Pakistan-US Defence Ties: Recalibration or Repudiation?

Washington Cancels $300 m in Coalition Support Funds (CSF) to Pakistan

In the lead-up to US Secretary of State Mike Pompeo’s official visit to Pakistan, the US government opted to program – i.e. cancel — $300 million US in coalition support funding (CSF) to Islamabad.[1] Thus far, the US has cancelled $800 m in CSF funding from Pakistan. Pentagon spokesperson, Lt. Col. Kone Faulkner, said that the cut came “due to a lack of Pakistani decisive actions in support of the South Asia Strategy.”[2]

The ‘South Asia Strategy’ centers on holding “Pakistan accountable for its failure to deny sanctuary to militant proxies” operating in Afghanistan.[3] Evidently, Washington does not feel that Pakistan has lived up to the expectations laid-out in the South Asia Strategy, but Pakistan maintains that its counterterrorism (CT) and counterinsurgency (COIN) activities were valid (and supportive of the US). Moreover, Islamabad asserts that the cut CSF funding was supposed to reimburse Pakistan for its aforementioned efforts.[4]

Be it the cut in CSF funding and, as a consequence, Pakistan’s suspension from the International Military Education and Training (IMET) program and the stay on arms deliveries funded through Foreign Military Financing (FMF), the prelude to the US’ chilling effect on Pakistan emanates from President Trump’s tweet in January 2018, in which he accused Pakistan of opposing US interests.[5] In turn, the White House – while initially leaving the door open to providing military aid to Pakistan (conditional on Pakistan’s actions) – it has entirely moved to cutting military funding and training support.

Currently, it does not appear that Pakistani purchases from the US or bilateral economic activity (such as trade) will be affected, but that can change. Indeed, significant shifts in US-Pakistani bilateral defence ties appear to be in motion, though to what specific outcome (aside from shutting Pakistan out from military assistance packages) is unclear. Part of that lack of clarity comes from Pakistan itself, which – despite the US’ carrying a narrative of Pakistan being duplicitous – kept acting as though the US was being supportive.

The tone-deaf response of the Inter Services Public Relations (ISPR), which – in response to Trump’s initial tweet – said the US and Pakistan were “allies.”[6] However, the current Pakistani government – now led by PTI – had promised to recalibrate Pakistan-US relations, with Khan stating: “…our government will engage the US to make this relationship more balanced and trustworthy.”[7] However, is this a substantive shift?

Pakistan’s New Government is Uneasy with Washington

The Khan government’s ties with the US had begun awkwardly. Following a call by Pompeo to Khan, the US State Department outlined that the call reiterated “the importance of Pakistan taking decisive action against all terrorists operating in Pakistan,” which the Pakistani foreign ministry disputed, stating that “no such mention” was made in the conversation.[8] However, Pakistani news reports claim that Islamabad will “bury” the issue when Pompeo visits Pakistan.[9] Nonetheless, the PTI government at least made its intent to control the narrative – albeit with a disputed set of facts – vis-à-vis Washington.

Clearly, the PTI government is showing a measure of unease with the US, especially on the issue of the US using official engagements to deliver the “do more” message. However, besides calling for more balance in Pakistan’s ties with the US, the current government has not offered specific expectations or outcomes regarding the US. Indeed, it requires time to properly construct a revised foreign policy, especially one as large as recalibrating Pakistan’s defence ties with the US; these ties have largely defined Pakistan’s issues – including its large-scale CT/COIN operations in the late 2000s and early 2010s – since 2001.

Thus, it is concerning that the US Secretary of State is opting to visit so soon – i.e. within weeks of the PTI being sworn-in and, in turn, having no time to engage with other institutions (much less Pakistan’s policy intelligentsia) to construct a concrete, recalibrated foreign policy. In effect, Washington is precluding the Pakistani process, or – if one is optimistic – offering its terms ahead of that recalibration. If taken cynically, it would appear as though Washington was trying to shape Islamabad’s decisions.

By omitting CSF, FMF and IMET, the US has either (1) transformed previously existing programs into points of leverage to secure amenable Pakistani policies or (2) opted to stop dealing with the Pakistani military. If (2) is the objective, then the PTI government could be pushed on matters such as bilateral trade, civilian or development aid (e.g. USAID) and support from the International Monetary Fund (IMF). Thus far, these have not been affected by Washington’s decisive review of its defence ties with Pakistan, but seeing how Pompeo had asserted that the IMF should not be used to bail Pakistan out from hard-currency losses from the China Pakistan Economic Corridor (CPEC) project, this could change.[10]

Prime Minister Imran Khan Promises to Recalibrate US-Pakistani Ties on ‘Mutual Benefit’

It is no secret that the success of Pakistan’s current government rests on its economic performance in the near and medium-terms. Be it balancing Pakistan’s current account deficit (through loans and generating high-value exports), increasing the employment-rate, delivering socio-economic programs in all domains (i.e. education, healthcare, housing, etc) and attracting foreign direct investment (FDI), Washington most certainly owns viable foreign policy cards to leverage with Islamabad.

For example, since 1993 the US has consistently maintained a trade deficit with Pakistan, i.e. enabling the Pakistani economy to accrue hard-currency gains through exports to the US market.[11] Granted, this deficit has decreased since 2014, though one can argue that some of this has to do with the reduced performance of Pakistani exporters (given how the previous government maintained an import-friendly environment via a relatively high fixed currency exchange-rate). Punitively, the US can opt to limit Pakistan’s surplus or, should it offer a mulligan, offer mechanisms that could enable Pakistan to increase those exports (e.g. via FDI of export-capable industries, sharing of technology and/or know-how that could let Pakistan improve the quality and competitiveness of its products and services, etc).

