The year 2016 witnessed some progress towards the restoration of political and economic stability in Pakistan. Eight years after the restoration of democracy, the political institutions showed signs of gaining a modicum of strength and self-confidence. This process was reinforced by the smooth change of command of the Pakistan army with the retirement of General Raheel Sharif and the appointment of General Qamar Javed Bajwa as the new chief of the army staff by Prime Minister Nawaz Sharif. This was the first change of command of the Pakistan army in a normal manner after the completion of the three-year tenure of the COAS under the civilian set-up which assumed reins of power in 2008. It augurs well for political stability and a smooth civil-military working relationship in the country.

Despite some occasional complaints by the governments of Sindh and KPK, ruled by PPP and PTI respectively, on resource allocation and otherwise, the Centre and the provinces generally maintained a reasonably good working relationship in practical terms. The complaints of the minority provinces regarding the China-Pakistan Economic Corridor (CPEC) were taken care of to a large extent at the sixth meeting of the Joint Cooperation Committee (JCC) held at Beijing and attended, amongst others, by the chief ministers of Sindh, KPK and Balochistan last week. There was also considerable progress in the fight against the monster of terrorism in the country. According to the latest reports, terrorist attacks and the resultant deaths declined by 30% and 28% respectively in 2016 as compared with the corresponding figures in 2015. However, the simmering insurgency in Balochistan, despite its diminished intensity, remained another source of deep concern.

On the economic front, the performance of the PML-N government at the Centre has been mediocre at best. Still, there has been some marginal improvement in the various important economic indicators over the past three years. As against the GDP growth rate of 3.7% in 2012-13 that the PML-N government inherited from the outgoing PPP government, the GDP growth rate during the last financial year was 4.7%. The national saving and investment rates, the main determinants of economic growth, however, remained stuck around 14% and 15% respectively over the past three years. It is worth recalling that India and China save and invest about 30% and 50% of the GDP per annum respectively enabling them to record high economic growth rates. Pakistan’s exports registered a decline of 13% approximately in 2015-16 compared with the corresponding figure a year earlier. The output of the agricultural sector declined by 0.19 % during 2015-16 as against the targeted growth rate of 3.9%. The prospect of the large scale Chinese investment in Pakistan under CPEC amounting to more than $56 billion over the coming years and the start of the implementation of various projects under its umbrella, however, were one bright spot in the otherwise unsatisfactory picture of the Pakistan economy.

During 2016, Pakistan’s external affairs remained dominated by the tensions in Pakistan-India relations, deep differences with the Afghan government on issues of terrorism and the Afghan peace process, the growing strategic divergence between the US and Pakistan, the strengthening of strategic cooperation between Pakistan and China, and the rapprochement between Pakistan and Russia. There is fundamental and enduring antagonism between Pakistan and India fed mainly by New Delhi’s hegemonic designs in South Asia and the Kashmir dispute. To this list, one can add the disputes on the distribution of river waters under the Indus Waters Treaty of 1960 and the policy differences on the issue of terrorism. Tensions in Pakistan-India relations, therefore, are likely to remain a norm rather than an aberration in the long run. Similarly, the growing distance between Pakistan and the US, and the increasing strategic cooperation between the US and India reflect a long-term trend caused by the growing rivalry between Washington and Beijing, especially in Asia. These processes are inevitably pushing Pakistan towards greater cooperation with China and Russia.

The foregoing provides the background against which Pakistan must come to grips with the internal and external challenges confronting it. Perhaps the most important challenge is the issue of terrorism. Internally, despite the successes achieved under Zarb-e-Azb, we are nowhere near the stage where we can claim to have eliminated this scourge. Despite the decline in acts of terrorism, 500 terrorist attacks, which caused the death of 950 people and injured 1815 others, were recorded in 2016, according to the annual report of the Pakistan Institute for Conflict and Security Studies (PICSS). Externally, Pakistan’s image has been badly tarnished image by the issue of terrorism. This is the inevitable consequence of its deeply flawed Kashmir and Afghanistan policies of 1990’s, and an ineffective media campaign abroad. Our problems in this area are aggravated by the activities of non-state actors, who, in some cases, have assumed an autonomous character and operate at cross purposes with the official policies.

The need of the hour is for the government to bring such non-state actors under its full control to ensure that their activities in no way deviate from its declared policy of not tolerating terrorism in any form or manifestation. Simultaneously, Pakistan must continue its anti-terrorism operations within the country with the maximum possible vigour so as to eradicate the scourge of terrorism in our country. We must also promote moderation and tolerance in our thoughts and actions in accordance with the real teachings of Islam if we wish to achieve complete success in this field. The domestic efforts to overcome the menace of terrorism should be accompanied by an effective media campaign abroad to put across our point of view on the subject to the international community. The simmering insurgency in Balochistan calls for political and economic reforms to meet the justified aspirations of its people within the framework of the constitution together with the use of force, where unavoidable, for pacifying the area.

Pakistan’s slow rate of economic growth is another important challenge confronting Pakistan. There is little hope that Pakistan would be able to eradicate poverty, raise the standard of living of its people, and assume a dignified position in the comity of nations unless it succeeds in accelerating its GDP growth rate to 9% or above. It speaks volumes about the mismanagement of our economy by our present and past governments that whereas India has been able to raise its GDP growth rate to 7.5%, our GDP growth rate is still below 5%. The only sustainable way to accelerate our GDP growth rate to the desired level is to raise our national saving and investment rates to over 30%. This would in turn require a radical reform of the taxation system so as to widen the tax base and raise the tax-to-GDP ratio substantially. Further, a national policy of austerity and the policy framework necessary for raising national saving and investment rates to the required levels would be a must for success in the economic field.

Finally, we must re-examine our India and Afghanistan policies to bring them within the reach of our national resources and in line with the regional and international realities. While we must continue our policy of maintaining friendly relations with the US, we should reduce our economic and military dependence on it to take into account the evolving global and regional strategic environment. Our efforts to deepen strategic partnership with China, build up cooperation with Russia, and strengthen friendly relations and cooperation with Iran, Saudi Arabia and Turkey must continue with increased focus and attention.