The Econmist - USA (2021-10-09)

The Economist October 9th 2021 Asia 55

In  the  Taliban  Pakistan’s  generals  have
gained not perfect allies, but a group over
which  they  exercise  more  leverage  than
anyone else. Significantly, the interim gov­
ernment announced by the Taliban in Sep­
tember appeared to demote several figures
seen  as  estranged  from  Pakistan  and  to
promote  those  closest  to  it.  Senior  mem­
bers  of  the  Haqqani  network,  widely  seen
as a cat’s paw of the isi, hold several posi­
tions in the cabinet, including minister of
the  interior.  Mohammed  Yaqoob,  the  new
defence minister and son of Mullah Omar,
a  Taliban  founder,  is  also  pally  with  Paki­
stan. It was no coincidence that a relaxed­
looking  Faiz  Hameed,  then  the  Pakistani
intelligence chief, had himself appeared in
Kabul  shortly  before  the  announcement.
Many in Islamabad caution, however, that,
although  the  Taliban  clearly  listen  to  ad­
vice,  they  may  not  always  do  as  they  are
told,  and  may  indeed  split  into  factions
and thus be unable to do so in any case.
If Pakistan’s military and civilian boss­
es  have  both  profited  from  the  change  of
guard in Kabul, what about everyone else?
Despite  escaping  the  worst  effects  of  co­
vid­19,  the  country  is  not  in  good  health.
Over  the  past  decade  gdpper  person  has
grown  by  less  than  2%  a  year  on  average
(see chart 1). At barely $1,200 it is not even
two­thirds of India’s.
By  other  development  indicators,  too,
Pakistan  trails  its  region.  The  only  South
Asian country with a lower life expectancy
is  Afghanistan.  With  its  exports  perform­
ing poorly and imports from China soaring
(and crushing many local industries), Paki­
stan has grown increasingly reliant on re­
mittances—worth  $21bn  in  2019—to  prop
up its balance of payments. Its other crutch
has been bail­outs from the imf: Pakistan
has received 22, more than any other coun­
try (see chart 2). 
Though the prospect of becoming a re­
gional  trading  hub  remains  a  distant
dream,  Pakistan  faces  a  more  immediate
crunch.  Mr  Khan  ran  for  office  promising
to  build  an  Islamic  welfare  state.  What
Pakistanis have experienced instead is in­
flation—which reached 11% in April but has
now cooled to 9%—and a currency that has
lost a quarter of its value against the dollar
since  he  became  prime  minister.  Rising
global  oil  prices  are  set  to  deliver  another
unwelcome jolt. 
Shaukat  Tareen,  Mr  Khan’s  fourth  fi­
nance  minister,  has  been  trying  to  per­
suade the imfto ease terms on a $6bn bail­
out  that  was  agreed  in  2019,  but  then  de­
layed  until  February  this  year  after  the
prime minister balked at the required belt­
tightening. The release of an added $2.75bn
in  special  drawing  rights  in  August,  Paki­
stan’s  automatic  share  of  the  imf’s  global
push  to  compensate  countries  for  covid
troubles, came in the nick of time to prop
up sliding confidence. In July the stock of

Pakistan’s foreign debtswelled to some

$122bn,closeto50%ofgdpand,morewor­

ryingly,almostfivetimesthevalueofits

netforeign­currencyreserves.

MuchofthisdebtisnowheldbyChina,

Pakistan’s “all­weather friend” and its

partner in one of the most ambitious

branchesoftheBeltandRoadInitiative.

The China­Pakistan Economic Corridor

(cpec) issupposedtoseesome$67bnof

ChineseinvestmentsinPakistan(seemap

onpreviouspage),muchofit invitalpower

plantsandtransportlinks.Butaccording

to a new study by AidData, a research

group,ofthe$34.3bninassistanceprom­

isedbyChinabetween 2000 and2017,at

least$27.8bnhascomeintheformofloans

oncommercialterms,ratherthanthecon­

cessionallendingtypicalofWesternaid.

