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Pakistan welcomes IMF $6.7 billion lifeline

ISLAMABAD: The government on Thursday welcomed a $6.7 billion loan from the International Monetary Fund (IMF) but economists warn it can only be a stop-gap unless Islamabad enacts uncomfortable economic reforms. The IMF executive board authorised a three year loan, making an initial $540 million available to the authorities.

The remaining amount will be evenly paid out over the duration of the programme, subject to the completion of quarterly reviews, the Washington based global lender said.

“We welcome the timely decision by the IMF board in approving the loan,” Rana Asad, a spokesman for the finance ministry, told AFP.

He said Pakistan had got the loan on its “own conditions” and that the money would be used to pay off previous loans.

“Basically it is for debt repayment,” he told AFP.

The aid is an Extended Fund Facility (EFF), which is aimed at helping a country that faces serious balance of payments problems because of structural weakness that require time to address.
 The repayment period for an EFF loan is between four and a half and 10 years.

In its announcement of the loan on Wednesday, the IMF said Pakistan’s adherence to the programme would likely encourage financial support from other donors.

“Despite the challenges it faces, Pakistan is a country with abundant potential, given its geographical location and its rich human and natural resources,” the IMF said.

“The authorities’ programme is expected to help the economy rebound, forestall a balance of payments crisis and rebuild reserves, reduce the fiscal deficit, and undertake comprehensive structural reforms to boost investment and growth.”

The loan is aimed at reducing Pakistan’s fiscal deficit  which neared nine percent of gross domestic product (GDP) last year  to a more sustainable level and reform the energy sector to help resolve severe power cuts that have sapped growth potential.

The country’s daunting array of problems range from an energy crisis to dwindling foreign exchange reserves and a sinking currency, all the while facing down a Taliban insurgency.

Economic growth has sputtered in recent years.

GDP growth came in at 3.7 percent in 2012 and is forecast to come in at 3.5 percent this year and 3.3 percent in 2014, according to the IMF’s latest projections.

The request for a loan came just weeks after May elections that marked the country’s first democratic transition of power, putting Prime Minister Nawaz Sharif in office for a third time.

The new loan came after months of negotiations.

Pakistan abandoned a previous $11.3 billion IMF loan programme in 2011 after refusing to carry out strict financial reforms, and still owes about $4 billion to the Fund.

But Muzammil Aslam, managing director of Emerging Economics Research, which provides investment advice to fund managers, warned it would be difficult for the government to abolish tax subsidies and raise electricity tarries.

“Nobody takes the Pakistani government seriously in terms of the economic reforms it is supposed to incorporate,” Aslam told AFP.

“The pre-conditions are very tough for the government to fulfiL. Non-performance could cease the release of the loan and thus could raise bigger challenges for the government.”

Mohammad Sohail, chief executive officer of Topline Securities, a Karachi-based research and investment house, said the IMF would keep up the pressure on the government.

“A quarterly review of the performance would compel the government to live with fiscal discipline otherwise it would face the music,” he said.

The political situation in Pakistan is also expected to pose a challenge for the IMF.

“There isn’t any doubt that it’s going to be an extremely difficult programme for the IMF to oversee,” Jacob Kirkegaard of the Peterson Institute for International Economics told AFP.

“If Pakistan was not a nuclear-armed country, the dominant countries at the IMF board would probably be less interested in trying everything possible to stabilise the situation there.” (AFP) (GNN)

Analysis: Surprise or not, U.S. strikes can still hurt Assad

WASHINGTON: It would hardly be a surprise to Syrian President Bashar al-Assad or his military if American missiles start hitting Syria soon. With weeks to prepare for an attack, Assad might benefit in some ways from the delay in any strike caused by President Barack Obama's decision to seek approval from a divided U.S. Congress.

U.S. officials and defense experts say Assad's forces cannot take enough targets out of reach to blunt the U.S. military mission, especially since it is billed as having very limited objectives.

Obama is calling for a limited military strike in response to a chemical weapons attack on civilians blamed by the United States on Assad's forces.

Fixed targets, for example, cannot be protected no matter how much time elapses. "A building can't be moved, nor hid," one U.S. official said, speaking on condition of anonymity.

Other fixed targets could include airfields, although not any storage facilities with chemical weapons in them.

Defense analyst Anthony Cordesman of the Center for Strategic and International Studies think tank said if successful, hitting fixed targets would eliminate key assets to Assad that "can't easily be replaced, like command and control facilities, major headquarters."
"These are lasting targets," Cordesman said.

