Shehbaz Sharif was sworn in as the 24th Prime Minister of Pakistan on 4 March 2024. The Pakistan Muslim League (Nawaz) and Pakistan People’s Party (PPP)-led coalition government has been in power for two months now. Nothing much seems to have changed for Islamabad since Sharif’s last term as Prime Minster from April 2022 to August 2023. This paper delves into the foreign policy approaches of the new government and argues that in this context, Pakistan’s attention largely continues to revolve around three things – maintaining a conciliatory approach towards its traditional partners, securing foreign loans to stabilise its economy and looking at re-gaining strategic relevance by balancing between big powers. It also outlines the main foreign policy challenges for Pakistan that are critical to manage.
Wooing traditional partners
From 6 to 8 April 2024, Shehbaz Sharif undertook his maiden foreign visit as the PM of Pakistan, to Saudi Arabia. This was no surprise. In the past, Shahid Khaqan Abbasi, Imran Khan and Shehbaz Sharif, the 21st, 22nd and 23rd Prime Ministers of Pakistan, respectively, chose Saudi Arabia as the destination for their maiden foreign visits. Some experts expected that this time, Sharif would visit Beijing first. After all, China has remained Pakistan’s highest trading partner and an ‘all-weather strategic cooperative partner’ for a long time. It has provided loans to Islamabad at critical times, including an amount of USD 2.5 billion in June 2023 to stabilise Pakistan’s economy.[i] In 2024, as the ‘game changing’ China-Pakistan Economic Corridor (CPEC) enters the next decade, Pakistan’s outreach to China could have been more special than the usual visits in the last few years, which were mostly to seek financial assistance. However, for Islamabad, maintaining close ties with Riyadh has become a strategic decision.
Three main reasons are visible for Pakistan’s increasing outreach to Saudi Arabia. First, a traditional ally of Pakistan, Saudi Arabia, has been deepening ties with India. Progresses made under the India-Saudi Arabia Strategic Partnership Council (SPC), established in 2019, is an example in this context. Islamabad has also hoped that Riyadh will support it in its protests against India on Kashmir, a point that Saudi Arabia has diplomatically balanced by urging both countries to resolve outstanding disputes through dialogue.[ii] This has left Pakistan dissatisfied. Second, Saudi Arabia has provided meaningful economic assistance to Pakistan in the last two years. In July 2023, Saudi Arabia deposited USD 2 billion in Pakistan’s central bank to boost its economy.[iii] In January 2022, Saudi Arabia made the largest single-country contribution of USD 1 billion to Pakistan to deal with its devastating floods.[iv] Additionally, in April 2024, Saudi Arabia pledged an amount of USD 5 billion as investments in Pakistan.[v] As long as Pakistan’s economic situation remains weak, support from Saudi Arabia will remain crucial. Third, the relevance of Saudi Arabia within the Islamic world makes it important for Pakistan to woo Riyadh. Shehbaz Sharif’s performance of Umrah (in Mecca) and offering of prayers in Madinah during his maiden foreign visit were meant to project Pakistan as an important part of the Islamic world. The Islamic Development Bank (IsDB) located in Jeddah has supported Pakistan in its fight against climate change, polio eradication and financing energy infrastructure, among others. The religious ‘brotherly ties’ with Saudi Arabia remain extremely important for Pakistan’s foreign policy calculations.
However, this does not take away from the ‘iron-clad’ friendship that Pakistan continues to have with China. On coming to power, PM Sharif criticised the Imran Khan government for slowing work on projects under CPEC and hoped China would increase its investments as CPEC entered the next phase. President Xi Jinping and Premier Li Qiang of China were among the first to congratulate Shehbaz Sharif on his re-election as Prime Minister on 4 March 2024. As Mushahid Hussain Sayed, Chairman of Pakistan's Senate Committee on Defence noted - “Pakistan-China relations remain solid and substantive, irrespective of any changes in the region or a change of governments, as these are based on mutual interests reinforced by supporting each other's core interests”.[vi]
Securing external loans
One of the main reasons for continuity in Pakistan’s foreign policy approach, especially towards its traditional allies, is Islamabad’s desire to strengthen its economic partnerships and seek loans and investments. This has become repeatedly visible in the last two months since the new government came to power. For instance, the visit of the Foreign Minister of Saudi Arabia, Faisal bin Farhan, to Islamabad from 15 to 16 April 2024, witnessed Pakistan pitch for investments worth USD 30 billion.[vii] When Shehbaz Sharif visited Saudi Arabia for the second time from 27 to 28 April 2024, mainly to attend the World Economic Forum (WEF), he projected that investments into Pakistan will give returns ranging from 14% to as high as 50%.[viii] With another delegation of investors from Saudi Arbia visiting Pakistan in May 2024, the Saudi investments via the Special Investment Facilitation Council (SIFC), (which was established in June 2023 to ‘facilitate, fast track and protect foreign investments’) are being fast-tracked. It may be noted that there have been a record number of high-level visits between the two countries in the last two months.
