Comment by Riaz Haq on September 21, 2014 at 10:34am

Washington Post: Pakistan is eyeing sea-based and short-range nuclear weapons, analysts say

In one of the world’s most volatile regions, Pakistan is advancing toward a sea-based missile capability and expanding its interest in tactical nuclear warheads, according to Pakistani and Western analysts.

The development of nuclear missiles that could be fired from a Navy ship or submarine would give Pakistan “second-strike” capability if a catastrophic nuclear exchange destroyed all land-based weapons. But the acceleration of Pakistan’s nuclear and missile programs is renewing international concern about the vulnerability of those weapons in a country home to more than two dozen Islamist extremist groups.  

“The assurances Pakistan has given the world about the safety of its nuclear program will be severely tested with short-range and sea-based systems, but they are coming,” said Michael Krepon, co-founder of the Stimson Center, a Washington-based global security think tank. “A cardinal principle of Pakistan’s nuclear program has been: ‘Don’t worry; we separate warheads from launchers.’ Well, that is very hard to do at sea.”

Western officials have been concerned about Pakistan’s nuclear program since it first tested an atomic device in 1998. Those fears have deepened over the past decade amid political tumult, terror attacks and tensions with the country’s nuclear-armed neighbor, India, with which it has fought three wars.

That instability was underscored this month, as anti-government protests in the capital appeared to push Prime Minister Nawaz Sharif’s government to the brink of collapse. The political crisis was unfolding as Pakistan and India continued lobbing artillery shells across their border, in a tit-for-tat escalation that illustrated the continued risk of another war.

For more than a decade, Pakistan has sent signals that it’s attempting to bolster its nuclear arsenal with “tactical” weapons — short-range missiles that carry a smaller warhead and are easier to transport.

Over the past two years, Pakistan has conducted at least eight tests of various land-based ballistic or cruise missiles that it says are capable of delivering nuclear warheads. Last September, Sharif, citing “evolving security dynamics in South Asia,” said Pakistan is developing “a full spectrum deterrence capability to deter all forms of aggression.”

The next step of Pakistan’s strategy includes an effort to develop nuclear warheads suitable for deployment from the Indian Ocean, either from warships or from one of the country’s five diesel-powered Navy submarines, analysts say. In a sign of that ambition, Pakistan in 2012 created the Naval Strategic Force command, which is similar to the air force and army commands that oversee nuclear weapons.

“We are on our way, and my own hunch is within a year or so, we should be developing our second-strike capability,” said Shireen M. Mazari, a nuclear expert and the former director of the Institute of Strategic Studies Islamabad, a hawkish Pakistani government-funded think-tank.

Pakistan’s nuclear push comes amid heightened tension with U.S. intelligence and congressional officials over the security of the country’s nuclear weapons and materials. The Washington Post reported in September 2013 that U.S. intelligence officials had increased surveillance of Pakistan in part because of concerns that nuclear materials could fall into the hands of terrorists.

http://www.washingtonpost.com/world/asia_pacific/pakistan-is-eyeing...

Comment by Riaz Haq on March 12, 2015 at 8:34am

WASHINGTON: The new China International Pay­ments System (CIPS), which is set to debut before the end of 2015, has been described as a “worldwide payments superhighway for the yuan.”

What the creation of such a system means in the short-term is that the Chinese currency (officially known as the renminbi) has the potential to become a truly international, convertible currency and a more attractive currency for conducting international trade and finance. What it means in the long-term is that America’s long reign of economic dominance is at risk.

Ever since the end of World War II, the dollar has been the bedrock of the international financial system. The rise of a competitor currency to challenge the dollar seems almost impossible. While the euro and the yen have emerged as possible options for supplanting the dollar, they have never had the global clout of the US dollar. China’s plans for the internationalisation of the renminbi, though, are a different matter entirely. Given the size and heft of China’s economy, it only makes sense that China is creating a global payments system to make it easier for people to trade, invest and conduct transactions using the renminbi.

One way to measure how important the Chinese currency has become worldwide is to look at the percentage of international trade finance deals that are conducted using the renminbi. On a global basis, the renminbi accounts for nearly 9 per cent of all trade finance deals worldwide, the second largest behind only the dollar. Moreover, as of January 2015, the renminbi is now the fifth most used payments currency in the world, trailing only the dollar, the euro, the pound sterling, and the yen.

According to Wim Raymaekers, head of banking markets at SWIFT, this is “an important milestone” that confirms the transition of the renminbi from an “emerging” to a “business as usual” payment currency.

One area where the launch of the new Chinese payments system could really have an impact is in the global energy markets. As a result of the so-called “petrodollar system” established between the US and Middle East oil producers, oil exports are priced and transacted in dollars.

