 Good afternoon. Welcome to the U.S. Institute of Peace. My name is Zachary Constantino. I'm a visiting expert here at USIP. It gives me great pleasure to welcome our esteemed panel and I have the privilege of moderating this afternoon's discussion. Can everyone hear me? Okay, good. It's not even the end of January and yet we have a lot to discuss in terms of Pakistan's domestic politics and foreign policy. In the last few weeks alone, we've had an important meeting between Prime Minister Imran Khan and President Trump. We had Foreign Minister Qureshi in town to discuss Iran and the state of Afghan peace talks. We had the extension of the Army Chief and the attendant controversy surrounding how that was conducted. In mid-February, we are going to have a plenary session of the Financial Action Task Force, which may determine whether or not Pakistan moves forward to the blacklist or remains on the gray list. And just today, we had a prominent civil society activist Manzor Pashteen detained in Pakistan. So we have a lot to discuss, a lot of important developments in the domestic and foreign policy arenas, and we have really an all-star panel to try to make sense of all of these issues and give you a sense of what to look for in Pakistan 2020. What should we expect in the coming year? I will keep my introduction very short. This is a panel that needs no introduction. And I will introduce the speakers in order of their speaking sequence. So to my immediate right is Dr. Joshua White. Dr. White previously served on the National Security Council staff and the South Asia Directorate. He was also a senior Foreign Policy Advisor in OSD Policy, and he is presently an Associate Professor of Practice in the South Asia Studies Department at Johns Hopkins Seiss. To Josh's right is Dr. Sahar Khan, who is with Cato's Foreign and Defense Policy Department. She was formerly an Associate Editor with the Washington Quarterly, a Distinguished Journal of Commentary, and is now teaching at American University in AU School of Public Affairs. To Sahar's right, we have Cyril Almeida. Cyril is a veteran journalist and commentator. He was formerly with Dawn, a leading English daily in Pakistan, wrote for their Sunday column and is probably one of the most perceptive observers of civil relations in Pakistan. And then last but not least to his right is Uzair Yunus, formerly of Albright Stonebridge, writing extensively and commenting extensively on economic issues. He's also a non-resident fellow at the Atlantic Council and he just started a podcast called Pakistanonomy. So stay tuned for his podcast. I've asked Josh to go first. He will discuss kind of the recent tensions with Iran and what that may pretend for Pakistan, followed by Sahar, who will discuss India-Pakistan tensions as well as the yet to be determined trajectory of Afghan peace talks, followed by Cyril, who'll give us a tour de force of Pakistani domestic politics and civil relations. And then finally we'll end with Uzair, who will talk about the state of the Pakistan economy. Do we see signs of a recovery or not? Before I yield the floor to Josh, I would ask that the audience please silence your mobile devices. If you need to take a call, please step outside. And without further ado, Josh, the floor is yours. Great, thanks Zach. It's great to be back at USIP, see many friends and familiar faces, including up on this stage. As Zach said, I was given the charge of starting off with sort of a wider frame of comments about implications of US-Iran tensions on Pakistan's future. Think of this as sort of an amuse-bouche for the rest of the conversation, just to get everyone excited about the subtleties of Punjabi politics and other things that are sure to come. But I wanted to set the frame very briefly. After the killing of Soleimani not long ago, there was concern that there would be a wider US-Iran conflict or a full-out war that hasn't come to pass, thankfully. But we may be entering a more subtle next stage of US-Iran competition, which very well could implicate Pakistan. And so I want to note very briefly three potential risks for Pakistan in the coming year of these heightened tensions. And the first is perhaps the most obvious, but also the most troubling, and that is that Afghanistan could become a more potent site for US-Iran proxy activity. Thus far, with few exceptions, there's been a detente of sorts between the United States and Iran in Pakistan. And this hasn't been the result of pleasant feelings or goodwill, but it's been the result, largely, of a perceived commonality of interests along several lines. The first is that both countries think that they stand to gain something from a peace deal that could bring perhaps more stability to Afghanistan, but also could result in a drawdown of US forces, which Iran would like to see. There's been some commonality of interests on counter-narcotics, which are concerned to both countries, and where the work of both countries have probably been similarly fruitless, but there's been some alignment. And then there's some interest in not having Afghanistan be wholly dependent on outside powers, and probably a commonality of interests in seeing Afghanistan be less reliant on Pakistan for its trade. So along with this alignment of interest, there's been some measure of mutual restraint, and no direct targeting of each other in flagrant ways in Afghanistan. And this is not because there aren't opportunities to. The United States would have many ways to target Iran and Iranian interests, and Iran would have many ways of targeting the United States in Afghanistan, US forces, US civilians, US infrastructure. So it hasn't been for a lack of opportunity. And in addition, I think both sides have decided that they're not going to press Afghanistan to choose between the United States and Iran. That's been part of the sort of implicit US policy. And I would say this detente source has been sustained even as Iran has become more overt, more obvious in its political outreach to the Taliban over the last couple of years. It's political support for the Taliban. It's broader hedging away from diversification, away from its more traditional relationships with the Hazar community, with the Tajiks and the Uzbeks. And as it has provided what we all believe to be some level of probably modest material support to the Taliban, this detente has largely remained in place. And so I think it's worth thinking about what it would look like if that status quo changed over the coming year, and in ways that could complicate or even spoil the already very sort of fragile peace process that is underway. That's probably the most significant implication is that it could derail what peace process that may not even come to fruition. But also as Ambassador Olson has noted in his writings, it could generate the significant incentive for the United States to hang around more significantly with special operations or intelligence forces in Afghanistan in order to be able to prosecute targets in Iran or to hold Iranian assets at risk or to be able to see what is happening in the region. So it creates a different structure of incentives for the United States if there's the sense that there could be ongoing significant competition in Afghanistan with Iran. And this detente could break of course if the United States does something or if Iran does something or if there's a miscommunication. It's possible the United States would do something. Thus far, the United States has only stepped up its rhetoric about Iran in Afghanistan. Secretary Pompeo has said some things which are difficult to understand and parse about Iran's nefarious activities in the Iranian in the Afghan peace process. But at the very least, there's some rhetoric coming from the United States that's focusing a spotlight on what Iran is ostensibly doing in Afghanistan, although the details are still very thin. And Iran has again, has many opportunities and options to do things in Afghanistan against the United States if it wanted to. It has a significant population of Afghan Shia in the form of the Fatima-Yun Brigade who have fighting experience who could in theory be leveraged in Afghanistan for various operations. And the Soleimani successor, the head of the new head of the Quds Force is someone who has spent much of his career focused on Afghanistan and on Central Asia. And it sort of has a very sophisticated lay of the land already of what Iran's options are. None of this is highly likely because anything that Iran does would be risky. But I would just say, since we're talking about Pakistan here, none of this would be good for Pakistan to see this detente break. And I'm happy to talk more about that. The second thing that could be problematic for Pakistan is that it would further complicate Pakistan's efforts to navigate the Saudi-Iranian divide. This has long been awkward for Pakistan. And at the same time, Pakistan has decided to privilege its relationship with Saudi Arabia but is compelled to sustain at least a working relationship with Iran because Iran is a neighbor. And this balance, waxes and wanes, Pakistan made probably one of the better foreign policy decisions of its last decade in declining to be involved in Saudi's foolish war in Yemen. So it has made some decisions to distance itself from the worst episodes of Saudi adventurism. But at the same time, it's shown pretty consistently that it will fall in line with Saudi pressure and that of its other patrons like China. So I think this is very navigable for Pakistan. Any greater tension that it has with Iran would complicate some of the border management efforts it has in dealing with the bloach problems on the respective borders. So it would provide complications but nothing that Pakistan would be unable to manage. And I think the third and final dimension in which U.S. Iran tensions could be complicating is in the economic dimension and Uzair could speak to this in more detail. But there are a couple of dimensions one could imagine here. The first is, of course, on energy. Pakistan imports a large percentage of its energy in the form of oil and in the past, few oil and increasingly natural gas. And even though LNG prices have for probably over a decade largely been decoupled from crude oil prices, we've seen even in the last month after the spike in crude oil prices there hasn't been an appreciable increase. The price of energy is not at a comfortable level for Pakistan as a major energy importer but it's probably at a manageable level. But this is something that the Pakistan is certainly should be worried about that any tensions in the straight of hormones