THE plan seems to be unravelling. That bailout, whether $25 billion or some other figure, that we were told is ‘there for the taking’ is now in doubt. War is breaking out in Gaza and the Saudi Arabian government has abandoned its talks to ‘normalise’ relations with Israel.

These talks were more than a year into their career it seems, since the meeting between the Saudi crown prince and the American president in the kingdom in 2022. With their abandonment goes the larger framework within which any bailouts were going to come.

Things are going pear-shaped quite fast for Pakistan. At the time of writing, it is not clear how intense the real war in Gaza is going to be and how far its fallout will travel. But the moment feels a little like the days between Sept 11 and October 7, 2001.

That was when the Americans were gearing up for a war that was to last two decades, and reshape the world in important ways. There should be little doubt that the conflict in Gaza will have a far-reaching impact as well which is difficult to envision at this time, given the uncertainty.

This matters greatly for Pakistan. The first such war initiated by the Americans impacted our country directly because we were a front-line state. That war brought financial inflows the likes of which previous military rulers could only dream about. It gave the economy a historic boost.

It gave us an enduring terrorist problem of our own to tackle as many of the jihadi groups that had been nurtured on Pakistani soil through the 1990s started to turn their guns on the Pakistani state. Many made great fortunes during that war. Many more still lost their lives as a result of the fallout on Pakistan.

But there was one thing the so-called ‘war on terror’ did that held Pakistan in good stead for almost two decades. It made Pakistan central to the designs of a global superpower, and gave the country a relevance in international affairs that was unprecedented. So long as American troops remained in Afghanistan, nobody was willing to see instability in Pakistan spill too far.

As the war in Gaza gets going — and the real war is yet to begin — Pakistan will have to shout even harder to be heard.

This is critical to understand because the economic situation we are in currently mirrors very closely the situation we were in back in 2000. Those with a memory will recall those days, a country bereft of foreign exchange reserves while trying to shoulder a crippling debt burden and held hostage to a moribund economy, and isolated on the global stage.

It took three rounds of debt rescheduling, a traumatic fiscal adjustment, large-scale unemployment, massive hikes in power tariffs and much more to pull the country through those years, with little to no prospect of growth returning anytime soon.

All those steps taken in the first few years of the Musharraf regime were nothing more than treading water, despite the excruciating pain it was imposing on the populace.

It was 9/11 that changed all that, and the onset of the ‘war on terror’, and the next two decades were passed under the shadow of a newfound relevance for the country, as well as the underwriting by great powers. The two decades that followed 9/11 were simply a postponement of the day of reckoning that had in reality arrived as far back as 2000.

With the American troops finally gone from Afghanistan, and the winding up of the ‘war on terror’, that relevance was gone, and Pakistan was left to its own devices to muster up the strength to carry its debt burden and economic dysfunctions, and to find a way to replenish its foreign exchange reserves that now take less time to drain than to build up.

The real war that is about to start will most likely heighten the irrelevance into which Pakistan has been drifting for the past few years. Which means we are now on our own to carry the weight of our debt burden and sort the myriad dysfunctions that afflict our economy. We are on our own to find a way to maintain the stability of architecture in this country, insofar as that architecture keeps incomes going in a population of 240 million.

For more than a quarter century now (I get tired of trying to locate the most appropriate starting point) we have kept our country afloat by arranging foreign injections from one source or the other. The most common resort has been to multilateral organisations — the IMF, World Bank and Asian Development Bank.

In the 2010s bilateral partners like China and the Gulf countries (including Saudi Arabia) join in with large debt offerings to help finance the dysfunctions that necessarily come with all our growth spurts.

The result has been the accumulation of debt with no corresponding increase in the debt-carrying capacity. And now we are back to 2000, trying to figure out how to carry this mountain with legs so weak they can barely carry the body of the state itself.

As the war gets going (and the real war is yet to begin) Pakistan will have to shout even harder to be heard. The great powers on whom we have depended for decades, are consumed with their own internal difficulties and the outbreak of conflicts in critical regions like Eastern Europe and the Middle East. Nobody has the time or the bandwidth for Pakistan, and this is only going to increase in the days to come.

If those running our country these days don’t yet realise how deep their economic problems are, then we are all in a great deal of trouble. But if they do, they should stop this search for a silver bullet which will solve all problems in one go.

The way forward involves solving the thousand little problems that tie down the country’s potential. And identifying those takes a structured approach, as well as a little mind.

The writer is a business and economy journalist.

khurram.husain@gmail.com

X (formerly Twitter): @khurramhusain

Published in Dawn, October 12th, 2023