The twilight war

THE good news is that the probability of an all-out Indo-Pakistan war is low. Before we spell reasons for this seemingly unreasonable optimism, let us make a brief ‘tour de horizon’ of the terrorist scene.

After 9/11 and the change in ISI leadership, Pakistan tried to sweet talk the terror groups into holding their hand in Kashmir. The December 13 terrorist attack on the Indian parliament in New Delhi, signalled the failure of Pakistan to influence the militants.

Since January this year, after large-scale arrests of Lashkar-i-Taiba (LT) Jaish Mohammad (JM), leadership and ranks, the apparent success of the Americans in Afghanistan and with Pakistan swinging firmly into the western anti-terrorism coalition, the terrorists too have regrouped with one new objective: Pakistan is to be subjected to the same terror as India. A new group calling itself the Hezbullah Alami (HA) probably consists of the hard core LT and JM men. It claims the murder of Daniel Pearl as well as the eleven French submarine construction engineers in Karachi. The recent act of terrorism at army camps in Jammu is the work of this very same group. To topple the government of President Musharraf is their priority No.1.

The new group is probably affiliated with Al Qaeda, for both groups have more or less the same objectives. In their view, a Pakistan under Musharraf is as much an enemy as India or the western world. A grand terror grouping is in the making to face the anti-terror coalition of the West.

Is our optimism misplaced? One hopes that nations can show greater wisdom than terrorists. Let us consider some basic points.

Pakistan is determined to localize aggression, if any, across the Line of Control (LoC); its retaliation will be confined to Kashmir. It takes two to make war. An Indian military attack will work to Pakistan’s advantage in reopening the dormant Kashmir case at the United Nations. This fringe benefit must not be lost sight of. Pakistan should formally move the Security Council to intervene in accordance with its Charter obligations and to help restart the process to implement its own resolutions on Kashmir.

Next, as regards an Indian aggression across the international border with Pakistan, the western powers will certainly not tolerate the Indians to launch an overall land, air and sea attack. In the unlikely event that this does happen and a major city or a large area of Pakistan is captured, the dynamics of the nuclear Mutually Assured Destruction (MAD) theory starts operating.

Pakistan has declared its intentions. The Indians know it. The world knows it. Pakistan will prime its nuclear missiles and so will India. India should be convinced that these will be used, God forbid, as a measure of very last resort. The consequences are simply too horrible and far-reaching and defies contemplation. The West will be equally culpable if a nuclear war is thrust on us.

And finally, an Indo-Pakistan war at the present time is against the US interest in the region. The centre of gravity of the anti-terrorism war has shifted from Afghanistan to the Pak-Afghan borderland and more so to our tribal areas. A war with India will be a heaven-sent opportunity for the Taliban to regroup in our tribal areas.

The current chest-thumping, threatening moves, diplomatic and military taunts and exercises will continue. Till when? Not much is expected from a Musharraf-Vajpayee meeting, if it takes place, next month in Kazakhstan. For reasons of anti-Musharraf mileage India will probably wait till a civilian prime minister is inducted next October. So it promises to be a long hot summer of threats, brinkmanship, confrontation and possible strikes on a day-to-day basis.

The real problem for the Indians is that having climbed up the gum tree for domestic or other reasons and invested billions of rupees in the process (war games and maximum military alertness does not come cheap), the BJP-led government would look pretty silly to climb down without a victory, no matter how phoney or flimsy it really is.

Pakistan can help India climb down the tree and, in the process, earn some propaganda kudos - kudos with an eye on Kashmir forensics in the court of international opinion.

Let us put our thinking caps on: India accuses the LT and JM for the recent Jammu massacre, and the splinter groups of the same parties (now known as Hezbullah Alami) have confessed to murdering Daniel Pearl and the suicide attack that killed eleven Frenchmen in Karachi. Does it make any sense for Pakistan to support the same terrorist group or sub-groups that hit the vital defence interests of Pakistan? It was easy for Pakistan to pin the Karachi suicide bombing outrage on to India. A vital defence project was meant to be put in jeopardy. The only beneficiary of this action would be India. It goes to Pakistan’s credit that it did no such thing. Because it knows that it is the same two-edged terror that strikes in both countries.

Even if one accepts the Indian allegation that Pakistan has originally sired the LT and JM, how responsible is a parent for his adult offspring? (Pakistan was partly responsible for creating the Taliban monster as India wholly was for creating the Sikh Bhindranwalle. Surely, the Indians know that monsters once created have a life of their own). We are not the keepers of our children. At best we can disinherit them. Both India and Pakistan today have exactly the same terrorist enemy, especially since December 13. The terror organizations and India have one objective in common which is to humble and weaken Pakistan, but for opposite reasons. The Indian objective: Pakistan should give up for ever all claims on Kashmir. The terrorist objective: nuclear war. A nuclear war for them is not a nightmare but a dream-come-true.

