Pakistan’s new economic leadership and especially the Ministry of Commerce need to realize that modern day global trade is changing course. Gone are the days where countries single-mindedly focused on expansion of trade or had blind faith to slip into the prescribed WTO straight jacket to become a part of the global trade order. Both, the 2008 Financial Crisis and a Noodle Bowl effect of FTAs, RTAs, PTAs, etc. have slowly but surely undermined the once unquestioned wisdom of multilateral functioning. Modern day thinking being that while expanding global markets is a worthy goal, history offers lessons that only fair and ‘constructive trade’ is what nations should be seeking - ‘Constructive’ referring to a realization that only such trade is welcome which tangibly adds value to the home economy and ensures a gradual but clear development of its core national industries – Central Asian Republics (CAR) could prove to be invaluable to us in this context. Ironically, our trade equations with India & China thus far may tell a different story!
A new prudent mindset will be critical when engaging CAR, Afghanistan, Iran, Turkey and possibly Eurasia. Not only because we need to be mindful of our economic interests vis-à-vis accessing this region but also because there is this new found realization in these countries that while they will welcome enhanced cum new economic linkages the resulting development from the same must take place at home (meaning within their respective economies). President Ashraf Ghani of Afghanistan of late has made this very clear to virtually all the visiting Pak business delegations seeking to enhance exports into Afghanistan. Just like in South Asia where resolving the logjam between Pakistan and India holds the key to SAARC’s success; likewise, successfully ironing out bottlenecks and removing the present mistrust in the Pak-Afghan relationship (possibly also in our present relation with the US) will determine the success rate of our efforts in Central Asia and beyond.
India in this regard has the most comprehensive CAR strategy in place, which was formally put in place more than 15 years back. It encompasses both soft (intangible) and real-time (tangible) endeavours that project Indian initiatives as a helping hand in their growth and development rather than being seen as exploitative. Also, by committing huge resources to successfully gain a foothold in CAR and beyond India makes it clear that it is there for the long haul. Further, India very astutely uses its old connections and experience from the days of the ‘iron curtain’ to approach the region from all sides: through Afghanistan, Iran, Caucasus and Eurasia. Pakistan not only needs to learn from the Indian model but also has to come up with its own engagement strategy based on forming partnerships and creating synergies with its friends who already enjoy a relatively strong presence in that region: China & Turkey. Even Russia should be aggressively approached as it still enjoys a strong influence in the area and should be receptive at a time when Kremlin itself is in desperate search for new friends and partners. Perhaps, the new mindset and an altered trading culture that we expect from this new government needs to seriously consider shunning the historically on-going ‘game theory’ between Pakistan and India, which as a result has in fact ended up compromising potential gains of both sides.
Game theory is policy making based on mere negativity that the opponent should not gain even though the result may benefit you as well. Instead a sensible way forward should be adopted whereby to convince the Indians that by leveraging Pakistan’s geographical advantage, selective and mutually beneficial partnerships can be developed in key and large scale projects; a step that could not only be a win-win for both the countries, but can also ultimately pave the way for unlocking the real potential of South Asia.
Also, a focus on the western side of our borders by no means signifies an “either/or” approach to our eastern side. As already mentioned that trade and linkage on the western side will entail a significantly different kind of push where market penetration will be slow and returns even slower. In addition, initially the Government of Pakistan will have to invest funds and resources without expecting anything in return in the short run. History tells us that regardless of who so far has successfully penetrated these markets, their models of engagement have invariably been identical: Invest now to reap fruits in the long-term. Further, their investments have primarily been of the following nature:
- Government-to-Government (mainly raw materials)
- Big (Indian) Businesses backed by respective governments - to – The local CAR business houses – to - In-turn connected with the CAR government/ruling elites.
- Private-Public Partnerships again facilitated by the government-to-government patronage.
Finally, the Government of Pakistan should be very clear that it is not immediate exports what it should hope to achieve in these countries but a value reduction in its import bill through substitution of cheaper energy inputs and alternate solutions to our any (prevalent) energy sector woes. The strength of these countries lies in their wealth of natural resources like gas, coal, high-grade carbons and hydrocarbons, surplus electricity generation capacity, oil, uranium and gold and this is precisely where business will take place. The intangible benefits will accrue from promoting a soft image of Pakistan keen to help in the fields of education, exchange training programs in defense & security, setting-up of financial systems, stock exchange linkages, joint agriculture endeavors mainly in cotton, corn, animal breeding and fruits, healthcare, and last but not least, in tourism and cultural activities.
The writer is an entrepreneur and economic analyst.