Pakistan’s deep state is watching every action of the second Trump administration in the US cautiously. PTI, the main opposition party, thinks the change of guard in Washington may somehow help it defuse existential threats. That may be why it keeps sending mixed signals about its willingness to cooperate. On the international front, Pakistan’s politics is becoming increasingly entrenched in the big geopolitical game plans of the US and China and geostrategic priorities of the European Union, Russia, the Gulf Cooperation Council, and Israel.
Domestically too, it is becoming increasingly exposed to explosive socio-ethnic-religious fault lines of parochialism, intolerance, religious extremism, and our habit of living in a fools’ paradise. When we look at the recent surge in militancy and terrorism in Pakistan in this backdrop, everything makes sense.
That said, for an economy to function properly, even the best understanding of socio-political contexts is not enough. Developing a suitable roadmap and actually beginning the journey is crucial.
Unfortunately, the ongoing economic recovery is not a well-planned start of such a journey, even as the hybrid regime is trying to sell it as such. For Pakistan’s politics to move decisively forward in the emerging world order and for its economy to grow sustainably, supporting the state to meet emerging challenges and revival of nationalism is a must.
With millions of ordinary Pakistanis unemployed and below the poverty line, all energies must be focused on economic growth this year
It is difficult to predict when and how this national spirit will emerge and start taking root in the society. But we are at a make-or-break point in our history.
The ambiguity revolving around the Trump Administration’s willingness to implement an agreement governing the repatriation of the Afghan refugees post-Taliban takeover of Kabul could potentially make Pakistan’s war on terrorism more complex and costlier.
The Israel-Hamas ceasefire brokered mainly by the US is also keeping the establishment tense about how sustainable this ceasefire is and what would be Israel’s next move in its quest for expanding geopolitical influence in the Middle East. PML-N and PPP stalwarts are also worried about their future regarding the strength of the present regime. Meanwhile, PTI, despite its leader’s overconfidence, is shaken: the party structure has been in complete disarray.
These intrigues are translating into economic uncertainty, abrupt policy shifts, and hurried policymaking, and giving birth to unrealistic projections while sidelining critical issues.
The warning about a looming drought in the country after insufficient rains, for example, is being taken lightly. Similarly, concerns of provinces on sharing national water resources are not being addressed properly.
The Prevention of Electronic Crimes Amendment Bill of 2025 is being contested by journalists, and the indecent hurry with which it was approved by the National Assembly is being criticised by the entire society. What prompted the hybrid regime to come up with it was not only its will to safeguard national security in cyberspace effectively; the regime was also desperate to silence every voice of dissent.
Unless the establishment chooses to limit its effective role in the current political dispensation, unless PML-N and PPP deal with PTI more flexibly, and unless PTI exhibits a more mature understanding of other parties’ stances, the risk of reversal of economic recovery will loom large.
Inflation has eased after rendering millions of ordinary Pakistanis jobless and millions more below the poverty line. The rupee has remained stable so far at the cost of Pakistan, which is making some discomforting geostrategic choices and limiting our options to develop a truly homegrown development plan. Now, all energies must be focused on economic growth this year.
The International Monetary Fund believes three per cent GDP growth is still possible, but this would barely keep things where they are now, let alone allow space for job creation or lifting people out of poverty.
Pakistan requires much faster growth in 2026 and beyond, and that is not possible without initiating social reforms aimed at rebranding Pakistan as a national state instead of one in search of its identity.
Published in Dawn, The Business and Finance Weekly, January 27th, 2025
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