26 May 2019

Pakistan: the IMF Bailout Agreed, the Hard Part Begins Now

Arvind Gupta

The IMF and the government of Pakistan have agreed on a structural adjustment program of USD 6 billion for three years to stabilise Pakistan’s crisis ridden economy. This will be the 13th such IMF package since 1988. The agreement was reached after months of tough negotiations. The International Monetary Fund (IMF) board is expected to approve the loan agreement in July 2019.

According to some Pakistani economists, the structural adjustment program is focused on stabilisation and not growth. Under the conditionalities agreed, the government will have to take measures to reduce its current account and budget deficits by increasing tax collection, hiking the prices of utilities and letting the rupee float. As an advance action, the Oil and Gas Regulatory Authority (OGRA) of Pakistan has announced a 47 percent increase in the gas prices and recommended a 205 percent hike by 1st July. The Pakistan government has been regularly raising the gas prices since it came to power.

Pakistani Duplicity Caused the United States to Lose in Afghanistan

by Lawrence Sellin

“The war in Vietnam was not lost in the field, nor was it lost on the front pages of the New York Times or the college campuses. It was lost in Washington, D.C.”

H. R. McMaster wrote that statement in his 1997 scathing critique of the Vietnam War, Dereliction of Duty: Lyndon Johnson, Robert McNamara, the Joint Chiefs of Staff, and the Lies That Led to Vietnam. He was a major in the Army at that time. Now, he is a retired lieutenant general and former national security advisor to President Donald Trump.

It is indeed ironic that McMaster eventually contributed to what many people thought to be impossible by repeating the mistakes of Vietnam and losing the Afghanistan war—both in the field and in Washington, DC.

The Canadian Parliament establishes the North-West Mounted Police, the forerunner of the Royal Canadian Mounted Police.

Pakistan’s Economy Remains Imran Khan’s Biggest Challenge

By Umair Jamal

Pakistan is expected to receive around $6 billion worth of financial support from the International Monitory Fund (IMF) over the next few weeks. The incoming financial assistance is going to be one of the toughest financial packages that the country has ever obtained, with serious implications for the Pakistan Tehreek-e-Insaaf (PTI) government.

PTI’s government is taking the loan at a time when the party literally has nowhere else to turn for financial support that can match what is being offered by the IMF. Arguably, the country’s prime minister, Imran Khan, is not in complete control of the financial matters of the country for a number of reasons. A lot has changed during the past eight or nine months concerning Khan and his party’s political standing and ability to inspire confidence through smart and efficient policy work. It is undeniable that Khan has lost a lot of space when it comes to making decisions that fall under his jurisdiction, but have implications for other state institutions.

It cannot be said more plainly that Khan’s team has even failed to get the basics right. Khan, in an attempt to avoid the IMF’s financial help, cost Pakistan a vital amount of time that could have allowed much-needed leverage to the current government when it comes to negotiating the terms of a potential agreement with IMF. A government that comes to power with great promises of improving governance structures through efficient policy work, claiming it has the best available team at its disposal, cannot afford to make blunders. Unfortunately, Khan’s team has only inspired confusion and raised questions when it comes to the current government’s ability to govern with clear direction and purpose.

The Great Power Game is On and China is Winning

By ROBERT W. MERRY

From across the pond come two geopolitical analyses in two top-quality British publications that lay out in stark terms the looming struggle between the United States and China. It isn’t just a trade war, says The Economist in a major cover package. “Trade is not the half of it,” declares the magazine. “The United States and China are contesting every domain, from semiconductors to submarines and from blockbuster films to lunar exploration.” The days when the two superpowers sought a win-win world are gone.

For its own cover, The Financial Times’ Philip Stephens produced a piece entitled, “Trade is just an opening shot in a wider US-China conflict.” The subhead: “The current standoff is part of a struggle for global pre-eminence.” Writes Stephens: “The trade narrative is now being subsumed into a much more alarming one. Economics has merged with geopolitics. China, you can hear on almost every corner in sight of the White House and Congress, is not just a dangerous economic competitor but a looming existential threat.”

At a Ukrainian aircraft engine factory, China’s military finds a cash-hungry partner

By Anton Troianovski

ZAPORIZHIA, Ukraine — The president of a top Ukrainian aerospace company says its new Chinese investors often ask the staff for “little conversations.” 

They want to know about record-keeping and planning, the setup of production lines and the interplay between workshops. 

“They’ll talk for three hours, and the next day, a totally different group of people will come,” said Vyacheslav Boguslayev, whose sprawling Soviet-era company, Motor Sich, is one of the most advanced military aircraft engine manufacturers in the world. 

