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With New PM Shehbaz Sharif Sworn in, a Look at what Lies Ahead for Pakistan

By Prof. Tridivesh Singh Maini

On April 10, 2022, Imran Khan lost the vote of confidence.  Pakistan Muslim League (N) (PML-N) Supremo, who earlier served as the Chief Minister of Punjab (Pakistan), Shehbaz Sharif, was elected (unopposed) and sworn in as Prime Minister on April 11, 2022. All eyes are on the likely economic and foreign policy of Sharif. 

State of the economy 

The Pakistan economy is afflicted by numerous challenges:; economic growth is estimated to be 4% in 2022 (lower than the previous year’s growth of 5.6%), inflation is likely to rise to 11% and there has been a significant dip in Pakistan’s foreign exchange reserves. While the Pakistan Rupee had gone down to 190 vis-à-vis the $US, it gained 8 rupees after the election of Sharif. Pakistan’s debt has been rising and its foreign exchange reserves have also fallen significantly. The Ukraine-Russia crisis has impacted the Pakistan economy, not just because of the rise in global oil prices but also because wheat imports from Ukraine accounted for 39% of Pakistan’s total imports from Ukraine.

 Before analysing the likely policies of the new PM, it would be pertinent to point out, that Shehbaz, unlike his brother, shares a reasonable relationship with the military and is unlikely to adopt the path of confrontation. 

In terms of foreign policy, Pakistan’s ties with China are likely to remain strong. The China Pakistan Economic Corridor (CPEC) project was begun during the Prime  Ministership of Nawaz Sharif and some projects were begun in Punjab as well, with, the Chinese having repeatedly hailed Shehbaz for his efficiency and delivery. Sharif accompanied his brother on visits to China. In his meeting with Shehbaz Sharif in May 2021, Chinese Ambassador Nong Rong hailed the role played by PML-N and Sharif in strengthening China-Pakistan ties. After the exit of Imran Khan, and the election of Shehbaz Sharif as the PM, a report in the Global Times also argued that Pakistan-China ties will only strengthen further. 

Unlike Khan, Shehbaz Sharif can not afford a downward slope of ties with the West . In fact, in a recent interview, he said that a manageable relationship with the US is essential for Pakistan’s interests (in this way, he will be on the same page as the Pakistan army). This is important given that Pakistan had signed an agreement with the IMF of  6 Billion USD (discussion on the 7th review of the same is likely to resume soon). Apart from this, if Pakistan still remains on the grey list of the Financial Action Task Force (FATF), its economy is likely to get impacted significantly. Strained ties with the US will also impact relations with the Economic Union (EU) with whom Pakistan shares close economic relations. The EU is an important trade partner accounting for over 14% of Pakistan’s trade and an important market for Pakistan’s garments and textiles (both account for over 75% of Pakistan’s exports to the EU).

Sharif as the CM of Punjab has advocated better ties with India —  especially greater people to people ties and economic linkages between both Punjabs (Sharif’s brother, Nawaz Sharif, repeatedly spoke about Pakistan’s need for trade, not aid). Prime Minister Narendra Modi congratulated Shehbaz Sharif in a tweet – soon after the latter was sworn in, and Sharif responded by pointing to the need to the need for addressing key economic challenges jointly. 

During his visit to India in 2013, Shehbaz Sharif met with the then Indian PM, Dr Manmohan Singh, and also visited his ancestral village. While addressing an interaction between the visiting Pakistani delegation and industrialists, Sharif spoke in favour of closer economic exchanges and cooperation in the area of research. 

As Prime Minister, the situation will be significantly different. After being elected as Prime Minister, Shehbaz Sharif said:

We want good ties with India but durable peace is not possible until the Kashmir dispute is resolved,”

While Modi in his tweet said:

‘India desires peace and stability in a region free of terror, so that we can focus on our development challenges and ensure the well-being and prosperity of our people’.

Sharif while thanking Modi for his felicitations said that while Pakistan desired cordial relations with India, outstanding issues including Kashmir need to be addressed.

This was a clear signal that Sharif will not like to appear soft on India and give an opportunity to the Pakistan-Tehreek-E-Insaaf (PTI) to attack him for the same.

Developments in Recent months and the Possibility for trade 

Pakistan’s foreign policy will be driven by the army, which has given some indicators of wanting normalisation of ties with India in recent times. A clear reiteration is the statements made by the Pakistan Army Chief, Qamar Javed Bajwa. The past few months have also witnessed some other events such as the re-opening of the Kartarpur Religious Corridor, in November 2021 and religious tourism related initiatives. Pakistan also gave a green signal to India to send relief materials to Afghanistan (shipments of wheat as humanitarian aid) via Pakistani territory. Given the economic challenges, which Pakistan is afflicted with at this point in time, the resumption of trade via Wagah-Attari which was disrupted in 2019 will be beneficial. In 2021, a go-ahead  had been given for the resumption of bilateral trade, with Imran Khan giving the green signal for imports of essential commodities (sugar and cotton) from India, after pressure from certain business lobbies. The decision had to be reversed due to objections from various quarters.  In February 2022, Imran Khan’s adviser on commerce, Abdul Razak Dawood, had also pitched for the revival of bilateral trade. Said Dawood

As far as the ministry of commerce is concerned, its position is to do trade with India. And my stance is that we should do trade with India and it should be opened now’

While Pakistan’s neighbours have been trying to benefit from India’s surplus stocks of sugar and wheat, Pakistan has not. It would, of course, be important to realise that Shehbaz Sharif’s priorities will be addressing domestic challenges, keeping a disparate coalition together and working in sync with the Pakistan army. In terms of foreign policy, ties with China and Middle Eastern countries – especially Saudi Arabia – (Sharif is expected to travel to China and Saudi Arabia in his first overseas trip) are likely to be prioritised and attempts will be made to reduce tensions with the west. Given all the above factors, and limited room for manoeuvre, Sharif is unlikely to take any big steps vis-à-vis India – though initiatives pertaining to people to people ties as well as the resumption of bilateral trade cannot be ruled out.

Tridivesh Singh Maini is Assistant Professor, Jindal School of International Affairs, OP Jindal Global University, Sonepat, Haryana.

Image credits – Deccan Herald

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