The President's Daily Brief - PDB Situation Report | April 26th, 2025: Inside China’s Struggling Economy & Kashmir Attack Sparks Crisis Between Nuclear Rivals

Episode Date: April 26, 2025

In this episode of The PDB Situation Report: The U.S.-China tariff war continues to simmer. Washington floats the idea of cutting tariffs—while Beijing warns the world not to strike deals with America at its expense. Christopher Balding, a leading expert on Chinese financial markets, joins us to break it down. A brutal terrorist attack in Indian-controlled Kashmir leaves 26 civilians dead. Now, tensions are rising between India and Pakistan—two nuclear-armed rivals. Intelligence analyst Siddhant Kishore explains what’s at stake if this turns into something bigger. To listen to the show ad-free, become a premium member of The President’s Daily Brief by visiting PDBPremium.com. Please remember to subscribe if you enjoyed this episode of The President's Daily Brief. YouTube: youtube.com/@presidentsdailybrief Learn more about your ad choices. Visit megaphone.fm/adchoices

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Save on the stay. Oh, and free waffles are yours to claim. Book direct at storesotails.com. Welcome to the PDB Situation Report. I'm Mike Baker. Your eyes and ears on the world stage. All right. Let's get ourselves briefed.

We'll start things off with a look at the still simmering, it's simmering U.S.-China-Terif War. You've heard about that, haven't you? New threats, stock of tariff cuts, and a whole lot of posturing. Some might call it voging, but not much progress. We'll speak to a leading expert on the Chinese economy and financial markets, Christopher Balding, about the latest. Later in the show, a deadly terror attack in Indian-controlled Kashmir leaves 26 dead, and now India and Pakistan are trading threats, and that's not a good thing.

Two nuclear-armed nations now on a collision course. Intelligence analyst Siddent Kishore joins us for more on that. But first, today's Situation Report Spotline. The U.S.-China-Therr remains at an impasse despite both sides expressing openness to dialogue. This week, China issued a stern warning, get this, to countries considering trade agreements with the U.S. that might undermine Chinese interests, threatening reciprocal countermeasures. That's rather bullying of them. Meanwhile, the Wall Street Journal reports that the U.S.

White House is reportedly contemplating significant tariff reductions on Chinese imports, potentially slashing rates from 145 percent that's quite the tariff to between 50 and 65 percent in an effort to de-escalate tensions. President Trump has indicated a willingness to negotiate, but insists that any tariff cuts would depend on reciprocal actions from Beijing. However, and there's always a however, China has denied that any negotiations are currently underway and is demanding the removal of all U.S. tariffs as a precondition for talks. As both sides dig in, markets remain jittery, as you might imagine, swaying on speculation rather than substance. My next guest has a very interesting history with the Chinese Communist Party, the CCP. He was a professor at

Peking University's HSBC School of Business until 2018. That year, he was fired for criticizing the government censorship. Christopher Walding is currently a senior fellow at the and Rejection Society, and he joins us now. Christopher, thanks very much for joining us here on The Situation Report. Thanks for having me, guys. Well, let's start with the situation back in 2018. Talk to us a little bit about your experience there. That was actually, you know, I was, it was actually started for me in 2017, and I was,

we were staying with friends and I just happened to tweet out that there were some academic journals that were actually censoring some of their material in China at the request of the Chinese government. And I tweeted it out. And it went mini-biral. And so there were newspapers all over the world picking up that academic journals were censoring academic articles in China at the request of the Chinese government. And needless to say, that did not sit very well with my bosses in Beijing.

And so basically later that fall, I was basically informed that my services were no longer required. And, you know, I had a family and children that were actually in school, you know, attending Chinese language schools. And we thought about leaving immediately, but we decided to wait out the year and left China. Was it left at that? Was there any other pressure or concerns that you had? Or was it simply, look, here's your walking papers. I guess I'm surprised in a way that they didn't show you the door immediately and say it's time for you to go. It was one of those situations, to be honest, that you could absolutely see, you can see China changing.

I mean, actually, when it actually happened was actually at Xi's second inauguration. It was like a week after. And the way it works in China is they hold all these meetings, you know, all. the way down the power structure. And so it actually, I actually, the decision to fire me got made at the time of she's second election. And I say that only because the decision to release me to fire me was taken well above any of my immediate superior's head, first of all. And then second of all, it was one of those situations you could clearly see China change. It was one of those decisions I knew was bound to happen at some point, I was going to leave, I was going to leave

China in, you know, at some point in the not too distant future, it was just a question of when. So it was not surprising. And I think the reason they didn't make something happen earlier is they just, they were smart enough to not want to draw attention to my leaving at the time. What do you mean by you could see China changing? So she was first elected in 2012. and I left in 2018. And I first started getting hints that there were major changes underway in probably 2014 from colleagues. And even, you know, even the what I would consider, you know, pro-CC colleagues that I had. And I had colleagues that ran the gamut from, you know, Chinese, Chinese colleagues that were borderline libertarian,

all the way through to hardened CCP members. And even the CCP members that I knew, they were concerned about norms that were being violated and how much China was changing and how power was being used internally and really cracking down and changing. I think of China that many of them who were younger had really come to know as, okay, we're communist, but we still have an openness, a degree. of openness to the world and how much that was changing. Okay, that's really fascinating.

Let's shift gears a little bit. Obviously, the tariffs, the trade war with China has been front and center in the headlines. And I think, you know, typically what's been happening is, you know, because of the way that news stories tend to be structured, right? Here's three minutes. We're going to tell you everything you need to know, right? It's a little bit difficult. But typically, you hear often, well, China won't be able to withstand this because, you know, their export dependent, their economy is, you know, won't be able to withstand a sustained trade war.

