Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
Food Security in Pakistan: Historical & Contemporary Perspective
Author: Samaha Chaudhry. Published in the Friday Times on August 21, 2023.
The hunger situation in Pakistan is the most abysmal
in South Asia. According to one UNOCHA report, it is
worse than even Afghanistan. Our number of stunted
children – twelve million – is highest in the region;
over half of our population, women and children
particularly, experience some kind of deficiency, and
according to the Global Hunger Index, our hunger
problem is ‘serious’.
To say that such headlines were shocking would be a
lie. After all, haven’t we all heard it before, from the
day we first heard our elders talk about Pakistan? We
are a poor country and most of our compatriots can
barely afford one nutritious meal in a day. Therefore,
our firefly is gratitude – its home must reside in the
gardens of those who can eat comfortably.
Melancholic and spiritual as this portrayal is, it
makes it all the more important to investigate the
origins of such great lack. We must ask why. Why is it
that this image was fit into our minds from the very
beginning? Was our nation born poor? Were we
always starving, even a thousand years ago? Is the
white man right when he speaks of his burden – how
he civilized the brown brute who was in need of rescue
from his own savageness?
In answering such a question, our finger can never
stray from colonialism: the single most destructive
force the world has experienced in the past few
centuries. Although there was no uniform system in
the subcontinent with regards to cultivation, the
process was not commercialized – at least in the
modern sense. In many areas, subsistence farming
was practiced; peasants grew their own food, and a
variety of food was grown to cope with the nutritional
needs of a household. Even with the caste system in
place, the peasants were not entirely without
protection; if nothing, they still had share in the
harvest. They were still food secure.
Then, entered the colonial powers, and the British
emerged as victors among them. With the introduction
of commercial farming, indigenous systems of
production were decimated on a massive scale. No
longer did the poor peasant grow a variety of food for
the dietary needs of his family unit. Instead, he was
encouraged to grow the crops which would generate
the most cash – and specialize in them
This may sound profitable to our ears, but one must
note here that the farmer, independent in cultivation
of his nutrition before, was now made forcibly
dependent on the modern market. The South Asian
farmer encountered the newborn classes of
middlemen, and feudal lords whose sole purpose was
to extract as much rent as possible for the British and
their own pockets. With what meagre wages he had
left for himself, he was now expected to buy other
kinds of food from the market, and meet his dietary
needs. Thus, he became subjected to price shocks,
inflationary and interest mechanisms – all the while,
sinking deeper into poverty himself.
Moreover, commercial farming had to be done on
certain lines – making use of modern technology,
always in search of innovation to maximize profit.
Farmers who could not afford this new schema of
production were forced to take loans, often from
middlemen, who found even better grounds to exploit
them, and entrap them in debt cycles. Stripped of
autonomy, and in most cases, his share of profit, the
peasant encountered true systematic alienation in
Marxist terms for the first time. Life in pre-colonial
times may have been difficult, but now, the hunger of
liberal modernism was catching up – a unique
monster in its own right.
It is no surprise, then, to see that while agricultural
production was peaking in India, its peasants were
pushed deeper into poverty and hunger. The common
man was clearly not the beneficiary of the schemes of
modernism and productivity erected to apparently
civilize him. After all, he was prohibited to touch even
salt from the seas. No, the cash was for the masters
and their friends.
This backdrop of food insecurity still haunts us today.
Pakistan, born an agrarian economy, was poor in part
– and a very large part – because it was made that
way by its colonial masters and their colluders – many
of them in assemblies and governments. Most feudal
families today were likely given land by the British in
exchange for their cooperation. After all, dissidence
never went unpunished in the British Empire, at least
not when it came to the brown skin.
Today, Pakistan stands at its worst food security
junction in history; the floods of 2022 decimated most
of our crops and impacted 34 million people – to put
this into perspective, farmland the size of Czech
Republic was drowned. Food shortages since the
pandemic has resulted in an increase in overall price
of food – although, Pakistan has had a relatively
stable wheat production, we have been importing food
since the lockdown. The economic crisis further
compounds this inaccessibility; in March 2023 alone,
food inflation stood at 47% in urban areas and has
touched approximately 50.1% in rural. Moreover, IMF
loans are expected to further devalue the rupee;
farmers may hit targets and export, but at what cost?
The government is not likely to give greater subsidies
in production, anyway, given the structural
adjustment policies it must now implement.
On top of this, there is a new hyena we must combat,
which was never our hyena at all: the climate crisis.
Although one may argue that the Earth’s climate has
always been shifting, there is no doubt that human
activity in the past century has greatly accelerated the
pace of change – and worsened its impacts. And the
brunt of this assault of nature is borne not by those
who caused it, but those they impoverished. For
instance, Pakistan emits less than 1% of the world’s
emissions, and yet is the eighth most vulnerable
nation to its consequences. From deadly heatwaves to
melting glaciers to lethal flash floods, we do not have
the privilege of escaping global warming.
It is essential, therefore, that we begin adapting to the
crisis, seeing as we cannot mitigate it – not unless we
join hands with all the countries in the world and
revamp the entire global financial system – which
would be idyllic, but unfortunately, we cannot afford
to be idealists. Being the nation facing the brunt, we
are forced to root our feet in realism and pragmatism.
Flood embankments, mass relocation of individuals
from flood plains, strengthening disaster management,
and improving water storage facilities seem to be key
to this process. However, greater research and
investigation is obviously needed – on a district-to-
district level – to discover adaptation strategies most
suited to the needs and climate of Pakistan. The hour
is upon us, and we succeed only as long as we put the
vulnerable first. Perhaps, that, too, is an idyllic dream.
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Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team

Authority and Democracy: Envisaging Local Government In Pakistan

Author: Samaha Chaudhry. Published in the Friday Times on March 22, 2023.
Musharraf’s death in February harkens us back to the
decades-long debate of democracy versus
authoritarianism, the rule of the people versus that of
unelected military leaders. Public and media opinion
in recent years has started shifting in favor of the
democratic tide, although this in no way implies active
enthusiasm for the system. A healthy, functioning
democracy for most Pakistanis remains an elusive
dream.
There are active reasons for this phenomenon, the
foremost being that whenever Pakistan has ever called
itself a democracy, it has been engulfed in the
poisonous fumes of mostly oligarchic and dynastic
politics with superficial representation for common
citizens at best. Military rule is officially over and yet,
it seems that even under so-called democratic
conditions, the country is on the brink of collapse and
the shots are being called by those in Rawalpindi. We
only have foreign reserves to pay for two more weeks
of imports; inflation is at an all-time high of 37% and
Pakistan continues to rank at number 145 in the Free
Speech Index.
Meanwhile at the time of Musharraf, we had a Prime
Minister assassinated (a similar event nearly occurred
under Shehbaz Sharif’s government just a few months
ago), an entire Lawyer's Movement and the
constitution once again ‘held in abeyance.'
One might argue that the primary difference between
a democratic and authoritarian rule is that
irrespective of how easily the common man can put
food on his family’s table, important principles are
upheld in the former— a universal franchise of all
those contracted under a body politic.
However, it is precisely on the irrespectives that the
issue ought to be erased. As utilitarian as it sounds,
no system ought to prevail simply on principle alone,
unless it practically distinguishes itself as
qualitatively better form of reality. The differences
between democracy and authoritarian regimes matter
most to those who care about the constitution, and
universal enfranchisement, and the notion of
representation without taking into consideration all
that it does not structurally encompass.
They do not take into consideration that principles do
not fill stomachs; they do not prevent journalists from
being murdered and entire villages being put to death
(until the 25th Amendment in 2018) for the crime of
one. Therefore, if the notion of ‘universal
enfranchisement’ exists, it does so only in
adulteration. Rates of high political apathy already
show the alienation of the common man from the
political system, the oppression of minorities and the
systemic disenfranchisement of women from the
political scene. Clearly, enfranchisement is limited to
either those from a particular class, or a very brave
heart — in Pakistan, the latter often join the ranks of
those eventually disgruntled with the mess of the vote.
What is being argued is not that authoritarianism is
better than democracy — or that principles of
organization are utterly useless. Rather, what I am
arguing is that for many on-ground, democracy can be
as bad as authoritarianism.
This does not entirely mean that the system itself
needs to be entirely discarded; there are constitutional
safeguards with regards to the issue of true
representation — the foremost being the envisaging of
local governments in Pakistan.
It is forgotten often that Pakistan has a three-tiered
federal system — Article 140-A mandates provincial
governments to devolve “political, administrative and
financial responsibility and authority to the elected
representative of the local governments.” Technically,
the local governments are responsible for carrying out
the implementation of provincial laws — and within
the ambit of the former, have their own executive and
legislative capacity, albeit to a limited extent.
The purpose is obvious: it is recognized that in order
for self-governance to truly function in a country as
massively populated and conflicted as Pakistan, what
is needed is democracy on a grassroots level, starting
from the tehsil. Only then can we dream of a sufficient
degree of accountability, tehsil to tehsil.
However, local governments have their own push-
backs, the first and foremost being the political
establishment itself. Aside from election delays and
bureaucratic hurdles, it is not uncommon for local
governments to be dismissed entirely. PTI did this
recently in March 2021. Even more notable was the
2019 occasion when fifty-eight government officials
were sent home packing after the indictment of the
Punjab Local Government Act.
Unless and until these barriers are unmade, the era of
meaningful representation – the backbone of any
functional democracy – in which people exercise active
grassroots agency instead of being delegated to
passive participation — can never be ushered in.

Strategic Stability & Nuclear Deterrence In South Asia

Author: Dr Moonis Ahmar. Published in the Friday Times on July 29, 2023
The asymmetrical nature of deterrence in Indo- attack me because if you do, something
Pak relations is reflected in New Delhi’s edge in unacceptably horrible will happen to you.'
conventional weapons and large-scale
modernization of India’s nuclear arsenal. Is Based on the above subject, one can argue that
nuclear deterrence in South Asia durable the concept of deterrence is as old as the
enough to be able to prevent another war in the existence of this world, with periodic
region? Or will an arms race, whether transformations which took place in its
conventional or nuclear, continue to drain the application from time to time. Weapons form
resources of both India and Pakistan? the core of deterrence, which was demonstrated
when nuclear weapons began to shape state
According to Key Concepts in International policy with the purpose of deterring the other
Relations by Martin Griffiths and Terry side and signaling refrain from aggression. For
O’Callaghan, in its simplest form, deterrence deterrence to work reliably, the three ‘Cs’ are
consists of the following threat, intended to critical: capability, credibility and
dissuade a state from aggression: ‘Do not

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Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
communication. If any of the Cs is missing,
deterrence will not work.
The history of nuclear deterrence goes back to
the post-1945 era, when the nuclear arms race
between the United States and the Soviet
Union acted as a useful way to prevent the
outbreak of another global war. Nuclear
weapons are supposedly supposed to deter the
other side and are not to be used, because they
conclusively create a ‘zero sum game,’ in which
there are no winners and losers. Talks for
nuclear arms control yielded muted results,
because the nuclear stockpile held by the five
de jure and four de facto nuclear states are
capable of destroying the world several times
over. De jure nuclear powers are the
permanent members of the UN Security
Council and the de facto nuclear states are
Israel, India, Pakistan and North Korea.
Coming back to the nuclearization of South
Asia, with the testing of nuclear devices by
India on May 11, 1998 and Pakistan on May 28,
1998, the two countries ended a policy of
nuclear ‘opacity’ and embarked on
manufacturing nuclear weapons and missiles.
That caused enormous fear and concern in the
influential capitals of the world, that both
countries, in view of their unresolved issues,
may be tempted to use their nuclear weapons
against each other. Yet, in order to ensure the
world over responsible handling of their
nuclear arsenal, India and Pakistan established
nuclear control and command authority, and
took measures to ensure nuclear safeguards
and nuclear restraint, along with pursuing a
policy of minimum nuclear deterrence. While
the Indian nuclear program is two pronged i.e.
directed against China and Pakistan,
Islamabad’s nuclear program is India specific.
Twenty-five years after the nuclearization of
South Asia, the region is grappling with the
prospect of a nuclear arms race, with India
taking the lead in land, sea and air based
nuclear weaponry, by expanding the range of
its nuclear missiles with an ambition to deter
China and Pakistan in the Indian Ocean region.
It means nuclear weapons have come to stay in
South Asia, and continue to act as a credible
means to avoid an all-out war.
