It would be near impossible, in the absence of another WikiLeaks-type moment, to establish firmly that the US leaned on the Pakistani civil bureaucracy–military complex (referred to within Pakistanis almost universally as the ‘establishment’) to block the Karachi Electric deal; backroom conversations between elements of the intelligence fraternity do not happen over email. I surmise that the request to block the deal would have been delivered by the relevant intelligence chief-of-mission at the US embassy in Islamabad to his official military intelligence counterpart; or perhaps to a senior ‘asset’ depending on how far you want to go in developing the narrative. Thereafter, a key civilian bureaucrat would have been told to stall negotiations and introduce impediments to prevent the deal from proceeding; in effect, covertly signalling and encouraging either Abraaj or the Chinese to withdraw from the deal if government consent was not forthcoming. There would never be more than two or three people of seniority or rank involved in this process and none would acknowledge that such a strategy was being implemented. But the power of the establishment in Pakistan is such that its ability to exercise control over the key levers of government is absolute and nothing happens without its assent, irrespective of who is running the government. That is just the way it is. Let us see how this was blocked.

The deal to sell Karachi Electric to SEP was announced in October 2016 and was expected to close within a few months pending what the Abraaj team expected to be ‘fairly vanilla’ commercial and regulatory condition precedents – events that had to take place before the deal was done. The deal would have produced a great return, making $618 million in exchange for a $300 million investment made by IGCF as part of the $1.77 billion sale price, and it would have provided $550 million cash for AHL itself between its direct holdings in Karachi Electric, its interests as a limited partner in IGCF and amounts owed to it by KES Power. Not only would the transaction have created a fantastic case study for APEF VI, for which Abraaj was totally focused on raising funds for during that period, but it would also alleviate all the financial pressure that Abraaj had come to face as a direct result of the delay in the return of this capital. Finally, the deal itself would be good for Pakistan if SEP fulfilled its pledge to invest a further $9 billion in upgrading and enhancing capacity and infrastructure. Abraaj would have emerged with an additional impact investment fund backed by fresh Chinese capital ready to replicate and develop on a global scale – utilising its economic and political resources to make true infrastructural and societal change that touched the end consumer across emerging markets. In preparation for that, a senior team within Abraaj had already commenced negotiations with the government in Mozambique to build a new ‘gas city’ modelled on Dubai and entered discussions with the UAE government on food security initiatives in that country.

There was little that could be used in terms of criticising Abraaj’s management of Karachi Electric; by 2016, the utility was generating EBITDA over $200 million per annum and had delivered $1 billion in infrastructure investment. Loss of electricity through transmission had been reduced from 38 per cent (unofficially 50 per cent) to an audited 18 per cent. A once mistrusted, inefficient public utility company was now a thriving commercial enterprise, providing a dependable service for millions of consumers, facilitating lasting development across Karachi (and Pakistan, more broadly). The SEP had not only endorsed Karachi Electric’s success but was knocking on its door to allow the largest ever amount of foreign direct investment in the city to be deployed.

The first instrument of delay was the NEPRA chairman, Tariq Sadozai, a retired army brigadier whose inaction contributed to the scuppering of the transaction. In his role as chairman, he had constitutional protection against being fired by the government for not doing its bidding and approving the tariff. The relationship between the NEPRA and the central government has not been an easy one but it is legally and constitutionally independent and would remain so even if recent changes were implemented. The point is that the government has limited powers to instruct the NEPRA what to do, which gives it considerable powers to presume its own line on certain issues. Executives involved in the negotiations believe that Sadozai did not have the domestic strength to resist the government onslaught unless he was specifically promised protection in the murky, byzantine way the Pakistani state operates.