Then it stops, right, because typically news stories don't have time to get into details. But what I'd like to do right now is have your perspective on China's economy and their ability to actually sustain. a trade war with the U.S., can they, can't they? And from your perspective, if we look at the Chinese economy, maybe focus on what do you think are the biggest weaknesses? Where are the points of leverage from a U.S. perspective? I think, first of all, thank you for taking the time because there's a lot more depth in detail, both about, you know, what we see in the news and then the different approaches that you can possibly take. So, first of all, I think it is, it is.

As you note, it is very important. China is remains a very export-dependent economy. Depending on the exact numbers you use, you know, China has a trade surplus of upwards of a trillion, upwards of a trillion dollars. Which by any number, I don't care how you slice it is an absolutely huge number. So to say that they're not export dependent just isn't reality. And I think what's important as we look at what's happening now is to go back and look a little bit as to what happened with the first Trump administration when they signed a deal, when they put tariffs on and then signed a trade deal with China.

Basically, what happened at the time was they put Trump one put tariffs on China and actually the U.S. trade started to leave a lot of China. Actually, after China, I went to Vietnam for two years, and I can tell you, Vietnam was going absolute gangbusters. I mean, they simply couldn't build factories as fast enough. I mean, they couldn't build electrical lines fast enough. The ports were just absolutely slim. They were building port capacity as fast as they could.

And so we actually saw go to Mexico. I think Mexico is now the second largest trading partner or the largest trading partner of the United States. So we saw a lot of that trade leave China and go to other destinations. But at the same time, there were two things that happened. First of all, and this is the smaller part. I'm going to start with the smaller part. The first thing was businesses sprung up to what we call transship.

And transship is basically in trade economics. All that means is there's going to be a mostly finished Chinese product. It gets shipped somewhere, and then it gets re-labeled as made in Vietnam, made in South Korea, made in Mexico, made in Mexico, made in Vietnam, whatever, it has to have a significant degree of work done to that product. But of course, China cuts a lot of Chinese exporters either do it illegally or they cut it as close as possible. And so, and I mentioned that because one of the things is, is we saw,

We saw large amounts of, we saw not insignificant amounts. And I say insignificant amounts, let's say 10 to 20% of trade, I'm going to be a little bit liberal, 10 to 20% of trade that we see going through Vietnam or Mexico is probably mostly Chinese made and has either little, if any, Mexican or Vietnam worked done up. Okay. So when we ask, and people ask, well, why are we slapping tariffs on other countries? one of the things we want to do is we want to cut down on this practice of it's really a Chinese product, but it's getting labeled made in Mexico or made in Vietnam. And one of the things that's important about this is what the Trump administration is actually saying to the government of Mexico, the government of Vietnam is, when we're buying a made in Mexico labeled product, we want it to be made in Mexico by Mexicans, by Mexican companies.

Now, to me, it's a no-brainer that that should be an easy sell to the Mexican government, to the Vietnamese government. But that is one of the battles that he's facing. The second part is, think of the world economy like a balloon, okay? And so if, so what you saw was when the Chinese government or when the U.S. government put tariffs on China, actually trade with China, imports from China, decline significant. Okay, quite significant. But the Chinese trade surplus went up.

So what actually happened? What happened was is the Chinese government, because their export dependent, they still needed to sell their products around the world. So what happened was is we bought more from Vietnam. We bought more from Mexico. We continued to buy higher levels of goods from other countries. But what happened was is China sold more to those other countries. Okay. And so the Chinese trade surplus went up. So one of the, and that's actually accounts for about 80% of the change in trade with China and other countries.

Okay. So actually, China runs a trade surplus with pretty much with pretty much every part of the world quite significant. Before U.S. tariffs in 2018, it was basically in simple terms. This isn't exact, but it was large, China was largely running a trade surplus with the United States and small surplus pluses or balanced trade with most every other place. Now, China is running very large, very significant surpluses with pretty much every place in the world. Pretty much. And there's a couple of places that doesn't apply to, but they're typically smaller in mineral oil exporting type of countries.

And so basically what part of the pitch to other countries, as people ask the question, well, why are we putting trade tariffs on these other countries is we're saying, look, we're going to tariff. And if you want to work with us, you could be part of the American block or you can be subject to basically China cannibalizing all the industry in your country. It's interesting because, you know, you're getting this response from China, which I think, I, I, I, I don't know whether it caught the White House off guard or not, I suspect not. But, you know, now you've got the Chinese reaching out to other nations saying, hey, think twice before you cut a deal with the U.S. So they're saying, think about whether you want to be part of the China block. I mean, it's a fascinating moment in our relationship. And I've got, let's see, oh, several pages of questions left for you, Christopher, but we have to take a quick break.

So if you'd stay right where you are, then we'll be right back more of Christopher Balding. and the situation report. How many discounts does USAA auto insurance offer? Too many to say here. Multi-vehicle discount, safe driver discount, new vehicle discount, storage discount, legacy. How many discounts will you stack up? Tap the banner or visit usa.com slash auto discounts.

