US cancellation of Pakistani defence aid overshadows secretary of state visit

The trip is part of a push by the US to promote its new Indo-Pacific security and diplomatic strategy. However, the talks are likely to be overshadowed by the Pentagon decision to suspend some $300 million in ‘coalition support funds’ as a result of concerns that Pakistan is not doing enough to rein in militant activity along its border with Afghanistan.

The loss of the defence assistance comes at difficult time economically for Pakistan, with the Khan government having to shoulder counter-terrorism expenses and cope with dangerously low foreign exchange reserves and high debt levels. As a result, Islamabad is expected to request assistance from either the IMF or a close ally, like China, in the coming weeks.

Pakistan will need to mend ties with the US if an IMF package is requested as  Washington remains concerned about using such funds to repay debt incurred from Chinese-backed projects. The US’ allocation of votes at the IMF means it retains the ability to veto any aid disbursement. With Pakistan’s economy in a precarious position, expect Islamabad to take a softer stance towards Washington in matters of security cooperation in the medium-term.

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