Transitory Gains, Endless Pains

Faulty strategic decisions by Pakistan have historically centered on regional over-extension, alliances of convenience, and delayed economic reforms. The primary consequences include severe economic instability, prolonged internal radicalization and international isolation vis-a-vis regional rivals. The decision by the Pakistani leadership to unconditionally support the US for fighting a War against the former USSR in 1979, and again in its so called war on terror after the 9/11 attacks has had long-term consequences. Nevertheless, soon after the US intervention in Afghanistan ended in 2021, the implications became painfully clear as was the case in 1990 after the defeat of the USSR. The supporters of past decisions(mostly the beneficiaries) argue that at the time those decisions were made, the prevalent environment dictated the government of Pakistan to act quickly in favour of the USA. To defy the US would have meant grave consequences--, Pakistan lacked the means and resources to chart an independent path--, in that atmosphere of overwhelming coercion and fear, the only rational choice was complete cooperation; and the government of Pakistan chose to unconditionally side with the US even to the astonishment of the US Government. Well, as ends justify the means, the intractable cobweb of economic and security issues hurting Pakistan till to date, defy the poor logic and arguments spread by the never changing ruling elite. 

This piece expostulates that the decision-making process is short-circuited when a single person is calling the shots(with selective consultation with nodding spectators only); and the long-term consequences can be less than satisfactory or even disastrous. A multi-layered decision-making process not only buys time for the decision makers, but it also makes for greater responsibility and reduces the negative fallout to a large extent. Let’s briefly review the fallout of the past faulty strategic decisions made by Pakistan. 

The Economic Stagnation and Dependency is largely owed to Prioritization of Security over Economics i.e. justified by the internal and external threats, decades of over-sized military spending and prioritizing geostrategic leverage over macroeconomic stability have led to chronic balance-of-payment crises, massive debt, and reliance on international bailouts (e.g., IMF). This gets further compounded by Stagnant Exports and R&D i.e. neglect of human capital development, export diversification, and local research, which stifled long-term economic growth. Secondly, the biggest blow back comes from the Jihadi proxies of the past that contributed to Radicalization and lingering Internal Insecurity challenges, culminating in widespread domestic terrorism and sectarian violence. The provinces of KPK and Balochistan are worst hit by foreign sponsored terrorism emanating from Afghanistan and consequently, it has devastated local economies, displacement of millions and massive social & human losses. The  over-reliance on Patron States as a backlash of unconditional alignment with global powers provided short-term financial gains without benefits coming to the people of Pakistan; ultimately leading to abandonment once strategic needs shifted, severely damaging regional standing. The non-resolution of Kashmir (IIOJ&K), Indus Water Treaty and Sir-Creek issues and now Indian use of proxies from the soil of Afghanistan have led to a persistent military stalemate with India, which necessitates higher defense spending, while keeping trade down for many other reasons. 

"Transitory gains but endless pains" perfectly captures the structural economic and social cycle in Pakistan. Governments frequently rely on stopgap measures, short-term foreign bailouts, and inflationary policies for quick relief, while everyday citizens bear the long-term, compounding burdens of inflation, infrastructure decay, and energy shortages. The country's cyclical challenges include Stopgap Economics vs. Real Growth , the Burden of Utilities and Economic Stratification i.e. elite entitlement and a non-inclusive policy direction often shelter the highest earners while squeezing the general public. Consequently, basic expenses become unmanageable for a vast majority of households, forcing many to compromise on essentials like food and healthcare just to make ends meet. 

Pakistan has sought 24 International Monetary Fund (IMF) bailouts since 1958, including a recent $7 billion program. These recurring packages offer short-term stabilization and prevent immediate default, but trigger enduring domestic pain through heavy taxation, hyper-inflation, energy tariff hikes, and structural reforms that stifle economic growth. To secure disbursements, successive governments are forced to impose stringent conditions like privatization, removal of power subsidies, and high interest rates. This pushes the cost of living and doing business to unprecedented heights, deepening poverty. The Systemic Economic Toll includes a crippling debt i.e. total debt hovers around Rs 71 trillion, with debt servicing consuming the lion's share of federal revenue, leaving minimal space for health, education, or infrastructure. 

Apropos, looking for a way out, I came across ‘The Pakistan Institute of Development Economics’ (PIDE) Reform Agenda’, which proposes structural overhauls to transition Pakistan from a highly regulated, debt-driven economy to a competitive, market-oriented system; the Government of Pakistan needs to pay  serious attention to all the recommendations. The ongoing Pakistani initiative to “lead a horse to water” to save the region (especially Gulf States/Iran) from greater disaster and unhooking USA, must translate into greater economic benefits coming to Pakistani State and people rather than individuals. The flow of energy from Iran and greater trade and economic opportunities in the region and world with elevated diplomatic stature and internal stability should top the list .