“They’ll ask all the same questions as yesterday, and this continues for a week,” he said.

Racing to upgrade its military, China has been turning to Ukraine. And Ukraine — with its economy scrambled by hostilities with Russia — has been willing to accept China’s embrace.

The Global Consequences of a Sino-American Cold War

NOURIEL ROUBINI

NEW YORK – A few years ago, as part of a Western delegation to China, I met President Xi Jinping in Beijing’s Great Hall of the People. When addressing us, Xi argued that China’s rise would be peaceful, and that other countries – namely, the United States – need not worry about the “Thucydides Trap,” so named for the Greek historian who chronicled how Sparta’s fear of a rising Athens made war between the two inevitable. In his 2017 book Destined for War: Can America and China Escape Thucydides’s Trap?, Harvard University’s Graham Allison examines 16 earlier rivalries between an emerging and an established power, and finds that 12 of them led to war. No doubt, Xi wanted us to focus on the remaining four.

Despite the mutual awareness of the Thucydides Trap – and the recognition that history is not deterministic – China and the US seem to be falling into it anyway. Though a hot war between the world’s two major powers still seems far-fetched, a cold war is becoming more likely.

China Deserves Donald Trump

By Thomas L. Friedman

A U.S. businessman friend of mine who works in China remarked to me recently that Donald Trump is not the American president America deserves, but he sure is the American president China deserves.

Trump’s instinct that America needs to rebalance its trade relationship with Beijing — before China gets too big to compromise — is correct. And it took a human wrecking ball like Trump to get China’s attention. But now that we have it, both countries need to recognize just how pivotal this moment is.

The original U.S.-China opening back in the 1970s defined our restored trade ties, which were limited. When we let China join the World Trade Organization in 2001, it propelled China into a trading powerhouse under rules that still gave China lots of concessions as a developing economy.

Reforming the Chiang Mai Initiative

By Mie Oba

In early May, the 22nd ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting made a significant decision. The Chiang Mai Initiative (CMI), a mechanism for foreign currency exchange in times of emergency created under ASEAN+3, had previously been regarded as a pool of foreign exchange reserves accessible by the countries concerned as a U.S. dollar loan. At this meeting, however, it was decided to permit local currency swaps.

The decision is a nod to the use of the mechanism in cross-border transactions in Asian local currencies such as the yuan and the yen, and the growing demand for it as a currency for foreign exchange reserves. More importantly, given the various uncertainties and instabilities threatening the economy of East Asia, such as the protracted and intensifying antagonism between the United States and China and the resulting downturn in China’s economy, the decision is an attempt by East Asian countries themselves to create a regional financial system as a response to the unforeseen circumstances of the region.

What Does China Want From WTO Reforms?

By Antara Ghosal Singh

As the world debates the prospect of a China-U.S. trade agreement, yet another debate is taking Chinese strategic circles by storm: World Trade Organization (WTO) reforms.

It is argued that the ongoing trade negotiations between the United States and China, U.S.-Japan, U.S.-EU and the already concluded new NAFTA or USMCA between the U.S., Mexico and Canada, are really only the “prologue” to the ultimate “big show” – reform of the WTO, which will set the rules of the game in global trade and investment for the next quarter of a century or so. As per the Chinese narrative, the “game” surrounding WTO reforms has already begun and it is just a matter of time before the formal negotiations begin, likely following the successful completion of the separate negotiations in the various ongoing trade spats. In fact, the trade negotiations, many Chinese scholars argue, will further pave the way for WTO reforms by securing broad-based consensus among related stakeholders on matters of concern.

China’s official discourse is that China will support “real reforms” at the WTO but will stay away if it is “trap.” “If someone wishes, in the name of reform, to put China in a tailor-made straitjacket of trade rules to constrain China’s development… they will be very much disappointed,” stated China’s ambassador to the WTO, Zhang Xiangchen, at a WTO conference in Paris in November 2018.

How Is Iran Worse Than Saudi Arabia?

BY PETER BEINART

With ideas like Medicare for All and the Green New Deal, the 2020 Democratic presidential contenders are challenging the ideological parameters that have defined American domestic policy since the Reagan era. If only they were doing so on foreign policy too.

Consider their responses to President Donald Trump’s recent escalation with Iran. Yes, one Democrat after another has calledon Congress to prevent Trump from going to war. But Democrats have not frontally challenged the core assumption underlying Trump’s belligerence: that Iran is a uniquely malevolent actor in the Middle East.

