Economic prowess: In a non-polar world, Pakistan needs a fresh foreign policy

That militancy is the biggest near term threat Pakistan faces is obvious. What may not be obvious is that the roots of militancy go deeper than just Pakistan’s links with the Afghan Talibans or its support of various other militant groups.

They can be traced to Pakistan’s foreign policy since 1947. The greatest challenge for Pakistan is to transform itself from a client national security state to a modern viable nation state. Pakistan cannot meet this challenge without making major changes in its foreign policy, the centre-piece of which would be a gradual shift in its focus from the West to the East. Although Pakistan must continue to expand ties with China, it should not think in terms of replacing the US with China as the largest source of aid.

An eastward-looking policy would attach the highest priority to the normalisation of relations with India and secure peace on the western borders because the ‘peace dividend’ alone can unlock the full potential of the region which is home to about one–fifth of humanity.

As the US prepares to withdraw from Afghanistan and reduce its involvement in the region in the backdrop of serious economic crisis, Pakistan has got more diplomatic space to make fundamental changes in its foreign policy based on long-term interests of the people than just expediency or the next tranche of US aid.  Pakistan is at the crossroads. Unless it makes a clean break with its turbulent past, it may descend further into chaos and anarchy. It has an opportunity to disengage from all conflicts but this would have to entail getting rid of historical baggage and a fresh and realistic assessment (sans ideology and illusions) of changing global political economy and power dynamics.

It is instructive to review the historic context of Pakistan’s policies. The first India-Pakistan War of 1947–1948 was fought over Kashmir. Following a Muslim revolt in the Poonch and Mirpur area of Kashmir, on October 22, 1947, a Lashkar of tribals from the north-western Pakistan, some five thousands strong, led an incursion into the valley from Abbottabad. Even as the Indian army came to the rescue of Kashmir’s maharaja, the joint incursion of the Lashkars and regular troops enabled Pakistan to acquire roughly two-fifths of Kashmir which it established as Azad Kashmir. On October 30, 1947, Mir Laik Ali, a special emissary of Quaid-e-Azam, met with the US state department officials in Washington and requested American financial assistance.

The two events, use of tribal Lashkars and request for US financial assistance, took place within three months of Pakistan’s birth and were to cast a long shadow over Pakistan’s foreign policy.  Ironically, it was Mr. Jinnah, a proponent of peaceful and constitutional independence movement and opponent of the British colonialism, who went for a military solution and sought the help of then rising neo-colonial power, the United States, when Pakistan’s very survival was at stake.

Pakistan’s policy was India-centric and militaristic since its inception and sought to take advantage of the West’s need for a regional ally against Communism. This cold war mindset to play a proxy in the “Great Game” dominated Pakistan’s foreign policy for decades and also impinged on its domestic polity and policies. A key characteristic of this was cycles of friendship and estrangement with America. The US provided considerable military and economic assistance from 1954 to 1965 but suspended its military assistance in 1965 during the Indo-Pak war. The relations became strained in the mid to late sixties to a point where it was alleged that there was ‘collusion’ between China and Pakistan. The suspension of US military assistance during 1965 war brought home the point to Pakistani rulers that all the defense treaties – bilateral or multilateral - with the US won’t help her in the event of any confrontation with it principal rival India. Actually, it was China and Muslim countries like Iran, Turkey, and Indonesia that supported and helped Pakistan during 1965 war. Despite this, Pakistan naively expected that the US might come to her assistance when India attacked former East Pakistan in 1971. Again, it was to be disappointed.

I would not go into details of the so-called ‘Afghan Jihad’ in the 1980s but Pakistan’s success in continuing its nuclear program - ignored by the Reagan administration as a quid pro quo for Pakistan’s support against the Soviets- during this period convinced the military establishment that it could pursue its ambition to ‘liberate’ Kashmir and dominate Afghanistan because it was a “frontline” state. Apparently, it forgot about the US stance during 1965 and 1971 wars. Emboldened by what Pakistani establishment mistakenly saw its ‘success’ in Afghanistan, it made militancy an integral part of Pakistan’s foreign policy. That was a monumental blunder. Pakistan came close to being declared a terrorist state in the 1990s while straining relations with neighboring India, Iran, and a large segment of Afghan population.

This set of policies continued throughout the 1990s and till 9/11 even as Cold War became history. The world’s political and economic map changed dramatically after disintegration of the Soviet Union in 1991. During the 1990-2010 period, many developing countries focused on economic reform and grew rapidly as a consequence of the liberalisation of international trade in increasingly globalised financial markets. The combined output of the developing economies overtook the developed world in 2008 (on purchasing power parity basis) and is now around 55% of world GDP, almost twice its share in 1990. Asia’s 27 developing countries with 18% of world gross domestic product have overtaken the 17-nation euro area this year. Ten years ago, the European Union made up 21% of the total and the Asian countries 8%.



The decade after the new millennium saw the emergence of China and India as global economic powers. What was a uni-polar world in 1991 transitioned to a non-polar world. Richard Hass, President of the Council on Foreign Relations, described it as a world dominated not by one or two or even several states but rather by dozens of actors possessing and exercising various kinds of power. “This represents a tectonic shift from the past”, he wrote in 2008. However, Pakistan struggled for political stability while indulging in foolish adventures like the Kargil. It behaved as if the Cold War was not over and Americans would continue to tolerate its development of the nuclear weapons program and use of the militancy as a foreign policy tool because of its unique “geo-strategic” location even as it faced sanctions from the US.  Musharraf’s decision to join the War on Terror was partly motivated by his desire to end Pakistan’s growing international isolation and increasing discomfort of the US with Pakistan’s relationship with the Talibans.

