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Pakistan: Imran Khan’s Economic Policies To Be Overshadowed By Foreign Policy – OpEd

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On August18, Imran Khan, Chairman, Pakistan Tehreek-i-Insaf (PTI) formally took the oath of prime minister. Earlier he was chosen prime minister by the National Assembly by securing 176 votes, while his opponent, PML-N President Shahbaz Sharif managed to get 96 votes. The protests by PML-N leaders continued nearly all the way through the session, despite the repeated attempts by the speaker to restore order in the House. Against this Chairman, PPP, Bilawal Bhutto Zardari, much younger as compared to Shahbaz Sharif, delivered a very articulated speech.

Concurrently the names to head finance, foreign affairs and defense ministries are being finalized. These three ministries are critically important as these will set the pace of economic development and project a soft image of Pakistan. While Asad Umar, Finance Minister in waiting, he is expected to keep his focus on two prime deficits, budget and trade, the influx of foreign exchange to meet debt servicing will be dictated directly by the foreign policy.

Initially, it appeared that Pakistan may face not get any encouraging response from the International Monetary Fund (IMF). The US, which in the past had been more than gracious in advising the IMF to lend money to Pakistan, seemed very hostile. In the prevailing scenario, it looked certain that Pakistan had no option but to approach other friendly countries, Saudi Arabia and China and request them to extend soft-terms loans to avoid eventual default. Now the reports suggest that the IMF has ruled out the possibility that it would deny Pakistan a bailout package under the US influence.

Reportedly, the Islamic Development Bank (IDB) was instructed by Saudi Arabia to lend US$4 billion to Pakistan after Imran Khan took the oath as country’s next prime minister. The offer was made immediately after a statement by Asad Umar that Pakistan would decide on whether to seek a bailout from IMF or friendly nations such as China and Saudi Arabia. A point yet to be clarified is whether the loan by IDB would be in addition to a three-year US$4.5 billion oil financing facility for Pakistan activated in July 2018.

Umar has expressed an intention to seek a US$12 billion bailout package from IMF. However, after the response of the US president, other contingency arrangements have to be made. The PML-N government, which also enjoyed godfathering of Saudi Arabia, has left Pakistan with huge burden of external loans resulting in balance of payment crisis and massive depreciation of Pak rupee.

It goes without saying that global and regional super powers have a special interest in Pakistan. The US is heavily dependent on Pakistan for logistic support for the combat troops stationed in Afghanistan. Pakistan also provides transit facilities to Afghanistan. In the prevailing scenario ‘do more’ mantra of the US goes on but it can’t afford to antagonize Pakistanis to disrupt NATO supplies. Despite being a super power, the US suffers from ‘bitten once shy twice’ situation that happened after attack on the Salala post.

While the US considers Pakistan a partner in war against terrorism only, China has substantial economic interest in Pakistan. At no point in time can China afford a situation where the pace of work on the China Pakistan Economic Corridor (CPEC) may be jeopardized. Over the past year Chinese loans have kept Pakistan afloat and support of any magnitude in the future can’t be ruled out. As the economic interest of China grows in Pakistan, it will also have to extend military support to save the country from any aggression. While President Trump may not be aware of this fact the US administration is fully cognizant that any retaliatory move will allow China to gain a solid footing in Pakistan.

Saudi Arabia, India and Iran are three regional super powers. A past mistake of India to bid farewell to Iran-Pakistan-India (IPI) gas pipeline project has caused it colossal losses. Even investment of millions of dollars in the construction of Chabahar Port in Iran by India has not provided it an efficient and effective access to Afghanistan. India is keen on the construction of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, which will also pass through Pakistan. Therefore, India is obliged to maintain minimum working relationship with Pakistan.

Maintaining a cordial relationship with Iran and Saudi Arabia is a must for Pakistan. The country can’t afford any hostility with either of the countries because it encourages terrorists to use its province, Baluchistan for cross border terrorism under the disguise of Baluchistan liberation movement. Saudi Arabia has enjoyed good relations with Nawaz Shariff and its concerns with the change of government are natural. Imran Khan has expressed to adopt a more independent course and also expressed willingness to mediate in improving relationship between Saudi Arabia and Iran.

In a phone call with Iranian President Hassan Rouhani, Khan accepted an invitation to visit Tehran. Reportedly, Saudi Crown Prince has also expressed intention to visit Pakistan soon in a bid to strengthen bilateral relationship. Khan also said, “We want to improve ties with Iran. Saudi Arabia is a friend who has always stood by us in difficult times. Our aim will be that whatever we can do for conciliation in the Middle East, we want to play that role. Those tensions, that fight, between neighbors, we will try to bring them together”.

It is not an easy situation for Khan to handle. Saudi Arabia has welcomed US President Donald Trump’s withdrawal from the 2015 nuclear agreement that curbed Iran’s nuclear program and his efforts to economically strangle the Islamic republic with harsh sanctions. Saudi Arabia has not forgotten that Pakistan’s parliament rejected in 2015 a Saudi request to authorize Pakistani troops to participate in its troubled military campaign in Yemen.

Appointment of Ms. Shirin Mazari as Defense Minister also becomes a source of concern for the monarchy. She had openly criticized in a series of tweets the fact that Pakistani General Raheel Sharif commands the 41-nation, Saudi-sponsored Islamic Military Counter Terrorism Coalition (IMCTC). She had asserted that Pakistan should not cooperate in Saudi Arabia’s alleged pursuit of a US agenda and should instead forge ties with Iran and India.

Khan will have to follow the collective wisdom of maintaining cordial relationship with global and regional powers. However, he will also have to safeguard Pakistan’s sovereignty. Pakistan should not be made subservient to any country for seeking bailout packages. He will also have to nurture the culture of living within means, rather than enjoying extravaganzas on borrowed money.


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Shabbir H. Kazmi

Shabbir H. Kazmi

Shabbir H. Kazmi is an economic analyst from Pakistan. He has been writing for local and foreign publications for about quarter of a century. He maintains the blog ‘Geo Politics in South Asia and MENA’. He can be contacted at [email protected]

3 thoughts on “Pakistan: Imran Khan’s Economic Policies To Be Overshadowed By Foreign Policy – OpEd

  • August 23, 2018 at 1:04 am
    Permalink

    the value of TAPI is overstated. India is not obliged to do anything with pakistan in the face of pakistan repeatedly denying India transit routes to Iran and Central Asia.

    it might be worth knowing, for all the costs imposed by the talibs in Ghazni or the costs of maintaining the roads into Afghanistan from Chabahar, India has replaced pakistan substantially as the source of grains (esp. rice), medicines and clothes for Afghanistan.

    instead of blaming everything on ‘beyrouni saazish’, educated people like you should teach pakistanis the cost of hatred, jihad and being a neighborhood nuisance has imposed on pakistan. no amount of screaming, marketing, lobbying and re-labeling will change reality. IK or no IK, the foundation is weak.

    Reply
    • Shabbir H. Kazmi
      August 25, 2018 at 6:17 am
      Permalink

      This is an endless blame game. Neither of the countries examine its acts. India will have to learn to live with its neighbors, rather making them subservient.

      Reply
  • Shabbir H. Kazmi
    August 25, 2018 at 6:13 am
    Permalink

    Thanks, it is easy to accuse Pakistan but will you also have a dispassionate look at what India has done in last seven decades. There is tit for tat, if India continue spreading hate, it should also be ready to get the same.

    Reply

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