Pakistani Economic Stress Watch

[RamaT]

So can you tell me how fast the unmeasured parts of the economy grew?
<snip>
This is as good a source as I have found, if you have better I'd be very appreciative if you could point me to it.

however large the black/rural economy is.. 10%, 30%, 50%, it's not going to grow at large rates without major industrialization and other modern inputs.. and those can be tracked.

You have answered your own question.

This statement makes no sense, instead of trying to come off as a wise sadhu, please elucidate so us mere mortals can follow. You were the one going off on the 'unmeasured economy'.

Unmeasured economy would reflect only in personal well being of some Pakistanis. Otherwise it would reflect in "measurable factors" like literacy, healthcare, infrastructure (electricity/water) and tax collection. None of these has seen much change, but yet it is alleged that the Pakistan "economy has grown" by 9 or 8 or 7.67 or mea culpa per cent.

Here's the serious response..

The fact that GDP growth does not have broad based effects does not mean that growth didn't happen.. it can be limited in certain sectors of the economy and certain geographic regions, in the Pakistani case I'd say the industrialized Punjab regions as that's where the people in power sit.

This is the snarky response..

Yes, I made a mistake reading a chart.. you made a joke to score points off it, congratulations. You still missed reading the first post of this thread as I pointed out so does that mean I scored points too, who's ahead on degree of difficulty?

Now guess where this "growth" has reflected. Pakistan has shown an increase in the defence budget, the number of private TV channels owned and in number of malls built. At the same time there has been a "measurable inflow" of something more that 3 bilion USD per year into Pakistan - of which 1.5 billion is for defence alone.

Now guess how the "economic growth" is happening?

Deficits, loans, remittance inflows and US grants.. this has been brought up before earlier in the thread. Whatever the originator, the GDP has grown.. and the longer the Pakistanis are able to play their game it will continue doing so. The purpose of this thread(according to the first two posts) was to find indicators that this was failing. I haven't seen any yet, please do share if you see such.

Also, I still don't understand why you don't make your points plainly instead of trying to play the magician behind the curtain, a la Oz.


*edited to fix proper quoting.

[shiv]

Deficits, loans, remittance inflows and US grants.. this has been brought up before earlier in the thread. Whatever the originator, the GDP has grown.. and the longer the Pakistanis are able to play their game it will continue doing so. The purpose of this thread(according to the first two posts) was to find indicators that this was failing. I haven't seen any yet, please do share if you see such.

Also, I still don't understand why you don't make your points plainly instead of trying to play the magician behind the curtain, a la Oz.

It's fairly simple. The economy of Pakistan is purported to be growing but Pakistan is not showing signs of economic improvement. You are the person saying that it is not failing.

As far as I can tell Pakistan is failing miserably on many counts.

On the topic of what has been discussed before and what I have or have not said plainly - I (and others) have plainly stated, (even on this thread) that Pakistan's integrity (holding together) is being supported by grants to the army and government while the same army and government do not actually control large parts of their own territory physically and are unable to exert the control needed to extract tax even in the areas they physically control.

Pakistan's "splitting up" is dependent on the survival of the artificially fed "government' - which is mainly the army in a civilian garb. The idea that Pakistan may not split up is as unclear to me as the idea that it will split up. There is a good chance that it might. Are you certain that Pakistan is going to hold together. I put it to you that you are yourself being the magician by claiming that you know something that nobody else does to assert that Pakistan is not heading towards breaking up.

[RamaT]

Deficits, loans, remittance inflows and US grants.. this has been brought up before earlier in the thread. Whatever the originator, the GDP has grown.. and the longer the Pakistanis are able to play their game it will continue doing so. The purpose of this thread(according to the first two posts) was to find indicators that this was failing. I haven't seen any yet, please do share if you see such.

Also, I still don't understand why you don't make your points plainly instead of trying to play the magician behind the curtain, a la Oz.

It's fairly simple. The economy of Pakistan is purported to be growing but Pakistan is not showing signs of economic improvement. You are the person saying that it is not failing.

As far as I can tell Pakistan is failing miserably on many counts.

Failing for the 'aam admi'? sure. But the question is does that weaken the governing apparatus? and if it doesn't then I would argue that until the point that it does it has no real impact in the order of things as they are.

On the topic of what has been discussed before and what I have or have not said plainly - I (and others) have plainly stated, (even on this thread) that Pakistan's integrity (holding together) is being supported by grants to the army and government while the same army and government do not actually control large parts of their own territory physically and are unable to exert the control needed to extract tax even in the areas they physically control.

We agree here, in fact my whole argument as said in my first post to this thread is that with the 3.5 hanging about to help it may not matter that the internal structure is a basket case as they will help it along for their own ends.

Pakistan's "splitting up" is dependent on the survival of the artificially fed "government' - which is mainly the army in a civilian garb. The idea that Pakistan may not split up is as unclear to me as the idea that it will split up. <snip>

Again, agreed that the artificially fed government is what is keeping this construct moving forward in time.. the point of this thread as articulated in post #1 was that the failure was inevitable. Playing devils advocate, I listed some reasons why this inevitability is not so based on the current geopolitical climate around the Paki state.. see http://forums.bharat-rakshak.com/viewto ... 32#p978232

All you have stated is that either is possible, yes.. but we already know that. Would be happy to discuss the merits of the individual points or where you think my logic is flawed.

<snip>There is a good chance that it might. Are you certain that Pakistan is going to hold together. I put it to you that you are yourself being the magician by claiming that you know something that nobody else does to assert that Pakistan is not heading towards breaking up.

