Prime Minister Imran Khan’s latest U-Turn on opening trade with India illustrates why Pakistan cannot fulfil its leaders’ stated goal of an economy-oriented foreign policy without moving away from the Islamist ideology that currently defines Pakistani nationalism.
Imran Khan’s Cabinet linked trade with India to the resolution of the Kashmir dispute on terms favorable to Pakistan, rejecting an earlier decision by the Cabinet’s Economic Coordination Committee to import sugar and cotton from India. Given that India has not given in to Pakistan’s demands on Kashmir after 72 years, multiple wars, and Pakistan-backed terrorism, linking the opening of trade to the Kashmir issue runs against the logic of geo-economics.
Pakistan officials have been saying lately that the country is eager to focus on geo-economics instead of geopolitics. Pakistan’s Chief of Army Staff (COAS) General Qamar Javed Bajwa, while speaking at the inaugural Islamabad Security Dialogue in March 2021, spoke of the country’s “geo-economic potential”, the need for “economic security and cooperation”, and of Pakistan becoming the “connecting conduit” between South and Central Asia.
General Bajwa expressed the desire for Pakistan to be “a nation at peace” and South Asia “a region in harmony”. The speech, coming weeks after the ceasefire along the Line of Control (LoC) in Jammu and Kashmir, led many to hope that India and Pakistan may soon return to the negotiating table and might start trading with one another for mutual benefit.
But last week, a day after Federal Minister for Finance, Hammad Azhar announced the decision to import sugar and cotton from India, the Federal Cabinet reiterated the ‘no trade with India unless the Kashmir dispute is resolved’ mantra. Ideology and entrenched strategic thinking trumped the kind of pragmatism that is needed to move away from geopolitics to geo-economics in external relations.
Pakistan’s fraught economy
If the Pakistani establishment had truly been on the path to regional integration, as the army chief had stated, then the first step would have been to allow the import of products that Pakistan badly needs and are available from India at lower cost than elsewhere.
General Bajwa’s assertions did not conform to Pakistan’s traditional ideological paradigm. As author and diplomat, Husain Haqqani, wrote in his book Reimagining Pakistan, “Economic considerations have always been deemed secondary in Pakistan’s policy priorities, important only to the extent of finding resources for greater goals such as securing Kashmir, facing the ‘Indian threat’ or reviving Islam’s lost glory.”
Pakistan’s leaders have tended to not understand economics. Unlike other American allies during the Cold War, Pakistan squandered billions of dollars in assistance from the United States in pursuit of a strategic advantage against India, instead of building its economic foundations.
Japan, Germany, South Korea, and Taiwan — all these countries benefitted from American largesse, but they used it for building their economies, educating their populace, and investing in their societies. Pakistan used up American funding in building its conventional army. Instead of seeking American investment and technology, Pakistan shunned structural reforms and ended up becoming a rentier State, living off collecting aid to address American strategic concerns for seven decades before trying to do the same with China.
There is a reason why, despite receiving 22 loans from the International Monetary Fund (IMF) since 1958, Pakistan has yet to implement structural reforms that would enable the country’s economy to move forward on its own steam.
According to the IMF, global economic growth for 2021 will stand at 6 per cent, but Pakistan will only grow at 1.5 per cent. A country with a population of over 210 million, Pakistan’s annual bilateral trade with the world’s largest economy – the United States — stands at $6.6 billion, which is equivalent to American trade with Morocco, a country of 36 million people.
Pakistan wants to compete with India, which has a population six times larger and an economy that is 20 times larger. India’s bilateral trade with the US, at $146 billion, is more than 20 times the volume of Pakistan’s trade with America.
Moreover, Pakistan remains on the grey list of the Financial Action Task Force (FATF), a global body that combats money-laundering and terrorist financing. And international arbitrators have repeatedly found that Pakistan does not fulfil its contractual obligations to foreign corporations.
General Bajwa may wish for “an economically interconnected South Asia”. But for now, South Asia is the least integrated of all regions around the world. Trade between ASEAN (Association of Southeast Asian Nations) countries is 25 per cent of their global trade, but trade amongst South Asian countries is only around 5 per cent.
Attempts at regional economic integration, namely a South Asian Free Trade Area (SAFTA) or South Asian Preferential Trading Agreement (SAPTA), have been held hostage by Pakistan’s insistence that the Kashmir dispute be resolved before any movement on the trade front. Even General Bajwa, while speaking of the need for “sub-continental rapprochement”, reiterated that it would need a resolution of the Kashmir dispute.
Is the current army chief truly seeking to change Pakistan’s foreign policy or is he simply seeking breathing space to consolidate his position? If it’s the former, then General Bajwa would need to go against the army’s own institutional interests and whatever his personal beliefs or preferences, as the institution is more likely to prevail.
As long as the Pakistani establishment does not allow an open discussion on why the country cannot get all of Kashmir, it would be unable to enter into a real discussion with India for a deal. That is why the Musharraf-Manmohan Singh era talks, which reportedly brought the two sides on the verge of a comprehensive settlement, failed to produce anything long lasting.
Pervez Musharraf was strong as long as he remained both army chief and president. But he had to step down as army chief in 2007 to accommodate the demand for promotion from junior generals. His likely successor as the army chief at the time, General Ashfaq Pervez Kayani, covertly supported the Lawyers’ Movement against Musharraf to ensure that he could take over as army chief.
General Bajwa is much weaker than Pervez Musharraf and is aware of this. He is, therefore, unlikely to prevail in undertaking major policy changes, let alone abandoning Pakistan’s national ideology based on Islam and anti-Indian rhetoric. His endeavours must be seen as a pursuit of breathing space and possibly another extension in the top job.
The author is Director, Initiative on the Future of India and South Asia. Views are personal.