Pakistan's paradox: Rising power, fragile state? | DW News

Key Concepts

• Hybrid System: A political structure where civilian government exists but the military maintains significant control over national security, foreign policy, and the economy.
• Economic Informality: Economic activity that occurs outside the state's regulatory and tax framework, leading to narrow fiscal bases and rigid manufacturing.
• Human Capital: The economic value of a worker's experience and skills, specifically referring to investments in education and healthcare.
• Digital Payments: A technological tool proposed to bring informal economic activity into the formal, taxable, and measurable system.
• Demographic Dividend: The potential economic growth resulting from a large young population, provided they are equipped with education and entrepreneurial opportunities.

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1. The Geopolitical Paradox

Pakistan currently occupies a central position in international diplomacy, acting as a mediator between the US and Iran, strengthening ties with China, and maintaining a defense pact with Saudi Arabia. Journalist Khurram Hussain notes that this has led to a "surging confidence" among the leadership and intelligentsia, effectively ending the fears of international isolation that followed the 2021 US withdrawal from Afghanistan.

2. Challenges to Democracy

The state of democracy in Pakistan is characterized by a "hybrid system" where power is increasingly arbitrary and unanswerable to the public.

• Constitutional and Judicial Shifts: Recent amendments and the restructuring of the superior judiciary have centralized power, moving it away from democratic legitimacy.
• Crackdown on Dissent: There is a documented suppression of independent media and social media expression. TV channels operate with time lags to allow for censorship, and individuals face punishment for online speech.
• Political Persecution: The imprisonment of former Prime Minister Imran Khan for over two years is viewed by his supporters as political persecution, while the government frames it as a legal consequence of corruption and violent political tactics.
• Path Forward: Hussain argues that a return to credible democracy requires the three major political parties (PPP, PMLN, and PTI) to reach a consensus. He asserts that agitation, as attempted by the PTI, is not a viable strategy for systemic change.

3. Economic Structural Issues

Pakistan’s economy remains fragile, relying on international bailouts and struggling with low tax collection and weak exports.

• The Problem of Informality: A significant portion of the economy operates outside the "line of sight" of the state. This prevents the benefits of growth from trickling down and keeps the fiscal base narrow.
• The "Silver Bullet" Fallacy: Hussain warns against the search for a single, quick-fix solution. He emphasizes that economic stability requires "hard work," rigorous data collection, and evidence-based policymaking.
• Digital Transformation: The adoption of digital payments is highlighted as a critical frontier to "light up the dark corners" of the informal economy, allowing the state to measure and integrate economic activity.

4. The Youth and Human Capital

With 60% of the population under 30, Pakistan faces a critical juncture regarding its youth.

• Shift in Policy Imagination: The state must move away from the outdated model of simply "creating jobs" and instead focus on creating an environment that nurtures entrepreneurship and connects youth to global online marketplaces.
• Education Crisis: Approximately 25 million children are out of school. Hussain emphasizes that the federal government must collaborate with provincial governments to improve pedagogy and ensure that graduates are prepared for a 21st-century marketplace.
• Long-term Investment: There is a call for the government to look beyond short-term fiscal requirements and prioritize long-term investments in human capital, including healthcare and demographic control.

5. Synthesis and Conclusion

Pakistan is experiencing a rare moment of global relevance, but this success is disconnected from the daily struggles of its citizens. The country’s future depends on its ability to translate its diplomatic leverage into domestic reform. This requires:

1. Political Consensus: Ending the cycle of arbitrary power and political agitation.
2. Economic Formalization: Using technology to bring the informal economy into the system.
3. Human Capital Development: Investing in education and entrepreneurship to harness the potential of its young population.

As Khurram Hussain suggests, the "hard work" of measurement and structural reform is the only path to turning Pakistan's current global moment into sustainable, long-term progress.