It is when a nation is going through an economic crisis such as the one Pakistan’s new Prime Minister Imran Khan inherited from his predecessors, that such a nation becomes increasingly vulnerable to exploitation through deals that are unbalanced and unfair towards the country in need of a rapid cash injection. Because of the poor state of Pakistan’s current account deficit which itself is a product of decades of internal economic mismanagement, Pakistan could have been a likely candidate to be taken advantage of from multiple sources due to the country’s apparent economic desperation. This however is not the case under the leadership of Imran Khan.
Instead, Imran has taken an approach which has actually pitted the powerful IMF against mightily wealthy nations who are now quietly vying to win a place in Pakistan’s economic future. As an international body, the IMF is readily placed to inject the necessary cash inflow into Pakistan’s coffers in order to keep the economy solvent. That being said, the IMF tends to impose highly draconian terms on its loan recipients. Furthermore, as some IMF officials have already voiced critical statements regarding Pakistan’s long term relationship with China in respect of the all important China-Pakistan Economic Corridor (CPEC), many Pakistanis have rightly voiced concerns that the western-centric IMF may not be the best route to take when it comes to finding a sustainable solution to present problems.
Imran Khan has again reiterated that the IMF is but one option for Pakistan while he mentioned that other state-partners of Islamabad may instead work out a loan and/or investment arrangement on a mutually agreed basis. As the Pakistani Prime Minister is set to travel to both Saudi Arabia and China in the very near future, it remains clear that both long term partners of Islamabad are clear contenders to engage in such an agreement.
While Pakistan’s current account deficit seemingly has little to do with the Korean peace process, there are some stark parallels which demonstrate that Imran Khan has been able to make the best out of a bad situation in a similar way to that which DPRK (North Korean) leader Kim Jong-un has done. At this time last year, the DPRK was economically isolated as the United States, China and Russia all voiced their opinion in favour of sanctions against Pyongyang. This year however, Donald Trump wooed the DPRK with an elaborate video presentation suggesting that billions in investment would flow into the DPRK as a result of positive action steps that the DPRK has taken towards de-nuclearisation.
Trump has further indicated in more recent weeks that he believes that due to the peace process, the DPRK’s economic future will indeed be bright. This month, both China and Russia formally presented proposals to be considered by the UN Security Council for an immediate relaxing of sanctions on Pyongyang. As China and Russia, like the US all acknowledge that progress is being made in the peace process, it is Beijing and Moscow’s view that now is the time to encourage further de-escalation in Korea using a model of peace through prosperity. Notably, South Korea has tacitly endorsed the Sino-Russian proposals.
In this sense, Kim Jong-un has turned his nation from an economic pariah into a one that is presently at the centre of an international bidding war to see which state can be the first to successfully offer major investment proposals for Pyongyang’s long term economic growth.
This parallels Imran Khan’s modus operandi of using the looming “threat” of an IMF agreement to encourage long standing partners like China and Saudi Arabia to offer a deal that is more mutually beneficial. As China continues to invest in CPEC and Saudi Arabia looks to embark on a major oil refinery project which like the southern terminus of CPEC is located in Gwadar, it becomes clear that neither Beijing nor Riyadh wants the progress of their projects in Pakistan to be jeopardised by a possibly restrictive IMF deal that could negatively impact on Pakistan’s relations with its bilateral partners. As western speculators continue to act with caution in respect of Saudi markets, this is all the more reason why Saudi Arabia’s links with Pakistan represent an opportunity for the cash rich petro-giant to diversify its economic partnerships throughout Asia.
No one can pretend that the state of Pakistan’s accounts are healthy and likewise, no one should be so foolish as to think that decades of mismanagement can be solved in a series of months. The spirit of Imran Khan’s Naya Pakistan (New Pakistan) instead should look to embrace sustainable problem solving endeavours whose positive impact will be felt for years to come.
While it is still possible and perhaps even probable that Islamabad will have no choice but to take out a loan from the IMF, the fact that Imran is keeping all potential lenders on their toes is a testament to his proactive style of politics which clearly represents a refreshing change from the lethargy and pessimism of the past.