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Diplomacy

Shifting Focus from Geopolitics to Geo-economics in Pakistan's Foreign Policy

Strategic Insights

— 2 min read

Pakistan's foreign policy has traditionally been driven by its strategic location, connecting Central Asia, South Asia, and the Middle East. However, due to internal and external factors, the country is no longer in the same position to capitalize on its geography. A shift in global power dynamics and the emergence of middle powers have made it essential for Pakistan to adapt its national strategy to the changing dynamics. The National Security Policy of Pakistan (NSP) 2022 highlights the importance of geoeconomics as a major determinant of national security, national image, and diplomatic relevance. This shift in focus from geopolitics to geo-economics is crucial for Pakistan's survival and requires a concerted effort to strengthen the economy through economic diplomacy.

Key Takeaways:

  • Pakistan's foreign policy has traditionally been driven by its geostrategic location, but the country is no longer in a position to capitalize on its geography due to internal and external factors.
  • The National Security Policy of Pakistan (NSP) 2022 emphasizes the importance of geoeconomics as a major determinant of national security, national image, and diplomatic relevance.
  • Pakistan needs to focus on economic diplomacy to strengthen its economy and achieve geoeconomic objectives, particularly by expanding partnerships with nations like Africa, Southeast Asia, and Europe.
  • Economic diplomacy requires building strong relationships with stakeholders and advancing economic interests in a sustainable manner to stay relevant in the changing geopolitical environment.
  • Several projects, including CPEC-II, TAPI, and CASA 1000, have been initiated to improve Pakistan's economic diplomacy and regional connectivity.
  • Joining the International North-South Transport Corridor (INSTC) will enable Pakistan to collaborate with Russia and enjoy economic benefits, potentially enhancing trading by 30%.
  • Pakistan needs to engage in effective economic diplomacy with India and its Western partners to convince them of the importance of the INSTC project for its economic sustainability.
  • FDI inflows from the US have declined, while Chinese FDI inflows have seen a rise, presenting an opportunity for Pakistan to engage in economic diplomacy to increase FDI inflows.
  • Internal stability and unity are essential for the success of economic diplomacy, requiring focused and cohesive efforts by civil and military institutions, the private sector, industry, and academia.

Statistics:

  • Pakistan's FDI inflows from the US decreased by $59.4m from FY23 ($217m) to FY24 ($157.6m).
  • FDI inflows from the UAE declined by $24.7m in FY24.
  • Chinese FDI inflows increased by $202.1m in FY24, reaching $944m.
  • The International North-South Transport Corridor (INSTC) has the potential to enhance trading by 30%.

Sources:

  • National Security Policy of Pakistan (NSP) 2022
  • Szatlach, "Economic Diplomacy: A Tool for Advancing National Interest"
  • Centre for Aerospace and Security Studies (CASS)
  • Turkmenistan-AfghanistanPakistan-India Natural Gas Pipeline (TAPI) project
  • CASA 1000 project
  • Trans-Afghan Railway line project
  • International North-South Transport Corridor (INSTC)

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