ISLAMABAD – US president Trump’s favorite foreign policy tool is money andhe has developed a habit of implying this ‘arsenal’ quite so often with aview to achieving political and strategic objectives.
And though Asad Umar may sound politically correct by asking the US to carefor its own debt owed to China, not about Pakistan’s, the danger of comingunder severe economic pressures from Washington cannot be ruled out.
Even before Mr. Trump landed in the White House, his major campaign promisewas to build a wall along the US-Mexico border and make Mexico pay for it.His political opponents at home and international observers were thinkinghow he would actually achieve the objective if he was to win the election.Win he did and made it clear that the way to charge Mexico was there inhigher tariffs.
Even when the countries like Canada attempt to differ with his policies hetakes no time in making it clear that such differences are going to costthem “a lot of money.”
His most notable economic and trade war is ongoing with China. The scaleof imports from China he targeted – despite having expressed his personalliking for Chinese leaders – was mammoth. The two countries are continuingto impose tit-for-tat tariffs and other economic penalties on each othermuch to the dismay of the rest of the world. Such an economic war doesthreaten the smooth conduct of commercial relations around the globe.
The new set of economic sanctions against Iran are clearly aimed at havinga nuclear deal with Tehran that satisfies the US that Iranians do not movetowards possessing nukes in years ahead. And Turkey becomes the latestdirect target whose aluminum and steel exports to the US have been slappedwith additional, higher tariffs. The immediate target is to pressurizeAnkara to release American pastor Andrew Brunson who is being held andtried on espionage charges.
Russia has its own share of ‘sanctions’ to tackle. And even America’s closeallies such as EU and NATO members are constantly being cajoled intospending higher for defense so that the US’ contributions towards NATO’sactivities – the operations that serve US objectives, primarily – may becut. And international companies doing business with countries undersanctions are also being threatened.
Form a Pakistani perspective, let us not forget that Trump had started therhetoric against Pakistan on the very first day of 2018 claiming to givethe country billions and billions of dollars and not receiving enough inreturn.
The “do more” demand and its contours – where the Americans want Pakistanto remain engaged in a constant war with militants – need littleexplanation. The threatening statement of the US Secretary of State thatthe US would not favor IMF loans to Pakistan being used to repay Chineseloans – though factually misleading – should be taken very lightly. Aletter to that effect has already been written by the US State Departmentto the IMF.
Yes, Pakistan’s debt trap of today is not because of Chinese loans comingfor CPEC. But it does not change the reality that the US still has thereins – to a large extent – not only of the Fund but also the World Bankgroup and also the Asian Development Bank. Besides, though the IslamicDevelopment Bank (IDB) has reportedly approved a new loan of $ 4 billionfor Pakistan, one has to keep it in view that the largest shareholders ofIDB – the Saudis in addition to other oil-rich Arabs – would not like toantagonize the US.
In our view, a financial onslaught against Pakistan has already beenstarted by placing the country on the so-called ‘Grey List’ of theFinancial Action Task Force (FATF) – the global money-laundering watchdog.The recent review by the Asia Pacific Group (APG) of FATF of how Pakistanis faring in compliance with the 10 point Action Plan of the watchdog isnot very encouraging, the reports indicate. (Daily Pakistan Global will becoming up with a piece containing details of progress and review in daysahead.)
The US itself, the UK and the Gulf Cooperation Countries (GCC) are thesources where more than three fourth of around $ 20 billion remittances ofoverseas Pakistanis originate from. This has been a crucial help forPakistan’s Balance of Payments (BoP) over past decade or so. And this iswhere the US has a lot of influence. The flow of this money can sure bedisrupted if so is desired.
The US remains the single largest market absorbing Pakistan’s deterioratingexports. The US administration has not so far opted for pressurizingPakistan on this front. A country in desperate need of reviving its exportscan hardly afford any drastic measure such as higher tariffs and duties onPakistani products.
Seen from the geostrategic angle, the US’ new South Asia policy and renewedcampaign in Afghanistan remains short of achieving objectives. And Pakistanin every such situation has been used as a punching bag. Right now it isnot only Afghanistan. The US’ strategic designs and objectives in thisregion also entail keeping Pakistan away from Chinese sphere of influence,providing India an overland access to Afghanistan, stopping Iran fromdeveloping regional connectivity and economic partnerships and Pakistanplaying an active role in favor of Saudi-led camp in the deterioratingsecurity situation of the Middle East.
The new government in Islamabad may have to face an even tougher economicline by the US – though the objectives would not be simply that, economic.
BY: Irfan Takalvi