It has been a remarkable turn of fortune for a political leader who some 13 years ago was ousted from power in a military coup and exiled after conviction on treason charges. Elected as prime minister of Pakistan for a record third time, the 63 year old business tycoon Nawaz Sharif is back at the helm of what is often described as the world’s most difficult country to govern.

Sharif’s previous stints in power were each shortened by his being sacked half-way through the term, and it’s certainly not going to be smooth sailing for him this time. Pakistan is facing a security and economic meltdown, and the political landscape has changed extensively since his last term in office. It remains to be seen whether he is able to get the country out of the deep, for Pakistan is at war with itself, with no easy solutions in sight to its complex problems.

But it is a huge stride forward for Pakistani democracy that for the first time in its chequered political history, power has been transferred from one elected government to another. Since becoming an independent state some 66 years ago, this Muslim country has alternated between autocratic military dictatorships and elected but ineffective civilian governments. Its long periods of military dictatorship have greatly retarded the development of democratic politics.

As a key ally of the West, Pakistan returned to democracy in 2008, ending an eight year-long military rule. The transition to elected civilian government was never easy; a weak government led by Asif Ali Zardari, widower of the slain former prime minister, Benazir Bhutto, proved incapable of dealing with Pakistan’s grave political, economic and security challenges, and the country descended into near-chaos. The beleaguered Zardari government nevertheless managed to complete its five-year term, a rare feat in a country where no elected government had previously done so.

This uninterrupted political process, it is hoped, marks a turning point in Pakistan’s politics. But there’s still a long way to go for its struggling democracy to take root. The worsening internal security situation and failing state institutions remain the biggest threat to political stability that isn’t just critical for Pakistan but for regional peace.

Compared to the previous left of centre Pakistan People’s Party government, Sharif’s centre-right administration is better placed to deal with the challenges that confront his strife-torn country. With the support of various allies, Nawaz Sharif’s Pakistan Muslim League has a comfortable enough majority in the National Assembly to allow the government to take tough decisions to stabilise the economic downslide and prevent a complete breakdown of security. Unfortunately, though, there has so far been little sign of the new government moving decisively on these key reforms.

Sharif has inherited an economy on the verge of collapse, along with a highly fragmented political landscape. Economic revival is the top of priority, and for the first time, Pakistan’s growth rate has been less than 3% for five consecutive years, far lower than other South Asian countries. The combination of population growth and rising inflation is pushing more and more Pakistanis below the poverty line.

As well as these economic woes, there are the problems of rising militancy and sectarian violence that pose existential threats to this nuclear-armed nation. Escalating militant violence has cost the country dear, both in terms of human lives and economic loss. Thousands of troops are locked in an unending war in the lawless tribal region along the Afghan border, and rising Islamic radicalism threatens to tear apart the social fabric. Pakistan has the dubious distinction of being the largest incubator of jihadi extremism that now threatens its own security and that of the region.

Pakistan has long been the centre of a proxy war between Arab countries and Iran, and that has done much to fuel sectarian violence. Radical Islamic groups under the patronage of some Arab countries have been recruiting jihadists from Pakistan to fight alongside the rebels in Syria, yet another symptom of a state losing control.

Most worrisome of all is the failure of the political and military leadership to devise a coherent and overarching strategy to deal with these twin menaces. That has given the militants greater space to operate, but it has also forced the government to begin to review its counter-terrorism strategy. It clearly needs to take charge of national security and foreign policies that have long been the domain of the military, and to do so the government needs to have a much clearer national narrative. The way that civil-military relations will evolve under the Sharif government is important, because although the military has taken a back seat since 2008, and seen its influence decline significantly, it continues to determine the direction of Pakistan’s security and foreign policies. The new government must take on board the country’s powerful generals effectively if it is to counter militancy and Taliban insurgency in the tribal regions.

Pakistan’s battle against militancy is linked to the war in Afghanistan. The greatest nightmare is the prospect of an escalating civil war in Afghanistan after the withdrawal of the ISAF troops. If the Taliban establishes control in just some parts of Afghanistan, that would give a huge boast to Taliban forces now fighting Pakistani troops in the tribal regions, and would be nothing short of disastrous for Pakistan’s new government.

The point here is that it is in the interests of both Pakistan and the West to cooperate in their handling of the Afghan end-game. A political settlement in Afghanistan is critical for a peaceful withdrawal of the NATO forces, and for regional security too. Pakistan’s role will perhaps be the most critical of all, as its cooperation is key to winding down the war. Its geographical proximity along with ethnic and political linkages across the border mean Pakistan would also play the role of spoiler. Post 9/11 alliances between the West and Pakistan are full of paradoxes; although an ally in the ‘war on terror’, Pakistan has also been described as an epicentre of Islamic militancy and jihadi terrorism. It has served as the major logistical line for NATO forces in Afghanistan, with more than three-quarters of all supplies to the coalition forces going through its territory, but its lawless tribal regions have also provided safe havens for the Taliban. Pakistan thus occupies the unique position of being able to exert strong leverage over both sides, a dichotomy that has been a major source of conflict between the U.S.-led coalition forces and Islamabad.