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Sign up for your $1 per month trial at Shopify.com slash special offer. Welcome back to the Situation Report. Joining me once again, as we talk about China, the trade wars and all things tariffs, is Christopher Balding. He's a senior fellow at the Henry Jackson Society and an expert on the Chinese economy. Christopher, thanks for sticking around, by the way. I appreciate that very much. Let me ask you this. When it comes to economic reporting out of China, from your perspective and your experience, how much of it is accurate, how much of it is creative accounting, and how much is

just outright fabrication? I think that's an interesting question. When it comes to the data, I think it's very, very clear that it is all, their data is basically all fabricated. You know, when I was living with Chinese data on a daily basis, you could literally see them go back in and make changes week to week. And, you know, as a simple example, a lot of economics works in a lot of economic data should work in a pyramid type structure where, you know, it's kind of like one plus one equals two. at a low level of data. And you work and you go, oh, well, two plus two equals four. And you kind of can build up to, okay, well, these are, these are what final numbers. Well, it would not be uncommon.

And we saw an example of it this year in China where they reported very robust growth for, you know, the year of 5%. And somehow tax revenue declined 3%. I mean, that's a gap of 8%. And they seem to be going in opposite directions, okay? And, you know, there were times you could go in and literally see them making changes in data day to day. So when it comes to the actual data, it's simply not trustworthy. When it comes to the economic reporting, one of the problems that is very accurate in a lot of reporting is that, you know, I don't know.

There might be one or two outlets that still actually have reporters in China. but all of the reporting that you're seeing done is being done from New York City. And there's probably of any reporter that I know of that is considered on the China economics beat or the China beat, there's probably only a couple that have what I would call any type of depth of connection in China about, you know, of just people they can call on to say, hey, tell me, what do you know? And so it's actually, I think it's giving, and I'm not saying intentionally, but I do think it definitely is not giving an accurate picture of what is going on in China. And, you know, to be fair, China has kicked out basically all the reports.

So it is, it is hard for sure. Yeah, no, I take your point. It's not intentional on the part of the people covering it. The report is covering it from outside. it's certainly intentional on the part of the CCP. And that's a real combination, right? If what you're saying is, look, the data isn't trustworthy and there's no transparency from the outside, you know, then that begs the question for Western companies looking to do business in China because I think, you know, the Chinese market, grabbing the Chinese market has always been sort of the holy grail for a lot of multinational. But if you can't do any proper due diligence, you know, what are you building your business on?

No, that's exactly correct. And in fact, China has even, China has basically even made it illegal to do due diligence. So, you know, like if you were thinking of setting up a China business or a China subsidiary, you know, there are, you know, everything from consulting to security firms that you would say, hey, I need to do diligence report on this site or who my joint venture partner might be. And, you know, technically and really pragmatically, those are illegal now. I mean, think about that. It's basically illegal to do, you know, a background report on whom my joint venture partner is.

I mean, in most of the world, that would be almost, you know, that would be considered crazy. But that's the reality of China. So, you know, it's still is baffling to me to address. degree why firms do that. You know, one great example, there was a study about a year ago. China said that they were, you know, working to become compliant with IP laws. And even 90%, even the government office in Beijing in charge of IP laws, they were using pirated Microsoft software. Okay. So it's, it's, you know, and so you saw similar numbers about. the number of pirated Microsoft copies throughout China. And so even a company like Microsoft,

it's like, look, I understand why you would want to get into the market. The reality is that you're not going to and you're not going to make any money because there's so much pirated software. Now, looking at the current conflict, right, the trade war that's going on and the tariff back and forth and retaliatory measures taken by the Chinese government, look, you've said before, I think, paraphrasing, that China is heading for serious trouble. So what does that look like? I mean, where do you think they're heading? I had very interesting conversations just recently with some folks, very smart individuals

who are like, look, China is on the rise. And their point was, you know, we believe that the U.S. is on the decline. So at some point those two countries collide. But is that your perception or are we getting it wrong when we think somehow that China is ascending? The way that I would put it is this way. Let's back up and say, how does China view itself? China as the word in Chinese is frequently translated as Middle Kingdom. And that is technically accurate.

That is technically accurate. But it does not mean middle in the way that most of Americans. Americans or Westerners would think of it. And, you know, when we think of middle, we think of almost like the middle seat in an airplane rub, okay, where I don't get the aisle, I don't get the window, I'm in the middle seat. But that's not what it means in China. You know, what you do get, Christopher, you get both armrests, right? That's just airplane etiquette.

I'm just telling our people who get all our viewers, you got to remember that if you're in the middle seat, you got to claim both those armrests because that's your right. That's your God-givor. You got to tell it. I digress. Yeah. Middle and Chinese means something much closer to the, like the middle of the universe, around which the rest of the planets rotate.

It's almost more like the sun, okay? And the planets rotate around the sun, okay? And so the reason I mention that is, is it's not just that China views itself as ascending in power terms, either an absolute or relative power terms. It is that China views itself as returning to its central place of primacy in the world. Okay. So it's not just that it's ascending relative to the United States. It's not just that, hey, we're getting bigger.

It is that we're returning to our place of primacy as the center of the universe, I think, is a better way to think about it. So when you think about, well, and now let's move forward, but still, you know, not quite up to current history. China has been preparing for this decade and probably the, you know, the next few years for many years. And one of the things she wanted to do is and put in a plan. And this started roughly a decade ago and you don't hear the term used anymore. But he put in place something called Made in China 2025.

And basically, he wanted to remove Chinese departments. dependency on technology and other sources from around the world. Okay? Whether it was, you know, certain metals or whether it was, you know, U.S. chips, all kinds of, all kinds of different things that he viewed as, as potentially a choke point that others could use against China. And so, you know, we've seen, you know, just this week that China's rolling out new parts of its global payment system.

