Risk Analysis 2.0

Welcome to the Weekend.

Let us see what has happened at the regional and global international political and strategic system and what lies ahead for all of us!

Pakistan: Pakistan is in a precarious and intertwined web of challenges that have shaped its risk landscape. The historical pattern of suppressing democratic processes and introducing artificial solutions to counter popular political forces has failed to address underlying social conflicts, exacerbating tensions and perpetuating instability. This impacts the political sphere and has far-reaching consequences for the country's social fabric, economic prospects, and overall development. The erosion of democratic institutions undermines trust and faith in governance, deepening disillusionment among the populace and creating a breeding ground for political unrest. Abductions, forced disappearances, and trying civilians in military courts will not augment well for Pakistan’s global standings, including GSP+ status. One of the pressing issues Pakistan faces is the upcoming deadline for the renewal of its GSP+ status, which expires on December 31, 2023. This status grants preferential trade benefits to Pakistan, allowing a significant portion of its exports to enter the EU at reduced or zero tariffs. However, concerns have been raised by the EU regarding Pakistan's eligibility for GSP+ due to the deteriorating democratic principles within the country. As the EU is Pakistan's second-largest trade partner, accounting for a substantial share of its total trade, the potential loss of GSP+ status poses significant challenges for Pakistani exporters.

To address these risks, urgent and concerted efforts are needed to improve the deteriorating democratic conditions in Pakistan. The solution lies in prioritizing free and fair elections, upholding democratic values, and addressing the concerns raised by the international community. By doing so, Pakistan can secure the extension of the GSP+ status and pave the way for a more inclusive, prosperous, and sustainable future for its people. In this context, Foreign Minister Bilawal Bhutto-Zardari and Minister of State Hina Rabbani Khar have been urged to intensify diplomatic efforts and engage with international counterparts to build Pakistan's case for extending GSP+. The upcoming visit of Minister of State Hina Rabbani Khar to European countries is a critical opportunity to address concerns, present Pakistan's progress in democratic reforms, and advocate for the continuation of preferential trade benefits. The successful extension of GSP+ would significantly boost Pakistan's export sector and contribute to its economic stability.

Pakistan-Iran-Afghanistan-Russia Barter Trade: Pakistan's recent implementation of the 'business-to-business barter trade mechanism 2023' reflects the country's desperate attempt to address its balance of payments crisis and curb soaring inflation. Pakistan's current economic challenges, compounded by the upcoming negotiations with the International Monetary Fund (IMF) for new funds, have prompted the government to explore alternative solutions in case the bailout talks fail. With foreign exchange reserves barely sufficient to cover one month's imports, Pakistan's government has resorted to allowing barter trade with Afghanistan, Iran, and Russia for specific goods, including petroleum and natural gas. The government order, known as the Business-to-business (B2B) Barter Trade Mechanism 2023, was introduced on June 1, requiring approval for state and privately owned entities to participate in this trading mechanism. The barter trade mechanism lists 26 commodities that Pakistani entities can export to Afghanistan, Iran, and Russian markets. In return, they can import a range of essential items such as crude oil, liquid natural gas, liquid propane gas, chemical products, fertilizers, fruits, wheat, industrial machinery, and vegetables from these countries. While the United States has imposed sanctions on those purchasing Iranian oil, a barter deal may receive more leniency. By engaging in barter trade, Pakistan aims to overcome the limitations imposed by its limited foreign exchange reserves and the complex international trade landscape. However, it is essential to consider the potential implications and limitations of such a mechanism. While barter trade offers a short-term solution, there may be a more sustainable long-term strategy for addressing the underlying issues affecting Pakistan's economy. This development raises questions about the country's ability to attract foreign investment and stabilize its economic conditions. The reliance on barter trade reflects a precarious situation, highlighting the urgent need for comprehensive reforms to improve Pakistan's economic competitiveness and ensure the stability of its external accounts.?

Terrorism: An enduring and pressing security dilemma for Pakistan lies in the issue of cross-border havens in neighboring Afghanistan, particularly for militant groups like the banned Tehreek-e-Taliban Pakistan (TTP). While cross-border attacks were common during the previous Western-backed government in Kabul, the situation has not improved significantly since the Afghan Taliban assumed power. According to a recent report, between August 2021, when the Taliban swiftly captured Kabul and ousted the Ashraf Ghani administration, and April 2023 witnessed a staggering 73 percent increase in terrorist attacks in Pakistan compared to the corresponding period preceding the Taliban's takeover.?