Given the urgency of Pakistan’s current account deficit, the US can, at least as a plausible policy tool, offer a mix of FDI, grants, loans, facilitating Pakistani exports and other measures to help Pakistan reduce that deficit well within the PTI’s current mandate. Those mechanisms can also be tied to the PTI’s development projects (e.g. funding housing or the national healthcare insurance program) which would not only (via US funding) pull hard-currency to Pakistan but also implement some of the PTI’s key electoral promises.

Of course, this is assuming a positive US approach, the punitive method (of restricting trade and civilian aid) could also be put on the table as a pressure-tactic. Given the current record of the White House, this aggressive approach must not be discounted; in fact, as far as Pakistan is concerned, it could be a factor.

In any case, one must not underestimate the breadth of foreign policy tools the US can employ upon the Pakistani government. For the PTI, Washington certainly offers a lot in the way of smoothening the party’s inheritance of the previous government’s problems and, in turn, materializing some of the PTI’s promises. Interestingly, a relationship of this nature would be different from the security-first approach of the past, though it must be noted, the US could dangle economic benefits as a means to yield security interests.

Examining the Alternative: Repudiation

Thus, any call for repudiating the US is, given the reality of the situation, difficult. In fact, assuming such a road could put the PTI’s political integrity at-stake (e.g. consider the economic damage the US could cause by closing its market to Pakistani exporters). The lack of time given for it to adjust – and plan accordingly should the US impose punitive measures – places PTI in a difficult position, at least in terms of issuing any strong repudiation towards the US. Likewise, the malaise on Pakistan’s hard-currency reserves and current account balance was in great part driven by the China Pakistan Economic Corridor (CPEC) – i.e. requiring Pakistan to import Chinese inputs at an aggressive pace – does not offer leverage.

Currently, the PTI requires time to construct and implement policies to reduce the US’ leverage, especially from an economic standpoint. It would not be surprising if Pompeo’s visit is designed to achieve a quick – i.e. reactionary – response from Pakistan. Indeed, no other country has been engaging the new Pakistani government as rapidly (and with the timely CSF cuts in mind, as aggressively) as the US. In the absence of active contingencies to circumvent some of Washington’s leverage (e.g. the trade surplus), Pakistan might not have much of a choice but to react (positively or negatively). Thus, one can expect PTI to see seek an opportunity to salvage macroeconomic, socio-economic and, potentially, defence gains for the near-term by offering a positive response. However, it is the US that is entering from a position from strength.

[1] “U.S. cancelling up to $300M in aid to Pakistan over record on militants.” Thomson Reuters (via CBC). 02 September 2018. URL: https://www.cbc.ca/news/world/pakistan-us-military-aid-pompeo-pentagon-1.4808245 (Last Accessed: 03 September 2018).

[2] Ibid.

[3] Testimony by John J. Sullivan (Deputy Secretary of State) to the Senate Foreign Relations Committee. US Department of State. 06 February 2018. URL: https://www.state.gov/s/d/2018/278003.htm (Last Accessed: 03 September 2018).

[4] Kamran Yousaf. “It’s not aid, US owes money to Pakistan in CSF: Qureshi.” The Express Tribune. 02 September 2018. URL: https://tribune.com.pk/story/1793667/1-suspension-300m-csf-taken-pompeo-visit-qureshi/ (Last Accessed: 03 September 2018).

[5] Donald J. Trump. Twitter. 02 January 2017. URL: https://twitter.com/realDonaldTrump/status/947802588174577664

[6]  “In case of US action, Pakistan is ready: DG ISPR.” The Express Tribune. 03 January 2018. URL: https://tribune.com.pk/story/1599824/1-pakistan-america-still-friends-says-dg-ispr/ (Last Accessed: 04 January 2018).

[7] Drazen Jorgic. “Pakistan’s Imran Khan calls for more ‘trustworthy’ ties with U.S.” Reuters. 09 August 2018. URL: https://www.reuters.com/article/us-pakistan-usa/pakistans-imran-khan-calls-for-more-trustworthy-ties-with-u-s-idUSKBN1KU0SZ (Last Accessed: 03 September 2018).

[8] “Pakistan disputes US account of Pompeo-Khan phone call.” Al Jazeera. 24 August 2018. URL: https://www.aljazeera.com/news/2018/08/pakistan-disputes-account-pompeo-khan-phone-call-180824152443793.html (Last Accessed: 03 September 2018).

[9] “Govt to ‘bury’ Imran-Pompeo phone call transcript: report.” Pakistan Today. 29 August 2018. URL: https://www.pakistantoday.com.pk/2018/08/29/govt-to-bury-imran-pompeo-phone-call-transcript-report/ (Last Accessed: 03 September 2018).

[10] “U.S.’ Pompeo warns against IMF bailout for Pakistan that aids China.” Reuters. 30 July 2018. URL: https://www.reuters.com/article/us-imf-pakistan/us-pompeo-warns-against-imf-bailout-for-pakistan-that-aids-china-idUSKBN1KK2G5 (Last Accessed: 03 September 2018).

[11] “Trade in Goods with Pakistan.” United States Census Bureau. URL: https://www.census.gov/foreign-trade/balance/c5350.html (Last Accessed: 03 September 2018).