would complicate both oil imports and LNG imports in ways that could bite at precisely the moment when Pakistan really can't afford any more austerity than it already has. And I think the final economic dimension here is in the nature of Pakistan's trade with Afghanistan. Afghanistan has sought over the last 10 years to diversify its imports away from Pakistan and toward Iran. It receives more, gets more of its imports through Bunder Abbas and other Iranian routes than it used to. This has been helpful for Afghanistan. It's become less dependent upon Pakistan and some of the border management challenges that it has with Pakistan. And it's really not clear the degree which the United States as it steps up its pressure on Iran is going to press Iran and press Afghanistan to begin moving back in the other direction. Again, Afghanistan has very few options from which to import. And the United States carved out an exception for the port of Chabahar in principle but in practice it's not clear that anything is really moving forward in a substantive way with Chabahar and international lending institutions are still quite cautious. There are many other ways that the United States could begin to put the squeeze on Iran and on Afghanistan in ways that would in some ways force it back into using Pakistani trade routes. And so while that might in principle be helpful for Pakistan in a very minor way it would be at the expense of the resiliency of the Afghan economy in a way that's probably not helpful in the long term. So I would just wrap by saying none of these things are highly likely at the moment but there are some risks as the U.S. Iran tension moves into a new stage that might be more interesting and more subtle and equally problematic for Pakistan as it has to navigate these dynamics. So I will stop with that. Thank you Josh, Dr. Khan. Sure, well thank you everybody for being here. It's always a pleasure to speak at USIP. So today I'm tasked with talking to you about Pakistan's foreign policy and there are two issues I'd like to discuss. One is sort of the ongoing tensions with India because of the Kashmir crisis. And the second is of course the Afghan peace process in Pakistan's role in that process and the tensions that it's created between U.S. and Pakistan. So I think for many of us in this room we've been following this but very briefly, India, Jammu and Kashmir was a state and it enjoyed a really special status in India according to the constitution. According to Article 370, Jammu and Kashmir was able to have its own constitution, its sort of its own institutions. On August 5th, 2019, the BJP-led government was reelected in the summer and they revoked the special status of Kashmir. And what that means is that the Jammu and Kashmir state is no longer a state. It has now become a union territory and it's divided into two union territories. One is called the Jammu and Kashmir union territory and the other one is the union territory of Ladakh. Now besides the fact of what kind of implication it has for India's democracy and how that's evolving, for Pakistan, Pakistan reacted very swiftly to this development because the Article 370 revocation was not just followed by sort of an empty political rhetoric but there was a lockdown which involved a communications lockdown. There was no internet and a mobile service was locked down in Kashmir. There were a lot of political activists and the Kashmiri government officials were detained and they remained detained. So Pakistan reacted as sort of this part of being, of course, India's neighbor, but also because Pakistan views itself almost as a spokesperson for the Muslims of Kashmir. And of course we can talk about that in the Q&A but at least for the Khan government that's kind of the impression that they have. And so Pakistan did a few things. One was, of course, to react politically. They declared that they were going to end bilateral diplomatic relations with India which meant that they asked the Indian High Commissioner Ajay Bistra to leave Islamabad. It also meant that the Pakistan's counterpart, Mohin al-Haq, Ambassador Mohin al-Haq, was asked not to go to New Delhi. India, Pakistan also suspended bilateral trade with India and the Khan administration said that when they go to the UN, they will raise the issue of Kashmir with the UN Security Council. Now, President Prime Minister Man Khan went, when he went to New York City and he spoke to the UN General Assembly, he spoke really candidly and very deeply about the Kashmir State and he has said that he feared a bloodbath once the curfew was over. Now, Prime Minister Modi actually did not speak about Kashmir in his remarks at all and the Indian government to this day maintains that the Kashmir issue is a domestic issue and that according to the 1972 Simla agreement, any issue that happens in Kashmir should be dealt bilaterally between India and Pakistan and it's not something that should involve in the international community, specifically the UN. Now, of course, Kashmir has sort of been the bone of contention between India and Pakistan since partitions, since 1947. So why is it that this time the Kashmir issue had such a reaction? I think there are a few reasons. One is that besides that the special status that Article 370 gave Kashmir, this was the only, Kashmir is the only Muslim majority state to have enjoyed the status. This is also the first time in an Indian democracy where a state has been downgraded to a union territory which has sort of, you know, constitutional implications and also has governance implications. But with respect to Pakistan, the issue has been sort of the BJP's push for demographic change. Now, because of the special status, the only people who could own land in Kashmir were those who were Kashmiri. Now, the BJP government has allowed non-Kashmiris and essentially non-Indians even to be able to purchase land in Kashmir which might change the demographics of Kashmir and this is something that Pakistan has been wanting to highlight internationally, especially when Prime Minister Khan came to New York. He wants to rally the international community and discuss essentially how Kashmiris are losing their rights. Not just that, but also Kashmir has been under, I would say, a communications lockdown till about two days ago. So for the past six months, there has been no internet connection and mobile service has been down as well. Just two days ago, mobile service has been allowed and only about 300 white listed websites have been allowed by the Indian government, but social media is still restricted. So Kashmiris are very much in a communications lockdown and then also political activists, a lot of politicians remained, I would say unlawfully detained in Kashmir. So this is an issue that Pakistan has been trying to highlight, but the problem with Pakistan is a credibility issue. So Russia, for example, has already taken India's side. China, which has generally taken Pakistan's side, is still a little, I would say reluctant to downright say that India is wrong in the way that it's treated Kashmiris. And I think Prime Minister Khan is having a hard time rallying support for this. Some of this is also, Pakistan is looking towards the United States, about the US should probably do something to help the Kashmiris out and to tell the Modi government that what they're doing is essentially wrong and a gross violation of human rights. Now what this means for US-Bakistan relations is twofold. Of course, the Trump administration has been very active in saying that they want to end the war in Afghanistan. President Trump, when he campaigned in 2016, one of his campaign promises was to get the US troops out of Afghanistan and Iraq. But, and he is also one of the few politicians who wanted to have direct talks with the Taliban, which were going on until about Labor Day of 2019 when suddenly the talks fell apart. Now, what does this mean for Pakistan? Not only the Trump administration, but I would say even the Obama administration and before that the Bush administration, they've always known that Pakistan has had a special relationship with the Taliban. In the 1990s, Pakistan was one of the only countries along with the UAE and Saudi Arabia to recognize the Taliban as the official government of Afghanistan. And also just based on certain links that have existed between the Taliban and Pakistan, the US feels that Pakistan should be able to help them negotiate a direct deal with the Taliban. I would say the problem has been two fold one is that Pakistan does have a relationship with the Taliban, but I think the US sort of over exaggerates it and also has a tendency to perhaps overthink it a little too much. And second, I don't think that Pakistan and Taliban are as close as US administration would like to think. The Taliban has become stronger over time. They themselves have been, I would say, developing diplomatically and politically. Even now with the Trump administration wanting to reduce troops, they have increased troops in the past six months or so. They're about 13,000 US troops now. And Pakistan has sort of been, I would say, left behind. The Trump administration has accused Pakistan of not doing enough and has suspended military and security aid. But now they're sort of at a point where the Trump administration wants Pakistan's help, but it's unclear exactly how Pakistan can help. Now, what does this all mean for sort of Pakistan's foreign policy? I think Prime Minister Amran Khan is sort of in a difficult spot. One is of course sort of just internally they're trying to highlight the human rights violations that the Indian government is doing in Kashmir, but Indian historians also like to show Pakistan that, well, there might be demographic changes in Kashmir that are going on, but this is something that Pakistan has done in the past too. If you look at the history of Gilgit and Balistan, this was a princely territory that Pakistan had inherited. And actually Pakistan had policies in place that changed the demographics of that region. So there's certainly a certain hypocrisy associated with Pakistan's call for human rights violation. The second problem, of course, is Pakistan's credibility. Pakistan is routinely accused of sponsoring militant groups, especially Kashmiri militants. And now that they have a relationship with the Trump administration, they're trying to develop a relationship, a better relationship with the Trump administration, it remains unclear how that sponsorship affects its relationship with the Taliban. And also then the effects it might have on the Pakistani Taliban. So I mean, very