Okay. So they really targeted addressing all of what they saw as their weak points on the global stage. And so that kind of, I would say, brings up to the current history. Why are they doing this? Chairman She put in basically earlier this decade, late last decade, told his generals, we want to be in a place where in 2027, we continue. take Taiwan. Okay? Now, I'm not saying he will try to take Taiwan by force. I am saying you can clearly see that these things are not necessarily different, okay? That they're not necessarily

running on independent tracks. And whether it's Taiwan or whether it's those other issues, she has clearly put a lot of thought and effort in it. So what is the current state of the of the economy. I think it's very clear. And to a degree, we're going to people, reasonable people would argue over this. But I think just about everyone would say that the Chinese economy is not strong. Okay. We might argue over what degree of not strong or is it potentially even contracting, things like that. But I think just about everyone would say it's not strong. And at that point, you get into all kinds of, you know, well, what if, you know, what if exports decline, you know, because it is an export dependent economy? Is it, would this possibly push him to act on Taiwan,

you know, other issues like that? But I think you see all of these issues kind of coming together. I take your point. I think, you know, once you get beyond, okay, it's not strong, then in part due to the lack of transparency, a lot of it becomes speculation. And then you're also talking sort of the soft science of, okay, well, how will they react into, you know, that situation? And, of course, the focus has always, well, recently been on, you know, what's their timeline and what will the scenario look like for Taiwan. Let's talk about the tariffs if we could. Just briefly, the time that we've got, there's been some reporting just over the past 24 hours or so from the F.T. and a handful of others that, you know, there may be movement from the Chinese side

to reduce tariffs on U.S. goods. And that comes in the wake of the White House, President Trump, indicating that he could be considering slashing the existing tariffs of whatever, 145% for the most part, in half or more. Have you heard anything about that? Have you heard anything about a potential move? Because that could signal, okay, let's dial all this. back. Let's try to find some reasonable ground here. Have you heard anything about that or do you see any other indications that the Chinese regime may be looking to dial this down a little bit? I think you have to define what you mean by the Chinese dial down. And what I mean by that is, I think they've made their position pretty clear so far in that if Trump takes off the existing

tariffs, they will talk. And of course, you know, that's their public posturing. So, you know, if they were offered something that pleased them that didn't go all the way that, you know, they might bend. But so far, their public position has been, you take off the tariffs and we are happy to talk. And, you know, just before I got on here, I saw that there were reports that President Trump this morning was asked, have you talked to China? And he says, yes, she called me. And the Chinese Ministry of Foreign Affairs quickly jumped on. said, no, there's been no talks, there's been no conversation. So it's, I think one of the hard things is, is to know exactly what the, what the reality is. I think, you know, as a simple example, at 145%, that's effectively a trade of bargo is what that is. It would not surprise me to see, you know, President Trump roll those back to, say, 50, 60, 70%, and, you know, gets a degree. of rejoicing because it wasn't 145%. Sifting through all the noise to get, you know, what is going on is, I think is very difficult right now. And I do kind of sympathize with journalists in their reporting

because you can see that there's lots of posturing and sometimes it proves true and sometimes it does. Yeah, and your point is absolutely correct. I've got years of experience with this particular point. And that is that you were talking about due diligence and, you know, how difficult it is. And in China, you know, doing a normal business intelligence review of a company, an entity, principles, that sort of thing, anywhere in the world is basically out of the question in China because they do consider it to be classified information. So, you know, that then opens up a world of hurt. So, again, without that transparency, without the clarity of their economic.

situation. Yeah, I think, you know, your point is correct. I guess the problem is that it speaks to sort of the strategic thinking of the White House, because unless they've got some crystal ball, unless they've got some in, you know, some much more accurate intelligence on the economic condition of the Chinese society, I, you know, I don't know if, you know, were if we're approaching this with the information that we need to be thinking through it in the long term or whether we're just throwing things at the wall and seeing how the Chinese government reacts. I don't know if that makes any sense. That was not particularly eloquent.

But then again, Christopher, I'm not known as being particularly eloquent. Well, I can tell you, you know, when I lived in China, there was kind of a joke among the expat community. and it went in China, there are a thousand ways to say no, including many where they say yes. Okay. And the basic idea of this was China has many, many ways that they can basically not make something happen, and including sometimes where they say, yes, let's do that. And then, for instance, they never call you, okay? And so it's frequently intentional.

And I can tell you when I had to do negotiations, I developed a very simple, a very simple rule about whether or not it was worth my time to negotiate or pursue something. And it was very, very simple rule. And you could tell almost in five minutes if something was going to happen. And it was if you approach to negotiation or a situation where you needed something, if they wanted something to happen. The guy who made the decision would snap his fingers and it would be done. Like, you could see instantaneous action. If they didn't want something, they would say, sure, talk to my secretary or whatever. And then the secretary would turn you over to the intern and then the intern would drag you out for a week or two.

And then you'd work your way up to the secretary and then the secretary would just go around in circles. And so one of the things that I, you know, there's even right now, something that isn't really, being reported on is Trump wants to is insisting I get on the phone with she and we hammer this out, we get a deal. She is saying, I want to turn you over to the junior, junior, junior vice ministers and we'll start there and then those guys will negotiate for a couple of months and then we'll work it up to the junior vice minister level and those guys will negotiate for a couple of months and on and on until, you know, maybe in a couple of years we get something between you and me. And so even in how they're approaching the negotiation, you can see a very different approach and a very different focus.

