Does Pakistan Need Another Regional War to Prove Its Geo-Political Worth?

Ever since its independence, Pakistan has been on the verge of bankruptcy and an economic disaster. Pakistan joined the Western alliance, led by the United States of America, not only to enjoy economic and military aid but to counter-balance the regional aggressive rival and neighbor, India. Whether it was the Cold War, the Soviet invasion of Afghanistan, or the War on Terror; Pakistan thoroughly capitalized on its significant geo-strategic location and earned the capital to resuscitate its flagging economy. Apart from that, it has been struggling direly to meet both ends on the economic front. Certainly, it would be deadly for a state like Pakistan to resort to yet another alliance to fight someone else’s war — or one by itself — rather, it needs to implement the requisite economic and political reforms and utilize its real asset, the youth, to pull Pakistan out of the eternal crises. Only through political will and consensus will we achieve this feat and put Pakistan back on the road to prosperity. 

The history of our survival has been theatrical. Pakistan received the aid of $1 billion between 1950 and 1959 under the US Economic Cooperation Act of 1948. Additionally, Pakistan secured over $100 million of aid in the form of military equipment and training under the Mutual Defense Assistance Agreement (MDAA) which was signed in 1954. Apart from it, Pakistan, being a member of SEATO (Southeast Asia Treaty Organization) and CENTO (Central Treaty Organization) secured economic and military support from America and other Western nations during the Cold War. This aid helped Pakistan modernize its military and improve its infrastructure. It additionally provided Pakistan with a sense of security and protection against potential aggression from other countries. 

However, by the end of the Ayub era and early 1970s, the Cold War started winding down. Moreover, the ineffectiveness of SEATO and CENTO to provide security to Pakistan, the changing global political dynamics, and Pakistan’s pursuit of a more independent foreign policy led it toward a withdrawal from the military alliances. 

After the failure of these military alliances and the separation of its eastern leg, Pakistan pursued a more socialist economic model. However, the country could not sustain the economic crisis, which eventually led to high-rising inflation, poverty, and unemployment. In this dire situation, Pakistan was ready to be an ally of the West for yet another war. The collapse of the Bhutto regime and the Soviet invasion of Afghanistan provided Pakistan with another lifeline for a decade to come. 

Pakistan played an important role in the US-backed resistance against the Soviet Union. Pakistan’s support for the Afghan mujahideen was a major factor in the Soviet Union’s eventual withdrawal from Afghanistan. 

As compensation, Pakistan got economic aid worth $3.2 billion through the Pressler Amendment of 1985 and another $1 billion worth of military aid during the same period. In addition, Pakistan received substantial economic assistance from allied Western nations and Saudi Arabia, amounting to an estimated $3 billion during the 1980s. In addition, Pakistan also secured economic support from international organizations such as the World Bank and International Monetary Fund (IMF) which was intended to help Pakistan overcome the economic challenges posed by the influx of Afghan refugees and to support the resistance against the Soviet Union.

With the collapse of the Soviet Union, the US no longer saw Pakistan as a vital ally in the region. Thus, annulling the Pressler Amendment, the US imposed severe economic sanctions upon Pakistan for its pursuit of a nuclear program. 

This once again plunged Pakistan into yet another dire socio-economic and socio-political crisis throughout the entire decade of the 90s. Pakistan faced political instability and economic challenges such as high inflation, a large trade deficit, and lack of foreign investment, and struggled to service its foreign debts. It eventually increased poverty and inequality, which ultimately culminated in sectarian violence and separatist movements. Thus, it was once again time when Pakistan was desperate to get its hands on a few more billion dollars by plunging into yet another war. 

September 11, 2001, was the day when Pakistan’s geo-strategic significance put it back in the spotlight. Pakistan became an important ally of the United States in the War on Terror. This alliance brought the much-needed dollars to Pakistan, and the US began providing the country with large amounts of economic aid and military support. 

The United States provided Pakistan with a significant amount of economic aid under the Enhanced Partnership with Pakistan Act, 2009 (also known as the Kerry Lugar Berman Act), which authorized $7.5 billion in non-military aid to Pakistan over a period of five years. 

