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Britain continued seeking arms deals with Saudi Arabia in weeks after Khashoggi was murdered

By Richard Hall

It is not the first time UK trade policy has been criticized for putting deals ahead of human rights .
The British government pursued arms deals with Saudi Arabia in the weeks after the killing of journalist Jamal Khashoggi, even as it publicly condemned the murder.
Jamal Khashoggi was killed by Saudi officials inside the country’s consulate in Istanbul on 2 October, prompting global condemnation and calls for a re-evaluation of ties with the Kingdom.
As the UK government called for answers over the dissident’s death, British trade officials responsible for arms sales continued to hold high-level meetings with their Saudi counterparts.
A delegation from the Defence and Security Organisation – an office within the Department for International Trade that promotes arms exports for UK companies – travelled to Riyadh on 14 and 22 October, according to a Freedom of Information request obtained by the Mirror newspaper.
The latter of those meetings came on the same day as the foreign secretary, Jeremy Hunt, condemned Khashoggi’s killing “in the strongest possible terms” in a speech to parliament.
“Whilst we will be thoughtful and considered in our response, I have also been clear that if the appalling stories we are reading turn out to be true, they are fundamentally incompatible with our values and we will act accordingly,” Mr Hunt said on 22 October.The foreign secretary made a point of announcing the cancellation of a planned visit to Riyadh by the trade secretary, Liam Fox. However, he did not disclose that meetings over arms sales were still taking place.
Even before the murder of Khashoggi, the UK government had been under pressure to halt arms exports to Saudi Arabia over alleged war crimes and rising civilian casualties in Yemen.
Riyadh intervened in Yemen’s civil war in 2015 to reinstate the internationally recognised government of Abd Rabbu Mansour Hadi, who was ousted by Iran-backed Houthi rebels.The fighting has killed at least 10,000 civilians – most of whom were victims of airstrikes carried out by the Saudi-led coalition – and left nearly 16 million people on the brink of famine.The coalition has admitted causing civilian casualties, but attributes the deaths to “unintentional mistakes”, and says it is committed to upholding international law. The Houthis have also targeted civilians throughout the conflict, according to the UN.
Since the war began, the UK has licensed £4.7bn worth of weapons to Saudi forces, making it by far the largest buyer of UK arms. Khashoggi’s killing brought new pressure on the British government to reassess its ties to Saudi Arabia, after Germany and Norway halted all future arms sales to Riyadh. “Jeremy Hunt was quick to join the condemnations of the killing, but he has done nothing to stop the arms sales. How many more atrocities and abuses would it take for him to act?” said Andrew Smith of Campaign Against Arms Trade.
“The regime has used these weapons to devastating effect in Yemen, where the Saudi-led coalition have inflicted the worst humanitarian crisis in the world. The murder of Jamal Khashoggi was yet another appalling crime by the Saudi authorities.”
Even as more evidence has emerged pointing to the culpability of the Saudi government in Khashoggi’s killing, the UK appears to have made no substantial change to its relationship.
Prime minister Theresa May held face-to-face talks last month with Mohammed Bin Salman, Saudi Arabia’s de-facto leader whose close aides carried out the killing and subsequently attempted to cover it up.Ms May said she stressed “the importance of a full, transparent and credible investigation into the terrible murder” during her meeting with the crown prince at the G20 summit in Argentina. But Labour leader Jeremy Corbyn accused her of not following through with action.“Rather than be robust, as she promised, we learned the prime minister told the dictator ‘please don’t use the weapons we are selling you in the war you’re waging’ and asked him nicely to investigate the murder he allegedly ordered,” Mr Corbyn said last month.“Leaders should not just offer warm words against human rights atrocities but back up their words with action,” he added.
Mr Hunt has defended arms sales to Saudi Arabia, citing Britain’s “important strategic partnership” with the country “which has saved lives on the streets of Britain”.
The Saudi meetings are not the first time that Britain has been criticised for putting trade before human rights concerns. British academic Matthew Hedges was detained for months in the United Arab Emirates and accused of spying on behalf of the UK.
During the five months Mr Hedges was held in solitary confinement, Mr Hunt called the arrest “appalling” and criticised the UAE publicly. Behind the scenes, however, high-level trade meetings continued apace. Liam Fox, the trade secretary, Baroness Rona Fairhead, the minister of state for trade and export promotion, and Alistair Burt, the minister for the Middle East, all met with UAE officials to drum up trade between the two countries.
Polly Truscott, Amnesty International UK’s foreign affairs expert, told The Independent in November that the UK has “long given the impression that security and trade interests trump human rights concerns in the UAE”.“With Matthew Hedges’ case, it almost seems to have come as a surprise to the government that the UAE actually locks up people after deeply unfair trials,” she said.The Freedom of Information request by the Mirror found that the 14 October talks focused on “Riyadh Operations Centre requirements”, which is likely a reference to the operations centre where Saudi strikes against Yemen are coordinated. Commenting on the meetings with Saudi officials, a government spokesperson told The Independent: “The government takes its export responsibilities very seriously, operating one of the most robust export control regimes in the world. Risks around human rights abuses are a key part of any licensing assessment.
“Visits by officials from the UK will continue to play a role in maintaining our relationship with Saudi Arabia including in how we work together to tackle regional threats, and support mutual national security and prosperity interests.”

