When India ups the diplomatic ante against Pakistan, and has the backing of the western world and erstwhile friends, Pakistan Prime Minister Imran Khan is left with very few political options to quell terror outfits and their leaders. This may mean stronger implementation of the National Action Plan against terrorism. But this is an also an opportunity for Khan to regain lost political ground and authority in the military, something that none of his predecessors have been able to do.
Apparently, the Pakistani military leadership is not that impressed with Khan's aggressive bid, but those close to him told Business Today that this is his moment to make things happen and uphold his commitment to turn around Pakistan.
Over the years, the Pakistan army and its officials have made extra-state organisations their prized assets. Parting with them is not easy for them. With the US force's Abottabad operation to eliminate Osama bin Laden and then two surgical strikes by India in last 30 months along with the covert operations by Iranians, the Pakistan army's share in the political space is shrinking. Khan has no option but to claim this space. For the first time in last four decades, Pakistan is not only down economically and militarily but is also losing friends rapidly at the geo-political level.
Those who observe the political developments in Pakistan have a legitimate question: Can Khan muster the courage to take charge? In 2016, Nawaz Sharif tried to put pressure on Army leadership, but within a year of this he was booted out. Similarly, post the battlefield debacles in 1965, 1971 and 1998, political parties could not garner strength or use the opportunity to move the discourse in their favour. The opportunity for Khan is different.
In August last year, Khan's political ascent was only the second successful transition of power between two democratically elected governments in Pakistan's history. He came with a promise to turn around the fortunes of the country. This incident is seen as an opportunity for him to claim authority. To Khan's advantage, the democratic influence is spreading in Pakistan's political space. But on March 7, induction of dreaded terror organization Harkat-ul-Mujahideen's chief Maulana Fazlur Rehman Khalil and his supporters in Khan's political party Pakistan Tehreek-e-Insaf, raises questions. The outfit assisted Osama bin Laden, killed US journalist Daniel Pearl and is regularly involved in organizing terror plots in Afghanistan. What is more worrisome is that the announcement was made by Khan's Finance Minister Asad Umar. Umar is considered as a more moderate, forward looking and suave politico.
On March 13, China may abstain from the UNSC resolution to declare Maulana Masood Azhar, chief of Jaish-e-Mohammad, as a terrorist. The UNSC already recognizes JeM as a terror outfit, but China has continuously blocked any bid to declare Azhar a terrorist. So, China's current response is a rare diversion from the stated stance of Chinese to back Pakistan. China had blocked India's entry into the elite Nuclear Suppliers' Group on Pakistan's insistence. Despite all efforts, India earlier couldn't delink Chinese approach at the multilaterals. But after the Pulwama attack, the Chinese diplomats found it difficult to water down the proposal of condemning the attacks at UNSC. The proposal was moved by France and supported by other permanent members, the US, the UK, and Russia.China needs Indian support to resurrect the Belt and Road Initiative, or BRI, and Chinese diplomats are now asking their Pakistan counterparts to not take their support for granted. In fact, Chinese diplomats issued a cautious note on the Indian airstrike, and chose not to back Pakistan blindly. Similarly, despite Pakistan's diplomatic outreach and threats to boycott the Abu Dabhi meet, the Organization of Islamic Countries continued with their schedule with Indian foreign minister Sushma Swaraj as Guest of Honour and didn't mention Kashmir in the final statement. The US and the western world is also unhappy with Pakistan harboring terror groups.
Meanwhile, on March 5, bending to pressure, the civilian government decided to further implement the May 2017 UNSC resolution 1373 on counterterrorism -something India repeatedly complained about for non-compliance - and banned 68 organizations under their Anti Terrorism Act, 1997. The list of 44 terrorists, including the son and brother of dreaded terrorist Masood Azhar, Mufti Adbul Raoof and Hamad Azhar, were detained for interrogation. The National Action Plan - devised after the December 2014 killing of students in the Army Public School, Peshawar - also required making similar strides against the terror groups, but efforts were half baked.
Meanwhile, the same UNSC resolution also made it mandatory for Pakistan to pass the litmus test of multilateral Financial Action Task Force, or FATF. India, along with the US, the UK, France and Germany, is pushing to put Pakistan in the grey list for its failure to curb terror financing. Khan's government is supposed to implement a 26-point action plan by September 2019. Otherwise, Pakistan would be put on the FATF black list alongside North Korea and Iran. To prevent blacklisting in October, Khan will have to do much more.
A major worry for Khan is the country's economy and his inability to make inroads so far. If he doesn't live up to the expectations of the International Cooperation Review Group of subgroup Asia Pacific Group of Financial Action Task Force (FATF), and gets blacklisted, the country will find it very difficult to raise capital from the international market. In February 2018, the FATF nominated Pakistan for monitoring under this group, which is commonly known as grey list. After the Pulwama attack, India - a full member - is aggressively pushing for the blacklisting of Pakistan and is also backed by the western countries.