And I suspect a lot of this on the Trump side is driven by what he learned in term one. And if you remember, he put on tariffs two years into his administration. And he announced the deal, I think it was in like January of 2020, where China was going to start buying more, the phase. the phase one deal. And so I think he basically learned a lot about dealing with China in the first go-round. And so I think that's why neither side is really all that interested in changing at the moment. No, I think you're right. It's a really interesting point that you're raising. And, you know, you look at the styles, the mindset, sort of the traditions. You look at President Trump in the White House. He seems, you know, he's very transactional.

right? I mean, a lot of what he talks about is leader to leader, as opposed to this phased approach that I think can be frustrating, perhaps, for him at times. In the time that we've got left, and it's not much, I apologize for keeping as long as we have. But if you had to say in 60 seconds or less, the weakest link, the weakest part of the Chinese economy, what would it be? What they're concerned about is the uneducated migrant workers in the big cities. And a lot of those migrant workers are in export focused sectors and industries. You know, I lived in for nine years in Shenzhen. And, you know, within two hours, you could drive, you could literally drive, you know, within a one to two hour drive. And literally, I mean, any product that was made that was needed anywhere in the world, it was called the factory workshop of the world for a reason. And there are just tons of migrant workers. And you could see them working and to be honest, they stuck out like sore thumbs.

Those are the people, those are the people they're worried about because those are the people that will gather. Those are the people that are, I think, would be frustrated. They're not worried about the people that are being interviewed by Bloomberg or the FT about the state of U.S. China trade relations. They're worried about those migrant workers that don't have jobs and they're in export industry. Because the tariffs basically shut down factories and shut down the ports, ships aren't moving, containers are stacking up? That is correct, yes, because a lot of that work, you know, people always talk about the great technological advancements, but a lot of the fact, a lot of the work that's still being, a lot of the products that are still being shipped are still labor-intensive, you know, dirty type of factories, whether it's, you know, whether it's, you know, just bath towels or whether it's, you know, different minerals and stuff like that, that is still heavily labor intensive. And, you know, those people being unemployed, that is, that's what

they fear more than anything. The potential for social unrest. Absolutely. Interesting. Well, I've got a lot more questions for you, Christopher, but we've run out of time, unfortunately. And I do hope you'll come back when we give you a shout because what I'd love to do, as this trade war with China shakes out, have you back on so we can discuss either the aftermath or the ongoing problems. Christopher Balding of the Henry Jackson Society, listen, thank you again for joining us and for all your insight. Very much appreciated. All right, coming up after the break, a deadly terror attack in Indian-controlled Kashmir leaves 26 dead, and now India and Pakistan are exchanging threats. Oh, good, that's what the world needed,

more tension and more conflict, and they're edging toward a dangerous potentially showdown. Intelligence analysts Sedan Kishoreh joins us next to give us his insight. Starting a business can seem like a daunting task, unless you have a partner like Shopify. They have the tools you need to start and grow your business. From designing a website to marketing, to selling, and beyond, Shopify can help with everything you need. There's a reason millions of companies like Mattel, Heinz, and all birds continue to trust and use them. With Shopify on your side, turn your big business idea into sign up for your $1 per month trial at Shopify.com slash special offer.

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Some follow the noise. Bloomberg follows the money, whether it's the funds fueling AI or crypto's trillion-dollar swings. There's a money-side to every story. Get the money side of the story. Subscribe now at Bloomberg.com. Welcome back to the Situation Report. troops from Pakistan and India exchanged fire on Thursday night across the line of control and disputed Kashmir. It's the latest escalation between the two nations since a brutal terror attack in the

Indian-controlled part of the region left 26 people dead earlier in the week. Now, while Pakistan has denied any role in the attack, India is responding aggressively, closing its main border crossing, expelling Pakistani military diplomats and suspending, and this is important, a key water-sharing treaty between the two countries. According to Indian intelligence sources cited in local media, the attack may have been carried out by the Resistance Front. It's a shadowy group tied to the Pakistan-based terror organization, Lashkari Taiba. Joining us now to break it all down is Middle East security researcher Saddam Kishore from the Institute for the Study of War. Sid, thanks very much for joining us here on the Situation Report.

It's really appreciated. Thank you, Mike. I'm glad to be here today. Excellent. Listen, let's start from the top. How close are we to seeing a conflict between India and Pakistan? I mean, obviously, two nuclear armed nations, they've been to war before. How worried should we be over this? Perhaps this is a matter of extreme sensitivity, Mike, and I'm glad that you brought this up.

because people and analysts, especially in Washington, are not really ready to understand how important this conversation is going to be. The reason being, it's not just because two nuclear-armed countries are about to have one of the largest military standoff in South Asia. But the reality is we are fairly close to have a good amount of military engagement between both countries. As we speak, the Indian chief of army staff, General Oedi, has already reached the line of control, And we have seen significant amount of engagement around the border overnight. We saw the Pakistani border security forces violate the ceasefire. They have also scrapped the line of controlling agreement that existed after the 1970-1 war, which perhaps completely scraps out any ceasefire agreement between both countries.

