Pakistan and Germany are now celebrating the 58th anniversary of their bilateral development cooperation. Both the states have a tradition of good and amicable relations. The Islamic Republic of Pakistan was one of the first countries with which Germany launched development cooperation back in 1961. Primarily, the cooperation is focused on renewable energies and energy efficiency, basic education and vocational training programmes, health and governance, etc.
The role of development cooperation has also been significant in various sectors, there is a need to further expand and strengthen bilateral relationships in the areas of trade and investment that are equally significant for achieving sustainable development outcomes. Similarly, this is a clear message in the 2030 Agenda that accomplishing the multifaceted Sustainable Development Goals (SDGs) in developing countries requires financing beyond current aid levels. Therefore, for Pakistan to show real progress towards the SDGs, along with development cooperation, increased trade with and investment from Germany are of paramount significance.
The governments of Pakistan and German are cooperating for sustainable development in Pakistan. Commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ) and the German Federal Foreign Office (AA), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) supports the Pakistani Government in the development and implementation of sustainable and effective solutions for political, economic and social transformation.
The main goal of Germany’s development cooperation is to see a stable and prosperous Pakistan playing a constructive role in the region. During the governmental negotiations on development cooperation that were conducted on September 6, 2013, Berlin has announced a new contribution of EUR 102.5 million, thus increasing the total contribution of German taxpayers towards Pakistan to more than EUR 2.5 billion. In this context, human capital has given Pakistan an enormous advantage.
In a country where 60 per cent of the population mainly comprises of youth, chances for growth are comparatively high. On the other hand, Pakistan’s untapped natural resources and excellent geographical connectivity bring innovative opportunities for development. Thus, the power corridors in Islamabad need to focus on these areas of strengths that Pakistan can potentially offer to the world.
Against this backdrop, Berlin welcomes the granting of autonomous trade concessions to Pakistan by the European Union (EU). The EU constitutes an important aspect of bilateral relations. Germany has always supported the Pakistani efforts to get greater access to EU markets including the approval of Pakistan-specific autonomous trade preferences. It seems that Germany would continue to be an advocate of Pakistan within the EU. Pakistan is one of the three countries in the world that have a trade surplus with Germany. Textile, leather goods and other items hold a competitive ground in German markets, and the visit of business delegations will pave the way for future development.
Encouragingly, Germany has now become the largest trading partner of Pakistan in Europe and the fifth-biggest source of foreign investment in the country. Several German multinationals are running a lucrative business in Pakistan for decades. In recent years trade and economy cooperation have become an important factor in the deepening of Pakistan-Germany relations. German Federal Statistical Office shows that Pakistan’s exports to Germany increase by over 76 per cent while bilateral trade volume increased by 2 per cent during the past five years.
On the investment side, many German companies have identified business opportunities to Pakistan’s economy that it can offer to the foreign markets. Foreign Direct Investment (FDI) flows from Germany to Pakistan increased over past years, thereby making Berlin one of the major sources of foreign investment to Pakistan. The renewal of the Bilateral Investment Treaty in 2009 on completion of its 50 years and signing of the roadmap for strategic dialogue has paved the way for taking these relations more closer, thereby enhancing the multifaceted cooperation between the two countries in the coming days.
Resultantly, bilateral trade between two countries fosters friendly relations and plays a pivotal role in strengthening the bonds between business-to-business contacts. Trade relations are growing at a rapid pace. Pakistani business community is keen to increase trade with their German counterparts. Similarly, the German companies are equally eager to explore our lucrative markets.
One of the most important areas is the re-introduction of beneficial framework conditions for the energy sector of Pakistan. German Development Cooperation is supporting to extend energy generation capacities especially through hydropower and is working closely with the public and the private sector towards increasing the efficient use of existing resources through extensive Energy Efficiency projects. Significant technical has been rendered by GIZ to public and private sector partners for the development and increase of renewable energy applications. Energy Management Systems were already introduced in four industrial sectors, namely textile, steel re-rolling, edible oil and steel foundries.
On sidelines, Berlin appreciates Pakistan’s sacrifices in counter-terrorism and the constructive role that Islamabad has been playing in promoting peace and stability in Afghanistan. There is the convergence of views on the need to accelerate the peace process in Afghanistan but on a whole German too wants tranquillity and stability in Afghanistan.
Indubitably, Pakistan-Germany relations have been built on solid foundations to withstand the pressure of all kinds. Interestedly, Pakistan-Germany relations predate the former’s emergence on the world map. Berlin considers Islamabad as an essential partner and Pakistan’s contribution too will prove to be indispensable for the stability of the entire region. Moreover, the contemporary era is an opportune moment to rigorously work for the expansion of Pakistan-Germany strategic, trade and economic cooperation.
DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy and position of Regional Rapport.