The Government of Pakistan has taken two major decisions, giving a new dimension to its security and energy strategy. On the one hand, the Economic Coordination Committee (ECC) has approved an additional defense budget of PKR 50 billion (about ₹1,576 crore) to safeguard the international borders, upgrade naval bases and strengthen the security of the China-Pakistan Economic Corridor (CPEC). On the other hand, state-owned company Pakistan Petroleum Limited (PPL) has started the process of creating an artificial drilling island in the sea, 30 km off the Sindh coast, to accelerate offshore oil and gas exploration. Let us tell you that after US President Donald Trump claimed that Pakistan has “huge oil reserves”, the expectations and ambitions of the government in the energy sector have increased.
These days, Pakistan is facing economic crisis, rising inflation, political instability and security challenges. The sudden increase in the defense budget by PKR 50 billion at such a time, coupled with the unprecedented pace of offshore energy exploration, is an indication that Islamabad is shifting its strategic priorities in two directions—hardening of security and aggressive pursuit of energy self-reliance. Both steps seem to go in the opposite direction to the economic pressures of the time, but Pakistan’s strategic thinking also gives a bigger message.
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Let us tell you that this additional amount in Pakistan’s defense budget is on top of the already announced Rs 2,550 billion defense budget. In fact, Pakistan wants to build new fencing on the Afghanistan-Iran border for border security and prevent smuggling and also wants to make larger allocation to the Special Security Division (SSD) of the South and North, which have been created to protect foreign investment and Chinese interests in CPEC. Apart from this, Pakistan is looking to upgrade naval bases which can give a new direction to strategic activities in the Arabian Sea.
Security of CPEC is the central element of this entire framework. China has so far invested more than $25 billion in Pakistan. In such a situation, this additional budget gives the message that Pakistan wants to protect CPEC at any cost – even if the financial burden for it is increasing.
Moreover, the decision comes at a time when Pakistan’s foreign exchange reserves are limited, stringent conditions are in place for the IMF’s new programme, inflation is above 20%, energy subsidies have almost been eliminated. In such a situation, it is natural to raise the question whether Pakistan has the capacity for such huge security expenditure? The Government of Pakistan argues that this is a “technical grant outside the regular budget” used for special projects, but the reality is that Pakistan’s economic structure cannot sustain the burden of such special expenditures for long. Yet Islamabad does not want to compromise on military requirements.
On the other hand, the artificial island that Pakistan Petroleum Limited is building is a major step in Pakistan’s energy exploration. About 25 wells are planned to be drilled, with investment estimates ranging from $750 million to $1 billion. Under this, 23 new offshore blocks are to be allotted. However, US President Trump’s claim of “massive oil reserves” has raised new hopes in Pakistan. But the reality is that Pakistan has drilled only 18 wells in the sea since 1947, and most of them were unsuccessful. ExxonMobil left the market after the 2019 Kekra-1 drilling failure. Today, when Pakistan is again carrying out aggressive offshore operations, the question is whether this is a decision based on sound economic grounds or a risky bet based on political expectations? Creating artificial islands is certainly a new step from the technical point of view, but there is no guarantee of its success.
If seen, Trump’s announcement of “oil cooperation” is a big political signal for Pakistan. If American companies become part of Pakistan’s offshore operations, Pakistan’s energy security partnership with China may be affected, Pakistan may come into a new position in the US-China competition, the meaning of strategic activism in the Arabian Sea may change. This indicates a possible change in Pakistan’s foreign policy.
On the other hand, if we look at this whole matter from India’s point of view, India’s defense budget is much bigger than Pakistan’s, but Pakistan’s new strategic priorities give some indications for India. Such as strengthening of fencing and SSD on the Afghan border, naval base upgrade, offshore projects in the Arabian Sea, participation in energy by both America and China. All this points to a long-term change in Pakistan’s strategic thinking, which could have implications for the regional security architecture.
However, on one hand, Pakistan is struggling with economic crisis, on the other hand it is adopting aggressive policy on both security and energy fronts. This dual strategy is both risky and politically adventurous. If the offshore discovery is successful, it could provide economic relief to Pakistan. But if it fails, the current financial crisis could deepen. At the same time, a sharp increase in security expenditure could limit Pakistan’s economic recovery potential. It is clear from both these decisions that Pakistan wants to move its future forward on the two tracks of energy resources and strategic security. How much stability this direction will bring and how much risk it will bring, will become clear in the coming years.