Along with the aid from other countries and international organizations such as the World Bank, IMF, and the EU, Pakistan got an additional $1.5 billion under the Foreign Military Financing (FMF) program during the fiscal year of 2010 only. 

Overall, while the War on Terror did bring some dollars to Pakistan, it also had negative impacts on the country’s long-term economic and political dynamics. 

Pakistan’s alliance with the United States during the Cold War, the Soviet Union’s invasion of Afghanistan, and the War on Terror have had immense negative impacts on the country’s socio-political and socio-economic situation. Pakistan has suffered from dire political instability, increased militancy and extremism, and a culture of Kalashnikovs and drug trafficking. Meanwhile, Pakistan has lost around seventy-thousand human lives along with the economic burden put on the country because of the influx of Afghan migrants and internally displaced people. 

The alliance has also affected the country’s international image, which has hurt Pakistan economically and politically. The industry, education, health care, and tourism have all suffered their share. This catastrophe has ultimately brought us to where we stand after 75 years of independence. 

The current crisis facing Pakistan is of enormous magnitude. A constant shadow of default looms over the country, though we have defaulted at an individual level. With foreign exchange reserves reaching their lowest of $3.67 billion, the country is on the brink of bankruptcy. The only ray of hope that seems to be there is another bailout from the IMF and other friendly countries that is conditioned to strict fiscal and institutional reforms. Other than that, we have found ourselves once again at the same spot where we were after the end of the Cold War and the collapse of the Soviet Union. The United States of America does not need us anymore!

Apart from the US withdrawal from Afghanistan, the glacial pace of CPEC and political instability and unwillingness to reform are the major reasons why we find ourselves here. Thus, there is a great need for immediate economic reforms and restructuring of governance and bureaucracy if we want to get out of this crisis. 

Talking of Pakistan’s economic collapse, Pakistan’s economy has faced several challenges in recent years, including high inflation, a large trade deficit, a shortage of foreign currency reserves, and being unable to service its debts. To avert an economic meltdown, Pakistan needs to implement a number of economic reforms, however not necessarily populist in nature. They include:

1. Fiscal Reforms: Pakistan needs to reduce its budget deficit and improve its tax collection system by widening its tax net. It needs to focus on implementing cost-saving measures, though unpopular as they may be, such as cutting down subsidies and reducing the size of its public sector.

2. Monetary Reforms: The State Bank of Pakistan (SBP) needs to be more autonomous, transparent, and accountable. It should focus on controlling inflation and stabilizing the currency.

3. Energy Sector Reforms: Pakistan’s energy sector needs immediate reforms, as the amount it consumes in subsidies is more than the total defence budget of the country. Pakistan needs to reduce its dependence on expensive fossil fuels and improve its power generation capacity by promoting the use of renewable sources of energy.

4. Privatization: Though politically unpopular, if the country wants to get out of the dreadful economic crisis, it has to privatize some of the major state-owned enterprises (SOEs).

5. Agriculture Reforms: Pakistan needs to improve its agriculture by focusing on increasing productivity, improving the quality of crops, and reducing the cost of inputs. Though agriculture accounts for 22% of Pakistan’s GDP, only 8% of it comes from farming, which is saddening. 

Other than the economic reforms, the country desperately needs to restructure its governance if the country is to stabilize economically and politically. Steps to be taken include transparency and accountability to rebuild the trust of people and foreign investors. Strengthening institutions such as Central Bank, Judiciary and regulatory bodies is another key element that will ensure economic stability. Besides, good governance is achievable only if proper policies are laid down to tackle corruption and improve the law and order situation. All this is possible through a stable political system not troubled by changing governments and variable policies. 

On the bureaucratic front, we need the following restructuring policies. Firstly, bureaucrats need to be empowered. They need to be given more autonomy so that they stand more responsive and accountable to the public. Secondly, all selections should be merit-based, where public officials are not only selected on merit but also given adequate training and opportunities to learn. There is a need to reduce political interference in the selection process, as well as in the functional domain of bureaucracy. The government needs to empower and encourage the use of technology and innovation so that public servants can be more efficient and able to find new and better ways of delivering services. 

These all suggestions look very promising. But the question that must arise is “what is the problem in implementing these reforms?”  

