The US government recently decided to cancel $300 million in military aid to Pakistan owing to its inability to curtail homegrown terrorist networks in the region. India might have to play a larger role in curbing terrorist activity in the region if Pakistan goes on the back-foot. A reduction in US aid will likely result in a reduction in Pakistan’s military budget and could drive the country further into China’s embrace

by Dilsher Dhillon

After months of speculation, the US government has decided to cancel $300 million in military aid to Pakistan owing to its inability to effectively curtail homegrown terrorist networks like Haqqani and Lashkar-e-Taiba in the region. The move comes ahead of a visit by the US Secretary of State, Mike Pompeo, to Pakistan this week.

The talks will be testy. In early January 2018, the US suspended roughly $1.3 billion in security aid to the country, explaining that Pakistan needed to “do more to earn the aid”.

It seems counterproductive that US’s continued pressure on Pakistan to take a tougher stance on curbing terrorist organisations comes as it cuts off financial aid to the country. This could have an unintended effect of driving Pakistan further into China’s embrace. Stripped of a crucial source of funding, the move will also make it a lot harder for Pakistan to fight against Pro-Taliban forces.

To make matters worse, Pakistan’s clampdown on terrorism will be hamstrung by the country’s impending financial crisis. As it contends with billions of dollars of Chinese debt and a growing import bill, the country will reportedly seek a bailout from the IMF. If that fails - which is a distinct possibility if Pompeo has his way - Pakistan will opt for Plan B: more Chinese debt. China has vested interests in Pakistan through its economic corridor, and will stump up the cash needed to protect its projects.

And How Does All This Affect India?

Despite lobbying for an end to US security aid to Pakistan, India benefited from the US’s stabilising presence and continued oversight in the country. It might have to play a larger role in curbing terrorist activity in the region if Pakistan goes on the back-foot. Rather than relying on Pakistan and funding its anti-terrorism efforts, the US could tie up with India to clean up the situation in Afghanistan.

Additionally, the cuts to US aid amid Pakistan’s financial crisis will likely foster the continued growth of the China-Pakistan Economic Corridor, which has irked India due to China’s investments in Pakistan-occupied-Kashmir. However, a reduced military budget will make the Pakistani military’s proxy war along the Kashmir border harder to finance, which will benefit India in the long run.

A Silver Lining

Pakistan’s economic survival has hinged on US aid for decades, but there could be a silver lining to the the recent US policy. Since 9/11, a surge in military aid has served to increase the Pakistani army’s grip on the country’s democratic institutions. The cancellation of aid could serve to reduce the influence the military elite wield over the country.

It might also prove to be a much-needed fillip to making Pakistan’s economy self-sufficient. Without US aid to fall back on, prudent macroeconomic policies could finally take priority. The new Prime Minister recently instituted an 18-member economic advisory council to rebuild the country’s economy. The council’s first order of business is meeting the country’s short-term import obligations.