Pakistan has struggled to establish a robust economic framework since gaining independence, primarily due to a series of ineffective policies. This persistent instability has hindered the nation’s ability to alleviate poverty among its citizens. Currently, Pakistan finds itself grappling with a profound economic crisis, heavily reliant on foreign loans, with a daunting repayment obligation of approximately $80 billion looming over the next three years. This financial burden is exerting immense pressure on the national economy. In September 2024, the International Monetary Fund (IMF) extended a $7 billion bailout package to Pakistan, marking the 22nd instance of the country seeking assistance from the IMF since its inaugural loan in 1958. This funding is part of a new Extended Fund Facility (EFF) programme designed to stabilize the economy and facilitate essential reforms. A recent World Bank report indicates a modest improvement in Pakistan’s economic outlook, projecting a real GDP growth of 2.8 percent for FY25. However, this growth is insufficient to combat the rising poverty rate, which has escalated from 40.2 percent in FY23 to 40.5 percent in FY24.
Pakistan’s economic situation is currently characterized by soaring inflation and rising unemployment, compelling many citizens to seek opportunities beyond its borders. Unfortunately, a troubling trend has emerged: some individuals resort to begging upon their arrival in foreign lands, casting a shadow over Pakistan’s international reputation. With a population of 230 million, the country is home to an estimated 38 million professional beggars, as reported by the Daily Dawn of Pakistan. These individuals earn an average of PKR 850 daily, collectively receiving a staggering Rs. 32 billion in charitable donations each day, which translates to approximately PKR 117 trillion annually, or around $42 billion.
In response to this growing concern, the Pakistani government has recently placed over 4,300 beggars on the Exit Control List (ECL) to curb their overseas travel. This decision follows warnings from Saudi Arabia and other countries in West Asia regarding the influx of Pakistani beggars entering their regions under the pretext of religious pilgrimages.
Moreover, Pakistan’s economic challenges are compounded by its geopolitical strategies, often perceived as strategic blackmail. This approach aims to exploit its pivotal position between major global powers like the United States and China. While it has garnered substantial financial and military support, this tactic has also led to long-term repercussions, fostering a perception of dependency and opportunism that ultimately undermines Pakistan’s diplomatic standing on the world stage.
The story of Pakistan’s strategic maneuvering in its relationship with the United States is a long and intricate one. Over the decades, this relationship has oscillated between cooperation and suspicion. From the onset of the Cold War, Pakistan positioned itself alongside U.S. interests, becoming a member of alliances such as the Central Treaty Organization (CENTO) and the Southeast Asia Treaty Organization (SEATO). These affiliations opened the floodgates for substantial military and economic assistance from Washington.
The 1980s marked a significant chapter during the Soviet-Afghan War, where Pakistan’s Inter-Services Intelligence (ISI) emerged as a crucial player in supporting the Afghan Mujahideen. This partnership aligned perfectly with U.S. objectives to curb Soviet expansion, solidifying Pakistan’s status as a vital ally and ensuring a steady stream of American aid.
Yet, the pursuit of nuclear capabilities by Pakistan introduced a new layer of complexity. In 1990, the U.S. responded to Pakistan’s nuclear ambitions by halting the delivery of F-16 fighter jets, a move intended to signal disapproval. Undeterred, Pakistan sought assistance from China, which helped develop the JF-17 Thunder aircraft. This shift not only lessened the blow of U.S. sanctions but also demonstrated Pakistan’s readiness to explore alternative alliances when faced with pressure from its traditional partner.
In the aftermath of the September 11, 2001 attacks, Pakistan re-emerged as a crucial ally in the so called War on Terror, leveraging this partnership to secure significant financial and military support from the United States. Between 2002 and 2013, Pakistan benefited from approximately $26 billion in aid, which included advanced military hardware like F-16 fighter jets and Cobra attack helicopters. However, Pakistan’s strategy of selectively targeting certain militant groups while allegedly providing refuge to others, notably the Taliban and the Haqqani Network, revealed a troubling double standard. This approach not only strained the relationship with the U.S. but also painted Pakistan as a reluctant partner, adept at manipulating American strategic interests for its own gain. Consequently, U.S. aid has been inconsistent, often reflecting Pakistan’s actions. In 2011, the Obama administration withheld around $800 million in military assistance over doubts regarding Pakistan’s dedication to counterterrorism. Similarly, in 2018, the Trump administration cut approximately $300 million in military aid, citing a lack of sufficient action against terrorist organizations.
Most recently, in December 2024, the Biden administration revealed intelligence suggesting that Pakistan was developing a long-range ballistic missile capable of striking the United States. According to a report from the Wall Street Journal, despite U.S. attempts to resolve these concerns through diplomatic means, Pakistan persisted with its missile programme, prompting sanctions against a state-owned entity involved in its development.
