Islamabad, Pakistan – As US Secretary of State Mike Pompeo travels to the Pakistani capital Islamabad this week, with relations between the erstwhile strategic allies at a low ebb, analysts warn the road ahead could be even tougher for the South Asian nation.

Pompeo lands in Islamabad on Wednesday and will hold talks with the country’s top civilian and military leadership during a one-day visit, before continuing on to neighbouring India.

On Sunday, the Pentagon confirmed the US was moving to cancel $300m in Coalition Support Funds, a reimbursement payment to Pakistan’s military, “due to a lack of Pakistani decisive actions” against armed groups targeting US and Afghan forces in neighbouring Afghanistan.

The move was part of a sustained effort by the US administration to pressure Pakistan, after President Donald Trump cut more than $1.1bn in security assistance in January, accusing Pakistan of “nothing but lies and deceit”.

Pakistan denies it supports any armed groups, saying it has carried out indiscriminate military operations against the Tehreek-e-Taliban Pakistan (TTP) and all other armed groups that have operated on its territory.

The TTP’s presence in the country’s northwestern tribal districts, along the border with Afghanistan, has been severely degraded by a series of military operations launched since 2014, but the group still launches sporadic large-casualty attacks on Pakistani targets.

Pakistan claims the TTP is being offered safe haven in eastern Afghanistan, from where the group has launched several attacks on Pakistani forces.

The principal US complaint for years, however, has been that Pakistan has failed to act against leaders of the Afghan Taliban and the feared Haqqani Network who, it says, have been based in Pakistan for more than a decade.

Last month, tensions rose still further when Afghan President Ashraf Ghani accused Pakistan of supporting hundreds of Afghan Taliban fighters as they launched a raid on the eastern Afghan city of Ghazni.

Pakistani Foreign Office spokesman Muhammad Faisal, responding to the charge, said: “These are completely baseless allegations with no evidence.”

‘Crucial visit’

The Ghazni offensive, the first major Taliban assault on a city in months, and the timing of the aid cut mean Pompeo’s visit comes at a particularly sensitive time, as longtime Pakistani opposition politician Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party has just taken the reins of power, analysts say.

“This visit is crucial,” said Hassan Akbar, director at the Jinnah Institute think-tank in Islamabad. “It will set the tone for the new administration in Islamabad, regarding their approach to the United States.”

The timing of the visit, coming as it does so soon after Ghazni and the aid cut announcement, is also significant, said Akbar.

“While the Ghazni offensive failed to meet its objective, it has given a serious setback to the efforts at peace in Afghanistan, and has clearly demonstrated the weakness of the US’ recent Afghanistan strategy,” he said.

“We expect that they will be looking to put more pressure on Pakistan, to either cut ties with, or use whatever influence they feel Pakistan has, with the Taliban to bring them to the negotiating table.”

The signs leading in to the visit suggest difficult conversations will be had. On Sunday night, Pakistani Foreign Minister Shah Mehmood Qureshi warned that relations with the US had reached the point where they were “almost non-existent”.

“With the visit of the US secretary of state we have an opening and a beginning can be made, and we will try to build a consensus in areas of mutual interest,” he told reporters in Islamabad. “It is our shared objective to cleanse the region and the world of terrorism.”

‘No carrots, only sticks’

Zahid Hussain, a senior journalist and security analyst based in Islamabad, said Pakistan should not expect an easy set of meetings on Wednesday, particularly giving the timing of the $300m assistance cancellation.

“The message is clear, it is basically a departure from the previous administration’s policy of the carrot and the stick,” he said. “Now it seems that there is no carrot, only a stick.”

Hussain warned while the US may be prepared to take a more aggressive stance with Pakistan, it may be impossible for Pakistan to deliver on Trump’s demands.

“To expect Pakistan to fight the US war here on Pakistani soil may be expecting too much,” he said, pointing out many Afghan Taliban commanders are understood to have rebased themselves to Afghanistan from Pakistan, as the armed group’s offensive against the Kabul government strengthens.

