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Pakistan Panic: 3rd Currency Devaluation In 2018 Sends Sovereign Risk Soaring Above Argentina, Ukraine

While many of the world’s eyes are on the carnage in Argentina as EM collapses, Pakistan has quietly devalued the Rupee three times this year, amid tumbling reserves which has sparked enough investor anxiety to send CDS spiking.

Pakistan is now ‘riskier’ than Greece, Ukraine, and Argentina…

The country has been roiled by domestic political and economic turmoil and was not helped this week when Moody’s changed the outlook on Pakistan to negative from stable citing heightened external vulnerability risk.

Moody’s affirmed its B3 rating

Says foreign exchange reserves have fallen to low levels and will not be replenished over the next 12-18 months, absent significant capital inflows.

Moody’s says low reserve adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks.

It certainly looks like they are losing control of the currency…

 

And to pile on – Pakistan’s main stock index – down 33% YTD in USD terms – just suffered a ‘death cross’…

Notably all of this carnage has accelerated since the start of January which coincided with Pakistan’s decision to ditch the dollar(following Trump’s remarks) and get closer to China.

“SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions,” the State Bank of Pakistan (SBP) said in a press release late Tuesday, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

“The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan,” Dawn news, Pakistan’s most widely read English-language daily, announced while quoting the SBP press release.

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Image source: WION News

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Pakistan And America Are In The Throes Of A Serious Diplomatic Crisis

Pakistan And America Are In The Throes Of A Serious Diplomatic Crisis

The steady deterioration of relations between these two erstwhile long-time allies is continuing with the latest political crisis between them that was sparked by the US’ decision to limit the distance that Pakistani diplomats in DC could travel outside the city. Islamabad imposed reciprocal measures against American diplomats located anywhere in the country, and the situation has since remained frozen, but is nowhere near resolved. While American-Pakistani relations have been worsening for the past couple of years now and especially since Trump’s aggressive New Year’s tweet against the country, they hit a low point when an American military attaché who had hit and killed a motorcyclist was originally forbidden from leaving the country aboard a US military plane that had come to retrieve him last week. A Pakistani court had ruled that he didn’t have full diplomatic immunity but he nevertheless left the country on Monday under unclear circumstances.

It was presumably the legal actions initially pursued against this diplomat that infuriated the US to the point of wanting to humiliate all Pakistani diplomats in the American capital through the imposition of new travel restrictions, but Islamabad had a good reason for broadening its own reciprocal decree to include all American diplomats anywhere in the country. It was reported at the end of last month that the CIA failed in its secret plan to stage a jailbreak to free its local agent who was accused of cooperating with American intelligence in its quest to kill Bin Laden, and it’s well-known that US diplomats sometimes clandestinely go beyond their official duties in running spies inside their host nation. That’s probably what the Pakistanis are worried about after the news broke that the CIA was trying to organize a jailbreak, one which probably would have been violent and likely resulted in the deaths of some prison guards.

…click on the above link to read the rest of the article…

India Builds Over 14,000 Bunkers In Preparation For War With Pakistan

The Government of India is planning to construct 14,460 bunkers for civilians in five border districts in Jammu & Kashmir – Samba, Poonch, Jammu, Kathua, and Rajouri – which reside along Line of Control (LoC) and the international Indo-Pakistani border, reports The Times of India.

The state-owned National Buildings Construction Corporation (NBCC) will build these bunkers in populated regions that rest within 3 kilometers (1.86 miles) from the de facto border between the two countries, which have experienced an increasing amount of incursions by the Pakistani Army.

In February, Jammu and Kashmir Chief Minister Mehbooba Mufti announced during a State Assembly that 41 civilians had been killed in ceasefire violations along the LoC by Pakistan between 2015 and 2017. To safeguard civilians from Pakistani shelling across the border, NBCC will build 13,029 small bunkers and 1,431 more massive community bunkers. The Times of India said the construction program would cost around 4.157 billion rupees (US$63.8 million).

