Afghanistan: Game on for Pakistan! Game over for India?

Political shift of power in Afghanistan is likely to have net-positive geostrategic and economic gains for Pakistan; IF MANAGED WELL. Why? Let us borrow some concepts from game theory and analyze key economic data to check the validity of this argument.?

Why Game Theory?

Game Theory is the framework to analyze strategic decision-making under uncertainty by comparing the payoffs of all players (here referred to as countries). ?It is globally used in political affairs, war strategy, political economy, and other disciplines where strategic decision-making is made. For simplicity, Pakistan, India, USA, Afghanistan, China, and others are considered players in this game. We will analyze their strategic decisions over the past decade and check their payoffs. Then estimate the future payoffs of these countries in light of the new developments. To keep the article concise, we are analyzing the situation after 9/11.

Winners and Losers of Stage 1 (2001 – 2011)

Pakistan joined USA’s war by considering USA’s pressure to join Afghan war as a ‘credible threat’. USA had built a global public relations momentum after 9/11, and Pakistan neither negotiated a better deal, not they assessed the cost to the economy and security. Let’s explore the payoffs of key players after this decision.

Pakistan’s Payoffs (Negative):

1.????With $252 Billion cost of the economy, Pakistan lost around 70,000 people as the backlash to joining the war in terror.

2.????Pakistan’s security situation deteriorated sharply, and the country lost popular support in Afghanistan.

India’s Payoffs (Positive):

1.????India invested on turning public opinion in Afghanistan, considerably negative against Pakistan.

2.????With over $3 billion investment in Afghanization in a landlocked country with no direct boarder sharing with India; India opened its embassies network and used intelligence infrastructure to destabilize Pakistan.

3.????On economic front, India enhanced the ties with USA and grew the economy with 5%+ GDP growth rate along with improvement in various sectors. Interestingly, the ally of USA in the war against terrorism, Pakistan, did not gain any net economic benefits out this decision. Rather, a ‘Do More’ rhetoric.

Economic Cost:

Pakistan’s exports to Afghanistan stood at $ 983 million in FY21 and saw a steady decline after peaking in 2011. While India and UAE gained Pakistan’s share. India specifically took Pakistan’s export share of Agriculture, Food, and Textile over the last decade, without even sharing the border with Afghanistan. Under the previous regime, Pakistan’s business influence was bound to decrease over time as the chart depicts.

Stage 2: Shift of Strategy and Climax: (2012 – 2021)

With realization of the poorly managed decision of Afghan war, Pakistan first carried out a nationwide clean-up operation to improve the security situation within the country. To enter into Stage 2 of the game, it was necessary to cleanup the house first and join hands with regional players like China and Russia. With USA losing domestic support for Afghan war, and failed attempt to increase Indian influence in Afghanistan, Pakistan is back in the geo-strategic economic game. Let’s explore the payoffs of Taliban’s Takeover of Afghanistan.

Pakistan’s Payoffs (Positive):

1.????Pakistan dismantled the anti-state apparatus of India in Afghanistan with locals’ support. Now, Afghanistan will not be a national security threat due to India’s involvement.

2.????Pakistan is again a major stakeholder in Afghanistan’s growth and CPEC’s success. Its likely to get better economic deal in the Central Asia’s trade if negotiated well.

India’s Payoffs (Negative)

1.????Starting well, India lost its local support in Pakistan after the cleanup operation, and also lost Afghanistan as their gateway to Central Asia.

2.????India has also lost its ability to infiltrate into Pakistan. After Pakistan’s decision to not let USA use its land for Afghan operations, India cannot instigate Taliban to raise arms against Pakistan.

Stage 3: Rebuild and Grow (2022 onwards)

With CPEC’s expansion and China’s focus on Belt and Road Initiative (BRI), Pakistan will be the net beneficiary of Afghan peace and opening of trade routes. The Taliban will prefer Pakistan, China, Russia, and Iran over USA, India and allied counties for trade relations and financial assistance.

Multi-billion dollars’ worth of pipelines, rail and road network has to go through Afghanistan into Central Asia. Taliban’s first priority will now be to win the hearts of Afghan people and gain international financial support to rebuild.

There is reasonable evidence to assume that Pakistan, China, Russia, and Iran will lead the future economic negotiation. Payoffs of this stage are very uncertain but India will have 0 to negative payoffs. Pakistan will have positive payoffs, but it has to negotiate well to get exceptionally good payoffs. China, Russia, Iran and Central Asian countries will have positive payoffs.

Pakistan is back in the game!