Thursday, October 3, 2019

CPEC is Dead ?

Pakistan’s political and military leadership, and business elite, have stopped investing their capital in CPEC. Now how do we get out of it? 1 August 2019 It’s over. If ever there was a thought within Pakistan’s leadership — political, military, and business — that Beijing could replace Washington as the foreign capital with the most influence in Islamabad, that idea is now firmly dead. We just have not gotten around to telling China yet.

Over the past few weeks, Profit has spoken to several sources in both Pakistan’s business elite circles as well as people who are familiar with the thought process of the military leadership and the picture emerging is not a favourable one of the relationship with China:

the more Pakistanis learn about the true costs of the China Pakistan Economic Corridor (CPEC), the less inclined they are to want to participate any further than we already have. If anything, the signal coming from the country’s establishment appears to be that, far from pivoting Pakistan’s economic and political orientation towards China, Pakistan should retain its historical role as the country that is able to balance its relationship with both China and the United States.

This emerging consensus — particularly within the military leadership — represents a subtle but important shift in the relationship with Beijing. Pakistan stared long and hard at the costs and benefits of becoming an integral part of what Beijing hopes will become the new Pax Sinica world order, and found it wanting.

For all its flaws, Pax Americana still offers Pakistan a good deal. Nobody in Pakistan’s leadership wants to offend China, but nobody wants to bend over backwards to become a Chinese satellite state either. Why CPEC is a raw deal The biggest difference between the Pax Sinica and Pax Americana is one of how each superpower defines its own self-interest.

The United States, though far from perfect, has a somewhat more enlightened view of the world order and America’s place in it: at least until the advent of President Donald Trump, the United States wanted to create a world order which is designed to benefit both the United States and its allies.

China it seems, by contrast, wants to build a world order where China’s needs are met first and foremost, and the rest of the world’s needs — including those of its allies — are at best secondary considerations, and at worst, not even considerations at all. We will explain why we think this difference exists, and how it impacts Pakistan, but first, it is important to recognise why it may have developed in the first place.

 The United States started becoming a powerful country in the 1890s as its wealth grew, but in the early years, the US did not make the effort to translate that wealth into significant military power, though it developed increasingly sophisticated military capabilities over the next 50 years. By the end of World War II, however, the United States was not just the richest country in the world, it was richer than the rest of the world combined. (Seriously, for over 10 years following the war, the United States accounted for over half of global GDP.)

It was also, despite some threats from the Soviet Union, more powerful militarily than the rest of the world. It was in that heady moment of near absolute power that the United States stumbled into having to create Pax Americana, never having fully wanted a globally dominant role, and never having historically seen itself as the arbiter and guarantor of global peace and stability.

That absolute power gave America a confidence that is unrivaled in history, and the accidental nature of its arrival in power allowed it to be generous with those who were losing it. As a result, the system that the United States designed — the Bretton Woods institutional order, the Marshall Plan, etc. — were all designed to enable mutually beneficial relationships between Washington and its allies.

America was unquestionably the leader, but it was a confident leader that did not feel the need to thump its chest and point out that it was the leader.

China, by contrast, is arriving at its Great Power status in a very different set of circumstances. We tend to speak of the ‘rise’ of China, but the truth is that for most of human history, China has been the richest and most powerful country on earth.

 The past three hundred years where this has not been the case are actually a historical anomaly, and, from the Chinese perspective, an embarrassing interregnum from which they must recover. In other words, China is not merely stumbling into Great Power status: it wants it, it believes it deserves it, and it will brook no opposition to getting what it wants.

The system that China has designed, therefore, is geared towards a completely different goal: unlike the United States, which was comfortable sharing its wealth and power as a means of growing wealth for both itself and its allies, China wants to create a global system where wealth and power flow in the direction of China as a means of strengthening it relative to its main rival (the United States), even if that means weakening its allies in the process.

This latter system has obvious flaws from the perspective of Pakistan, which has seen itself as one of modern China’s oldest and staunchest allies. The deal that Islamabad is getting from Beijing in the form of CPEC looks impressive from a distance, but is in fact far from a mutually beneficial relationship.

