welcome to foreign policyOverview of South Asia.
This week’s highlights: international monetary fund Delegation arrives in Islamabad amid economic protests in Pakistan-administered Kashmir, US Assistant Secretary of State for South Asia Donald Lu Traveling through this region, India port management agreement With Iran.
Economic stress has sparked violent protests in Pakistan-administered Kashmir this week. For the Pakistani government, the violence could not have come at a worse time. A senior delegation from the International Monetary Fund (IMF) arrived in Islamabad this week to discuss the possibility of a much-needed new aid package.
The IMF’s visit comes days after the fund released a report expressing concerns about Pakistan’s ability to implement austerity measures and economic reforms. Some of these policies, such as increasing electricity prices and withdrawing subsidies, are exactly what Kashmiri protesters were opposing.
Pakistan came close to defaulting on its debt last year, but has achieved some economic stability in recent months. Last year’s IMF package brought in much-needed revenue. The inflation rate has been halved from 38% in May 2023 to just over 17% last month. Import control measures have eased the external balance of payments deficit and increased interest from foreign investors.
Still, the economy remains in crisis and deeply in debt, with growth expected to be only 2% in the current fiscal year ending June 30. And it’s not just the protests in Kashmir, but also the demonstrations by farmers against Islamabad’s bizarre decision to import wheat despite a bumper crop, which they say will lead to lower prices and therefore lower profits. claims.
In all of this looms the essential but elusive question of economic reform. Pakistan’s economy has suffered from severe structural constraints for decades. a large but inefficient agricultural sector, an overreliance on textiles as the only export that struggles to compete with the rest of the world, a high dependence on imports of expensive hydrocarbons, insufficient tax revenues; And it is a heavily indebted public company.
This shows that Pakistan’s economy is fragile at the best of times, as has been the case in the past few years after the COVID-19 pandemic and Russia’s war in Ukraine created supply chain bottlenecks. It means receiving a devastating blow from a physical shock.
Without reforms to address structural weaknesses, Pakistan’s usual tactics in economic crises, especially the pursuit of bailouts and other aid, will only provide temporary relief until the next catastrophe occurs. The government’s strategy now includes new investment mechanisms aimed at attracting capital from Gulf Arab states and other countries heavily influenced by Pakistan’s powerful army chief.
But Islamabad insists it is committed to reforms. The military fully supports the current government and is likely to have had a major role in starting the privatization process, a major reform agenda for Pakistan’s cash-strapped national airline earlier this year. Past Pakistani governments have reneged on reform plans for political reasons, given the powerful interests that resist the government, from the agricultural lobby to the entrenched bureaucracy.
Pakistan’s Finance Minister Muhammad Aurangzeb offers hope. He is a banker, not a politician, suggesting he is less vulnerable to such political pressures. But the government appears to have already weakened Mr. Aulengseb, stripping him of key portfolios and giving more powers to former finance minister and current foreign minister Ishak Dar.
Faced with public anger and rejection by Pakistanis that February’s elections were fraudulent, the government may conclude it lacks the political capital to pursue reforms. The military, which has vast assets across many sectors, could eventually change course if it fears that change would jeopardize its economic interests. If Islamabad fails to undertake reforms again, it will be more than just a missed opportunity.
The stakes are especially high this time. Pakistan is facing a worsening brain drain problem, with increasing numbers of people going abroad to work, eroding its large population, an important potential economic asset. It also faces a surge in terrorist threats that regularly target foreign investment in the country. Further into the future, worsening effects of climate change could wreak havoc on economies, including the vulnerable agricultural sector.
Pakistan may reach a stage where the cost of prioritizing political expediency over prudent economic policy becomes prohibitive for both the economy and the country as a whole.
Mr. Donald Lu visited the area. Donald Lew, the US assistant secretary of state for South and Central Asian affairs, visited India, Sri Lanka, and Bangladesh this week. A State Department press release ahead of the trip described the visit as an effort to strengthen bilateral relations and demonstrate U.S. support for a “free, open, and prosperous Indo-Pacific region.”
