Unequivocally, the geographic factors of a particular region play a significant role in defining the strategic importance of that region in the global arena, impacting its foreign and domestic policies. Many states and regions got limelight due to their location in the world map, changing their fates in terms of economy and national standing on the global stage. Panama, for instance, is known for trade facilitation region that boosts the international trade volume, economy and global cooperation. According to the World Bank Report, Panama’s GDP has grown from 1 billion dollars to 66 billion dollars from the year 1960 to 2020. In this century, the idea of a transit-based economy has successfully been leveraged by many states, transforming their GDPs. Singapore, Hong Kong, United Arab Emirates (UAE), and The Netherlands are classical examples of transit economies.
In line with this, Pakistan is among the lowest GDP states of South Asia. It has been grappling with the issue of economic deficit since its inception due to multifarious reasons. However, there are many pathways to scale up the financial volume of the state, addressing the current account and fiscal deficit of the nation. Amazingly, one of such ways includes a transit-centric economy backed by its geographical position. Due to its geographical location, Pakistan, is located at the crossroads of Asia. Further, it is the heart of the central Asian states and also lies in close proximity to the energy rich regions like Iran and Middle East.
It also possesses maritime significance in terms of Arabian sea that is situated in the south of Pakistan, facilitating maritime trade with the Middle East, Africa and European continents
Moreover, it also possesses maritime significance in terms of Arabian sea that is situated in the south of Pakistan, facilitating maritime trade with the Middle East, Africa and European continents. Additionally, favorable topography, wide ranges of mountainous terrains including Karakorum and Himalayan ranges with the presence of strategic passes like Khunjerab and Bolan pass connect the nation with Central Asian region, China and Afghanistan, increasing the strategic importance of the state. Further, it also has the blessing of an extensive network of waterways, rivers like Chenab, Jhelum, and Indus, offering the opportunity for trade of goods via water transportation with the regional players.
The presence of strategic deep, warm water ports like Gwadar and Karachi port are serving as trade linkages between China and The Middle east, acting as the best alternative to the Strait of Malaka
The presence of strategic deep, warm water ports like Gwadar and Karachi port are serving as trade linkages between China and The Middle east, acting as the best alternative to the Strait of Malacca. In addition to the aforementioned geographical factors, Pakistan has the potential to drive almost 10 billion dollars of economy by 2025 out of trade routes by connecting regional actors with each other in terms of trade expansion as per World Bank Report 2020. Even, the World Economic Forum (WEF) 2019 report highlighted the strategic location of Pakistan that would make it a key player in the South Asian region.
With the addition of economic gains, Pakistan would have the opportunity to diversify its economic means in addition to agriculture and industrial sectors. Further, it would enhance the ways to Foreign Direct investment into the state by cooperating with multiple investors. Moreover, South Asian region has always been vulnerable to instability and this transit-led initiatives of Pakistan would bring peace into the region by inculcating interdependence within the region with the tool of trade routes, promoting the environment of coordination.
Global markets would connect to Pakistan to navigate their goods via transit routes of Pakistan, affiliating it with big powers of the globe
Additionally, this regional cooperation would bring technology exchange, technocratic exchange, job creation, cultural exchange and many other avenues to Pakistan, strengthening its national standing globally. With this, global markets would connect to Pakistan to navigate their goods via transit routes of Pakistan, affiliating it with big powers of the globe. Such transit trade routes would also create balance in the south Asian region by neutralizing the hegemony of the Indian factor in the region, fostering the economic and trade roots of Pakistan. Also, the domestic fabric of the nation would get fortified via the sufficient finance and employment opportunities, eradicating poverty and grievances from the country. Moreover, both the states, Pakistan and India, can address their security dilemma via this prospect of transit facilitation, mending their ties with each other. Hence, this initiative would act as a game changer for Pakistan.
Uraan Pakistan initiative 2025 is also focusing on the transit economy sector in the light of 5 Es mechanism
At present, under China Pakistan Economic Corridor (CPEC) many railway lines, roads, logistics system and other supply chain mediums are already developed. The development of Gwadar is also in the phase of completion under CPEC 2.0. With that, new five corridors are also added to this program. Addressing climate issues and infrastructure advancement are part of these five new corridors. Additionally, Uraan Pakistan initiative 2025 is also focusing on the transit economy sector in the light of 5 Es mechanism. Moreover, Special investment facilitation council (SIFC) is eradicating bureaucratic hurdles from the paths of projects and developmental programs.
However, Pakistan is surrounded by various challenges while offering this transit facility. First, surge in the terrorism episodes, particularly after the regime change in Afghanistan, is barricading the propagation of transit trade in the region. Further, the poor transportation routes including uneven roads, inadequate railway lines and airports are hindering the growth of such transit-driven initiatives. Moreover, political instability in Pakistan coupled with weak democracy are not allowing the government to efficiently work on the infrastructure development of Pakistan that would smoothen the supply chain of the entire trade system. The evil of red-tapism within the state’s machinery is adding fuel to the fire by putting delays in the implementation plans of such a transit-oriented opportunity. Furthermore, the instigators by using the tools of misinformation and propaganda are also putting obstacles in the path of the state, which is endeavoring to promote transit- led schemes. Besides, the stark reality of climate change is also impacting the development and infrastructure of the nation, engendering the hurdles in the promotion of transit-focused economy programs. Last but not the least, the tentacles of corruption in transit- led plans are one of the stumbling blocks in the success of the transit economy.
To counter new waves of terrorism, reformation in the National Counter Terrorism Authority (NACTA) is need of the hour
Owing to the aforementioned prevalent concerns, Pakistan is still struggling in the promotion of transit trade facilities in the region, necessitating consolidated plan of actions to cater to those barriers. Despite the number of setbacks, there are many ways to wrestle against the afore discussed challenges. First, to counter new waves of terrorism, reformation in the National Counter Terrorism Authority (NACTA) is need of the hour. Also, in Afghanistan, there is a prevalence of commercial terrorism; so, joint efforts with the state of Afghanistan and new methods to beat nontraditional terrorism would demagnify the issue. In addition, more infrastructure development projects would connect the region with Pakistan via trade. Further, transparent electoral process with peaceful transfer of power would cater to political instability, nourishing democracy. Digitalization of governance outlook would reduce red-tapism, addressing unnecessary delays in developmental projects. Moreover, investment in cyber security and promotion of education would lessen the impacts of propaganda, a tool of fifth generation warfare. Also, to curb the damage of climate change, technology exchange steps by shaking hands with international communities must be taken into consideration. Lastly, to combat corruption in transit-led projects, in particular, stringent audit measures must be taken to ensure transparency.
The threats can be mitigated and managed if proper actions are taken on time, lest the future of Pakistan be plunged into dire straits
To conclude, Pakistan has recently availed International Monetary Fund (IMF) loan scheme, depicting it as a weak, loan-based economy. Blatantly, the geography of Pakistan is providing it a new way to explore it strengths and enhance it economy by connecting the region via trade routes. Although, this opportunity comes with multiple impediments but suggested solutions would help the nation to utilize its geography by controlling these issues. The threats can be mitigated and managed if proper actions are taken on time, lest the future of Pakistan be plunged into dire straits.
Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.
