United States
https://www.aviation-defence-universe.com/washington-helped-islamabad-come-out-of-grey-list/
Washington helped
Islamabad come out of ‘Grey list’
The Author
·
Trying to retune its ties
with Pakistan
By Jai Kumar
Verma
New Delhi. 03
November 2022. On 21 October the Financial Action Task Force
(FATF) has taken out Pakistan from its ‘Grey List”. FATF issued a statement
that “Pakistan is no longer subject to FATF’s increased monitoring process; to
continue to work with APG (Asia/Pacific Group on Money Laundering) to further
improve its AML/CFT (anti-money laundering & counter-terrorist financing)
system”. Pakistan was put in grey list of FATF in 2018 as it failed to check
the financial assistance to terrorist outfits. As the country was in FATF’s
grey list Islamabad was not getting financial assistance from International
Monetary Fund (IMF), Asian Development bank (ADB), World Bank, European Union,
and other financial institutions. At present Pakistan’s economy is passing from
a critical phase and it needed urgent financial assistance.
Pakistan’s
track record is so dismal that in past meetings of FATF it was saved by China,
Turkey, and Malaysia from downgrading to ‘Black List’. But in the current
meeting United States, United Kingdom and other western countries supported
Islamabad hence it instead of slipping to black list it came out from grey
list. India sharply reacted to the exit of Pakistan from grey list. The Ministry
of External Affairs (MEA) Spokesperson Arindam Bagchi stated, “We understand
that Pakistan will continue to work with the Asia Pacific Group on Money
Laundering (APG) to further improve its Anti Money Laundering (AML) /Counter
Terror Financing (CFT) system.” He also reiterated that “As a result of FATF
scrutiny, Pakistan has been forced to take some action against well-known
terrorists, including those involved in attacks against the entire
international community in Mumbai on 26/11”.
Pakistan
lobbied hard to come out from the grey list. In the latest meeting of
FATF, China, US and other western countries supported Pakistan. China blocked
the blacklisting of Hafiz Talah Saeed leader of Lashkar-e-Tayyeba (L-e-T) and
son of L-e-T Chief Hafiz Saeed. China rescued Pakistan five times in four
months in United Nations.
Both China
and US have declared each other as their main adversaries but they supported
Pakistan albeit with different motives. China considers India as its
prospective challenger hence it wants to weaken India. China’s long-term policy
is the containment of India and China is using Pakistan to achieve this. All
Chinese weapons, missiles and platforms are against India. China is Pakistan’s
biggest bilateral creditor and invested huge sum in China Pakistan Economic
Corridor (CPEC). Pakistan claims that it has all weather strategic partnership
with China.
Besides
helping Pakistan in FATF, US also helped Islamabad in getting IMF loan.
Pakistani Finance Minister Miftah Ismail claimed that IMF sanctioned $1.7
billion loan and also extended the programme for a year more. US ambassador in
Pakistan visited Pak Occupied Kashmir and called it as Azad Kashmir.
Recently US
approved $450 million to service Pakistan’s F-16 fighter jets although India
objected for the same. US wants to keep Pakistan army happy as several times
civil administration speaks against US but Pakistan army always maintained
cordial relations with US.
Both US and
Pakistan share intelligence on Afghanistan. This time US left Afghanistan but
its intelligence organisations are monitoring the developments in Afghanistan
as US administration does not trust the present Taliban regime. US intelligence
agencies are keeping eye on Afghanistan through Pakistan and extermination of
al Qaeda Chief Zawahiri is proof of it. Afghan government has US designated
terrorists but US is not taking any action against them because of Inter
Services Intelligence (ISI) of Pakistan.
On the other
hand, Islamabad also getting US assistance in curbing the rising terrorist
activities of Tehreek-e-Taliban Pakistan (TTP) as the outfit made hundreds of
lethal attacks on Pakistani security forces. TTP fighters are residing in
border areas of Pakistan and Afghanistan. TTP which is known as Pakistani
Taliban are getting support from Afghan Taliban.
