The traditional two-camp theory, which had divided the world into two superpowers and the rest split between them either in support of or in an adversarial role, is no more in vogue. Not that the superpower concept has ceased to exist—China has fast-tracked its pace to assume the role sooner than later. In theory, the two-camp paradigm does exist. In practice, it has stopped being a source of disintegration or economic decline.
The multipolar as world is described today, to a larger part, is the result of China’s relationship theory that rests on pragmatism and regional cordiality. The beauty of this theory is that despite the ideological leanings and partisanship, many Asian, Middle Eastern, and African countries have learned to live with both China and the US without getting controversial or inviting economic hardships.
In the previous century, an economically weak country would align with the superpower and depend on its military, technological, and economic prowess to survive. In the present century, countries strive to rise by their bootstraps, for which they first learn to make bootstraps. With economic and financial interests overlapping, countries seldom have a reason to fight one another because that would take the entire block down. A relationship built on economic interests enables countries to keep their political leaning separate from economic interests.
The Association of Southeast Asian Nations (ASEAN), a group of 10 countries, presents an excellent example of surviving amicably with divergent views.
From 2010 to 2020, ASEAN has grown to a combined GDP of $3 trillion. Some ASEAN countries have sweet, and others have sour relations with US and China. However, no country has allowed their relationship with the contending powers to influence its economic and trade relations. The cooperative regional order the countries have built is based on a culture of pragmatism and accommodation.
The result of the non-interference policy in the political affairs of the partner countries is that they could focus on economic growth and development. As the Singaporean diplomat Tommy Koh has observed, “The US, China, and India cannot take the role of driving the region because they have no common agenda. ASEAN is able to drive precisely because the three great powers cannot agree. And we can continue to do so as long as the major powers find us neutral and independent.”
ASEAN was not always a non-partisan group of countries.
When established in 1967, it had the complete support of the US. China and the Soviet Union ranked it as a neo-imperialist American creation. However, when China opened its economy and embraced regional economic corporations as its core developmental policy, ASEAN became China’s best partner. The corporation signed a free trade agreement with China in 2002. The trade relations between China and ASEAN have expanded ever since. In 2000, their trade relations were worth $29 billion; in 2022, it has gone to $669 billion.
In January 2022, Australia, China, Japan, New Zealand, South Korea, and the members of ASEAN made the Regional Comprehensive Economic Partnership—a free trade agreement—which is likely to put their economies on a new growth trajectory.
The ASEANs also have excellent and close relations with the US. Its trade with the US had also increased to $364 billion. President Trump did ignore ASEAN like he ignored the rest of the world; the gap was readily filled when Joe Biden became President of the US. In May 2022, Biden hosted an ASEAN summit at the White House attended by most of the union’s key leaders. Later in June, the President launched Indo-Pacific Economic Framework to accelerate regional economic relations. Seven out of ten ASEAN countries signed the agreement with Australia, Fiji, India, Japan, New Zealand, and South Korea.
Despite the goodwill the ASEAN enjoys with China, their relationship is occasionally marred by the South China Sea disputes. Similarly, the US keeps pressuring them to drop the idea of adopting 5G technologies from China. The US has also been consistently persuading the union to forget to join Belt and Road Initiative (BRI). All these frictions have had little or no consequence on the economic and trade relations among the ASEAN countries and their relations with the US and China at the individual level. Countries are free to adopt or discard China’s 5G technology. All ten ASEAN, however, have joined various projects of BRI. According to Angela Tritto, Albert Park, and Dini Sejko of the Hong Kong University of Science and Technology, “ASEAN countries had launched at least 53 projects under the BRI umbrella as of 2020.”
The projects have brought economic relief to many countries, such as Laos. It was one of the poorest countries in the world, but after embracing BRI, it now boasts of a high-speed train like the capital, Vientiane, to China Yunnan Province, which has been instrumental in uplifting the country’s economic conditions.
There is a lesson for Pakistan in ASEAN’s approach to managing geopolitical competition between China, the United States, and other regional countries like India.
According to repeated reports from Pakistan Business Council, Pakistan is one of the lowest regionally integrated countries in the world. Pakistan has had a consistent trade deficit since 2003, mainly due to high-energy imports. “Since 2012, China has emerged as Pakistan’s largest trading partner replacing the United States. However, in recent years, the biggest trade deficits were recorded with China, India, United Arab Emirates, Saudi Arabia, Kuwait, and Malaysia.”
We could have bought oil at a cheaper rate from Iran and Russia; however, we preferred to appease the US sanctions on both countries. As a result, the Pakistan-Iran Gas Pipeline project is lying dormant because of Pakistan’s inefficient foreign and economic policies. The government is spends almost 75 percent of its ‘foreign reserves’—most of it procured through debts—on buying expensive oil, with the result that industries are shutting down, and exports have nosedived due to the energy crisis.
Instead of engaging with China in trade and investment, Pakistan is seeking debt to overcome the balance of payment crisis. Moreover, the China-Pakistan Economic Corridor has suffered because of unabated politicians’ spats and Pakistan’s policy of appeasement towards the US.
At the regional level, strained relations between Pakistan and India have been the source of economic meltdown, making the South Asian Association for Regional Corporation a redundant regional block. Neither has the organization effectively solved regional conflicts nor could it become a catalyst of economic change. Foreign direct investment has been consistently declining in South Asia since 2018. In 2021 there was a 28.25% decline from 2019. The region’s economic growth has registered a 17.26% increase from 2020; however, compared to the ASEAN, it is much lower. The poverty rate has declined, however, at a very slow pace.
According to the World Bank, in 2020, Pakistan’s exports to India amounted to $16 million, while India’s exports to Pakistan amounted to $229 million. This represents a significant decline from the peak of trade between the two countries in 2012 when bilateral trade was valued at $2.7 billion. We haven’t learned to keep political and economic interests separate.
The chaos at home has its reflection on our trade relations with regional countries, impacting economic growth. The result is that Pakistan’s middle class has shrunk, democratic values are being compromised, and the rate of savings and the quality of credit have gone down. The only thing rising is the debt-to-GDP ratio.
As acknowledged in the National Security Policy 2022-2026, Pakistan’s success rests on embracing the geo-economic security paradigm for which engaging with regional countries on trade and development is indispensable.
The writer is a public policy analyst based in Lahore. She tweets @durdananajam
