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Saturday, April 13, 2024

Pakistan: A dependently independent nation

Due to foreign assistance and external debt, Pakistan could not chart out its sovereign foreign policy which must have been based on the interest of her and her people. However, it remained under the influence of the US, IFIs and other countries- which conferred little benefit to Pakistan but more to donors.

Pakistan is endowed with a myriad of natural resources and its geopolitical importance still undergoes multifarious economic and political issues. foreign reserves are declining which currently stand at $ 9 billion; rupee depreciation, which is at a historic high of 233 (26 July); trade deficit, the gap between imports and exports remains a humongous task to eradicate that was $ 30.8 billion in 2020-21 and stands at much higher $ 48.664 billion in 2021-22 despite a ban on import; the current account deficit, which is $ 18 billion due to trade deficit; subsidy cuts; hike in petroleum prices and power tariffs; inflation that was recorded 21.3 percent in June first time since 2008.

Food inflation which stood at 25.9 percent over the previous year having a shortage of wheat and edible oil which, in consequence, has abated affordability of middle-class and daily wagers to eat and dragooned them to drop out from school, especially girls, enhanced child labor to meet expenses of households, diminution on health and other essential commodities and compromise on the quality of food; loss of jobs and purchasing power; political instability which is being termed as the rationale behind rupee depreciation and many more. Have you ever wondered why we endure these issues time after time?

Read more: Pakistan to get a $1.2 billion IMF bailout: Moody’s and Fitch

Why don’t we have an everlasting solution to these issues?

Simply put, it is all due to economic dependency on the US, China, Saudi Arabia and International Financial Institutions.

Economic dependency or foreign dependency is defined as a tool of a stronger country or creditor to make a weaker country economically dependent. Consequently, it changes the dependent country’s economical and political behavior and policies. Dependency on the assistance of superpowers has a decisive sway over the recipient country to adopt the donor’s preferred policies. Also, a country obtaining a loan from World Bank or International Monetary Fund (IMF) must agree to engineer its economy as per the creditor’s conditions. Resultantly, paying-off debt often begets balance-of-payment difficulties.

Apart from this, it deepens borrowers’ economic crises and dependency rather than halting them. It is widely believed by economic experts and political pundits that interference of donors, foreign governments, or international agencies in the recipient country’s political process results in bad governance or a reduction in the quality of governance.

Presently, Pakistan is witnessing a decline in foreign reserves which is believed to afford just six weeks of imports. So, Pakistan is eagerly looking for an IMF bailout for evading bankruptcy because this is the only way out for her. However, Pakistan has to meet all pre-conditions to get the IMF package which includes levying taxes on petroleum products, immediate implementation of NEPRA’s decision on fuel adjustment, National Accountability Bureau and other anti-corruption organizations to ensure good governance, etc.

But, raising petroleum prices and power tariffs will be unaffordable for the ruling party in the run-up to the 2023 general election. Thereby, the incumbent government will be between the devil and the deep blue sea to choose either side. Besides, Pakistan is likely to get $ 4 billion from friendly countries this month. It is better for Pakistan temporarily but a bailout from IMF and assistance from friendly countries will have a decisive influence over the foreign policy of Pakistan as always that will ultimately usurp the interest Pakistan.

Read more: The unbridled powers in Pakistan

Since the inception of Pakistan, it has been dependent on superpowers, friendly countries and International Financial Institutions. Since 1951, Pakistan has been invested by foreign-funded capital inflow.

Consequently, Pakistan was left heavily dependent on foreign capital inflows

Regretfully, due to foreign assistance and external debt, Pakistan could not chart out its sovereign foreign policy which must have been based on the interest of her and her people. However, it remained under the influence of the US, IFIs and other countries- which conferred little benefit to Pakistan but more to donors. As US reliance constrained us to join SEATO and Cento in the 1950s and allied with the US to outsmart the mighty Soviet Union in Afghanistan in the 1980s. Besides, Pakistan compellingly jumped into the war on terror after the 9/11 incident which was not our personal war but we were involved for the US.

