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CURRENT AFFAIRS
Sir Farid Ullah Khan (4th Lecture)
9/6/2021
Policies of Modi Government on Palestine
➢ Legal Policies
➢ Administrative Policies
➢ Political Policies
➢ Diplomatic Policies
1) Legal Policies adopted by Modi Government
Modi Government reversed the legal status given to Kashmir given under Article 370and 35 (A).
Article 370: With exception of defence, communication, foreign policy, currency, Kashmir was
autonomous in other affairs. These were with center.
Article 35 (A): A non- Kashmiri Indian was not allowed to have the domicile of Kashmir; he could
not become the citizen of Kashmir.
Article 370 was added in1949, and 35 (A) was added in 1954. Modi reversed the special status given to
Kashmir in the constitution.
Procedure being adopted by reversal of Kashmir:
The governor of Kashmir advised the president of India to issue an ordinance for reversal of special status
of Kashmir by omitting Article 370 and 35 (A), President issued the ordinance. It was endorsed by the
Indian Parliament by a 2/3rd majority. (Indian Parliament: LoK Sabha – Lower house, Rajya Sabha –
upper house)
2) Administrative Policies adopted by Modi Government
a) The administrative law of Kashmir Status was amended. How?
The restriction over non-Kashmiri Indian from purchasing land in occupied Kashmir was removed. Now
anyone could purchase land in occupied Kashmir whether a Muslim or non- Muslim. Purchasing land
means becoming a citizen of Kashmir because you get the domicile of Kashmir then.
b) The status of state Kashmir has been abolished.
Not only the special status of Kashmir under Article 370 and 35 (A) of Indian Constitution was abolished
rather Kashmir is no more a state. It does not have a status of state, as it is divided into two union
territories.
i) Jammu and Kahmir Valley
ii) Ladakh

c) More and more troops deployed in held Kashmir and these troops and security forced had extra judicial
powers
o More than 70,000 troops were already deployed in held Kashmir. Modi added 100,000 more
troops, There is an excessive use of force by Indian troops (Paramilitary & Military Forces etc.).
For Example:
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o The longest curfew in the history of August 5, 2019 till date.

o Mainstream media was closed
o Telephone and internet service blocked / suspended in majority of areas till now.
o Imposed Section 144, an administrative law from British rule times (1935 Act), two or more than
2 people not allowed or will be jailed. Meaning, protests and mobs are not allowed. Modi gave
shoot on sight orders.
o Modi Government made use of the Special Protection Act. Any Kashmiri could be detained
without any charge for two years and that person could not be presented in the court of law.
o More than 13000 Kashmiri citizens been detained under the special protection act, majority of
the political entities are either detained or put on house arrest.
o Use of pallet guns
o killing people (Mass graves)
o Mysterious disappearances.
o Using Kashmiris as a human shield (Indian Army Major tied a Kashmiri protestor to his jeep as
human shield), to avoid Kashmiri people’s wrath – stones from Kashmiri people.

3) Political Policies adopted by Modi Government

The Kashmir based political policies adopted by BJP
Kashmiri based BJP Policies were driven from the governor house, a Hindu governor was appointed by
BJP that believed in, supported Hindutva.
Two key points in the policies of BJP
i) The Kashmir based political policy adopted by BJP in Kashmir: the Kashmiri political
leadership is corrupt; it did not play its role in Socioeconomic development of Kashmir. It did not
play its due role. On the contrary, they pocketed the benefits on their own. They became
billionaires themselves. There is a need to bring socio – economic development in Kashmir to
improve Human Development Index (education, health, road infrastructure, rail infrastructure
etc.). The center must have more role to play to get rid of corrupt political leadership, only
possible by removing special status of Kashmir. The policy was Kashmir based.
ii) The policy of BJP on National Level: One country, one law, why special status?
India is one country. It is a federation comprising upon federating units. All federating units have
equal powers (like we have provinces, they have states). Therefore, Kashmir must not have
special status or more power.
BJP that is a Hindu Nationalist Party and follows Hindutva policies to attract Hindutva people (Hindu
Nationalists) voters, BJP promotes / supports Hindu policies and Hindu nationalism. It supresses
minorities - especially Muslims. They plan to suppress Muslims and convert Muslim majority states into
Hindu majority states.
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4) Diplomatic Policies adopted by Modi Government

a) Holding Pakistan responsible for whatever is happening in Kashmir. India has perpetually
adopted the policies of blaming Pakistan, externalizing the internal situation of Kashmir.
Originally it is an indigenous move, it is a freedom struggle . but they hold Pakistan responsible
for it. Feb 2019 air strike, Fake surgical strike in 2016. Reversing special status of Kashmir is
purely an internal issue. It has amended its own constitution. “Kashmir is an integral part of India,”
Modi. No foreign intervention would be allowed in the internal affairs of India
b) Modi Government smartly used its economic card, to diffuse the world opposition against the
August 5th move. How?
USA, EU, Muslim world and others’ opposition was neutralized by playing economic card. India
is an unignorable 3 trillion-dollar economy. (Read Manmohan Singh and his Economic Policies)
o Major importer of hydrocarbon from KSA, UAE, Iran, Qatar
o Defence importer from USA & European Countries

Response of Kashmiris
Kashmiri political leadership outrightly turned against India / Modi’s Government
o Hurriyat Conference has always been anti- India, in favour of independence and unification with
Pakistan (compilation of many parties)
o Jammu and Kashmir Liberation Front: Yaseen Malik is in favour of independent Kashmir, not
in unification with Pakistan.
o People Democratic Party (PDM) led by Mehbooba Mufti, National Conference led by Farooq
Abdullah and son Umer Abdullah, they had always been pro-India. This leadership has also
turned against Modi govt. Farooq Abdullah, “Modi proved Jinnah was right.” The vision of Jinnah
was right. Mehbooba Mufti, “the reversal of the special status of Kashmir by Modi government
has made me realize to say this that not going with Pakistan in 1947 on the basis of two nations
theory was a blunder made by our forefathers, because of which, the present generation of
Kashmiris is suffering.”
Majority of the pro India leadership is either put on house arrest or jailed.
In spite of the fact that there has been a prolonged curfew, shoot on sight order and severed
communication, section 144 is imposed, Kashmiris are still coming out in protests. 13,000 Kashmiri youth
is imprisoned.
The response from Indian Opposition
The leader in the Indian senate, Rajya Sabha, Ghulam Nabi Azad, opposition leader, himself belonged
to Kashmir, “the prisons of Kashmir are full. Rest houses have been declared as prisons and they are
also full. It is a common voice in Kashmir, torture cells are being established across Kashmir. Houses of
the citizens are turned into prisons and torture cells.”
Shashi Tharoor from congress claims that Modi proved Jinnah right, another congressman says that
Modi turned India into Israel and Kashmir into Palestine.
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The response of International Society, Civil Society and Human Rights Organizations
Response of the world governments:
o World Governments with exception of Malaysia, Turkey, China and a few others, they did not
outrightly oppose it because of the economic, geo-strategic importance of India. Especially USA.

