Economic diplomacy is an in-thing, and its utility is increasing by the day as it has proved itself as an extremely cogent method in resolving extremely cogent bilateral and multilateral issues creating tensions in the international arena.
Throughout history, military might and the politics of force have dominated global relations.
But, with the fourth Industrial Revolution, power components in both international and bilateral relations have shifted from the political-military expanse to economic (commercial) and cultural ones.
That said, economic diplomacy — the method through which states conduct their external commercial relations and leverage those connections based on economic prowess — is not a new phenomenon. It has been used for centuries by savvy nations.
Since 1947, Pakistan has gone through periods of high economic growth and periods of almost non-viable economic growth. Such ebbs and flows have affected the overall economic growth of the country.
With passing times, financial problems have increased manifold and, due to the lack of vision and reforms, the state is yet to find the path to economic sustainability.
Pakistan has always been enamored of the notion of unforeseen threats. Such a mindset of threat perception has only come at the cost of economic ties and opportunities. Geopolitics has always been considered more relevant than geo-economics, even though the two intersect. As a result, economics or economic diplomacy has continued to be neglected in the face of security-related objectives.
Today, the country scores inadequately on almost all economic indicators.
Despite a change of fortunes in the last couple of years, both in economic growth and sustainable law and order, the country has far to progress on socio-economic pointers.
Therefore, it is bewildering why Pakistan’s economic diplomacy is so ineffective, especially given how its neighbours have espoused and embraced it so diligently. Today, India is one of the fast-growing economies in the world, and it has used this economic might as diplomatic leverage with all its commercial partners.
Worth a strong mention are its ties with Iran. India’s ties with Iran continue to expand and deepen and does not affect its ties with the Arab world. This is a balancing act we can, and must, emulate.
Worth also mentioning here is Pakistan’s economic ties with the US. For the last 70 years, despite all the financial aid and bilateral bonhomie, Pakistan has failed to foster a relationship based on mutual trade.
Although the US is one of the leading export partners of Pakistan, it has been unable to exploit the economic opportunities presented by such ties, unlike China or India.
Today, China and India are both major investors in emerging US technologies.
Name any big company and their CEO is almost certain to be of Indian descent. Google and Microsoft are just a couple of exapmples in the long list. China, on the other hand, has invested massively in new start-ups. According to recent reports on CNBC and Bloomberg, China has been investing in fast-growth tech start-ups to broaden its interests and to take advantage of critical military technologies (military robotics, artificial intelligence, rocket engines, etc) offered by these new start-ups.
The most famous example of China’s expanding economic diplomacy is of course the One Belt One Road initiative.
More than ever before, Pakistan today is in need of economic diplomacy. With hostile neighbours and an unstable region, the primary aim of the government should be to swim through such instability with robust economic diplomacy. Pakistan has strategic importance, and trade and connectivity initiatives should be worked on with its neighbours, keeping in view the economic benefits.
Fortunately, CPEC is a brilliant example of such integration, which has the potential to not only uplift the social and economic landscape, but also to play a significant role in boosting Pakistan’s exports.
However, in commencing such an effort, it is vital that the government do everything in its power to protect local and indigenous industries affected by the massive influx of foreign goods.
While all these factors are important, unforeseen factors that play a critical role are political stability and the role of other socio-religious actors. The rise of the far right has further exacerbated Pakistan’s sectarian divide and deepened its fissures. Such conditions are detrimental to economic growth and diplomacy.
Economic diplomacy can only be viable when the country is experiencing economic growth; a nation experiencing uncertainty and massive law and order issues can seldom become an economic power.
Therefore, it is indeed time for policymakers in Islamabad to forge and implement a policy based on economic diplomacy that employs all its economic levers. If Pakistan can exercise its influence as a nuclear power with increased financial muscle, it could do far better as a nation than it has managed in the last 70 years.