According to a report published today by a Pakistan’s leading English newspaper, “the Foreign Office (FO) on Monday confirmed that Pakistan’s participation in a ‘High-level Dialogue on Global Development’ held virtually on the sidelines of the BRICS meetings was blocked by a member (India).” It is ridiculous to believe that Chinese can be told as to who to invite to a conference they hosted.
Pakistan continues to follow a “blame it on India” policy for domestic consumption and refuses to see and accept the reality: its own diminished importance in global politics and diplomatic isolation.
Hopefully, Pakistan’s military establishment has learnt the most important lesson that the current economic crisis can teach it: Pakistan is no longer that important in the grand chess board of international politics that it used to be. Saudi Arabia and China didn’t rush to our help. The West pretty much ignored us, notwithstanding our delusions of being a nuclear power and therefore of vital importance to global security.
Pakistan’s efforts to resume the IMF’s 2019 programme have involved the toughest negotiations it ever had. Gone are the days when the United States would quietly use its influence to help Pakistan. Pakistan did approach the United States after failing to get concessions from the IMF but it didn’t help much.
A paper published by the London School of Economics (2012) noted that “exceptionally favourable conditionality and flexibility in giving waivers, on not meeting even soft conditionality standards, led successive Pakistani governments to treat lightly the fundamental issue of domestic resource mobilization measures that underpinned each program.”
Pakistan was often viewed as part of the greater middle east, and part of the buffer zone against the Russians but the U.S. strategic priorities have shifted away from the Middle East over the recent years. American interest in Pakistan since the end of the Cold War was episodic and transactional. 9/11 is ancient history.
America’s quest to dominate the Middle East and its historic rivalry with the former Soviet Union (now Russia) was driven largely by the need to ensure the uninterrupted flow of its oil to America and its allies. Throughout most of this period, the Persian Gulf constituted a disproportionate share of global oil reserves and U.S. oil imports. With the growth of non-fossil energy sources, the discovery of large oil and natural gas deposits outside the Persian Gulf and increased domestic U.S. oil and natural gas production, the Middle East’s vast energy resources have been of declining strategic significance to the United States.
Pakistan was often viewed as part of the greater middle east, and part of the buffer zone against the Russians but the U.S. strategic priorities have shifted away from the Middle East over the recent years.
Strategic Blunder in Afghanistan
Pakistan’s military establishment is rightly worried that it has lost its “leverage” with the United States after its exit from Afghanistan. The fact is the U.S. military establishment followed its agenda since the beginning of the Afghan invasion in 2001 and had to support withdrawal when the war had lost popular support. The decision had been made but Pakistan’s foreign policy makers overestimated their importance, as usual.
It is nothing short of a strategic disaster that after spending nearly two decades of supporting the Taliban and celebrating their return to power in August 2021 as an instance of “breaking the chains of slavery”, Pakistan finds itself diplomatically isolated with little leverage even with Afghanistan. Taliban leaders have taken the same firm line as previous Afghan governments against Pakistani efforts to build fences along the Durand Line, which Islamabad sees as the formal Afghan-Pakistan border.
The Taliban continue to enjoy a close relationship with the Tehreek-e-Taliban Pakistan (TTP), a terrorist group that has been fighting Pakistan’s armed forces for years. After repeatedly claiming victory against domestic terrorists, the Pakistan Army has been forced to hold talks with the TTP, which were ironically brokered by Kabul. Days after coming into power in August 2021, the Taliban released many TTP members including Faqir Mohammed, a former TTP deputy emir. Recently, the Pakistani Taliban (TTP) announced an indefinite ceasefire with Pakistan's government after talks brokered by the Afghan Taliban government.
