‘Miraculous results can be achieved by practising the methods of subversion.’— Chanakya

WITH the application of Chanakya’s prescription to its regional neighbours in South Asia, India annexed Sikkim; fuelled a coup d’etat in Maldives; subdued Bhutan; terrorized Nepal; masterminded insurgency in Sri Lanka and converted East Pakistan into Bangladesh. India’s South Asian foreign policy aims at achieving total security for itself and total submission by its immediate regional neighbours to the dictates of New Delhi.’ Its arrogance of ‘I say — you obey’ keeps durable peace away from South Asia.

India wishes to settle four scores with Pakistan; one, prolonged Muslim rule in India (when Pakistan was not even created); two, emergence of Pakistan on the debris of Akhand Bharat; three, Pakistan’s support to the people in the disputed state of Jammu and Kashmir in their struggle to get their right of self-determination granted to them; and four, Pakistan resisting India’s regional hegemonic attempts.

India and Pakistan gained independence through a constitutional, legal and political process in which all major political parties in India unanimously decided to establish two independent dominions to replace the British colonial rule. To the misfortune of India and Pakistan, these two countries did not part as friends from united India to live as good neighbours thereafter. Instead, they became antagonists and have constantly lived since 1947 in a state of conflict, turmoil, unrest or no-peace no-war.

The Kashmir dispute, dominating the political landscape of South Asia since 1947, largely dictates the foreign policies of India and Pakistan and hardens their bilateral attitudes and relations. India now feels that being the largest regional country it can ignore the UN Security Council resolutions on Kashmir and annex this disputed state in due course of time with the superiority of military forces at its command. As many as 70,000 Kashmiris have died resisting India’s expansionist and aggressive designs. Public resistance continues and Kashmiris are alienated from India.

India exerts intense pressure on Pakistan to change its Kashmir policy. It launches media and diplomatic blitzkrieg against the indigenous freedom struggle in Kashmir and against Pakistan to cover up its own massive human rights abuses in the occupied territory. The September 11 tragedy in the US and the war against terrorism initiated by America since then gave India a chance to swim with the flow of international public opinion and intensify its efforts to paint Kashmiri freedom fighters in murky colours of its own choice.

India cries ‘wolf’ to fool the world that it is a victim of terror. The real victims of state-sponsored terrorism are the people of Kashmir who have sacrificed so much for so long to throw away the yoke of India’s occupation forces from their shoulders. India permits neither to locate UN observers on the LoC nor allows neutral media teams to operate within the disputed state of Kashmir, obviously because it has a lot to hide.

British prime minister Tony Blair told Indian audience recently that Pakistan has a ‘very strong position’ on (disputed) Kashmir. The Indian argument that the Kashmir dispute should be settled bilaterally between India and Pakistan defies logic and international law. India itself violates the principle of the so-called bilateralism when it requests various countries through diplomatic and military channels to exert pressure on Pakistan to modify its Kashmir policy. The existing military stand-off on the borders followed such a diplomatic offensive. India’s policy of heads I win, tails you lose — a naked display of power — cannot be the norm of international behaviour.

No country is permitted to accept or reject UN resolutions selectively. True, the UN has a resolution on terrorism that India tries to exploit in the present scenario. But, it is equally true that the UN has not yet defined ‘terrorism.’ India is uneasy with an additional truth. Nehru accepted the UN resolution and repeatedly made solemn and unequivocal commitment to hold a plebiscite in Kashmir. India now reneges from this undertaking.

During the Kargil crisis the US and India pressured Pakistan ad nauseam about the ‘sanctity’ of the Line of Control and the impropriety of violating it. President Clinton was so fascinated by this word that he played a decisive role in converting India’s military failure into a political success. Whether or not the LoC in Kashmir has any sanctity is not the burden of this piece.

Suffice to say that after the mobilization and deployment of Indian military forces India’s ministers and the army chief have threatened to engage targets across the LoC is ‘sanctity’ of the LoC a one-way traffic, one may ask? The responsibility of the consequences that will inevitably follow will rest with India if it commits the blunder of flexing it military muscles across the LoC.

Military conflicts, threats of war, repression on people and acts of blackmail can neither settle the Kashmir dispute nor create durable peace in South Asia. It is wishful for India to think that it can annex the disputed state of Kashmir with the use of force. Military power can seize some territory but it cannot conquer the hearts of the people. If not now, another generation of the people of Kashmir shall ensure that the blood of 70,000 martyrs is not wasted. Kashmir shall simmer and so shall South Asia if this dispute is not peacefully settled. Should this happen both India and Pakistan will suffer because their economic potential will largely remain exploited. The victims will be the people of this region who will continue to subsist in poverty and backwardness.

Kashmir is a political dispute that needs a political settlement. Military action failed to settle it in the past. It will fail again in the future. Some paper tigers in India are advocating a short, limited and aggressive offensive in a strategically sensitive area to put Pakistan on the defensive. Such mavericks need sympathy and a prolonged sobering stay in Kalapani. Good vision, political sagacity and prudence demand India and Pakistan not to play with fire that can destroy them both. Let there be no doubt on this issue. Both these countries possess military deterrent capability. They do not need any advice that such a capability is more effective when not used.

India foresees for itself a greater role in regional and world affairs. Its efforts will remain frustrated so long as it has subnormal relations with its neighbours in South Asia. Indira Doctrine and Gujral Doctrine are instruments of coercion, blackmail and hegemony. No self-respecting country will accept them. India is a large country. Pakistan should have no objection if India wishes to play a positive and constructive role in the region and beyond on the basis of sovereign equality of states.

