Chinese Investment in Pakistan: Rhetoric or Reality?

Chinese Investment in Pakistan: Rhetoric or Reality?

Much has been written and said about the announcement by the Chinese government in April this year to invest $46 billion in building an economic corridor, the China Pakistan Economic Corridor (CPEC), in Pakistan linking China to the Central Asian republics. The announcement came on the back of the $12 billion loan package made to Pakistan by the World bank the previous year. However, despite the political rhetoric and the show of bonhomie between the leaders of the two countries, and, the media frenzy that followed such announcement, there are serious questions that need to be raised as regard the risks of the promised Chinese investment in Pakistan.  The lion’s share of the investments are largely going to be in the form of loans of $22 billion by Chinese banks to help resuscitate some of the ailing debt-ridden Pakistani coal and nuclear power plants. The loans can be broken down into two broad temporal categories, the ‘Early Harvest’ ones in the next 3-4 years, and, the other loans promised after 2020. [1]  The key question that China watchers need to raise here is, how much is the Chinese government willing to stretch it’s banks now that there is a stock-market meltdown, currency devaluation, import stagnation and deepening recession within it’s own country? Advocates of China’s overseas investment model will no doubt point to the muscular investment by China in countries fraught with high political, financial and credit risks in Latin America and Africa in the last ten years. In fact, the example of Venezuela, a politically and financially high-risk country in which China has invested over $52 billion from 2008 up till 2014, the biggest Chinese investment in any single country so far, may hold some of the answers.  Although foreign loan-related information is hard to come by as regards most Chinese state-owned lenders, it is estimated that international investments comprised one-fifth of China Development Bank’s loans in end-2014. The majority of the loans were commodities-backed and have gone to resource rich countries in Latin America and Africa which were deemed extremely high risk by western banks or western multilateral institutions. [2]  The overseas investment model of China Development Bank was based on the oil-for-loan model...

Impact of Cultures, Ideals and Visions on Alternative Movements

Impact of Cultures, Ideals and Visions on Alternative Movements

Knowledge has been the foundation of all development and every age and era has seen some product or service that became a standard or benchmark for that time. This was always a general trend to follow and adopt a popular product or behavior but after the Industrial Revolution of 18th century it became possible to offer products made through different technologies that that offered alternative methodologies for producing the same product. An everyday example would be of soap that has remained a cleansing product for over two centuries. The end-use remains same despite change in technologies. It has become a dominant standard for cleansing. But in case of more complex products like software totally different technologies compete for space for same or similar value added end uses. An example is that of Microsoft Office that is based on Windows based technology while a similar product the Open Office that is based on Linux. Office was offered as a method of writing and recording. In this case the dominant trend is being impacted as the end-use is changed substantially by technological dexterity and Office is now used beyond its original simpler usage. Competitive advantage (Porter, 1980) has been the strategic reason for adoption of different technologies but this was until now product-centric. Competition has now moved to a different level. It is the different technologies that are now competing for producing the same product. This has been termed as differential generic strategy (Porter, 1996) that now attempts to corner niche markets or even carve out a new niche from the old one. A good example of this is the Southwest Airline that carved a niche for itself by offering low -cost no-frills flying to consumers and beat the dominating trend of flying with fully loaded services offered by traditional airlines. The competing methodology in this case was creating a new consumer who could now switch from driving or taking a train to flying short hauls at competitive or even lower price within a far shorter time. But can it be said that new alternatives, technological or strategic practices, can upset or change the dominating trend and set new standards or benchmarks? (Hofstede, 1991) said that...

India’s Rising Regional Military Engagement

India’s Rising Regional Military Engagement

Nitin Gokhale New Delhi has been strengthening defense ties with countries across the region. Sometime in the latter half of 2013, the top brass of the Indian military had a short but effective brainstorming session with other stakeholders in the national security architecture. The participants were drawn from the National Security Council Secretariat (NSCS) which functions directly under National Security Adviser (NSA) Shiv Shankar Menon, senior officials from the Ministry of External Affairs (MEA), the Research and Analysis Wing or RAW, India’s external intelligence agency and of course the Ministry of Defence. The main agenda: how to further India’s interests in the immediate and strategic neighborhood through effective use of India’s military.  For the past decade, India has been receiving increasing requests for joint exercises and training slots from what are described as “Friendly Foreign Countries” in the bureaucratic parlance of South Block, the colonial style building that houses both the defense ministry and the external affairs ministry. Considering these requests, a review was called for. At the end of the high-level meeting, a six-point formula for stepping up the nation’s military diplomacy was finalized. Specifically, the officials decided to: leverage the military element of national power towards the furtherance of the national interest; contribute to the national security environment by developing a shared confidence amongst the armed forces; strengthen defense relations to promote India’s influence in the region; establish a presence commensurate with India’s strategic interests and the comfort level of the host nation; assist friendly foreign countries in developing defense capabilities consistent with India’s security needs; exploit India’s presence in UN Missions to further the national interest. Many of the elements in the policy are part of India’s ongoing engagement with its friends and neighbors, but the fact that a reiteration was considered necessary signifies renewed interest in making full use of Indian military’s standing across the world. One of the first decisions flowing out of the new thinking was to post defense attachés in the Central Asian Republics. Accordingly, three new attachés have been placed in Turkmenistan, Uzbekistan and Kyrgyzstan in the past three months. These three countries are of particular immediate interest because of their proximity to Afghanistan, currently in the...

