• Budget 2020-21
• Terrorism and FATF
• Pashtun Tahafuz Movement
• COVID-19 crisis
• Peace and Reconciliation
• COVID-19 crisis
II Developments in Pakistan
The Pakistan National Assembly approved the budget for 2020-21 in the backdrop of worsening economic situation, particularly because of the Coronavirus pandemic. The Economic Survey presented before the budget predicted contraction of economy by 0.38% during the financial year 2019-20, a scenario widely believed to be highly overoptimistic. Media reports suggested further deterioration in the external sector picture, with Pakistan needing foreign loans of $14 to 15 billion during 2020-21 because of falling exports and remittances from Pakistanis living abroad and the need to repay external debt of $11 billion. The total outlay of the no new tax budget for 2020-21 is Pak Rs. 7,294.9 billion, 11% lower than the figure in the previous year and it projects growth of 2.1% in 2020-21, once again an overoptimistic figure in the light of the ground realities. In an austerity move, the budget cuts subsidies by 48%, hikes petroleum levy by almost 73% and freezes salaries and pensions of government employees. The defence budget at Pak Rs.1289 billion is up by 11.9% compared to the last year, but this figure does not include another Pak Rs.693 billion provided for military pensions and armed forces development programme. In contrast, the allocation for health and education is a measly Pak Rs. 25 billion and 83 billion respectively, highly inadequate even if one takes into account devolution of these subjects to provinces. The allocation for new and continuing development projects is expected to reduce the economic activity generated by the state through these programmes by around 20%. The budget envisages a highly ambitious and unrealistic tax target of Pak Rs. 4.9 trillion in an environment of a serious economic downturn and projects a fiscal deficit of 7%. However, because of the unrealistic tax target, Fitch Ratings has projected the deficit to go up to 8.2% of GDP. The outlay for defence and debt servicing exceeds the net revenue that would be left with the federal government after transfers to the provinces as per the National Finance Commission award. In an acknowledgment that the budgetary figures may have to be revised in the course of the financial year, Prime Minister’s adviser on Finance, Hafeez Sheikh, said that making precise plans was not possible because of the uncertainty resulting from Coronavirus pandemic. Overall, the budget is yet another proof of Pakistan living grossly beyond its means.
Terrorism and FATF
In a briefing to PM Imran Khan on the performance of his ministry, Interior Minister Ijaz Shah claimed that Pakistan had met most of the conditions set by the Financial Action Task Force (FATF). Later in the month, Indian media reports suggested that the FATF had decided to retain Pakistan on its grey list. However, the Pak Foreign Office stated that Pakistan’s case was not taken up at the FATF meeting held in June, because in April this year, it had been decided to push back review of Pakistan’s case to October because of the Coronavirus pandemic.
The US State Department’s Annual Country Report on Terrorism for 2019 stated that Pakistan continued to serve as a safe haven for certain regionally focussed terror groups targeting Afghanistan and India and was yet to take effective action against them. The report further stated that though Pakistan had indicted LeT founder Hafiz Saeed and twelve of his associates, it had made no effort to prosecute other terrorists such as Masood Azhar and Sajid Mir, the mastermind of the 2008 Mumbai attack. Pakistan rejected the report, describing it as ‘self-contradictory’ and ‘selective’ in its characterization of Pakistan’s efforts to counter terrorism and claimed that the report had overlooked the role played by Pakistan in brokering the deal between the US and Afghan Taliban.
PM Imran Khan came in for widespread criticism, including from Pakistan’s opposition parties, for describing Osama bin Laden as a ‘martyr’ in the course of a speech in the National Assembly.
An anti-terrorism court convicted four JUD leaders- Hafiz Abdul Rehman Makki, Abdul Islam, Malik Zafar Iqbal and Muhammed Yahya Aziz – of charges of terror financing and terrorism. The former two were awarded a jail term of one year each and the latter two of five years each.
