From a Nuclear Power to a Collapsed State, What Will Happen if Pakistan Fails?

Nuha Yousef | a year ago

12

Print

Share

Last year, Pakistan entered a very critical phase after a series of disasters such as devastating floods, political paralysis, rising inflation, and renewed terror networks plunged countries with Pakistan’s global weight into a full-blown crisis.

If, as some experts warn, the worst happens, this unfolding catastrophe will extend beyond Pakistan’s borders.

Uzair Younus, director of the Pakistan Initiative at the Atlantic Council’s South Asia Center, said: “This is a country of 220 million people, with nuclear weapons and serious internal conflicts and divisions. The world didn’t like the outflows of refugees and weapons that came from countries like Syria and Libya. In comparison, Pakistan is magnitudes larger and more consequential.”

Younus, who is also vice president of Asia Group, a strategic consulting firm, added that if the economy remains moribund and there is a shortage of goods and energy leading to a political crisis on the streets of major cities, it will also “allow the Pakistani Taliban and other terrorist groups to begin hitting at the government more directly.”

Younus pointed out that it is difficult to overestimate the difficulty of the current situation in Pakistan, and it is unfortunate that a series of recent events combined with chronic mismanagement have created a potentially deadly threat to Pakistan’s political system.

Younus, who described the situation as the worst threat to Pakistan’s national cohesion since 1971 (the year Bangladesh gained independence from Pakistan), noted that there are three intersecting crises at the moment in Pakistan: an economic crisis, a political one, and a third security crisis that has escalated since the fall of Kabul.

 

Economic Pressure

Pakistan’s foreign reserves reportedly dwindled to just $3.7 billion, barely enough for a few weeks of energy imports to keep cities and businesses running, while public debt grew to $270 billion.

Pakistan has been particularly hurt by the war in Ukraine, which has forced it, along with other developing countries, to engage in a bidding war over scarce liquid natural gas that it has been unable to afford.

The heavy debt burden forced Prime Minister Shahbaz Sharif to beg the International Monetary Fund to resume a bailout that was suspended early last year.

Negotiations have resumed, with the International Monetary Fund reportedly demanding painful concessions, a difficult process ahead of subsequent elections scheduled for later this year.

In the meantime, there are already signs that economic pressure will affect the most basic needs of Pakistanis.

In late January, Pakistan suffered unprecedented nationwide blackouts of more than 24 hours; although the cause of the outage is unclear, it may be a hindrance to what lies ahead.

Yousuf Nazar, a Pakistani economic analyst and former banking executive, said in press statements: “The electricity generation capacity of Pakistan is significantly dependent on the continued import of fuel.”

 

Complex Crisis

It is especially dangerous for a heavily indebted economy without strong political leadership and a kleptocratic elite. While many of Asia’s countries have gradually become rich and stable over the past few decades, Pakistan has remained poor and chaotic.

During the globalization and trade liberalization that took place across Asia during the nineties, Pakistan was engaged in a power struggle between military and civilian elites.

Pakistan’s economy has long been characterized by a highly corrupt set of policies designed to enrich civilian elites and military officials while neglecting the vast majority of the population working in industries such as agriculture and textiles.

But the infusion of foreign money that has financed the lavish lifestyles of Pakistani elites seems to be drying up.

Saudi Arabia, a longtime donor to Pakistan, announced last month that future aid packages to foreign countries would depend on internal market reforms, a clear warning to recipients such as Egypt and Pakistan, whose economies are characterized by ballooning public sectors and military control.

The UAE recently committed some financial assistance to Pakistan, but the amount is barely enough to cover imports of vital goods for a few more weeks.

Meanwhile, China, which holds 30 percent of Pakistan’s debt, has so far shown no willingness to renegotiate terms, while the United States has largely moved away from the region after its bitter exit from Afghanistan.

Pakistan’s relationship with India, its economically rising neighbor now led by a hardline Hindu nationalist government, also shows no signs of improving.

Michael Kugelman, deputy director of the Asia Program at the Wilson Center, said: “There are so many factors one could mention in terms of years of bad policies, but one must also talk about the issue of elite capture.”

He added that India has made efforts to implement reform policies that include universal education and access to health care. In Pakistan, those in power simply ignored the economic needs of the people.

 

Weak Nuclear State

The economic crisis is coupled with political instability that could weaken state control and gradually make it more difficult to govern Pakistan with each passing year.

After Imran Khan was removed from power last year, during a conflict with supporters in the military that he claimed was a US-led plot, Imran Khan organized mass rallies aimed at reinstating him as prime minister.

Amid a wave of assassinations and arrests of his allies and supporters, Khan himself was injured in an assassination attempt last November when a gunman shot him during a campaign rally.

Khan is a polarized figure in Pakistani politics, boasting a large and committed base. Had he been killed, it would have been easy to imagine Pakistan entering into a full-scale civil conflict.

But all the major political parties, despite their deep differences, are trying hard to keep the country safe, and the military remains the final arbiter in politics.

But mischievous political infighting and frequent changes in leadership have made overseeing the economy more difficult, putting Pakistan on a path to deeper problems.

Arif Rafiq, a non-resident fellow at the Middle East Institute who specializes in Pakistan, said: “The fragmentation of the state is not possible, but we could see a deep-seated economic crisis that pushes many people below the poverty line, puts simple commodities out of reach, increases food insecurity, and also foments anger among the public.”

He added that this could have real political consequences, not only for political parties but also for the military. If the state is unable to meet the economic needs of the people and responds only by force, it will only lead to more anger.

Pakistan is witnessing a rise in insurgency by radical Islamist groups, as well as “ethnic” militants in the resource-rich province of Balochistan.

The Pakistani Taliban announced its return with a suicide attack last month that killed more than 100 worshippers attending Friday prayers at a mosque.

The attack is a warning sign that instability in neighboring Afghanistan, which has suffered tens of thousands of deaths during the past two decades of US occupation, could again affect Pakistan.

The economic and political crises have also spilled over into the slow recovery of millions across the country after last year’s historic floods, which submerged nearly a third of Pakistan’s territory and displaced millions of its poorest citizens.

Although the disaster can be blamed in part on climate change caused by rich countries, international aid has been slow and meager, leaving Pakistan mostly alone to take responsibility.

Former Prime Minister Asif Ali Zardari, notorious for his bizarre personal corruption, once told US diplomat Richard Holbrooke that Pakistan was too big to fail, likening the country to US banks that received massive bailouts to prevent collapse in 2008.

Although Pakistan is itself a nuclear power, and the world’s fifth most populous country, it is not yet clear whether its leaders can unite and find a way out of the worst crises in the country’s history.