Response of International and Regional organizations:

o UN Security Council met thrice after August 5, 2019
o UNGA Conference - The president of UNGA claimed the special status of Kashmir should not
be reversed, it is the violation of UN Charter about Human Rights
o UNCHR head – Indian Goct. Involved in massive human rights violence.
o The observer from UN to Kashmir, the reversal of special status is basically having one prime
objective / focus: to bring a demographic change in Kashmir – in report.
o UNCHR two reports
o Amnesty International: 1 report on human rights violation
o European Union had 3-hour discussion on human rights violation in held Kashmir

The response of International Media

BBC, CNN, Al Jazeera, Foreign Affairs, The Guardian, The Economist have excessively called out the
human rights violation of Kashmiris
Policies adopted by Pakistan (4-dimensional strategy)
1. Public Mobilization
Public Mobilization within Pak, AJK and across the world. How?
- Every Friday Pak protested until Corona erupted
- Speeches BY PM and his team in public gatherings
- The March of Kashmiri Nationalists from Muzaffarabad to working boundary
- For the freedom of Kashmir, the biggest Protest in the history of London and Manchester outside
Indian High Commission (Pakistani + Sikh + Kashmiri supporters)
- New York, Washington, Brussel, Istanbul, Berlin, protests in front of Indian embassies
- Lobbyist of Pakistan across the world to access the world leaders.
It was the first time when such public mobilization was adopted by Pakistan.
2. International media excessively and comprehensively accessed
- 8 Pages Pictorial coverage was given in Washington Post on human rights violation - paid by
Ambassy of Pakistan
- Coverage in New York Times, The Guardian
- Humanitarian writers accessed to write on Kashmir
- We used Indian Opposition’s opinions and the opinions of Kashmiri Political figures on
international media
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3. International and Regional Organizations being approached by the Foreign Ministry of Pakistan
- Kashmir Issue brought back to UN Security Council after 54 years – 3 meetings within 1 year
- EU Parliament 3-hours long discussion
o Credit to Foreign Minister of Pakistan
o President of AJK
- OIC Conference was called upon thrice

4. Accessed the world leadership

- PM and his team accessed more than 70 countries leadership repeatedly. How?
o Telephonic Conversation
o Physical visits
- Repeatedly accessed the UN Secretary General and President of UNGA on the issue
- We accessed Trump, Erdogan, Germen Chancellor, Vladimir, British PM, French President, UAE
Prince, KSA King and Prince, Iran President, and many more

Policy Options Being Approached

Projecting the hard image of India
India played a key role in projecting the hard image of Pakistan in previous 2 years (2019 – 2020).
Government of Pakistan adopted the strategy of projecting hard image of India – For Example: PM
Imran Khan adopted this strategy in his memorable UNGA speeches in 2019 and 2020 – the speeches
were predominantly focused on Kashmir,
Hindutva

India is being governed by BJP extremist party following extremist ideology / polices of Hindutva RSS -
Rashtriya Swayamsevak Sangh. BJP is an offshoot of RSS.
- The ideology of Hindutva was adopted by RSS in 1920 inspired from Hitler’s ideology of Naziism.
India belongs to Hindus.
- Hindu is a martial race, and all other religious groups are either settlers or invaders or converters.
Therefore, they should not have equal citizenship rights
- India must expand, India must comprise upon whole south Asia
- The Indian government should support Hindu religion, it must not be a secular state.
BJP is the offshoot of RSS.
- 1980: The rise of BJP from Gujrat.
- 1985:A movement started against Babri Mosque led by Atal Bihari Vajpayee. - Babri Masjid
must be demolished and Ram Mandar must be constructed.
- 1989: Election of Gujrat – BJP got majority in Gujrat
- 1992: Babri Mosque demolished - RAM mandar foundation stone done by PM Modi
- There are more than 1400 mosques which are to be demolished by BJP this is included in the
election manifesto of BJP
- Majority of BJP leaders are from RSS, Vajpayee, LK Adwani, Modi, Rajnath, Amit Shah etc (Now
leaders of BJP, once were active members of RSS)
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BJP is not only demolishing mosques, but also coming hard upon Muslims specially in Assam and
Bengal. How?
- The newly amended Citizenship Law of India: Modi amended the law in 2019, now all the settlers
from South Asia would be given citizenship except Muslims.
- The Muslim of Assam would have to prove their citizenship as per NRC (National Register of
Citizens) of Assam – After Assam, the NRC would be applied in Bengal then other southern
states of India.
- The Extreme brutality of India against Muslims, especially on Cow Slaughtering
- Muslims were and would be held responsible for spread of Covid
The use of force by Modi Government in held Kashmir
Excessive use of force, Modi has launched state terrorism in Kashmir. Modi Government is trying to
bring demographic change in Kashmir
Muslim Ethnic cleansing of Muslims – observer appointed in Kashmir from UN, Amnesty Intl, UNGA
President, UNHCR, Congress Leadership.
Article 35 (A) was abolished: the administrative law was amended , it provided India / Modi with an
opportunity to settle more and more Hindu in held Kashmir . They are given the right to buy and sell land
in Kashmir to bring demographic change, as stated by UN Observer to Kashmir, Amnesty International,
UNCHR, UNGA President.
That is the main objective. WHY?
o Indian Govt wants to be the permanent member of UN. With exception of China, all the
permanent members of the United Nations Security Council are in the favour of India. But (except
China) there is one more hurdle and that is the Violator of UNSC resolution 1948 by India. As
per UN resolution 1948 India must conduct referendum in Kashmir, India knows, if the
referendum is conducted, the result will not be in its favour. India also knows that it cannot
become a permanent member of UN until it conducts the referendum in Kashmir. Therefore, to
get the result in its favour, India wants to bring demographic change in Kashmir.
o To minimize the independence movement of held Kashmir Muslims
o Modi held Pak responsible for what is happening in Kashmir, this strategy not working anymore
. Political Leadership in Kashmir is now against Kashmir. India is faced with internal eruption.
Independence movements in number of states. State terrorism by Modi is responsible for this.
o Pakistan and India at the brink of war since the last 7 decades. Kashmir caused number of wars
(1948 war, 1965 war, 1999 war etc). At present and in future, Kashmir is and will be a triggering
and clash point between India and Pakistan. “If this time war happens this would be on Nuclear
end,” Imran Khan.
o Non-implementation of Kashmir resolution is UN's failure. It was UN’s responsibility to conduct a
referendum in Kashmir – Inability of UNSC. This been continuously reminded by Pakistan.
x–x–x
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How to resolve conflict

1. Conflict Resolution
2. Conflict Management – avoid war
3. Conflict Transformation – transform = Musharraf 4 point formula – special economic zones on both
sides of border – Trade – Complete internal autonomy to both Kashmirs, getting troops out on both sides
etc.
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Current Affairs(Sir Farid)

The Revival / Resurgence oof Afghan Taliban
26/6/2021

3 Types of Revival:

1. Military Resurgence
2. Territorial Expansion
3. Diplomatic Acceptability
There are the 3 different kinds of resurgence / revival of Afghan Taliban.

