Regional economic transformation and Pakistan

The forces of economic transformation are in motion in the wider region around Pakistan. Phenomenal progress is underway in the Middle East/Arab world and its economic engagement with other regions/countries. States in West/Central Asia are exploring opportunities for providing corridors of connectivity from China to Turkiye and Europe. Pakistan as the natural hub of connectivity of these regions with South Asia requires a focus on internal stability and economic fundamentals to fully capitalize on available opportunities for economic growth and prosperity.

For many years, Arab and Gulf countries have been sending positive vibes for regional economic integration. Crown Prince Muhammad Bin Salman’s ‘Vision 2030’ for Saudi Arabia, reaching its mid-point this year, is making remarkable progress and despite criticism, is likely to accomplish its final targets in 2030. It has already surpassed some of its targets, such as women’s participation in the economy and development. To support its agenda of non-oil dependent economic progress, Saudi Arabia has taken substantive measures for creating a conciliatory environment in and around it, constructively addressing areas of divergence with key regional countries including Qatar, Turkiye, Iran and others.

A momentous development indeed has been the Saudi-Iran rapprochement in collaboration with China. Apart from its positive impact on regional political stability, this development is expected to give a significant boost to investments in infra-structure projects through a renewed post-COVID 19 push to the Chinese Belt and Road (BRI) initiative. Economists anticipate that the melting of the ice between these two leading oil-based economies will stimulate regional economic dynamics in an unprecedented manner.

These developments signify that the direction of the Gulf Cooperation Council (GCC) region is to be the new fulcrum of economic integration and global connectivity. The economy of the United Arab Emirates (UAE) has also shown resilient growth despite a global slowdown in recent years caused by COVID-19 and the consequent global commodity crisis. Qatar is also taking big strides on the international economic scene by hosting major international events like the football World Cup. Kuwait, Bahrain and Oman are also on the path of sustained economic recovery. These petroleum driven economies in the Gulf are also benefitting from the increase in global demand and prices caused by the Russia-Ukraine conflict. 

Pakistan by virtue of its geographic location and religious and cultural significance as a leading Muslim country with a long border with Afghanistan and tremendous commonalities with Gulf countries and Iran, can make contributions toward synchronizing connectivity initiatives.

Mansoor Khan

The other region showing economic vibrancy and the urge for connectivity is Central and Western Asia. Uzbekistan, Turkmenistan, Tajikistan and Kazakhstan have emerged as stable economies/societies located at the confluence of Russian, Chinese and European land masses with interest in trade, transit and energy corridors. Deepening uncertainty in Afghanistan remains a weak link in realizing the tide of sub-regional and cross-regional connectivity.

Pakistan by virtue of its geographic location and religious and cultural significance is strategically located and as a leading Muslim country with a long border with Afghanistan and tremendous commonalities with Gulf countries and Iran, can make contributions toward synchronizing connectivity initiatives. Following crucial developments related to the withdrawal of US/NATO troops from Afghanistan in August 2021, Pakistan seems to be shying away from its natural role as a linchpin for a transition in Afghanistan and for promoting regional connectivity with the Gulf and West Asia. The domestic crisis is crippling Pakistan’s crucial abilities in this context.

The way forward for Pakistan is an effective transformation in governance and framework, focusing on economic fundamentals, domestically and in regional/ international engagement. At the domestic level, it’s imperative to undertake comprehensive reform for promoting economic growth generating employment opportunities for the youth in agriculture, manufacturing and services. Special attention is required to employ scientific and technological innovations in emerging fields such as Artificial Intelligence (AI) and modern digital tools.

On the external front, it’s important for Pakistan to have engagement with Afghanistan to seek understanding on security and counter-terrorism (including the TTP issue) as well as exploring the way forward on human rights (girls education) and inclusivity in Afghanistan. Afghan stability is key for wider regional connectivity. Therefore, the Gulf and Central/West Asia regions may be associated in this engagement to create mutual stakes in the regional economy/ connectivity. In case the Afghan Taliban continue to ignore welfare and mainstreaming of their people in the regional and international equation, they will be facing internal as well as external pressures. Bilaterally, Pakistan may enhance the facilitation of trade, transit and economic interaction for the benefit of the two peoples. Without such an outright approach, it would be difficult to prevent Afghanistan from sliding into deeper chaos, instability and isolation, with serious implications for Pakistan.

Apart from Afghanistan, Pakistan needs to work out an independent approach to strengthen economic interaction with GCC countries and Iran targeting regional connectivity projects including linking ports of Gwadar and Chabahar with other regional ports, as well as projects in infrastructure and energy. The emerging economic momentum in the region is likely to attract investments both from the Western World including the US, Europe and China.

The bottom line is that economic transformation is the most optimal solution for Pakistan to find a way out of its current economic and social difficulties. The window of regional economic integration and connectivity is asking for a grab.

- Mansoor Ahmad Khan is Pakistan's former ambassador to Afghanistan. Former ambassador of Pakistan to Austria & PR to UN Vienna. Ex Chairman UN CND. Twitter @ambmansoorkhan