China strikes back

THE Petroleum Economist of Sept 3 reported that China has agreed

to invest up to $290 billion in the development of Iran’s oil, gas and
petroleum sectors, and another $120bn in its transport and
manufacturing infrastructure. This is a calculated kick aimed at
America’s strategic objectives.

According to the report, China will have the first right of refusal on all projects
in Iran and a 12 per cent guaranteed discount on energy imports from there.
China will provide the “technology, systems, process ingredients and
personnel required to complete such projects” including “up to 5,000 Chinese
security personnel on the ground to protect Chinese projects….”

China’s agreement to so massively finance Iran’s development is an extension

of its Belt and Road Initiative. It is also an ‘in your face’ response to America’s
aggressive trade, technology and military moves against China over the last
year. It will prick the balloon of the US strategy of ‘maximum pressure’ against
Iran designed to bring the latter to its knees economically and oblige it to
accept additional constraints on its nuclear and missile programs (beyond the
JCPOA) and curb its politico-military ambitions in the Middle East. In
entering this agreement, China has announced that it is not intimidated by the
“secondary sanctions” which the US has threatened to impose on companies
and countries which continue economic relations with Iran in defiance of
America’s unilateral sanctions against Iran.

China can import virtually all of Iran’s oil and gas production. This could
increase Iran’s oil exports manifold from 200,000 barrels per day at present
to its full capacity over 4-5 million bpd. China’s energy giants — CNPC, CNOC,
Sinopec — can rapidly expand Iran’s oil and gas production from existing and
new fields. Iran will not need other markets, such as India which has halted oil
imports from Iran in compliance with US sanctions.

China’s agreement to massively finance Iran’s

development is an extension of its Belt and Road
Initiative.
A considerable part of Iran’s gas could be exported via the existing
Turkmenistan-China gas pipeline and new oil pipelines can be constructed on
the same route. This will significantly diminish the threat of a US/Western
maritime energy blockade against China or Iran. Further, China’s reliance on
US-friendly energy suppliers in the Gulf (Saudi Arabia, UAE) and East Asia
(Indonesia, Brunei) will be dramatically reduced since it could meet all or
most of its requirements from Iran and Russia.

The transport infrastructure which China plans to build in Iran, including

high-speed rail on several routes, will provide Beijing with additional avenues
for its trade — overland trade through Iran and Turkey to and from Europe
and maritime trade through Iranian ports (including, ironically, the hitherto
Indian-sponsored port of Chahbahar) to the Middle East, Africa and beyond.

Iran’s economic partnership with China will supplement its current close
security ties with Russia and alter Middle East power equations. China will
acquire considerable influence over Tehran’s nuclear and security policies,
adding to its leverage with the West including the US. On the other hand,
Iran’s reinforced ‘strategic’ partnership with China will considerably enhance
its capacity to promote its policy objectives in Yemen, Iraq, Syria, Lebanon
and Afghanistan. Iran may also feel sufficiently emboldened to retaliate
robustly to Israel’s frequent strikes on its military assets and militia affiliates
in Syria, Lebanon and Iraq.

In Yemen, Iran is now playing a more open role to promote a political

settlement which accommodates the Houthis. The Arab coalition has been
weakened by an unsuccessful military campaign, internal differences and US
and Western criticism of the human cost of the conflict.

In Syria, President Bashar al-Assad has clearly won the civil war against the
Western Gulf coalition with the support of Russia and Iran. Once its economy
is stabilised, Iran could play an even more robust role not only in Syria but
also Iraq and Lebanon.

Iran and China may also enhance their influence in Afghanistan. Donald
Trump has declared that the agreement with the Taliban is ‘dead’ — at least for
now. The most significant provision of this agreement was not the withdrawal
of 5,000 American soldiers but the Taliban’s acceptance of the continued
presence of 8,600 US ‘counterterrorism’ forces. These troops would prolong
US capacity for force projection within and across Afghanistan’s borders. Now,
it is possible that the Afghan Taliban, perhaps at Iran’s instance, may no
longer accept the rump US presence in a revived deal.

China’s Iran partnership would supplement and reinforce its long-standing

strategic participation with Pakistan. Obviously, Beijing wants strategic
relationships with both. However, the Iranian partnership offers China
another strategic ‘window’ besides CPEC and insurance against possible US or
Indian disruption of the China-Pakistan corridor. Moreover, over time, the
Sino-Iran economic partnership could add a security and military
dimension.Western pundits often speak of a Chinese naval base in Gwadar. In
fact, it could well appear in Chahbahar.

Time is running out for India to make a strategic choice between an ‘Asian
Order’, combining China, Russia, Iran, Pakistan, Turkey and Central Asia
under the SCO and the BRI, or an alliance with the US and participation in its
‘Indo-Pacific’ strategy. So far, India has had the best of both worlds. It is
building an alliance with the US to emerge as China’s Asian ‘equal’ and
establish its domination over South Asia and the Indian ocean. Yet, India
pleads for US ‘strategic altruism’ to enable it to preserve its traditional arms
supply relationship with Russia and its growing trade and investment
cooperation with China. As the Sino-US global confrontation intensifies, the
strategic space for India, and others, to manoeuvre between the two global
powers will become progressively narrow. China’s forthright support to
Pakistan on occupied Kashmir is an early indication of the emerging
alignments.

So far, despite Trump’s hostile trade tariffs, technology restrictions and

military pugnacity, China has kept open the option of reverting to a ‘win-win’
cooperative relationship with the US. But, a firm consensus seems to have
emerged in Washington that China is America’s primary rival and threat to its
century of global dominance and that China’s further rise can and must be
stopped by a ‘whole-of-government’ strategy of comprehensive containment
and confrontation. China appears to have picked up the gauntlet. A titanic
clash is in the offing across the world.

Pakistan’s Kashmir strategy

MODI’S abrupt and illegal move to annexe occupied Jammu &
Kashmir was a moment of truth for Pakistan, the Kashmiri people,
India’s ‘secularists” and the world community.

In Pakistan, those who believed that a compromise on Jammu & Kashmir

would end Indian hostility and promote cooperation have had their eyes
opened. It is now evident that for Modi and his BJP-RSS cohort, a ‘final
solution’ for Kashmir (through demographic transformation) and hostility
towards Pakistan are not merely electoral artifices; they are part of their
supremacist vision of a Hindu India that is to be ruthlessly realised.

Pakistan has had to adjust quickly to this ugly reality. Prime Minister Imran
Khan believes his earlier offers of a dialogue, and Pakistan’s self-restraint in
last February’s military exchanges, were seen by Modi as signs of weakness
and appeasement. He is now committed to advocating the Kashmir cause
globally as the Kashmiris’ “ambassador”.

Pakistan’s early diplomatic response was standard: recall of

ambassadors, termination of trade and approaches to the UN and human
rights organisations.

The initiative to raise Kashmir in the UN Security Council was bold.

The UNSC’s “informal consultations” on Jammu & Kashmir, after an

interregnum of 50 years, agreed by all 15 members, represent a clear
diplomatic victory for Pakistan. This affirmed that Jammu & Kashmir is
disputed territory and not India’s internal matter. The council, now actively
seized of the issue, will take cognisance of the ongoing developments in India-
held Kashmir.

The legitimacy of the Kashmiris’ struggle must be

propagated on the basis of international law.
Strong expressions of concern have also emanated from the UN and the global
human rights organisations (except, strangely, from Pakistani organisations)
regarding India’s round-the-clock curfew, communications and news
blackout, arbitrary arrests and violent and lethal suppression of protests.

Islamabad has announced that Pakistan’s foreign minister will raise India’s
human rights violations in the Human Rights Council that convenes in Geneva
in early September.

Prime Minister Imran Khan has declared that he will strongly propound
Kashmir’s cause in his address to the UN General Assembly (reportedly on
Sept 27) and in his meetings with other heads of state and government.

Sadly, while India’s so-called free press has rallied around Modi’s illegal move
to integrate occupied Kashmir, and covered up the massive repression
underway there, sections of the Pakistani media have already begun to carp
about the PTI government’s alleged failure to craft a Kashmir policy and
secure external support, ignoring what has been achieved and the deleterious
impact of their critique on the morale of the oppressed Kashmiris.

There is no doubt that the Arab and Islamic world is weak and divided. The
OIC’s voice has been muted, not only on Kashmir, but even on Palestine, the
raison d’être for its creation. Its unity and influence cannot be revived
instantly by Pakistan.
Yet, Kuwait was supportive in the UNSC; Saudi Arabia has issued a statement
of concern; as has the OIC Secretariat and the Islamic Human Rights Council.
Hopefully, the OIC will eventually come together to defend the fundamental
rights of the Kashmiris.

