Over 15 days have passed since the gruesome Peshawar carnage shook up the entire country. The atmosphere is still somber as a flurry of activity continues in government quarters.

So has the situation reached tipping point?

Do the authorities intend real, meaningful action or are they still looking to stage manage some mass catharsis and bid their time before returning to their old ways?

A slew of senior analysts remain skeptical, and they have good reason to be, given recent history.

Nevertheless, I for one shall not be carried away by past experiences and lose sight of new factors that suggest that Pakistan may have turned the corner. There is more at play than meets the eye.

US troops are going home and so is US money

When the US military campaign in Afghanistan came knocking at our door, the country was under a host of economic and military sanctions imposed by none other than the US itself.

The Pressler Amendment of 1985 had bound the US president to annually certify that a country receiving military or economic aid from US was not pursuing a nuclear program. For five years, President Regan and then President Bush (Senior) signed the certificate, up until the Soviets finally withdrew from Afghanistan.

The period 1983-1990 saw US military aid stand at an average of around half a billion dollars (in 2009 constant dollar).

But the Soviet withdrawal from Afghanistan in 1989 drew a rather abrupt drop scene of this decade long Pak-US military friendship.

Then in May 1998, Pakistan defied international pressure and went ahead with nuclear tests. President Clinton imposed further sanctions under Symington Amendment and Glenn Amendment.

When General Musharraf toppled the elected government in October 1999, US Congress invoked Section 508 of the Foreign Assistance Act prohibiting all aid to Pakistan; these were termed as ‘democracy sanctions’.

The US non-military aid to Pakistan for the period 1991-2001 averaged just $75 million per year, while the total military aid during the eleven year period was a paltry $7 million.

All of this changed in September 2001. President Bush (Junior) waived Pressler, Symington and Glenn Amendments and the US Congress voted to allow the President to waive ‘democracy sanctions’. This broke loose a flood of US money.

US military aid to Pakistan in the first year of the new war, 2002, was a staggering $1.74 billion. The non-military economic assistance that year was $937 million.

See Sixty years of US aid to Pakistan

The US has certainly not been the only donor. As shown in a report by Center for Global Development, the US financial assistance worth $ 1.3 billion was just 30 per cent of the gross Official Development Assistance (ODA) that flowed into Pakistan in 2011, totaling $4.15 billion.

See Aid to Pakistan by the Numbers

Assistance from US and allies to Pakistan has maintained a high level since then despite many challenges.

For a broad comparison, consider that Pakistan’s total current expenditure for 2010-11 was Rs 2,296 billion and out of this Defense Affairs and Services (not total military budget) was Rs 445 billion.

The Coalition Support Fund (which reimburses expenses incurred by US allies against the war on terrorism) for the year 2010 was $1.22 billion (in 2009 constant) or roughly Rs100 billion; in other words, over a fifth of military’s current expenditure. It has remained at this level for a good 13 year period. This is a long time to stay hooked on to something.

Bloomberg quotes Congressional Research Service claiming, the U.S. paid Pakistan $11 billion out of the Pentagon’s Coalition Support Fund budget as of 2013. Including other military and economic aid, the US has given Pakistan about $28 billion during the 12 years through 2014.

General Raheel Sharif got an extension in the Coalition Support Fund for 2015 worth $1 billion during his recent visit to the US. But by 2016, US will be completely out of its combat status in Afghanistan.

In November 2016, during the next US presidential elections, Democrats would like to take pride in having successfully concluded the longest war in US history.

So while budgetary supports and civilian aid from the US and others will continue, though at a reduced level, military aid will slide down sharply, if not dry up completely after 2015.

Pakistan needs to keep around 150,000 troops in North Waziristan until at least 2017.

The monster of terrorism looming large at the western border at the time when resources are shrinking is no good news.

The time to act has arrived as Pakistan’s military strategists can no longer (financially) afford to let matters linger on its western borders.

