China, India, money woes, US conspiracy claims: the issues keeping Pakistan's new PM busy

Time is not on the side of the new coalition government that took office in Pakistan this week following the chaotic ousting of Imran Khan as prime minister.

With a general election expected to be called by year's end, Khan's newly anointed successor, Shehbaz Sharif, has said his immediate priorities are stabilising the country's shaky economy and fixing its damaged diplomatic relations with "all-weather friend" China, as well as partners in the Middle East and an increasingly hostile West.

He also announced that construction would be sped up on the US$60 billion China-Pakistan Economic Corridor (CPEC) - a flagship project of Beijing's Belt and Road Initiative that was first put forward in 2013.

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In his acceptance speech to parliament on Monday, Sharif said that the biggest challenge facing his administration would be living up to extraordinarily high public expectations following the no-confidence vote that led to Khan being deposed.

Sharif built a reputation as Pakistan's Mr. Fix-It in the decade up to 2018, when he led the government of populous Punjab province and was famed for his day-to-day hands-on management of key projects and programmes - often seen dressed in a safari suit, panama hat, and Wellington boots when required.

After 2015, he leveraged his position as younger brother of Nawaz, the then-prime minister under whose watch the CPEC was announced, to channel billions of dollars of investment from the project into Punjab's infrastructure.

Chinese diplomats were the first to meet Sharif on his first day in office on Tuesday, with Pang Chunxue, Beijing's charge d'affaires in Islamabad, telling him he was viewed with "great respect and admiration" in China and was seen as a "strong and committed friend".

Michael Kugelman, deputy director of the Asia programme at the Washington-based Wilson Centre think tank, described Pakistan's new prime minister as "a product of what Imran Khan has long decried as a dynastic, ossified, and corrupt political elite".

"He's about as different as they come from Khan - known for being a steady and focused manager, not a populist, with not much charisma," Kugelman said.

Ahead of Sharif's election as prime minister by 174 members of Pakistan's 342-seat National Assembly on Monday, 123 lawmakers from former cricketing superstar Khan's Pakistan Tehreek-e-Insaf (PTI) party resigned amid claims the no-confidence vote had been orchestrated by the US.

On Thursday, acting deputy speaker of parliament's lower house Qasim Suri accepted their resignations, meaning by-elections for their seats will need to be held within the next two months. Meanwhile, at least 19 PTI MPs are known to have defected to Sharif's coalition.

But PTI is by no means out of the running ahead of a general election that must be held by October next year, political analysts said - despite huge public discontent at its incompetent governance and mishandling of the economy.

Khan, who founded the party in 1996, enjoys almost cultlike support among his base, which he has sought to capitalise on by claiming to be the victim of an international political conspiracy.

Sharif said on Monday that he would call a closed-door meeting of parliament's national security committee to get to the bottom of Khan's claims that a US State Department official had threatened Pakistan's ambassador in Washington with regime change hours before the no-confidence motion was submitted.

The ambassador, whom Khan said wrote about the threats in an encrypted diplomatic cable, will be summoned to brief the committee in the presence of the country's three armed services chiefs, and the heads of the intelligence and diplomatic services, Sharif said.

"If there's even an iota of truth that I conspired with foreign powers, I will resign on the spot," he said.

PTI supporters also have accused Pakistan's powerful military and intelligence services, known collectively as "The Establishment", of being complicit in Khan's downfall.

Though both sides deny it, the army under chief of staff General Qamar Javed Bajwa is widely acknowledged to have supported Khan's rise to power in 2018. They later had a falling out, however, after the ineptitude of his administration turned public sentiment against the military.

For much of its existence as an independent country, Pakistan has been under direct military rule - most recently from 1999-2008 - and even when not in power, the armed forces and intelligence services have brazenly manipulated the country's politics.

The Supreme Court's ousting of Sharif's brother Nawaz in 2017, and previous prime minister Yousaf Raza Gilani in 2012, were both actively supported by the intelligence services. PTI's social media team has hinted that it expects a tsunami of leaks from "The Establishment" about Khan's alleged abuses of power now he has been deposed.

Analysts said it was Bajwa's decision to withhold support from Khan amid the no-confidence vote that likely tipped the outcome against him.

It has also raised questions about the democratic integrity of the coalition of political parties and independents who make up the new Sharif-led government.

Sharif has vowed to enact new legislation strengthening the role of parliament and making polls less susceptible to rigging before the next general election is called.

But there is widespread scepticism as to whether this would represent genuine democratic empowerment.

