Foreign policy and economic imperatives

ARTICLE: Last week, there was uproar in the market on foreign exchange flowing in and out from friendly countries. There were theories circulating on making and breaking of past and new regional blocs. However, in foreign policy, there are no zero-sum games. The relations are harnessed over time and strategic alliances are made based on mutual interests. In today's world, countries' foreign policies are run based on economic and security interests. At times these interests collide, and the key is to maintain a delicate balance.

What is happening in Pakistan could be a tactical shift; but that might not be a 180-degree move. China is Pakistan's all-weather friend whereas Saudi Arabia is Pakistan's historic Muslim ally, and hosts largest share of diaspora. Both countries' relationships are independent and Pakistan's foreign policy must anchor on its own interest. At one point, the US was Pakistan's strategic partner; today, both countries' mutual interest is stability in Afghanistan. Moreover, the US is Pakistan's biggest buyer of exports. Iran is a neighbor, and improvement in the relationship is important for stability in Balochistan.

Pakistan's foreign policy must focus on improving economic ties with its partners and neighbors while keeping its security interests intact. At the same time, economic dependency on anyone partner must not be too high, a situation that often leads to compromising country's foreign policy. There are signs of regional realignments, and the Foreign Office must act accordingly.

China is Pakistan's strongest strategic partner, and the relationship is deepening with growing economic ties. China helped Pakistan in the late 1990s when the West imposed sanctions on Pakistan. It topped up foreign reserves by $500 million at a time when SBP's reserves were even less than $500 million. In turn, Pakistan reciprocated by helping China becoming a member of the WTO. In the last 10 years, China has invested in the energy infrastructure, even though multilaterals and Western countries have taken their hands off the table. Now the CPEC round-2 is in action. Engagements should be more inclusive and will further strengthen bilateral ties.

For a long time, Pakistan and Saudi Arabia have maintained a close diplomatic relationship despite few hiccups along the way. For instance, when Pakistan did not send troops to Yemen in 2014, bilateral ties came under some strains. The new government in 2018 attempted to regain lost ground, which reaped benefits as the kingdom returned the favor with economic help during tough times. There were talks of investment when the crown prince visited Pakistan.

Over past two years, Pakistan is said to have quietly registered reservations that KSA has shown more warmth in economic relations with India. And last week's incidence is in continuation of it. FM Qureshi's statement and money going out are reflecting a temporarily strain in an otherwise cordial long-term relationship. The Saudis are biggest buyer of Pakistan labor - around 3 million NRPs work in that country. Pakistan cannot afford to lose that. At the same time, Pakistan cannot afford to compromise its foreign policy.

Another important player in the equation is the US. Unlike China, the US is not Pakistan's strategic partner. Pakistan used to have strategic alliance with the US back in the 80s when they fought against a common enemy, the erstwhile Soviet Union - which at that time was close to India and was about to reach Pakistan's borders. Combating the Soviet invasion in Afghanistan thus became a common goal for both Pakistan and the US.

Since the 2000s, Pakistan-US ties have been transactional. Pakistan helped the US run its War on Terror in Afghanistan. Now the US wants Pakistan's help in bringing stability to Afghanistan. Today, both countries' goals are converging again. On the other hand, India is a strategic ally of the US. Both countries have growing economic ties and US wants a strong India to counter growing Chinese influence in the region. At the same time, Modi's regime has become increasingly hostile against religious minorities and that is making its friends in the region uncomfortable - such as Bangladesh and Iran. West is also becoming uneasy with India's growing jingoism. Pakistan must play its cards right to make the tailwinds turn its way.

Recent developments of China's economic interest in Iran is a manifestation of realignment of regional ties. China has offered an investment deal of $400 billion in Iran over the next 25 years - this is making US, India and KSA uncomfortable. Pakistan and Iran can get connected to China's Belt and Road initiative. This deal is diluting Indian interest in Iran. China wants economic and security stability in the region. It is in Pakistan's interest to improve its relationship with Iran for stability in Balochistan. It is in the interest of China, too, as CPEC's western route needs a stable Balochistan. CPEC and Iran-China investment can run in parallel and complement each other. Chabahar to Zahedan connectivity can help in bringing economic stability to Afghanistan.

Stability in Afghanistan is in the interest of all - the US, China, Iran and Pakistan. This gives room to open up Pakistani ports to landlocked central Asian countries. This brings Russia into the equation as well. Buy-in of Russia can open up regional markets. Here, India is on weak grounds.

The question is how the US will deal with Iran. If Biden comes to the White House, the US stance on Iran may soften. This will ease things for Pakistan. In case Trump is reelected, hostility towards Iran may increase. But having a stable Afghanistan can dilute pressure on Pakistan to not become part of the trio. However, the US is politically united on confronting China. As a nation, the US increasingly fears China's growing economic-military clout in the region and beyond.

Pakistan should play its role by enhancing its ties to all regional nations as well as Western stakeholders. It is time to push India back on Kashmir issue as Modi's hostile policy has already forced the country to play on the back foot. The Trump administration is keen on building economic and business ties with Pakistan. The US needs Pakistan's support in the Afghan peace process, and it cannot afford Pakistan's complete tilt towards China. Hence the need for striking a delicate balance.

Copyright Business Recorder, 2020