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The Nikkei View

Towering hurdles for Pakistan's new government

Massive debt, IMF pressure and diplomatic tightropes threaten Imran Khan's populist pledges

Charisma helped Imran Khan win Pakistan's election, but will it help the new prime minister confront the country's stark political and economic realities? (Reuters)

In a historic reshuffling of Pakistan's political order, Pakistan Tehreek-e-Insaf, or Pakistan Movement for Justice, swept to power in July's general election, putting its leader, former cricket star Imran Khan, in the prime minister's office.

The July 25 vote ended decades of political domination by Nawaz Sharif’s Pakistan Muslim League-Nawaz and the Pakistan Peoples Party, which alternately held the reins of power except for those times when the military was in charge.

The view persists in many quarters that the military helped propel PTI to the top, and some within the ousted PML-N even claim that what just happened was a de facto military coup.

While the charismatic Khan enjoys wide popularity among the Pakistani public, his PTI was unable to secure a majority in the National Assembly, the lower house of parliament, and had to form a coalition government with smaller groups and independent politicians. This raises questions about the new government’s ability to overcome the multiple challenges facing the country.

The first challenge is to restore public confidence in politics. Former Prime Minister Sharif, who led the PML-N, was jailed in July on charges of corruption. Many observers say the military, with which Sharif had a contentious relationship, was behind his downfall.

During Khan's election campaign, one of his main pledges was to eradicate corruption. But regaining public confidence in politics will take more than just boosting transparency in politics; it will also require ensuring greater fairness in the courts.

On the economic front, the most pressing issue is addressing the country’s soaring external debt and budget deficits. Partly because the country has pushed forward with building a China-Pakistan Economic Corridor as part of China’s Belt and Road Initiative, Pakistan’s balance-of-payments problem has deepened and its foreign exchange reserves have plunged to critically low levels.

Some experts speculate that the Khan government will have no choice but to turn to the International Monetary Fund for help, but there is no telling how the government will deal with the issue.

One reason for the uncertainty is that the U.S., the largest financial contributor to the IMF, is wary about the idea of IMF rescue funds for Pakistan. U.S. Secretary of State Mike Pompeo recently warned that there was “no rationale” for an IMF package that could be used to repay opaque Chinese loans, which have ballooned due to the corridor project.

To gain Washington's consent on an IMF bailout, Pakistan would have to increase the transparency of its deals with China. Doing so, however, would invite serious pushback from both Beijing and the Pakistani military, which is thought to have benefited from the corridor project. A senior executive in the ruling PTI revealed that a state-run Chinese bank promised to extend additional loans to Pakistan, possibly an indication that Khan is willing to use China as a check against the U.S.

If Pakistan received an IMF bailout, the country would probably be required to implement budget austerity measures in return, making it hard for Khan to make good on his election pledges to expand social welfare programs. The balance-of-payments crisis is a tricky problem for the new government because it is intertwined not only with social policies but also with Pakistan's diplomatic relations with America and China.

Another foreign policy challenge is Pakistan's relationship with India. As both countries are nuclear powers, any tensions between them pose a potential threat to all of Asia. The PML-N regime under Sharif tried to mend fences with India, which frustrated the military. But if the Khan government adopts an India policy influenced by the military, tensions in South Asia could flare up again.

Afghanistan is yet another diplomatic concern. For years, the Pakistani military extended support to the Taliban, an anti-government Islamic extremist group in Afghanistan. That backing was one of the reasons for the erosion of Pakistani-U.S. relations. A close eye must be kept on how the new government deals with the military on this and many other issues.

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