Considering an appeal of the Sindh government against the Sindh High Court judgment overturning the conviction by a lower court of Ahmed Omar Saeed Sheikh for the 2002 murder of the Wall Street Journal correspondent, Daniel Pearl, giving rise to the possibility of his immediate release, the Supreme Court refused to stay the High Court order pending consideration of the appeal. However, the Sindh government extended Omar Sheikh’s detention under the Maintenance of Public Order Ordinance, which was to expire at the end of June, till September 30 to obviate the need to release him.
Pashtun Tahafuz Movement
The government called upon the Pashtun Tahafuz Movement (PTM) to come to the negotiation table and discuss all contentious issues to resolve them. While accepting the offer, the PTM leader, Manzoor Pashteen said that the government must first take steps to bridge the trust deficit and take confidence building measures to demonstrate its sincerity. In this context, he referred in particular to the filing of FIRs against PTM activists and incarceration of many of them. He added that if there are excesses by the state, there would be a protest.
At the end of June, Pakistan had over 2,08,000 Coronavirus cases and death toll of 4254, up from over 1500 at the end of May. PM Imran Khan said that the virus was here to stay and exhorted people to continue to take precautions to protect themselves. ADB approved a loan of $500 million for Pakistan to expand health sector facilities and offer a pro poor fiscal stimulus to tide over the adverse impact of the Coronavirus crisis. Pakistan also signed loan agreements of an additional $1 billion with the World Bank and the Asian Infrastructure Development Bank for the same purpose.
Pakistan continued its anti-India rhetoric, alleging that India was planning a ‘false flag operation’ against it. It also alleged ceasefire violations by India at the LoC and claimed that these had from time to time resulted in casualties among civilians. It was further alleged that by mid-June, India had committed over 1100 ceasefire violations this year. Civilian casualties were also reported on the Indian side.
Responding to criticism of hardliners that the government had allowed India to become a member of the UN Security Council (UNSC), Foreign Minister Shah Mahmood Qureshi said that India becoming a non-permanent member of the Council was a matter of concern, but heavens would not fall because of this development as Pakistan too had served in the same position seven times. The POK “Prime Minister” Raja Farooq Haider criticized Qureshi for making the above statement and said that Kashmiris did not want to see India even as a non-permanent member of UNSC.
PM Imran Khan said that he had no doubt that India was behind an attack on the Pakistan Stock Exchange in Karachi, which was claimed by the Balochistan Liberation Army and resulted in the death of four security personnel and all the four attackers. India rejected the allegation as absurd.
Pakistan harassed and detained two staff members of the Indian High Commission in Islamabad, alleging that they were involved in a hit and run road accident and possessed fake currency. The incident was clearly in retaliation to expulsion of two staff members of the Pakistan High Commission in New Delhi in May on the charge of indulging in espionage. The two Indian staff members returned to India. Later in the month, India asked the Pakistan High Commission in New Delhi to cut its personnel strength by half and decided to do likewise in the case of the Indian mission in Islamabad. While announcing this decision, India noted that officials of the Pakistan High Commission had been engaging in acts of espionage and dealings with terrorists and two staffers of the Indian mission in Islamabad had been abducted at gunpoint.
Pakistan announced its intention to open the Kartarpur Corridor, which had been closed because of the Coronavirus pandemic, giving India two-day notice for the purpose. India noted that Pakistan had given only a two-day notice as against the mutually agreed seven-day notice for travel and was trying to create a ‘mirage of goodwill’ by making the offer, adding that it would evaluate the offer before making any further announcement.
Pakistan regretted the US action in blocking the listing of an Indian national working with an Indian construction company active in Afghanistan as a proscribed person by the UNSC 1267 committee. According to media reports, the US had earlier informed all members of the UNSC that it was officially blocking the Pak proposal. The above person is one of the four Indian nationals whom Pakistan had tried to link to terror attacks on its territory.
The spokesperson of the Pak Foreign Office said at the beginning of June that India and Pakistan were cooperating with each other in the framework of FAO’s Commission for Controlling the Desert Locust in South-West Asia (SWAC). However, later in the month, Pakistan skipped a bilateral meeting on locust that had been scheduled to be held at Munabao in Rajasthan.