Oneindia News: India builds bunkers along the LoC with Pakistan for villagers

The chairman and managing director of NBCC, A K Mittal, told The Times of India that “pre-cast construction methodology” would be used for the bunkers.

“Strategically located casting yards will be used to fabricate RCC components, which shall be transported by trailer/ tractors and the bunkers will be erected by cranes and labourers. We will plan in such a way that each bunker is completed in maximum 2-3 days,” he added.

The Times of India provides insight into the specific locations where the individual and community bunkers will be built.

“In Samba, 2,515 individual and eight community bunkers will be built. Similarly, in Jammu 1,200 individual and 120 community bunkers will be constructed. A maximum of 4,918 individual and 372 community bunkers will be built in Rajouri. In Kathua, 3,076 individual bunkers will be constructed. Poonch will get the maximum number of 688 community bunkers and will get another 1,320 individual bunkers.”

…click on the above link to read the rest of the article…

The Iran-Pakistan border is a geopolitical powder keg

The Iran-Pakistan border is a geopolitical powder keg

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The Iran-Pakistan border contains all the ingredients for a geopolitical explosion – regional rivalries, Sunni-Shia conflicts, ethnic insurgents, espionage, drug smuggling and human trafficking.

China considers the stability of the region so important that it brokered a series of border security meetings between Iran and Pakistan over the past year.

Much of China’s multi-billion-dollar investment in the China-Pakistan Economic Corridor (CPEC) hinges on the commercial viability of the Pakistani port of Gwadar, near the Iranian border, for which it has a 40-year operational lease. Moreover,  CPEC is the regional linchpin of the Belt and Road Initiative, an ambitious plan to connect Eurasia, the Middle East and Africa to China through a series of land-based and maritime economic zones.

Additionally, the planned Chinese naval base on Pakistan’s Jiwani peninsula, even closer to the Iranian border and located at the mouth of the Persian Gulf, is a critical military node in China’s “String of Pearls” facilities designed to dominate the strategic sea lanes in the Arabian Sea and Indian Ocean.

Such ambitions present a direct economic and military threat to India. Commercially, Gwadar competes with joint Iranian-Indian development of the port of Chabahar, just 150 miles to its west.

According to numerous reports, Saudi Arabia contributes to the instability of the border region by sponsoring virulently anti-Shia Sunni militant groups, such as Jaish al-Adl, who launch attacks on Iran from safe havens in Pakistan.

Iran retaliates by supporting the Baloch Liberation Front (BLF), an ethnic separatist group, whose sanctuaries and leader, Dr. Allah Nazar Baloch, are claimed to be inside Iranian territory and routinely conduct cross-border operations against Pakistani government targets. Members of the BLF are suspected to be in contact with Iranian intelligence, often through drug lords acting as intermediaries. BLF members are occasionally confused with their anti-Shia counterparts. Some months ago, a BLF team was mistakenly attacked by Iranian border guards. One member, shot in the encounter, was taken to Imam Ali Hospital in Chabahar for treatment, but later died of his wounds. The other team members were subsequently released by Iranian forces.

…click on the above link to read the rest of the article…

 

World War 3? Pakistan Vows REVENGE On India After Attack

World War 3? Pakistan Vows REVENGE On India After Attack

As the world quietly goes about their business, Pakistan has vowed to get revenge on India after an attack.  The tensions between the two nations are quickly spiraling out of control leading many to wonder if World War 3 will break out in the area soon.

According to the Express UK, the devastating attack from India along the contested border known as the Line of Control (LoC) as tensions between the two South Asian nations flare, a retired soldier has claimed. The LoC splits the region of Kashmir, with Pakistan owning one side and India, the other. The region of Kashmir has beencontested by both countries for decades causing high levels of tensions between the neighboring states.

Fayaz Ahmad, a politician from the Kashmir region of India, stated that announcements were made over some loudspeakers on the Pakistan side of Balakote that have declared acts of “retaliation” will take place.  “They said that India has killed many of our soldiers, we will take revenge for it after we bury our dead today. People are advised to take safety precautions,” said Ahmad.