If this crackdown happens, the financial markets could be isolated from the global integrated market. The first causality of this will be the global multinationals. Further, the IMF, along with other development funds like World Bank, Asian Development Bank, European Central Bank et al, have observer status at FATF. This would mean that Pakistan will find it tough to have access to these cheaper funds for development projects. This time around Khan will have to clean his house, but that is unlikely to happen unless he reins in the Army.
Pakistan's economy is already in a mess. Khan's party insiders told Business Today that they would need an additional $10-12 billion to ignite an investment cycle. But the challenge is how to get it. Public spending in Pakistan is shrinking. The inflation rate is more than 6 per cent, which negates the mid-5 per cent growth rate of its GDP. The most worrisome part is that the expansion of GDP is on the basis of foreign debts. Pakistan's debt to GDP ratio is touching 74 per cent. A $2.8 trillion foreign debt for a $308 billion economy is trouble, especially when the current account deficit (4.1 per cent) and fiscal deficit (5.9 per cent) are exploding.
Moreover, Pakistan's economy is largely import oriented, further depleting foreign exchange reserves. At present, its coffers hold less than $7 billion, less than half of $18 billion two years ago. The present reserves are not enough even for imports needs for more than a fortnight.
If Pakistan is denied the easier capital from global development funds, the revival of the economy would be impossible. Although Khan managed to get an aide of $4 billion from Saudi Arabia and tranche of $2.5 billion debt from China, this can at best delay a collapse but it is not a sustainable method for survival or a turnaround. Despite the 'all weather friendship' with China, Pakistan should only expect debt (that too an expensive one) and not aid. Meanwhile, the Saudi regime has agreed to an additional $4 billion in deferred payments for Pakistan's oil purchases. But the US establishment under Donald Trump has already scrapped the military aid commitments, and wants effective action against terrorists on Pakistani soil.
Relations Getting Complicated
The money from the IMF will not come easily, especially with the US and other western countries turning hostile. Khan will have to disclose the details of CPEC debt arrangements and implement a series of reforms in food and fuel subsides to get this money. He will also have to give proof that this money is not going towards terror funding.
Khan and his Finance Minister, Asad Umar, understand that over-dependence on China will create more problems. Unlike his predecessors, Khan does not want over-dependence on Chinese debt, considering the repayment provisions. The repayment of debt and repatriation of investments on various projects in the CPEC will start from 2020/21. By 2024, Islamabad will have to make provisions for repayment of $4.5 billion annually. In these calculations, we have not figured in the $22 billion capital goods imports for existing approved CPEC projects and services imports in terms of Chinese expats.
The two understand that if the projects are executed without job creation by the Chinese companies, they will create more unrest among the local population in various parts of Baluchistan. People tracking the CPEC projects told BT that Khan's regime tried to amend these methods but haven't achieved success as yet. These observers believe that Beijing is systematically enmeshing Pakistan in debt with a view to grabbing control of critical projects - for instance railways, ports and highways - similar to the way it did with Sri Lanka and Myanmar. The most worrying part in the CPEC blueprint details that the disbursement of the loan will depend on Pakistan's capacity for repayment.
All this makes the need for cheaper funds for development projects more essential. Khan is negotiating for another tranche of $12 billion from the IMF. Pakistan has already received 21 bailouts in the last six decades, totaling twice as much as the $5.3 billion taken in 2013. Turning things around from here on will by no means be easy for Khan.
Blast From The PastApart from the entry of Maulana Fazlur Rehman Khalil in Imran Khan's PTI, his political history and method behind his rise will come in his way. He and his party-run government in Khyber Pakhtunkhwa had openly extended support to Maulana Samiul Haq, head of Darul Uloom Haqqania. His Defence Minister, Pervez Khattak, was the province's chief minister then. The outfit is suspected to have links with Taliban, and has been a part of the conspiracy that led to the assassination of ex-prime minister Benazir Bhutto. Recently, Khan's minister shared a stage with UN-designated terror outfit Jammat ud Dawa's chief Hafiz Saeed at a conclave of Difa-e-Pakistan Council - a coalition of over 40 Pakistani political and religious parties that advocate conservative policies.
To up the ante, Khan would need a fresh discourse and plans to revive Pakistan's economy. Can Khan change the discourse? The discourse around terrorism in Pakistan is different from the rest of the world. There are groups that are backed by the Pakistan army directly, and some groups are backed by fundamentalist groups patronised by officials in the armed forces (serving and retired both). There are groups -- largely splinters - that have turned the tide against the Pakistan army and its officials. Then there are mercenaries. Understanding Pakistan's power structure, this appears difficult. The streamline of the dreaded terrorists in the political space is complicating the matter further.
Security agencies in India worry that not a whole-hearted crackdown may derail counterterrorism efforts further. And chance of revival of Pakistan will fail if splinter groups of Lashkar-e-Taiba, Maulana Masood Azhar-led Jaish-e-Mohammad, Hafiz Saeed's Jammat ud Dawa or Salahuddin Farooqui's Jaish-e-Adl and many other outfits working from Pakistan's territory continue their activities.
One hopes against hope that Khan makes full use of this and revives Pakistan for sake of regional peace.