For Akbar, too, the prospects for positive outcomes from Pompeo’s visit are limited.

“In the coming days, I think the situation in Afghanistan is going to get worse. And as that gets worse, I see the US likely blaming Pakistan for ‘not taking action’ against armed groups,” he said.

“It’s a bleak situation.”

Asad Hashim is Al Jazeera’s digital correspondent in Pakistan. He tweets @AsadHashim

The death toll from ongoing fighting in Libya‘s capital, Tripoli, has risen to at least 50, health officials said, as violence between rival militias rages on.

The health ministry said on Tuesday clashes between armed groups had also left more than 138 people wounded.  

The previous death toll stood at 39 people, including 18 civilians.

On August 27, fierce battles erupted in Tripoli’s districts after the Seventh Brigade, an armed group based in Tarhouna, 65km southeast of the capital, launched a surprise offensive against rival militias.

A truce was reached the next day but clashes resumed shortly after, forcing authorities to close Tripoli’s only functioning airport.

The UN-backed Government of National Accord (GNA) in Tripoli declared a state of emergency on Sunday.

Al Jazeera’s Mahmoud Abdelwahed, reporting from Tripoli, said the situation remained tense with sporadic fighting and indiscriminate rocket fire continuing to land in residential areas.

“Several attempts have failed to put a ceasefire in force since the clashes erupted on August 26,” Abdelwahed said.

“The Seventh Brigade whose commanders say it works under the presidential guard of the GNA was disavowed by the government in April.”

Facebook blackout 

On Monday, social media website Facebook was blocked in Tripoli and surrounding cities.

Libyan utility LPTIC, which owns the two state telecoms firms, said in a statement that a lack of security had led to outages. Maintenance engineers were unable to reach some stations which had stopped working due to a lack of power.

It did not address the Facebook issue.

Access to the web is controlled by state firms and monitored by security bodies which are effectively controlled by armed groups working with the weak GNA.

Independent national media based inside Libya scarcely exists as journalists often face threats from armed groups or officials unhappy with critical coverage

Libya slid into chaos after the 2011 uprising that overthrew and ruler Muammar Gaddafi and led to his death.

The country is governed by rival authorities in Tripoli and the country’s east, each of which are backed by an array of militias. 

Few challenges are more existential for Saudi Arabia than the need to wean its economy away from an excessive dependence on oil. The country faces two certainties on the external and domestic fronts: the excessive volatility of oil markets with its attendant consequences on the national budget and a growingly young and educated labour force (more than 50 percent of Saudis are below 25 years of age).

Saudi Arabia has traditionally bought social peace by distributing rents to its citizens through salaries, subsidies, and other welfare instruments. This social pact has become increasingly precarious in the midst of fluctuating oil revenues and expanding expenditure commitments at home.

It is in this context that Saudi Arabia’s Vision 2030 was hailed as a reformist intent, signalling a transformative move towards a post-oil future. A key plank of this strategy was the partial privatisation of Saudi Aramco through an initial public offering (IPO) of around 5 percent of its share in global markets. When the Saudi king recently pulled the plug on this international listing of Aramco, observers have started wondering about the fate of diversification.

Is there still hope for diversification after a central pillar of the Vision 2030 has fallen through? And, is Saudi Crown Prince Mohammed bin Salman’s grand vision still relevant and credible?

Diversifying without an Aramco IPO

The short answer is that it is still too early to write off the prospects for diversification in Saudi Arabia. Equally, diversification would have proven challenging, with or without the partial privatisation of Aramco.

Firstly, although Aramco’s listing in international stock markets has been called off, the national oil company is still planning to raise debt through its acquisition of a strategic stake in SABIC, the country’s petrochemical giant.

With its currently modest debt levels, Saudi Arabia should have little difficulty raising money through capital markets. The only difference would be that the cash would be raised in a roundabout way through bonds rather than equities.

