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A melting world
NOTHING is more important for Pakistan now than to learn to stand on its own feet. The triumph of Donald Trump as the next president of the United States underscores this urgency. Those who think that Trump will be a friend to their cause should prepare to be sorely disappointed.
Trump will not care for Pakistan, or for Imran Khan for that matter, any more than any other president has. And the reason is simple: there are no American interests at play here, and he, more than perhaps most other presidents, is a pragmatic man driven by self-interest above all else.
The election portends something more though. Increasingly, the US is coming to be consumed by its internal dissensions, power struggles, fissures and dysfunctions. There is probably no country on earth more dysfunctional than America these days. The rate of accumulation of their public debt, and all successive attempts to try and arrest its rise, bears testimony to this.
Economically, America is getting trounced by the economies of East Asia, principally, but not exclusively, China. Politically, its old guard now stands defeated, bereft of any vision or package of policies to lead them into the new world rising before them.
In truth, the vision by which that country has ruled itself and upon which it has built its foreign policy — neoliberalism and the myth of free market fundamentalism — was destroyed in the Great Financial Crisis of 2008. That was the time to seek out a new path forward. But instead, they preferred to simply bail their banks out, and revert to business as usual. The result is what has happened now.
In the years to come, quite possibly under Trump’s new presidency, the US will reorder itself significantly. It will pull out of Nato and the World Trade Organisation, preferring to embrace a more muscular unilateralism in its security policy and old-style protectionism in its economic policy towards the world. It’s all going, the architecture of the old world along with certitudes.
This is a matter of deep concern for Pakistan, a country that is firmly tethered to the financial architecture of the old world. Since 1988, Pakistan has been in near-continuous IMF programmes, and deeply dependent on the World Bank for its policy advice and substantial foreign exchange requirements.
More recently, from the middle of the 2010s onwards, we have added China, Saudi Arabia and the UAE to our creditors. But none of these players is equipped to provide endless financing to a country with chronic balance-of-payments problems. Today, even their support is conditional on a functional IMF programme, mainly for the surveillance that Fund programmes provide.
Pakistan built its economy in the shadow of a US war. It began in the 1960s with a Cold War alliance when the infrastructure through which the country secured its power generation and food security was built. It continued through the 1980s when the first attempts at liberalisation began, the first elements of our present industrial structure were laid down, and the first experiments with market-based pricing of agriculture goods began. It came to a crescendo in the 2000s when under the cover of the American war in Afghanistan, the Musharraf regime pivoted strongly towards a consumption-led growth model and using unprecedented access to foreign financing, engineered a growth boom the likes of which we had never seen before.
We have been running the same model on repeat ever since. In the mid-2010s another growth boom was engineered, this time using Chinese money. And in the early 2020s, yet another, this time using funds made available in the post-Covid world.
Today, that growth model, the institutional scaffolding built in the 1960s and the liberalisation orthodoxy embraced in the 1980s all are outmoded. Unless another Great Power war comes along in which Pakistan is called upon to play a role, the world in which this country grew up and came of age, dysfunctions and all, is now passing away.
Pakistan can no longer count on the idea that some big power or the other will always be available to bail us out. The world in which we were ‘too big to fail’ is disappearing. Now more than ever, it is imperative that the country finds a way to grow out of its dysfunctions, to retool its growth model so as to not deplete its foreign currency reserves after only a few years of economic growth. Now more than ever the rulers’ thirst to gain the attention and affections of a big power, so as to somehow sweet-talk them into underwriting one more growth boom for us, has to end.
Business as usual in how the country is run also has to end. The normal conduct of politics cannot become hostage to the cut-throat politics of demonising and seeking to destroy one’s opponents. The ship of state — the only ship we have — cannot be forever rocked by the political storms that refuse to subside on its decks. The world is changing. Our country must change. Our politics must change. We must change.
Many of us are watching keenly to see how Trump will deal with the genocide Israel is waging in Gaza these days. But there may well be a region more consequential even than the Middle East these days. That region is East Asia, where the brewing undercurrents of historic animosities and boundary disputes may well equal if not surpass those in the Middle East. Will Trump pull forces out of East Asia and station them in the Mediterranean or the Red Sea or the Persian Gulf to keep the fallout from Israel’s relentless aggressions in check? I seriously doubt it.
Pakistan may well find itself having to choose, China or the US? But even before it comes to that, the global architecture that Pakistan has grown accustomed to relying on is now melting away. Time to learn to stand on our own feet.
The writer is a business and economy journalist.
Published in Dawn, November 7th, 2024
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