THAT Pakistan-US relations stand restored for a long period of time to come augurs well for Pakistan’s external security environment in general and some specific internal security- related issues in particular.
All of these are pre-requisites for creating an enabling environment for economic growth and development. The US support will go a long way in helping Pakistan fight the menace of terrorism, extremism, and sectarianism that a core group in the current Pakistan government was keen on eliminating much before the September 11, 2001 tragedy.
The turn in world events in the fall of 2001 provided the necessary trigger point for accelerated action in the above direction. And, this action would no longer have the support of just one interior minister or just one president or just one government. Rather, the power of the fall 2001 incident would mobilize a whole world coalition against the issues that some in Pakistan had already recognized as such, although this recognition had to be kept low-key due to strong resisting forces. As a consequence of the September 11 event though, congruency of goals against terrorism would be promoted amongst the world’s powers that be.
Meaningfully, the goals of the world’s biggest power would also become congruent with those of a small core group in Pakistan government that would, in turn, help this core group sell the same to a wider cross-section of not only the government but also of the civil society. Having performed an effective selling job within and having marketed a progressive and a liberal image abroad in general and in the USA in particular, Pakistan is poised to make headway in the direction of anti-extremism within. The avowed goals must, however, be translated into effective action with positive perceptible outcomes in the foreseeable future. Since the general and special publics evaluate performance on an ongoing basis, credibility of a strategy must stand the test of public scrutiny through effective implementation and follow-up on planned and intended action.
Since the above anti-terrorism effort is likely to spread over the long haul, the warmth in the Pakistan-US relationship too is likely to continue for as long as there is a harmony in goals and strategy. These are not likely to diverge in the foreseeable future nor would the Pakistan-US relationship from the favourable direction it has currently taken.
However, it is the economic impact of this favourably developing the Pakistan-US relationship that needs an assessment independently of the one made by the financial wizards at the helm who appear all too sanguine about the latest economic developments. Since not all of them are trained economists, one tends to heavily discount both their evaluation of an intentions for the economy. The intentions cannot be doubted especially if we have a trained international banker instead of a trained economist heading the ministry of finance. He would, therefore, do best what he thinks he knows best and would discharge his responsibility to the best of the capabilities he acquired as a banker in North America rather than as a development economist trained in development thinking for the third world.
When we set out to determine the economic impact, the premise is usually vastly different from the one assumed by government functionaries. Once again, the assumption, as in the anti-terrorism coalition is, that there is a congruency of goals between ours’ and the world’s biggest power. While anti-terrorist effort is a plus-sum game, this certainly is not the case in the realm of economics where our economic interests diverge significantly from those of the developed world bordering a zero-sum game at times or mostly.
This should be obvious from the manner in which the Congressmen representing the US textile interests defended the same when Pakistan requested more market access for its textile products. There was nothing that the US President could do to help as the Pakistan and the US textile interests clashed. So, while a promise to write-off $1 billion in debt out of a total of $3 billion is encouraging and very welcome, one must not forget that some Far East Asian countries that the US had chosen to ally with after the Second World War were given complete debt write-offs by the USA. In addition, the USA had helped them with their development blueprints and had helped them implement some of their most difficult initial reforms including redistribution of assets before growth.
So, based on the economic help Pakistan has been receiving since the anti-terrorist coalition took shape, it is obvious that the USA too has been calibrating it to the degree and kind of support it has been receiving from Pakistan since September 11, 2001. If Pakistan is a wee bit skeptical about the durability of its relationship with the USA, similar is perhaps the sentiment and the view from the USA as far as its relationship with Pakistan is concerned. The quality and content of USA’s financial aid should, therefore, be gauged against the above backdrop. It would be exceedingly naive to view American financial help as one that will work in Pakistan’s best economic interest. For, neither are we the kind of allies that the USA had cultivated after the Second World War in Far East Asia. Nor, are we a kind of people who would lend mindless support to any world cause unless we either share an interest in it or we believe in it as much. Short of sounding presumptuous, Pakistanis are some of the more rational allies the world powers might have experienced.
If that be the case, then whether an economic package works for our full or partial benefit is something only for us to gauge. That we leave it for the judgment of the donors to determine whether it is in our interest is a mistake that the Pakistan governments have made time and again. And, this has been a serious point of disagreement between the government hired economists and the independent ones.
Those at the helm of the government tend to leave economic matters to the finance ministry and the donor agencies while they themselves focus more on political issues which they believe require their greater time and attention. So, if terrorism, extremism, and sectarianism are to be fought on a priority basis, it is perhaps the economic apple cart that the ones at the helm would not like to touch as long as the going is free from turbulence here. It must, however, be realized that it is status quo on the economic front and surface calm maintained at the behest of donor agencies that feed not only into the symptoms of terrorism we address so ardently but also into the collective state of nation’s backwardness and underdevelopment on the world map.
So, if economic performance is to be gauged only by the release of tranches by the IMF; then it is not a valid enough indicator as tranches are influenced not merely by economic factors but by a host of politico-economic factors as would be borne out by an analysis of trends over the past decade. There were times in mid-1990s when tranches were held up merely because the government would resist reduction in the top rate of import duties. Then there have been times when neither the tax revenue target could be met nor the fiscal deficit target but tranches were released as long as the top rate of import duty was brought down to the IMF-desired levels and our markets opened up to foreign goods. There is an international political economy at work that determines the release of tranches quite independently of the strength or performance of a domestic economy. Then there are signals received from the foreign policy formulators when some governments have to be bailed out due to foreign policy convergence rather than the soundness of our economic fundamentals. Reasons are politico-economic again.
Similarly, economic agenda set only at the behest of donor agencies would again smack of foreign interests more than of our own. While agriculture has been rightly prioritized with 70 per cent of the population concentrated in rural areas, the agricultural development strategy based on corporate farming remains highly controversial reflecting foreign interests and priorities more than our own’. Indigenous inputs into formulating an agricultural development strategy are conspicuous by their absence as is the emphasis on medium — and large-scale industry which does not feature on the agenda at all suiting the interests of our trading partners who wish to flood our markets with goods manufactured in their countries. Are we to write the obituary of our medium- and large-scale manufacturing industry? Calls for loud breast beating if this is what our donors expect and if this is what we have yielded to already. While emphasis on SMEs is in order and is in fact in line with our long-standing demand, the idea was never to substitute medium- and large-scale manufacturing with SMEs. While IT and energy too are the need of the hour, the foreign interests might again override national interests as is the case in both agriculture and industry of the country.
So, while the above are the means, the goal is to integrate the people in the national economy which strategy is hardly evident from the rudiments of the economic uplift plan outlined from time to time. We will keep making this below-the-waterline mistake for as long as we will keep assuming that the donor-driven agenda has our best economic interests at heart. While this article attempts to demonstrate yet again the divergence of our economic interests, it would be wise to see convergence only to the extent it is visible. That is, fighting terrorism and extremism to the extent that it does not harm the interests of our coalition partners. As for our interests, while we do need to address the symptoms of terrorism and extremism, these will be rooted out only if the underlying causes are addressed too. And, the underlying causes within the frame of reference of our national boundaries extend deep into the economic realm which only we can address best. To expect our coalition partners to lend a helping hand there might be naive and unrealistic as this is where the interests begin to diverge after a temporary and goal-specific meeting of the minds only in so far as symptomatic treatment of terrorism and extremism is concerned. As for the underlying sources and causes, a starkly independent view of the country’s economic policy ought to be taken sooner rather than later.
