The Intercept’s Latest Leak Might Deal Irreparable Damage to Pakistani-Chinese Relations

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Yves here. Andrew Kobybko provides an important sighting, although he has arguably buried the lede. The latest Intercept leak provides further confirmation that the ouster of former Pakistan prime minister Imran Khan was to deny Pakistan the ability to chart an independent (as in multipolar-oriented) path and move it back into the US orbit. The latest leaks indicate that some of Pakistan’s moves that gave it the appearance of having some space between Pakistan and the US were strictly optical. Korybko contends that that’s not much of a loss for Russia, but by contrast, the China-Pakistan Economic Corridor is a significant component of the Belt & Road Initiative.

By Andrew Korybko, a Moscow-based American political analyst who specializes in the global systemic transition to multipolarity in the New Cold War. He has a PhD from MGIMO, which is under the umbrella of the Russian Foreign Ministry. Originally published at his website

At the same time as Pakistani officials were negotiating with Russia to import oil and abstaining from anti-Russian UNGA Resolutions alongside China, their country’s arms were being used by Ukraine to kill Russians and therefore undermine China’s diplomatic efforts to freeze the most dangerous conflict since World War II.

The Intercept reported on Sunday that “U.S. Helped Pakistan Get IMF Bailout With Secret Arms Deal For Ukraine, Leaked Documents Reveal”, which is its second damning disclosure in as many months after it revealed in August that the US did indeed encourage the ouster of its former premier in spring 2022. The latest leaks allege that Pakistan has been selling arms to the US for transfer to Ukraine since that summer and that the US pressured the IMF to bail Pakistan out this summer as a quid pro quo for that.

The sequence of events suggested by The Intercept’s last two reports add credence to Imran Khan’s consistent claims that he was deposed through a combination of American meddling and internal subterfuge as punishment for his truly neutral stance towards the NATO-Russian proxy war in Ukraine. Once his multipolar governmentwas replaced by pro-US proxies, Pakistan instantly reverted back to its traditional status as America’s top proxy in South Asia, following which it cut a deal for arming Kiev.

This whole time, however, its officials vehemently denied Indian media reports about its indirect weapons transfers to that country. Pakistan also abstained from anti-Russian UNGA Resolutions and continued trying to negotiate an ultimately unsuccessful energy deal with Moscow. In hindsight, those three moves were nothing but a ruse for misleading Russia and “saving face” before its so-called “iron brothers” in China in the hopes that they wouldn’t think that post-coup Pakistan “defected” to the US.

As it turns out, Pakistan was secretly selling arms to China’s systemic rival for over a year already with the intent of perpetuating the same proxy war that Beijing has tried to freeze since February, which represents a blatant betrayal of its decades-long strategic partner. To add insult to injury, it allegedly pushed through the latest deal this summer in exchange for the US pressuring the IMF to bail it out, thus showing that Pakistan already decided on Western sources of aid instead of considering such from China.

This insight proves that Pakistan has been functioning as the US’ “Trojan Horse” for duping the SinoRusso Entente ever since Imran Khan’s scandalous removal from office nearly a year and a half ago. At the same time as its officials were negotiating with Russia to import oil and abstaining from anti-Russian UNGA Resolutions alongside China, their country’s arms were being used by Ukraine to kill Russians and therefore undermine China’s diplomatic efforts to freeze the most dangerous conflict since World War II.

For these reasons, neither China nor Russia has any reason to trust Pakistan after The Intercept’s latest leaks, but their officials might still act cordially towards it in public for the sake of optics. Russia can easily disengage from Pakistan since those two hadn’t successfully reached any major investment deals during their prior rapprochement, but China is in a much more difficult position due to Pakistan hosting the China-Pakistan Economic Corridor (CPEC), which is the Belt & Road Initiative’s (BRI) flagship project.

Although former Foreign Minister Bilawal Bhutto Zardari told his Chinese counterpart Wang Yi in May 2022 that Pakistan remains committed to CPEC, which former Prime Minister Shehbaz Sharif reaffirmed during talks with Chinese President Xi Jinping that November, it’s now known that they were lying. The first was in the process of clinching Pakistan’s first Ukrainian arms deal with the US for facilitating an IMF bailout while the second was continuing these sales when they took their respective trips to China.

If they truly considered CPEC to be crucial to their country’s 21st-century development, then they’d never have sold arms to China’s systemic rival in exchange for financial aid but would have instead focused solely on doing whatever might have been required to secure such aid from Beijing. This observation proves that Pakistan secretly pivoted to the US right after Imran Khan’s ouster, which means that its officials were lying to Foreign Minister Wang’s and President Xi’s faces about their commitment to CPEC.

