WASHINGTON: Prime Minister Nawaz Sharif may strain his relations with the new army chief if he continues to expand his policy-making powers, warns a US intelligence report.

The report, presented before the US Senate Select Committee on Intelligence on Wednesday, notes that Mr Sharif is seeking to “acquire a more central policy-making role” for civilians in areas that the Army has traditionally dominated.

“His push for an increased role in foreign policy and national security will probably test his relationship with the new Chief of Army Staff, particularly if the Army believes that the civilian government’s position impinges on Army interests” the report warns.

But it also notes that the prime minister has publically stated that the Army and the civilian government are “on the same page.”

The annual report is an assessment of the threats the United States may have to deal with in 2014 and is compiled jointly by all US intelligence agencies.

Pakistan figures prominently in a chapter on South Asia, which predicts that Prime Minister Sharif’s primary focus in 2014 will be on improving the economy, including the energy sector, and countering security threats.

The report says that Mr Sharif probably won the May 2013 election primarily because the previous government failed to improve either the economy or the generation of electricity.

It also notes that in September 2013, Islamabad secured an IMF program and met the conditions for fiscal and energy reforms under its three-year, $6.7 billion Extended Fund Facility. This paved the way for a second disbursement of $550 million in December.

But the report warns that “continued use of scarce foreign exchange reserves by the State Bank of Pakistan, to prop up the Pakistani rupee might make future disbursements difficult.”

The US intelligence community informs the Senate that Pakistan wants good relations with the United States “but cooperation with Washington will continue to be vulnerable to strains, particularly due to Pakistani sensitivities toward perceived violations of sovereignty.”

It notes that Prime Minister Sharif entered office seeking to establish good relations with the United States, especially in areas that support his primary domestic focus of improving the economy.

Mr Sharif and his advisers were pleased with his late October 2013 visit to Washington. Pakistan was eager to restart a “strategic dialogue’ and its offices and press have touted results of the initial meetings of several of the five workings that comprise the dialogue.

The report notes that Mr Sharif also seeks rapprochement with New Delhi in part in anticipation of increased trade, which would be beneficial to Pakistan’s economic growth. Mr Sharif will probably move cautiously to improve relations, however, and India also will probably not take any bold steps, particularly not before the Indian elections in Spring 2014.

The two other South Asian nations that drew the attention of the US intelligence community are Afghanistan and India.

Afghanistan

The report notes that the status of the Bilateral Security Arrangement remains unresolved despite its endorsement but the Afghan leaders during the mid-November 2013 Loya Jirga. Regardless of the status of the BSA, the bilateral relationship still might be strained if Afghan officials believe that US commitments to Afghanistan fall short of their expectations.

The IMF estimated that Afghanistan’s GDP growth rate fell from 12 per cent in 2012 to 3.1 per cent in 2013. It forecasts four to eight per cent growth in2014 and beyond, largely because of reduced ISAF expectations.

Afghan elections in 2014 will be an important step in the country’s democratic development. President Hamid Karzai has stated that he will step down after the election; eleven candidates are currently competing to succeed him.

The Taliban, confident in its ability to outlast ISAF and committed to returning to power, will challenge government control over some of the Pashtun countryside, especially in the South and East. The Taliban senior leadership will maintain a structured and resilient leadership system. The Afghan National Security Forces, however, will probably maintain control of most major cities as long as external financial support continues.

India

The report on India includes an assessment of New Delhi’s desire to improve relations with Pakistan. It says that India shares US objectives for a stable and democratic Pakistan that can encourage trade and economic integration between South and Central Asia. We judge that India and Pakistan will seek modest progress in minimally controversial areas, such as trade, while probably deferring serious discussion on territorial disagreements and terrorism.

India will continue to cooperate with the United States on the future of Afghanistan following the drawdown of international forces. India also shares concerns about the resurgence of the Taliban in Afghanistan, seeing it as a long-term security threat and source of regional instability.

India and China have attempted to reduce long-standing border tensions through confidence-building measures, such as holding the first bilateral military exercise in five years in November 2013 and signing a Border Defence Cooperation Agreement during Prime Minister Manmohan Singh’s visit to China in October 2013.

However, mutual suspicions will likely persist.

In this election year in particular, coalition politics and institutional challenges will remain the primary drivers of India’s economy and foreign policy decision making.

Any future government installed after the 2014 election will probably have a positive view of the United States, but future legislation or policy changes that are consistent with US interests in not assured.

Coalition politics will almost certainly dominate Indian governance. Since the 1984 national elections, no party has won a clear majority in the lower house of Parliament.

We judge that this trend will continue with the 2014 elections, and the proliferation of political parties will further complicate political consensus building.

In 2014, India will probably attain a 5 percent average annual growth rate, significantly less than the 8 percent growth that it achieved from 2005 to 2012 and that is needed to achieve its policy goals.