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Costly bargain: Pakistan spent $100 bn to fight terrorism in last 11-years

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By NewsGram Staff Writer 

New Delhi: Latest Pakistan Economic Survey of 2014-15 has revealed a shocking piece of information. The country spent around $100 bn (Rs. 6.4 lakh crore) between 2004-05 and 2014-15 to fight terrorism.

Based on current budget allocation, the sum could have sustained Pakistan’s education funds for 134 years to come.

The losses are direct and indirect. Of the $6.63 billion lost due to terrorist attacks in 2013-14, 38 per cent represented reduced tax collection and 30 per cent reduced foreign investment.

Pakistan contends that the heightened incidences of terrorism is a reaction to the conflict and instability in Afghanistan after the 9/11 attacks.

The US invasion of Afghanistan led to an increased influx of refugees into bordering Pakistan, which “witnessed a sudden spike in the frequency and scale of terrorist attacks”, according to the Economic Survey.

Pakistan’s economy is estimated to have grown 4.2 percent during 2014-15.

How terrorism disrupts business

Terrorism in Pakistan is driven by sectarian and ethnic factors. 54,960 people (including terrorists) have died since 2005, according to data released by South Asia Terrorism Portal(SATP), a resource from the New Delhi-based Institute of Conflict Management.

According to IndiaSpend, Pakistan had seen a 748 per cent increase in terrorism-related deaths over the past decade.

Terrorism has disrupted production cycles, delayed exports and increased business costs. “Pakistani products have gradually lost their market share to competitors,” the Survey said.

Pakistan is ranked 154th out of 162 countries, according to the 2015 Global Peace Index, a measure of unrest, published by the Institute for Economics & Peace, a think-tank based in Sydney.

The index judges peacefulness of a country based on 23 indicators under three broad themes: 1) safety and security in society; 2) domestic and international conflict and; 3) degree of militarisation.

With a rating of 3.049, Pakistan is ranked 8 places ahead of last-placed Syria (ranked 162nd) but 11 places behind neighbouring India (ranked 143rd).

Tribal areas the most violent

The Federally-Administered Tribal Areas (FATA) in Northwestern Pakistan are the country’s most violence-prone region, accounting for more than half of all terrorism-related deaths in 2014, according to SATP.

Sindh accounted for 21 percent of total deaths, followed by Balochistan with nearly 12 percent.

The FATA region is home to the violent Tehreek-e-Taliban Pakistan (TTP), founded in 2007 and currently headed by Maulana Fazlullah.

The TTP is a different organisation from the Afghan Taliban, originally founded and supported by Pakistan in the 1990s to exert influence over Afghanistan.

TTP “was founded to fight (the) Pakistani establishment,” D. Suba Chandra, director of Institute of Peace and Conflict Studies, said in a comment in The Hindu.

TTP has claimed responsibility for some of the most serious attacks in Pakistan, including that on an army school in Peshawar last year. More than 130 children died in that attack.

Terrorism and counter-terrorism

“This attack is a response to Zarb-e-Azb (sword of the prophet) military offensive and the killing of Taliban fighters and the harassment of their familie”,” TTP spokesperson Muhammad Khorasani had said last year.

The Pakistani Army launched Zarb-e-Azb on June 15, 2014 in retaliation for a deadly attack on Karachi airport that left 28 people (including 10 terrorists) dead.

The operation has led to the death of 2,763 militants over the past year, according to Major General Asim Bajwa, director general of Pakistan’s Inter-Services Public Relations.

However, Pakistan’s anti-terrorism efforts have been selective as a US State Department report points out.

It says that the Pakistani military moved against domestically-focused groups, such as the TTP, while the Afghan Taliban and the Haqqani network leadership continued to find safe havens.

While the Pakistani military action only disrupted the activities of these groups, it did not target them directly, the US report said.

The report further states that Pakistan took no action against groups such as anti-India Lashkar e-Tayyiba (LeT), which continues to “operate, train, rally, propagandize and fund-raise in Pakistan”.

