United States: The US Secretary of State stepped into the debate on Pakistan’s external financing debate in the course of a TV interview in end July while expressing the desire “to engage with the new Pakistani leadership in a mutually beneficial relationship”. Replying to a question the Secretary also said “we will be watching what the IMF does. There’s no rationale for IMF tax dollars — and associated with that, American dollars that are part of the IMF funding — for those to go to bail out Chinese bondholders or China itself”. These remarks gathered a great deal of attention in Pakistan notwithstanding the general preoccupation with the election results and new government formation on account of the general apprehension that IMF conditionalities would intrude into terms of contracts entered into in different CPEC projects about which there has been some degree of opacity so far.
The continuing turbulence in relations with the US was suggested also by the stoppage of funding from the International Military Education and Training Programme (IMET) of the US government under which Pakistan military officers have trained and attended courses at the US National Defence University. According to Pakistani press reports, outgoing Pakistani officers were told that the university has been asked to fill the positions for the next year with officers from other countries.
LeT Militant Listing: The United States in early August designated Abdul Rehman al-Dakhil described as a senior Lashkar-e-Taiba (LeT) commander as a global terrorist. The designation came amidst US expression of concern and “deep reservations” over the participation of terrorist-affiliated individuals in the elections in Pakistan. In April, the US had listed the Milli Muslim League (MML), and Tehreek-i-Azadi Kashmir (TAJK), as LeT fronts. The State Department described Dakhil as a long-time LeT member and an operational leader and described him as having carried out terror attacks in India between 1997 and 2001, after which he shifted to West Asia. He was captured in Iraq in 2004 by British forces and spent 10 years in US custody in Iraq and Afghanistan before being transferred to Pakistan in 2014. After his release from Pakistani custody, on an unspecified date, he resumed working for LeT and became divisional commander for Jammu in 2016. A MEA statement in Delhi said with regard to the listing that it “calls into question Pakistan’s sincerity in taking effective action against such terrorist elements."
China Trade Data: According to figures released by the State Bank of Pakistan, Pakistan’s trade deficit with China increased to $9.7 billion in the current financial year with Chinese exports at $11.45 bn up by $1.38 bn. China is Pakistan’s largest trade partner. On the other hand, during the year Pakistan exports to China increased by just $120 million to $1.744 bn creating a trade gap of $9.7 bn accounting for over 30 per cent of the overall trade deficit of the country.
Total imports in FY 2017-18 were $55.8 bn and exports at $24.7 bn with total trade deficit of the order of about $37 bn.
Terrorist Attack on Chinese Nationals: A suicide attack in Dalbandin area of Balochistan on 11th August on a passenger coach carrying Chinese engineers wounded at least five people, including three Chinese nationals. The attack took place as 18 Chinese engineers working on a mineral project were being transported to Quetta. The engineers are described as working on the Saindak project, a joint venture between Pakistan and China to extract gold, copper and silver. The Balochistan Liberation Army (BLA) has claimed responsibility for the attack.
Iran: According to press reports in the first week of August power supply from Iran to the Makran region in Balochistan was drastically reduced seriously affecting areas in Gwadar, Pasni, Turbat etc. According to these reports Pakistan imports about 100MW from Iran under long-term contracts to meet the demand in the coastal region having no access to the national grid. The Ministry of Energy informed the Senate Standing Committee on Power that Iran was facing a serious heatwave and was both unable to meet its domestic electricity demand as well as failing to fulfil its power export obligation to Pakistan. Other reports suggest that nonpayment of past bills may have been the reason for the reduction in supply which Pakistan officers said would be restored by mid-August.
India: Amidst occasional protests and reports regarding ceasefire violations two India Pakistan developments stand out. The Ministry of External Affairs in its first comment on the Pakistan election made on 28th July a positive statement about the elections. This was followed up by a congratulatory phone call from PM Modi to Imran Khan on 30th July in which he expressed the hope that democracy would take deeper roots in Pakistan.
Election Results: The Pakistan Tehrik i Insaf turned in a strong performance and although short of a majority was easily the single largest party in the national elections. Imran Khan was sworn in as the next Prime Minister of Pakistan. The final tally of seats, after addition of reserved seats for women and minorities, shows the PTI with 158 seats, the PML (N) 82 and the PPP 53 out of a total of 339.The PTI will also form governments in Punjab and Khyber Pakhtunkhwa and provide support to a local coalition in Balochistan with the PPP retaining Sindh. While debate over the extent to which pre-election developments, including the jailing of former P M Nawaz Sharif, weighted the scale against the PML (N) will long continue, the fact of Imran Khan’s strong performance is generally accepted. This appears to be the case notwithstanding many complaints and allegations about the actual conduct of the polling process.
Other points of interest in the overall election results are briefly: The three largest parties - PTI, PML (N) and PPP - together have gathered a much larger number of national assembly seats than in previous polls; Parties such as the MQM, the religious combination the MMA, the Awami National Party (ANP) correspondingly have each suffered major losses and in the aggregate have a reduced footprint in the National Assembly. Overall the performance of the mainstream religious parties was lack lustre. On the other hand, the newly formed Barelvi grouping Tehril i Labaik Pakistan (TLP) showed a strong performance. Although it failed to win even a single seat in the newly elected National Assembly, the Tehreek-i-Labbaik Pakistan (TLP) in terms of votes cast was the fifth largest nationally. The political rise of the Barelvis is among the most novel features of this election.
Imran Khan’s victory is regarded as a vindication of his individual agitational style of politics with its emphasis on good and corruption free governance. That his was the preferred party of the military is accepted and derided by his allies and foes respectively. Nawaz Sharif’s inability to manage the civil military equation and its frictions and contestations is the principal reason attributed for his downfall and his party’s defeat. Nevertheless, he and his family members are not being written off as powerful factors in future politics. His continuation in jail will constitute in fact one of the new government’s principal distractions and the longer he is in custody the bigger will be the question marks about the credibility and legitimacy of the new government.
Portfolios: Some of the portfolios of interest are Human Rights: Dr Shireen Mazari a strategic analyst long known for hardline views on India; Petroleum: Ghulam Sarwar Khan; Information and Broadcasting: Fawad Chaudhry; Foreign Affairs: Shah Mahmood Qureshi who was Foreign Minister during a part of the PPP government’s tenure during 2008-13; Defence: Pervez Khattak the former PTI CM of KPK province; Finance: Asad Umer; Railways: Sheikh Rashid Ahmed who had held this portfolio during General Musharraf’s time also.
Economic Challenges Ahead: The continuing current account deficits and the financing gap this has opened up on the external front is seen as a pre-determined priority for the new government. Through the run up to the elections press reports have speculated about the inevitability of an application to the IMF for a loan to finance the deficit with the consensus being that the quantum of financing sought would at least be double of the 5.3 Billion U S $ provided in 2013 when Pakistan had last sought an IMF package. Alongside the external financing gap there are also serious issues of the budget deficit and the two together imply that the new government may well be forced into unpopular decisions with regard to public spending, import compression and taxation fresh in its tenure.
August 24, 2018