So this creates a significant advantage for India to continue or further increase its military engagement on Pakistan. So there are a few coars or courses of action that I resume Indian Army and Indian Armed Forces are going to take. Number one would be extensive airstrike across the border that would definitely alarm some of the Pakistani, some of the Pakistani air defense systems in the region. Perhaps F-16s can be scrambled by the Pakistani Air Force. This is exactly the situation that played out in 2019 after Bulwama attack. 40 Indian soldiers were killed by a V-Bid attack, a vehicle board improvised explosive device, Doff getting 40 Indian personnel, and after that, India launched a series of airstrikes on Pakistan. Well, the damage and the casualty assessment remains unclassified, remains classified till

date from the Indian side, but we know for a fact that was a significant strategic blow to Pakistan. Similarly, in 2016, India launched a ground operation into Pakistan after another similar attack by Pakistani terrorists, and that attack also did not receive any significant response from India because India conducted surgical cross-order rates, but that did not able to restore any sort of deterrence. This time, the situation and the calculus is very different in the Indian information space and also in government. This time, people want to see significant casualties, both in uniform and without uniform, in Pakistan. That puts extreme amount of pressure on the Indian government to have a reaction that matches that threshold, that crosses the previous

threat tools that we have established to restore deterrence. When I say restore deterrence, I think this is the time when India needs to create a new deterrence all of a sudden so that it creates a reverse psychological impact on upcoming Pakistani generations that enhances our credibility and restores the fear of a massive, massive robust Indian response. So in terms of escalation, we are going to have significant escalations in the border in no less than 48 hours from now. I want to kind of take a step back and look at this particular incident. In the immediate aftermath of this attack, the Indian government was obviously very quick

to accuse Pakistan. Have you seen specific evidence presented by the Indian government, the authorities, to back that up? So there was a report that came yesterday in which intelligence agencies have given reports to journalists that suggest that they had intercepted direct communications between the terrorists who conducted these attacks and their handlers in Pakistan-occupied Kashmir. So there is no hidden fact behind this that it was a Pakistan orchestrated state-sponsored terrorist attack, just because we may not have a concrete data point as of now that connects this attack directly to the Pakistani government,

but there are a few things to understand here. Number one is that these attacks come at a very sensitive time in Pakistan, when we know for the fact that the Pakistan military is increasingly unpopular among its own population. Pakistan army has not been able to prevent significant terrorist attack in most of its provinces across Western Pakistan. They have failed to control the Taliban Pakistan, TDP. They are able to control the Baloch insurgents because we had a recent hijacking of a train, something which has never been picked up properly on Western media just because that happened in Pakistan. Apart from that, the Pakistani army is also very well known for its orchestration of state elections. So we know for the fact that this time Pakistani army is being

extremely unpopular. A week ago, the Pakistani army chief gave a very communal speech, very incited the two-state theory, and also called upon Kashmiri militants, Kashmiri terrorists to act upon, and that Pakistan would never leave them alone. This attack also happened at the time when the Prime Minister of India was in Saudi Arabia during a state visit to the the holiest Muslim nation. This also happened when, let's not forget that Vice President J.E. Vance was in the country. So this created a very good advantage for the Pakistanis to act when it knew the situation in India is sensitive, where India is vulnerable, and that's the time they struck. We do not need a confirmation from either side that this was a Pakistani state-sponsored attack

because the history suggests and we have interception of communications. And it is a matter of time when the real cells will be revened when the real connection would also be unfolded, because for now, we have identified at least three of the five terrorists who conducted these attacks, and it is reported that at least two of them who have not been identified actually infiltrated from Pakistan and have their origins in Pakistan. Talk to me, Sidip, if you could, about, let's give an overview for our viewers of the two key groups here that have surfaced, and I think, you know, a review or a summary of who they are. the ties to Pakistan that India alleges.

I mean, all of this would be important to understand. But Lesgari Taiba and the Resistance Front, if you could give us an overview of these organizations. Sure. So, Lashkarah Taaba is a group which was long form during the initial Kashmir insurgency around 1990s. The leader of Saeed is the founder of this organization. Lashkarah Taiba is a militant offshoot of its major political,

political arm which is called the Jemadha J&D, which is also a Kashmir, Pakistani-based Islamist organization. As far as the ideology of this organization is concerned, it is what we classify in the ICA as an SGA group, the Salafi jihadi Islamist organization, which is not restricted to any geographical borders and want to expand its influence of Islamist ideology across the border. The idea is to use Kashwiri, so-called Kashmiri resistance to propagate communal violence, to propagate minority, to conduct attacks on minorities, and in fact wage a war against the state of India. And to certain extent, they were also been very influential in terms of putting some psychological impact on the Indian population, which is also a byproduct of what is actually

do in this country, or in general in any part of the world. Secondly, the same group has also been accused of conducting several attacks against Indian soldiers and also in civilians, the move by 2008 attacks that happened in which more the 160 civilians were killed. That was also a responsibility that was claimed by Lashkar-et-Daiba. The group that's claimed responsibility for this attack, the resulted in 26 deaths, the resistance of front. They've claimed that their motive essentially was that the Indian government is trying to change the demographic. Exactly. By moving in.

Okay. So include that if you could in your overall view. Sure, absolutely. That was the basic motivation was. 100%. 100% Mike. That's a really important point that you picked up, how these organizations are projecting their claims and how they are representing their ideology.

That's absolutely correct. The TRF has claimed that this was attack against Indian government's attempt to change the demography of Kashmir. So a little background to that is that in 2009. The Indian government passed a few laws that abrogated special autonomy given to the Kashmir state, Jambu and Kashmir. So this organization that a system is front, people call it an offshoot or a proxy of Lashkir-T-T-Ovah-L-E-T, but I would rather say that it is in fact a unit, a special forces unit within L-ET which works on a hybrid module by a true T both internally in Kashmir and externally from Pakistan.