Saudi Arabia is reportedly outsourcing its war in #Yemen to child soldiers


Some Sudanese families are reportedly so desperate for money, they bribe militia officers to take their children to war zones.

Saudi Arabia is reportedly outsourcing its war in Yemen to be fought by child soldiers from Sudan.
According to a bombshell investigation from the New York Times’ David Kirkpatrick, the Saudis are dipping into their deep pockets to bankroll a militia of Sudanese fighters — many of them children — to fight on the frontlines against Yemen’s Houthi rebels, insulating the Kingdom from casualties and the political blowback they could cause. Many of the Sudanese fighters come from the region of Darfur, where violent conflict consumed the countryside for more than a decade. Across the Red Sea in Yemen, they face a steep risk of death again:
At any time for nearly four years as many as 14,000 Sudanese militiamen have been fighting in Yemen in tandem with the local militia aligned with the Saudis, according to several Sudanese fighters who have returned and Sudanese lawmakers who are attempting to track it. Hundreds, at least, have died there.
The conditions inside Yemen were already bleak. The war there, led by Saudi Crown Prince Mohammed bin Salman, has by some estimates claimed the lives of nearly 50,000 people. The conflict has spurred a massive humanitarian crisis, leaving more than 12 million people on the brink of starvation and in desperate need of assistance.
Kirkpatrick reports that some families in Sudan are so desperate for money from Riyadh, they bribe militia officers to allow their children to fight, some as young as 14 years old. While estimates vary and Saudi Arabia denied employing child soldiers, the Times reports that minors make up anywhere from 20 percent to 40 percent of the Sudanese fighters in a unit:
“People are desperate. They are fighting in Yemen because they know that in Sudan they don’t have a future,” said Hafiz Ismail Mohamed, a former banker, economic consultant and critic of the government. “We are exporting soldiers to fight like they are a commodity we are exchanging for foreign currency.”

Congress has made a half-hearted attempt to curtail the violence in Yemen

The US government as a whole — from Congress to President Donald Trump — so far has done little to meaningfully put an end to hostilities in Yemen. The US currently sells weapons to the Saudi-backed coalition in Yemen, and provides them with some intelligence support. And while the US indicated in November it will stop refueling the coalition’s aircraft used in the conflict, which potentially limits the Saudi’s ability to carry out bombing campaigns, calls are growing for Congress to do more.
When Saudi journalist Jamal Khashoggi was murdered in October, momentum built — briefly. Lawmakers made preliminary moves to cut America’s ties to the three-year conflict, with the Senate passing a historic resolution to cut military aid to Saudi Arabia related to the war in Yemen.
But as Vox’s Tara Golshan explains, the resolution was thrown back to square one after House Democrats helped Republicans stall any action on Yemen until at least the new Congress comes into session.
Meanwhile, the White House has pushed back against efforts to end aid, and done little more than turn a blind eye to Riyadh’s range of troubling actions — including the crown prince’s likely involvement in Khashoggi’s murder.
But as new harrowing stories come to light detailing the atrocities being carried out in Yemen, the conflict — and the US’s complicity in the violence — may become harder to ignore.

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Protecting the #Kalash: The #EU Must Hold #Pakistan Accountable

Written by Nicolas Bay on 3 December 2018

As a prominent trade partner of Pakistan, the EU has a duty to hold Pakistan accountable for its apathy regarding the indigenous Kalash community, argues Nicolas Bay.

