Can US-Pakistan cooperation on Sharifullah's arrest signal a broader strategic shift?

The U.S.-Pakistan relationship has long been unidimensional, largely driven by military cooperation while civilian ties remain weak. The imbalance stems from Pakistan's fragile civilian leadership, which has hampered economic collaboration between the two countries. In contrast, military-to-military relations have consistently formed the cornerstone of bilateral ties.

During the Biden administration, Washington's focus on the Indo-Pacific region elevated India as a key strategic partner, primarily as a counterbalance to China. Pakistan, however, was left out of this equation. In a virtual group briefing arranged by the White House, Kurt Campbell, the former U.S. policy czar for the Indo-Pacific region, said that Pakistan was firmly in China's orbit. I pushed back, highlighting Pakistan's strategic role in Afghanistan, Iran, and Central Asia, and its potential to promote regional stability in partnership with the U.S.

That exchange led to a request from the White House for an in-person meeting with senior U.S. officials, where I argued for a reassessment of U.S. policy towards Pakistan, based on many strategic and economic factors, apparently without much success. Under the current Trump administration, a reversal of the Biden-era policy is unlikely, as Washington continues to favor India as a partner in the region and has changed its direction towards the East and against China.

Despite this, military cooperation between Pakistan and the U.S. has continued in the background. While Pakistan receives substantial military equipment from China, the superior quality and advanced technology of U.S. weapons remain attractive for Pakistani military leaders. Pakistan's military leadership is keen to maintain this flow of aid, ensuring that military ties persist even amid diplomatic strains.

However, U.S. overt assistance to Pakistan in fiscal year 2025 is programmed at just $101 million, excluding any covert funds. With the Trump administration's pause on foreign aid, it remains uncertain whether Pakistan will be among the countries to benefit, even if aid resumes.

Pakistan's recent counterterrorism cooperation—particularly its role in the arrest of alleged Daesh operative Mohammad Sharifullah—has earned rare praise from Trump, who publicly thanked Islamabad during a joint session of the US Congress. This collaboration is a positive development, but its long-term significance remains unclear.

U.S. foreign policy under National Security Adviser Michael Waltz, a former Special Forces officer with experience in Afghanistan, is likely to be shaped by his powerful personal perceptions of the region and of Pakistan that he saw as a cause of the deaths of US comrades at the hands of the Pakistan-backed Haqqani group. Despite the ambivalent Pakistani relations with the Afghan Taliban, Pakistan is believed to have continued to provide vital counterterrorism assistance, facilitated drone strikes, and enabled U.S. surveillance operations across Afghanistan, Iran, and China.

To capitalize on this history of cooperation, Pakistan must first address its political instability and economic woes. Only by stabilizing its political environment can Pakistan attract foreign investment, particularly in projects linked to the China-Pakistan Economic Corridor (CPEC). Encouraging U.S. companies to invest in CPEC-related mineral and infrastructure projects will require convincing both Washington and Beijing—a delicate balancing act.

A well-structured, independent judiciary is crucial to fostering investor confidence. The U.S. recognizes Pakistan's strategic value, but without judicial and economic reforms, any partnership will remain limited. The fraught experience of US investors in power production and infrastructure during the Musharraf era that got caught up in Pakistani courts, even when they had agreed with their Pakistani partners to arbitration in London, may be an obstacle to investment in infrastructure But there may be great opportunities for US firms to join CPEC investments by providing engines for improved railways systems or in developing mineral resources in Balochistan.

Pakistan's fight against extremism hinges on the concept of 'shaping the environment.' Military force alone cannot eradicate insurgencies—political stability, economic development, and social inclusion are essential. Engaging Pakistan's youth—where the median age is 22—through education, healthcare, and political participation is vital.

Immediate measures should include releasing detained political workers and initiating dialogue with them. On the economic front, clearing the ongoing IMF review is critical, as past experience shows that IMF funds are rarely disbursed after the second borrowing tranche, when conditionality increases and Pakistan struggles to stay on the reform path.

In the long term, Pakistan must privatize state-owned enterprises that stifle private sector growth. China achieved this by compelling its military to focus solely on defense, paving the way for companies like Huawei to emerge. Pakistan must follow this model to create a clear distinction between state-owned, military-owned, and civilian enterprises and create an open field for private sector investment that is being crowded out by State Owned Enterprises, especially and increasingly owned by the military.

Pakistan's economic relationship with the U.S. revolves around IMF and World Bank programs. The Trump administration's ongoing review of U.S. membership in these institutions poses a serious risk to Pakistan, which relies on them for economic relief during crises. Chapter 22 of the Project 2025 report from the Heritage Foundation specifically asks the US to withdraw from the IMF, World Bank, and OECD.

Regional integration could offer an alternative pathway for economic growth and stability. If U.S. sanctions on Iran and Afghanistan are eased or lifted, Pakistan could become a vital trade gateway for Central Asia and India. This would involve helping the US Administration understand the importance of using economic incentives to draw Afghanistan and Iran into the regional and global systems and not become harbors for terrorism. Developing the western corridor of CPEC and integrating Afghanistan into the project would unlock significant economic potential. A project proposal by Britain's development ministry to build a dam on the Kabul River Gorge, supplying energy to both Afghanistan and Pakistan, could attract foreign investment—if security concerns are addressed.

Pakistan's path forward requires a unified national vision. Critical decisions must not be confined to Islamabad's secret corridors of power. Business leaders, civil society, and grassroots representatives must be included in shaping the country's future. Key elements in that dialogue are the youth who represent more than half the country’s productive population, and its Middle Class, and women. This will involve investing in health and education of the youth of Pakistan.

To paraphrase the Cheshire Cat’s advice to Alice in Lewis Carrol’s Alice’s Adventures in Wonderland, "When you don't know where you're going, any road will take you there." Without clearly defined goals, Pakistan cannot choose the right path. The time has come for Pakistan to articulate clearly its national objectives and pursue them with purpose. Then it will be spared the awkward twists and turns of its unequal partners, including in Washington DC.

*The author is the founding director and Distinguished Fellow at the South Asia Centre of the Atlantic Council in Washington DC. He is the author of The Battle for Pakistan: The Bitter US Friendship and a Tough Neighbourhood and Crossed Swords: Pakistan, its Army, and the Wars Within. He can be reached through his website: www.shujanawaz.com.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the editorial stance of Nukta.