More important will be the positions of the major powers, especially the five
permanent members of the UNSC. Geopolitics will play an important part in
determining their positions.

So far, China has declared its support for Pakistan’s position. Pakistan’s
strategy will have to build on this critical support. Russia will walk a fine line
between its traditional relationship with India and its new strategic
partnership with China and, by extension, with Pakistan. The US will use
India’s self-created vulnerability on Kashmir to keep it in line, as it flirts with
Pakistan to get the Afghan deal done with the Taliban. (Trump’s mediation
offer was a non-starter and should not divert Pakistan’s attention.) France is
desperate to replace Russia as India’s main arms supplier and will continue to
act as India’s surrogate in the UNSC. The UK may be sympathetic on human
rights issues but, like many others, will take refuge in the impotent advocacy
of ‘bilateral’ Pakistan-India talks on the Kashmir dispute.

While building its strategy with China’s support, Pakistan would also need to
secure US acquiescence for its Kashmir objectives. For this purpose,
Islamabad can use the leverage provided by its facilitation of the US-Taliban
negotiations. France will need to be neutralised by stronger diplomatic and
other measures.

The compulsion for the Security Council and the international community to
intervene in the dispute and promote a solution will depend on Pakistan’s
persistence in propagating the Kashmir cause in the face of Indian threats and
coercion and, even more importantly, on the resilience and strength of the
Kashmiri people’s freedom struggle. The world will intervene if ethnic
cleansing and genocide occurs in Kashmir or if there is a real danger of
another Pakistan-India war.

Confronted by Modi’s attempt to eliminate Kashmir’s identity and autonomy,

the people of occupied Jammu & Kashmir have no choice but to resist. This
will now be a universal sentiment among Kashmiris. There will be few fence
sitters or Indian collaborators. There is also likely to be greater support among
the Kashmiris for armed resistance. Militant organisations, especially
indigenous groups like Hizbul Mujahideen, rather than the Hurriyet’s political
leadership, will lead the new struggle.
Pakistan will need to adopt a clear and politically defensible position on the
Kashmiri freedom struggle. On the one hand, it must propagate the legitimacy
of the struggle on the basis of international law and the numerous UN
resolutions. On the other hand, Islamabad will need to distance itself from
proscribed terrorist organisations that may enter the anticipated fray in
occupied Jammu & Kashmir.

Ultimately, if India confronts a Kashmiri insurgency, a resilient Pakistan,

international pressure and an impaired economy, it may agree to negotiate a
mutually acceptable settlement with Pakistan and the Kashmiris. But the
Hindu fascists may choose not to compromise. Bleeding in occupied Kashmir,
they are likely provoke another war with Pakistan, bringing Armageddon to
South Asia and much of the world.

The international community must thus act now to stop them.

Kashmir: India’s Afghanistan

WHEN the history of modern India is written, it is likely to record
that the imperial ambitions of Hindu India died in Kashmir.
Afghanistan is justifiably known as the ‘graveyard of empires’.
After 19 years, the US is still fighting its longest war there.

India’s war in occupied Jammu & Kashmir is over 70 years long. It has been
fought by an occupation force of 700,000, seven times the maximum number
of troops deployed at any time by the Soviet Union or US-Nato in Afghanistan.
The Kashmir war will end only when New Delhi realises that it cannot break
the will of the Kashmiri people and that it is doing grievous damage to the
Indian state.

This future is visible now.

First, the illegality of India’s occupation of Kashmir is being widely

acknowledged.

The Security Council and the UN secretary general have again reaffirmed the
UN resolutions requiring a plebiscite in Kashmir. India’s position violates
these resolutions.

The Kashmiri Muslims will vigorously oppose being

transformed into a minority in their homeland.
Article 370 of the Indian constitution was supposed to encapsulate the terms
under which the Maharaja of Kashmir was supposed to have acceded to India.
By removing this article, India has eliminated the only legal argument it had
itself advanced to justify its claim to Jammu & Kashmir. By its own legal
yardstick, therefore, there now is naked occupation.

Second, the Modi government has closed all doors to a peaceful and
negotiated resolution of the dispute. It has rejected a bilateral dialogue with
Pakistan as well as third-party mediation. Following its Aug 5 unilateral
actions, India says there is nothing to negotiate with Pakistan except the
“return” of “Pakistan-occupied Kashmir” to India.

Nor does the Indian government contemplate a negotiated relationship with

the Kashmiris. They will be now ruled directly by Delhi’s proconsuls. India has
clearly opted for a military solution. The Kashmiri Muslims face an existential
threat. They will vigorously oppose being transformed into a minority in their
homeland by Hindu colonists. They have no choice but to intensify their
freedom struggle.

The BJP’s fascist plan to impose a ‘final solution’ by changing Kashmir’s

demographic composition will result in serious violations of human rights and
humanitarian laws and could lead to a genocide in occupied Kashmir.

Responsibility for mass murder and genocide by ‘Hitler’s Hindus’ will turn
India into an international pariah, tear apart its social fabric, and erode its
ability to cling on to Kashmir.

Third, India’s arrogance and hostility, the Hindutva racism and the visible
suffering being imposed on the Kashmiri people have transformed Pakistan
from a fearful friend into a bold ally of the Kashmiri freedom struggle.

Kashmir has been again proclaimed as a core issue for Pakistan. The BJP’s
actions have radically diminished the hope within Pakistan that relations with
India can be normalised and the Jammu & Kashmir dispute resolved through
negotiations.

India’ latest clampdown and anticipated crackdown of the Kashmiri uprising

will create considerable domestic pressure on the Pakistani government to
actively support the Kashmiri freedom struggle. Such assistance would be
entirely legitimate.

The principle of a plebiscite prescribed in Security Council resolution 47

(1948) and subsequent resolutions reflects the legal recognition of the right to
self-determination of the people of Jammu & Kashmir. The UN General
Assembly, in Resolution 2649 (1970), and several subsequent resolutions, has
repeatedly affirmed the legitimacy of the struggle of peoples under colonial
and alien domination, “recognised as being entitled to the right of self-
determination”, to “restore to themselves that right by any means at their
disposal, including armed struggle”. These resolutions, furthermore, also
recognise the right of such peoples “to seek and receive all kinds of moral and
material assistance” in the “legitimate exercise of their right to self-
determination”.

Whether Pakistan does or does not assist the Kashmiri freedom struggle, India
is likely to accuse Pakistan of ‘cross-border terrorism’ and threaten the use of
force and even resort to aerial strikes on and/or military incursions.

The world is fully aware that a Pakistan-India conflict could turn into a
disastrous war with an inherent nuclear dimension. To avoid this, the
members of the Security Council, other states and international institutions,
are likely to resort to preventive measures.

The major powers and the UN will make efforts to convince India to reverse its
course and engage in a credible peace process with Pakistan and the Kashmiri
people.

But Modi is drunk with power. He and his RSS coterie (Amit Shah, Ajit Doval
et al), are convinced that oppression of the Kashmiris and aggression towards
Pakistan is a winning strategy within India. They will probably spurn the calls
for restraint and dialogue.

The temptation for the international community then may be to take the
“easier” route of coercing Pakistan to refrain from assisting the Kashmiri
freedom struggle and accept India’s imposed “realities” in occupied Jammu &
Kashmir.

However, unlike preceding governments, the present Pakistani leadership will

not succumb to such coercion.

There is a growing sense in Islamabad that the BJP’s heavy-handed strategy is

likely to backfire, sparking a major indigenous Kashmiri insurgency which will
be difficult to defeat. If India resorts to the threat or use of force, there is
renewed confidence in Pakistan that it can neutralise New Delhi, if necessary,
by recourse to credible nuclear deterrence.

India’s prolonged occupation of Kashmir is likely to turn into an Afghan-like

quagmire. It will corrode morale in India’s armed forces, divide its polity and
erode its economy. Like the colonial powers of the past, India will ultimately
lose the debilitating war against a determined popular insurgency.

It may take another 10 or even 20 years. But the heroic people of Kashmir,
much like the famed Hindu Kush, will eventually bury the imperial dreams of
Hindu India.

Economy: policy problems

OVER the past year, the PTI government’s economic focus has been
on redressing macroeconomic imbalances. However, there are a
host of other policy problems that require honest, competent and
decisive decisions. Here are 10 important examples.

