BRICS and Pakistan: Prospects of Recovery

Outline

1. Introduction
2. BRICS and the emergence of a multipolar economic order
3. Expansion of BRICS and its growing significance for the Global South
4. Pakistan’s recurring economic vulnerabilities
5. Why BRICS matters to Pakistan
6. Pakistan’s geographical position and strategic relevance
7. Trade diversification through deeper engagement with BRICS economies
8. Investment, connectivity and the potential of regional integration
9. The New Development Bank and alternative development finance
10. Local currency cooperation and the limits of de dollarization
11. China, Russia and the wider diplomatic opportunities for Pakistan
12. India as a major political obstacle to Pakistan’s membership
13. Why BRICS cannot substitute for domestic economic reform
14. Balancing BRICS engagement with the IMF, West and traditional partners
15. A realistic roadmap towards closer engagement
16. From external dependence to internally driven recovery
17. Conclusion

Essay

The international economic order is undergoing a gradual but significant transformation. For much of the period following the Second World War, global finance and economic governance were dominated by Western institutions and advanced economies. The International Monetary Fund, the World Bank and the dollar based financial system became central pillars of this order. The rise of China, India and other emerging economies, however, has created demands for greater representation of the developing world. BRICS has emerged as one of the most visible expressions of this shift. For Pakistan, which continues to struggle with external debt, weak exports, fiscal pressures and recurring balance of payments crises, the growing influence of BRICS naturally appears attractive. Yet BRICS should neither be romanticized as an economic saviour nor dismissed as an irrelevant diplomatic forum. It can provide Pakistan with greater trade, investment and diplomatic opportunities, but it cannot rescue an economy unwilling to reform itself. Pakistan’s prospects of recovery through BRICS therefore depend less upon merely obtaining membership and more upon using engagement with the bloc to support a broader transformation from dependence towards productivity.

BRICS began with Brazil, Russia, India and China, with South Africa subsequently joining the grouping. What originally appeared to be an economic label gradually evolved into an organized platform through which major emerging economies sought greater influence over international economic governance.

Its importance rests partly upon scale.

BRICS countries collectively contain a substantial share of the world’s population, natural resources, manufacturing capacity and economic output. China and India are among the world’s largest economies. Russia is a major energy and commodity producer. Brazil possesses enormous agricultural and mineral resources. South Africa remains one of the most significant economies on the African continent.

The grouping has therefore provided emerging economies with an additional platform for discussing trade, development finance, monetary cooperation and reform of international institutions.

The establishment of the New Development Bank was particularly important. It demonstrated that BRICS intended to move beyond diplomatic declarations and create institutions capable of financing infrastructure and sustainable development.

The expansion of BRICS has further increased its significance.

The inclusion of additional states from the Middle East, Africa and elsewhere has broadened the grouping beyond its original five members. This expansion reflects a wider international trend towards multipolarity.

Many developing countries do not necessarily seek to abandon relations with the West. Instead, they want greater strategic choice.

They wish to trade with the United States and Europe while simultaneously deepening economic relations with China, the Gulf, Russia and other emerging markets. BRICS benefits from this desire for diversification.

Pakistan finds this changing environment particularly relevant because its own economic model has repeatedly produced external vulnerability.

For decades, Pakistan has experienced a familiar economic cycle. Periods of relatively strong growth increase imports. Exports and foreign investment fail to rise sufficiently to finance them. Foreign exchange reserves decline, pressure on the rupee increases and the government eventually seeks external financing.

The immediate crisis is stabilized, but the productive structure of the economy remains largely unchanged.

A few years later, the cycle returns.

Pakistan’s repeated engagement with the IMF should therefore be understood as a symptom of deeper structural weaknesses rather than the primary cause of its economic problems.

The country has a narrow tax base, relatively weak export performance, high energy costs, inefficient state owned enterprises and significant dependence upon imported energy and industrial inputs.

No international organization can permanently compensate for these weaknesses.

Nevertheless, BRICS matters because it could broaden the external economic environment within which Pakistan attempts to address them.

Pakistan already possesses extensive relations with several BRICS economies.

China is its largest strategic economic partner and a central participant in the China Pakistan Economic Corridor. Pakistan has also sought deeper energy and trade relations with Russia. Its longstanding relationships with Gulf countries create additional connections with the expanding BRICS framework.

Geography strengthens this relevance.

Pakistan lies between South Asia, China, Central Asia and the Arabian Sea. Its ports potentially provide access to maritime routes for regional trade. The China Pakistan Economic Corridor was itself conceived partly around the idea of connectivity between western China and the Arabian Sea.

However, Pakistan must be careful about repeatedly describing geography as though location automatically creates prosperity.

It does not.