The route to India’s goal of getting a greater share in the global power cake passes through Pakistan highway. But it can use this highway only if it sheds the prejudices of the past, creates durable peace in South Asia and demonstrates the vision of establishing friendship with its immediate neighbours. India may remove the blinkers put on its eyes by Hindu terrorist organizations like Vishva Hindu Parishad and Bajrang Dal that spread venom in the politics of that country.

The writer is a retired general of the Pakistan army.

MULTILATERAL aid agencies are quite pleased with the economic performance of the military regime. The IMF, World Bank and the Asian Development Bank have voiced their satisfaction with the economic trends in Pakistan despite major challenges.

The Asian Development Bank, in particular, is increasing its annual aid to one billion dollars for three years from 600 to 700 million dollars a year. The government on its part has been meeting the demands or conditionalities of the lending agencies. China, too, is seen joining the ranks of these nations, particularly after it became a member of the World Trade Organization, with its varied stipulations.

These agencies are pleased with three achievements of the government: low inflation, rise in the foreign exchange reserves to 4.8 billion dollars from around one billion dollars, and stability of the rupee. Of course, major external factors like large aid, delivered or committed, fall in international prices and the ebb in the outflow of funds from Pakistan have made decisive contributions to such developments. And the world has seen finance minister Shaukat Aziz making capital use of such advantages. And in recognition of that he has been given the “Best finance Minister for 2001” award by “Euromoney.”

Now Paul Chabrier, director of the Middle Eastern Department of the IMF, wants Pakistan move a few steps further to consolidate its gains. Having noticed the improvement in revenue collection during the last two to three years, he wants the revenue-GDP ratio to be raised from 15 per cent to 10-20 per cent to meet the rising official expenditure.

He argues that Pakistan’s recent focus has been on reducing expenditure and that has not been a major success. The reason, he said, was that the major expenditures could not be reduced. For example, the large debt servicing cost of Rs 329 billion or the defence outlay of Rs 131.6 billion, which is expected to increase following the massing of Indian troops on our borders and Pakistan’s reciprocal action. After these two heads had consumed most of the expenditure of Rs 622 billion this year - minus the shortfalls - there is so little to spend on the nation-building or social sector activities.

While Mr Chabrier spoke of the tax-GDP ratio of 15 per cent now, Shaukat Aziz spoke of the 13 per cent tax-GDP ratio. Both are right. While the finance minister spoke of only those taxes formally billed as tax, Chabrier included the non-tax items in the budget which are in fact clean taxes, like the hefty surcharge on POL which are to get Rs 47 billion this year. According to the official Economic Survey, while the tax-GDP ratio was 13.6 per cent last year, the revenue-GDP ratio was 16.4 per cent. Chabrier hence chose the middle path.

A 20 per cent share for the government from the GDP is not too high in a country like Pakistan. And the IMF official wants that in three years. Not only the government but also the country needs that to achieve macro-economic balance and allocate far more for social sector development.

Currently there is an agitation in France against the tax-GDP ratio exceeding 50 per cent. In fact, the tax is touching 52 per cent of the GDP and the government is inclined to agree to push that down close to 50 per cent next year.

But in Pakistan the 20 per cent target seems too high to many in view of the past failures and the current economic state of the country despite the improvements in the official sector. To begin with, the tax base is too narrow. Even if the number of persons paying income tax this year crosses two million in a population of 145 million that is too small a number by world standards.

Many of them are low income salary earners who pay so little. And some are small traders who make token contributions. Above that all, there is heavy corruption in the taxation departments and 40 to 50 per cent of the money of the tax-payers is said to go into the pockets of tax collectors instead of the tills of the government.

And yet there is massive evasion of sales tax though the GST format is devised to check its evasion. The CBR now says it has come across hundreds of traders who have been reporting loss in sales and claiming higher refunds. Earlier senior CBR officials were found to be a party to such large refund fraud. How many more of such officials the current investigation will uncover remains to be seen. But admittedly if the GST had not been as heavy as it is, the evasion and corruption in the CBR ranks might have been far less. The government has to accept the principle the higher the taxation, larger the evasion and wider the corruption in the taxation services.

We have not been told by the CBR that it did too well in December despite the lower economic activity. Against its targeted revenue of Rs 17.5 billion it collected Rs 21 billion an increase of Rs 3.5 billion. But why the very low target when the average collection for the month should be at least Rs 35 billion. Was it designed to show a better performance, though not credible?

Tax revenues in Pakistan are very low for a variety of valid reasons. What matters immediately is not the fact we have a population of 145 million and vast natural resources. When the bulk of the people are unemployed and their productivity is low, and wages are very poor, tax revenues will be low. In the trade sector there is excessive smuggling and the informal trade in the goods produced within the country is very large. Agriculture, too, is marked for its poor productivity, except in very limited sectors and is poorly taxed, more so when too many persons are dependent on too small a production.

The bulk of the taxes 30 to 40 of them — hence fall on the industries and they are not able to bear them through honest means. While some of the industries evade them many of them become eventually sick and shut shop. So about 4,000 industrial units in the country were reported to have become sick. The Corporate Industrial Restructuring Corporation headed by Tariq Hmaid now says that 11 units have been so far revived while 31 units had been sold off, saving the jobs of 37,000 workers. Evidently the still sick units are too many, and they have made the banks, too, sick with their heavy loan default.

What is needed is a real and fast breakthrough in this area. But in spite of the gradually improving economy we are told that production of large scale industries in the first five months of this financial year ending November went down. And that affects everything from revenue collection, employment and exports.

The solution lies in larger and faster investment. Some committees headed by private sector investors are working on it, while efforts are being made to induce foreign investors, particularly from the Gulf. Unfortunately, if the post-September 11 development, including the Afghan war stood in the way, the India-Pakistan war climate is a new deterrent.

India is deliberately sustaining the wa