US to Pay Pakistan $1 Million Per Day to Open Supply Route

Night Watch
Posted: May 18, 2012 12:01 AM

China: Update. China's aircraft carrier completed its sixth sea trial. The carrier was seen in port at Dalian on 15 May after having been at sea for nine days.

Pakistan: After Pakistan received an invitation to attend the NATO summit in Chicago next week, some officials announced a new agreement to reopen NATO supply routes to Afghanistan through Pakistan, while others denied a new agreement had been reached, but that Pakistan is willing to reopen the supply line, if the pricing arrangements can be concluded.

According to McClatchy, the U.S.-led coalition will pay Pakistan a still-to-be-fixed fee of $1,500 to $1,800 for each truck carrying supplies, a tab that officials familiar with negotiations estimated would run nearly $1 million a day. Other sources reported individual containers could run as high as $5,000 each.

Comment: The US commander of the allied forces in Afghanistan stated, in paraphrase, that the six month blockade of the Pakistani supply routes did not hurt the allied forces. General Allen's remark raises the question why the allied forces have been so insistent in reopening the supply routes and at such a high price.

Pakistani forces supposedly will provide security for the supply convoys. That ensures that Pakistani black marketers, the Taliban and other anti-Kabul groups and anti-Islamabad groups also get a share of any leakage of supplies in the pipeline. Allowing for a time lag, the anti-government fighters should show increased capabilities by June.

Somalia: In a press release, the director of Australian Securities Exchange Limited said he was happy to announce that Range Resources Limited, a company that was prospecting for oil in Puntland, and its partner, Horn Petroleum Corp have found oil off the coast of the Horn of Africa.

Workers at Range Resources said they continue to find more oil as they drill deeper. Officials from the Puntland administration are yet to issue any statements on the Australian Securities Exchange Limited's press release, which was published on Range Resources' website.

Comment: Over time, a profitable oil industry should transform the economics of this region and reduce the attractiveness of piracy.

Greece: For the record. A blog of the Financial Times published details of the Greek government's efforts to increase tax collection in compliance with EU and IMF directives. The government tied unpaid property taxes to current electricity bills for households and businesses. So many Greeks stopped paying both but received electricity because of a ruling that a cutoff would be illegal. The power company and the government folded.

The number of non-payments was sufficiently large that the main power company nearly collapsed, requiring a government bailout to keep it "afloat." One commentator opined that the new drachma will be IOUs, as the currency of the street so that Greece can retain the euro as the currency of the bankers. That suggests that the grey economy might get its own currency.

Comment:  The government hoped to raise nearly Euros 2 billion in back taxes. The program backfired.

Administrative Note: NightWatch thanks Readers for the many feedback notes received this week.

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