In 2001, US intervened through operation Enduing Freedom (OEF). Taliban Government was toppled
down. Thousands of Taliban either been killed or captured thousands more to be refugeed in the hilly
belt of Afghanistan and more infiltrated into the tribal belt off Pakistan.

In 2002, President Bush declared victory against Afghan Taliban. The victory was short-lived, how?

Irreversible resurgence of Afghan Taliban began in 2004 / from 2004 onwards.

1. Revival of Afghan Taliban: Military Resurgence

1. US failed to defeat Afghan Taliban:

i) US brought in more than 100,000 troops in Afghanistan. When?

o 2001 – 35000 troops

o Till 2007 – 70000
o In 2008 – 32000 more troops were sent to Afghanistan

100,000+ troops came in Afghanistan, majority fighting troops.

What else did US do? Brought in all the possible military technologies that could be used against
Gorilla. The variety of weapons – for example:
o drone technology (In Afghanistan, most used machinery / technology against Afghan Taliban)
o variety of helicopters: Cobra Helicopter, Airborne Helicopters. In Gorilla war, helicopters play
a leading role
o Lesser guided artillery
o Brought in B – 52 Bombers
There is a long list weapons being introduced brought by US in Afghanistan.

Brought in 100000+ troops, every possible military technology that could be used against Gorilla.

ii) US fought the longest ever war in US History in Afghanistan. How?

War on terror began in 2001 from Afghanistan (Beginning from 0EF). In that war is still continued –
US has fought 2 decades long war in Afghanistan . More than 3 thousand major military operations
being carried out by US IN Afghanistan.

Iii) The second more expensive war fought by US in its history.

Most expensive war: Generally, war on Terror. By the end, more than 6 trillion-dollar military
expenditure of US in Afghanistan. Alone in Afghanistan, more than 1 trillion-dollar expenditure.
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iv) US made repeated policy shifts to win the war in Afghanistan

o 2001 Policy : OEF

o 2008 Policy: 3D (Disrupt, Dismantled, Defeat)
o 2011 Policy: AfPak
o 2014 Policy: Drawdown
o 2017 Policy: Trump’s South Asia Policy
US used many other policy options to win the war on terror in Afghanistan, but outrightly failed.

2. NATO failed to defeat Afghan Taliban:

Not only US, NATO also failed to defeat Afghan Taliban.

Article 5 of the NATO Charter / Constitution is about Collective Responsibility / Collective Defence.
According to the article, “If any of the member nation is being attacked, all the members are bound
to retaliate in the defence of that country.” They would attack the attacker.

US being a NATO member, it invoked Article 5 of NATO and all the NATO members sent their troops
to Afghanistan.

i) Now, NATO (Specially UK, Canada, Germany, France, Italy , Spain, Turkey, etc) brought in
65000+ troops in Afghanistan. Plus, all the possible military technologies that could be used against
Gorilla.

ii) NATO fought the longest ever and the most expensive war in its history:

2 decades long war.

800-billion-dollar expenditure
NATO did it all but failed to defeat Afghan Taliban.

3. International Assistance Security Assistance Force (ISAF): NATO + non-NATO (38 countries)

Non-NATO: Australia, UAE, Jordan, Japan, etc. sent troops to Afghanistan.

It is the world largest military alliance against Gorilla in human history. It made every possible attempt
to defeat Gorilla – Militarily through weapons, through soldiers, through operations, through finance
– but they failed.

So, Militarily Afghan Taliban have won the war. In other words, America has lost the war. One more
thing, Drawdown celebrated by Afghan Taliban as their victory in 2014 (December 31, 2014). What
was the Drawdown?

On December 31, 2014, US & NATO Countries handed over the operational responsibilities to Afghan
National Army and majority of the international troops pulled out. How?

US pulled out 91000 troops from Afghanistan

NATO pulled out 50,000+ troops from Afghanistan

Majority of the non-NATO countries pulled out all of their troops.

This was drawdown. It was not a complete withdrawal; it was a drawdown. It as celebrated by Afghan
Taliban as their victory.
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It is being said that US & NATO withdrawal would be celebrated by Afghan Taliban as their victory.
Why?

It is a military rule, whenever a conventional force / state army fails to defeat a gorilla (here in this
case Afghan Taliban), it is considered the victory of the other party – it has happened in Afghanistan.
They have failed to defeat Afghan Taliban because Afghan Taliban have strongly resurged, it is the
defeat of US and NATO countries and the victory of Afghan Taliban.

2. Revival of Afghan Taliban: Territorial Expansion

How?

The territorial expansion of Afghan Taliban started / began in 2004. It is divided in 3 phases:

1st Phase: 2004 – 2010

Territorial Expansion, how? Afghan Taliban War Strategy:

o Afghan Taliban resurged / started attacks across the Pashtun Belt of Afghanistan.
In Eastern Afghanistan
In Southern Afghanistan
o Attacks on main highways - Military convoys (US, NATO & Aghan Forces) across the Eastern
and Southern Afghanistan being attacked.
o Attacks on US, NATO & ANA Military installations – Airbase, Check posts, cantonments –
wherever they could attack, they did.
o Afghan Taliban hit Ammunition Depots of US, NATO & Afghan Forces,
o Afghan Taliban hit / destroy their Oil Depots to decrease / weaken their capacity to continue
the war

2nd Phase: 2010 – 2014

Attacks in Central Afghanistan

Not only continued attacks in the Pashtun Belt, expanded their attacks to Central Afghanistan.
Specially the Capital City of Afghanistan: Kabul.

Further, they not only increased / intensified the military attacks by Afghan Taliban but also Afghan
Taliban started establishing their military bases, training and recruiting centres in the Hilly Belt of
Afghanistan.

Expanded Territorial Expansion across the Pashtu Belt.

