US special Representative for Afghanistan and Pakistan Richard Holbrooke has claimed that the US will focus more on ‘energy-related issues’, a laudable objective given Pakistan’s acute electricity crisis but an area in which it is difficult to see an immediate American contribution to the solution.

Presently, circular debt is crippling power generation, with many IPPs producing electricity significantly below their capacity because they claim they have no money to purchase fuel. So will the Americans nudge the IFIs to help sort out the circular debt issue? Medium to long term, the problem is really of securing new energy supplies and changing the mix of power-sector fuel to reduce our unhealthy dependence on imported-oil-based fuels.

One of the major initiatives that the Government of Pakistan is hoping to push through is the Iran-Pakistan gas pipeline, in the hope of using much of the gas thus acquired to produce electricity here. But the Americans are opposed to the project because of the source — Iran. The Americans prefer the proposed Turkmenistan-Afghanistan-Pakistan pipeline, but security concerns in Afghanistan and the need to first verify that the assigned gas fields in Turkmenistan actually have enough gas to make a pipeline feasible have put that project in doubt. So will the Americans continue to block access to international funding for the IP pipeline or will they give Pakistan a viable alternative? With civilian nuclear cooperation ruled out by the US, there aren’t many other options.

Trade though remains the best bet if the US really wants to help Pakistan stand on its own feet economically. A report of the Pakistan Policy Working Group last year highlighted the tariff issue: ‘We raise the same tariff revenue from Pakistan’s $3.7bn in exports to the US as from France’s $37bn in textile exports to the US. The average US tariff rate on Chinese exports to the US is three per cent, compared to 10 per cent on Pakistani exports.’ The recently announced textile policy here hopes to raise textile exports to $25bn by 2014, a three-fold rise from present levels.

More access to the US market by lowering the tariff barriers could significantly help achieve that goal. Even with the worst recession in decades gripping the US economy, the fact is that Pakistani textile imports contribute only a fraction to the US market, meaning that there is a great deal of room for growth. The question is: will Congress allow it? Protectionist sentiment is running high in the US, so it may find it easier to simply sanction more aid. But, as ever, we need more trade and not just aid.