Reko Diq: The recent $5.9 billion award by the World Bank’s court (ICSID)
against Pakistan is a classic outcome of misplaced patriotism, incompetence
and corruption. Like India, and as suggested by the UN trade organisation
UNCTAD, Pakistan should have long ago denounced the unequal investment
treaty which allowed a foreign company to sue it.

The court’s award on Reko Diq is now final and contesting it further may be
futile and impede foreign investment, and further delay exploitation of the
huge ($1 trillion) deposits of copper and gold in and around Reko Diq. While
rejecting the award in principle, the government ought to explore a pragmatic
solution which circumvents the exorbitant award and enables early, efficient
and beneficial exploitation of the mineral resources.

There are several areas in the economic landscape that

require competent decision-making.
LNG imports: Although well aware of the rapid depletion of Sui gas,
Pakistan’s preceding leaders failed to arrange for sustainable imports, eg
through the Iran pipeline. The previous government negotiated a ‘sweetheart’
LNG deal with Qatar. Two LNG terminals were assigned in an equally opaque
exercise. Now, an intricate game appears to be underway to determine who
gets the sorely needed third terminal. To remove the smell of rotting fish, the
government should make the entire decision-making process on the LNG
business totally transparent.

‘Autonomous’ entities: Over 300 government entities cumulatively lose

two per cent of Pakistan’s GDP each year. Everyone agrees these entities have
to be restructured, divested or closed down. For over a decade, nothing has
moved. Previous governments found it difficult to divest or restructure
politically sensitive but commercially disastrous entities like PIA and the Steel
Mills. The temptation is to sell off the most profitable enterprises first (eg the
two Punjab power plants). Instead of trying to reinvent the wheel, the
government would do well to hire one or more specialist firms to propose a
plan and execute it quickly.

Housing and wealth creation: The allocation of government land and

financing of home acquisitions are traditional vehicles for wealth creation and
GDP expansion, as illustrated by the history of America and modern China. In
Pakistan by contrast, government land has been parcelled out through official
entities mostly to house the rich and powerful rather than the poor or middle
class. This has accentuated economic and social inequality. The prime
minister’s housing scheme can be the vehicle not only to provide shelter, but
also create wealth for the poor and middle class (and expand GDP) through
the allocation of adequate land and cheap credit for affordable housing.

SMEs: The heavy borrowing on the local market by recent governments has
consistently squeezed out lending to small and medium enterprises which are
the main creators of jobs, goods and services. Today, many SMEs in Pakistan
are borrowing money for business development at exorbitant 20pc to 30pc
interest rates from so-called private financing channels. A conscious policy is
required to provide easier credit at market rates through normal banking
channels to SMEs.

SEZs: The establishment of Special Economic Zones including under CPEC

have been delayed mainly due to the fight over whose land would host the
zones (and be sold at enormous profit). The government ought to promulgate
a law on ‘eminent domain’, allowing it to requisition sites for SEZs at pre-
industrial prices. This will save the government money and speed up creation
of the SEZs.

Waste disposal: Pakistan’s major cities are drowning in their own filth, as
illustrated by Karachi’s plight after last week’s monsoons. Karachi produces
11,000 tons of solid waste daily; Lahore 7,000; Hyderabad 4,000, etc. Waste-
to-power plants are one answer to dispose of solid waste. Some Latin
American countries are paying 16-20 cents p/kwh to have US and Swedish
companies fully finance the installation of the most efficient plants. In
Pakistan, provincial authorities offer nine to 10 cents. The one Chinese plant
set up in Lahore at this rate has been abandoned. Realistic power rates and
collection fees are essential to attract investment for these waste-to-power
plants.
Thar coal: Pakistan will be unable to fully exploit the vast Thar coalfield for
power generation because there is insufficient water to cool the plants, the
carbon emissions will be unacceptably high and the electricity produced is not
much cheaper than alternatives because the cost of mining (with outdated
equipment) is very high ($40 vs $8 in Virginia, US). Thar coal could be used
for power, fertiliser and other purposes if gasified to pipeline quality, the
carbon emissions captured and mining made more efficient. Advanced
technologies to achieve this are available. The government and power
companies need to make the decision to invest in and apply these
technologies.

Manufacturing: In Pakistan, manufacturing contributes only 10pc to GDP.

The country will remain non-industrialised unless it builds the essential tariff
and non-tariff ‘protections’ for its nascent domestic industries (disregarding
the suicidal ‘liberalisation’ advocates) and/or encourages its enterprises to
enter into joint ventures with efficient foreign producers (who will enter such
joint ventures if they cannot export into Pakistan).

CPEC: Pakistan needs infrastructure to develop; only China is ready to build

it; its official loans are ‘cheap’ (2pc to 3pc with long repayment periods, akin to
‘grants’). The loans for power projects to Pakistani companies were
‘commercial (around 6pc interest). Chinese companies have executed most of
the projects, since Pakistan had limited capability to do so. The equipment
supplied for the power plants was mostly Chinese but many of the turbines
and boilers were sold by America’s General Electric. The power projects are
highly profitable, perhaps excessively so. There is no ‘debt trap’. The Chinese
loans will be easily repaid (unless the projects are rendered economically
unviable by retroactive conditions).

Expanded cooperation with China remains the best route to Pakistan’s

industrial and commercial development. In the afterglow of the Washington
visit, some among Pakistan’s business and official elite seem susceptible to the
Western propaganda against CPEC and China. They risk making a major
strategic blunder.

The Afghan prism

DESPITE the Indian media’s assumptions of a US strategic volte-
face, Islamabad would do well to acknowledge that the Trump
administration still views its relations with Pakistan largely
through the prism of Afghanistan. President Donald Trump’s
desire for an early end to America’s longest war is the principal
reason for his invitation to Prime Minister Imran Khan.
Pakistan has played a key role in facilitating the Afghan peace process and the
US-Taliban talks. These have reportedly made encouraging progress over the
past few months. An agreement on the withdrawal of US-Nato troops has
evidently been reached between the US and the Afghan Taliban, although no
timetable for the withdrawal has been finalised and it is not clear if the troop
withdrawal would be commenced before, during or after a political settlement
in Afghanistan.

The Taliban, for their part, have agreed to prevent terrorism against the US
and third countries from Afghan territory post a settlement. It is unclear if the
US will ask, as it did earlier, to leave behind a ‘small’ counterterrorism force in
Afghanistan.

Despite facilitating US-Taliban talks, Pakistan has not

secured any tangible reciprocity from the US.
Two weeks ago, US Secretary of State Mike Pompeo said in Kabul that “the
time for peace has come”. He hoped for a political settlement by Sept 1.

While the troop withdrawal and counterterrorism agreements are ready, the
US special envoy, Zalmay Khalilzad, has so far insisted on resolving two other
issues simultaneously: an intra-Afghan dialogue between the Taliban and
Kabul government and a general ceasefire, tweeting that “nothing is agreed
until everything is agreed”. US withdrawal from Afghanistan could be delayed
if the US insists on the conclusion of intra-Afghan negotiations before troop
withdrawals commence.

The Taliban have rejected direct talks with the Ashraf Ghani government
(which they consider a US puppet), but are willing to engage with all Afghans,
including members of the government in their personal capacity. An informal
dialogue process was attempted in several locales and finally took place last
month in Doha coterminously with the separate US-Taliban talks.

This two-day intra-Afghan session issued a positive declaration expressing the

desire of all Afghan parties and groups to reduce civilian casualties “to zero”
and preserve Afghanistan’s unity and sovereignty and Islamic principles.

However, there is a formidable array of questions that must be answered to

arrive at an intra-Afghan political settlement: how will power be shared? On a
territorial basis and/or through distribution of executive posts at the centre
and provinces? How would security be maintained? Would the Taliban and
regime forces be responsible for security in the areas they control? Would
these forces be eventually integrated; if so, how? Would the US and the
international community continue to provide economic and other assistance
to a post-settlement Afghanistan, including areas/entities controlled by the
Taliban? Will the (US-drafted) Afghan constitution be reaffirmed, amended or
replaced? Will protections for women and minorities be preserved?

The Taliban have, so far, rejected the US proposal for a ceasefire during the
dialogue. They have the military momentum, and fear losing the support of
some hard-line commanders. The Taliban may eventually accept a ceasefire if
convinced either that the US is genuinely committed to troop withdrawal or
that they can achieve their end-goals without further fighting.

An Afghan political settlement will not be durable unless it is supported by

regional powers and Afghanistan’s immediate neighbours Pakistan and Iran.
The US special envoy adroitly commenced a trilateral US-Russia-China
dialogue to build regional consensus. Indeed, Afghanistan is one place where
the three major powers, despite their global rivalry, may have a convergent
interest in fighting terrorism and promoting stability.