3rd Phase: 2010 – 2014

US Justice Department Report 2018:

o More than 45% of Afghan Territories are directly controlled by Afghan Taliban
o More than 70% of Afghan Territory under the strong influence of Afghan Taliban.
o Afghan Taliban have presence in 26 out of 34 provinces of Afghanistan
o More than 35% of the overall attacks since 2014 are being carried out by the Afghan Taliban
in the Non- Pashtun Belt – The bordering areas of Afghanistan with Iran, Tajikistan,
Turkmenistan, Uzbekistan.
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3. Revival of Afghan Taliban: Diplomatic Expansion

i) From 2001 till 2008, there was not a single country that could provide diplomatic support too
Afghan Taliban. In 2008, Pakistan was the first country that supported the idea of negotiations with
Afghan Taliban. Why? Our Stance: Military Solution to Afghan Security Conundrum / situation is not
possible. The conflict in Afghanistan could not be militarily resolved. Taliban could not be militarily
defeated. How? Why did we say so?

o US failed to defeat Afghan Taliban

o NATO failed to defeat Afghan Taliban
o ISAF failed to defeat Afghan Taliban

What US could not achieve, what NATO could not achieve, how could the weak Afghan Army do so?

The Afghan Army is not well-trained, does have enough military equipment, does not have sufficient
resources of finance, their capacities are very limited. After US, NATO withdrawal, Afghan Forces
would not be able to face the Afgan Taliban.

ii) Pakistan was the first country which supported negotiation process. Foor a very long time,
Pakistan was repeatedly criticized by US, NATO7 Afghan Government for its stance. Pakistan was even
blamed to be secretly supporting Afghan Taliban. But, with the passage of time, the opinion of the
world changed towards Afghan Taliban.

After Pakistan, the opinion of the neighbours of Afghanistan changed towards Afghan Taliban - 2015
onwards.

Neighbours: Russia, China, Iran, Central Asian Republics (Total 5: Kazakhstan, Kyrgyzstan,
Tajikistan, Turkmenistan, and Uzbekistan). Their opinion changed after the rise of Islamic State of
Khurasan Province (ISKP). How did it change? In the line of Pakistan. In the line of traditional stance of
Pakistan. Stance that Afghan Taliban could not be militarily defeated. There is only one way to deal
with Afghan Taliban that is negotiations. How to negotiate?

a) Accept Afgan Taliban as a diplomatic entity

b) Release all Taliban Prisoners
c) Power share with Afghan Taliban in the Afghan Government
Stance by Neighbours. Automatically, after neighbour countries, Muslim world (KSA, Turkey, Malysia,
Qatar, UAE) accepted it.

iii) Doha Deal: Doha Deal – US signed it with Afghan Taliban - made Afghan Taliban a certified
diplomatic entity.

o US declared them Islamic Emirates of Afghanistan. US first accepted them as a party and then
called them Islamic Emirates and started negotiations with them.
o US released all the Taliban Prisoners it had
o US & NATO removed all the Taliban Leaders from sanction list

US accepted them as a diplomatic entity automatically means NATO accepted them as a diplomatic
entity.

Afghan Taliban travelled from a militant group, from a terrorist entity to a diplomatic force / entity.
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Why Afghan Taliban could not be defeated?

i) Ideology: Afghan Taliban had a Jihadist Ideology. A Muslim country is being BY INFIDELS, Jihad
is a must. On the basis of this Jihadist ideology, they kept attracting others towards their plans.

ii) Afghan Taliban persistently received support, there has never been a shortage of arms /
weapons to Afghan Taliban. Why? Ammunition was enough in Afghanistan – Russian weapons, US &
NATO weapons captured by Afghan Taliban were used against international troops.

iii) No shortage of Finance

- Source of Finance was Opium trade.

- Fundraising on the name of Jehad & Afghanistan – Jihad Money

iv) The Terrain of Afghanistan is more suitable for non-state actors. To defeat a Gorilla on the
land of Afghanistan is not an easier task.

v) Afghan Taliban received increasing support from its supporters within the Afghan Population.

They provided refuge to Afghan Taliban.

The Rise of ISKP in Afghanistan and its Implications

ISIS is originally a Middle Eastern phenomenon. Started from Iraq, then spread to Syria. 2015 onward,
it predominantly got defeated in these 2 countries by Russia, Iran, Syria, Iraq. They together defeated
ISIS. Later, a surprising rise of ISKP occurred in Afghanistan. How?

i) Sprinter groups / the remnants of Al-Qaida liked the Khurasan Group - they joined ISKP in
Afghanistan

ii) A splinter group of TTP under Shahid Ullah Shahid joined ISKP

iii) A splinter group of Afghan Taliban joined ISKP

iv) All the Anti- Shia militants joined ISKP

ISIS has made its presence in 5 different provinces in Afghanistan, it has renamed and rebranded itself
in Afghanistan as ISKP.

Implications
i) ISKP and its implications in Afghanistan

The chances of Civil war increased in Afghanistan. How?

ISKP gave a new version of civil war that is sectarian warfare in Afghanistan. ISKP is intensifying /
exacerbating Shia Sunni conflict / sectarian warfare in Afghanistan. Targeting Shia Population, mostly
Hazara community.

ii) ISKP and its implications on the region

- Increasing relations of ISKP with Lashkar e Jhangwi and TTP in Pakistan: the Nexus of ISKP with
Lashkar e Jhangvi & TTP is a security threat to Pakistan.
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- ISKP- Jundallah Nexus: threat to Iran

- ISKP – Islamic Movement of Uzbekistan (IMU) Nexus: these organizations are in Central Asian
Republics – threat to Central Asia.
- ISKP – East Turkistan Islamic Movement (ETIM) Nexus: ETIM is in Xinjiang province of China –
threat to China
- ISKP and Chechen fighters nexus: Chechen fighters of Chechnya which is an autonomous
state of Russia – threat to Russia as ISKP is penetrating there. It is rising there with the help of
Chechen fighters
- The rise of insurgency in the region means threat to the BRI (Belt and Road Initiative)
o If there is threat to Pakistan / rise of instability in Pakistan, threat to CPEC will rise
o Destabilization in central Asia or Iran or both will lead to the destabilization of China
Central Asia Iran Corridor.
o As a result, China Central Asia Russia Europe Corridor would be destabilized.

Centre of BRI is Xinjian. All the corridors are connected to Xinjiang.

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What happened in Doha Deal?

