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Pakistan needs IMF support to breathe again

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Pakistan has been suffering from its worst economic age, where the International Monetary Fund (IMF) has already slashed the growth outlook for the cash-strapped country, forecasting its economic growth 0.5pc this year, down from 6 percent in 2022.

Pakistan has been facing around 27pc inflation this year as per IMF prediction that could harm the country of an over 230 million people.

The global lender also warned that the country will struggle with unemployment this year and also last year’s deadly flood that resulted in the death of 1,739 people, has caused a damage of $30 billion.

To cover the current economic crisis, the coalition government of Pakistan’s Prime Minister Shahbaz Sharif is in talks with the IMF to receive a key tranche of a $6 billion package.

Sharif’s predecessor, Imran Khan, who is now a key opposition, has signed the package in 2019.

On Tuesday morning, Sharif held a telephonic conversation with IMF Managing Director Kristalina Georgieva, and the talks were centered around matters related to the IMF program.

Pakistan hopes to get bailout funds in a day or two

During the conversation, Sharif had expressed hope that the lender would announce a decision pertaining to the release of bailout funds within a day or two, according to local media.

Pakistan’s ninth review by the IMF under the 2019 Extended Fund Facility (EFF) for the release of a $1.2bn tranche is still pending with fewer than 10 days remaining until the program’s expiry on June 30, Dawn reported.

Pakistan was expected to get around $1.2 billion from the lender in October last year, but it has not been preceded and the IMF says Pakistan is not able to meet important prerequisites required for the budget.

The IMF Managing Director Kristalina Georgieva (L) met Pakistani Prime Minister Shehbaz Sharif (R) in Paris (Pakistan Prime Minister’s Office)

Now, when the deadline is about to expire, Pakistan’s primer held back-to-back meetings with Georgieva in Paris last week, to make sure it gets the money to deal with current economic difficulties.

“In connection with the meetings held in Paris, the IMF director general acknowledged efforts by the finance minister and his team for completion of the program,” said a handout released by the Prime Minister’s Office (PMO).

Sharif also reiterated his determination to achieve the goals of improving the economic situation through joint efforts, according to the handout.

Several observations on parts of budget

The IMF had earlier this month brought several eye-brows over Pakistan’s budget for fiscal year 2024. It made it clear that Islamabad has proposed some measures which are against the EFF program’s condition.

Esther Perez Ruiz, IMF representative for Pakistan, had earlier said Pakistan needed to satisfy the IMF on three counts, including the budget for the upcoming fiscal year, before its board will review whether to release the pending tranche, according to Dawn.

Considering the expiry of the program which some days remain, it seems Pakistan has failed to convince the IMF creating fear that the budget would not be materialized this time again.

Meanwhile, the government of Sharif is doing what it can to address IMF’s concerns and said Islamabad is flexible on the budget and expressed readiness to engage with the lender to eventually reach an good-natured solution.

Reportedly, the government of Pakistan last week has brought some changes to the fiscal year’s budget, including fiscal tightening measures dictated by the IMF in a last-ditch effort to secure critical funding, according to Dawn.

Pakistan’s Finance Minister Ishaq Dar had recently said that Pakistan and IMF had detailed negotiations for the last three days as a last effort to complete the pending review.

The changes include Rs215bn additional tax measures, a Rs85bn spending cut, withdrawal of an amnesty on foreign exchange inflows, lifting of import restrictions, a Rs16bn hike in Benazir Income Support Program allocations, and the powers to increase the petroleum levy from Rs50 to Rs60 per litre, Dawn reported.

Almost all irritants between two sides addressed

“Almost all the irritants between the IMF staff and the Ministry of Finance were addressed hours before the finance minister’s wind-up speech,” Dawn quoted an official.

Speaking on condition of anonymity, the official also said that it was now up to the IMF’s mission to line up the precise dates for the lender’s executive board approval and disbursement of funds.

However, he acknowledged that it was not on the calendar until June 30, when the $6.5 billion Extended Fund Facility agreed in 2019 is set to expire.

Pakistan primer Sharif during his visit to France also met with this expatriate community there. During the meeting, Sharif explained to them the circumstances in which the coalition government assumed office as well as the “mammoth economic, diplomatic and political challenges” that the government had to deal with over the last one year.

“I also outlined the broad contours of the Economic Revival Plan to put the economy back on track through long-term policies. Achieving economic self-reliance remains the overriding goal for the government,” Sharif added.

ASIA

Chinese, Russian troops hold joint exercise targeting cross-border terrorism

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China and Russia have held a joint military exercise focusing on cross-border terrorism, amid growing concern over terrorist attacks in Moscow.

The drill was held on 25 June in a river area near the Heilongjiang Bridge linking Russia’s Blagoveshchensk and China’s Heihe, the Chinese military’s official media outlet PLA Daily reported on Tuesday.