At their last meeting in Beijing, Pakistan was invited to join the three great
powers to expand regional support for an Afghan peace settlement. Iran was
reportedly also invited to the Beijing consultations but refused to participate.
Iran has close traditional relations with the Tajiks, Hazaras and Shias, and
new relations with some hard-line Taliban commanders. If US-Iran tensions
escalate, Tehran could severely disrupt the Afghan peace process.

US withdrawal and Taliban resurgence will end India’s two-front strategy

against Pakistan and its ability to sponsor TTP and BLA terrorism from
Afghan territory. New Delhi would gladly play the role of a spoiler to disrupt
the Afghan peace process were it not afraid of angering its US ally.

As has been oft-stated, apart from the Afghans, Pakistan has the highest stakes
in securing Afghan peace. This would (hopefully) end US hostility and
pressure; halt cross-border terrorism from Afghanistan; ensure execution of
several pending regional connectivity projects; and enable the early
repatriation of Afghan refugees.

Despite its bold and continuing facilitation of the US-Taliban talks, until now,
Pakistan has not secured any tangible reciprocity from the US (apart from the
designation of the BLA as a terrorist entity). On the contrary, until recently,
Washington maintained economic pressure on Pakistan via the IMF and
FATF, and demanded action against the leaders of the proscribed pro-
Kashmiri organisations (LeT and JeM) which Pakistan has taken.
In the Washington talks, the US is likely to ask Pakistan to ‘do more’ to
persuade the Taliban to negotiate with Kabul and accept a ceasefire. It may
also go beyond Afghanistan to seek assurances regarding the Kashmir
insurgency, nuclear and missile issues and relations with Iran.

Pakistan would do well to avoid assuming additional obligations on the

western or eastern front. Over-promising and under-delivering could reopen
the mistrust and acrimony that has dogged Pakistan-US ties since at least
2005.

Instead, Pakistan should expect that its strong support to the desired peace
process will finally yield some gestures of US support. The US could take
action against the TTP and BLA; help in monitoring and fencing the Pakistan-
Afghanistan border; provide counterterrorism equipment; release blocked
CSF moneys; and promote Afghan refugee repatriation. Washington could
adopt more even-handed policies towards Pakistan and India. Further, the US
administration could encourage its corporations and private equity firms to
actively consider investment in Pakistan to revive growth and unleash its vast
economic potential.

Economic redemption
PAKISTAN is facing hard economic times. It is vital for its
policymakers to seek durable solutions not illusory quick fixes.

Peace with its neighbours is essential for durable development. But Pakistan
cannot usher in peace unilaterally. Reciprocal steps to contain terrorism in the
region may be a good first step. Yet, bilateral tensions are unlikely to abate so
long as Indian repression continues in occupied Kashmir under the BJP’s
hard-line rule. And durable peace will require a just settlement of the Kashmir
dispute.

In any case, there is no ‘peace dividend’ in the offing. India is embarked on a

massive arms buildup to fulfil its great power ambitions. Pakistan cannot
disarm unilaterally.

Promoting far-reaching agreements with President Ghani at this time appears

counter-intuitive. He is likely to be replaced by a new leadership expected to
emerge from the US-Taliban talks and an intra-Afghan dialogue. It would thus
be best to negotiate a new relationship with the post settlement power
structure and leadership.

Pakistan was preordained to get into financial trouble.

Past governments and leaders, who betrayed the people’s trust and looted the
country’s wealth, deserve all the penalties prescribed by the law.
Unfortunately, the repatriation of ill-gotten gains is often blocked by ‘safe
havens’ where the wealth has been transferred. Net assets recovered are
usually a fraction of the stolen amounts. These will not provide meaningful
financial relief to the Pakistani exchequer.

Yet, justice should be done if only as a deterrent against future criminal

behaviour. It is even more vital for the government to end the rampant
exploitation of power and authority that occurs in Pakistan, each day and at
every level. Unless honesty and meritocracy are comprehensively imposed,
Pakistan will not be able to emerge as a dynamic modern State.

Bad policies are the principal cause of Pakistan’s economic plight. The
‘original sin’ was the acceptance by Pakistan, and most developing countries,
of almost total trade and financial liberalisation under the 1994 WTO
agreements. The ability to protect nascent industries through tariff and non-
tariff protections was removed. Weak and vulnerable currencies were
subjected to convertibility. The ladder used by advanced countries to climb
their way to industrialisation was knocked away.

Only the largest developing countries — China and India — resisted complete
liberalisation. China did not give up capital controls. India retained a highly
protective trade regime. The Asian financial crisis of the mid-1990s was an
illustration of how ‘liberalised’ developing economies and currencies could be
damaged by international speculation and targeted attacks. The story has been
repeated in South Africa, Nigeria, Argentina, Venezuela.

Pakistan was preordained to get into financial trouble. It has a high propensity
for imports. Domestic demand contributes 90 per cent to GDP. Its domestic
manufactures constitute only 10pc of the economy. Exports are stagnant
because manufactures, mostly textiles, have remained under-invested,
uncompetitive and un-integrated into the global or regional supply chains.
Fiscal deficits are endemic. Pakistan’s 10pc tax-to-GDP ratio is half that of
most other countries. Apart from the essential defence expenditures, 2pc of
GDP is spent on over 300 mostly loss-making state organisations.

The PTI government was faced with huge current account and fiscal deficits
because the previous government in its last year spent with abandon to
improve its prospects in the national elections. The incoming government had
no choice but to seek relief from the IMF, whose mandate is to help countries
overcome balance-of-payments problems. Most IMF prescriptions are fairly
standard: reduction in expenditures and subsidies, increase in prices for
essential goods, and currency devaluation (theoretically, to make exports more
competitive).

However, the conditions initially advanced by the IMF for the support facility
went well beyond these ‘standard’ prescriptions. It asked for a ‘free float’ of the
rupee (implying drastic devaluation). Simultaneously, the US raised
unwarranted objections to (non-existent) repayment of Chinese loans. These
demands were resisted by the ex finance minister. Presuming indefinite delay
in the IMF programme, the ‘markets’ made Pakistan pay a heavy price for its
‘resistance’.

Now, following Pakistan’s cooperation on Afghanistan and the 40pc

devaluation of the rupee, a more ‘normal’ $6 billion three-year IMF package
has been approved. It will help Pakistan raise substantial additional money
from the bond markets to meet the bills for its imports and repay debt.

Yet, Pakistan has undertaken to achieve some ambitious targets: a 30pc

increase in tax revenues and 15pc growth in exports. The government will also
have to implement some unpopular measures, including sharp increases in
energy prices and interest rates and forego many of its social development
programmes. GDP growth is projected to slide to around 2.5pc next fiscal year.

The IMF programme should be the start of a process of building durable

solutions to Pakistan’s systemic economic challenges. Apart from structural
reforms and improved economic governance, the key to economic redemption
is massive domestic and foreign investment.

Pakistan’s economy has underperformed because it has been cash-starved and

constrained by policy and execution inefficiencies. There is huge pent-up
demand for consumer and durable goods and health, education and other
services; unexploited domestic and export potential in textiles, agriculture,
engineering and electronic goods; opportunities in infrastructure development
and in undervalued assets and companies.

Public- and private-sector investors in China, the GCC and elsewhere have
indicated interest in these Pakistan opportunities. The government must play
an active role in promoting domestic and foreign investment.

An article in the Foreign Affairs issue of July-August 2019 entitled: ‘The

Global Economy’s Next Winners’ envisions a “new globalisation” in which “the
prospects for low-income countries are growing more uncertain”. Domestic
demand will be the main driver of growth. Export-led growth may have room
to grow in some low-wage countries, if they invest in the right infrastructure
and “eventually in modern high-tech factories that can compete with those of
the rest of the world”.

The authors conclude that “technology may enable some people in low-income
countries to jump ahead in economic development without retracing the paths
taken by those in advanced countries”. That may be the best road to Pakistan’s
economic redemption.

War with Iran

THE drumbeat of war in the Persian/Arab Gulf has become
incessant in the past few weeks. Oil tankers have been mysteriously
damaged. A US surveillance drone has been shot down by Iran’s
Revolutionary Guard (IRGC). Missiles have struck Saudi
installations and Basra sites. The US has sent a naval armada and
2,500 additional troops to the Gulf, intensified economic pressure
and built the legal grounds for military operations against Iran.

The world is waking up to the potentially devastating consequences for the

region and the world of this professedly unwanted yet inexorable march
towards a US-Iran war.