In the Chitral District of the Khyber-Pakhtunkhwa province of the Islamic Republic of Pakistan, live the little-known indigenous people of the Kalash community.
Now totalling only 3000 people, they have lived and preserved their way of life for centuries. They speak the Kalash language and considered to be Pakistan's smallest ethnoreligious community. The protection of this minority, including its culture, religion and language, is essential.
However, like many other minority communities in Pakistan, the Kalash are increasingly facing threats by Pakistani and Taliban authorities to convert to Islam and renounce their traditional way of life.
Kalash youth have recently been targeted and are now converting to Islam due to outside pressure. Some convert of their own free will, but local journalists claim that some Kalash youth convert because of the economic incentives offered, as the community struggles financially.
"[Pakistan] insists that it values the preservation of the Kalash culture. But these claims are simply a backdrop to increased conversion, deterioration of the Kalash community's economic conditions, a lack of cultural education and the loss of ancestral lands"
Children are required to take courses on Islam but are not permitted to receive education on their own religion or traditions.
This educational requirement is a violation of Article 30 of the UN Convention on Rights of the Child (UNCRC), a Convention ratified by Pakistan, which ensures "the right to learn about and practice one's own culture, language and religion."
For women, the lure of conversion is more pronounced. Despite Kalash women having more freedom in marriage and divorce within their culture, the declining socio-economic conditions of the community is prompting many young women to marry Muslim men and convert to Islam.
Although some convert by choice, reports by the National Commission on Human Rights ascribe much of the reduction in Kalash population to forced conversion.
The local Pakistani government claims to seek protection for the Kalash, insisting that it values the preservation of the Kalash culture.
But these claims are simply a backdrop to increased conversion, deterioration of the Kalash community's economic conditions, a lack of cultural education and the loss of ancestral lands. In 2017, the Kalash religion was not included in the national census and the community is not included on birth certificates or passport forms, unlike other minority groups in Pakistan.
The Islamic Republic of Pakistan has been a beneficiary of the European Union's GSP+ scheme since 2014, a program designed to assist developing nations by providing them with preferential trade subsidies. In exchange for these trade preferences, participating countries must "implement 27 core international conventions on human and labour rights, environmental protection and good governance" (European Commission).
As part of this agreement, Pakistan can be held accountable for any violation of human rights including the International Convention on the Elimination of All Forms of Racial Discrimination and the International Convention on Economic Social and Cultural Rights.
Without proper recognition of the Kalash, it will be impossible for the community to obtain its necessary rights. Pakistan must recognise the community and the culture on official forms, return their ancestral lands (Silver Oak Forests) for the community's economic use, and provide protection from forced conversion and attacks from the Taliban. 
Europe must ensure these safeguards for the Kalasha people as part of the GSP+ agreement and insist that the Government of Pakistan preserves this unique and historical culture.
As a prominent trade partner of Pakistan, the EU has a duty to hold Pakistan accountable for its apathy regarding the Kalash community.