President
Biden has fascination for Pakistan and its army. In 2008 Pakistan awarded US
Vice Presidential candidate Joe Biden and Republican Senator Richard Lugar
‘Hilal-i-Pakistan’ which is the second highest award in Pakistan. In 2011 Biden
as Vice President went to meet Pakistan army Chief General Ashfaq Parvez Kyani
to Rawalpindi, which is unprecedented. In November 2015 Biden as Vice President
invited Pakistan army chief Raheel Sharif in White House.
Pakistan
supplied ammunition to Ukraine through C-17 Globemaster of Royal Air Force of
United Kingdom. Pakistan took the risk of anger of Russia to please US.
In October
2022, General Qamar Javed Bajwa Chief of Army Staff of Pakistan made a five-day
visit to US. The visit was few weeks before his scheduled retirement. Although
few analysts claimed that Bajwa visited US as he wanted to ascertain US
reaction before getting one more extension. Strong critics of Bajwa claimed
that as he had close relations with US since he became Army Chief in November
2016 and he wanted the blessings of US before overthrowing the present civilian
government.
Nonetheless
the visit of General Bajwa was to reset the ties between both the countries
which were damaged badly by former Prime Minister Imran Khan as he continuously
blamed US for ousting him from prime ministership. Bajwa also visited Saudi
Arabia after removal of Imran Khan as the ties between both the countries were
damaged during his prime ministership.
In the
current visit Bajwa reassured US that relations between both the countries
would remain cordial even after he relinquishes the post of Chief of Army
Staff. He also took Chief of General Staff Lt. General Azhar Abbas who is among
the six important frontrunners for the coveted post of Chief of army staff.
General Bajwa also introduced Lt. General Abbas to important dignitaries in
Washington DC. Bajwa met US Secretary of Defence Lloyd Austin and National
Security Advisor Jake Sullivan and discussed important issues pertaining to
defence. Bajwa emphasised that Pakistan is a trusted and tested friend of US
and cordial relations would benefit both the countries.
Bilawal
Bhutto foreign minister of Pakistan also met US Secretary of State Antony
Blinken on the sidelines of United Nations General Assembly session in
September this year. In the meeting he reaffirmed about the assistance of $56.5
million for flood relief as well as the additional $ 10 million of food
security.
Although now
Washington is also interested in repairing ties with Islamabad but there is a
trust deficit as US felt cheated in Afghanistan when overtly Pakistan was
helping US but covertly assisting various terrorist groups in Afghanistan
especially Haqqani network. These terrorist outfits were attacking US led NATO
troops.
Even when the
relations between US and Pakistan deteriorated the cooperation between defence
forces of both the countries continued as most of arms, ammunition and
platforms in Pakistan defence forces are of US origin. Large number of senior
officers of Pakistan defence forces have personal interests in US.
The national
security strategy of US released in October 2022 classified China as the main
threat to the country. Hence US is trying to undermine China and for that it
considers India as an important partner but as India follows an independent
foreign policy hence Washington is also trying to retune its ties from
Islamabad and wants to dilute China Pakistan relations. The annual bilateral
trade between US and Pakistan is around $6 billion and US is Islamabad’s biggest
trade partner while China is the largest state investor in Pakistan. Hence US
wants to have cordial relations with Pakistan but it does not want to replace
China as in that case US has to put very large amount in Pakistan.
Washington
has appointed Donald Armin Blome as US ambassador in Pakistan in April 2022.
The post was vacant since 2018. Not only this members of Congress and several
high-ranking US officials also visited Islamabad. In April General Bajwa stated
that Islamabad has “excellent” relations with US and Pakistan receives best
military equipment from US. Pakistan from several years was getting financial
assistance, supply of defence equipment, training from US and now when it is
passing from grave financial crisis Islamabad wants all types of help from US.
