For Pakistan, many opportunities, questions in China’s Iran-Saudi deal

get along well enough not to be overly bothered by Pakistan’s good relations with both,” the expert added.

Iranian Foreign Minister Hossein Amir-Abdollahian stated that the agreement provided “major” opportunities for “the two countries”, the region, and the Muslim world.” Apparently, joint ventures between Iran, Saudi Arabia and Pakistan may be possible if the Chinese mediation efforts prove to be sustainable.

added that reduced regional tensions can reduce the recruitment capacity of jihadi groups, and Pakistan can avoid being entangled “in the zero-sum game of the two regional rivals.”

Al-MONITOR Sabena Siddiqui

HAVInG agreed to exchange ambassadors and reopen their embassies within two months, bitter rivals Saudi Arabia and Iran issued a trilateral statement March 10 after a decisive round of talks facilitated by China. While the deal will have repercussions throughout the Middle east, another major player that stands to gain is Pakistan, Iran’s immediate neighbor and a close strategic ally of riyadh.

Since breaking diplomatic ties in 2016, Iran and Saudi Arabia have remained on opposite sides of nearly every regional conflict, from Syria to Iraq to Yemen. Iraq and Oman had also worked to engage the two rivals, but it was Beijing that finally managed this geopolitical shift. Pakistan attempted to resolve the regional rift as soon as it happened and continued mediation efforts over the years. Being home to the second largest Shiite population after Iran (though it is a majority Sunni state), Islamabad had to deal with religious and sectarian violence by extremist groups from both sides whenever the matter intensified.

“ONE OF BIGGEST WINNERS”

FROM DEAL: Adopting a nuanced approach, Islamabad tried to maintain balance in its dealings with both the countries. A statement by the Pakistan Foreign Office called the normalization an “important diplomatic breakthrough” made possible by “China’s visionary leadership.”

Michael Kugelman, South Asia director at The Wilson Center in Washington told Al-Monitor that Pakistan would be one of the biggest winners if the deal works. “Few countries are more vulnerable to Iran-Saudi Arabia rivalry than Pakistan. It has a military alliance with the Saudis, it borders Iran, it has a Shia population of 20%, it is pressured to help Saudi Arabia militarily, and it is periodically targeted by militants based in Iran,” Kugelman said. He added that Islamabad has sought to be neutral in the rivalry, but that its alliance with Saudi Arabia makes that difficult. “It’s easier to be neutral— meaning to pursue warm relations with both countries—if Saudi Arabia and Iran nearly $26 billion have been invested by China up till now and the project has entered the second phase. Both Saudi Arabia and Iran were invited to join this trade connectivity project but their involvement remained negligible. With their bilateral differences set aside, both China and Pakistan can benefit as the two rivals can participate or invest in various CPeC projects.

Having had dependable ties with neighbor China, Pakistan was one of the first participants of President Xi Jinping’s mega-project, the Belt and road Initiative (BrI). In 2015, the China-Pakistan economic Corridor (CPeC), flagship corridor of the BrI was launched. Ultimately worth around $65 billion, it is also the only corridor nearing completion from the six corridors of the BrI.

As per Kugelman, “The sustainability of the deal is the fundamental issue at play. The key signpost will be whether each country changes, or at least adjusts, the policies that have most upset the other. In particular, would each side draw down their support for violent proxy groups that target the other, and the other’s interests? For example, if we start seeing less Saudi and Iranian involvement in the war in Yemen, that would be a very strong and encouraging data point.”

Zeeshan Shah, a financial analyst at FInrA in Washington, told Al-Monitor, “Saudi pressure has reportedly been behind Pakistan’s calculation in not expanding trade with Iran and not completing the gas pipeline, on top of the nuclear sanctions on Iran.” Shah added, “Pakistan’s external security had been under increased pressure from riyadh to choose a side. The Iran-Saudi rivalry narrowed Pakistan’s economic and political maneuverability and reduced its strategic options.”

MUCH NEEDED ECONOMIC

BOOST: Considering the economic crisis that Pakistan is going through due to political instability and catastrophic flooding, Islamabad would welcome a rapid increase in cross-border trade with Iran and investment from the Kingdom, along with possible joint ventures with Tehran and riyadh. However, a european diplomat posted in Islamabad told Al-Monitor on condition of anonymity that this development would help Pakistan only in the medium to long term unless sanctions on Iran are lifted.

Highlighting some advantages, he nevertheless, many details remain unresolved. Soon after the announcement, Saudi Foreign Minister Prince Faisal bin Farhan said, “It does not mean that an agreement has been reached to resolve all pending disputes.”

