During talks with his Iranian counterpart during an upcoming visit to Tehran, President Asif Ali Zardari is likely to take up the issue of $330 million in pledged Iranian financial assistance to Pakistan that never made it to the country.
Four years since Iran pledged $330 million at an international donors’ conference in Tokyo, Japan – one of two major global initiatives launched to support Pakistan’s fragile economy and help it fight terrorism – even the modalities for the $10 million grant and $320 million loan have yet to be finalised due to a lukewarm approach by Iran, according to official documents obtained by The Express Tribune.
Both sides were close to an agreement on the utilisation of the grant component, when, in August this year, Iranian embassy’s deputy head of mission informed Pakistan that Tehran had decided that the grant should not be used for health and education sector projects in Balochistan. Instead, he said Islamabad should propose a few fresh projects across the country.
Pakistan also forwarded three major projects to Tehran for partial funding under the $320 million loan component. The projects include $718 million to establish a power transmission line through which Iran will export 1,000 megawatts of electricity, $100 million for the construction of Nushki-Dalbandin road in Balochistan and $700 million for the up-gradation of the Quetta-Taftan railway track.
According to a government official, the issue of financial assistance was included in President Zardari’s talking points for the upcoming visit, but it was not confirmed whether the president would take up the issue.
Recently, the Iranian vice president cancelled his visit to Pakistan after Finance Minister Dr Abdul Hafeez Shaikh refused to sit with the Iranian delegation. The visit was meant to discuss important agreements between the two countries, including the pledged assistance by Iran.
Meanwhile, Economic Affairs Division Secretary Javed Iqbal said that Pakistan has time and again raised this issue with Iran. He added that the Iranian side reiterated its commitment and assured to fast track the process in a recent meeting with Iran’s finance minister on the sidelines of IMF annual meetings, which were recently held in Tokyo.
A majority of commitments made at the international donors’ conference failed to materialise. According to budget documents, Pakistan received less than $1.3 billion out of the total pledges of $5.1 billion made by nearly 30 countries and international lending agencies.
In 2010, the country received Rs95.7 billion, the amount dropped to Rs13.7 billion in 2011, and to Rs5 billion in 2012. For the current financial year, economic managers have received approximately Rs1.1 billion – most donors honouring only 25% of their pledges. The assistance package of $5.1 billion offered in Tokyo is going to expire next fiscal year.
Meanwhile, President Zardari will also hold talks with his French counterpart Francois Hollande on bilateral issues during his forthcoming visit to France next week, an official source said. The meeting is expected to take place on December 11 in Paris, where Zardari is due to co-host an international event called “Stand up for Malala” with Unesco on December 10.
This will be the third engagement between Zardari and the French leadership, following his two earlier visits to Paris in May 2009 and August 2010. However, it will be the first bilateral meeting between President Zardari and Francois Hollande after the latter’s election to the presidency in May this year.
The Afghan imbroglio is expected to dominate talks between the two presidents despite French withdrawal of combat troops from Afghanistan this year. (With additional reporting by Qaiser Butt)
Published in The Express Tribune, December 6th, 2012.