Pakistan suffered even more than double economic assistance and lost about 70,000 lives. Later, Pakistan-China relations strengthened, US, using IMF, toiled to make sure that Pakistan complies to pursue her geopolitical interests and challenge China’s economic influence. So, IMF urged Pakistan for greater transparency while dealing with China and ensures IMF loans did not finance China’s Pakistan Economic Corridor (CPEC).

Sorrowfully, after decades of being a scapegoat, Pakistan could not manage to tailor her independent foreign policy. When the Russo-Ukrainian conflict erupted, the visit of former Prime Minister of Pakistan Imran Khan was being questioned by US despite the conflict erupted after Imran Khan had arrived. De facto, numerous European Union and NATO members were trading with Russia- some have still not cut trade 100 percent. Apart, Pakistan’s incumbent minister for finance was afraid of purchasing Russian oil due to fear of US sanctions. On the contrary, NATO and EU members were importing fossil fuels from Russia, even our neighboring county India, US’s QUAD allay, is also purchasing crude oil from Russia reportedly hiked imports during the conflict.

Apart from this, in 2020 US sanctions on Iran augmented, and she gave exemption to Turkey, Iraq, India and others allowing them to trade in the energy sector with Iran but in spite of a lot of sacrifices for the US, she did not favor Pakistan in this exemption. Also, Pakistan played a key role in the Doha pact but was denied due credit. Similarly, China and other friendly countries have utilized Pakistan for their personal gains as well whenever they needed whether it was in favor of Pakistan or not.

Read more: Tapping the untapped, Pakistan Navy organizing Maritime Expo (PIMEC)

History witnesses that foreign dependency will leave little or no space for the recipient country to craft sovereign foreign policy and left the recipient country in temporary development, long-lasting dependency and a quagmire-like situation from which the recipient country could not manage to come out.

Why do we persistently remain dependent on the US, IFIs and other friendly countries?

To answer this, I can say, these are trade deficit, current account deficit and fiscal mismanagement. We are importing more than we are exporting due to the incapability of producing constructive products and importing non-essential and luxury items which consume foreign reserves heavily. Also, we do not have proper management of the resources we have. We are mismanaging the finances that are all adversely impacting the economy of Pakistan.

To cope with these and become independent in real meaning, our country must be economically self-reliant. For being self-reliant, different countries find different approaches to ascertaining their best potential, resources and geography. Similarly, Pakistan has to find these areas. Firstly, Pakistan should modernize its industry, in an attempt to increase exports, and decrease imports of non-essential and luxury items (if not for always just for now). For this, the government must create incentives like providing subsidies in energy and reform the industrial sector as per need.

Read more: Pakistani Ulema fail to convince TTP against violence

Government should encourage the establishment of new modern factories and companies so that they may create employment opportunities and meet the needs of the people. Secondly, the government should pay special heed on Foreign Direct Investment, for it has advantageous impacts on the host country. Since we are rich in paradise-like beautiful places and other natural resources, we should focus on tourism, mining, effective agriculture so on.

Taking the example of Maldives, Japan created various tourist resorts which earn them billions. We must transform northern areas of Pakistan into tourist destinations to lure foreigners so that they spend money in Pakistan. Also, encourage foreign companies to invest in Pakistan, for it will create jobs and pay taxes which will ultimately contribute to the revenue of Pakistan.

Lastly, the government should stick to the policy of earning more and spending less. In the coming years, Pakistan must focus on paying off debt, cutting the budget of defense, development etc so that we can be self-reliant and can pursue independent foreign policy.

Read more: Why Pakistan needs strong urban flooding management policies?

To sum, a country can develop, when it has an independent foreign policy based on the best interest of the country and the people of that country. If we go to self-reliance, Pakistan will be independent in real meaning and progress will be our destination.



The writer is a freelance columnist based in Karachi. The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space