The future is unwritten, Pakistan may or may not break up.. neither of us knows, I am stating my opinion and backing it with specific reasoning, no magic. The fact that there may be more people lined up on one side or the other is also irrelevant, what is relevant(and what I tried to do) was to point out the major forces reinforcing the status quo and base my argument on the fact that currently there is no credible counter to those forces(though I wish there were).

If there are other forces you see that are pushing for Pakistan to fall apart, please identify them and their trend lines. That would further this threads ability to deliver on its goal, to discern which direction Pakistan is tilting.

[shravan]

JUST IN: Islamabad: Saudi Arabia announces 400 million dollar in aid for Pakistan.

[shiv]

Failing for the 'aam admi'? sure. But the question is does that weaken the governing apparatus? and if it doesn't then I would argue that until the point that it does it has no real impact in the order of things as they are.

<snip>

The future is unwritten, Pakistan may or may not break up.. neither of us knows,

I have no argument with this. But if you want my views - it's going to be a long one...

Pakistan is, in my view a failed state which has been kept intact by protecting and funding the Pakistan army which is all that matters to keep the state together. I believe that the only entity that can exert some force to claim a hold on territory in Pakistan's NWFP and Baluchistan is the Pakistan army. But there are a few points to note here (in my view)

1) The Pakistan army is supported mainly by the US. The Chinese role is not significant in keeping Pakistan intact. The Chinese role is mainly in arming Pakistan against India and not in helping the army combat a civil war that it is facing.

2) Even with US help the Pakistan army has lost control over North Waziristan, areas of Baluchistan and some other parts of NWFP. The Pakistan army, for instance is unable to provide the level of security needed for infrastructure projects in Gwadar. It is possibly a white lie even for me to say that Pakistan "does not control" xyz areas in the sense that Pakistan has never controlled them but has always existed in a state of uneasy peace.
As I see it, the meaning of all "government" is a protection racket. Government collects tax, provides security (by law enforcement) and supports social development like roads, water and power. A fundamental issue in these "uncontrolled areas" of Pakistan is that the Pakistani "government" - be it army or civilian have never managed to enforce tax collection or their own laws. These areas have been independent for all practical purposes.

3) In addition to these lacunae and "supported" governance - the Pakistani government (and army) are unable to enforce the most fundamental requirement of all government anywhere at any time in history - i.e the ability to collect tax to fund government. This is not happening in even the core areas of Pakistan.

4) Karachi the only functioning port is essentially out of control. "Control" of Karachi is possible only in a military campaign - but it makes more sense for the Pakistani government to keep the current balance of power in Karachi without forcing change.

What I am trying to say here is that Pakistan is an agglomeration of feudal estates that are loosely controlled by alternately cooperating and alternating forces of which the Pakistani army is the most powerful and influential force that has acquired for itself (and kept) the reputation of being the "ruling party" of a coherent nation state.

This is a situation that has gradually become worse since 1971 up until which time Pakistan seemed to be a proper functioning nation state at least in its ability to give the appearance of governing the whole land. The splitting away of Bangladesh was a huge indicator of dysfunction in governance. But the Pakistani army has continuously received infusions of cash since then. if things were not so bad in the 1971-1973 period, what has changed now? Mainly population and the growth of Islamism. Pakistan had only two forces in the past - one a collection of feudals who purported to support "democracy" and Pakistani politics and the other was the army. Islam has come up as a third force and with a virtual doubling of the population in the last 40 years, the islamists have a far larger population to entice and "play" with. And that has what has led to the virtual breaking away of parts of Pakistan. Pakistan set up for Islam, is now fighting Islam.

The question is - can control of Pakistan by just funding the army last forever? A lot of "experts" including the US do not seem to think so. 180 million people (in 2010, more later) have to find some way of supporting themselves. This is not happening. Even the US cannot provide them all with sustenance the way it provides for the army. The "economic growth" as indicated by figures reflect periods of external aid - not a real growth in industrialization or exports. The rate of growth of population appears to be outstripping the rate at which they can be provided for leading to chronic poverty. Can this last for 10 years more or 50 years more or 100 years more without massive restructuring of Pakistan? Nobody knows. Everyone is predicting failure and solutions to avoid that failure.

That leaves me with the last two questions:
1) What are the "solutions" that are being suggested to Pakistan?
2) What will be the nature of failure if Pakistan fails to follow those solutions.

1) Solutions: Make peace with India. Open up trade. This is essentially the only way out
2) What will be the nature of "failure" of Pakistan: Chronic state of civil war, decline of human development parameters, burgeoning population, mass migration, famines and strife spreading to neighboring states like fghanistna and India. if you notice this is already happening.

If the US stops supporting the Pakistan army - this is bound to get worse. Unless Pakistan makes peace with India. Arms and funds to the army will not make Pakistan succeed. In the long term, ONLY economic integration with India will work. Failing that we are only going to see more and more of what we have seen in the last 10 years. The future, in my view, is here. Pakistan is already in a state of failure.

[jagga]

i've met some middle class paquis in europe who are well educated (on paper) and have emigrated since there are no jobs back home - most were quite bitter and hopeless about prospects of decent employment

+1
During my discussions with Pure's, I have also found them quite hopeless and bitter.Recently one of them been to India (Company sent him for some asignment).After the visit, he told me that "India is atleast 15 years ahead of pakistan but poverty in India is many times more than pakistan" (I tried to understand the Lahori Logic behind this but I just replied with 'OK'). I didnt argue with him on this because he himself was doing lot of pakistani bashing. I didnt want to stop/interupt him .

