Economic quagmire — which factor is to be blamed?

In the post-pandemic period, the shipping industry also rattled, thus infusing shocks in the global sea-borne trade, which exacerbated the crises by ultimately raising the freight-costs in multiples over-weeks

Picture source - Wikipedia

A notion which is taught in business-literature is echoing, that the businesses exist in ‘open-systems’, which makes them always prone to macro-environmental vagaries to such an extreme, that their state-of-the-art systems and sophisticated coping-strategies’ manuals get subdued by the time-being emergent influencing-factors, which ultimately paves way for an ad hoc approach to decision-making.

Since the Covid-19 pandemic struck, global patterns of economy, finance and trade have turned upside down. For instance the app, Zoom and many e-commerce sites have existed for many years but nobody ever predicted their massive-adoption amid the pandemic and afterwards. On contrary, giant industries such as aviation and automotive have come to a stand-still, as the former is pandemic-stricken and latter is stricken by global shortage of semiconductor-chips. Each industry has its own tale to be documented and iterated.

In the post-pandemic period, the shipping industry also rattled, thus infusing shocks in the global sea-borne trade, which exacerbated the crises by ultimately raising the freight-costs in multiples over-weeks. At the moment, globally renowned-ports have become congested so much that their efficiency-metrics of handling containers have deteriorated massively. Global Shortage and the administrative mishandling of commodities, basic materials or fuel add salt to the economic injuries. The global shipping industry is in quagmire, which compels other facets of economy to be dragged in to the same quagmire hence this situation is infusing cost-push inflation in upcoming months globally.

All these changing business-trends and under-performance of supply chains are signalling the miseries of the developed-countries, which further sheds light upon the seldom-discussed intensity of these miseries in developing countries as a corollary. The developed part of the globe, which was once considered as a yard-stick of the best and superlative-form of anything ever created on the face of earth is now standing on equal-footing with the developing part of the globe because the strategies crafted earlier before decades, aiming to strengthen supply-chains and averting shocks, are now failing miserably.

A country which is professed as a global super-power i.e. US, calibrated the entire supply chain of critical items, as evidenced by the promulgation of Presidential Executive Order 14017 of Feb 24, 2021.

Connecting this to Pakistani-context where, Pakistan had signed earlier an MOU with Uzbekistan to formalize Pakistan’s ports access to Uzbekistan. Fortunately this was ratified by the Federal Board of Revenue by the issuance of an SRO-1256(I) 2021, titled as Uzbekistan-Pakistan Transit Trade Rules 2021 in the month of September this year, which permits Uzbekistan to utilize Pakistan’s ports facilities including Gwadar. This has been kicked off at least officially on paper, for which hundreds of policy-papers or strategy-proposals have been drafted and submitted to higher echelons of power in last few decades by the eminent experts and think-tanks, as they all had dreamed it be reemergence of the romanticized silk-route. This dream awaits the massive capital-spending over the infrastructure to be translated into reality.

Pakistan’s Gwadar port is no more a dream, but a crystal-clear reality by the fact that both Pakistan’s LPG needs and Afghan transit trade have been carried out for some time along with other positive trade developments. The negative thoughts looming over Gwadar and propagating its inability to operate as a port by some regional trouble-mongers, have all drowned somewhere in Arabian Sea.

The world was unanimously watching the recent Afghan-turmoil. If we turned to global news media, we were frequently listening, the words being uttered by the news-casters and analysts that ultimately environed Afghanistan as a battle-field in our minds, but it wasn’t ever paid heed to the same war-torn Afghanistan that had imported hundreds of tons of fertilizer in the same period. Surprising right? Even majority of Pakistanis didn’t pay attention that it was actually the Gwadar port, which facilitated the Afghan transit trade and the fertilizer was reaching in bulk to Afghanistan amid the climax of regional crises just a week before ‘Fall of Kabul 2021′. Similarly it was reported that approximately 43000 tons of fertilizer was imported by Afghanistan via Gwadar in the year 2020. This year, on 13th of October, 32,000 tons of DAP fertilizer was imported by Afghanistan via Gwadar port. Doesn’t it seem an oxymoron by watching war-revealing media and Afghan’s transit-trade potential?

Taliban leadership has already showed a profound interest in joining CPEC, which is a blessing in disguise in Afghan-context.

Pakistan has gained an immense but silent diplomatic-success in the best interests of regional stability, which is sensed and lauded by the regional stakeholders. If we calibrate Pakistan’s Diplomacy from the Western perspective, then we could be myopically underestimating the regional dynamics by lamenting Pakistan’s diplomacy over just an awaited courtesy phone call from Washington without realizing the orchestra of political and regional factors behind.

Calling or not calling someone could a play a cosmetic role in diplomatic protocols but taking it as a scale to rate an atomic-power and a regional-influencer is totally devoid of diplomatic-essence because global politics and diplomacy have matured very much and they always anchor strategic-interests aggressively irrespective of the time, region, person or system.

Contrarily, if we calibrate Pakistan in regional-perspective, we can feel Pakistan’s prominence as evidenced multiple times by the high-level engagements at the civilian, diplomatic, military and intelligence spectrum unprecedented before.

Leveraging our regional-diplomacy, Pakistan should accelerate utilizing the Gwadar port to the possible fullest capacity currently and streamlining its up-gradation and peripheral-development as already envisioned. Similarly matters pertaining to Central-Asian route’s infrastructure-investment should be put forward and brain-stormed by Pakistan at top-notch forums of regional-cooperation such as Shanghai Cooperation Organization (SCO) etc. and even in the upcoming Joint Coordination Committee (JCC) on CPEC because providing access to Afghanistan and other Central Asian states to our ports will solidify a revenue-base in terms of tariffs, duties, provincial and federal taxes, fees etc. and more importantly it will instill a series of unparalleled positive economic-impacts with massive multiplier effects.

In quest of circumventing the shocks of the global supply chain fiasco, Pakistan needs to explore avenues of import substitution on an emergency basis, as the current trajectory of trade balance is widening the gap between dollar inflows and outflows exorbitantly.

The broken supply-chain has become a monster, which is notoriously affecting global-economies by targeting the critical-factors of industries, which ultimately deteriorated the chain entirely. We have always read about Ground, Sea and Air Lines of Communications (LOC) in military-literature, similar to that we are in dire need to launch more precisely a Supply Chain Lines of Communication (SCLOC), which will integrate and secure all conventional Lines of Communications (LOC) simultaneously. This further necessitates us to look seriously upon creation of strategic-reserves of some essential items, zero or small stocks of which could make public lives’ worse.

In a nutshell, the global supply chain is in shambles, incentivizing the market shenanigans, traders or brokers of different goods and services to gamble. The resultant economic ramifications have compelled the world to scramble in the quest of economic stability and we need to diligently squeeze out of this economic-quagmire.