Wars today are won or lost in the court of international opinion — which means. the international press and organs of opinion. The tragedy is that governments in their myopia wish to win these wars in the local Urdu press. Let us convert the present impasse between India and Pakistan into an opportunity. Let us craft bold proposals keeping in view that the world is our court. We have to reach out.

For example, let us propose a mutual withdrawal from the LoC area to agreed positions, to be monitored by a largely beefed-up UN observer force, which also includes Indian officers on our side of the border and, likewise, Pakistani officers on the other side.

Let the onus be on the Indians to stonewall each and every sensible suggestion for mutual inspection to block terrorist infiltration and reject the same with their usual legal legerdemain. Each refusal will weaken India in the eyes of the world.

Now at long last most of us in Pakistan do appreciate the fact that Kashmir cannot be won and can most certainly be lost by terrorism, which is no longer an intelligent weapon to advance this or any other cause.

Our model in this matter should be China in relation to its Taiwan policy. Of course, we are not a China and India is far from being a Taiwan. But China loses no opportunity to suck in Taiwanese dollars for mega investments in China and opening its doors to Taiwan tourists without diluting its case one whit. No hostilities. No terrorism.

Let us offer a peace package to the Indians: normalization of trade and traffic and ease of travel for the Kashmiris across the LoC. Our rusty propaganda machine has failed to project the point that today’s Pakistan is not the same as yesterday’s. Both India and Pakistan have the same enemy and it is that Indians in their rage understand this and a slumbering world takes notice.

The writer is a former member of the National Assembly of Pakistan.

Lobbying & its ill-effects

THE past decade has been a strange, split-screen kind of period. On your left screen there was America the superpower, which triumphed over communism, created a new realm called cyberspace and outpaced rivals in Europe and Japan.

On your right screen there was America the scandalpower, plagued by an explosion in political money and insider lobbying and a decline of trust in government. Throughout the 1990s, these two screens seemed separate. But the Enron scandal, starring a firm that symbolized both America’s economic dynamism and its political cronyism, brought the screens together. It showed how lobbying and campaign money can damage the economic system.

This is why the Enron scandal is so potent. Its many tentacles are united by a sense that rich insiders are rigging the system at the expense of ordinary Americans. Enron’s energy dealers ripped off California’s consumers _ and got away with this behavior because of Enron’s clout in Washington.

Wall Street’s analysts cynically promoted Enron’s stock to unsuspecting investors because they coveted fat investment-banking fees _ and got away with this conflict of interest because lobbyists and campaign dollars kept the regulators soft. Capitalism rightly rewards people who make life better by providing goods and services. But when rewards are distributed according to insider influence, that is cronyism.

Recent editorials have focused on accounting, because that is where the economic costs of cronyism are potentially highest. Since the 1970s, the accounting lobby has fought off regulation and squashed opposition to its consulting ambitions _ despite the fact that those ambitions sometimes turned outside audits into insider shams.

As a result, corporate accounts have been distorted _ in Enron’s case, spectacularly _ and investors are hard-pressed to know which companies deserve their money. Capitalism defeated communism partly because the apparatchiks directed savings to the wrong places. When cronyism undermines the information that investors rely upon, it damages capitalism’s central nerve.

—The Washington Post

Indian coercion won’t work

EVEN as India stepped up its warmongering tactics by increasing provocations along the border with Pakistan, regional and global developments have made the coercive approach look irrelevant. India had carried out missile tests several times since December 2001, when a coercive strategy was adopted. Advances in missile technology were highlighted to give greater credibility to its arm-twisting approach. Pakistan has exercised its right to carry out missile tests of its own, to demonstrate its capability to counter the Indian pressure. Though the Indian spokesperson claimed that India was not impressed, the body language of Indian leaders told a different story.

More significantly, President Putin of Russia has chosen to offer his good offices to facilitate a dialogue between the leaders of India and Pakistan, which makes New Delhi’s coercive antics look even more out of tune in a world hungry for peaceful solutions. Mr Putin’s gesture, which was made with the clear backing of President Bush who was visiting Russia, seeks to revive the process of dialogue that had been resumed at Agra, and which Prime Minister Vajpayee and President Musharraf were due to pick up during a meeting in New York in September 2001. The BJP government had ended two years of confrontation that had followed the Kargil episode in the summer of 1999. The Agra summit almost achieved a breakthrough, till the hardliners in the BJP vetoed it.

The terrorist outrage of September 11, 2001 led the Indian leadership to radically change its strategy, to exploit the new focus on terrorism. The Indian policy establishment felt that the international environment had been transformed in a manner favourable to them, since the 12-year-old struggle in Kashmir could now be tarred with the brush of terrorism, linked to Islamic extremism, and got rid of once for all. They faced an initial disappointment, when President Musharraf joined the US sponsored coalition against terrorism, making Pakistan a frontline state in the campaign launched against the Al Qaeda network that had found a sanctuary in Taliban ruled Afghanistan.