And,This other pure told me since independence all the power is under only few pakistani families. He was quite bitter as well.
One thing I keep hearing from them is,If we had same opportunities as India in pakistan we will prefer working in pakistan.

[Pranav]

(I tried to understand the Lahori Logic behind this but I just replied with 'OK'). I didnt argue with him on this because he himself was doing lot of pakistani bashing. I didnt want to stop/interupt him .

[SureshP]

Pakistan to receive $1.4b in aid


ISLAMABAD:
The second day of the Pakistan Development Forum meeting on Monday saw a total of $1.4billion in pledges from the United States, Japan and Saudi Arabia.

US special envoy for Pakistan and Afghanistan Richard Holbrooke announced a release of $500 million under the Kerry Luger Bill, which will impact and benefit flood victims in Pakistan immediately.

Japan also announced $500 million, $233 million in soft loans for rehabilitation of roads and bridges and $267 million to international organisations, for the development of Pakistan’s flood affected areas, while Saudi Arabia announced $400 million in aid.


The second day focused on the sustainable economic development of the country.

Finance Minister Doctor Abdul Hafeez Sheikh chaired the session on growth and sectoral reforms.

Vice presidents of the Asian Development Bank and World Bank and the assistant director of the IMF also attended the session.

Finance Secretary, Salman Siddiq claimed the government has cut current expenditures by around Rs20 billion, while power subsidy has been reduced from Rs256 billion to Rs66 billion. He said fiscal deficit will remain at Rs361 billion for the year 2010-11, and that the role of TCP in importing sugar is being abolished.

Governor of the State Bank of Pakistan, Hafiz Kardar said inflation is expected to exceed initial estimates of 9.5 % to 14.5 %.

http://tribune.com.pk/story/77663/japan ... ch-in-aid/

[Lalmohan]

as we know pledges >> actual received aid, almost 70:30 in most cases

[harbans]

Paki's really have no money at all. Khatm, khalaas. I just wonder how they keep their Govt machinery running. US keeps their Army up and on plus the fauj are big on the civilian industry side making soap, detergent, brooms, shoes to running madrassa's. There's really not much scope for it's citizens other than to get Canadian visa's or come to K or Mumbai. Every 10 years or so the whole country goes bankrupt. This has been happening last 6 decades. If one tries to stabilize them through giving money they will arm themselves and the lashkars to the teeth and either it's Army or it's Lashkar will try and blow itself up on India on the borders or inside. It's high time the world realized this is one artificial nation state that needs some slicing.

(I tried to understand the Lahori Logic behind this but I just replied with 'OK'). I didnt argue with him on this because he himself was doing lot of pakistani bashing. I didnt want to stop/interupt him .

Strikes a cord..well done, must not waste too much energee on a Paki

[jagga]

Harbans ji, I agree with you but may be not my cousin. We went to this corner shop. Couple of pakjabis were already there in the shop. We started having a small chat. One pure went like this, Dekho Pajji India should not have so many consulate at Af-Pak border. My cousin's exact words: Behn***d tu jakey dekhya ki? (translation: Sister F****R Did you go there and saw it yourself)
I looked at the face of pure's, It made my day

[sanjaykumar]

Hey Jagga, we need your cousin in external affairs.

[Pulikeshi]

Harbans ji, I agree with you but may be not my cousin. We went to this corner shop. Couple of pakjabis were already there in the shop. We started having a small chat. One pure went like this, Dekho Pajji India should not have so many consulate at Af-Pak border. My cousin's exact words: Behn***d tu jakey dekhya ki? (translation: Sister F****R Did you go there and saw it yourself)
I looked at the face of pure's, It made my day

Wish there was a picture or a video - Thanks for making my day!

[Prem]

US monitoring corruption in Pakistan, says Holbrooke
http://www.thepakistaninewspaper.com/ne ... p?id=18375
ISLAMABAD:, Nov 15 (Online): United States Special Envoy for Afghanistan and Pakistan, Richard Holbrooke has said that efforts being made for good governance in Pakistan adding that US has reservations on corruption in country and we are monitoring it.In an exclusive chat with a private TV channel, Holbrooke said the US has its reservations on growing corruption in the country. "We are closely monitoring corruption in Pakistan", he said. He said we want that the aid given to Pakistan is being utilized transparently ( Does this kaffir not know that islam forbid corruption and Pakistan Is Islamist Desh PIID )dont du.He said that we know the recent floods played havoc in Pakistan and that the United States will provide US$ 500 million to Pakistan under Kerry-Lugar Bill.Holbrooke said Pakistan Army chief Gen. Ashfaque Pervez Kayani will take decision about operation in North Waziristan. A large part of Pakistan military has been engaged in the war against terrorism, he said. He denied any US pressure for launching operation in Waziristan.
Replying a question the US envoy for Pakistan and Afghanistan said that the permanent membership of the UN Security Council for India is difficult.He said the US wants to keep its troops in Afghanistan for next four ye

[Kamboja]

If I may pose a question -

Assuming that Pakistani economic conditions will continue to deteriorate from now until some future point where governance at a national level breaks down.

In that case, imagine a graph of TSPA's 'power' (some measure of wherewithal) plotted vs. Pakistani economy -- what is the shape of that graph? Suppose the economy deteriorates in a straight line -- does this mean that concurrently, TSPA's 'wherewithal' will decline in a parallel straight line? Or will TSPA simply take a larger and larger share of a shrinking economic pie to keep itself running until this is no longer feasible, at which point we would see a collapse of governance as well as implosion of TSPA?

In the latter scenario TSPA's 'power' curve would be flat (or would even rise) while the economic line steadily drops, until the point where the economy hits 'zero', the x-axis; then the TSPA power curve would plummet almost vertically to zero as well.

