Pakistan federation and the lie within

"You cannot live within the lie of mutual benefit through integration when integration becomes the source of your subordination."

I could not resist borrowing this phrase from the Canadian PM Mark Carney's scintillating speech at Davos when wondering if the fledgling federation of Pakistan also currently lives within a lie. Evidently, multiple policy paradoxes and expediency are weighing down this arrangement. Given the plethora of noises from out of Peshawar, Quetta and at times Karachi, the edifice of the federation is creaking, and crying for an urgent course correction.

The 18th Constitutional Amendment (2010) was meant to be such a course correcting tool for the reset. Fifteen years on, Pakistan is trapped between constitutional promise and political practice. Persistent complaints from provinces, particularly Khyber-Pakhtunkhwa, Sindh and Balochistan, raise a fundamental question: does Pakistan need a new social contract to make its federation workable, or does it simply need to honour the one it already has?

The 18th Amendment abolished the Concurrent List and transferred 47 subjects exclusively to provinces. The Article 160 introduced a fiscal "floor", ensured that the federal government can never reduce a province's share in the National Finance Commission (NFC) Award below the existing level (currently 57.5%). Third, Article 172(3) granted provinces joint and equal ownership of oil and gas discovered within their territories, ending decades of near-total federal control.

Yet today, the NFC Award remains the most visible arena of federal-provincial conflict. While the 7th NFC Award (2010) increased provincial shares and introduced criteria beyond population, population still carries 82% weight. Punjab, benefits most from this formula. For FY26, it is set to receive over Rs4 trillion, enabling large infrastructure projects, while smaller provinces struggle to fund salaries and basic services.

For K-P, Sindh and Balochistan, the NFC formula gives greater weight to poverty, inverse population density and revenue generation. K-P has demanded over Rs1 trillion in outstanding dues, including funding for the Newly Merged Districts, where the Centre had promised a dedicated 3% share from the divisible pool. Balochistan, too, has repeatedly complained of shortfalls in transfers under the NFC Award.

The Centre, meanwhile, pleads fiscal distress, citing debt servicing, defence and IMF conditionalities. This vertical imbalance — where provinces resist any reduction in their share while failing to meaningfully tax agriculture, property and services — has produced paralysis, with negotiations for the 11th NFC Award stalled as of now.

Another anomaly in the way of cooperative federalism stems from unilateral policy decisions on energy, development or security by Islamabad. Provinces accuse it of willfully violating the Constitution by not convening meetings of institutions such as the Council of Common Interests for fostering consensus on critical federation-level issues.

This is most visible in development planning. Provinces question why the prime minister chairs committees reviewing provincial projects, or why federal ministries remain involved in devolved sectors. Sindh's opposition to proposed new canals to irrigate Cholistan Dessert reflects deeper fears: that federal mega-projects override provincial consent and undermine downstream water rights. Despite Article 172(3), K-P has a long-running dispute with Wapda over transfer of net hydel profits from Tarbela, or demands for higher gas royalties by Balochistan, persist.

The controversy around the proposed mining legislation in K-P and Balochistan reveals a common anxiety: who really controls resource wealth, and who benefits?

Lawmakers argue that centralising authority in regulatory boards undermines rights of all provincial stakeholders and violates the spirit of the 18th Amendment; development without consent is akin to extraction without representation.

Security too constitutes a fault line. K-P and Balochistan remain heavily securitised, with "Aid of Civil Power" regulations still in force in K-P, and Rangers deployed in Sindh's cities for decades.

K-P's insistence on provincial consent for operations to clear terrorist sanctuaries as well as issues related to refugees underlines some of the faultlines that belie the claim of a "cooperative federation". Recent verbal spats over cross-border militancy (Tirah operation and displacement of locals) all exacerbate the fault lines and kick up questions about jurisdiction. The Centre views such dissent as defiance; provinces see it as constitutional assertion.

Water distribution remains a perennial source of inter-provincial bitterness. Sindh accuses Punjab of upstream over-extraction in violation of the 1991 Water Accord, while Balochistan accuses Sindh of denying it its share. These disputes intensify during shortages and reinforce perceptions of inequity.

Karachi illustrates a different dysfunction. Federal agencies control large swathes of land, provincial laws weaken elected mayors, and the Centre periodically calls for "neutral" administrators. The result is a governance vacuum where accountability is diffuse and services collapse, as seen during recent monsoon crises.

Overlaying all disputes is the perception of Punjab as the federation's favoured "elder brother". From PSDP allocations and higher investments in education projects to motorway financing and administrative leniency under IMF pressures, critics argue that political alignment with the Centre translates into preferential treatment. This is best illustrated when, in January 2026, the federal government approved the Rs465 billion Lahore-Sahiwal-Bahawalnagar motorway, drawing scrutiny for unmet guidelines, resource concerns, and the absence of a viable financing plan or final design. The project was cleared by CDWP in breach of the National Fiscal Pact and Prime Minister's directive requiring at least 50% funding from the Punjab government.

Pakistan's federation crisis is less about the inadequacy of the 18th Amendment than about its selective implementation. Provinces demand autonomy but resist local devolution and taxation. The Centre demands fiscal discipline but struggles to relinquish control. Both invoke the Constitution while bending it to short-term political ends, including ignoring the spirit of Article 173(2), which calls for cooperative management of federal-provincial relations.

All these issues denote simmering and potentially deadly discord. Whether Pakistan needs a new social contract or adherence to the existing one to sustain the federation depends entirely on the will of the ruling elites.