This phrase suggests that the United States wants to emphasize its strategic approach to South Asia. Although the State Department’s statement mentioned rights and democracy in relation to Sri Lanka, values were not a prominent theme in public messages about Mr. Lew’s visit. This is important in Bangladesh, where the US has been emphasizing election integrity in the lead-up to January’s vote. The State Department later classified the poll as neither free nor fair.
The Biden administration appears keen to emphasize the broader priorities attached to the U.S. Indo-Pacific strategy, including not only rights promotion but also trade relations and cooperation on climate change.
Counterterrorism cooperation between the United States and Pakistan. On Monday, the United States and Pakistan issued a joint statement at the end of bilateral dialogue that focused in part on their shared concerns about Islamic State Khorasan (IS-K) and Pakistan’s Tehreek Taliban. The meeting was significant given that the Biden administration has sought to restructure relations with Pakistan to focus more on non-security issues since the US withdrawal from Afghanistan.
The US is likely motivated by growing concerns about IS-K, which in recent months has shown an increasing ability to anticipate threats far beyond Afghanistan, including in Europe. ing. U.S. officials want to explore new counterterrorism cooperation with Pakistan, which borders Afghanistan, a major IS-K stronghold.
Still, that possibility is somewhat limited given that U.S. security assistance to Pakistan has been suspended since 2018. Notably, the joint statement primarily refers to cooperation beyond funds and weapons, including capacity-building efforts such as police training and investigation and investigation support. Prosecution.
India signs port management agreement with Iran. On Monday, New Delhi announced a 10-year deal to develop and operate a port in Chabahar, Iran. The agreement follows a similar agreement reached in 2016, but progress has been limited. The port project is of strategic importance to India, allowing it to access Central Asia – a gas-rich region where Islamabad is also seeking to increase its commercial involvement – using an alternative route that bypasses Pakistan.
In 2018, the US announced that Chabahar port was exempted from sanctions. However, such exemptions may not be automatic, although they remain likely for major US partners, as relations between the US and Iran have turned completely hostile in recent months. There is sex. Asked about the deal on Tuesday, a State Department spokesperson was not necessarily reassuring, saying “any entity” doing business with Iran risks sanctions.
But an Indian deal could advance U.S. interests. China has been pushing back against China, which has strengthened ties with Iran in recent years. It will also facilitate the transportation of supplies, including humanitarian aid, to Afghanistan. India previously halted imports of Iranian oil in line with U.S. sanctions, and will hope those considerations will protect it this time.
Relations between India and the Maldives remain at a difficult stage. The Maldives seeks an end to India’s military presence in the country while strengthening relations with China, including military cooperation. But the island nation continues to make demands of India, which New Delhi acknowledges.
In April, the Maldives asked India to allow limited exports of essential goods, and India complied. After a visit to New Delhi this week, Maldives Foreign Minister Moosa Zameer announced that India has agreed to extend its budgetary support to the country for another year by $50 million. India’s state-run banks are providing these bills to the Maldives free of charge and without interest.
These requests for assistance demonstrate the Maldives’ continued desire for close ties with India. Maldives President Mohamed Muiz appears to be seriously seeking a better balance in relations with India and China. Meanwhile, New Delhi’s intention to provide continued support to Male underlines its own view that bilateral relations remain important and that India is keen to remind the Maldives of that fact. There is.
Activist Nipun Malhotra and Sanskriti Bhatia discuss in Print The time has come to reconsider the framework for disability rights in India. “Now is our moment of reckoning, to rethink India’s disability policy landscape and shift the tide from surveillance to inclusion,” they write.
a Kathmandu Post Office Editor Nepal has publicly expressed skepticism after several political parties promised to attract more investment to the country. He argues that “the only way for Nepal to attract quality investment and leapfrog its development efforts is through collective political efforts to ensure policy coherence.”
inside daily starjournalist Tamanna Khan We argue that Bangladesh can and should do a better job in the fight against dengue. “Every life lost to dengue fever is preventable, at least in the 21st century,” she wrote. “Besides, Bangladesh has successfully eradicated several diseases in the past. Why not dengue fever?”
