From a security to developmental state: Pakistan's adaptation to geoeconomic disruptions

When American author Edward Luttwak coined the term ‘geoeconomics’ at the end of the Cold War, he envisioned it as an extension of traditional geopolitics. Realpolitik would continue to reign supreme but economic tools of statecraft would become more prominent.

As the world bids adieu to the post-Cold War unipolar moment, international relations theorists are consumed with debating the tools and strategies great powers will employ to out-compete each other. One of the key ingredients already on display is geoeconomics. From the use of energy supplies as a tool of conflict in the Ukraine war to the liberal use of sanctions against rivals, the dawning of the ‘technology curtain’, and the gradual return to trade protectionism, the brazen use of Luttwakian geoeconomics is there for all to see.

This evolving global order is drifting towards creating U.S. and Chinese (and perhaps Russian) spheres of influence. Many strategically important states – call them middle powers for convenience – are being wooed by Washington and Beijing. But this isn’t what these states wish for.

Unlike the Cold War, where the world ultimately divided into relatively neatly defined camps, success today lies in constructive multi-alignment. Both US and China are also acutely aware of this dynamic and are quick to emphasize that they are not asking countries to pick a camp. This is true. And yet, as Washington and Beijing pull further apart, with every passing conversation about global supply chains, sourcing of technology, and military spheres of influence, it becomes difficult for these middle powers to see great power messaging as anything but presenting them with an either-or choice.

Few countries have a starker challenge in this regard than Pakistan. It is one of the world’s largest nations and a nuclear power that is geographically contiguous to China and a strategic partner to both US and China. The overwhelming majority of Pakistan’s economic inputs come from China and most of its outputs go to the West. Moreover, the China Pakistan Economic Corridor (CPEC), which connects western China to Pakistan’s warm waters has been a lightning rod ever since it was touted as the litmus test for the Belt and Road initiative. Simply put, Pakistan’s economy is deeply intertwined with both camps: divorce from either camp would be tantamount to cutting off a limb. Nor does Islamabad have the option of playing ostrich and hope that it will be ignored as great power rivalry heats up in its backyard.

It is this recognition that was partly responsible for the formulation of Pakistan’s first National Security Policy (NSP) released in January 2022. Pakistani planners realized that sitting back and letting competition between the big boys engulf South Asia would quickly make their country a proxy battleground, something Pakistan has had a horrible experience with throughout its history and is desperate to avoid. To do so, it somehow needed to force all major powers to find benefit in supporting a stable Pakistan.

Pakistan’s NSP attempted to do so by espousing a vision of economic security, with geoeconomics as one of its key pillars. But the NSP presents a very different take on the concept, seeking ‘cooperative geoeconomics’ by creating positive interdependence with other regional and extra-regional economies. Through the NSP, Pakistan committed itself to eschewing camp politics, instead seeking multi-alignment by positioning itself as a hub of regional connectivity (as one element of the strategy).

The guiding principle of this geoeconomic vision was to create an incentive structure such that the cost of an unstable Pakistan became greater than the cost of a stable Pakistan for its friends and foes alike.

Pakistan could achieve this if it positioned itself at the center of a web of trans-boundary economic projects that tied in positive interests of regional and extra-regional states with Pakistan’s geography in ways that competing geopolitical camps found benefit in ensuring Pakistan’s continued stability. At the same time, these initiatives would spur Pakistan’s economic growth and begin to address its perennial economic weakness.  

For example:

• Regional energy projects to which Afghanistan, Pakistan and India are already signatories could be operationalized to ensure flows from Central Asia to India through Afghanistan and Pakistan. For millions of consumers in these countries, these projects would create an interest in seeking to avoid any disruption.

• Proactive Pakistani efforts to create Central Asian access to Pakistan’s warm waters, already under way, would reduce the dependence of the Central Asian Republics [CARs] on Russia. Western interests would be served while developing greater stakes for the Afghan leadership to abide by international investment covenants and norms.

• CPEC’s extension to Afghanistan, a priority for both China and Pakistan, would allow Beijing a monopoly route through Pakistan, while helping to create greater meaningful integration between Pakistan and Afghanistan.

• Meanwhile, attracting Western investment in the Special Economic Zones developed through CPEC could create an interesting mix of Western and Chinese equities on Pakistani soil. Western technology has already been used in CPEC projects.

• Similarly, if and when global restrictions are eased, tying in Russian and Iranian interests is also part of the vision.

• And if India-Pakistan relations improve, an east-west corridor across South Asia would create mutual dependence between these two economies, forcing an Indian interest in stability across the transit corridor in Pakistan. Incidentally, the east-west corridor would also connect with the north-south Pakistan-China axis to optimize regional economic integration, something China is interested in despite its tensions with India and Indian opposition to CPEC.

Pakistan’s geoeconomic aspirations were always going to be a tall order, not least because the U.S., and more so China, expect greater Pakistani backing for their geostrategic interests. Its connectivity vision is also stymied by its exceptionally challenging neighborhood -- both of Pakistan’s western neighbors, Iran and Afghanistan, are internationally isolated; Pakistan and India have no relationship to speak of; and while China is touted as an ‘all weather friend’, the closer Pakistan gets to China, the more concerned several Western capitals and India get (and conversely, if Pakistan gets closer to the West, that would be of concern to China).

And yet, Pakistan doesn’t have a choice if it wants to avoid the eye of the geostrategic storm. Unfortunately, Pakistan has received little international support for its vision even though much of the world – that traditionally labeled Pakistan a security state – had for years counselled its leaders to transform their country into a developmental state. The great powers must realize that whatever their competitive interests in Pakistan’s neighborhood, any outcome that destabilizes a nuclear power of 250 million people will ultimately be counterproductive for all.

For now, Pakistan’s geoeconomic pivot remains an ambition. It’s one major contribution thus far has been to codify a refreshing view on geoeconomics that departs from its Luttwakian connotations to a more cooperative and consensual one. This is bound to be attractive to every middle power that is seeking an escape from traditional camp politics.

The views in this interview article are not necessarily those of FES.