PAK-US STRATEGIC DIALOGUE
United States to extend bilateral relations and
cooperation in major sectors of the economy

By Naveed Iqbal

The second round of Pak-US strategic dialogue concluded in Islamabad last week. The issues recounting the defence ambits were discussed in GHQ, Rawalpindi. A string of new projects of socio-economic uplifting worth $500 million have been announced by US Secretary of State, Hillary Clinton as development aid for power generation capacity and infrastructure enhancement. This amount is the part of $1.5 billion US aid package that Pakistan is to receive every year over the next five years. It has been claimed by the US administration that the new aid aims at winning the skeptical point of view of the majority of Pakistanis regarding US role in South Asia’s politics. Yet its stipulation on providing civil nuclear technology to Pakistan and the inappropriate critical appraisal for Pak-China civil nuclear deal for power generation seemingly has already defeated the core of the dialogue. Notwithstanding, just by assuming for a moment that the core is violated, it is not the worst case scenario to continue the dialogue as the push-pull situation remains at the heart of international diplomatic relations. Quiet unconventionally, this time a sufficiently wide horizon of legitimate demands was observed from Pakistan being an inevitable ally in the war on terror, which went beyond security and defence related demands and agreements unlike those in the past. Mainly, a discussion was held on providing wider access to Pakistani products in American markets and crafting a Bilateral Investment Treaty for attracting foreign direct investment (FDI) in the country. The dialogue also concluded on an agreement to jointly finance a three year infrastructure enhancement program to promote the exports of Pakistan’s world famous mangoes in partnership with leading mango farms in southern Punjab and northern Sindh. USA has also agreed to provide US $125 million as the first installment to repair power generation facilities, replace inefficient tube well pumps and promote energy efficiency. Further US $10 million are being allocated for establishing linkages for research collaboration between the US and Pakistani institutions. Some quarters though, see this as a strategic shift in the US approach towards Pakistan, quite converse to the infamous Afghan-Pak Policy. Nevertheless, apart from the financial aid, the cynical view of the general public insinuates that this phenomenon of probable policy shift from the US side is partially true.

These figures and announcements seem to be fascinating and could easily mislead the readers regarding the US relations and its seriousness regarding helping the country on a long term basis. Nevertheless, if we know what we have lost since the war against extremism, we would end up with the conclusion that the US as a long term partner is offering much less than what it should be.

According to the finance division statement, Pakistan has suffered a striking economic loss of Rs2.1 trillion due to the ongoing war on terror which roughly is equal to US $24.53 billion at current PKR-US$ exchange rate. However, if the same figure is calculated on September 2001’s (the year when the international war on terror was launched) exchange rate it would have been US $33.298 billion. The reported year wise breakup of this expenditure suggests a rising trend (27 per cent per annum) in the overall losses and costs to the country. The damage of precious human lives in suicidal blasts, lives of the Pak army soldiers fighting against extremists, communication infrastructure and other invisible losses to small businessmen due to disappearance of fear-ridden buyers from the market have not been included.

The reasonable and justifiable options, therefore, which the government could plead with US can be based on these losses and costs being suffered by the country. 

Secondly, a strong case can be prepared for the demand of more import quota for national textile products in the US market as a sustainable and far reaching solution for internal economic financial grievances. Surprisingly, the import quota issue has remained untouched in the whole series of summits.

For revival and rehabilitation of the socio-economic sectors, a more comprehensive and across the board policy can be formulated. Not only US, but all allied partners like the European Union (EU) can also be approached with a strong and clear vision. Inking of agreements like the Free Trade Agreement of EU with Islamabad, demand for a Generalized System of Preferences (GSP) Plus status for enhanced trade market access, so as to enable the country’s exporters to compete with its competitors and to compensate its trade losses by allowing import duty concessions on products of Islamabad’s export interests could be a few points from a potentially viable negotiating agenda.