The Kerry-Lugar bill had tried to use the US aid as a lever to create a new civil-military balance in Pakistan in 2009. The brazen attempt to give the newly elected government supremacy over military affairs had annoyed the army and was effectively blunted as aid to both civilian and military continued unabated.

The new reality is that the aid pipelines are drying up, especially the ones that directly supplied our military. It is bound to create a new civil-military power equation.

The civil-military hostility of 1990s can at least partly be attributed to the sudden reduction in size of the budget pie. We are again facing a similar moment in our history.

The only way to sustain previous levels of allocations is to increase the size of the national budget. That can come through measures like expansion in tax base, foreign investments and the overall growth in GDP of the country.

Peace is a pre-requisite to growth and it is only possible if terrorism is uprooted and we embark on a new era of regional cooperation.

Pakistan cannot afford to lose China as a friend

The recent upsurge in terror acts is blamed on the Operation Zarb-e-Azb, which, despite its shortcomings, the world has come to recognise as a step forward in the fight against terrorism.

Two weeks before the launch of Zarb-e-Azb, (on June 15, 2014), General Raheel Sharif paid a visit to China, holding meetings with political and military leadership of the new global power.

Since then, there has been a crisscross of meetings between US, China, Afghanistan, Pakistan and India.

China has advised Pakistan to settle its disputes with India through talks. It has also exhorted ‘neighbours of Afghanistan’ to not meddle in its internal affairs. It has come out in support of the new government in Kabul and has signed economic cooperation agreements worth tens of billions of dollar with Afghanistan, Pakistan and India.

A new economy is emerging in the region, and China is a dominant player in it.

China and Pakistan have close cooperation in almost every sector of defense. According to SIPRI, during the five-year period 2009-13, Pakistan was the world’s third biggest importer of arms in the world (having a 5 per cent share in total international arms imports) and 54 per cent of Pakistan’s imports came from China.

Looking at it from the other side, China became the world’s fourth largest arms exporter during the same period and 47 per cent of its total exports were bought by Pakistan.

China has three main stakes in the region that are related to Pakistan.

One: it sees the militancy in Pakistan and Afghanistan as a source of unrest in its home province Xinjiang, and it has zero tolerance for religious extremism.

Islamic militancy in Pakistan and Afghanistan is a constant source of inspiration, if not support, for ethnic Uighurs of Xinjiang and a major irritant for Beijing.

Two: Xinjiang is important for China from more than one aspect. It has a fifth of that country’s oil reserves and its largest coal and natural gas reserves. It also serves as the distribution hub of the gas China imports from Central Asia.

Beijing has recently said it is investing $300 billion in the region and a good part of this is going in developing roads and railways that will link China with Europe and other regions. One important route shall pass through Pakistan and China wants its merchandise to flow on it, but is wary of religious extremism traveling back into its already troubled region.

See: China Invests in Region Rich in Oil, Coal and Also Strife

Three: China has stakes in the region’s economy. It already has a $3.5 billion copper mining contract at Mes Aynak near Kabul. China's appetite for mineral resources is insatiable.

Besides that, many of the Chinese investments in other countries of the region can materialise or optimise if there are no cross-country hindrances. This provides “once-in-a-lifetime opportunity to kick-start the two redundant economies of Pakistan and Afghanistan.”

Also read: Can China bring peace to Afghanistan?

Pakistan’s western allies have been exhorting it to ‘do more’ in the war against terrorism with frustratingly limited success. The pressure to walk the last mile now may not be coming from the wily West but from ‘all-weather friend’ China.

Given the ‘unreliability’ of the US, Pakistan is trying to diversify. Its recent overtures to Russia are part of this effort but these are unlikely to yield anything substantial given the uncertainties faced by that country’s economy especially in the face of the current slump in oil prices.

So Pakistan is left with China as the only reliable military partner – and it certainly cannot afford to lose or annoy her.