Pakistan's new government can improve ties with US and India

Pakistan’s new government can improve ties with US and India

Pakistan’s parliament elected Shehbaz Sharif as the country’s new prime minister just days after his predecessor Imran Khan was ousted in a no-confidence vote.

Aamir Qureshi | AFP | Getty Images

Pakistan has a new prime minister – and this could bode well for the South Asian country’s return to a healthier economy and its relations with its traditional backer, the US, as well as its rival, India.

On Monday, Pakistan’s parliament elected Shehbaz Sharif as the country’s new prime minister, just days after his predecessor Imran Khan was ousted in a no-confidence vote.

In what one observer called the “affirmation of democracy,” the move was certainly not inevitable in a country where no prime minister has served a full term in office.

Surprising observers, the all-powerful Pakistani army, which has ruled the country for decades through coups d’état, remained in the barracks.

A decisive intervention by the judiciary was the next surprise. Pakistan’s Supreme Court ruled that Imran Khan’s government was to undergo a vote of no confidence that it had sought to block. Khan eventually lost the rescheduled confidence vote in the early hours of Sunday and was removed from office.

What will Sharif do?

In his maiden speech, 70-year-old Sharif said he planned to turn Pakistan into a “paradise” for investment, while also announcing an increase in the minimum wage.

Sharif’s way forward is not an easy one, Iqbal Singh Sevea, the director of the Institute of South Asian Studies at the National University of Singapore, told CNBC.

“He has inherited an economy ravaged by a current account deficit and inflation. He will need to increase the state’s ability to generate revenue through taxes and increased investment, especially in the export sector,” said the associate professor. .

The dream for Pakistan is that they can export to China. The reality for Pakistan is that they export to the US and Europe.

James Schwemlein

Senior Director, Albright Stonebridge Group

Pakistan is engaged in its 23rd IMF bailout. The country’s economy is under pressure from rising inflation, more than 10% this year, amid soaring prices of crude oil and other commodities after the war in Ukraine.

Under his supervision, Pakistan is likely to negotiate a new loan with the IMF and commit to structural reforms and generate more tax revenues, Sevea said. “The task is all the more difficult because he will have to do it without cutting subsidies and going against welfare policies.”

Sharif is an internationally renowned figure, according to James Schwemlein, a senior director at the Albright Stonebridge Group in Washington, who pointed to his reputation as a capable executive.

“Shehbaz Sharif headed Pakistan’s largest province, Punjab. He did that largely developing a very positive impact on business. He was responsible for significant investment in infrastructure. He is well known among all international interlocutors – be they American or being Chinese,” he said. †

India: better relations?

India in particular will pay attention to the new government.

The way events unfold in Pakistan will likely provide New Delhi with an opening to improve relations with its neighbor, former Indian Foreign Minister Shashank told CNBC.

Pakistani “affirmation of democracy”would provide an “opening to make progress in bilateral relations,” he said.

“But the test will be signals from the Sharif government and its all-powerful army,” Shashank added. “The Pakistani military is desperate to build relations with the US,” he said.

USA: Fix Ties

The top priority for the new administration would be to restore ties with Washington, analysts said.

Khan had used his oft-repeated accusation of a US plot to remove him from power to block the vote of no confidence in his government. He claimed the US was upset by the perception that Pakistan had moved closer to Russia and China under him.

Khan had deviated from the traditional pro-American establishment to pursue a markedly different foreign policy, and embraced China’s Belt and Road projects, Schwemlein told CNBC’s Asia Squawk Box.

He called his enmity against the US “dangerous” for Pakistan and told CNBC on Monday: “The dream for Pakistan is that they can export to China. The reality for Pakistan is that they export to the US and Europe.”

Pakistan’s economic fortune is largely linked to maintaining positive relations with the West, but Khan “took action against it, said Schwemlein.

It is likely that the new Sharif government will align more closely with the US

China: strategic ties

According to Shibani Mehta, a research analyst at Carnegie India, Pakistan had cultivated ties with both the US and China as a way to overcome its security dilemma and maintain its balance of power with India.

“Because of its history with the US and China, Pakistan needs them more than they need it,” Mehta said. “The United States has shown little desire to get involved in regional disputes. China’s motivations are rooted primarily in a shared suspicion and history of war with India, and commercial interests in Pakistan,” she said.

A change in Pakistan’s relationship with either or both will depend on Washington and Beijing’s strategic objectives

Shibani Mehta

Research Analyst, Carnegie India

“A change in Pakistan’s relationship with either or both will depend on Washington and Beijing’s strategic objectives,” she added.

But Sevea pointed out that whoever comes to power, the military would continue to have an important voice in Pakistan’s foreign policy.

“Given the concerns within the military over Imran Khan’s criticism of Pakistan’s relations with the US and the army chief’s assertion about the importance of the relationship with the US, it is likely that Sharif will seek to return to a balance between the two.” said.

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