Biden’s
recent statement that Pakistan “may be one of the most dangerous nations in the
world” should not please much to Indian analysts. India should inculcate
self-reliance as both China and US is assisting Pakistan which is India’s sworn
enemy and has waged a low-intensity war against India. Delhi should not look
for short-term solutions but should plan long-term strategy. At present world
is passing from a turmoil. Russian Ukraine war is continuing, Taiwan is in
danger, animosity between US and China is increasing, Prime Minister of UK had
to resign within 45 days. World suffered economic disaster because of Corona
virus and several countries are facing economic disaster. Hence India should
emphasise on ‘Make in India’ programme and should make sincere efforts to
produce more and more weapons, arms, and ammunition so that it can lessen its
import of defence items. India should also enhance its defence export so that
it can achieve its target of export of defence items worth $4.87 billion by 2025.
(Jai Kumar Verma is a Delhi-based strategic analyst and Life member of
United Services Institute of India and member of Manohar Parrikar Institute for
Defence Studies and Analyses. The views in the article are solely the author’s.
He can be contacted at editor.adu@gmail.com)
https://www.aviation-defence-universe.com/friend-shoring-a-boon-or-a-bane/
Friend-shoring: A boon or a bane?
·
An asset for democratic world
·
A China containment trump card
By Jai Kumar Verma
New Delhi. 21 September 2022. Just before the world was hit by
Corona virus and Covid -19 became the greatest global fear, a Morgan Stanley
Research outlined how secular trends and trade tensions were, together, slowing
globalization and potentially reversing it, in a concept that’s been referred
to “slowbalization.”
It was 2019 and since then the humanity first suffered the onslaught of
the pandemic and now it is in great trouble because of Russia Ukraine war. Not
only this, the danger of Chinese attack on Taiwan is also looming large on the
horizon.
Russia Ukraine war created wheat shortage and energy crisis in the
world. These threats have not only disturbed the supply chain, even the
production of several essential items was jeopardised. The supply of food
grain, petroleum products including gas and other important items was
disrupted. These catastrophes forced the western world to plan about rejuvenating
the world economic order, so that the supply chain as well as production of
essential items remain uninterrupted.
And then came the most famous speech given by US Secretary of the
Treasury Janet Yellen at South Korean multinational LG’s Science Park of Seoul
in July this year. She put forth the concept of ‘friend-shoring’ which means
that trade should be restricted only to the dependable allies so that the
threats to supply chains is minimised. The phrase ‘friend-shoring’ is akin to
the concept of ‘onshoring’ and ‘nearshoring’ which means that production and
supply chain should be either within the country or near the country. As the
world has become a global village hence it is not feasible to produce
everything within the country or very near to the country hence the idea is
changed to ‘friend-shoring’ which would restrict the supply chain networks with
like-minded and friendly countries. She appealed to the countries friendly to
US that all should work together so that more robust supply chains between trusted
and likeminded countries can be devised. Although Yellen made it clear that US
is not deserting from world trade.
Yellen also mentioned that “Supply chain resilience is a key focus of
the Biden-Harris Administration. The necessity of this work has been
illustrated clearly by the events of the past two years – first by COVID-19 and
our efforts to fight the pandemic, and now by Russia’s brutal war of aggression
in Ukraine. Together, they have redrawn the contours of global supply
chains and trade.” She further mentioned that “‘Friend-shoring’ is about
deepening relationships and diversifying our supply chains with a greater
number of trusted trading partners to lower risks for our economy and theirs.”
President Joe Biden also issued an order in 2021 to review American
supply chains. The appraisal would suggest how to secure and strengthen the
supply chains and in what manner US dependence on foreign supplies can be
reduced.
The notion of ‘friend-shoring’ would also reduce the overdependence on
China. Beijing has emerged as the ‘world’s factory’. According to United Nations
Statics Division statics, China’s global manufacturing output was about 30
percent in 2018. China is world’s foremost producer of chemical fertilisers,
cement, steel, machinery parts, clothing, textiles, and footwear. China’s
economy is now the world’s second largest economy and claims that it would take
over US in few years. China is also threatening US’s lone super power status.
