How ready is Pakistan for a crisis of the century?

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— Geo.tv

The IMF describes the current global debt (government and private sector) of over 330 trillion US dollars as dangerously high. Global debt was $226 trillion in 2020, the largest single-year increase since World War II. Corona and Ukraine are the main causes and the situation continues to deteriorate.

The US Department of Defense has announced the largest $1 billion package for Ukraine’s heavy armaments. NATO chiefs say war in Ukraine could go on for years. A G7 summit is hosted by Germany; A NATO summit is also planned and the EU moves towards a blockade of Russian oil and gas. So far, over 7,000 sanctions have been imposed on Russia. Amidst all this, Chinese President Xi Jingping called the Russian President on Tuesday to voice full support for Russia’s “sovereignty and security.” The Ukraine crisis seems far from over.

The post-Corona world was already in the worst shape to face an intercontinental conflict. The IMF and World Bank now estimate that 60% of low-income countries are at serious risk of defaulting on debt repayments. According to a recent Bloomberg According to the report, Pakistan is among the top 15 countries. The World Bank has lowered its growth forecast for 2022 from 4% to 2.9% and warned of 1970s-style stagflation.

Shamshad Ahmad, Pakistan’s former foreign minister, believes the world is once again in turmoil because of the longstanding US-Russia rivalry and the pressure the West is putting on Russia by pushing NATO closer to its borders. dr Maleeha Lodhi, Pakistan’s ex-ambassador to the US and UK, believes the international business environment is more tense today compared to previous challenges.

The big power blocs continue to tease each other. Last week, 47 western bloc countries signed a joint statement at the UN Human Rights Council, expressing grave concern over the human rights situation in the Xinjiang Uyghur Autonomous Region. The State Department remains baffled by the 35 countries, including China, South Asia and Middle East countries, that have abstained at the UN from condemning Russia’s aggression in Ukraine.

Although the US government has reduced its budget deficit to US$1.1 trillion from a record US$3.1 trillion in 2021, increases in commodity prices have put unprecedented pressure on the US economy. Inflation in the United States is nearing 9%, a 40-year high, oil prices have surpassed a record $5 a gallon, interest rates rose 0.75% last week (the highest since 1994), and the US bond market is fed up with its worst year on record. This brings President Biden to the Middle East next month to help increase oil production and lower prices, and to persuade countries that have abstained from Russian aggression to take decisive positions.

How well is Pakistan prepared for this crisis of the century? Unfortunately, all sorts of negatives and concerns are voiced in response. These include a change of government and extreme political acrimony; an upcoming leadership change at a world-class institution; the toughest IMF conditions among 14 loan packages since 1980; a budget deficit of almost 10%; and extreme inflationary pressures on the poor, lower and middle classes. One of Pakistan’s top industrialists said last week the country is at risk of default as it lacks Rs 3 trillion in tax revenue and $15-20 billion in foreign exchange. Unfortunately, the disharmony between political parties and other interest groups over the past few years due to overall political management leaves us in the worst condition to deal with this global crisis.

On the outside front, Pakistan was still reeling from the end of a 20-year war in Afghanistan, relations with the new Biden administration were strained, and American attention had shifted to India in South Asia, the Middle East and the Asia-Pacific power struggle with China. Amid the ever-expanding US axis between Israel and India, the United States is increasing pressure on Pakistan to establish diplomatic ties with Israel. Being a long-time close ally of China increases its difficulties. Some of the 35 countries that didn’t vote in the UN vote on Russian aggression benefited from a sharp rise in oil prices, while others, like India, benefited from buying Russian oil at a discount. Pakistan has won the least so far, and in doing so is a state of politics and a freeze on actions.

Shamshad Ahmad, ex-foreign minister, believes Pakistan did the right thing not to get involved as a party in the Ukraine crisis. He added that if world powers advise Pakistan and India to hold a dialogue on Kashmir, why can’t they settle their own disputes like Ukraine? He expressed strong reservations about the role of the UN in resolving conflicts and restoring peace. Regarding the situation in Pakistan, Mr. Shamshad said we must stop waging war on anyone and focus on internal economic development through self-reliance. Mr Shamshad expressed reservations about overthrowing an incumbent government in a strained and fragile world order and advocated immediate elections to restore political stability. He concluded by saying that the country needs a healing process in which everyone should play their due role.

dr Maleeha Lodhi, Pakistan’s ex-Ambassador to the US and UK, shared that Pakistan has faced and overcome even greater challenges in the past. She adds: “What is needed today is political unity and the will to address the structural economic problems in order to avoid financial crises in the future; otherwise, Pakistan will reel from crisis to crisis, which of course affects the country’s national stability and security Has.”

She added that the Pakistani establishment and government are aware of the challenges. Given the scale of local and global challenges, it is imperative that a political and public consensus be forged to address them. She added that partisan interests should be put aside and the former ruling party’s baseless conspiracy claims should be ended.

While we may have one of the best armies and nuclear arsenals, experienced politicians and successful businessmen, the reality is that Pakistan will default on its external financial obligations if our friendly countries withdraw their State Bank of Pakistan deposits and other loans . Our nuclear and other government assets are at unprecedented risk and have long been watched by global sharks.

We have brought the internal power banter to a point where solutions are being sought both at the top and on the street. All those at the forefront of affairs must try to become part of the solution and not the problem. Unilateral legislation without real debate in assemblies is futile. Frantic press conferences with accusations and threats from all political parties should stop. The threats of long marches, excessive force to resolve political disagreements, and abandonment of meetings should be reconsidered. When politicians lower the temperature, social media users may engage in more productive debates than mud fights. In this tense global power game, we should avoid dragging key global actors into local politics beyond what is reasonable. War, pandemic or not, unless we establish and abide by sensible rules of the power game in Pakistan, we will not be able to achieve a self-sufficient and honorable polity. The least everyone involved can do is band together and set out a short- to medium-term framework to solve political and economic problems and inspire hope among the masses. A favorable environment is urgently needed in which the “soft power” of the Pakistani people can create a self-reliant and self-confident Pakistan.

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