A country becomes a trade corridor only when goods can move through it efficiently. That requires reliable roads and railways, functioning ports, predictable customs procedures, political stability and regional cooperation.

Pakistan’s geographical position is therefore an opportunity rather than an achievement.

BRICS engagement could help Pakistan convert part of that opportunity into economic value.

Trade diversification would be one of the clearest benefits.

Pakistan remains heavily dependent upon a limited range of exports, especially textiles. Its major export markets have traditionally included the United States and Europe.

These markets remain extremely important and should not be abandoned.

The objective should instead be diversification.

Brazil, China, Russia, South Africa and the wider BRICS membership represent large consumer and commodity markets. Pakistan could expand exports of textiles, sports goods, surgical instruments, agricultural products, pharmaceuticals and information technology services.

The agricultural relationship with Brazil deserves particular attention. Brazil is one of the world’s major agricultural economies and possesses significant expertise in agricultural research and productivity. Cooperation could include technology, livestock, agricultural machinery and knowledge exchange rather than trade alone.

Russia and Central Asian markets could offer opportunities for agricultural and manufactured exports, while Gulf economies remain important destinations for food products, services and labour.

Yet trade expansion requires competitiveness.

Pakistan cannot simply join another international grouping and expect exports to rise automatically. Pakistani firms must produce goods that international consumers want at prices they are willing to pay.

This requires lower energy costs, better logistics, improved standards and greater productivity.

BRICS membership cannot substitute for these conditions.

Investment represents another potential benefit.

Pakistan has enormous infrastructure requirements in electricity transmission, water, transportation, urban development and digital connectivity.

The New Development Bank could potentially become relevant if Pakistan eventually gains access through membership or another appropriate institutional arrangement.

The attraction of the NDB lies in the possibility of expanding sources of development finance.

Pakistan has traditionally relied upon multilateral institutions, bilateral partners and international capital markets. Additional financing channels can reduce excessive dependence upon any single source.

But expectations must remain realistic.

The New Development Bank is not a charitable institution. Development banks lend money with the expectation that projects will be economically viable and debts will be repaid.

Pakistan’s problem is already excessive dependence upon borrowing.

Replacing a dollar denominated loan from one institution with another loan from a different institution does not constitute economic recovery.

Borrowing contributes to development only when it finances productive assets capable of generating future economic returns.

This is why infrastructure financing must increasingly be evaluated according to productivity rather than political visibility.

The same caution applies to discussion of de dollarization.

BRICS countries have shown interest in greater use of local currencies in international trade. For Pakistan, reducing unnecessary dependence upon the dollar could provide some benefits, particularly when trading with countries willing to settle transactions through alternative arrangements.

Currency swap mechanisms can reduce immediate demand for dollars in certain bilateral transactions.

However, de dollarization is sometimes discussed as though changing the currency of payment would eliminate Pakistan’s external vulnerability.

It would not.

A country experiences external pressure when it imports more goods, services and capital than it can sustainably finance through exports and investment.

Whether a particular transaction is settled in dollars, yuan or another currency does not eliminate this underlying imbalance.

The real solution to Pakistan’s foreign exchange problem is earning more foreign exchange.

That requires exports, remittances, productive foreign investment and internationally competitive services.

BRICS can assist this process, but it cannot replace it.

Geopolitically, closer engagement could nevertheless increase Pakistan’s strategic options.

Pakistan spent much of its post independence history navigating relationships with major powers. Its ties with the United States have alternated between close security cooperation and periods of mistrust. Relations with China have remained comparatively consistent.

A more multipolar world provides Pakistan with opportunities to avoid excessive dependence upon any single external partner.

BRICS could give Islamabad an additional platform for engagement with major emerging economies and countries of the Global South.

Pakistan could use such forums to advocate issues particularly relevant to developing countries, including climate finance, debt sustainability, technology transfer and reform of international financial institutions.

This matters because Pakistan’s climate vulnerability, development needs and debt constraints are shared by many developing states.

Yet membership faces an obvious political obstacle: India.

India is not merely a BRICS member but one of its founding and most influential participants. Pakistan and India remain divided by longstanding political disputes, particularly over Kashmir, as well as broader strategic competition.

New membership in BRICS depends upon political agreement among existing members. India can therefore complicate Pakistan’s efforts to join.

Pakistan should not assume that support from China automatically guarantees admission.

BRICS itself contains competing interests. China and India cooperate within the grouping while simultaneously competing strategically elsewhere. Russia, Brazil, South Africa and newer members have their own foreign policy priorities.

Pakistan will consequently need diplomacy rather than expectation.

It should deepen bilateral economic relationships with individual BRICS members regardless of the immediate membership question.

This is important because the economic benefits associated with BRICS do not depend entirely upon possessing a seat at its summit.

