US Courts Pakistan with $500M Investment Amid India Tariffs: Opportunities and Risks for Shehbaaz Sharif

Islamabad (The Uttam Hindu): Geopolitical equations are changing rapidly in South Asia. After imposing a massive tariff of 25% on India last month for buying Russian oil, now the US President Donald Trump administration has made a new move. Amid tensions with India, the US has extended a hand of friendship towards its neighbour and economically troubled Pakistan. On Monday, an American company has signed a major mineral investment agreement of $500 million (about Rs 4150 crore) with Pakistan, which has created a new stir in the region.

The deal was signed between Missouri-based US Strategic Metals and Pakistan's largest miner Frontier Works Organization. Under the deal, mining of critical minerals as well as a poly-metallic refinery will be set up in Pakistan. The move is a follow-up to a trade agreement between Washington and Islamabad last month. After the deal, the US Embassy in Pakistan described it as "another example of the strength of US-Pakistan bilateral relations."

Prime Minister Shahbaz Sharif's office also issued a statement saying that talks were held with the US delegation on copper, gold and other rare mineral resources. Sharif has long been claiming that Pakistan has mineral reserves worth trillions of dollars, which can help the country recover from poverty and debt through foreign investment.

While this American investment has come as a big relief for Pakistan, it has also brought two major concerns for Prime Minister Shahbaz Sharif:

1. Balochistan rebels: Pakistan's biggest concern is that most of its mineral wealth is in the troubled and insurgency-affected province of Balochistan. Here Baloch separatists have long been violently opposing the exploitation of resources by foreign companies. Earlier, they have also targeted Chinese companies and their projects. The US State Department itself declared the 'Balochistan National Army' a foreign terrorist organization in August. In such a situation, Shahbaz Sharif fears that if the American company starts mining, the Baloch rebels can attack it too, which can spoil the entire project.

2. Fear of old friend China's displeasure: Sharif's second and perhaps the biggest worry is his evergreen friend and biggest debtor China. The whole world is aware of the struggle for global dominance between America and China. China has invested trillions of dollars in Pakistan and is its biggest ally. In such a situation, when India-America relations have soured, Pakistan's move closer to America may displease China. Shahbaz Sharif fears that if China withdraws its support out of displeasure with American investment, it will become impossible for Pakistan to repay its huge debt and its economy will completely collapse.

It is clear that this American deal, besides being a golden opportunity for Pakistan, is also a big challenge, which is entangling Shahbaz Sharif on two fronts simultaneously.