Pakistan in 2014: Time ripe for a virtuous cycle?
January 2nd, 2014
11:51 AM ET

Pakistan in 2014: Time ripe for a virtuous cycle?

By Robert D. Lamb, Special to CNN

Editor’s note: Robert D. Lamb is senior fellow and director of the Program on Crisis, Conflict, and Cooperation at the Center for Strategic and International Studies in Washington, D.C. The views expressed are solely those of the author. This is the latest in the '14 in 2014' series, looking at what the year ahead holds for key countries.

During U.S. Defense Secretary Chuck Hagel’s meetings last month with Pakistani Prime Minister Nawaz Sharif and new Chief of Army Staff Gen. Raheel Sharif, the two countries traded familiar complaints: for Pakistan, the continuing U.S. drone strikes against targets in Pakistan’s sovereign territory; for the United States, the ongoing use of Pakistani territory as a safe haven for Taliban, Haqqani network, and other militants fighting in Afghanistan.

But they also reaffirmed the importance of the partnership, given their shared concern over the very real threats to Pakistan’s stability: armed militants attacking Pakistani state targets, sectarian and political violence increasing intercommunal tensions, terrorist groups threatening India with cross-border attacks and increasing on-again-off-again tensions with its larger neighbor, and devastating energy and economic crises that keep tens of millions of Pakistanis in poverty and threaten Pakistan’s social cohesion. Pakistan is a country that is too big to fail: its population is large, it has nuclear weapons, and its extremist groups have international connections. Instability there would affect too many international security concerns to ignore.

These threats are not going away any time soon. The next 12 months will be a critical period as the United States will withdraw most (and potentially all) of its troops from Afghanistan by the end of 2014. That drawdown will have significant – and unpredictable – effects within Pakistan and on the U.S.-Pakistan relationship. The challenge will be to get beyond the frustrations and disagreements and find ways to cooperate as the opportunities to do so arise.

The good news is that opportunities do exist beyond security cooperation. Leaders of both countries would do well to pursue policies and investments that can start to reverse the economic crisis and build relationships giving more people a stake in stability.

The drawdown of international troops from Afghanistan will have three key effects on Pakistan. First, funds related to the use of transit routes through Pakistan into Afghanistan will decline, affecting income for Pakistani transportation companies, as well as fees that help the government’s budget. Pakistan’s economy is already in crisis and in need of a cash infusion; removing millions of dollars from the economy can only hurt, and the United States has already frozen significant amounts of military aid (a policy that is reversible).

Second, the nature of the conflict in Afghanistan will change as Afghan troops lose international support for their battles against militants. How that conflict changes cannot be predicted. If fighting gets worse, violence could spill across the permeable border. But if somehow the conflict settles down, battle-tested fighters without a job could become recruits in Pakistan. Either way, there is a real risk that Pakistan’s military will face an increase in threats on its own territory during a time when it already is stretched thin fighting internal adversaries.

More from CNN: The folly of drone attacks

Third, once international forces are largely gone from the region, international concern over Afghanistan (and the aid accompanying that concern) will inevitably start to shift toward other priorities. And there are fewer international priorities in the region higher than Pakistan’s stability.

While the economic and security effects of the drawdown will pose real challenges to Pakistan, the shift in attention away from Afghanistan could actually accrue to Pakistan’s benefit. The United States and European countries will need to be convinced that Pakistan’s new leaders are committed to rooting out state support for militants groups and to making hard decisions needed to bolster its own economy, including unpopular conditions the International Monetary Fund requires for future financing and addressing some of the privileges Pakistan’s wealthy families and top military officials enjoy at the rest of the country’s expense. And disagreements over reimbursements by the United States to Pakistan’s military for counterterrorism expenses will need to be addressed, among other issues.

But the increased attention that is likely to be paid to Pakistan over the next year should focus on three key issues. First is the Pakistan military’s evolving doctrines on counterterrorism and nuclear weapons. Counterterrorism doctrine has generally been shifting in a productive direction, such that more and more military officials consider internal militancy to be at least as great a threat to Pakistan as India. This should be encouraged and supported. Nuclear doctrine is more problematic as it has increasingly emphasized tactical weapons, considered more “usable” in the battlefield. That is one of the most important issues to watch for in 2014.

Second is the energy crisis. Energy shortages and blackouts are creating widespread discontent and are holding back Pakistan’s economic development. Pakistan and Iran have agreed to build a natural gas pipeline, but progress has been caught up in international sanctions against Iran. With a six-month agreement to lift some sanctions from Iran, there might be room in the next year for the pipeline to proceed and take some pressure off Pakistan’s energy crisis.

