Pakistan: New government will focus on strengthening bilateral ties with China

Pakistan’s Federal Minister for Planning Ahsan Iqbal, who also happens to be General Secretary of the Pakistan Muslim League (N) (PML-N) while addressing a conference in Lahore (the capital of Punjab province in Pakistan) on April 24, 2022 made some important points. First, he said that due to the slow progress of the China Pakistan Economic Corridor (CPEC) project — during the previous Imran Khan led Pakistan Tehreek-E-Insaaf (PTI) government, Pakistan’s bilateral relations with China had got adversely impacted. While Iqbal has given orders for scrapping the CPEC Authority, and merging it into the Pakistan’s planning commission,  even Khan had to replace the head of the CPEC Authority due to slow progress of CPEC projects. In August 2021, Lt Gen (retd) Asim Saleem Bajwa, a former army spokesperson, was replaced by Khalid Mansoor. This change was made days after Former Pakistan Foreign Minister Shah Mehmood Qureshi’s visit to China during which the latter had expressed concern with regard to the progress of the CPEC Project. 

Current Pakistan PM and PML-N Supremo Shehbaz Sharif has indicated that his government will focus on strengthening bilateral ties with China and  special focus will be given to projects related to CPEC. In his first speech after taking over as PM of Pakistan, Shehbaz Sharif said that his government will give high priority to ties with China, while Beijing which has worked closely with Sharif as CM of Punjab welcomed his appointment as PM.

Iqbal significantly highlighted the importance for Pakistan’s ties with the west. Said the Minister:

“It is against the national interest to spoil relations with the European Union and the US as we have to go to their markets for trade and technology’

Both the army and the ruling PDM (Pakistan Democratic Movement) alliance had expressed their discomfort with Imran Khan’s accusations against the US for plotting to remove his government (the Pakistan army categorically ruled out any US role in Khan’s ouster). US is important for a number of reasons. First, along with EU it is an important export destination for Pakistani goods.

Second, from the point of view of Pakistan’s negotiations with the International Monetary Fund (IMF) for financial assistance, Islamabad needs to improve ties with the US. A loan for 6 billion under a three year Extended Fund Facility (EFF) agreement was negotiated between IMF and Pakistan in 2019. Talks pertaining to the 7th review had been put on hold due to the political situation in Pakistan.

Earlier this week, Pakistan’s current Minister for Finance and Revenue Miftah Ismail held talks with IMF officials, on the sidelines of the annual meeting of IMF/World Bank and said that officials of the IMF will be coming in May 2022 for negotiations on the 7th review of the EFF. Ismail said that he had requested the IMF to extend the duration of the program as well as to increase the funding. Said Ismail:

‘I’ve also requested that they enhance the funding available to Pakistan from $6 billion under this programme to perhaps a little bit more.’

The IMF on its part said that Pakistan had agreed to roll back subsidies to the oil and power sectors before a review next month of the agency’s support to Pakistan.

Ahsan Iqbal also made an interesting reference to ties with Gulf countries deteriorating during Khan’s tenure.  Shah Mehmood Qureshi, Foreign Minister in the PTI government, had expressed his disappointment with Organisation of Islamic Cooperation (OIC), chaired by Saudi Arabia, for not convening a meeting of OIC Foreign Ministers to discuss the Kashmir issue – in the aftermath of the revocation of Article 370 in Jammu and Kashmir by India. This had led to a downward slide in ties between Pakistan and Saudi Arabia, with the latter asking Pakistan to return $1 billion USD (which was part of a $ 3 billion assistance package from the Saudis to help Pakistan deal with its balance of payments crisis). Imran Khan’s hints of forming a parallel Islamic bloc to OIC along with Malaysia, Iran and Turkey had also not gone down well with the Saudis. In 2019, it was due to Saudi pressure that Khan did not attend the Kuala Lumpur Summit whose attendees included the Qatari emir, Turkish president Recep Tayyip Erdogan, and then Iranian president Hassan Rouhani.

In December 2021 however, the Saudis provided financial assistance of over $4 billion — $ 3 billion in cash deposits to Pakistan’s central bank, and $1.2 billion for financing refined petroleum products to Pakistan. The main reason cited for this assistance was Riyadh’s desire to prevent Islamabad from moving closer to Tehran. A strong reiteration of the importance which the PML-N led coalition attaches to ties with Saudi Arabia is the fact that Pakistan PM Shehbaz Sharif will be embarking on his first official visit to Saudi Arabia (April 28-30,2022)

While it is true, that Pakistan’s ties with China have strengthened in recent years, the steps taken by the PML-N led coalition clearly indicate that it is keen to strike a fine balance in its foreign policy, and that it needs to not just reduce tensions with the west, but also keep ties with traditional allies in the Gulf intact. The economic crisis in Sri Lanka clearly underscores the perils of being excessively economically reliant upon China, something which has been flagged not just by western analysts, but by business communities in different South Asian countries including in Pakistan.

Tridivesh Singh Maini
Tridivesh Singh Maini
Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global University, Sonipat, India