briefly, it's a complicated issue, but I would say the main problem with Pakistan's foreign policy is inconsistency. And also, there's a lot of over-exaggeration of, I would say, Pakistan's capability when it comes to the Afghan peace process. I welcome your questions and I look forward to them. Thank you, Dr. Khan. Sarah. Thank you, Zach. Good afternoon, everyone. Thank you for coming here today. And thank you to USIP, the Asian Center, Andrew Wilder for hosting me. Our excellent moderator, Zach, has asked me to focus on domestic politics and civil military relations. Thank you, Zach, for giving me the entertaining but risky brief. Domestic politics and civil relations in Pakistan are tricky yet simple because they're often about not much changing but a lot happening. And if you take 2019, if at the start of 2019 you had predicted that last year would have ended with the same prime minister, the same army chief, serious economic and governance challenges, and a political opposition positioning itself for a comeback, you wouldn't have been wrong. But the path Pakistan took last year surprised a lot of people and I think probably everyone in this room. So with that in mind, I mean, Pakistan has always continues to surprise, disappoint, excite and challenge. And let's see what 2020 will bring. I'll start with the big picture and then move on to the PTI government, obviously, and then the political opposition and finally with the military and what role it's envisaging for itself in Pakistan. First, the big picture. It is a surprisingly stable outlook for 2020. We now know that we have an army chief till 2023. The chief justice, who's newly assumed office last month will be in office till Feb 2022. There's no major election scheduled for 2020. The next Senate elections will be in 2021. There could be local government elections, but given the political resistance to that at the provincial tier, may not see it unless forced upon the country by the Supreme Court as it did the last time. So, you know, stable in big picture, but you notice I haven't talked about the PTI or Imran Khan yet. And what can we say about this government? I think the current PTI government led by Prime Minister Imran Khan has struggled to assert its authority, it's assert its governance credentials and impose a credible reforms agenda. 2020 should be the year in which a first time government now coming into its second year in office, almost two years, one and a half years should be able to assert itself. Instead, we've seen the opposite. However, Prime Minister Khan has talked in recent weeks and months of his government having turned an economic corner and 2020 being a year for progress. Problem is, Prime Minister Khan has not explained what exactly his agenda is for 2020. And I'm sure Zair will discuss a lot of the economic position and challenges in the country. And so, without a plan and continuing economic struggles, I'm not sure whether Imran Khan will be able to come up with a plan midway. I have tried for the sake of this audience and myself too, and speaking to my friends in Pakistan and following the Pakistani media to ascertain how, or if anything, Imran Khan intends to do in 2020, which he hasn't done in his first 18 months. But so far, not found anything. Obviously, I wish Mr. Khan and the PTI government well, because as goes his government goes the fate of millions of Pakistanis. But I would not be surprised if 2020 passes are similar to what 2019 was, which is this government struggling to find its footing and struggling to articulate reforms agenda. The problem with political reforms or structural reforms that Khan occasionally talks about is that they require political capital. And with this government already in disarray so early on, despite the firm backing of the military, it's hard to see how judicial, bureaucratic, or even police reforms can be pulled off at this stage. First, you need to have the macro picture a little more stable politically before you can get parliament to work on those things or the provincial governments. Unfortunately, Prime Minister Khan occasionally shows an inkling to push forward some kind of reforms agenda, but then immediately turns around and bashes the opposition, which precludes any cooperation, I think. So that's the picture of PTI going forward 2020. I would suggest it will be largely like it was in 2019. The government will remain in power, but it will struggle to impose its authority and extend a credible reforms agenda. What's more interesting perhaps this year then is the political opposition in the country and the role that it will take. With the PMLN and the BBP having assented to the Army Extension Bill in parliament, the parties have signaled a familiar style of Pakistani politics, where the opposition accommodates the military leadership and seeks to cohabitate in order to replace the incumbent government. While that's distressing from a democratic standpoint, it at least simplifies trying to understand what's happening in the country. For the BBP, I think in the year ahead, the order of priorities will be to maintain its dominant ruling position in some, to disentangle the political leadership of the party from the court cases and inquiries it has found itself in, and of course to continue to attack the PTI at the central level. How well the BBP is able to achieve any of its goals will depend on also the reaction of the PTI government. It may seem from afar that Pakistan at the moment is being controlled or this PTI government is getting all the excuse from the military, but the Prime Minister's office is a powerful office. There's a lot of executive power, and if he chooses to harass the political opposition, you can use that office to do it. So will the BBP be able to get out of it? I don't know. The PMLN is, I mean, we've all seen what's happened. The longest running soap opera in Pakistan's politics is the Shaba Sharif versus Nawaz Sharif narrative. I think it seems clear that 2020 will be about the Shaba's Sharif approach to politics asserting itself and consolidating on the ascent to the extension that was agreed to. I think, you know, quid pro quo is a word phrase I'm hearing a lot in the US, and so 2020 will be about figuring out what the quid pro quo for the PMLN was or for Shaba's to get what he'll get after agreeing to essentially extending the tenure of an army chief who the party had accused of stealing the last election from it. So there must be something in it. I don't know. What will be interesting is that if the Shaba's Sharif approach dominates or the PMLN in 2020, whether it will do so at the provincial tier, attacking the political government in Punjab, which is weaker of the PTI, or if has long been Shaba's dream to sort of ascend to national politics and try and capture the prime minister's office. Again, without military support, I don't see that happening. I foresee Pakistan having the same prime minister at the end of the year, or at least the same government. But, you know, obviously if you're the PMLN, you will seek to capitalize on the disquiet that's being felt in the country at the moment. Economic, the economic downturn is really hurting. Jobs, the poor government's performance in KP and Punjab in particular is dominating the media. So, there are opportunities for the political opposition, but it depends on how well they're able to capitalize on those. On the issue of civil military relations, I think the trend lines are clear. The military seeks to remain a dominant force in national politics and the national security arena. General Bajwa's, the Army Chief General Bajwa's extension has also demonstrated that when necessary, the political process will be made explicitly subservient to the military's needs or desires as articulated by the current leadership. Not much to be added on that at the stage. I think anyone who's watching Pakistan knows the trajectory we're on. I think one way of looking at it is that over the last several decades, Pakistan had had alternating decades of military rule and civilian rule. And so what we are entering right now in 2020, the 11th year of the so-called transition to democracy is perhaps a new hybrid regime model that we're seeing play out where the military controls things behind, not control, but has a great deal of influence from behind the scenes and a political government remains in place as a democratic veneer. What has been a bit surprising, I think perhaps, with this hybrid regime model is the willingness of the Army Chief and Prime Minister Khan to embrace each other so publicly and so directly. From a civilian perspective, it probably makes sense to keep the Army Chief on board and as close as you can in the military leadership on side because that might determine your political faith. What is less obvious is why General Bajwa would have allowed the military leadership for his tenure to be dominated by being perceived to be so close to the PTI. There are risks of that, political risks of that, that the military, I think, is increasingly becoming aware of which is why within the media in Pakistan, to the extent that these issues can be talked about, there's an indication that perhaps the military has realized Imran Khan needs to get his act together or else. Now, I don't believe that. I think that's just a way of putting pressure on the government again to improve its government's record. So I expect 2020 to be a bit about rebalancing by this military leadership, that it has publicly become too closely associated with this political government and its lack of performing in the economic and government's arena. So that might be something to look forward to. The final thing I think, unfortunately, is a personally sad and issue is sort of the, there are pressures that the media, political dissidents and other figures, rights activists, et cetera, felt in the country. I think as Zach mentioned with the arrest of Manzur Pashteen, it's indicated that the hard line approach will continue. I expect there to be no let up in pressure on the media, political dissidents, rights activists, and of course the PTM, which has been declared to be a red line that nobody should cross. So unfortunately, I wish I could end on a more positive note, 2020 is, I think going to be a lot more of the same with some unfortunate edges to it. Thanks, Zach. Thank you, Zero. Thank you for having me here in Alpailon to Siril and add to the depressing news on the economic front. But I'll sort of start my comments looking at the big picture in the economy and what the structural constraints have been for a long time in Pakistan's economy and how that