In order to project their nuclear weapon’s
program as credible and safe, India and
Pakistan came up with their respective nuclear
doctrines and also signed agreements for
ensuring safety of their nuclear arsenal. In
December 1985, after attending the first
SAARC summit in Dhaka, the President of
Pakistan General Zia-ul-Haq made a stopover
in Delhi where after meeting the Indian Prime
Minister Rajiv Gandhi, the two countries agreed
to exchange information about each other’s
nuclear installations, an arrangement which
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was given practical shape when in December
1988, on the sidelines of SAARC summit held
in Islamabad, India and Pakistan signed an
agreement in which the two countries agreed to
exchange a list of their nuclear installations
every year by December 31. Called nuclear
confidence-building measures, the idea was to
induct trust, responsibility and professionalism
by India and Pakistan about their respective
nuclear programs.
Likewise, in 1991, India and Pakistan signed
an agreement not to attack each other’s
nuclear installations. Prior to that in 1990,
India and Pakistan agreed to establish a hot
line between Director General Military
Operations (DGMOs) to manage military crises
situations. In 2005, New Delhi and Islamabad
signed an agreement for giving advance notice
of ballistic missile tests.
While nuclear confidence-building measures
formed the core of nuclear deterrence, India
and Pakistan are unable to bridge their trust
deficit and eradicate a mindset based on
paranoia and hostility, which is responsible for
putting a question mark over their professional
approach to dealing with threats of nuclear
escalation.
One needs to analyze the phenomenon of
nuclear deterrence in South Asia in three ways.
First, both sides claim that a level of maturity
and prudence is reflected in their nuclear
programs after a quarter century of their overt
nuclearization. The standoff in Indo-Pakistan
relations, and stalled comprehensive dialogue
since the Mumbai attacks of November 2008
tends to deepen the vacuum in stabilizing a
credible nuclear restraint regime. When there is
the absence of Track-1 diplomacy under
comprehensive dialog, which has a specific
component dealing with the nuclear issue, the
two sides are unable to engage in dialog on
ensuring confidence, trust and transparency in
their nuclear programs.
Literature on the nuclearization of New Delhi
and Islamabad spells out that “Pakistan is
pursuing a policy of “full spectrum deterrence
(FSD)” designed to prevent conventional conflict
at any level by the threat of nuclear first use in
response to aggression. Pakistan’s first
response may, and probably would, be
conventional. It would resort to nuclear use in
response to a ‘large-scale attack.’ The full
spectrum covers both short-range, low-yield
weapons and long-range weapons to cover the
most distant targets in India, which is
identified as the sole adversary. While the
capability to inflict unacceptable damage is
inherent in the full-spectrum approach, the
threat of the use of short-range weapons is
meant to deny India the space for limited
conventional war. India follows a policy of No
Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
First Use (NFU) against all nuclear-armed
states, but with a commitment to retaliate in
the case of any use of nuclear, or large-scale
chemical or biological, weapons against its
territory or its armed forces anywhere.”
In a useful and an informative monograph
entitled, “Nuclear Deterrence and Stability in
South Asia: Perceptions and Realities”
published by Antoine Levesques, IISS Research
Fellow for South Asia with Desmond Bowen,
IISS Associate Fellow for South Asia, in May
2021, the authors argued that the “failure of
deterrence leading to a confrontation between
India and Pakistan could result in the first
offensive use of a nuclear weapon since 1945
and potentially escalate into a broader nuclear
exchange. Neither side would truly win such a
war, the consequences of which, including the
breakdown of the nuclear taboo that has held
for more than 70 years, would extend far
beyond the region. Unless national survival
were truly at stake, it is hard to see what
security gains would warrant nuclear use.
India and Pakistan became nuclear-armed
states when they both tested weapons in
1998.”
Fingers were pointed against Pakistan from
several sides about the unreliability of its
nuclear weapons program, because of the
unstable character of the state and the growing
influence of Jihadi forces. It is a nightmare and
a doomsday scenario according to the West if
the Pakistani state is seized by Jihadi elements
and they also manage to seize control of the
country’s nuclear installations and weapons. In
order to dispel such fears and conspiracy
theories, from time to time, Islamabad has
reminded the International Atomic Energy
Agency (IAEA) about the safety of its nuclear
arsenal.
Second, nuclear deterrence in the context of
India and Pakistan has been tested numerous
times in the last several decades. In 1990,
when the two countries had not overtly gone
nuclear, crisis escalation in Indo-Pakistan
relations took place over Kashmir, which
reportedly forced Pakistan to activate its
nuclear weapons. The so-called mission of
Robert Gates, the then CIA Chief to both India
and Pakistan to manage the nuclear crisis in
1990 is often quoted as a major challenge to
the very concept of nuclear deterrence.
Apart from other crises in Indo-Pak relations
since 1990, the February 2019 crisis in Indian
occupied Kashmir triggered a crisis which
threatened a nuclear showdown in South Asia.
According to Antoine Levesques and Desmond
Bowen in their IISS monograph: “On 14
February 2019, a suicide bomb attack – for
which the Pakistan-based Jaysh-e-Mohammad
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(JeM) terrorist group claimed responsibility –
killed 40 Indian paramilitary personnel in
Pulwama in the Indian state of Jammu and
Kashmir. In retaliation, India carried out an
airstrike targeting what the Indian government
described as a major JeM training camp in
Balakot, a town in the Khyber Pakhtunkhwa
province of mainland Pakistan. Pakistan’s
counter-retaliation resulted in the loss of an
Indian aircraft and the capture of its pilot. (He
was later released.) There are reports that India
threatened to use, and possibly prepared, a
small number of conventionally armed ballistic
missiles against Pakistan. During the crisis,
both sides engaged in deterrence signaling that
alternated between provocation, and which was
evidently clouded by misperceptions that could
have led to miscalculation and unintended
escalation. This episode, in which chance
played an ameliorative role, challenged both
countries’ long-standing claims of being able to
contain a crisis well ahead of any resort to
nuclear weapons. Such claims have been, at
best, soliloquies, rather than resulting from
dialogue between the two.”
International players like United States, Russia,
China and Saudi Arabia reportedly played a
crucial role in defusing the 2019 crisis, which
had the potential to escalate in the wake of
Pulwama and the Balakot incident, leading to
the shootdown of two Indian aircraft by the
Pakistan Air Force. American President Donald
Trump, who was visiting Vietnam at that time,
had to intervene and persuade the Modi regime
to refrain from retaliating following the shooting
of Indian fighter aircraft by the PAF.
Lately, the fragility of the Pakistani state
because of a severe economic crisis and
seemingly perpetual political instability tends
to question the capability of Islamabad to
secure its nuclear arsenal from a possible
seizure by Jihadi groups. When the economy of
Pakistan has narrowly escaped default and the
country is under heavy burden of debt, will
international lenders take advantage of the
situation and pressurize Pakistan to put the
country’s nuclear installations under the
control of the IAEA? This may verge on the
conspiratorial, but when a country is facing
breakdown both economically and politically,
how can it be expected to protect its nuclear
arsenal from possible seizure?
The stability of nuclear deterrence in South
Asia will continue to have a question mark if
both India and Pakistan are unable to make
significant progress in their nuclear confidence
building measures, or if Islamabad continues
to slide downhill, exacerbating the fragility of
the Pakistani state.
Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
Artificial Intelligence and the New World Order
Author: Giancarlo Elia Valori. Published in the Israel Defense in August, 2023
An in-depth look into how artificial intelligence affects
changes in the world order from two viewpoints:
structure and international rules.
Today we will begin to focus on analysing how
artificial intelligence affects changes in the world order
from two viewpoints, namely structure and
international rules. As to the international situation,
Artificial Intelligence has the potential to influence the
balance of power between countries in the economic
and military spheres. The capabilities of non-State
actors will also expand unprecedentedly and
international competition around technology will
become more intense.
In terms of international rules, Artificial Intelligence
has the potential to change the form and principles of
warfare and impact existing international laws and
ethics. The security and governance challenges posed
by AI technology are issues that must be addressed by
all mankind.
Countries should look at the problem from the
perspective of building a community with a shared
future for mankind and discuss the future of AI
international rules starting from the concept of
common security.
It must be said, however, that the topic and issues
pertaining to Artificial Intelligence do not stem from
the spread of the Internet and cyber-science in recent
years, but go back a long way.
In 1950 British mathematician Alan Turing (1912-54)
proposed the concept of Artificial Intelligence. In 1956
the first symposium on Artificial Intelligence was held
in Dartmouth, New Hampshire, USA, and AI was later
officially recognised as a science by the international
community of scholars.
As we entered the second decade of the 21st century,
the research and development of AI technology
stepped up its pace. Today, almost seventy years after
the first theoretical approaches, Artificial Intelligence
is widely used in an increasing number of production
and human life areas. In some specialised fields, it is
almost at the same level or even surpass the human
brain’s performance.
As a ubiquitous technology with the potential to
transform human society, Artificial Intelligence has
been widely discussed in the areas of science and
technology, industry, the military, society and ethics,
as we mentioned above.
Hence will Artificial Intelligence have an impact on
international relations? What kind of impact will it
have? It is worth exploring some of these issues. It
should be noted that AI technology itself is complex,
hard to explain and uncertain. If you are not an expert
in the field, you cannot go into its “workings”, but you
can set logical and moral grounds for discussing it.
An attempt will be made to analyse Artificial
Intelligence only on the basis of the events that have
occurred as a function of it, or of the development
trend generally recognised by the academic
community as having an impact on international
relations, with the hope of trying to explore the
necessity and possibility of building a common rule.
There are certainly many exaggerated expectations
about how science and technology will affect modern
international relations. Some people, like Alvin Toffler
in his book The Third Wave - published in the United
States in 1980 and in Italy in 1987 - predict that the
future world will be fraught with risks and nuclear
weapons and on the brink of economic and ecological
collapse. They also predict that the existing political
system will quickly become obsolete, and the world
will face a major crisis.
Such predictions often overestimate the difficulties
that technology causes to human beings, but
underestimate the human will and ability to solve
them. After the Cold War, against the backdrop of
globalisation, multilateralism gradually turned into
international consensus - at least until the collapse of
the Union of Soviet Socialist Republics - as did the
effectiveness of the international non-proliferation
system; the global movement to tackle climate change;
and the increasingly strengthened cooperation
between countries to tackle a new ecological order.
The same holds true for the development of peace
movements, which have shown consensus and
responsible attitude of mankind in upholding
founding values and responding to challenges.
The problems caused by technology can be solved
through the continuous evolution of technology itself,
and human beings must also build a rigorous system
of prevention through ethics and laws. Indeed, each
technological revolution has accelerated the process of
globalisation, bringing a number of planetary issues
onto the agenda of international politics. Hence the
world at least has become more transparent and
integrated than in the past.
But before getting to the heart of the discussion,
several issues need to be clarified. The first question is
the following: what Artificial Intelligence are we talking
about?
1. Are we talking about Artificial Intelligence in the
strict sense that can simulate individual human
behaviour, such as recognition, learning, reasoning
and judgement?
2. Or are we talking about a general Artificial
Intelligence with autonomous consciousness and
independent innovation capabilities similar to the
human brain that can then set itself above man
himself?
3. Are we talking about a weak Artificial Intelligence,
which exists to solve specific tasks, and is only good
at voice and image recognition, and at translating
certain materials, such as Google's AlphaGo and
iFLYTEK's intelligent translator? That is to say, a mere
waiter?
4. Or are we still talking about a strong artificial
intelligence, capable of thinking, planning, problem-
solving, abstract thinking, understanding complex
concepts, learning quickly, learning from experience
and other human-level artificial intelligences, such as
the prototype Mecha child David, capable of
experiencing love in the movie AI (2001), or the
humanoid robot Ava in the movie Ex Machina (2015)
with the consciousness of living a normal life?
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5. Or are we talking about an artificial super-
intelligence, experiencing “singularity” with
computational and thinking capabilities that far
surpass the human brain in all areas including
scientific innovation, general knowledge and social
skills? (Such is the definition of superintelligence by
the Swedish philosopher from the Oxford University,
Nick Bostrom, known for his reflections on the so-
called existential risk of humanity and the anthropic
principle).
When we discuss the AI impact on international
relations and even on its model, we can only confine
ourselves to the well-known AI technology and its
applications based on big data, deep learning, as well
as computing power and algorithms as its three major
pillars. We cannot speak of future AI technologies that
have not developed yet (at least as far as we know)
such as the technology of simulating the brain's
activities at 100% of its total operation, while today we
know that the human brain only works at 10% in
different areas each time and never, as a whole, at the
aforementioned 100%. The second question is the
following: can Artificial Intelligence influence
international relations and hence the international
order? So far, the answer is yes.
Throughout history, technological innovation and
spreading have revolutionised the fate of one or more
countries countless times, changing regional patterns
and even the world situation. Just think of the impact
of technological revolutions recorded over time on the
military, as well as on the methods of organising
government, on beliefs, and hence on the transfer of
power between countries, with the related evolution of
power structures.
