Ukraine war: threats and opportunities for Pakistan

The Global Economy is transitioning to a new multipolar world order, the most significant shift in the global balance of power since the second world war. The Russia–Ukraine war has accelerated this transition that was already underway with the BRIC (Brazil, Russia, India, China) countries rising contribution to global production and trade, outstripping the growth in the US and EU economies in the last decade. This metamorphosis offers opportunities for emerging markets, including Pakistan, to open trade and investment ties with neighbours and other regional economies. However, significant threats have emerged that limit our ability to make independent foreign, economic and energy security policies. The most prominent threat is the balance of payment crisis, with Pakistan facing the risk of sovereign default on external debt repayments. The International Monetary Fund’s bailout has helped stabilise the economy and avert the immediate risk of default. Nevertheless, it seemingly comes at a cost, with Pakistan being unable to secure oil from Russia at concessional prices, which India, China and Bangladesh have successfully done to shield their population from the price hike spiral. The economic opportunities of the new multipolar world order are enormous for Pakistan. The challenge, however, is how we pursue these opportunities diplomatically and strategically in line with our national interests, particularly given our dependence on international multilateral financial institutions, predominantly under the influence of the West.