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
-
Japan Is Emerging as a Regional Security Power Broker
Commentary
While Japan’s re-emergence as a security partner in the Indo-Pacific may not be welcomed by its geopolitical antagonists, Tokyo’s multilateral approach to preserving the statu...
By Derek Grossman
-
China Presses a Weakness in America’s Tech Policy
Commentary
America’s semiconductor strategy now must confront not only who controls the factories, tools, and materials required to make chips, but also who controls the language those c...
By David Feith
-
CNAS Insights | Japan isn’t rearming. It’s adapting to a new era.
CNAS Insights
Japan’s defense posture is changing and changing fast. Military spending has increased sharply over the past four years. Japan’s Self-Defense Forces (SDF) are acquiring long-r...
By Richard Fontaine
-
Tale as Old as Time: Security, Strategy, and U.S.-ASEAN Statecraft
Video
Everyone wants the U.S. race car. Who's willing to wait for it? On this month's episode of Bottom Line with USABC, President & CEO Amb. Brian McFeeters sits down with Lindsey ...
By Lindsey Ford