Terrorism has been a contentious issue between India and Pakistan. Pakistan accuses neighboring India of supporting separatists in Balochistan as well as other militant groups. Pakistani Defence Minister Khwaja Asif recently accused India of helping terrorist groups in the country to launch “heinous acts” and said that India “has designs against Pakistan”.

India, in turn, accuses Pakistan of being a state sponsor of terror, responsible for terrorist attacks in Kashmir and the rest of India – the most serious being the 26/11 attack on Mumbai.

(With inputs from IANS)

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Pakistan Fears Economic Turmoil, Re-thinks ‘Silk Road’ Project With China

In 2017, Pakistan turned down Chinese funding for a $14 billion mega-dam project in the Himalayas because of cost concerns.

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A man passes through a railing while others board a train as they make their way home at the Cantonment railway station in Karachi, Pakistan. VOA

After lengthy delays, an $8.2 billion revamp of a colonial-era rail line snaking from the Arabian Sea to the foothills of the Hindu Kush has become a test of Pakistan ’s ability to rethink signature Chinese “Silk Road” projects because of debt concerns.

The rail megaproject linking the coastal metropolis of Karachi to the northwestern city of Peshawar is China’s biggest Belt and Road Initiative (BRI) project in Pakistan, but Islamabad has balked at the cost and financing terms.

Resistance has stiffened under the new government of populist Prime Minister Imran Khan, who has voiced alarm about rising debt levels and says the country must wean itself off foreign loans.

“We are seeing how to develop a model so the government of Pakistan wouldn’t have all the risk,” Khusro Bakhtyar, minister in Pakistan’s planning ministry, told reporters recently.

Pakistan
Visitors read instruction material about land that was reclaimed from the Indian Ocean for the Colombo Port City project, on the Galle Face sea promenade in Colombo, Sri Lanka, Jan. 2, 2018. The Port City project was initiated as part of China’s Belt and Road Initiative. VOA

Unease elsewhere

The cooling of enthusiasm for China’s investments mirrors the unease of incoming governments in Sri Lanka, Malaysia and Maldives, where new administrations have come to power wary of Chinese deals struck by their predecessors.

Pakistan’s new government had wanted to review all BRI contracts. Officials say there are concerns the deals were badly negotiated, too expensive or overly favored China.

But to Islamabad’s frustration, Beijing is only willing to review projects that have not yet begun, three senior government officials have told Reuters.

China’s Foreign Ministry said, in a statement in response to questions faxed by Reuters, that both sides were committed to pressing forward with BRI projects, “to ensure those projects that are already built operate as normal, and those which are being built proceed smoothly.”

Pakistani officials say they remain committed to Chinese investment but want to push harder on price and affordability, while re-orientating the China-Pakistan Economic Corridor (CPEC), for which Beijing has pledged about $60 billion in infrastructure funds, to focus on projects that deliver social development in line with Khan’s election platform.

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China’s ambassador to Pakistan, Yao Jing, Islamabad. VOA

‘Mutual consultation’

China’s Ambassador to Pakistan, Yao Jing, told Reuters that Beijing was open to changes proposed by the new government and “we will definitely follow their agenda” to work out a roadmap for BRI projects based on “mutual consultation.”

“It constitutes a process of discussion with each other about this kind of model, about this kind of roadmap for the future,” Yao said.

Beijing would only proceed with projects that Pakistan wanted, he added.

“This is Pakistan’s economy, this is their society,” Yao said.

IMF bailout likely

Islamabad’s efforts to recalibrate CPEC are made trickier by its dependence on Chinese loans to prop up its vulnerable economy.

Growing fissures in relations with the United States, Pakistan’s historic ally, have also weakened the country’s negotiating hand, as has a current account crisis likely to lead to a bailout by the International Monetary Fund, which may demand spending cuts.

“We have reservations, but no other country is investing in Pakistan. What can we do?” one Pakistani minister told Reuters.