Finally, Pakistan’s economic crisis has many roots and no easy solutions. But investors have begun to recognize real opportunities. Despite Pakistan’s economic crisis, domestic consumer demand has been rising since 2007. Important multinational corporations have outperformed in Pakistan compared to their global averages. Pakistan’s top domestic companies have enjoyed 35 percent annual growth, while small and medium-sized enterprises have significantly lower borrowing rates than in other countries in the region. Pakistani markets have more diversification potential than even African markets. Most importantly, Pakistan’s young demographic suggests that, if the jobs crisis were resolved, its economic growth could outpace that of many other countries.

In short, Pakistan’s economy has the potential for a real virtuous cycle. Whether 2014 is the year policymakers and investors can get that cycle starting is worth watching.

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Topics: 14 in 2014 • Pakistan

soundoff (17 Responses)
  1. Joseph McCarthy

    Time is overripe for Pakistan to put it's foot down and demand and end to those dastardly drone attacks in which at least 70% of those on the receiving end are civilians who happen to be in the wrong place at the wrong time. We Americans need to fight for an end of this ignominy once and for all! Above all, we need to let the Pakistanis determine their own future.

    January 2, 2014 at 7:07 pm | Reply
    • Silverado

      Drones keep the Muslim Allah obedient. Allah fears drones and Muslims behave better under the supervision of drones.

      January 3, 2014 at 1:29 am | Reply
      • Quinton

        Gee Silverado, you obviously have a case of "affluenza". Have you ever studied Islam or the story of the Prophet Mohammad? Obviously not! At any rate, nobody deserves to be on the receiving end of those cursed drones of ours or those of the British, whether they are Muslims or not!

        January 3, 2014 at 8:36 am |
      • syed naqvi

        Question to Silverado, your name sounds where you from. Go get some education.
        First find the meaning of Allah. At least google it. You are bad name to America (if you are American)

        January 4, 2014 at 1:00 pm |
      • Khan

        Prophet mohammed was a rapist and preached mass scale raping.

        March 25, 2014 at 2:04 am |
    • qaisar

      Agreed.

      January 3, 2014 at 5:00 am | Reply
  2. chrissy

    Amen @ Joseph! I couldnt have said that better if i tried. It was perfect, every word. Especially about them damn drones!

    January 2, 2014 at 11:54 pm | Reply
  3. j. von hettlingen

    While the leadership in Islamabad is keen on crucial financial inputs from Washington to revive Pakistan's economy, ordinary people in Pakistan oppose any aid due to anti-American resentments. The US relies on Pakistani co-operation in counter-terrorism before the Nato drawdown of troops in Afghanistan. Much is uncertain in the wake of the Afghan presidential election next spring. Pakistan would welcome a limited number of Western troops in Afghanistan beyond 2014 for counter-terrorism operations and to train and equip the Afghan army.

    January 3, 2014 at 10:27 am | Reply
  4. Ali Hamza

    Policy makers in Washington need to understand the immense damage being done by drone strikes to recent reconciliation process in Pakistan. They must realize that Taliban threat is deeply rooted in the region's tribal makeup, the society there is too primitive; there is no such thing as education. Frontline organizations are fastly perishing, but it’s the tribal resistance to foreign intrusion which is on rise, termed as Pakistani Talibanization. It’s important here to mention that throughout the course of the area's history the tribal people have always resented outside control, from British era to modern day Pakistan, there was never government control in region even the presence of Pakistan army was very limited up until 1980s. Drone strikes don't help, a single innocent killed alters the perception of whole family, or the tribe, and they see USA as the culprit. Education is the only way the centuries old tribal customs and linkages can be moved to a lower place in tribal's lives. So the world should help move this region ahead, providing good education opportunities, infrastructure, or simply more possibilities. Impact the peoples' lives, change them. A child living there doesn’t get out to play fearing drone; America for him is some ugly bully taking his childhood away. Or it can be good America helping develop their daily lives.

    January 3, 2014 at 1:43 pm | Reply
    • Yaser Ali Devjiani

      Initially, this is the responsibility of Pakistan Government to provide support to tribal groups instead of world. What the government can do, in addition to educate them, is to provide alternative ways to work rather than fighting. These groups can help in developing infrastructure (the motorway development between China and Pakistan). These tribes are more helpful in developing transport communication among cities, Baloach tribes can help in developing Iran-Pakistan pipeline. Bottom line is government should give alternatives rather than fighting.