Secondly, even if Aramco’s listing had gone ahead, it wouldn’t have solved Saudi Arabia’s diversification challenge on its own. While a centrepiece of Vision 2030 and despite all the fanfare on the original announcement, the Aramco listing would have only served as a wealth management strategy.

A helpful start, indeed. But diversification is a more serious and intricate development challenge in the context of Middle East’s oil exporters. Quick-fixes or stop-gap arrangements can only provide a temporary breather; they are no substitute for structural economic reforms.

To diversify its economy, Saudi Arabia would need a holistic development vision that recognises the fundamental inseparability of economics and politics.

Diversification is unlikely to result from a technical blueprint delivered by jazzy foreign consultants. For too long, the country has attempted to reform its economy in ways that neutralise the effect of such reform on politics. But the trouble is that any genuine shift in the country’s economic structure will produce political consequences, which neither the rulers nor the consultants they hire wish to confront.

For example, to develop a non-oil economy the regime will have to accommodate the prospect of a truly independent private sector, which can generate new pockets of economic influence whose power could spill over into the political domain.

It is precisely for this reason that authoritarian regimes in the Middle East are suspicious of outsized economic actors who could initiate political action.

This means that regimes only tolerate a private sector that is dependent and loyal. Firms recognise that the standard operating principle to survive (and thrive) is to partner with regime insiders either directly or through brokers and fixers.

The moment a business becomes successful or indicates a potential for growth, it is pressurised to “sell or go into partnership” with the regime’s frontmen. Firms thus face a binary option: partner or perish.

In this scenario, firms prefer to operate under the radar and avoid direct confrontation. When connections with the royal circle become the most valuable asset for firms, small young companies have poor prospects in the marketplace.

Challenges of private sector growth

It is little surprise, then, that the Saudi private sector is dominated by large established players or companies that are simply a front for powerful royals. And, it is usually these large connected conglomerates that benefit from state contacts through opaque procurement and licensing procedures.

With one of the largest construction industries in the Middle East, Saudi Arabia can unlock its economic potential through a systematic reform of this sector, which would involve making bidding procedures genuinely competitive.   

Connected firms also have privileged access to the two essential inputs private firms need – land and credit. Small firms face huge difficulties in accessing land, especially in peri-urban spaces where powerful families tend to leave land parcels idle in anticipation of capital gains.

Until recently, arbitrary land confiscations by members of the royal family were a common occurrence. This land is sometimes sold back to the government for implementing public projects, generating a handsome rent for insiders.

Public land registries are notoriously under-developed. And, when it comes to accessing bank credit, small and medium enterprises (SMEs) face a systematic disadvantage, receiving only about two percent of total loans.

Difficulties in land ownership mean that these firms lack the requisite collateral needed to secure bank loans. With oil-induced uncertainty affecting bank lending and large exposures to a few connected borrowers, commercial banks have limited room or incentive to offer intermediate credit to SMEs, a segment of economy that is most deserving of such capital.

As if entry and survival in the market weren’t hard enough, SMEs also find it difficult to exit the market as insolvency is exceptionally hard to resolve in Saudi Arabia. On this account alone, Saudi Arabia ranks 168th out of 189 countries in the 2018 Doing Business report.

This does not bode well for the forces of creative destruction that define a dynamic firm space where firms can enter, compete, or exit according to the diktats of market competition.

In the midst of these structural barriers, diversification will remain a pipe dream.

The politics of diversifying an economy 

To diversify, the Saudi government needs to introduce radical pro-competition reforms, make land markets more transparent, and de-couple markets from the stranglehold of connected actors and firms. However, any such reform is likely to have grave political consequences, since it will reduce or kill the rents that help to sustain the cooperation of royal elites and their influential business partners.