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Laborers dig the ground before replacing concrete sleepers along railway tracks in Karachi, Pakistan. VOA

Crumbling railways

The ML-1 rail line is the spine of country’s dilapidated rail network, which has in recent years been edging toward collapse as passenger numbers plunge, train lines close and the vital freight business nosedives.

Khan’s government has vowed to make the 1,872 km (1,163 mile) line a priority CPEC project, saying it will help the poor travel across the vast South Asian nation.

But Islamabad is exploring funding options for CPEC projects that depart from the traditional BRI lending model, whereby host nations take on Chinese debt to finance construction of infrastructure, and has invited Saudi Arabia and other countries to invest.

One option for ML-1, according to Pakistani officials, is the build-operate-transfer (BOT) model, which would see investors or companies finance and build the project and recoup their investment from cash flows generated mainly by the rail freight business, before returning it to Pakistan in a few decades time.

Yao, the Chinese envoy, said Beijing was open to BOT and would “encourage” its companies to invest.

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A man waits to cross a portion of track once shared with the Karachi Circular Railway line in Karachi, Pakistan. VOA

Large rail projects, problems

Rail mega-projects under China’s BRI umbrella have run into problems elsewhere in Asia. A line linking Thailand and Laos has been beset by delays over financing, while Malaysia’s new Prime Minister Mahathir Mohamad outright canceled the Chinese-funded $20 billion East Coast Rail Link (ECRL).

Beijing is happy to offer loans, but reticent to invest in the Pakistan venture as such projects are seldom profitable, according to Andrew Small, author of a book on China-Pakistan relations.

“The problem is that the Chinese don’t think they can make money on this project and are not keen on BOT,” Small said.

Off-books debt

During President Xi Jinping’s visit to Pakistan in 2015, the ML-1 line was placed among a list of “early harvest” CPEC projects that would be prioritized, along with power plants urgently needed to end crippling electricity shortages.

But while many other projects from that list have now been completed, the rail scheme has been stuck.

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. The difference between the two validate the investments made on the road, and give a hopeful image for the future.

Pakistani officials say they became wary of how early BRI contracts were awarded to Chinese firms, and are pushing for a public tender for ML-1.

Partly to help with price discovery, Pakistan asked the Asian Development Bank (ADB) to finance a chunk of the rail project through tendering. The ADB began discussions on a $1.5-$2 billion loan, but China insisted the project was “too strategic,” and Islamabad kicked out the ADB under pressure from Beijing in early 2017, according to Pakistani and ADB officials.

“If it’s such a strategic project then it should be a viable project for them to finance on very concessional terms or invest in?” said one senior Pakistani official familiar with the project, referring to the BOT model.

China’s foreign ministry said Beijing was engaged in “friendly consultations” with Pakistan on the rail project.

Chinese companies participated in BRI projects in an open and transparent way, “pooling benefits and sharing risks,” it said.

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In this file photo taken Oct. 10, 2015, a bus moves past by solar power and wind power farms in northwestern China’s Ningxia Hui region.

Chinese debt or no project

Analysts say Pakistan will struggle to attract non-Chinese investors into the project, which may force it to choose between piling on Chinese debt or walking away from the project.

In 2017, Pakistan turned down Chinese funding for a $14 billion mega-dam project in the Himalayas because of cost concerns and worries Beijing could end up owning a vital national asset if Pakistan could not repay loans, as occurred with a Sri Lankan port.

Khan’s government chafes at several Chinese intercity mass transport projects in Punjab, the voter heartland of the previous government, which now need hundreds of millions of dollars in subsidies every year.

Also Read: Creating a New Silk Road: China’s Billion Dollar Investments to Expand Its Transportation Network

They also fume about the risk of accumulating off-books sovereign debt through power contracts, where annual profits of above 20 percent, in dollar terms, were guaranteed by the previous administration.

With the ML-1 line, there are also those who harbor doubts closer to home, including the previous government’s finance minister, Miftah Ismail, who said his ministry had always had concerns about its viability.

“When people say it’s a project of national importance, that usually means it makes no sense financially,” he said. (VOA)