Beijing stands to be the main beneficiary, since it already had long-term comprehensive strategic partnerships with Tehran as well as riyadh. Since Beijing had to meticulously balance both the allies, ending their differences may have become necessary. Trying to maintain the positive tempo, China now plans to host an Iran-GCC summit soon.

Meanwhile, China is the largest trading partner of both the rivals, representing almost 30% of Iran’s total international trade, and Saudi Arabia’s largest oil export market with bilateral trade up 33.1% on a yearly basis.

At the Financial Sector Conference in riyadh, Saudi Finance Minister Mohammed Al-Jadaan mentioned that Saudi investments into Iran can happen “very quickly” after the agreement to restore diplomatic ties.

In another fresh development, the export-Import Bank of China announced that it would provide Saudi national Bank loan cooperation in yuan. dong dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, stated that this facilitation could become a “good template” for deals with other countries. Apparently, Tehran and Beijing have also discussed increasing yuan-based trade.

Most of all, Beijing can now accelerate its mega-connectivity project, the Belt and road Initiative. In addition, riyadh can join the China-led Shanghai Cooperation Organization, of which Iran is also a member.

Hard-line segments of Iranian army or establishment could have some objections. The truce also may have no immediate impact on the Yemen war, as the Houthis have made it clear that they are not subordinate to Tehran.

According to the diplomat, “There is a high degree of symbolism due to the involvement of Beijing, though only in the last phase of the talks. It was a remarkable achievement as the two old rivals reached the conclusion that as the old saying goes: ‘you can eat soup with your enemy, though with a longer spoon.’” to be done with respect to the USA’s international influence and alliance systems after the Trump years, but enormous potential power resides in these nations to work together to deal successfully with China. no grand bargain will be struck between the USA and China on world order. This is especially true given that both the US and Chinese governments currently strive for illusionary primacy in the Indo-Pacific.

In the past, Beijing restricted itself to being just an economic partner and investor in the Middle east. Being directly involved with this agreement, China may also have to play the role of a guarantor and accept responsibility for the actions of both its allies and possibly even maintain the peace in the oil-rich volatile region.

The USA and China are well on their way to confrontation, which could eventually lead to war. during the past two years, almost every international issue divided Washington and Beijing. They disagreed about the most effective ideological underpinnings and political structures for modern societies, the futures of Hong Kong and Taiwan, freedom of navigation and the nature of maritime claims in the South China Sea, how best to curtail the north Korean and Iranian nuclear weapons programmes, nuclear weapons and arms control, cyber-penetration and other influence operations, the place of alliances in the current era, bilateral trade and intellectual property, human rights, 5G networks and advanced technology, climate change, China’s Belt and road Initiative and geoeconomic coercion, the India-China dispute in the Himalayas, and the proper roles and missions of international organizations. In the fervo4r of the just completed U.S. electoral season, many of these disagreements have worsened a problematic reality that the Biden administration just inherited of late, Beijing and Washington seemed uninterested in using diplomacy to arrest the potentially catastrophic decline in relations. Few meetings have been held between their top diplomats, and crisis management mechanisms are moribund. Thus neither the USA nor China made any serious effort to reduce disagreements on major issues. Instead, they hurled daily public accusations against the other.

When Secretary of State, Mike Pompeo all but said that Washington could not successfully address its problems with Beijing as long as the Chinese Communist Party ruled there; in short, a call for regime change.

China in its media has found nothing good to say about the USA, from its racial and class problems to its international behaviour.

This absence of diplomacy perplexes because it widens the U.S.-China gulf and increases the likelihood of eventual violent confrontation. History is replete with examples of how such conflict-ridden policies by contending states lead to tragedy.

The writer has a PhD in Political Science and can be reached at akramzaheer86@yahoo.com

THe U.S. intelligence community’s annual threat assessment for 2023 certainly cannot be faulted for having a narrow focus or Pollyanna perspective. From a rising China, russian aggression and Iran’s nuclear ambitions to climate change, future pandemics and the growing reach of international organized crime, the IC’s analysis is as comprehensive as it is worrying.

Inaugurated two decades ago as a gesture of transparency and to inform Congress and the American public, the annual threat assessment offers the intelligence agencies’ top-line conclusions about the country’s leading national-security threats — though always in ways that will not compromise “sources and methods.” As in the past, America’s spies and intelligence analysts have stayed in their lane and avoided policy questions or any suggestion that some problems are more important than others.

Yet when testifying to the Senate Intelligence Committee on March 8, U.S. national Intelligence director Avril Haines was not as constrained. She made it abundantly clear that the Biden administration regards China as “our unparalleled challenge,” and as America’s leading national-security threat.

