The Biden administration has added 24 companies to an export control list for supporting and dealing with sanctioned states. Among these, 10 were based in Pakistan and the UAE and have been assumed to divert items for Pakistan’s nuclear activities. Some of these companies manufacture microelectronics and others operate industrial machinery within that sector. Amidst a risk of a balance of payment crisis, Pakistan needs foreign inflows on an urgent basis. Therefore, this development poses a problem.
Ever since the Russia-Ukraine invasion, the US has made disciplined use of export controls and the entity list to punish companies for their Russian military support. Since February 2022, sanctioned state dealings have been under the spotlight. Already, in October, Biden expressed concern over Pakistan’s use of nuclear weapons and the changing global geopolitical situation. In this regard, Pakistan should remain cautious of its sensitive perception in the international arena given increasing foreign payment demands.
Likewise, there should be some level of control over business and company dealings within the country. Suppliers of US goods must now seek a special difficult-to-obtain license before shipping or dealing with companies on this new list. This adds more complications to trade dealings and after the payment of over a billion dollars against Sukuk, pressure is already levied on the exchange rate. With this current control, businesses must be careful in day-to-day operations, so such developments are avoidable. Because, as mentioned, we cannot afford sanctioning and economic hardening at this time.
On the other hand, it should also be noted that this rising fear around Pakistan’s use of nuclear weapons comes after the assessment of a Swedish group insinuating increased threats of nuclear war. This explains US fears around nuclear possession in the world, but the lack of scrutiny on India is also worrying. Understanding this also reiterates the sensitivity of Pakistan’s reputation in the international arena.