The conflict may be ‘limited’ at the outset but could escalate rapidly, eg further
attacks on oil tankers in the Hormuz, US ‘retaliation’ against IRGC gunboats
and other naval vessels, Iranian missile strikes against US and GCC targets
accompanied by attacks by Iranian or Shia militias against US personnel and
installations in Iraq, Syria, Afghanistan and elsewhere, and missile and rocket
attacks against Israel and Israeli-occupied territories by Hezbollah and other
Iran-allied groups. To avoid such anticipated attacks, the US, and possibly
Israel, could resort to major pre-emptive aerial strikes to eliminate Iran’s
missile and naval capabilities.

However, even if such strikes are successful, Iran is unlikely to capitulate (if its
resilience during the Iran-Iraq war is any indication). Under external attack,
there will be no popular movement in Iran to oust the regime (although
President Rouhani and the ‘moderates’ may be replaced by the hardliners and
the IRGC). To remove it, the US and its allies would need to launch a full-
fledged invasion of Iran. Given the experience of Iraq and Afghanistan, neither
Washington nor any regional power, has the stomach for it.

War is a ‘lose-lose’ option for all those who would be

involved in this conflict and even those who are not.
Even if Russia and China, which America has designated as its ‘rivals’, do not
intervene, directly or indirectly, on Tehran’s behalf, the end-state of a war with
Iran will be: one, chaos within Iran, with the possible eruption of ethnic
insurgencies in its peripheral provinces; two, a war of attrition led by the
remnants Iranian regular forces and Shia militias against US and allied forces
and installations across the region; three, Tehran-inspired intensification of
the conflicts in Iraq, Syria, Yemen, and Afghanistan; four, an Iranian
denunciation of the nuclear non-proliferation treaty and eventual
development of nuclear weapons; five, a major and extended interruption in
oil exports from the Gulf, pushing prices to unprecedented heights, and six, a
global economic recession.

War is thus a ‘lose-lose’ option for all those who would be involved in this
conflict and even those who are not. Regardless of the culpability of those
responsible for the reckless actions that have brought the region to the brink
of war, common sense, and a sense of self-preservation dictate that the
principal parties walk back from the precipice.

Any endeavour towards de-escalation will need to address the major causes of
the crisis and respond to the concerns of all parties. Each of the elements of
the current confrontation — nuclear proliferation, regional conflicts, economic
sanctions, tanker and missile attacks — have been addressed, if at all, in
piecemeal fashion so far. They are all interlinked and must be resolved
comprehensively and concomitantly.

A first step away from the brink could be acceptance of the UN secretary
general’s proposal to hold an independent inquiry into the tanker attacks of
May and June. All parties should pledge not to resort to the use of force while
this investigation is under way.

Simultaneously, the UN Security Council should demand: one, a halt to the

Houthi missile attacks against Saudi and Emirati targets, two, a general
ceasefire in Yemen; three, the opening of all avenues for the supply of
humanitarian help to the Yemeni population; and four, the initiation of a
summit-level dialogue between the main parties to evolve a political solution
to the conflict.

Most importantly, the EU, the three European parties to the Iran nuclear deal,
and Russia and China, with the support of the UN secretary general and
General Assembly, should undertake a high-level diplomatic initiative to: 1)
convince Tehran not to breach the limitations, especially on nuclear
enrichment levels and stocks, contained in the deal; 2) set up an international
mechanism (an Instex plus) to enable Iran to conduct trade as per the terms of
the deal; 3) press the US to lift the unilateral sanctions it has imposed on Iran,
at least progressively in response to reciprocal confidence-building measures
undertaken by Iran; 4) secure Iran’s agreement to discuss and address the
widespread concern regarding its policies across the region, including in Syria,
Lebanon, Iraq, Yemen and Afghanistan; and 5) establish a mechanism to
discuss a missile-and-arms-control regime in the region.

Despite Ayatollah Khamanei’s public rejection of talks with the US during the
Japanese prime minister’s recent mediatory visit to Tehran, Iran is unlikely to
have closed all doors to dialogue. Some of Foreign Minister Javad Zarif’s
recent statements have mentioned openness to discuss all issues. (He once
told me that Iran had proposed a ‘grand bargain’ to the US in 2001-2; the
response they received was Iran’s inclusion in the ‘axis of evil’ in president
George W. Bush’s September 2002 speech at the UN General Assembly).

The Trump administration appears to be internally conflicted on its Iran

policy. There is a general perception that hardliners — National Security
Adviser John Bolton, and Secretary of State Mike Pompeo — are pushing
President Trump towards a war with Iran. But Trump may be using them,

wittingly or otherwise, as part of his ‘art of the deal’ negotiating strategy. His
main objective is to secure re-election in 2020. ‘Success’ in dealing with Iran
would enhance his electoral prospects. But a war with an uncertain outcome is
a risky strategy. He has notably responded cautiously to the drone downing. A
major diplomatic success would be a preferable option for Trump.

Although Iran is not always an easy neighbour, Pakistan has multiple reasons
to prevent a war against it. Over the past 40 years, several ‘independent’
Muslim states have been progressively attacked, subverted and neutralised:
Egypt, Iraq, Syria, Libya, Sudan. If Iran is militarily and economically
destroyed, who is next?

Pakistan & Sino-US cold war

AFTER the secretive Bilderberg meetings in Switzerland last week,
Martin Wolf, the respected Financial Times economic columnist,
wrote an op-ed entitled: ‘The 100 year fight facing the US and
China’. Wolf’s conclusions are significant:

“...[R]ivalry with China is becoming an organising principle of US economic,

foreign and security policies”; “The aim is US domination. This means control
over China, or separation from China”. This effort is bound to fail. “This is the
most important geopolitical development of our era. ...[I]t will increasingly
force everybody else to take sides or fight hard for neutrality”; “ Anybody who
believes that a rules-based multilateral order, our globalised economy, or even
harmonious international relations, are likely to survive this conflict is
deluded”.

Pakistan is near if not in the eye of the brewing Sino-US storm. Neutrality is
not an option for Pakistan. The US has already chosen India as its strategic
partner to counter China across the ‘Indo-Pacific’ and South Asia. The
announced US South Asia policy is based on Indian domination of the
subcontinent. Notwithstanding India’s trade squabbles with Donald Trump,
the US establishment is committed to building up India militarily to counter
China.

On the other hand, strategic partnership with China is the bedrock of

Pakistan’s security and foreign policy. The Indo-US alliance will compel
further intensification of the Pakistan-China partnership. Pakistan is the
biggest impediment to Indian hegemony over South Asia and the success of
the Indo-US grand strategy. Ergo, they will try to remove or neutralise this
‘impediment’.

The US is arming India with the latest weapons and technologies whose
immediate and greatest impact will be on Pakistan. India’s military buildup is
further exacerbating the arms imbalance against Pakistan, encouraging Indian
aggression and lowering the threshold for the use of nuclear weapons in a
Pakistan-India conflict. Washington has joined India in depicting the
legitimate Kashmiri freedom struggle as ‘Islamist terrorism’.

The China-US confrontation is likely to escalate further in

the foreseeable future.
A hybrid war is being waged against Pakistan. Apart from the arms buildup,
ceasefire violations across the LoC and opposition to Kashmiri freedom, ethnic
agitation in ex-Fata and TTP and BLA terrorism has been openly sponsored by
India, along with a hostile media campaign with Western characteristics.
FATF’s threats to put Pakistan on its black list and the opposition to CPEC are
being orchestrated by the US and India. The US has also delayed the IMF
package for Pakistan by objecting to repayment of Chinese loans from the
bailout.

Although the US has moderated its public antipathy towards Pakistan while it
extracts Pakistan’s cooperation to persuade the Taliban to be ‘reasonable’, it is
likely to revert to its coercive stance once a settlement is reached in
Afghanistan, or if the negotiations with the Taliban break down.
The Sino-US confrontation is likely to escalate further in the foreseeable
future. US pressure on smaller states to fall in line will become more intense
under the direction of US hawks. Under Xi Jinping, China will not “hide its
strength or bide its time”. Beijing has retaliated against Washington’s trade
restrictions. It will “defend every inch” of Chinese territory.

Likewise Narendra Modi in his second term is unlikely to become more pliant
towards Pakistan. He has been elected on a plank of extreme Hindu
nationalism and hostility towards Muslims, Kashmiris and particularly
Pakistan. Modi will not shift from this posture since he needs to keep his
people’s attention away from the BJP’s failure to create jobs and improve
living conditions for anyone apart from India’s elite. India’s economy is facing
headwinds and growth has slowed. There are multiple insurgencies across the
country, apart from the popular and sustained revolt in disputed Kashmir
against India’s brutal occupation.