Pakistan Army’s Day of Infamy, December 16, 1971: Time To Ponder – OpEd

By Dr Subhash Kapila
Pakistan’s annals of history in the decades to come will carry rankling of December 16 1971 as “Pakistan Army’s Day of Infamy” when General Niazi of the Pakistan Army and 93,000 of his soldiers surrendered at Dhaka to the Indian Army which had to intervene to put an end to the genocidal slaughter of millions of East Pakistani Bengali Muslims and flow of millions of Muslim Bengalis to India for refuge.
The Pakistan Army undoubtedly contributed directly to the breakup of Pakistan on December 16 1971. It was traumatic for the remaining people of West Pakistan to witness the breakup of their State as they had been wrongly led to believe that the Pakistan Army of ‘Ghazis’ (Holy Warriors) was invincible and was emerging victorious in East Pakistan against the Indian Army.
Excerpted from the writings of Shuja Nawaz whose celebrated book “Crossed Swords” on the Pakistan Army has stood well received, and besides being a brother of one of Pakistan Army’s Chief wrote that it was a corrupt military’s “wishful thinking”, a military which had become used to the “culture of entitlement”, “clouded by blissful ignorance and liberal doses of alcohol” which led to Pakistan’s debacle. A severe indictment of the Pakistan Army by one of its own.
The United States was in a position to restrain the Pakistani Generals from their genocidal instincts with its tremendous leverage that it had over them but did not move. US President Nixon and his Secretary of State Kissinger were heavily biased against India. In this connection, a Western observer Christopher Hitchin has commented that “Bangladesh….. In 1971….. Kissinger overrode all advice in order to support the Pakistani Generals in both the civilians’ massacre policy in East Bengal and their armed attack on India from West Pakistan. This led to a moral and political catastrophe, the effects of which are still severely felt.”
The Pakistan Army may have succeeded in suppressing the truth that its surrender at Dhaka was for reasons beyond its control. But what the Pakistan Army could not conceal on December 16 1971 was the breakup of Pakistan irretrievably.  People of Pakistan on that day were horrified with the breakup of Pakistan and violent disturbances could not breakout against the Pakistan Army because of the iron grip that the Army exercised.
Pakistan Army wrongly maintains that it was India which engineered the break-up of Pakistan in 1971? The stark reality that Pakistan Army and all Pakistanis must face is that it was the entire Pakistani population of East Pakistan comprising Bengali Muslims who rose in revolt to liberate themselves from the colonial rule of Pakistan Army. If India was interested in break-up of Pakistan it could have done that earlier. East Pakistan from simmering in the period 1947-1970 went into a pressure cooker- burst in 1971 precisely arising from the large scale pogroms inflicted by Pakistan Army in 1970-71.
The younger generations of Pakistani born after 1971 may not even be conscious of the contributory role of the Pakistan Army in the breakup of Pakistan as Pakistani history stands tutored for decades by the Pakistan Army. It is this younger generation of Pakistanis whose future is at stake by the ‘Garrison State’ mindsets propagated by the Pakistan Army for retaining its political hold on Pakistan, who must research and study the reasons for the ‘Day of Infamy’.
Pakistan’s younger generation stands challenged in 2018 a as to what form and contours Pakistan must adopt to emerge as a modern, moderate Islamic democracy to befit it to emerge as a responsible stakeholder in the region.  Here I would like to borrow the observations of a Pakistani noted Columnist Ghazi Salahauddin in one of his topical pieces on the subject. He observes that “In any case, Pakistan has traversed almost an era in our history since 1971, and one can easily demonstrate that we have not yet understood what that time meant and whether we have to re-invent  or re-imagine the country that we have now”.
Quoting him in the same context but in a much earlier Column, he so accurately observed that “Besides, because of our pathological disdain for history, we do not much care about the choices that we have made as a nation”. Who in Pakistan have fostered this disdain for Pakistan’s history? Obviously, the Pakistan Army because if the younger generation of right-thinking Pakistanis delve into history, the narrative of Pakistan Army for its hold on Pakistan would  undeniably be questioned and go horribly wrong.
Historically, December 16 1971 was not only a “Day of Infamy” for Pakistan Army but also a “Day of Infamy for Pakistan” as on that day Jinnah’s concept of a separate Homeland for Indian Muslims stood devastatingly negated and buried as debris in the annals of Pakistan’s history. Reflecting this, the DAWN Editorial on December 18 2018 stated “On this day the dream of Pakistan was violently broken’”
Borrowing Jinnah’s concept, the East Pakistani Muslims liberated themselves from Pakistan’s and Pakistan Army’s colonial yoke of decades of political and economic neglect and established the independent Nation State of Bangladesh—a term   for ‘Bengali Muslims Homeland’. Bangladesh’ ‘War of Liberation’ witnessed the loss of millions of lives due to genocidal slaughter by the Pakistan Army, loot and rapine. The Pakistan Army extracted a heavy price from Bangladesh ‘War of Liberation’ by wiping out an entire generation of Bengali intellectuals, both old and young, with targeted killings.
The Hitlerian instincts of the Pakistan Army manifested in 1971 in East Pakistan became etched in global memory. The Pakistan Army’s propensity for slaughtering Pakistani citizens did not cease in 1971 and in recent times the same continues in Baluchistan, in Frontier Tracts of Pakistan’s Western Frontiers and Gilgit-Baltistan. The Pakistan Army displayed the same instincts abroad when Pakistan’s later military dictator on General Zia on an assignment in Jordan with a Pakistan Army Brigade massacred Palestinians in refugee camps.