It seems to me that the two scenarios - TSPA power mirroring the Paki economy in a long, slow deterioration, as opposed to maintaining it's current level until an overnight implosion - will have very different implications for India.

[Prem]

Govt’s domestic borrowing reaches Rs 6 trillion
ISLAMABAD: State Bank Governor Shahid Kardar on Monday informed the donor community that government borrowing from the banking sector has reached 56 percent or Rs 6 trillion, putting pressure on the exchange rate and resulting in an increase in inflation. Kardar told the Pakistan Development Forum that the Finance Ministry had piloted an amended SBP Act through the National Assembly, limiting government borrowing from the SBP to only 10 percent of previous fiscal revenues.

http://www.dailytimes.com.pk/default.as ... 2010_pg1_2

[Prem]

A Poak with Takiya Thinking Tope

Debt write-off to have serious consequences: Hafeez Shaikh
ISLAMABAD: Finance Minister Dr Abdul Hafeez Shaikh on Monday said that seeking debt write-off was a serious issue, which would have great consequences for the country’s future.“Being a sovereign nation we ought to fulfill our commitments,” the finance minister said while addressing the Pakistan Development Forum (PDF) session.Shaikh said that most of the foreign debts were obtained from multilateral agencies like the International Monetary Fund, World Bank, Asian Development Bank and Islamic Development Bank, and Pakistan had made commitments to these institutions while taking the loans.“Debt write-off has not one-dimensional aspect, it is a serious issue with great consequences,” the minister said, adding that seeking loans write-off would also affect raising capital from financial markets.He said the PDF event was to communicate with the world and to apprise them about the challenges the country was facing in the wake of the worst ever floods the country witnessed, adding the forum was not about getting pledges or debt waivers

http://www.dailytimes.com.pk/default.as ... 2010_pg1_5

[Brad Goodman]

Pakistan to cut expenses by Rs 295bn

ISLAMABAD: The Finance Ministry on Monday presented the revised budgetary framework 2010-11 before the donor community, under which the federal and provincial governments would place a cut of Rs 295 billion on their expenditures and generate additional revenues by Rs 66 billion with total savings of Rs 361 billion to ensure containing of consolidated budget deficit at 4.7 percent of the GDP.

Now how is that possible if defense expenditure stays same or rather goes up.

[Ambar]

That leaves me with the last two questions:
1) What are the "solutions" that are being suggested to Pakistan?
2) What will be the nature of failure if Pakistan fails to follow those solutions.

1) Solutions: Make peace with India. Open up trade. This is essentially the only way out
2) What will be the nature of "failure" of Pakistan: Chronic state of civil war, decline of human development parameters, burgeoning population, mass migration, famines and strife spreading to neighboring states like fghanistna and India. if you notice this is already happening.

If the US stops supporting the Pakistan army - this is bound to get worse. Unless Pakistan makes peace with India. Arms and funds to the army will not make Pakistan succeed. In the long term, ONLY economic integration with India will work. Failing that we are only going to see more and more of what we have seen in the last 10 years. The future, in my view, is here. Pakistan is already in a state of failure.

The best medicine for Pakistan's chronic ailments is to dismantle the concept of 'Pakistan'. Sindh has a long history of being a center of thriving businesses, Frontier provinces were self-sufficient and peace aspiring,Baluchistan is rich in minerals and Punjab is rich with militants both in uniform and without it.

The downward pressure is because of the Punjabi feudal + Predominantly punjabi army nexus that has held industrious folks (Whatever be their number) hostage. The day free money from Uncle Sam stops,so will the money from ADB,WB,IMF,EU and Japan. China will never try to sustain a country of 180m,instead they'll grab strategically important pieces of real-estate and leave the rest to dogs.

As long as the Pakjabis dominate the day to day running of that septic pool, it will continue to burn.

One of the members asked a question about how they could sustain the govt machinery despite all the woes? The answer is simple : Money printing. This is no different to what military dictators in Africa and South American banana republics are doing/have done in the past. Damn with the inflation,lets atleast keep the baton wielders happy by throwing sums of nominally high denominations is their economic policy.The champagne will stop flowing when the dollar tap closes.

[shiv]

One of the members asked a question about how they could sustain the govt machinery despite all the woes? The answer is simple : Money printing. This is no different to what military dictators in Africa and South American banana republics are doing/have done in the past. Damn with the inflation,lets atleast keep the baton wielders happy by throwing sums of nominally high denominations is their economic policy.The champagne will stop flowing when the dollar tap closes.

Ironically Ambar - I suspect the US has also done just that - so it gets easy to feed Pakistan.

I don't foresee the dollar tap closing outright. The US is "promising to stay engaged" with Pakistan. But as I see it the only thing that can stabilize Pakistan in the long term is peace with India. But the Paki army survives on a hyped up "India threat". The US will have to make a call on supporting the Paki army forever and perpetuating rivalry with India or gradually clamping down on the freedoms that the Pakistan army has in this regard. The latter choice will make India more powerful - but the US will have to swallow that.

Alternatively it is a chronically failed Pakistan and India will just have to firewall the country and keep fighting terror as we have done for two decades, until something new happens.

[Ambar]

One of the members asked a question about how they could sustain the govt machinery despite all the woes? The answer is simple : Money printing. This is no different to what military dictators in Africa and South American banana republics are doing/have done in the past. Damn with the inflation,lets atleast keep the baton wielders happy by throwing sums of nominally high denominations is their economic policy.The champagne will stop flowing when the dollar tap closes.