The larger point I thus wish to make is that a genuine economic open door (infitah) will create both winners and losers. In this context, diversification is not just about creating winners who have a vested stake in a reformed business environment; it also requires compensating losers who could potentially spoil reform efforts.

In East Asia, this was done by striking deals with rent-seeking groups who could throw spanner in the works. As famous economist Pranab Bardhan has argued, these deals were often backed by institutional arrangements to share rents with potential spoilers.

Such arrangements existed, for example, in Japan where potential spoilers in the Liberal Democratic Party were systematically bought off. In Malaysia, the Chinese business conglomerates brought prominent members of Malay political elites on company boards.

Extrapolating this to Saudi Arabia, could one imagine a bargain that keeps ruling clans out of business in exchange for higher royal stipends or in-kind rewards? 

To do so, however, would require an active recognition of the political fallout of economic reform and the creation of new bargaining structures that could balance the interests of reformers and spoilers, and nudge the growth trajectory towards a higher equilibrium.

Had the political fallout of an Aramco listing been worked out before and the buy-in from relevant actors secured in advance, the devastating blow to the credibility of Vision 2030 could have been avoided.

After all, it was clear from the outset that the valuation of Aramco was hugely over-optimistic and that an international listing would necessitate a more transparent disclosure and an opening up of Aramco’s books, something that would face political resistance. In the end, politics trumped whatever economic rationale lay behind the proposed IPO.

Going forward, rather than relying on flashy, big bang approaches to diversification, Saudi policymakers need to adopt a more grounded and constructive strategy for economic reform that recognizes the centrality of politics.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance. 

Berlin, Germany – Karin Hermes had just finished tutoring her 15-year-old Turkish German student when they started talking about racism.

Hermes, who is Filipino German, and the student shared experiences of the everyday racism they had been facing, discussing how bad the situation was in Berlin. 

They were interrupted. A trainee teacher nearby said that if they didn’t like it in Germany, they could go somewhere else.

“I was angry. I mean, that’s a person in a position of authority saying that to a student,” Hermes, 31, told Al Jazeera. “He yelled at us, as if telling us we don’t belong here and that we should go elsewhere. How does that attitude affect students?”

Hermes, a PhD candidate in American Studies, says experiences like this are common for German people of colour. 

She and her friend, 24-year-old student Farhiya Hassan, told Al Jazeera their personal boundaries are regularly crossed, with comments about their skin tone, knowledge of the German language and questions about where they are “really from” in social settings, workplaces or as they go about their day. 

The concept of a German nation is closely linked to whiteness. This is where we still are.

Elisabeth Kaneza, human rights activist

It’s a situation that Art Jannik Starkarat can relate to. 

Born and raised in the western state of Bonn, the 29-year-old moved to Berlin seven years ago and has been surprised at how much more racism he has experienced in the German capital.

Starkarat, whose parents are Indonesian, changed his name last year and says racism was one of the main reasons behind his decision.

Starkarat, a musician with a doctorate in Chemistry, told Al Jazeera: “When I had my old name I was always asked, ‘Where did you really come from? Where are your parents from?’ If you experience this once or twice you don’t notice, but if it happens regularly it really hurts.

“These questions showed me that I didn’t belong to this society, that this is not where I should be and this is not where I deserve to live. That feeling came just with questions around my name. And these questions don’t come from authorities, they come up in everyday life.”

In recent months, a string of events has forced Germany to address racism.

At the end of August, xenophobic protests exploded in Chemnitz, a city in the eastern state of Saxony, after the fatal stabbing of a German man, allegedly by two refugees from Syria and Iraq. 

Thousands of protesters took part, many of them from far-right groups. Some did Nazi salutes and waved banners calling for “criminal foreigners to go out”. Migrants and journalists were injured amid the chaos.

In July, a verdict was handed down in what has been described as one of the most important trials in the country’s post-war history. 

Beate Zschape, the 43-year-old sole survivor of the neo-Nazi National Socialist Underground (NSU) group, was sentenced to life in jail for her role in the racially motivated murders of 10 people – nine of whom were non-white – between 2000 and 2007.

