Diplomacy: economy first

Last week, the PM decided to constitute an 'Economic Outreach Apex Committee' headed by Dr Moeed Yousaf. This could well be the beginning of real change in Pakistan's foreign policy contours. In today's world, economic ties leverage political and security policies; while in Pakistan, economic relations are still treated as a subset of security and political ties.

The whole security narrative must change. Economic security should be paramount based on which regional policies' gains can be better achieved. Pakistan received a rude awakening last year when Prime Minister Imran Khan did not attend the Islamic Summit in Malaysia with a view to avoiding disturbing its ties with Saudi Arabia. Had Pakistan's economy not been so fragile and dependent on the kingdom's financial largesse, the diplomatic trajectory since could have been very different.

Instead, Pakistan's combined trade with Malaysia and Turkey is less than 3 percent of country's total trade value. Our dependency in terms of remittances and oil imports is much heavier on Saudi Arabia. Crown Prince Mohammad bin Salman succeeded in leveraging his superior (economic) hand to pull strings. Such economic dependencies have restricted Pakistan from thinking and planning long-term relations.

Credit goes to Moeed Yousaf for making PM and the cabinet members realize this imperative. The military is also on board, as there is realization within the echelons of power that economic security is critical to overall national security paradigm. But a lot of ground work is required to be done to make the system flow in the right direction.

There is a need to change the mindset of Pakistan's diplomats. A known commentator noted that whenever any country's ambassador visits key officials in Islamabad - out of 30 minutes, he speaks on trade and investment relations for 25 minutes, while mere 5 minutes are spent on security. On the flipside, when Pakistani ambassadors meet officials in stations abroad, they spend 25 minutes on security and rest of the five minutes on marketing the traditional export goods.

Then, there is a lack of coordination between various ministries in Islamabad on how to strengthen the economic ties. After the passage of the 18th amendment, many related subjects are in the provincial domain. This adds another layer of frictions. There must be a central body to work on integration of relevant departments and ministries to move towards a common goal. That is why economic outreach committee must be housed in the PM office, rather than anywhere else in the twin cities.

Pakistan's economic diplomacy is confined to traditional commodities (other than very few value-added) that we sell in the world. There is a limit to which these can be extended. There are hosts of services which Pakistan can export. There are different skillsets of workers required in different parts of the world which are required to be tapped. But for doing so, the traditional way of commerce and foreign ministries working in silos,must change. Why is the IT ministry not part of it? Somethings can be done by Science and Technology. Health services (being a provincial subject) can earn a decent chunk of foreign exchange.

The first step is taken in the form of making this committee. The next is to map the world in terms of our competitive advantage. Then the appointment of diplomats, commercial consulates, etc, should be based on what Pakistan wants to sell in those countries. This focused diplomacy can yield results in the medium to long terms.

For example, tens of thousands of Africans are visiting India every year for medical tourism. Pakistan can grab its share through making right policies. The human resource deployed in Africa should focus on enhancing medical tourism. But at the same time, Pakistan needs to get its hospitals requisite international certifications to tap the potential. All these require coordination and implementation both at home and abroad.

Similarly, Pakistan has a huge potential of business process outsources (BPO), and IT-related services. India has cashed in on it. But there are frictions in Pakistan. A bigone is on the payment side. PayPal doesn't exist in Pakistan. The country does not have any of its own digital payment gateway (one is in the process of making). Here the role of State Bank of Pakistan (SBP) is important. Swift payment system is of utmost importance. That holds true for becoming part of any global value chain.

Then there are tariffs and duties. Most of them are applied for revenue consideration. These need to be based on enhancing trade. Here coordination is required with finance and commerce ministries. There are issues in rules and regulations which in current form do not allow things from opening up. These are required to be changed. Someone has to anchor it.

Then the KPIs of commercial consulates must be designed based on the target markets. Not the same plain vanilla approach can be copy-pasted everywhere. In current system, the commercial consulates report to commerce ministry while ambassador is linked to the foreign office. The roles are interdependent and key people in both posts are required to be deployed based on expertise in areas where Pakistan's competitive advantage is with that country.

The buzz word is economic connectivity. The focus is to develop economic ties with countries where our strategic interests are aligned. That is happening with China. A similar approach is required to enhance investment and trade ties with Turkey, Malaysia and Central Asian counties - to name a few. Once we move in this direction, short-term economic compulsions may not hinder the long-term strategic goals.

Moeed Yousaf is conducting an experiment. It is a change management exercise. Thinking has to alter. The narrative required to build is that integration of various offices through economic security perspective can help leverage the rest.

Copyright Business Recorder, 2020