Around 1700 B.C. the discovery/invention of the
chariot in battle changed the power structure in
Mesopotamia, Egypt, India and the Yellow River region
of China. For instance, the Aryans entered Northern
India, and the rise of the Shang dynasty (1675-1046
B.C.) took place. After 1200 B.C. the emergence and
spread of iron-casting technology enabled ordinary
infantry - equipped with (relatively cheap) armours
and weapons made of such metal - to overturn
chariots, which were driven by the opposing warring
elites.
However, not only the military aspect should be
considered. The consolidation of bureaucratic
dominance - i.e. the prior acquisition and mastery of
alphabetical structures and arithmetic calculation -
made possible the rise of agricultural empires such as
Assyria and Persia. In the 7th century B.C. the
number and technology of horse archers once again
broke the military and political balance in Eurasia,
and the steppe nomadic peoples – such as the
Mongols - gained an advantage over rural peoples,
forming the largest empire of all time (1206-1368).
Just to make another more recent example, the
emergence of nuclear technology changed the modern
world’s political landscape and further strengthened
the power structure of the major powers shaped at the
end of World War II, which created and imposed upon
themselves the status of permanent members in the
Security Council of the United Nations. Those powers
set a series of international rules, such as the use of
nuclear energy for peaceful purposes; the nuclear
States’ commitment to the non-proliferation of nuclear
weapons, and the non-nuclear States’ access to
peaceful nuclear technology.
At the same time, they enacted a series of
international agreements such as the Treaty on the
Non-Proliferation of Nuclear Weapons, the
Comprehensive Nuclear-Test-Ban Treaty, the UN
Negotiating Mechanism for Nuclear Disarmament, the
Global Nuclear Security Summit, and the Southeast
Asian Nuclear-Weapon-Free Zone.
Hence we should not be surprised that there is no
difference between the aforementioned war chariot
and Artificial Intelligence, or the dual use of nuclear
energy (for military or peaceful purposes), all of which
changed and are changing the balance of international
power.
An in-depth analysis into how new technology has
been affecting the international balance of powers.
In July 2017 the Belfort Center for Science and
International Affairs at the Harvard Kennedy School
published the report Artificial Intelligence and
National Security, arguing that in the future artificial
intelligence could become a transformative medium
comparable to nuclear weapons, aircraft, computers,
and biotech security technology. It is therefore
reasonable to include Artificial Intelligence in
discussions that may influence international relations.
The international order includes two basic aspects,
one being the power structure and balance of power of
the major countries and groups of States, and the
other being the rules that should be followed in the
management of relations between these countries.
The international order is a state of affairs in which
countries in the global system should adopt non-
violent methods to resolve conflicts in accordance with
international rules. Its constituent elements are jus
gentium, shared rules and regulations, and relevant
institutions.
Changes in this system are essentially caused by
changes in the international structure, but the
structure is not a constitutive element of the
international order. Hence, if the aforementioned
fallacious system is to be changed, a new
international order must be established, which is
nothing more than the redistribution of power, i.e. the
core content of the rearrangement of international
institutions.
Artificial Intelligence can have an impact on existing
international rules and give rise to a new jus gentium
by changing the balance of power and mutual
relations of international players, thus influencing
changes.
First of all, Artificial Intelligence will economically
affect the balance of power between countries and
even trigger a new cycle of influence and co-
management by the great powers.
As early as 1989 Paul Kennedy argued - in his book
The Rise and Fall of Great Powers. Economic Change
and Military Conflict from 1500 to 2000 - that in the
long run there was an obvious link between the
economic rise and fall of every great world power. In
June 2017 Pricewaterhouse Coopers published Seize
the Opportunity. 2017 Summer Davos Forum Report
predicting that by 2030 the AI contribution to the
world economy would reach 15.7 trillion US dollars
and that the People's Republic of China and North
America were expected to become the largest
beneficiaries, totalling 10.7 trillion US dollars.
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In September 2018 the report Frontier Notes: Using
Models to Analyse the Impact of Artificial Intelligence
on the World Economy, published by the McKinsey
Global Institute, estimated that Artificial Intelligence
would significantly improve overall global productivity.
Excluding the impact of competition and
transformation cost factors, Artificial Intelligence
could contribute an additional 13 trillion US dollars to
global GDP growth by 2030, with an average annual
GDP growth of around 1.2 per cent.
This is comparable to or greater than the
transformative impact of many other technologies
throughout history, such as steam engine in the 19th
century, industrial production in the 20th century,
and information technology in the current century.
The report also pointed out that countries and regions
(mainly developed economies) with leading positions in
Artificial Intelligence can achieve economic growth of
20 to 25 per cent on current basis, while emerging
economies may only record half this rate.
The Artificial Intelligence gap can lead to further
deepening the digital divide. Artificial intelligence can
change the global industrial chain. The new
industrialisation represented by industrial robots and
smart manufacturing will lure the manufacturing
industry back to developed economies, and will impact
the de-industrialisation of many developing countries
sooner than expected. Hence opportunities would
remain locked in the country that provides “only” the
resource or raw material.
The development and implementation of Artificial
Intelligence require a lot of funding, high-tech content,
and can lead to changes in the employment structure,
making highly repetitive and low-tech jobs gradually
disappear.
Moreover, in another McKinsey report from 2017,
based on research into 46 countries, it was predicted
that by 2030 as many as 800 million people worldwide
would lose their jobs and be replaced by automated
robots. There will be a massive displacement of jobs
worldwide similar to that seen in the early 20th
century, when most of the world's jobs moved from
agriculture to industry. At the same time, the
widespread implementation of AI technology will also
increase the demand for professionals in this field.
According to the research, there are three types of
countries that are most likely to benefit from the
development of AI technology.
The first type consists of countries with first-rate
advantages in Artificial Intelligence - such as the
United States and China - and they are all favoured.
The second type is represented by capital- and
technology-intensive countries with a small
population or a downward trend, such as Japan,
South Korea and Singapore, which not only have the
capital and technical conditions to develop Artificial
Intelligence, but can also use the AI development to
compensate for a lack of total population or a
downward trend, as well as an ageing population
structure and other disadvantages.
The third type includes countries with more scientists,
mathematicians, engineers or States that value and
appreciate vocational training related to science,
technology, engineering and mathematics (STEM).
Over and above the economic issue, Artificial
Intelligence will militarily change the balance of power
between countries. Proponents of military AI believe it
will subvert the form and style of warfare. Armoured
or mechanized warfare uses materials to release
energy, relying on oil and steel, whereas computerised
warfare uses networks to gather energy, relying on
information, links and connections. According to
current expectations, once warfare enters the AI era, it
will be a confrontation of robots and automation,
controlled by the aforementioned AI.
It can be expected that, under AI conditions, elements
of warfare such as combatants, battle concepts and
winning mechanisms will change completely. In a
traditional war, even if there is a gap in terms of
weapons and training levels between the opposing
sides, the disadvantaged side can anyway fight with
favourable times and places, superior strategies and
advanced tactics. For example, during the wars in Iraq
and Afghanistan, improvised explosive devices (IED)
caused problems for the US and Soviet armies in the
latter country.
Under the conditions of intelligent warfare, instead,
the technological contribution of one side through AI
will quickly create an overwhelming advantage on the
battlefield, thus making it impossible for the weaker
side to define an effective observation-judgement-
decision-action cycle, always remaining in a passive
position.
In its report Artificial Intelligence Changing the World,
the Brookings Institution put forward the concept of
“hyperwar”, i.e. war is a process of race against time
and usually the side with the fastest decision-making
and execution process will prevail. The decision-
making speed of the AI-assisted command and control
system will far exceed that of the traditional mode of
warfare - combined with the automatic weapon
system that can autonomously decide to launch lethal
weapons - and will greatly accelerate the warfare
process, so that a new expression - “extreme speed
warfare” - will and must be coined to describe this
mode of warfare.
Regarding the latter, the article What Happens When
Your Bomb-Defusing Robot Becomes a Weapon,
published by Caroline Lester on the website The
Atlantic on 26 April 2018, used many analyses to
show that military robots can significantly reduce the
threat of roadside bombs, with all due respect to Iraqi
and Afghan patriots.
Artificial Intelligence will also lead to revolutionary
changes in military equipment. Unmanned lethal
automatic weapon cluster combat could become the
protagonist and the main combat method in future
wars.
Once the aerial drone, the unmanned submarine, the
ground robot, the unmanned tank, the war of attrition
and sea tactics are perfected, they will make large-
scale weapon platforms - such as aircraft carriers and
fighter aircrafts - complex and expensive, as the latter
are less advantageous from the viewpoint of warfare
cost and combat effectiveness.
It is as if an F-35 fighter jet, with a single cost of
hundreds of millions of dollars and with one man on
board fighting a group of low-priced armed drones, is
equivalent to shooting mosquitoes.
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What needs to be explained is that there is still great
uncertainty about the AI impact on armies: it is not
known to what extent and how this impact will
manifest itself. In the discussion held at the
Conference Artificial Intelligence and Security of the
7th World Peace Forum at Tsinghua University in July
2018, some experts pointed out that although the
future development trends of machine learning in
industrial robots, material science and other
technologies can be generally studied, the specific
impact of the mix of these technologies on future
warfare cannot be accurately assessed.
In the first thirty years of the 20th century, European
military powers such as Germany, Great Britain, the
Soviet Union, France and Italy developed tank, aircraft,
missile and radio communication technologies.
Nevertheless, it was only after Germany had waged
the Blitzkrieg in World War II that the world
discovered that those new technologies together could
bring such unimaginable changes to warfare. Now,
regardless of algorithmic warfare or similar tactics, the
heated debate in strategic circles is still to analyse the
AI impact on the operations of a single technology.
Without a holistic understanding of the military
applications of AI technology, the planned
countermeasures could become a costly and
unnecessary new Maginot Line.
Prof. Valori now looks at where the world is heading,
whether it will be more open or closed, more
cooperative or more confrontational
The global changes at the turn of the two millennia
and the epidemic of the century are currently
intertwined. The world economy is struggling to
recover and is facing many complex challenges.
Economic globalisation is facing headwinds. Where is
the world heading? Will it be more open or more
closed than now? Cooperation or confrontation?
This is the reason why it is necessary to continuously
emphasise the need for building an open world
economy. There must be no restraints or reversals of
the trend. We need to be on the right side of history,
expanding relentlessly by fully opening up to every
innovation we can control, such as, hopefully,
Artificial Intelligence - inter alia - about which we will
speak later in connection with a new economic world
order. We need to build a community with a shared
future for the whole of mankind.
The planet is circumscribed: there are no more terrae
nullius - in the broadest sense - to be conquered, or
peoples “to be educated” through the bogus,
mystifying and hypocritical “white man's burden” or
various divining “manifest destinies” to be imposed on
others with smart bombs or humanitarian wars.
Building an open world economy is an inevitable
choice in line with the historical trend of equal
development, or rather with the elimination of colonial,
neo-colonial and imperialist remnants. Equal
economic globalisation is the only way for the
development of human society. Economic
globalisation is historically the objective prerequisite
for the development of social productive forces, and
the inevitable result of scientific and technological
progress has given great momentum to world
economic growth.
It has favoured the flow of goods and capital, the
progress of science and technology and civilisation:
indeed, Artificial Intelligence, which until yesterday
seemed like science fiction, with yesterday's eye
projected onto today may seem uchronia, but is
objective reality.
Exchanges between peoples are in line with the
common interests of all States. In today's world, a new
step of scientific and technological revolution, as well
as industrial transformation, proves to be each time a
profound development. The system of global
governance is deeply changing and the international
model is affected, thus speeding up the process.
The interests of all countries are interwoven and
destiny is shared. Cooperation and mutually beneficial
relations - in the case of bilateral relations - are
becoming the general trend. Peace, development,
cooperation and mutual gain would be the trend of
the present times, even if not yet achieved due to the
needs and demands of the international war industry
(see the case of the Ukraine-Russia war).
After all, no one can cope with the various challenges
facing mankind alone, and no country can turn
geographically into an island closed in on itself, such
as the United Kingdom which dominated the world in
the 19th century, also thanks to its physical
configuration, later followed by its former colony,
namely the United States of America.
Openness brings progress and, conversely, isolation
will inevitably leave those that supports it behind. If a
country wants to develop and thrive, it must grasp,
follow and adapt to the general trend of world
development, otherwise it will inevitably be left behind
by History. The desired project of a new world
economic order firmly pursues a strategy for
liberalising and facilitating trade and high-level
investment policies, and promotes the creation of a
pattern of contacts and relations linking land, sea,
overseas, East and West, which are the fundamental
promoters of a common global open-minded approach.
They are the pivots of a stable source of strength and
power for global economic growth, regulated by the jus
gentium.