The ‘Land of the Pure’ —a theological State founded  with Islam as the State religion could not hold together its Bengali Muslim citizens and emerged in 1971 as the ‘Land of the Impure’ where millions of East Pakistani Bengali Muslims were  butchered by the Pakistan Army forgetting that the Bengali Muslims were their Islamic co-religionists. What an irony for Bengali Muslims as it was they who initially founded the Muslim League at Dacca in 1906—the political party that Jinnah adopted to pursue his Pakistan Dream.
The Partition of Pakistan in 1971 brought about by Pakistan Army’s arrogant high-handedness against their fellow Pakistanis—the Muslim Bengalis of East Pakistan should have forced Pakistan, the Pakistan Army and all right thinking Pakistanis to indulge in some scorching soul-searching. But it did not happen for the simple reason that the Pakistan Army has continued to be in a state of denial on its atrocities in East Pakistan.
The Pakistan Army suppressed the Hamidoor Rahman Commission Report  headed by then Pakistan’s Supreme Court Chief Justice to investigate the events leading up to the dismemberment of Pakistan. The Report stands buried in Pakistan Army GHQ in Rawalpindi as severe strictures stood passed on Pakistan Army’s military hierarchy.
Pakistan’s reputed columnist Ayaz Amir, himself a former Pakistan Army officer asserted righty in the DAWN OF December 16 2005 that “If we had drawn any lessons from the events of 1971 we would have foresworn military rule for ever, indeed consigned the very memory of coups d’état to a never-to-be opened hall of national shame.”
“Pakistan is Pakistan Army and Pakistan Army is Pakistan”. This self-delusionary charade continues because the Pakistan Army has hidden the truth from Pakistan citizenry of its crimes against humanity on a genocidal scale. Pakistan Army has gotten away with this charade by propaganda to Pakistan citizenry that it was an Indian conspiracy to dismember Pakistan with the help of treacherous Bengali Muslims so perceived.
 Has the Pakistan Army learnt any lessons from the ignominy it heaped on Pakistan as a Nation-state? Does not seem so as even in 2018 the Pakistan Army refuses to give up its grip on the Praetorian State that it has created and impedes Pakistan’s notional civilian governments to exercise full control on the foreign and security policies of Pakistan as per the norms of civil-military relations templates in normal modern democracies
Pakistan indeed also had its own ‘Two Nations’—the predominant West Punjabis and the numerical more larger Bengali Muslim population of East Pakistan which after liberation on December 16 1971 emerged as a separate nation of Bangladesh.
The Pakistan Army under the guise of Martial Law unleashed a merciless ethnic genocide on the Bengali Muslims of East Pakistan beside widespread rape and plunder. This prompted an exodus of millions of  Pakistani Bengali Muslims into India. Thus was prompted India’s military intervention against the Pakistan Army ethnic genocide and the support to the Mukti Bahini or ‘Liberation Army’ of the Bengal Muslims. It finally culminated in the fall of Dhaka on December 16 1971 and the liberation of Bangladesh as the Islamic Republic of Bangladesh.
Pakistan Army’s rapacious record along with ethnic genocide of their co-religionists Bengali Muslims stands widely recorded in Indian and Western military literature but hardly discussed within Pakistan for obvious reasons. Pakistan Army and its then many Western supporters had stoutly maintained that the Pakistan Army was the ‘Glue that held Pakistan together’. If that had been the truth then how come Pakistan Army glue could not hold East Pakistan together as an integral part of Pakistan in the form that it had emerged in 1947?
The Pakistan Army was defeated on the vicious battlefields of East Pakistan as evident from the fact that 93,000 Pakistan Army soldiers had to surrender to the Indian Army. These Pakistani Army Prisoners of War continued in Indian captivity for nearly a year until Bhutto who had emerged to head Pakistan after Pakistan’s military defeat begged Indian PM Indira Gandhi at the Simla Conference for their release.
Pakistan in the wake of December 16 1971 ‘Day of Infamy ‘went through a traumatic military and political suffering. Its proud Pakistan Army touted as the most powerful Army in the Muslim World stood vanquished on the battlefield.
Obviously, because Pakistan’s failure to hold East Pakistan and its more populous Bengali Muslim East Pakistan was not a ‘political failure ‘but an outright ‘failure of the Pakistan Army’. India was held up from repeating its success in East Pakistan on West Pakistan under pressure from the United States and Britain. Both of them feared that this would lead to a complete dismemberment of Pakistan as a Nation State which at that time was not desirable in their strategic calculus.
As the year 2018 passes into history and Pakistan is beset with far more political and military turbulence arising from Pakistan Army’s acts of commission and omission generated by Pakistan Army’s unquestioned hold over Pakistan’s political dynamics, it is high time for all right thinking patriotic Pakistanis to force a ‘National Debate’ to ponder how the Pakistan Army could go wayward in hurtling Pakistan into a second Partition and pre-empt any further disintegration within Pakistan.
Contextually, in 2018, Pakistan has yet another Prime Minister who is in outright collusion with the Pakistan Army and as its creation furthering Pakistan Army’s corporate political narrative. Pakistan’s PM Imran Khan was instrumental in bringing down from office the former PM Nawaz Sharif without completing his five year term. Is it not paradoxical that PM Imran Khan’s every political statement is followed by the qualifying additive that ‘This has the support of the Pakistan Army?
Concluding, one has to emphatically observe that even after 47 years after Pakistan’s ‘Day of Infamy’ on December 16 1971 Pakistan as a Nation State has not learnt the lessons that it should have. The Pakistan Army which brought about the dismemberment of Pakistan in 1971 continues unchallenged in not submitting to civilian political control. On the contrary it continues to foist its own choice of Prime Ministers on Pakistan and when a Prime Minister attempted to bring it under civilian political control, the Pakistan Amy stage managed in what I then for the first time termed as a “Judicial Coup”. Pakistan must reinvent itself and that onerous task has to be shouldered by Pakistan’s young generation emerging from the masses.