India lodged a protest with Pakistan over the action of Islamists in desecrating ancient Buddhist rock carvings in “Gilgit Baltistan”. India also sought access for experts to the area to restore and preserve the invaluable archaeological heritage.
The Economic Coordination Committee of the Pak Cabinet approved award of the contract for construction of two hydroelectric projects on river Jhelum in POK to Chinese companies. Both projects form part of the China-Pakistan Economic Corridor Energy Project Cooperation agreement signed in November 2014. The $2.4 billion, 1124 MW Kohala project will be developed by Kohala Hydropower Company in collaboration with China Three Gorges Corporation, International Finance Corporation and the Silk Road Fund. The $1.3 billion, 640 MW Azad Pattan project is to be developed by Azad Pattan Power Ltd. with China Gezhouba Group Company Ltd.
In yet another instance of opacity in implementation of the CPEC projects and undue concessions being given to Chinese companies, the Secretary of the Pak Ministry of Maritime Affairs told the Senate Standing Committee on Finance that the Gwadar Port concession agreement with its Chinese operator provided for only a 20 year tax holiday for the main contractor and had no provision for extending the tax concession to sub-contractors. The Committee had summoned the Secretary as it had been told by the Federal Board of Revenue that they proposed to give up to 40 year tax holiday to Gwadar port operators, their contractors and sub-contractors on the recommendation of the Maritime Affairs Ministry. The government had extended 40 year concession in October 2019 through an ordinance, which expired, necessitating a legal cover for its action. The Senate committee was also informed by the Secretary, Maritime Affairs that the contract governing the affairs of the Gwadar port was confidential and could not be disclosed publicly. The Chairman of the committee then suggested that the contract document be shared with its members for one hour during an in-camera meeting.
Following the Galwan valley clash between Indian and Chinese forces, Foreign Minister Qureshi said that China had tried its best to resolve the border issue amicably and through talks, but India did not take it with the same spirit and “continued constructions in the disputed region, which led to a bloody clash.’ In a subsequent statement in the Senate, he said that there had been a dramatic shift in the region and “China has openly landed in the arena against India.” He also referred to a telephonic conversation with his Chinese counterpart, adding that he was aware of the Chinese approach.
III Developments in Afghanistan
Peace and Reconciliation
Intra Afghan dialogue envisaged under the US-Taliban deal could not be commenced during June in spite of continuing shuttle diplomacy of the US Special Representative, Zalmay Khalilzad. He visited Doha, Islamabad and Kabul in the first half of the month and expressed the hope that violence would stay low and intra Afghan negotiations would begin soon. He sought to downplay the continuing links of the Taliban with Al Qaeda, mentioned in a report submitted by a UN monitoring team to the UN Security Council, by saying that he had not read it and, according to his information, it covered the period up to March 15, while the US-Taliban agreement had been signed on February 29. The UN report had also pointed out that a new group named Hizb-e-Wilayat-e-Islami had been formed outside Afghanistan with members of the Taliban opposed to the US-Taliban agreement and Al Qaeda had four to six hundred operatives active in 12 Afghan provinces, was running training camps in the east of the country and its senior leaders were present in Afghanistan. According to the report, the Taliban were regularly consulting Al Qaeda during their negotiations with the Americans. Separately, Secretary of State Mike Pompeo held a virtual meeting with President Ghani at the beginning of the month. However, belying Khalilzad’s hope, violence by the Taliban that had gone down as a result of the three day ceasefire announced by them during Eid holidays, picked up significantly as the month progressed. The Afghan National Security Council stated that during the third week of June alone, the Taliban carried out 422 attacks in 32 provinces, killing 291 government troops and injuring 550. The Taliban Deputy leader, Sirajuddin Haqqani said that even while pursuing peace, the Taliban would continue on the path of jihad and strengthen their military power. In the face of growing violence, the US forces conducted two airstrikes on Taliban targets. The head of the US Central Command, General Kenneth Mckenzie said that he could not recommend a full withdrawal of US troops from Afghanistan unless the Taliban cut off their links with Al Qaeda, adding that the threat to the US is not the Taliban and has never been the Taliban, but the entities they allow to live in Afghanistan. His remarks came weeks after media reports indicating that President Trump had asked the Pentagon to draw up plans to fully withdraw troops from Afghanistan before the US Presidential election in November.