So this organization came into existence after 2019. One aspect of removing that special autonomous power given to the state is that Indians from the rest of the country are now eligible to buy properties in the province in the state. The idea behind is not to change the demography or to resettle or to change the minority composition of the country, but the idea is to increase economic opportunities in the country and bring investment from the rest of the country into Kashmir. perhaps mainstream the state into connecting to the heartland of the country. To certain extent that has worked phenomenally for this for the state. But how the other Islamist organization view it, that it is a way in which the Modi government wants to resettle Hindus back into the province,

but that is not the fact. So this is how they frame them, how they frame, how they gather popular support. Because let's be honest. No, no, this scale of terrorist attack cannot happen without a very robust network of local. support. We have seen evidence, we have seen in previous attacks. There is, there are groups, there are local communities, there are local shepherds that actually help them conduct these attack that allow terrorists to conceal their weapons, help them with logistics supply, helps them help them with communications and things like that. So these are the weak points

that terrorists exploit. They brainwashed the people in their support zone. They brainwashed them educating the end falsely putting this doctrinal education into them that, hey, listen, this is the government trying to change the demography. Now, you need to fight for your religion, you need to fight for your identity. Because let's not forget, all the people who were killed in the attack were singled out based on their faith. They were asked to show their ID cards. They were asked to strip naked to confirm if they're Muslims or not. Based on that, they were shot dead. So let's be very clear about the communal angle of this attack. That's very interesting. That's very interesting. I don't think that has surfaced in other media reports.

It made it sound as if it was just, you know, they walked out into a meadow. I believe the reporting was seven gunmen and just open fire in sort of a random fashion. But you're saying that they were actually checking identification cards, absolutely shooting those that they identified. Yeah, these are not something that is coming out of media. These are accounts of first-hand survivors and victims and individuals who were actually injured in this attack. Sid, if you'll stay with us, I've got a long list of questions for you, but we need to take a quick break. So if you'll stay where we are, and then we'll be back with more of the Situation Report and Sedanka Shore shortly.

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Your car, your timeline, your terms. Visit carvana.com to sell your car today. Carvana. Delivery fees and terms may apply. Welcome back to the Situation Report. Joining me once again is intelligence analyst Sid Kishore. Sid, thanks for sticking around. Very much appreciated.

Let's look at the aftermath of the attack and the moves taken by the Indian government and then retaliatory moves by the Pakistan government. Of all those actions so far, what do you consider to be the most serious, the most concerning? I think the most serious and most concerning is the dead silence that is right now in the military domain of the country. That has really freaked the Pakistanis out. They are so busy recalibating their thoughts, they are so busy. on pretending to be on really extreme high alert and they have no absolute assessment of what

exactly is going to happen. But that is one thing that has created a big psychological impact on the enemy on the Indian side. Let's talk a little bit about what responses have unfolded within the next 48 hours after the attack. So the attack happened on April 22nd. Now we are on April 25th. In these two days, India has taken a series of diplomatic actions which are nothing beyond SOPs. So to begin with, India has recalled some of senior staffer from the Pakistani High Commission, which is the embassy equivalent. India has scrapped off a very significant water treaty, which allows India to redistribute some of the water flow into Pakistan. Shutting this water sharing treaty creates significant water security into Pakistan that clearly damages the agricultural problems,

electric electric power grids are supplied by this water. They have drama, and they have of drammoxler structure which will not be functioning anymore because India has grabbed this article. Are you surprised Sid about the water treaty? I mean, my understanding, correct me if I'm wrong, please, but my understanding is that, you know, they've made their way through, you know, past conflicts without taking that step. Absolutely, that's right. Absolutely. Back in the time, the conflict, which was happening, let's say, in 1965 or 1971, they were some sort of discipline in this conflicts. There were two armies facing each other standoffs. There were no civilian aspect involved in that. The idea was not to target civilians and conduct a psychological operation

that completely, completely wrecks Indian population in a very significant manner. So I think this is a right step in the direction to make Pakistan understand that India unilaterally unanimously can actually take a step in the right direction and make Pakistan realize of its own insecurities. Pakistan as a country is economically very malarish, I would say that's the right word. It is not self-sufficient. It has China on its right side, Western countries on the west side, and it is clearly they have not been able to return any of the investment at any Western or non-South Asian country has made. So that creates a significant impact. Now, the fact that the Water Treaty is now being broken despite other large-scale conflicts just speaks to the fact

how important it is for India now to establish a renewed deterrence because this scale of terrorist attack has not happened in a very long time since 2008 in which more than $36 million have been killed. Other thing is that this is a new government. This government is known for its government is very popular for taking robust actions. Well, we can have another conversation about how influential or what the implementation of these actions are, how reliable, how useful they have been, but it is actually known for giving a very robust response, at least on the face value. So this creates significant shock phase not just in Pakistan, but also in the broader international community, because this water treaty was actually an international organization conducted and facilitated treaty.

but India was still able to call aside to, you know, just scrap it off individually. So, I mean, I'm going back to a comment that you made earlier in our conversation, which I think is really important, talking about the train hijacking. It was just in passing that you said it really didn't attract any media attention in the West. And I think that's correct, right? But the only discussions I had in the aftermath of that train hijacking were with Indian media. And I don't recall actually any major U.S. news outlets talking about it in any significant manner. You've got a long history, obviously, of conflict and tension between these two countries.

I go back to an earlier comment. Both are members of the Nuclear Club. That's important. It's not the only issue here, but it's an important. that kind of sits in the corner of the room. Where does this go? Do you think both governments are disciplined enough to walk this back in short order?

Or does this escalate? From your perspective, do you think this goes into a full-blown conflict? No, Mike, I do not think so. The reason being is because Pakistani army and the population in general are very well aware of their insecurities and their capabilities. Now, how I see it unfold, I would say it's an asymmetric escalation that India would definitely make attempts escalate into the conflict. But Pakistan, due to given its vulnerabilities, incapabilities and a group of diplomatic pressure that India will lobby in the future will pressure Pakistan into not reacting in the same momentum. So that's one thing that I would clarify here.