Building an open world economy is an unavoidable
prerequisite to advance and adhere to the common
values of all mankind. Countries have different
histories, cultures, systems and levels of development,
but the people of each State pursue the common
values of peace, development, equity, justice,
democracy and freedom for all mankind: gens una
sumus. The common value of all mankind embodies
consensus on the respect for the values of each
different human civilisation. It represents mankind's
common quest for a better future and is also an
important symbol of human progress.
The fact of building an open world economy, of
fostering economic globalisation in a more open,
inclusive, balanced and win-win way for everybody, of
pursuing cooperation instead of war and/or political
confrontation, of embracing openness instead of
narrow-mindedness, of pursuing mutual benefit and
avoid a zero-sum game means to consciously promote
adherence to the common feelings and sentiments of
all mankind.
Practice has shown that the peaceful development of
the world is inseparable from mutual openness and
tolerance. Any unilateralism and extreme self-interest
are totally unworkable. Engaging in “inner circles”
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must also be fully rejected. The same holds true for
triggering confrontation along outdated ideological
policy lines, which in the past meant oppressing the
weak so that the winner could take it all. The
particularism of self-styled economic-political and
ideologically imposing elites is an increasingly narrow
blind alley. Believing to be the repository of truth and
wanting to impose one's own model on States,
countries and nations, as well as peoples, is a moral
and above all a factual crime.
Only with a highly responsible attitude towards the
future and the destiny of mankind can we promote the
construction of an open world economy, and practise
global governance with broad consultation as a joint
contribution to shared benefits. Support exchanges
and mutual learning between different sources of
knowledge is the right way for the world to grow wider.
This means being on the right side of History and
continuing to promote the construction of new
economic and political world orders.
Mankind is currently emerging from a particular
historical period. The Covid-19 epidemic has fully
affected the planet and we have sustained global
changes not seen for more than a century, as a
reminder of the Spanish flu pandemic. The global
industrial and supply chains have been affected.
There have often been cases of unilateralism,
protectionism and interstate bullying, i.e. risks and
uncertainties in the international community. The
world, however, has not returned to a state of total
mutual closure and separation. Open cooperation is
still maintaining itself as a historical trend and the
possibilities of common benefits for all are still what
people, namely citizens, want and desire.
China and the new Middle East
Author: Dr Murad Ali. Published in the The News International in May 2023
Due to its growing role in the Middle East, China is
emerging as “an economic heavyweight…a diplomatic
lightweight and…a military featherweight” in the
region (RAND Corporation).
There is no doubt about the conclusions asserted in
one of the 2016 studies of the American think tank,
although Beijing still has minimal security or military
role in the region as compared with that of the US; its
diplomatic position has certainly magnified than how
it was in the past. The international community was
certainly taken aback by how China silently but
successfully brokered a truce between Saudi Arabia
and Iran, two illiberal regimes which are exceptionally
oil-rich countries in the volatile Middle East.
It is too early to celebrate the deal and be sanguine
about the prospects of this rapprochement for the
region and beyond, including its implications for
Pakistan which has friendly ties with both countries.
Having said that, it is expected that the mending of
fences between the two countries could bring
considerable ease for Pakistani policymakers as they
have consistently struggled to strike a balance while
choosing Riyadh over Tehran.
The recent opening of the Mand-Pishin ‘border
sustenance market’, the first of the six such initiatives
planned on the border of Balochistan, Pakistan’s
largest province by area and the Iranian province of
Sistan-Baluchestan, the country’s second largest
province out of 31 provinces in terms of size after
Kirman, and many other such economic and trade
initiatives would at least not summon the kingdom’s
wrath.
Based on these principles, not only will individual
people gain momentum for development in the future,
but the world will benefit even more. To this end, on
the one hand, it is crucial to establish an overarching
vision, and to firmly pursue a mutually beneficial
strategy of openness for all. This means going global
with a proactive attitude, and insisting on the
implementation of broader cooperation between States,
so that a wider scope and deeper awareness of
openness to the outside world can be reached. Only
by taking action in this world will we be able to
achieve a higher level of participation.
The system of an open economy will step up the
construction of a new development model with the
domestic cycle as the main structure and national and
international cycles promoting each other, so as to
create new advantages in international economic
cooperation and free competition.
On the other hand, we need to promote the
construction of a new type of international relations,
to adhere to the correct concept of justice and
interests in international trade, and to oppose all
forms of protectionism, hegemonism and Cold War
mentality. Not only does this encourage countries to
make full use of their comparative advantages and
jointly optimise the allocation of global economic
resources, but it also fosters the construction of a
global value chain for shared benefits that can
promote a global market for the benefit of all parties.
This means creating a free multilateral and non-
discriminatory trading system for the benefit of global
economic stability, post-Covid recovery and
sustainable development.
It must be emphasized that rivalry between Saudi and
Iran, where the former is the largest oil producer in
OPEC, and the latter is also a major player, is a
decades-long tussle to gain predominance in the
Middle East. This battle for regional supremacy has
been shaped by multiple factors comprising the clash
of their respective religious identities, political
ideologies, and core national interests. In this rivalry,
oil is an integral part and due to this international
powers find it hard to stay away from the region.
Keeping in view their historical mistrust, the role of
Beijing has been hailed by most countries – sans the
US/Israel and the likes – in bringing Riyadh and
Tehran to the negotiating table. Commenting about
their conflict, Saudi King Fahd once lamented in 1988:
“I don’t know where it will end…Iran has harmed
relations not only with us but also with its neighbors
and the whole world…Iran has tried many times to
undermine security in the Gulf region, the Arabian
Peninsula, and the world. What has Iran gained? Iran
has gained nothing”. At the same time, he also added:
“we cannot change the geographic reality of Iran, and
Iran cannot change our geographic reality”.
This is a fact that needs to be realized not only by
Riyadh and Tehran, but all countries enmeshed in
endless boundary and other disputes, including
Islamabad and New Delhi. Mutual coexistence should
be the norm. But alas, it is not so in most cases,
particularly when one party is replete with hubris,
fuelled by material superiority or ideological
superiority or both.
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If countries and their leaderships remain mired in
historical wrangles and do not want to talk to each
other at all, it will be a zero-sum-game for all. Those
nations can truly prosper that are able to get rid of
historical baggage and move ahead. There is no doubt
that both Saudi and Iran used to regard each other
with immense scorn and their hatred for each other
was rarely muted.
Ayatollah Ali Khamenei, Iran’s current supreme leader
(in office since 1989), used to denounce the Saudi
royal family as “sinful idols of arrogance and
colonialism”. In a tit for tat, Crown Prince Mohammed
bin Salman, widely known as MBS, used to always
assert that “if you see any problems in the Middle
East, you will find Iran”. Hence, given the intensity of
hatred and animosity, the current reconciliation is by
no means a modest achievement of not only Beijing,
but also of Riyadh and Tehran to bury the hatchet
and move on.
At the same time, it must be remembered that there
have been such episodes of understanding in the past
too. For example, from 1998 through 2001, the
leadership in both countries issued statements about
collaboration that are reminiscent of today’s
friendliness. Prince Nayef bin Saud, the Saudi interior
minister, once declared that: “We consider Saudi
Arabia’s security as Iran’s security and Iran’s security
as our security”. Iran’s ambassador to Saudi Arabia
went even further by stating that “Iran’s missile
capabilities are at the disposal of the Kingdom of
Saudi Arabia”. He added that “our relations with
Saudi Arabia have reached a historical stage where we
are complementing one another”.
However, several ill-fated events later brought an end
to the Saudi-Iran détente and resulted in renewed and
fiercer rivalry. Specifically, the victory of Ahmadinejad
in the 2005 presidential election reversed the course
of their bilateral ties. Formerly a mayor of Tehran and
a veteran of the Revolutionary Guard, he renewed his
pledge to return Iran to its revolutionary course and
assert itself as “the preeminent power of the region”.
Hence, old mutual suspicions and mistrust based on
the fundamental incompatibility of the two
governments and two systems, “one powered with
revolutionary zeal and the other the status quo – one
Shia, the other Sunni” were reinvigorated once again.
Tehran’s interventions in Lebanon, the fall of Saddam
in 2003 and the subsequent Sunni-Shia civil war once
again brought the two countries on a collision path.
In another theatre, the Houthi advances in Yemen
started ringing an alarm bell in Riyadh. As Saudi
Arabia shares an eleven-hundred-mile porous border
with Yemen, the rise of the Houthis was a big gain for
Iran. One deputy of Ayatollah Khamenei declared that
the capture of Sanaa was “a victory” for Tehran,
jubilantly adding that Tehran now controlled four
Arab capitals: Baghdad, Beirut, Damascus and Sanaa.
Saudi really felt threatened because Riyadh realized
that an Iranian encirclement would be an undeniable
reality, something which must have given sleepless
nights to the monarchy, resulting in the ill-fated
Yemen war.
The implementation of Iran’s nuclear deal in January
2016, known as the Joint Comprehensive Plan of
Action (JCPOA) which led to the easing of US, EU and
UN sanctions, further confounded the security
dilemma of the Saudi Kingdom and its allies in the
Gulf region. Two weeks before the lifting of
international sanctions, Riyadh-Tehran hostility took
a new turn when in January 2016, a furious mob
vandalized and scorched the Saudi embassy in Tehran.
In a tit for tat, Saudi Arabia responded expeditiously,
ordered its diplomats to leave Tehran and told Iranian
diplomats to leave Saudi Arabia within 48 hours. This
particular episode was the harbinger of another dark
chapter in the increasingly deteriorating Riyadh-
Tehran bilateral ties. It was also a reminder of how
Saudi-Iran rifts have metastasised into various
theatres including Syria, Yemen, Iraq, and elsewhere
throughout the Middle East and even beyond. The
Saudi-Iran hostility has had violent repercussions.
And like several Middle Eastern countries, the
economic and geopolitical implications of the
competition are deeply felt in Pakistan as well.
China definitely deserves kudos for what it has
accomplished regarding the Middle East in a world
plagued by war after war.
At the same time, what prompted Beijing to intervene
and quell hostilities at a time when the US and its
allies are bitterly embroiled in the Ukraine theatre?
Well, China imports huge oil from hydrocarbon-rich
Iran and Saudi Arabia. Iran’s vast oil reserves,
discovered in 1909 by the British, where the Anglo-
Persian Oil Company (APOC) reaped equally
significant dividends, made Iran a weighty oil
producer.
The Shah’s Iran emerged – as Daniel Yergin in his
Pulitzer Prize winner book ‘The New Map: Energy,
Climate, and the Clash of Nations’ has described – as
a ‘vital gas station for the British empire and the
United States, at least until the 1979 revolution’.
Similarly, three decades later, in 1938 Saudi Arabia
followed the same path, rather it surpassed Iran when
American surveyors discovered an inexhaustible
supply of oil in Saudi deserts.
Here, another major player entered the world of oil
when the Saudis announced the arrival of the Arabia
American Oil Company (Aramco); by 1949 it was
producing over half a million barrels of crude per day.
For China, both Saudi Arabia and Iran are vital
sources of its oil needs today. Called the ‘world’s
factory’, China is the world’s largest trading nation
and importing approximately 38 billion kilograms of
oil from all Middle Eastern sources in 2000 to roughly
187 billion kilograms in 2017.
The Middle East has been a source of 50 per cent of
China’s total oil imports since 2000. Keeping in view
its current growth and future demands, it is projected
that by 2040, about 80 per cent of the oil China
utilizes will come from abroad, the Middle East being
a pivotal region to cater to China’s energy demands.
Given this, China has significant economic interests
in the Middle East. However, it is not a one-way traffic.
Like several other regional markets where China is the
largest trader, Beijing is also a key exporter of
manufactured goods to Middle Eastern markets. It is
because of Beijing’s tremendous manufacturing
prowess that President Obama in his autobiography ‘A
Promised Land’ asserts that “Americans bought cars
from Germany, electronics from South Korea, and
practically everything else from China”.
To some extent, the same is the case with Middle
Eastern bazaars. The region buys all types of
manufactured goods from China – from factory
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machinery and electronic equipment to clothing and
shoes. Not to forget here are ‘Made in China’ prayer
caps, prayer mats, prayer beads and other various
commodities that visitors bring from Saudi Arabia
when they visit the kingdom for Hajj or Umrah.
Over the last decade and a half, the region has
imported more from China than from the US. Like
many other regions, trade growth between China and
the Middle East since the mid-1990s has been
consistently spectacular. Between 1993 and 2016,
China’s exports to the Middle East grew from about $3
billion to $124 billion. The region’s share of global
Chinese exports has doubled since 1993, and now
accounts for six per cent of China’s total.
While all this was prior to 2016, following the launch
of the Belt and Road Initiative (BRI), the Middle East
has been on President Xi’s radar as the BRI situates
Iran, along with Turkey, Egypt, and Israel, as transit
nodes in the grand web of infrastructure projects
intended to connect continental Eurasia from east to
west. In Saudi Arabia too, Chinese companies have
established and continue to operate several transport
facilities, including those utilized by millions of
Muslim pilgrims visiting the kingdom for the annual
Hajj.
