THE government of President Pervez Musharraf saw September 2001 as a turning point for the Pakistani economy. The country was poised to launch a medium term programme aimed at achieving two related objectives: accelerating the rate of economic growth and alleviating poverty. It was to be developed and assisted by the International Monetary Fund, the World Bank and the Asian Development Bank. Bilateral donors were also expected to join this effort.

The donor community was anxious to help Pakistan since it was impressed with the progress the government had made in implementing the stabilization programme sponsored by the IMF. There was also a consensus among the donors that the point had been reached in Pakistan when the objective of public policy had to shift from addressing some of the immediate problems that had derailed the economy to dealing with long-term structural issues.

Islamabad had now to focus on growth and alleviating poverty. There was no better instrument available for doing this than the Fund-Bank Poverty Reduction and Growth Facility — the PRGF. The PRGF, as its name implies, was designed to help countries achieve these two objectives. In return for the adoption of public policy directed at growth and poverty alleviation, the Fund and the World Bank were set to provide a significant amount of concessional money.

As Islamabad was getting ready to negotiate access to the PRGF, the terrorists struck New York and Washington and America launched its war against international terrorism. This profoundly changed Pakistan’s economic situation. Once the coalition assembled by the United States began bombing Afghanistan, it became apparent that Pakistan would face a great deal of collateral damage. It also became clear that this time around — as opposed to the conflict in Afghanistan in the ‘eighties — the West was likely to stay involved in the region for some time to come.

It will take a while to account fully for the losses to the Pakistani economy of the war in Afghanistan. This subject is receiving considerable attention not only in the Pakistani press. It is also the subject of fairly incisive reporting being done by the western journalists who are covering the Afghan war from Pakistan. In a report titled “Pakistan’s economy bombed”, The Economist wrote recently of the way the country’s trading partners were evaluating risk. “If you find it necessary to explain to potential buyers that your factory is not, in fact, on the outskirts in Kandahar, you are in trouble.”

This kind of perception about Pakistan’s location right in the centre of the war zone has cost it the cancellation of export orders, a sharp increase in insurance coverage, and a significant increase in freight charges. The finance ministry in Islamabad believes that the cost to the economy in 2000-2001 will be of the order of $2 billion. The Pakistani branch of ABN Amro bank has lowered its forecast of economic growth this fiscal year by up to a full point, to between 2.5 to 3.1 per cent. Pakistan has a legitimate reason for seeking compensation for this loss and my expectation is that its pleas for help will not fall on deaf ears. But this is not the only reason why I think the terrorist attack on the United States has fundamentally changed Pakistan’s economic situation.

In planning for our long-term economic and social development we need to take full cognizance of the changed perception of the West to the threat it faces from the countries in the region to which Pakistan belongs. The debate on the real reason for this threat will go on for a long time but the fact remains that there are hordes of very angry people in this part of the world. Their anger is directed mostly at the regimes in power in these states and at the United States. America attracts the ire of these people because it is seen as a protector of the despised regimes. For this reason it is quite apparent that the West is willing — in fact eager — to engage itself more profoundly in changing this mindset. Nothing will do this more effectively than deep economic, social and political development.

As a candidate, George W. Bush had rejected the idea of American involvement in “nation building” in the developing world. Following September 11, this is precisely what he is setting out to do not just in Afghanistan but in other countries of the region as well. I see a consensus being reached in the policy circles in Washington that treats Central Asia — defined to include Pakistan — as the soft underbelly of the evolving global system. It is believed that it will take a concerted international effort to turn the people of this region from hostility towards the West to become the West’s full partners. This I believe is the real significance for the Pakistani economy of the events of September 11.

Pakistan was enlisted as the front line state in this war — according to President George W. Bush, the first war of the 21st century — soon after the terrorists struck America. In public the Pakistani leadership did not ask for any reward for putting itself in the line of fire of a new and a not very well understood enemy. President Pervez Musharraf and his associates went to great lengths to indicate — I believe correctly — that their participation in the war was not conditioned on any compensation being received from the United States and other western countries.

They were right to emphasize that Pakistan’s participation in the war against international terrorism was not contingent upon its receiving a large amount of external assistance. Pakistan was willing to take an active part for the simple reason that it understood that it had also paid a large price for terrorist activities in the country. This point is worth underscoring. I have the impression reading opinion columns in Pakistan’s more important newspapers that a large segment of the public in the country believes that Pakistan should have been handsomely rewarded for siding with the West.