If the annual threat assessment was less categorical, that is because it represents a harmonized view. differences of expert opinion and bureaucratic battles across 18 intelligence agencies come with the territory, requiring compromises on both wording and substance. Having chaired scores of meetings to coordinate IC assessments as a member of the national Intelligence Council, I can attest to the heated debates that are involved. Forging a consensus among such an animated crowd is a true art.

But as important as it is to argue over evidence and language, it all ultimately takes a backseat to the first step in any analysis: figuring out what questions the final product should address. Part of the answer, of course, depends on the president and other key policymakers. With a $67 billion budget, the IC owes its paymasters that much at least. But the task also calls for a sober examination of the facts and their implications, regardless of whether these align with the administration’s views. Here, this year’s threat assessment fell short.

Like the White House, the IC’s assessment emphasizes the threats represented by Chinese President Xi Jinping’s confrontational approach and advances in China’s military, economic and technological capabilities. But there is less insight into China’s domestic problems and what those could mean for Xi’s regime. As threat assessments go, this omission may be justifiable. But when it comes to improving policymakers’ and ordinary Americans’ understanding of their country’s foremost global competitor, Xi’s domestic difficulties should not get such short shrift.

Consider Xi’s effort to restructure the even China’s own dodgy official economic statistics reveal a massive festering problem. China’s 31 provinces have racked up $5.1 trillion in debt to fund development, and that figure does not even include all of the additional local government financing vehicles (LGFVs). These off-the-books entities serve as backdoors for municipal governments to tap banks for loans and sell bonds after they have borrowed heavily to finance property and infrastructure projects. According to the International Monetary Fund, the total debt associated with LGFVs has exploded to almost $10 trillion.

Chinese property sector following decades of massive investment. According to Michael Pettis of the Carnegie endowment, this sector accounts for as much as one-third of China’s gross domestic product, but it is extraordinarily bloated and thus underperforming. Two years ago, Chinese authorities tried to crack down on borrowing by overleveraged developers, sparking multibilliondollar defaults and leaving scores of cities littered with abandoned projects and faced with long construction delays. Many of the big developers are still struggling, as are local governments that have racked up massive debts financing their work.

This red ink is as much a political problem as a financial one. Chinese LGFVs have $790 billion worth of bonds coming due this year and another $70 billion of offshore debt will have matured by 2025. Land sales to developers have long been local governments’ principal revenue source. But with these tanking, officials are being forced to slash salaries, pensions, services and health care in order to service debts.

These cuts have provoked demonstrations in several cities — and it isn’t only workers and pensioners who are upset. China’s burgeoning middle class bet big on real estate in recent years, giving the country a homeownership rate of nearly 90%. But now the property sector’s turmoil is hitting them hard. With 70% of Chinese household wealth tied up in property, owners have seen their nest eggs shrink.

In response, the Chinese government once again eased credit to stimulate the real-estate market last november, and by January, home prices had ended a 16-month decline. But potential buyers remain wary. There is still a massive backlog of unfinished projects and everyone remembers the large protests last year by would-be homeowners who had taken out up-front mortgages on homes that may never be built. More stalled projects and flagging sales already bode ill for 2023.

To be sure, like other short- and long-term domestic challenges facing China — from growing youth unemployment to a shrinking labor force — property-sector woes are not an immediate threat to Xi’s rule or the Communist Party of China’s power. But they do obviously pose problems for his agenda, both foreign and domestic. Following the massive protests against the “zero-COVId” policy late last year, Chinese officials are well aware of the political risks. Under Xi, the CCP is expanding its presence in China’s government ministries as well as business boardrooms, and a raft of reforms has tightened access to officials and information.

In short, the IC’s otherwise well-presented unclassified annual assessment should have dug deeper. Congress and the public deserve to hear its best insights into the problems facing Xi’s regime. As we all know by now, what happens in China does not stay in China.

Kent Harrington, a former senior CIA analyst, served as national intelligence officer for East Asia, chief of station in Asia and the CIA’s director of public affairs.

WASHiNGtoN

AFP fEWexpect Chinese President Xi Jinping’s diplomacy to yield breakthroughs on the Ukraine war. But in Washington, there are fears Beijing may succeed elsewhere — in winning credibility on the world stage. Xi pushed forward positions on Ukraine during two days of talks in Moscow, a week after China announced the restoration of ties between Iran and Saudi Arabia — rivals in a region where the United States for decades has been the main diplomatic powerbroker.

The United States has been skeptical of China’s diplomatic offensive, believing its proposed ceasefire