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US Cuts Aid to Pakistan Amid New Chinese Plan To Dump The Dollar

As much of the world’s focus is fixed on the current unrest rocking Iran, Donald Trump is using the heralding of the new year to publicly attack another Middle Eastern country: Pakistan.

“The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools,” the president said via his infamous Twitter account on New Year’s Day. “They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!”

Pakistan responded almost immediately by dismissing Trump’s tweet as “incomprehensible” and of “no importance.” Pakistan’s Foreign Office then summoned the U.S. ambassador to Pakistan, David Hale, to demand an explanation regarding the president’s comments. The prime minister’s office released the following statement:

“Recent statements and articulation by the American leadership were completely incomprehensible as they contradicted facts manifestly, struck with great insensitivity at the trust between two nations built over generations, and negated the decades of sacrifices made by the Pakistani nation.”


The Guardian reports that in a surprise visit last month, U.S. Vice President Mike Pence said the Trump administration was putting Pakistan on notice to end its support for Taliban insurgents. The New York Times also reported last week that the Trump administration was considering withholding $255 million in aid to Pakistan over its failure to confront terrorism, specifically its refusal to allow the U.S. access to a captured militant from the Taliban-linked Haqqani network.

As promised, Trump’s erratic ambassador to the U.N. Nikki Haley confirmed the U.S. would withhold the $255 million in aid.

Between the years 2009 to 2014, the Obama administration approved as much as $7.5 billion in assistance to Pakistan with stipulations that expressly prohibited funds being used for nuclear proliferation, support for terrorist groups, or attacks in neighboring countries. The U.S. has accused Pakistan of deliberately failing to defeat the Taliban, claiming they keep them at bay just enough to continue justifying such a generous aid package. One official who visited the border between Pakistan and Afghanistan said he found men on the front line “standing there in the snow in sandals.”

Clearly, the money is not going to where it is supposed to go. On the face of it, the United States should be justifiably angry given the U.S. has invested so much money in the country for a specific purpose (supposedly).

That being said, Pakistan’s illustrious history of financing terror groups is not exactly a secret. In 2009, Pakistan’s president at the time, Asif Zardari, openly admitted that Pakistan had a history of creating Islamist terrorist factions, including Lashkar-e-Taiba and Jaish-e-Mohammed, as part of a foreign policy strategy to target India. Now, Pakistan is more or less embroiled in a fight with those same groups it once heavily supported. In 2007, the Telegraph reported that under the Bush administration, the CIA was supplying money and weapons to a militant group known as Jundullah, which has conducted raids into Iran from Pakistani territory. The Bush administration gave at least $10 billion to Pakistan at the time, almost without question as to where the money was going.


Even attacks directed at American personnel can be extensively traced back to Pakistan, which reportedly provides militants with safe houses. The Pakistani army itself is accused of providing sanctuary to the Taliban, as well as fundraising and training for the militant group. It has also directed a number of terrorist activities towards neighboring India. According to Foreign Affairs, the U.S. has knowingly reached out to Pakistani organizations with ties to Islamist militants.

So why would the U.S. attack Pakistan for its support for terror groups now, specifically? Is it because Donald Trump wants to steer U.S. foreign policy on a different course from his predecessor, even though he knowingly supports Saudi Arabia  a country that finances terrorism around the world? Or is there something else behind Trump’s hostility towards Pakistan?

As the Guardian notes, this will only further push Pakistan into the open arms of China. China’s Foreign Ministry’s recent statement on the matter was clearly an attempt to come to Pakistan’s defense in a diplomatic snub to the U.S. The statement said:

“We have said many times that Pakistan has put forth great effort and made great sacrifices in combating terrorism. It has made a prominent contribution to global anti-terror efforts.”

And this is exactly the issue at play here. Pakistan says the president’s comments are designed to paint Pakistan as a scapegoat for the United States’ failures in Afghanistan. But really, the main thorn in Washington’s side right now is Pakistan’s relationship with China.

China has pledged to invest $57 billion in Pakistani infrastructure as part of its so-called “Belt and Road” initiative. Despite what we hear about North Korea on a daily basis, Pakistan also has the fastest growing nuclear arsenal in the world. With this in mind, the U.S. is well aware that it is currently expanding its submarine fleet with Chinese assistance.

Just last month, Pakistan announced it was considering a proposal to replace the U.S. dollar with the Chinese yuan for bilateral trade between Pakistan and China. Between 2015 and 2016, bilateral trade between the two countries totaled $13.8 billion. Pakistan is but one of a host of countries actively discarding the U.S. dollar and opting for the Chinese yuan instead, a major blow to the U.S.’ control of the world’s financial markets.

In the middle of last year, it was reported that China was considering its own military bases in Pakistan. It also recently granted hundreds of millions of dollars in aid to the Islamic nation.

Despite Trump’s tough rhetoric and schizophrenic approach to “radical Islamic terror,” his attitude towards Pakistan likely has nothing to do with terrorism at all. Even the U.S.’ official counterterrorism strategy in Pakistan only helps to create more terrorists, so it is unclear what Pakistan could do differently to appease its American counterpart in that respect.

This most likely has everything to do with the fact that Washington’s long-standing rival, China, is slowly but surely eating up parts of the world the U.S. has long had its eye on — and the U.S. is fast running out of options in its bid to contain China’s expanding influence.


Darius Shahtahmasebi
Darius Shahtahmasebi is a New Zealand-based legal and political analyst, currently specializing in immigration, refugee and humanitarian law. Contact Darius: Support Darius' work on Patreon:

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