Pressure and challenges from the IMF regarding debt woes over the China-Pakistan Economic Corridor (CPEC) won't compromise Pakistan's commitment to the CPEC.
Pakistan is experiencing a deep economic crisis, and the nation is facing a burden of foreign debt of $95 billion. Overseas Pakistanis have been sending their earnings to their family members in Pakistan, which for a long time was a good source of foreign exchange earnings for the government of Pakistan. But due to mismanagement, poor planning and corruption, these remittances have been decreasing over time. Also, the Pakistani rupee has weakened against the strengthening US dollar, resulting in a decline in Pakistan's foreign exchange reserves. This, along with the difficulty Pakistan faces in repaying its debts, has worsened the country's economic problems. These led Pakistan to seek a bailout package from the IMF.
The IMF team has been in Pakistan recently and negotiations started over a bailout, which included many conditions, including details of CPEC agreements. Although Pakistan was in dire need of financial assistance and could accept some of the IMF's monetary conditions, it could not compromise regarding the CPEC.
Pakistan's involvement in the CPEC is backed by the whole country, and this won't change even if there is a new government. The CPEC is an essential element of Pakistan's national strategy, and we believe it is the only way forward for Pakistan. So the IMF's pressure can only prompt Pakistan to strengthen its ties with China. We are already good and trustworthy friends.
The US has used the World Bank and IMF as tools to exert its political hegemony in the past and it still does so. Secretary of State Mike Pompeo has previously warned against any IMF bailout for Pakistan that would pay off Chinese loans to Pakistan. Categorically, they asked not to fund any project that is part of the CPEC or backed by China. They wanted us to guarantee there would not be any transfer of funds to China.
It is obvious that the US does not accept China's rise and is trying to restrain it. The US will use all necessary means to put pressure on China and anyone entering into a partnership with it. The US aims to pressurize Pakistan as a way to limit China's further economic development. But Pakistan enjoys a very special relationship with China and wants to take this friendship to new heights.
China has established the Asian Infrastructure Investment Bank (AIIB), which is helping developing countries to improve their infrastructure. The bank works on the basis of merit and without any political prejudice. India offers an example of this. India has been skeptical about the Belt and Road Initiative (BRI) and has had a sometimes difficult relationship with China, but India has already been one of the beneficiaries of AIIB loans. Many other developing countries have received AIIB loans and are satisfied with its policies.
It is time to establish an Asian Monetary Fund in order to help developing economies based on merit only, without any political motives. The IMF is bound by US influence and functions as an economic wing of US foreign policy. Many developing countries have been victims of harsh IMF terms and want to get rid of IMF control. I think China has the experience and resources to come up with new initiatives, and the developing world would appreciate and support it.
There is a visible divide in the world, between those who are pro-globalization and those who believe in protectionism. Creation of a new funding institution would put China in a position of global moral leadership. Developing countries would extend their support for globalization and Chinese initiatives like the BRI, free from external monetary coercion. Pakistan, being an all-weather, time-tested friend, will stand with China at all times.
The author is a non-resident fellow with the Center for China and Globalization and a professor at the National University of Sciences and Technology in Islamabad, Pakistan.