Key points:

o In 2018, Trump wrote a letter to the PM of Pakistan requesting him to bring Afghan Taliban
on the Dialogue Table. Pakistan duly complied.
o Negotiations started between the two parties – US team led by Zalmay KhalilZad & Afghan
Taliban being led by Mula Abdul Ghani Bradar.
o Pakistan played the role of a mediator.
o Ater 14 months of long negotiations, Doha Deal was signed.
a) Exchange Prisoners: US would release all the Taliban Prisoners, in return, Afghan
Taliban would release all the US Prisoners – US & Taliban released each other’s
prisoners.
b) US would pull out its troops from Afghanistan – US is doing so.
c) Afghan Taliban would give a guarantee that they would not allow Afghan Territory to
be used against US & its allies for terrorist attacks.
d) Intra Afghan Negotiations would be carried out between Afghan Government &
Afghan Taliban.
i) Release of the Prisoners
ii) Power share
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Intra Afghan Negotiations

Between Afghan Government & Afghan Taliban

1- The exchange of prisoners between Afghan Government and Afghan Taliban

There were around 12,000 Afghan Taliban prisoners and around 500 Afghan Government prisoner
with Afghan Taliban.

Afghan Government refused to / was not ready to release key Taliban prisoners because those key
prisoners were involved in the killing of Afghanis. When Afghan Government refused to release the
prisoners, Afghan Taliban also refused to release the prisoners. Repeated deadlock occurred between
Afghan Government and Afghan Taliban regarding the exchange of prisoners.

After 7 months of long effort, when US and Pak Intervened, exchange of prisoners process completed.
Where? In Doha round of talks / round of Intra Afghan Negotiations between Afghan Government
and Afghan Taliban. Afghan Government and Afghan Taliban were pressurised by Pakistan and US.

Afghan Government agreed on the release of the prisoners / was ready to release the prisoners. On
which conditions? Afghan Government got ready to release the key prisoners on the condition that
the key prisoners would live a life in exile, not in Afghan and Afghan Taliban agreed to that. In return,
the process of prisoners exchange got completed.

2- Power Share Formula: what is in the formula?

i) Afghan Taliban want control of 17 different provinces of Afghanistan. Means what? Governors
in those 17 provinces must be Taliban. Governance of 17 out of 34 provinces which are already under
their control. Afghan Government is not ready to give those provinces to Afghan Taliban.

ii) Afghan Taliban wants existing government to topple down – existing government should step
down. And national government must be established in Afghanistan. Afghan Taliban are demanding
the establishment of National Government. The government would be a non-elected government and
it would have all the stake holders.

US seems to have agreed to the demand of Afghan Taliban, have accepted the demand of Afghan
Taliban that is National government would be established for 3 years and that National Government
would be non-elected and would have the representation of all the stakeholders – especially Afghan
Taliban.

On the other hand, Afghan Government led by Ashraf Ghani is outrightly against the idea.

Ghani said that he would prefer early elections instead of going for National Government (non-elected
government.

This is a huge major deadlock. Reason for non-agreement between Afghan Government and Afghan
Taiban.
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iii) ISKP is a major hurdle in the negotiation process:

On one hand, deadlock between Afghan Government & Afghan Taliban is a hurdle in the negotiation
process and on the other hand another hurdle is ISKP. How?

ISKP doesn’t want negotiations to succeed between Afghan Government & Afghan Taliban – doesn’t
want successful negotiations. Why?

Because, if negotiators succeed both would make an alliance against ISKP. The future of ISKP in
Afghanistan would be endangered. Resultantly, they are repeatedly making attacks across Afghanistan
to sabotage the negotiation process.
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The prospectus of peace in Afghanistan in the post US withdrawal Scenario:

1- The chances of peace are predominantly dependant on US withdrawal from Afghanistan. How?

Whether US would pull out or not, that is the question. Chances of peace are dependent on it. How?

As per Doha agreement, US has agreed to pull-out its troops from Afghanistan on step wise basis

Complete withdrawal / pull-out till Sept 11, 2021. As per the agreement, they original date to pull-out
their forces was May 1, 2021. But Biden delayed it till September 11, 2021. In Doha Deal, US has agreed
to pull out, and it will do so.

If US pulls out from Afghanistan, chances of peace increases. Here, it is important to note that US
wants to end this endless war in Afghanistan. This war had been a huge cost for US – military, social
and more important economic cost. To end the war US has to pull-out from Afghanistan.

Major Demand of Taliban: they will stop fighting if US pulls out its troops from Afghanistan. On the
other hand, US has got Geo strategic advantages in Afghanistan. What are the objectives?

o To contain China Russia and Iran.

For that it has to keep a strong military presence in Afghanistan. If US does that – if it doesn’t pull out
completely, Taliban will not stop fighting.

2- The US withdrawal / exit from Afghanistan is conditioned with Taliban’s compliance with peace.
That Taliban would stop fighting and would join the mainstream.

But Taliban are still fighting. And it was decided in Doh Deal that if Taliban do not stop fighting, US
may not pull out form Afghanistan and war will continue.

3- Afghan Government and Afghan Taliban Agreements necessary for the brighter chances of Peace
in Afghanistan

If they remain unsuccessful to come to an agreement, Afghan Taliban would increase their fighting.
AND this is apparent that Afghan Taliban are increasing number of attacks because Afghan
Government does not agree to the demands of Afghan Taliban.

4- If US establishes its Basis in the neighbouring countries of Afghanistan – in Pakistan or Central Asian
Republics - And US continues attacks against Afghan Taliban.

5- If Pakistan and Central Asian Republics provide ground line / aerial line of communication (which
we are already providing). US will continue Military intervention in Afghanistan and Taliban will also
continue fight.
 Rumi :D

6- If Afghan Government and Afghan Taliban do not reach out to a conclusive agreement, the chances
of a bloody civil war are brighter – unfortunately.

Civil war is still going on in Afghanistan, but it would increase to a very dangerous level.

7- On the other hand, the hope of peace in Afghanistan would remain live if the global powers i.e. US
and neighbours – Russia, Pakistan, China are on the same page / remain on the same page to deal
with the security conundrum in Afghanistan.

Afghan Government would be pressurised by US because its existence is dependent on US and NATO
– financial and military support.

On the other hand, Afghan Taliban knows well that they are strong enough, they are not to be
defeated but not strong enough to control Kabul. Plus, neither of the neighbours – neither Russia, nor
China, nor Iran nor Pakistan - wants the complete / overwhelming control of Afghan Taliban control
in Afghanistan.

Keeping all these factors in mind, we can hope that peace will be established. But the chances of peace
in Afghanistan are brighter only in all out political settlements
 Rumi :D

Afghan Security conundrum and Implications on Pakistan; Options Available

The objectives of Pakistan in Afghanistan + effects:

1- Peace and Stability in Afghanistan

If there is war in Afghanistan there cannot be peace in Pakistan. Means what? War in Afghanistan
would have far reaching impacts on Pakistan. How? if there is a war in Afghanistan, it means, insecurity
in Afghanistan. Insecurity in Afghanistan would result into the influx of refugees in Pakistan. Already
3 million refugees are in Pakistan. Millions of refugees will enter Pakistan if civil war exacerbates. It
would be a tough and an unpleasant situation for Pakistan.

