Pakistan is dying (and that is a global problem)

[Music] a nuclear-armed state on the brink of collapse it's the stuff of nightmares but it is slowly becoming Pakistan's waking reality its import dependent economy has run out of Foreign Exchange causing food and energy shortages and the resulting economic hardship is driving political polarization radicalization and extremism such developments would be troubling anywhere but for nuclear-armed Pakistan domestic instability feeds into wider border disputes with India and Afghanistan who may look to advance their territorial claims and the consequent escalation could destabilize South Asia potentially dragging the world down with it into the bargain is a looming death crisis Islamabad is in hook to the IMF the World Bank China and others meanwhile the military is watching events closely with many fearing another coup Pakistani Society thus needs cooler heads and agile policy making to claw its way out because while economics is a gun politics is knowing when to pull the trigger foreign [Music] [Music] to create a nation's money is to control its Destiny in 1835 the British Empire established a uniform currency for Colonial India seeking to reap the benefits of senior age and control the means of paying taxes and crucially debts little has changed since Pakistan became independent in 1947 but the destiny of its 230 million citizens depends on foreign currency to import Essentials like food energy and fertilizers for years though more foreign exchange has flowed out of Pakistan than in prompting Islamabad to run persistent fiscal and current account deficits and in 2022 circumstances took a turn for the worse as Russia invaded Ukraine global commodity prices sword placing pressure on Pakistan's Forex reserves soon thereafter Mass flooding along the Indus inundated one-third of the country devastating both subsistent farms and Export crops the resulting double whammy increased Pakistan's import dependence while depriving it of export income and burdening the state with an additional 15 billion dollars repair bill which equals roughly four percent of the GDP by January 2023 currency reserves were sufficient only for several weeks of imports Islamabad responded by opposing blackouts raising tariffs on energy insufficient Imports and leaving food and raw material shipments in Port well this clampdown stamped the payments outflow it cost production cuts and Industrial decline the textile industry accounting for one-tenth of Pakistan's GDP and two-fifths of employment laid off 7 million workers meanwhile factories saw gas bills raise production costs making local products uncompetitive on global markets economic privation has heightened political tensions within Pakistan and with its creditors islamabad's current IMF program began in 2019 under Imran Khan's Premiership as a cricket player Khan was no stranger to spin but not even he could Square his populist credentials with the imf's austerity demands Khan was eventually ousted from power in a no-confidence vote but not before he threw dirt at his political opponents and gasoline on Pakistan's political bonfire now the resulting crisis could force Pakistan to transition to a market determined exchange rate and halt energy subsidies thus raising inflation lowering consumption and inducing a recession but such measures may only radicalize a society where the cost of living is starting to outweigh the benefits and with few Democratic Avenues available militancy is surging extremist attacks Rose by 27 in 2022 culminating in one of the country's most deadliest attacks ever at the Peshawar mosque in January this year moreover jihadism in Pakistan is inextricably linked to territorial disputes the Pakistani and Afghan Taliban de facto reject the validity of the Durant line a British colonial era border that bisects pashtun territories yet as a jurisdictional shield the Border allows for militant incursions into Pakistani territory and should the country crumble internally the Taliban will look to leverage nationalist sentiment among Pakistan's 40 million ethnic pashtoons located chiefly in hybrapaktankwa to push for diplomatic recognition or increased pashtune autonomy such events could Ripple out to neighboring Balochistan which has been plagued by separatist militants since 1948. local separatist groups claimed the province is neglected and underdeveloped and given its large hydrocarbon and gold reserves a weakened central government May swell the ranks of separatist forces wishing to break away from Pakistan if both the pashtun and Balochi territories were to Rebel there wouldn't be much left of Pakistan but the greatest threat to South Asian stability would be the status of Pakistan's nuclear Arsenal as of 2021 Islamabad was assessed to have 165 nuclear warheads four plutonium production reactors and expanded uranium enrichment infrastructure and new Delivery Systems in development in a collapse scenario non-state actors Rogue agencies factions or individuals would have ample scope to pilfer nuclear assets worse they could be sold off if Pakistani weapons or nuclear technology fell into unscrupulous hands and given the likely arise in separatist and jihadist militancy there would be no shortage of potential buyers Pakistani collapse would thus proliferate nuclear weapons worldwide equally troubling would be an india-pakistan confrontation with the most likely Flashpoint being Kashmir though mutually assured destruction theoretically the terrorists nuclear States from direct conflict in Kashmir this theory has been empirically tested in 1999 both States fought a war over the District of Cargill and to this day both sides monitor the regional balance of power carefully should Pakistan lose its military capacity to a domestic crisis India may be tempted to advance its interests across the line of control yet nuclear