CPEC makes British colonialism in South Asia look generous by comparison. The flaws in CPEC The biggest so-called mystery about CPEC is as follows: if CPEC was supposed to be such a huge bonanza for Pakistan in terms of investment, which is it not showing up in the foreign direct investment (FDI) numbers?

Why is Pakistan’s current account balance still negative? In fact, why is Pakistan’s current account balance actually getting worse? The answer is relatively straightforward: because CPEC is not an investment into Pakistan, it is structured as a resource extraction exercise.

Here is how it works:

China announces that it has invested in a project in Pakistan worth, let’s say $1 billion. That $1 billion, however, is required to mostly be spent on Chinese equipment, and labour, a significant portion of which is to be imported from China as well, with very little by way of supplies coming from the local economy.

That $1 billion, therefore, never hits Pakistan’s economy as an investment. It is $1 billion that goes from the Chinese government or state-owned company to a state-owned company within China to pay for equipment.

 Even the Chinese labour gets its salaries deposited into bank accounts within China. The money, in other words, stays completely within China and so never shows up as foreign investment into Pakistan.

Where it does show up is in the trade statistics: that $1 billion of equipment will show up as an import, against which Pakistan will have to arrange foreign currency from somewhere.

And it will show up as a liability on the balance sheets of whichever company or government entity is contracting with the Chinese government or state-owned company.

Let us recap what we get and what China gets out of this so-called $1 billion investment. China gets:

$1 billion in sales for a Chinese state-owned company ·

 $1 billion in new loans for a Chinese state-owned bank at very high interest rates

Pakistan gets: · $0 in investment ·

$1 billion in imports and increase in net trade deficit ·

$1 billion in liabilities for a Pakistani company or government entity

As is evident from the above, this is an arrangement designed purely to benefit one party and that party is not Pakistan.

 It could still work out in Pakistan’s favour if the economic value of the asset being built was greater than the $1 billion in liabilities taken on to build it.

Unfortunately, more often than not, it is far from clear as to whether that is the case. This example cited above, by the way, is not hypothetical. It is actually showing up in Pakistan’s macroeconomic numbers.

Pakistan’s imports from China have dramatically increased since 2013, when CPEC was first announced.

Prior to 2013, Pakistan’s imports from China had been rising because of the 2007 China-Pakistan Free Trade Agreement, but had stabilized to around $6.6 billion a year.

After 2013, the rise has been very steep. We estimated how much of that is CPEC-related by assuming that the pre-2013 levels of imports from China can be categorized as the “normal” level and the amounts above that are broadly CPEC-related. By our calculations, using data from the Pakistan Bureau of Statistics, we estimate that Pakistan’s CPEC-related imports have come to $31 billion over the past six years.

Does that number sound familiar? It is very close to the number that was originally touted as the total economic value of CPEC’s “fast-track” projects. The government of China was not lying when they said CPEC would be worth that much.

They just left out to whom. The actual investment flows from China during that time have been higher than in the past, it is true, but still relatively smaller compared to this other method.

Since 2013, China’s net investment into Pakistan has been $2.5 billion, much higher than the $813 million China invested in Pakistan in the 10 years prior to 2013, but still a relatively small sum compared to the wild projections and promises that the Pakistani press and government wanted to believe when it was first announced.

The shift in Pakistani thinking While Pakistan’s civilian and military leadership is prone to making bad decisions, they are not completely stupid. They can see these numbers, and they are privy to far more details than have been told to the public about the specific terms of the agreements with China for CPEC projects.

And it is becoming increasingly clear that they are becoming deeply uncomfortable with the direction this has taken Pakistan. Neither the civilian politicians nor the military leadership want to accept the blame for what is clearly a massive blunder on the part of the government of Pakistan in negotiating the CPEC contracts.

 If any lawyers reviewed them, it is unclear if they understood them, or if their views were taken into consideration at all by the decision-makers. (Hint: there is a reason why good lawyers in the United States are rich:

American businesses are willing to pay big money to them to help avoid precisely this kind of massive blunder. It is an investment well worth it.) The deed is done now, however, and Pakistan cannot easily extricate itself from these arrangements. But, sources familiar with the military leadership’s thinking tell Profit, the leadership in the military has decided to start following the first rule of being in a hole: stop digging.

