Pakistan sees new opportunities for attracting US investment
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The visit to Islamabad of a senior Trump administration official has raised hopes of a thaw in a long-frozen US-Pakistan relationship. Eric Meyer, the acting Assistant Secretary of State for South and Central Asia led a US delegation to Pakistan Minerals Investment Forum and during a two-day stay, met the country’s top civil and military leadership. It was the first official high-level engagement between the two countries since Trump’s return to the White House this year.
While the main focus of the discussion was on the expansion of American business interests and deepening of economic ties, the talks also emphasized the need for continuing collaboration on counterterrorism. The US has shown particular interest in critical minerals. Pakistan sits on one of the largest mineral deposits and the government is keen to mobilize foreign investment in the sector.
The recently held investment conference in Islamabad served as a platform for the United States and global stakeholders to explore investment opportunities in Pakistan. Several US companies have reportedly shown interest in emerging minerals sector and unlock the country’s vast mineral potential. The participation of 300 foreign delegates, in the two-day mineral summit in Islamabad has raised hopes of drawing foreign investment in Pakistan’s mineral sector, which remains mostly unexplored due to lack of financing and access to technology.
Prime Minister Shehbaz Sharif has highlighted mineral resources as the lynchpin of the nation’s economic revival. According to him the country’s mineral wealth ‘worth trillions of dollars’ could free its economy from perpetual dependency on frequent bailouts from global lenders. There have been significant discoveries of hydrocarbons and gold-copper deposits.
Pakistani officials hope to attract American investment in rare earth particularly. That could also help the resetting of relations with Washington beyond security cooperation between the two countries. But there are obstacles in the way that have to be overcome before foreign investment can come in.
The imposition of higher US tariffs on Pakistan’s major competitors in textile goods like China, Bangladesh, Vietnam and Cambodia, could open new opportunities
Zahid Hussain
Notwithstanding a discernible American interest in the mineral sector, Pakistan would require improving the law and order situation in the region. The majority of untapped mineral wealth is located in the two provinces of Khyber Pakhtunkhwa (KP) and Balochistan, which are reeling under growing militancy and insurgency.
Though Pakistani officials have assured robust security for investors, the latest surge in militant violence particularly in Balochistan remains a serious concern. More practical measures are needed to be taken to allay investors’ concerns. Investors will also examine economic viability before committing funds rather than relying on the optimistic estimates of Pakistan’s government.
Moreover, Pakistan needs to ensure policy continuity.
The visit of a senior American official came days after President Donald Trump imposed a 29 per cent tariff on goods the US imports from Pakistan, along with duties on dozens of countries from rivals to allies. Pakistan charges 58 per cent duties on American goods and services.
Pakistan’s exports to the US are $6 billion annually — 18pc of the total exports of the country. Textile products comprise 75 to 80 percent of the country’s exports to the US. While American action has evoked strong concern over the impending impact on Pakistani exports, some economists say it could bring long-term opportunities.
They point out that the imposition of higher US tariffs on Pakistan’s major competitors in textile goods like China, Bangladesh, Vietnam and Cambodia, could open new opportunities.
Other exported commodities include leather, surgical goods, rice, cement, steel products and salt. Over the last few years there has been a substantial increase in IT exports to the United States. Pakistan is sending a high-level delegation to Washington to promote trade relations and discuss new tariffs on Pakistani goods. Islamabad has also indicated that it is willing to review the tariff on American goods and increase imports from that country. But it will not be easy for Pakistan to get the concession from the Trump administration.
Pakistan is also trying to leverage US concerns over terrorism. Despite freezing of relations, the security agencies of the two countries have continued their counter-terrorism cooperation. Islamabad recently helped the US apprehend a Daesh leader alleged to be the mastermind of the August 2021 attack on Kabul airport where over a dozen American soldiers were killed. In his address to the Congress in February, President Trump praised Pakistan’s government for its help.
The cooperation in counter-terrorism has helped the melting of the ice between Islamabad and Washington. But there is still no sign of the two countries going beyond this.
Notwithstanding the optimism generated by the recent visit of senior US officials, the future of US – Pakistan relations remains uncertain. While showing an interest in investing in strategic minerals, there is no US commitment yet. And despite some melting of the ice, relations with Pakistan are still not a priority for the Trump administration.
- Zahid Hussain is an award-winning journalist and author. He is a former scholar at Woodrow Wilson Centre and a visiting fellow at Wolfson College, University of Cambridge, and at the Stimson Center in DC. He is author of Frontline Pakistan: The struggle with Militant Islam and The Scorpion’s tail: The relentless rise of Islamic militants in Pakistan. Frontline Pakistan was the book of the year (2007) by the WSJ. His latest book ‘No-Win War’ was published this year. X: @hidhussain