The Pulwama crisis has confirmed the imminent danger posed by the Kashmir
dispute. In their resistance to Indian occupation, Kashmiris groups will at
times respond violently to India’s gross and systematic violations of human
rights. India will blame Pakistan for such violence and its failure to put down
the Kashmiri resistance. The next Pakistan-India confrontation could lead to
general hostilities. These could escalate rapidly to the nuclear level.

The most dangerous scenario for Pakistan would be an Indian conventional

attack under a US nuclear ‘umbrella’. Pakistan’s second strike capability is the
only certain counter to this catastrophic scenario.

Some in Pakistan may be sufficiently disheartened by its imposing challenges

to advocate peace with India at any cost. But, for Pakistan, “surrender is not
an option” (to quote the title of John Bolton’s book about the UN).

Accepting Indian domination over South Asia will compromise the very raison
d’être for the creation of Pakistan. The current plight of India’s trapped
Muslims should be an object lesson to those who believe that displays of
goodwill will buy India’s friendship. A thousand years of history refutes that
thesis.

In any event, irrespective of what Pakistan does, the Kashmiris will persist in
their struggle. They have survived periods of Pakistani indifference. If Modi’s
government attempts to fulfil its campaign pledge to abrogate Jammu &
Kashmir’s special, autonomous status, the Kashmiri resistance will further
intensify. Islamabad will then face a choice of supporting the just Kashmiri
struggle or cooperating with the Indians to suppress it (just as the Arab states
are being pressed to do to the Palestinian struggle for statehood.)

Even as it seeks to stabilise the economy and revive growth, Pakistan’s civil
and military leadership must remain focused on preserving Pakistan’s security
and strategic independence. The alternative is to become an Indo-American
satrap.

A better future is possible. But it is not visible on the horizon.

Against all odds, presidents Trump and Xi may resolve their differences over
trade and technology at the forthcoming G20 Summit or thereafter. Or,
Trump may be defeated in 2020 by a reasonable Democrat who renounces the
cold war with China. Alternately, Modi may be persuaded by Putin, Xi and
national pride not to play America’s cat’s-paw and join a cooperative Asian
order, including the normalisation of ties with Pakistan. Yet, Pakistan cannot
base its security and survival on such optimistic future scenarios. It must plan
for the worst while hoping for the best

Future of Pak-US relations

PAKISTAN’s long, close and turbulent relationship with the US has
had a pervasive impact on this country’s history. The last phase of
that relationship, the ‘war on terror’ alliance, ended in August
2017, when Donald Trump announced a punitive policy towards
Pakistan, suspending high-level contacts, freezing Coalition
Support Funds repayments and demanding Pakistan’s cooperation
on Afghanistan.

Over the next 18 months, America’s initially coercive demands on Afghanistan

became progressively realistic, eventually asking Islamabad to help start direct
talks between the US and the Afghan Taliban.

Pakistan has delivered on this request. Several rounds of US-Taliban talks,

held mostly in Doha, have reportedly led to draft agreements for withdrawal of
US troops from Afghanistan and to prevent Afghanistan’s territory from being
used as a base for global terrorism in future. However, the Taliban have
refused to talk to what they call the ‘puppet’ government in Kabul or to accept
a ceasefire until US troop withdrawal is under way.

The US has not offered Pakistan any tangible concessions in exchange for its
assistance. Contrary to earlier assurances that Islamabad would have no
responsibility for the talks’ outcome, it is now asking that Pakistan play an
important role in achieving a successful conclusion of the ‘peace process’.
US demands have been extended to the eastern front. During and after the
Pulwama mini-crisis, US pressure was ratcheted up — directly and through
the UN and the FATF — to demand actions against the Lashkar-e-Taiba and
Jaish-e-Mohammad and the inclusion of JeM’s Maulana Azhar on the UN
Security Council’s ‘terrorism’ list.

America’s new hostility towards Pakistan is due mostly to

its emerging global rivalry with China.
Islamabad has seen it in its own interest to comply with the demands to
proscribe the activities of the LeT and JeM. It has also continued its
cooperation on Afghanistan. However, this may not prove sufficient to restore
friendly ties with the US.

America’s new hostility towards Pakistan is due mostly to its emerging global
rivalry with China, in which India has been chosen as Washington’s strategic
partner whereas Pakistan is listed on China’s side of the power equation. The
recently announced US South Asia Policy is predicated on India’s regional
domination.

Read: Pakistan wants ‘proper ties’ with US like its relations with China

If Pakistan is to establish an equitable relationship with the US, it will have to

build the capability to resist India-US military, financial and domestic
pressure. To do so, it needs strong and nationally-oriented governance and
China’s unreserved cooperation.

Pakistan is well placed to resist military pressure. The Pulwama mini-crisis

demonstrated two things: one, that Pakistan can defend itself by conventional
means; two, that nuclear deterrence worked once again to moderate military
behaviour on both sides. Yet, India is embarked on a major arms acquisition
and modernisation process which Pakistan will have to continue to neutralise
if not match. Most importantly, Pakistan must disabuse India of any
presumption that, under a US umbrella, it could ‘test’ Pakistan’s nuclear
deterrence or resort to a pre-emptive strike against Pakistan’s strategic assets.
A Pakistani ‘second strike’ capability will eliminate this danger.

Pakistan’s financial defences are vulnerable. The nation needs to come

together to implement the politically difficult yet vital tax and other measures
required to ensure a sustained balance in the country’s fiscal and external
accounts. For the longer term, Pakistan should join the nascent efforts of
China, Russia and some other countries to construct alternate or
supplementary arrangements to the US-dominated financial system.
Likewise, Pakistan is not fully equipped to fight the ‘hybrid’ war being waged
by India and others in Balochistan, ex-Fata, sections of the media and politics
to destabilise the country domestically. Using all the tools of modern
technology, Pakistan must develop a sophisticated intelligence, counter-
insurgency and political action capability for defence.

‘Defensive’ measures do not imply systemic hostility with the US. There are
vast areas for mutually beneficial cooperation which can be promoted as long
as the US does not threaten Pakistan’s core interests and positions, especially
its rejection of Indian domination and support for Kashmiri self-
determination.

Counterterrorism, regional arms control and global non-proliferation are

identified issues for continued cooperation.

Trade and investment are the most promising areas to build a future Pakistan-
US relationship. The US is Pakistan’s prime export market. Pakistani exports
are held back due to lack of competitive capacity. Pakistan’s current
industrialization drive should target production for exports to the huge US as
well as Chinese and Asian markets.

Similarly, even though US official assistance to Pakistan will be minimal and

conditional, Pakistan should make a concerted effort to invite US private
investment into the vast and untapped economic opportunities that exist in
almost every sector of the Pakistan economy, including the SEZs and the
privatisation programme. Apart from finance, such investment will bring
advanced management techniques and production technologies to Pakistan.

Pakistan and the US also agree that there are vast opportunities for regional
economic cooperation and integration, although their respective regional
priorities are not yet fully convergent.

Despite the new Cold War, the US may find it expedient to cooperate with
China and Pakistan to stabilise the Afghan economy in a post-settlement
scenario, including through Afghanistan’s integration into CPEC, and
collaborative execution of several agreed transnational projects, such as the
TAPI and CASA-1000 ventures.

Pakistan’s revived relationship with Saudi Arabia and the UAE offers another
avenue for indirect economic Pakistan-US cooperation. Significantly, Saudi
and UAE investments in the energy and petrochemicals sectors, besides
potentially building Pakistan’s bridges with US corporates, will also link them,
via oil and gas exports, to China and Central Asia through Pakistan.
Hope resides in the possibility that the US will perceive the economic
momentum in Asia, unleashed by the Belt and Road Initiative and Asian
economic integration, as a strategic opportunity rather than a challenge. US
participation could transform the Belt and Road endeavour into a globally
beneficial enterprise.

Indeed, faced by global threats of climate change, poverty and nuclear

annihilation, and offered the alternative of a cooperative, knowledge-driven
future of growth and prosperity, the US, China, Russia and other powers,
including India, ultimately would be wise to opt for ‘win-win’ cooperation
rather than ‘lose-lose’ confrontation.