The case exposed the failure of the state, media and intelligence services to properly investigate the murders, and several parliamentary inquiries have since followed.

Also in July, Mesut Ozil resigned from the German national team amid accusations of racial discrimination from footballing authorities after he had a picture taken with Turkish President Recep Tayyip Erdogan. 

His resignation led to a social media campaign,#MeTwo, a play on the #MeToo hashtag for survivors of sexual assault. Thousands of people of colour in Germany tweeted their stories of everyday racism.

Students said teachers had asked them when their parents would be marrying them off. Some recounted being singled out by police for identification documents on a train full of white people. Many shared racist slurs they endured on a daily basis.

“Germans have a way of understanding themselves and their nation,” Elisabeth Kaneza, a human rights activist, tells Al Jazeera.

“Although it is already a very diverse nation, its own history and legacy with other cultures and nations outside of Europe is not well taught and is not in the historical memory. So what we find is the imbalance of racist behaviour towards different origins.

“If you are from western or northern Europe, you rarely get these questions of where you are from. The concept of a German nation is closely linked to whiteness. This is where we still are.”

I hope that what’s happened in the last few months leads to more of an understanding among white Germans that some of us non-white citizens have entirely different daily experiences with racism.

Karin Hermes, tutor

Germany doesn’t record data on ethnicity and race.

Early last year, a UN fact-finding team released a damning report on the institutional racism and discrimination towards the approximately 800,000 people of African descent living in Germany. 

The team, which conducted interviews in a number of cities including Berlin, Dresden, Hamburg and Cologne, revealed there are many areas that black people won’t travel to for fear of being attacked, and sharply criticised the school system and police force, as well as state and federal authorities for denying that the issue exists.

The refugee situation has added to xenophobic sentiment. There were more than 2,000 attacks – roughly six a day – on refugee centres in 2017.

German authorities say social cohesion is an important issue.

Federal Interior Minister Horst Seehofer told Al Jazeera: “The Ministry of the Interior, Building and Community runs and supports a large number of projects in order to improve the coexistence of all people living in Germany. One example is our sponsored national competition, ‘Living Together Hand in Hand – Designing Communities’, in which 21 winners received prize money of up to €25,000 ($29,000) that serves to support projects and concepts that promote integration and coexistence.

“We see the #MeTwo debate as a socio-political contribution that pursues the same goal.”

I don’t think that many people have really understood the Nazi history. It’s just a feeling of guilt and a very narrow understanding of how it came to the Holocaust and what it means to get there.

Emine Aslan, anti-racist activist

Critics say that if Germany really wants to address racism, however, society needs to dissect its roots.

“I link it to collective memory,” says Emine Aslan, an anti-racist activist from Frankfurt. “Racism and structural discrimination is closely linked to the Nazi regime and anti-semitism. People think that we have dealt with that, so racism no longer exists.

“But I don’t think that many people have really understood the Nazi history. It’s just a feeling of guilt and a very narrow understanding of how it came to the Holocaust and what it means to get there. The other thing is that Germany has only recently started speaking about its own colonial history. There is still no collective memory around German colonialism and how this affects us now.” 

Kaneza, the human rights activist, said it is important to speak up.

“Whenever you raise the issue of racism, it’s perceived as an accusation to the general white population, which is not true,” she says. “By being silent about it, we are covering it up and it’s a complicity. This is still not very well understood.”  

Those who have experienced racism hope events over the past few months will lead to something more positive.

“The NSU and Chemnitz, for example, have brought out the explicit racism and showed the difference in treatment towards non-white Germans and migrants,” says Hermes, the Filipino German tutor.

“I hope that what’s happened in the last few months leads to more of an understanding among white Germans that some of us non-white citizens have entirely different daily experiences with racism and safety, and that denying this won’t make the racism go away.”