New Agony and Opportunity in Pakistan

Tim Ferguson

As the Chinese speaking world was winding down for its new year holiday (and China’s economy appeared to be winding down, spooking many others), there was a news opening for one of Beijing’s favored states: Pakistan.

Of course, much of the news from the long-suffering Islamic republic continued to be grim: Violent spasms in various parts of the country continued, with jihadists attacking not only security forces but as usual innocents as well. Aid workers are a favored target, most tragically those trying to immunize children against polio. As the Wall Street Journal (paywall) noted, this is having the double effect of killing the clinicians and worsening the toll from the disease. The city of Peshawar is now thought to be the world’s worst reservoir of the virus.

It is hard to be hopeful for this tortured land. But China keeps seeing a strategic business opportunity, with word this week that it could “sell” three nuclear plants to the power-starved nation. This follows a pattern of infrastructure development in a South Asian corridor that offers both ocean access ultimately and encirclement of unfriendly India at the same time. Of course, anything “nuclear” in Pakistan raises hackles with that part of the world that still hews to a non-proliferation policy, but…whatever.

Amid the endless reports of carnage, the economic climate under restored prime minister Nawaz Sharif has some people looking up, or at least looking out for investments. In a good year for “frontier” markets generally, the Karachi stock index, even after this week’s global jitters, is up 69% over 12 months.

This week a scholar at the Council on Foreign Relations in New York released a brief for renewed engagement by the U.S. in Pakistan. This is a tough sell on both ends after years of friction (including still-raw memories for Western journalists of Daniel Pearl) and severe fatigue among Americans with anything bordering on Afghanistan. But part of the argument is that the Paks are the way around the frustration with Kabul, Karzai and the Taliban. This was Richard Holbrooke’s endgame before his death took him out of U.S. policymaking. Admittedly, this would involve a delicate dance with India, whose enhanced trade with the bitter foes since Partition would be part of the equation. At least under the current administrations in New Delhi and Islamabad, some steps are possible.

Not much is clear ahead, but with Pakistan at least, surprises are likely to come to the up side, as current events keep expectations low.