By Ahmad Shafaq
Anyone looking at Pakistan’s economy today would imagine a thirsty man chasing a mirage in the middle of the desert. The country is facing the worst economic crisis of its modern history. It has reached a point where the government’s main concern is no longer rebuilding the economy, but finding fresh loans to pay the installments and interest on old ones. Caught in this desperate situation, Pakistan has been knocking on the doors of Washington, Beijing, and Riyadh all at once in the hope of keeping itself afloat. Yet every door it knocks on brings another bitter reminder of just how fragile its economy has become.
Under the China-Pakistan Economic Corridor (CPEC), Islamabad asked the Chinese companies operating power plants to write off 172 billion rupees in surcharge penalties that had accumulated because of delayed payments. The government hoped the much-publicized “all-weather friendship” between the two countries would ease the burden. Beijing refused outright, insisting that commercial agreements had to be honored, and that was that.
That refusal has created another headache for Pakistan. The outstanding dues owed to those companies have now climbed beyond 423 billion rupees. Sooner or later, that burden will land on ordinary Pakistanis in the form of even higher electricity bills.
After failing to persuade China, Islamabad turned, as it so often has in the past, to Riyadh. This time, however, the request is extraordinary. Pakistan has asked Saudi Arabia for an Oil Financing Facility worth $6.7 billion on highly concessional terms, citing the wars in the Middle East and the possibility of rising oil prices. The request reveals just how desperate the situation has become.
In previous years, Pakistan paid interest of between four and six percent on oil obtained through deferred payment arrangements. This time it has offered only a symbolic one percent. It has also asked for a repayment period of fifteen years, with no installments at all during the first five. Such an arrangement may buy Islamabad a few years of breathing space. Even so, the request says something far more important: Pakistan itself does not expect to have the capacity to pay for imported oil outright for at least the next fifteen years. Meanwhile, rising fuel prices are already waiting to test the patience and purchasing power of the Pakistani public.
Then there is Washington. Pakistan has asked the U.S. Treasury for a special financial facility worth $10 billion. The story behind that request is not an economic miracle, but a political game being played out on Washington’s diplomatic chessboard.
According to Islamabad, during the recent period of heightened tension between Washington and Tehran, Pakistan quietly served as an intermediary, carrying messages between the two sides through back channels. It now hopes those diplomatic efforts will be rewarded with $10 billion that would allow it to ease some of the pressure imposed by the IMF’s strict conditions.
A few encouraging signals have come from Washington. The broader picture, however, points in the opposite direction.
Relations between the United States and Iran have continued to deteriorate rather than improve. For that reason, Pakistan’s request has yet to move beyond paperwork and remains far from becoming a reality. To political and economic observers, the entire situation is as troubling as it is ironic.
How can a state that survives on foreign loans, emergency assistance, and repeated debt relief present itself as an effective and influential mediator between two of the world’s major rivals? The truth is that countries such as the United States do not keep Pakistan engaged because of any lasting friendship. They do so because they do not want to lose their influence over it. Washington understands that abandoning Pakistan altogether could push it completely into China’s economic orbit. Strategic ports like Gwadar would lose their importance for American interests. At the same time, Pakistan’s geography and its so-called role in regional security calculations ensure that it remains part of the equation for every major power.
That is why the world’s powers neither allow Pakistan to become so weak that it collapses, nor help it become strong enough to stand fully on its own.
This is one of the harsh realities of international politics. There are no permanent friendships. There are only permanent interests. No country is going to hand Pakistan billions of dollars simply because it is an Islamic state or because of its historical legacy.
Until Pakistan expands its exports, reforms its tax system, confronts corruption in its state institutions, military structures, and political circles, and strengthens its productive economy, it will continue to serve as another piece on the geopolitical chessboard of stronger powers. Cosmetic diplomacy and oil bought on borrowed money may keep the lights on for a while. They cannot build a nation’s future.
