Once, there was a New World Order, which was characterised by free global trade and e-commerce. Well, it is coming to an end. This is being replaced with a “Reorder” (a term used by Peter Zeihan, author of the book “The End of the World Order is Just the Beginning”), and it is built on three key pillars: decarbonisation, deglobalisation, and digitisation.
While concerted efforts towards decarbonisation have been ongoing for at least a decade, they are falling short in reducing fossil fuel consumption. A stronger global drive is required to reduce carbon emissions, for which regional and cross-regional partnerships are necessary and are taking place.
Deglobalisation aims to reduce China’s dominance in global manufacturing and distribution and the market for its products in the Western world. China is the undisputed leader in electric vehicles and battery storage technologies and has more access to its raw materials than any other nation. Therefore, it will continue to make a strong footprint on international trade in the coming years and decades.
The third pillar of the reorder is an accelerated drive to digitisation, as manifested by the super-fast adoption of artificial intelligence platforms like ChatGPT. In the very near future, machines will seamlessly communicate with each other, leaving the human workers to go on a holiday, literally.
The country needs to take internal steps to achieve economic stability before it can get a seat at the table where important regional decisions get made
The regional trade corridor treaty signed during the G20 meeting in Delhi under the tutelage of the USA is a sign of new and massive regional business partnerships that will probably last decades into the future.
Once again, Pakistan finds itself at a crossroads in a region stretching from China to India, Iran, Saudi Arabia, and possibly Israel, where monumental politico-economic shifts are taking place. Can Pakistan become relevant or be a partner in the developments taking place around us? Or should we rather take internal steps to achieve economic stability?
The latter may be the preferred option because if we become economically stable, say in the next five years, we would still be in a position to be a stakeholder in the new economic order. For this, a major change has to take place first.
Pakistan faces a huge challenge due to a warming planet, which will cause the most damage to countries near the equator. Due to a lesser temperature differential between the Indian Ocean and the landmass, the monsoon winds slow down, resulting in less rain in the Himalayan ranges and significant snowmelt.
The centuries-old snow glaciers that have fed into the Indus Delta are receding, which could badly disrupt our agriculture, thus putting the country’s food security at stake. Under these conditions, rather than exporting our agricultural production to earn foreign exchange, we should be devising ways of sustainable farming that will improve food self-sufficiency and keep our rural population employed.
Agriculture and food security considerations will play a vital role in geopolitical alliances as the richer countries will use their financial muscle to enter into food supply arrangements with agricultural countries like Pakistan.
In the face of global warming, which will result in water scarcity and reduced yields, we will have to avoid putting our agricultural outputs in the hands of other nations and jeopardise the food security of a largely poor population of 250 million people. Ensuring food security for a fast-growing population also requires rethinking whether it’s in our greater interest to grow cash crops like cotton or we need to shift towards widening the farmland area to grow more food staples.
A major cause of our economic problems is the high energy import bill due to our vulnerability to the unpredictable and usually high international crude oil prices. The fuel burden, together with the foreign-currency-indexed electricity prices, has brutally eroded the common man’s income.
It is hard to think of viable relief measures for the short term, but new thinking about relying more on indigenous energy resources can yield results within a few years. Our biggest energy source is the coal deposits of Thar, Sindh, but the scaling up of local coal production has been halted due to the drying-up of funding for coal-based power projects from our traditional financiers, namely multilateral development banks and bilateral lenders, including China.
Whatever we do now to increase the share of coal in the energy-use mix will have to be through the application of home-grown measures as the world is taking a hands-off approach when it comes to the “dirty” fuel.
The billions of tons of copper ore and gold reserves in the Reko Diq field stand alongside Thar Coal fields as Pakistan’s two major natural resources. With green technologies fast replacing conventional energy sources, it is estimated that by 2050, the world will need 650 million tonnes of copper annually for use mainly in storage batteries, electricity grid and other renewable energy applications.
Annual production from the Reko Diq field is expected to reach 80m tonnes starting from 2032, and Pakistan’s copper deposits can play an even bigger role in meeting a part of global demand for several decades.
The Reko Diq success story can be replicated by identifying and assessing the metal and mineral resources of Baluchistan and entering into more value-addition-based deals for their development, production and export. This is important because a new phase is dawning whereby the “future materials” like cobalt, lithium, silica, nickel, copper, aluminium and others are going to become far more precious than oil.
If these economic priorities are to be pursued, a workforce with skills needed in the coming decades will have to be developed from now. For example, farmers may be given training and financial support to promote sustainable agriculture to develop drip irrigation systems that result in efficient water use and can also be used for the timely delivery of nutrients and pesticides.
Pakistan will rise from its current economic predicament only through a laser-sharp focus on its key priorities. The agenda to reform our agriculture practices for food security, developing sustainable energy solutions and expanding the scale of exploration and mining of minerals and metals are in Pakistan’s long-term interest.
These ventures can be undertaken with limited use of federal resources and mostly under public-private partnerships. If these efforts are given a sense of urgency, we, too, will get a seat on the table where important regional economic decisions get made.
The author can be reached at [email protected]
Published in Dawn, The Business and Finance Weekly, September 18th, 2023