Their mission was to deceive China into thinking that the former premier’s removal was a purely domestic affair so that it would remain oblivious to the fact that the US was clandestinely obtaining control over BRI’s flagship project by proxy. As a result of these deception operations, the Biden Administration pulled off an unprecedented power play against China that resulted in the US indirectly exerting influence over CPEC and thus holding tens of billions of dollars of Chinese investment hostage.

The People’s Republic is therefore in a dilemma since disengaging from Pakistan or at least decelerating the pace of its investments there to hedge against this newfound strategic risk could prompt speculation about the future of BRI while doing nothing keeps China vulnerable to US blackmail. Nevertheless, the restoration of Pakistan’s traditional status as the US’ top proxy in South Asia after Imran Khan’s ouster and the country’s relapse into IMF dependence mean that CPEC investments aren’t safe.

Accordingly, China might soon be forced to informally cut its losses since continuing to develop a connectivity corridor that’s now under its systemic rival’s de facto control would be highly irresponsible. It might also second-guess the wisdom of continuing to arm Pakistan against India after The Intercept’s latest leak showed that Islamabad exploited this military support to sell domestically produced arms to Ukraine via the US, which prolongs the same proxy war that Beijing is trying its best to freeze.

The post-coup clique felt so comfortable with the deluge of arms that their country received from China for potential use against India that it didn’t think that Pakistani security would suffer by exporting what it produces at home to Ukraine for killing China’s Russian strategic partners at the US’ behest. The more that one dwells upon their strategic calculations, the deeper their betrayal of China becomes, which reinforces the claim that Pakistan is the US’ “Trojan Horse” in the New Cold War.

In spite of all this, China might still stay the course in relations with Pakistan, perhaps out of fear that gradually “decoupling” could lead to Islamabad concluding that it has nothing to lose by complying with Washington’s demands to destabilize Xinjiang. Regardless of whatever China chooses to do, The Intercept’s damning disclosure proves that Pakistan is once again doing the US’ geopolitical bidding, which destroys the goodwill and trust that Imran Khan cultivated for his country across the Global South.

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  1. The Rev Kev

    So I am looking at a map of Pakistan and I see that to the east is India, to the south-west is Iran, to the north is Afghanistan and to the north-east is China. You would think that with all this in mind, that they would try to make solid allies out of at least one of those powerful bordering nations. And yet their leadership seems to want to tie their fate with that of the US and annoy and betray countries like China and Russia. You can tell that before too long, that they are going to come a cropper. And I think that the US will just write them off and go onto the next country to use up.

    1. nippersdad

      Pakistan had signed a memorandum of understanding for their link in the Belt and Road Initiative in 2013, but it has been a long time since I have seen that spur from Karachi to the Pakistani coast, much less the one going from India to Iran through Pakistan, on any map. The last one I saw had a sea link from India to Iran on it, so China may have been more aware than the article lets on.

      They do take the long view, though, so your theory that the Pakistani proxy will come a cropper is likely their view as well. The US never does not seem to be able to maintain long term friendships with anyone, and China/Russia are probably counting on that.

    2. Feral Finster

      Once you understand that Pakistan is less a nation than a group of self-interested factions, everything will become clear.

      1. ambrit

        True. Join Pakistan and Afghanistan together and call the result “Chaosistan.”
        Wasn’t Pakistan the place where “Osama bin Laden” (or his body double,) was finally found?
        Pakistan likes to play everyone around them off against each other. That can last only for so long. Then….

          1. ambrit

            Agreed. First, the “person of interest” was ‘found’ in Abbotabad, the most secure military city in the region. That the Pakistani Army didn’t know about ‘him’ is ludicrous. Second that the video of the actual ‘killing’ was not released is “curious,” for a regime that prioritizes Public Relations and the Narrative above all else. Third was the ‘hasty’ “burial at sea” of the body. All in all, too many ‘questionable’ aspects to this to pass the smell test.

              1. ambrit

                That is wonderful. I remember some wag on the television remarking that “finding a skeletally thin, very tall arab man confined to the Afghan region and who needed dialysis should not be too difficult for the much vaunted spy agencies of the West.”
                The ‘War on Terror’ (aka “War of Terror”) needed a bogeyman to focus the public’s attentions on while the Police State was constructed and tested in the West. Thus, bin Laden had to be “alive” and a constant “threat” to the Western public.
                I wonder who the poor sod who was killed in Abbottabad was.

  2. furnace

    This seems to complicate the situation quite a bit, but I find it hard to believe that the Chinese were completely unaware. I, of course, have no sources for this so it’s just speculation, but I can imagine that they maybe were turning a blind eye to it, for the sake of the Belt and Road investments. Pakistan is in a very dire situation, particularly with what pertains to climate change and global energy prices (the EU pretty much forced the third world off LNG by buying all available supply or driving the price to the moon, with catastrophic consequences). I don’t really know anything about Pakistan internal politics, but couldn’t this make the coup regime a bit shaky? Imran seems to be very popular, and this naked betrayal of a historical ally might not go so well with the public (but I don’t really know).