Now, as the US prepares to unwind its costly misadventure in Afghanistan, which failed to defeat the Talibans, Pakistan must seize the initiative to help shape the events to the maximum possible extent it can. The immediate near-term goal has to be the attainment of peace and stability in Afghanistan which faces an uncertain future and possibly civil war. This cannot be achieved by working with the US alone. Regional powers particularly China, Russia, India, and Iran have a natural stake in a peaceful Afghanistan. None of them has ever been comfortable with Pakistan’s close relationship with the Talibans. While China and Russia have been basically happy to let the US fight the Talibans, India and Iran have provided hundreds of millions of dollars to Afghanistan since 2002. Although it may be a bitter pill to swallow, peace is not possible without the Talibans.  But it is also inconceivable without the participation of the non-Taliban groups and support of the regional powers. Pakistan may have the greatest leverage with the Talibans but that is not enough to secure peace. Actually, the war has hurt Pakistan so much, it would be wise to engage even India in a multilateral peace effort. Pakistan’s establishment should treat it as a lesser evil compared to the confused policies and hostile attitude of the US military establishment. Ultimately, durable peace in the region would rest more on Indo-Pak relations than the so-called AfPak or US with its diminishing influence, although it would remain the biggest military power for decades. But for now, it is on the retreat.

More importantly, at a broader and strategic level, Pakistan must redefine security to include energy, water, and economic security. Pakistan has pushed itself into a corner where the West considers it relevant mainly because it is a politically unstable nuclear power in a troubled region. It does not figure much in the US Middle East policy, which is focused on nuclear non-proliferation, energy security, Israel, and preventing Iran from building a nuclear bomb. Pakistan needs to have friendly ties with Iran which is not only an important neighbor but a potential source of energy having one of the five largest hydrocarbon reserves in the world.  Although the proposed Pak-Iran gas pipeline has been a sore point in Pak-US relations, Pakistan’s Middle East policy should focus on its energy needs with strictly a neutral stance vis-à-vis the dangerous and destabilising regional rivalry between Saudi Arabia and Iran. Pakistan cannot afford to be a battle ground of proxy conflicts and must do all it can to prevent that.

South Asia is one of the least developed regions in the world and conflicts have held it back from realising its full potential. Pakistan needs friendly relations with India to access a big market but also to find a peaceful solution for its water needs because armed conflict is just not an option. Paradoxically, it is not the alliance with the US but the recent estrangement (perhaps a blessing in disguise) that has led the military establishment to support normalisation process with India.



In the Asia-Pacific region, the containment of China has emerged as America’s top foreign policy priority. Myanmar was the first foreign trip of President Obama after his re-election. While both the US and China need each other, probably more than either needs Pakistan, it is China that now dominates Asia-Pacific and even traditionally pro-US countries like South Korea and Singapore have adopted a more neutral posture with the rise of China as a major trading partner and source of capital.

Pakistan is in Asia and its long-term security and economic interests will be best served by promoting regional peace and not by stockpiling conventional and nuclear weapons. It desperately needs massive investment capital flows, a large proportion of which are contributed by private transnational corporations (TNCs) and the developing countries. Revenues of just the foreign affiliates of these TNCs at $28trillion were nearly double the size of the US GDP in 2011. Both the US and Europe are mired in serious and prolonged economic slump and the ability of their governments to help the developing countries has been seriously impaired by crippling sovereign debt levels.

The role of the World Bank and the IMF has shrunk sharply in the last three decades. The developing countries, that provide hundreds of billions of dollars every year in international investments, are a much bigger source of global capital than these once mighty multilateral institutions ever were. For example, the developing countries made a total of $384 billion in foreign direct investments in 2011 compared to the World Bank’s total lending of $43 billion. Pakistan’s ability to attract foreign investments would depend mainly on the peace prospects in the region and how private transnational corporations and some of the largest capital exporting countries like China, Norway, Saudi Arabia, Russia, Qatar, Kuwait, Hong Kong and Singapore view its prospects. All of them attach high priority to developing economic ties with India and would like to see and support improved relations between India and Pakistan.

In 2011-12, foreign direct investment exceeded $5 billion in each of these countries: India, Brazil, Indonesia, Malaysia, Turkey, Chile, Colombia, Peru, South Africa, Thailand and Czech Republic; compared to just over a billion dollars in Pakistan despite being the six most populous country in the world. This can’t and won’t change regardless of the US policy toward Pakistan. Few realise that Pakistan has the potential to attract more capital in just a few years than the entire US aid during the past decade only if it would disengage from all conflicts and work with India and Afghanistan for peace in the region.

A confluence of trends including emergence of a non-polar world, changes in the world balance of economic power, diminishing Western influence in the Middle East in the aftermath of Arab Spring, and a more assertive Russia make it an imperative for Pakistan to shift its foreign policy focus from the West to the East and make expansion of trade and economic ties with China, India, and the rest of Asia a corner stone of this shift.

Pakistan’s military establishment and political elites need a new vision for foreign policy, a vision that recognises that in today’s non-polar world the economic size and strength of a country is the single-most important and primary determinant of its standing and influence in the international community. Hence, a principal goal of foreign policy should be to grow economic power. The choice is before Pakistan whether it wants to end up like nuclear-armed but bankrupt North Korea or aim towards becoming a modern Asian economic power.

The writer is author of The Gathering Storm, Pakistan: Political Economy of a Security State (Royal Books, 2008) and a former head of emerging markets investments, Citigroup

Published in The Express Tribune, January 1^st, 2013.