Ironically Ambar - I suspect the US has also done just that - so it gets easy to feed Pakistan.

I don't foresee the dollar tap closing outright. The US is "promising to stay engaged" with Pakistan. But as I see it the only thing that can stabilize Pakistan in the long term is peace with India. But the Paki army survives on a hyped up "India threat". The US will have to make a call on supporting the Paki army forever and perpetuating rivalry with India or gradually clamping down on the freedoms that the Pakistan army has in this regard. The latter choice will make India more powerful - but the US will have to swallow that.

Alternatively it is a chronically failed Pakistan and India will just have to firewall the country and keep fighting terror as we have done for two decades, until something new happens.

Doc, at a certain point it will be unsustainable for US to go on wild-goose hunt in faraway places.The current financial crisis is the beginning of the end to dollar's global hegemony, and when the 'world's currency' status goes away,so will their stomach to keep zombie countries alive.

The next decade in my opinion will be the most important decade in this era. We might see the torch of global dominance being passed onto Panda from US. US will then have to worry about protecting its businesses than protecting its 'business of war'.That's when the tap will close,no more 5 billion $/year gifts to nuttyvilles like Pak

A runaway inflation and massive devaluation will ensure that store shelves go empty overnight an that'll what cause the screws to come loose in Pakistan.And that IMHO will be more efficient than a hundred TTPs.

[ramana]

Thats why MMS quipped QE2 is good.

[svinayak]

The next decade in my opinion will be the most important decade in this era. We might see the torch of global dominance being passed onto Panda from US. US will then have to worry about protecting its businesses than protecting its 'business of war'.

THis is all false. US will be still pre dominant power for the next 25 years and even for next 50 years.

[amit]

^^^^^^^^

Just to add to Ambar's post, the cost of propping up the Pakistan State/Army to counter India is/will go(ing) up exponentially.

Look at it from this viewpoint. Suppose the Pak Army was given the same kind of money (in dollar terms) that it has got over the past few years in the early 1990s. They would have had a better equipped Armed force than India during the same period and would have gone to war to take Kashmir and it would have been a hard call on India's part to stop it.

Now the same amount of money is barely keeping the Pak Armed forces equipped enough to fight a few days war with India.

Over the next five-10 years the cost of doing that will keep going up. And at the same time the US' ability to keep on financing this zombie would be going down. Yes I know the Chinese are there, but I don't see them opening their purse strings the way the US does. Of course its a another matter that they could send their troops into Pakistan.

Ambar is right the next 10 years is crucial and I think the Pakis know that if they are to bring India down they have to do it within this period or else they'll never have the satisfaction of taking India down with them.

[amit]

The next decade in my opinion will be the most important decade in this era. We might see the torch of global dominance being passed onto Panda from US. US will then have to worry about protecting its businesses than protecting its 'business of war'.

THis is all false. US will be still pre dominant power for the next 25 years and even for next 50 years.

You Mean Predominant military power. That is something totally different from what they are today or have been over the past 60 or more years. That is: The Predominant military and economic power.

I think the last bit is about to change. The military part will keep on due to their large military economic complex. But their ability to finance states like Pakistan to counter a rising power like India will become severely limited. That's going to be the game changer.

[amit]

You know I just hope that Poak's $50 billion debt is written off.

Now before you guys jump on me let me explain.

This is a country which has no self-sustaining economy. It does not produce enough to keep growing and so will be forever dependent on foreign help to keep afloat.

In such a situation what happens the day after the debt is written off? Will the Poaks wake up a new leaf, cut corruption, tax the Rapes, cut Army expenditure and generally do what prudent government do to make the country they govern a better place?

I don't think so. They'd be laughing all their way to the banks.

However, the Pakis are unlikely to be able to borrow money after this and since most of the money they owe is from multilateral lending institutions, it will set a precedence for other poor countries if they still continue to get money.

It would be left to the 3.5 friends to keep on pumping money into Poakland. Will they be up to it? I very much doubt it.

That's why their Finance Minister is so shit scared of a debt write off. I just hope they do it!

[abhischekcc]

Sacrificing own Rook to kill the enemy's king eh?

[amit]

Sacrificing own Rook to kill the enemy's king eh?

In chess terminology it would be the Cambridge Springs Defense to Queen's Gambit Declined. Full of traps and can be used to good effect on unsuspecting and overconfident players (that is TFTA players).

Long ago when I used to play I've used it to win a number of interesting games in tournaments.

[abhischekcc]

How did you guys miss this? This is huge:

http://www.telegraphindia.com/1101116/j ... 182686.jsp

Fake notes with Pak ‘stamp’
NISHIT DHOLABHAI
New Delhi, Nov. 15: Recent seizures in Bengal of fake Indian notes printed on official Pakistani currency paper have opened up a new front in New Delhi’s battle to corner Islamabad over terror funding, home ministry sources said.

They said the government would approach an international forum, the Financial Action Task Force (FATF), this week with this “evidence” of Islamabad’s involvement in printing fake Indian notes. Pakistani currency paper is meant only for use by that country’s government to print its own notes.

The FATF is an inter-governmental body that develops policies to combat money-laundering and terror financing, and counts India but not Pakistan among its 34 member countries. A ministry official acknowledged that the FATF had no punitive powers but added that India planned to request the World Bank and the International Monetary Fund to put pressure on Pakistan.

The CBI has arrested seven “petty criminals” from Bengal and seized Rs 1 crore in fake currency that bears the stamp of Pakistani printing machines, sources said. Each such German-made machine costs Rs 14-21 crore, ruling out the possibility of small-time criminals setting up a facility, an official said.

