THE CONFUSED REPUBLIC OF PAKISTAN

Pakistan reversed its decision to revive its economic relationship with India in a day, yet the hint of a recalibration is apparent. EPISODE #17

Hi Everyone,

A very happy Easter Monday to you.

Last week confirmed the worst fears about India’s tryst with the corona virus. There was a surge in infections. Only saving grace is that the potency of the virus seems to be less, especially with respect to the death rates. If not contained the pandemic would derail the nascent economic recovery. So not just lives, but livelihoods too would come under strain.

Separately, we witnessed another flip flop in public policy. A day after the Union Finance Ministry announced a cut in the rates of small savings, Finance Minister Nirmala Sitharaman reversed it. She did so by taking to Twitter—the new medium for policy pronouncements.

But another flip flop caught more attention. The one by Pakistan. A day after it announced resumption of trade with India, its union cabinet reversed the move. What do we make of this? Is it plain confusion emanating from the dual power structure where the army outranks the civilian government? Or is it a harbinger of welcome fresh thinking across the border? I read the tea leaves in the latest post.

Once you read this post, please, please do drop me an email with your thoughts or ping me on twitter at @capitalcalculus.

A big shout out to Vandana B, Mr T P Balakrishnan (If you haven’t already, please do read his very lengthy and compelling response to last week’s post), Gautam, Shreya, Pratishtha, Saumya and Amman (who recommends watching Fauda on Netflix) for your informed responses, appreciation and amplification. Would be nice if more of you joined the conversation. It is key to growing this newsletter community. And, many thanks to readers who hit the like button 😊.

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Read on

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THE PAKISTAN CONUNDRUM

For 24 hours last week Pakistan gave everyone cause for hope.

On Wednesday, Pakistan’s Finance Minister Hammad Azhar disclosed that the government was lifting the ban on import of sugar and cotton from India--something that was widely seen as a signal of a further thaw in the otherwise frosty relations between the two neighbouring countries, especially since both sides had just agreed to restore cease fire along the border. However, on Thursday Interior Minister Sheikh Rashid Ahmed said the decision had been “deferred”.

Clearly Prime Minister Imran Khan, who is having a torrid time at the crease (to use a cricketing analogy) as Prime Minister, could have spared himself the blushes. Now Khan is in an unenviable position: At one level he has revealed Pakistan’s strategic hand (desire to dial down tensions) and at another he has had to humiliatingly acknowledge that the military is the real boss.

The obvious inference from this episode is the confused state of Pakistan. Not surprising given the dual power structure unevenly shared between the army and the elected civilian government. At the same time if we look beyond the amusing flip-flop by Khan there is a hint of a recalibration. Especially if you take into account, as the Indian army recently stated, that there is a perceptible drop in terrorists crossing over from Pakistan into Kashmir.

The good news is that it is the Pakistan military which is desiring this rethink. It is likely that Khan may have hurried the process instead of calibrating the strategic shift. A case of too much too soon. Or it may well be another act of perfidy. Given bitter experiences it is safe to assume that with Pakistan anything is possible.

Yet the fact is that the Pakistan government’s pronouncements on resumption of trade with India was preceded by a statement from its all powerful army chief: General Qamar Javed Bajwa. According to Bajwa it was time for the two countries to bury the past so as to unlock the potential of South Asia (ironically something that every government since Atal Bihari Vajpayee has backed only to be rebuffed by Pakistan).

Bajwa’s public remarks have nothing to do with some new found love for his country’s Eastern neighbour with whom Pakistan has fought three formal wars, innumerable skirmishes and overtly and covertly funded cross border terror (including the audacious 26/11 attacks on Mumbai).

Instead it is more to do with the tacit recognition of an imminent reset in geopolitics being initiated by the Western majors including the United States which could potentially diminish Pakistan’s importance in global equations. This transformation has gained momentum with the economic meltdown triggered by the covid-19 pandemic, which originated in Wuhan, China.

Transactional Love

Photo by Andy Feliciotti on Unsplash

It is abundantly clear that the Western majors led by the United States are ganging up to take on China. The transition in the White House from the unpredictable Donald Trump to President Joe Biden has if anything only given more teeth and acceptability to the plan. And one battleground for this confrontation is likely to be the Indo-Pacific region. Further this is about regaining economic leadership or at the least ensure that the Dragon does not replace the United States as the preeminent global economic power.

Obviously then the tools and nature of this confrontation are going to be different.

For one this face off is unlikely to be an armed one. In the previous rounds of friction not directly involving China, the Western majors did, at some time or the other, tap Pakistan’s ability to groom terror outfits like the al Qaeda and Lashker-e-Toiba to undermine the enemy. But those battles are over and the Americans are in the middle of winding down their presence in West Asia. Consequently the utility of hosting a terror factory—which could also be employed to deal a “thousand cuts” to India has declined.

