Efficacy of economic diplomacy

ByMalik Nasir Mahmood Aslam

Seasoned social activist


February 18, 2023

economic diplomacy

Malik Nasir Mahmood Aslam talks about an essential practice

Globalization has brought in the fourth industrial revolution and the world has moved far off from treating military might as the only solution to problems. Power components in both international and bilateral relations have shifted from the political-military expanse to economic and cultural aspects and it is often stated that companies make countries. Though economic diplomacy is an age-old phenomenon historically practiced in rather a rudimentary shape and form and it was considered a valid part of statecraft. With the passage of time, the process and practice of economic diplomacy have been fine-tuned and are employed in a highly professional manner.

In the context of Pakistan, it is witnessed that the country has gone through an extremity of vicissitudes that consisted of periods of high economic growth and equally crucial periods of almost non-viable economic growth. Such ebbs and flows have affected the overall economic growth of the country and it currently suffers from a highly unstable situation. 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.

Actually, 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. Currently, the country scores inadequately on almost all economic indicators. With the change in political complexion both in economic growth and sustainable law and order, the country has far to progress on socioeconomic pointers.

Pakistan’s Economic Diplomacy

In this context, it is not surprising that Pakistan’s economic diplomacy is so ineffective, especially given how its neighbors 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.

On the one hand, India continues to engage Israel without alienating the Arab world and its growing Muslim population and on the other, its ties with Iran continue to expand and deepen. This is a balancing act that is worth emulating and efforts are required to be made to re-design the strategic and economic policies.

It is pointed out in this respect that Pakistan’s economic ties with the US are specifically important. For the last seventy-five 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 its leading export partners in Pakistan, it has been unable to exploit the economic opportunities presented by such ties, unlike China or India.

Currently, China and India are both major investors in emerging US technologies. China has invested massively in new start-ups in America and India is not far behind. China has been investing in fast-growth tech start-ups to broaden its interests and to take advantage of critical military technologies including military robotics, artificial intelligence, and rocket engines 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.

CPEC Integration

More than ever before, Pakistan today is in need of economic diplomacy. With hostile neighbors 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 neighbors, keeping in view the economic benefits.

Till recently, CPEC was a brilliant example of such integration which had 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, what emerged as a problematic issue in this respect was that the government did not take into consideration protecting 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 socio-economic 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 as a country experiencing uncertainty and massive law and order issues can seldom become an economically credible player on the world stage. Keeping in view the current economic issues confronting Pakistan it is indeed time for policymakers to forge and implement a policy based on economic diplomacy that employs all its economic levers. It is essential that rational and all-inclusive economic diplomacy is put on the rails as soon as possible. The Weekender


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