There is a new coalition government in power in Islamabad. And, like its
predecessors, it not only inherits an economy in crisis, but is also engaging
the International Monetary Fund (IMF), as well as key foreign partners – including
Saudi Arabia and the UAE – for emergency support.
اضافة اعلان
The past,
unfortunately, has a tendency to repeat itself in Pakistan. Its elite power
struggles and economic breakdowns not only recur, they tend to do so
simultaneously. Amid Pakistan’s never-ending game of political musical chairs,
its rulers have gone to the IMF nearly two dozen times and, over the decades,
Abu Dhabi and Riyadh have stepped in on numerous occasions to avert a total
meltdown of the Pakistani economy.
So Gulf Arab
rulers will be unsurprised as the new prime minister, Shehbaz Sharif, makes his
way to the region in the coming weeks with outstretched hands. Shehbaz’s
brother, Nawaz – a former three-time prime minister – made this journey several
times before.
Abu Dhabi and
Riyadh are already providing billions in short-term financing to bolster
Islamabad’s foreign exchange reserves. But with inflation in the double digits
and the current account and fiscal deficits heading toward dangerous levels,
Pakistan desperately needs to shore up its foreign exchange reserves, which now
barely cover two months of imports, as well as manage the rising cost of fuel.
The Sharif
government recently decided not to reverse costly energy subsidies announced by
the previous government, which may not only put its current IMF program in
jeopardy, but will also force cuts in development spending.
Shehbaz, like his predecessor, may also seek to draw Gulf Arab states into projects associated with the Gwadar port and the China-Pakistan Economic Corridor. But regional states are likely to defer decisions on major investments until after the next general elections. The coalition government’s longevity is uncertain and, in any event, short. It could last for as little as three months or well into next year, when the current National Assembly’s term is set to end.
Pakistani
commentators aligned with the new government claim that Shehbaz will return
from Saudi Arabia with “good news”. That could mean an additional deposit with
Pakistan’s central bank to stave off a balance of payments crisis and an
expansion of the existing oil credit facility provided by Riyadh.
Shehbaz, like his
predecessor, may also seek to draw Gulf Arab states into projects associated
with the Gwadar port and the China-Pakistan Economic Corridor. But regional
states are likely to defer decisions on major investments until after the next
general elections. The coalition government’s longevity is uncertain and, in
any event, short. It could last for as little as three months or well into next
year, when the current National Assembly’s term is set to end.
Shehbaz’s visit to Riyadh may end up simply focusing
on mending relations with Crown Prince Mohammed bin Salman. The Sharif family
has long-standing ties to Saudi Arabia. It spent the early-mid 2000s in exile
in Jeddah after Nawaz was deposed by then-army chief General Pervez Musharraf.
The Sharifs also had investments in Saudi Arabia. But Nawaz’s refusal in 2015
to join the Saudi-led coalition in the Yemen war angered Riyadh and marked a
rupture in Sharif-Saudi relations.
Around the same
time, Nawaz’s government built ties with Qatar and Turkey, marking a shift from
its Saudi-centric approach toward the Middle East. Additional aid from Riyadh
might require the Sharifs to offer something in return, such as a tougher
posture on Iran.
Shehbaz is
unlikely to continue the Islamic populism of his predecessor, Imran Khan – and
this could earn him goodwill with both Abu Dhabi and Riyadh. Khan was not only
a staunch critic of India’s human rights abuses in the disputed region of
Kashmir, he was also outspoken against the Hindutva ideology of India’s ruling
Bharatiya Janata Party. Both Shehbaz and the Pakistani army, seek a more
pragmatic approach with New Delhi with greater priority toward trade. And this
approach, while having political costs at home, could reduce friction with Abu
Dhabi and Riyadh, which are drawing closer to India.
Khan’s
international Islamic populism was a focal part of his relations with Turkey,
which rankled both Saudi Arabia and the UAE. Shehbaz will pursue strong
relations with Ankara – his ties to the country date back to his tenure as
chief minister of the Punjab province – but these efforts will be largely
driven by economic cooperation.
Pakistan will see
rising political instability in the coming months as Khan’s protests continue
and economic conditions deteriorate. Amid the political chaos, one can expect
Pakistan’s military-to-military ties with partners in the Middle East to grow.
The pace of joint military exercises between Saudi Arabia and Pakistan seems to
have accelerated in the past year. And Turkey is a growing source of defense
hardware for the Pakistani military. Strategic cooperation between Pakistan and
its Middle East partners will be more or less insulated from the political
tumult in Islamabad.
An extraordinary
bailout package from Pakistan’s Gulf Arab partners could provide the new
government the lifeline it needs to stay in power into next year and propel
Shehbaz to victory in the next general elections. But having achieved its
primary goal of dislodging Khan from the office of prime minister and
preventing him from appointing his preferred senior officer as army chief, the
new coalition government may unravel in the coming months. Shehbaz could opt
for early general elections later this year as political tensions heat up and
economic conditions worsen. But with Khan attracting massive crowds in street
protests since his downfall, a return to power for the nation’s former cricket
captain cannot be ruled out.
Given the
uncertainty in Pakistan, major powers in the Gulf and the Middle East would be
wise to monitor developments in Islamabad from a safe distance.
The writer, @arifcrafiq, is president of Vizier
Consulting, LLC, a political risk advisory company focused on the Middle East
and South Asia, and a non-resident scholar at the Middle East Institute.
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