News Analysis |
Information Minister Fawad Chaudhry has said on Tuesday that Secretary of State Mike Pompeo assured Pakistan last week that Washington would not try to block any request for a bailout from the International Monetary Fund (IMF). Earlier, in a much-publicized statement, Mike Pompeo said United States had serious reservations over Islamabad’s IMF bailout.
The US showed the fear that Pakistan might use the cash extended under the package to return the Chinese loans. It also blocked the $300 million of Coalition Support Fund only days before visiting the country. The latest trip by secretary state was primarily aimed to bridge the trust deficit and mend the broken relationship between the two friends turned foes.
Washington and Islamabad’s Conflicting views
In a statement, while talking to the Reuters, Information Minister said that “relations between the United States and Pakistan were broken before Pompeo’s trip to Islamabad but the visit had set many things straight and reinvigorated ties”. “He assured Pakistan that … if Pakistan opted to go to IMF for any financial help, the USA will not oppose it,” Fawad clarified.
The U.S. in its bid to stop China emerged as a natural ally of India. IMF would only extend the massive loans to Pakistan if it promises to comply with certain conditions. It would want a political guarantee to support the political interests of the U.S in the region—which would be against China’s interest.
Responding to the minister’s statement, a spokesman for the U.S. State Department said Washington wanted to see “a prosperous Pakistan that contributes positively toward regional stability and security.” But, refrained from making a clear-cut statement and said that, “….If they do request assistance, as we do in all cases in evaluating any loan program, we will examine closely all aspects.”
Amid the daunting challenges facing Pakistan’s ailing economy, the incumbent government has decided not to consult the International Monetary Fund (IMF) for now. However, much scrutinized Economic Advisory Council (EAC) did not rule out the IMF program. Government is convinced; it may come out of the quagmire if it opts to take some unpopular and limited options available in its kitty. Moreover, the majority of the economists still believe that eventually, the country would go to IMF.
Read more: US seeks ‘reset’ in ties with Pakistan
U.S quest for Regional Dominance Contradicts Pak-China Ambitions
Pakistan is aware of the American dominance of the global financial system. After Trumps South Asia policy, Pak-US relations were severely strained. Both sides exchanged verbal blows at each other. Meanwhile, America used its power to lobby other Western countries to put Pakistan on the grey-list of the countries. Pakistan’s inclusion in the list after its failure to prevent money laundering and terrorism financing has put an extra pressure on the country to take precautionary steps going forward.
Pakistan would have to be extra-cautious dealing with the U.S. and some unpopular tough measures remain a more feasible option to avoid the IMF-clutches. It looks hard but is certainly doable.
The U.S. is using its clout to put Pakistan on the brink. Pakistan is contemplating a plan to consult the friendly countries and some of the financial institutions including Islamic Development Bank, and Asian Development Bank for additional funding to bridge the $9 billion external financing gap. Pakistan is on course to formulate its sovereign foreign policy keeping in view only Pakistan’s interests.
Eventually, it faces a rough ride ahead. Its shrinking foreign exchange reserves, the currency crises, and ever-increasing balance of payment gap have put the country on the edge of financial collapse. The remedies available are limited, and IMF’s conditional loans can compromise Pakistan’s sovereignty. The U.S. in its bid to stop China emerged as a natural ally of India.
IMF would only extend the massive loans to Pakistan if it promises to comply with certain conditions. It would want a political guarantee to support the political interests of the U.S in the region—which would be against China’s interest. Pakistan would have to be extra-cautious dealing with the U.S. and some unpopular tough measures remain a more feasible option to avoid the IMF-clutches. It looks hard but is certainly doable.