translates into what happened in 2019 and what may happen in 2020. In my view, there are four key structural impediments that are historic and decades long in Pakistan's economy. The first, Josh already alluded to, are energy imports. It is a major structural embediment to growth. In the region, Pakistan has some of the highest energy costs, which then make its economy really uncompetitive, particularly if you're trying to export and compete in a globally competitive market where these Asians, the Indians, the Vietnamese, et cetera are highly competitive. A lot of it that has to do with the energy costs. Then there is the internal issue in the economy, which is the agricultural sector, which employs the vast majority of Pakistanis today. It's sharing the GDP as output has reduced in the last few decades, but it's still a major employer. That sector is in crisis. And if you look at the 2019 state of the economy report by the state bank where it made the prediction that the economy would grow at about 4% or so, it banked on a revival in the agricultural economy and that has not happened. Inside the agricultural crisis has only worsened in the last 12 to 18 months. Then there's the skills gap. If you look at Pakistan's literacy numbers and literacy as defined by the government, which is you can sign your name on a piece of paper, about one in two Pakistanis are illiterate. If you raise the threshold in terms of actual skills, it's even worse and it's a lot worse for women than it is for men. So an economy that's trying to be competitive cannot become competitive when it has a skills gap, when it's dependent on expensive energy imports that make it uncompetitive from the get-go and where the largest employer as a sector is in deep crisis. The fourth problem there is that if you look at Pakistan, its trade routes are essentially have become north-south, especially with CPAC, but the problem is that that north-south access is essentially imports coming into the country either from China or the Gulf states in the form of gas or oil imports. Historically, South Asia has traded east-west on the east-west access, but on the east-west access, there's a crisis on all sides. There's Afghanistan is an issue, Iran is an issue, India is an issue. So that means that there is no way for this economy to structurally align itself in vertical supply chains where it can have a competitive advantage and grow in the long-term. And that as long as that continues, it will saddle long-term economic growth in Pakistan. And I want you to keep this in mind as I dive deep into what's coming in 2020. 2019 was the year of an external economic crisis in Pakistan. So they went to the IMF, should have gone sooner rather than later, but that's done now. They tried to sort out this issue and by and large, the external crisis has been dealt with at least for the time being, which is what happens in Pakistan every four years or so. Current account deficit has been slashed, imports. I was just in Karachi, drove by the Karachi port, it was literally empty because you have to have, they've got imports tremendously, that has had an impact on the economy. But 2020 will be the year of a domestic economic crisis. And how the government deals with that will be essentially what determines its political fortunes as well, going back to some of Cyril's points. And I agree that the problem with this government has been that it hasn't had a priority. So if you look at the transition that began in 2007 with the arrival of the People's Party as a coalition government, very early on, you knew that the priority was to keep the coalition together and pass the 18th Amendment to restructure the country constitutionally. They passed that and that was the priority. The PMLN comes and says, we're going to do CPAC and energy, solve the power crisis. By and large, they did it. Now you can disagree with the way in which those two outcomes were achieved, but that was the priority and they set their eyes on it and they achieved it. The PTI, what is their strategy? What is the big goal, big picture goal they're seeking? Nimran Khan keeps talking about social welfare, but the PPP did BISP, the Benazir Income Support Program. The PMLN expanded on it. So social welfare as a whole does not really make much sense in big picture economics. And so as someone who watches the economy, I'm struggling to look at what it is that they're trying to achieve on the economics side and that is a big problem for the country. Now in terms of why do I say it's a year of domestic economic crisis, there's three reasons for that. One is that there's a big fiscal deficit that's already mounting. So if you look at the numbers from the Federal Bureau of Revenue, which is the IRS equivalent, it's gone to about 300 billion rupees already. That's the deficit they have in the first half of the year. The target was 5.5 trillion rupees in tax collections. They lowered it by about 400 billion and now they're going to probably miss it by another 500 billion rupees. So the IMF is not going to be happy with that. So what do you do in this instance? The easiest option for every government in Pakistan has been to continue pushing regressive taxes on the average citizen, which is what this government will do as well. So sales tax will probably go up, withholding taxes on petroleum and energy will go up, electricity, surcharges will go up and import duties will go up. What does that do? It promotes inflation in the economy, which is already 13%, that's my second point. That then forces the state bank of Pakistan to maintain high levels of interest rates because it cannot cut interest rates in a high inflation environment, which then further prevents the economy from growing and inflicts more pain on the economy. So you can't really grow. And then finally, the inflection point will be security expenditures, which is something people don't pay a lot of attention to. But if you look at, at least from my economy watcher hat, that's where a lot of the relationship between the PMLN and the army started falling apart. If you look at what they were asking for in current expenditures and what Ishaq Dar, as finance minister, was delivering to them, there was always a two to five percentage point gap. And no one was happy about this. But when Imran Khan came into power to show that they're on the same page, the current expenditures were essentially frozen. Now there were current expenditures, capital expenditures continued to grow, but the military did take a hit on that, right? So the question is, when the budget comes out in May again and the conversation happens that look we have a big fiscal deficit, what should we do about it? And will the military say, okay, cut our, or freeze our allocations for another year? I don't think that's gonna be a very pleasant conversation for the finance ministry, the prime minister's office and the GHQ. Primarily because you have a chief of army staff now who's extended for three years and he's banked on the PTI for the long run, but he has core commanders and officers to answer to as well, who will not be happy with the status quo if this continues. So you will be stuck in 2020 in a low growth, high inflation, high interest rate environment, which is not good for the economy. And that's the major problem for this government moving forward. On the plus side, there are some issues that I see that are good for the economy. The financial action task force, the indications are, Pakistan will probably be off the gray list in the coming weeks, if not months. That will allow financial capital flows to grow further, which is good for the economy, at least in the short term. There's stability in the treasury bills market and we've seen for the first time large amounts of dollar flows into Pakistan's domestic T-bill market, which is good for growing that. And I think there's been some criticism saying that this is a near-term risk to the economy. My view is that when you open up the economy for capital inflows, you first have to attract risk-free flows into the economy and then you go from there. The question is can you do the structural reforms to go to the next level of quality flows and that's where Pakistan always stumbles and remains to be seen. And then third, that all stakeholders are there for a while on the horizon. So I think that sort of stability at least at the higher level may be a good thing for the economy, especially if it gets serious about structural reforms. And finally, there's a good startup scene happening in the country. And I think as they go up from attracting, out of the FATF and attracting more dollar flows, I think the startups can play a really good role at least in boosting long-term economic growth outlook in the country. And I think people essentially missed that because it's easier to look at the macroeconomy and the problems there, but on the micro side, there are some good things happening. But I think I'll sort of stop where the question will be is how long does the Chief of Army staff who has extended for three years and has backed this government, how long will it take him to look elsewhere and away from a stumbling government that is going from one economic crisis to the other? And I think the budget will be the key inflection point that will have a big impact in terms of how does the PTI go from here on out, especially because if you look at the parliamentary picture, Prime Minister Khan is the weakest Prime Minister since Jamali in the Musharraf era. He had a four-word majority when he was elected Prime Minister. So it won't take a lot to either have an in-house change or an out-of-house change. And I think ultimately it will come down to whether or not the GHQ looks at the financial picture and says, can this be sustained or not? And that's where things will change. Thank you. Thank you for those insightful comments. I will exercise the chair's prerogative and pose the first question. So what I heard from the group in terms of Pakistan 2020 looking forward, much of what you expect to see is gonna fall within the range of manageable, normal, essentially Pakistan muddles through. And Cyril made the point that Pakistan's balance of power will increasingly, or at least for the foreseeable future, promote a political equilibrium that by and large is held together through military power and influence. So I would ask each of you to put on your red team hats and to think about low-probability, high-impact developments or scenarios that you think could be possible. However remote the prospects in the foreign policy arena, in the domestic arena, what are some, again, low-probability, high-impact