It is still unclear when any U.S. attack on Syria will happen but Assad already has had ample time to try to get ready. U.S. officials have been openly discussing the possibility of hitting Syria since shortly after the August 21 chemical weapons attack near Damascus.

Even if Congress approves military action, a final vote would be unlikely before the middle of next week.

A second U.S. official, also speaking on condition of anonymity, acknowledged that the delay added "complexities" to the planning efforts.

"It may change target sets," the official said. "We'll continue to refine our targeting options to conditions on the ground."

Assad has already moved some military equipment and personnel to civilian areas and put soldiers whose loyalty to Assad is in doubt in military sites as human shields against any Western strikes, the Istanbul-based Syrian opposition has said.

It cited movement of rockets, Scud missiles and launches, as well as soldiers to locations including schools, university dormitories and government buildings inside cities.

That could complicate the ability of the United States to reach some targets.

COLLATERAL DAMAGE

General Martin Dempsey, chairman of the U.S. military's Joint Chiefs of Staff, acknowledged publicly to Congress that Obama has ordered the military to develop plans that keep a lid on collateral damage - civilian deaths and damage to civilian infrastructure.

"Though they are in fact moving resources around - and in some cases placing prisoners and others in places that they believe we might target - at this point our intelligence is keeping up with that movement," Dempsey, the top U.S. military officer, told lawmakers on Wednesday.

WAIT FOR MONTH?

The question of whether losing the element of surprise makes a difference militarily became a bone of contention in the debate over congressional backing for Obama's attack plan.

Senator John McCain, one of the Republicans who has pushed hardest for military action in Syria, said this week he was "astounded" when Obama said the military had advised him that an attack would still be effective in a month's time.

"When you tell the enemy you are going to attack, they are obviously going to disperse and make it harder," McCain said in Congress on Tuesday.

"It's ridiculous to think that it's not wise from a pure military standpoint not to warn the enemy that you're gonna attack," McCain said.

The Obama administration says the planned attack is designed to strike a particular balance - being strong enough to deter Assad from using chemical weapons in the future while also degrading his ability to do so.

But the Obama administration has said any attack would not be designed to topple Assad or necessarily shift the momentum in Syria's civil war to the detriment of government forces.

U.S. objectives include targets directly linked to the Syrian military's ability to use chemical weapons, as well as missiles and rockets that can deliver them, Dempsey said.

Air defenses that could be used to protect chemical weapons sites are also potential targets, Dempsey said.

"That target package is still being refined as I sit here with you," Dempsey told lawmakers.

Despite the stated objective of deterring Assad, the U.S. military cannot guarantee its strikes will prevent Assad from using chemical weapons in the future.

Even the objective to degrade - a military term that means "diminish" - his capabilities is vague. There has been no clear, public objective offered by the United States on how much it must damage Assad's capabilities.

(Additional reporting by David Alexander; Editing by Alistair Bell and Will Dunham) (Reuters)  (GNN)

Kerry portrait of Syria rebels at odds with intelligence reports

WASHINGTON : Secretary of State John Kerry's public assertions that moderate Syrian opposition groups are growing in influence appear to be at odds with estimates by U.S. and European intelligence sources and nongovernmental experts, who say Islamic extremists remain by far the fiercest and best-organized rebel elements.
 At congressional hearings this week, while making the case for President Barack Obama's plan for limited military action in Syria, Kerry asserted that the armed opposition to Syrian President Bashar al-Assad "has increasingly become more defined by its moderation, more defined by the breadth of its membership, and more defined by its adherence to some, you know, democratic process and to an all-inclusive, minority-protecting constitution.

"And the opposition is getting stronger by the day," Kerry told the Senate Foreign Relations Committee on Tuesday.

U.S. and allied intelligence sources and private experts on the Syrian conflict suggest that assessment is optimistic.

While the radical Islamists among the rebels may not be numerically superior to more moderate fighters, they say, Islamist groups like the al Qaeda-aligned Nusra Front are better organized, armed and trained.

Kerry's remarks represented a change in tone by the Obama administration, which for more than two years has been wary of sending U.S. arms to the rebels, citing fears they could fall into radical Islamists' hands.

As recently as late July, at a security conference in Aspen, Colorado, the deputy director of the Pentagon's Defense Intelligence Agency, David Shedd, estimated that there were at least 1,200 different Syrian rebel groups and that Islamic extremists, notably the Nusra Front, were well-placed to expand their influence.

"Left unchecked, I'm very concerned that the most radical elements will take over larger segments" of the opposition groups, Shedd said. He added that the conflict could drag on anywhere "from many, many months to multiple years" and that a prolonged stalemate could leave open parts of Syria to potential control by radical fighters.

