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Bombs for Bailouts: Pakistan Supplied Weapons to Ukraine in Return for U.S.-Brokered IMF Loan

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The Biden administration helped Pakistan get a controversial new bailout from the International Monetary Fund after Pakistan agreed to secretly sell arms to the United States for the war in Ukraine, according to a new blockbuster report by The Intercept. The deal allows Pakistan to sell some $900 million in munitions while keeping IMF loans flowing to the government in Islamabad amid a spiraling economic crisis, which is driven at least partly by the austerity measures imposed by the IMF loan. Pakistan’s position on the war in Ukraine has shifted significantly since Russia’s invasion and the ouster of Prime Minister Imran Khan, who was removed from office in 2022 under pressure from U.S. diplomats who objected to his “aggressively neutral” stance on the war. Khan is now imprisoned in Pakistan on corruption charges. Meanwhile, the caretaker government backed by Pakistan’s powerful military has delayed planned elections, widely seen as an attempt to block Khan’s supporters from power. “When the United States has a primary foreign policy objective, in particular when it’s a war, everything else falls away. That’s what you’re seeing in Pakistan now,” says The Intercept’s Ryan Grim.

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González.

As President Biden and other world leaders gather in New York for the United Nations General Assembly, we turn to a major new investigation by The Intercept about how the Biden administration helped Pakistan get a controversial new IMF bailout after Pakistan agreed to secretly sell arms to the United States for the war in Ukraine. According to The Intercept, the secret arms deal was worth about $900 million, money which Pakistan then used to help shore up its financial position in the eyes of the International Monetary Fund. The Intercept reports the deal was discussed at a meeting in Washington in May between Assistant Secretary of State Donald Lu and the Pakistani Ambassador to the U.S. Masood Khan.

Pakistan’s stance on the war in Ukraine has shifted notably since Russia’s invasion and the ouster of Prime Minister Imran Khan, who was removed from office in April 2022. Khan is now imprisoned in Pakistan. In August, The Intercept revealed the existence of a classified Pakistani cable that outlined how the U.S. State Department had encouraged the Pakistani government to remove Khan from office in March 2022, just weeks after Russia had invaded Ukraine. The document stated the U.S. objected to Khan’s neutral stance on the war. According to the memo, one State Department official warned Pakistan’s ambassador to the United States that, quote, “all will be forgiven in Washington” if Khan is removed. Since Imran Khan was removed from office, Pakistan has shifted to support the U.S. and Ukraine on the war. At the same time, Pakistan has cracked down on supporters of Imran Khan, and elections have been postponed indefinitely. Meanwhile, the strict conditions of the IMF bailout have sparked mass protests in Pakistan.

We’re joined now by Ryan Grim, The Intercept’s Washington bureau chief. His latest piece, co-written with Murtaza Hussain, is headlined “U.S. Helped Pakistan Get IMF Bailout with Secret Arms Deal for Ukraine, Leaked Documents Show.”

So, elaborate on this, Ryan Grim. Talk about the significance of the arms deal and Pakistan’s changing position on the Ukraine war. In fact, it happened to be that Imran Khan was visiting with Russian President Putin the day Russia invaded Ukraine.

RYAN GRIM: Right, on top of Khan’s neutrality, because, you know, Imran Khan had tried to play balancing role between the United States, Russia and China generally. On top of that, he happened, coincidentally, to be in Russia on the day of the invasion for a long-planned bilateral agreement, and that absolutely infuriated Washington. Several weeks later is when you had that critical meeting where Assistant Secretary Don Lu conveyed Washington’s impression, which was that if Khan stays in power, Pakistan will be isolated from the EU and from the United States, but if Khan is pushed out of power, then all will be forgiven, because, as Lu put it, Washington understood that Imran Khan’s policy was his own policy and not the policy of Pakistan — in other words, that if somebody new were put in place, the hope was that Pakistan would then become a key ally again of the United States in its geopolitical struggle generally, but very specifically with Ukraine and Russia.

What’s key to understand is that the United States doesn’t actually have much of an industrial base when it comes to producing the ammunition, munitions, artillery shells, the kind of low-grade weapons that you need for the kind of grinding war that’s going on between Ukraine and Russia. If you want, you know, a $100 million F-35, that they’re going to lose when it crashes, then the United States is able to produce those, because entire lobbying infrastructures and executive suites and entire cities outside of Washington, gleaming cities and skyscrapers, can be built up around those. But just producing artillery shells? You know, that’s something that the U.S. has kind of outsourced to countries like Pakistan in the past. And so, Ukraine was very quickly running low.