scenarios that could affect the overall state of the economy, the trajectory of domestic politics, relations with India, Afghanistan, tensions with Iran? Who wants to go first? Dr. White. Sure, I mean there are two that come to mind. The first is the U.S. policy toward Afghanistan. This is not a low-probability, this is a moderate probability. We have President Trump seems committed to drawing down U.S. forces regardless of whether there is a sustainable peace process even underway. Almost all of the Democratic candidates have said that they will either draw down all U.S. forces or most U.S. forces. So there's a very real possibility that there is a fairly dramatic decrease of the U.S. presence platform in the region before a peace process has traction and is able to continue. And I think that provides very significant incentives for the Taliban to stall. And that combined with political pressures in the United States could mean that, by the end of 2020, it's easy to imagine being in a place where there's really sort of no peace process actually underway because the Taliban are waiting out a U.S. drawdown and Pakistan's anxieties about competing for influence in Afghanistan and suddenly spike again with all of the bad behavior, understandable but perverse behavior that we would come to expect. The other prospect, which is lower probability, would be another India-Pakistan conflict sparked along a similar pattern as to Polwamo or one of the other recent crises. And it's a whole other conversation, but I think many of us who look at these crises closely believe that we're in a phase where they're likely to develop much more quickly than they have in the past. There are new technologies and doctrines in play on both sides that make these risky. And I for one believe that both countries have underestimated the risks involved and overestimated their ability to manage escalation. And they have also tasted the political fruits of the benefits of these crises in ways that make them sort of uniquely attractive to being able to signal to domestic constituencies toughness and seriousness. So all of that combines to create a kind of low probability but I think very troubling escalation scenario that we should all worry about. Okay, easy. I think for me is a serious Iran, US, Saudi crisis that shuts down the Persian Gulf for the Arabian Sea. And I think the reason for that is that if that were to happen and let's say all prices spike to even north of $100 or about $100, all of the IMF projections and the finance ministry projections that have been made in terms of stabilizing and continuing stability in the macroeconomy of Pakistan will be out of the water. They won't have any dollars to pay for growing energy imports. And the last time that happened in 2007-08 when oil was really high and the Zardari government was dealing with this you need to remember that Pakistan was just importing oil at that time. Now it imports natural gas which is indexed to the price of oil long-term contracts from Qatar and other sources. So it's sort of exposure has increased phenomenally in that period. And I think if the Persian Gulf were to shut down then you will have not only a domestic economic crisis but an external one where the $6 billion that the IMF has provided will be nothing compared to what the country will need. Sure. I mean, low probability in Pakistan's case it's always difficult to know what the probabilities are. But I can think of a couple of things maybe on the security and the political front. On the political front perhaps one of the provincial governments rebels against, they're quite fragile. In KP, Imran Khan just ousted three of his own hand-picked ministers for plotting a rebellion against their chief minister in the province. So it is possible that a crisis of the provincial tier could snowball in one of the provinces, Punjab, KP, snowball and have national repercussions. There's no constitutional requirement for Pakistan to hold elections at the same time to the provinces and the center but it's become a democrat or an electoral norm in Pakistan so an implosion there could. But again, like I said, that's low probability. Another thing on the security front I'd say low probability would be that because of FATF and other sundry pressures and Pakistan needing access to the IMF and credit markets, et cetera it has had to take some actions against militant groups within extant militant groups inside Pakistan at a time when Kashmir is, as we in Pakistan say under lockdown, et cetera. So a potential militant backlash of these groups that find themselves under pressure at the very moment that their reason for existence i.e. Kashmir is under pressure from a Hindu supremacist in their view. That could be something to watch out for. But again, I'd rank that as a low probability event. If it exploded it would be high impact. Dotcom. I mean, I agree with my panelists here. I think one of the low probability events would be if Pakistan actually responded militarily to India about the Kashmir crisis which I feel like is something they would not do. At least Prime Minister Khan has been really restrained in his even I would say considering past rhetoric and his current rhetoric. And so I don't really see him responding militarily. And also to say what was there said about the economy and what Josh touched on, I think it's sort of absolutely low probability. Okay. We will open the floor up to questions. We have mics moving around. Please state a question, not a monologue. And also please state your name and affiliation. So Ambassador Olson. Hi, Rick Olson, USIP. And thanks very much to the panel for fascinating discussion. I wanted to focus particularly on Cyril and Nuzer's presentations, to sort of summarize obviously and to remove some nuance. I mean, I heard several things. I heard an agricultural crisis ongoing, increasing regressive taxation, stagnant politics, increasing repression, and perhaps a deteriorating external environment. So against that, why do we think it's gonna be business as usual and why aren't we thinking about more like why is in Pakistan on the verge of a revolution? I think, well, of course, the revolution could come. But in the Pakistani context, because of some political, we have a quite, even right now, thriving political culture where descent, if you're unhappy with the government, there are other political options. And I think the reason why we've never had that revolution and we're not any closer to it is that we swap out our governments and our military dictators to every 10 years, unlike in the Middle East where you have them around for 20, 30 years. So that in a strange way acts as a safety valve to the explosion because the political turmoil itself, the chopping and changing of governments, the militaries are supporting one side and then the other side, political parties, cutting deals with each other, et cetera, allows for enough change to prevent perhaps that building up of all those tensions and them exploding. But again, that's just my hypothesis. If the revolution comes, I'd be surprised of all these reasons. I think on the economic side, it's happened before, right? So it's not the first time they're in the IMF program. It's not the first time regressive taxes will go up. It's not, it's been done before the playbook is already there. But I think overall why there aren't any major protests when the economy is down in the dumps and things like that is that you have to remember the way the British economic system was calibrated is essentially what Pakistan's economic system today is. It's rent seeking with a focus, a bureaucratic focus on preventing famines and mass food shortages. So if last week you saw what happened with the wheat crisis happening, in two days it was solved because the imports were brought in an emergency basis and food was on the table again, right? And if you go to Interior Syn, you go to Interior Punjab, the situation has remained by and large the same, but people by and large there is stunting, there is lack of progress physically in socioeconomic terms, but people don't go hungry, right? The state does a pretty decent job at keeping this issue at bay. And I think that's why you continue to muddle along because that's just how it's been forever. I was in Tata, I did an Interior Sintour in December and I had been in like about 10 years and it was the same, which was really depressing to see. Like you didn't see any vegetable vendors in the main markets in Tata. This is like the capital, historic capital of the Sindhi feudal elite, right? But the people don't have those things and so they don't, it's not been taken away from them. So it's like, gas shortages, okay, we had gas shortages last winter too. And so in a way there's this inbuilt resilience because of this issue. I would just add, I think that, you know, one of the few things that political scientists have to contribute to are thinking about these kind of things is that people who studied social movements, can rightly point out simply having bad conditions obtained is not enough. People need a sort of an organizing architecture and some kind of way to focus their concern. And I think it's, you know, it's difficult for people to mobilize against a sort of generalized gross incompetence in a way that if, you know, it's different if there's a triggering event, if somebody sacks the Chief Justice or if there's something that is visible that mobilizes a segment of society that can then cross mobilize other segments of society, then you can see some of the social movement dynamics come into play. I think that's what's very interesting about the earlier comments about how Imran Khan came in, promising everything, which is the equivalent of promising nothing. And then I think very few people in my view were surprised that he was poor at executing. But I think there has been some surprise that he's been so poor at prioritizing in his discourse. Here are the two or three things that I'm going to do. Here are the two or three problems that I'm going to solve. And so that makes governance very hard, but it also sort of inoculates him because, you know, what exactly are you protesting? Well, he said he's gonna do everything. Well, it actually makes it harder, I think, for the opposition to sort of focus on a failure of delivery in a specific area or two that would actually help a social movement to get started. Okay, the gentleman in front of me. I'm Sufi Lagari with the Sindhi Foundation. You mentioned that in the sin, the feudal elite, but in the sin, the rural areas feeling is the, all the Punjab is exploiting