Is America winning in Asia?

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In an earlier article in this space I wrote that President Joe Biden, having been distracted by the war in Ukraine, had finally turned his attention to Asia. But the way Biden’s Washington defined Asia excluded Pakistan. A great deal of attention was being given to India. The main reason for this was the growing competition between China and the United States — now the world’s two largest economies. Some analysts believe that even with a significant slowdown in the rate of growth of the Chinese economy, China will overtake the United States in terms of the size of its economy in a decade or two. Would this happen without an open conflict between the two nations? President Biden has said that “the United States won’t stand by and let China win the 21^st century.”

This sentiment was in line with the thinking of Thucydides, the Greek sage-historian who studied the conflict between Athens and Sparta and argued that conflict is inevitable when a rising power challenges the one that has been in command for a long time. The Harvard University political scientist Graham T Allison coined the term ‘Thucydides Trap’ in an article published in The Financial Times in 2012 to describe the likely conflict between a rising and an established power. He used the term to describe the growing tension between the United States and China and feared that America may go to war to prevent China from becoming the dominant world power.

According to Susannah Patton who researches Indo-Pacific strategy at the Lowy Institute in Sydney, Australia and is the director of the Asia Power Index, her data show that the United States leverage has declined in terms of regional power dynamics. Twenty years ago, 5 per cent of exports from Southeast Asia went to China and 16 per cent to the United States. By 2020, they were both around 15 per cent. China’s increasing economic dominance was shown by the trends in regional trade. It does around two and half times more volume in the region than the United States. China is now the largest trading partner of almost every Asian country. The situation would turn even more in favour of China when the enormous amount of investment it was making in what President Xi Jinping has called the Belt and Road Initiative or BRI. Two countri

Electricity import on agenda as Bilawal visits Iran today

ISLAMABAD:

Foreign Minister Bilawal Bhutto Zardari is scheduled to undertake a two-day visit to Iran from Tuesday (today) for talks on a range of issues, including electricity supply from the neighbouring country amid a severe energy crisis in the country.

This will be Bilawal’s first visit to Tehran as foreign minister. He is undertaking the visit at the invitation of Iranian Foreign Minister Dr Amir Abdollahian.

During the visit, the foreign minister will hold a detailed exchange of views with his Iranian counterpart on all areas of mutual interest, an official handout issued by the Foreign Office said on the eve of the visit.

During his stay in Tehran, he will also call on the Iranian president and meet other dignitaries. On Wednesday (tomorrow) the foreign minister will visit Mashhad, the Foreign Office statement added.

During the delegation-level talks, the two sides will review all facets of bilateral relations, including trade and economic ties, electricity supply from Iran, border sustenance markets, road and rail connectivity and facilitation of Zaireen.

Iran is currently supplying electricity to Gwadar and Pakistan is keen to further enhance that cooperation. The country is currently in the grip of energy shortages, causing long power outages.

But there was no mention of the Iran-Pakistan gas pipeline project that was signed during the Pakistan People Party’s (PPP) term between 2008 and 2013. Iran has completed work on its side of the border but Pakistan could not undertake the project, fearing the US economic sanctions.

Even the PTI government, which otherwise talked of pursuing an independent foreign policy, failed to pursue the pipeline project, which if completed, would significantly help address the gas shortage in Pakistan.

In the meantime, Foreign Minister Bilawal will also review regional security situation with particular focus on developments in Afghanistan and South Asia as well as combating Islamophobia.

Bilawal’s visit to Iran is part of regular high-level exchanges between the two countries. The last meeting between the two foreign ministers was held on the sidelines of the World Economic Forum (WEF) at Davos on 26 May.

“Pakistan and Iran enjoy close cooperative ties, based on shared geography, cultural affinities, and historic people-to-people linkages. These fraternal relations have been further strengthened through frequent high-level exchanges. The two countries are celebrating the 75th anniversary of the establishment of diplomatic relations in 2022,” according to the statement.

Despite the positive portrayal of ties in the official statement, relations between Pakistan and Iran have faced many challenges. The major challenge includes maintaining a delicate balance in ties between Iran and Saudi Arabia. But with Iran and Saudi Arabia trying to mend fences, this may make Pakistan’s problem less complicated.

Pakistan not in danger of falling in FATF blacklist: sources:

ISLAMABAD:Pakistan has in no danger of slipping into the black list of the Financial Action Task Force (FATF) when a crucial four-day review meeting begins in Berlin tomorrow, government sources said.

According to government sources, the United States, Germany, and other important states have expressed a partial willingness to extend cooperation to Pakistan in coming off FATF grey list in view of Pakistan's significant progress in meeting conditionalities of the FATF action plan.

