The global economic landscape has undergone profound changes since the end of the Cold War. This successive transition posed heinous challenges; simultaneously it offered opportunities to the states around the world to refurbish policies aligned with their interests. Notwithstanding the concurrence of the US-led global order, the rise of China has revamped the dynamics in favor of states that are eager to abandon the conformist security paradigm and want to restructure imperatives of security, progress, and development.
In Pakistan’s context, the fallouts of unipolar world order coupled with domestic political and economic constraints beleaguered Pakistan. In the first decade of the 21st century, Pakistan’s foreign policy apparatus driven through the security-oriented calculus as Pakistan remain the coalition partner and front line state in the global ‘War on Terror’ thus continue applying the same security parameters to design its foreign policy vis-a-vis immediate neighbors and other regional states.
Nevertheless, China’s BRI initiative of revitalizing the ancient Silk Road route put the economy at center stage and the helm of regional geopolitics start revolving around this mega Beijing-led initiative. China-Pakistan Economic Corridor (CPEC) – a pilot project set the platform for Pakistan to redefine its preferences from security-driven ambitions to economic-led policies.
The rhetoric of shift in the foreign policy became eminently visible during the government of PTI that decisively opted economy as vertex point of Pakistan’s envisioned path of progress and prosperity for the foreseeable future. In an account of this, the idea of human security echoes a shift from a state-centric security paradigm to social welfare. Human security has several dimensions, including water security, food security, community security, health security, environmental security respectively. Pakistan’s shift has pivoted around the country becoming a regional hub of economic connectivity in South Asia and is driven by the “sincere desire to re-cast Pakistan’s image as a peace-loving and useful member of the international community.”
Henceforth, the stakeholders, policymakers are determined to ensure national economic security that remains imperative for Pakistan’s capacity to maximize its defense and deterrence and to spend greater resources on human welfare.
Pakistan’s Geo Economic Vision:
Pakistan’s geo-economic vision is predominantly based on the following basic principles that aim to change the narrative of geo-political contestation to geo-economic:
- Durable peace at the domestic and regional level is the prerequisite for the promotion of the economic vision of Pakistan.
- Pursuing non-interventionist policy in the domestic affairs of neighboring states and also playing a constructive role in crisis mitigation.
- Geographical diversification by boosting intra-regional trade and connectivity and ensure positive-sum gains for all the engaging actors.
- Provision of viable environment for the Foreign Direct Investment (FDI), multilateral trading activities.
- Promote the indigenous “Made in policy” by shifting from the traders-based to the industrial-led economy.
- Products diversification- making a shift from lower value-added products to higher value-added products aligned with emerging market trends of the development.
- To pursue an economic diplomacy strategy under the inclusive security framework to increase Pakistan’s economic footprint globally.
“Emboldened by the national progress, prosperity, and sovereignty, the Prime Minister of Pakistan recently unveiled a comprehensive National Security Framework incorporating both the traditional and non-traditional facets of national security with economic security. This envisioned plan aims at the acting as a pivot in the region with a focus on shifting Pakistan’s synergies from hard power to geo-economics”
Effectiveness of Geo-Economic Vision:
To have a critical appraisal of Pakistan’s Geo-economic vision, the understanding of the global economic model is a prerequisite. Contemporarily, redistribution in global economic power has given rise to a new era of great power competition, driven by great power competition between the US and China, instrumented by economic tools to achieve strategic objectives. This increased convergence of economic and security thinking and strategies to change into a noteworthy reformation of the global economic regime that governs international trade and investment. In addition to that in the new geo-economics world order, the balance and relationship between economics and security have also altered with a greater focus on relative economic gains given their implications for security; and extended apprehension over the security vulnerability posed by interdependence of undermining state control, self-sufficiency and resilience. On a broader canvas, the Chinese model of economic development (BRI) has attained resounding success and to an extent, Pakistan’s economic endeavors are converging with this [vary] project that has its outreach from Asia to Europe and Middle to Africa. Thus there is a clear preference of “economy” as modus operandi of diplomatic deliberations at inters- state level.
From Pakistan’s lens, sitting at the crossroads of South, Central, and West Asia makes it one of the key actors in the realm of regional multilateral affairs. To take full advantage of its geographic presence, Pakistan aims to shift its focus from geo-politics to geo-economics through interest maximization based on enhancing connectivity and paving the path for all-encompassing development.
The reflection of the envisioned economic policy of inclusive growth and development can be witnessed in Pakistan’s civil, military leadership’s initiatives toward non- non-confrontational neighborhood policy. Normalization of ties with India is one major step towards realizing the shift from geopolitics to geo-economics.