2- If there is war in Afghanistan, there cannot be peace in Pakistan. Why?

These non-state actors would carry out attacks in Pakistan too.

ISKP, TTP and other terrorist organizations.

Attacks in Pakistan: the chances of materialising CPEC would undermine. CPEC would transform
Pakistan into a transitory door, the attacks would become a threat to that. Afghan territory would be
used by these terrorist organizations for destabilising Pakistan. CPEC will not be successful then.

Afghan Security situation has excessive effects on Pakistan. If civil war continued, ISKP and TTP will
continue in Afghanistan. Resultantly, whole region specially Pakistan would be under attack – security
threats would increase for Pakistan. We want to eliminate these groups – ISKP, TTP. Their bases are in
Afghanistan.

3- The Intelligence role of RAW in Afghanistan to terrorize Pakistan should end

India must not have intelligence role in Afghanistan to terrorize Pakistan. Afghan territory is being
used by RAW for terrorising Pakistan. If Civil War exacerbates, opportunities for those the intelligence
organization / for India increases – more attacks in Pakistan.

4- Pakistan does not want US withdrawal / withdrawal of the international troops from Afghanistan
without a political settlement. We do not want US to leave Afghanistan in the large in a difficult
situation. Why? Civil war would increase. Non state actors will rise. Therefore, political settlement is
necessary. Power-sharing formula must be finalized – deal between Afghan Government and Afghan
Taliban by US. If US succeeds to finalize a deal, there will be no power vacuum. Failure to finalize a
deal would result in civil war and power vacuum. This Power vacuum would be filled by non-state
actors. If US leaves Afghanistan without a comprehensive political settlement, it will result in:

1- Civil War
2- Power vacuum that would be filled by nonstate actors.

Impacts of US withdrawal / Afghan Security on Pakistan:

Pakistan wants to end the endless war i.e. war on terror in Afghanistan.

Why? After Afghanistan, Pakistan has been the worst affectee of the War on Terror in Afghanistan.
How? PM Imran Khan Interview, New York Times:

- Pak lost 150 billion dollars

 Rumi :D

- 70,000 civilians martyred

- 8000 security personnel martyred in Pakistan
- Increasing number of Suicide bombing in Pakistan – 2nd highest in world

The war on terror has extremely negative impacts n Pakistan, we want this war to end. How?

The war on terror will end when US will pull out its troops / when international troops will withdraw
from Afghanistan.

It will be result oriented only if the withdrawal is supported by a political settlement in Afghanistan -
withdrawal after making a political settlement in Afghanistan. Otherwise, there would be a civil war –
More dangerous results. So, at one hand there is our appeasement, on the other hand strong
apprehension.

Appeasement: US withdrawal will lead to an end of the War on Terror in Afghanistan

Apprehension: Civil War which will cause negative impacts on Pakistan.

The Role of Pakistan in the War against Terror

o We gave ground line of communication to US & NATO

o We gave Aerial line of communication to US & NATO

To send their supplies into Afghanistan - since 2001.

Pakistan conducted series of military operations on its soil against Taliban. Why? To help out the
international troops in Afghanistan.

Pakistan provided military base to US on its soil - Shamsi air base, Baluchistan – from 2001 till 2011.
Now again US is demanding a military base from Pakistan to which PM IK has said “Absolutely Not”

We will not give any base to US anymore. Can be concluded in one sentence:

“Friend in peace not in war”

(Sir Farid will also publish an article on it)

Partner in peace, not in war.

US would not be allowed to use Pakistan territory for attacks against Afghan Taliban.

Revival of religious parties in KPK and Baluchistan (Can be an impact in the future– not yet)

Why? Because Afghan Taliban will wield influence through religious sections in Pakistan.

Will the revival be Maulana Fazlul Haq led? Perhaps, no! Why? Maulana does not have enough
influence on Afghan Taliban. Influence will be of Madrassah Haqqania, but (after Maulana Sami
ul Haq) Madrassah Haqqania is leaderless. They don’t have a leader who could have influence on
Afghan Taliban.

One more option: Would PTI absorb religious settlement in Pakistan in order to be acceptable to
Afghan Taliban? Would PTI adopt a religious version specially in KPK & Baluchistan? Many of
their leaders now give religious statements. (Topic is important for research)
 Rumi :D

To have the Support of Pakistan, China, Russia, Iran & OF Muslim world is not enough for
Afghan Taliban. If they want to remain in power, Afghan Taliban need support of US, NATO
and India as well – they will have to establish relations with them. They will have to
transform themselves. They will not become hardliners.

The PM of Pakistan said no to US for military bases, is it easy to say a “No”?

Because US is the highest exporting market for Pakistani products.
Pak is trapped in FATF List
Loan to Pakistan is given by IMF.
Remittances from US & Europe – a big contributor

Providing base is also not easy. Why?

China would get antagonized.
Taliban said that if any neighbour country provides a base to US, Taliban will attack
them.

“TO BE OR NOT TO BE? THAT IS THE QUESTION!”

 Rumi :D

Current Affairs

Sir Farid

11/8/2021

Economy

Circular Debt (Economy and energy mixed)

What is Circular Debt?

The loan of IPPs (Independent Power Producers), Importers and Banks over the Govt. of Pakistan is
called "Circular Debt".

Main Players of Energy Sectors

In energy sector, the main players / stakeholders are:

- Importers which import oil & gas, e.g., Shell, Attock, and PSO etc.
- Oil and Gas Producers e.g., OGDCL, Pakistan Oilfields Limited (POL) and Mari Oil Limited (MOL)
etc.

Our per day oil requirement is 500 thousand Barrel Plus, and around 100 thousand Barrel is locally
produced, and the rest is imported. Similarly, 1 billion Cubic Feet per day is our Gas Need and
above 32% is locally produced and the rest is imported.

Generation Companies (GENCOs) like WAPDA produces electricity primarily from water and some
from oil. While IPPs (Independent Power Producers) are producing electricity mainly from oil.

- DISCOs (Distribution Companies) include NTDC (National Transmission Dispatch Company),

LESCO (Lahore Electric Supply Corporation), IESCO (Islamabad), PESCO (Peshawar), K-Electric
(Karachi).

Gas Distribution is done by:

Sui Southern – it covers Sindh and Baluchistan

Sui Northern – It covers KP, Punjab, Islamabad and GB

This Gas Distribution is for domestic sector and for electricity production.

- Also, there are Banks which provide loans to Importers, IPPs, and Govt for producing
Electricity.