Another resident in the region, Naseer Ahmad, spoke of “bombs exploding” and bullets being fired in the midst of heavy shelling. “All one could hear was the sound of bullets hitting tin or bombs exploding. The firing continued from morning till evening. We could see smoke from the hills around us. We are stressed. We don’t know what will happen when it will stop,” said the resident.

On Sunday New Delhi said that Pakistan had been “punished” for its “misadventure”, according to Brigadier Y.S Ahlawat of the Indian Army.  “In a befitting reply, the Indian Army has retaliated accurately with heavy fire on the Pakistani posts which were involved in ceasefire violations,” Ahlawat said.

…click on the above link to read the rest of the article…

40,000 Indians Flee As Fighting Erupts On Pakistan Border

Along the 786 km-long Line of Control (LoC) which divides the State of Jammu Kashmir between India and Pakistan, sporadic cross-border military gunfire between both countries is not that unusual.

However, this weekend, in the region of Noushera, Rajouri and Akhnoor sectors of Jammu and Kashmir, more than 40,000 Indians have fled their homes and shops amid the fourth consecutive day of intense shelling from Pakistani military forces, the Economic Timesreports.

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In the latest report from Indian 24 News, cross-border firing between both countries continues along the international border in the Kanachak and Pargwal sectors in Jammu, besides the LoC in the Nowshera area of Rajouri district on Sunday evening.

The number of people killed on the Indian side this month has risen to 13 including three armymen, three BSF personnel and seven civilians. The toll is almost as high as number of causalities on the Indian side in the entire of 2017, when nearly a dozen people including security personnel were killed on the entire border from Kathua to Poonch district. In most of the villages, almost entire populations have shifted to safer places fearing an escalation of firing along the border. Sources said that most of the people had shifted to their relatives’ homes.

Arnia, a border town in the Jammu district in the state of Jammu & Kashmir, India, with a population of 18,000, is now deserted as the intense shelling from Pakistan drove residents to safer grounds.

The Economic Times describes a first-hand account of the chaos in Arnia, as 80-year-old Yashpal and his family huddled in their house until two mortar shells damaged it.

“It had happened during the 1965 and the 1971 wars. Such large number of mortar bombs had not since fallen in Arnia,” Yashpal said.

…click on the above link to read the rest of the article…

Pakistan Threatens India With Nuclear War After Indian Army Chief’s Statement

Hawaii’s ballistic missile attack on Saturday turned out to be nothing more than fat-fingered “fake news” by State officials. However, a far more significant threat of nuclear war is growing on the border between India and Pakistan, called the Line of Control (LoC), which continues to be generally ignored by Western media outlets.

Indian Army Chief General Bipin Rawat said Friday his military was ready to call Pakistan’s “nuclear bluff” and carry out aggressive military operations across the border.

“We will call the (nuclear) bluff of Pakistan. If we will have to really confront the Pakistanis, and a task is given to us, we are not going to say we cannot cross the border because they have nuclear weapons. We will have to call their nuclear bluff,” Gen. Rawat warned, responding to a question during a press conference on the “possibility of Pakistan using its nuclear weapons in case the situation along the border deteriorates,” said the Hindustan Times.

On Saturday, Pakistan’s Foreign Minister Khawaja Asif unleashed a Tweetstorm denouncing Rawat’s comments as “very irresponsible. Amounts to invitation for nuclear encounter. If that is what they desire, they are welcome to test our resolve. The general’s doubt would swiftly be removed, inshallah.”


“Very irresponsible statement by Indian Army Chief,not befitting his office. Amounts to invitation for nuclear encounter.If that is what they desire,they are welcome to test our resolve.The general’s doubtwould swiftly be removed, inshallah.”


“The threatening and irresponsible statement by the Indian Army Chief today is representative of a sinister mindset that has taken hold of India. Pakistan has demonstrated deterrence capability,” he tweeted.

“These are not issues to be taken lightly. There must not be any misadventure based on miscalculation. Pakistan is fully capable of defending itself,” he added.