Pakistan can increase trade with Brazil without being a BRICS member. It can deepen energy relations with Russia, expand investment with Gulf countries and continue CPEC cooperation with China.

Membership would create additional diplomatic opportunities, but bilateral economic substance should come first.

Pakistan must also avoid interpreting closer BRICS engagement as a choice between East and West.

Such thinking would be strategically counterproductive.

The European Union and United States remain important markets for Pakistani exports. Western countries are significant sources of technology, investment, education and development cooperation. International financial institutions will continue to matter to Pakistan for the foreseeable future.

At the same time, China, the Gulf and emerging economies are increasingly important sources of trade and capital.

Pakistan’s interest therefore lies in diversified engagement rather than bloc politics.

The country should pursue what might be described as economic multi alignment.

It should cooperate with China without unnecessarily antagonizing the United States, expand relations with Russia without sacrificing European markets and engage BRICS without treating the IMF and World Bank as enemies.

Foreign policy should serve economic development rather than ideological symbolism.

The greatest mistake Pakistan could make would be to treat BRICS as another external rescue mechanism.

The country has repeatedly looked abroad for solutions to problems created at home.

At different moments, foreign aid, geopolitical rents, remittances, IMF programmes, Chinese investment and Gulf deposits have provided essential breathing space.

But breathing space is not recovery.

Recovery begins when the economy becomes capable of financing a larger proportion of its development through its own productive capacity.

This requires difficult domestic reforms.

Pakistan must broaden its tax base. Powerful sectors that remain undertaxed cannot permanently be protected while governments repeatedly increase burdens on salaried citizens and formal businesses.

Loss making state owned enterprises require restructuring, professional management or privatization where appropriate.

The energy sector needs reform because expensive and unreliable electricity undermines industrial competitiveness.

Export policy must move beyond subsidies and preferential treatment towards productivity, technology and value addition.

Education must become better connected with the labour market.

Political stability and legal predictability are equally important because investors hesitate to commit capital where rules can change abruptly.

These reforms would benefit Pakistan whether it joins BRICS or not.

Indeed, they would make Pakistan more attractive to BRICS members.

Strong countries attract partnerships because they offer opportunities. Weak countries seek partnerships because they need rescue.

Pakistan must aim to become the former.

A realistic pathway towards BRICS should therefore proceed gradually.

First, Pakistan should deepen economic relations with individual members. Trade agreements, business councils, banking arrangements and investment partnerships can create practical interests supporting closer integration.

Second, diplomacy should emphasize Pakistan’s economic contribution rather than merely its geopolitical importance.

Its large population, mineral resources, agricultural capacity, ports and connectivity potential can make it valuable to a wider emerging market network if these assets are developed properly.

Third, Islamabad should engage constructively with countries whose support cannot be assumed.

BRICS membership should be pursued through patient diplomacy rather than presented domestically as an ideological victory against another international bloc.

Finally, domestic reform must accompany diplomatic engagement.

Without economic credibility, membership in another organization will merely add another summit to Pakistan’s foreign policy calendar.

With reform, however, BRICS could become part of a wider strategy of recovery.

The distinction is fundamental.

BRICS cannot create Pakistan’s recovery.

It can expand the opportunities available to a recovering Pakistan.

Conclusion

BRICS represents an important feature of the emerging multipolar world and offers Pakistan meaningful opportunities for trade diversification, development finance, investment and diplomatic engagement with the Global South.

Its expansion demonstrates that emerging economies increasingly seek alternatives and supplements to institutions traditionally dominated by Western powers.

Pakistan has legitimate reasons to pursue closer relations with the grouping. Its partnership with China, developing relations with Russia, ties with Gulf states and strategic location provide a foundation for engagement.

Yet expectations must remain disciplined.

BRICS membership will not repair Pakistan’s tax system, reduce electricity losses, make its industries competitive or create political stability. The New Development Bank cannot permanently finance an economy that repeatedly borrows without increasing productivity. Trading in local currencies cannot solve an external deficit created by weak exports.

Nor would replacing dependence upon Western institutions with dependence upon another group of external powers constitute genuine economic sovereignty.

Pakistan’s recovery must therefore begin at home.

The country needs stronger institutions, competitive exports, fiscal discipline, human capital and a stable environment for investment. BRICS should complement these reforms by providing additional markets, capital and diplomatic space.

If Pakistan reforms itself, deeper integration with BRICS could accelerate recovery and increase its strategic autonomy.

If it does not, membership would change the forum in which Pakistan seeks assistance without changing the conditions that make assistance necessary.

The real promise of BRICS, therefore, is not that it can rescue Pakistan from dependence. It is that it can provide Pakistan with additional opportunities to outgrow dependence.

That distinction should define Islamabad’s approach to the emerging world order.