A melting world – newspaper

NOTHING is more important for Pakistan now than learning to stand on its own two feet. The triumph of Donald Trump as the next President of the United States underscores this urgency. Those who believe that Trump will be a friend to their cause should prepare for bitter disappointment.

Trump will care no more about Pakistan or Imran Khan than any other president. And the reason is simple: American interests are not at play here, and he is, more than perhaps most other presidents, a pragmatic man driven primarily by self-interest.

However, the election promises even more. The United States is increasingly consumed by internal dissension, power struggles, divisions and dysfunction. There is probably no country on earth today that is more dysfunctional than America. The pace of accumulation of their national debt and all successive attempts to halt its increase bear witness to this.

Economically, America is ravaged by the economies of East Asia, particularly, but not exclusively, China. Politically, the old guard is now defeated and has no vision or policy package to lead them into the new world that is emerging before them.

In reality, the vision by which this country has governed 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. This was the time to look for a new way forward. But instead they preferred to simply bail out their banks and return to normal operations. The result is what happened now.

In the coming years, the USA will reorganize itself significantly, possibly under Trump's new presidency. It will withdraw from NATO and the World Trade Organization, preferring to pursue a more forceful unilateralism in its security policy and an old-fashioned style of protectionism in its economic policy towards the world. Everything is going on, the architecture of the old world along with certainties.

This is a matter of grave concern for Pakistan, a country firmly entrenched in the old world financial architecture. Since 1988, Pakistan has participated almost continuously in IMF programs and is heavily dependent on the World Bank for its policy advice and significant foreign exchange needs.

More recently, starting in the mid-2010s, we added China, Saudi Arabia and the United Arab Emirates to our creditors. But none of these actors is capable of providing endless financing to a country with chronic balance of payments problems. Today, even their support is dependent on a functioning IMF program, especially for the monitoring that the IMF programs provide.

Pakistan built its economy in the shadow of a US war. It began in the 1960s with a Cold War alliance that built the infrastructure that supported the country's electricity production and food security. This continued into the 1980s, when the first attempts at liberalization began, the first elements of our current industrial structure were established, and the first experiments with market-based pricing of agricultural goods began. Things came to a head in the 2000s when, under the guise of the American war in Afghanistan, the Musharraf regime pivoted sharply to a consumer-led growth model, using unprecedented access to foreign financing to engineer a growth boom the likes of which we had never seen before seen.

We've been using the same model ever since. In the mid-2010s, another growth boom was engineered, this time with Chinese money. And another in the early 2020s, this time with resources made available in the post-Covid world.

Today, this growth model, the institutional framework built in the 1960s and the liberalization orthodoxy advocated in the 1980s are outdated. Unless there is another great power war in which Pakistan plays a role, the world in which this country grew up and came of age, disruptions and all, will now end.

Pakistan can no longer rely on one great power or another always being available to save us. The world in which we were “too big to fail” is disappearing. Now more than ever, it is important that the country finds a way to grow out of its dysfunctions and retool its growth model so that its foreign exchange reserves are not depleted after just a few years of economic growth. Now more than ever, the thirst of those in power to win the attention and affection of a great power and somehow persuade it to secure another growth boom for us must end.

The current leadership of the country must also come to an end. Normal political behavior must not become hostage to brutal policies aimed at demonizing and destroying 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 have to change.

Many of us are watching with interest to see how Trump will deal with the genocide that Israel is committing in Gaza these days. But there may well be a region today that is even more consequential than the Middle East. That region is East Asia, where the brewing undercurrents of historical hostilities and border disputes may well equal, if not exceed, those in the Middle East. Will Trump withdraw troops from East Asia and station them in the Mediterranean, Red Sea or Persian Gulf to contain the consequences of Israel's relentless aggression? I seriously doubt it.

Pakistan may have to choose: China or the USA? But even before that happens, the global architecture that Pakistan has been able to rely on is melting away. Time to learn to stand on your own two feet.

The author is a business journalist.

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X: @khurramhusain

Published in Dawn, November 7, 2024