On 29 April 2024, as per the final review of the International Monetary Fund’s Stand-By Agreement (SBA) with Pakistan, USD 1.1 billion was disbursed. This comes in addition to the USD 3 billion provided last year by the IMF under the SBA and the USD 1.1 billion given under the Extended Facility Fund (EFF) in 2022. It was the 24th time Pakistan went to the IMF asking for funds.[ix] The new government’s approach continues to reflect on Islamabad’s habit of luring more foreign assistance and loans than bringing about substantial structural changes in its economy or making an attempt at introducing fiscal disciple.
Balancing for strategic relevance
On 3 March 2024, in his speech at the National Assembly as the Prime Minister elect, Shehbaz Sharif noted that Pakistan will not be part of any “great game” and would continue to maintain cordial relations with its external partners. He also called out the “global silence on Gaza” and appealed the international community for “freedom of Palestine”.[x] An analysis of these statements points towards Pakistan’s continuing attempt to stay strategically relevant in the backdrop of the deepening US-China global rivalry and the on-going regional tensions triggered by the Israel-Hamas conflict.
The withdrawal of the US forces from Afghanistan in 2021 took away much of the strategic relevance that Pakistan had in eyes of the West. For the US, Pakistan could be pushed to align with its policies in Asia at large. Take for instance the pressure on Pakistan to abandon the gas pipeline project with Iran despite the glaring need for Islamabad to address the energy crisis in the country.[xi] Pakistan had to give in to such pressure on few occasions because loans from the IMF depended on its relations with the West, the US to be more specific. The US has also been Pakistan’s largest export market. For these reasons, Pakistan maintained a conciliatory attitude towards the US. For the US however, Pakistan was not a priority post withdrawal of forces from Afghanistan. Yet, one big reason why it is hard for the US to ignore Pakistan is because it continues to be Beijing’s biggest ally in Asia. Unlike Imran Khan, the Sharif administration is conscious of this reality and looks at ways to balance its relations with both China and the US, to remain geopolitically more useful. On one hand, it is noted that, “Beijing has become the leading supplier of Pakistan’s conventional weapons and strategic platforms and the dominant supplier of Pakistan’s higher-end offensive strike capabilities. China’s military diplomacy with Pakistan quantitatively and qualitatively rivals its military partnership with Russia”[xii]. On the other hand, reportedly, Pakistan facilitated its Noor Khan airbase in Rawalpindi to be used as an air bridge by the West to supply arms to Ukraine in 2022.[xiii] In another instance in March 2023, Pakistan opted out of the virtual Summit for Democracy, co-hosted by the US, only a week after participating in the International Forum on Democracy organised in China. Such ways of balancing between the US and China are expected to continue under the new Sharif government. Experts are of the opinion that both Beijing and Washington prefer to work with the Sharif brothers (than Imran Khan) leading Pakistan. A formal letter from President Joe Biden to PM Sharif on 29 March 2024, stating that “the United States will continue to stand with Pakistan to tackle the most pressing global and regional challenges” is reflective of the way the US wishes to look at Pakistan today.[xiv] This should be understood not only in the context of the US-China rivalry but also in the context of Pakistan’s open support for Gaza.
During the visit of Saudi Arabia’s Foreign Minister to Islamabad recently, both countries called for an “immediate cease-fire and uninterrupted delivery of human aid in Gaza”.[xv] Similarly, when Iranian President Ebrahim Raisi visited Islamabad from 22 to 24 April 2024, the two countries had a common position against Israel, calling on the United Nations Security Council to take action. Besides stating to increase their bi-lateral trade to USD 10 billion in the next five years, both countries have aimed to “unite at the Organisation of Islamic Countries (OIC) and other international forums alongside fellow Islamic nations to push for a complete ceasefire”[xvi]. This brings Pakistan back to being an important country within the Islamic world, a position it wishes to leverage. Without backing Iran wholeheartedly, as reflected in the way Islamabad called for restrain and de-escalation when Iran attacked Israel in April 2024, Pakistan hopes to make its voice count in the region and maintain a balance between the West and Middle East. Taking note of this development, the US State Department has announced that it will impose sanctions on countries doing business with Iran.