A public renunciation of CPEC would be too embarrassing for the government — both the politicians and the Army — but they are certainly not willing to undertake any further agreements with the government of China.

According to one source, one factor that helped influence the military leadership came when even the military-owned FWO was subjected to exploitative lending contracts by Chinese state-owned companies for construction of CPEC infrastructure projects.

It may not be worth risking the relationship with China to try to wriggle out of those contracts, but it was enough to disabuse the top brass of the notion that CPEC would be part of a mutually beneficial relationship with China.

That reluctance to dive into further CPEC-related projects is on display in Pakistan’s business leadership’s decision as well. Take Engro, for instance. In 2016, it appeared that the company was going to jump in head on into the CPEC-related energy projects and direct significant investment towards them.

However, in the ensuing three years, Engro appears to have changed course: while it is continuing its investment in Thar Coal energy projects, those are in partnership with the Sindh government. And it is not considering any additional investments in CPEC-linked areas.

CPEC is dead. What comes next? Slowly but surely, CPEC will die off as a talking point in the government of Pakistan and as a topic of conversation in the media.

But the government of Pakistan is still stuck with the agreements they have already signed, and with the expectations they have raised in Beijing that CPEC will be a showcase for the broader Belt and Road Initiative (BRI) for China.

Those expectations will now need to be tempered. Sources familiar with the military leadership’s thought process on the matter say that the military — which sets the foreign policy agenda in Pakistan — is now contemplating a return to the pre-CPEC Pakistani foreign policy of serving as one of the few countries that was able to balance an alliance with both the United States and China.

That is likely easier said than done, however. Firstly, China is not in the mood to play second-fiddle to the United States anymore, in Islamabad or anywhere else in the world.

This current Chinese government — under President Xi Jinping — is considerably more assertive than it has ever been in the past. They are unlikely to take kindly to Pakistan scaling back its share of the commitment to CPEC.

 And secondly, Pakistan had made a very overt turn towards Beijing and away from Washington. The United States is not exactly in the mood to have Pakistan back as an ally either, at least not without significant concessions on Pakistan’s part.

It is unclear whether Pakistan will be willing to make all of those concessions, but it is at least a conversation they will have to consider if the pivot back towards Pakistan’s historic foreign policy arrangements are to be successful. Sources familiar with the matter say that the government of Pakistan has already made initial overtures to the United States and made it clear that Islamabad’s pivot towards Beijing has effectively been cancelled.

Those overtures certainly did not hurt as Pakistan negotiated with the International Monetary Fund (IMF) for its 12th bailout in three decades. What does this mean for the Pakistani economy? Pakistan’s business leadership — accustomed as it is to the ways of Britain and the United States — has always been significantly more comfortable staying in the Pax Americana orbit than it ever was going to be in Pax Sinica.

Think about it: would the typical Pakistani business executive send their child to Harvard or to Tsinghua University?

 Are Pakistani executives likely to be comfortable negotiating with their American or European counterparts or would they be comfortable seeking approval for everything they do from Zhongnanhai?

Is a Pakistani general more comfortable in Sandhurst and West Point or whatever the Chinese equivalent is? In material terms, the direction of the Pakistani economy is unlikely to be too dissimilar from what it has been in our history.

Pakistan’s single largest export market is the United States and the largest geography to which it exports is the European Union.

Investment flows from the US and Europe dwarf — even in the CPEC era — anything that China ever invested in Pakistan. But in terms of what the future direction of the country could have been, this will be very different.

It will mean all of those people learning Mandarin can either stop or continue knowing that it will likely just be a curiosity rather than an economic need. It will mean that Pakistani businesses can stop pretending to have a CPEC strategy. And it will mean that the supposed disentanglement from the US-dominated global financial system need not happen. The more things change, the more they stay the same.




