In Part01 we talked about Zero day and what happens to Pakistan on Sept 30th, 2020. Now let us see what happens after this day and also about the ripple effects.
1. What is Debt Trap?
A situation in which a debt is difficult or impossible to repay, typically because high interest payments prevent repayment of the principal
2. What is Debt-trap diplomacy?
Debt-trap diplomacy is a type of diplomacy based on debt carried out in the bilateral relations between countries. It involves one creditor country intentionally extending excessive credit to another debtor country with the alleged intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations (often asset-based lending, with assets including infrastructure).
China - SriLanka Trap:
The Exim Bank of China gave large sums of loans to the Sri Lankan Government to build the "Magampura Mahinda Rajapaksa Port", funded by China's state-owned Export–Import Bank at an annual interest rate of 6.3%. Due to Sri Lanka's inability to service the debt on the port, it was leased to the Chinese state-owned China Merchants Port Holdings Company Limited on a 99-year lease in 2017.
China - Pakistan Trap:
China–Pakistan Economic Corridor (CPEC) is a collection of infrastructure projects that are currently under construction throughout Pakistan. Originally valued at $46 billion, the value of CPEC projects is worth $62 billion as of 2017. According to official statistics, 20% of CPEC is debt-based finance, while 80% of CPEC is investment with the project contributing to 40,000 jobs for local Pakistanis and 80,000 jobs for Chinese. So after 2020, Pakistan rupee will collapse, lead to hyperinflation and chaos sets in.
NOTE: Price of liter of milk already costs more than price of petrol and diesel. Electricity prices have gone up by almost 20%.
Gwadar Port/City Project:
Gwadar forms the crux of the CPEC project, as it is envisaged to be the link between China's ambitious One Belt, One Road project, and its 21st Century Maritime Silk Road project. In total, more than $1 billion worth of projects are to be developed around the port of Gwadar by December 2017. As of 2017, in total there are 9 projects funded by China in and around Gwadar.
What happens next?
1. Gwadar Port will inevitably fall in China's hands for a 99-year lease. When that happens, China will have ports leased in Pakistan and SriLanka. Also, China and Malaysia have touted "Port Alliance" in an effort to reduce dependency on Singapore.
2. Oil from Middle East will now land at Gwadar port and will be transported to China via Belt Line Road. China will get cheaper gas by cutting the trade route by 40%.
3. China would have surrounded India on all sides possibly escalating tensions in sub-continent.
4. Because of Pakistan's collapse, Jihadi take over might happen which could result in Nuclear take over
Steps India must take -
1. Liberate Baluchistan, Sindh province through international diplomacy and Geneva Convention
2. Mobilize International community to force Pakistan to hand over nuclear arms to IAEA
3. Black list Pakistan at FATF (Financial Action Task Force)
4. Form alliance with USA and put pressure in South China sea
5. Force Japan, Russia, USA, France to provide India a seat in UNSC
Question of the day - Should India bail out Pakistan to some extent to avoid China surrounding India?
Please add comments and let me know your view points.
1. What is Debt Trap?
A situation in which a debt is difficult or impossible to repay, typically because high interest payments prevent repayment of the principal
2. What is Debt-trap diplomacy?
Debt-trap diplomacy is a type of diplomacy based on debt carried out in the bilateral relations between countries. It involves one creditor country intentionally extending excessive credit to another debtor country with the alleged intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations (often asset-based lending, with assets including infrastructure).
China - SriLanka Trap:
The Exim Bank of China gave large sums of loans to the Sri Lankan Government to build the "Magampura Mahinda Rajapaksa Port", funded by China's state-owned Export–Import Bank at an annual interest rate of 6.3%. Due to Sri Lanka's inability to service the debt on the port, it was leased to the Chinese state-owned China Merchants Port Holdings Company Limited on a 99-year lease in 2017.
China - Pakistan Trap:
China–Pakistan Economic Corridor (CPEC) is a collection of infrastructure projects that are currently under construction throughout Pakistan. Originally valued at $46 billion, the value of CPEC projects is worth $62 billion as of 2017. According to official statistics, 20% of CPEC is debt-based finance, while 80% of CPEC is investment with the project contributing to 40,000 jobs for local Pakistanis and 80,000 jobs for Chinese. So after 2020, Pakistan rupee will collapse, lead to hyperinflation and chaos sets in.
NOTE: Price of liter of milk already costs more than price of petrol and diesel. Electricity prices have gone up by almost 20%.
Gwadar Port/City Project:
Gwadar forms the crux of the CPEC project, as it is envisaged to be the link between China's ambitious One Belt, One Road project, and its 21st Century Maritime Silk Road project. In total, more than $1 billion worth of projects are to be developed around the port of Gwadar by December 2017. As of 2017, in total there are 9 projects funded by China in and around Gwadar.
What happens next?
1. Gwadar Port will inevitably fall in China's hands for a 99-year lease. When that happens, China will have ports leased in Pakistan and SriLanka. Also, China and Malaysia have touted "Port Alliance" in an effort to reduce dependency on Singapore.
2. Oil from Middle East will now land at Gwadar port and will be transported to China via Belt Line Road. China will get cheaper gas by cutting the trade route by 40%.
3. China would have surrounded India on all sides possibly escalating tensions in sub-continent.
4. Because of Pakistan's collapse, Jihadi take over might happen which could result in Nuclear take over
Steps India must take -
1. Liberate Baluchistan, Sindh province through international diplomacy and Geneva Convention
2. Mobilize International community to force Pakistan to hand over nuclear arms to IAEA
3. Black list Pakistan at FATF (Financial Action Task Force)
4. Form alliance with USA and put pressure in South China sea
5. Force Japan, Russia, USA, France to provide India a seat in UNSC
Question of the day - Should India bail out Pakistan to some extent to avoid China surrounding India?
Please add comments and let me know your view points.
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