Even more alarming, the number of fatalities resulting from these attacks surged by 138 percent, with Khyber Pakhtunkhwa (KP) and Balochistan provinces bearing the brunt of the violence. Amid the Taliban's rise to power and the present day, Pakistan made an ill-fated attempt to engage in peace talks with the TTP, widely believed to be responsible for the majority of these attacks. While the Afghan Taliban initially supported these negotiations, officials from the de facto government in Kabul continue to deny any involvement or use of their territory for terrorist activities. However, substantial evidence points to the TTP finding sanctuary within Afghanistan under the protection of the Taliban.?

Taliban-Qatar Secret Talks: In a development that carries profound implications for the global fight against terrorism, it has come to light that the Qatari prime minister, Mohammed bin Abdulrahman al-Thani, engaged in secret talks with the supreme leader of the Taliban, Haibatullah Akhunzada. On May 12, in the southern Afghan city of Kandahar, these covert discussions centered around resolving tensions with the international community. This unprecedented meeting represents the first known encounter between the reclusive Taliban chief and a foreign leader, marking a significant shift in the dynamics of Afghanistan's incumbent government and their willingness to engage in dialogue to alleviate their isolation. The implications of this secretive engagement are multifaceted and demand careful analysis. This signifies a notable departure from the Taliban's historically reclusive and antagonistic stance towards the international community. This marks a potentially critical turning point in the relationship between Afghanistan's rulers and the rest of the world. Qatar's pivotal role as a mediator in facilitating these talks highlights its growing influence and diplomatic leverage in the region. As a trusted intermediary, Qatar has demonstrated its commitment to fostering dialogue and seeking peaceful resolutions to regional conflicts. While the exact details of the discussions remain undisclosed, the fact that this meeting took place raises numerous questions about the potential outcomes and implications for counterterrorism efforts. It is crucial to closely monitor the developments that may arise from these talks, particularly regarding the Taliban's commitment to renouncing violence, severing ties with extremist elements, and embracing a more inclusive approach to governance. The international community will be keen to assess whether this newfound willingness to engage in dialogue translates into tangible actions that contribute to lasting peace, stability, and the eradication of terrorism in Afghanistan.?

UAE's Withdrawal from the US-led Gulf Maritime Coalition: ?The recent decision by the United Arab Emirates (UAE) to become the first Arab state to withdraw from the US-led Gulf Maritime Coalition marks a significant turning point in the region's geopolitical landscape. This move is widely seen as an indication of the declining influence of the United States on Gulf states and the broader Middle East region. The decision comes amidst growing concerns raised by the US regarding the Chinese military presence in UAE waters, with the US consistently warning the UAE about the implications of its deepening military ties with China on its relationship with the US. This development raises important questions about the future of international cooperation in maritime security and underscores the shifting dynamics of power and alliances in the region. The 34-nation task force, headquartered at the US naval base in Bahrain, was initially established to combat terrorism and piracy in the Red Sea and Gulf areas. The region itself holds immense strategic importance, as it encompasses critical shipping routes vital to global trade. In recent years, tensions between the US and Iran have resulted in several attacks on vessels navigating through these waters. Against this backdrop, with its geographically strategic position along these maritime trade routes, the UAE has played an active role as part of the US-led coalition. However, the Emirati decision to withdraw from the alliance can be attributed to growing frustrations over the perceived failure of the US to address Iranian threats in the region adequately. This withdrawal has broader implications for regional dynamics, particularly in terms of the balance of power and shifting alliances. The UAE's decision signifies a recalibration of its foreign policy priorities as it seeks to assert its autonomy and pursue alternative avenues to safeguard its national security interests. By emphasizing its commitment to dialogue, diplomatic engagement, regional security, and adherence to international law, the UAE aims to project itself as an independent actor capable of shaping its strategic course. The ramifications of the UAE's withdrawal extend beyond bilateral relations between the UAE and the US. It also raises questions about the long-term sustainability of the US-led coalition and its ability to address the evolving security challenges in the region effectively. The void left by the UAE's departure opens up opportunities for other regional actors to step in and assert their influence, potentially reshaping existing power dynamics and alliances.