The 2016 tariff determination was delayed by Sadozai by a year and, when issued, was significantly below Abraaj and SEP expectations. The requested tariff was Rs 15.8 and the approved tariff was determined by Sadozai at Rs 12. This could have precipitated the collapse of the SEP deal. Karachi Electric appealed against the determination. It was heard by the same body that had set the original tariff. The result was a slight improvement to Rs 13. The prime minister at the time, Shahid Abbasi, was committed to the deal happening and he took the unprecedented step of having the federal government appeal the decision on the tariff on behalf of Karachi Electric in an effort to move the deal forward. The NEPRA kept silent on the government’s request until after the incumbent government left office and a caretaker government was appointed to preside over the 2018 elections. This government had no mandate to influence the outcome one way or the other. Once the caretaker government was in place, Sadozai announced the tariff as remaining unchanged. NEPRA’s decision had clearly blocked the deal.

Whilst this was happening, the army leadership assured the Abbasi government that it supported the deal. Naqvi himself was given similar assurances separately. It was unthinkable that a former senior army officer would have gone against the wishes of the army leadership. By setting such a low tariff for Karachi Electric, in spite of the successful trajectory the company had been on for the previous eight years, it appears that elements within the military elite were set on disrupting the deal. Indeed, given the way in which Pakistani power politics work and the way in which the military continue to function in the civilian realm, it is highly unlikely that Sadozai would have taken this stance without clearance. For the establishment, undermining the sale of Karachi Electric, whilst clearly not in the national interest as the civilian governments perceived it, would go a long way to appeasing the US without permanently disrupting the wider CPEC initiative, which, in any event, was hitting roadblocks and slowing down because of direct US governmental lobbying and obstruction; if that was the understanding that they had reached in the background.

In tandem with the tariff issue, the SEP also needed to obtain an NSCC. However, this was not granted by the Privatisation Commission secretary because the ‘relevant’ departments had not provided the clearances (the specific departments that were being disruptive were not identified). Naqvi met repeatedly with Prime Minister Abbasi and, given that this roadblock was a national security issue, with the director general of the ISI. Over a period of two to three months, the KES thought they had brought the deal back on track despite a wider crisis unfolding back in Dubai and London courtesy of The Wall Street Journal and The New York Times, which started in February 2018. He was helped by the strategic patience of the Chinese but hindered every time the deal took a step forward in Pakistan by something negative happening elsewhere. The coordinated attacks on Abraaj in the US press were a major setback and the coverage was directly repeated almost verbatim in key elements within the Pakistani media known to be ‘establishment-backed’. This led to yet another slowdown in the approval process despite the outgoing prime minister taking the issue directly into the federal Cabinet for approval to overrule the privatisation secretary, going public with his support for Karachi Electric and condemning bureaucrats for destroying the government’s ability to implement decisions. Nothing moved.

Two individuals, the NEPRA chair and the secretary of the Privatisation Commission – ostensibly unconnected – had together thwarted the largest single inward investment in Pakistan’s history. They cannot have done this by accident.

As far as the Pakistani media were concerned, Naqvi had chosen sides within the Pakistani party system. The fact that outgoing Prime Minister Abbasi supported the deal despite Naqvi’s friendship with his political opponent speaks volumes for his commitment. Having said that, I spoke to a number of people across the political divide in Pakistan and found that Naqvi had friends in all the major political parties; but perhaps that’s just how Pakistan works. Naqvi and his friends in Dubai had supported Imran Khan’s 2013 election campaign and he was also privately working on ideas for what would be Khan’s first government, including, as it was reported, helping on developing the Agenda for Economic Revival 2018-2023, a summary delivered by PTI supporters from academia and the private sector on how to stimulate growth in Pakistan. This was regarded by many as a kind of economic manifesto for the PTI. There was a clear perception that Naqvi was aligned with the PTI and much speculation about this exact role existed, especially after Imran Khan’s ex-wife released a book during the election campaign designed and timed to disrupt Khan’s electoral chances in which she discussed Khan and Naqvi’s closeness. This was further confirmed when he openly started visiting Islamabad weekly as part of Khan’s trusted inner circle of advisers after he became prime minister, including being party to the extensive debates on the negotiations with the IMF. This role was publicly reported and called into question in the media at the time because Naqvi had no official party affiliation or government role. Every report on Naqvi advising Khan duly repeated the Wall Street Journal allegations. One journalist in Pakistan told me that a Wall Street Journal reporter kept calling local journalists, urging them to report his stories.