- See more at: http://southasiajournal.net/cpec-is-dead-somebody-tell-beijing/

Countering Militancy in FATA

 Executive Summary and recommendations

The military operation in South Waziristan is unlikely to succeed in curbing the spread of religious militancy in the Federally Administered Tribal Areas (FATA), unless the Pakistan government implements political reforms in that part of the country. Pakistani Taliban groups have gained significant power in the tribal agencies, seven administrative districts bordering on Afghanistan. While state institutions in FATA are increasingly dysfunctional, the militants have dismantled or assumed control of an already fragile tribal structure. This encroaching Talibanisation is not the product of tribal traditions or resistance. It is the result of short-sighted military policies and a colonial-era body of law that isolates the region from the rest of the country, giving it an ambiguous constitutional status and denying political freedoms and economic opportunity to the population. While the militants’ hold over FATA can be broken, the longer the state delays implementing political, administrative, judicial and economic reforms, the more difficult it will be to stabilize the region.
Badly planned and poorly coordinated military operations, followed by appeasement deals, have accommodated militant recruitment and actions, enabling Pakistani Taliban groups to expand their control over the region. Many militants, including commanders fleeing military operations in Northwest Frontier Province (NWFP)’s Malakand division, have also relocated to FATA. Instead of a sustained attempt to dismantle and destroy the Tehrik-i-Taliban Pakistan (TTP) network – led by Baitullah Mehsud until his death on 5 August 2009 in a U.S. drone attack and now by his deputy Hakimullah Mehsud – the military continues to rely on a two-pronged approach of sporadic strikes and negotiations with militant groups. Given that such operations are, by the military’s own admission, restricted, militant networks are ultimately able to absorb the blows even as indiscriminate damage alienates the local population caught in the crossfire.
The current military operation may well be a more extensive attempt to root out the Baitullah Mehsud network in South Waziristan but it remains an incomplete effort and could even prove counterproductive because of parallel efforts to reach or consolidate peace deals with rival TTP groups. It has yet to show that it will be directed at the Afghanistan Taliban or al-Qaeda strongholds. It has also already spurred a new round of internally displaced persons (IDPs) with little to show that the country has planned for that eventuality.
More than a million FATA residents already have been displaced by the conflict, mostly from Bajaur agency in the north and Waziristan in the south. Ongoing military operations in Khyber agency have forced as many as 100,000 to flee to safer locations in NWFP. While the military restricts domestic and international humanitarian access to FATA’s conflict zones, neither the Pakistan government nor the international community has addressed the full costs of the conflict to civilians. Mala­kand’s IDPs have justifiably received considerable domestic and international attention, but the needs of FATA’s IDPs are yet to be addressed.
Militant violence and military operations have also undermined any prospect of economic development in the tribal agencies. FATA was severely underdeveloped even before the rise of militancy due to government neglect, legal barriers and structural impediments to investment and private enterprise. With no economic regulation or proper courts, a black economy has flourished, notably a pervasive arms and drugs trade. Violence is now contributing to poverty, with the lack of jobs making FATA’s residents vulnerable to militant recruitment.
The military’s resort to indiscriminate force, economic blockades and appeasement deals is only helping the Taliban cause. The Pakistan government could win hearts and minds and curb extremism through broad institutional, political and economic changes to FATA’s governance. The government should dismantle the existing undemocratic system of patronage driven by political agents – FATA’s senior-most civilian bureaucrats – as well as tribal maliks (elders) who are increasingly dependent on militants for protection. It must enact and the international community, particularly the U.S., should support a reform agenda that would encourage political diversity and competition, enhance economic opportunity, and extend constitutionally guaranteed civil and political rights and the protection of the courts. Earlier attempts to counter extremism in the tribal areas had failed because they prioritised short-term gain over fundamental changes to the political and administrative set-up.
On 14 August 2009 President Asif Ali Zardari announced a reform package lifting restrictions on political party activity; curtailing the bureaucracy’s arbitrary powers of arrest and detention; excluding women and minors from collective responsibility under the law; establishing an appellate tribunal; and envisaging audits of funds received and disbursed by the auditor general. The Pakistan Peoples Party (PPP)-led government has described this reform package as the first step towards mainstreaming FATA, and much remains to be done. It must now swiftly implement these measures and, more importantly, take steps to fully incorporate the tribal areas into the federal constitutional framework, with provincial representation, legal protections under the Criminal Procedure Code and the national and provincial courts.
Donors, particularly the U.S., have allocated significant money for FATA’s development, but most is channelled through unaccountable local institutions and offices. This severely limits aid effectiveness and may even impede rather than encourage democratisation. The international community should recognise that the opponents of reform are not the people of FATA but the military and civil bureaucracies and the local elite, all of whom would lose significant powers if the government were to extend full constitutional and political rights to FATA.

