Pak seeking a bailout from IMF to repay Chinese ‘predatory infra’ debts, US Congressmen write to Pompeo
Updated Apr 06, 2019 | 13:39 IST | Srinjoy Chowdhury
Three Congressmen have written to US Secretary of State Mike Pompeo and his colleague in the US Cabinet, Steve Mnuchin, the Treasury secretary, on April 5 expressing “deep concern”.
Photo Credit: AP
US Secretary of State Mike Pompeo.
Days after US Secretary of State Mike Pompeo’s outburst, accusing China of “shameful hypocrisy”, for continuing to stop meaningful action in the United Nations Security Council against Maulana Masood Azhar of the Jaish-e-Mohammed, an already designated terror outfit, a bipartisan group of Congressmen of the US House of Representatives have spoken out against Pakistan asking for money from the International Monetary Fund to pay for debts because of “predatory Chinese infrastructure projects”.
Three Congressmen – Ted Yoha, the Ranking member of the Subcommittee on Asia, The Pacific and Nonproliferation, George Holding and Ami Bera – have written to Pompeo and his colleague in the US Cabinet, Steve Mnuchin, the Treasury secretary, on April 5 expressing “deep concern”. Pakistan, they have said, was seeking a “bailout deal” to “relieve debts”. Yoha and Holding are Republicans while Bera is a Democrat.
The Congressmen said China is investing $62 billion in Pakistan to build the CPEC – the China-Pakistan Economic Corridor. India has objected to it several times as it runs through Indian territory held by Pakistan. They said: “Its debt repayment and profit repatriation terms are not transparent and have understandably raised concern inside Pakistan. Illustrative of the dangers of China’s debt-trap diplomacy, Sri Lanka became unable to make payments on the Chinese debt it had taken on for the Hambantota Port Development Project.”
Sri Lanka was forced to hand over 15,000 acres of land near the port for a 99-year lease and the “impact of Chinese predatory financing in Pakistan... cannot be ruled out. There is a critical need for transparency in CPEC projects, including loan terms and contractual details. Unless the terms are subjected to strict scrutiny an IMF bailout could be used for paying up Pakistan’s debt obligations to China.”
Of course, China's relationship with Pakistan is different from its ties with Sr Lanka. Islamabad is a strategic ally, a recipient of Chinese nuclear technology and advanced weapons systems, so Beijing’s reaction could be considerably different there is a debt issue.
That Pakistan has squandered IMF money is also a problem, the Congressmen said. In the last three decades, Pakistan has been dealing with the IMF for 22 years but despite recommendations, “Pakistan has failed to carry out necessary structural reforms to address its structural economic problems”. So, another bailout by the IMF, unless Pakistan is transparent and deals with its problems relating to balance of payment, high fiscal deficit and unsustainable debt “will again be doomed to fail”. What the bailout will do is “enrich China”.
Asking for strong action against Beijing, the Congressmen said: “It is critical that we continue to counter China’s attempts to hold hostage countries that are unable to repay unfavourable loans in an attempt to further their geostrategic goals.”