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

Published: December 31, 2012
Pakistan must redefine security to include energy, water, and economic security.

Pakistan must redefine security to include energy, water, and economic security.

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 immediate

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.

The choice

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 1st, 2013.

Facebook Conversations

Reader Comments (11)

  • raza ali
    Jan 1, 2013 - 11:58AM

    Sir i do agree that we should have an independent foreign policy, in my view this can only be managed when we have a strong political system under constant and positive scrutiny from judicial system (not a judiciary that wants to remain in limelight). These two entities, backed by a strong armed forces ( needed to extend the political will of the political govt). Moreover, a strong economic base to have all of the above.
    Dear readers, in the absence of the above a dream of an independent foreign policy will remain a dream.
    As beggars are not choosers!


  • Aahjiz BayNawa
    Jan 1, 2013 - 12:57PM

    @raza ali:
    An independent foreign policy will always remain a dream unless and until we can crystallize our national identity and clarify our national goals.


  • Aahjiz BayNawa
    Jan 1, 2013 - 1:00PM

    With continued American dominance, it is still a unipolar World. Get your view straight.


  • raza ali
    Jan 1, 2013 - 2:49PM

    @ Aahjiz
    You are right dear, as without a clear purpose/ aim even a labor do not start off his day. This is Pakistan and for the past many years we have failed to identify the aim or a policy, in such a scenario how do u expect us to progress.


  • raza ali
    Jan 1, 2013 - 3:05PM

    Am not advocating a thorny relationship with the US, it will be living in a fool’s world if anyone even suggests that. , that as a sovereign nation make a policy that conform to our on ground realities and not in air like they are now.


  • Aahjiz BayNawa
    Jan 1, 2013 - 5:12PM

    Conflicting “ground realities” make national consensus impossible. Therefore, the nation lacks a clear-cut direction without which a robust foreign policy is out of question. First things must come first.


  • Jan 1, 2013 - 7:15PM

    This is injustice,
    you talk about releasing of Taliban prisoners
    and liberty for more
    but not comments on increasing insurgency inside Pakistan’s citieswhy?


  • Jan 1, 2013 - 10:53PM

    Pakistan must recognize and decide how to fully leverage its hugely important geography. On the economic front, both China and the United States have significant long-term interests in Pakistan, as does Russia, because of its strategic location as a transit country. Some see the growing US-China competition in Central Asia as the start of a New Great Game for power and influence in the Asian continent. This Game will present Pakistan with its greatest challenge and the greatest opportunity in the 21st century.

    The Chinese see the value of access to the Arabian sea as the shortest route for trade in and out of Western China to develop and stabilize its restive Xinijiang province. A number of Chinese companies are working on building roads such as the Karakoram Highway and other infrastructure for this purpose.

    As part of President Obama’s “pivot to Asia” to check China’s rise, the Americans have a strong competing interest in creating a new silk route in Asia that bypasses China. Americans envision such land route extending from resource rich Stans in Central Asia to resource hungry South Asia and Southeast Asia region via Afghanistan, Pakistan and India. The expected energy flow for energy-hungry Pakistan and the potential annual transit fees worth billions of dollars from this trade route are part of the US sponsored incentives for Pakistan to help stabilize the situation in Afghanistan. The first example of this effort is the American push for TAPI–Turkmenistan-Afghanistan-Pakistan-India gas pipeline.


  • Mike Jain
    Jan 2, 2013 - 9:37AM

    Imagine! If the 1947 Kashmir conflict had not occurred! The economic potential that friendly neighbors would have been able to unleash to feed the starving and lift the destitute out of their misery (Think of Canada/US, US/Mexico, France/Germany). Instead, we have spent all that money and human capital fighting for a piece of land that none of the main populations of both countries, outside of Kashmiris, own!!!

    Question: Can the military establishments (e.g.: Top Generals) of both sides, be made stakeholders in each others’ economy? Can they be allotted quotas for purchasing shares in companies across the border? Might this “conflict of interest” lead to an aversion to belligerence and help cause a shift in policy?

    Remember, Switzerland escaped the fate of other European countries. Rumor has it that it was able to remain neutral from Hitler’s war, because the Nazis had their money parked in the Swiss Banks!
    Finance, Defence and Foreign Ministers of India/Pakistan, ARE YOU LISTENING?


  • usman ahmed
    Jan 19, 2013 - 11:57AM

    Pakistan was confronted with host of problems since its inceptionk, Indian leaders accepted the partition with the hope that Pakistan cannot survive as a state, to add to the problems India forced to muslims to migrate to Pakistan, didnt gave the share of Paksitan. Didnt ahered to the principles of partition. Pakistan had to suport Kashmiries a muslim state in their quest to join Pakistan then Pakistan had to seek economic assistence from somewhere to start its business as an independent state. India compelled Pakistan to become a security state through its covert and overt means to damange Pak economicaly and physicaly, sicerity to exist as a good neighbour in India was missing. Pakistan was pulled in the affairs of Afghanistan being neighbour and route to outside world. Security situation has been further agravated by indian interference through its heavy presence in Afghanistan, it has damaged Pak economy. Above all incompetent and corrupt leadership of Pakistan has further compounded the problems of Pakistan. India needs Pakistan to import energy from centeral aisan states or Iran, india needs trade route to centeral aisan states for her economic development but she cant get it through coersive tactics. Pakistan must change its foreign policy to look east minus india unless india shows some sincerity and quest for peace. Pakistan cannot throw herself in the feet of india for economic benefits through trade with her. Peace is required on equal footings and with dignity. India also needs to control the hindu extremists who foiled peace efforts in the past and are warmongers. Similiarly Pakistan is also require to control millitants at home. Pakistan must change her foreign policy to look east to focus on her economy and security at the same time. Peace at home is required to attact foreign investments in era of global economy.


  • Vinay
    Feb 14, 2013 - 2:53AM

    @usman ahmed:
    Hi Usman,
    I request you to get off the brain washing u get in ur schools. Kindly let me know ur basis of argument that “Indian leaders accepted the partition with the hope that Pakistan cannot survive as a state, to add to the problems India forced to muslims to migrate to Pakistan, didnt gave the share of Paksitan.”. Kindly don’t quote some stupid pro pakistani references.

    You say “Pakistan had to suport Kashmiries a muslim state in their quest to join Pakistan”
    Why is that? You interfered in Kashmiri affairs, even though the king of Kashmir didn’t have an intention to accede to India, which led to the other things that followed.

    “India compelled Pakistan to become a security state through its covert and overt means to damange Pak economicaly and physicaly, sicerity to exist as a good neighbour in India was missing.” You had your share of inadequacies and now are tying to blame India.

    I don’t want to go any further and just want to say….wake up, work for a peaceful region and then this region has the potential to become one of the most sought after economic destinations in this world.



More in Pakistan