September 25, 2018
Pakistan’s Debt May Be an Opportunity in Disguise
It is critical that Washington seize this opportunity to work with Islamabad.
Pakistan’s recent decision to review its economic agreements with China, if implemented successfully, will pay dividends for promoting regional and global stability. While the world stands to benefit from a more developed and stable Pakistan, Beijing’s lending approach and Pakistan’s mounting debt are likely to deliver questionable results. Washington’s proposed “reset” of relations with Pakistan under Prime Minister Khan’s leadership provides an opportunity for the United States to head off the systemic consequences of China’s Belt and Road Initiative while retaining space for Pakistan to make progress on legitimate U.S. concerns.
Pakistan’s past record of economic mismanagement, coupled with China’s predatory loan practices, is a cause for concern; since 2001, Pakistan has turned to the International Monetary Fund (IMF) for three bailouts. Today’s current account crisis , sparked by excessive fiscal spending, rising oil prices and growing private sector borrowing demonstrates that IMF bailouts have not fundamentally changed the Pakistani government’s approach to spending.
A true economic crisis in Pakistan could send shockwaves through the regional security environment. Pakistan’s global importance remains under-discussed given its fragility . But with the world’s sixth largest population , sixth largest military and sixth largest nuclear arsenal , Pakistan’s ability to shape global trends—even if solely through the introduction of relative chaos and unpredictability—should give onlookers pause. An economic crisis could provide the powerful Pakistani military with the political space needed to seize power. In a worst-case scenario , an extremist group or radical faction of the military could gain control of one of Pakistan’s sensitive military or nuclear sites.
Read the full article and more from The National Interest
More from CNAS
-
How Long Will Deterrence Hold?
Podcast
Mike hosts Michèle Flournoy, former Co-Founder and Chief Executive Officer of the Center for a New American Security (CNAS), where she currently serves as Chair of the Board o...
By Michèle Flournoy
-
Trump’s Second Term: How Will the New Administration Reorder U.S. Foreign Policy?
Video
The return of President Donald Trump to the White House represents a significant moment for both US foreign policy and geopolitics. Following Trump’s comprehensive election wi...
By Lisa Curtis
-
Sharper: Trump's First 100 Days
Commentary
Donald Trump takes office in a complex and volatile global environment. Rising tensions with China, the continued war in Ukraine, and instability in the Middle East all pose s...
By Charles Horn
-
The Trump-Biden-Trump Foreign Policy
Commentary
The stability of U.S. interests and values, the role of Congress, and the realities of today’s world will demand a significant measure of constancy....
By Richard Fontaine