This impression may have been created by the pronouncements of the stream of senior officials representing several western governments who passed through Islamabad in the days following the terrorists’ attack. Many of them were quite explicit in indicating that stabilizing Pakistan economically was an important component of the war against terrorism and such stabilization would require a large amount of western assistance. That assistance seems slow in materializing and that is creating considerable misgiving in Pakistan. I believe it is wrong to be disheartened. Let me explain.

Let me begin by asking two questions. Why is the West interested in paying for the revival of the Pakistani economy? And, what should Pakistan do to its economy in the aftermath of the terrorist attack on New York and Washington?

It now appears that America and its partners have begun to understand that the near collapse of the Pakistani economy was the consequence of the way the previous conflict in Afghanistan was concluded in the late ‘eighties. The argument advanced in the various interviews given by President Musharraf during his recent visit to New York, London and Paris — and, no doubt, used by him in his private dialogue with the western leaders — runs somewhat as follows.

By quickly walking out of Afghanistan and Pakistan after the Soviet withdrawal from the area in 1989, the West left a number of unaddressed economic, political and social problems in both Afghanistan and Pakistan. This contributed to the eventual emergence of the Taliban in Afghanistan and the progressive failure of the state in Pakistan. The Taliban withdrew behind an ideological wall and the structure they constructed behind that wall was deeply suspicious of everything that was western. This attitude eventually led to the export of terrorism to the West, in particular to America. Pakistan also became an unwitting victim of this body of belief. Its own political and social structures came under the influence of this line of thinking. Many Pakistani analysts, fearful of this development, coined a new word — “talibanization” — to describe what was happening to the country. Therefore in order to create a world free of terrorism, rescuing Pakistan’s economy and society from further deterioration had to be given a high priority.

Having coined the word “talibanization” to describe the rapid drift towards obscurantism, Pakistan should participate in the war against terrorism without seeking a quid pro quo for itself. The expectation — and related to it now the disappointment — that Pakistan’s redesignation as the frontline state in this war would bring in foreign assistance worth billions of dollars gives the unfortunate impression that our airspace, airports and intelligence agencies were available for sale. President Musharraf has correctly emphasized that that was not the case.

It is in our interest not only to be a partner in the world’s on-going campaign against international terrorism. We can also use our presence in this effort to give it the right kind of direction. Before picking up this point, let me ask another question: In what way is the world prepared to help Pakistan?

The donor community has adopted a comprehensive approach to assist the Pakistani economy and getting it to grow again. The donors to Pakistan have pledged to work together to lighten the burden of debt carried by Islamabad. They have agreed to provide new money to Pakistan at the rates on which the country could afford to borrow. And, they have promised to provide preferential access to Pakistani exports in their markets.

All these efforts will provide additional resources to Pakistan that could not have been anticipated before September 11. However, the donors have not said much about the way Pakistan should spend the additional resources it was set to receive other than to indicate that a serious effort had to be made to improve the level of social development in the country.

Pakistan was still working on the details of this economic programme when Kabul fell to the forces of the Northern Alliance. This somewhat unaccepted development created the apprehension in many Pakistani quarters that the country would lose its front-line status once again. Not only that, some people feared that the 63 days of fame — from September 11 to October 23, the day Kabul changed hands — will undoubtedly create some unforeseen problems for Pakistan.

Islamabad had very deliberately gone over to the western side in this new war. Did it have anything to show for this other than a severe blow to the economy? The country and its leaders may have earned the permanent hostility of the forces of radical Islam before they had the time to demonstrate that the alternative model on which they were working held out real hope for the citizens. To counter this reaction, the authorities in Pakistan will have to demonstrate quickly that it was better for the country to be a full participant in the rapidly evolving global economic system. It would be counter-productive if Pakistan continued on the track to which it was being taken by the forces of obscurantism bent upon instituting a social, political and economic order that has no place in today’s world.

IT started as a manhunt for Osama bin Laden (dead or alive) and the smoking out of the al-Qaida. It then expanded to the removal of the Taliban as the ruling party in Afghanistan and escalated into war which included the aerial bombardment (carpet bombing) of Afghan cities and front-line positions of Taliban troops.

Within weeks an operation with limited objectives had become a full scale war, admittedly one-sided for though there are reports of some covert operations on the ground, the bombing was carried out from 30,000 feet, out of range of Taliban anti-aircraft guns. There has been no formal declaration of war, as there wasn’t in Vietnam but that is a technicality.

