Pakistani Prime Minister Nawaz Sharif is scheduled to meet with U.S. President Barack Obama on October 23 during a four-day visit to Washington. The trip will mark the first official visit of a Pakistani leader to the United States since Pakistan’s new government took office after the country’s May 2013 legislative elections. Sharif’s visit will play out against the backdrop of Washington’s desire to achieve a safe, dignified exit from Afghanistan and to secure its strategic interests in the region after its forces are gone.
Relations between the United States and Pakistan have been strained since 2011, when the U.S. raid on Osama bin Laden’s compound in Pakistan and a friendly fire incident that left dozens of Pakistani soldiers dead poisoned bilateral ties. These issues prompted Pakistan to close U.S. supply routes to and from Afghanistan and led the United States to withhold some of its military and economic aid.
But the relationship has significantly improved since Islamabad reopened the supply routes in July 2012. And just before Sharif’s visit, Washington announced its plans to release more than $1.5 billion in blocked aid to Pakistan. This rapprochement has been the result of deliberate hard work. Both Pakistan and the United States know that they will need each other over the next few months.
Despite these improvements, significant points of contention between the two countries persist, especially regarding the security situation in South Asia and U.S. policy in the region. Receiving less press in the United States are important issues related to bilateral trade and energy cooperation.
Sharif is likely to broach all of these concerns during his visit to the White House. Whether the United States makes concessions on these points will provide an indicator of how much Washington is willing to compromise with Islamabad in its effort to balance its short-term interests in withdrawing from Afghanistan and its longer-term goals in the region, such as counterterrorism.
U.S. policy in South Asia—in particular with regard to India, Pakistan’s traditional competitor—will likely constitute a substantial part of the Sharif-Obama discussion. The United States and India have moved toward creating a strategic partnership in the past decade, and this burgeoning relationship has challenged American ties with Pakistan.
A new complication has emerged just in time for this meeting. In mid-October, Indian Finance Minister Palaniappan Chidambaram and U.S. Treasury Secretary Jacob Lew signed an agreement pledging expanded U.S.-Indian cooperation in targeting the financial networks of terrorist organizations, including the Pakistan-based Lashkar-e-Taiba, a militant group responsible for a series of coordinated terrorist attacks in 2008 in Mumbai. Pakistani policymakers, especially those in the security establishment, reacted swiftly and angrily to news of this pact, which they allege would privilege India at Pakistan’s expense. Reflecting these concerns, the Pakistani media reports that Sharif plans to argue “that it would be unacceptable for Pakistan to give the role of ‘policeman’ to India in the region.”
Relations with Afghanistan constitute another potential irritant, although of a different nature. The United States intends to increase the proportion of troops and matériel leaving Afghanistan via Pakistan from 20 to 60 percent by the end of 2014, and Washington expects Islamabad’s support in the reconciliation process between the government of Afghan President Hamid Karzai and the Taliban. Discussions with Pakistan promise to be especially difficult because the United States needs to moderate the Afghan-Pakistani relationship, which is notoriously tense, at a time when its own dependency on Islamabad is likely to increase.
The United States has been trying for months to conclude a bilateral security agreement with Karzai. Two issues have held up negotiations: whether U.S. forces stationed in Afghanistan will be subject to Afghan jurisdiction and the extent of the security guarantee that the United States is willing to provide to Afghanistan. The Afghan government is asking for the possibility, under the bilateral security agreement, to seek U.S. assistance for intervention in Pakistan in the event of a Pakistan-based terrorist attack on Afghanistan’s soil—a demand unacceptable to Islamabad.