Aside from spike in Taliban violence, another hurdle in the commencement of intra Afghan negotiations was the continuing disagreement between the Taliban and the Afghan government over release of prisoners. According to a Reuters report, the government was reluctant to free hundreds of Taliban prisoners accused of violent crimes. However, at the end of the month, Reuters quoted an unnamed government official as saying that the prisoner issue had largely been resolved and the government would release an alternative set of prisoners, with the talks expected to begin in mid-July. Khalilzad began a new round of travel to Doha, Islamabad and Tashkent at the end of June.
Addressing a webinar organised by the Atlantic Council, President Ghani rejected the possibility of formation of an interim government in Afghanistan as part of a potential peace deal with the Taliban.
A trilateral meeting of representatives of the US, Russia and Afghanistan was held in June. It welcomed the Afghan government’s commitment and progress towards releasing Taliban prisoners and called upon the Taliban to reciprocate by releasing all government prisoners. The participants also called for significant reduction in violence and an initial meeting between the negotiating teams to agree on the agenda and the next steps concerning the intra Afghan dialogue. However, within days of this meeting, media reports concerning US intelligence having concluded that Russia offered bounties to Taliban-linked militants to kill American troops in Afghanistan emerged. Facing the Presidential election later this year, President Trump denied that he had been briefed about the matter. Russia denied offering any such bounties.
A report of the United Nations Assistance Mission in Afghanistan (UNAMA) released in June said that sustained and effective efforts in fighting corruption in Afghanistan remained critical to the country’s future. It described how anti-corruption reforms slowed down in 2019 and noted that the institutional gaps left by stalled progress in both strategy and implementation were not filled by the expected establishment of an independent anti-corruption commission. Separately, the US Special Inspector General for Afghanistan Reconstruction (SIGAR) strongly criticized the Afghan government for appointing one of the key masterminds behind the collapse of Kabul Bank in a government agency and for not taking practical action on 6,500 cases of corruption. SIGAR further pointed out that lack of political will and serious weakness concerning the freedom of legal and judicial institutions had blocked the way for investigation of cases and corruption had been institutionalised within the structure.
The number of Coronavirus cases in Afghanistan at the end of June stood at 31,517, with death toll of 745. However, lack of adequate testing remained a concern in assessing the exact extent of the disease in the country.
The Pak Chief of Army Staff, General Qamar Javed Bajwa, accompanied by the DG(ISI) visited Kabul and met President Ashraf Ghani and Chairman of the High Council for National Reconciliation, Abdullah Abdullah. According to media reports, bilateral relations, including the peace process, border management and facilitation of trade came under review. A statement issued by the Presidential palace in Kabul said that the two sides discussed Pakistan’s support for the peace process and how “the soil of either country should not be used against the other.” As per some media reports, Bajwa’s visit to Kabul was arranged by the UK Chief of Defence Staff, Gen. Nick Carter.
In a joint statement issued at the end of visit of the Afghan Acting Foreign Minister, Mohammed Hanif Atmar, to Iran, the two countries expressed their intent to finalize a comprehensive document on strategic cooperation. Iran welcomed a peace process led and owned by the people and government of Afghanistan and expressed its readiness to facilitate intra Afghan negotiations and host them, if demanded by the Afghan government. The two sides emphasized the need for reduction in violence in Afghanistan to create a positive environment for the negotiations. The recent incidents of death of some Afghan migrant workers trying to cross over into Iran were discussed, Iran reported progress in its investigation into those incidents and the two sides agreed to take required measures to prevent repeat of the same.