Even as he criticized Trump’s recent actions, Representative Seth Moulton last week called Iran “a major threat to our national security.” In a statement emailed by her staff, Kirsten Gillibrand condemned its “malign activities.” Cory Booker has in the past insisted that the United States “be more vigilant than ever in fighting Iranian aggression.”

Iran and the Problem of Occupation Warfare

George Friedman

There has recently been a lot of talk about a war between the United States and Iran. In my view, it’s unlikely because the risks are too high for both countries. Iran can’t take the chance that its military would be destroyed, and the U.S. can’t accept the costs a real victory would entail. Since Korea, the United States has performed poorly in war, with the exception of Desert Storm, when the destruction of Iraqi forces allowed U.S. entry into Kuwait and no Kuwaiti resistance to American occupation emerged. But in Vietnam, Afghanistan and Iraq, the United States faced the problem of what I would call occupation warfare, a type of combat that carries a substantial price even after the initial war has been won.

The Three Phases of War

Iran Bluster Is about Red Lines, Not War

by Michael Rubin

In the past week, American-Iranian tensions flared to heights not seen since the Reagan years, when U.S. and Iranian ships and planes faced off in the Persian Gulf. Not only have Iranian irregular forces apparently sabotaged four ships off the major Emirati port of Fujairah with either magnet bombs or underwater drones, but a subsequent drone attack on a Saudi pipeline amplified tensions to a new level.

Even on the best of days in hyper-partisan Washington, there are enough polemics to go around. The fact that national security in general—and Iran policy in particular—have become political footballs only makes the problem worse. Never one to miss an opportunity to throw fuel on the rhetorical fire, President Donald Trump threatened via tweet, “If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!”

Iran’s Uranium Stockpile and the Future of the JCPOA

By Ankit Panda

Behrouz Kamalvandi, a spokesperson for Iran’s Atomic Energy Organization, spoke to Tasnim Newson Monday, clarifying the measures recently announced by Iranian President Hassan Rouhani pertaining to the country’s commitments under the 2015 Joint Comprehensive Plan of Action.

Rouhani, on May 8, announced that Iran would cease complying with two provisions in the 2015 agreement, which sought to impose verifiable limits on Iran’s civil nuclear program in exchange for sanctions relief. Initially, Tehran will no longer keep its stockpile of low-enriched uranium (LEU) under the 300 kilogram limit permitted by the agreement. Furthermore, it will also not comply with the agreement’s limits on heavy water.

As I discussed in greater length recently at The Atlantic, Rouhani’s announcement was designed to point blame at the United States. The two specific provisions that went into effect regarding the LEU and heavy water limits came days after the U.S. State Department announced that Washington would sanction any individuals or entities involved in allowing Iran to comply with exports of excess LEU out of its borders in exchange for natural uranium (as allowed by the JCPOA). The Trump administration also said it wouldn’t permit any heavy water to become available to Iran “in any fashion.”

Trump’s Pardons of U.S. Soldiers Send a Very Dangerous Message, at Home and Abroad

Judah Grunstein

Of all the constitutional powers enjoyed by the U.S. president, perhaps none is so vulnerable to abuse as the presidential pardon. As a check against the potential abuse of power by the judicial branch, it serves an important constitutional function. As a public demonstration of clemency and the power of redemption, it contributes symbolically to the health of the republic. But when used improperly, the pardon becomes a poison to the body politic, rather than an antidote to what is ailing it.

This is certainly the case when it comes to President Donald Trump’s decision to pardon Michael Behenna, a U.S. special operations forces officer convicted by a court martial of murdering a detainee in Iraq in 2008. Trump is also reportedly considering pardons for several other U.S. officers accused of war crimes in Iraq and Afghanistan, but who have not yet stood trial.

THE TOXIC TWENTY REVISITED


Russia and China's Distinct but Overlapping Arsenals

Russia and China are both engaged in an undeclared war on the West. They are not allies, but they cooperate. Their arsenals are different, but overlap. Six tactics are common to both.

First is cyber-attacks on the confidentiality, integrity, and availability of data held on a target country’s computer systems. China concentrates more on stealing intellectual property and acquiring big databases that help it conduct digital surveillance of the outside world. Russia’s efforts include gathering high-level political intelligence, and also the sabotage of critical infrastructure such as power grids.

Second are diplomatic divide-and-rule gambits designed to weaken multilateral rule-based organizations, and to create the perception of targeted countries isolation and indefensibility. For China, these center on its campaign to humiliate and isolate Taiwan, and to constrain EU decision-making. Russia’s approach is a bit cruder, focused mainly on Ukraine, which it depicts (not very successfully) as a failed fascist state.