Both Trump and Biden were keen to get out of Afghanistan as concerns about terrorism took a backseat in recent years. American foreign policy became more focused on the emerging challenges, most notably, global competition with China and rivalry in the Asia Pacific, relations with Europe, climate change and energy, and more recently the Russian invasion of Ukraine. The U.S. Secretary of Defense Llyod Austin’s presentation at the International Institute for Strategic Studies’ annual Shangri-La Dialogue (June 10-12) in Singapore emphasised how the United States views the “Indo-Pacific as the strategic centre of gravity for American interests in the 21st century.” He also advocated for maintaining open channels with Beijing to manage tensions. He studiously avoided any ideological framing of competition with China as a contest between democracies versus autocracies. He did not question any countries’ relationship with China or urge countries to resist Chinese entreaties.
Pakistan, America, and the IMF
Beginning in the early 1990s, the Cold War order was reconstituted into an aspiring global commonwealth that enlarged NATO and transformed the United Nations, the IMF and the World Bank, the World Trade Organization (WTO), and the European Union. The United States remains the dominant international power due to its size and role in these organisations, notwithstanding the rise of China as a global economic power and the emergence of a multi-polar world. Pakistan would not be able to get IMF loans if the U.S. strongly opposed an IMF programme. Despite all the noises about IMF’s role in Pakistan and rhetoric against neo-liberalism, Pakistan’s successive rulers bear primary responsibility for going to the IMF the record number of 22 times. It was Pakistani governments that sought American or IMF assistance due to their policy failures. Consequently, the multilateral institutions (IMF, World Bank, etc.) and Western sources account for more than 50 per cent of the government of Pakistan’s external debt. It is the fourth largest borrower of the IMF and the only one from Asia with current outstanding credit of more than one billion dollars.
China-Pakistan Relations and India
However, Pakistan’s dependency on China has grown over the past decade. China is now Pakistan’s single largest bilateral creditor with a total debt of around $27.3 billion, including $6.3 billion in short-term loans. Despite China’s public support for Pakistan, it has often privately expressed reservations about Pakistan’s policies. Pakistan’s news media has been selective in its coverage of China’s foreign policy.
Regardless of who is in power, the Pakistani state’s worldview and perception of its importance appear to be somewhat divorced from reality. While China has always publicly voiced support for Pakistan’s stand on Kashmir, its position has remained largely a moral one. Consider that just in the last few days, Prime Minister Narendra Modi participated in two summits at the invitation of Chinese President Xi Jinping. The India-China bilateral trade increased by 15.3% to over $31bn (more than Pakistan’s total annual exports) in just the first quarter of 2022. India is also attracting hi-tech investments from Taiwan as well although China and Taiwan are adversaries.
China is now Pakistan’s single largest bilateral creditor with a total debt of around $27.3 billion, including $6.3 billion in short-term loans. Despite China’s public support for Pakistan, it has often privately expressed reservations about Pakistan’s policies.
China’s stance on Kashmir was best expressed by its foreign ministry spokesperson in the August 2019 press briefing. Hua Chunying declared, in carefully chosen words: “China's position on the Kashmir issue is clear and consistent. It is also an international consensus that the Kashmir issue is an issue left from the past [italics added] between India and Pakistan. The relevant sides need to exercise restraint and act prudently. In particular, they should refrain from taking actions that will unilaterally change the status quo and escalate tensions. We call on both India and Pakistan to peacefully resolve the relevant disputes through dialogue and consultation and safeguard peace and stability in the region.”
However, Pakistan’s foreign policy establishment continued to suffer from grand delusions. For example, Munir Akram, Pakistan’s ambassador to the United Nations, wrote an opinion piece in DAWN (September 2019) arguing that “if India confronts a Kashmiri insurgency, a resilient Pakistan, international pressure and an impaired economy, it may agree to negotiate a mutually acceptable settlement with Pakistan and the Kashmiris.”
The Russia-Ukraine war has paradoxically seen a convergence of Chinese and Indian energy interests. “One of the consequences of this conflict is a fundamental realignment of the global energy system, trading relationships and geopolitical alignments, with China and India more closely aligned with Russia,” said Jason Bordoff, who is director of Columbia University’s Center on Global Energy Policy and was an adviser to President Barack Obama.