All of this means more Chinese investment, more
Chinese workers, and greater Chinese stakes in the
region. Some estimates suggest that by the end of
2014, there were over 160,000 Chinese contractors
based in North Africa and the Middle East. This
number will certainly swell once BRI projects are fully
operational in the region.
During his 2019 visit to China, signalling that Riyadh
was eager to promote partnerships beyond the US and
Europe, Prince Muhammad bin Salman was given a
warm reception in Beijing. During the visit, he
announced a slew of agreements worth $28 billion,
including a $10 billion plan for Saudi Aramco to
partner with two Chinese companies to build a new
refining and petrochemical complex in the Chinese
coastal city of Panjin in the central Liaoning province,
situated on the northern shore of the Liaodong Bay.
Is there light at the end of the tunnel?
Author: Tabish Gauhar. Published in the The News International in July 2023
The man on the street is least concerned with the
technical reasons behind the recent back-breaking
increases in electricity and petrol prices that have
sharply eroded their monthly disposable income.
It is also Human Nature 101 that we instinctively seek
simplistic answers and solutions that inadvertently
create false narratives and allow actual factors off the
hook without explanation. But to sustainably fix a
structural problem, one must first diagnose its root
causes before offering tailored remedies that may work
within the peculiar ecosystem in which it exists.
On a purchasing power parity basis, it is perhaps safe
to say that the current energy prices in Pakistan are
unsustainable for its residential, commercial, and
industrial customers. It is a standard economic
textbook theory that the true cost of service should be
recovered from ratepayers, other than the most
vulnerable segments that may remain subsidized via
targeted social security programs such as
BISP/Ehsaas. There is no (or very little) money in our
federal budget to provide across-the-board relief to
average middle-class folks bearing the brunt of
MBS also expressed his desire to integrate the
kingdom’s Vision 2030 with China’s own overseas
initiatives. The then Chinese foreign minister Wang Yi
reciprocated, asserting that “China and Saudi Arabia
have achieved fruitful results in practical cooperation
as the two countries seek greater complementarity
between the Belt and Road Initiative and the Vision
2030 of Saudi Arabia”.
With or without the BRI, China has emerged as a
global heavyweight when it comes to financing and
executing mega infrastructure projects, particularly in
the construction sector. For instance, research shows
that “in 2017, seven of the ten largest construction
firms, by revenue, were Chinese”. Similarly, as per
another study, China has surpassed other nations as
it has gained unrivalled capacity to implement mega
construction projects at home and abroad. It is
because of this unmatched potential that among the
20 largest construction contractors, 14 are Chinese,
while six are from the EU and there are none from the
US.
Given the dominant role that China now plays in
global transportation infrastructure, Riyadh’s
prospects for achieving the much-vaunted Vision
2030 dream of becoming a logistics hub in the region
will also depend, to a considerable extent, on how the
Kingdom allures Chinese actors. While China is
already active in this sector in the region, as of 2016,
more than 160 Chinese companies were operating in
the Kingdom. In 2018, Chinese firms won 13 per cent
of contracts across the Middle East region, including
work on five major energy projects in Saudi Arabia.
In sum, Beijing is in many ways an ideal partner for
the Saudis as well as the Iranians, who like many in
Pakistan have been full of praises for the ‘China
model’ as a means to achieve economic reforms even
at the cost of political liberalization. However, while
the US has certainly receded, focusing more on the
Indo-Pacific theatre and the Ukraine war, it still has
substantial security (and economic) interests in the
region and will never like the idea of playing second
fiddle to the Chinese in the region dominated
primarily by the US since WWII.
inflation, and the small and large industries that drive
economic growth and create jobs.
By comparison, the much-richer Europeans were
shielded from last year’s energy price shock (due to
Russia’s invasion of Ukraine) with almost $650bn of
subsidies, while much-poorer Pakistanis could not be
because we had to restore the IMF bailout package
and did not have the same financial wherewithal. In
any case, subsidies are neither the right answer nor a
sustainable structural solution to Pakistan’s energy
problem.
Contrary to popular belief, electricity theft and bill
defaults are not the primary causes of power tariff
increase. In fact, the regulated tariff determinations
now assume an almost barebone ‘line losses’
allowance and a 100 per cent bill recovery ratio. Of
course, the actual aggregate technical & commercial
losses are higher in at least half of our distribution
companies, but those incremental losses are not
necessarily or formulaically passed through to the end
consumers.
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Nonetheless, the last-mile distribution sector will
continue to financially bleed and provide
unsatisfactory service without a customer-centric
mindset that is impossible for state-owned natural
monopolies to evolve. Their managements and boards
must be handed over to the private sector in an open
and transparent process, alongside an equitable
sharing of liability between the federation and
provinces per the spirit of 18th Amendment and
recent NFC Awards.
Privatization, in any shape or form, without
competition, would however be a big policy mistake
and a recipe for disaster. Since DISCOs have already
lost exclusivity in their franchise zones, the wheeling
(tolling) regime needs to be operationalized so that the
bulk power customers can freely choose their electron
supplier. In a controlled manner, the market should
be further liberalized to allow all consumers (including
residential) the option to also choose their service
providers. To achieve this milestone, implementation
of the wholesale commodity market (CTBCM) needs to
progress at God’s speed.
In a deregulated, multi-seller and multi-buyer model,
the biggest beneficiary will be the consumer who only
cares about affordable tariff and uninterrupted supply
of service that the prevailing system is unable to
provide. The biggest losers will be those DISCOs
whose prime customers will switch to cheaper and
more reliable suppliers of electrons on the same wires.
Unless they too are free to source their own supplies
(that is: not forced to buy expensive power from the
national pool) and set their own non-regulated tariffs
to effectively compete on a level playing field.
It is, however, the state’s responsibility to provide
energy, as an essential service, to all people regardless
of their profile and creditworthiness. Therefore, a
‘social cost’ will necessarily be imposed on the DISCOs
(even if they are privatized) that ultimately must be
funded by the federal and/or provincial exchequer to
provide societal justice without compromising the
business case.
In an ideal scenario, the most efficiently run
distribution companies should be allowed to charge a
relatively low power tariff to their consumers without
cross subsidizing their fellow countrymen in the loss-
making DISCOs as is currently the case. This, of
course, is easier said than done as it will open a can
of worms in other spheres (such as gas, water, and
agriculture) and require a lot of political will to do
away with the ‘uniform’ nationwide electricity tariff
policy in vogue. But a differentiated, performance-
based tariff regime would incentivize healthy
competition among various distribution franchises in
the long run.
In any case, Islamabad needs to realize that it cannot
and should not continue to run these last-mile
operations and cede their management control to the
private sector and local governments. The fear of
letting go, equally pronounced among the politicians
and bureaucracy, may be justified because it is
venturing into unknown territory, but it is mostly
parochial in nature. The ability to provide jobs to
constituents, influence transfers and postings, and
steer development funds for political purposes, is one
of the main attractions of maintaining the status quo
across the board.
The top leadership and decision-makers must realize
that it is the common consumer that ultimately
suffers in the do-nothing scenario, and that we can
apply the lessons learnt from Pakistan’s relatively
successful experience of liberalizing the
telecommunication and banking industry.
What to do with legacy power purchase agreements?
The chief culprit behind the increase in electricity
rates is the host of legacy power purchase agreements
that successive governments signed with foreign and
domestic investors to set up independent power
projects in Pakistan.
All these IPP deals are on ‘take or pay’ basis, providing
almost guaranteed and very healthy returns under
sovereign cover, with dollar indexation, and several
other financial and contractual incentives.
It is easy, with 20/20 hindsight, to question the
wisdom of policymakers to bind the country into long-
term commitments on such unsustainable terms and
conditions. It is, however, also true that no electricity
is worse than expensive electricity, and that we should
be thankful for at least having the generation
infrastructure in place even if it is more than our
actual needs today.
Notwithstanding the strong correlation between
economic growth and electricity consumption,
Pakistan’s economy can simply ill afford to pay Rs40-
50 for each unit of electricity produced by the
imported coal and LNG-based power plants. A primary
driver of the Rs2,500bn circular debt choking the
power sector is the fixed capacity charges that have
now reached almost Rs2,000bn per year. With more
than 20,000 MWs of additional ‘committed’ projects in
the pipeline at various stages of construction and
development, this continually rising must-pay cost
cannot simply be ‘passed through’ to consumers in
the name of economic orthodoxy.
In fact, increasing rates depress overall electricity
demand resulting in a higher per unit tariff for all.
Customers are also forced to conserve (not necessarily
a bad thing on its own), and incentivized to steal,
default or switch to captive sources of supply, while
the system’s fixed charges keep rising. Peel the onion
and you will find this happening at all levels, making
the entire sector unviable.
As a general principle, reopening signed and sealed
contracts -- voluntarily or otherwise -- is a double-
edged sword that damages long-term investor
confidence or exposes the country to international
arbitration. The sanctity of contracts should be
maintained even though our economy continues to
pay a heavy price to arguably make those deals
‘bankable’ at the outset. Nonetheless, we need to
reprofile the front-loaded debt of the newer IPPs to
provide some breathing space to the ratepayers in the
next 3-5 years.
Debt restructuring is a controversial topic in Pakistan,
although it is common all over the world for
financially distressed borrowers and their lenders to
find new common ground when needed. Yes, we will
end up paying a bit more in absolute terms by
stretching the loan tenor but need to provide some
tariff relief to consumers in the short-to-medium term
but only if this is done as part of a holistic reform plan
for the sector.
The massive devaluation of the rupee against the US
dollar, alongside the major recent jump in
international fuel prices, has also significantly
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Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
contributed to the overall increase in consumer tariffs
in Pakistan. The exchange rate is related to a
country’s macroeconomic fundamentals and not much
can be done by the power-sector practitioners to avoid
its adverse impact. However, the freezing of the
USD/PKR rate under the older IPP contracts must
have arrested some of the recent tariff increases but
probably not enough to move the needle appreciably.
On the fuel side, we should do whatever it takes to
convert all existing imported coal power plants to
cheaper indigenous Thar lignite as expeditiously,
technically, and logistically as possible via the railway
network. Several feasibility studies and analysis have
already been done on this public private partnership
model to reduce consumer tariff and save foreign
exchange.
A technical reason behind monthly tariff increases is
the so-called violation of merit order dispatch policy
which basically means that the least cost generation
principle is not always followed. There are often
constraints such as transmission bottlenecks not yet
fixed, or contractual imperatives (must-run coal
plants, for instance), but mostly it is due to
suboptimal fuel mix and availability caused by late
ordering and/or lack of funds. Although governments
and power companies are loath to admit it publicly,
circular debt chokes liquidity and flow of capital in the
system resulting in unavailability of (imported) fuel
especially during the summer season.
And this is also why consumers still experience
unplanned loadshedding from time to time, even when
Pakistan’s current installed generation capacity
exceeds peak demand. Simply put, if we don’t have
enough money to buy petrol, it does not matter how
many cars are idly parked in our garage that we are
nonetheless paying for in fixed costs.
The cost of renewable energy has come down
appreciably over the past decade, thanks to
technological improvements and the Chinese
‘economies of scale’ manufacturing miracle. In most
instances, their total cost of generation is now less
than even the ‘marginal’ fuel cost of imported coal,
LNG and oil-fired power plants operating in Pakistan.
It, therefore, makes economic sense to replace these
hydrocarbon-based assets with newer wind and solar
power to reduce overall consumer tariff.
However, without addressing the legacy fixed costs of
older generation plants, such ribbon-cutting optics
are not the structural solutions and hard choices the
sector requires. We need to consider these ‘stranded’
costs part of the national debt and a budgetary line
item spread over the entire economy. While not a
solution per se, this accounting treatment would
relieve power-sector consumers from bearing the
entire financial load of prior policy actions and
inactions.
From gas addiction to green innovation.
To help transition to clean energy, developed countries
(including the USA, EU, and UK) have pledged funding
for developing nations in the form of grants, low
interest loans and private investments. South Africa
($8.5bn), Indonesia ($20bn), and Vietnam ($15bn) are
the first three beneficiary countries under a Just
Energy Transition Partnership (JETP) program, while
India and Mexico are next in line.
One potential use of a similar JETP initiative for
Pakistan could be the early buyout of idle oil based
IPPs and redeploying the capital to build cheaper wind
and solar hybrid plants, and desalination plants along
the coastal belt. With the right policy framework and
minimal red tape, we could use this money to also
finance private projects across a wide spectrum
including mining of battery raw materials, nature-
based carbon offsets, electric buses, electric rickshaws,
and smart grids.
