November 23, 2017

Interplay Between Economy And Security

Pakistan’s economy faces fundamental challenges to sustain its economic growth and hence economic security. With falling domestic and foreign investments, the current policy of consumption-led growth is threatening even to maintain the present low economic growth.

Posted on 10/2/17
By Ikram Sehgal | Via ViewsWeek
The road to Khujarab Pass border post between China and Pakistan, the Roof of the World through Silk Route (KKH). (Photo by Muzaffar Bukhari, CC license)

The road to Khujarab Pass border post between China and Pakistan, the Roof of the World through Silk Route which is part of the CPEC. (Photo by Muzaffar Bukhari, CC license)

A strong connection between the country’s prosperity and military power or put simply, economy and security are two sides of the same coin; without political stability, without security and without peace it is difficult to develop an economy. An economy will only thrive when there is security for the people. The economy needs a secure environment for development while security creates the pre-conditions for sustainable economic growth and integration into regional and global economy. Without security chaos and confusion will result with violence creating its own economy for its sustenance (smuggling, narcotics trade, land mafia, extortion, ransom, etc). In today’s world a strong economy translates into greater military power, the weaker the economy the weaker is the military power.

 

The role of the state is of paramount importance with relation to its economy and national security. If the State is weak for any reason and its institutions are unable to function or are corrupt, both economy and security become compromised and lawlessness raises its head. Some drivers of a weak economy are 1) a large fiscal deficit 2) tardy growth of the economy 3) increase in expenditures 4) large-scale borrowing for expenditure requirements; debt starts accumulating 5) high percentage of resources used for paying off interest on government borrowings 6) high levels of tax avoidance and tax evasion 7) high levels of unemployment, inflation and 10) weak political institutions, etc. Currently, Pakistan’s economy faces fundamental challenges to sustain its economic growth and hence economic security.

 

The importance of Foreign Direct Investment (FDI) can never be undermined, especially for a developing country like Pakistan, influx of FDI have recorded steep decline many times in the past resulting in halting of growth, due mainly to various uncertainties in Pakistan. Averaging a little more than US$ 1.0 billion annually, FDI has shown a sign of improvement after a long time with 10% year-on-year to cross the $1 billion mark during July to last year Dec. But given the “balance of payments” position and urgent need to further boost industrial production, Pakistan needs to increase its mobilization of foreign resources, this includes remittances by our expatriates through recognized channels. At present Pakistan’s economy faces fundamental challenges to sustain its economic growth and hence economic security. With falling domestic and foreign investments, the current policy of consumption-led growth is threatening even to maintain the present low economic growth.

 

China has played a major role in boosting Pakistan’s economy through the China-Pakistan Economic Corridor (CPEC), a game-changer for Pakistan and for the region.  Linking China’s province of Xinjiang with the Gwadar port, CPEC is a collection of projects aimed at upgrading Pakistan’s infrastructure and consequently enhancing economic links between the two. Overall value of CPEC projects at around U$62 billion makes it very hard to downplay the impact that this initiative would have on the Pakistani economy. CPEC is expected to create approximately 700,000 direct jobs by 2030 and boost the country’s annual growth by around 2-2.5 percentage points. CPEC has the potential to deeply reshape Pakistan’s economic standing and overall role in the region.

 

A cornerstone of Pakistan’s future economic growth having the potential of lifting the people out of poverty and misery, the 12 energy projects under CPEC are expected to add 5,000 megawatts of electricity to the national grid. This would boost industrial production as well as agricultural output. Security challenges are often a good indicator of the geo-strategic relevance of an initiative and confirm its sensitive importance. Regional and global players have initiated propaganda at destabilizing Pakistan. India has launched a terror campaign in Balochistan from where the project begins, RAW’s senior operative Indian Navy’s Commander Kulbushan Jhadev, now in Pakistani custody confessed that his agents shuttling through Iran, Balochistan and Afghanistan had established terror centers. India also orchestrated a series of “false flag” operations where it slaughtered its own army personnel while putting the blame on Pakistan.

 

The military has rendered invaluable assistance by setting up a Special Security Division (SSD) comprising of 15,000 troops, including 9,000 Pakistan Army soldiers and 6,000 para-military forces personnel to protect the CPEC. India views CPEC-related developments as a magnifier of both Pakistan’s material clout and of China’s overall influence in the region. However, a concerted media campaign within the country causing doubts about its economic and political potential, is playing into the hands of our enemies. Some pseudo-intellectuals and so-called liberals, wittingly or unwittingly, oppose the CPEC while others having a penchant for self-flagellation do not see anything worthwhile in CPEC. On the other hand CPEC’s success is subject to a stable political, economic and security environment.

 

Gone are the days of fighting wars the old fashioned way, today Hybrid Warfare that blends conventional and irregular warfare and cyber warfare has become reality. Disruptive, exploiting modern technology and financial markets it is used to counteract military superiority, A vital part of hybrid warfare economic sabotage  is spreading disinformation and exposing truths, campaigns on social media, manipulation of currency markets, stock exchanges, etc.

 

With all its benefits economic globalization can also have alarming effects on security. Because of increasing interdependence of world economies as a result of the growing scale of cross-border trade, flow of international capital and wide and rapid spread of technologies, organized crime has diversified, taking on global proportions and reaching macro-economic proportions. Mafias are truly a transnational problem: a threat to security, especially in poor and conflict-ridden countries. In terms of global reach, penetration and impact, organized crime has become a threat affecting almost all nations. Cross-border crime and international terrorism are based on significant financial resources illegally obtained by economic fraud, then the vicious circle is closed and money from illegal activities and organized crime are laundered in the economy. From within the State is weakened because of bad governance – corruption, abuse of power, weak institutions, no accountability (in managing resources), etc.

 

Treated as a vital pillar of National Security focus must be given to the economy as priority. Strong economic power guarantees national security, strategic thinkers believe security is achieved not by military means but by a booming economy which serves as an enabler of national security while a weak economy is a constraint to national security – case in point, despite being armed to the teeth the Soviets lost the Cold War in the market place. Unless the economy is strengthened through pragmatic macro-economic policies, structural reforms, investment in education and health and infrastructure, Pakistan will have huge problems trying to sustain itself as a secure State.

The writer is a defense and security analyst.

 


Filled under: Pakistan, Views Digest, ViewsWeek Exclusive

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