Until a few months ago, the US adamantly opposed an International Monetary Fund bailout package for Pakistan, one that would be used to repay crippling Chinese loans to build the massive China-Pakistan Economic Corridor project. Until a few months ago, there were no signs of an exit deal between the US and the Taliban and there were no signs of any improvement in Pakistan’s relations with the US.
Imran Khan, elected a year ago and under heavy criticism in Pakistan for backing away from his campaign promises on human rights and corruption, saddled with a descending economy and the nickname “U-turn Khan,” nonetheless appears to have engineered a complicated pas de deux with the US that might get Washington out of Afghanistan and Islamabad out of enormous debt over the CPEC.
Until a few months ago, US President Donald Trump was blaming Pakistan for having done nothing in lieu of the US$30 billion Pakistan had received over the course of a decade or so. Things, however, have changed dramatically. Pakistan is in President Trump’s good books. There is a deal-in-the-making and Pakistan has got an IMF package which it will use to manage the Chinese loans and the CPEC projects.
A recently released IMF staff report says that by the end of the program in 2022, Pakistan will have fully repaid China’s enormous commercial loans, while almost half of bilateral loans, currently standing at US$15.5 billion, will also stand repaid, although some critics say that is daydream.
China, of course, has not expressed any objections against the deal. On the contrary, a 50-member delegation met Imran Khan soon after the IMF deal and pledged to invest more than US$6 billion in Pakistan in various sectors of the economy.
For now, Pakistan thus seems to be playing on both sides of the geopolitical spectrum, skilfully managing the two opposing super-powers, although this is nothing short of walking a very tight rope.
When the new Khan government was established exactly a year ago, the country’s economy was in tatters. The CPEC had failed to generate enough economic growth and Pakistan’s foreign exchange reserves were down to less than US$10 billion. The new government. had initially tried to “review” the CPEC projects, an initiative that died soon after its birth because of strong Chinese opposition and a Chinese “warning” of severe consequences.
Although the new government decided not to make the Chinese “angry,” it was apparent, as one official told Asia Sentinel, that Pakistan had no option but to reach out to the IMF and seek a bailout package. Realizing the overwhelming influence of the Chinese, Pakistan needed to balance its relations with the US as a counterweight to China, Hence, the IMF bailout that Pakistan could use to help progress the CPEC projects that it was initially putting under review with a view to even scrapping some of them.
According to some reports, of the 22 projects completed in the first phase of the US$62 billion economic corridor project, which includes the construction of the Gwadar port, modern transportation networks, numerous energy projects and special economic zones, eight of them were in complete financial distress, becoming a source of friction between Pakistan and the Chinese for the non-payment of loans.
Pakistan, therefore, needed a package to bail itself out of the Chinese debt.
But how could Pakistan use the IMF bailout when the US was clearly opposed to it? The key to improving ties with the US was Afghanistan, where Pakistan appears to have, by now, successfully brokered a deal between the US and the Taliban to end the US’s longest-ever war, a role that Trump was quick to acknowledge in his talks with Khan in Washington DC during the latter’s first visit to the US.
Indeed, Afghanistan, rather than Pakistan’s economic crisis, was the top agenda in the bilateral talks between the two presidents. Pakistan’s officials in Islamabad understood that the US desperately wants out of Afghanistan and that this urge to end the stalemated 17-year war, which has taken the lives of 244,000 Afghan and other civilians and nearly 4,000 coalition troops, could be used to revitalize relations between the two estranged “allies” and revive military aid that the same US president had cut off in 2018 due to Pakistan’s “insubordinate” role in Afghanistan and not being “sensitive enough” to US interests.
But this position changed recently when Pakistan, because of its facilitating the resolution of a deadlock between the US and the Taliban after the sixth round of talks in Doha, was invited to sit on the negotiating table with the US, Russia and China and finalize the peace process.
The joint statement of this summit in Beijing said that “China, Russia, and the United States welcomed Pakistan joining the consultation and believe that Pakistan can play an important role in facilitating peace in Afghanistan.”
In this context, if a previous US refusal to let Pakistan use the IMF money to manage CPEC and Chinese loads was intended to make Pakistan play a conciliatory role between the US and the Taliban, Pakistan’s own decision to play that very role is rooted in reconfiguring its policy ad regional position with a view to balancing an overwhelming Chinese influence in Pakistan.
However, the question that continues to lurk in the background is: will Pakistan be able to maintain its ‘bromance’ with the US beyond a US exit from Pakistan? Although the US does want Pakistan to play a pro-US role in Afghanistan, it is quite clear that Pakistan would not be the only player in the post-withdrawal Afghanistan. China and Russia have also established strong relations, limiting Pakistan’s ability to influence things.
For now, however, Pakistan is aligned both with the US and the Chinese, a position that Pakistan historically knows how to play to its advantage. This is how Pakistan traversed the geo-political spectrum in the 1960s. Imran Khan is more skilful than his image as a former cricket star and dilettante reformist makes him appear.