and taking our resources, jobs and everything. And my question is also related to the national question or nationalist movements. Now you see PTM in Balochistan in Sindh. How do you see the nationalist question and will be impact in the 2020 or overall? Sindhi's Baloch and Pashtun and even Sraiki, they don't trust on Punjab. And it's a very hard question. It's a very hard problem. And even the civil military relations, these three province feel that very unequal and even the Bhutto's family, all is murdered by the Punjabi military. So how do you see you guys in that related question, my national question? There's a lot there. About these nationalist movements, PTM of course, I think with the arrest of Mansoor Pishneen, it's clear that the hard line approach is going to continue. There has been concern within the military itself about amongst the Pashtun officers that, you know, is this the best way to approach it? But that seems to be the decision that the current leadership has taken. Balochistan, of course, is one big no-go area for us as Pakistanis for almost a generation now, since 2004, I'd say. Unfortunately, what's happened there is a result of the military's dominance and the depoliticization of the government out there, in a sense, is what you would have called moderate nationalist parties like the BNPM or the National Party, et cetera. Their fortunes have way into. And it's just a question of, Pakistan's a tough country to govern at the best of times. So once people see people in power and then they get disappointed, then it's harder to energize those people again. So on sort of nationalist issues, I think the Pashtun issue, the PTM issue is probably the most interesting phenomenon in Pakistan since the lawyers' movement that Josh mentioned. What is interesting, and I know Manzur a little bit, was that he has avowedly stayed away from the political process. I clearly wanted to keep it as a movement. Imran Khan once upon a time also had that approach. I'm not comparing the two of them, but until Manzur makes the decision or the PTM as the leadership, which is loosely net, decides to get into the political process. I don't see them being able to resist what is coming their way and has been sort of dealt to them right now. I mean, I would say that Pakistan is really paranoid about secessionist movements, especially after what happened in 1971. No government wants to be in power where perhaps some nationalist movement is able to get more power. And this we see that especially in Balochistan, especially if you pay attention to how Pakistan's anti-terrorism laws have evolved, just how terrorism is defined, how the state has cracked down on nationalist secessionist movements is really telling too. I think the other problem has been sort of the militarization of the police. The military of course interferes in the ways that it does, but the police at the provincial level, they're the ones who are in charge of law enforcement of security and they have wanted over time to become more like the military. They want more weapons, they want sort of more power, more I would say executive power even. And so I think seeing that evolution as well indicates that they're really worried about secessionist movements. And so whereas movements can erupt, I don't think there's really any way that they could become even more powerful or that a revolution would start because of that. The gentleman in the back, with his hand up. Yes sir, my name is Kammi Bhatt and I'm with the Pakistani Spectator and my question is, aren't you being very critical of him, Ran Khan, given his sincerity, his honesty, his dedication? For example, he is doing a lot of things for the poor segment of the population that no government ever did. And he knows that these people are not going to vote because most of them don't have the level of education. They are not really political parties spent to help him, but he is doing out of his good heart. And number two about fiscal, I mean he is controlling those fiscal, he is at least trying his best. And number three thing is the impression of the absence of corruption. Don't you think that it should help? Because I mean Pakistan is lucky to have this kind of guy who doesn't have the motivation of making billion of dollars and then leaving the country. Don't you think that these all, if you consider all these elements in his favor, then in long term he is, whatever he is doing it would give some reward to Pakistani economy. Thanks. Well maybe we'll start with Sahar and move down the line. I mean I think it's important, first of all, I think it's important to be critical of no matter who is the prime minister. And I think in Ran Khan, there are certain things that are really good about him, right? The fact that he's made his money independently and he has not potentially done what other political leaders have done. I think that perhaps speaks to his integrity. The fact that he's created Chalkat Khan, the hospital that's been doing, I would say an amazing job at providing treatment for cancer patients. He has done systematically some good things too, but at least I feel like there are two problematic things which I think raises eyebrows in Washington. One is sort of his approach towards the military, which is something that you spoke about too, the sort of public display of affection towards the military. I think it's problematic when you think about how a democracy should develop. Technically, especially when I put my academic hat on, a democracy should be a place where civil institutions are more powerful than the military institutions. And that is not what is happening in Pakistan. The second I think issue with Ran Khan has been that perhaps he is new and he's not corrupt and everything, but the people that he has surrounded himself with in the party are certainly corrupt and they have certainly flipped flop throughout political parties as well. And so I think that has been really problematic when you talk about his credibility. And the third I think which he has in terms of foreign policy issue is that he's not really dealing properly with the credibility problem that Pakistan has. Because of Pakistan's lack of credibility in the international arena, it affects Pakistan's economy, it affects Pakistan's reputation, and it certainly affects even perhaps his reelection campaign as well. And just as far as, I think the dangerous part of Imran Khan has also been that anytime there's some criticism of Imran Khan, it's seen as being anti-state or criticizing the Pakistani government, which I think might be problematic because even despite all of Pakistan's history, it still has a really rich culture of dissent where just because you criticize the government doesn't mean you're necessarily going to be taken away. So I think that's something that is really important too. Sir? Yeah, I just say like your comments themselves reveal that Imran Khan has a genuine political base in Pakistan. He continues to enjoy support amongst his core. I assume that core is shrinking now because 18 months in power have refuted everything you just said, including on the corruption perception indexes, right? I don't think that's, as Sara has mentioned, you know, he surrounds himself with people who are not dissimilar to what the other parties have. In fact, he's taken people mostly from other parties to build this government. Sort of 18 months in power, I don't know. I mean, you'd have to poll the poor in Pakistan and ask them whether they're still comfortable with the direction the economy is taking. I'd be surprised if anyone comes out looking good on these 18 months and I'll say for me personally and for other watchers of the Pakistani political scene over the last four decades, perhaps the worst spell of governance we had would have been 2008 to 2010, which was when the ouster of Musharraf and Asa Zardari had taken over, Benazir Bhutto's assassination, the transition to democracy, et cetera. For various reasons, I was a pretty bad, tortuous spell for Pakistan. But I think this current 18 months and another 12 months of this might give that phase a run for its money in terms of being the worst ever. So I admit and candidly acknowledge that Imran Khan has a political base, which is a legitimate base that he has built up himself. But when it comes to results, I think, you know, they speak to the exact opposite of what you've just suggested. Because I mean, your point is I agree with the fact that he has a base and it's really popular, but you know, what's the state saying that the way to disaster is through the road of good intentions or something like that, right? So in good intentions, in 18 months, yeah, 12 months, they could keep the base happy. But when you have 13% inflation, when you have a wheat crisis that is leading to people not being able to get two loaves of bread a day, that has an impact, right? And so the good intentions, then no one cares about that. And then I think he's been a victim in many ways of his own rhetoric, right? So if you look at the campaign trail, the promise was that when there is an honest leader at the top, people will pay taxes. But you look at the tax growth rate in the 18 months he's been in power, it's been on average compared to what has been the growth rate in the last two administrations. Add to it the fact that nominal growth is coming on the back of 13% rate of inflation, right? So the real growth in terms of the base tax to GDP growth is actually receding, not improving. So he has to answer that question. We must ask that question off him, right? And again, I agree that the fact is that it's not his own integrity. No one's questioning that, but it's about the people he surrounded himself. And I mean, what happened with the Metro Bus project in Peshawar? Why is the party slowing down the investigation into that is a question people should ask and wonder about. And there are many other examples like that, right? So I think being critical after looking at the facts is a fair thing to do. And we can disagree on the interpretation of those facts, but the good intentions in 18 months, at least on the economic front, have not delivered so far. And that is having a real impact on people's lives across the board in the country. Josh. Yeah, I would just say that there's been so much happening in Pakistan, it's easy to forget that Imran Khan has also undertaken a sustained campaign of retribution against his political adversaries, which is not wholly unlike what previous political leaders have done, but it is both harmful to his leadership, but it is harmful to his governance agenda. It makes it such that