Aftershocks of America’s messy withdrawal from Afghanistan continue to reverberate. US Secretary of State Antony Blinken received quite a grilling from Congress this Monday. During his hours-long predicament, Mr. Blinken let slip something that should concern Pakistan: Biden administration is reviewing its ties with Pakistan and it expects Islamabad to “line up” in pressuring the Taliban next door.
Ever since President Biden’s inauguration, unease has been building up in Pakistan. Biden never called PM Khan. His key cabinet members kept visiting the neighborhood while skipping Pakistan. On the other hand, the CIA chief was here, there have been phone contacts at top defense levels, and the two NSAs have met twice. Yet, the tone of White House and State Department has remained frosty.
Folks are wondering if Pakistan would feel the heat for the way the US, and its Western allies, had to retreat amid live-on-TV humiliation in Kabul a month ago. While predictions of a complete breakup are exaggerated, fact of the matter is that US-Pak ties have been on the downhill since 2011. A decade later, the mistrust has only grown to complicate bilateral cooperation on even shared interests.
Pakistan has tangible economic interests to protect. For instance, the American market purchased $5 billion worth of Made in Pakistan merchandise and materials in FY21, accounting for a fifth of Pakistan’s goods exports. Remittances from the US totaled $2.75 billion last fiscal, about 10 percent of overall proceeds. FDI inflows are low, but the US still accounted for close to 10 percent of $1.8 billion in net FDI for FY21. American investors are also a prominent source of portfolio inflows in the stock market.
Can the government ensure that economic transactions will remain insulated from strategic fallout? Having workable relations, or lack thereof, can also impact Pakistan’s creditworthiness at international financial institutions (IMF and World Bank, mostly). Then there is Pakistan’s fate hanging at the FATF. It is important for Islamabad to be on the right side of global multilateral forums – otherwise, the country’s risk premium would increase among foreign investors, despite local market opportunities.
It does not help that both Democrats and Republicans now seem miffed at Pakistan’s role in the region, as recent congressional hearings have indicated. This frustration can grow into anger if the two countries remained at cross purposes on Afghanistan. To pressurize the Taliban to comply on human rights and counter-terrorism, the Biden administration is squeezing the group by withholding $9 billion. Whereas Pakistan thinks that the economic squeeze will be counter productive in achieving those goals.
At this juncture, policymakers are very far from sowing the crop of economic diplomacy, leave alone reap some fruits from their geopolitical harvest next door. If US-Pak relationship ends up in a deep coma, Pakistan will have to make efforts to keep Europe engaged. There are dire warnings of humanitarian disaster in Afghanistan, with UN leading the call for immediate global assistance. Pakistan is ideally placed to offer cooperation to international community through logistics and expertise. The country also needs to come out with an effective diplomatic narrative to avoid bad press in the West.
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