Two Years of PTI-Led Government: Economy and foreign policy

ARTICLE: Realpolitik dictates that economic interests need to form the core of a country's dealings abroad if it is to survive in a world that is bound by trade and investment. In that context, the Khan government's second year in power has been a mixed affair. There are some bright spots where ground realities have guided the foreign policy; but there are also some examples where geopolitics and ideological tie-ups have continued to weigh heavy. This lack of coherence has often thrown up interesting contradictions.

When Prime Minister Imran Khan was about to start his second year in power, expectations were rife that this would be the year of economic reforms. Despite the economic strain, he was still popular among his base, the ruling party faced no credible opposition, and institutional support seemed to be firmly behind the government. The IMF was finally on board; Trump had been placated after Khan's US sojourn; and FATF signaled relief. But India's annexation of Kashmir last summer, and the pandemic earlier this spring, quickly threw the government off course. Economy has been a casualty of both events.

First, Indian Prime Minister Narendra Modi's actions in Kashmir, and Pakistan's ensuing vocal response, set off a process that consumed the Khan government's reformist focus at home and exposed the limits of Pakistan's friendship with close allies. Since military conflict with India was not an option, Pakistan had to ramp up its diplomatic efforts to highlight the plight of Kashmiris. This has had some effect, to the extent that several leading politicians and human right groups in America and Europe have condemned India's alleged designs to change Kashmir's demography away from the Muslim majority.

But the Western and Gulf leaders continued to embrace Modi, pin medals on his 56" chest and do big business there. This situation was a classic case of realpolitik, but it wasn't acceptable to the foreign policy mandarins at home who had been recued to issuing condemnations. But the insistence on more diplomatic support, especially from the OIC bloc, put Pakistan on a collusion course with its oil- and cash-rich benefactors in the Middle East. Countries like Turkey, Malaysia, and Iran offered diplomatic help via a summit, but Pakistan, which still seems keen on such an initiative, has been found vacillating.

It is the economics that forced Pakistan to lay low, for any Islamic summit taking place without Saudis in the driver seat was to be perceived by Riyadh as an effort to contest their leadership claim of the Muslim world. But when the anniversary of Kashmir annexation came last month and Pakistan had little to show for its advocacy, the frustration got the best of the foreign minister and he dared the Saudis to up their game on Kashmir. But a fortnight of drama later, in the end Pakistan's retreat is reflective of its economic dependence on an ally that isn't interested in moral leadership. Both countries now seem to have fallen to a transactional normal: Saudis won't pull their billions and Pakistan won't bother on Kashmir.

Things corrected course for the Khan government when there was a strong return to a warm relationship with China. There are multiple factors at play. One, administrative and policy-level developments related to CPEC in the last 12 months have breathed new life into this bilateral, and China has been appreciative. Second, India's actions in Kashmir and its issuance of a new map disturbed Beijing as well, sapping the erstwhile "Wuhan spirit" of bilateral cooperation between the two countries. Third, the recent China-India deadly clashes in Ladakh have sown immense distrust in China, as India is perceived to have tried to take tactical advantage when China's global diplomacy was delicately traversing the pandemic landscape. While those events have brought China even closer to Pakistan, relations with other neighbors also stabilized a bit. Pakistan calmly rode the period of American belligerence towards Iran; as a result, the southwestern border has been calm and the bilateral relationship has caught some warmth. While the external posture of a post-war Afghanistan is an open question, for now Pakistan's positive role in cultivating the US-Taliban peace agreement in February and the ensuing on-again, off-again intra-Afghan dialogue has produced an opening for a closer relationship with a new government in Kabul next year.

As for Uncle Sam, it looks fine in hindsight that the Pakistan government didn't try to ingratiate itself too much with the Trump administration, even as Modi spared no expense. But then, Pakistan has little economic leverage to pull. Coronavirus is now threatening to hasten the US-China economic "decoupling", and this will have global repercussions as "security" is what will come next after "economy" if Trump is re-elected. After the Democratic and Republican party conventions last week, and with Trump using "law and order" platform to make his case for re-election, the outlook for November 3 vote is murky.

If Joe Biden defeats Trump, it can be a blessing in disguise for Pakistan. For one, Biden has engaged with Islamabad both as a senator and Obama's VP, arguing for more engagement. Besides, Democrats are expected to resume America's moral mantle, which might hurt Modi's demographic ambitions in Kashmir. Moreover, a Biden administration is likely to approach US-China relationship with maturity, which helps Pakistan because it won't be asked to choose between the two superpowers.

The pandemic can be turned into an opportunity by deploying a forward-looking and hard-nosed foreign policy. With China in its corner, Pakistan has a role to play in vaccine diplomacy, by testing and producing vaccines for the low-income and poor countries. As global manufacturers look to 'China plus one' mode of operation to diversify by adding one more factory in Asia, Pakistan can try to be that plus-one by tapping Chinese supplier ecosystem that is essential to move factories outside China. In the West, the crisis has led to calls to localize product supply-chains, something which can hurt Pakistan's exports. This calls for a robust trade diplomacy. As the government embarks on its third year, its foreign policy must address such opportunities and challenges for the sake of economic growth and development.

Copyright Business Recorder, 2020