U.S. Policies Aggravate Pakistan’s Dysfunction

By inviting Pakistan’s Prime Minister Nawaz Sharif to the White House, President Obama may only have wanted to signal America’s continued interest in the nuclear-armed country. But in Pakistan it reignited the belief that Uncle Sam simply cannot manage the world without Pakistan’s help.

For years, Pakistan’s policies have coincided with those of the U.S. only nominally. Pakistan’s support for the Taliban in Afghanistan is the main reason Mr. Obama had to reverse his decision of pulling out troops from that country. Pakistan’s development of battlefield nuclear weapons also runs contrary to U.S. plans for reducing nuclear proliferation. Diplomatic statements notwithstanding, the two sides have very different priorities.

Even after feting Pakistan’s democratically-elected leader, it is unlikely that Mr. Obama’s problems in Afghanistan or with Pakistan will end anytime soon. Although he continues to retain popularity at home, according to recent polls, Mr. Sharif has little control over foreign policy. Pakistan’s powerful military, currently headed by General Raheel Sharif (no relation to the Prime Minister) persists with its obsessive competition with neighboring India, which in turn shapes Pakistan’s worldview.

Mr. Obama lost the initiative in Afghanistan by relying on Pakistan’s ability to set up negotiations with the Taliban. He has spent the last seven years alternating between coaxing Pakistan’s leaders with economic and military assistance and delivering tough messages. The pretense of toughness has lacked credibility. Diplomacy and inducements have failed because they only reinforce the Pakistani view that the country’s geostrategic importance for the United States outweighs its resentment of negative Pakistani policies.

Pakistan has received $40 billion in US military and economic aid since 1950, of which $23 billion were given after 9/11 to strengthen the country’s resolve in fighting terrorism. But Pakistan’s focus has always been its rivalry with India, against whom it has initiated (and lost) three wars, using US equipment each time.

Americans have several reasons to mistrust Pakistan, which also accuses the U.S. of being a fair weather friend. Pakistan acquired nuclear weapons while promising the US it won’t go nuclear if it gets US assistance. Pakistan’s ongoing support of Jihadi terrorists is part of Pakistan’s effort to expand regional influence in competition with India, especially in Afghanistan and the disputed Kashmir region.

Over the last 13 years, many US soldiers have been killed in Afghanistan by the Taliban and the Haqqani network trained, armed and supported by Pakistan. The recent surge in Taliban activity, manifested most blatantly during the Taliban occupation of the Afghan city of Kunduz, is attributed by US and Afghan officials to Pakistani support.

It seems that while officially Pakistan was helping US and Afghan officials in peace talks with the Taliban, its covert support was preparing the Taliban for reoccupying Afghanistan after the completion of the US withdrawal.

In 2009, Congress made aid to Pakistan conditional to specific criteria. The administration was required to certify to Congress that Pakistan was meeting American terms in fighting terrorism and diminishing the military’s role in politics. But for several years, instead of certifying that Pakistan was doing what it was expected, the Secretary of State has invoked the right to waive the conditions on grounds that continuing aid to Pakistan was necessary for US national security.

The Obama administration spent its first few years trying to convince Pakistan’s civil and military leaders of the virtues of changing their strategic calculus. In doing so, they praised Pakistan publicly and expressed optimism every time Pakistan took a positive step, however small.

Over the last two years, much optimism was expressed over Pakistan’s decision to militarily eliminate terrorist safe havens used by terrorists responsible for attacks inside Pakistan and against China. But now the administration appears to have woken up, once again, to the realization that Pakistan’s decision to act against terrorists does not extend to all jihadi groups.

During a recent visit to Islamabad, National Security Adviser Susan Rice reminded Pakistan of its unfulfilled commitments about helping with the Afghan peace process. She also asked Pakistan to act against the Haqqani network, which has been involved in several attacks on American targets including one on the U.S. embassy in Kabul in 2011.

Washington’s complaints against Pakistani support for the Haqqani network are not new. The former Chairman Joint Chiefs, Admiral Mike Mullen, who met with Pakistan’s army chief 26 times in an effort to ensure consistent Pakistani cooperation described the Haqqani network as a “veritable arm” of Pakistan’s security services at the end of his tenure.

If things have not changed since 2011, one cannot help but question the administration’s intermittent hopefulness about a turnaround in Pakistani policies.

Pakistan is the sixth largest nation in the world by population but only 26th by size of GDP on PPP basis and 42nd in nominal GDP. It has the world’s sixth largest nuclear arsenal and eighth largest army but performs poorly in most non-military indices. It ranks 146 out of 187 countries in the world on the Human Development Index, which measures health, standard of living, and education.

The World Economic Forum’s Global Competitiveness Report ranks Pakistan’s primary education at 136 out of 144 countries. The country has one of the world’s lowest tax to GDP ratio, with international aid making up for low tax collection.

