Global Politics Quarterly Review

CWA # 1797
Global Politics Quarterly Review
Pakistan: Cholistan Canal Dispute, Militant Violence & Power Sector Crisis
A review of major developments in the second quarter (April-June 2025)

Abhimanyu Solanki
20 August 2025
Photo Source: Dawn

In Pakistan, several notable developments have occurred in the second quarter of 2025 in areas of politics, security, economy, and society, highlighting the country’s ongoing struggle to address numerous challenges and issues. The federal government has released the economic survey 2024-2025 and presented the federal budget for the 2025-2026 fiscal year amid mounting fiscal pressure and economic stagnation. Also, Islamabad has been actively engaging with South Asian countries, along with deepening ties with China. 

Four key developments are notable in the country’s landscape: First, the Army-backed Cholistan canal project in Punjab, which has provoked  discord between Sindh and Punjab provinces, resulting in intense confrontations in several districts. Second, Pakistan's efforts to improve bilateral relations with Bangladesh and Afghanistan. . Third, a substantial decrease in militant attacks was reported in the country, particularly in Balochistan and Khyber Pakhtunkhwa, in the second quarter. However, the overall security situation remained precarious, and several people have lost their lives, reflecting a state of instability in several parts of the country. Fourth, the federal government has directed its focus towards its power sector, which is facing debt issues. For that, the government has planned institutional reforms to eliminate the PKR 1.2 trillion circular debt through measures like privatization of loss-making entities, providing low-interest loans, etc., to restore financial stability, crucial for the power sector.
 
Politics: Cholistan canal dispute and federal response
Pakistan is at a critical juncture where water stress, climate change challenges, and food insecurity is rigorously impacting the country's agriculture-driven economy. A major inter-provincial dispute erupted in April over the Cholistan Canal Project. As part of the Green Pakistan Initiative, a joint effort of the government and the Army, the Cholistan Canal Project was launched by Punjab Chief Minister Mariam Sharif along with the Chief of Army Staff, Asim Munir. The project aims to provide irrigation through a canal to the Cholistan Desert, which lies in the southern part of Punjab province, so that agricultural output can be increased in the province. The Cholistan Canal Project aims to irrigate a total of 4.8 million acres of barren land by constructing six canals—two each in Sindh, Balochistan, and Punjab.

However, the plan provoked resistance from Sindh Province.  The provincial government in Sindh expressed its unhappiness with the project as  the water availability data measured from the river which was used to justify the project, was based on flood time flows  and neglects the chronic low level of water flow in the Indus River at normal times. The project report also ignores the fact that from 1999 to 2024, two main structures in the Indus Basin, the Torbela dam, has only reached full capacity for 17 days, while the Mangla dam has filled up for merely four days in the last 25 years. Hence, it will be disastrous to divert the river’s water flow..

Sindh CM Murad Ali Shah warned, “The canal will not be built as long as the PPP exists”. Simultaneously, the Sindh High Court issued a stay on Indus River System Authority’s (IRSA) water availability certificate for the Cholistan Canal Project. WWF-Pakistan also expressed grave reservations over the project. The project ignited public dissent and clashes in Sindh, leading to tensions between the Punjab and Sindh provinces. Civil society members, including lawyers, students, farmers, laborers, and political representatives, have expressed concerns over what they perceive as unequal water distribution that could adversely affect the Indus River and its dependent communities. Its potential impact on Sindh’s shrinking delta, due to sea intrusion driven by reduced ecological flows, is the main concern of the people living in Sindh . Eventually, on 2 May 2025, Prime Minister Shehbaz Sharif announced the decision to withdraw the canal project following a decision made in the Council of Common Interests (CCI) meeting.

External Affairs: Strategic Trilateral Engagements
Pakistan participated in regional diplomatic engagements with two back-to-back trilateral dialogues facilitated by China. The  trilateral foreign affairs meetings in China have become vital in strengthening ties with Afghanistan and Bangladesh, although China’s influence remains significant. These meetings reflect a subtle yet strategic shift in South Asia’s geopolitical landscape.