Foreign policy challenges ahead
Ishaq Dar, the former Finance Minister of the federal government, whose record at managing the country’s economy is poor, now leads the Ministry of Foreign Affairs of Pakistan. On 28 April 2024, Dar was additionally appointed the Deputy Prime Minister of Pakistan, a position that remained vacant for a long time. Dar will have dual responsibilities at a time when deciding on the foreign policy of Pakistan is expected to get challenging. A few challenges for the new government have been outlined below.
First, it continues to remain a challenge for Pakistan to avoid a sovereign default and seek further external loans if no structural changes are brought about in the economy. Pakistan’s foreign debt is about USD 124.5 billion, largely owed to multilateral institutions like the IMF, the World Bank and the Asian Development Bank and countries like China, Saudi Arabia and the UAE.[xvii] As per IMF data and the Asia Development Outlook Report, inflation rate in Pakistan is the highest in whole of Asia, standing at 24.8% in 2024.[xviii] A Pakistan-based think-tank, Tabadlab, in a detailed report titled ‘A Raging Fire’, noted that Pakistan is moving towards “inevitable default”, particularly given the increasing interest expense and reliance on debt.[xix] This leaves the Sharif government to struggle with policy changes at home and convince its foreign partners to continue to lend money for its survival. Second, Pakistan is seeing increasing violence, with 245 incidences of attack and counter-attacks being reported in the first quarter of 2024.[xx] Most of these incidences have been traced to internal sources. Yet, they have severe external implications, including its ties with Afghanistan, Iran and China. In March 2024 alone, three instances of suicide bombings targeting Chinese interests - in Gwadar port, at Turbat naval-air base and near a hydropower project in Besham city that killed five Chinese engineers, were reported. As a result, Chinese companies halted two projects demanding better security plans to be brought about by Pakistan. Such instances have created a security concern for China even as the CPEC hopes to make progress within Pakistan. Similarly, instances of cross-border attacks in Balochistan have remained a bone of contention between the two countries and may trigger problems despite a thaw in Iran-Pakistan relations. Third, political instability within Pakistan, especially in the aftermath of Imran Khan’s arrest in May 2023 added to Islamabad’s deteriorating image as a functioning democracy. More recently, soon after the result of the general elections was announced in February 2024, the US, the UK and the EU demanded probes into election irregularities.[xxi] Such instances only add to the challenges of the federal government in Pakistan. Fourth, as mentioned above, balancing between the global tussle between China and the US will continue to remain a challenge for Pakistan in the times to come, as new theatres of conflict emerge in global politics.
Conclusion
The new government in Pakistan came to power on 8 February 2024, after an election process that witnessed several challenges and controversies. While Shehbaz Sharif has become the PM again and is backed by his family and the PPP, some predict the 14th National Assembly may not even complete its five-year term. Besides dealing with such political insecurities at home, economic troubles continue to remain an old issue within the country, along with rising security threats in many corners of Pakistan. Given such domestic compulsions, the new federal government does not seem to have the bandwidth to make meaningful changes on the foreign policy front. It continues to depend on external partners for more loans to address the gloomy economic condition, hopes to have a more balanced stance between the US-China global conflict, seeks to exercise restraint and increase cooperation with Iran, placate Saudi Arabia and other important members of the Muslim world for geopolitical relevance and manages to live under the tutelage of its deep friendship with China. To conclude, one can state that Pakistan continues to live with its old problems and even older approaches in a new and fast changing world, making it difficult for Islamabad to make any constructive contribution in the international realm.
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*Dr. Shrabana Barua is a Research Fellow at the Indian Council of World Affairs.
The views expressed are personal.
Endnotes
[i] Shrabana Barua, “Pakistan’s economy from 2022 to 2023 looks dismal”, ICWA Issue Brief, 23 January 2023, URL: /show_content.php?lang=1&level=3&ls_id=8935&lid=5827./show_content.php?lang=1&level=3&ls_id=8935&lid=5827.
[ii] Bashir Ali Abbas, “Eye on the Middle East | Saudi-Pakistan joint statement on Kashmir shows Riyadh’s balancing act”, Hindustan Times, 11 April 2024, URL: https://www.hindustantimes.com/analysis/eye-on-the-middle-east-saudi-pakistan-joint-statement-on-kashmir-shows-riyadh-s-balancing-act-101712857524868.html.
[iii] “Cash-strapped Pakistan receives $2 billion from Saudi Arabia: Pakistan Finance Minister Dar”, The Hindu, 11 July 2023, URL: https://www.thehindu.com/news/international/cash-strapped-pakistan-receives-usd-2-billion-from-saudi-arabia-pak-finance-minister-dar/article67067729.ece.
[iv] “Saudi Arabia always supported Pakistan in difficult times, says PM Sharif”, Arab News Pakistan, 12 January 2023, URL: https://www.arabnews.pk/node/2231036/pakistan.
