Analysing Pakistan’s economic and foreign Policy

28 Aug 2018

Pakistan faces two major issues at the moment. The first is its topsy-turvy economy and the second is the ensuing water crisis. At present, the Pakistani economy is mainly dependent on its foreign policy. Any country’s foreign policy sets its principles for international trade.

In Pakistan, if our foreign policy were to become strong and effective, our goods would gain access to different markets around the world. Then, at the same time, our workers could have the opportunity to go abroad and earn money.

Due to our defective education system, we cannot produce talented students that are able to develop technology in the country while the competent ones go abroad. If Pakistanis could have easy access to foreign countries, they would be able to acquire modern education and technical skills abroad. The educated youth could then return and play a vital role in the development of the country. But this will only be possible if we revisit our foreign policy and remove the bottlenecks that are holding it back.

The United States of America has fifty states, each of which has its own laws. Except for a few things such as currency, economy, foreign policy, and defence, which are under federal jurisdiction, the rest are managed independently by each state. If all of these fifty states seceded and closed their borders, then the US states would be like any country in South America. As another example, the European countries have opened their trade doors and now have become a global power. Why is the same not happening in our region as well? Pakistan must realise that regional trade is key to the country’s economic revival.

The question then arises why we must put so much emphasis on regional trade? In order to provide a sufficient answer we need to analyse the current economic situation of Pakistan as well as its geographical location.

our future is dependent upon the service sector because our manufacturing sector is in shambles. There are many reasons for this failure. Electricity and gas load-shedding for the past decade has caused our trade industry to suffer greatly.

It is important for Pakistan to negotiate with India in order to resolve the water crises irking both the countries. Presently, India is also facing an acute water shortage and the common Pakistani citizen does not have a well-informed understanding of that crisis

Moreover, we have to import fuel from abroad to generate power, which not only increases the cost of production but also the consumer price. Selling expensive products in the competitive international market has become a herculean task. We have to focus on the service sector if we want to put our economy back on track. Pakistan needs to become a trade hub for international and regional countries as well as a prime location for tourism. This is only possible if we develop cordial foreign relations with other countries in the region.

Pakistan can become a trade market for important countries such as Russia and the Central Asian States. Iran, India and China, in particular, must be included, with their combined population of over two billion. This would allow Pakistan to boost its economy by providing services and taking trade commissions in the form of tariffs, taxes, and transit tolls from these countries without manufacturing any products of its own.

Moreover, if a trade market between India and China were to be established in Pakistan, businessmen arriving from India and China would have to stay in Pakistan. This could lead to colossal development in the hospitality sector.

Now, how would we need to alter our foreign policy in order to achieve such goals? First, let us look at our policy regarding India. The newly-elected Prime Minister, Imran Khan, has envisaged individuals and international companies coming to Pakistan from abroad, setting up industries, and doing business here. Suppose that foreign companies come here, invest their capital, and start doing business while we continue to keep access to India closed. Why would foreign investors invest in our country, without having access for their products to a population of one billion?

On the other hand, if we have open business with China, then Pakistanis will have no choice other than to buy Chinese goods. If we open the market to India, there would be competition between the products coming from China and India. This competition would provide the opportunity for Pakistanis to opt for cheap, quality products. Similarly, if we include India in the China-Pakistan Economic Corridor (CPEC), it would further boost the success of this project. Pakistan could benefit immensely from providing services through the trade route.

Likewise, it is important for Pakistan to negotiate with India in order to resolve the water crises irking both the countries. Presently India is also facing an acute water shortage and the common Pakistani citizen does not have a well-informed understanding of that crisis. Therefore, the two neighbouring countries should engage in serious dialogue on the issue.

Now, let us consider our ties with Iran. Pakistan can get cheap oil and gas by boosting its trade relations with Iran, which, in turn, can bring improvement to its foreign exchange reserves. Pakistan currently imports liquefied natural gas (LNG) from far away countries. But due to Iran’s close proximity; Pakistan could acquire inexpensive gas easily.

Moreover Afghanistan is a gateway to Russia and the Central Asian States. These states possess huge oil and gas reserves. In this regard, a Turkmenistan — Afghanistan — Pakistan — India (TAPI) gas pipeline was once discussed in the past. If the pipeline project were completed, Pakistan would be able to access gas at a very low price and the money received from India in the form of transit fees would be a boost to the national treasury.

But, at present, Pakistan’s relationship with India and Afghanistan is at its lowest point in history. Pakistan’s newly-elected Tehreek-e-Insaf (PTI)government needs to take the reins of foreign policy into its own hands.

It is a good omen that the influential circles of Pakistan are extending their full support to the new government. It would be better for Pakistan if this kind of cooperation was to continue unabated and changes were allowed to be made to its foreign policy.

Published in Daily Times, August 28th 2018.

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