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Few of those who fought for Pakistan’s independence in the 1940s could have predicted that the colonial power they removed had returned under a new name. On May 9, 2023, the arrest of former Prime Minister Imran Khan ignited political clashes between his supporters and opponents that are ongoing to this day. This instability has neatly summarized the story of Pakistan’s existence since its independence: unstable, volatile, and chaotic.
Many political, social, and economic issues plagued Pakistan for nearly 76 years. The country was involved in several conflicts with neighbouring India, experienced military dictatorships that crippled Pakistan’s political and economic structures, and saw any progressive step met with two steps back toward the status quo. Today, Pakistan again finds itself between a rock and a hard place.
The present and future of the country’s economy lie in the hands of the Western-backed International Monetary Fund (IMF) and the People’s Republic of China. Both powers represent a neo-colonial mission to expand their influences within Pakistani affairs through economic measures, reminding of the legacy of economic exploitation asserted by colonialism still present across the globe today.
Big Brother: China’s Expanding Role in Pakistani Affairs
The relationship between China and Pakistan today is often heralded as a friendship. Surrounded by potential enemies, such as India and Afghanistan, China stands as Pakistan’s strongman in the game of regional diplomacy. In the aftermath of Donald Trump’s unpredictable presidency, Pakistan is shifting closer to China’s circle of influence. How China values this relationship can be shown through Pakistan’s inclusion in its Belt and Road Initiative, a major transcontinental operation aiming to expand China’s political and economic influence.
Another indicator of the importance of this relationship is the Chinese-Pakistani Economic Corridor (CPEC), a series of investment partnerships that expand China’s influence across various Pakistani industries. Furthermore, China’s refusal to attend the recent G20 summit hosted by India in occupied Kashmir indicates the value China places on this relationship. As the issue of Kashmir has been present since the independence of both India and Pakistan, fighting several wars and an ongoing conflict, this move by India represented a dangerous play to legitimize their occupation. On the surface, Pakistan’s relationship with China may seem mutually beneficial, but there is more to it than meets the eye.
The country today is experiencing an inflation rate that is rising at an alarming rate, making it more difficult for the average person to access necessities. The floods in Pakistan during the summer of 2022 devastated their food supply and forced many people into poverty. Pakistan’s current economic crises put them in no position to object to China’s attempts to expand its influence in the Pakistani economy.
Historically, the United States has always been Pakistan’s major contributor by supplying them with regular foreign aid and supporting their political and military institutions. However, their relationship has recently soured due to Donald Trump’s foreign policy that stressed the need to take the U.S. out of the affairs of countries abroad. To make matters more shallow, Pakistan borders Iran, India, and Afghanistan, countries that do not have the best relationships with the country and have borders that are often the site of conflict. Thus, the economically and politically landlocked Pakistani government has been carefully and precisely nurtured into a new-colonial relationship with the Chinese government.
Neo-Colonialism: The Rebirth of the Colonial Machine
Experts define neo-colonialism as the reimposition or continuity of an element of colonial rule over another independent country. A neo-colonial relationship may be established by diplomatic means or economic provisions. It is a highly effective and efficient system that led the U.S. to invade Iraq in the early 2000s and continue its war in Afghanistan for over a decade. In the past, Pakistan shared a neo-colonial relationship with the U.S., which generously provided the then-military dictatorship of Pervez Musharraf with aid in return for Pakistan’s help in the war on terror. After the U.S. invaded Iraq, President George Bush declared a worldwide war on terror and vowed to eliminate Islamic extremists and terrorist groups. The U.S. coerced Pakistan’s military involvement in return for military aid.
Today, China is using debt to trap Pakistan economically and force their hand. Debt-trapping is a common method used by colonial regimes to force an indebted nation to submit to the colonizer’s will. These regimes would supply high-interest loans to nations that did not have the means to pay them back but instead force them to gradually give control over aspects of their sovereignty to the colonizer.