[v]“ Saudi trade delegation arrives in cash-strapped Pakistan to discuss investments worth $5 billion”, Firstpost, 6 May 2024, URL: https://www.firstpost.com/world/pakistan-saudi-arabia-delegation-investment-5-billion-13767597.html.
[vi]Xu Wei, “Pakistan, China vow to elevate ironclad ties”, China Daily, 13 March 2024, URL: http://epaper.chinadaily.com.cn/a/202403/13/WS65f0da7fa310df4030f500e4.html.
[vii] “Pakistan has pitched ‘epic menu’ of $30 billion investment projects to Riyadh — foreign minister”, 18 April 2024, Arab News Pakistan, URL: https://www.arabnews.com/node/2495266/pakistan.
[viii] “Pak PM Shehbaz Sharif set to visit Saudi to advance investment talks”, Business Standard, 20 April 2024, URL: https://www.business-standard.com/world-news/pak-pm-shehbaz-sharif-set-to-visit-saudi-to-advance-investment-talks-124042000271_1.html.
[ix] IMF, URL: https://www.imf.org/en/Countries/PAK#.
[x] “In maiden speech, Pakistan PM Shehbaz Sharif says ‘Assembly should pass resolution for freedom of Kashmiris, Palestinians’”, The Indian Express, 4 March 2024, URL: https://indianexpress.com/article/pakistan/pakistan-pm-shehbaz-sharif-speech-kashmir-palestine-economy-9194267/.
[xi] Shrabana Barua, “Impeded Progress on the Iran-Pakistan Gas Pipeline”, ICWA Viewpoint, 27 March 2024, URL: /show_content.php?lang=1&level=3&ls_id=10702&lid=6805.
[xii] Sameer Lalwani, “A Threshold Alliance: The China-Pakistan Military Relationship”, USIP Special Report, 22 March 2023, URL: https://www.usip.org/publications/2023/03/threshold-alliance-china-pakistan-military-relationship.
[xiii] “Pakistan’s Clandestine Support to Ukrainian War Effort”, The Pakistan Military Monitor, Commentary, 13 May 2023, URL: https://thepakmilitarymonitor.com/pakistans-clandestine-support-to-ukrainian-war-effort/.
[xiv] US Embassy and Consulates in Pakistan, “LETTER FROM PRESIDENT JOSEPH R. BIDEN TO PRIME MINISTER SHEHBAZ SHARIF”, 29 March 2024, URL: https://pk.usembassy.gov/letter-from-president-joseph-r-biden-to-prime-minister-shehbaz-sharif/.
[xv] “Pakistan and Saudi Arabia call for a cease-fire in Gaza, saying efforts so far are insufficient”, The Hindu, 17 April 2024, URL: https://www.thehindu.com/news/international/pakistan-and-saudi-arabia-call-for-a-cease-fire-in-gaza-saying-efforts-so-far-are-insufficient/article68073296.ece.
[xvi] Dhrubajyoti Bhatacharjee “Iranian President Raisi’s visit to Pakistan”, ICWA Viewpoint, 3 May 2024, URL: /show_content.php?lang=1&level=3&ls_id=10806&lid=6875#:~:text=The%20President%20of%20Iran%2C%20Dr,April%2022%20–%2024%2C%202024.
[xvii] Peirre van der Eng, “Foreign debt will be Pakistan’s economic touchstone in 2024”, East Asia Forum, 5 March 2024, URL: https://eastasiaforum.org/2024/03/05/foreign-debt-will-be-pakistans-economic-touchstone-in-2024/.
[xviii] International Monetary Fund, 2024, URL: https://www.imf.org/en/Countries/PAK.
[xix] Ammar Habib Khan and Zeeshan Salahuddin, “A Raging Fire”, Tabadlab Report, 18 February 2024, URL: https://tabadlab.com/a-raging-fire/.
[xx] Business Standard, ‘Pak sees 245 terror attacks, counter-terror operations in first qtr of 2024’, 1 April 2024, URL: https://www.business-standard.com/world-news/pak-sees-245-terror-attacks-counter-terror-operations-in-first-qtr-of-2024-124040100264_1.html#:~:text=Pakistan%20witnessed%20as%20many%20as,to%20a%20think%20tank%20report.
[xxi] Mint, “Pakistan Elections: US, UK, EU demand probe into irregularities, fraud as both Nawaz Sharif, Imran Khan claim victory”, 10 February 2024, URL: https://www.livemint.com/news/world/pakistan-elections-us-uk-eu-demand-probe-into-irregularities-fraud-as-both-nawaz-sharif-imran-khan-claim-victory-11707528643817.html.