Pakistan: Paying the Price for Our Indulgences

Crises, such as the ones we are currently living through, including the tail end of the pandemic, inflation, the war in Ukraine, energy shortages, and looming food shortages, have the advantageous side-effect of sometimes laying bare what was previously hidden. That is, if one is willing to look. But the West, so caught up in its self-centered vision of its own moralism, prefers to look away. The fact that sanctions on Russia haven’t had the desired effect of running the Russian economy dry is repeatedly reinterpreted as a cover-up by Putin and his cronies, instead stoking hopes that a collapse of Russia (if that was desirable to begin with) would be imminent if only we held out for a bit longer. It is almost as self-delusional as the umpteenth attempt by clerics of the Catholic church to ‘get with the times’ just a bit more, hoping that this time around people would finally flock back to churches again, even if attendances have continuously plummeted since the beginning of the aggiornamento of the 1960s.

We’re also deluding ourselves about the effect these self-inflicted measures have on us and on our societies. Germany is eroding what’s left of its battered industrial foundations, with its automotive industry effectively destroying itself with its politically motivated alignment with an uncompromising and unnecessary switch to e-mobility. At the same time, more and more people in Europe are preparing for a winter in which they might have to freeze, only so they can “stick it to Putin,” even though the latter seems perfectly happy to sell his surplus natural resources to India, who then in turn sells them back to Europe—with a profit, of course. Even many conservatives seem to relish the opportunity of taking part in this armchair battle, enjoying the fact that their calls for self-defense of the West are finally socially acceptable again, and chastising all those who dare to question the effectiveness and pureness of the cause.

But there is another issue the West is possibly more oblivious to than ever before. It is the neo-colonial effects of our moralism, our desire to feel righteous about ourselves and our heroic willingness to stand up against a Russian villain that we spent the past 20 years convincing ourselves was good enough a reason to fall back on our prejudices and resentments against the Russian from half a century ago. This moralism isn’t making us friends in large parts of the world. In fact, it may even create more resentment towards the West than the age of colonization did, since the West back then did at least often export knowledge and civilization into many of its former colonies, while all that we’re exporting now seems to be a repeatedly failing model of democracy, garnered with gender studies offerings at Kabul University, that lead to emergency evacuations of students the moment our occupancy of the country ends.

The West seems to be perfectly willing to let other parts of the world pay the price for our desire to feel morally righteous. This is the case in Pakistan, a nation of 220 million citizens, notoriously unstable and torn between global players. Pakistan is close to following in the footsteps of Sri Lanka and is currently in the process of collapsing economically. Contrary to Sri Lanka, though, Pakistan has ten times as many inhabitants, a strong Pashtun minority with close ties to the Afghan Taliban, and nuclear weapons.

But before we look at the West’s, especially Europe’s, contributions to this crisis, let’s summarize what has led to the current crisis in Pakistan internally.

In 2018, Imran Khan, a charismatic ex-Cricketer, was elected prime minister. Khan represents the Pakistan Tehreek-e-Insaf (PTI) party and was elected—as usual in Pakistan—with the official support of the influential military and its Army chief Qamar Javed Bajwa. Opposition leaders claimed that Khan was “selected,” rather than “elected,” a process that seems all too common in Pakistan, but which more often than not turns out to be a double-edged sword, as the support of the fickle army is prone to being retracted as quickly as it is granted.

This is exactly what happened to Khan in April of 2022, when a no-confidence vote in Parliament led to his dismissal as prime minister, shortly after the army had officially stopped backing him. Earlier, Khan and the military had a falling out over the transfer of the director general of the Inter Services Intelligence (ISI) in October 2021. While the military had approved the transfer for weeks, Khan held back on signing off on the transfer, as he preferred the then-ISI chief who was loyal to him. Since then, army chief Bajwa has insisted that the military is now taking a “neutral stance” and hasn’t officially backed Khan’s successor in office, Shehbaz Sharif of the Pakistan Muslim League-Nawaz (PML-N) party, either.

While Khan openly blamed the Biden administration of “indulging in a regime change conspiracy” for Pakistan’s pursuit of an “independent foreign policy,” his critics describe his track record as prime minister as being the reason behind his ousting. While both sides try to debunk (or rather ridicule) each other’s arguments, the fact remains that Khan opted to heavily subsidize fuel, which gained him popularity among voters but drained state coffers at an increasing rate since the outbreak of open war in Ukraine in February 2022. A $6 billion loan from the IMF—Pakistan’s 22nd loan from the institution since 1958—put additional pressure on Khan, as the IMF demanded the slashing of subsidies on fuel, electricity, and natural gas as a prerequisite to the release of the latest $1.17 billion installment of the loan, a much needed financial injection to the ailing economy.

Khan’s successor, Shahbaz Sharif, has been trying to appease the IMF and has thus succumbed to the demands, a move that may bring in much needed funds into the country, but that raises the pressure on Pakistan’s ordinary citizens. The country has a notoriously weak economy and is struggling with expanding its economic portfolio from the export of cotton textiles. The ratio of taxes to GDP remains one of the lowest in the world, and the literacy rate is the lowest in all of South Asia at 52%. All these factors make for an extremely volatile situation, leaving the country vulnerable to all sorts of crises, be they economic, natural, or political in nature.