Pakistan’s possession of the Shaheen-III missile, with its impressive range of 2,750 kilometers, allows it to reach any target within India. However, the nation is now pivoting its strategic focus towards developing missiles capable of striking the United States. This shift has raised alarm bells in Washington, particularly as it could also pose risks to Israel. Concerns regarding Pakistan’s missile program were first voiced by the US government in 2015, following the successful test of the Shaheen-III. Yet, recent developments have prompted a more assertive response from the US, which now perceives Pakistan’s missile capabilities as a potential threat to global stability. The imposition of sanctions and increased scrutiny underscore a growing apprehension in Washington about Islamabad’s military advancements.
In light of Pakistan’s missile development efforts, the United States has implemented significant measures to rein in the programme. In 2023, the Biden administration escalated sanctions against three Chinese firms believed to be aiding Pakistan in enhancing its missile technology. This action has further strained relations between the two countries, reflecting a deepening mistrust of Pakistan’s missile ambitions.
Pakistan’s Foreign Ministry has firmly dismissed the assertions made by the United States, characterizing them as ‘unfounded’ and lacking in rational basis. This response came in light of comments from US Deputy National Security Advisor Jon Finer, who described Pakistan’s missile program as an ‘emerging threat.’ The ministry emphasized that Pakistan’s strategic capabilities are fundamentally defensive, designed to protect its sovereignty and promote regional stability. This scenario highlights Pakistan’s ongoing strategy of enhancing its defense mechanisms while navigating the complex geopolitical landscape involving major powers.
It is a well-acknowledged reality that Pakistan cannot be deemed a dependable partner, a sentiment shared by both the United States and China. However, Pakistan’s relationship with China has taken on a strategic dimension with unique implications. Beijing perceives Pakistan as a counterbalance to India, a crucial ally in its Belt and Road Initiative (BRI), and a vital access point to the Arabian Sea. Islamabad has adeptly leveraged this dependency to obtain Chinese loans and military collaboration, exemplified by the development of the JF-17 fighter jet and the financing of the China-Pakistan Economic Corridor (CPEC). Yet, the escalating debt that Pakistan owes to China, along with the opacity surrounding CPEC projects, reveals Islamabad’s precarious position. While the country has gained short-term financial relief, it risks falling into a debt trap, potentially sacrificing its long-term economic autonomy to Beijing.
China’s military support has significantly enhanced Pakistan’s defense capabilities, including assistance in the development of nuclear weapons and ballistic missile technology. In addition to military aid, China has extended considerable economic support. In July 2023, China agreed to roll over a $2.4 billion loan to Pakistan for an additional two years, providing crucial assistance during a period of severe economic turmoil. Furthermore, Pakistan continues to seek additional financial aid from China to tackle its ongoing economic difficulties.
China’s role in bolstering Pakistan’s missile development initiatives cannot be overstated. Evidence indicates that Chinese support has been pivotal in enhancing Pakistan’s missile technology, particularly with the Shaheen series of ballistic missiles. This partnership has significantly strengthened Pakistan’s strategic deterrence, especially in relation to its longstanding rival, India.
Navigating its strategic location between global powers has brought Pakistan both advantages and obstacles. By aligning itself with U.S. interests during crucial moments, Pakistan has managed to secure military and economic assistance. However, its simultaneous focus on developing nuclear and missile capabilities has resulted in sanctions and strained diplomatic ties. Meanwhile, the deepening military relationship with China has offered Pakistan alternatives to Western aid, yet it has also complicated its geopolitical landscape.
The consequences of Pakistan’s strategic maneuvering have been substantial. Its heavy dependence on foreign assistance, whether from the United States or China, has hindered necessary domestic economic reforms and entrenched a cycle of reliance. Additionally, this dual allegiance has attracted criticism from both nations. The U.S. has repeatedly reduced aid, pointing to Pakistan’s perceived duplicity in counterterrorism efforts, while China may eventually grow weary of the financial burden associated with supporting its ‘iron brother.’
The military’s stronghold on foreign policy in Pakistan, coupled with its preference for strategic alliances over sustainable development, has led to stagnation in the economy. This focus on geopolitical strategies at the expense of self-sufficiency raises critical concerns about the nation’s capacity to forge a genuinely independent foreign policy.
While Pakistan’s approach of positioning itself between the United States and China may offer immediate benefits, it is laden with significant risks. Resorting to manipulation of powerful allies erodes trust, creates dependency, and constrains the potential for authentic partnerships. To transcend this delicate balancing act, Pakistan must shift its focus towards economic independence, uphold transparent governance, and cultivate a foreign policy based on mutual respect rather than opportunistic gains. Only through these measures can Pakistan aspire to be a credible and autonomous actor on the international stage
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