"So many Pakistani civilian leaders have talked a big game about their plans for strengthening parliament, and yet those promises invariably end up amounting to little more than a damp squib," the Wilson Centre's Kugelman told This Week In Asia.

A stronger parliament would go a long way towards aiding Pakistan's democratisation, he said, but "the returns haven't been all that impressive" on politicians' promises as yet.

Beyond the murky realm of Pakistan's power politics, Sharif's government has inherited a witches' brew of economic, diplomatic and security challenges - each as formidable as the next.

Kugelman said the biggest diplomatic challenge would be patching up ties with the West after Khan's recent tirades about a US-led plot.

"The new government will need to do some serious damage control in order to salvage its relationships with the US and Europe, which happen to be key Pakistani trade partners," he said.

Observers in South Asia, meanwhile, have expressed hope that the change of government could spell an end to the three-year diplomatic freeze in Pakistan's relations with arch-rival India - noting the speed with which Indian Prime Minister Narendra Modi posted his congratulations to Sharif following the latter's election.

The nuclear-armed adversaries had stood on the brink of war in 2019 after Indian air force jets crossed into Pakistan's air space in February that year to bomb the camp where jihadists planned a suicide attack that killed more than 40 paramilitary policemen in disputed Kashmir.

In his acceptance speech, Sharif said he would like for relations between Islamabad and New Delhi to improve. However, he said any sustainable progress depended on India being willing to discuss the Kashmir dispute.

Unlike Khan, Sharif did not specify whether talks would be conditional upon Delhi considering the reversal of its August 2019 decision to withdraw the special constitutional status of the Himalayan region, which is also a flashpoint in India's ongoing border dispute with China.

Avinash Paliwal, an associate professor of international relations at the School of Oriental and African Studies in London, said army chief Bajwa had "silently sustained ... backchannel talks" with India since 2018 and Modi's congratulations "might help picking [up] the thread that was lost" by the ousting of Sharif's brother Nawaz.

"Both India and Pakistan need to stabilise ties for multiple reasons", he said, adding that they would "prefer" to do so "before electoral cycles kick in". India's next general election is expected in 2024.

Improving ties with India would also help Islamabad persuade the West to support Pakistan's crisis-hit economy, analysts said.

"The most critical economic challenge facing the new set-up is maintaining the solvency of Pakistan," said Najam Ali, CEO of NextCapital, a Karachi-based financial services provider.

"Immense macroeconomic adjustments are required in order to keep Pakistan solvent while combating sky-high international commodities prices with limited fiscal space and external account pressures."

Sharif has said it is imperative for his government to attain the West's cooperation if it is to get to grips with Pakistan's ballooning trade, fiscal and balance of payments deficits.

But Ali doubted that international lenders and donors would be willing to give the country any more breathing space - at least until the new government convinces the International Monetary Fund to resume payments under a US$6 billion bailout programme that was agreed in 2019 but which repeatedly stalled during Khan's rule.

China rescheduled US$4.2 billion of Pakistan's debt at the end of March, not long after Saudi Arabia and the United Arab Emirates had deferred payments on their respective loans of US$3 billion and US$2 billion to Islamabad.

The IMF, in a report issued after negotiations with Khan's government in February, projected Pakistan's total external financing requirement during the current financial year, ending on June 30, would grow to US$35 billion, the equivalent of 10 per cent of GDP.

Without the IMF resuming payments, Ali said it would "not be possible for Pakistan to manage its external account imbalances".

Security will also continue to be a challenge, analysts said, as terrorist attacks are likely to continue with increasing frequency regardless of who is in charge.

Scores of soldiers and police officers have been killed in recent weeks after the Afghanistan-based insurgent group Tehreek-i-Taliban Pakistan, or Pakistani Taliban, launched its first-ever spring offensive against Pakistan's security forces to coincide with the start of Ramadan, the Muslim month of fasting.

Abdul Basit, a research fellow at the S. Rajaratnam School of International Studies in Singapore, warned that the group was "likely to increase its attacks in the next few months" as "terrorist groups always exploit political chaos and vacuum to their benefit".

"The longer the political chaos [in Pakistan], the greater the chances of terrorist exploitation," he said.

Basit said the insurgent group would seek to manipulate the failure of Pakistan's democratic system to resolve the political deadlock and "present its self-styled sharia system premised on the Afghan Taliban's Islamic Emirate model as the answer to the ongoing political tensions".

This article originally appeared on the South China Morning Post (SCMP).

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