Russia, Ukraine, and Pakistan

Russia has invaded Ukraine and global commodity prices have been on a tear. From crude oil to coal, wheat, and palm oil, prices are skyrocketing as markets fear for the worst. With inflation across the world at levels not seen for years, if not decades, and a global economy only just recovering from the pandemic, the timing of this conflict could not have been worse. In the United States, pressure is mounting on Biden to allow increased domestic production of oil; Japan is moving to expand subsidies; and China is prioritizing a strategy to secure key commodities at all costs. Pakistan’s government has also reacted to this, with Prime Minister Khan announcing a surprise cut to petroleum and electricity prices, with the total cost of this subsidy amounting to over Rs. 200 billion over the next four months. This populist move, and the overall speech given by the prime minister, needs closer scrutiny, because within this speech we find the framework of Khan’s political strategy for 2022 and beyond.

A key opening thrust of the speech was focused on the need for Pakistan to have an independent foreign policy. This, the prime minister recalled, was why he went to China and engaged with Putin during a historic trip to Moscow. From Khan’s point of view, this independence was not possible in previous governments as they were beholden to the West due to their assets in places like London and Switzerland. It was for this reason, Khan argued, that Pakistan joined the United States in the war on terror and its civilian leaders permitted Washington to wage a war through drone strikes on Pakistani soil. What the prime minister was insinuating was that since he did not have assets in the West, he could not be persuaded to follow foreign diktats, which is why he said “absolutely not” to the United States as it sought some level of counter-terror cooperation with Pakistan in 2021, which potentially included some level of American military capabilities on Pakistani soil.

From here, Khan pivoted to the economy, sharing data on how his government inherited an economy in crisis, how the pandemic added to the pain, and how well his government had performed despite these crises. He shared data on inflation and exports in a bid to showcase his government’s performance. Inflation, he accepted, was a major problem, which is why his government was announcing a subsidy for petroleum products and electricity. Other programs were also mentioned, including the Kamyab Jawan program, expansion of cash transfer under Ehsaas, and yet another amnesty, this time focused on investments in industrial projects.

The speech, especially the key focus on foreign policy, populist economic measures, and another amnesty targeted towards benefiting the elite is an indication that Khan has his eyes on the elections. With the opposition agitating on the streets and proposing a no-confidence vote in parliament, Khan knows that the tide could soon turn against him. To prepare for this, the prime minister is laying a minefield for if and when he finds himself out of the prime minister’s office and as an opposition leader.

This minefield will seek to attack the prime minister’s opponents, both civilian and non-civilian, on the foreign policy front: there is no doubt about the fact that there is unease among parts of Pakistan’s civilian and non-civilian elite over the increasing distance between Islamabad and Washington. The Russian-Ukraine crisis has further added fuel to this fire, especially given that a significant portion of dollar flows that keep Pakistan’s economy afloat come from Europe and the United States. In this scenario, a government which is not led by Khan may try to engage and hit the reset button with Washington and the West. If this happens, Khan is likely to argue that foreign forces opposed to his independent foreign policy conspired to oust him from power. This rhetoric will rally his core base of supporters who have been drawn to Khan for his consistent opposition to what one could call western imperialism as represented by the United States and its foreign wars.

On the economic front, Khan’s strategy has two core goals. The first is to provide relief to ordinary citizens in a bid to bolster his popularity while providing more handouts in the form of an amnesty scheme to elites to keep them onside. These measures may bolster his chances in the upcoming elections, especially if they are held ahead of schedule. Should this strategy fail, the incoming government may find itself forced to take painful measures that raise prices, taxes, and debt. At this point, Khan can fall back to his pre-2018 rhetoric of how a corrupt elite, brought to power through a foreign conspiracy, is burdening the masses with inflation and borrowing increasing amounts of money from abroad to indent the nation, thereby undermining its sovereignty.

Some may argue about what happens if Khan remains in power and must clean up the economic mess he is creating. Like previous leaders before him, Khan will deal with that mess if and when the time comes. After all, one does not have the luxury of thinking about the medium-term when near-term survival is at stake.