Gunmen attack security base in Pakistan's Balochistan province

Gunmen attacked a security forces’ training base in the restive southwestern Pakistani province of Balochistan on Tuesday, setting off a gunbattle in which at least four members of the security forces and four attackers were killed, officials said.
The attackers apparently intended to hit a residential compound at a training center of the paramilitary Frontier Corps in Loralai district but were challenged at the entrance, according to a statement from Inter Services Public Relations, the main military communications unit.Four members of the security forces were killed and two wounded in an initial exchange of gunfire before the attackers were isolated in an adjacent compound. Four gunmen, including one who detonated a suicide vest, were subsequently killed.
“The valiant and timely action of security forces denied the terrorists entry into residential area which would have resulted in more casualties,” the ISPR statement said.
The attack, in the early hours of Tuesday morning, was the latest in Balochistan, Pakistan’s largest and poorest province which is at the center of the strategic China Pakistan Economic Corridor (CPEC) infrastructure development project.
The Pakistani Taliban, also known as Tehrik-i Taliban Pakistan or TTP, which is separate from the Afghan Taliban, claimed responsibility.
Balochistan is rife with ethnic, sectarian and separatist insurgencies, and a number of militant groups, including the TTP and the Balochistan Liberation Army, operate in the province.

What China’s $26.5 billion investment for CPEC will cost Pakistan

The figures are much lower than the projections made by some private institutions because China’s investment on CPEC was earlier pegged at over twice $26.5 billion.
Pakistan will pay $40 billion to China in 20 years in shape of repayments of debt and dividends on a $26.5 billion investment under flagship China-Pakistan Economic Corridor (CPEC), documents of the Ministry of Planning and Development reveal.
Out of $39.83 billion – to be precise – the debt repayments of energy and infrastructure projects amount to $28.43 billion. The rest of $11.4 billion will be paid in shape of dividends to the investors, showed the official estimates.
The figures are significantly lower than the projections made by some private institutions, primarily because the outflows have been worked out on the basis of only $26.5 billion investment.
This suggests that unlike the claims of $50 billion to $62 billion CPEC investment, the actual investment likely to remain half of the initially announced investment figures.
The only major project that can materialise in the next few years is $8.2 billion Mainline-I Project of Pakistan Railways. The mainline project cost has not been included in these estimates.
The Ministry of Finance has also shared these estimates with the International Monetary Fund (IMF) last month, confirmed a government spokesman on CPEC affairs. The country on an average will return $2 billion per annum to China.
These are the first comprehensive estimates of inflows that are based on under implementation projects and the outflows have been estimated on account of debt servicing of energy and infrastructure projects and dividends payments of power plants. CPEC portfolio currently comprises energy projects, being setup by private investors, and infrastructure schemes undertaken by the government.
The government loans of $5.9 billion have been signed at an interest rate ranging from 2% to as high as 5.2%. There are three government loans totaling $774 million that have been obtained at 5.2% rate.
The commercial loans for setting up power plants have been arranged at an interest rate of London Interbank Offered (Libor) plus 4.5%. However, it is the return on equity, which in some cases is as high as 34.2%, that will cause outflow of $11.3 billion.
CPEC inflows of the existing under implementation projects will dry in 2022-23 when the country will receive $26.5 billion, according to the Planning Ministry’s working. On the basis of these inflows, Pakistani authorities have estimated that the country will return $39.83 billion to Chinese firms.