Circular debt is the loan of the IPPs, Importers, and banks over the government of Pakistan. Circular
Debt is a Problem as it has increased to more than 2300 billion rupees in Pakistan. The highest being
from the IPPs then the Importers and finally the Banks. This is a great problem for us nowadays.

(It is available in sir’s magazine. It is available in the last magazine not the recent edition, but it is
available in book now.)
 Rumi :D

Why has this Circular Debt increased? The cause behind the increase in the debt:

1. Problems with the production sector:

- Higher Production Cost because more than 60% of electricity is produced from oil and gas.
Pakistan is producing the most expensive electricity in Asia. Electricity is more expensive when
produced from oil and gas, oil and gas is being used to make electricity being made by IPPs.

- Firstly, Oil is the expensive source and secondly that the majority of the oil is imported. since
the oil is not locally produced we end up importing it. In 2020-2021 we spent more than 17+
billion dollars on it. The majority of this oil is being used for electricity

- Additionally, the depreciation of PKR compared to Dollar e.g., in 2017, 98 PKR was worth 1
dollar now in 2021 it has changed to 163 PKR to 1 dollar. So, our rupee is being depreciated
against dollar, and oil is becoming expensive. Since we purchase oil in dollars it worsens the
situation. So, this is the major reason for expensive electricity in terms of Oil and Gas.

Expensive agreement with IPPs:

- The second cause in the same regard is the expensive agreements with IPPs. How this
happened? These IPPs were installed in 1991, 2002, 2011, and 2014 (to meet electricity
requirement we installed IPPs according to our need), these include both internationally
owned and locally, but mostly international. The source generation of IPPs was oil (mostly),
i.e., from 1991 to 2011, all were oil based. But in 2014 the majority are oil based and few are
gas based.

- Principal amount or capacity payment is to be made to ever IPP even if it is not generating a s
ingle megawatt of electricity. E.g., Agreements were made between the gov of Pakistan with
IPPs, and it was decided in it that a specific plant would produce 100mw of electricity theref
ore the government agreed to purchase it, but let’s say the government isn't buying even 1m
g from them if that is the case then the gov has to pay 33 percent of the payment.
- All the IPPs were to be paid in dollars, the government has a shortage of dollar thus
exacerbating the issue.

- Normally rental based agreements vary between 3 to 10 years. After this completion, they are
subjected to renegotiation We didn't renegotiate the deals either due to criminal negligence
or corruptions (kickbacks).

The above problems were with production sector in Pakistan.

2. Problems with Transmission System

a) Line Loss is the biggest problem because the transmission lines are as old as 1970s which
results in 17%+ line loss, i.e., the highest in the region (Asia). We are higher than all our
neighbours (Bangladesh has 12% line loss, while less than 9% in India, and 3% in China.) As a
result, 100 Mega Watt produced and 17 Mega Watt loss in Line.

b) Electricity theft is also a major problem

Kunda System in far flung areas of rural lands where domestic consumers and agriculturists
do that. In urban centres, Karachi with the highest, there isn't even a single city in which this
isn't practiced. it’s found in domestic and industrial theft.
 Rumi :D

c) non-payment of bills such as in merged areas

There are areas in Pakistan which are not paying bills, e.g., merged districts (FATA). Here bills
are not paid at all.

d) The pending bills over Government departments is also a major issue.

3) The govt. is stuck in an unavoidable situation: Additionally linked to this is the government is
stuck in an unavoidable situation, to reduce the circular debt it will have to increase the per
unit price of electricity. More than 200 billion PKR subsidy is being given by the government.
Already, Pakistan is generating the most expensive electricity in Asia which has burdened not
just the domestic consumer but also the industrialist. if the gov continues to give subsidies to
overcome burden on consumers then Circular Debt will increase more and more.

The crux is that the cost of production of electricity is more while collection of payment is less which
results in ever increasing circular debt. In last 8 to 9 years annually, we have faced 300 to 350 billion
PKR increased in Circular Debt.

Measures and Solutions

1) Renegotiate the deals with the IPPs, IPPs produce 60 percent electricity from oil and some
from gas plus the agreements are expensive, after 10 years the agreements must have been
renegotiated.

- The agreements from 1991 should have been renegotiated in 2001 but weren't until 2020,
agreements from 2002 were renegotiated in 2020 instead of 2012. This means that illicit
financial motives were involved, or kickbacks were given.

We renegotiated in 2020 both of the 2002 and 1991 agreements but principal amount
and capacity payment will not be paid now, they will only be paid for the amount
produced.

The locally owned IPPs will be paid in PKR, not in Dollars. This will save our dollars.

- The agreements made in 2011 are due for renegotiation in 2021 and it should not be delayed.
- Also, 2014 agreements should be renegotiated voluntarily – requests should be made to them.
- Imran Khan saved 150-200 billion PKR in his tenure. (According to Minister of Water and
Power, Finance Minister)

2) Cheaper Electricity Generation:

a) Hydroelectric projects

Cheaper electricity generation must be practiced.

Suki Kinari that is 883 mw project to be completed in 2022, Karot 700 mw will be completed
in 2022, Kohala 1100 mw to be completed in 2024, Muhmand dam 800 mw to be completed
I 2025, Dasu 4300 mw to be completed by 2027, Daimer basha 4800 mw to be completed by
2027
 Rumi :D

15000 mw will be produced by 2027 and then per unit cost will be 2 to 4 PKR maximum, while
today it is 23 PKR.

b) Wind projects

3000 mw projects at coastal belt in Jhimpir, Sindh will produce 3k mw by 2027. Also, 1500
mw in Dalbandin, Baluchistan will be completed by 2027 and per unit cost will be 5 PKR.

c) Coal projects

- Two projects of 330 mw will be complete from thar coal, one of them (means 330 mw)
project will complete in 2023

- Thal supernova coal project in Punjab of 600 mw will complete by 2023

Per unit cost will be 8 PKR maximum.

d) Civil nuclear project

- K2 11 mw is completed in 2021 and is operational

- K3 1100 mw to be completed by 2022

Per unit 8 PKR

e) Solar projects

Solar projects include Quaid e Azam solar plant in Bahawalpur with a capacity of 900mw
project, about 600 mw has been installed.

Cheaper Electricity Generation: The benefits will be:

i) Indigenous sources for electricity generation, not imported oil and gas which will
reduce our trade deficit substantially.

ii) Clean and renewable Energy.

iii) Coal is the largest pollutant / carbon emitter. Pakistan must utilize its own local coal
for which latest technologies must be used and trees must be planted in order to
reduce carbon emission.

