Moeed Yusuf, Prime Minister Imran Khan’s national security adviser, has repeatedly voiced Pakistan’s discomfort at being portrayed as a spoiler by the US as it seeks to persuade India to abandon its traditional foreign policy of non-alignment and join forces against China.

“Pakistan wants bilateral US-Pak relations that are not clouded by hyphenating the relationship with US policy towards other countries in the region,” Yusuf said in a speech in Islamabad on January 22.

Islamabad has been under pressure from the US to cut down the scale of the estimated US$60 billion China-Pakistan Economic Corridor (CPEC).

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Since its launch in 2015, more than US$28 billion has been spent on building power generation plants and connectivity infrastructure along China’s only overland connection to the Middle East via the port of Gwadar that it operates on Pakistan’s coast.

After a two-year slowdown coinciding with a change of government in Islamabad, Pakistan reinvigorated the CPEC last year by signing contracts for new hydropower projects in the half of disputed Kashmir that it administers.

06:15

Who has the upper hand in the India-China border dispute?

Who has the upper hand in the India-China border dispute?

In the first remarks on CPEC by a senior official since Biden became president, US Central Command chief General Keith McKenzie reiterated the Pentagon’s view of Pakistan as a key facilitator of China’s expanding role in the Middle East and South Asia.

“China uses its Belt and Road Initiative and the CPEC to expand Chinese influence and presence,” McKenzie said in an address to the Middle East Institute in Washington on February 8.

Irrespective of this, CPEC would remain Islamabad’s “overriding priority”, ex-ambassador Lodhi said.

“CPEC is emblematic of China’s aim to strengthen Pakistan, economically and strategically,” she said.

Lodhi said Islamabad did not think the Biden administration would adopt a zero-sum view of Pakistan’s ties with China as these were “a stabilising factor for the region”.

“Indeed, there may be regional convergences between the US and China as for example in seeking peace and stability in Afghanistan where Pakistan’s interests align with both countries,” she said.

Islamabad awaits Biden’s decision as to whether he will stick to the May 1 deadline set for the withdrawal of the remaining 2,500 US troops from Afghanistan set under the Trump administration’s February 2020 deal with the Taliban.

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If Biden postpones the withdrawal and the Taliban responds violently, Pakistan fears it will be blamed for not applying enough pressure on insurgent leaders based on its territory.

“We can’t be in a situation where Pakistan is seen as the potential solution for all problems and when the solution doesn’t come then Pakistan is seen as the reason for all evils,” said national security adviser Yusuf, addressing the Wilson Centre, a Washington-based think tank, on January 19.

Pakistan is equally nervous about the impact closer ties between New Delhi and Washington will have on its ability to defend itself against India.

“The US is going to help India through capability build-up, technological transfers and development, and intelligence sharing,” said Asfandyar Mir, a postdoctoral fellow at the Centre for International Security and Cooperation at Stanford University in California.

“This will certainly spill over and qualitatively improve India’s conventional military posture towards Pakistan, which for now is somewhat balanced,” he said.

“In Pakistani perception, this will not only strengthen India but also pose a significant challenge to Pakistan’s stepped-up focus on Kashmir.”

Islamabad and New Delhi have not been on speaking terms since India rescinded the semi-autonomous status of the part of Kashmir it administers in August 2019.

On February 5, three days before Biden’s conversation with Modi, India restored 4G connectivity in Kashmir.

The US State Department’s positive response touched a raw nerve in Pakistan by speaking about “India’s Jammu and Kashmir”, rather than deferring to its disputed status by calling it Indian-administered Kashmir.

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Pakistan immediately expressed its “disappointment” at the State Department’s choice of words, prompting a clarification that US policy on Kashmir had not changed.

Pakistan has been grey-listed since 2018 by the FATF, a Paris-based watchdog established by the G7 to crack down against terrorism financing and money laundering.

On February 22 the FATF will evaluate Pakistan’s compliance with a 27-point action plan given to Islamabad last year as a road map for exiting the grey list.