    1. Polar Socialist

      To misquote Al Capone about Khan’s situation: you can much further with popularity and Army than with popularity alone.

  3. Hemanth Kumar

    The writeup is interesting but not surprising. Pakistan’s strings are pulled by its military and it won’t surprise anyone if it turns out Pakistan also rented its soldiers to Ukraine and/or Russia for money. It had done this before in Middle East and a couple of other places.

  4. Giandavide

    I don’t understand much Korbyko’s logic:

    Pakistan sell arms to usa > Pakistan cut economic ties with china

    The ukraine war duration isn’t caused by the pakistani arms, and i hardly found surprising that a country almost failed that begs money to IMF found itself blackmailed with such requests. But what’s the economic alternative to China for Pakistan? apart getting loans from IMF (good luck) Korbyko doesn’t explain that. Indeed, as shown in a good NC article i read today, the european neoliberal elites makes business with russia while pushing their population to hostilities. Why the pakistani elites should be characterized by higher moral values and coherence than european elites? Business is business! Probably the economic ties between China and Pakistan will be maintained, even while the sell to arms against Russia go on. Then the peace in Ukraine is so crucial for China? I don’t think so, also cause the relationship between Usa and China now cannot worsen below a certain point: that would mean Usa fighitng a simultaneous war with China and Russia. But when the Usa will get free hands in Europe they will probably pivot their politics to pacific area, and i’m not sure the chinese will be so happy to get all the cares and the attention. In general if russian economic projects in Pakistan fail and Pakistan sell weapons against Russia, i think it’s more a failure of Russian soft power than a Chinese failure, a failure that Korbyko tries to hide, maybe for chauvinist reasons, while he just talks about China

    1. Random

      The more important point here is that the military overthrew a leader that wanted to maintain neutrality because of American pressure.
      Not something you want in a country that’s strategically important to you.

    2. ComradePuff

      I agree with a lot of this, especially the idea that the business will just continue. One of the reasons China has been so successful in Africa is due to long term persistence and economic engagement at all levels of society. If leaders can be carted off so easily, then so can anything else. It is the countries which are coup-proof that China has to worry more about.

      I suspect that the US has a very small circle of friends left in Pakistan, which is why it had to resort to kidnapping its president and essentially bribe the military by agreeing to buy back the arms they had already sold them. Usually the weapons flow in and not out, as the US is a military empire, so I see this as weakness for the US position.

    3. Anon

      There is/was sizable Chinese investment in Ukraine, also, that war, however isolated, will destroy their customer base as it is likely to spread West if it continues to escalate. Not everyone hopes to be king of an ash heap, some just to prosper.

      The ouster of Khan portends more than the arms sales do, but combined make for a compelling argument. Given China’s investment in Pakistan, I can hardly think their foreign service is any less perturbed by developments, than the Russian, whichever dropped the ball.

      Also, recall Obama’s ‘Pivot to Asia’… despite our administrative battle in Ukraine, I sincerely doubt China is basking in neglect as the military alliances stack against them.

    1. MFB

      Inter-Services Intelligence has been “practising” this stuff for about seventy years now. You’d think they’d have untangled their web by now.

  5. Lex

    I concur with other commenters that this was likely not a blindside surprise to Beijing. Over the medium and long term I expect it will cause more problems for the US than it solved in the short term. But that’s DC’s SOP.

    1. John k

      Yes. It doesn’t seem likely that the intercept would have better sources than China in China’s back yard.
      But that begs the question, ‘why is the us so much better than China/Russia in bribing the locals’? Principles?Palaces on Florida beaches?

      1. furnace

        Maybe it’s a simple lack of scruples as well as easy channels to do dirty business. The CIA has been doing its job for a long time, after all. The Chinese comparatively seem naive sometimes, though I’d argue that’s to their credit. It’s a smart idea to avoid looking like the colonialists of old (and neo-colonialists of new).

      2. timbers

        Reserve currency is a big part. Unlimited briding because it can all be printed with unnoticed impact domestically. If so, the reserve currency holder will always have an advantage in bribing.

  6. Matthew G. Saroff

    If the IMF loan was the reward for a coup, how would this not qualify as odious debt which can be repudiated under international law?

    I know that it has been decades since this has applied, but it is a well accepted part of internal law.

    1. ComradePuff

      Exactly. There is nothing to celebrate about an IMF loan. I would argue that the arms deal was the reward and the military pocketed the cash. Unless the US steers Pakistan into using IMF funds to purchase more American arms which America can buy back, setting up a kind of self-licking ice cream there, it is hard for me to see how this coup has any legs for the long term. Regardless, I think the US has adopted a wayward child here that will need a lot of discipline and never stand on its own.