RECOMMENDATIONS

To the Government of Pakistan:
  1. Repeal the Frontier Crimes Regulation (FCR) 1901 in its entirety, replacing it with Pakistan’s Criminal Procedure Code, in accordance with Article 8 of the constitution and internationally accepted human rights standards, including prohibition of collective punishment.
  2. Extend full provincial rights to FATA by merging it with NWFP, in turn:
a)    merging the Frontier Regions adjoining Bannu, Dera Ismail Khan, Kohat and Peshawar districts with their connected districts;
b)    allocating seats for FATA’s seven tribal agencies in NWFP’s provincial assembly, with constituencies delimited by population, and devised after extensive consultations with stakeholders;
c)    allowing the NWFP provincial assembly and the National Assembly (lower house of the national parliament) to legislate FATA policy;
d)    eliminating the role of tribal jirgas (councils of elders) to hear civil and criminal cases, and establishing civil and criminal courts at the subdistrict and district levels, presided over by civil and criminal judges;
e)    allowing defendants the right to legal representation and appeal to higher courts, and extending the jurisdiction of the Peshawar High Court and the Supreme Court to FATA; and
f)     abolishing the FATA secretariat, the FATA Development Authority, and the office of the political agent, and transferring their authority to the NWFP secretariat, relevant provincial line ministries and district departments.
  1. Establish a uniform judicial system across NWFP by repealing the Nizam-e-Adl 2009 that imposes Sharia (Islamic law) on NWFP’s Provincially Administered Tribal Areas (PATA), and fully incorporating those districts into the provincial and national justice system.
  2. Prioritise relief and rehabilitation to FATA’s internally displaced persons and engage in broad consultation with local and provincial leaders on a plan for relief, future reconstruction and resettlement with the goal of sustainable provision of public services, economic infrastructure and citizen protection through civilian led law enforcement and judiciary.
  3. Disband khassadars (tribal police) and levies (official tribal militias) and absorb their members, after requisite training, into the NWFP police force, while strengthening the capacity of civilian law enforcement agencies to maintain law and order in the tribal agencies and the bordering Frontier Regions as well as NWFP’s settled districts.
  4. Disband all lashkars (private militias) immediately and take action against any member guilty of abusing civilians’ rights.
  5. Encourage private investment and economic growth by:
a)    developing the physical structure of the tribal agencies, including viable road networks, farm-to-market roads as well as energy and irrigation projects;
b)    facilitating interest-free loans and removing restrictions on lending to FATA residents;
c)    while the FCR remains in force, preventing any legal action against small and large businesses under the collective responsibility clause in FATA and NWFP, including forced closures, seizure of property and economic blockades against tribes;
d)    enabling private asset formation by implementing land reforms to partition collectively owned property and establish legal individual ownership through a transparent process, enforceable by regular courts;
e)    strengthening FATA’s public education system to make FATA’s students nationally competitive by raising teacher salaries in tribal agencies to higher levels than elsewhere in the country, improving school facilities, and inculcating strong written and verbal English-language skills; and
f)     Prioritise relief and rehabilitation of FATA’s IDPs.