…click on the above link to read the rest of the article…

Pakistan Suspends Military And Intelligence Cooperation With US

In the wake of President Trump’s twitter outburst last week, alleging that Pakistan has given the U.S. “nothing but lies and deceit” accompanied by the suspension of US financial aid, Defense Minister Khurram Dastgir Khan declared that military and intelligence cooperation with the United States are suspended, during an address at the Institute of Strategic Studies in Islamabad on Tuesday.

Khan, who was speaking at a seminar titled: “Contours of Security Environment of Pakistan,’ said the U.S. is now facing defeat in Afghanistan after a 16-year war, despite spending billions of dollars. With defeat imminent, he claims the U.S. is using Pakistan as a ‘scapegoat,’ rather than defending and securing the Pak-Afghan border.

“Pakistan does not want to put a price on its sacrifices but wants them to be recognized,” Khan added that Pakistan would not allow Afghanistan’s war to be fought on Pakistani soil.

Military relations between Pakistan and the United States have stretched as far back as 1947. The Afghan-Pakistan Center of Excellence is a division of United States Central Command (USCENTCOM), with military operations sometimes jointly focused on Afghanistan and Pakistan. It’s widely known that CIA drone bases and U.S. military logistical operations for Afghanistan are located in the country.

Kahn emphasized, “a wide field of intelligence cooperation and defense cooperation have been suspended,” but added the supply lines for NATO troops in Afghanistan would remain open. There was little mention of the fate of CIA drone bases operating in the country.

Khan stated, “you see the facilities that we have extended to them (Americans) are still in operation. We have not suspended them. But there is also a wide field of intelligence cooperation and defense cooperation which we have suspended.”

…click on the above link to read the rest of the article…

Iran Claims It Has “Hard Evidence” Of Foreign Meddling In Protests

Friday’s UN Security Council meeting didn’t disappoint in terms of the anticipated level of inflammatory rhetoric and accusations. Also not unexpected is that the US finds itself isolated after a week of the Trump White House going on the offensive: first by essentially calling for regime change in Iran after the onset of mass protests last week (the State Dept.’s first statement a week ago referenced “transition of government”), and then came the bombshell announcement that all foreign aid to Pakistan, which reportedly totals up  to $2 billion in promised security aid, has been cut.

And not helpful to any of this was Trump’s lashing out through a series off the cuff tweets aimed at Iran and Pakistan in the past days – some of which may have precipitated Pakistan’s finally pulling the trigger on ditching the dollar in trade with China in retaliation.

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Image via the AP

These countries and others came out swinging at the UN. First, Iran’s ambassador told the meeting that his government has “hard evidence” that recent protests in Iran were “very clearly directed from abroad.” 

According to the Washington Post, Iran’s highest legal authority previously claimed direct CIA involvement in the unrest which has now taken over two dozen lives, including at least one police officer and three Iranian intelligence officers who were reported killed during clashes in the western city of Piranshahr on Wednesday. The Washington Post summarized the allegations as follows:

Iran’s prosecutor general, Mohammad Jafar Montazeri, alleged Thursday that an American CIA official was the “main designer” of the demonstrations. And Iranian Ambassador Gholamali Khoshroo – whose country isn’t a Security Council member but was invited to participate Friday – said the protests had gotten “direct encouragement by foreign forces including by the president of the United States.”

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Pakistan Opens Fire Along Border Killing Indian Troops, Warns “Nuclear War Cannot Be Ruled Out”

Pakistan Opens Fire Along Border Killing Indian Troops, Warns “Nuclear War Cannot Be Ruled Out”

With most of the Western hemisphere on holiday, another crisis appears to be developing on the India–Pakistan border known as the Line of Control (LoC). The incident started on Saturday, where at least four Indian soldiers were killed, in an exchange of fire with the Pakistani Army on the Line of Control (LoC) dividing Kashmir, ABC News reported.

The two sides reportedly exchanged heavy fire in the Keri sector of the Rajouri district, about 222 km southwest of Srinagar city, the summer capital of the Indian state of Jammu and Kashmir.