According to the New York Times, China and India, with the demand from their enormous domestic markets and the supplies from their vast refineries, “are also central in determining the direction of oil prices.”
It should be obvious to the decision-makers in Pakistan that India with around $600 billion in foreign exchange reserves – the fifth largest globally – is a global economic power and any notion that the international powers would treat India and Pakistan at an equal footing is not only dated but a serious impediment to formulating a realistic foreign policy.
FATF
Pakistan’s problems with the Financial Action Task Force (FATF) were also largely of its own making. Pakistan’s reckless pursuit of using Jihadi proxies harmed Kashmiris’ genuine struggle against Indian atrocities by earning us a bad reputation for supporting terrorism. When Pakistan was placed on the grey list in February 2018, even China and Saudi Arabia did not oppose the move. The U.S.-led move to put Pakistan on the grey list came a few months after the Department of Financial Services of the State of New York fined Habib Bank New York branch $225 million for “failure to comply with New York laws and regulations designed to combat money laundering, terrorist financing, and other illicit financial transactions.”
While Pakistan may officially be taken off the grey list in the next few months, it should be noted that it was the country’s military establishment that took the lead in the country’s efforts to comply with FATF’s requirements. On 3 July 2019, the top 13 leaders of the banned Jamaatud Dawa (JuD), including its chief Hafiz Saeed and Naib Emir Abdul Rehman Makki, were booked in 23 cases for terror financing and money laundering under the Anti-Terrorism Act, 1997.
On 8 January 2021, a special anti-terrorism court sentenced Zaki ur Rehman Lakhvi, a senior official of the militant group Lashkar-e-Taiba (LeT), to five years in jail for terrorism financing, just six days after he was arrested. The swift conviction came just a month before the FATF was to meet to review Pakistan’s anti-terror and anti-money laundering measures. A U.N. Security Council sanctions committee had earlier declared that Lakhvi was involved in militant activity in many other regions and countries, including Chechnya, Bosnia, Iraq and Afghanistan.
While Pakistan may officially be taken off the grey list in the next few months, it should be noted that it was the country’s military establishment that took the lead in the country’s efforts to comply with FATF’s requirements.
On 9 April 2022, a Pakistani court sentenced Hafiz Saeed, founder of Lashkar-e-Taiba (LeT), the armed group blamed by the United States and India for the deadly 2008 Mumbai siege, to 31 years in prison in two cases of terrorism financing.
What China -U.S. Relations History Can Teach Pakistan?
While some in Pakistan view the United States and China through the prism of old-style territorial rivalry, trade competition and technology issues have dominated their conflict in recent years. However, U.S. trade with China has grown enormously in recent decades and is crucial for both countries. Today, the United States imports more from China than from any other country, and China is one of the largest export markets for U.S. goods and services. China benefitted tremendously by expanding trade with the U.S. after it joined the WTO in 2001. As a condition of admission, Beijing committed to a sweeping set of economic reforms, including steep tariff cuts for imported goods, protections for intellectual property (IP), and transparency around its laws and regulations.
Chinese wise leaders didn’t see those conditions as an infringement of its sovereignty but instead turned it into one of the biggest opportunities during the past decades. The value of U.S. goods imports from China rose from about $100 billion in 2001 to $505 billion in 2021. China’s special economic zones played an important role in driving this phenomenal growth. Deng Xiaoping gave provincial governments substantial autonomy to attract economic activity, including foreign investment, as well as boost urbanisation.
A couple of days ago, Prime Minister Shehbaz Sharif said Pakistan's economic future was linked to the success of the China-Pakistan Economic Corridor (CPEC) with Gwadar port as its main component. The CPEC does offer opportunities but Chinese loans or aid cannot and will not help Pakistan much in reforming its economy and finding its way forward because development cannot be borrowed or imported. According to Oxford University’s Stefan Dercon, one of the world’s top development economists, “China’s economic model managed to exploit its great but only natural resource: people.”