A trilateral meeting between Pakistan, Afghanistan, and China was held in Beijing. All three countries agreed to expand the CPEC project to Afghanistan. It was also decided that the sixth Trilateral Foreign Ministers’ Meeting would be held in Kabul at an early, mutually convenient date. It proves to be a vital step in Pakistan’s foreign affairs to improve relations with Afghanistan. Another trilateral meeting was held between Pakistan, Bangladesh, and China. The three sides agreed that cooperation would progress with the principles of openness, inclusivity, mutual respect, and trust. They also decided to set up a joint working group to carry forward the points agreed upon in the meeting. With China’s role, the trilateral format creates an opportunity to ease tensions between Pakistan and Bangladesh through political and economic cooperation. It also allows Pakistan to adjust to regional shifts, particularly against India’s growing partnerships. Alongside these talks, Pakistan joined the fifth Pakistan–China Maritime Dialogue in Beijing, which focused on naval cooperation, maritime security in the Arabian Sea, and the protection of CPEC sea lanes. The discussions showed both sides’ concerns about regional maritime challenges and highlighted China’s continued interest in Pakistan’s coastline under the Belt and Road Initiative. 

Yet, despite these diplomatic achievements, the situation on the ground remains more complicated. China has agreed to railway projects in Afghanistan in the past, too, but no progress has been made so far. And ongoing Chinese projects in Afghanistan are also being targeted by Islamic State Khorasan Province (ISKP) fighters, like in the Longan Hotel attack, where ISKP claims responsibility with a “anti-communist stance,” highlighting a continuous threat to Chinese investments in Afghanistan. The UN 2024 report also states that 6000 ISKP fighters remain active in different parts of Afghanistan. Also, border issues between Pakistan and Afghanistan are regularly leading to casualties on both sides, impacting bilateral engagement.

Security: Militancy and Infrastructure Targeting
Throughout the second quarter, the country experienced hundreds of militant attacks, resulting in major fatalities, including civilians and security personnel.The Pakistan Institute for Conflict and Security Studies (PICSS) security report provided  data showcasing a slight decline in militant attacks. The majority of attacks took place in Balochistan and Khyber Pakhtunkhwa provinces. Railways and gas pipelines became new targets, with the use of remote-controlled IED blasts.. Militancy has also impeded the region’s economic progress by decreasing investment and halting development projects.

Harsh measures taken by the government, relying on aggressive operations by the security forces, provide more impetus to militants. In the case of Balochistan, the current insurgency was catalyzed by then-President General Pervez Musharraf’s unilateral decision to construct Gwadar Port, bypassing constitutional structures including the National Assembly, Council of Common Interest, and the Balochistan Provincial government. The province has also been subjected to resource extraction, yet locals and the provincial government receive minimal benefits or returns, despite the fact that mining and energy extraction are constitutionally designated as a provincial and not a federal subject. Militancy, coupled with inadequate benefit sharing, continues to remain a long-term issue.

Economy: Power Sector Reforms
Pakistan’s power sector distress constitutes a protracted structural challenge that poses a major threat to the country’s energy security and economy. Massive circular debt, electricity theft and losses, and inefficient distribution remain critical challenges. In the second quarter, the central government  decided to undertake structural reforms, and the recent budget includes a plan to gradually eliminate PKR 1.2 trillion in circular debt over the next five years, with the objective of restoring financial stability. This budget for the upcoming fiscal year 2025-2026 sets out major plans, including the privatization of loss-making state-owned companies and a circular debt management plan for the Power sector.

Additionally, Pakistan’s macroeconomic outlook drew international attention during the quarter, reflecting fiscal consolidation goals and sectoral reforms. The United Nations projected Pakistan’s GDP to grow at 2.3 per cent in FY25, while the Economic Survey of Pakistan forecasted a slightly higher growth rate of 2.7 per cent, citing partial recovery in services and agriculture sector. However, industrial stagnation continues to constrain economic momentum.

Power sector crisis started to shape in the mid-2000s, under the Shaukat Aziz era, when focus was shifted to fossil fuel-based generation. In the 2010s, CPEC proved to be a major factor in power sector debt growth, where dozens of coal plants were built with the condition that Pakistan was obliged to pay fixed costs regardless of use. Also, the Chinese-built coal plants use imported coal rather than coal produced in Pakistan due to logistics and quality issues. Pakistan’s energy sector, despite an installed generation capacity of 46,605 megawatts, generated only 90,145 gigawatt-hours during the fiscal year, reflecting an average utilization of just 10,290 megawatts. This mismatch indicates broader economic stagnation. In FY25, Pakistan’s real GDP grew by just 2.68 per cent, driven mainly by services, while large-scale manufacturing, one of the largest consumers of electricity, contracted, and agriculture grew by only 0.56 per cent. With subdued industrial performance, electricity demand remains weak, rendering existing capacity investments fiscally unsustainable.

