Situated at the crossroad between East Asia, South and Central Asia and the Middle East, and adjoining India (a country with which it shares profound historic, cultural and social bonds and economic interests) Pakistan occupies a position of significant geostrategic importance. It has a land area of 770,880 square kilometres (slightly smaller than New South Wales) and a population of about 177 million, of whom 46 per cent are under 20 years old.
Pakistan is rich in natural resources and human potential. It has some of the world’s largest coal reserves, as well as copper, gold, gemstones and other mineral deposits. The workforce is young, with a good supply of well-educated workers. About 2 million people enter the labour market every year. Almost 950,000 students were enrolled in tertiary study in 2010, almost 7 per cent of the population have tertiary degrees and the Government of Pakistan plans to increase that proportion to 10 per cent by 2015.
Pakistan is a democratic nation facing a challenging environment. Security concerns and governance challenges have constrained its development. It has been at the front line against violent extremism in its region and has suffered considerable human and economic losses, especially since 2001, at the hands of extremists opposing the state’s efforts to combat terrorism. Economic activity continues to be affected by declining infrastructure, including chronic power shortages; energy is likely to remain a constraint on economic growth in the short to medium term. GDP growth averaged 7 per cent in the period from 2004 to 2007, but constraints on growth (including natural disasters) held it to an average of 3 per cent in the four years to 2011.
Australia established diplomatic relations with Pakistan soon after the partition of British India (into India and Pakistan) in 1947 and has had a resident mission in Pakistan since 1948. Australia and Pakistan are both members of the Commonwealth.
Government, business and people-to-people links
The people of Australia and Pakistan share a passion for sports and the arts. Strong people-to-people links centre on an active and successful Pakistani community in Australia. In the 2001census, around 30,000 people in Australia listed Pakistan as their country of birth, with around 33,000 claiming Pakistani ancestry. In 2010–11, more than 1,500 Pakistani citizens settled in Australia as either skilled migrants or family of Australian permanent residents or citizens. Almost 7,000 Pakistani students are currently studying in Australia, which has become one of the largest markets for Pakistani students outside the United States and the United Kingdom. In addition, Pakistan received 110 Australia Awards scholarships in 2011 and has been offered 143 in 2012. The awards promote knowledge, education links and enduring ties between Australia and Pakistan.
Pakistan’s bilateral merchandise trade with Australia is well established but modest; it was worth $586 million in 2011. Currently, Australian exports to Pakistan consist primarily of food products, cotton and coal. Australia imports mainly textile products from Pakistan (for example, 19 per cent of bed linen imported into Australia comes from Pakistan). The revival of the Australia–Pakistan Joint Trade Committee and the Pakistan–Australia Business Forum provides formal mechanisms to explore and improve trade relations. Cooperation on agriculture is an area of particular promise. Since 2005, Australia has been working through the Agriculture Sector Linkages Program to develop Pakistan’s export potential in citrus and dairy products.
A recently announced three-party agribusiness venture in Punjab province illustrates opportunities available to Australian agriculture businesses and investors in Pakistan. The project will involve collaboration between Pakistani farms, Australian expertise (provided by South Australia-based Nippy’s Fruit Juices), and investment from the United Arab Emirates (by ENSHAA Corporation). Currently, 40 per cent of Pakistan’s citrus crop spoils before it can be harvested. The project will put this fruit to use by providing value-added fruit juice manufacturing. The provincial Punjab Government has welcomed the project, which will contribute to the local economy, improve regional value chains and infrastructure, and be a model for other ventures in the area. This project opens a growing and potentially huge market for an Australian company, showcasing Australian agribusiness know-how and food processing technology.
Australia’s development assistance to Pakistan has increased substantially in recent times, and is projected to increase to $96 million in 2012–13, making it a significant component of the bilateral relationship. The signing of the Australia–Pakistan Development Partnership in 2011 was an important milestone. The partnership establishes principles, mutual commitments and priorities for development cooperation and is the basis for ongoing engagement with the Government of Pakistan on development issues. Australia remains strongly committed to the Friends of Democratic Pakistan—a multilateral institution with much unrealised potential—and to donor coordination efforts, including through participation in the Pakistan Development Forum.
Australian assistance focuses on saving lives through improved maternal and child health, improving the quality of, and access to education for girls and boys, and enhancing sustainable economic development through increased agricultural production. Australia also supports good governance and responds to requests for humanitarian and early recovery assistance following natural disasters, such as the 2005 earthquake and the floods of 2010 and 2011.
Cooperation to combat transnational crime, such as terrorism financing and illegal migration, has been strengthened through the Pakistan–Australia Joint Working Group on Border Management and Transnational Crime. The Australian Federal Police has a 25‑year relationship with Pakistani law enforcement agencies. Working together, Australian and Pakistani agencies have significantly disrupted transnational crime, for example through drug seizures. By providing training programs and specialist training equipment, Australia is helping Pakistan build capacity to counter serious and sophisticated crime.
In 1907, the Australian Army sent its first student to Quetta Command and Staff College, and has regularly filled a place there since. The Australia–Pakistan defence relationship has grown significantly over the past five years. In addition to the position at Quetta, the Australian Defence Force now sends a student to the National Defence University in Islamabad each year, conducts an annual counterinsurgency exchange between the Australian Defence College and Quetta Command and Staff College, and sends defence personnel to attend specialised courses in Pakistan. Australia has increased the number of training positions offered to the Pakistan military in Australia from 70 positions in 2009 to more than 140 in 2012. Many of the Pakistan military’s senior officers have visited Australia for talks, and some for training earlier in their careers, which has fostered the development of ‘chief-to-chief’ relations. Defence leaders engage regularly through a bilateral strategic dialogue and, since 2010, a ‘1.5‑track’ security dialogue, which brings together senior leaders from Australian and Pakistani militaries, government agencies and think tanks to discuss issues of mutual strategic interest.
By 2025, people-to-people links between Australia and Pakistan will deepen further as many tens of thousands of Pakistanis who have lived, worked and studied in Australia take full advantage of the cultural, academic and business links forged during their time here. These ties will offer opportunities to further broaden the Australia-Pakistan relationship.
Australia will continue to share significant interests with Pakistan in a stable and prosperous South Asian region, and will continue to work with Pakistan to help it realise its potential as a stable, secure, moderate and fully functioning democracy, including through integrating economically with its fast‑growing neighbours, China and India. Australia will continue to have an interest in positive and resilient India-Pakistan relations.
Pakistan has good economic growth potential because of its youthful demographics and strong consumer markets. However, there are continuing security issues, and supporting Pakistan’s growing population will be a challenge. Ongoing social and economic reforms will be difficult to achieve, but are fundamental to economic growth. Should Pakistan effectively implement necessary reforms and broaden its regional economic engagement, it would stand to see significant benefit. Where possible, Australia will continue to encourage and assist reform, development and integration, both bilaterally and through common institutions.
There is much scope for improvement in Pakistan’s business environment. Greater transparency, improved infrastructure and better economic conditions could prompt more interest from Australian investors in sectors including mining and energy, agriculture, services and education.
Pakistan’s long-term challenges will likely remain—extremism, poverty, broader economic development and governance issues. Australia’s interests are best served by continuing to engage and work with Pakistan on the security (including ‘non-traditional’ security threats such as water management), development and economic fronts to support it as a supportive and longstanding partner.