Demand-side management is an uninteresting, yet
crucial, area that does not receive enough attention
from policy makers. A MW saved is a MW generated.
Our building codes and energy efficiency standards for
consumer appliances sold on the market are not best
in class and must be urgently revised to promote
conservation and productivity. We employ slab rates
and peak/non-peak tariffs as financial incentives but
very little has been done to educate the consumer on
how to reduce their electricity bills beyond just
replacing incandescent bulbs with LEDs.
In the developed markets, various consumer
distributed energy resources, such as rooftop solar PV
and home batteries, are now being connected to the
distribution grid in a bi-directional and AI-driven
digitized relationship between multiple sellers and
buyers of electricity. This not only reduces peak load
but also the quantum of investment required to
upgrade the transmission infrastructure as the energy
sector “electrifies” further. The power sector is being
decentralized the world over and should also be
decentralized in Pakistan.
Long addicted to cheaply priced natural gas,
Pakistan’s existing indigenous reserves are projected
to fully deplete within the next decade or so. Gas is
used in our country to cook food, heat homes,
generate electricity, manufacture fertilizer, produce
heat for process industries, and fuel CNG vehicles. Its
allocation among provinces, and various categories of
users, has always been a political and constitutional
hot potato.
We have also not had a major new discovery for some
time despite a series of policies rolled out to
incentivize exploration and production of onshore,
offshore, conventional, and tight, natural gas. Barring
a stroke of luck, we are likely to enhance our
dependance on imported liquified (and cross-border
piped) natural gas in the coming years, unless we
reduce its demand in the economy.
We would be able to better manage the gas demand
and supply equation if domestic space heating and
cooking gets electrified to a large extent in urban
areas, or green hydrogen (produced by electrolyzing
water using renewable energy) replaces it in urea and
steel production. Likewise, it would help reduce gas
demand if new wind and solar power plants alongside
grid-connected batteries increasingly replace gas
turbines, and the LPG footprint is expanded for
commercial and residential heating and cooking.
Suffice it to say that each of these workstreams
requires a coherent set of enabling policies and
regulations to allow the private sector to make the
economics work and play its due role. For instance,
without effectively curbing the smuggling of LPG (also
diesel) across the Iranian border on which an entire
informal ecosystem depends, no related policy would
ever work.
Like power, the gas market also needs to be
deregulated and liberalized by removing all
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Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
impediments to the direct exchange of molecules
between sellers and commercial & industrial buyers.
The government should just be a ‘matchmaker’
between foreign suppliers (whether from Azerbaijan or
Russia) and our domestic fertilizer and export-
oriented textile companies seeking state subsidies in
the name of regionally competitive energy tariffs. It is
true that from a pure economic standpoint, our value-
add industries should have preferential access to
indigenous natural gas vis-a-vis domestic heating and
cooking.
However, our socio-political ground realities are such
that households will always have priority over local
gas production. It also makes little sense for the state
to import expensive LNG and sell it to residential
customers at highly subsidized rates. While this has
been a major driver of the gas sector’s own circular
debt problem hiding below the radar, PSO’s LNG-
related receivables of Rs450bn highlights that serious
disconnect.
The government must also let the private sector decide
whether to set up more LNG import terminals (at their
own cost and customer risk) by removing all obstacles
to their accessing the common pipeline infrastructure
or using cryogenic road tankers. Like the power
DISCOs, our two state-controlled Sui gas distribution
companies will likely lose some of their best
commercial and industrial customers to cheaper and
more reliable private suppliers -- unless they too are
allowed to source (and sell) their own gas from
wherever (and to whomsoever at whatever price) on a
level playing field.
But no matter how we slice and dice it, the state will
have to recognize the previous take-or-pay contracts
signed with LNG suppliers and terminals as its
sovereign liability that may, or may not, be fully
recovered from consumers. Yet again, there are no free
lunches or quick fixes on the table here but spurring
overall economic activity with more affordable private
energy should hopefully compensate for such
‘stranded’ costs in the long run.
Energy solution: less, not more, govt
The Russian invasion of Ukraine, and massive
currency devaluation, are the top two ingredients of
the petrol (and diesel) ‘bombs’ thrown on motorists in
Pakistan recently.
Since most of our crude oil and refined petroleum
products are imported, we remain at the mercy of
international oil commodity markets that no longer
swing by OPEC’s actions alone. The government’s only
significant lever is the quantum of taxes and levies
that it prescribes in the retail consumer prices to meet
its budgetary needs.
It also fixes the oil marketing and distribution margins,
and the prime minister personally approves uniform
country-wide petroleum prices every two weeks.
Despite (or because of) this tight regulatory embrace
and market intervention, everyone including the local
refineries, oil marketing companies, retail dealers, as
well as consumers, is unhappy and struggling to
make ends meet. Although deregulation and price
liberalization will not immediately reduce retail prices
of petrol and diesel in Pakistan, the sector needs these
reforms to incentivize long-term investment and
planning.
For example, Pakistan’s five domestic refineries must
be upgraded and modernized to save foreign exchange
(via import substitution) but without public funding
support. This can only happen if their investment
cases allow them to set their own ex-refinery prices,
implicitly benchmarked against market competition
from importers, traders, and state controlled PSO with
almost 60 per cent market share (alongside Parco).
For a transparent price discovery mechanism in real
time, mobile app technologies and a petroleum
commodity exchange (like the electricity trading
platform under implementation phase) should be
employed. Regulatory enforcement agencies would
also need to keep a close eye on any price
manipulation, collusion, and cartelization attempts. A
huge fear of the unknown, exacerbated by a couple of
country-wide fuel shortages and dry outs in the recent
past, prevents policymakers from taking this leap of
faith in the market. The sooner they get over it, the
better for everyone including the consumers.
Since taxes and levies are regressive in nature, and
across-the-board fuel subsidies unsustainable, the
government should launch a targeted, fiscally tenable,
and foolproof relief program for motorcyclists and
rickshaws. Another way to lower the price of petrol
and diesel in Pakistan is to reduce their long-term
demand by increasing the penetration of electric cars,
buses, rickshaws, and motorcycles. The e-mobility
transportation sector is growing rapidly elsewhere due
to falling battery costs, improving technology,
regulations, subsidies, expanding charging
infrastructure footprint, and more EV manufacturers
entering the space.
However, this will have to go hand in hand with
power-sector reforms in Pakistan to reduce the
charging cost, improve quality of supply, and
strengthen the grid infrastructure. The domestic
automobile industry would also need to step up to
locally assemble and manufacture affordable EV
vehicles to support electrification of the transportation
space, if an enabling set of policies and incentives are
in place.
In summary, there could well be more than one way to
skin the energy cat, but daily firefighting and band-
aid treatments will not address the sector’s systemic
issues. Make no mistake about it, structural reforms
and turnarounds are long and painful journeys, are
not a win-win for all, and require a paradigm shift in
thinking and approach. If we truly believe the
customer is king, all other considerations and current
practices that do not serve their needs ought to be set
aside. The bottom line is that we need less (not more)
government in the show by restricting its role to
policymaking and regulatory oversight only.
As a fundamental principle, the state must now stop
offering its sovereign balance sheet to energy suppliers
and instead direct them to sign corporate agreements
with commercial and industrial customers at non-
regulated tariffs. A light-touch government footprint
(other than for truly strategic G2G transactions or the
financing of nuclear, dam-based hydro, and cross
border energy projects) is needed for a more
sustainable and cost competitive sector.
Reforms are frustrated by deeply entrenched vested
interest groups who want to continue extracting rent
from the same broken system. It is a collective failure,
and lack of will and imagination, that we are still
following the 1990s investment model.
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Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
A unified federal ministry of energy, alongside
independent regulatory agencies, is a simpler and
more effective organizational structure for the
executive. Yes, we need to enhance the institutional
and personnel capacity of Nepra and Ogra but that is
part of the evolutionary process. No one is arguing to
give carte blanche freedom to the private sector to loot
and plunder the public under some misguided laissez-
faire capitalist ideology. Far from it, we have more
than enough checks and balances in our ecosystem
(executive, bureaucracy, regulators, parliament,
The Trinity of Taxation in Pakistan
Author: Ausaf Ashraf & Saud Bin Ahsen. Published in the The Daily Times in August 2023
The purpose of the Government is to uphold and
protect the natural rights of its citizens. So long as the
Government fulfils this purpose, the laws given by it
are valid and binding but, when it ceases to fulfil them,
then the laws would have no validity and the
Government can be thrown out of power. In Locke’s
view, unlimited sovereignty is contrary to natural law.
The government derives its authority to collect taxes
from the constitution which is the ‘grundnorm’.
According to Hans Kelsun, the grundnorm is a part of
a normative theory of law and the constitution is the
highest form of normative structure.
In taxation, this normative structure provides the
social contract between the people and the
government. People reside their trust in the
government by electing the public representative and
giving them authority to levy taxes and the
government is bound to spend the revenue so
collected on the social and economic well-being of the
people.
As Pakistan is facing the challenge of low tax
collection, a detailed gap analysis was completed by
the World Bank, which indicates that Pakistan’s tax
revenue potential would reach 26 per cent of GDP if
tax compliance were raised to 75 per cent, which is a
realistic level of compliance for lower-middle-income
countries (LMICs). This means that the country’s tax
authorities are currently capturing only half of this
revenue potential.
However, recent studies have indicated that tax
collection could be enhanced by improving tax culture
and removing the trust deficit between taxpayers and
tax collectors through positive changes in their
mindsets. Therefore, the challenge for Pakistan is to
transform its tax culture which is shaped by
interaction among the trinity of taxation i.e. the tax
policy givers, tax collectors, and taxpayers.
The literature on taxation in Pakistan brings forth two
sets of terms seeking to explain our lackluster tax
performance i.e. terms related to tax policy and tax
governance e.g. distortionary exemptions, concessions,
weak enforcement, low compliance by taxpayers,
reliance on indirect taxes and issues in improving tax
administration. The second set of terms emanating
from literature on public finance treats tax governance
as a science and identifies its various characteristics
such as buoyancy of the tax system, tax elasticity and
tax yield as explanatory variables.
Now, we will explore the origins of these terms and
the phenomenon associated with them in the
mindset of the tax collector, tax policy giver and
taxpayer and then develop a collective picture to show
how the respective mindsets about these three sets of
actors, through their mutual interaction, constitute a
tax culture which is unhealthy. This op-ed series also
judiciary, media, civil society, among others) to protect
the public interest.
Relinquishing control will not be easy for the
government, but it is a way forward in the right
direction. Finally, it will be tough to turn Pakistan’s
energy sector into an island of excellence if it remains
surrounded by a sea of chaos. Macroeconomic and
political stability are, therefore, indispensable allies
and prerequisites of a successful turnaround in the
coming years.
uses concepts such as the Stanford Sociologist W.
Richard Scott’s trichotomy of Regulative, Normative
and Cultural Cognitive pillars and explains how the
normative and cultural-cognitive approaches may be
used for nudging citizens to be more responsive
taxpayers.
Starting with Culture is that complex whole that
includes knowledge, belief, art, law, morals, custom,
and any other capabilities and habits acquired by
man as a member of society. More aptly, culture in
each society and organization is mobile, and is derived
from a complex relationship between everyone in
society and organization; it includes what those
individuals “think” (i.e., ideas, knowledge etc.) and
“do” (i.e. their behaviours and habits) as a member of
a society or organization.
The term “culture of taxation” is not used frequently
in social science literature. A country-specific tax
culture is the entirety of all relevant formal and
informal institutions connected with the national tax
system and its practical execution, which are
historically embedded within the country’s culture.
The tax culture is the relationship between taxpayers
and tax collectors in a tax system. The values and
attitudes of people in a society or an organization,
both positive and negative, toward the tax system are
part of the culture of taxation.
From the tax collector’s side, the cultural issue is
about the use of discretion. How do tax collectors use
their authority to deal with a taxpayer? If tax
collectors feel that they have more power than
taxpayers, the posture of tax collectors is likely to
dominate the taxpayer. The behaviour of the actors in
a tax system is important.
The behaviour of taxpayers is about their decisions
regarding tax compliance, tax avoidance, and tax
evasion. The decision to comply with the tax law
depends on the cost-benefit ratio in terms of the value
of the tax evaded amount and the tax with penalties if
caught. The tax and penalties are payable only if there
is a high probability of being caught. The higher the
probability of detection the more is compliance as the
tax and penalty amount is higher than the original tax.
Tax Morale is also an essential part of tax culture. Tax
morale is the intrinsic motivation of individuals to pay
taxes which is determined by several factors. Trust in
government institutions plays a significant role in tax
morale and emanates from a perception of fairness.
