Why Pakistan Should Be on America’s Radar?
Why Pakistan Should Be on America’s Radar?
Until recently, the economic relationship between Pakistan and the United States was overshadowed by waves of aid and security cooperation. However, the global economy is changing. Strategic engagement now relies on mutual economic needs rather than traditional aid. Pakistan’s economic fundamentals, resources, and demographic advantages position it as a valuable partner for the US. Together, they can build resilient supply chains, foster technological innovation, and promote sustainable growth. Shifting US involvement from aid to investment will better support Pakistan’s development. It will also serve Washington’s long-term strategic interests.
The Untapped Treasure Trove Beneath the Surface
Little do Americans know that the mineral wealth of Pakistan is estimated to be valued between the $6–8 trillion mark. These deposits are not only about copper and gold, but lithium, antimony, and rare earths are also present. In fact, these are the materials that currently launched the global clean energy Yuan and the semiconductor industry. Pakistan presents US with a unique opportunity to diversify its critical mineral supply chains since the country desperately needs to look beyond China as one of its principal suppliers of the minerals including plentiful supply, a willing partner, and the closeness of a key market.
The billions that will be generated by the Reko Diq project alone which will generate 74 billion dollars in the almost 40 years span is sufficient sample of potentials.
Provided with clear governance and good security to investors, these ventures might position Pakistan in the world map of mining and provide the US with a safe supplier of materials in high demand.
Moreover, the US economic presence in Pakistan is strangely humble despite the visible opportunities. As indicated by International Trade Administration, the country already hosts 83 American firms that have an annual sales figure of more than 3 billion US dollars. However, the US Foreign Direct Investment has seldom been over the 300 million dollars annual mark. Although the FY2021–22 witnessed more than 50% increase in direct US investment, the reduction to 127 million in 2022 illustrates how weak investor confidence can be. Such volatility cannot be overcome, but it does require time specific policy changes and a regular policy of diplomacy.
The SIFC’s Role
The Special Investment Facilitation Council (SIFC) of Pakistan is a relatively recent institution which may become a game changer. As a one stop shop and targeted at major investors, it has already simplified approvals and lifted foreign ownership limits and opened visa requirements to major sectors such as IT, Agri-tech, renewables, and mining. Involving both the civilian and military leadership means that investment promotion is considered as a national strategic priority and not as a current policy trend.
In the case of the US companies who are already used to highly regulated markets of the emerging states, the SIFC may be the choice that would turn Pakistan not only promising, but feasible.
There are some areas of convergence in the need and where Pakistan and the US are strong. In energy, the dire demand of clean, affordable power in Pakistan aligns with the expertise of the US in the areas of solar, wind, and energy storage technologies. The widespread English-backed young talent in Pakistan, which is driving its own startup boom, provides opportunities to localise the innovation efforts of US venture capitals and technology giants to plug these enterprises into the international knowledge flow.
Another high potential sector is agriculture. Post-harvest logistics, cold chain solutions and precision farming technologies in the US could be used to transform the way Pakistan farms, raising its agricultural output exponentially, achieving greater food security, and opening new export opportunities.
Counterbalancing Geopolitical Concentration
The China–Pakistan Economic Corridor (CPEC) has resulted in China having deep economic engagement in Pakistan with major investments in infrastructure and energy. Nevertheless, to be dependent on one sole partner is risky both strategically and economically.
For Pakistan, diversified sources of investments increase sovereignty and resilience. For the US, increasing economic presence in Pakistan would not only create an offset to Chinese presence, but also create trust with one of the more important regional actors. Of sensitivity to this equation is the category of critical minerals. It seems that unless the US acts swiftly, it can easily find itself with these resources and the capability they hold to leverage the geopolitics of the Pacific, firmly in the grip of Beijing.
The existing system of the investment treaty between Pakistan and the US is obsolete because it does not bring in the dynamics of the digital era, climate-oriented investment, and intellectual property. A modernized Bilateral Investment Treaty may prove to be more transparent in setting up dispute resolution procedures, upgrading investor protections, and may involve incentives on green and technology-based investments.
Also, frequent high-level interaction on the US–Pakistan Business Council and other institutional frameworks might lead to a predictable flow of opportunity and harmonization of policies.
This means that there is an increasing role of geoeconomics in the global order, the intertwining of foreign policy and economic statecraft. Foreign direct investment in this context ceases to be a business decision. The investment in the minerals, renewable energy of Pakistan, and digital economy would enable the US to receive not only financial rupture, but also a reliable partner in a key area. The incentives to Pakistan are also powerful with industrial modernization, diversification in exports, and creation of jobs in numbers that aid alone would never do.
Disclaimer:
The views and opinions expressed in this article are exclusively those of the author and do not reflect the official stance, policies, or perspectives of the Platform.
