The Government of Pakistan is in a bad way financially. It needs an $8 billion bailout from the International Monetary Fund (IMF) to stave off financial crisis. The Pakistani currency, the rupee, has lost 36% of its value in the last year, and the country is committed, lock, stock and in over-a-barrel contracts to a Chinese infrastructure program that could cost as much as $75 billion.
Along comes Uncle Sam with a club. If the IMF’s $8 billion is going to pay off debts to China, the Trump Administration has reportedly signaled, it will be vetoed.
That could hurt because the Chinese investment in Pakistan is huge and potentially transformative. The once-sleepy port of Gwadar on the Indian Ocean is being transformed into a major-league operation. It will be linked by road and rail all the way across Pakistan to the Chinese border. The Chinese project also calls for power plants using coal, waterpower, wind and solar to be built around the country, with more highways and railroads, and in several cities, new mass transit systems.
But how to pay for the bill? The new government of one-time cricket star turned Prime Minister Imran Khan has no idea. And by the way, what is the bill? If the government knows, it isn’t saying, but everyone agrees it’s going up.
That’s what happened in the Maldives. At least that’s what the finance minister of the new government – the one that did NOT make the deal with China to build roads and bridges and a hospital – says. He says everything was overpriced and that the hospital will wind up costing three times what a competitor had bid. But, the new finance minister admitted, what the old government did cannot be undone.
That seems to be the case for Pakistan. President Khan went to Beijing to beg for adjustments to Pakistan’s long-term obligations to China. The consensus seems to be, he got nowhere. A deal, Xi Jinping indicated, is a deal.
But this is not just a big deal for poor Pakistan. All the projects there are part of an even bigger deal China’s Belt and Road project, to recreate the old Silk Road system in 21st century clothing. President Xi sells it has a development boom for the mega-region from Azerbaijan to Pakistan, but critics note all the Belts and Roads and the money lent to build them will return to China, with interest.
The port of Gwadar is located in Baluchistan, the very poor, but resource-rich state in southwestern Pakistan. Critics abound here where those rail and road links back to China must cross for hundreds of vulnerable miles. They say Pakistan is not only being ripped off by China’s contracts, that Baluchistan is going to have its resources ripped out and shipped out to China with only economic scraps tossed to the locals.
Recently the Chinese consulate in Karachi was attacked by terrorists from the Baluch Liberation Army. Two police officers died. The Baluch group has done this before, but this time the Chinese foreign minister told Pakistan it had to do a better job of protecting Chinese personnel.
Some Pakistani officials blamed it all on India.
If that sounds lame, U.S. officials continue to blame Pakistan for America’s 17-year failure to defeat the Taliban in Afghanistan.
The Pakistani foreign ministry proudly leaked a letter recently sent by President Trump. It was polite and said if Pakistan could help bring the Taliban to the peace table, relations between Washington and Islamabad could be good again.
Shortly after the leak, a U.S. government source offered a correction: The letter may have been polite, but its message was blunt – bring the Taliban to peace or Pakistan is dead to us. Dead to the U.S. and deep in debt to China. You think you have problems, think about Imran Khan.
Kathy Gannon is a journalist for the Associated Press, who was attacked and wounded while reporting from Afghanistan. Her colleague, Anja Niedringhaus, was mortally wounded. Gannon has received extensive coverage as she struggled to recover from her wounds and return to war reporting.
Gannon was born in Timmins, Ontario. In 2002 she won the International Women’s Media Foundation Courage in Journalism award. In 2003 she was awarded a Edward R. Murrow fellowship from the Council on Foreign Relations.
Gannon is the author of I is for Infidel: From Holy War to Holy Terror in Afghanistan. She was the 2015 recipient of the McGill Medal for Journalistic Courage from the Grady College of Journalism and Mass Communication.
Gannon had spent 18 years, reporting from Afghanistan prior to her attack, and was the Associated Press‘s regional chief.