It was the first joint counter-terrorism drill between the neighbouring countries since Russia’s intervention in Ukraine.

It came just days after terrorist attacks in Russia’s southern region of Dagestan on 23 June, in which at least 22 people were killed in shootings at two synagogues, two Orthodox churches and a police station.

In March, more than 140 people were killed in an attack on a concert hall in Moscow, the deadliest terrorist attack in Russia for almost two decades. The Khorosan branch of ISIS claimed responsibility for the attack.

According to the PLA Daily, last week’s joint exercise simulated ‘terrorists trying to cross the border’ to launch an attack.

Chinese and Russian troops used aerial reconnaissance, maritime interception and land ambush to intercept and capture the terrorists during the exercise.

The exercise, which focused on improving intelligence sharing and operational coordination, showed the “firm determination” of both militaries to take effective measures to “combat all forms of terrorism, separatism and extremism” while jointly securing border areas, the report said.

The report also said that the two sides discussed further deepening border cooperation.

This is not the first time the two countries have held joint counter-terrorism exercises. In 2019, China’s People’s Armed Police took part in an exercise with the Russian National Guard in Russia.

According to Tass, Russian Foreign Minister Sergei Lavrov reaffirmed the two countries’ ongoing cooperation in the fight against terrorism, including on multilateral platforms, during a meeting with his Chinese counterpart Wang Yi in April.

Aiming to strengthen law enforcement cooperation

Last week’s joint exercise follows an agreement between Chinese and Russian leaders during Russian President Vladimir Putin’s visit to Beijing in May to strengthen cooperation in law enforcement and defence, including by expanding joint training and exercises.

The Chinese and Russian coast guards also signed a memorandum of understanding on maritime law enforcement cooperation in April last year.

In March, China and Russia organised a naval exercise with Iran focusing on anti-piracy efforts. China and Russia also held joint naval and air exercises in the Sea of Japan, or East Sea, in July last year.

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Controversial military operations and ethnic dynamics in Pakistan’s fight against terrorism

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In a recent high-level meeting, the federal government of Pakistan announced its intention to launch a new military operation against terrorist organizations. This decision is aimed at eradicating militancy under the banner of Azm-i-Istehkam. Surprisingly, the military leadership has remained silent on this proposed operation, leaving the advocacy to political figures, notably Defense Minister Khawaja Asif of the Pakistan Muslim League (PML-N).

The Pakistan People’s Party (PPP), a significant coalition partner in the federal government, has maintained a conspicuous silence on the matter. Meanwhile, despite the approval from Khyber Pakhtunkhwa’s Chief Minister Ali Amin Gandapur, factions within Pakistan Tehreek-e-Insaf (PTI) and the Sunni Ittehad Council have openly opposed the operation. This divergence in political opinion highlights the complex dynamics at play in Pakistan’s approach to counter-terrorism.

The opposition from various regional and ethnic parties, including the Pashtun Protection Movement (PTM), Pakhtunkhwa Milli Awami Party (PkMAP), and the Awami National Party (ANP), stems from deep-seated concerns about the operation’s focus and its implications. Historically, PTI and PkMAP have not been staunchly anti-Taliban. PTI’s leader, Imran Khan, has consistently opposed military actions against Taliban militants, advocating instead for dialogue. Similarly, PkMAP leader Mehmood Khan Achakzai, while ostensibly opposing terrorism, is perceived to have friendly relations with the Taliban, as evidenced by the relative safety of his party members from Taliban attacks.

Significant religious-political entities have complex stances on militancy in Pakistan

The relative safety of certain political groups, like PTM and the National Democratic Movement, from Taliban violence raises questions. Critics argue that this perceived immunity could suggest covert alliances or understandings, casting doubt on the motivations behind their opposition to the military operation.

Jamiat Ulama-e-Islam (JUI-F) and Jamaat-e-Islami (JI), both significant religious-political entities, have complex stances on militancy. JUI-F’s position has been ambiguous since the Soviet invasion of Afghanistan in 1979. In contrast, JI, having reaped substantial benefits from the Afghan war, now finds itself sidelined and is striving to reassert its relevance by attempting to align with nationalist sentiments.

The media and sections of the government, particularly those influenced by Punjabi and Urdu-speaking elites, have often portrayed the Taliban as predominantly Pashtun. This narrative has led to the proposed military operation being focused on Pashtun-majority areas, such as Khyber Pakhtunkhwa and Balochistan. Defense Minister Khawaja Asif’s statement that the operation will target these regions reinforces this perception.

Pashtun-dominated regions reject the notion that terrorism is a Pashtun phenomenon

However, leaders from Pashtun-dominated regions, like Khan Muhammad Wazir of the ANP, reject the notion that terrorism is a Pashtun phenomenon. Wazir points to the involvement of non-Pashtun militants in numerous terror attacks across Pakistan. He highlights the role of Punjabi militants in groups like the Punjabi Taliban, Lashkar-e-Jhangvi, and Jamaat-ul-Ahrar, who have orchestrated some of the deadliest attacks in recent years. Wazir’s argument underscores the ethnic diversity of militant groups in Pakistan, challenging the stereotype of the Pashtun terrorist.