According to the sources, the forensic report on these fake notes says: “Use of similar security fibre, printing process and printing pattern indicate the notes are printed on highly sophisticated paper.... This cannot have been done by non-state actors.”

The following thoughts come to my mind:

1. Printing fake currency in official paper? How stupid can the pakis get? Its like getting caught with your hands in the cookie jar.

2. If IMF and WB stop or even delay loans to pakistan, it will mean more pressure on US to support that flea infested country.

3. Printing fake currency is causus belli, a just cause of war. Is India building a case for war? I hope so.

4. India is taking this action just after the US prez left the country. This disagreement over munna illustrates how deeply divided Indian and US world views are. I believe that any talks of Indo-US strategic partnership are now effectively over.

5. If point 4. above is correct, then Obama has killed 12 years of rapproachment between India and US. This is the biggest foreign policy disaster in US towards India.

6. The roots of Indian establishment's (which includes, bureaucrats, diplomats, generals and politicians - both serving and retired) angst towards America can be traced to the American perfidy and hypocrisy over David Headley. It is something that US still does not 'get' - that it was their own power politics that 'lost' India. - This is a cultural divide - not something that yankees are good at navigating.

7. Expect more Indian moves that will be anti-American.

8. Remember that US needs India to al least stand aside if it decides to attack Iran. The current situation means a war against Iran is less likely. But Iran was never a foreign policy objective for Obama.

9. The biggest winner is China in all this.

Uncle = -1
Panda = +1
India = -1+1 = 0

[rohiths]

You know I just hope that Poak's $50 billion debt is written off.

Now before you guys jump on me let me explain.

This is a country which has no self-sustaining economy. It does not produce enough to keep growing and so will be forever dependent on foreign help to keep afloat.

In such a situation what happens the day after the debt is written off? Will the Poaks wake up a new leaf, cut corruption, tax the Rapes, cut Army expenditure and generally do what prudent government do to make the country they govern a better place?

I don't think so. They'd be laughing all their way to the banks.

However, the Pakis are unlikely to be able to borrow money after this and since most of the money they owe is from multilateral lending institutions, it will set a precedence for other poor countries if they still continue to get money.

It would be left to the 3.5 friends to keep on pumping money into Poakland. Will they be up to it? I very much doubt it.

That's why their Finance Minister is so shit scared of a debt write off. I just hope they do it!

1. Will Pakistan be able to payoff the debt even if it wants to ? NO
2. Will Pakistan ever get rid of corruption nepotism and violence? NO
3. Will 3.5 friends abandon their support to Pakistan? Maybe, but only after Pakistan army disintegrates
4. Has Pakistan anything productive to sell to the rest of the world? NO
5. Does Pakistan have any significant mineral deposits and oil? Most probably not

Pakistan is presently on financial life support. Once that life support goes, the army will be weakened and eventually wither away.
In my opinion Pakistan is beyond salvage. Foreign aid practically runs Pakistan. Once it is gone, it will be back to the stone age for them. (or their golden age )

[shiv]

During my discussions with Pure's, I have also found them quite hopeless and bitter.Recently one of them been to India (Company sent him for some asignment).After the visit, he told me that "India is atleast 15 years ahead of pakistan but poverty in India is many times more than pakistan" (I tried to understand the Lahori Logic behind this but I just replied with 'OK'). I didnt argue with him on this because he himself was doing lot of pakistani bashing. I didnt want to stop/interupt him .

Still it's worth keeping a quick repartee for these guys on the lines of "..yes but India's middle class is twice the size of Pakistan's entire population"

[shiv]

If I may pose a question -

Assuming that Pakistani economic conditions will continue to deteriorate from now until some future point where governance at a national level breaks down.

In that case, imagine a graph of TSPA's 'power' (some measure of wherewithal) plotted vs. Pakistani economy -- what is the shape of that graph? Suppose the economy deteriorates in a straight line -- does this mean that concurrently, TSPA's 'wherewithal' will decline in a parallel straight line? Or will TSPA simply take a larger and larger share of a shrinking economic pie to keep itself running until this is no longer feasible, at which point we would see a collapse of governance as well as implosion of TSPA?

In the latter scenario TSPA's 'power' curve would be flat (or would even rise) while the economic line steadily drops, until the point where the economy hits 'zero', the x-axis; then the TSPA power curve would plummet almost vertically to zero as well.

It seems to me that the two scenarios - TSPA power mirroring the Paki economy in a long, slow deterioration, as opposed to maintaining it's current level until an overnight implosion - will have very different implications for India.

Interesting question.

My guess is that the TSPA will "simply take a larger and larger share of a shrinking economic pie to keep itself running until this is no longer feasible"

But I don't think armies "just fold up". Armies are packed with leadership material and men ready to fight. There may be some kind of revolt in the army before any collapse comes. The army should be able to see loss of power and funds long before it is evident to others, and any change of course or revolt will happen long before a "collapse".

One possibility is that some middle ranks in the army will see the wisdom of not getting into an open ended competition with India while funds dwindle and the country sinks into civil war. After all the same army is also deployed for the civil war and those cadres will have a different view of reality.

So it might transpire that the army will grab more and more resources until things start looking bad and then do a course correction. A "course correction" for the Paki army involving dropping India as a threat may actually cause a revolt - but the revolt may come in the form of army units moving over and aligning with anti-India Islamist factions. But those groups will be doomed in the long run. Everyone is against them.

I suspect all this has been gamed out. Nukes are the only wild card here. As long as those nukes are safe teh actual events can all be handled.

However the "best outcome" may be - to quote your words:" TSPA power mirroring the Paki economy in a long, slow deterioration" and eventually positioning itself as secondary to a futire civilian leadership.

