In the Musharraf years and early period of Mr. Zardari’s government, then-U.S. ambassador Anne Patterson played a central role in Pakistani
politics, including as a mediator between the military and the politicians, leaked U.S. diplomatic cables have shown.
However, U.S. officials
insist that they no longer seek to influence internal politics in Pakistan, where anti-American sentiment runs
high. And instead, plan to squeeze Pakistan.
Pakistan external balance is deteriorating
Pakistan external balance is deteriorating and
it has external debt servicing needs.US officials see the debt primarily to China through its infrastructure initiative. The US could block new IMF assistance, if/when it is requested.
The US often struggles to convert its economic power into political outcomes, though President Trump has ramped up efforts to do precisely that. In the fight against terrorism, the US Treasury has greatly expanded its
efforts to cut off financing and through the experience and the Great Financial Crisis, access to the US dollar market, including for funding, is not simply a utility but is a privilege that the US could deny its adversaries.
“It’s a familiar situation, we have rising debt servicing and faltering growth the short-term solution is the IMF, it’s probably a matter of months.”
– Yousuf Nazar, a former Citigroup Inc. banker"
US cuts security
aids for Pakistan
There are other ways in which the
US can use its financial acumen to impose its will. Here is a drama that is unfolding, though it has not percolated into the public’s consciousness yet. It begins in Pakistan, which has been party to at least 13 IMF programs since 1980. Although it has
not formally asked for another one, macro considerations suggest it is likely. Many expect Pakistan’s likely new Prime Minister, Imran Khan, to seek one shortly after assuming office. His party is about 22 seats shy of a parliamentary majority, after
running a campaign against the two main ruling families. The US is threatening to veto it, which would make it hard for Pakistan to service its debt. Its debt is primarily owed to the IMF, World Bank, and China.