In Geopolitics This Week
Pakistani Rupee Slides as Islamabad Seeks More Financial Support, Deliveries of NATO Armoured Vehicles to Ukraine Intensify, M23 Rebels Resume Offensive and Make Gains in the DRC, and other stories.
Pakistani Rupee Slides as Islamabad Seeks More Financial Support
The Exchange Companies Association of Pakistan (ECAP) removed the cap on the exchange rate of the US dollar on Wednesday, resulting in a 1.2 percent decrease in the value of the Pakistani rupee to 243 against the US dollar on the open market. This led to a further 9.6 percent decrease in the value of the rupee on the following day, hitting a record low of 255.4 rupees per dollar.
The move by the ECAP highlighted the existence of three separate exchange rates in Pakistan, causing difficulties in manufacturing, exporting, remitting, and everyday banking activity. This is largely the result of the fixation of Finance Minister Ishaq Dar to “bring the dollar below 200” after taking charge in September last year. The plan has so far not been successful, as the expected foreign investments and loans have not materialized and the State Bank of Pakistan's reserves have fallen to as little as $4.1 billion.
Pakistan's economy is now reportedly near collapse, with a plummeting currency, rising inflation, devastating flood damage, and drained energy import reserves leading to regular nationwide blackouts. The situation is further complicated by the informal integration of the economies of Afghanistan and Pakistan, which has resulted in a growing dollar cartel.
To shore up economic indicators across the country, Islamabad is seeking financial assistance from abroad via the International Monetary Fund and a number of bilateral loans. As part of these efforts, this week saw Islamabad host the President of the United Arab Emirates, Sheikh Mohamed bin Zayed, for meetings with Prime Minister Rahim Shebaz Sharif and other members of his government.
The visit follows a previous one by Sharif to Abu Dhabi earlier in the month, during which he already sought assistance from the UAE. The UAE agreed to provide financial assistance, promising to lend $1 billion and deferring a previous $2 billion loan. The UAE is a key trading partner for Pakistan, with bilateral trade between the two countries expected to double its 2021-2022 volume of $10.6 billion in the years ahead.
Deliveries of NATO Armoured Vehicles to Ukraine Intensify
The United States and its European allies have committed to sending Ukraine several different types of NATO-built armoured vehicles. Previously reluctant, Germany will also participate in these transfers by sending Leopard 2 battle tanks to Ukraine. The decision concerns at least one company of Leopard 2 A6 tanks from Bundeswehr stocks, while other countries have received Berlin's consent for the transfer of their Leopard 2 stocks to Ukraine.
The decision was followed by a similar pledge from the United States, paving the way for the transfer of US-built Abrams tanks to Ukraine as well. The US will reportedly send 31 Abrams tanks in addition to 109 Bradley Fighting Vehicles, 90 Stryker Armoured Personnel Carriers, 300 M113 Armoured Personnel Carriers, 250 M1117 Armoured Security Vehicles, and 580 Mine Resistant Ambush Protected Vehicles. The US and the Netherlands are also said to be refurbishing some 90 Soviet-era T-72 tanks that they pledged to send to Ukraine in November.
An influx of NATO-made main battle tanks may strain Ukraine's logistics system. It will be challenging to operate and maintain several different types of armoured vehicles from varied defence industries without the ability to repair and maintain the vehicles with locally-sourced parts and materials. Keeping such a varied mechanized force combat-ready in a drawn out conflict with Russia could therefore prove to be a logistical nightmare for Ukraine. The Ukrainian military has already established a process for conducting maintenance and basic repairs near the front lines and relatively protected areas of Ukraine, with NATO-built equipment often sent to Poland for repairs.
The Ukrainian military will need to quickly train crews to operate these new tanks while figuring out where its new armoured forces can make the biggest difference on the battlefield. While third-generation main battle tanks such as Abrams, Challengers, and Leopards are formidable weapons systems, Ukraine will need new or revised military doctrines for training, tank warfare and fire support in order to use them effectively. The utility of these tanks may ultimately depend on how many are transferred, how quickly the transfers and training can be completed, and the efficacy of established maintenance and repair facilities.
M23 Rebels Resume Offensive and Make Gains in the DRC
M23 rebels in the Democratic Republic of Congo (DRC) have clashed with DRC soldiers and other rival militias, and have cut off a strategic road in the region. The group, which first rose to prominence in 2012 when it captured the city of Goma, has been gaining territory in North Kivu province and is steadily advancing towards the capital.
The road cut off by the rebels is considered vital for supplying the city of Goma. The DRC's army confirmed a withdrawal has taken place and called it a tactical move to protect civilians in the face of renewed unrest caused by the offensive. The M23 rebels took control of Kitshanga, a city of more than one million people located on the Rwandan border, which was already cut off from the north after rebels took National Highway 2 during their offensive in October and November last year.
The insurgency has caused regional tensions, with Congo accusing its neighbour Rwanda of supporting and sponsoring the Tutsi-led rebellion. United Nations experts and Western powers have also accused Rwanda of backing the M23, but the government of Rwanda has denied any involvement. A classified report conducted by a group of analysts at the United Nations Security Council reportedly found evidence that Rwanda has militarily intervened inside Congolese territory since at least November 2021, providing “troop reinforcements” for M23 operations.
The United Nations peacekeeping mission in the DRC (MONUSCO) condemned the latest attack by M23 rebels. MONUSCO called for the rebels to withdraw from occupied areas and cease hostilities in accordance with the roadmap set out in the Luanda mini-summit.