The Atlantic Council and the Johns Hopkins University School of Advanced International Studies hosted their second annual Pakistan conference on November 1–2, 2023. This year’s theme was resilience and reforms, and speakers discussed themes such as the future of artificial intelligence, the role of middle powers in today’s volatile geopolitical environment, and strategies to improve Pakistan’s economy. Uzair Younus, director of the Pakistan Initiative at the Atlantic Council’s South Asia Center, has offered following critical takeaways
Key Takeaways:
- Timely, Free, and Fair Elections: Free and fair elections are essential for Pakistan’s political stability and economic prosperity. Though further delays are possible, the announcement of elections on February 8, 2024, is seen as a positive sign. It is important for the military to be seen simply as a security provider and to extract itself from both overt and covert electoral interference.
- Devolution of Power: After elections, a transparent, consensus-driven process should devolve power to functional local governments. This would enhance political competition and accountability while meeting citizens’ needs.
- Human Capital Challenges: Pakistan’s human capital challenges, especially those confronted by Pakistani women, are a major driver of economic instability. Investments in education and public health are essential.
- Market Reforms: The economy is distorted by market frictions, largely due to a state apparatus refusing to back down. Pakistan must implement a two-pronged strategy: radically improve educational and public health services while pressing market reforms that eliminate significant parts of an interventionist and overly burdensome bureaucratic and regulatory system.
- Geopolitical Uncertainty: Pakistan’s political system is in perpetual crisis, making it vulnerable to escalating regional and global tensions. A longer Israel-Hamas conflict could lead to a split between elites and ordinary citizens, triggering popular anger targeting elites. The situation, where citizens believe the government lacks a credible mandate, could be exacerbated by former PM Khan’s populism and his sustained imprisonment.
- Foreign Investments: Policymakers must recognize that Saudi Arabia and other GCC countries are interested in investing in Pakistani assets, however, Pakistan’s public sector severely lacks the capacity and requires interlocutors who understand and execute basic financial transactions.
- Technological Advancements: Pakistan can benefit from emerging technologies by improving human capital and fostering next-generation ventures through public-private partnerships.
- Resource Reallocation: Pakistan’s fiscal policies should be overhauled, shifting resources from untargeted subsidies to targeted, direct transfers to citizens. Tax policies should attract investment in productive sectors. Moreover, the regulatory framework should be modified to encourage the startup ecosystem (which includes non-tech firms) to grow.
- Climate Resilience: Combating this threat necessitates a fundamental shift in how the country develops and executes policies, especially those related to water management, the power sector, and agriculture.
Conclusion: There was a broad consensus among the participants that Pakistan’s economic and foreign policy will remain chaotic as long as political instability remains. Major geopolitical events like the US withdrawal from Afghanistan, Russia-Ukraine war, and the ongoing Israel-Hamas conflict have compounded Pakistan’s challenges, which could be aggravated further by an increase in regional or global tensions. Pakistan’s path to sustainable growth depends on addressing these critical challenges and embracing reforms that promote human development, innovation, and climate resilience.