EDITORIAL: Ambassador Maleeha Lodhi while speaking at the inaugural session of ‘the Dialogue on Economy’ hosted by Pakistan Business Council emphasised the need for a sweeping foreign policy review, given that the last one was undertaken 20 years ago. She added, “all foreign policy begins at home. Weak economy dependent on external financial resources and internal political turmoil weigh heavily on the conduct of Pakistan’s diplomacy and stymies its ability to emerge as a middle power.
“ There is no doubt that the steadily weakening economy, due to four to five decades of mismanagement and flawed policy decisions ranging from 75 to 80 percent reliance on indirect taxes whose incidence on the poor is greater than on the rich with the obvious outcome of ever-rising poverty levels (at 41 percent today), refusal to contain current expenditure with the elite recipients increasing their share each year by more than the rate of inflation leading to unsustainable fiscal deficits that are met with increased borrowing from both external and domestic sources.
This disturbing state of affairs is liberally sprinkled with nepotism in appointments and its associated evil, incompetence, and corruption (with the power and tax sectors leading concerns for donors) one has all the ingredients to determine why the country’s economy is so fragile today.
As if matters are not bad enough Pakistan is also subject to boom-bust cycles with severe negative implications on the foreign exchange reserves dealt with by going on an International Monetary Fund (IMF) programme with its associated ever-increasingly harsh politically challenging conditions.
Since 2019 Pakistan is faced with another cyclical rather unique phenomenon: long term bilateral partners particularly China, Saudi Arabia and the United Arab Emirates are visibly unimpressed with pledges of our administrations to implement and sustain the necessary reforms and have linked all assistance to Pakistan being on a rigidly monitored IMF programme.
And this is where Dr Lodhi’s comment on the repercussions of a weak economy reliant on external resources has relevance but as she correctly points out the global order is undergoing a change with unipolarity and globalisation on the wane.
There is no doubt that multipolarity is now a factor in the global order as China, with a 17 trillion dollar economy, is projected to close the gap with the 23 trillion dollar US economy (given its growth rate is almost double that of the US), the overtaking of US AI tech firms by the Chinese DeepSeek tech; at a fraction of the cost, and Russia’s overtaking US technology in its long-range ballistic missile, Oreshnik.
At the same time, globalisation is no longer a viable slogan, which is not only being undermined by the emerging multipolarity but also by the over-use of sanctions and tariffs by successive US administrations as foreign and economic policy tools which are expected to continue by the current administration.
Pakistan faces a massive dilemma, given the new world order and our extremely fragile economy. Our long-term economic objectives notwithstanding, notably to emerge as a middle power, our historical bilateral partnerships have become dependent on being on an ongoing IMF programme and seek loans from other multilaterals, all headed by nationals of G-7, who continue to support globalisation - notably free trade - even though Europe, particularly Germany, stopped purchase of cheap Russian gas as a foreign policy tool to the detriment of its own economy.
It is even more of a challenge as Pakistan’s historical bilateral partners, who re-extended rollovers of 16 billion dollars to tide us over the ongoing crisis, have repeatedly expressed their unwillingness to extend such roll-overs unless we were on an ongoing programme.
Pakistan’s foreign policy aims, which are linked to considerable security concerns especially after the recent uptick in terror attacks, are a source of additional concern to our foreign partners, which partly explains why most foreign delegations meet up with both civilian and military leadership.
There is, therefore, a need to proceed with caution at the present historical juncture and desist from taking ad hoc decisions based on a perception limited by a micro instead of a macro paradigm.
The foreign policy review must take input from all stakeholders — the civilians tasked to take account of the emerging world order and our economic compulsions and the military injecting realism based on our geo-security concerns.
Copyright Business Recorder, 2025
Comments