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
VideoForging an Alliance Innovation Base
Daniel Kliman, Senior Fellow and Director of the Asia-Pacific Security Program at the Center for a New American Security (CNAS), discusses plans to forge an Alliance Innovatio...
By Daniel Kliman
CommentaryCan America Trust the Taliban to Prevent Another 9/11?
For nearly 20 years, the U.S. intervention in Afghanistan has been sustained by a single, vital national interest: the clear and present danger of another September 11–like at...
By David H. Petraeus & Vance Serchuk
CommentaryGlobal Supply Chains, Economic Decoupling, and U.S.-China Relations, Part 1: The View from the United States
The trade war has defined the current adversarial relationship between the United States and the People’s Republic of China (PRC). While President Donald J. Trump has at times...
By Sagatom Saha & Ashley Feng
CommentaryHow China Is Exploiting the Pandemic to Export Authoritarianism
The Chinese Communist Party is now undertaking its most audacious effort yet at shaping international perceptions....
By David Shullman