A soldier stands guard at the mausoleum of Pakistan's founding father Muhammad Ali Jinnah during events to mark his birth anniversary in Karachi December 25, 2019. Photo: AFP / Rizwan Tabassum

PESHAWAR – When the US State Department tagged China and Pakistan as “countries of particular concern” (CPC) for reputedly violating religious freedoms, Islamabad saw the criticism as the front edge of a potential wider diplomatic assault.

Pakistan’s powerful army, which autonomously handles much of the nation’s foreign relations, reportedly perceived the announcement as veiled US criticism of its broad tilt toward China and alleged hidden role in facilitating the Taliban’s seizure of power in Kabul.

Though Pakistan’s so-called “deep state”, led by its powerful Inter-Services Intelligence (ISI) spy agency, likely believes that the worst is yet to come from its traditional US ally, Pakistan’s foreign office quickly rebuked the US State Department’s CPC assessment as “arbitrary and selective” and in disregard to ground realities.

Despite the deflection, the State Department’s CPC assessment could have severe ramifications for Pakistan at a time its economy and finances are wobbling.

The Biden administration could ­­– if it so wills ­­– seek to suspend loans extended to Pakistan from key international financial institutions, withdraw US development and security assistance, ban imports and curtail state visits from CPC-designated countries.  

During a closed-door briefing to lawmakers on national security issues held last week, Pakistani policymakers reportedly rang alarm bells that the US could be on the verge of imposing more stringent measures if it perceives China is dominating Islamabad’s foreign policy calculus in the post-US withdrawal from Afghanistan era.

Local media reports quoting military officials said that Pakistan is now actively trying to strike a new “balance” in its relations with the US and China, but has so far failed to arrive at a policy mix that will please both superpowers.

Islamabad recognizes that a full-blown strategic alliance with China will further alienate the US, which is already irked with Islamabad over the turn of events in Afghanistan, including volatile allegations that ISI facilitated the Taliban’s battlefield victory and the US’ ignominious defeat.

Taliban supporters gather to celebrate the US withdrawal of all its troops out of Afghanistan in Kandahar on September 1, 2021, following the Taliban’s military takeover of the country. Photo: AFP / Javed Tanveer

Local observers of Afghanistan’s situation claim that the Biden administration is under rising domestic pressure to act against Pakistan for allegedly colluding with the Taliban and covertly undermining key US interests in the region.

Those same policymakers fear that the US may react viscerally if Pakistan entered a “collective security pact” with Beijing, as has been broached, in sight of the region’s fast-changing geostrategic dynamics after the Taliban’s takeover.

Ayesha Siddiqa, a Pakistani political commentator and author of numerous books who serves as a research associate at the SOAS South Asia Institute, told Asia Times that many ex-generals with service in the Afghan war now hold key positions in the US Department of Defense. Ayesha notes many of them likely had colleagues killed or injured during the conflict.

“They knew very well that Pakistan had long been a major facilitator of the Taliban and that they sheltered, trained and equipped them to fight the US troops in Afghanistan.”

But because the US needed Pakistan for its wider strategic interests in the region, US policymakers opted to look the other way and continued to provide aid and assistance to Islamabad.

Now, after America’s pullout from Afghanistan, the US hardly requires Pakistan’s logistical support and many at the Pentagon may have revenge high on their minds, particularly after apparently being spurned by Islamabad when requesting access to Pakistan bases to continue monitoring the situation in Afghanistan.

“Their interest is now shifted to India, which border disputes with China hence, we observe sea changes in US priorities in the region,” Ayesha added.

She said that the US’s biggest competitor in South Asia is now China, with whom Pakistan enjoys genial relations and strong economic ties via the US$60 billion China-Pakistan Economic Corridor, part of Beijing’s Belt and Road Initiative (BRI).

A mountain pass along the China-Pakistan Economic Corridor. Image: Facebook

“Pakistan’s warm economic and military ties with China are the second major obstacle in normalization of relations between the US and Pakistan,” Ayesha opined.      

During the recent security briefing, Pakistan policymakers expressed apprehension that the US may enforce the “Afghanistan Counterterror Oversight and Accountability Act”, which the US Senate introduced in September.

Republican senators have sought legislation to impose sanctions on the Taliban and against all foreign governments that prop or support the hardline Islamic group.

The legislation also calls on the Secretary of State, Antony Blinken, to assess the role of Pakistan in supporting the Taliban from 2001-2020, coinciding with the US occupation of Afghanistan.

The senators also want Blinken to report on the circumstances leading up to the toppling of Afghanistan’s government, then led by president Ashraf Ghani, and Pakistan’s alleged support for the Taliban’s successful offensives against Panjshir Valley rebels and the broader Afghan national resistance.

The US has significant leverage over Pakistan to exact economic and political damage. Pakistan policymakers reportedly expressed concerns at the recent briefing that the US could use its influence over international agencies to tighten the screws on Pakistan’s finances.

Pakistan is already struggling to revive a desperately needed US$6 billion International Monetary Fund (IMF) bailout program. The IMF, perhaps under US direction, recently imposed stringent new conditions for the release of a $1 billion tranche of the program.

Similarly, despite showing significant progress on the Financial Action Task Force’s (FATF) recommendations, Pakistan is still languishing on the terror-financing watchdog’s grey list that limits its access to foreign funding and banking access.

Pakistan is now desperately seeking external sources to help bridge its widening debt gap by the end of the current financial year ending in July 2022.

The country needs to pay $14.7 billion in debts during 2021-22, including a tad over $4.7 billion to China for CPEC-related project loans and another $4.4 billion in commercial loans owed to Chinese banks at market rates.

Islamabad’s pleas to Beijing to reschedule the repayments have reportedly so far fallen on deaf ears.

A money changer counts Pakistani Rupee notes in Karachi in a file photo. Photo: Agencies

In addition to the Chinese loans, Pakistan must also pay back $2.6 billion to multilateral lenders, $1 billion on an outstanding Eurobond and over $1 billion to the IMF. 

Pakistani economist and former finance minister Dr Hafiz Pasha, in his new book titled “Charter of Economy, Agenda for Economic Reforms in Pakistan” claims that international lending agencies are under the influence of the US, which he claims is demanding “regional security-related measures from Pakistan.”

“There is a view that the attitude of the IMF may be influenced by extraneous developments. However, the country will have to pay a huge price by yielding to the demands of the US,” he wrote.

Pakistan’s National Security Adviser Moeed Yusuf disclosed in a TV talk show on November 20 that the US was now holding direct talks with Pakistan over the potential use of a vital air corridor to Afghanistan.

He said that Pakistan was currently evaluating whether opening the corridor would influence the behavior of terrorist outfits now operating from Afghan territories and against the Pakistani state. Pakistan has been hit by a rising number of militant attacks since the Taliban’s takeover.

“Pakistan is not in a position to refuse the US’s demand for facilitation on the reconnaissance measures. Pakistan will accommodate the US counterterrorism process whether it likes it or not,” Ayesha opined.

Whether the facilitation of such a corridor – or whatever else the US Pentagon and other US agencies may be seeking from Islamabad – will be enough to avert the sanctions US lawmakers are now pushing for remains to be seen.