I do not see going it into full-blown war is because India does not need to do that. If you compare the military preponderance of both countries, Pakistan is a very significantly lower proportion compared to India. So that is one stated fact. Secondly, Pakistan has a history of being defeated despite several attacks that they themselves started the war. India has never started a war with any country. Pakistan started war in 65, 48, 99. 71 and since then they have realized that they cannot attack India in a full symmetrical manner. So since then they have gotten into this irregular hybrid warfare where the same people across the border and ask them to conduct these small and large-scale terrorist attacks.

So Pakistan understands that. Pakistan would not up the ante. India will actually do escalations. That's very clear. That is just a matter of time. But Pakistan is under certain diplomatic military and economical constraints that will prevent it from responding in the same manner. Let's go back to something else we discussed earlier was the links between Pakistan and this attack. And I take your point. But over just looking at the involvement of LAT, the resistance front in this and the claims of the Indies. government, but in your mind, is it important at this stage for the Indian authorities to actually present something more specific in terms of evidence for this link? I mean, would that,

I mean, my perception is that would be beneficial, right, in terms of stating their case. You've got to, otherwise you're looking at, well, there's allegations, and of course, they're always going to turn around and claim that it's the Pakistani government that's behind this. So do you think it's something? important for them to do that and do you think they will? I think it's a part of the process. I do not think that Indian government, as of now, is obliged to present evidence. The thing is, the reason is because it's a historical trauma within the people of India. Secondly, Indian media or Indian population of the government does not really take

Pakistani accusations or Pakistani considerations of the event very seriously. So their observations, their words are not to be taken very seriously in New Delhi, so that removes the owners from the Indian government to present any evidence directly proving Pakistan's complicity in this attack. Now, thirdly, it's a historical evidence-based analysis that people have always carried out. The people who were captured in 2008 attacks were all Pakistani citizens. They did not come from Barcelona or Madrid.

They were people who were actually Pakistani citizens who came into India to water waste. And then Pakistan also has a history of backing these groups. Several infiltration attempts are being conducted by Pakistani infiltrators, militants, and terrorists who actually have enough materials on them that Indian government classify as Pakistani military supplies. So you will see them having ammunition and weapons. You have an AK-47 with the labeling on it of Pakistani Ordnance Factory and things like that. is multiple evidence. These are still very small pieces, bits and pieces. But how we do not need like a superficial or a concrete communication memo or like something of that. So to directly

implicate Pakistan and Pakistani government participation in such a type because it is not just this incident. It is one small part of a bigger massive campaign that Pakistan has unleashed for almost three decades though. Okay. Yeah, I think that's correct. I see what you're saying, and I don't disagree. I just, I think, you know, going back to what we talked about in terms of the failure of perhaps the Western media to cover something like this or to understand, I think there

is a general perception perhaps in the West that you have something like this. And, of course, one side, when I'm talking about the Indian-Pakistan relationship, one side is going to accuse the other, the other is going to say we have nothing to do with it. So I suppose if I was advising the Indian-Pakistan relationship, one side is going to accuse the Indian-Rakistan relationship, one-s going to the Indian authorities, I would say, look, you know, package up specific presentation. If you've got comms that, you know, directly link Pakistani individuals and authorities or others to this, then, you know, package that up, present a, you know, a body of evidence, because I think that that is nothing but beneficial in terms of driving home the point.

Otherwise, you will have this perception that, okay, of course they're going to accuse the Pakistanis, of course the Pakistanis are going to say they have nothing to do with it. And then they move on. And I think it's too important to leave it at that for what that's worth. I'm sure the Indian authorities are saying, I wonder what Mike would advise us to do. But, like, see, no, actually, you have raised a very important point, Mike. I think this back-channeling that you have advised that Indian government must do, I think what they need is to present this concrete evidence and all the data points and comms

and intelligence that they have gathered that directly implicates Pakistan to the Western allies and partners. Because this is a situation in which India will need diplomatic support from the West. India will move it actually at least, at the very historical support that it is already getting, but this needs to come with a categorical calling out of Pakistan. President Trump has already expressed his condolences for this attack, but what actually we require the Indian government is to provide these set of evidence to the US government so that Donald Trump, President Donald Trump, could actually single out Pakistan and then they can threaten with several things.

There is a lot that the United States government can leverage over Pakistan in the situation, starting from cutting off military aid, cutting aid, civilian aid, cutting off, security waivers, threatening with sanctions, grain-listen into FATS, and so many other things that the government can do, both India and Pakistan and Western governments as well. So this is important, my thank you for raising that point. I think if India is able to communicate their concerns

and their evidence to Western allies, that would be super important. Well, Sid, I think you've hit on something that actually, I think is actually absolutely correct. I suspect already the liaison relationship, misinformation is being discussed. You know, the collection of evidence is being shared, I would assume, between Intel services. So you're absolutely right. There is always a back channel. Regardless of what we see in the press, you know, government to government that's out there in the open, you know, There tends to be a solid working relationship underneath that that exists, oftentimes,

between the intelligence services. So I suspect that sharing of information and understanding is already going on. Sid Kishore, listen, thank you. This has been very, very helpful, very informative, and we very much appreciate you joining us and sharing your expertise. And I hope that the next time we call you, you'll come back. Well, that's all the time we have for this week's PDB Situation Report. Now, if you have any questions or comments, you know, maybe you've got a joke or a humorous anecdote.

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