“Pakistan’s Vision Central Asia”
Under the Umbrella of BRI, China desires to establish an economic corridor through linking Central and South Asia, assisting states in the region transform from “land-locked” (CARs) to “land-connected,” and collectively develop an international transport route connecting Europe with Asia and connecting the North with the South. This particular Beijing’s plan largely lies on the flagship project – CPEC which means Pakistan becomes a vertex point in shaping up regional economic architecture. As Pakistan already offered its infrastructure for better connectivity of Central and South Asia, in particular, cooperation between Gwadar and other ports in the regions would raise impetus for the shortest and most economical sea route for cost-effective transit trade.
During the visit to Uzbekistan, Prime Minister Imran Khan underlined the five pillars of Pakistan’s “Vision Central Asia.” Under this policy, Pakistan aims at an enhanced, tangible, effective, result-oriented, and long-term sustainable engagement with Central Asian countries by forging strategic partnerships. The policy has five pillars: political; trade & investment; energy & connectivity; security and defense; and P2P exchanges.
It is pertinent to mention that Pakistan has already initiated an inclusive framework of deepening trade ties with Uzbekistan. The core reason for economic diplomacy with Uzbekistan is significant because it is the gateway to important Central Asian Republics, more importantly, it also provides access for the Russian federation. It has shown readiness to sign the free trade agreement (FTA) during the visit of the Prime Minister. Under the FTA, Pakistan will get duty relief on its over 100 tariff lines and Uzbekistan on 37 tariff lines. The current bilateral trade with Uzbekistan stands at just 37 million dollars, which will escalate manifold once the FTA with Uzbekistan is signed. The total trade of Uzbekistan with the world stands at $30 billion out of which its exports are at $11 billion and imports stand at $19 billion.
Pakistan also vows to complete outstanding projects. For instance, The CASA-1000 project is a 1,270km power transmission line that is expected to export excess hydropower generated in Kyrgyzstan and Tajikistan to Pakistan through Afghanistan. The project would support the economic integration of the four participating countries by establishing a regional electricity connection and creation an integrated electricity market.
In addition, the other projects of construction of the Trans-Afghan railway corridor in the future will be able to connect the countries of Central Asia with China and other major economies of the Asia-Pacific region. Therefore, Pakistan’s geo-economic vision is timely aligned with regional geopolitical trends. It can be argued that why Pakistan is specifically targeting the CARs region? There could be several key aspects.
First, there are key convergences in the economic interests of Pakistan and the Central Asian states. Connectivity is our biggest asset as CARs desire to have access to warm waters whilst Pakistan tends to explore the landlocked markets of the region. Notably, geographical location makes Pakistan the shortest, most economical, efficient, and easiest land connectivity route for Central Asia to the Arabian Sea, particularly for Uzbekistan.
Second, the shared geography, geo-economic dynamics, and cultural ethos favored connectivity between the two regions creates a positive-sum gain equation for the entire region.
Third, CARs are stable and growing economies that offer huge natural energy resources and a market of 80 million. Through creating greater economic activities, cost-effective trade and more employment opportunities would turn the rhetoric of Pakistan’s regional economic plan into reality.
Fourth, appraisal of EU and ASEAN economic models suggest that their regional trade ratio is 85% and 65% respectively. But Pakistan’s regional trade is confined to 5% only. Thus trade with CARs would assist to increase its trading ratio with the regional states and also its economic ambitions would attain notable success.
“Pakistan’s Look Africa Policy”
Look Africa Policy is another key aspect of Pakistan’s geo-economics vision. This contour of foreign policy tends to establish economic orientated multi-lateral ties with the African states in the forthcoming years. It is pertinent to mention that Pakistan’s total trade with Africa is $3 billion as against the total trade volume of $3 trillion. Furthermore, despite immense potential Pakistan’s share in total trade of African countries merely confined 0.3%. Thus to further expand the economic ties, 10 major states out of the 54 African nations selected trade promotion include Nigeria, Kenya, South Africa, Morocco, Algeria, Egypt, Sudan, Tanzania, and Ethiopia respectively.
According to this outreaching initiative, Pakistan to offer to negotiate a Preferential Trade Agreement(PTA) with three African trading blocs – Southern African Customs Union (SACU), East African Community (EAC), and Economic Community of West African States that constitute (ECOWAS). Likewise, Pakistan also intends to accord PTA with ECOWAS, which includes Benin; Burkina Faso; Cabo Verde; Côte d’Ivoire; Gambia; Ghana; Guinea; Guinea Bissau; Liberia; Mali; Niger; Nigeria; Senegal; Sierra Leone; and Togolese, is also envisioned. The value of bilateral trade between the countries is less than $100 million. As per policy, joint working groups (JWGs) on trade will be established by the commerce ministry to engage major African countries to have regular interaction.
