Should Pakistan realign itself when Global Economy is transitioning to a new multipolar world order after the Ukraine War?

Ukraine war might be a testing time for Pakistani authorities and at the same time it may come up as an opportunity for the ‘Pakistan Economy’ to revive and grow as the adverse conditions have provided a favourable platform for countries like India and China.

The Russia-Ukraine war and the subsequent energy sector conflicts have effected a significant shift in the Global Economy towards a new multipolar world order, The global balance of power is enduring a severe jolt since the cold-war era. The Russia–Ukraine war has accelerated this evolution that was already underway with the BRIC (Brazil, Russia, India, China) countries rising contribution to global production and trade, outstripping the growth in the US and EU economies in the last decade.

The transformation offers Pakistan a golden opportunity amid underlying threats

This transformation in the global order, offers opportunities for emerging markets, including Pakistan, to open trade and investment ties with neighbours and other regional economies. However, significant threats underlie their capability and intentions to make independent foreign, economic and energy security policies.

The most vicious threat is the balance of payment crisis, with Pakistan facing the risk of sovereign default on external debt repayments. The International Monetary Fund’s bailout has helped stabilise the economy and avert the immediate risk of default. Nevertheless, it seemingly comes at a cost, with Pakistan being unable to secure oil from Russia at concessional prices, which India and China have successfully achieved to protect their population from the price hike.

Between economic opportunities the challenges before Pakistan are colossal

The economic opportunities of the new multipolar world order are massive for Pakistan. However, the challenges are equally enormous. It is how they pursue these opportunities diplomatically and strategically in line with their national interests and their over-dependence on international multilateral financial institutions, predominantly under the influence of the West.

This will require forging stronger economic ties with emerging economies that offer Pakistan a better deal in terms of trade and market opportunities for their goods and services while enhancing their cooperation and relationship with existing superpowers. This is essential because of their precarious external debt situation.

Strong leadership acumen is required for Pakistan to make a turn-around

But, all these measures need strong leadership acumen and the incumbent government appears to be another lamb in the market. Pakistani goods especially ‘Basmati Rice’ can be bartered in exchange for oil from Russia at a discount. Pakistan can open ‘Vostro’ accounts where funds in Pakistani Rupee can be deposited for buying oil from Russia and in exchange Russia can pay from the ‘Vostro’ account for importing essential goods from Pakistan. But all these need very strong statesmanship with dynamic geopolitical relations. Pakistan should not remain aloof from the emerging global world order. They must reevaluate their external affairs and consider repositioning themselves politically and globally, which will adequately impact their economic policies for a positive initiation. With the global winds of change blowing very fast, they need to act swiftly on the foreign policy front or risk falling behind and thereby jeopardizing their dream of a prosperous, independent and secure Pakistan.

A prudent balance of geopolitical equation will only help Pakistan

A country’s economic policies are strongly intertwined with foreign policies and geopolitical relations and the current dispensation in Pakistan has to use its influence globally with its best diplomatic acumen to balance its equation with the US West while securing commercial benefits from growing energy powers, shifted to the Russian bloc. Only then we can envisage sustainable and inclusive growth for Pakistan.   

A distant possibility can be to develop energy infrastructure with Russia if acceptance of their role in the trade do not antagonize the West.

Many emerging and advanced economies will look to have a more diversified energy mix moving forward that includes gas, nuclear, and renewable energy. Funding, particularly for large energy projects, will be accessible through both bilateral and multilateral partners. Nuclear energy, in particular, offers great promise as an alternate, low-carbon fuel for power generation that Pakistan should explore.

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Strengthening bilateral relations with ‘Emerging India’ will be the key to success

Privatization of state-owned assets may drive more infrastructural growth. A lesson can be derived from immediate neighbours India which has attained exponential growth in practically every sector whereas Pakistan is lagging far behind. It is the time to build and strengthen bilateral relations with India which might help in providing them with the required economic impetus. Healthy bilateral trade relations with India will not invite ire from the West, at the same time it will open many more trade corridors for Pakistan. The country should contemplate the global changes meticulously and strive to corner beneficial gains from the shifting of geopolitical dynamics.

Russia already has strong ties with India. This may benefit Pakistan in one way or the other if India can use its influence on Russia to enable Pakistan for starting conducive trade relations with Russia. On the other hand, India and China contend for regional supremacy and influence but maintain a working relationship for their mutual economic interests. This example can be reciprocated by Pakistan for its economic growth.

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In light of these changing global realities, Pakistan must reposition itself with a long-term perspective, and leverage its rich endowment of natural resources and human capital to embark on a new path of sustained economic growth. The need of the hour is alienating their foreign policy conducive to the interest of Pakistan’s economic growth.

Reigning on terrorism – a must

But for all these to happen the Government of Pakistan have to reign over the innumerable terror groups and terrorism as well. The growth of a peaceful Pakistan will always be sustainable and bliss for the citizens of the country.

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