Once people perceive the tax system and tax
authorities as fair, they will have more trust in those
authorities and vice versa. Thus, the degree of tax
compliance might rely on how people consider
themselves and interpret their situation relative to
others and they might not pay taxes if they perceive
unfairness. Tax Policy Maker: Tax law and policy
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Special readings for CSS 2023 (Special)/ 2024 exam by CSS Exam Desk Team
affect taxpayers’ behaviour, especially when the tax
system is complex. The complexity of the tax system is
the sum of compliance costs and administrative costs.
Several studies find that high compliance costs are
responsible for large informal sectors in developing
countries. A good tax system needs to be least
distortionary, have ease of collection, not discriminate,
and be politically acceptable but Pakistan’s tax policy
is not based on these well-known and clear principles.
Ad-hoc tax revenue-enhancing measures through
SROs and mini-budgets have developed a complex tax
system that confounds principles of rational tax policy.
Exploring the tax collector mind set in Pakistan:
The tax collector in Pakistan generally thinks that the
taxpayers in general are tax evaders and do not want
to discharge their tax obligations voluntarily. In order
to make them pay their due taxes under the law they
need to be regulated and tax laws need to be enforced
strictly. This perception has evolved over time. With a
strong colonial legacy of bureaucratic behaviour, there
is a disconnect between the tax collector and the
taxpayer in terms of trust and cooperation to work for
the common good of society. There are many reasons
that can be traced to understand the level of distrust
and clash of divergent mindsets like the Colonial
legacy.
The British rulers created an administrative system
with the motive of strengthening their rule. After
independence, the colonial system of laws and
administration was adopted with little changes. The
bureaucracy joining the service in the newly
established country continued with its colonial
mindset. Largely the mindset of being the servants to
the public could not be inculcated. The tax-collecting
machinery was also not an exception. The behaviour
with the public continued to be of the master instead
of being a public servant. No concept of facilitation in
a true sense could ever be embedded in the overall
approach of the tax bureaucracy as well. The tax
collector in traditional society places less emphasis on
guiding and facilitating the taxpayer and instead
prefers to impose enforcement measures and create a
nuisance. They do not communicate with each other
in a friendly manner. The tax collector does not want
to go to the grassroots level and interacts with his
client who is contributing to the national exchequer.
This mindset is counter-productive to the healthy tax
culture as the policy formulation and implementation
are done without contextualizing the local and
cultural dynamics.
Other reasons include a lack of professional capacity
and proper training, Unrealistic collection targets,
Multiple fora and excessive litigation, Weak internal
accountability, and Misuse of Tax Money.
 Lack of professional capacity and proper training:
Ever since the reform efforts have been launched
by successive governments the focus on improving
and enhancing the professional capacity of the tax
collectors was missing. There has never been a
well-thought-out and concrete human resource
development strategy building the professional
capacity of the text collectors in a systematic
manner. Isolated training programs with subjective
selections have been launched but there has never
been a comprehensive well-planned training and
capacity-building strategy keeping in view the ever-
changing requirements of a modern revenue
agency.
 Unrealistic collection targets: Besides other
obstacles in the way to developing a taxpayer-
friendly mindset setting the tax machinery at the
operational level usually complains about
unrealistic and unevenly distributed text collection
targets. The collection targets are assigned not
giving due consideration to the ground realities and
the potential of the area or a group of taxpayers.
The follow-up of the text collection targets by the
senior management is made minutely and on a
day-to-day basis which forces the field officers to
adopt every means to achieve the tax collection
targets ignoring the genuine grievances and
problems of the taxpayers.
 Multiple fora and excessive litigation: The taxpayer
has the choice to avail of any available forums
which include regular appeal, revision, ADRC,
Federal Tax Ombudsman, and writ petition before
the Honourable High Court. Excessive litigation
and delays in decisions by the courts in tax cases
are also among the factors that shape the mindset
of a tax collector. Hard-working and honest text
collectors are discouraged. They lose their
motivation to positively and systematically conduct
the tax audits of the defaulters. The higher courts
are liberal in granting stays even without taking
into account the departmental viewpoint. Judicial
activism has contributed to developing distortion in
the smooth and speedy realization of due taxes.
 Weak internal accountability: Internal
accountability and check and balance an integral
components of an organization guaranteeing its
transparency and efficiency. A strong internal audit
system also brings a balance to the working of the
officers. It ensures the quality in the delivery of
service and sustainability of the organization in the
medium to long run. An efficient internal audit
system safeguards the taxpayers from excesses
and non-professional treatment. Unfortunately, the
internal audit and accountability system of the
Federal Board of revenue is not so efficient, robust,
and unbiased. The least favourite officers are
posted in internal audits. Therefore, the week
internal audit system has been instrumental in
developing a mindset of the tax collectors to act
according to their whims instead of following the
laws and rules in letter and spirit. In addition to
this, the ill-planned and non-integrated IT system
of FBR has paved the way for tax collectors to avoid
due control and accountability.
 Misuse of Tax Money: The taxpayers have a feeling
of mistrust and obscurity against the government
as to the fact that the funds generated out of their
taxes are not properly used rather, they are
mishandled. In this background, many taxpayers
don’t feel the moral obligation to fulfil their part of
the social contract between the state and its
citizens as long as the state doesn’t fulfil its duties
toward the general public.
Focusing on the taxpayer’s mindset in Pakistan.
Following human nature and economic rationale, no
one wants to part with his hard-earned money even in
the shape of tax being a contribution to enjoy a
civilized society. Smart taxpayers avoid taxes by
staying within the legal framework whereas
scrupulous ones would opt for tax evasion which is
liable to legal action.
The taxpayer’s mindset develops in response to
government legislation and tax policies. In our culture,
the taxpayer believes that Pakistan inherited tax laws
from the colonial era the focus of which was to extract
the maximum without any consideration for economic
growth and social welfare. Even today our economy is
dependent on foreign loans for running day-to-day
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state business and these loans have attached
conditionalities that are not business-friendly. The
policy interventions by the government under the
direction of donors like the International Monetary
Fund (IMF) are considered an erosion of state
authority.
Moreover, it is believed that the governments are not
representatives who legislate under the dictation of
the foreign lending agencies and the pressure groups
within the country an example of such legislation is
the Income Tax Ordinance 2001, which was drafted by
an Australian and went through 322 amendments
before the date of its enforcement as it conflicted with
earlier legislation and the administrative framework of
the Income Tax department. Other reasons are also
taken into consideration below.
 Penalty/ Prosecution against tax defaulters: In our
culture seeing is believing. The compliance by the
taxpayers improves if there is a probability of being
caught and a certainty of penalty. When tax
defaulters are let off scot-free due to the legal and
administrative weaknesses then other persons also
feel encouraged to follow suit which promotes the
culture of tax evasion. The compliant taxpayers
lose trust in the system feel demoralized and
consequently avoid paying their due taxes.
 Non-user-friendly Information technology:
Automation and IT intervention have been
introduced to facilitate the taxpayers and are
appreciated by the taxpayer however the IT
interventions are not user-friendly and operate in
silos. The semi-literate population is not inclined to
use this software with ease and comfort. Delayed
Refunds: The taxpayers have a persistent issue of
delayed refunds due to the confiscatory
withholding regime. The compliant taxpayer has no
option to avoid this tax. The legislature has
provided a mechanism for a refund of excessive
deductions but the department under pressure to
meet budgetary targets delays the refund without
any legal basis. This is another discouraging factor
that hinders the taxpayer from fulfilling his tax
obligations and becoming a compliant taxpayer.
 Tax Litigation: The individual taxpayers and the
corporate entities earning huge profits usually
adopt the litigation and stay by the courts as a tool
to delay or avoid their due tax liabilities. The tax
evaders compare the cost of litigation over the
period vis a vis their due tax liability and prefer to
go for the legal shield instead of depositing their
taxes. This practice by many taxpayers encourages
the culture of preferring litigation instead of
discharging the text liability as a responsible
citizen. The lawyer community is the impetus of
this culture. In the backdrop of the above analysis,
it can safely be concluded that there is a distrust
among the three stakeholders of the tax culture i.e.,
tax policymaker, tax collector, and taxpayer. They
are operating in their spheres with their specific
mindsets which has led to a lack of mutual trust
among the three stakeholders resulting in low tax
Reviewing Pakistan’s climate action
Author: Shafqat Kakakhel. Published in the The Daily Times on May 11, 2023
It is gratifying to see that the National Security
Dialogue, which has emerged as an important
national security forum, will address the existential
threat of climate change at its third session. Led by
Federal Climate Change Minister Sherry Rehman, a
panel of eminent Pakistani and foreign experts will
discuss various aspects of the global climate crisis
and its ramifications for Pakistan. This article
collection from that of the optimum level. The
problem needs to be tackled in a well-defined
conceptual framework. Following W. Richard Scot’s
institutional theory of Regulative, Normative and
Cultural-Cognitive approaches policy actions can
be proposed and categorized within the three
conceptual streams.
 Policy actions: The exemptions and concessions
should be rationalized and restricted to the extent
of general public welfare and the promotion of
economic activity. To improve the trust of the
masses in general and the taxpayers in particular
the exemptions allowed to accommodate the elites
of the society should be withdrawn. The distortions
in the tax laws like presumptive tax regime and
block taxation should be removed without yielding
to any pressure group or lobby to avoid the
complication of tax laws, increase revenue and
provide a level playing field for all taxpayers.
Alternate Dispute Resolution Committees should
be decentralized at the regional level to make it an
effective forum to resolve the issues of the
taxpayers involving factual controversies to create
confidence in the taxpayer in the tax system and
promote a healthy culture. A full-fledged
prosecution department manned with experienced
lawyers is proposed on the pattern of the Advocate
General’s office to defend the tax appeals efficiently
and expeditiously. It is also proposed that the
number of forums should be reduced to three i.e.
Commissioner Appeals, Federal Tax Courts and the
Apex Court. The departmental officers should not
be posted in any appellate forum. The first forum
may take up appeals about factual issues and
small cases. The tax court should have jurisdiction
to accept appeals with legal issues and cases of
medium to large taxpayers. There should be a time
limit for all forums to decide the cases keeping in
view the principle of time value of money.
There is no second opinion on the importance of IT for
an effective, transparent and robust tax system.
Integrated on real real-time basis, user-friendly and
reliable IT systems are the most important factors in
promoting the trust of the taxpayer in the system
saving him from hassle and exploitation and creating
ease of doing business for compliant taxpayers.
 Administrative measures: Market-based
compensation package linked with a well-defined
qualitative and quantitative performance
monitoring system and strong internal
accountability would be greatly helpful in
modifying the mindset of the tax collector freeing
him from the compulsions of sustenance and
helping to change his attitude towards the taxpayer.
South Asian culture believes in heroic traditions.
The person known for his good deeds is respected
and treated as distinguished. Using the tradition of
the region public acknowledgement and
appreciation of highest paying taxpayers would
also promote the tax culture.
attempts to present a broad- brushed tour d’ horizon
of Pakistan’s climate change agenda.
The robustness of a country’s climate action is
predicated on five essential prerequisites, noted below:
One, a political commitment by the national
leadership to support the efforts of the international
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community to address the looming climate emergency
and reinforce the resilience of the key economic
sectors, the citizens, and ecosystems to adapt to the
adverse impacts of an increasingly volatile climate
through policies implemented in collaboration with all
stakeholders.
Two, active participation in regional and global
discourses for forging consensus on the climate
change challenges and responses.
Three, development and implementation of policies
and plans of action for contributing to the realization
of the global agenda as well as adaptation to the
impacts of climate change on the national economy,
human security, and ecology.
Four, climate change governance comprising
institutions operating at national and sub- national
levels for assessment, policy formulation, and action,
as well as periodic review and monitoring of progress
achieved or missed, resource mobilization; and
Five, resources (technical, technological, financial and
human) mobilized from domestic and external sources
and optimally deployed.
Let’s see how Pakistan fares with regard to the
aforementioned criteria.
 High-level political commitment: The National
Security Policy of Pakistan (NSP) (2022-2026)
refers to Pakistan’s acute vulnerability to climate
change and proclaims the objective of “a climate
resilient Pakistan that prioritizes climate
adaptation, sustainable water management and
disaster management”. It aims to achieve the water,
food, health, and energy security of Pakistan. In
recent years our leaders have attended the annual
climate change summits convened by the UN
secretary-general and reiterated Pakistan’s
commitment to the global climate goals enshrined
in the Paris Agreement and elaborated by the
annual climate conferences (aka COPs). Their
statements are disseminated at home. Although
the effects of climate change must be tackled in
Pakistan’s coastal regions, cities and rural areas,
the heads of our provincial governments and
autonomous regions seldom speak about climate
change. However, with the support of domestic and
external partners the provinces have formulated
comprehensive climate change policies. The
implementation of those blueprints has been
uneven, though. The provincial governments say
they lack the financial and human capacities to
develop and implement climate change related
policies.
