Pakistan seeks Saudi Arabia's help to tackle financial crisis

Agencies
October 17, 2018

New Delhi, Oct 17: Pakistan is seeking foreign aid to tackle its sagging economy and Saudi Arabia is one of the most important investors that it needs to get its hands on, opines Arif Rafiq, who authored 'The China-Pakistan Economic Corridor: Barriers and Impact'.

In an article, titled "What Is Saudi Arabia's Grand Plan for Pakistan?", published in The National Interest, Rafiq notes that the first foreign visit of Imran Khan after taking over as Pakistan's Prime Minister was to Saudi Arabia in a bid to woo Riyadh to invest in energy and mining in Pakistan.

"It appears that Islamabad asked Riyadh to park funds close to $10 billion with the State Bank of Pakistan-well before these investments achieve financial close-to shore up Pakistan's forex reserves in the interim," Rafiq wrote in the article published on October 16.

Terming Pakistan's claims and subsequent denials of inviting Saudi Arabia to join the China-Pakistan Economic Border (CPEC) as a strategic partner, as "Islamabad's scramble for dollars", the article states that talks between the two countries on several projects, including CPEC will, however, continue.

Islamabad has put forth five projects including the Reko Diq copper and gold mine in Balochistan, which amounts to hundreds of billions of dollars. However, the author, who is also editor of the CPEC Wire newsletter, pointed out that last year Pakistan lost an arbitration case to the Tethyan Copper Company.

The World Bank's International Center for Settlement of Investment Disputes ruled against Islamabad in relation to the unlawful denial of a mining lease for the Reko Diqproject in 2011. The tribunal is expected to determine Pakistan's liability this year, which might exceed 11 billion US dollar.

With Reko Diq's not-so-strategic location, that is, less than one hundred miles from Pakistan's border with Iran, the mine could be an easy target for the insurgent attacks.

"Resource nationalism is a driver of the ethnic Baloch insurgency, but it also receives support from regional states," Rafiq wrote.

Mentioning the suicide bombing incident by Balochistan Liberation Army, which attacked a convoy transporting Chinese engineers to the Saindak copper and gold mine, Rafiq noted that the attacker used an Iranian vehicle.

"Militants with several Baloch separatist groups combatting the Pakistani state are believed to be in Afghanistan or Iran. Projects linked to the Saudis would become targets in the same way Chinese projects have been over the past fifteen years," the article states.

Islamabad wants to rope in Riyadh for the second set of projects, which includes two government-owned operational regasified liquefied natural gas-fueled power plants in the Punjab province.

"Riyadh reportedly expressed interested in purchasing equity in the plants on a government-to-government basis, but that may not be legally possible. Instead, a Saudi power company, ACWA Power, could take part in open bidding for the plants. Sale of the plants could earn Islamabad much-needed cash, but there are geopolitical complications tied to that sale too. These power plants are fueled by liquified natural gas (LNG) from Qatar. Sale of the plants to a Saudi public or private entity would likely require an alternate source of LNG and could even impact Pakistan's fifteen-year LNG supply contract with Qatar," writes Rafiq.

The third investment project for Saudi Arabia in Pakistan is a Saudi Aramco refinery in Gwadar, the site of a Chinese-operated port and industrial zone. Just like Reko Diq mine, Gwadar shares a close proximity to Iran border.

The article goes on to mention that "Gwadar is a competitor to Iran's Chabahar port, where India will operate a terminal that will be used to bypass Pakistan to access Afghanistan and Central Asia. It is an end node for the China-Pakistan Economic Corridor, which begins in Kashgar, located in China's Xinjiang region. Economic activity and investment in Gwadar have progressed tepidly when compared to other regional upstarts like Duqm in Oman and Khalifa Port in Abu Dhabi, which have received significant inflows from China, with the potential to exceed $10 billion. Investment from a global energy giant like Saudi Aramco would catalyze other investments and boost port activity."

Rafiq also notes that even though a refinery in Gwadar would give the Saudis "an economic foothold in a strategic location" as it is right outside the Strait of Hormuz but close to Persian Gulf shipping lanes, and could lock Pakistan into purchasing Saudi crude, there are several flip sides to this investment.

One of the limitations to Saudis' investment is the memorandum of understanding signed by Saudi Aramco with a consortium of Indian state-owned oil companies for a $44 billion oil refinery and petrochemicals complex in India.

Rafiq also points that the domestic demands of Pakistan will be met if a refinery were to open in Gwadar and it would help Pakistan to save on import bills.

"Whether it's infrastructure development, energy trade, or defence hardware sales, China is ubiquitous across the Middle East and has been an equal opportunity partner to both Iran and its Gulf Arab adversaries. Iran is crucial to China's Silk Road Economic Belt. And the Gulf Arab states, especially the United Arab Emirates, could be critical to its Maritime Silk Road," reiterates Rafiq.

