In a seminar last week, Pakistan urged the U.S. to restore military financing and sales suspended by the Trump administration. In response, U.S. Principal Deputy Assistant Secretary of State for South and Central Asia Elizabeth Horst urged Islamabad to focus on working with the International Monetary Fund (IMF) to help rebuild its economy. “The reforms that Pakistan and the IMF agreed to are not easy, but it’s crucial that Pakistan take these actions to bring the country back to sound financial footing, avoid falling into further debt, and grow Pakistan’s economy,” she said, as the global lender continues to dither on reviving a suspended loan facility that has been on the backburner since last year.
America’s ambivalence—and calls to “do more” to enact reforms mandated by the IMF—to Pakistan’s economic crunch reflects its prevailing foreign policy, which favors India in a bid to challenge China in the Pacific Ocean. By contrast, Pakistan is seen as playing a pivotal role in helping China secure a route to the Gulf through the Indian Ocean by utilizing the land route to the Gwadar Port. Amidst this simmering cold war, Pakistan is still striving to retain ties with both the U.S. and China, with its ambassador to Washington stressing: “We do value the U.S. encouragement to India and Pakistan to engage. But beyond that, the U.S. could act as a catalyst to help resolve the Jammu and Kashmir dispute which has kept the region on the brink of war.” The indirect messaging conveys Pakistan’s concerns of the fallout of the new U.S. policy to counter China in the region.
The geopolitical shifts in the Gulf following China’s brokering of ties between Iran and Saudi Arabia stand to impact Pakistan because of its deep dependence on all stakeholders. In this regard, Pakistan must be ready to modify its foreign policy priorities—as reflected in a leaked memo penned by Minister of State for Foreign Affairs Hina Rabbani Khar for Prime Minister Shehbaz Sharif—by evolving a strategy that avoids any negative fallout while also retaining all its traditional alliances.