So, what our reporting found is that by August of 2022, so just a few months after Khan was ousted, according to the documents that we reviewed, Pakistan was producing significant amounts of artillery, that were being paid for by the United States, shipped to Ukraine, and then taking part in the war over there. As the economy continued to collapse, Pakistan needed an emergency IMF loan, and the United States agreed to confidentially tell the IMF about the weapons program and about the money that Pakistan was getting from the weapons program to kind of bridge the financing gap that was necessary. Otherwise, there would have been a complete economic meltdown in Pakistan.

JUAN GONZÁLEZ: And, Ryan, in terms of the use of the IMF like this as a political instrument, essentially, what was the impact of the package and the reforms, the so-called reforms that the IMF always —


JUAN GONZÁLEZ: — requires of countries, in Pakistan, on top of the political convulsion that has resulted from the removal of the prime minister?

RYAN GRIM: Right. As you know, these reforms always come at a price to regular people in the country, these kinds of structural adjustments that are insisted on by the IMF. And because of that, the IMF always insists that it negotiate with an elected government that has a mandate from the people. Now, “mandate” can be broadly defined, because often it’s very directly going in the face of what the will of the people of that particular country is, but at least they want an elected government in place that they can kind of pin these reforms on. They ended up having to raise energy prices by nearly 50% to get this IMF loan.

And so, the government that followed Imran Khan was able to strike that deal before it turned over to a caretaker government. The goal of and the only mandate of a caretaker government is to hold elections. But because this massive IMF deal was in place, Pakistan can now kind of run on cruise control for a while. And so that is the financing that has then allowed them to postpone the elections, and not just postpone the elections, but deepen this very brutal crackdown, with thousands of supporters of Imran Khan getting rounded up, Imran Khan himself in prison, Imran Khan’s deputies in prison, this dystopian censorship where Pakistani media outlets are told that they’re not — by the military, that they’re not even allowed to mention Imran Khan, which creates these bizarre situations where if he’s in a photograph, they’ll put kind of like a chyron or some image over him to not run afoul of this bizarre blanket censorship regime that’s underway. And so, that has all been enabled by this IMF loan, which enabled then the postponing of the elections.

JUAN GONZÁLEZ: And since Khan was removed from power, what has been Pakistan’s position on the war in Ukraine?

RYAN GRIM: Interestingly, the Foreign Office yesterday, in response to our story, flat-out denied that they’re providing any weapons for the war in Ukraine. Nobody believes that. We’re not the first to kind of report on this; we’re the first to confirm it with documents. But there’s been plenty of video and photographic evidence of munitions made in Pakistan that are being used in the Ukraine war. So, publicly, they’re still proclaiming some sort of neutrality. But you have had comments from the military leadership that have been hostile towards the Russian invasion and have kind of satisfied the United States requirement, and the fact that they’re operating this multi-hundred-million-dollar — it’s over a billion by now, because our data stopped last summer. The production of the munitions for the war effort makes it clear that after Khan was removed, Pakistan became a reliable ally of the United States in this war.

AMY GOODMAN: Before we move on to the showdown on Capitol Hill around the government shutdown, I wanted to ask you about the person you interviewed, Arif Rafiq, Ryan, who said, “Pakistani democracy may ultimately be a casualty of Ukraine’s counteroffensive.” So, why would the U.S. and its allies go to such lengths for Pakistan’s allegiance on Ukraine?

RYAN GRIM: Yeah, as you’ve covered on this show for so long, when the United States has a primary foreign policy objective, in particular when it’s a war, everything else falls away. And that’s what you’re seeing in Pakistan now. And for Pakistanis, the irony is clearly not lost, that the United States is bringing together kind of the world to stand up for the defense of democracy and sovereignty in Ukraine, meanwhile, quite deliberately and openly, sacrificing democracy in a country of 230 million people in Pakistan, that that democracy is being asked to sacrifice itself for the one in Ukraine. And so, it’s also caught up in the geopolitics of Pakistan’s shifting relationships with Russia, with China and with the Gulf countries, which obviously don’t even pretend to be champions of democracy. So now pretty much everyone involved with Pakistan now is no longer pushing for any defense of civil society or human rights within the borders, though perhaps the protests and the pressure that’s coming internally from Pakistan might force some sort of reckoning in the State Department as their rhetoric gets too far removed from the reality.

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