Economic diplomacy

By Mansoor Ahmad
April 24, 2024
Iranian President Ebrahim Raisi (left) and Prime Minister Shehbaz Sharif greet each other during the former's three-day official visit in Islamabad, April 22, 2024. — X/PakPMO

LAHORE: In the current interconnected world, the economy cannot be separated from politics. It is certainly an art to manage the economy without unduly hurting the interest**s** of our trading partners.


India is doing this prudently. It is importing oil from Iran, financing its infrastructure projects, while Pakistan is threatened with sanctions if it imports oil or gas from Iran. India has been a close ally of Russia for so many decades. Most of its arms and ammunition come from Russia. It continued importing oil from Russia when strict sanctions were imposed by the US on Russia after its attack on Ukraine. Pakistan hesitated for quite some time before daring to import discounted Russian oil and was not slapped with sanctions. India is now closer to the United States than Pakistan, though we have been complying with US policies throughout our history. Our close relations with China were exploited by the US when it brokered meaningful dialogue between the two countries in 1962. But this closeness was questioned when we allowed China to build CPEC that, on full completion, could have been beneficial for our economy. The project started 10 years ago is still in limbo.

Against this backdrop, the visit of the Iranian President at the height of tensions in the Middle East and the visit of Ishaq Dar with Nawaz Sharif to China indicates that Pakistani planners have finally decided to show some courage and improve the economy by exploiting all possible avenues. They are moving delicately, trying not to annoy any of their trading partners but simply trying to emulate what India has been doing for a long time.

Our best allies of the past, Saudi Arabia and the UAE, have closer economic ties with our foe, India. Now we are courting Iran, which these countries consider their enemy. The Saudi Kingdom is investing in Gwadar, which has already been developed by the Chinese. The Chinese may not like a western ally so close to Gwadar, but Pakistan, it seems, has decided not to put all its eggs in one basket. Is it really so? Or is it an illusion?

Pakistan is facing pressure from all sides because it is economically vulnerable and also because some countries that needed it for their protection are now friends with their main enemy. There is a lesson to be learnt for Pakistan. We have been blindly supporting many countries in their causes, but those very countries looked the other way when supporting Pakistan annoyed their new-found friends.

Pakistan has never been so vulnerable in its history. It needs the IMF program, for which it needs US support. It has to colonize its industrial zone around the CPEC routes that require relocation of Chinese industries with the consent of the Chinese government. It is vying for heavy investment in agriculture that needs pleasing Saudi Arabia and UAE. Let us hope that Pakistan succeeds in these ventures. The concept of Investment and not loans should be carried forward with full dedication. But investment alone would not solve our problems. We should fast track our efforts to drastically reduce expenses, hugely increase our revenues and tremendously improve our governance.