Conclusion
Overall, these developments in the second quarter of 2025 shows that Pakistan needs a more robust mechanism for inter provincial water disputes and a change is strategy to work on militant affected areas. The state has done well in terms of engaging diplomatically with South Asian countries like Bangladesh and Afghanistan and in case of economy, prioritizing fiscal reforms in several sectors, still evaluation of the progress will remain crucial. Despite a reported decline in militant attacks as per reports, the casualties remain high, and state cohesion is tested further by inter-provincial disputes during the Cholistan Canal issue amid rising climate change and water scarcity challenges. The proposed power sector reforms targeting the elimination of circular debt by 2026 seem ambitious and, if successfully implemented, could help restore macroeconomic balance, pushing towards economic stability in the country. However, for diplomacy to convert into balanced benefits and for reforms to be effective with fruitful results, stability at home is essential.

CHRONOLOGY
Pakistan in the Second Quarter: Major Developments
03 April: PICSS published a report stating militant attacks increased to 85 in May 2025. PICSS recorded 85 attacks in May compared to 81 in April, resulting in 113 fatalities. 

04 April: Sindh CM, in his statement to the media, said, “The canal will not be built as long as the PPP exists.” In response, Punjab Information Minister Azma Bokhari rebuked the PPP, stating that the party should not air its internal disputes in the media. 

07 April: Sindh High Court issued a stay on IRSA’s water availability certificate for the Cholistan Canal Project. WWF-Pakistan also expressed grave reservations over the project.

08 April: Karachi Bar Association President was attacked amid opposition to canals project

15 April: The Fifth Pakistan-China Maritime Dialogue was held in Beijing

19 April: Several thousand people, mainly lawyers, travelled to Babarloi town in Khairpur district from across Sindh in response to the Karachi Bar Association’s call for an indefinite sit-in against the federal government’s controversial canal project.

26 April: Three personnel of the Balochistan Constabulary (BC) were martyred and 20 others sustained injuries in a bomb attack targeting a police bus on Dasht Road in Mastung district, approximately 35km south of Quetta

29 April:  Power sector’s circular debt had reached Rs2.396 trillion at the end of the first three quarters (July-March) of the fiscal year 2024–25.

02 May: Prime Minister announced the decision to withdraw the Cholistan Canal Project following a decision made in the CCI meeting.

17 May: UN projects 2.3 per cent GDP growth in FY 2025.

21 May: A trilateral meeting of the foreign ministers of Pakistan, Afghanistan, and China was held in Beijing. 

21 May: Six people, including three students, lost their lives and over 40 others, mostly students, sustained injuries after a bomb targeted a school bus in Khuzdar.

09 June: The Economic Survey 2024-2025 was published.

10 June: Finance Minister Aurangzeb introduced a PKR 17.6 trillion Federal Budget 2025-2026.

19 June: A remotely controlled explosive device fitted to railway tracks caused four bogies of the Jaffar Express to derail in Jacobabad. 

19 June: Terrorists targeted the main gas pipeline of the Bettani Gas Field in Lakki Marwat district. 

21 June: The inaugural Trilateral Foreign Ministers’ Meeting of Bangladesh-China-Pakistan was held in Kunming, Yunnan province of China. 

23 June: Pakistan’s energy sector, despite an installed generation capacity of 46,605 megawatts, generated only 90,145 gigawatt-hours during the fiscal year, reflecting an average utilization of just 10,290 megawatts. 