Now imagine the price of oil being quoted in Chinese yuan and not US dollars. What if Saudi oil exporters decide they want yuan and not dollars for their oil? That means anyone buying or selling oil in commodity markets has to have a yuan bank account in addition to a dollar bank account. Given the voracious energy demands of China’s growing economy, it’s easy to see why a global payments system facilitating these trades makes sense.

Right now, of course, the renminbi does not pose a direct threat to the dollar. While 41pc of all global payments involve the dollar, only 2pc involve the renminbi. But think ahead a few years.

If the Chinese economy continues to grow, if plans continue to internationalise the renminbi, and if gridlock in Washington continues, it’s at least theoretically plausible that the renminbi could eventually supplant the dollar as the reserve currency of choice around the world. Especially since the investment theme of “de-dollarisation” has started to be picked up globally.

If the renminbi ever replaces the dollar, there are going to be effects felt from Wall Street to Main Street. For one, foreign investors won’t need to hold as many dollars since they’ll be conducting transactions in yuan instead.

http://www.dawn.com/news/1168964

Comment by Riaz Haq on March 13, 2015 at 9:45am

The Obama administration accused the UK of a “constant accommodation” of China after Britain decided to join a new China-led financial institution that could rival the World Bank.
The rare rebuke of one of the US’s closest allies came as Britain prepared to announce that it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first country in the G7 group of leading economies to join an institution launched by China last October.

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Thursday’s reprimand was a rare breach in the “special relationship” that has been a backbone of western policy for decades. It also underlined US concerns over China’s efforts to establish a new generation of international development banks that could challenge Washington-based global institutions. The US has been lobbying other allies not to join the AIIB.
Relations between Washington and David Cameron’s government have become strained, with senior US officials criticising Britain over falling defence spending, which could soon go below the Nato target of 2 per cent of gross domestic product.
A senior US administration official told the Financial Times that the British decision was taken after “virtually no consultation with the US” and at a time when the G7 had been discussing how to approach the new bank.
“We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” the US official said.
British officials were publicly restrained in criticising China over its handling of Hong Kong’s pro-democracy protests while Mr Cameron has made it clear he has no further plans to meet the Dalai Lama, Tibet’s spiritual leader — after a 2012 meeting that prompted a furious response from Beijing.
While Beijing has long been suspicious about US influence over the World Bank and International Monetary Fund, China also believes that the US and Japan have too much control over the Manila-based Asian Development Bank. In addition to the AIIB, China is the driving force behind last year’s creation of a Brics development bank and is promoting a $40bn Silk Road Fund to finance economic integration with Central Asia.

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The Asia Infrastructure Investment Bank is one of four institutions created or proposed by Beijing in what some see as an attempt to create a Sino-centric financial system to rival western dominated institutions set up after the second world war. The other institutions are: the New Development Bank, better known as the Brics bank, and a contingent reserve arrangement, seen as alternatives to the World Bank and International Monetary Fund; a proposed Development Bank of the Shanghai Co-operation Organisation, a six-country Eurasian political, economic and military grouping dominated by China and Russia.


http://www.ft.com/intl/cms/s/0/31c4880a-c8d2-11e4-bc64-00144feab7de...

Comment by Riaz Haq on December 5, 2015 at 10:14am

#China Creates a World Bank of Its Own, and the #US Balks http://nyti.ms/1XH1gIO 

As top leaders met at a lush Bali resort in October 2013, President Xi Jinping of China described his vision for a new multinational, multibillion-dollar bank to finance roads, rails and power grids across Asia. Under Chinese stewardship, the bank would tackle the slow development in poor countries that was holding the region back from becoming the wealth center of the world.

Afterward, the United States secretary of state, John Kerry, caught up with Mr. Xi in the corridor. “That’s a great idea,” Mr. Kerry said of the bank, according to Chinese and American aides briefed on the encounter.

The enthusiasm didn’t last long, as the Obama administration began a rear-guard battle to minimize the bank’s influence.

The United States worries that China will use the bank to set the global economic agenda on its own terms, forgoing the environmental protections, human rights, anticorruption measures and other governance standards long promoted by its Western counterparts. American officials point to China’s existing record of loans to unstable governments, construction deals for unnecessary infrastructure, and villagers abruptly uprooted with little compensation.

But the administration suffered a humiliating diplomatic defeat last spring when most of its closest allies signed up for the bank, including Britain, Germany, Australia and South Korea. Altogether 57 countries have joined, leaving the United States and Japan on the outside.

The calculation for joining is simple. China, with its vast wealth and resources, now rivals the United States at the global economic table. That was confirmed this week when the International Monetary Fund blessed the Chinese renminbi as one of the world’s elite currencies, alongside the dollar, euro, pound and yen.

Countries are finding they must increasingly operate in China’s orbit. And backing the new bank would bring financial advantages, as well as curry favor with Beijing. While many countries had similar doubts as the United States, they figured they could just shape the organization from the inside.

