By Dimitra Staikou
In 2025–2026, Pakistan’s economic crisis has begun to take on characteristics far deeper than those of a conventional fiscal collapse. Behind the negotiations for new bailout packages from the International Monetary Fund, a silent yet highly consequential power struggle is unfolding between the IMF and the Pakistani military over control of the country’s core economic power structures. State-owned enterprises, energy facilities, mines, ports, and banks are gradually becoming arenas of confrontation between two competing models of economic governance: on one side stands the military-driven logic of speed and rapid investment agreements, and on the other a more institutional and rules-based approach that the IMF seeks to impose through mechanisms of accountability and transparency.
At the center of this strategy lies the Special Investment Facilitation Council (SIFC), a mechanism created to accelerate foreign investment during a period of severe economic pressure. Officially, the SIFC is presented as a tool designed to reduce bureaucracy and facilitate investment procedures. In practice, however, it has evolved into a powerful economic instrument of the Pakistani military, allowing senior military officials to act as key intermediaries between the state and foreign investors. Through the SIFC, fast-track approvals, regulatory exemptions, and special investment privileges are granted in ways that often bypass the country’s traditional political and administrative institutions.
The growing influence of the Pakistani military over economic management is not entirely new. Historically, the military has maintained a strong presence not only in security and foreign policy but also in critical sectors of the economy through military foundations, business conglomerates, and extensive networks of influence. Yet during 2025 and 2026, this influence appears to be entering a qualitatively different phase. The creation and strengthening of the SIFC marked the institutionalization of a more direct military role in the country’s economic governance, with senior military officials actively participating in the attraction, management, and acceleration of foreign investments.
This evolution intensified following the worsening economic crisis and the increasing inability of civilian governments to effectively manage fiscal pressure, inflation, and energy shortages. Within this environment, the military promoted the narrative that only a centralized and “disciplined” mechanism could ensure the rapid implementation of major investments and preserve economic stability. The SIFC was thus presented as a “parallel structure of efficiency,” capable of bypassing bureaucratic inertia, political confrontation, and the administrative dysfunctions that have long characterized the Pakistani state. For many critics, however, this logic gradually reinforces a model of economic governance in which military influence expands far beyond its traditional role.
The significance of this process becomes even greater because of the geopolitical value of the economic networks and infrastructure involved in these agreements. China and the Gulf states have emerged as the principal investors behind many of the planned partnerships, strengthening their presence in sectors of strategic importance for Pakistan’s future economy. For Beijing, economic penetration into Pakistan is directly linked to the broader ambitions of the Belt and Road Initiative (BRI), while for the Gulf monarchies, Pakistan represents a crucial geopolitical and economic partner in South Asia. Within this framework, the SIFC functions as a mechanism that enables faster foreign access to critical infrastructure and key sectors of the country through direct agreements and special investment arrangements.
Concerns intensified when a series of investment initiatives in sectors such as energy, logistics, mining, and infrastructure began advancing through special fast-track procedures under SIFC supervision. International analysts, along with segments of Pakistan’s opposition, argued that the growing use of military mechanisms in economic decision-making is creating a system of limited political accountability in which civilian institutions and parliamentary bodies play an increasingly marginal role. At the same time, transparency organizations and economic observers warned that concentrating such extensive managerial authority in unelected power centers increases the risk of opaque agreements and limits public oversight over the management of state resources and core economic mechanisms.
For the International Monetary Fund, however, the central issue is not the need to attract investments but the manner in which those investments are implemented. The IMF views military-controlled or military-influenced economic systems as lacking sufficient transparency, political oversight, and institutional accountability. Continuous bypassing of political institutions, special exemptions, and the concentration of economic authority in unelected centers of power raise serious concerns regarding the long-term sustainability of economic governance. From the IMF’s perspective, a state that repeatedly depends on international bailout packages cannot continue functioning through parallel and opaque mechanisms of authority without undermining its institutional stability.
The militarization of economic governance is also directly connected to the deeper crisis of trust surrounding Pakistan’s political institutions. For significant parts of the state apparatus, as well as for many international investors, the military often appears to be the only institution capable of providing continuity, stability, and security within an environment of political uncertainty. Yet this very logic creates a vicious cycle: the stronger the military’s economic role becomes, the weaker the civilian and institutional mechanisms capable of balancing power become in return.
Ultimately, the confrontation between the IMF and the Pakistani military is not solely about economics but about the future of the Pakistani state itself. On one side stands a model based on speed, centralized decision-making, and the military management of economic crisis. On the other hand stands the attempt to impose a more institutional and rules-based model of governance, emphasizing transparency and political accountability. The outcome of this confrontation may determine not only Pakistan’s economic stability but also the way in which the country balances the need for immediate economic survival against the long-term necessity of institutional stability and state credibility.
Pakistan’s crisis is therefore no longer an isolated South Asian issue but part of a broader global realignment of power in which economic dependency, investments in critical infrastructure, and control over strategic economic networks are increasingly transformed into instruments of geopolitical influence. The confrontation between the IMF and the Pakistani military reflects a much larger struggle between competing international models of economic and political organization: on one side, the Western institutional and rules-based model of governance, and on the other, a more centralized system in which strategic investments are directly linked to state power, geopolitical influence, and the management of critical infrastructure.
Within this context, China’s growing presence in Pakistan acquires particular significance. Beijing no longer views Pakistan merely as an economic partner but as a critical geostrategic hub within the Belt and Road Initiative through which it seeks to expand its influence across trade corridors, energy infrastructure, and ports connecting Asia, the Middle East, and the Indian Ocean. The port of Gwadar, energy investments, and major transportation projects already form part of a much broader strategy of Chinese economic penetration into South Asia and beyond.
For Europe in particular, Pakistan represents a warning example of how economic weakness can gradually evolve into a crisis of political and institutional autonomy, especially in a world where investments, infrastructure, and debt are increasingly used as tools of geopolitical influence and strategic control. In recent years, the European Union has attempted to respond to the expansion of Chinese influence through the Global Gateway initiative, which seeks to finance strategic projects and transport networks based on European standards of transparency, institutional accountability, and sustainable development. At the same time, the growing Chinese presence through the Belt and Road Initiative, combined with the increasingly assertive role of regional powers such as Turkey, points to a new environment of geopolitical competition stretching from South Asia to the Eastern Mediterranean. Ankara has sought in recent years to expand its geoeconomic presence in Asian and Muslim markets through infrastructure networks, defense cooperation, and commercial partnerships, while simultaneously maintaining complex relations with both the West and Beijing.
Within this fluid geopolitical environment, Pakistan’s case acquires particular importance for the European Union because it demonstrates how economic crises can evolve into arenas of geopolitical realignment in which economic dependency becomes directly linked to political influence, control over strategic infrastructure, and shifts in regional balances of power. In this new geoeconomic environment, Pakistan functions as a warning example of how economic dependency can gradually transform into a limitation of political sovereignty. And this is no longer a dilemma affecting only the fragile economies of South Asia, but one that increasingly concerns the future balance of power within the international system itself.
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The Writer:
Dimitra Staikou is a Greek lawyer, journalist, and professional writer with extensive expertise on South Asia, China, and the Middle East. Her analyses on geopolitics, international trade, and human rights have been published in leading outlets, including Modern Diplomacy, HuffPost Greece, Skai.gr, Eurasia Review, and the Daily Express (UK). Fluent in English, Greek, and Spanish, Dimitra combines legal insight with on-the-ground reporting and creative storytelling, offering a nuanced perspective on global affairs.