The Drums of War

By Nabeel Khoury

If your allies and your own military and intelligence experts are telling you you’re wrong, they may have a point. 

The Trump administration’s warning about an imminent attack by Iran in the Middle East appears to be unfounded and its escalation of pressure on Tehran part of a strategy to win concessions from the Islamic Republic.

Amid escalating tensions between the United States and Iran, when asked by a reporter on May 16 whether war was imminent, U.S. President Donald J. Trump responded: “I hope not.” In light of that sentiment, the U.S. escalation against Iran does not make strategic sense. If you wish to only modify an opponent’s behavior you do not push it into a corner. 

If the U.S. goal was to “never be held hostage to the Iranian regime’s nuclear blackmail,” as U.S. Secretary of State Michael Pompeo noted Trump has promised, then surely the best way forward would have been for the United States to stay in the Iran nuclear agreement (the Joint Comprehensive Plan of Action or JCPOA) and seek to strengthen its provisions.

Trump and Abe: The Odd Couple

By Weston S. Konishi

At the invitation of Japanese Prime Minister Shinzo Abe, U.S. President Donald J. Trump will travel to Tokyo later this week as the first foreign leader to meet Japan’s newly-crowned Emperor Naruhito. This unique honor caps off Abe’s campaign to develop a close personal rapport with his famously mercurial counterpart—including nominating Trump for a Nobel Peace Prize and presenting a set of gold-plated golf clubs to the bling-happy leader of the free world.

Such largesse is not without its reasons. Japan relies on its alliance with the United States for its national security and, although China has become its largest overall trade partner, the United States is Japan’s largest export market. This is a bilateral relationship that Japan cannot afford to lose.

Yet the Trump administration presents unique challenges for Tokyo. Not only did the administration impose steel and aluminum tariffs on Japan soon after coming to office but it forced Tokyo into bilateral trade talks to avoid even more damaging tariffs on autos and other goods.

Artificial Intelligence: Ethics, Congress, Data And The Tech

By COLIN CLARKon 

Artificial intelligence sparks images of thinking robots doing things without human intervention. While that is part of its promise, reality is much more complex. Join me as I explore the intricacies of ethics, technology, policy and politics with three experts on this somewhat arcane but strategically crucial subject.

This interview offers something close to a master class in AI, exploring why the US is not likely to use autonomous robots to kill the enemy, why Congress must come to grips with the many challenges AI raises, how the National Geospatial Intelligence Agency and the Intelligence Community are grappling with the unique issues of classification, fast access to data and the need for global access across the force, how companies like Booz Allen Hamilton are managing the data they need to train AIs and much more.

The Internet Security Apocalypse You Probably Missed

By Charlie Warzel and Sarah Jeong

Instead of my usual monologue, this week I’ve invited my colleague, the editorial writer Sarah Jeong, to have a conversation about the biggest story from last week that you probably missed.

Charlie: Sarah, Welcome to Privacy Project ThunderDome! We had a rather apocalyptic week in the security world. Not one or even two but three sprawling security flaws were announced in some major products and pieces of hardware. There was a WhatsApp hack, an Intel chip vulnerability and a Cisco router bug (with the fun name Thrangrycat, which isn’t fun at all but actually super alarming). How wild was last week?

Sarah: Part of me has to wonder if the sheer number of Bad Security Disaster stories have exhausted both the media and its audiences. These stories are way worse than “Facebook made a mistake and now you need to change your password,” because they concern the security of the web’s infrastructure. Imagine finding out that there’s something ever-so-slightly wrong with 50 percent of all the steel beams manufactured since 2013.

Does Cyber Command need more electronic warfare tools?

By: Mark Pomerleau   

Within the U.S military services, leaders often discuss the close relationship of cyber warfare and electronic warfare. But what’s less clear is the relationship between these two disciplines at U.S. Cyber Command.

That may be changing.

According to recent budget documents as well as industry representatives, Cyber Command is investing tens of millions of dollars in tools that allow operators to take advantage of cyberspace as well as the electromagnetic spectrum.

There has been some discussion regarding the need for electronic warfare enabled cyber capabilities.

Traditionally, Cyber Command’s high-end warriors have focused on IP-based networks. But some targets in the future may not be connected to these types of networks and instead may only be accessible through the electromagnetic spectrum. As a result, budget documents for fiscal year 2020 point to several initiatives across the military’s cyber organizations to develop electronic warfare systems in conjunction with more traditional cyber tools.