A Dialogue with Agha Humayun Amin Major (r)

A Dialogue with Agha Humayun Amin Major (r)

Agha Humayun Amin Major (r) Tank Corps: 13 Years service in Pakistan Army (PAVO 11 Cavalry,29 Cavalry,58 Cavalry,15 Lancers,5 Independent Tank Squadron,14 Lancers,15 SP) and 31 years research . Ex Editor Globe , Ex Assistant Editor Defence Journal , Ex Editor Journal of Afghanistan Studies. Publications: More than 200 articles in News, Nation , PRAVDA,Pakistan Army Journal , Citadel Magazine of Command and Staff College,Journal of Afghanistan Studies,Indian Strategic Review,Dawn ,Friday Times,Outlook Afghanistan ,Afghanistan Times,Frontier Post,Globe,Defence Journal,Media Monitors Network,Pakistan Army till 1965 held at US Army War College Library,US Army Command and Staff College Library,Indo Pak Wars a Strategic and Operational Analysis,Sepoy Rebellion of 1857-59 Reinterpreted, The Essential Clausewitz,Man’s Role in History: Education/Credentials : Masters (History). Past/Present Clients: Various Think Tanks , Afghanistan Research Associates,Centre for Study of Non State Militant Actors in Afghanistan and Pakistan. Can you share some of the important events of which you were an active part in your Military Service? The first event was 1984 mobilization. Pakistan Army was in bad shape and would have come to certain grief if India had attacked. We were mobilized and concentrated at Qila Sobha Singh near Pasrur. Tanks were in bad shape and the nuclear deterrent was not there. Only assassination of Indira Gandhi averted the disaster that Pakistan was sure to face. The second event was 1987 mobilization in face of Brasstacks. Again the Pakistani military was in bad shape but disaster narrowly avoided because Indians had no long term strategic vision. The Indians lost three golden chances to strategically reduce Pakistan in size in 1971, 1984 and 1987.Now Indians will reap the harvest of destabilization, which would be difficult to foresee as well as handle. What exactly do you mean by destabilization? When India avoided the chance to reduce Pakistan by size, then what exactly are you referring to by destabilization? India lost chances to deal with the Pakistan factor in 1971,1984 and 1987.With the nuclear deterrent now fully active India cannot impose any settlement on Pakistan. The threat of destabilization and a possible war will now increase because of following factors: A new Afghan civil war. US China rivalry in Pakistani Baluchistan. India Pakistan tensions over water. Greater religious...

Awakened from a deep slumber- is it enough to hold the ship up in bad weather? – Abhimanyu Naruka

Awakened from a deep slumber- is it enough to hold the ship up in bad weather? – Abhimanyu Naruka

At the dawn of the 20th century India moved briskly towards a free market economy and increased financial liberalisation. With these initiations things have improved in our country, especially sectors related to infrastructure, medical, education and services. Now the question here is, are these actions good enough to stand with world top economies, considering the fact that globalisation has increased the interdependence among all the major economies. The global economy is presently going through some rough phase post the American recession and the on going Euro zone crisis has had its effect on our economy, especially on our exports. This in turn is reducing the income of our nation and putting a counter effect on our Balance of trade. In simple words our nation’s income is reducing, but on the other hand side we just cant let the expenditure fall on important sectors in our country, thus presently our country is facing the problem of Fiscal deficit. Since august it seems the finance ministry team has woken up from deep sleep because we have seen a barrage of economic reforms in last three months, the most debated one FDI. Obviously these reforms seems to provide a fresh lease to our economy and as far as the FDI decision is concerned it is the responsibility of  the administration to look after the interests of the retailers specially in the rural and small town sections. But as the saying goes we need to work on these reforms and get the interest of the Investors going on our country otherwise we are going to leg behind China and Brazil. In past decade or so our country has seen massive urbanisation, though standard of living in urban areas has improved, on the same side there is little difference in the life of rural population. Rural issues are dying day by day, we still have infrastructure scarcity in these areas and a lot of agricultural issues are still unresolved. Government needs to take some dire actions with regard to this problem. One another trend which seem to have emerged in past decade or so is our rate of saving is going down, Urban India is playing a major role...

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