A Geopolitical Perspective on Pakistan’s Economic Crisis

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Dr. Manoj Kumar Mishra    26 August 2018

Pakistan under the leadership of cricketer-turned-politician Imran Khan not only inherits the legacy of economic and political instabilities of earlier regimes, the issues have assumed more complex and serious forms and the new government is hard-pressed to undertake the gargantuan task of overcoming the financial crisis without American assistance whose aid has been crucial to Pakistani economy in ticking its foreign currency reserves and the US support which has been vital in securing IMF loans the latest one was in 2013 when Islamabad received $6.6 billion in loans to overcome its balance of payment crisis. Pakistan’s relations with the US took a nosedive in January 2018 when the Trump Administration suspended most security assistance following a freeze of $255 million until Pakistan showed commitment to fight terrorism to American conviction. While stringent American sanctions have pushed Islamabad into the orbit of Beijing’s economic influence, the new government in Islamabad reels under unremitting Chinese debts which are unlikely to be repaid let alone economic recovery unless Pakistan turns to IMF for fresh loans. However, Pakistan has been included in the ‘grey list’ of the Financial Action Task Force (FATF) for its failure in freezing assets of terror outfits which would not only compound the problem of the financial crisis by placing Islamabad’s banking and monetary transactions to global scrutiny but it would also sabotage Islamabad’s chances of securing loans from IMF where the US enjoys predominance.

While this time Islamabad would seek a bailout from IMF, the American Administration is most likely to be reluctant to assist Pakistan in securing any concessions from IMF not only due to souring of bilateral relations, Washington would guard against any fresh loans which would be directed to repay Chinese debts (Washington views Beijing’s Belt and Road Initiative as part of Chinese strategy to enhance its global military and strategic influence). Unless Islamabad can change its track record of being a ‘haven,’ ‘sanctuary’ and ‘training ground’ for terror outfits in American perception, Pakistan is likely to face an array of economic salvos. Given Imran Khan’s past record of indulgence in anti-American rhetoric which was clear in his opinions about and opposition to drone strikes on Pakistani soil (he threatened to shoot down any US drone that hit inside Pakistan if he was elected to power), his opinion ascribing the rising tide of terrorism in Pakistan to Islamabad’s participation in US-led anti-terror campaign and his questioning of open-ended US military presence in Afghanistan to mention a few, it is unlikely that uptick in relations will ensue unless Pakistani military which allegedly catapulted Khan to power and its intelligence wing change their long-held policy of using radical Islamic groups as foreign policy tools.

While it is not farfetched to understand that Pakistan to be more peaceful and stable needs a peaceful and stable Afghanistan given the fact that promotion of radicalization and militancy as a foreign policy tool directed towards its western neighbor has demanded from Islamabad enormous resources and internal peace to sacrifice. Far from achieving peace, the two neighbors very often got entangled in a blame-game charging each in propping up terror against the other. It is argued that Islamabad would prefer an unstable Afghanistan to a peaceful one as long as mutual antipathy and distrust characterize Indo-Pak relations. Pakistan has for long provided a theory that India’s enhanced presence in Afghanistan would encircle it from two sides by squeezing it in the middle. Therefore, it has had expressed its apprehension regarding Indian presence in Afghanistan leading the US to limit New Delhi’s presence largely to non-military developmental aspects. Pakistan argues that it pursues its legitimate security interests in Afghanistan.

India’s strategic experts coined the term ‘strategic depth’ to explain Pakistan’s attempts at securing overriding influence in Afghanistan while undermining New Delhi’s presence. This concept was built upon the strategic concern that was first expressed by General Arthur F. Smith, the then Chief of General Staff in India as early as February 1946. He argued that a pliable government in Kabul was meant to give Pakistan the much required strategic depth to launch a counter-offensive from Afghan territory. (Ayesha Jalal, The State of Martial Rule: The Origins of Pakistan’s Political Economy of Defence, (Cambridge: Cambridge University Press, 1990), p. 50).

However, former Pakistani general Mirza Aslam Beg’s viewpoint on the concept corresponds more to the reality of Pakistani policy and ambitions in Afghanistan given his first-hand knowledge of Pakistan’s military and strategic policies. He argues: “the strategic depth concept was developed to gain territorial space in case of war with India has no military logic, nor does it conform to the operational policy of Pakistan, which is to defend its borders and defeat the enemy if it attempts to violate Pakistan’s territory. (General M. A. Beg “Afghanistan Turmoil and Regional Security Imperatives,” paper presented at the second international conference at Tehran, Iran, December 22, 2002. http://www.friends.org.pk/Beg/afghan%20turmoil.htm).

Analyzed broadly, Pakistan’s ambitions in Afghanistan are far more comprehensive including Islamabad’s spread of influence further towards Central Asia rather than ensuring military depth in Kabul exclusively. This desire has been sustained by acting through radical Islamic groups and banking on radical Islamic ideology in order to contain the influence of other regional powers, ensuring arms and aid by facilitating the presence and operation of the US during the Soviet intervention and War on Terror and blocking its territory for trade between India on the one hand and Afghanistan and Central Asia on the other. This concept indicated invigoration of Pakistan’s attempts at linking itself with the Central Asian region through communication networks and ensuring pro-Pakistani establishment in Afghanistan.

