ABSTRACT
This chapter argues that the withdrawal of Soviet troops from Afghanistan created a favorable security climate for Pakistan and Japan to promote further their economic ties. Trade liberalization and deregulation in Pakistan generated new Japanese interest in Pakistan’s economy. As a whole, trade was expanded during 1988-97. So was Japanese ODA to Pakistan. Moreover, Japanese FDI also took a new and vibrant turn at some point in time. Pakistani leaders welcomed this trend in their country’s foreign economic relations by adopting a Look East policy, i.e. to look toward East Asian miraculous economies with a pivotal role being played by Japan to help overcome Pakistan’s economic woes and develop the economy. For Japan, Pakistan seemed capable of playing a role similar to that of the 1950s when Pakistan help revived the Japanese textile industry. Similarly, in the 1990s, Pakistan’s increasing role in Central Asia, as a trade and energy corridor, could be used by Japan as an entry point for the promotion of its own trade as well as for the region. For a long time, no trading link was developed between Japan and Central Asia (details have been explained in Chapter 1). Additionally, Japan’s increasing regional role in world politics also led it to seek to prevent nuclear proliferation in South Asia. Although on the surface, the US was a less obvious player than in the past, it still influenced Japanese foreign policy, as was evident in the position Japan took on nuclear proliferation in South Asia. Thus economic interests, originating before the creation of Pakistan, continued to provide a resilient base, even when security considerations sometimes caused temporary friction in the trilateral relationship.