Now the plan is about containing the economic super power status of the world’s second largest economy: China. For long the West has seen India’s immense economic potential as something that could be nurtured as a counter balance to China in Asia. However, the Elephant has mostly disappointed rather than delivered on this potential.

Though, their latest assessment seems to suggest that they believe India is at a tipping point. This thought has gained ground rapidly in the post-covid world—the spate of tough economic reforms culminating in this year’s Union Budget seems to have convinced the rest of the world that India is finally getting its act together. Further India demonstrated chutzpah in standing up to unprovoked bullying by the Chinese military attempting an illegal land grab along the Eastern border. What India lacked in military might it more than made up with the stunning bravado of its troops—twenty of whom were martyred in the skirmish at Galwan Valley, Ladakh. For now, China has blinked—whether it is tactical or not we will know only over time.

Not surprising then that India is the new object of affection for Western majors. Hopefully the mandarins in South Block see this for what it is: transactional love. Frankly nothing wrong with the Western thinking, after all every country will look to maximise its gains.

Clearly, the options before Pakistan are rapidly shrinking. Not only is it on the verge of losing its veto vote on all things India, its biggest nightmare may be about to unfold. And, given its deadly dependence on China it risks becoming collateral damage. And like General Bajwa pointed out in his speech—as did his predecessors—the chickens are coming home to roost: terrorism is now poses a bigger threat to Pakistan. And to top it all the Pakistan economy is under severe strain; if anything the covid-19 pandemic has only worsened the odds.

Neighbour’s Envy

I recall Vijay Kelkar, technocrat and former finance secretary, often telling me that the economy was the best line of defence for a country. His argument was that if India grew at 10% it would not only have overcome its own domestic challenges but it would also have acquired a strategic advantage over its rivals. (I was privileged to have known Kelkar, among other brilliant thinkers who deeply influenced Indian public policy in the last three decades and whose professional paths crossed my career as an economic journalist. I learnt so much from them. Grateful.)

If I am not mistaken Kelkar publicly voiced this argument later, during his tenure as chairman of the 13th Finance Commission. In fact I notice that his mantra has been given a moniker: the Kelkar doctrine. If you are interested in reading about it, please click here.

My sense is that Pakistan is tacitly acknowledging this doctrine, especially with the world in the midst of a geopolitical reset. In fact in a must-read piece published by the Indian Express (those interested can click here) strategic affairs expert Raja Mohan articulates this brilliantly.

“ (Pakistan Army Chief General Qamar Javed) Bajwa’s call for “burying the past” with India and moving on is premised on the conviction that the time has come for Pakistan to relook at the weakening economic foundation of its national security. As an institution that sees itself as the guardian of Pakistan’s ideology and interests, it is not surprising that the Army has taken the lead in reframing the debate on relations with India. But persuading Pakistan to follow through might not be easy.”

A similarly insightful view was articulated by Gautam Bambawale, former Ambassador to China and Pakistan, in a must listen Bharatvaarta podcast. According to Bambawale the trigger for a rethink by Pakistan has been induced due to mounting economic pressures on the country. Unable to grow its economy at desired levels—a situation that has worsened post-covid—it is becoming increasingly difficult for the country to fund the defence establishment. All the more since American bail-outs are now far and few and come with strings and enhanced scrutiny.

But like Mohan, Bambawale too hedges his bets on whether the current move is tactical or otherwise. Given Pakistan’s history of duplicitousness it is always best to doubt and verify.

Yet it is safe to conclude that the status quo in the region is altering and that the ball for once is in Pakistan’s court.

For the sake of South Asia, fingers crossed.

Recommended Reading

If you haven’t already, suggest you do so immediately: get onto Clubhouse. The initial days, like it was for Twitter, are rocking. It is a relatively new social media platform which hosts audio conversations among members on a range of fascinating topics—unfortunately this is accessible only through invites (I have few and happy to share on a first-come, first-serve basis); and yes, you need to own an IoS device. Irritating? Absolutely.

It is very addictive so be warned.

I stumbled on an excellent room co-hosted by Aparna Jain and Vedica Kant on non-fiction books. It is a session which runs every Friday at 7.30 pm IST where people share their choice of non-fiction books. Besides humbling you (realise how little you have read) it also informs. Thanks to a participant I have added Bottle of Lies: The Inside Story of the Generic Drug Boom to my reading list. It is the inside story on India’s biggest scandal—Ranbaxy—which nearly took down its pharma industry.

Till we meet again next week. Stay safe.