people try to get what they can while they can get it because they think that once they're out of power, they will be persecuted. And so I think the personal becomes political and the political really has deep impacts on Pakistan's ability to get out of these governance traps that we've been talking about. Andrew, the woman behind Andrew, and then Steve. Thanks for great presentation. When I raised my hand, it was because no one had actually mentioned the corruption word. Wow, we had an entire panel discussion. And I guess maybe just to follow up a little bit on that, Mary-Doo is there, but I guess at one level, this was gonna be one of the signature programs of this government, and you just touched on why that's not going to plan, certainly on recent visits to Pakistan. That's been a big complaint, I think of the business community, it's scared away investments, the economic impact of that. But of course also, it's a bit tricky to run based your legitimacy on anti-corruption campaign. Why not, as you pointed out, many of the people are corrupt. But I'm wondering, given how much Imran Khan's pinned a lot of legitimacy and credibility on that issue, I'm wondering how you see that anti-corruption agenda playing out during the next year. I think it's already failing, and they're already taking a step back from that. A lot of that has to do with the fact that when you go to the business community in Karachi and talk to them about what's going on, they will say, well, on the one hand, you want our cooperation, the government want our cooperation on documenting the economy, on the other, in that same room, they tell us that we're thieves. And that's not the way to do business. And if you're gonna have that line, then you're gonna have an antagonistic relationship which means that progress will not be achieved. On the flip side of that is the bureaucracy, where again, if you start arresting bureaucrats, if you start arresting foreign ministers, who by the way, the current ministers within the PTI will vouch for, for example, Ms. Taishma, the former finance minister, right? Perfectly ethical guy, arrested for no rhyme or reason, now out on bail. So when you start doing things like that, everyone takes a step back and says, I don't want my signature on a document. I don't want to push a project through because the next year or six months later, the National Accountability Bureau will come and say, why did you buy this for five rupees when now the price is four rupees? Well, it was five rupees at that point in time, that's why I did it, but you're in jail for 90 days, right? Without any due process or whatsoever. And I think that was the problem that they had. So now they're trying to take out the teeth out of the NAB ordinance in many ways. And the opposition is signaling that it will cooperate because it benefits them as well. That's part of the larger deal again, what's the quid pro quo there? But I think it was the worst time to do that because your economy is already slowing down. And there was a misdiagnosis. I wrote about it and I got a lot of flack last year that if you look at Bangladesh, you look at China, you look at Vietnam, you look at even South Korea when it was growing, it was more corrupt than Pakistan was, but they grew faster. So if your logic is that corruption is preventing growth and why did it not prevent growth in those instances, and the misdiagnosis has had a terrible impact in the economy. Just like to add one thing to that, I think this anti-corruption mantra of the PTI needs to be unpacked a bit. And it needs to be seriously addressed because it has been fairly obvious to some of us that the anti-corruption agenda was a political agenda. It was about labeling the PPP and the PMLN leadership as such in order to get them out of power. I don't think that there has ever really been an anti-corruption agenda beyond that in the country realistically. Imran Khan spent his career trying to label these political opponents a certain way in order for it to gain power. Now I'm not saying that there's no corruption in Pakistan, of course we all know exactly, but it has become such a dominant theme in domestic politics because it was used as a political cudgel in order to attack political opponents so the military also does not have a soft corner for it. So I mean, in the context of Pakistan over the last 10 years we've heard this so much, has there really been any study which has suggested that corruption has increased vastly over the 10 years over Musharraf's regime, for example, the comparison point? And I don't think I've met anyone inside Pakistan who thinks that we have a corruption problem but that it has escalated to this level that it has caused a existential threat opposes an existential threat to Pakistan. I think the anti-corruption mantra or tagline that Imran took up was meant to have a political, was meant for political purposes. So I mean, if you speak to your average business man they might argue that these last 18 months for some of the reasons that Josh just meant because it's a bit smash and grab at the moment. Arguably corruption may have gone up in fact over the last 18 months but I've never seen corruption as being central to the political functioning of Pakistan. What it is is a casual use to beat up opponents when they fall out of favor with the state, I think. Thank you, my name is Fatma Salman I'm with the South Asia Center at the Atlantic Council. First I wanted to thank USIP and all the panelists for doing such a fantastic job of unraveling some really complicated issues. My question is kind of tackling the US-Pakistan relationship in 2020. We know that in July Imran Khan was here and President Trump and Imran Khan spoke and then we have the World Economic Forum last week when they had conversations on the sidelines. I'd like to know what is the potential for a US-Pakistan expansion, expanding trade relations in 2020? Because I don't think we necessarily hit on that. I'd love to hear some of your thoughts on that. Well, I'll leave the trade relations to that. But as far as US-Pakistan, the evolution of that and going forward, it's a big year for the US elections are in November. President Trump, his campaign promise was to end the war in Afghanistan and Iraq, bring US troops back. That's not happening anymore. There are more US troops now than there were under Obama. I think there are 13,000 now as opposed to 8,500 from before. So I think the US-Pakistan relationship is not necessarily something the Trump administration is putting a high priority on. I think also President Trump is very transactional. And in 2018, when he tweeted about Pakistan, which was, we've given so much aid to Pakistan, we've gotten nothing in return, I think that still stands for him. He, I think, in his administration would like to see Pakistan do more when it comes to the Taliban and potentially not just bring them to the table for direct negotiations, but also lead the path to having negotiations between the Taliban and the Afghan government. And that is something I think that is out of Pakistan's reach. I don't think Pakistan has an ability to convince Taliban to really do anything. I think, and I think for the Trump administration, that's an overestimated thing. So 2020, going forward, I think for US-Pakistan, I don't think that much is going to change. A lot of it will depend on whether or not President Trump is re-elected. For now, all the military and security aid that has been frozen will remain so. The IMIT program is, I don't think it's going to restart. And even though Prime Minister Khan has asked for more help, especially when it comes to the Kashmir issue, I don't think he's going to get it. Thank you, just two finger on this, on the strategic. I think, for me, 2019 was the year in which it became very obvious that the administration's South Asia strategy as originally articulated was structurally incoherent and that if one wants to pursue a peace settlement in Afghanistan, that's not consistent with a loud and strong pressure strategy on Pakistan. And that was the view of, I think, many people from the beginning, but it sort of came full circle. The South Asia strategy was rebranded. Actually, it was sort of whatever the opposite of rebranded is, where you keep the language and you replace it with different content. And so now that strategy is essentially to be more accommodating toward Pakistan, not, I think, in the expectation that Pakistan will be actively helpful in Afghanistan, but with the hope that it will not be actively unhelpful in Afghanistan. And so what I think that means for the relationship in the coming year is that it does, in a weird way, create some space for the relationship. There's probably a low expectation that the United States will provide economic funding or security funding in the way that it has in the past. And both sides probably share that expectation, right? The United States is going to treat Pakistan somewhat more like it treats a normal country than it has in the past, right? And so that means that the kind of engagements we might expect are not ones that require a large dollar investments led by sort of a government to government track, but ones where there are attempts to identify things that might happen from the private sector or things that can be enabled from both sides. So it's just a different kind of environment that I think comes about because of this entering a period of somewhat more normalcy, having recognized that Afghanistan is actually the priority of this administration and drawing down is probably the priority of the next administration, whoever that is. It's not to say that any number of Zach's wild cards couldn't change that because we all know the history of this relationship being up and down, but that seems to be what the kind of, the space of the status quo projection would open up. And I think on the trade side, like the real, there's a lot of potential, right? And both ways. The imports from the US into Pakistan will not grow in 2020 primarily because there's an IMF program and Pakistan cannot pay for these imports, right? But there's export potential. But the question is how many more bet sheets and towels will Pakistan sell to the United States? Not much, especially when it's competing with Bangladesh. So it has to find a competitive advantage somewhere. The technology sector is one, but again, their domestic policy issues hold it back and FATF has held it back, right? So the issue is how can you unlock, let's say, startup funding from Silicon Valley into Pakistani starters and venture capital flows? There's potential, but there the