    2. Expat2uruguay

      @matthew saroff:

      If the IMF loan was the reward for a coup, how would this not qualify as odious debt which can be repudiated under international law?

      I think it would be naive to think that Pakistan would have any recourse against the IMF after seeing the lack of justice for an IMF loan given illegally to Bolivia in 2020/21.

      That loan was given to the coup government ran by the random legislator, Jeanine Áñez, that took over after violent groups forced the elected President Morales from power in Bolivia in April 2020. Some have called that a coup, but the OAS immediately backed Áñez, that seized power during the chaos with a Bible in her hand.
      That interim government only had a mandate to hold elections within 3 months, and shouldn’t have been able to get an IMF loan at all. But of course they delayed elections for a year, because of the pandemic you know, and in that time took out the illegal IMF loan. When the previously ousted government of Bolivia regained power in the election, it very quickly repaid the entire IMF loan plus interest.

      And you can also look at the huge record-setting loan that the IMF gave to Macri in Argentina that was then the source of capital flight from that country. And Argentina is of course is put forward as a poster child for bad lending by the IMF, so why do they give such a country the largest loan ever? Because the US’s guy was running the show of course! And now there’s an presidential election in Argentina this October where the most likely candidate is running on a platform of dollarizing the economy. He’s able to convince voters that this is necessary because the inflation is so bad, which is due to the Argentina having to pay back the outrageous interest on all its loans, not just to the IMF but also Wall Street vulture capitalists like Black Rock etc.

      The IMF is completely dirty, and all these crooks of US origins keep getting away with it. There is no justice in the current “rules-based system”.

    3. Yves Smith Post author

      No, odious debt is not a legally recognized concept. It was only invoked successfully 2X, over 100 years ago. One was simply an excuse for the US defaulting

      As even your link notes:

      … Mitu Gulati argues that odious debt is not part of international law because “[n]o national or international tribunal has ever cited Odious Debt as grounds for invalidating a sovereign obligation.

      Please don’t misinform readers.

  7. Aurelien

    I doubt if the Chinese view this as seriously as the Intercept does. Pakistan, given its strategic situation, needs friends where it can find them, and has manoeuvred adroitly between some of the main players. It will do whatever it thinks its security requires it to to. Only the West (and especially the US) is naive enough to believe that states acquire permanent friends and allies and never betray or mislead them.

    The fact is that the Pakistanis do not trust the US, and they limit their cooperation to those things that they think they can safely do. Historically, they have trusted China much more, and I doubt if this episode will change anything. The Chinese will understand that the Pakistanis are doing the minimum they can get away with to keep the US on side: they’ve never had an exclusive relationship with Pakistan, and don’t expect to.

  8. Piotr Berman

    China will not break with Pakistan easily, (a) sunk investments (b) long term perspective. The real price includes

    – broken natural gas with Iran, piped natural gas being fastest and comparatively cheap way to increase electricity supplies

    – discount on oil from Russia

    – nuclear energy deals with China or Russia (currently building in India and Bangladesh), Western supplies such on cost and timeliness to ridiculous degree

    – further reasons to loose the confidence of Pakistanis, although there are plenty of other reasons. Abysmal economic performance (IMF deals are excellent for loosing weight, however slim you are already), repressions…

    I do not see how the government can survive upcoming February elections, barring dictatorial methods — the leader of the opposition that leads in the polls is in prison already, and plenty of PTI activists are arrested, I did not track news on their convictions (knowledge of written Urdu would help…).

  9. DeSelby

    Aside from Pakistan’s underhand dealing, I read The Intercept article as an indictment of the IMF – the flow of money means ultimately the IMF paid for the weapons supplied to Ukraine.

    1. Anon

      We seized a sovereign nation’s foreign reserves, and allegedly blew up a pipeline. Clearly we are operating outside the scope of accepted norms. Who pays for what is a molehill (vs a mountain) at this point. That said, the IMF was the bribe, yes, but it has long since been a corrosive agent of imperial intent. This is how we get clean clothes, and rich, coincidentally.

  10. Susan the other

    Procurement. Of what exactly? Shrub sent a huge inventory of materiel to Iraq/Afghanistan without a plan to repossess it. Just left it there “to rust.” But not really because it has been in use and of use ever since. Making Wesley Clark’s claim about coups in 7 countries believable. It’s possible that Pakistan became the armory for all that stuff. Baluchistan? Maybe Pakistan wasn’t doing much arms manufacturing but simply forwarding all that American made weaponry, jeeps and stuff off to all points Middle East. If something like this is the case it is too blatant for China to have failed to observe it.

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