Germany’s development cooperation towards Pakistan
GERMANY — the EU’s economic, political and strategic hub– has been positively engaged with Pakistan in imparting its noteworthy role towards the economic and social development in Pakistan. It has been rightly endorsed by meaningful support from Germany’s Development Ministry (BMZ). Islamabad persistently attempts to cement its ties beyond its 70 year old friendship with Berlin. Pakistan cordially recognizes Germany’s support for flood affetees, Belin’s concern for the situation in Afghanistan and its continued support for Pakistan’s GSP Plus status.
Pakistan has significant economic potential. It has a favourable geographical location at the crossing point of three regions: South Asia, Central Asia and the Middle East. With over 200 million people, Pakistan is the fifth largest country in the world and, therefore, a huge market for trade and investment. About 35% of the population is under the age of 15. Moreover, Pakistan and Germany have been engaged in development cooperation for more than 60 years. Currently, bilateral development cooperation focuses on climate and energy, good governance and social protection and sustainable economic development and training and employment.
With a young population, a rapidly growing middle-class, considerable natural and human resources and low labour costs, the country could fare much better with more trade and investment opportunities. This is also a clear message in the 2030 Agenda that accomplishing the multifaceted Sustainable Development Goals (SDGs) in developing countries requires financing beyond current aid levels. Therefore, for Pakistan to show real progress towards the SDGs, along with development cooperation, increased trade with and investment from Germany are of paramount significance.
Germany’s development cooperation with Pakistan is geared towards supporting the country in achieving sustainable economic development. The BMZ had committed 174.25 million euros for 2020 and 2021 in support of these efforts. Cooperation focuses on the following core areas and areas of intervention: Geographically, the programme of development cooperation is concentrated on the north-west of the country. Germany is one of the few donors working with their own structures and staff in Khyber-Pakhtunkhwa and in what used to be called the tribal areas (now Merged Areas). Another focus is on the populous Province of Punjab.
Germany’s continuous support to Pakistan is evident from the suspension of debt service of 26.213 million Euro under the Debt Service Suspension Initiative. The German Development Bank maintains an active portfolio of more than 600 million Euros much needed financial cooperation with Pakistan for sustainable economic growth. Moreover, in a first of its kind climate partnership between the two countries to enhance the climate resilience of the vulnerable communities in Pakistan, Germany will provide financial assistance worth 150 million Euros.
In mid-2022, the exceptionally heavy monsoon rain caused devastating floods. More than ten per cent of Pakistan’s area was under water after heavy rains, leaving more than two million people homeless. In September 2022, the German Development Ministry committed assistance for Pakistan of a total of 39 million Euros to help deal with the current crisis and the social consequences of the floods and with the reconstruction of infrastructure. Germany assists provincial and local governments in the Provinces of Khyber-Pakhtunkhwa and Punjab in delivering their new tasks, improving local governance, increasing tax revenue and reinforcing their dialogue with citizens.
In addition, Germany is working in Pakistan to reduce push factors for migration and displacement by assisting the economically weaker regions on the Afghan border in hosting refugees and improving municipal infrastructure in communities with high numbers of migrants. Where possible, account is taken of women as a target group in all projects and special support is provided to their active participation.
In response to the devastating consequences of the flood disaster, the BMZ had already committed about 67 million Euros to help Pakistan rebuild key infrastructure and address the social consequences of the disaster. The new funding that is mainly intended to finance new projects that will assist the country in adapting to climate change. Examples include the construction of rainwater retention basins and drainage systems in order to protect people from flooding in the event of heavy rains.
Pakistan is also one of the “Pathfinder” countries for the Global Shield against Climate Risks that was launched last year under Germany’s G7 Presidency. Under the Shield, Pakistan and other developing and emerging economies that are severely affected by climate change will get more systematic protection against climate risks. This also includes the generation of the necessary climate data.
Currently, the German Development Ministry (BMZ) committed additional funding for Pakistan to assist the country in addressing the damage caused by climate-related events last year and in adapting to climate change. This was announced by BMZ State Secretary Jochen Flasbarth at an international conference for Pakistan in Geneva (Jan 23, 2023). The BMZ is planning to add another 84 million euros to the climate partnership between Pakistan and Germany.
More than 40 German companies are present in the Pakistani market. Some of the well-known German companies based in Pakistan include BASF (Chemicals), BMW (Automobile), Daimler AG (Automotive), DHL (Courier), Lufthansa Cargo (Cargo airline) (Not currently flying to Pakistan), Merck Group (Pharmaceutical), Metro Cash and Carry (Wholesale) and Siemens (Conglomerate). In addition, the German Development Organization GIZ has extended its cooperation to complete several development projects in various sectors of Pakistan.
Moreover, some of the leading German think tanks and organizations–The Friedrich Ebert Stiftung, the Friedrich Naumann Foundation for Freedom and the Hanns Seidel Foundation are represented in Pakistan– supporting projects in the fields of strengthening democratic institutions, promoting human rights and empowering women, tackling climate change, deradicalisation, regional cooperation and media work, among others. The Pak-German relationship has been positively galvanized by Pakistan Foreign Minister Bilawal Bhutto Zardari’s latest visits to Germany (October 2022, February 2023).
Most importantly, GSP+ is a European Union scheme to support bilateral trade with partner countries. Germany has been its staunch supporter. The introduction of GSP+ to Pakistan has indeed boosted Pakistani exports in the European Single Market. However, this preferential status comes with a caveat— as Pakistan may lose this status by the end of this year– if it remains unable to implement the EU’s demands. Yet, hydropower energy sector is another milieu where Germany can help Pakistan. Like Germany, Islamabad does expect from the other European countries (Belgium, France and Netherlands) to assist Pakistan in addressing non-traditional challenges accompanied with the emerging economic needs.