The skirmish started when Pakistani troops used automatic weapons, small arms, and mortars to attack Indian positions in Shahpur area of J&K’s Poonch district. The Indian army said Pakistani soldiers violated the 2003 cease-fire, calling the attack an “unprovoked cease-fire violation.”


Indian media is admitting that Pakistan conducted a surgical strike (Not like their bollywood one) in Occupied Kashmir in retaliation to bombardment of villages of Azad Kashmir on LOC by Indian army.


A local government official said that the “Pakistani army today resorted to unprovoked firing along the LoC here, killing three troopers and wounding one” He added that “the slain included an officer of the rank of Major.”

Strength to the families of the four Armymen lost today at LoC Keri, Rajouri sector. An incident that sounds like it was more than just a ceasefire violation. RIP, braves.


…click on the above link to read the rest of the article…

Pakistan Plans Replacing Dollar With Yuan In Trade With China

Pakistan Plans Replacing Dollar With Yuan In Trade With China

Pakistan is considering replacing the U.S. dollar with the Chinese yuan for bilateral trade between Pakistan and China, Pakistan’s Minister for Planning and Development Ahsan Iqbal said according to Dawn Online and The Economic Times. Interior Minister Iqbal, who has been central to the planning and implementation of China-Pakistan economic ties, was reported discussing the proposal after unveiling a long-term economic development cooperation plan for the two countries, Reuters added.

Iqbal spoke to journalists after the formal launch of Long Term Plan (LTP) for the China-Pakistan Economic Corridor (CPEC) signed by the two sides on November 21, Dawn online reported on Tuesday.  The CPEC is a flagship project of China’s Belt and Road initiative. The 3,000 km, over $50 billion corridor stretches from Kashgar in western China to Gwadar port in Pakistan on the Arabian sea.

Asked if the Chinese currency could be allowed for use in Pakistan, the minister said the Pakistani currency would be used within the country but China desired that bilateral trade should take place in yuan instead of dollars, in yet another push to de-dollarize what China considers its sphere of influence.

We are examining the use of yuan instead of the US dollar for trade between the two countries,” Iqbal said, adding that the use of yuan was not against the interest of Pakistan. Rather, it would “benefit” Pakistan.

It would also show that world that when it comes to Asia, the “superpower” of significance is no longer the US. And so, as China’s influence grows, the long-term plan highlighted key cooperation areas between the neighboring states including road and rail connections, information network infrastructure, energy, trade and industrial parks, agriculture, poverty alleviation and tourism.

…click on the above link to read the rest of the article…

Pakistan Air Force Ordered To Shoot Down US Military Drones

Pakistan Air Force Ordered To Shoot Down US Military Drones

The Pakistan Air Force (PAF) has just been ordered to shoot down any foreign drones that violate the country’s airspace including attack drones operated by the United States, Chief Marshal Sohail Aman said on Thursday.

The announcement is a complete change from the air force’s previous view, of which foreign drone strikes on its soil were condemned but the air force never threatened to shoot them out of the sky. “We will not allow anyone to violate our airspace. I have ordered PAF to shoot down drones, including those of the US, if they enter our airspace, violating the country’s sovereignty and territorial integrity,” Air Chief Marshal Sohail Aman told an audience in Islamabad.

The statement was made about two weeks after a US drone strike targeted a militant compound in Pakistan’s tribal region along the border of Afghanistan, leading to multiple casualities, The Times of India reported.

This is the first time, the Pakistani government has taken a hard stance against foreign drones, especially the ones operated by US forces based in Afghanistan. The comment from Aman was shocking despite the US has been launching missiles into Pakistan and violating the country’s sovereignty since about 2004. The CIA was responsible for most US drone strikes in Pakistan until November 30, 2017, said The Times of India.

It’s believed, senior members of terrorist groups have been killed over the years in drone strikes, but it has come at a cost of “hundreds of civilian” deaths in the form of collateral damage.

…click on the above link to read the rest of the article…

India: The next Pakistan?