Wazir’s emotional plea for an operation starting in Punjab, rather than Pashtun areas, aims to shift the focus to the diverse origins of militancy. He names several key figures from Punjab involved in terrorist activities, such as Tariq Lahori of Daesh and Maulana Qasmi of Jamaat-ul-Ahrar. By highlighting these figures, Wazir seeks to demonstrate that terrorism in Pakistan is not confined to any single ethnic group.

Doubt on the narration of the proposed military operation “Azm-i-Istekham”

The insistence on a military operation in Pashtun regions, driven by a media narrative dominated by Punjabi and Urdu-speaking elites, risks alienating the Pashtun community. Wazir’s call for international intervention by entities like China, the United States, Russia, the United Nations, and the Organization of Islamic Cooperation (OIC) underscores the severity of this perceived ethnic targeting. If the government and media continue to frame terrorism as a predominantly Pashtun issue, it may lead to increased ethnic tensions and further marginalize the Pashtun population.

The proposed military operation “Azm-i-Istehkam” and the political dynamics surrounding it reveal deep-seated ethnic and regional tensions within Pakistan. While the operation aims to eradicate terrorism, its focus on Pashtun areas risks reinforcing harmful stereotypes and overlooking the broader ethnic diversity of militant groups. A more equitable approach, recognizing the involvement of non-Pashtun militants and addressing the root causes of militancy across all regions, is crucial for fostering national unity and effectively combating terrorism. Only through such an inclusive strategy can Pakistan hope to achieve lasting peace and stability.

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Huawei Harmony aims to end China’s reliance on Windows and Android

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While Chinese tech giant Huawei’s recent smartphone launches have been closely watched for signs of progress in China’s chip supply chain, the company has also developed expertise in sectors vital to Beijing’s vision of technological self-sufficiency, from operating systems to car software.

Chinese President Xi Jinping told the CPC Politburo last year that China must fight hard to localise operating systems and other technologies “as soon as possible” as the US restricts exports of advanced chips and other components.

OpenHarmony, developed by Huawei, is widely promoted in China as the “national operating system”.

“This strategic move is likely to erode the market share of Western operating systems such as Android and Windows in China as local products gain traction,” Sunny Cheung, an associate fellow at the Jamestown Foundation, a US defence policy group, told Reuters.

In the first quarter of 2024, Huawei’s own version of the HarmonyOS operating system overtook Apple’s iOS to become the second best-selling mobile operating system in China after Android, according to research firm Counterpoint. It has not yet been released on smartphones outside China.

“Harmony has created a strong core operating system for the future of China’s devices,” Richard Yu, president of Huawei’s consumer business group, said at the opening of a developer conference last week.

Self-sufficiency

Huawei first introduced Harmony in August 2019, three months after Washington imposed trade restrictions over alleged security concerns. Huawei denies that its equipment poses a risk.

Since then, China has stepped up its self-sufficiency efforts, pulling out of the main code-sharing centre Github and supporting a local version, Gitee.

China banned the use of Windows on government computers in 2014 and now uses mostly Linux-based operating systems.

Microsoft derives only 1.5 per cent of its revenue from China, its chief executive said this month.

Originally built on an open-source Android system, Huawei this year released the first “pure” version of HarmonyOS, which no longer supports Android-based apps, further separating China’s app ecosystem from the rest of the world.

Huawei said in its 2023 annual report that OpenHarmony was the fastest-growing open source operating system for smart devices last year, with more than 70 organisations contributing to it and more than 460 hardware and software products produced in the financial, education, aerospace and industrial sectors.

Visited by Reuters, Charlie Cheng, deputy director of the Harmony Ecosystem Innovation Centre, said the aim of making it open-source was to replicate Android’s success in eliminating licensing costs for users and provide companies with a customisable springboard for their own products.

“Harmony will definitely become a mainstream operating system and give the world a new choice of operating systems besides iOS and Android,” he said.

Google, Apple and Microsoft did not respond to requests for comment.

China’s previous efforts to build large open source projects have struggled to gain traction among developers, but Huawei’s growing smartphone market share and extra work to develop a broader ecosystem gives Harmony an edge, analysts said.

Huawei’s Yu said this month that more than 900 million devices, including smartphones, watches and car systems, were running HarmonyOS and that 2.4 million developers were coding in the ecosystem.

“OpenHarmony will need more time and iterations for these developers to feel more confident about working with OpenHarmony,” Emma Xu, an analyst at research firm Canalys, told Reuters, adding: “But the reputation, behaviour and trust that HarmonyOS has achieved will certainly have a positive impact.”

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