The vice president of a leading United States technology think-tank Daniel Castro said on Thursday that internet restrictions in Pakistan might provide short-term political power but it can cause long-term economic instability due to significant costs associated with these shutdowns.
Castro called the internet restrictions in Pakistan a “puzzle” and “an anomaly” in the middle of the digitalization drive, which also carries huge economic costs, including the risks of its citizens and businesses leaving Pakistan.
Castro, the vice president of the Information Technology and Innovation Foundation (ITIF) spoke to a select group of journalists during a conversation organized by the United States Embassy in Pakistan.
The US’s logistic support for the talk underscores the importance that it now attaches to internet freedom in Pakistan.
“We recognize country sovereignty. But what countries have to decide is basically what their goal is going to be and whether are they putting short-term interests ahead of long-term interests.
“Most of the arguments for shutdowns are that it is good for political stability or maybe political power in the short term. And my argument would be that economic stability that you would get from not having shutdowns outweighs any short-term benefits,” said Castro.
He said there has to be certain red lines. Just like you wouldn’t want to shut down all the rooms or all the ports of entry if there was some kind of harmful content coming in or harmful products coming in.
Castro’s remarks came against the background of internet censorship in Pakistan including the banning of X, formerly Twitter, and rolling out social media firewalls that are aimed at disrupting and controlling normal access to different social media mediums.
Castro said one of the reasons he got very interested in what was happening right now with Pakistan and some of the internet shutdowns is because he thought there was “this puzzle in the sense that Pakistan is a leading digital economy”.
There are also concerns about the adverse implications of internet censorship on women who make up half of Pakistan – and are facing restrictions and adverse impacts on their small businesses.
“When Twitter is taken down, that actually hugely impacts her source of revenue because it impacts where she’s actually getting her clients. And so I think that part of the message is also sometimes lost, that people might say, well, we are not shutting down the Internet”.
He said Twitter is a commercial activity and that has a huge impact as well.
Castro argued that most of the countries that are leading digital economies are thinking about how they build more digital infrastructure and trying to make sure that people are connected.
“It is almost this anomaly here to see a more advanced digital economy doing that attack basically to itself, taking people offline.
“The reason it is such an anomaly is because we know that internet shutdowns, whether it’s hours, minutes, and days, are impacting specific services and have a significant economic cost,” he added.
He said there have been numerous studies that show that connectivity, broadband, and wireless connectivity lead to economic growth, lead to improvements in terms of trade, lead to higher wages, and better-paying jobs.
He argued that trade and digital services are one of Pakistan’s leading areas. Castro said his interactions with Pakistanis suggested that the internet restrictions were impacting the freelancers and online workers in Pakistan.
The freelancers can get paid global rates but “the problem is you cannot get paid those global rates if you cannot get onto your Zoom meeting”.
He said when one is not able to deliver to the client because he is kicked offline, or has slow Internet connections because of some of the shutdowns that not necessarily cut people off entirely but slows their speed down.
Castro said during his interaction with students of the universities in Lahore, it emerged that they were worried about the impact of internet restrictions.
“They have to ask, where do I go next? Do I stay in Pakistan and help build the next generation of products and services, future startups that can scale and deliver massive value or do I leave the country because I can’t do this here because of various barriers that might hold it back?”
Castro said people in Pakistan recognize that artificial intelligence is going to have a massive impact on the economy and society, and companies are trying to scale up quickly. These companies are looking for talent and talent hubs.
He said some global companies are turning away from Europe due to regulatory policy issues.
“These companies are looking at the rest of the world and other places to invest, things like not having connectivity, that’s a factor that will impact where they invest, and that could have just a tremendous impact in terms of if Pakistan basically wins as this could be a hub of AI innovation for some of these multinationals, or it could not be, and some of these policies I think have these big impacts.”
He said social media platforms like WhatsApp, Facebook, Twitter, and YouTube are not just for entertainment or socialization, they are core parts of many businesses, especially small enterprises.
To a question about the exact economic impact of internet restrictions in Pakistan, Castro said he did not have a specific number on the economic cost but “usually it’s millions of dollars per day of economic activity that’s lost when you’re talking about wholesale on the internet”.
He said the impact is significant because we do know that most users spend a significant amount of time on social media. And X is a major social media platform.
Castro said there are direct effects, and then there are indirect effects, which are harder to quantify but often might be even larger than the direct effects. So the indirect effects are things like a decision not to invest in a particular country because of the concerns about the shutdowns.
There is also an economic impact on account of the amount of Virtual Private Network (VPN) subscriptions, which has shot up.
“When someone’s willing to spend $100 or $20 a month or however much they’re spending, that shows that whatever value they’re getting out is higher than that. So whoever’s being blocked, that’s how much loss they’re showing up there for them,” he added.
Interestingly, PPP Chairman Bilawal Bhutto has also expressed his reservations about the internet slowdown.
He said the PML-N-led coalition government did not consult his party before deciding on an internet slowdown. “The country has 4G services but the internet is working at a speed reminiscent of the internet from 1990s,” he reportedly said.