The analysts claim that strategy planners in US wants to curb the growth
of China. According to recent study by an important think tank several
companies would shift a quarter of their global product sourcing from China to
other countries. The process of shifting from China to other countries was
expedited because of pandemic, climate change and aggressive behaviour of
China. Not only this countries like Vietnam, South Korea and India are
providing several facilities so that these companies shift their factories from
China to their countries.
US and other democratic countries are planning to shift production of
critical items in friendly countries and extend trade with each other as they
want to reduce dependence on China and Russia which have different values and
systems. Although it is best if all things are produced and sold in the
homeland but it is not feasible now, hence friendly countries and allies are
included in production and in supply chains.
At present efforts are made to diversify the production units as pulling
all manufacturing units from China is not feasible hence efforts are to reduce
the dependence on China. Chinese exports increased after 2001 when Beijing
joined World Trade Organisation (WTO) and started taking the benefits of it.
Under ‘friend-shoring’ if US supplies gas and rare earths to Europe and
Europe sells semiconductor chips to Australia and Canada, the supply chain
would certainly be stronger then purchasing these items from China and Russia.
US and South Korea are old business partners and Biden administration wants to
preclude China from controlling the technological industries. Hence it is
promoting South Korea to produce semiconductors, batteries for electric
vehicles etc. In his recent visit President Biden had visited a South Korean
chip factory and would like to establish similar factory in Texas (USA).
Proponents of ‘friend-shoring’ mention that the buyers should not only
emphasise on price. They should view other considerations also.
The economists claim that ‘friend-shoring’ or ‘ally-shoring’ would
damage the world economy as the global supply chains have reduced the tariffs,
transportation, and communication costs. The production cost is lessened
because the firms are allowed to purchase goods where it is more
cost-effective. Manufacturing units are located in developing countries because
of low-cost labour. The under-developed countries get the employment while the
final products are less expensive hence even the poor persons in the developed
world can purchase the product. The labour in the developing countries gain
skill and after some time they manufacture more sophisticated items.
‘Friend-shoring’ may start the process of ‘deglobalisation’ which means
higher prices in short run while lesser growth in long-term.
The friends do not remain friends all the time as Britain left European
Union. Severe difference cropped up between US and Canada during the time of
President Trump.
China would think many times before invading Taiwan because of its close
trade relations with US and Europe but in case of ‘friend-shoring’ there would
be a clear division between friends and foes. The economic dependence on
countries of different ideologies may avert the battles.
Friend-shoring would be disastrous for poor countries as their economy
would never rise. There would be mass exodus from the poor countries to wealthy
countries which would create problems in developed countries too. The poor
countries would become failed countries and extremism and radicalisation would
grow there and they would export terrorism.
If ‘friend-shoring’ is essential then it should be limited to essential
and strategic items of national security only.
Way Ahead
The advocates of ‘friend-shoring’ claim that in pursuit of reducing the
cost, the companies have ignored resilience which included climate disasters
including floods, famines, earthquakes etc. Companies also discounted
chokepoints. Hence companies should diversify their production plants in
different countries.
The diversification is also essential because of change in policies of
the country. The relations between US and China became tense when US under
presidency of the then President Trump adopted tit-for-tat policy and imposed
tariffs on Chinese goods. China also retaliated not only with US but imposed
restrictions on Australian imports. Russia-Ukraine war has also disturbed the
supply chain. It clearly indicates that in view of national security it is
essential that strategic items should be produced either within the country, by
friendly neighbours or countries with similar values and institutions. China,
which has emerged as a big economic power and now threatening several countries
would suffer a setback. Several poor countries suffering because of China’s
debt trap, may take a sigh of relief and if China’s economic strength reduces
it would not lay debt trap to other countries. India may also be benefitted if
more industries shift from China as few would certainly come to India.
(Jai Kumar Verma is a Delhi-based strategic analyst and Life Member of
United Services Institute of India and member of Manohar Parrikar Institute for
Defence Studies and Analyses. The views in the article are solely the author’s.
He can be contacted at editor.adu@gmail.com)
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