[RamaT]

Failing for the 'aam admi'? sure. But the question is does that weaken the governing apparatus? and if it doesn't then I would argue that until the point that it does it has no real impact in the order of things as they are.

<snip>

The future is unwritten, Pakistan may or may not break up.. neither of us knows,

I have no argument with this. But if you want my views - it's going to be a long one...

Pakistan is, in my view a failed state which has been kept intact by protecting and funding the Pakistan army which is all that matters to keep the state together. I believe that the only entity that can exert some force to claim a hold on territory in Pakistan's NWFP and Baluchistan is the Pakistan army. But there are a few points to note here (in my view)

I think the root of our disagreement is differing definitions of 'failure'. In my mind failure occurs when the governing structure falls apart, i.e. USSR. Now the USSR was failing before it failed, but it didn't 'fail' until the degree and rate of decline went so far that the government disbanded, internally in their case, but can also occur via force as many other times in history.

So, the Pakistani state may be failing or in imminent danger of failure but so far it has not 'failed', when there are 4 other 'stans' standing in its place or when India/China have annexed mass amounts of their land and become completely strategically irrelevant then they will have failed.

As an aside, maybe it might be better to call them a 'Zombie' state to reflect this status.. they don't know they're dead yet.

1) The Pakistan army is supported mainly by the US. The Chinese role is not significant in keeping Pakistan intact. The Chinese role is mainly in arming Pakistan against India and not in helping the army combat a civil war that it is facing.

I agree with you that this is the current situation, see below in detail answer to your other question why this may not be so in the future. Also, I make the point that the current situation, whatever it is, has sustained their power structure for the past decade. When the US lost interest in the '90s is when they were really having problems as they didn't have a more powerful client whose scraps to live off.

<snip>

What I am trying to say here is that Pakistan is an agglomeration of feudal estates that are loosely controlled by alternately cooperating and alternating forces of which the Pakistani army is the most powerful and influential force that has acquired for itself (and kept) the reputation of being the "ruling party" of a coherent nation state.

Yes, and they control the diplomacy foreign policy and access to their land in the larger sense. The fact that their land is so strategically located is what gives them some semblance of power. The whole point is this set of ruling elites have been able to further their agenda while claiming to represent the 'Pakistani state' and until there is such a large change that this core structure loses control, they have not failed.

<snip>

That leaves me with the last two questions:
1) What are the "solutions" that are being suggested to Pakistan?
2) What will be the nature of failure if Pakistan fails to follow those solutions.

1) Solutions: Make peace with India. Open up trade. This is essentially the only way out

That is the sane way out, for the mutual betterment of themselves, their countrymen and India. But, this is not the only 'way out'.. there is also a 'way in'. The elites have shown over the past 50 years that they are able to figure out ways to be 'useful' to larger powers so that they can get what they need to perpetuate their system. There are ways they can do so in the future and they are exploring them so they can lumber onward.

1. Extract as much $$ from US as possible currently, simultaneously get US to help develop their economy(additionally helping the elites) and weaken those that don't accept their hegemony over the Paki landmass.

2. Court China as a hedge against too much US influence, and present themselves as a thorn to India. This is of some interest to China but not enough to get massive $$ and the Pakis realize that. So, they are trying to make China dependent on them in some deep way.

Two strategies for China:

A. Oil shipments through Arabian sea ports through Karokaram and into China. If this gets established then it changes the game hugely for China and its economy and they will be vested in maintaining the current order. Just think of the money and time the Chinese would save by not having to ship oil around India, by giving the Pakis a few % it will completely alter their budget situation. If you think this isn't a big deal just think how many wars US has had for oil, the Chinese will be the same once that link is built, they will not want to give it up and will pay.

B. The Chinese spent some $11 billion dollars in developing a copper mine in Peru, half way around the planet. They need industrial metals(copper, iron, etc) badly, for another 15 years at least. If the recent chirping of the Afghani mineral regions extending through Pakistan have any merit then that's $500 billion worth of metals under their feet. The Chinese will pay for these handsomely(much cheaper than shipping from Peru), and all the contracts will go to the elite/army.

2) What will be the nature of "failure" of Pakistan: Chronic state of civil war, decline of human development parameters, burgeoning population, mass migration, famines and strife spreading to neighboring states like fghanistna and India. if you notice this is already happening.

At the margins, the question is will it escalate to the point where it will be an existential threat to the system setup by the elites there. Until it becomes so, it is not much more than a nuisance to them.

If the US stops supporting the Pakistan army - this is bound to get worse. Unless Pakistan makes peace with India. Arms and funds to the army will not make Pakistan succeed. In the long term, ONLY economic integration with India will work. Failing that we are only going to see more and more of what we have seen in the last 10 years. The future, in my view, is here. Pakistan is already in a state of failure.

Their nooks prevent forcible takeover and the only problem they have to solve is how to acquire an economically generous and geopolitically influential benefactor. If they are able to find another 'paying client' in China, it doesn't matter what the US does. In fact it might even strengthen them internally and give them time to bleed some of that Islamist pressure if they can overtly tell the US to take a flying leap. Once they have a secure and paying relationship with the Chinese this becomes more plausible.

[RamaT]

In my messages earlier I pointed to two strategies the Pakistanis are exploring to join more deeply with the Chinese:

1. Oil shipped from the Arabian sea through them to China.
2. Mineral resource mining such as iron, copper, etc.

How can the above be countered by India?

Are there other angles that the Pakis are working with regards to China?

[Lalmohan]

why aren't the chinese pushing for more oil from iran?
what is the viability of an iran-xinkiang pipeline?