BRI: a historic opportunity

CHINA’S President Xi Jinping hosted the Second Belt and Road
Forum in Beijing on April 26/27 — 125 countries and 40
international organisations have joined the Belt and Road
Initiative. The BRI is an enormously ambitious project which
envisages the linkage of the entire Eurasian mega-continent, and
its near and far periphery in Southeast, South and West Asia,
Africa, Europe and Latin America, through interconnected land
and sea infrastructure, trade and investment.

Thirty-seven heads of state and government, scores of ministers and 5,000

delegates participated in the Forum, reflecting the growing endorsement of
the BRI. This acceptance reflects a desire among developing countries to
emulate the successful ‘model’ of China’s economic development and a
recognition that it can provide an invaluable path towards global economic
growth, greater prosperity and peace and stability in developing countries.

Reportedly, 175 agreements have been signed under the rubric of the BRI.
Projects amounting to $90 billion have been implemented. The planned
outlay on infrastructure projects is $1 trillion. This figure is likely to increase
as non-Chinese sources of official finance and private sector finance join in
funding BRI projects. The scope of the concept now envisages incorporation of
various forms of cooperation such as the digital economy, e-commerce and
creation of a BR Studies Network linking think tanks.

Not one of America’s Asian allies has the stomach to

confront China, their largest trading partner.
The US has declared its opposition to the BRI and sponsored a political and
media campaign to discourage developing countries and its allies from joining
it. The US and Western refrain of China’s so-called debt-trap diplomacy,
stories of corruption and failed projects have been repeated as nauseam
although the basis for such reports has been credibly refuted by the parties
concerned.

The admonitions regarding the debt owed to China are particularly galling
given that over 90 per cent of developing country debt is owed to Western
countries and institutions. Servicing this debt consumes around 30pc of
annual hard currency outflows from these developing countries. This debt is
due to flawed Western development ‘aid’ which has contributed only
marginally to the development of recipient countries.

The US opposition has a strategic rationale. The initiative trumps the US aim
of creating a ring of alliances around China’s periphery and maintaining its
domination of the ‘India-Pacific’. The US has yet to acknowledge this is a
losing battle.

Not one of America’s Asian allies has the stomach to confront China, their
largest trading partner. India has declared it values economic cooperation
with China. Japan and Australia have stopped joining the US Navy in ‘freedom
of navigation’ operations in the South China Sea. Miffed by US tariffs, Japan
has joined the BRI as a ‘third party’. A Japan-China Fund has been set up to
co-invest in BRI projects.

Seventeen Central European countries have formed a group with China to

promote economic cooperation including connectivity projects. Italy was the
first G7 country to officially join the BRI. Even others, like the UK, France and
Germany, who feel compelled by their alliance with the US to critique the BRI,
are availing of every commercial opportunity emanating from China’s
economic expansion and the BRI.

America’s own companies are unwilling to heed the official boycott. Over
150,000 US companies are operating within the Chinese economy. Only a
handful are likely to move out. China’s further ‘opening up’ is likely to further
reinforce the interdependence of the world’s two largest economies.

Pakistan hosts BRI’s flagship component. Prime Minister Imran Khan was one
of only seven leaders requested to address the summit. He called the BRI a
“model of collaboration, partnership, connectivity and shared prosperity” and
“a new and distinct phase — along the path of globalisation”. CPEC is now the
principal vehicle for intensification of bilateral ties. Of the $1tr allocated by
China to BRI projects, $72bn is envisaged for CPEC. Of the $90bn invested so
far, around $27bn was in Pakistan.
China values its ‘strategic partnership’ with Pakistan and recognises the
imperative of ensuring its security, stability and development. The level of
mutual trust between them is unparalleled. Its cooperation is essential to
ensure Pakistan’s ability to maintain credible deterrence against India and to
stabilise Afghanistan after US withdrawal. If India is ever amenable to
normalising ties with Pakistan, China’s, and perhaps Russia’s, intermediation
may prove more advantageous than America’s.

The opportunity for Pakistan in China is more compelling. China is supporting

Pakistan’s infrastructure development and industrialisation. It can be a
growing market for Pakistan’s exports. Pakistan must aim not only to emulate
the path of China’s growth but to improve on it, by learning from its successes
and failures. Pakistan’s aim should be not so much to ‘catch up’ as to ‘leapfrog’
into the 21st-century economy. In its cooperation, Pakistan should not seek
the technologies of the past or present but those of the future which China is
now introducing and applying: high speed rail (not old systems), AI, electric
vehicles, environment-friendly energy, e-commerce, etc.

Pakistan needs to be well organised. Islamabad must identify what it wants

and needs from China and formulate a strategy of how to achieve it. Such a
strategy will need to be coordinated with China at the policy, operational and
execution levels. Pakistan must deploy the best available technical and
administrative expertise — from the private or public sector, from within and
outside Pakistan — in each area of cooperation. The creation of an
autonomous CPEC Authority would be useful to achieve the planned
outcomes.

In an environment of great power rivalry, there must be strategic clarity in

Islamabad. India’s enmity is a constant; after elections, it may be reduced to
hostility or, at best, rivalry. The US South Asia strategy is predicated on India’s
regional domination. There can be no wishful thinking that this can be
changed by expressions of goodwill or clever diplomacy. The only way the US
will treat Pakistan equitably is if it sees attractive economic opportunities in
Pakistan. For this, Pakistan needs China’s cooperation.

Pakistan’s best choice now is to “tie itself to China with hoops of steel”, as
proposed by the then foreign secretary S.K. Dehlavi in 1962. It would be tragic
if we turn away from history’s beckoning finger once again.

Peace is difficult
THE recent military crisis with India was a baptism of fire for
Prime Minister Imran Khan and the PTI government. In the event,
the Pakistani leader emerged as a responsible statesman while
Modi exposed himself as a rash warmonger.

The Pakistani prime minister has expressed the hope that after his anticipated
re-election, Prime Minister Modi will be strong enough to politically to engage
in a dialogue for peace with Pakistan. He has similarly expressed hope for
peace in Afghanistan through the US-Afghan Taliban talks which Pakistan has
facilitated.

Unfortunately, peace is difficult to achieve in the present global environment.

A new Cold War is under way between the US and China. The Washington
‘establishment’ views India as an essential ally in its global competition with
China. After the Pulwama suicide attack, US National Security Adviser John
Bolton immediately proclaimed India’s “right to self-defence”, providing New
Delhi a virtual “carte blanche” to proceed with its threatened military action,
irrespective of the inherent risk of a wider Pakistan-India war. Responsibility
to avoid a conflict — by acting against Jaish-e-Mohammad (JeM) —
was placed on Pakistan.

US mediation to prevent a wider war was activated only after Pakistan

retaliated against India’s incursion, downed two Indian aircraft, captured an
Indian pilot and, reportedly, ‘locked’ its missiles on to several Indian targets in
response to similar Indian action. Pakistan’s foreign minister was gracious in
acknowledging US mediation. Yet, the lesson from the episode is clear:
strength is the only sure way to deter an aggressive adversary and secure even-
handed outcomes.

India is unlikely to offer any meaningful compromises to

resolve the Kashmir dispute.
It remains to be seen if after their anticipated re-election, Modi and the BJP
agree to resume a dialogue with Pakistan. But, even if talks resume, India is
unlikely to offer any meaningful compromises to resolve the Kashmir dispute
or move away from the aim of imposing an India-dominated ‘order’ in South
Asia and beyond.

This presumption is reinforced by the BJP’s electoral manifesto, which

promises to transform India into a ‘Hindu rashtra’ (state), build a Hindu
temple on the site of the destroyed Babri Masjid and strip Kashmir’s special
and autonomous status under the Indian constitution.

What India desires is that Pakistan accept India’s rule in India-occupied

Kashmir, much as Israel’s Arab neighbours are being asked to accept the
‘reality’ of Israel’s occupation of Jerusalem, the Golan and most of the West
Bank. But, unlike Israel’s neighbours, Pakistan has not been militarily
defeated by India. Even if Pakistan were to set aside its strategic stakes in
Kashmir (territory, affiliated people, water, China access), it will continue to
be drawn into supporting the resilient 70-year struggle of the Kashmiri people
for self-determination and freedom (azadi) from India.

Peace with India will have to be promoted the hard way, through possession of
the capability to deter and defeat Indian aggression or ‘diktat’ and insistence
on equitable negotiated solutions to outstanding disputes.

Likewise, building peace in Afghanistan remains an imposing challenge.

