Secret Pakistani arms sale to US helped facilitate IMF bailout: Report

WASHINGTON DC: A secret Pakistani arms sales to the United States helped facilitate a controversial bailout from the International Monetary Fund (IMF) earlier this year, as per two sources aware of the arrangement, with confirmation from internal Pakistani and American government documents, The Intercept reported.

The Intercept is an online American non-profit news organization.

The arms sales were made for the purpose of supplying the Ukrainian military. This signals Pakistani involvement in a conflict it had faced US pressure to take sides on.

As per The Intercept, the revelation is a window into the kind of behind-the-scenes manoeuvring between financial and political elites that rarely is exposed to the public, even as the public pays the price. Pakistan faced major protests in face of harsh structural policy reforms demanded by the IMF as terms for its recent bailout. There were several strikes in the country in response to the measures.

The protests are the latest chapter in a year-and-a-half-long political crisis roiling the country. With the encouragement of the US, the Pakistani military in April 2022, helped organize a no-confidence vote to remove Prime Minister Imran Khan.

Ahead of Khan’s ouster, US State Department diplomats privately expressed anger to their Pakistani counterparts over what they called Pakistan’s “aggressively neutral” stance on the Ukraine war under Khan. They warned of dire consequences if Khan remained in power and promised “all would be forgiven” if he were removed.

After Khan’s ouster, Islamabad emerged as a useful supporter of the US and its allies in the war, assistance that has now been repaid with an IMF loan. The emergency loan allowed the new Pakistani government to put off a looming economic catastrophe and indefinitely postpone elections.

A nonresident scholar at the Middle East Institute and specialist on Pakistan, Arif Rafiq, said: “Pakistani democracy may ultimately be a casualty of Ukraine’s counteroffensive.” As per The Intercept, Pakistan is known as a production hub for the types of basic munitions needed for grinding warfare.

As Ukraine grappled with chronic shortages of munitions and hardware, the presence of Pakistani-produced shells and other ordinances by the Ukrainian military has surfaced in open-source news reports about the conflict, though neither the US nor the Pakistanis have acknowledged the arrangement.

A source within the Pakistani military, leaked records detailing the arms transactions earlier this year. The documents describe munitions sales agreed to between the US and Pakistan from the summer of 2022 to the spring of 2023.

The authentication process was done by matching the signature of an American brigadier general with his signature on publicly available mortgage records in the United States; by matching the Pakistani documents with corresponding American documents; and by reviewing publicly available but previously unreported Pakistani disclosures of arms sales to the US posted by the State Bank of Pakistan.

Documents by Global Military Products reveal that the weapons deals were brokered. Global Military Products is a subsidiary of Global Ordnance, a controversial arms dealer whose entanglements with less-than-reputable figures in Ukraine were the subject of a recent New York Times article.

Documents outlining the money trail and talks with US officials include American and Pakistani contracts, licensing, and requisition documents related to US-brokered deals to buy Pakistani military weapons for Ukraine.

The economic capital and political goodwill from the arms sales played a key role in helping secure the bailout from the IMF, with the State Department agreeing to take the IMF into confidence regarding the undisclosed weapons deal, according to sources with knowledge of the arrangement, and confirmed by a related document, according to The Intercept.