October 15, 2001	Monday	Rajab 27, 1422

IN AN effort to revitalize the economy, President Musharraf, on August 14, announced the plans to construct 20 mega projects. An earth-shaking tragedy shook the entire world on September 11.

To avenge the attacks on the WTC and the Pentagon, the US has launched attacks on Afghanistan under the pretext of putting an end to world terrorism. Will America be able to wrap up this war in a few days remains to be seen. Whether it is a short and sharp affair, or a long drawn out duel, one thing is quite clear; there would be unease and turbulence in Afghanistan for a long time and Pakistan is the only country in the world which will be deeply affected. Even before the Afghan war, the economic conditions were pretty bad for the country. But this crisis has started to make them worse. Pakistan’s exports are already projected to decline by about $1 billion. A shortfall of about Rs60 billion, in the projected revenue collection of Rs440 billion, is being forecast. Export orders being cancelled. Multinationals are either winding up or are limiting their operations. These are enough indications of negative developments.

The USA, the UK, Canada among others are trying to ease things for Pakistan by adopting a helpful policy in economic matters. In the prevailing atmosphere of uncertainty, it is impossible to make any guesses about the exact size of losses or gains. But chances are that at the end of the day Pakistan will be financially and economically wrecked. The effect of the war will be dangerously negative for the economy, including the mega-projects. The government would be able to pay attention to them only when it comes out of the present state of shock and stupor.

The tripod: These mega projects are of two kinds — one whose benefits are restricted to their location and the other which have an impact on a wider area. In the second category fall three projects: the Gawadar Port, the Mekran Coastal Highway (MCH) and the Mirani Dam.

Gawadar Port will be the second gateway to Pakistan located on the western extreme. It will be linked to the rest of the country primarily through the MCH, connecting it first to Karachi. The Mirani Dam, situated about 30-40km, will provide water to Gawadar. A symbiotic nexus will bind these three with each providing life-sustaining nourishment to the other. The tripod will survive as one entity.

CARs and western China: Its significance lies in harmony with the huge economic potential of the CARs and the western China. The Central Asian Republics are all rich in oil and gas and are landlocked countries, while western China is an extremely underdeveloped area. China is planning to spend more than $200 billion on this area during the next five years. The most important city is Kashgar which is 3500km from Gawadar. China having big economic interest is helping build Gawadar from where it will be able to route its imports. It has promised more than $1 billion loan and is keen on assisting Pakistan in building other roads to acquire a convenient road link between Kashgar and Gawadar. Pakistan will have an access to the CARs. Besides, trade with the Gulf through Gawadar can be considerably expanded. The completion of these projects will give a big boost to the road transport industry. The government needs to encourage the local enterprise.

China has also taken over copper & gold Saindak project. An Australian company has acquired mining license of copper for Rekodek near Saindak. Big deposits of iron ore have been recently discovered in Balochistan. Billions of tons of mineral deposits lie locked away in the mountains, waiting to be mined. Mekran is rich in dates, fruits and fish. Development of the coastal highway and other roads can give a big boost to the export of these food items as well as their transportation within the country. The Mekran coastal area, including Gawadar has beautiful beaches. If proper attention is paid Gawadar can become another Dubai. Without doubt, it is the most important project. With 21 terminals, oil terminals and cargo terminals, Gawadar will have the same capacity as Karachi. A free trade area and export processing zone are also proposed to be built.

The worldwide recession, coupled with the debilitating effects of war are most likely to create a liquidity crunch with defence expenditure likely to go up and revenues to fall. The overall impact may somewhat be off-set by the lifting of sanctions and easing of conditionalities but the net result will not be favourable. In the given circumstances, government must reshuffle its priorities by giving importance to the following considerations.

1. A sharp line of demarcation must be drawn in the mega projects. The tripod, due to its importance must have preference over other projects.

2. The government must ensure that these are completed within the stipulated time. It is only hoped that this time round, it is going to be different and the hope generated by the announcement of these projects will be called through to the end. The tempo will not be allowed to fizzle out.

3. In case of the probable increase in the cost of the Saindak project, as it was abandoned after making huge investment, one hopes someone concerned would come forward and give the figure of loss suffered on this account.

4. The interest of China in Pakistan, more particularly in Gawadar may waver. This may appear as a far-fetched hypothesis, however it must be remembered that the world politics is like a kaleidoscope. The present alignments may bring about changes and if funding by China ceases it will be quite unlikely to complete Gawadar. A great opportunity for economic development may be lost.

The economic fall out of the Afghan War is a great threat to the completion of the mega projects. The government should review the priorities in the light of changed ground realities. Completion of all projects within 3 to 5 years may not be possible any longer. The government would be well advised to choose the projects of Gawadar, the MCH and Mirani Dam which should be given first preference by spending, on them, 90 per cent of the resources with reducing the period of completion if it is technically feasible.

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