      January 4, 2014 at 4:10 am | Reply
  5. Ali Hamza

    Lastly, on economic frontier Pakistan have huge potential. With increasing amount of young people and rising workforce. Stability and trust are the two fundamental requirements. KSE 100 index moved from around 13000 to 24000 points in last fifteen months, primarily due to more people watching for the first time in nation's history a successful democratic transition; the first signs of stability. The government regulating authorities must now think out of box, innovate, employ new economic ideas. There is a gap as the policy makers are too theoretic, they don't realize ground realities, or don't face the implications of their policies, common problem for countries with too much income disparity. The economy is on and will remain on positive trend; the government just have to steep up the slope.
    Pakistan is a developing country, and in 2014 it will continue to develop. The key concerns will remain, as there is a need for a national consensus which is no where near in view.

    January 4, 2014 at 4:46 am | Reply
  6. Phelix Unger

    If Pakistan doesn't or can't fix its own internal problems then America shouldn't be funding its government. As for the drone strikes, if people continue to surround themselves with known terrorist organizations then they have made their choice and already know the ramifications of their decisions. As for those who say stop the drones, well then don't allow terrorists to operate within their borders. Then the drones will have no reason to enter their airspace.

    January 5, 2014 at 5:20 pm | Reply
    • Patrick

      Please Phelix, quit taking up for the right-wing thugs in Washington and those cursed drones they're using to kill people like pigs in a pen. That makes me sick!

      January 6, 2014 at 6:45 am | Reply
  7. deven

    Fully agree with Phelix. Pakistan has taken billions of dollars and war machinery (army,navy and airforce) as donations and spent them mostly on fighting loosing wars with India. The balance funds were credited in personal accounts of the rulers in Swiss banks. Pakistan had large uneducated and unemployed population ready to create problem for the government..They were lucky that Soviets invaded Afghanistan.Gen Zia gave a job to these people to sustain their amilies--job of a terrorist.That is how Taliban was formed. Once Soviets withdrew US too pulled out and Pak influenced Taliban came into power in Kabul. This with the Nuclear capability gave Pakistan an inflated ego. They however could not absorb the Pak Taliban/Taliban into main stream as there were no jobs for them.So Terror camps were set-up in Pakistan.The bloody hand of Pakistan was found in terror attacks all over the world. 9/11 however changed everything.Pak ISI,Army and pro-Pak Taliban were evacuated to safe havens in Pakistan.The false front of partners against terror was blown-up when OBL was found and killed by Americans inside Pakistan.The evacuated Taliban and al-queda were given jobs by political parties for target killings and bomb blasts.The taliban in Tribal area started collecting revenue to sustain themselves and their families.Once paid terrorists now became rulers of tribal areas. They will not negotiate with govt unless

    February 5, 2014 at 1:11 pm | Reply
  8. deven

    conti...Sharia is imposed on people by Pak govt.So the talks are most likely to fail.
    Then comes power play in Afghanistan.India has invested in good will on development of roads,irrigation,aviation and health care.All projects were of high quality completed in time utilising and training local people.It will hate to see Pak becoming a major player in Afghanistan.Also Pakistan does not have funds for it.
    Iran which has better relarions with US will surely jump into Afghan affairs as it would not like Sunnis backed by Pakistan and S.Arabia diminate Shias.They have tolrated lot of Shia killings in Pakistan. S.Arabia willsupport Pak financially after all Pak has atomic bombs kept hidden with S. Arabia wrtten on them.
    China too has economic interest in copper ore in Afghanistan.However they will keep distance from US interests.Pak by jumping in lap of China will regrett later as they have never been a reliable partner.To get Tibbet brothers of India and soon after attacked India.In any case they only give loans for projects which will be completed by a chinese company.They bring own labour and take back the loan and the interest back to their country without imparting any experties to others.
    The scene is set for an interesting game of chess in Afghanistan. Let us see how things work-out but certainly Pakistan is not in position to dictate terms to Afghans this time as they are in no financial position to do so and TTP/Pak Taliban has found a base in Pakistan so there is no reason for them to move out of Pakistan.Mr Shaif was advisor to Gen Zia,was PM at the time of 1998 nuclear blasts and 1999 Kargil operation.He certainly is no messenger of peace. Drone attacks have been important factor to check terrorists in Pakistan and unless they close down on the terror training camps they should not be stopped.

    February 5, 2014 at 1:34 pm | Reply

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