One of the crucial aspects of Pakistan’s economic vision, Pakistan set to gain from the China-Iran Strategic Partnership deal. The bilateral deal between Tehran and Beijing calls for up to $400 billion in investments spread over 25 years in telecommunications (5G), infrastructure, banking, and free trade zones and also partial military cooperation, intelligence sharing, and weapons design. Adding further, the deal is imperative as it would allow Pakistan to extend CPEC in the region. Iran’s official inclusion into the BRI will be crucial in the reduction of Pakistan’s energy crisis and it will pave the path for sustainable trade between the two states. In addition, the completion of the Iran-Pakistan (IP) Pipeline can now be expedited.
In the year 2016, China Petroleum Pipeline Bureau (CPPB) stated its willingness to help complete the unexpended part of the IP from Gwadar to the Iranian border. Moreover, there are also plans for an LNG pipeline to China from Iran along the CPEC. Realization of this project will have several advantages for all three countries. Additional benefits to Pakistan from the Iran-China deal are a much-needed boost to Pak-Iran trade — the potential of which amounts to $5 billion. Moreover, Pakistan can benefit from another important component of the 25-year plan which is the proposed sharing of intelligence between Tehran and Beijing. Likewise, the establishment of economic zones alongside Pak- Iran borders would further increase trade between the two states. One of the aspects of the China-Iran deal is better bilateral and regional involutions with all neighboring countries which automatically highlights both Gwadar and Chabahar. Pakistan-Iran gas pipeline is an important issue for Pakistan. Pakistan may be able to mature its gas pipeline with Iran after the deal is materialized.
Major reforms in bureaucracy, taxation, sustainable infrastructure development, and the energy sector are essential to creating an investment-friendly environment for domestic and foreign investors is a fundamental imperative for turning the economic vision rhetoric into reality.
- There must be a shift from the current short-term focus of the economic stability program towards a credible long-term strategy – that may require some bridge financing to stabilize long-term economic growth.
- Pakistani diaspora is one of the most crucial aspects of promoting the geo-economic vision of Pakistan. Stakeholders should get the Pakistani diaspora onboard and encourage their involvement in the economy.
- Realizing the geo-economics paradigm also depends on the continuity and transparency of political institutions and strict practice of the separation of powers.
- Extremist tendencies should be mitigated through a chain of reforms in society overall. A progressive, tolerant and civilized societal behavior can lead the country towards sustainable economic development.
- Re-energising Afghan-Pakistan Transit Trade Agreement and also providing access to Afghanistan to export her goods to India.
- Improving economic and trade environment along Pak-Afghan border by establishing border markets and development of infrastructure.
- Being part of energy and trade corridors binding Central. South and West Asia through land routes and inviting Afghanistan to be part of CPEC.
- Minimum economic dependency over the IMF, World Bank would ensure a sovereign and stable economic regime.
- Great power competition and policies of containment are dominant. However, Pakistan has decided not to be a part of any regional conflict and has consciously chosen only to partner for peace and development.
- The regulatory framework needs to be improved. Legislative and empowerment measures must be taken to strengthen existing institutions such as The Federal Board of Revenue and the Competition Commission of Pakistan.
- The rise of the Taliban in Afghanistan is precarious and full of complexities. Pakistan has played a constructive and robust role in bringing the parties to the table. Durable peace in Afghanistan holds the key to trade, connectivity, and economic development in the region.
- The transnational nature of modern technology, data, and artificial intelligence has changed the nature of war, the balance of power, economic security, and the discussion of national security policies. Hence, Pakistan should re-orient itself as a technology-friendly country, focusing on investing in artificial intelligence, technology, and internet connectivity.
- Economic stability and peace in the region are linked with the peaceful settlement of the Kashmir dispute between Pakistan and India as per the United Nations Security Council’s resolutions. The onus is on India to create a conducive environment for forwarding movement.
- Political coalitions must be strengthened, as they are required to push reform. Any reform that is passed must be accompanied by legislative reforms by provincial governments. There must also be a clear political calculus on how to change and bring reform. All of this needs to be strategically thought out by the parliament.
- Infrastructure spending is designed to create construction jobs and increase productivity by enabling businesses to operate more efficiently.
- To ensure that opportunities reach all corners of a country and all citizens within its borders, a Territorial Development approach is necessary when designing public policy with the spatial concentration of people and firms that can be harnessed to improve living conditions everywhere, enabling the convergence of living standards across the territory.
- Better economic engagement through international forums/ associations such as SCO, SAARC, ASEAN, and ECO would uplift Pakistan’s economic posture.
To conclude, in pursuit of Pakistan’s prosperity, this holistic shift in its foreign policy trajectory opened up fresh corridors of diplomatic engagement. The new strides will not only enable Pakistan to ensure its domestic social and economic stability but will also assist Pakistan to accomplish the desired endeavors globally. Indeed, there is a dire need to execute a coherent and pragmatic strategy that cans in turn Pakistan’s geo-economics vision into reality.