Geopolitical and geoeconomic perspectives provide separate but frequently linked strategies in the field of foreign policy. The geopolitical approach focuses on a state’s power and its strategic placement in international arena. This standpoint shapes how governments manage alliances and conflicts through geographical control, military might and security strategies. Geoeconomic approach, on the other hand, places more emphasis on using economic instruments and policies to further political goals. It makes use of investment, trade,aid and sanctions to exert influence and further national objectives. In Pakistan’s context, geoeconomics means connectivity and development partnerships.
A complex interplay of political, economic and strategic factors has shaped the nature of Pakistan-US relations. Rather than being driven by economic synergies, geopolitical imperatives have historically determined this relationship with a blend of friction and cooperation. Pakistan sided with the US against the Soviet Union during the Cold War and benefited greatly from both military and financial support. Again, Pakistan was positioned as a crucial ally in the fight against terrorism spearheaded by the US following the 9/11 terrorist attacks. Pakistan’s geographical position makes it strategically important for the great powers.
However, in bilateral interactions between Pakistan and US, security concerns have frequently superseded economic considerations. US economic aid to Pakistan has varied dramatically in recent years, primarily due to changes in Washington’s goals and strategy in the region. Pakistan benefited greatly from military and economic assistance after the 9/11 attacks, which peaked during the height of the War on Terror. However, economic aid to Pakistan declined as US focus shifted to other global issues and scrutiny over the effectiveness of aid rose. This volatility highlights how security concerns dominate US-Pakistan relations and frequently cast a shadow over durable economic partnership. Consequently, the geoeconomic relationship between Pakistan and the US remains subservient to the latter’s geopolitical interests in the region and towards Pakistan.
There hasn’t been much room for comprehensive economic collaboration between Pakistan and the US. Relationship between the two is often characterised as transactional because economic assistance has frequently been conditional and linked to Pakistan’s role in serving the US geopolitical interests. Regarding trade with the US, Pakistan’s exports amounted to $4.9 billion while imports stood at around $2 billion in 2023.Though the US serves as an important trading partner of Pakistan and most important destination for the Pakistani exports, the statistics show a lacklustre picture. Thus, the economic ties between Pakistan and the US remain far below the potential.
Resolving Pakistan’s own economic issues is essential if it hopes to enhance economic relations with the US. In the first place, there is a necessity of providing an enabling environment for foreign investment and economic growth. In this context, there is an urgency to introduce structural reforms in the areas of governance, business climate and taxation. Through investment in important industries, technical assistance and capacity building programs, the US can also play a significant role. Several sectors can be identified for the US-Pakistan economic collaboration. Particularly, the US can help Pakistan develop human capital through enhanced collaboration in the IT and education sectors. For Pakistan, this can go a long way to realise innovation, economic diversification and integration in global economy.
There is a growing consensus that Pakistan and the US need to renew their relations based on a geoeconomic approach. This kind of shift can be a realistic response to the changing global geopolitical environment, especially in light of the US-China competition, as well as Pakistan’s urgent economic demands. Setting Pakistan’s economic agenda first in its dealings with the US is not only beneficial, but also necessary for long-term mutual gain and bilateral collaboration. For upgrading Pakistan-US economic ties, the Trade and Investment Framework Agreement (TIFA), signed in 2003, continues to serve as an essential platform. Held in February 2023, the most recent TIFA meeting emphasised the framework’s continued significance. Pakistan can take advantage of this platform for advancing economic agenda in relations with the US. Our economic managers need to identify key areas of partnership in trade and investment. Several industries have potential for cooperation including tourism, IT, AI and agriculture. Pakistan’s IT industry, for instance, has much potential for growth and advances in artificial intelligence can encourage even more innovation and economic progress. Likewise, agricultural sector offers prospects for modernisation and productivity through US investment and technological know-how.
In short, Pakistan needs a pivot to a geoeconomic approach for renewing relations with the US. Pakistan and the US can realise the true potential of their bilateral relations by addressing common issues, grabbing economic opportunities, and cultivating an atmosphere of trust and cooperation. To negotiate this new environment and pave the way towards closer ties, pragmatism and balance should prevail.
This article is based on the HEC-funded research project under National Research Program for Universities (NRPU). writer is Research Assistant at IR Department, NUML, Islamabad
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