Shangri-La Dialogue: The annual Shangri-La Dialogue, currently taking place in Singapore, has become a focal point for diplomats and military officials to analyze the growing arms buildup and escalating tensions between the United States and China in the Pacific region. Before the summit, the refusal of China's defense minister, who has been under U.S. sanctions since 2018, to meet with U.S. Defense Secretary Lloyd Austin set the tone for the discussions. In his opening speech, Australian Prime Minister Anthony Albanese emphasized the need for diplomacy to maintain regional stability. Singapore and China have agreed to establish a high-level hotline for military communications, underscoring their commitment to preserving dialogue amidst rising tensions. European officials attending the summit are expected to encourage other participants to take a stance on the Russia-Ukraine war, adding another layer of complexity to the discussions. Many countries in the Indo-Pacific region do not view the U.S.-China tensions as a "binary choice" and instead prioritize "multi-alignment options," seeking to form overlapping relationships with multiple major powers. For these states, multi-alignment is not a fallback option, but their preferred approach is to guard their national interests in the region. It is important to consider that Southeast Asia's ability to maintain its position amidst the escalating tensions remains to be determined. If the tensions between Beijing and Washington were to escalate into a military conflict, countries in the region could face significant pressure to choose sides, potentially undermining their strategic autonomy and stability. The ongoing discussions at the Shangri-La Dialogue underscore the magnitude of the U.S.-China tensions and their potential impact on regional security. As countries grapple with the complex dynamics, the need for effective diplomacy, dialogue, and a commitment to maintaining stability in the Indo-Pacific region becomes increasingly crucial. The summit's outcomes will shape the future trajectory of these tensions and the overall security landscape in Asia.?

Multilateralism:?

BRICS- The meeting of the foreign ministers of Brazil, Russia, India, China, and South Africa (BRICS) in Cape Town holds significant implications for the bloc's future trajectory. As a prelude to the upcoming summit in Johannesburg, this gathering provides an opportunity for critical discussions on various pressing issues. Among the prominent topics on the agenda are the development bank established by BRICS, the response to Western sanctions imposed on Russia, and the potential expansion of the group. These deliberations come at a crucial juncture, with each member country facing unique geopolitical challenges and seeking avenues for greater cooperation. The BRICS bloc, comprising major emerging economies, has gained prominence as a significant force in the global arena, with its members collectively representing a substantial share of the world's population, resources, and economic potential.?

SCO-The decision by India to host the upcoming Shanghai Cooperation Organisation (SCO) summit virtually instead of in person raises questions and invites speculation about the underlying reasons. Multilateral summits hold great significance as they allow world leaders to engage in face-to-face interactions, which often have a more profound impact than virtual meetings. The Covid-19 pandemic necessitated the shift to online platforms, but with a decrease in global cases, the resumption of in-person gatherings has become feasible. The Indian external affairs ministry has not clearly explained this decision, leaving room for conjecture. Some media outlets in India have suggested that concerns about hosting leaders from Russia, China, and Pakistan in person may have influenced the choice. While these speculations cannot be confirmed without official clarification, they underscore the need for transparency from the organizers. Understanding the motivations behind this shift to a virtual summit is crucial in assessing the potential implications for diplomatic relations and regional dynamics. The upcoming admission of Iran to the SCO in July will be a momentous occasion for the country. As the first multilateral organization that Iran would join since the Iranian Revolution in February 1979, this event carries significant importance. Membership in the SCO would provide Iran with a platform to engage with key regional powers and deepen its diplomatic ties.

Clashes between Kosovo and Serbia: Tensions between Kosovo and Serbia are escalating following the ethnic Albanians' election victory in northern Kosovo. Clashes broke out between authorities and the Serb population, prompting intervention by NATO peacekeepers. The US called for de-escalation and penalized Kosovo's participation in a US-led military exercise, while Russia blamed the EU and NATO for the tensions. The Balkan region has a history of ethnic and religious divisions, with Serbia claiming Kosovo as its own, supported by the Serb minority. The Albanian population supports Kosovo's independence, recognized by the G7 but opposed by Russia. Recent local elections saw ethnic Albanians assume important government positions in northern Kosovo after a Serb boycott. Russia holds a significant interest in the Balkans, maintaining a close relationship with Serbia. Tensions in the region have increased since the Ukraine Crisis, with Serbia, caught between Russia and the West. NATO's planned presence expansion in Kosovo raises concerns for Russia, potentially leading to a crisis akin to Ukraine. The situation requires close monitoring to prevent further escalation and maintain regional stability.

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Dr. Farhat Asif

*The views and analysis presented in this document are solely my own and should not be attributed to the organizations I am associated with or hold leadership positions in.