Germany urges assistance for Pakistani bailout
With vested interests in a stabilized Pakistan, Germany steps in to pull support for the now crumbling nation.
Islamabad -- German Foreign Minister Frank-Walter Steinmeier called upon the international community Tuesday to help avert the looming economic collapse of Pakistan: a key ally in the international fight against terrorism.
"We believe that the international community has to do what it can; what is required of it, and that is to express its readiness to stand at the side of Pakistan," he said in a joint press briefing with his Pakistani counterpart Shah Mahmood Qureshi in Islamabad.
Pakistan is facing an economic meltdown, mainly because of the political crisis that ended with former president Pervez Musharraf's resignation in August and the dozens of Taliban militant’s suicide attacks that caused foreign investors to flee.
The country's foreign reserves dropped by 75 percent over the last 12 months from 18 billion dollars to around 4.3 billion dollars.
At the same time, the rupee weakened by more than 27 percent against the dollar; the current account deficit reached a record 14 billion dollars in the year ending June 30; and inflation rose to over 30 percent.
In recent weeks prolonged power outages and skyrocketing electricity tariffs have already triggered countrywide protests, raising fears that the nuclear armed Muslim nation might fall into chaos, further complicating the ongoing fight against Islamic insurgency in Afghanistan.
Islamabad has appealed for urgent assistance to the Friends of Pakistan group, which held its first formal meeting during the recent UN General Assembly session in New York.
The group, which includes members of the European Union, the United States and China, plans to hold another meeting next month in Abu Dhabi to discuss how to provide financial help to Pakistan.
The Islamic country has also sought assistance from the International Monetary Fund to avoid default on its external debt payments; however, as Finance Minister Shaukat Tareen said last week, this will only be the case if they are unable to attain the much needed assistance of 3.5 to 4.5 billion dollars from friendly nations, within the next 15 to 30 days.
Steinmeier said the country’s friends should be supportive when it, "comes to Pakistan's negotiations with the IMF."
"It is necessary to provide this assistance not in the next six months or in six weeks, assistance aid has to be given here and now to help Pakistan," Steinmeier added.
He said his country has identified several areas of cooperation two of which include focusing on increased German investment and support in the education sector.
But a strict IMF programme may require Pakistan to do away with all subsidies, which especially hits hard on the poor as well as business activities in general.
The Taliban, who use the country's tribal region as a springboard to launch cross-border attacks on US led international forces in Afghanistan, can benefit from a situation where the public rises against the democratically elected government.
Germany has deep interest in a strong, stable and peaceful Afghanistan: an interest that is shared by Pakistan, Steinmeier said.
The visiting minister expressed appreciation for the tribal assembly of Pakistani and Afghan political and tribal leaders who concluded their meeting in Islamabad Tuesday after discussing ways to address the Taliban insurgency in both countries.