The Pandemic Depression
The Global Economy Will Never Be the Same
On January 1, U.S. President Donald Trump sent out a tweet accusing Pakistan of “lies and deceit” and then threatened to cut off all assistance that was in the pipeline. After some backtracking, saying it would slash only some funds, the administration returned to its initial position, announcing that it would in fact suspend all security-related assistance, including the Coalition Support Fund program, a very lucrative cash cow that has accounted for close to half of the $34 billion lavished on Pakistan since 2002.
This is not the first time, of course, that U.S. officials have called Pakistan out for its perfidy despite American generosity. Former President Barack Obama did so, albeit with more finesse, and even acted militarily against Pakistan in May 2011 when he ordered in U.S. Navy SEALs to kill Osama bin Laden, who was hiding in a safe house less than a mile from the premier military academy where Pakistani officers are trained. But Washington rarely followed through with its threats.
This time, the situation is different. The mere fact that the Trump regime is now on the verge of making good on its threat should cause some concern within the corridors of power in Rawalpindi, the headquarters of the overweening Pakistani military establishment.
A CREDIBLE THREAT
In the past, Pakistan weathered the United States’ storms of displeasure with the confidence that as long as the Americans were in Afghanistan, they needed Pakistan’s air and ground routes for resupply. Islamabad also believed that it had pretty much convinced Washington to stay engaged no matter what because its country’s fleet of terrorists and its fast-growing nuclear arsenal made it “too dangerous to fail.” In fact, Pakistan encouraged Americans to fear the worst outcome: a rupture in the state security apparatus that would allow terrorists to get their hands on Pakistani nuclear know-how, fissile materials, or weapons—even as Pakistan used U.S. funds to invest in such assets along the way.
These two factors—logistical dependence and nuclear coercion—gave Pakistan wide leeway in antagonizing the United States, including supporting, training, funding, and giving sanctuary to the various militant groups killing Americans and their allies in Afghanistan.
In fact, since 9/11 most of Washington’s threats in cutting aid have rung hollow for these reasons. Trump’s irrationality has changed this calculation. Now all bets are off, as Trump likely cares little about Pakistan’s well-curated myth that it is too dangerous to fail. But even if the Trump administration follows through and withholds aid—including allocations that are still in the pipeline from previous fiscal years (possibly totaling well over $2 billion, although exact figures are still being tabulated)—will it induce a change in Pakistan’s behavior?
Probably not. Trump’s White House has not yet discussed the equally important Economic Support Fund through which Washington has given Islamabad $11.1 billion since 2002. Also, Pakistan’s “all weather” friend, China, has already announced that it is standing by and intends to foster closer ties. However, whereas the United States provides military assistance, China provides loan assistance, and its history of predatory lending in developing countries does not bode too well for Pakistan. In Sri Lanka, for example, China built a needless and economically unviable port at Hambantota. The revenues have been paltry and Sri Lanka has been unable to service the loans. China is also investing in an economically unviable port in Gwadar, in Pakistan’s restive province of Balochistan. Thus, Pakistan should be more wary of China’s embrace than it is letting on.
Although the aid cutoff may not compel Pakistan to cease its noxious policies, Islamabad would be feckless to dismiss its symbolic significance. Since the onset of the “war on terror” in October 2001, the United States has periodically threatened to end or at least curtail assistance to Pakistan unless it demonstrated a real commitment to meeting U.S. goals. In the end, however, every administration failed to act on its rhetoric. Now, Trump may have given Pakistan a reason to believe Washington.
MORE DRASTIC OPTIONS
Apologists for Pakistan have already started their familiar drumbeat about the possible adverse repercussions of a severance in aid. Quite unsurprisingly they are arguing that Pakistan can ride out this drop in assistance, that Pakistan may lack the requisite ability to rein in the various terrorist networks that are operating on its soil, and that it can make it exceedingly difficult for the United States to continue supplying its forces in Afghanistan.
Each of these charges merits discussion, but only the last point is credible. China may well be willing to bail Pakistan out on a one-off basis, but it should be noted that Beijing has refused to do so in the past and there is little reason to expect it to behave charitably now. China deems Pakistan to be a useful ally and an invaluable strategic surrogate against India in South Asia. However, it does not want to take Pakistan on as another ward. Consequently, a lasting U.S. aid cutoff could impose significant economic costs on Pakistan.
Meanwhile, Pakistan’s claim that it lacks the ability to rein in, if not crush, various terrorist organizations operating from within the country needs to be forthrightly challenged. The Pakistani military establishment has spawned, organized, and supported these organizations over decades. It may not be able to dismantle them overnight, but it certainly has the institutional and military wherewithal to terminate them in due course. More to the point, when the Pakistani state chooses to crush insurgents, as it did with the Baloch in the late 1970s and 1980s, it gives them no quarter. Consequently, there is little reason to believe that Islamabad could not do so again were it so inclined.
Retaliation, however, is a real risk. Pakistan would most likely do what it has done in the past: block the ground lines that are currently being used to resupply the Afghan National Security Forces. This means Washington will have to turn to air transport. (The so-called Northern Distribution Network was never terribly useful and has been subject to Russian diktat.) This is where the Trump administration is most vulnerable. Should Pakistan cut off access to air routes over Pakistan, Trump will be in a difficult position. Had he continued with Obama’s rapprochement with Iran, he could have availed himself of the alternative land route that India helped build through Iran’s port of Chabahar. (In fact, India just concluded its first shipment through that route by delivering a million tons of wheat to Afghanistan.)
In the end, what will happen if this aid cutoff fails to get Pakistan to cooperate? In that case, the United States has other, more drastic options available. It could, for example, choose to rescind Pakistan’s status as a “major non-NATO ally.” This designation confers substantial financial and military benefits on Pakistan, apart from the diplomatic prestige that comes with it. After much puffery, the Trump administration has sent an unequivocal message to a dubious ally. The task before it now is to ensure that Pakistan realizes that it will not enjoy a future that resembles the past. This administration, its various other foreign policy vagaries and foibles aside, appears to have adopted a judicious stance when dealing with the persistent duplicity of an ostensible ally. Even if this course of action does not change Pakistan’s behavior, at least the Americans can have the satisfaction of knowing they are no longer subsidizing a country that undermines its regional interests in almost every way conceivable.