Talking about North-South gas pipeline project for which Pakistan is seeking investment from Saudi Arabia, the author observes, "Pakistan signed a government-to-government agreement with Russia to build the pipeline and supply the LNG. The two countries, however, have not come to agreement on pricing, and Rostec has struggled to find financing for the project, though reports last year indicated that China's Silk Road Fund could finance it. Russia may have difficulty supplying the LNG."

He asserted that Saudi's role in the project remains unclear. But Pakistan has also invited the Arab kingdom's investment in an open bidding for exploration in ten oil and gas blocs.

Noting that fuel makes up one of the most imported commodity in Pakistan, Rafiq says, "Reducing its dependence on imported fuels by ramping up domestic oil and gas exploration is critical for Pakistan to escape its boom-bust cycles that bring it to the IMF's doorstep every few years. Pakistan may actually have enough recoverable natural gas to not only meet domestic demand but also export it."

The article also notes that even though under Crown Prince Mohammed bin Salman's influence, the strategic use of aid and investment has increased, there is an economic basis for Saudi investment in Pakistan.

The article further mentions that the FDI from China has been going up as against going down of net inflows from the Gulf countries. But Iran has not been able to make any investment in Pakistan.

Rafiq opines that, "For Pakistan, there is no escape from geopolitics, even when it comes to issues like connectivity and trade. And that is true in a global sense as well as the United States adopts a tougher posture toward the Belt and Road Initiative, digs deeper into a tariff war with China, and continues to use economic sanctions or lawfare to force Iran to capitulate."

In his article, the author asserted that Pakistan faces strong challenge to address its economic problems. "Calls for Pakistan to become a "normal" state that puts its economic interests above its strategic are outdated, reflecting a view of globalization that is now passe," concluded Arif Rafiq in the piece.

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Agencies
May 30,2020

Washington, May 30: US President Donald Trump on Friday said that America is terminating its relationship with the World Health Organization as he blamed it and China for the deaths and destruction caused by the COVID-19 pandemic across the globe.

Stating that the funding of the WHO would now be diverted to other global public health organisations, Trump announced a series of decisions against China including issuing proclamation to deny entry to certain Chinese nationals and tightening of regulations against Chinese investments in America.

"Because they (WHO) have failed to make the requested and greatly needed reforms, we will be today terminating our relationship with the World Health Organization and redirecting those funds to other worldwide and deserving urgent global public health needs, Trump said.

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Agencies
February 4,2020

The death toll in China's coronavirus rose sharply to 425 with 64 deaths on Monday alone while 3,235 new confirmed cases were reported, taking the number of those infected with the deadly disease to 20,438, Chinese health authorities said on Tuesday.

The 64 people who died on Monday were all from the Hubei province, the epicentre of the virus, China's National Health Commission said.

Also, 3,235 new confirmed cases of novel coronavirus infection were reported, a big increase in a day.

Another 5,072 new suspected cases were reported on Monday, said the commission, adding that 492 patients became seriously ill.

The commission said that 2,788 patients remained in severe condition and 23,214 people were suspected of being infected with the virus, a pointer that it is increasingly turning virulent.

The overall confirmed cases on the Chinese mainland had reached 20,438 by the end of Monday, the commission said, noting that a total of 425 people had died of the disease.

A total of 632 people had been discharged from hospital after recovery, state-run Xinhua news agency reported As the virus spreads from human to human, 221,015 close contacts had been traced, with 171,329 others still under medical observation.

By the end of Monday, 15 confirmed cases had been reported in Hong Kong, eight in the Macao and 10 in Taiwan.

The Philippines reported the first overseas death from the virus on Sunday while 148 cases have been reported from abroad.

India has reported three cases of the coronavirus. All the three patients from Kerala recently returned from the affected Wuhan city.

Currently, 647 Indians and seven Maldivians who have been evacuated from Wuhan and Hubei are in 14-day quarantine at a medical camp in Manesar, near Delhi.

As the virus continued to spread at an alarming rate, Chinese President Xi Jinping on Monday warned officials of punishment if they shirked responsibility in tackling the virus outbreak.

On Monday, China has opened a 1,000-bed hospital built in record nine days in Wuhan city and started trials for new drug to contain the virus and is set to open another 1,300 bed hospital next to it on Wednesday.

The ruling Communist Party of China on Monday held its political bureau meeting presided by President Xi to review the steps being taken on various fronts to halt the spread of the deadly virus.

The outcome of the epidemic prevention and control directly affects people's lives and health, the overall economic and social stability and the country's opening-up, Xi said.

"Those who disobey the unified command or shirk off responsibilities will be punished," Xi was quoted as saying by the state-run Xinhua news agency.

Xi said that the party and government leaders supervising them would also be held accountable in severe cases.

Chinese armament firms, including those building aircraft carrier and military aircraft, have postponed planned work in order to concentrate on controlling the risk of coronavirus, state-run Global Times reported.

Noted Chinese health expert Zhong Nanshan has said that based on the fresh evidence, the novel coronavirus, which is spreading rapidly in China and the world, may reach its peak in the next 10 to 14 days, contrary to earlier estimates of climaxing sooner.