Since its emergence, Pakistan got locked into a territorial dispute with Afghanistan with a recurring demand for self-determination from Pashtun population spreading across the Af-Pak border area (Durand Line) to form Pashtunistan. Pashtunistan, more than an ethnic issue has been considered a geopolitical issue by successive Afghan regimes to gain access to the Indian Ocean and therefore to the world market. All the trade routes to Afghanistan’s south ran through Pakistan’s territory, and the Pakistani drive in Afghanistan was steered towards installing a pro-Pakistani clerical regime so that the Pashtunistan issue was subsumed under the broader banner of Islamic identity. Pakistan directed its efforts to ensure that Afghanistan remained dependent on its trade-routes so that its influence there did not get diluted.

The Soviet intervention in Afghanistan in 1979 provided Pakistan with the required security environment to pursue a friendly and amenable regime in Afghanistan so that Pashtunistan issue would get subsumed within the rubric of Islamic identity. Pakistan directed Pashtun hostility to fight against the Soviet Army and forge political Islam known as ‘Jihad.’ It is because of the cultural affinities of the Sunni Muslim Pashtuns on either side of the border and dominant influence of Pashtuns in the higher ranks of Pakistan’s army and bureaucracy, Pakistan’s Afghan policy tilted in favor of mujahedeen parties. Pashtunistan was more a geopolitical issue than an expression of ethnic solidarity is borne out the fact that Pashtunistan dominated Afghan foreign policy in the early 1960s despite little support it enjoyed among the Pashtuns of Pakistan.

While the Soviet forces were bogged down in Afghanistan, Pakistan considered it to be the right time to spread its influence further towards its north where the Islamic states of Central Asia are situated. Pakistan, to spread its sway into the Central Asian part of the former Soviet Union, not only reportedly trained Afghan groups but sent copies of the Koran across the border through them in a bid to bring them closer. Pakistan was allegedly engaged in subversive activities in the areas of the Central Asian part with the goal of liberating Soviet Muslims.

While attempting to muzzle the voice for independent Pashtunistan which would have deprived Pakistan of its geographic advantage by diversifying the only available trade routes running through Pakistani territory, Islamabad wanted to acquire economic depth in Afghanistan by taking rock-solid posturing in preventing its territory being used as a conduit for Indo-Afghan or Indo-Central Asian trade. Similarly, Pakistani involvement in the Taliban’s emergence and rise needs to be placed within the larger context of changed geopolitics in the Eurasian landmass. The Soviet Union disintegrated in the early 1990s and gave way to the emergence of six Central Asian states which were landlocked but rich with natural resources.

With the perceived loosening of Indian ties and influence in the region after the dismantlement of its closest partner, Pakistan was eager to extend both trade and political ties to the region. This required stability in Afghanistan torn apart by Civil War and local rule and influence of warlords. After repeated attempts by Pakistan’s favourite Hekmatyar to subdue other ethnic forces in Afghanistan, the second democratically elected government of Benazir Bhutto, under its Interior Minister General Naseerullah Babur prepared the groundwork to utilise the Taliban to bring stability to southern and eastern Afghanistan. He saw high stakes involved in Afghanistan for Pakistan through which trade routes could be opened and linked to different resource-rich Central Asian states (Jere Van Dyk. Islamic Fundamentalism in South Asia, U.S., Army War College: Strategic Studies Institute, 19 July 2007, p. 23). However, the act of resorting to radical Islamic groups for enhancing geopolitical influence has proved a boomerang for Pakistan in the long-run. It has not only kept Afghanistan boiling with continuous spilling human blood as the recent data of the UN Assistance Mission in Afghanistan (UNAMA) suggested that the Taliban have been responsible for 42 per cent of civilian casualties in the first half of 2018 but Pakistani citizens have very often fallen victim to the rising menace of terrorism.

Pakistan’s sense of insecurity from India’s growing economic clout and diplomatic influence is quite palpable in its opposition to Afghanistan’s membership in SAARC and alleged Pakistani involvement behind terror attacks on Indian embassy in Kabul and consulates including the one in Jalalabad and abduction of Indian engineers engaged in non-military reconstruction activities. It has raised doubts whether Islamabad followed legitimate security interests in Afghanistan although Pakistan has consistently denied its involvement in assisting radical groups. To undermine regional integration process, Pakistan resisted Indian efforts at introducing regional trade and connectivity proposals and pushing three agreements on the road, rail, and power that New Delhi came up with during the deliberations of the 18th SAARC Summit held in Kathmandu in November 2015. A confluence of factors like overreliance on Islamic radical groups for geopolitical influence, dependence on American military and development aid and allegedly diverting these to fund non-state actors (radical religious groups) and throwing weight behind Beijing more to promote geostrategic objectives than to meet economic needs under the CPEC project has left Pakistan’s economy in tatters. Seeking a bailout and fresh loans from IMF is not likely to address the broader economic malaise that has plagued its economy over the years. The incumbent Pakistani regime under Imran Khan’s leadership must engage in brainstorming as regards the need of diversion of internal resources and external economic assistance to development purposes and devising ways and means to participate in the regional integration process which will help Pakistan organize its economy in the long-run.

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