 Participation in regional and global conferences:
Our leaders’ participation in global climate
meetings has been mentioned earlier. Tragically the
main regional cooperation organization, the South
Asian Association for Regional Cooperation (Saarc)
has become dormant since India scuttled the 16th
Saarc Summit due to be hosted by Pakistan in
Islamabad in November 2016.The environment
ministers who had played an important role in
catalyzing regional climate change initiatives have
also become silent.The South Asia Cooperative
Environment Programme (SACEP) has been doing
useful work but lacks political clout.
 Policies and strategies for action at federal and
provincial levels: The Climate Change Policy of
Pakistan (NCCP) issued in 2012 and its updated
version released in 2022 contain scores of policy
initiatives concerning mitigation, adaptation and
capacity development. In 2013, the Ministry of
Climate Change crafted a ‘Framework for the
Implementation of the NCCP’ which prioritized the
implementation of water and energy initiatives.
Follow-up on the policies has been insufficient. The
most notable climate projects are those developed
and funded by the World Bank and the Asian
Development Bank. Pakistan has also developed
several sectoral policies related to climate change
imperatives, namely the National Water Policy
(2018), the Alternative and Renewable Energy
Development Policy (2020), and the National
Electric Vehicles Policy (2020). The National Water
Policy includes a dozen or so major initiatives for
integrated water resource management. The
Energy Policy aims at producing 8000 MW of
electricity from renewable sources by 2025 and
20000 by 2030 representing 20 and 30 per cent of
the total energy produced in the country. The
Electric Vehicle Policy contains targets and
incentives aimed at capturing 30 per cent of all
passenger vehicles and heavy duty truck sales by
2030 and 90 per cent by 2040. Pakistan has also
submitted its Nationally Determined Contribution
to Climate Change (NDC) to the UN CC Secretariat
in 2016 and its revised version in 2021. The
mitigation measures in the NDCs include planting
ten (10) billion trees, a 50 per cent reduction in
projected GHG emissions (subject to international
grant finance), and increasing the share of installed
capacity through renewable sources such as solar,
wind, and biomass to 30 per cent. Together with
higher investments in hydropower projects, the
country’s share of clean energy would reach 60 per
cent by 2030. The NDCs also refer to the increase
in the country’s protected areas, including national
parks, a number of nature- based ecosystem
rejuvenation projects and recharging groundwater
aquifers. In July 2022, the government, in close
collaboration with the UN system, developed the
‘Living Indus’ programme for ecosystems
restoration and climate adaptation comprising
nearly two dozen projects and initiatives aimed at
developing a sustainable, climate resilient Indus
Basin such as clean energy schemes, sustainable
groundwater governance, eco-tourism, biodiversity
conservation, and eradication of plastic pollution.
The Living Indus programme will cover all the
provinces and autonomous regions and promote an
ecologically vibrant and climate resilient Pakistan.
 Climate change governance (institutional
arrangements): In 2017, Pakistan’s parliament
adopted a National Climate Change Act which
qualifies as the most significant milestone in the
evolution of the country’s climate agenda. The Act
creates a robust institutional architecture for
addressing all aspects of climate change. The Act
establishes a National Climate Change Council
(NCCC), chaired by the prime minister or a
minister nominated by him/her.The council is
mandated to approve climate related policies and
coordinate their implementation. The Act envisages
a National Climate Change Authority (NCCA) to
serve as the main mechanism for the entire
spectrum of climate change policies, plans of
action, projects for external funding etc. It also
provides for a Climate Change Fund for climate-
related activities.
The present government has established the National
Climate Change Council which has held its first
meeting chaired by the prime minister. The other
provisions of the Act have not been operationalized
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despite the persistent demands by civil society. The
absence of a robust governance apparatus has
impeded climate action. It has also compounded the
challenges facing the small, poorly resourced, and
overworked Ministry of Climate Change to handle its
exponentially increasing workload thanks to the
willingness of a number of friendly countries such as
the US, China, the UK, Germany, the Republic of
Korea, and Japan to support Pakistan’s climate
change related plans. There is a pressing need for
more proactive climate diplomacy.
The Ministry of Climate Change (MOCC) being the
officially designated focal point for climate change
represents the country at all major climate change
meetings, especially the annual COPs, the Petersburg
ministerial meeting, the inter-sessional conference
held in June, and the summit convened by the UN
secretary general in autumn. The MOCC also serves
as the focal point for all the dozen or so multilateral
environmental agreements (MEAS) ratified by Pakistan,
including the biodiversity, ozone protection,
desertification and waste and chemicals conventions.
Revisiting National Security Policy 2022-2026
Author: Dr. Ikramul Haq. Published in the Minute Mirror on March 6, 2023
Pakistan, from its inception, was envisioned as an
Islamic welfare state, internationally relevant and
aligned with universal principles of justice, equality,
and tolerance. Seeking a peaceful neighborhood based
on mutual co-existence, regional connectivity, and
shared prosperity. Being secure and economically
resilient, and empowered by diversity of culture and
demographic dividends, ensuring fundamental rights
and social justice without discrimination on the basis
of caste, creed, or belief. Promoting good governance
through strengthening of institutions, transparency,
accountability, and openness as articles of faith—
National Security Policy of Pakistan 2022-2026
The National Security Policy of Pakistan 2022-2026
rightly identifies the key factors that are important for
averting potential threats to our existence and for
ensuring Pakistan’s prosperity. However, despite
knowing the way forward towards stability and
security, our rulers—civil and military alike—have
failed to implement the requisite policies for reaping
their benefits. The principle of universal justice is the
most important element for any national security
vision. Unfortunately, institutions responsible for
dispensing justice appear quite indifferent. Since its
existence, Pakistan’s justice system has been working
against the spirit of universal justice. Consequently,
we have been placed in the list of countries performing
poorly with reference to abiding by Rule of Law.
Through the Constitution (Eighteenth Amendment)
Act, 2010 [“18th Amendment”], the government’s
executive branch was removed from the process of
appointment and removal of judges to allow
independence of judiciary but with unfettered powers
including self-accountability, this needs
reconsideration. Post 18th Amendment analysis of our
judicial performance shows that some decisions of the
courts have caused global embarrassment while those
challenged at international forums have resulted in
huge losses to the national treasury.
For evaluating judicial effectiveness, two important
aspects among others are quality of judgements
delivered and inclusion of women in higher judiciary
in accordance with their proportion in the population.
We have failed to ensure both. The 2022 Global
The operationalization of the Climate Change Act
would not only energize Pakistan’s climate-related
activities but also enable the MOCC to pay more
attention to the follow up of the other MEAs in
coordination with the relevant s ministries.
Resources (mobilization and deployment): The MOCC’s
budget has all along been one of the smallest among
federal ministries. Over the years, Pakistan has
received funding for around 35 or projects from the
international funding windows such as the Global
Environment Facility (GEF), the Multilateral Fund
established under the Montreal Protocol for the Ozone
Layer, and more recently the Green Climate Fund
(GCF) and the Adaptation Fund (AF).
Pakistan has been one of the smallest beneficiaries of
global climate funding, mainly due to its lack of
institutional capacity.
Gender Gap report has ranked us at 145th, right
above Afghanistan. The report states that Pakistan is
a country where women have the smallest share of
senior, managerial and legislative roles (4.5%), even
lower compared to other developing nations like
Jamaica, where women represent 56.6% of workers in
that category, or Togo, which has the highest share of
women in senior roles, at 70.1%.
The United States Commission on Religious Freedom
(USCIRF) in its report [Religious Freedon in Pakistan
2022] claims that Pakistan is a country of 96.3%
Muslims, a mix of Sunni and Shia (approximately 10-
15% Shia), 0.2% Ahmadi, Hindu and Christian, 1.6%
and Sikhs, Buddhists, Baha’is, and Zoroastrians
represent 1.0%.
The report specifically highlights growing intolerance
for religious diversity fueled by extremism and existing
problematic Pakistani legislation, citing recent attacks
on religious minorities in the country. The report of
USCIRF reveals that 84 individuals were charged
under the blasphemy laws in 2021, apart from the
incident of mob incited killings, including that of
factory manager Priyantha Kumara, a Sri Lankan
national. It also mentions the case of Muhammad
Mushtaq, a mentally challenged man from Khanewal,
who was accused of burning the holy Quran and was
stoned to death and his body hung from a tree.
The report further pinpoints incidents of target killing
of a Christian Priest in January 2022, death of two
Sikh businessmen brothers and a man professing
Ahmadiyya faith, killed by a seminary student in
Okara District, Punjab. These and many unreported
episodes not only testify to the poor performance of
country’s institutions for maintaining the spirit of
equity, but also confirm rising level of religious
intolerance in the society. Assurance to all citizens of
equality, religious freedom and equal opportunities
are prerequisites for stability and prosperity.
The national security vision of any nation state
envisages peaceful neighbourhood based on the
principle of mutual co-existence. However, Pakistan
remains perpetually in conflict with its neighbours,
especially India. Pakistan and India may have political
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differences but they have never treasured their
common heritage in terms of history, culture,
language, music, food, crops, so as to forge peace and
tranquility in the region. A prudent foreign policy
requires that both countries should maintain good
relations so that they can reduce their massive
defence expenses and divert these for the welfare of
their masses.
Pakistan and India have the capability to be good
trade partners. Despite sharing many similarities,
both countries are a consistent threat to each other’s
existence and are not ready to initiate dialogue to
address their unresolved disputes. Similarly, Iran’s
relations with Pakistan are not ideal either. Iran’s
government believes that Pakistan is responsible for
its security related issues.
Pakistan is a host to around three million Afghan
refugees and supports Taliban government in
Afghanistan against opposition from the West. Despite
sharing borders, culture and religion, Pakistan and
Afghanistan hold opposing views on many issues.
While Afghanistan blames Pakistan for toeing
America’s hostile policies towards it in the past,
Pakistan considers that Taliban-supported banned
Tehreek-e-Taliban Pakistan (TTP) is responsible for
terrorist incidents within its borders [see also, A
lesson from the Taliban].
The China Pakistan Economic Corridor (CPEC) is
aimed at promoting and strengthening regional
connectivity. This initiative is considered as game
changing for Pakistan and the entire region. However,
we have failed to maximise gains from the second
phase of CPEC—though the first one was completed
during Pakistan Muslim League’s (Nawaz) tenure
(2013-18).
The pace of completion of the second phase of CPEC
based on promoting industrial cooperation, trade,
agriculture and socio-economic development, slowed
down during the coalition government of Pakistan
Tehreek-e-Insaaf (PTI) as it could not get proper
attention of our authorities. Despite taking massive
loans and making economic/industrial zones,
Pakistan failed to set up new industries vital for GDP
growth and for creating employment opportunities. As
a result, in the last four years, we have failed to
improve our GDP growth. This has led us to a position
where gigantic debt repayments, coupled with
insufficient revenue generation capacity, pose grave
national security risk. Due to our casual attitude
towards CPEC, China is not happy with us either.
Another important factor for national security is
economic prosperity that comes with political stability.
However, due to continuous intervention in state
affairs by powerful institutions, we could not frame
prudent and pragmatic policies for streamlining our
economic progress. In the past five years, we had six
finance ministers, with each of them coming up with a
different model to run fiscal affairs. Due to these
varied approaches the most needed International
Monetary Fund (IMF) Extended Fund Facility (EFF)
Programmes could not be completed within the agreed
time frame. Moreover, repeated violations of agreed
conditions with the lender of last resort have created a
huge trust deficit. Resultantly, they are reluctant to
execute staff level agreement after the Ninth Review.
Delay in reaching an agreement with IMF is increasing
our economic difficulties. Our external financing
needs have reached alarming levels as for the ongoing
year we have to pay US$20.49 billion, whereas for
next four years, estimated payments are on an
average US$25.23 billion per year. These numbers are
exclusive of the additional impact that can arise due
to current account deficit as mentioned by the IMF in
its reports.
Pakistan’s average annual gross financing
requirement in next four years will be around
US$37.5 billion. However, our current foreign
exchange level shows that external debt servicing
becoming due in one month is US$2.7 billion and
between 1 to 3 months it will rise to US$3.8 billion.
The country has very low levels of foreign reserves.
Furthermore, delay in signing the IMF programme will
push us into more problems. Without resumption of
the programme, it would be an uphill task to seek any
bilateral or multilateral monetary help to save
Pakistan from rescheduling external loans.
Our political leaders, beyond party affiliations, should
realize that merely writing wish lists in the national
security policy and acting contrary to them will not
bring us any good. The current political and economic
affairs are posing real threat to our national security.
We must devise a strategy for the implementation of
our national security vision contained in National
Security Policy of Pakistan 2022-2026, starting with
judicial reforms, followed by formulating a prudent
and pragmatic foreign policy.
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