PAK-US RELATIONS: A CASE OF ECONOMIC IMPLICATIONS FOR PAKISTAN (2008-2022)

Abstract

The evolving dynamics of Pak-US relations from 2008 to 2022 have been a defining factor in shaping Pakistan's economic trajectory. This period, marked by geopolitical shifts, strategic alliances, and mutual dependencies, underscores the complex interplay between foreign policy and economic stability. The bilateral relationship transitioned through phases of cooperation and divergence, particularly influenced by global counterterrorism efforts, the war in Afghanistan, and Pakistan's economic challenges. Key events, including US aid packages under the Kerry-Lugar-Berman Act and economic assistance tied to military cooperation, initially strengthened Pakistan's fiscal position. However, fluctuations in US support, especially after the withdrawal of NATO forces from Afghanistan, exposed Pakistan's economic vulnerabilities. Trade imbalances, conditional foreign assistance, and reduced foreign direct investment (FDI) highlighted the fragility of economic ties. Simultaneously, growing US concerns over Pakistan's alleged support for non-state actors led to stricter aid conditions and sanctions, further impacting economic stability. This study critically examines the economic implications of Pak-US relations during these critical years, exploring themes such as aid dependency, trade imbalances, policy shifts, and their broader impact on Pakistan’s economic sovereignty. It emphasizes the need for Pakistan to adopt a balanced foreign policy that leverages its strategic importance while reducing economic reliance on external powers.