Political will and consensus among the stakeholders is the major issue that hinders the implementation of these much-needed reforms. Political will is often lacking when implementing these unpopular reforms. It is either because of the lack of understanding of the need for these reforms or because it hampers the interests of powerful interest groups and the elite that stand to lose from the changes. Thus, political will and consensus among the different stakeholders are the need of the hour to put back this country on the road to prosperity. 

Now the answer to whether we need yet another regional war to prove our geo-political worth is a simple NO. It is never recommended or advisable for any country to resort to war for supporting its economy or enhancing its geo-political or geo-strategic worth. War brings immense human suffering and destruction and the economic benefits, if any, are often short-lived and outweighed by the long-term economic costs of rebuilding and recovery. 

Instead of looking for yet another regional war to feed its exchequer, Pakistan needs to focus on implementing the requisite economic and political reforms and policy changes to address the underlying issues that are causing its economic collapse. Pakistan’s youth bulge has the potential to be a significant economic asset for the country if utilized properly. 

Countries like Vietnam and Indonesia are two perfect examples to consider. Vietnam fought for decades with the United States, China, and France, yet it still owns foreign exchange reserves of around $85 billion, whereas we struggle with a meager $3.67 billion. That one product that has enabled Vietnam to achieve this success despite multiple problems is ‘rice’. The innovation and policy changes of Vietnam to facilitate world-standard rice production serves as a model for nations like Pakistan to emulate. 

Another example is Indonesia, which is faced with recurrent spills of volcanos, floods, and tsunamis. A country comprising nearly 7000 islands has pretty much similar problems to Pakistan. Yet it is accepted as the 16th largest economy in the world. The reason! “Edible Oil”. Indonesia produces world-standard edible oil and exports it the world over. The revenue earned is then used to import goods from other countries. 

Analysing the examples of Vietnam and Indonesia gives us enough to ponder what could be that one product that we could monetize and compete not only with our regional neighbors such as India and Bangladesh but developing nations as a whole. Thus, the greatest asset, as mentioned earlier, is our youth bulge (ages 15-24) which comprises 28% of our total population. However, overall, 60% of Pakistan’s population is below the age of 30. This, if properly trained and educated as per the international requirements and standards, should solve a bulk of our problems. The state thus needs to invest in education that is skill-based and accessible to all, regardless of their economic status and geographic location. 

To sum it up, Pakistan has never found itself on the safe side of the economic crisis because of its ‘rent-seeking’ approach. We have come through seven and a half decades with aid from Western nations and international organizations as compensation for our significant geo-political location. These bailouts have rendered us unable to find new and innovative ways of generating revenue; rather, it has caused us immense human and infrastructure losses. War can never be a prospect of economic growth and stability, rather we need the all-important policy adjustments and economic reforms. With that, we need to invest in our youth and provide them with skills and education that enable them to compete at the international level and establish themselves as valuable resources for the nation, because it is the only viable product that can put us back on track to stability and prosperity. 

Outline Followed:

1.      Introduction.

a.       Thesis Statement: Certainly, it would be deadly for a state like Pakistan to resort to yet another alliance to fight someone else’s war — or one by itself — rather, it needs to implement the requisite economic and political reforms and utilize its real asset, the youth, to pull Pakistan out of the eternal crises.

2.      An account of the history of our survival.

a.       The SEATO and CENTO alliances in the Ayub era.

b.      The Soviet invasion of Afghanistan

c.       The troubled decade of the 90s.

d.      The War on Terror and the period post 9/11.

3.      The impacts of our rent seeking policies.

a.       Socio-political and socio-economic impacts.

b.      Impacts on the country’s international relations.

4.      The magnitude of the current crisis and its reasons.

a.       Withdrawal of the US from Afghanistan and glacial pace of CPEC.

b.      Political instability and the unwillingness to reform.

5.      What are some reforms and restructuring required?

a.       Economic reforms.

b.      Restructuring of Governance

c.       Restructuring of Bureaucracy.

6.      What is required to achieve all this?

a.       Political will and consensus among all the stakeholders.

7.      Why we don’t need another war to prove our geo-political worth?

a.       Models of Vietnam and Indonesia.

b.      The economic prospects of our youth bulge if properly utilized.

8.      Conclusion.