[RamaT]

why aren't the chinese pushing for more oil from iran?
what is the viability of an iran-xinkiang pipeline?

Because Pakistan is closer? Once that route is secure then pipelines can be added. Need to lay the foundation before building a house.

[Lalmohan]

but longer term, iran is much more stable than pakistan
what makes china so confident that pakistan will guarantee the flow of oil and goods up into xinkiang?

[Pratyush]

LM/RT

Can the TSP actually make such a promise. Let alone diliver on it. Suppose India and the PRC get into a shooting match. Just how far will the PRC pipline be from the IAF. to be knocked out.

Also, there is not so minor problem of the pipeline having to travese through some of the coldest points of the planet. The raw oil in the pipe will freeze in winter. If it cannot be kept heated. On top of it the problem of pumping oil up through the mountains. The constant threat of landslide/rockslide etc.

You will see that it is not so viable an option.

They will be better off using super tankers if they are serious.

JMT

[shiv]

1. Oil shipped from the Arabian sea through them to China.
2. Mineral resource mining such as iron, copper, etc.

How can the above be countered by India?

Are there other angles that the Pakis are working with regards to China?

I see no practical way in which India can stop this. India can threaten, but India cannot do much without declaring war.

On the bright side I don't see anything of the sort happening as long as the US sits in Pakistan

Also on the bright side I don't see Pakistan providing the required security for China to pull this off - but let me make a separate (and repeat) post on this below.

[shiv]

Cross post, originally made at the link below
http://forums.bharat-rakshak.com/viewto ... na#p970928

Gwadar port is an interesting study of ChiniPak on and off lovemaking

From 2005
http://www.asianresearch.org/articles/2528.html

The convergence of Sino-Pakistani strategic interests has put the port project onto a fast track to its early completion. In three years since its inauguration, the first phase of the project is already complete with three functioning berths. The Chinese Premier Wen Jiabao will be on hand to mark the completion of this phase in March this year. Although the total cost of the project is estimated at $1.16 billion USD, China pitched in $198 million and Pakistan $50 million to finance the first phase. China also has invested another $200 million into building a coastal highway that will connect the Gwadar port with Karachi. The second phase, which will cost $526 million, will feature the construction of 9 more berths and terminals and will also be financed by China.

From 2006
http://www.dawn.com/2006/07/05/top1.htm

President Gen Pervez Musharraf has said that the Karakoram Highway will be linked to the southern Gwadar port in Balochistan. He was addressing a ceremony marking the inauguration of a dry port in the border town of Sust, 200km north of Gilgit, on Tuesday.

The dry port, a Pakistan-China joint venture, was built in 2,004 at a cost of Rs90m(PakRupees) to streamline border trade between the two countries.
<snip>
We are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the highway, development of railway link and gas and oil pipeline linkages and even fibre optic connectivity along the highway under one project.�

The president said the highway had been hailed as the eighth wonder of the world and added: �We are capable of creating ninth and 10th wonders in the form of railway and (oil/gas) pipeline linkages between Pakistan and China.�

From 2007
http://www.dawn.com/2007/02/02/top1.htm

The Economic Coordination Committee (ECC) of the cabinet on Thursday granted 40-year tax exemptions to the proposed operators of Gwadar port, making it a virtual tax-free port to the extent of its development and operations.
<snip>
He said the list of tax exemptions was long. Some of the major tax incentives included complete exemption from corporate income tax for 20 years, duty exemption on import of material and equipment for construction and operations of Gwadar Power and Development Free Economic Zone for 40 years and duty exemption for shipping, bunker oil for Gwadar port for 40 years, he said, adding that the port operators would also be exempted from all local and provincial taxes for 20 years.

"They will make Pakistan an economic hub," said Dr Ashfaq when asked what the port operators would give in return. He agreed that it would be an �almost tax-free port�.

He said the ECC approved a five-year policy for the automobile industry allowing a gradual tariff reduction on import of cars and light commercial vehicles by up to five per cent to produce about 500,000 vehicles by 2011-12.

From 2009
http://www.atimes.com/atimes/South_Asia/KH14Df02.html

China calls halt to Gwadar refinery
By Syed Fazl-e-Haider

QUETTA, Pakistan - Cash-strapped Pakistan, which has had to accept more than US$11 billion from the International Monetary Fund, is threatened with the loss of a huge foreign investment
after China said it had shelved its multi-billion dollar coastal oil refinery project at Gwadar, in southwest Balochistan province.

China has formally informed the Pakistani authorities that the refinery project has been deleted from the list of financial development plans agreed with Islamabad for the financial year ending next June as there has been no progress on the project, according to a Business Recorder report.

The decision, which follows suspension in January by the United Arab Emirates state-run International Petroleum Investment Company (IPIC) of work on the $5 billion Khalifa Coastal Refinery (KCR) project at Hub, also in Balochistan, creates uncertainty about the future of the planned $12.5 billion mega oil city project in Gwadar, of which the refinery there was to be a key element.

It also casts doubt over plans for a corridor carrying energy pipelines and refinery products the length of Pakistan from Gwadar onto western China.

From 2010
http://news.dawn.com/wps/wcm/connect/da ... n-told-860

About 100 acres of land in the Gwadar industrial estate earmarked for Chinese investment still remains underdeveloped.Minister of State for Industries and Production Ayatullah Durrani told a delegation of the China-Kashgar government here on Monday that Chinese investments were awaited by the government.

It is believed that the reluctance of Chinese investors to come to Gwadar is because of the law and order situation, energy crisis and inadequate facilities.