To the U.S. and the Broader International Community:
  1. Develop meaningful dialogue with the government on broad institutional reform to FATA’s governance, without which taxpayers’ money is unlikely to achieve the desired results.
  2. Refrain from transferring control over development programs from international NGOs and other implementing partners to the Pakistan government until the FATA secretariat, the FATA Development Authority and the office of political agent are abolished and their authority transferred to the NWFP secretariat, relevant provincial line ministries and district departments.
  3. Establish financial oversight mechanisms over donor-funded programs that do not rely on the political agents and tribal elites but instead include more representative and independent bodies such as national and NWFP-based NGOs with proven records of carrying out programs in FATA.
  4. Linked to political reform, establish mechanisms for community and civil society participation along with provincial and national ministries in design of comprehensive FATA development plans covering small farm assistance, accelerated infrastructure construction, social service delivery, vocational training programs for FATA workers, particularly women, to make them more competitive in the local and national job markets and civilian police, judiciary and support for rule of law.
  5. Join the Pakistan government, the Office of the United Nations High Commissioner for Refugees (UNHCR) and humanitarian NGOs in urgently preparing a comprehensive plan for IDPs in FATA expanding assistance to those displaced by conflict that assures domestic and international humanitarian access and their resettlement once citizen protection can be guaranteed.
  6. Condition military aid on demonstrable steps by the military to support civilian efforts in preventing FATA from being used by extremist groups to launch attacks from Pakistani territory within its region and beyond; if the Pakistani military does not respond positively, consider, as a last resort, targeted and incremental sanctions, including travel and visa bans and the freezing of financial assets of key military leaders and military-controlled intelligence agencies.
  7. Maximise the potential impact on proposed reconstruction opportunity zones (ROZs) by:
a)    expanding the commodities identified for duty-free status to include staples of the local economy such as leather goods, wool products, carpets and furniture; and
b)    requiring significant employment of FATA residents in companies participating in the program and where possible a preference for local FATA companies in program participation.

 A report by International Crises group for FATA 

Source ; http://www.crisisgroup.org/home/index.cfm?id=6356&rss=1

Monday, August 5, 2019

All Kohat Cantonment Garrison Cinemas in Pakhtunkhwa are Being turned into Cheap Commercial Projects

A commercial plaza being constructed in place of the PAF Cinema, Kohat. รข€” Dawn

While the Cantonments in Punjab are being up Graded into Cinema's like Jinnah Park in Rawalpindi and Installed with New Dolby Cinemas , the Policy of Punjabi Establishment is Entirely opposite and they are Turning the British Era old Cinemas of Pakhtunkhwa in Peshawar and Kohat and also in other Cities  into Cheap Commercial Projects that is both Tacky and Speaks volumes about the Plan to Turn the Pakhtunkhwa and its Resident into Wahabist/ Deobandi  Terrorist's  and also the Pukhtunkwa into a Terrorism Hub Deliberately due to policies that has a Deep rooted Meaning to use the Terrorist's against the Neighboring Countries  of Iran and Afghanistan from Launching Pad of Pukhtunkwa and Baluchistan 

KOHAT: All the four cinemas in Kohat city have been demolished replaced by commercial centres, thus depriving a large number of viewers of watching the movies on the big screen.

The cinemas were a big source of relaxation for the poor class which after daylong labour had an air-conditioned environment for as cheap as Rs50.

In the beginning families were attracted by the PAF cinema but with the passage of time, it also started playing Pashto movies featuring fights and violence which resulted in its downfall.

In early days, it screened English movies during three days of the week but then abandoned the practice. Now the young boys and families go to Islamabad to enjoy movies in quality picture houses even at the cost of paying many thousands of rupees.

Mohammad Hashim, a regular visitor to Islamabad with his friends, said the luxury of watching a movie at Islamabad cinemas was unique as the sound and screen were mind-blowing.

Two famous cinemas were owned by the army and the Pakistan Air Force, with the former constructed outside the walled city by the British as auditorium for their families in 1935.

It has been demolished and now converted into a marriage hall.

The PAF cinema also vanished with the time. Constructed in 1988 at a commercially ideal place at a corner plot it has been leased out to a private group of investors who have constructed a multi-storey plaza.

Still, only the structure has been completed but the shops are being sold like hot cakes starting from Rs6 million to Rs10 million on premium with monthly rent.

The oldest of all the cinemas was started with the name of New Royal in 1932 whose name was changed to Capital Cinema. Now, at its site stand a huge plaza, a hospital, a bank, and shops.

Haji Mohammad Akram, who owned the Flex Cinema, built in1944, while narrating the history of the picture houses, termed the phenomena as a dilemma, but said the dying industry could not support their families. He said that people were more interested in building shopping plazas and nobody was ready to take the risk of constructing Peshawar or Islamabad-like cinemas with millions of rupees as nobody would pay even Rs100 per ticket.

Historian Prof Mohammad Iqbal commented that historical places should be preserved with the help of the government. He regretted that those nations who did not remember their past were forgotten forever.

Published in Dawn, June 22nd, 2019