Op-ed by Salman Munir in Pakistan Today, Nov 17, 2020
The writer is a management consultant
In the 2009 film “The International”, Louis Salinger (Clive Owen) an Interpol agent, and Eleanor Whitman (Naomi Watts) a US Assistant District Attorney for Manhattan, jointly investigate corruption in International Bank of Business and Credit (IBBC), a fictional bank based in Luxembourg. During the course of their investigation they meet Umberto Calvini (Luca Barbareschi) an Italian politician and big arms manufacturer to understand why IBBC is interested in being an arms broker and dealer in missile-guidance control systems:
Mr Calvini, we would like to know why the IBBC, a bank, would purchase hundreds of millions of dollars worth of missile-guidance control systems from your company?
The IBBC has purchased billions of dollars worth of Silkworm missiles from China and presold to clients in the Middle East contingent upon the missiles being equipped with VOLCON guidance systems. My company is one of only two in the world who produce VOLCON.
Who is the other?
Sunay. Ahmet Sunay of Turkish Aerotech.
But why is the bank committing so much capital and resources to the sale of these missiles?
It’s a test. Small arms are the only weapons used in 99 percent of the world’s conflicts and no one has the capacity to manufacture them faster and cheaper than China. What Skarssen (the Head of IBBC) is attempting to do is to make IBBC the exclusive broker of the Chinese small arms to the Third World. The missile deal is the gateway to such transaction.
Yeah, but billions of dollars invested simply to be a broker? There can’t be that much profit for them.
No. This is not about making profit from weapons sale. It’s about control.
Control the flow of weapons, control the conflict.
No. The IBBC is a bank. Their objective is not to control the conflict. It’s to control the debt that the conflict produces. You see, the real value of a conflict, the true value, is in the debt that it creates. You control the debt and you control everything.
You find this upsetting? But this is the very essence of the banking industry to make us all, whether we are nations or individuals, slaves to debt.
The name IBBC, Luxembourg and the indulgence in illicit or illegal activities remind me of close-to home-bank that used to be known as Bank of Credit and Commerce International (BCCI). In just 19 years it started and concluded it’s journey as a worldwide bank. It was an Arab-funded and Pakistani-run bank that took the world by storm. It had people like former President Jimmy Carter working with it. Pakistani banker Agha Hasan Abedi who founded the bank in 1972, had earlier founded United Bank Limited (UBL). UBL is now one of the five largest banks in Pakistan. Over a period, BCCI had become rife with intra fights over control of the bank and externally went to bank with dictators of Latin America and Africa. Accused of money laundering and funding illegal operations, it was eventually closed in 1991. It showed great promise during the early years when it was run by Agha Hasan Abedi. Because of a lack of befitting and worthy successors and C-Suite, it sadly became known in later years, as the Bank of Crooks and Criminals International.
On the day BCCI was closed, my banker friends Jamil Hamdani (Jimmy) and Akbar Kazmi, and myself had a game of golf at the Karachi Golf Club. After the morning 9 we went to Jimmy’s house to relax and drink some liquid before lunch. Suddenly the landline rang (no cell phones then). Jimmy, a friend to high net worth individuals and a private banker of some standing answered the phone and told us to carry on as he will be busy for the rest of the morning. He then started calling his high net worth clients to pull out money from the BCCI as the Bank of England had decided to close the BCCI that very day. Banking is that powerful and that fragile when it comes to the powers that be.
Nations and individuals are indeed slaves to debt. The quagmire Pakistan is in today is because of its penchant for acquiring debt from one and all. The present government is no different from the previous governments. IMF controls the debt so we have to dance to its tune whether we like it or not. So much so that we know the prices should be controlled and brought down, still every few days oil, electricity and commodities’ prices start climbing the ladder of unaffordability. While the Prime Minister is oblivious to this, the common man is not. He is on the threshold of exhaustion and despair. A couple of days ago we proudly announced another $10 billion development loan coming from the ADB over five years. When I was working there, an Executive Director representing the Government of Pakistan on the Board of ADB told me that we are the biggest borrower of ADB and therefore we have a lot of clout. I was flabbergasted at this silliness. An individual with huge borrowings from a commercial bank might have some clout, countries on the other hand enjoy no such pleasure.