China is Pakistan’s largest creditor, with almost 10% of Pakistan’s debt owed to them currently. Furthermore, China has to reconsider their recent investments in the country as Pakistan suffers from further political instability. One of the major industries that China has poured money into is the energy industry. Several projects of the Belt-and-Road Initiative have been completed, including the Sahiwal Coal-fired Power Plant and the China Hub Coal Power Project in Balochistan. Transportation projects such as the Orange Line Metro Train in Lahore and the Peshawar-Karachi Motorway have been completed and are functioning. Chinese companies also hold a 40% share in the Pakistani stock exchange, with the total amount of Chinese investments in the country rising to more than $65 billion.
Their relationship hinders the profitability of Pakistani investments. Yet, as Pakistan’s current situation is taking a turn for the worst, the Chinese government may be forced to take a play out of the colonial handbook and make demands. China may demand a concession as they did from Sri Lanka, where they took 99% control over Hambantota International Port since Sri Lanka could not pay their loans. China already has complete operative control over Gwadar Port, a deep water port on the Arabian Sea vital to CPEC, and the Chinese government could expand its control into further economic avenues in Pakistan.
The IMF
The other avenue that Pakistan can utilize to revive their declining economy is through an IMF bailout. An IMF bailout is when the organization loans money to a country stricken by a crisis to ease some of its economic issues. However, bailouts come with strings attached as the IMF expects governments to meet certain conditions to obtain the loan, and many states have criticized these conditions for being too steep.
Pakistan’s relationship with the IMF stems further back than with China. As Pakistan was a newly independent state with an emerging economy, the country often had to resort to the IMF for financial aid, with their first agreement dating back to 1958, as they sought to develop. Since the 1980s, Pakistan has had 13 bailouts; however, none were ever completed as the government poorly managed the economy. The government never fully completed the structural changes required by the loan terms and could not utilize the funds efficiently.
Today, the government owes the IMF more than $7 billion. The current bailout program was started by former Prime Minister Imran Khan in 2019, after the previous 2013 bailout that provided a loan of 6.6 billion dispersed over 36 months. Yet, the loan terms have been renegotiated several times since then to no avail. The IMF now expects the government to raise electricity and gas prices in return for the bailout.
In another part of Pakistan’s political circus, Khan’s opponents criticized him, claiming his government did not do enough to utilize the IMF deal when they were in power. The role of the IMF often circulates in political conversations regarding the economy in Pakistan, such as their relationship with the state. The devastating summer 2022 floods indicate that financial institutions, such as the IMF, providing aid in loans strain the Pakistani government’s struggling financial capacity.
The IMF ends up trapping developing and formerly colonized countries into a continuous cycle of debt. Their governments become locked into conditional loans that slowly plunder their economy. Furthermore, it is an essential neo-colonial tool to control the distribution of wealth in the Global North, such as Europe and North America, at the expense of developing economies. The global inequality we see today is a direct result of many international financial institutions, which serve to reestablish economic exploitation, such as debt-trapping, over countries such as Pakistan.
Looking Toward the Future
Today, Pakistan’s position is between a rock and a hard place. Surrounded by enemies on all borders, stricken with political unrest that borders on nationwide anarchy, and stuck with a dwindling economy, the future is bleak. To make matters worse, China and the IMF seek to gain from this dangerous position the country finds itself in. Not to mention, there are also forces at play that orchestrate the country’s demise from within. Neither an IMF bailout nor further Chinese investments will pull the nation out of its economic misfortune. Pakistan needs to see some real structural changes if it is to amend the mistakes of previous governments. Hope lies with a new Pakistani generation who know their country’s past shortcomings and continuously question and critique those responsible for their current state of affairs.
The first progressive step links to a political solution that may ease the current tension in the country. The rising between the people, military, and government threatens to destabilize existing issues further. There should be a political solution that seeks the betterment of all people rather than a select group. In a country that has suffered from classism, casteism, and ethnonationalism, these divisions should be cast aside for any steps toward progress.
China’s debt-trap diplomacy is an ode to the methods employed by the English in Egypt and the French in North Africa. While history books claim most nations decolonized by the end of the 21st century, several powerful countries carry on the legacy of colonial exploitation in developing countries. China’s rising global influence through debt-trapping is a textbook example of colonial economic exploitation, only repackaged and redistributed through projects such as CPEC. Similarly, the IMF is an institution that stands to limit the growth of wealth in the Global South, ensuring economic inequality and the exploitation of developing economies by establishing vicious and never-ending debt cycles.
Edited by Chelsea Bean