Total Debt and Dividend Outflows of IPPS

“CPEC projects inflows will continue till 2030 on account of energy, infrastructure projects that will be based on pragmatic planning on their economic outlook and socio economic, agriculture and Gwadar projects,” said Hasan Daud Butt, official spokesman on CPEC affairs.
To a question, Hasan Daud said both the inflows and outflows have been prepared as per actual investment and are based on projects that are under implementations. He said the Planning Ministry has shared these estimates with the Ministry of Finance and they discussed it with the IMF.
The IMF and the United States have expressed concerns over CPEC debt without acknowledging the benefits of the investment that helped remove infrastructure and energy sector bottlenecks.
However, Pakistan can only sustain these repayments by enhancing its exports. In case the country still remains unable to increase exports despite removal of energy bottlenecks, it will be difficult to manage these repayments.
Assuming that Pakistan-IMF three-year relation will begin from fiscal year 2019-20, the country will repay $4.2 billion to China during this period on account of debt and dividend payments.
In the next fiscal year, Pakistan will return $1 billion to China that will reach to $1.9 billion during the last year of the IMF programme. The CPEC repayments will peak to $3.23 billion in 2025-26 and from that year it will start reducing and ending at $306 million in 2037-38, according to the documents.

Total inflows

The official statistics showed that CPEC inflows on account of 18 energy projects and 5 infrastructure projects that began in 2014-15 would end in 2022-23. Till last fiscal year, Pakistan has already received $11 billion worth of CPEC inflows.
For the current fiscal year, CPEC inflows have been estimated at $4.2 billion –which is the peak of the inflows. During the next four years, the inflows will amount to $4 billion, $3.73 billion, $2.53 billion and $1 billion in 2022-23.

Energy outflows

CPEC energy projects outflows have begun from this fiscal year that will continue till 2037-38. Against $2.4 billion Chinese investment in Kohala hydropower project, Pakistan will return $2.3 billion in loans and another $2 billion in dividend payments.

Total Inflows (Energy and Infrastructure)

Pakistan will get $1.7 billion Chinese loan for Karot hydropower project and payback $2.1 billion in loan and another $700 million in dividend in 20 years. Against $1.7 billion Chinese investment in Suki Kinari power project, the country will return $2.1 billion in loan and $1.94 billion in dividends.
The Port Qasim hydropower project is established at a cost of $2.1 billion and the repayment of debt will amount to $2.1 billion in addition to $1.73 billion on account of dividends. The Sahiwal power plant, setup with an investment of $1.8 billion, will cause $2.14 billion debt repayment and $1.37 billion in dividends.
Against an investment of $2 billion in Hubco power plant, Pakistan will pay $1.8 billion in loan and another $1.5 billion in dividends to the investors. The Engro power generation project, being setup with $1.1 billion investment, will result into $770 million in loan repayment and $407 million in dividends.
The Gwadar power project to be setup at a cost of $435 million will lead to debt repayment of $368 million and $417 million in dividend payments. The Thar electricity power plant is being setup with $1.64 billion Chinese investment.
The country will return $1.64 billion in loan and $749 million in dividend. In addition to that, five clean energy projects are being setup at a cost of $1.1 billion and their debt and dividend payments are far higher than the cost.

Infrastructure projects

Against a loan of $5.9 billion for five infrastructure projects, Pakistan will return $7.5 billion to the Chinese government over a period of 20 years. Against a loan of $1.3 billion for Karakoram Highway phase-II project, Pakistan will pay back $1.63 billion.
This is inclusive of $164.4 million debt that has been contracted at 5.2% rate. China has given a $2.8 billion loan for Sukkur-Multan motorway and the country will return $3.6 billion in 20 years. This loan also has an expensive component of $361.2 million that has been contracted at 5.2% rate.

Projected Outflow related Dividend and Debt (Energy and Infrastructure)

For Orange Line metro project, the country received $1.6 billion loan including $203.3 million at 5.2% interest rate. It will return nearly $2 billion loan over a period of 20 years.