References
1.    Dawn. (2025, February 15). Maryam, Gen Munir launch canal project in Cholistan. https://www.dawn.com/news/1903565
2.    The Nation. (2025, April 4). PPP, PML-N leaders clash over Cholistan Canal Project. https://www.nation.com.pk/04-Apr-2025/ppp-pml-n-leaders-clash-over-cholistan-canal-project
3.    The Express Tribune. (2025, April 4). Sindh CM threatens force to halt canal project. https://tribune.com.pk/story/2537201/sindh-cm-threatens-force-to-halt-canal-project
4.    Pakistan Today. (2025, April 7). Sindh High Court stays IRSA’s certificate for Cholistan Canal project. 
5.    WWF-Pakistan. (2025, April). WWF-Pakistan expresses serious concerns over the Cholistan Canals Project. https://www.wwfpak.org/?391256/WWF-Pakistan-expresses-serious-concerns-over-the-Cholistan-Canals-Project
6.    Dawn. (2025, April 10). Sindh HC stays IRSA certificate on canal project. https://www.dawn.com/latest-news/2025-04-10/
7.    Dawn. (2025, April 19). Lawyers converge on Khairpur town for sit-in against canals. https://www.dawn.com/news/1907289
8.    The Diplomat. (2025, April). Pakistan’s government backs down after Sindh province wracked by anti-canal protests. https://thediplomat.com/2025/04/pakistans-government-backs-down-after-sindh-province-wracked-by-anti-canal-protests/
9.    PICSS. (2025, April). Notable increase in militant attacks in Pakistan: PICSS weekly report. https://www.picss.net/featured/notable-increase-in-militant-attacks-in-pakistan-picss-weekly-report/
10.    Dawn. (2025, April 26). Mastung bombing: 3 Balochistan Constabulary personnel martyred. https://www.dawn.com/news/1892222
11.    The News. (2025, May 2). Govt agrees to halt construction of Cholistan Canals till consensus in CCI. https://www.thenews.com.pk/latest/1304737-govt-agrees-to-halt-construction-of-cholistan-canals-till-consensus-in-cci
12.    The Express Tribune. (2025, May 3). Scrapping of canals project 'landmark victory' of Sindh. https://tribune.com.pk/story/2543127/scrapping-of-canals-project-landmark-victory-of-sindh
13.    Gulf News. (2025, May 21). School bus bombed in Khuzdar; 6 dead
14.    Ministry of Foreign Affairs, Pakistan. (2025, May 21). Trilateral meeting between the Foreign Ministers of Pakistan, China, and Afghanistan. https://mofa.gov.pk/press-releases/trilateral-meeting-between-the-foreign-ministers-of-pakistan-china-and-afghanistan
15.    Ministry of Foreign Affairs, Pakistan. (2025, June 21). Inaugural meeting of Bangladesh-China-Pakistan trilateral mechanism. https://mofa.gov.pk/press-releases/inaugural-meeting-of-bangladesh-china-pakistan-trilateral-mechanism
16.    Dawn. (2025, June 21). PM scraps canal project after CCI decision. https://www.dawn.com/news/1918785
17.    Dawn. (2025, June 23). Pakistan’s energy paradox amid rising debt. https://www.dawn.com/news/1912542
18.    Dawn. (2025, June 29). Power sector’s circular debt reaches Rs2.396tr. 
19.    Dawn. (2025, June 19). Explosion derails Jaffar Express in Jacobabad. https://www.dawn.com/news/1912542
20.    The Express Tribune. (2025, June 19). Gas pipeline targeted in Lakki Marwat. 

About the Author
Abhimanyu Solanki is a postgraduate student at the University of Delhi. 


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2022: The World This Year
December 2022 | CWA # 879

Padmashree Anandhan

The Ukraine War
Europe: Heatwaves, Wildfires, Droughts, and Ice Melt in Alps
November 2022 | CWA # 838

Rishma Banerjee

Tracing Europe's droughts
NIAS Africa Weekly
March 2022 | CWA # 705

NIAS Africa Team

In Focus: Libya
The World This Week: 150th Issue
December 2021 | CWA # 630

GP Team

Europe in 2021
Pakistan Reader
October 2021 | CWA # 588

Abigail Miriam Fernandez

TLP is back again
NIAS Fortnightly on Science, Technology & International Relations
August 2021 | CWA # 528

STIR Team

Space Tourism
Science, Technology and International Relations
September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 71

Mahesh Bhatta

Nepal
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 70

Nasima Khatoon

The Maldives
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 69

Harini Madhusudan

India
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 68

Sourina Bej

Bangladesh
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer

Afghanistan