Pakistan PM brings an economic message to the White House

Prime Minister Nawaz Sharif wants to build a post-2014 relationship with the US that is based on economic ties, rather than the Afghanistan war legacy.

When Pakistan Prime Minister Nawaz Sharif meets with US President Barack Obama today, the future of Afghanistan, trade ties, and the contentious drone program are set to feature on Mr. Sharif’s agenda.

But driving the conversation, Pakistani government officials say, is a quest to decouple the relationship from its more contentious points over the past decade – drones, the Osama bin Laden raid – to focus on economic ties and Pakistan’s role in Asia after the US pulls out of Afghanistan.

“Fundamentally, there is still a window to work with at the moment, to relocate Pakistan in a better strategic equation with the US. There is better appetite for that in [Washington], to look at Pakistan as part of Asia,” says Sherry Rehman, Pakistan’s former ambassador to the US.

The aim of the visit is to start “building a post-2014 relationship,” says Sartaj Aziz, the prime minister’s adviser on national security and foreign affairs. “We have to develop an independent relationship and there are a lot of dimensions – peace in Afghanistan and the overall shared economic relationship, which is very important.”

Economic priority

Mr. Sharif plans on pushing an economic agenda in Washington, Mr. Aziz says, following the US decision to restore more than $1.6 billion in military and economic aid to Pakistan that was suspended when relations between the two countries deteriorated after the bin Laden raid.

“The US already cooperates with Pakistan on energy but we are looking for an expansion of this and private sector investment,” says Aziz. “We want better market access. As a matter of policy, Pakistan is not emphasizing aid, other than in education or energy, but trade. The US has been discussing this, but in fact, [bilateral] trade has stagnated at $5.7 to $5.8 billion over the past couple of years. Our plan is to double this in the next five years.”

Pakistan’s economy has struggled over the past decade. Over the past five years, the rate of GDP growth averaged at around 3 percent, with declining foreign reserves and abysmal tax revenue collection. In September, the International Monetary Fund approved a $6.64 billion Extended Fund Facility agreement with Pakistan.

Mr. Sharif and his party, the Pakistan Muslim League-Nawaz, contested this year’s elections on a platform of economic recovery. The government enacted a reform program in the energy sector and plans on privatizing state-owned companies that are a drain on government finances. It is hoping to attract foreign interest for these companies, as well as for projects planned in the energy sector, such as a power park in Balochistan. The Sharif government also wants better market access for Pakistani companies to export to the US, in particular the the textile sector, which has lost out share to Bangladesh in recent years.

Yet Pakistan continues to struggle to improve its fiscal deficit, and has long been asked to show commitment to expanding the taxpayer base and improving tax collection. The debilitating security situation and energy shortfall pose severe risks to the economy, which deters industries' expansion plans and productivity.

Pakistan’s influential Dawn newspaper noted in an editorial on Monday that “Economic issues are rightly being given importance but Pakistan’s problems are far deeper than any aid package or monetary assistance for military operations can help resolve. The Sharif government appears unwilling or unable to take the hard steps to structurally turn around the Pakistani economy, so what can an aid or trade partner — no matter how big — really achieve?”

Afghanistan, drones linger

Despite the shift Pakistan leaders would like to make toward a post-2014 relationship, Afghanistan and drones are still likely to feature heavily in any talks.

Officials said that Sharif is seeking clarity about US plans for Afghanistan’s future, in particular to assuage concerns that the US will “abandon” Pakistan after it withdraws from Afghanistan.

Pakistan “cannot be saddled with the burden of Afghan reconciliation,” says Ms. Rehman. “This burden needs to be articulated and shared,” she said. “The path to peace should not only be Islamabad’s responsibility.” 

Sharif is also expected to reiterate Pakistan’s opposition to the controversial drone program, highlighted by yesterday's Amnesty International report on US drone strikes in Pakistan. During a stopover in London before his US trip, Sharif told reporters that “There is no illusion about this policy; we believe drones challenge Pakistan’s sovereignty. We consider drone strikes as an attack on our independence; these attacks go against Pakistan’s interests. This should stop.”