This means that the cases would drastically increase in the next two weeks before slowing down.

Also, China has begun clinical trials to test a drug to treat the patients of the coronavirus which till now has no cure.

Currently, patients are being treated with a combination of antivirals and other measures, as scientists race to find a vaccine.

Some reports said drugs to treat HIV too was being tried to treat the patients.

The experimental antiviral drug, Remdesivir, to be tested in field trials is developed by US-based Gilead Sciences. It is aimed at treating infectious diseases such as Ebola and SARS, South China Morning Post reported.

It was given to the first US patient last week - a 35-year-old man whose condition appeared to improve within a day, it said.

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News Network
April 29,2020

Apr 29: US President Donald Trump doubled down on China for failing to tame the coronavirus at its very origin, saying it has led to 184 countries "going through hell", as several American lawmakers demanded steps to reduce dependence on Beijing for manufacturing and minerals.

Trump has been publicly blaming China for the global spread of the "invisible enemy" and launched an investigation against it. He has also indicated that the US may be looking at "a lot more money" in damages from China than the USD 140 billion being sought by Germany from Beijing for the pandemic.

Leaders of the US, the UK and Germany believe that the deaths and the destruction of the global economy could have been avoided, had China shared the information about the virus in its early phases.

"It's in 184 countries, as you hear me say often. It's hard to believe. It's inconceivable," Trump told reporters at White House Tuesday. "It should have been stopped at the source, which was China. It should have been stopped very much at the source, but it wasn't. And now we have 184 countries going through hell.”

The virus, which originated in China's Wuhan city in mid-November, has killed more than two lakh people and infected over three million globally. The largest number of them are in the US: nearly 59,000 deaths and over one million infections.

The massive outbreak in the US has put Trump under increasing pressure from American lawmakers to decrease US dependence on Beijing and they have also sought compensation from China.

Senator Ted Cruz and his colleagues have urged Defence Secretary Mark Esper and Interior Secretary David Bernhardt to support the development of a fully domestic supply chain of rare earths and other minerals that are critical for manufacturing defence technologies and supporting national security.

“It is clear that our dependence on China for vital rare earths threatens our US manufacturing and defence-industrial base. As the October 2018 Defence Industrial Base Report states: ‘China represents a significant and growing risk to the supply of materials deemed strategic and critical to US national security.' [...] Ensuring a US supply of domestically sourced rare earths will reduce our vulnerability to supply disruptions that poses a grave risk to our military readiness," the Senators wrote.

The US is 100 percent import-dependent for rare earths as well as 13 other metals and minerals on the US Government Critical Minerals List and more than 75 percent import reliant for an additional 10 minerals.

Congressman Brian Mast on Tuesday introduced a legislation to hold China accountable for its "coronavirus deception". The resolution would empower the US to withhold payments on debts owed to China equal to the costs incurred by the US in response to COVID-19.

“China's total lack of transparency and mishandling of the coronavirus outbreak has cost tens of thousands of lives, millions of jobs and left untold economic destruction. Congress must hold China accountable for their cover-up and force them to pay back the taxpayer dollars that have been spent as a result,” Mast said.

Cruz, member of the Senate Foreign Relations Committee, announced his intention to introduce a legislation to cut off Hollywood studios from assistance they receive from the Department of Defence if those studios censor their films for screening in China.

This legislation is part of Sen. Cruz's comprehensive push to combat China's growing influence over what Americans see and hear, which includes legislation targeting information warfare from the Chinese Communist Party across higher education, sports, films, radio broadcasts, and more.

Indian-American Congressman Ami Bera and Congressman Ted S. Yoho, both members of the House Foreign Affairs Committee, will lead a bipartisan virtual Special Order to highlight the importance of US global leadership during the COVID-19 pandemic.

“If we abdicate our place as a leader in global health, there is another country eager to take the reins. China has not been subtle in asserting itself on global health issues, and often not for the benefit of other nations. China's recent coronavirus debacle should be evidence enough that their communist regime cannot be trusted to lead with accountability, transparency, or pragmatism, traits that are essential when fighting widespread disease,” Yoho said.

“As for how China would fare as a global health leader, look no further than the disastrous initial response by the WHO to coronavirus, one that was clearly influenced by Beijing. Information was slow-walked, warnings from nations like Taiwan were ignored at crucial turning points, and cooperation with outside health experts was spurned until it was too late. And it has resulted in the largest public health disaster the world has seen in over a century,” he said.

In an interview to Fox News, Senator Marco Rubio alleged that if China had acted when those warnings were being made, instead of silencing the people that were talking about it, they could have limited the spread.

“So there was no doubt that that was a deliberate decision made on their part. The one way to hold them accountable is to do what we should be doing anyway. That is moving the means of production to become less and less dependent upon them. What you're going to see after this pandemic is that more and more countries are going to prioritize their healthcare manufacturing capabilities and other industries,” he said.

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