How US policy is turning Pakistan into a Chinese colony, thwarting America’s regional ambitions
Adnan Aamir says the US’ decision to block an IMF loan to Pakistan will only push the country more deeply into China’s sphere of influence
Pakistan’s economy is struggling and its remaining reserves of just US$9 billion can only cover the country’s imports for the next two months. Therefore, an IMF bailout is inevitable if Pakistan’s economy is to survive.
Unexpectedly, just five days after Pakistan’s elections, Pompeo opposed an IMF bailout package to Pakistan. He argued that American taxpayer dollars are part of IMF funding and therefore the US government would not allow a bailout package for Pakistan that could be used to repay Chinese creditors or the government of China. This is the first time the US government has openly made a move that is tantamount to attacking Pakistan-China economic cooperation.
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Against this backdrop, Pompeo’s recent statement is a major blow to US-Pakistan relations. This does not bode well for peace and stability in Afghanistan because now Pakistan will not be motivated to cooperate with the US government anymore on the Afghan front.
Given that the US is a major power broker in the IMF, its opposition will effectively thwart a bailout package for Pakistan. The country will have to explore other options to secure the funds needed to stimulate its economy. Unfortunately, there are not many countries or funding organisations that can offer Pakistan a generous financial bailout. Thus, Pakistan would be left with no choice but to ask for help from its all-weather friend – China.
A US$12 billion bailout package from China would substantially increase Pakistan’s debt to China since Chinese loans are already financing CPEC projects. Pakistan’s former finance minister Hafiz Pasha said Pakistan would have to pay as much as US$8.3 billion annually from 2019 onward to service CPEC loans.
The latest bailouts from China will further increase the debt servicing requirements, which will be extremely hard for Pakistan’s struggling economy to meet.
The US decision to block the IMF bailout has effectively put Pakistan on the path to becoming a Chinese economic colony. This will certainly not help the US in increasing its influence in South Asia and Indochina, but will rather immensely increase the influence of China in South Asia.
Adnan Aamir is a journalist and researcher. Follow him on twitter @iAdnanAamir. Email: [email protected]