An example of what clout a borrower has over a creditor comes to mind. In October 2018, Saudi Arabia had agreed to provide a helping hand to the PTI Government. It included a $6.2 billion financial package for 3 years. The Saudi Crown Prince Mohammed bin Salman (MBS) broke all protocols and drove Prime Minister Imran Khan to the airport to bid farewell. All hell broke lose with the media here and in Saudi Arabia at this start of a great friendship. In February 2019, MBS visited Pakistan on his first official visit in his capacity as the Crown Prince. A formation of JF-17 Thunder Jets and F-16 Fighter Jets escorted the Royal plane as it entered the Pakistani airspace. Upon arrival, Prime Minister Imran Khan also broke all protocols and personally drove MBS to the Prime Minister’s house- a show of great friendship and brotherly love. Come Islamic countries’ Summit in Malaysia, Pakistan was forced to decline attending this Summit although a strong proponent of this Summit. Thus neither the Prime Minister nor the Foreign Minister attended the Malaysian Summit under pressure from MBS and the loan that Saudi Arabia had given us. Much to the lament of Mahathir Bin Mohamad, the Malaysian Prime Minister at the time and another dear friend of Prime Minister Imran Khan and Pakistan. Thus there is no friendship or brotherhood between a creditor and a debtor. As we might find out in time to come about our “time-tested and sea-deep” friendship with China too. And China will be tougher than MBS in recalling a loan as Sri Lanka got to know.
I wanted to write about individuals who borrow and what happens to them. Lets leave it for another day. I just came to know about the sudden and untimely death of the Peshawar High Court Chief Justice Waqar Ahmad Seth while his petition for elevation/appointment to the Supreme Court was still pending. After his death the petition has become infructuous so we will not know what the outcome might have been. This question is bound to return to the Supreme Court sooner or later.https://www.pakistantoday.com.pk/2020/11/16/the-foreign-debt-trap/
The foreign debt trap, Pakistan keeps on borrowing, losing leverage
Op-ed by Salman Munir in Pakistan Today, Nov 17, 2020
The writer is a management consultant
In the 2009 film “The International”, Louis Salinger (Clive Owen) an Interpol agent, and Eleanor Whitman (Naomi Watts) a US Assistant District Attorney for Manhattan, jointly investigate corruption in International Bank of Business and Credit (IBBC), a fictional bank based in Luxembourg. During the course of their investigation they meet Umberto Calvini (Luca Barbareschi) an Italian politician and big arms manufacturer to understand why IBBC is interested in being an arms broker and dealer in missile-guidance control systems:
Mr Calvini, we would like to know why the IBBC, a bank, would purchase hundreds of millions of dollars worth of missile-guidance control systems from your company?
The IBBC has purchased billions of dollars worth of Silkworm missiles from China and presold to clients in the Middle East contingent upon the missiles being equipped with VOLCON guidance systems. My company is one of only two in the world who produce VOLCON.
Who is the other?
Sunay. Ahmet Sunay of Turkish Aerotech.
But why is the bank committing so much capital and resources to the sale of these missiles?
It’s a test. Small arms are the only weapons used in 99 percent of the world’s conflicts and no one has the capacity to manufacture them faster and cheaper than China. What Skarssen (the Head of IBBC) is attempting to do is to make IBBC the exclusive broker of the Chinese small arms to the Third World. The missile deal is the gateway to such transaction.
Yeah, but billions of dollars invested simply to be a broker? There can’t be that much profit for them.
No. This is not about making profit from weapons sale. It’s about control.
Control the flow of weapons, control the conflict.
No. The IBBC is a bank. Their objective is not to control the conflict. It’s to control the debt that the conflict produces. You see, the real value of a conflict, the true value, is in the debt that it creates. You control the debt and you control everything.
You find this upsetting? But this is the very essence of the banking industry to make us all, whether we are nations or individuals, slaves to debt.