If Pakistani press reports of a high-level meeting between the Pakistani prime minister and his top security ministers are to be believed, Sharif will likely complain to Obama about Afghan and Indian interference in Pakistani matters. He is expected to “make it clear that the centres of terrorism are located in the two countries and not in Pakistan” during his meeting at the White House. Pakistan aims to prevent Afghanistan from allowing anti-Pakistani movements to operate from Afghan soil, and Islamabad is deeply suspicious that Afghan and Indian intelligence services may be operating in collusion against its interests. Pakistani authorities assert that Afghanistan conspires with groups conducting violence in Pakistan and that India and Afghanistan facilitate insurgency in the restive southern Pakistani province of Balochistan.
If the United States were to maintain a residual presence in Afghanistan, it would offer a guarantee against interstate conflicts between Afghanistan and Pakistan, preventing or limiting aggression between the two neighbors. But the need to reassure both sides could lead Washington to embrace the “zero option” of leaving Afghanistan entirely—a less-than-optimal outcome for everyone—if Karzai does not accept Washington’s self-imposed restrictions and Islamabad does not give Karzai any significant and credible reassurances regarding its future behavior in Afghanistan.
Already, the United States is working to calibrate its policies to avoid such an outcome. The October 11 capture in Afghanistan of Latif Mehsud, a leader of the anti-Islamabad Pakistani Taliban (TTP), by U.S. forces offers a perfect example of these calculations. Mehsud’s capture is a boon to Pakistan, which has been fighting the TTP for years. And the TTP commander’s arrest took place while Mehsud was allegedly in the custody of the Afghan army, removing a seeming ally of the Afghan government and a foe of the Pakistani leadership. This served to warn Karzai not to exacerbate tensions with his southern neighbor.
Access to Energy
Inconsistent and insufficient access to power remains a real problem for Pakistan that severely limits its growth potential, especially in major electricity-dependent industries like textile manufacturing. Coverage leading up to Sharif’s White House visit strongly suggests that securing increased U.S. assistance in the energy sector will be high on the prime minister’s agenda. He tapped his energy minister to attend a meeting with U.S. Secretary of State John Kerry, and Pakistani officials have explicitly cited plans to address the issue during the Washington talks.
The United States already extends some energy aid to Pakistan, funding technical training programs, enhancements to hydroelectric dams, and other components of the country’s electricity infrastructure, but this support is modest in comparison to Pakistan’s overall needs. To the extent that increasing the funding for U.S. energy assistance depends on cooperation by the Republican-controlled House of Representatives, the Obama administration’s freedom of maneuver may be constrained. But Pakistanis could understandably see this internal political challenge as a problem for Washington to solve, not Islamabad.
And more aid alone will not be enough to keep the power flowing. The roots of Pakistan’s energy crisis go much deeper, permeating its national infrastructure, distribution network, and governance. Pakistani power companies suffer from gross mismanagement and corruption, and even the better-run utilities face tremendous difficulty in collecting payments and preventing the outright theft of electricity. Solving such a systemic problem will require Islamabad to make some difficult and politically costly decisions. Debate abounds as to the specific policy changes Pakistan ought to adopt—changes to subsidies, tariffs, and regulatory oversight have all been proposed. Given the intricacies of Pakistan’s energy problems, Sharif has few easy options for major and meaningful reforms.
Even if the prime minister could manage the sort of serious reforms that Pakistan needs, which would be long-term and technical by definition, they would not offer a shorter-term boost to the power grid—or to Sharif’s political fortunes. With that in mind, securing a high-profile commitment from the United States on energy is an especially attractive proposition for Sharif. A U.S.-funded dam or similar project would enjoy high visibility and provide the prime minister with concrete evidence that he is making good on his reputation as a pro-business leader who can get things done. Even though the U.S.-funded initiatives would likely take years to complete, the announcement of tangible new projects could create some sense of relief in Pakistan.
Securing these projects, however, may prove difficult. Officials in Washington, aware of Pakistan’s habitual inability or unwillingness to undertake meaningful reforms in governance of the energy system and its structural deficits, will worry that the prospect of new supply projects will simply encourage postponement of necessary reforms. But Washington’s broader geopolitical concerns might prompt Obama to give these proposals some serious consideration.