TothediscomfortofPakistan’sgener­

als,whomightwishforgreaterindepen­

dence,thecountryhasalsogrownincreas­

inglydependentonChinaforarms.Paki­

stanalonesoakedupa hefty38%oftotal

Chinese weapons exports between 2016

and2020,accordingtotheStockholmIn­

ternational Peace Research Institute, a

think­tank.

YetChinahasnotalwaysbeenhappy

withwhatis,ineffect,itsclosestallyofany

size. Repeated terroristattackstargeting

Chinese workers, including one in July

thatleftnineofthevisitorsandfourPaki­

stanisdead,havediminishedtrust.There­

motenessofChina’sborderwithPakistan

fromitsindustrialheartlandandstill­poor

roadlinkagesmeanthereislittleoverland

trade.Whateverthealignmentoftheirin­

terests,Pakistan’seconomyisjust1.75%of

China’s. Small wonder that Mr Khan,a

championof Islamiccauses everywhere

else,keepsquietabouttheincarcerationof

China’sMuslimcitizensinXinjiang.

ThepayofftoPakistanforsuchloyalty

isthatChinalendsimmenseandincreas­

ing weight to its otherwise disadvanta­

geousbalanceofpowerwithIndia. This

hasadownsidefor regionalstability,in

thatitmakesPakistanunwillingtocom­

promiseoveritseternalclaimstotheIndi­

an­controlledpartofKashmir,whichin

turnprovokesIndianmulishnessoverits

own counterclaims. In 2019 a suicide

bomb,forwhicha Pakistanigroupclaimed

responsibility,killedsome 40 Indiansol­

diersinKashmir,provokingclashesthat

cameclosetoopenwarfarebetweenthe

nuclearrivals.LaterthatyearMrModi’s

governmentstrippedKashmirofitslimit­

edautonomy.Thismightinthepasthave

rousedinternationalcondemnation.The

lackofithaspainfullyexposedPakistan’s

waninginfluence.

Letyoudownsomanytimes

Mr Khan’s current diplomatic offensive

comesinthecontextofthedwindlingop­

tionsbequeathedby hiscountry’sfeeble

economy, hypocrisy over Xinjiang and

longhistoryofdouble­dealing.“Pakistan

istryingtouseAfghanistantorehabilitate

itself,”saysMichaelKugelmanoftheWil­

sonCenter,anAmericanthink­tank.“Its

messageisthatwewererightallalong,

thereneverwasa militarysolution,soitis

wrongtoblameus.”WhatPakistannow

wantsisforothercountriestolenda hand,

andhelpshoreuptheTalibangovernment

astheonlywayofsustainingregionalsta­

bility.Thetroubleisthat,justasPakistan’s

leadersimaginethecountry’sstrategicsig­

nificancetohavegrownbecauseitholds

unique influence over the Taliban, the

West’swithdrawalhasentaileda steepde­

clineinitsinterestintheregion.

MrKhanmaywellberightthatthebest

hopeforpreventinga humanitariandisas­

terinAfghanistannow,andforkeepinga

griponjihadistgroupsthatlingeronits

soil,istohelptheTalibankeepalidon

things. “If Afghanistan destabilises, the

spillover effectcomes to Pakistan,”says

MoeedYusuf,MrKhan’snationalsecurity

adviser.“AfterAfghanistanwearethebig­

gestvictimofthepastfourdecadesandwe

arenotinterestedingoingthereagain.”

Butcomingfroma countrythathasforso

longrunwiththefoxeswhilehuntingwith

thehounds,asPakistanhas,suchwords

carrylimitedcredibility.n

Land of the poor

Pakistan, GDP per person

% change on a year earlier

Source: World Bank

1 5 4 3 2 1 0

-1

-2

2000 05 10 15 20

Very well, a loan

Pakistan, value of loans from the IMF, $bn

Source: IMF

2

12

10

8

6

4

2

0

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