The name IBBC, Luxembourg and the indulgence in illicit or illegal activities remind me of close-to home-bank that used to be known as Bank of Credit and Commerce International (BCCI). In just 19 years it started and concluded it’s journey as a worldwide bank. It was an Arab-funded and Pakistani-run bank that took the world by storm. It had people like former President Jimmy Carter working with it. Pakistani banker Agha Hasan Abedi who founded the bank in 1972, had earlier founded United Bank Limited (UBL). UBL is now one of the five largest banks in Pakistan. Over a period, BCCI had become rife with intra fights over control of the bank and externally went to bank with dictators of Latin America and Africa. Accused of money laundering and funding illegal operations, it was eventually closed in 1991. It showed great promise during the early years when it was run by Agha Hasan Abedi. Because of a lack of befitting and worthy successors and C-Suite, it sadly became known in later years, as the Bank of Crooks and Criminals International.
On the day BCCI was closed, my banker friends Jamil Hamdani (Jimmy) and Akbar Kazmi, and myself had a game of golf at the Karachi Golf Club. After the morning 9 we went to Jimmy’s house to relax and drink some liquid before lunch. Suddenly the landline rang (no cell phones then). Jimmy, a friend to high net worth individuals and a private banker of some standing answered the phone and told us to carry on as he will be busy for the rest of the morning. He then started calling his high net worth clients to pull out money from the BCCI as the Bank of England had decided to close the BCCI that very day. Banking is that powerful and that fragile when it comes to the powers that be.
Nations and individuals are indeed slaves to debt. The quagmire Pakistan is in today is because of its penchant for acquiring debt from one and all. The present government is no different from the previous governments. IMF controls the debt so we have to dance to its tune whether we like it or not. So much so that we know the prices should be controlled and brought down, still every few days oil, electricity and commodities’ prices start climbing the ladder of unaffordability. While the Prime Minister is oblivious to this, the common man is not. He is on the threshold of exhaustion and despair. A couple of days ago we proudly announced another $10 billion development loan coming from the ADB over five years. When I was working there, an Executive Director representing the Government of Pakistan on the Board of ADB told me that we are the biggest borrower of ADB and therefore we have a lot of clout. I was flabbergasted at this silliness. An individual with huge borrowings from a commercial bank might have some clout, countries on the other hand enjoy no such pleasure.
An example of what clout a borrower has over a creditor comes to mind. In October 2018, Saudi Arabia had agreed to provide a helping hand to the PTI Government. It included a $6.2 billion financial package for 3 years. The Saudi Crown Prince Mohammed bin Salman (MBS) broke all protocols and drove Prime Minister Imran Khan to the airport to bid farewell. All hell broke lose with the media here and in Saudi Arabia at this start of a great friendship. In February 2019, MBS visited Pakistan on his first official visit in his capacity as the Crown Prince. A formation of JF-17 Thunder Jets and F-16 Fighter Jets escorted the Royal plane as it entered the Pakistani airspace. Upon arrival, Prime Minister Imran Khan also broke all protocols and personally drove MBS to the Prime Minister’s house- a show of great friendship and brotherly love. Come Islamic countries’ Summit in Malaysia, Pakistan was forced to decline attending this Summit although a strong proponent of this Summit. Thus neither the Prime Minister nor the Foreign Minister attended the Malaysian Summit under pressure from MBS and the loan that Saudi Arabia had given us. Much to the lament of Mahathir Bin Mohamad, the Malaysian Prime Minister at the time and another dear friend of Prime Minister Imran Khan and Pakistan. Thus there is no friendship or brotherhood between a creditor and a debtor. As we might find out in time to come about our “time-tested and sea-deep” friendship with China too. And China will be tougher than MBS in recalling a loan as Sri Lanka got to know.
I wanted to write about individuals who borrow and what happens to them. Lets leave it for another day. I just came to know about the sudden and untimely death of the Peshawar High Court Chief Justice Waqar Ahmad Seth while his petition for elevation/appointment to the Supreme Court was still pending. After his death the petition has become infructuous so we will not know what the outcome might have been. This question is bound to return to the Supreme Court sooner or later.https://www.pakistantoday.com.pk/2020/11/16/the-foreign-debt-trap/
Published in Pak Media comment and Pakistan