U.S. and allied intelligence sources said that such assessments have not changed.

A spokeswoman at the State Department said Kerry's remarks reflect the department's position, adding that the opposition had "taken steps over the past months to coalesce, including electing leaders."

GREATER NUMBERS, LESS STRENGTH?

Experts agree that the Nusra Front, an offshoot of the group al Qaeda in Iraq, is among the most effective forces in Syria.

In a second hearing on Wednesday, Kerry was challenged by Representative Michael McCaul, Texas Republican.

"Who are the rebel forces? Who are they? I ask that in my briefings all the time," McCaul said. "And every time I get briefed on this it gets worse and worse, because the majority now of these rebel forces - and I say majority now - are radical Islamists pouring in from all over the world."

Kerry replied: "I just don't agree that a majority are al Qaeda and the bad guys. That's not true. There are about 70,000 to 100,000 oppositionists ... Maybe 15 percent to 25 percent might be in one group or another who are what we would deem to be bad guys.

"There is a real moderate opposition that exists. General Idriss is running the military arm of that," Kerry continued, referring to General Salim Idriss, head of the rebel Free Syrian Army. Increasingly, he said, Saudi Arabia and other Gulf states are funneling assistance through Idriss.

Kerry cited an article by Elizabeth O'Bagy, an analyst with the Institute for the Study of War think tank, in which she wrote that Islamic extremist factions are not "spearheading the fight against the Syrian government," but rather that the struggle is being led by "moderate opposition forces."

Several leading lawmakers, including Senator John McCain, Arizona Republican, also have said there is a viable moderate opposition in Syria that Washington should support.

U.S. intelligence sources do not dispute that Islamic extremists are in the minority on the battlefield.

"Most of the groups battling against Assad are composed of Islamist fighters, but only a small minority could accurately be characterized as extremist," one U.S. official said, speaking on condition of anonymity.

But a second official, who also asked not to be named, said moderate rebels may have lost strength rather than gained it in recent months. Due to their relative lack of weapons and organization, they are beginning to make alliances with better-armed Islamic radicals, whom they see pursuing more effective actions against Assad's forces, the official said.

Paul Pillar, who retired in 2005 as the U.S. intelligence community's top Middle East analyst, said he believed the Obama Administration was walking a fine line, trying to calculate how to punish Assad's government for allegedly using chemical weapons while not bolstering the strength of religious militant rebels.

"In a hard-fought civil war, especially one without a single well-organized opposition movement, success goes to the most ruthless and dedicated elements, which also tend to be the most extreme in their views. We are seeing such a process in Syria today," Pillar said.

An authorization to use military force approved on Wednesday by the Senate Foreign Relations Committee states that U.S. policy in Syria includes "upgrading the lethal and non-lethal military capabilities of vetted elements of Syrian opposition forces."

'CHOOSING ONE AMONG MANY SIDES'

Top U.S. intelligence and military officials have recently offered bleak public evaluations of the relative strengths of moderate and religious extremist Syrian rebels.

In an August 19 letter to Representative Eliot Engel, obtained by Reuters, the chairman of the Joint Chiefs of Staff, General Martin Dempsey, warned: "Syria is not about choosing between two sides but rather about choosing one among many sides.

"It is my belief that the side we choose must be ready to promote their interests and ours when the balance shifts in their favor," Dempsey wrote. "Today they are not."

A European security official with experience in the region said that extremist rebel factions were so strong and well-organized in the north and west of Syria that they were setting up their own public services and trying to create an Islamic ministate along the Iraqi border.

By contrast, the official said, more moderate rebel factions predominate in the east of Syria and along its southern border with Jordan but have largely devolved into "gangs" whose leaders are more interested in operating local rackets and enriching themselves than in forming a larger alliance that could more effectively oppose Assad's government.

"I've heard that there are moderate groups out there we could, in theory, support," said Joshua Foust, a former U.S. intelligence analyst who now writes about foreign policy.

"But I've heard from those same people and my own contacts within (U.S. intelligence) that the scary people are displacing more and more moderate groups. Basically, the jihadists are setting up governance and community councils while the moderates exhaust themselves doing the heavy fighting," Foust said.

As anecdotal evidence, Foust cited a recent report that on August 22, four out of five commanders of the moderate Supreme Military Council had threatened to resign and work "with all forces fighting in Syria."

A video on YouTube shows the rebel commander who made this announcement. He is seated in front of an Islamic extremist flag, next to a bearded cleric clad in the religious dress of a Salafist militant.

(Editing by Warren Strobel and Prudence Crowther) (Reuters) (GNN)