In the meantime, the Northern Alliance or the United Front as it is now called, which had been stymied for five years appeared to have new life injected in them as a result of the bombing on Taliban front lines, has swept down and taken Kabul along with some other cities. Television pictures show Kabul in a festive mood, as if liberated from an occupation force.

The war may have ended but there is no sign of peace and even the most optimistic among us believe that Afghanistan is in for a protracted civil war and the broad-based government that is being imposed on Afghanistan will be a patch-work solution, a tourniquet to stop the bleeding. Nor are the proud Afghans likely to take kindly to a government that is cobbled together and which, strictly speaking, does not take into account their wishes.

The rivalries between the several tribes and ethnic groups will not just disappear. They are too deeply entrenched and no one has a magic wand to make them disappear. Nor will this broad-based government be free of meddling from foreign powers including its neighbours. Afghanistan is a victim of its geography and its geography cannot be changed nor its neighbours and more importantly, the ambitions of those business interests who see in it the vast, natural resources of Central Asia, the main prize that they devoutly wish to win.

In the coverage of the war against terror, this has not figured prominently, if it has been mentioned at all. To do so would be to demean the high moral purpose of the war. Is there an equivalent of an East India Company waiting in the wings? The oil and gas of Central Asia aside, war is a profitable business. Manufacturers of weapons get rich in the first phase and in the second, others who make fortunes in the re-building of a country that has been destroyed. No matter who loses, Big Business always wins.

But as I wrote last week, we need to look beyond the war on terror and be concerned about what the war was doing to the people waging it and its institutions. George Bush has signed an executive order allowing foreigners suspected of international terrorism to be tried in special military tribunals. The reaction to what appears on the face of it to be draconian is surprisingly mixed.

There is, on the one hand, Alan Brinkley, a historian at Columbia University, who says: “Habeas Corpus is gone, trial by jury is gone. This is one of the most extraordinary assaults on civil liberties, albeit not of citizens, in our history.” Except for the Japanese internment during World War II, he says that the United States has never targeted citizens or non-citizens “in measures that would strip from them virtually all of the constitutional protections.”

Charles Fried of Harvard Law School insists that even if the president has suspended the writ of habeas corpus in the military tribunals, it would be justified. He argues that the Constitution allows Congress to suspend habeas corpus “when in cases of rebellion or invasion, the public safety may require it.”

Clearly, this executive order targets foreigners of Arab or Muslim origin which in the perception of the American public are either terrorists or fellow travellers (to borrow the terminology from the days of McCarthyism). I would very much doubt that a white, anglo-saxon foreigner would be hauled up and kept under detention to await his fate, which could be the death penalty.

This executive order is the outcome of the seething rage that is still being felt after the September 11 attacks on the World Trade Centre and the Pentagon. Intriguingly, it would not apply to the Timothy McVeighs and countless other members of hate-groups, who, in their fashion have declared a sort of war against United States. There is increasing evidence that the anthrax scare is the handiwork of domestic terrorism.

The ‘terrorists’ would be tried, if ever caught, by civilian courts and under due process of law. I don’t think the executive order will deter terrorists who are prepared to lay down their lives, as the hijackers did on September 11. It will, however, make lives of foreigners with Arab or Muslim names, a living hell.

A friend of mine came to see me and told me that his son was thinking of applying to an American University for admission to study business administration and asked me what I thought of it. I got the impression he was asking for political advice. I told him that he may find admission difficult and may not be given a visa easily. But if he gets both, he should definitely go. “But will he be safe?” the anxious parent wanted to know, safe from the law, not the lawless.

I told him that Christianity was a religion of peace and that he should not be intimidated by the actions of some American fundamentalists “though, when I was studying at the University of Southern California, we would call them the lunatic-fringe.” He told me that things had changed since September 11 and all foreigners were suspect. “Not all,” I told him, “some.” His son, unfortunately, would come in the category of foreigners who would be suspect.

WITH the prospect of a new political dispensation in Afghanistan India and Pakistan have stepped up their diplomatic activity to promote a set-up that conforms to their respective interests.

President Musharraf and Prime Minister Vajpayee during their recent tours tried to cultivate influential leaders, notably in the US, where both met President Bush. Their main concern appeared to centre on the likely impact of the changes that are bound to emerge from the massive US intervention in Afghanistan.

The US has exercised the full force of its outrage over the terrorist attacks of September 11 to pulverize the Taliban regime in Afghanistan which had provided shelter to Osama bin Laden, the head of the Al Qaeda organization that is held responsible for the terrorist attack. While Osama himself is proving elusive, there is a totally new situation in Afghanistan which is at the point of transition from control by the Taliban to a new order. This carries both challenges and opportunities for the countries of the region in general, and Pakistan and India in particular.