If it is deemed to have failed to be in compliance, however, Pakistan runs the risk of joining Iran and North Korea on the FATF blacklist of countries declared to be state financiers of terrorism.

Blacklisting would lead to the imposition of economic sanctions by the G7 and most multilateral organisations.

In Pakistan’s case, it would collapse its fragile economy and is thus considered by many analysts to be a “nuclear option” that Washington would only ever use in extreme circumstances.

Pakistan hopes that its recent actions, including the conviction on terrorism financing charges of top leaders of the Jamaat-ud-Dawa militant group, will relieve pressure from the FATF.

However, those hopes may have been dealt a blow by the January 28 decision of Pakistan’s Supreme Court to uphold the acquittal of British-Pakistani al-Qaeda operative Omar Saeed Sheikh on charges of kidnapping and murdering American journalist Daniel Pearl in Karachi in 2002.

The verdict sparked outrage in Washington and led the next day to a terse conversation between US Secretary of State Antony Blinken and Pakistan’s Foreign Minister Shah Mahmood Qureshi the following day – to date, the only interaction between the Biden administration and Islamabad.

The State Department afterwards issued a statement which was dominated by Blinken’s demands that Sheikh and his accomplices be held accountable.

He barely acknowledged the points covered in the parallel statement issued by Pakistan’s ministry of foreign affairs, which cited Qureshi as placing a premium on forging an economic partnership with the US, to replace their erstwhile security-dominated relationship.

This has renewed concern in Islamabad about “the lingering sword of blacklisting through the FATF and associated uncertainty on where the new US administration would stand”, Mir said.

Pakistan’s powerful military, which dominates foreign and security policymaking in Islamabad, appeared to signal its concerns about the evolving strategic situation on January 20, hours before Biden’s inauguration, by demonstrating the outreach of its sizeable strategic arsenal.

For only the second time ever, Pakistan tested its longest range nuclear-capable ballistic missile, the solid fuel-propelled Shaheen-III.

With a claimed range of 2,750km, it is capable of reaching India’s easternmost territory, the Andaman and Nicobar Islands in the Bay of Bengal – the primary testing site for India’s ballistic missile programme.

The test ended a moratorium adopted during the Trump administration because of US sensitivities about the Pakistani missile’s technical capability of reaching Israel.

Ex-ambassador Lodhi said the recent test was part of “Pakistan’s strategy to maintain a stable deterrence in South Asia which has been seriously disturbed by India’s escalation in acquiring weapons systems that augment its strategic capability.”

“Pakistan’s motivation is defensive and the test was not timed or aimed at anything beyond this consideration,” she said.

Nonetheless, the timing of Pakistan’s Shaheen-III test “surprised a lot of people” in the US, Mir said.

“Pakistan believes, perhaps correctly, that its nuclear programme is insurance against any punitive measures by the US, so it might remind US interlocutors of nuclear issues and elevate them in the dialogue,” he said.

02:24

Pakistan hosts joint naval drills including the US, China and Russia

Pakistan hosts joint naval drills including the US, China and Russia

Richard Olsen, a former US special representative on Afghanistan and Pakistan, said the question facing the Biden administration was whether it “simply accepts as an unpleasant fact that Pakistan has already moved into China’s camp or try to compete with China in Pakistan”.

While Islamabad’s strong tilt toward Beijing might be seized upon as an easy way for Washington to get out of a dysfunctional relationship, “there are costs”, Olsen warned, in a paper published by the Washington-based US Institute of Peace on February 3.

“Pakistan is a nuclear-weapons state with the world’s sixth largest army. That is a lot of combat power to allow simply to fall into a rival’s hands,” he said.

If the US entirely gives up its leverage in Pakistan in favour of building influence in India, its ability to play its important historic role in de-escalating conflicts between the nuclear-armed South Asian rivals would be diminished, he said.

“Since China shows little interest in assuming this responsibility, and in any case will not be perceived by [New] Delhi as an honest broker given that China has its own border conflicts with India, the likelihood of an escalatory cycle getting out of control seems more likely,” Olsen said.