This approach by Pakistan to the IMF was initially supported by Mike Pompeo, but he was adamant that IMF funding could not be used to support CPEC projects or subsidise debt repayments. He told a CBS News interview: “Make no mistake. We will be watching what the IMF does. There’s no rationale for IMF tax dollars and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself.” This followed an equally testy exchange at the first meeting between Khan and Pompeo. The subtext was clear: it would be fine if the IMF assistance were provided under US-imposed conditions that ensured no benefit to China. Khan was in a quandary. Any deal with the IMF could not be used just to push a problem down the road and saddle Pakistan with additional debt whilst undermining the country’s autonomy. But he needed the cash. Pakistani’s previous IMF deal, agreed in 2013, had granted a $6.6 billion bailout to the country, conditional on strict restructuring and rationalisation efforts. The new iteration contained similar conditions, which would devalue the currency precipitously. The prime minister was advised by his inner team to seek supporting finance from Saudi Arabia, the UAE and China to buy more time, which he did, providing space for Pakistan to negotiate more favourable terms with the IMF. Reuters reported in December 2018 that the UAE was to deposit $3 billion in Pakistan’s central bank in the next few days, this followed an October loan from Saudi Arabia of $6 billion, which included a “$3 billion deposit for its foreign currency reserves and another $3 billion in deferred oil payments”. This was an extension of blockade politics in an attempt to reduce Pakistani dependence on LNG from Qatar.

Naqvi, with a few other trusted aides of Prime Minster Imran Khan, met with senior World Bank officials to further discuss alternatives to the punishing IMF deal. They suggested to the officials that if the IMF deal was accepted, Pakistan needed to adopt a hard stance in relation to autonomy on the exchange rate in a fiscal deficit that supported the economic priorities of the PTI government. By this point he had a target painted on his forehead as a potential obstacle to the IMF negotiations.

The prime minister was receiving contradictory advice from his advisers, who were clearly not all on the same page as the local media outlets reported on each day with glee. Whilst Khan deliberated on which concessions to give to the IMF to get the package approved, Naqvi returned to London against the wishes of Khan, who wanted him to stay in Islamabad. According to Naqvi’s call logs, Khan was the last person he spoke to before he took off from Islamabad to London on his flight via Doha. He was arrested and detained on April 10, 2019, at Heathrow airport. Soon thereafter, Pakistan agreed to the IMF deal on what the media described as unfavourable terms; the finance minister was sacked and a trusted confidant of the establishment, Hafeez Sheikh, was imported into the government as a replacement – a steady hand.

The UK Crown Prosecution Service said Naqvi had phoned Khan after he was arrested, whereas his counsel clarified the call had been made the evening before he boarded his flight. His subsequent house arrest (which is still in place) makes it impossible for him to contribute to the political process in Pakistan. Having been courted by the US, Naqvi is now positioned in their eyes as an opponent to the Atlantic capitalist instrument of neo-liberalism, the IMF and by extension the American-led development industry based on that Atlantic model. He was projected as a firm supporter of the CPEC, Chinese investment strategy in Pakistan and an advocate of a policy of moving away from dependence on the West so that Pakistan could become more autonomous with support from other Muslim nations. In my opinion, it was this toxic combination that motivated the US to obstruct the Karachi Electric deal in 2017 and then destroy Abraaj itself in 2018 when Naqvi not only refused to shift ground but continued battling to save Abraaj, consummate the Karachi Electric deal and, to make matters worse, repeatedly popped up in Pakistan as Imran Khan’s adviser.

Brian Brivati has had a twenty-year academic career at the Institute of Contemporary British History and then Kingston University as a professor of contemporary history, human rights, and life writing