The two have had substantial differences over the appropriate strategy for ending the war in Afghanistan. Pakistan’s, reluctance to take action against the Taliban leadership that has taken sanctuary there reflects Islamabad’s worries about the NATO pull-out from Afghanistan. It fears a renewed civil war if they leave without a negotiated political settlement.

“Talks between the Taliban and U.S. officials appeared stalled, yet Pakistan could play a key role by working closely with the U.S. and the European allies on a political solution”

But the gap between Pakistan and the West seems to be narrowing as the 2014 withdrawal deadline approaches. There seems an increasing convergence of views on the need for a peaceful transition in Afghanistan and the opening of the Taliban office in Qatar raised hopes for talks between the Taliban and U.S. officials. The process appeared stalled before it could get off the ground, yet Pakistan could play a key role by working closely with the U.S. and the European allies on a political solution. Islamic militancy and jihadist violence are a cause for concern in Europe too, and many of the terrorist plots there have had links to bases in Pakistan’s tribal territories.

The European Union has provided significant financial support to Pakistan to help develop a more effective counter-terrorism strategy, and has been deeply involved in efforts to strengthen democracy in Pakistan because the battle against militancy and radicalisation is directly linked with a stronger democratic process. Pakistan’s long periods of authoritarian military rule have been a major factor in the rise of religious extremism there. Representative democracy is clearly the only way forward for Pakistan, with continued help from the European Union’s members critical to that.

Commentary

Europe also needs to keep up the pressure on Pakistan to reform

Nawaz Sharif’s government certainly faces daunting domestic and foreign policy challenges. Zahid Hussain is right to say that last May’s landmark elections marked the first transfer of power in Pakistan between two elected civilian governments, and therefore give hope that democracy is finally taking root in this nation of 180m people.

But we should make no mistake about the reality of a country that almost seven decades after independence remains so troubled and fragile.

Sharif’s first few months in power have been even more difficult than expected. Suicide bombings, targeted killings, sectarian violence and bloodshed continue to wreak havoc on the country’s social, political and economic structures. Corruption is rampant and the army and security services continue to exert an unhealthy influence over politics and policy. Relations with India and Afghanistan are as tense as ever.

Yet despite flawed democracy, feudal greed, military misrule and terrorism, the country works because of the resilience and tenacity of its people. The elections provided fresh evidence of the determination of millions of men and women to defy threats of violence, intimidation and centuries-old discrimination to cast their ballots in unprecedented numbers. Many millions of young Pakistanis voted for the first time, and the turnout of women voters was impressive.

The elections were important but people now expect good governance. They want a government that can deliver food, water and electricity. They want a roof over their heads and they want access to proper schools and hospitals. Above all, they want to work. With money in short supply, Pakistan is asking international lenders including the International Monetary Fund for $12bn in financing. For its part, Pakistan’s government must also raise domestic revenues through increased tax collection and a stronger export drive.

Peace with India and constructive engagement with Afghanistan are imperative. The last time he was in office, Sharif tried to make peace with India but was hindered by the uncompromising stance of the army and security services. As Zahid Husain points out, Pakistan will have a crucial role to play in ensuring peace and stability in Afghanistan following ISAF’s withdrawal of foreign troops in 2014.

The U.S. casts a long shadow over Pakistan’s foreign policy, but it is time the EU and Pakistan started exploring new avenues for stronger relations. Once peripheral to the EU’s Asia policy, Pakistan is slowly climbing up the EU’s foreign policy agenda, mainly because of the strong link with security in Afghanistan, connections between tribal areas in Pakistan and Europe’s “home grown” terrorists and U.S. and British insistence that the EU should help stabilise the country.

The EU must move faster to forge stronger and more comprehensive ties with Islamabad, including the convening of a third EU-Pakistan summit to hammer out a new agenda for deeper long-term relations. Pakistan also needs help to boost its exports, to Europe and generally. The EU has already given Pakistan improved market access by introducing autonomous trade preferences following a WTO waiver, and now the hope is that Pakistan will secure access next year to the GSP-Plus scheme for zero-duty, zero-quota exports to the EU. The option of an EU-Pakistan free trade agreement needs to be further explored.

The adoption by EU foreign ministers last year of a so-called “Five-Year Engagement Plan” aimed at boosting civilian institutions and civil society in Pakistan, along with a commitment to start a strategic dialogue with the country, are all positive steps forward. But the EU needs to be more innovative and creative in forging a strategy that looks at Pakistan not just as a developing country, needing traditional development aid, but as a fragile country in transition that needs help to modernise its flagging economy and reinforce its weakened political institutions.

The strengthening of the rule of law and Pakistan’s democratic institutions, with particular focus on institution building, legislative reform and voter participation, has to continue apace, and Pakistan’s army and security services still need counter-terrorism training to tackle the insurgency and fight radicalisation. As part of the reform effort, the EU must keep up its pressure for stronger state protection for Pakistani women and minorities.

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