A melting world – Newspaper

NOTHING is more important for Pakistan now than learning to stand on its own two feet. The triumph of Donald Trump as the next President of the United States underscores this urgent need. Those who think Trump will be a friend to their cause should prepare to be sorely disappointed.

Trump will not care about Pakistan, or about Imran Khan for that matter, any more than any other president has. And the reason is simple: there are no American interests at stake here, and he is, perhaps more than most other presidents, a pragmatic man driven by self-interest above all else.

However, the election portends something more. Increasingly, the United States is becoming consumed by its internal dissensions, power struggles, fissures, and dysfunctions. There is probably no country on earth more dysfunctional than America these days. The degree of accumulation of their public debt and all the successive attempts to try to stop its increase testify to this.

Economically, America is plagued by the economies of East Asia, primarily, but not exclusively, China. Politically, its old guard now stands defeated, bereft of any vision or package of policies to lead them into the new world that is rising before them.

In truth, the vision by which this country has governed itself and upon which it has built its foreign policy – neoliberalism and the myth of free market fundamentalism – was destroyed in the Great Financial Crisis of 2008. It was time to seek a new way forward. But instead they preferred to simply bail out their banks and return to business as usual. The result is what has happened now.

In the coming years, possibly under Trump’s new presidency, the United States will reorganize itself significantly. It will withdraw from Nato and the World Trade Organization, preferring to embrace a more muscular unilateralism in its security policy and old-fashioned protectionism in its economic policy towards the world. It all goes, old world architecture together with certainty.

This is a matter of deep concern for Pakistan, a country firmly tied to the old world financial architecture. Since 1988, Pakistan has been in almost continuous IMF programs and heavily dependent on the World Bank for its policy advice and significant foreign exchange requirements.

More recently, from the mid-2010s onwards, we have added China, Saudi Arabia and the UAE to our creditors. But none of these actors is equipped to provide endless financing to a country with chronic balance of payments problems. Today, even their support is conditional on a functional IMF program, mainly for the monitoring provided by the Fund’s programs.

Pakistan built its economy in the shadow of an American war. It began in the 1960s with a Cold War alliance, when the infrastructure through which the country secured its electricity production and food security was built. It continued through the 1980s, when the first attempts at liberalization began, the first elements of our current industrial structure were established, and the first experiments in market-based pricing of agricultural commodities began. It came to a crescendo in the 2000s when, under the guise of the US war in Afghanistan, the Musharraf regime pivoted sharply towards a consumption-led growth model and, with the help of unprecedented access to foreign finance, created a growth boom the likes of which we had never experienced. seen before.

We have been running the same model on repeat ever since. In the mid-2010s, another growth boom was created, this time with Chinese money. And in the early 2020s, another one, this time using funds made available in the post-Covid world.

Today, this growth model, the institutional scaffolding built in the 1960s and the orthodoxy of liberalization embraced in the 1980s are all obsolete. Unless there is another great power war in which Pakistan is called upon to play a role, the world in which this country grew up and came of age, dysfunctions and all, is now disappearing.

Pakistan can no longer count on the idea that some great power will always be available to bail us out. The world where we were ‘too big to fail’ is disappearing. Now, more than ever, it is imperative that the country find a way to grow out of its dysfunctions, to restructure its growth model so as not to deplete its foreign exchange reserves after only a few years of economic growth. Now the rulers’ thirst for the attention and affection of a great power, to somehow sweet talk them into drawing another growth boom for us, must stop.

Business as usual in how the country is run must also end. The normal behavior of politicians cannot become hostage to the demonized politics and try to destroy its opponents. The ship of state – the only ship we have – cannot be rocked forever by the political storms that refuse to lay on its deck. The world is changing. Our country must change. Our policy must change. We must change.

Many of us are watching closely to see how Trump will handle the genocide Israel is carrying out in Gaza these days. But there may well be a region more consequential than the Middle East these days. That region is East Asia, where the undercurrents of historical animosities and border disputes may well equal, if not surpass, those of the Middle East. Will Trump pull forces out of East Asia and station them in the Mediterranean or the Red Sea or the Persian Gulf to contain the fallout from Israel’s relentless aggression? I seriously doubt it.

Pakistan may find itself having to choose, China or the United States? But even before it comes to that, the global architecture that Pakistan has come to rely on is now melting away. Time to learn to stand on your own two feet.

The author is a business and economics journalist.

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X: @khurramhusain

Published in Dawn, November 7, 2024