The past five years witnessed an unstable situation in Afghanistan because though the Taliban had established their control over 90 per cent of the country, they lacked international acceptance. The Northern Alliance headed by Prof. Burhanuddin Rabbani enjoyed formal recognition of the international community, and occupied the seat of Afghanistan in the UN. The powers that sustained the Northern Alliance during its lean years were Russia, Iran, and India. Owing to its recognition of the Taliban regime, the leadership of the Northern Alliance harboured a hostile attitude towards Pakistan.

Events have taken a dramatic turn since September 11, and Pakistan took a major step by joining the global anti-terrorist alliance, virtually facilitating the elimination of the Taliban regime by extending critical assistance which it was uniquely placed by its geographical position to provide. The rapid success achieved in these operations cleared the way for the Northern Alliance forces to occupy Kabul.

Initially, President Bush had agreed with President Musharraf, during the latter’s visit to the US, that the Northern Alliance should not enter Kabul, following the precipitate withdrawal of the Taliban. However, the forces of the Alliance did not stop short, justifying their entry on the ground that the withdrawal of the Taliban had left a vacuum in the capital city.

Professor Rabbani, who still claims to be president, also moved into Kabul despite earlier indications that the US wanted him not to do so. Thus the Northern Alliance has been placed in an advantageous position to have a major say in the future political orientation of Afghanistan. The initial rhetoric of its leaders, after their entry into Kabul, was quite hostile towards Pakistan.

Despite its current advantage as the party in possession, the Northern Alliance is a congeries of disparate fragments that are already showing fissures in their so-called “United Front”. The Tajik faction headed by General Fahim is in control in Kabul. Gen. Rashid Dostum, the Uzbek warlord, has assumed control of Mazar-i-Sharif, while Gen. Ismail Khan, former Governor of Herat, has taken possession of that city.

Prof. Abdul Rasul Sayyaf is the only Pakhtoon leader in the Northern Alliance who has established his power in Ningarhar province, placing Abdul Qadeer Khan in charge. He is a brother of the ill-fated commander Abdul Haq, who had sought to mobilize some Pakhtoon tribal elders on behalf of an Afghan Shoora that met at Peshawar in late October but was captured and executed by the Taliban. Other Pakhtoon warlords have risen in the tribal belt along Pakistan’s border with Afghanistan.

The existing situation in Afghanistan is both fluid and unpredictable. There is a serious danger that the instability might persist unless the international community takes concerted and resolute action. The UN has been placed incharge, though the US retains a decisive hold over its involvement.

Security Council Resolution 1378 stipulates that an interim government should be formed through consultations among the representatives of major ethnic groups from all parts of the country, which would run the country for a period of up to two years. The UN has arranged a meeting of representatives of major Afghan groups in Germany, on November 27 to help create such an interim set-up.

The UN would also oversee arrangements for the establishment of a democratically elected government at the end of the interim period. The actual control over the ground situation remains vested in the command of the anti-terrorist coalition, which is dominated by the US, with its European allies providing support. After all, the war is not over. Two major tasks remain: elimination of the Taliban from the areas remaining under their control, and the capture of Osama bin Laden, along with whatever remnants of the Al Qaeda network are still around him.

Though the Northern Alliance has not claimed formal authority, its main backers, Russia, Iran and India have moved post-haste to establish a presence in the Afghan capital. An Indian diplomatic mission has reached Kabul, to start the process of reopening the embassy that was closed down in 1996. There should be little doubt that the Indian game plan is to help promote an administration in Kabul that would be hostile to Pakistan. India had extended both financial and military assistance to the Northern Alliance over the period it was confined to a small corner of Afghanistan.

Apart from capitalizing on this factor, India has also been trying to exploit the anti-terrorist orientation of the global coalition to discredit Pakistan. The leadership of the BJP government has been vociferously demanding that the action initiated against the Taliban should be extended to Pakistan, which, they maintain, nurtured the Taliban, and remains the main base of “cross-border terrorism” in Kashmir.

The new US Ambassador in India, Mr. Robert Blackwill sought initially to score with the government by giving assurances that the turn of terrorist organizations in Pakistan will come, once the war against the Taliban is won. Pakistan, on its part, sought to make a distinction between terrorism and the freedom struggle of the people of Kashmir.

There exist legitimate concerns in Pakistan as to how the emer