November 5, 2001	Monday	haba’an 18, 1422

HOW THE US war against terror has petrified Pakistan’s economy has been elaborately discussed in the Annual Report of the State Bank of Pakistan for the year 2001-2, and it is sufficient to spell gloom.

However, ground conditions suggest that the SBP has been cautious in interpreting available information and quite conservative in evaluating it. What we have on our hands is a blue print for a disaster at an advanced stage of implementation. The horizons are darker, far gloomier than the SBP view.

The government, with the commerce minister exuding confidence and the finance minister mixing despair with hope, is banking on debt write offs, effective rescheduling of debts, inflow of substantial, if not massive, aid and at least very soft loans for the bail-out. The script is desire-based.

Pakistan has been inundated with pledges of concrete support and positive policies for promoting exports. One has fallen woefully short of losses suffered by Pakistan due to the war against terror and the other has been negated by cancellation of orders, war insurance expenses, refusal of customers to visit Pakistan because of the conditions created by the US campaign and other factors that have been made inventories by the SPB. Relief is nowhere in the sight.

The commerce minister has talked of a ‘comprehensive package’ by the US; it is being prepared, he recently declared. Such announcements would be taken with a pinch of salt even if Washington makes them from an appropriate level. From Pakistan’s commerce minister, they are not worth, even a second glance. What compelled him to issue a statement that is outside his jurisdiction is incomprehensible, mind-boggling.

Whatever his reasons, the promise he held out on behalf of the US represents a regrettably subservient attitude unmindful of the national interests and in stark contrast of conditions. The present is a time for counting available pennies rather than building castles in the air for a nation that should be confronted with reality instead of raising palpably false hopes.

The US has had more than ample time to come up with solid support for Pakistan because Washington is possibly more conversant with the woes of Islamabad than the national capital.

The Finance Minister can also occupy himself more gainfully by concentrating on the job at hand, that is improving the economy with indigenous means rather than knock at the closed and locked doors for debt write-offs; that can be pursued at diplomatic and other levels in routine. Making it his main task means that he is not available for handling pressing problems crying for a solution. It should be clear to the managers of financial affairs of Pakistan by now that write-offs have to be ruled out. There hasn’t been the slightest of a positive response from the Paris Club; the US has not taken even a tentative step in this direction so far.

The best Pakistan can hope for is some relief in debt servicing but up to now, there is no indication of support on this count either.

Small amounts may be made available on soft to very-soft terms but they are unlikely to make a dent in the size of the losses Pakistan has undergone due to the war and revival of the economy with such loans is forlorn, unreal expectation for a long, long time, pessimistically speaking, not in the foreseeable future. Its impact would not vanish overnight when the war is over and no prediction is to be made about the duration of the US campaign at this stage. Further, all said and done, a loan is a loan and will only add to the existing debt burden.

After the end of the campaign— whenever that happens, a lot would depend on the ensuing political situation. Pakistan’s economy would be backed, or held hostage, in accordance with the ally’s appreciation of Pakistan’s role; they would make assessments from the viewpoint of their targets and not in the context of Pakistan’s needs. Pakistan may be decently rewarded, that is a possibility but not a certainty, if the war ends as per American and western plans but it could be punished if things do not go ideally for them and they feel that Pakistan did not live up to their expectations.

Another factor would be the economy of importing countries. The world economy is currently in recession; war is not the best cure for economic ills, even if the countries waging it have no dearth of resources.

Chances are that even after the campaign has culminated, one hopes it would not continue as endlessly as the agony of Iraq, The world would need some years to emerge from the darkness of recession. That period will weigh very heavy on Pakistan.

The conventional management will just not deliver in the present circumstances that seem set to persist for some years and their shadows will at least not shorten in a hurry. The economy needs to be totally restructured and linked with Pakistan’s relations with the world on the basis of mutual benefit instead of the present dispensation of serving vested interest elements. If the government cannot effectively adopt and strictly follow a nationalistic approach, the economy would not improve.

While the government that took over on October 12, 1999, has not been lacking, like its predecessors, in rhetoric and high-sounding pledges, there is nothing on record to show that it has been able to , indeed that it has sincerely tried to free the country from the stranglehold of feudals, industrialists, and the ‘middlemen’ who force the authorities to order avoidable imports that are often at the cost of local products and produce and ensure fair reward for farmers.

These areas are crying for the government’s attention and intervention. But if the policy of remaining a hostage to vested interests and serving special groups continues, loans would remain unaccounted for. The nose-dive of the economy will not just continue; the slide-down will become quicker, if anything.