the country
from its balance of payments crisis. The talks ended inconclusively,
with agreement to meet again in January.
China has strongly encouraged the IMF to make a bailout loan available
to Pakistan. Last month, China's foreign ministry spokesman Lu Kang
said, "As a member of the IMF, China supports the organization in
making an objective evaluation of Pakistan based on professionalism
and earnestly helping it properly address the current difficulty."
However, the main area of disagreement with Pakistan stemmed from the
IMF's insistence that Pakistan fully disclose the terms of the loans
made by China to Pakistan for the China Pakistan Economic Corridor
(CPEC), which is part of China's Belt and Road Initiative (BRI). This
is a very sensitive subject for China. China's has made loans to
numerous countries across Asia and Africa, and China has insisted that
the terms of these loans be kept top secret. Outside observers
believe that China is engaging in "debt trap diplomacy," and exposing
the terms of these loans would reveal the amount of leverage that
China has on all these countries. In the case of Pakistan, even the
central bank doesn't know the terms of the loan.
As we recently reported, the terms of China's loan to the Maldives is
becoming public, thanks to a surprise election victory and change of
administrations. The new president, Ibrahim Mohamed Solih, asked
China's ambassador Zhang Lizhong how much the Maldives owed to China,
and he was handed an invoice for the shocking amount of $3.2 billion,
many times more than Maldives could afford. This figure was so
embarrassing to China that later denied that they denied that Zhang
ever gave that figure. ( "24-Nov-18 World View -- Maldives can't determine how much money it owes to China"
)
However, the IMF is demanding to know all the details of China's loans
to Pakistan before it will approve a bailout package. That's because
a lot of the bailout money would end up going to China to pay off the
CPEC investment. That's why China is so supportive of an IMF loan to
Pakistan. And since most of the IMF money comes from US taxpayers,
American taxpayers would be paying for China's infrastructure projects
in Pakistan.
Nikkei and Market Watch
****
**** Pakistan's link to the FATF financial blacklist
****
This week is the tenth anniversary of the horrific 3-day terrorist attack on Mumbai, India,
killing
126 people, injuring hundreds more, and gutting the Taj Mahal Palace
Hotel, a major landmark for all of India.
It later turned out that the perpetrators were Lashkar-e-Taiba (LeT),
a Pakistan-based terrorist group that was funded by Pakistan's
Inter-Services Intelligence (ISI) agency. LeT's leader in the
operation was Hafiz Saeed. Pakistan refused to condemn him or LeT,
but kept him under house arrest for several years, under international
pressure. Then in November 2017, Pakistan freed him with no trial and all charges dropped.
As he
left the court a free man, he was greeted by chanting crowds and rose
petals.
The relevance of this story to Pakistan's relationship with the IMF is
that the IMF will not provide funding to a country on the blacklist of
the Financial Action Task Force (FATF). The FATF is a 30 year old
international policy-making body concerned with money laundering and
financing of terrorism and proliferation of weapons of mass
destruction.
There are currently 11 countries on the FATF blacklist, including
Pakistan. According to the October 2018 update, Pakistan has
committed "to address its strategic counter-terrorist
financing-related deficiencies," and take numerous steps including
the following:
<QUOTE>"(1) demonstrating that TF [terror financing] risks
are properly identified, assessed, and that supervision is applied
on a risk-sensitive basis; ...
(4) demonstrating that authorities are identifying cash couriers
and enforcing controls on illicit movement of currency and
understanding the risk of cash couriers being used for TF; ...
(8) demonstrating effective implementation of targeted financial
sanctions (supported by a comprehensive legal obligation) against
all 1267 and 1373 designated terrorists and those acting for or on
their behalf, including preventing the raising and moving of
funds, identifying and freezing assets (movable and immovable),
and prohibiting access to funds and financial
services."<END QUOTE>
In June, Pakistan agreed to tighten its compliance with anti-money
laundering laws and counter-terror funding. In view of Pakistan's
previous sponsoring of terrorist organizations targeting India and
Afghanistan, it's not surprising that Pakistan has no particular
desire to fulfill that commitment, even though the IMF will not
provide funding for a country on the FATF blacklist.
Finance Minister Asad Umar specifically addressed this question last
week and responded:
<QUOTE>"The government is neither in a hurry to sign a deal
with the IMF nor will it come under any pressure to take any
decision which burdens the country’s economy and its
people."<END QUOTE>
The IMF has other requirements as well: raise taxes, raise electricity
prices, tighten monetary policies and allow a further depreciation in
the value of the rupee currency. Asia Times and Pakistan Today and The News (Pakistan) and Financial Action Task Force (FATF)
****
**** Pakistan turns to its 'friends' for aid
****
Last month, Pakistan's prime minister Imran Khan leveraged the bizarre
death of Washington Post journalist Jamal Khashoggi in the Saudi
Arabian embassy in Istanbul to obtain $6 billion in aid from Saudi
Arabia. ( "25-Oct-18 World View -- Pakistan's 'desperate' Imran Khan attends Saudi investment summit amid Khashoggi crisis"
)
However, even with that aid, Pakistan still needs an additional $12-15
billion in aid to survive the next year. Imran Khan has paid visits
to both United Arab Emirates (UAE) and Qatar, but apparently returned
empty-handed from both visits.
So Pakistan has turned to its "all-weather friend," China, whose
friendship is "higher than mountains, deeper than oceans, stronger
than steel, sweeter than honey, and dearer than eyesight."
Khan visited China early this month, expecting a generous bailout
package from China. But to everyone's surprise, China flatly refused.
Perhaps China feels that its refusal will force the IMF to provide a
bailout, and then, as described earlier, the US taxpayer will be
paying China for CPEC, something that would delight the Chinese who
would be getting sweet revenge for unfair deals forced on China after
the Opium Wars in the 1800s.
So that brings us back to the IMF demands -- make the details of
China's loans to Pakistan public, and put procedures in place to end
terror financing. It remains to be seen whether Pakistan is even
capable of meeting these demands, or if it even wants to. Dawn (Pakistan) and Lowy Institute (Australia) and Pakistan Today and and Bloomberg (24-Oct)
Related Articles
- Pakistan's 'desperate' Imran Khan attends Saudi investment summit amid Khashoggi crisis (25-Oct-2018)
- Pakistan faces imminent financial crisis threatening China's CPEC (07-Aug-2018)
- Maldives can't determine how much money it owes to China (24-Nov-2018)
- After Mumbai's '26/11' nightmare finally ends, India - Pakistan relations face crisis (30-Nov-2008)
- Pakistan celebrates its 70th birthday, wondering what Pakistan is (15-Aug-2017)
KEYS: Generational Dynamics, Pakistan, Imran Khan,
International Monetary Fund, IMF, China, Lu Kang,
China Pakistan Economic Corridor, CPEC,
Belt and Road Initiative, BRI,
Maldives Ibrahim Mohamed Solih, Zhang Lizhong,
India, Lashkar-e-Taiba, LeT, Hafiz Saeed,
Inter-Services Intelligence, ISI, Asad Umar,
Financial Action Task Force, FATF,
Saudi Arabia, Jamal Khashoggi, Qatar,
United Arab Emirates, UAE
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
