Pakistan: The Cost of Ignoring Economic Management & Choosing Geo-politics

Pakistan has become a playground for geo-politics, both willingly and by choice, and continues to be so even while its economy is faltering and people are battling disease and hunger after unprecedented floods.  It is both an irony and a tragedy. The political bickering in the country is mounting, corruption remains unabated and Pakistan is still choosing geo-politics over economic management and instead of addressing the deepening crisis.


At a time when people are reeling from starvation and disease and the country is facing acute shortage of food, medicines and shelter, Pakistan is sourcing fighter jet-related packages. The US announcement of military aid worth USD 450 million to Pakistan under its Foreign Military Sales (FMS) programme for supplying F-16 upgrade package has surprised many analysts. While millions of Pakistanis still suffer from the worst floods in living memory, the US is eyeing enhancement of its military aid programme. It is surprising that a debt-ridden Pakistan, suffering from a massive payment crisis, further exacerbated by devastating floods, is willing to spend such a huge sum on a military modernisation programme.  Perhaps it reveals the priorities of the government.


Supplying the F-16 fighter jets to tackle domestic terrorists further raises questions. Do domestic terrorist activities in Pakistan warrant such weaponry? It is being criticized as it would be naive to believe that the F-16s are intended to tackle terrorists.


Pakistan is under no compulsion to procure military provisions because it never had any provocation to war from its neighbours, rather it was Islamabad itself that provoked wars with India in the past.  Pakistan has even, allegedly, channeled funds provided for war against terror to terrorist outfits, corruption and money laundering.  Earlier in 2018, Former US President Donald Trump suspended military aid stating that Islamabad had taken no action against terror groups. Instead, it provided a ‘safe haven’ for them while thery were waging a 17-year old war in neighbouring Afghanistan. Trump also accused Pakistan of ‘lies and deceit’ when it came to the military aid it had received from the US.  In November 2018, Trump reiterated that the USD 1.3 billion in aid to Pakistan would remain suspended until Islamabad  acts against militant safe havens. 


Post-Trump, the Biden administration did not pay much attention to Pakistan and it did not result in any tangible improvement in US–Pakistani relations though Imran Khan’s government called for the need to improve economic relations. 


The question to ask is not what the US gave to Pakistan, but how Pakistan used it.  Pakistan remained a close ally of the US, but it has neither learned the meaning of democracy nor development. Instead, it maltreats its minorities, women and critics while looking after terrorists. The US has also exploited Pakistan’s economic vulnerability and dependence. Former Pakistani Ambassador to the US, Husain Haqqani, said Americans have provided over USD 43 billion in military and economic assistance since 1954, helped build Pakistan’s conventional military capability, and bailed the Pakistani economy out on several occasions. This is in return for offering its geo-strategic locations to the US for advancing interests in the region. Pakistan was the major beneficiary of American assistance both financial and defence.


The US has continued providing military assistance and economic support with brief disruptions for strategic reasons. But it is aware of Pakistan’s complicity in harbouring terrorists. On many occasions, Washington hit out at Islamabad for providing safe havens to “agents of chaos” that kill Americans in Afghanistan and warned Islamabad that it has “much to lose” by harbouring terrorists.


The US administration has now once again fallen back to its geo-political diplomacy, by providing military aid. It is igniting an arms race by supplying F-16 fighter in a geopolitically unstable region rather than taking genuine measures and initiatives to create an environment for peace and economic development. As foreign aid and investment are not forthcoming, possibly Islamabad is now looking at military aid as a ray of hope to fill up its coffers.


The Pakistani economy has been suffering macro-economic imbalances despite US assistance and cooperation. Pakistan now faces a severe crisis on the external front, as well as an unstable political set up. “The Biden administration could have used Pakistan’s economic crisis to compel the country to sever its longstanding ties with terrorist groups. Instead, the US protects and rewards it, putting short-term geo-political considerations ahead of long-term interests”, commented Brahma Chellaney, an Indian analyst. The US aid had simply transformed the poor country to a ‘perpetual beggar’ and a failed democracy.


The Pakistan-China relationship is also not driven by economic development as much as it is driven by the geo-strategic designs of the two countries. While CPEC projects are far behind schedule, none of them has become economically viable, be it the Gwadar Port or hydro-electric and thermal power projects.  Rather these projects have increased Pakistan’s Chinese debt to about USD 8 billion at a time when its forex has dried up and it is unable to service the debt.


Islamabad’s economic policy is dictated by its military bosses and it is one of the reasons for its failure of economic management. Islamabad does not have an independent economic policy. It somehow believes that its military might should precede and can bring economic prosperity as it is aligned with great powers. Islamabad’s military influence in economic matters could be seen from the fact that when the country’s negotiations with the IMF were not resulting in the desired funds, Army Chief General Qamar Javed Bajwa called US Deputy Secretary of State Wendy Sherman seeking American help in securing an early disbursement of funds from the IMF.


The sudden change in the US policy towards Pakistan marks a departure from a year ago. At the outset, it seems that the US has rewarded Pakistan for critical help in eliminating Al Qaeda leader Ayman al Zawahiri, then hiding in Kabul near the US embassy compound Bonhomie. However, critics point out that the US sees Pakistan as geo-strategically important for its presence in the region after exiting Afghanistan. It is more so in the wake of the Russian war with Ukraine, which sees no end in the immediate future.


Pakistani leaders have never focused on economic management. Geo-politics and strategic matters have taken precedent in its national policy.  Weapons and money from the West have determined Pakistan’s national policy and not economic development. Such a policy has kept Pakistan dependent on foreign aid and has stymied its political and economic growth. Indian External Affairs Minister rightly stated that the US’ relationship with Pakistan has ‘not served’ either of the two countries. Enhanced defence engagement would not make Pakistan economically viable and it would only add to the already deteriorating crisis. And such engagements always flare up regional instability.


The EU’s strategy when it comes to Pakistan is also flawed; its policy is confused. The EU granted Pakistan GSP+ status in 2013 - giving Pakistani products duty-free access to the European market – in order to encourage it on the road to greater economic development. But alongside this should come greater democracy, enhanced equality measures and an emphasis on human rights. However, none of these have ever materialized. This was highlighted in a report by the European Parliament (2021), which required that GSP be suspended.  Nevertheless, the EEAS continues with its muddled approach to Pakistan with little concerted action.