3. Revamp the transmission lines

Transmission lines should be changed as 17% is lost due to bad transmission lines. So,
government should not only focus on the production of electricity but also change the
transmission lines. Although the procedure / phenomena is expensive so attract foreign
investors towards it.

4. Improve Governance:

Governance must be improved because many issues are related to bad governance especially in
WAPDA, so WAPDA services should be improved, meter reading should be checked regularly and
ensure that electricity is no being theft.

If all these measures are taken, then it will benefit agriculture and industries too. All these will have
massively good impacts on the economy.
 Rumi :D

Foreign Remittances

The money that the Pakistani citizens settled abroad send back to Pakistan through banking channels
and registered money exchange.

As per a report of State Bank of Pakistan issued in July for the year 2020-21, we get remittances from:

1. Middle East (KSA: above 7 billion dollars & UAE: above 5 billion dollars)

2. Europe (3 billion dollars)

3. North American Continent (2.5 billion dollars)

The largest Stabilizer in the Economy of Pakistan is Foreign Remittances because:

In the year 2019-20, 27 billion dollars was the trade deficit plus 13 billion dollars was loan payment.
So, total becomes above 40 billion dollars which flood away from Pakistan. Whereas 21.7 billion dollars
were remittances which came to Pakistan this reduced the deficit / shortfall to 18 billion dollars.

In 2020-21, trade deficit was 30bn $, Loan payment was of around 14 billion dollars, remittances were
of 29.4bn $ and we saved 14 bn $.

How to improve / increase remittances?

1. Regularize the private and non-registered money exchange business also known as hawala or
hundi, they are involved in money laundering that is a criminal act and also involved in terror
financing again a crime so they must be shut down and FIA even cracked down on them, they
were shut down owners were jailed.

2. The government must regularize the rest through registration, and they must be through the
banking sector using banking channels and that will only work if they are given some
attraction.

3. Control Private Business exchange money for increasing Remittances.

4. Improve the banking channels to make remittances easier though:

a) Quick delivery services e.g., it used to take 4 to 5 days to transfer funds now it must be done
in 24 hours within 24 hours money should be transferred.

b) Charges should be reduced. Taxes should also be reduced.

c) Roshan Digital Account (RDA) is an innovative idea and its salient features are:

i) Pakistani citizens sitting abroad can open an account in any bank of Pakistan within 2
hours and its requirement is just passport.

ii) They can invest in different sectors like the real estate, or they can invest in Roshan
Digital Certificate. They can also invest in the stock exchange or car financing, can do
Online Shopping, etc

It is an innovative idea. Why? because it was launched in September 2020 and till July 2021, more than
3 billion dollars have arrived in RDA and more 130,000 than accounts opened. However, there are 9
million Pakistanis (Diaspora) abroad. They all must be attracted to open RDA, it will provide money to
citizens family members here, dollar will arrive, investment will occur, business will flourish.
 Rumi :D

Conclusion: In 2019-2020, 21.7 billion dollars arrived in Pakistan. In 2020-21, 29.4 billion dollars arrived
in Pakistan. This never happened in the history of Pakistan. it is nearly an 8-billion-dollar jump. If
continued they will help Pakistan economy substantially.
 Rumi :D

Currency Depreciation

In 2000, 1 dollar: 37 PKR

In 2008, 1 dollar: 62 PKR

In 2013, 1 dollar: 83 PKR

In 2017, 1 dollar: 98 PKR

Now, 1 dollar : 165 PKR

Abnormal depreciation of rupee has happened why?

1) Quantitative easing:

It is a phenomenon in which in PKR is being printed by the state bank of Pakistan it is

conditioned against dollar, against euro, against riyal, against pound and yen. For printing
rupee, we need at least one of these currencies.

If the state bank prints more notes against the dollar reserves, the rupee has to be devalued.
This phenomenon is called "Quantitative Easing". If we have 1 billion dollar we can print 165
billion against it. To print more notes against the reserves, the depreciation of rupee occurs,
known as Quantitative Easing.

2) Demand and Supply Phenomenon

The availability of dollar in the market / the country will decide the price of the rupee. The
dollar reserves with the State bank of Pakistan, the commercial banks of Pakistan and the
dollar circulation in the stock exchange etc.

- If availability is less and demand is high, this will result in price hike of said dollar.
- if the rupee availability is high but the demand is less then also depreciation of rupee will occur
as currency trade in Pakistan is PKR vs dollar.
- The price of rupee is predominantly linked to price of dollar.

3) The artificial control of the price of rupee was lifted up by the government which resulted in
the depreciation of rupee. in the past few years, the government of Pakistan kept indirect
influenced / control over the price fixation of rupee. How? Dollar was acquired in the form of
a loan from external sources and that dollar was released to the private market that is
commercial banks and stock exchange which influenced the demand and supply phenomena
in the favour of rupee as dollar availability increased in the market. So, rupee stabilised
artificially. However, the disadvantage was the increase in foreign loan of Pakistan as it
exponentially increased. The government was left with no choice but to throw dollar in the
private market and ultimately the rupee couldn't compete with the dollar and the rupee got
depreciated.
 Rumi :D

Impacts

1. Inflation (price Hike) as every foreign product became more expensive. The largest imported
product of Pakistan is oil that became more expensive. Where in 2017 we were paying about
98 rupees but now we have to pay 165 rupees. The electronics also got more expensive along
with automobiles, edible oil, pulses and there is a long list which got expensive.

2. The locally produced products also become more expensive because the raw material for the
locally produced products is imported in the raw form or half-finished product. We import oil
and gas in the raw form as well as steel. Also, for cars we import spare parts and assemble
them.

3. Electricity also got more expensive for all consumers and a non-stop chained process of price
hike ensued. As a result of which agricultural, industrial and domestic user got burdened.

Depreciation of currency is not always negative / a bad thing as in Asia, the countries having
more exporting capacity, the depreciation is good for them. Such as yen even though it costs
less the countries having more exporting, so depreciation is beneficial for them since Japan
has the powerful economy right behind China.

How to stop it? / Remedies

1. Bring more dollar to the country whatsoever is the mean:

- Increase Remittances like we dd last year

- Acquire a loan: at the present the government cannot avoid acquiring loan because
we need dollar

- Reduce trade: deficit the lesser the trade deficit thus more dollars will stay in our
country which will stabilize rupee

- attract foreign investment.

2. Start trading with foreign countries other than in dollars, like Currency Swap Agreement (CSA)
which we have signed with China (PKR versus Yuan). We had the biggest trade deficit with
China. More than 14 billion dollars trade deficit is with China alone. So, if we control only this
one, the pressure on dollar will be controlled.

A student said, “Trade deficit with China is 7.89 bn $ 01 march2021 dawn.” So, confirm it.