The new bank “is an instrument for China to lend legitimacy to its international forays and to extend its sphere of economic and political influence even while changing the rules of the game,” said Eswar Prasad, former head of the China division at the International Monetary Fund and a professor at Cornell University. “And it gives the existing institutions a kick in the pants.”

Comment by Riaz Haq on December 5, 2015 at 5:56pm

#China Creates a World Bank of Its Own, and the #US Balks http://nyti.ms/1XH1gIO Contd

The Chinese-led institution, the Asian Infrastructure Investment Bank, is now in the process of picking its first projects. The choices, expected to be announced in coming months, will provide insight into how China plans to wield its power.

Either China is serious about taking a leadership role in the global economy and prioritizing projects that broadly benefit Asia, or it plans to use the bank as a conduit to further its own ambitions.

So far, China appears to be navigating the two extremes. It is assuaging critics by compromising on issues like board makeup, project oversight and procurement. But China is hardly yielding control, raising concerns about where the bank will land on issues like climate change and labor rights. The bank, for example, is still weighing whether to approve coal-fired power plants.

China is taking direct aim at the current development regime, the Bretton Woods system established under the leadership of the United States after World War II to help stabilize currencies and promote growth.

Beijing officials say they want to take a faster approach than their counterparts at the World Bank, the International Monetary Fund and the Asian Development Bank. The new bank, China promises, will not be bogged down in oversight.

The Chinese-led bank will also focus solely on infrastructure. To China, the World Bank and the Asian Development Bank failed to deliver on big projects meant to transform backward parts of Asia, resulting in an estimated $8 trillion of needed investment in rails, ports and power plants.

As a complement to the new bank, China is rolling out the “One Belt, One Road” program for the construction of a network of roads, rails and pipelines along the old Silk Road route through Central Asia to Europe. A maritime equivalent calls ports from Southeast Asia to East Africa to the Mediterranean.

“The U.S. risks forfeiting its international relevance while stuck in its domestic political quagmire,” Jin Liqun, the president-designate of China’s bank, wrote in a chapter for a recently released book, “Bretton Woods: The Next 70 Years.” He added, in reference to the United States, “History has never set any precedent that an empire is capable of governing the world forever.”

At the signing of the agreement for the bank in June, Mr. Jin and Mr. Xi posed for a photo alongside officials from the other 56 founding member nations in the Great Hall of the People.

An unexpectedly large group, it included countries as diverse as Iran and Israel, Russia and Poland, and an array of American friends. The total capital commitment, $100 billion, was double the amount originally envisioned.

Having underestimated the interest, the Obama administration is now starting to soften its stance. Three months after the signing, Mr. Xi met with President Obama at the White House, in the Chinese leader’s first state visit. At the summit meeting, Mr. Obama urged the existing banks to cooperate with the new institution. The United States, though, would still not join.

Comment by Riaz Haq on November 6, 2016 at 5:06pm

#Pakistan, #China to trade in own currencies rupee and renminbi, not #US dollars or #Euro. #CPEC

http://tribune.com.pk/story/1220159/bilateral-commerce-pakistan-chi...

Standard Chartered has taken the lead in conducting a roadshow in Pakistan to inform businessmen that hurdles to trade with China in local currencies – Pakistani rupee and Chinese renminbi – have been razed.

Until now, the two countries were trading in dollars, which caused hurdles in the way of banking transactions for traders. The two nations signed a currency swap agreement a couple of years ago.

Standard Chartered Pakistan Chief Executive Officer Shazad Dada said they had a very fruitful meeting with the State Bank of Pakistan on Thursday morning. The central bankers pledged to facilitate trade in the two currencies.

The roadshow is held at a time when most banks in the two nations have yet to set up their branches in each other’s countries. However, Standard Chartered has branches in both the countries.

The roadshow is part of an international series, as the Greater China Region’s Standard Chartered has conducted similar shows in the Middle East and Africa in recent days.

China is now in agreement with eight countries to conduct trade in their local currencies. These include Pakistan, Hong Kong, the UAE and Qatar.

China has been conducting roadshows since its official currency renminbi was included in the IMF’s Special Drawing Rights (SDR) list of global currencies, effective from October 1, 2016. The IMF lends in SDR denomination to nations across the world.

This coincided with China’s on-going investment worth $46 billion in Pakistan under the China-Pakistan Economic Corridor (CPEC).

Carmen Ling, the bank’s delegation lead to Pakistan and Managing Director, said the infrastructure had been laid to begin trade in local currencies. “Now, it all depends on how fast the requisite information is disseminated to businessmen.”

More than 60% of Standard Chartered’s market across Africa, Asia and the Middle East stand to benefit from the initiative. Twenty-five of the group’s 72 markets are in Africa and the Middle East.

The initiative could facilitate financing for Pakistan’s key infrastructure projects, while encouraging cross-border economic and trade partnerships, not only with China, but also with those markets positioned along the initiative, she added.

Comment