Islamabad's massive diplomatic push came on the back of recent foreign visits of Prime Minister Shehbaz Sharif, Foreign Minister Bilawal Bhutto and State Minister Hina Rabbani Khar. The matter of FATF grey list figured in discussions during these visits in which important FATF member countries expressed their soft corner towards Pakistan.

The government sources said that except those relating to prosecution of money laundering almost all points of the FATF action plan have been implemented. Pakistan has made significant progress in prosecution of money laundering crimes, undertaking all relevant legal reforms including amendments in laws.

Pakistan is of the view that it has an impartial, independent and transparent judiciary like the rest of the world, insisting that money laundering and terrorism financing cases can be prosecuted under the prevailing legal mechanism.

However, the flaws found in the prosecution system have been rectified while the directorate established with regard to Designated Non-Financial Businesses and Professions (DNFBPs) has become operational, the sources said.

According to sources, chances of Pakistan getting off the gray list are bright when the main meeting of FATF gets underway in Berlin from 14th to 17th June. Pakistan has implemented 32 out of 34 points of the two FATF action plans given in 2018 and 2021, according to sources in the Ministry of Finance.

Pakistan has implemented 26 out of 27 points of the 2018 action plan and six out of seven points under 2021 action plan, the sources said. Hina Rabbani Khar will lead the Pakistani delegation at the FATF meeting. Issues relating to Pakistan will be reviewed in the meeting on 15th-16th June. However, the final outcome about Pakistan's placement on the grey list will become clear in the week.

The government sources hinted at the possibility of Pakistan staying on the grey list for a while if any further progress was required but remained hopeful Pakistan's chances of removal from the list were higher than previously due to the massive diplomatic campaign.

After hitting a new peak Never back again real position.

After hitting a new peak never back his old position, the US dollar extended its gains against aand again the rupee in the interbank market and rose past the Rs205 mark to reach a new high during the early hours of trading on Tuesday — a trend that is largely attributed to the dollar strengthening in global markets, a dearth of dollar inflows and the central bank's depleting foreign exchange reserves.

According to the Forex Association of Pakistan (FAP), the greenback appreciated Rs1.70 from the previous day's close of Rs203.90 and climbed to Rs205.50 around 10:30am. (The FAP's closing rate shows a slight deviation from that of the State Bank of Pakistan, which posted a closing rate of Rs203.86).

Head of research at Tresmark, Komal Mansoor, views the rupee's fall in light of trends in global markets, where the dollar has been gaining ground.

According to a Reuters report, the US dollar stood by a fresh 20-year peak today and just about everything else nursed losses as investors braced for aggressive Federal Reserve rate hikes and a possible recession.

“The dollar's strength, on the basis of quantitative tightening, is the key driver in the global markets," Mansoor told in Media. She pointed out that Japan's Yen was at a 24-year-low and other "major and regional currencies are also at multi-year lows".

"This is playing in the minds of local traders," she explained.

Saad Bin Naseer, director of web-based financial data and analytics portal Mettis Global, highlighted the stalled $6 billion programme with the International Monetary Fund as another factor contributing to the rupee's fall while the local currency market faces a shortage of the dollar.

The IMF loan facility has been stalled since early April as negotiations with the international money lender remain inconclusive, with the lender earlier expressing reservations over fuel and energy subsidies introduced by the previous PTI government and now over targets set by the new government for the upcoming fiscal year.

The IMF's representative in Islamabad, Esther Perez Ruiz, told Reuters a day ago that additional measures would be needed to bring Pakistan's budget for the year 2022-23 in line with the key objectives of its programme with the IMF.

The rupee was under pressure as the targets set by the government in the budget for the fiscal year 2022-23 were not in line with the IMF's expectations, explained Naseer, adding that "budgetary measures have created uncertainty on the resumption of IMF programme".

"Until the government is not able to resume the IMF programme, pressure on the rupee will continue," he said.

Moreover, he added, "the fate of inflows from China [also] remains uncertain". Pakistan is still awaiting the rollover of $2.3bn loan from China.

"Furthermore, the rupee is also shedding its value in anticipation of the Financial Action Task Force (FATF) meeting, which will review Pakistan’s actions against money laundering and terror financing," Naseer noted.

Pakistan has been on the FATF's grey list for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018.

While a Dawn report, which cited diplomatic sources in Washington, says that China and other allies are working to get Pakistan off the list, uncertainty is likely to surround the matter until a formal announcement by the global body after its four-day session set to begin today.