The military and intelligence services that dominate Pakistani national security decision-making have sacrificed their country’s progress and prosperity in their relentless pursuit of military parity with India. Forcing New Delhi’s hand on Kashmir has become more important than educating Pakistan’s children.

American readiness to offer aid has bred dependence and hubris. The US has ended up as an enabler of Pakistan’s dysfunction by reinforcing the belief of its elite that it is too important to fail or be neglected.

The intermittent cycles of optimism and pessimism about Pakistan have led to confusion in Mr. Obama’s Afghan policy. It is time to finally accept Pakistan’s lack of cooperation in Afghanistan as a given while making plans for that country. The US would help Afghanistan, and even Pakistan’s people, more by insisting consistently that Islamabad correct its course. Instead of telling Pakistan’s elite how important they are, it might be more useful to stop footing the bill for Pakistan’s failings.

A Foreign Economic Policy

For decades, pundits have described India and China as rivals for leadership in Asia. Chinese President Xi Jinping’s recent visit to India suggests that economic cooperation, rather than strategic competition, could be the main driver for the two Asian giants. If Prime Minister Narendra Modi’s forthcoming meeting with US President Barack Obama also gives due weight to economic considerations, India could be on the verge of significantly redefining its global role.

It is good that Modi pays attention to economics, unlike the entrenched establishment in Pakistan, which clings to military strategies even when the cost is the country’s impoverishment. India and the United States could still emerge as strategic partners, but with shared economic interests rather than just shared concerns about the balance of power. And Sino-Indian rivalry could be postponed to a day when both countries have modernised their economies.

India has yet to realise its full potential as a leading global economy. The rapid economic growth that India has witnessed since the mid-1990s was ushered in by much-needed reforms. After being criticised by economists for its low rate of growth, India finally earned a place among the world’s leading emerging markets. Further reform could lead it to greater success among the BRICS, that is, Brazil, Russia, India, China and South Africa, and beyond.

Americans believe that India can achieve rapid economic growth through innovation if it opens up its economy to foreign technologies. As Modi and Obama meet, Indian policymakers must recognise that economic factors are as important to Washington as they are to Beijing. For American FDI, India must strengthen its intellectual property right regulations and protect foreign investors who are exporting new technologies to India. Greater protection for foreign technologies will not only encourage growth and innovation, but also bring in vital FDI.

New Delhi cannot afford to persist with its dated modes of thought on pharmaceuticals or the defence industry either. Spending on healthcare is only about 1 per cent of the GDP in India, making the country one of the lowest spenders in the world. A number of issues plague India’s healthcare sector, ranging from a lack of infrastructure and financing to a dearth of health workers across the country. Hatred of Western pharmaceutical corporations cannot be the core of India’s healthcare strategy.

While India has emerged as a hub for IT outsourcing, it has lagged behind in exporting value-added manufactured goods. It has been unable to increase its share of technology-intensive products. With wages rising and productivity falling in China, India has a great opportunity to attract American FDI in its manufacturing sector. Such investment could go a long way in kickstarting India’s economy.

The country will require over $500 billion just for funding its infrastructure needs in the next five years. This fact makes capital market reforms a critical component of the agenda. Lack of liquidity and transparency as well as an excessive government footprint in capital markets are a few of the problems plaguing this sector. Any positive commitment from Modi in this area would be music to American ears and might help attract dollars for infrastructure.

With India seeking to modernise its armed forces and diversify its arms acquisitions, opportunities for stronger US-India defence ties will arise. The speed with which the two countries collaborate will largely depend on how reforms are introduced in India’s defence sector. Both sides speak of the opportunities for defence cooperation. But success in this arena will require streamlining the licensing processes as well as improving foreign and private participation.

As the economy grows, India’s energy needs continue to expand as well. The energy sector has been dominated by monopolies and the state, resulting in a lack of market-based mechanisms in the sector. This has led to governance issues, inefficiencies and a lack of strong competition from private companies. Americans would like to see market-based reforms in the energy sector.

The first set of reforms, implemented in the early 1990s, marked India’s arrival on the global economic map and made the country a key destination for international investors and companies. It has made significant progress in the last two decades and is now counted among the world’s leading emerging markets.

Economic growth led to a rise in India’s global standing and has radically improved the country’s socio-economic indicators. It has also raised the expectations of people within and outside the Indian economy. The burgeoning middle classes expect more growth from the economy and are keen to see even more improvement in the country. So do the major powers courting India.

The success of Modi’s initiatives with both China and the US depend on his ability to put economics at the centre of India’s new foreign policy. India has a remarkable knack for exploring new ideas and then settling for old ones. For peace and stability in Asia, and in order to create a model for its neighbours, one can only hope that India under Modi will have the economic emphasis that the prime minister’s predecessor failed to sustain.