Pakistan’s facilitation of the US-Taliban talks appears to have been quietly

‘pocketed’ by Washington without offering anything tangible in return. The
IMF has insisted on onerous conditions for financial support. The threat of
the FATF ‘black list’ has not been lifted. Pakistan’s blocked CSF funds have not
been released. No concern has been voiced by the US regarding India’s UN-
documented human rights violations in occupied Kashmir. Far from censuring
India’s military aggression of Feb 26, the US, together with the UK and
France, has moved a resolution in the Security Council to place JeM’s Maulana
Azhar on the terrorism ‘list’.

The unfortunate reality is that Pakistan has been categorised as an adversary

by the US ‘establishment’, due to: America’s ‘strategic partnership’ with India
against China and ‘radical Islamic terrorism’; the blame assigned to Pakistan
for the US military failure in Afghanistan; Pakistan’s nuclear weapons
capability, and the considerable influence in Washington of the Indian-
American expatriate community, the Israeli lobby and Christian
‘fundamentalists’.

At present, this hostility towards Pakistan is tempered by Washington’s need

for Pakistan’s support to US-Taliban dialogue. Yet, here too, Islamabad’s help
is perhaps being taken for granted. Not only have no concessions been
extended to Pakistan, but US special representative Zalmay Khalilzad and the
US ambassador in Kabul have felt free to publicly criticise the Pakistani prime
minister’s reference to the anticipated future interim government in
Afghanistan. Pakistan needs to retain continuing leverage in the Afghan peace
process and secure concrete US concessions to reciprocate its help in this
process.

Khalilzad has played his cards well so far, outlining the US withdrawal
structure and the Taliban’s anti-terrorism commitments before turning to an
intra-Afghan dialogue in which representatives of the Ashraf Ghani
government can be incorporated.

Yet, despite his diplomatic skills, there is no assurance that Khalilzad’s process
will yield peace in Afghanistan. Afghan warlords, such as Dostum, are unlikely
to reconcile with the Taliban. Sooner or later, Iran is likely to retaliate in
Afghanistan and elsewhere against US sanctions, especially after the
designation of the Islamic Revolutionary Guards as a “terrorist” organisation.
This could disrupt the Afghan peace process. Moreover, time may run out on
Khalilzad. The Taliban’s gains in the coming ‘fighting season’ may settle
Afghanistan’s future on the battlefield.

Khalilzad recently briefed the envoys of China, Russia and the EU to build
wider support for his process. China can help by investing generously in
Afghanistan and building its regional connectivity. Russia’s role may be
critical in defeating the Islamic State-Khorasan. Both powers can help to build
a consensus for peace within Afghanistan and among its neighbours.

China and Russia may also hold the key to peace in South Asia. Presidents
Vladimir Putin and Xi Jinping have sought to halt India’s rush into America’s
strategic embrace, emphasising the enormous benefits of trans-Asian
cooperation and the high costs of confrontation.

Peace could come to the entire region if India decides to become a part of the
Asian ‘order’ being created under the Belt and Road Initiative and the
Shanghai Cooperation Organisation. Unfortunately, Modi and the BJP’s
obsessive ambition to emerge as China’s ‘equal’ has propelled them towards an
alliance with America and may consign South Asia to remain a ‘zone of crisis’
in the New Cold War.

Genocide, war or peace?

A FULL-SCALE war between Pakistan and India was averted last
month because India’s hastily delivered bombs caused no damage;
Pakistan’s response was measured, demonstrating capability but
deliberately avoiding Indian casualties; and Prime Minister Imran
Khan, apart from urging restraint, an impartial investigation and
dialogue, released the captured Indian pilot as a ‘peace gesture’.

Such gestures were, however, brushed aside by India’s prime minister. Despite
India’s military reversals, Modi and his cohorts have told the Indian public
that their ‘muscular’ response to Pulwama was successful. They will no doubt
depict Pakistan’s recent actions against the affiliates of Lashkar-e-Taiba and
Jaish-e-Mohammad as concessions forced on Pakistan by India’s military
intervention and diplomatic pressure. China’s continued ‘hold’ on the Security
Council’s ‘listing’ of Maulana Masood Azhar — at Pakistan’s request — may
blunt this boastful claim.

Any belief in India that its military adventurism has ‘worked’ could erode the
stability of mutual deterrence which Pakistan’s military response of Feb 27 re-
established. If New Delhi is convinced that Pakistan can be cowed by a
combination of military and diplomatic pressure, it may feel emboldened in
the next crisis to conduct military strikes at a ‘higher’ level.

The BJP’s plan to ‘resolve’ the Kashmir ‘problem’ is to

colonise it.
Pakistan must, therefore, take steps to expose India’s falsehoods before,
during, and after the military exchanges of Feb 26-28. It should advertise that
India’s bombs destroyed trees and killed a crow. It must reveal to the world,
including the people of India, how Pakistan could have destroyed Indian
military targets but chose not to do so. It should point out that India’s
captured pilot could have been humiliated and India could have had its nose
rubbed in the dirt by requiring a minister or its air chief to come and retrieve
him. Finally, it should be made clear that Pakistan’s actions against militant
organisations are designed to implement its own National Action Plan, not in
response to Indian or other external pressure.

Islamabad should not anticipate that Modi’s hostility towards Pakistan will
abate after the Indian national elections. Apart from their ideological animus,
if Modi and the Hindu alliance succeed in the forthcoming elections, it will
reinforce their conviction that aggression against Pakistan and the Kashmiris
is a winning formula.

Unfortunately, India’s aggressive posture is being actively encouraged by the

US which is now firmly aligned with New Delhi in its global rivalry with China.
Pakistan enjoys some leverage in the context of Afghanistan; but this does not
seem to have prevented Washington’s one-sided pressure on Pakistan during
and after India’s military incursion.

Yet, this does not imply that the Kashmir issue will fade away. Despite all odds
— massive Indian oppression, over 100,000 killed, Pakistan’s frequent
indifference — the Kashmiris have persisted in their struggle for freedom from
Indian rule for over 70 years.

The current uprising in occupied Kashmir is led by the third generation of

Kashmiris. It is entirely indigenous. It has continued for four years without
external support and is likely to be sustained. Like Afghanistan, Kashmir is
mountainous, and India is a large and fractured country where active
insurgencies are under way in 119 districts (according to former prime
minister Manmohan Singh) and can find succour from various internal
sources.

The BJP’s plan to ‘resolve’ the Kashmir ‘problem’ is to colonise it and

transform it into a Hindu-majority state. A first step in this plan would be to
eliminate Jammu & Kashmir’s ‘special’ and autonomous status under the
Indian constitution. If Modi and the BJP proceed with this plan, the Kashmiri
resistance will obviously intensify. The Hindu fundamentalists may then be
tempted to resort to the outright genocide of the Kashmiri Muslims.

As the blood flows, the Kashmiri diaspora, and sympathetic Pakistanis, will
seek to join the freedom struggle, including from Pakistan’s territory. The
Pakistan government will then face a binary choice: facilitate the freedom
fighters or fight them as ‘terrorists’.

As Pakistan is compelled to extend material support to the Kashmiri freedom

movement, war with India will become almost inevitable. Every war game of a
Pakistan-India conflict indicates the high probability of its escalation to the
nuclear level. Recent studies have concluded that a nuclear exchange in South
Asia will kill over 100 million people, devastate the entire region and trigger a
‘small nuclear winter’ and global economic collapse.

It is time for the international community to wake up to the existential threat

which the Kashmir dispute poses not only to Pakistan and India but to the
entire world. The UN Security Council must be activated to fulfil its Charter
responsibility to prevent such a catastrophe.

Pakistan must mobilise the international community to find a fair, peaceful

and durable solution to the Jammu and Kashmir dispute. To this end, it
should launch a well-planned and funded campaign to: counter Indian
propaganda regarding Kashmir; reaffirm the legitimacy of the Kashmiri
freedom struggle (which, under UN resolutions and international law, is
entitled to struggle “ by all available means” for self-determination and to
receive “moral and material” support in this struggle); press for an end to
India’s massive human rights violations in occupied Kashmir; promote
credible steps to avoid a Pakistan-India war, including arms control and
CBMs; and demand an internationally endorsed dialogue, engaging Pakistan,
India and the Kashmiris, to evolve a fair and mutually acceptable solution to
the Jammu and Kashmir.

Finally, Pakistan must not be shy to raise the Kashmir issue and the India-
Pakistan conflict in the Security Council. The issue is on the Council’s agenda.
Pakistan’s stance is based on UN Security Council resolutions. There will be no
adverse Council decision against Pakistan so long as China stands with
Islamabad. And China will find it easier to stand with Pakistan in defence of
legitimate Kashmiri rights and the principles of the UN Charter, rather than to
prevent the ‘listing’ of an individual.