Communications between the two states are poor there is no red telephone this increases the possibility of miscommunication and miscalculation and this would heighten the risk of nuclear confrontation especially if New Delhi cannot ascertain which Pakistani policy organs have the authority to negotiate or if Islamabad cannot reliably account for all its nuclear assets in that case the potential conflict could have Global consequences Pakistan's crisis therefore is the world's problem and preventing a spiral of radicalization and instability means first solving the economic crisis reducing military spending pursuing economic diversification and reducing import dependency will help but the Bedrock issue is the foreign debt Pakistan's geopolitical importance during the Cold War and the Afghan conflict granted access to nearly endless loans and bailouts from the IMF and other Western institutions yet the sums involved were Beyond Pakistan's repayment capacity and most importantly they were denominated in foreign currency this fact has far-reaching implications for Pakistan's economic life though the country May avoid the fault in the short run long term it's growing 130 billion dollar stock of external debt in is unsustainable service on Pakistan's dollar denominated obligations is 26 billion dollars for 2023 which drains the foreign exchange that is needed for essential Imports harsh austerity demands may also prove self-defeating should they push Pakistani politics further into crisis thus the only viable solution is for the creditors to take haircuts restructure the residual death postpone immediate interest payments and ensure New Capital flows otherwise the concrete choose of the external debt will drag Pakistan down for closing any chance of recovery yet death restructuring negotiations are not without subterfuge especially since Pakistan's external debt structure carries geopolitical implications since 2014 the proportion owed to private creditors including commercial Banks and bondholders has risen from 19 to 30 percent these entities care little about Foreign Affairs and even less about Pakistan and they will likely frustrate any debt resolution effort that does not pay them out in full meanwhile western-dominated multilateral creditors like the IMF the World Bank but also the Asian development Bank hold around one-third of Pakistan's external debt but they maintain that the write down would hurt their credit rating and thus their ability to discharge their functions that leaves China holding the bag Beijing is islamabad's largest bilateral creditor holding one-fifth of its external death it is also Pakistan's best hope for death forgiveness since Pakistan could negotiate a write down one-on-one there is also a qualitative difference since the Chinese death pertains to tangible infrastructure projects like the china-pakistan economic Corridor which connects xinjiang with guadaluport through Pakistan reducing trade dependence on the Malacca Strait having sunk 65 billion dollars into such projects a stable Pakistan is crucial to Chinese interests and given a rise in attacks targeting Chinese Nationals and the threat of jihadism spilling into xinjiang Beijing is unlikely to force Islamabad to repay its loans doing so would harm the Chinese position on the grand geopolitical chessboard yet China did not become a great power by making unilateral concessions so some parallel compromises from Western creditors even if symbolic may be needed to grease the wheels of death forgiveness ultimately Pakistan's crisis could quickly become everyone's problem should it spiral out of control the country is on the brink of Economic and political collapse and while Pakistan's nuclear Arsenal makes it too big to fail its foreign debt burden is too big for it to succeed for the moment creditors hold the whip him but soon even they may consider that forgiveness not as an act of Charity but as a concession to realism as it turns out death that cannot be repaid won't be repaid I've been your host Shivam from Caspian report researching this video and going through piles of data was a bit tricky we live in a data-driven world and having the skills to analyze large sums of data is more important now than in the past Math and Science are the primary tools that help us understand our information driven reality but Math and Science don't come so easily sometimes even I struggle with it but then I went through an introductionary course on data analysis Fundamentals by brilliant.org it took me through the basics I knew tested my understanding along the way and explained the correct answers in detail anytime I got something wrong the neat thing is the courses are designed to level up your knowledge base steadily it's the best way to learn math and science interactively and you can take the course I did on data analysis fundamentals or one of the thousands of other lessons ranging from foundational and advanced math to AI data science neural networks and more with new lessons added monthly and best of all you can try out everything brilliant.org has to offer completely free for a full 30 Days by visiting brilliant.org Caspian report or just click the link in the description the first 200 people using our link will get 20 off Brilliance annual premium subscription the that's a pretty good deal and investment in knowledge pays the best interest and as usual thank you for watching and Sarah [Music]

Channel: CaspianReport

Views: 2,900,460

Keywords: Pakistan, Security, Crisis, 2023, News, Media, Imran Khan, Arrest, Coup, Military, Islamabad, Demonstrations, Protests, Explained, Why, Pakistani, Kashmir, India, Afghanistan, China, Debt, Loans, IMF, World Bank, Money, Economics, Karachi, Gwadar, Balochistan, Pashtun, Collapse, Geography, Interesting, Facts

Id: Xqm3kcHpIsI

Length: 15min 18sec (918 seconds)

Published: Fri May 12 2023