domestic policy environment must first address the challenges before those flows are unlocked. And there's been some talk about doing that. And I think once the FATF issue is hopefully resolved, there'll be more opportunity there. But I think on the import side, no, it can't grow. On the export side, Pakistan has to first become competitive domestically before it can take advantage of the US consumer market. Okay, very quickly. Steve, Ambassador Raifal. The Army, it seems to me that the influence of the Army on the Pakistani political system is, if anything, grown in the last two or three years. And obviously the Army has made little attempt to disguise its preference for the PTI. Are there red lines we should be watching that would trip the Army to change its view and look for a new party to back? What would make the Army pull back? Before you answer that question, Ambassador Raifal, if you wanna very quickly pose your question, then I'll take two more in the back. It seems to me that most of you were acknowledging that the Prime Minister at least had good intentions, not at all good at implementation, but good intentions. What would you advise, what three or four things or two or three specific things would you advise him to do that would have a chance of getting things on track in terms of his campaign promises? Okay, Army red lines and policy advice. Easy questions. I think what has changed until December or November when this extension saga came to the fore, if I had been in Rang Khan, I'd be quite comfortable because ultimately you need a political alternative if you're gonna get in trouble, right? So the military had already gone to war with the PMLN and the PPP, I left the PTI, right? And Imran Khan is the PTI. You can't suddenly start fighting everyone at the same time. So ever since the PMLN has now indicated its willingness to play footsie with the military again, I think Imran's position will commensurately become a bit weaker because now that option, the Shabas Sharif option, et cetera, is reemerging or has emerged. So yeah, I think before that the problem was despite all these governance problems and all the other issues, as long as there was no political alternative Imran Khan could have been or should have been comfortable if I had been him. I think perhaps this had not occurred to Imran either. As for the question about what kind of policy things, I think the problem really here is that there's a misalignment of incentives. Essentially Imran Khan has carried his sizable political base but with the help of the military to political power, right? That's how he grabbed it. So once you start thinking that you are in the place you are in, not because of the voter, but because of the military leadership, I'm not so sure that sort of the tough decisions that economic change, structural change, reforms, et cetera, can be taken. Why would Imran at this stage be able or be willing to jeopardize his growing increasingly precarious political position by forcing unpopular, for example, police reforms or bureaucratic reforms or judicial reforms, any of that stuff chips away at your very political base of organized political parties in Pakistan. So I think as long as that logic to me, I would love to suggest that it's possible that there will be an improvement but I don't see why until the incentives change that there can be improvement. Imran Khan is and continues to so boldly or bluntly assert that he is where he is because of his close relationship with the military. And the military was, Imran was brought in essentially because the other options had become politically unpalatable to the military or they weren't willing to. So in that weird structural sort of incentive structure, I don't know how you get governance or you get reforms. I'm sorry, but perhaps maybe there will be able to. I mean, I would push to that go around the political issue, right? And I think they're feasible and implementable if there was focus primarily because the environment is right and the executive can do these. One is the energy sector reform, the circular debt or in the energy sector itself is crippling the economy. And there the PTI government itself can take the lead and do it, right? It deals with reforms or distribution companies. But if you start even with KP where you have majority you can start with there and that unlocks significant savings for the economy overall. And then secondly, you come up with an agricultural plan that deals with the crisis. And that's win-win for everybody, including the opposition because the feudal elite will also benefit from a growing pie in the economy from agriculture. And it is right. The yields have been flat if not declining for over two decades now. And I think on those two instances if he just sets his mind to it there's a lot of things to be gained. And the growth, which is what the state bank was also expecting from agriculture can play a big role in terms of, you know, dealing with the declining popularity that he's suffering from because of a poor economic scenario. Okay, I wanna give the back and opportunity to pose questions. So just two very quick questions. Yes, the gentleman right there. My name is Nadim. I work for Voice of America. My question is to Cyril. Since Imran Khan's coming to power, we've seen the curbs on the media in Pakistan. They've kind of, you know, grown. Do you foresee any let-up in that situation? Do you see improvement when it comes to the press freedom in Pakistan? What do you see? Or is this going to be the new normal in Pakistan? I mean, unfortunately, I don't see any... Yeah, just one more question and this will be the last question. My name is Vineet Kharia. I work with the BBC. Just a quick one on China-Pakistan Economic Corridor. I heard a lot about the Pakistan economy. Do you think eventually it will resuscitate the economy? And if not, how would it impact the Pakistan-China relationship if the reports are to be believed? Okay, that'll be the last question. Go ahead. Unfortunately, the climate for the media will worsen in Pakistan and I can see that categorically. There are multiple reasons for it. Usually what happens, I mean, most of the censorship or the curbs on the media are obviously coming from the military side. Imran Khan, however, usually when you have a political government, the political government acts as a bit of a buffer against the worst instincts of, you know, the worst parts of the state. Because they have to meet people and they meet journalists and they meet foreigners and they meet ambassadors and, you know, so there's this element of media curbs not being a good look for any democratic government. But Imran Khan has made it quite clear, and if you've heard him in the last week alone, that he considers the media just like the president in this country, to be the enemy. And so that buffer that had previously existed with civilian governments or nominally civilian governments in place, which were low to sign off on, on or acquiesce in further curbs, that doesn't exist at this moment. In addition to that, I mean, there is clear curbs on the media and by some of this, this economic downturn has really hurt the media and that's made it easier to tighten the screws on the media. There are mass layoffs happening in the Pakistani media at the moment, people not being paid salaries for months, which is not completely unusual, but the scale at which it's occurring right now and by some. So the economic headwinds combined with the state's willingness or the state's increasing desire to control what they call the narrative, I foresee a worsening of the media climate in 2020. I think on CPEG, you've gone, when CPEG was launched, China owned about eight, seven and a half, 8% of Pakistan's external debt. Today, according to IMF documents, about 25%, if you take a look at last year's data that came out. And so the question is, any country that owes so much money to one benefactor and then is unable to repay, which Pakistan will be unable to repay, will have to make certain difficult choices, right? And I think that's what Pakistan will end up in the next couple of years. Once this IMF program will be over, that's the next frontier for the economy and the external side is how do you negotiate with the Chinese? And the problem that again is that by itself, there's nothing wrong with the China-Pakistan economic order because it is infrastructure investment that the country badly needed. And yes, could have been negotiated better. You can argue about that, but fundamentally it was necessary. The problem is step two and step three, which is bolstering the competitiveness of the economy to allow it to export so that it earns the dollar inflows that it has to pay out in that repayments in dollar terms, right? And that's not happened and that is not anywhere close to happening. And so that's where the problem will lie is how do you pay those billions of dollars when your biggest sort of export earning potential is from the textile sector and then remittance flows from the Saudi economies and the Gulf-based countries, right? And that's where the Chinese problem lies for Pakistan. Last word, Josh. Yeah. From what we can see from a distance, phase one of CPAC, the large road projects, the coal-fired power plants, other things are basically complete. And there's been talk about phase two sort of projects which seem to have been held in advance for a while given what's happening in Pakistan. But I think this is really what to watch for and people have talked about agriculture and industry. My assumption is that nothing that China parachutes into Pakistan in terms of agricultural ideas, expertise or industrial plants is gonna fundamentally change Pakistan's ability to get competitive. But there are areas in agriculture and in diversifying industrial exports where China could probably be very helpful to helping Pakistan move in that direction. But it's predicated on Pakistan actually wanting to advance in those sectors and to China doing something that it doesn't usually do. It usually parachutes in large projects or stand alone industrial capacity. So I think both of those things would have to happen for that to be something that significantly changes the economic dynamic. So we are way over time. Let's give our outstanding panel a robust round of applause for their superb comments. I could also ask you to give a round of applause to one colleague in particular, Emily Ashbridge. She is instrumental in organizing and bringing together these events so we give her a round of applause. And thank you for coming. Enjoy the rest of your afternoon. Hey, thanks guys.