This is Part XI of a series of articles (the most recent of which is linked here) in which I have provided regular updates on what started as the demonetization of 86% of India’s currency. The story of demonetization and the ensuing developments were merely a vehicle for me to explore Indian institutions, culture and society.

The Modimobile is making the rounds amid a flower shower. [PT]     Photo credit: PTI Photo

Tribal cultures face an inherent contradiction. They create poison from within to grow more collectivist, controlling and tyrannical — members of the populace looks for nannies, and they readily find sociopaths to exploit that need. Their lack of organizational skills, their inability to engage in economic calculation and their irrationality lead to massive internal stresses and the ultimate devolution of such an unnatural society.

India finds itself in a situation where it is grasping for more totalitarianism to solve the problems that totalitarianism created. The demonetization exercise was an assertion of India’s underlying tribal and collectivist culture.

Demonetization Pain Continues

Cashless ATMs continue to be the new normal in India. In a recent conversation, economist Professor Madhusudan Raj mentioned that as many as 70% of the ATMs in his city are still not operational. The situation in villages and small towns is much worse. Banks are often clogged with people.

Eventually most people who must have cash will get it, but businesses need easy access to large amounts of their own cash without incurring transaction costs. They continue to face horrendous problems, which are translating into closures, retrenchment of staff, and bankruptcies. The tax authorities are getting increasingly rapacious. According to Professor Madhusudan Raj:

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Tomgram: Dilip Hiro, Flashpoint for the Planet

Tomgram: Dilip Hiro, Flashpoint for the Planet

In the post-Cold War world, Exhibit A in that process would certainly be the unnerving potential for a nuclear war to break out between India and Pakistan. As TomDispatch regular Dilip Hiro, author most recently of The Age of Aspiration: Money, Power, and Conflict in Globalizing India, makes clear today, there is no place on the planet where a nuclear war is more imaginable. After all, those two South Asian countries have been to war with each other or on the verge of it again and again since they were split apart in 1947.

Of course, a major nuclear war between them would result in an unimaginable catastrophe in South Asia itself, with casualties estimated at up to 20 million dead from bomb blasts, fire, and the effects of radiation on the human body. And that, unfortunately, would only be the beginning. As Alan Robock and Owen Brian Toon wrote in Scientific American back in 2009, when the Indian and Pakistani arsenals were significantly smaller than they are today, any major nuclear conflagration in the region could hardly be confined to South Asia.

…click on the above link to read the rest of the article…

World War 3 Could Start This Month: 350,000 Soldiers In Saudi Arabia Stand Ready To Invade Syria

World War 3 Could Start This Month: 350,000 Soldiers In Saudi Arabia Stand Ready To Invade Syria

War Soldiers - Public Domain350,000 soldiers, 20,000 tanks, 2,450 warplanes and 460 military helicopters are massing in northern Saudi Arabia for a military exercise that is being called “Northern Thunder”.  According to the official announcement, forces are being contributed by Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Bahrain, Sudan, Kuwait, Morocco, Pakistan, Tunisia, Oman, Qatar, Malaysia and several other nations.  This exercise will reportedly last for 18 days, and during that time the airspace over northern Saudi Arabia will be closed to air traffic.  This will be the largest military exercise in the history of the region, and it comes amid rumors that Saudi Arabia and Turkey are preparing for a massive ground invasion of Syria.

If you were going to gather forces for an invasion, this is precisely how you would do it.  Governments never come out and publicly admit that forces are moving into position for an invasion ahead of time, so “military exercises” are a common excuse that gets used for this sort of thing.

If these exercises are actually being used as an excuse to mass forces near the northern Saudi border, then we should expect an invasion to begin within the next couple of weeks.  If it happens, we should expect to see the Saudi coalition storm through western Iraq and into Syria from the south, and it is likely that Turkey will come in from the north.

The goal would be to take out the Assad regime before Russia, Iran and Hezbollah could react.  For the past couple of years, Saudi Arabia, Turkey and their allies have been funding the Sunni insurgency in Syria, and they were counting on those insurgents to be able to take down the Assad regime by themselves.

 

…click on the above link to read the rest of the article…

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