Analysis: Why a financially stable Pakistan is in US interest

The United States has made it clear over the past few weeks and months that it is closely following economic and security developments in Pakistan.

Over a dozen statements over the past three months have mentioned Pakistan in passing or specifically, and in each case, the tone and tone reflect a level of concern rarely seen in the past.

The most recent statement from the State Department expressed hope for economic stability in Pakistan and emphasized that Washington was aware of the country’s financial problems and supported efforts to rebuild the economy.

A State Department spokesperson told Dawn that the country needed to work with international financial institutions to strengthen its economy. She was asked if Washington shared the fear that many people in the country have been expressing that Islamabad is close to economic collapse.

The US official stated, “We encourage Pakistan to continue working with the International Monetary Fund (IMF) on the implementation of reforms, especially those that will improve Pakistan’s business environment” in order to “put Pakistan on a sustainable growth path” and “restore investor confidence.”

“Doing so will help Pakistan attract high-quality foreign investment and will make Pakistani business more competitive.”

When Bilawal Bhutto-Zardari was asked a similar question, he responded to Dawn: Others would continue to assist Pakistan “as long as we are willing to help ourselves.”

“We must assist them in assisting us by taking the necessary steps at home.”

The foreign minister mentioned that the international community had pledged to provide approximately half of the funds Pakistan required for reconstruction following the floods in 2022 at a recent conference held in Geneva. Pakistan must now contribute the remaining 50%.

In addition, the foreign minister emphasized the necessity of achieving a “conclusion with the IMF” and responding to the proposal to renegotiate our debt made by the French President Emmanuel Macron and UN Secretary General Antonio Gutteres.

The official from the State Department stated, “Pakistan’s macroeconomic stability is a topic of conversation between the Pakistani and US governments, including the US Department of State and our counterparts, the Department of the Treasury, and the White House,” to put the situation in perspective.

Rivalry among South Asian superpowers, but why is Washington so preoccupied with Pakistan’s economic and other stability? Conventional wisdom holds that our nuclear program is the driving force, and the world cannot afford to see a nation with a nuclear arsenal on the verge of extinction. However, this accepted wisdom only scratches the surface of the problem.

According to Hassan Abbas, distinguished professor of International Relations at the National Defense University in Washington, D.C., “Pakistan is the fifth largest country in the world and the second largest Muslim country – and that’s with a large army and an extensive nuclear infrastructure.” Pakistan is also the second largest Muslim country.

“The economic collapse of Pakistan can be devastating for anyone interested in maintaining international order and global stability. As a major global power, the United States is naturally concerned.

He continues, “Secondly, the US would not like to see Pakistan’s economy collapse while it is steered by a democratic government that is attempting to normalize its relationship with the US.”

He also makes a point about the rivalry between the great powers in South Asia: Because of its nature, it is in the US’s best interest to convey to Pakistan that it wants to remain engaged and cooperate whenever possible so that Pakistan does not overly lean toward China.

John Ciorciari, a professor at the Gerald R. Ford School of Public Policy at the University of Michigan, shares this viewpoint. He makes the observation that donors like Saudi Arabia and China may not have many explicit conditions attached to their aid, but they always have implicit strings attached.

“China will look to Pakistan for favorable development opportunities, like the energy corridor that connects China’s western provinces to the Arabian Sea and the strategically important port of Gwadar.” China will also try to get Pakistan’s help on geopolitical issues like Afghanistan and Ukraine, as well as the Taiwan Strait.

The Woodrow Wilson Center’s South Asia institute director, Michael Kugelman, concurs. A significant threat to Pakistan’s overall stability is the possibility of an economic collapse. Therefore, Washington’s desire for Islamabad to recover from its economic crisis and get back on track is understandable.

According to him, “I’m not sure if the US fears the Pakistani economy will collapse, but I do think it’s keen to do what it can to help avert that outcome—including supporting efforts to get things back on track again with the IMF.”

Kamran Asdar Ali, a professor of anthropology and the former head of the South Asia Institute at the University of Texas at Austin, uses historical context to explain why the White House is so concerned about Islamabad’s financial health.

Since the 1950s, the relationship between Pakistan and the United States has been linked to a variety of US security interests in the region: It was closely associated with politics during the Cold War in the 1950s and 1960s; Iran’s revolution and the Soviet invasion of Afghanistan took center stage in the 1980s. After the events of September 11, 2001, this relationship was rekindled at the beginning of the 2000s.

It also accepted and supported military regimes in Pakistan, which in turn benefited from military and non-military aid. Throughout all of these phases, the US state was closest to Pakistan’s military (and related civilian elite). “It has clearly shifted its regional preference to India with the change in Afghanistan in 2021 and the shift toward a China containment policy within the US,” he notes.

However, he argues that economic volatility may also result in a less stable Pakistani government, which may have an impact on the military itself, Washington’s longest-term partner in the nation.

One could argue that the most effective strategy for Pakistan’s economy might be a stable parliamentary system with checks and balances. As a result, Pakistan could once again become a fertile ground for extremism in the event of an uncertain future and an economic downturn.

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