Pakistan is facing the worst existential crisis since its inception. The country’s economy is on a ventilator with inflation soaring at 27.55 per cent, the highest since 1975. Its foreign exchange reserves are at a critically low level of $ 3.09 billion barely enough to cover two weeks of imports.
The Pakistani rupee has declined to 276 per dollar, and petrol prices have touched PKR 250 per litre. Food prices are showing a similar trend with wheat flour selling at over PKR 150 per kilogram. Apart from the food and power crisis, the spectre of default looms large on the Pakistani economy. Containers of imported goods are piling up in the country’s ports due to the shortage of US dollars.
Meanwhile, the Shehbaz Sharif government is desperate for a $ 6.5 billion bailout package from the International Monetary Fund (IMF). But the international lending agency is insisting on fiscal measures so stringent that it could cost the ruling alliance much of its political capital. Aimed at cutting down on the country’s fiscal deficit and public spending, these measures include increasing power tariffs and ending all power subsidies with immediate effect. It will help the government retire the circular debt it owes to the power sector companies but will cause great pain to the public.
Rubbing salt to Pakistan’s wound is the resurging terrorism as demonstrated by the killing of over 100 people in the Peshawar suicide bomb blast this week. Most analysts agree it is the ruling establishment’s karma afflicting the common people of Pakistan. The country was also at the receiving end of nature’s fury last year with devastating floods causing heavy losses to human life and the economy.
The Shehbaz Sharif government is exploring every option on the table to salvage the situation. However, its usual benefactors, China and the Arab world are not as forthcoming as before. The situation is so dire that many in Pakistan are now even looking towards India for help. It remains to be seen if the Modi government will forget all grudges showing the same benevolence as it did during the Sri Lankan economic crisis. The introspecting Pakistani media is full of praise for the India story.
Experts as well as common citizens look in awe towards India’s democracy, economy, foreign policy and PM Modi’s leadership as they urge their leaders to learn lessons from the South Asian giant. PM Shehbaz Sharif has admitted the follies of all the past wars with India although it is still early to know if it is a genuine change of heart or just a compulsion to get out of the current economic mess.
India, on the other hand, has invited Pakistan’s Foreign Minister Bilawal Bhutto to the upcoming Shanghai Cooperation Organisation (SCO) Summit in Goa. This comes despite Bhutto’s several acerbic comments against India and PM Modi in the recent past, even mentioning him in the same context as that of Al-Qaida’s slain chief Osama bin Laden on one occasion. This clearly shows the Modi government’s commitment to international peace and cooperation.
The same commitment has led PM Modi to take the lead in breaking the ice with Pakistan during his first stint in office. He even put his reputation at stake by breaking the protocol and suddenly landing in Pakistan in December 2016. Just a few days after, the gesture was reciprocated with an attack on the Pathankot airbase. The Indian government still showed magnanimity by allowing Pakistan to join the investigation into the attack, but to no avail. The Pakistani establishment continued its strategy of cross-border terrorism as was evident in the attacks on Uri and Pulwama. India’s swift response to these provocations put bilateral relations to a further freeze.
Nevertheless, the Modi government’s strategic thinking does seem to recognize the incentive in improving the bilateral ties. The start of the Kartarpur Corridor was a case in point. There were talks of similar corridors to facilitate pilgrims to Sindh’s Hinglaj Temple. Speculations were rife about the purported back-channel meetings between the former ISI chief Faiz Hamid and India’s National Security Advisor (NSA) Ajit Doval. All these efforts were scuttled by the hawkish stance of the Imran Khan government against India. Then came the Ladakh stand-off between India and China that re-emphasized the strategic necessity of mending fences with Pakistan. The India-Pakistan border and the Line of Control (LoC) have remained quiet for some time now and there are reports of a reduction of Pakistani troops from the forward position.
It is hard to miss China’s indifference to Pakistan’s current woes. Pakistan has also asked the Chinese nationals working on various projects under the China-Pakistan Economic Corridor (CPEC) to hire private security effectively dragging its feet from the responsibility of ensuring their safety. This could be an opportune moment for India to step in for Pakistan’s help. However, both sides will need to iron out issues like differences over negotiation mechanisms under the Indus Water Treaty, which have prompted India to issue notice to Pakistan.
Clear signals of a softening outlook towards India have emanated from Islamabad amid the current crisis. This could be the result of a genuine desire to turn a leaf in bilateral relations or a tactic to seek India’s financial help. There is a lot of scope to improve the bilateral trade, which stood at a meagre $ 513 million in 2021-22. Pakistan had banned all imports from India as a response to abrogation of the Article 370. India revoked the Most Favoured Nation (MFN) status to Pakistan following the Pulwama attack although New Delhi had allowed the export of essential medicines during the pandemic in 2020.
Import of several goods like sugar and medicines could immensely help Pakistan in stabilizing inflation. But it will need a permanent and irrevocable end to animosity towards India. Pakistani leaders also need to realize the transactional nature of the Chinese alliance. It could learn the perils of China’s friendship with the countries like Sri Lanka. Unfortunately, India’s budget has separate allocations for all its South Asian neighbours except for Pakistan. Burying the hatchet with India is only going to ensure Pakistan’s safe future.
