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Thursday, August 5, 2010

“Debt is a national security threat, one of the greatest we know of…”

State Bank of Pakistan has reported that Pakistan’s external debt stood at $53.013 billion as on 31-3-2010 against $48.265 a year ago indicating an alarming increase of 10% in a span of one year. Due to devaluation of the currency and budget deficit, this debt will become far dearer in rupee terms. This is exposing the vulnerability of Pakistani state in terms of its national security. Some optimists are of the opinion that IMF’s program indicates its confidence in the sustainability of mounting debt but it is a fact that the debt, both external and domestic will continue to mount creating serious threats for the viability of the state and its security. A country which gets into the debt trap, as all those who accept IMF program, compromises on its national security in compliance with conditionality first targeting national security budget. Moreover, a borrower has no chance of becoming a power of any hue, what to talk of a military power.
Foreign Policy Magazine has reported that rising US debt has been viewed as a huge national security problem that must be tackled now, the leader of the House said Monday. "It's time to stop talking about fiscal discipline and national security threats as if they're separate topics: debt is a national security threat, one of the greatest we know of," House Majority Leader Steny Hoyer, D-MD, said in a speech at the Center for Strategic and International Studies. "Unsustainable debt has a long history of toppling world powers." 
Hoyer didn't call outright for cutting defense spending, but he did say that the United States needs to shift away from a focus on military power, increased focus on development, and examine on the root causes of anti-Americanism, while still prosecuting the war against violent extremists. "America's military is a powerful weapon, but it is not the only one we have," he said. "We cannot afford to turn our backs on any weapon in our arsenal."
In one sense, Hoyer is echoing the Obama administration's policy as set forth in the recent National Security Strategy, which went farther than ever before in arguing that a strong economic base is the foundation of U.S. national power.
"First and foremost, we must renew the foundation of America's strength. In the long run, the welfare of the American people will determine America's strength in the world, particularly at a time when our own economy is inextricably linked to the global economy," the document reads. "Our prosperity serves as a wellspring for our power."
At last weekend's G-20 summit, the world's top economies pledged to half deficits by 2013. The Obama administration reportedly resisted such austerity measures inside the negotiations, and the prospects of the United States reaching that goal are slim. The White House would prefer to delay tackling the budget until the global economic recovery is on more solid footing.
Hoyer is calling for president's debt commission to tackle the problem now and for a budget agreed to be signed immediately, even if actual measures won't be implemented until the economy is stronger.
"An agreement like that, to be implemented after the economy has fully recovered, is a necessity today," he said.
The White House and the Democrats in Congress, the House especially, haven't seen eye to eye on several economic policy issues lately. Only last week, Hoyer announced the Congress won't even pass a budget resolution this year, instead passing a "budget enforcement plan" that would allow the administration to spend $7 billion less than what it requested last year but would also allow Congress to avoid preparing a long-term budget plan before the November elections.
"It isn't possible to debate and pass a realistic, long-term budget until we've considered the bipartisan commission's deficit-reduction plan, which is expected in December," Hoyer said.
Congress has yet to pass fiscal 2010 war funding, despite Defense Secretary Robert Gates's warning that the military would have to start doing "stupid things" to make ends meet if the money isn't delivered soon.

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