For example, it is possible that increasing U.S. energy aid could convince Islamabad to reconsider its plans to buttress its energy sector in ways that align it with some of Washington’s regional and global adversaries, such as Tehran. Sharif has vowed in stark terms to continue the construction of a natural gas pipeline with Iran unless Pakistan receives either the gas it requires from elsewhere or the $3 million per day in contractual penalties that it will incur if the pipeline is not finished by the December 2014 completion deadline.
Islamabad is also looking to Beijing for energy assistance. China recently announced plans to sell Pakistan two new nuclear reactors, prompting allegations in India and elsewhere that Beijing is violating the guidelines of the Nuclear Suppliers Group, which govern the transfer of nuclear materials, equipment, and technology. (The United States in 2008 helped win exemption from these guidelines for India, lifting nuclear trade sanctions against New Delhi). Washington is nothing if not sensitive to nuclear issues in Pakistan, especially when China is involved, although the new power plants proposed for Pakistan would be under safeguards and would not be direct proliferation threats.
The White House has been largely silent on both these plans, but they will no doubt loom large in the background of any discussions of Pakistan’s energy future.
Expanding Bilateral Trade
Sharif is also likely to broach expanding trade ties between the United States and Pakistan. More specifically, the prime minister will seek greater market access for Pakistani goods and the removal of tariffs from key Pakistani exports, especially textiles and fabrics. Such trade liberalization would be consistent with Sharif’s growth-centric agenda and his long-standing call for “trade not aid.” U.S. experts have made the case that expanded economic ties would be a cost-effective solution for advancing U.S. interests as well.
But both the American and Pakistani sides ought to closely consider the obstacles that stand in the way of a preferential trade pact between their countries. U.S. lawmakers in Congress, whose support would be crucial, would require no small measure of convincing that Pakistani goods would not disadvantage American producers, and U.S. textile manufacturers have objected vociferously in the past to measures that would facilitate Pakistani imports. Indeed, the administration of former U.S. president George W. Bush sought in 2001 to remove tariffs that disadvantage Pakistan’s textile trade with the United States to no avail.
Especially given current trends on Capitol Hill and the animus between the House of Representatives and the White House, political constraints in Washington alone would likely consign such a deal to the distant future. This sort of trade reform is not necessarily a nonstarter, but hopes that the October 23 meeting could produce anything but an embryonic proposal are premature.
Outside of textiles, enhanced trade could face a bigger stumbling block: many Pakistani products simply are not ready to meet the demands of American markets. U.S. agricultural regulations, for instance, are stringent and numerous, imposing standards on production, packaging, labeling, transportation, and more. Even if Pakistani farmers and agribusinesses were willing to bear the high capital costs required to meet U.S. standards—and it is far from certain that they would be—Pakistan lags far behind in terms of the regulatory infrastructure and technology that would also need to accompany a successful comprehensive trade deal with the United States.
Beyond the Visit
Questions about Afghanistan and regional security may dominate news coverage of Sharif’s visit to Washington, but the prime minister is likely to seek some lower-profile—though nonetheless important—changes in the bilateral relationship. Potential agreements outside the security arena are worth considering on their own merits, and they also provide a useful indication of American thinking. Whether the United States agrees to further support Pakistan on these points may provide some insight into how much the U.S. need to withdraw expeditiously from Afghanistan colors Washington’s choices in other aspects of its relationship with Pakistan.
Both the U.S. and Pakistani sides clearly face strategic and political constraints on how much they can expect from Sharif’s visit. The two countries will need each other in the months to come—and the very fact that there will be a visit proves that both sides know that. But if there is a mismatch between what the interlocutors ask for and how much they believe the other side can give, the talks could well increase mutual resentment. The result may be a new cycle of tensions that could imperil not only Washington’s short-term goals in Afghanistan but also its broader strategic interests in South Asia.