It remains to be seen whether Sharif will be able to consolidate Pakistan, as he is part of a political establishment that has had its fair share of opportunities to run the country. Shahbaz Sharif’s better known brother Nawaz is a three-time former prime minister, but he was deposed in 2017 due to corruption charges. Nawaz has since moved to London, but his influential voice is still prominently heard within the ruling party. Shortly after taking the reins as prime minister, Shahbaz traveled to London to meet with his brother to discuss future steps.

Naturally, Pakistan is at a cultural crossroads. During the U.S. war in Afghanistan, Pakistan became one of the chief allies of the United States in the region, even though this did not necessarily translate to popularity of America in the country. Frequent U.S. drone strikes at the border region with Afghanistan were repeatedly criticized by Pakistani governments and led to major civil unrest in the country, but for a long time this did not deter the United States. It was only after Khan took office of prime minister that relations with the U.S. cooled notably, while he strengthened cooperation with Russia and China.

The influence of China in the region is, of course, undeniable. So even though the new government of Sharif wants to appease the United States, it has also clearly stated its intent to remain on good terms with China. The question remains, though, for how long such a neutral stance will be considered acceptable by the opposing parties. Sooner or later one side will likely expect Pakistan to take a clear stance and side with one or the other parties geopolitically. And while the U.S. has previous experience of dealing with the Sharifs, times have changed, and it remains to be seen whether Shahbaz Sharif believes Pakistan can afford alienating China in the long run. Ideological concerns aside, a desolate country such as Pakistan will sooner or later take a very pragmatic approach to which of the global players can aid its development out of poverty.

This ultimately leads us to the question of Europe’s role in the current crisis. Due to the lack of gas pipelines into the region, Pakistan decided around 2016 to rely on then relatively cheap liquefied natural gas (LNG) as a main energy source. A boom of new technologies and gas fields around the mid-2010s led to LNG dropping in price and becoming a real alternative for emerging markets. In 2016 Pakistan signed a long-term delivery contract with Qatar, and in 2017 with the Italian company Eni SpA and the supplier Gunvor Group Ltd. These contracts were meant to secure long-term cheap energy to Pakistan.

But with the invasion of Ukraine by Russia, things changed. Gas prices on the world market exploded as Europe tried to gain independence from Russian deliveries. Every single tanker transporting LNG across the oceans was bought by Europe at horrendous prices. This also included ships from Qatar that were already on route to Asia, which were rerouted to Europe, as the Deutsche Welle already reported in March.

The above-mentioned Eni and Gunvor Group then declared that it had no LNG to deliver to Pakistan. Rather than buying the missing gas at sky-high prices on the spot market, Eni and Gunvor Group preferred to pay the moderate penalty payment at 30% and deliver whatever gas they had to Europe instead. Whatever penalty fee these companies had to pay, it was probably worth it for them, as the contractually guaranteed price for Pakistan was $12 per unit, while at the same time Europe already paid $30 per unit or more.

However morally dubious such practices may be, it should not be forgotten that it is Europe’s moralism that entices them to do so. We readily ignore such shady behavior if it serves our purpose of doing the supposedly right thing, just as we ignore the fact that Qatar—of all places—is supposed to be a morally more acceptable business partner than Russia.

While European citizens are starting to pay the price for this moralism, other nations in the world are already being hit with full force by the resulting crisis. Pakistan has already experienced blackouts, the government often cutting off entire cities for up to 12 hours, and at times the Internet is being switched off altogether. To alleviate the worst, the government tried to buy any energy it could get its hands on, but a recent $1 billion gas tender did not receive a single offer by a supplier. It was the fourth time in a month that Pakistan was unable to acquire any additional LNG, despite waving a bundle of money at anybody willing to deliver it to them. The plans for the Pakistan Stream pipeline, signed by Khan with Russia, won’t come to fruition in time to avoid the worst in the current situation.

As is often the case when things are bad, they tend to get worse before they become better. In July, Pakistan was hit by floods, costing the lives of hundreds of people. At the same time, the rupee has fallen to its lowest in more than two decades, leading to intensifying fears of default among investors. Meanwhile, Imre Khan has decided not to go down without a fight. In a surprise landslide victory during the regional elections in the Punjab region, Khan’s party won 15 out of 20 seats in the provincial assembly. The symbolic value of this victory will be noticed by the government as well, as Punjab tends to be one of the core states of the Pakistan Muslim League-Nawaz. Strengthened by this victory, Khan renewed his call for immediate federal elections, but Sharif has repeatedly turned down any such demands. While Khan said in a recent interview that he is worried that Pakistan is nearing an “economic collapse,” Sharif seems to want to at least hold out until November, when the appointment of the new army chief is due. Speaking of which, the most powerful player in Pakistani politics, the army, remains quiet so far, but for how long?

The powderkeg that is Pakistan is clearly not only the West’s responsibility, but the past two decades of interactions with the West clearly have not helped move the country into a more stable future, either. The foreign politics of the drone war  stoked support for terrorism rather than quenching it, and, while Europe’s morally motivated energy politics might not have been the only cause of turmoil in Pakistan, the role of cheap energy supply in any modern economy can not be underestimated. As the economist Steve Keen keeps reminding us, “empirical data shows that, at the global level, the relationship between changes in energy and changes in GDP is 1:1.” In other words: by using what is left of our wealth to drive energy prices to unknown heights (all for the benefit of moral indulgences), we are crashing economies on a global scale. In doing so, we have not only decided for ourselves that we want to be poor, but we have also decided it for countless millions of people in the rest of the world, people who already know the realities of poverty much better than we do.

So how is that moralism working out for us?