The US operations achieved quick success, and the Taliban regime disintegrated within a few weeks. As the Northern Alliance forces entered Kabul, several hundred jihadis who had gone from Pakistan to support the Taliban were captured. It was reported, at that time, that more than a hundred of them were handed over to India, with which the Northern Alliance enjoyed a close relationship resulting from Pakistan’s recognition of the Taliban regime.

Some analysts believe that India has been making use of these captured jihadis to stage-manage terrorist attacks that take place conveniently to suit Indian designs. What is remarkable is that whether it is the attack on the Indian parliament on December 13, 2001, or the attack on an Indian camp near Jammu on May 16, 2002, the alleged terrorists are invariably killed, so that they cannot tell any tales. The Indian government always indignantly rejects Pakistan’s call for an impartial inquiry.

After the December 13 incident, India massed its forces along the border with Pakistan, as well as the Line of Control in Jammu and Kashmir because it claimed that the incident had been the handiwork of Pakistan based terrorist outfits. This coercive deployment was accompanied by demands for the handing over of 20 terrorists by Pakistan, and for the cessation of “cross-border terrorism” in Kashmir.

President Musharraf had responded to the demands by his historic address of January 12, 2002, banning five jihadi groups, including those accused by India, and announcing that Pakistan was committed to eliminating terrorism in all its manifestations. Though international opinion acknowledged these decisions as constituting a positive response to India’s concerns, and even the BJP leadership called them “path-breaking”, the menacing concentrations along the borders were maintained.

The ostensible justification was that Pakistan had not handed over the 20 terrorists wanted by India, which however refused to provide proof of guilt of the named persons. As for “cross-border terrorism”, India would wait for the end of the winter for proof whether the incursions across the LoC had indeed ceased.

As the period of eyeball to eyeball standoff got prolonged, there were different explanations. One was that the confrontation was expected to improve the electoral prospects of the BJP and its allies in the state elections in February. This did not happen, and that explanation ceased to have validity after February. The other explanation, that continues to make sense, is that India wants to impose costs on Pakistan, which its fragile economy cannot sustain. Of course India’s own costs are three times higher, but then its economy is bigger and more robust.

Sensible voices in India had begun questioning the effectiveness, as well justification for these concentrations from mid-January onwards. It was pointed out that President Musharraf had been calling for the resumption of the dialogue since the September terrorist incident, and that even if there were a conflict that could turn nuclear, the real issues would have to be tackled through negotiations.

However, Mr. Vajpayee appeared to be under the sway of his hardliner colleagues. The outbreak of anti-Muslim riots in Gujarat, with proof of the active involvement of the BJP-run state government, appeared to reinforce the determination of the government in Delhi to divert attention to the contrived hostility towards Pakistan.

Five months have already passed since India began its intimidating concentration of forces along our borders. Despite the constant refrain from Islamabad for the resumption of a dialogue, India has chosen to act tough, obviously taking a leaf out of the book of Ariel Sharon, who has been getting away with arrogant and barbaric behaviour in Palestine, in the name of fighting terrorism. The pundits in New Delhi believe that with Islamic extremism in the dock since September, they can move decisively to suppress the freedom movement going on in Kashmir, which even their enhanced repression has not extinguished.

It appears that the intensification of the coercive rhetoric during this month may be related to the calculation in India that President Musharraf’s position may have been weakened by the referendum held on April 30. The major opposition parties in Pakistan, notably the PML(N) and the PPP appear to be raising a challenge to the military government, ahead of the election due in October. New Delhi may have concluded that the political infighting now making its appearance in Pakistan may make President Musharraf more amenable to pressure tactics of the kind reflected in the intensification of cross-border firing and naval concentrations.

Not only are the escalating tensions worrying the international community, but also there is a visible change within Pakistan, in favour of maintaining unity against the attempted intimidation by India. President Musharraf has been again consulting diverse sections of opinion makers, including political leaders, journalists as well as with the cabinet and the National Security Council. He has felt obliged to declare that Pakistan will defend itself with all its capabilities, though it would prefer the path of dialogue. This led Mr. Vajpayee, who had threatened “decisive” military action, to bring the temperature down by announcing that he did not see war clouds on the horizon.

The announcement, on May 24, that Pakistan would carry out tests of its ballistic missiles is a timely step that should make both Indian opinion and world leaders to take notice. India has been conducting tests of its missiles at regular intervals over the past several months, which had drawn criticism that was remarkably mild. These had been clearly designed to add to the pressure being exerted by its concentrations along our borders.

Our restraint, and low key approach, were tailored to the post-September 11 global climate of opinion. However, with Indian coercion persisting, this legitimate exercise of our right to maintain credible defence should give New Delhi a pause to rethink its strategy.

The extent to which this development has increased international concern is evident from Mr. Putin’s US-backed initiative. He has linked his mediatory role to the anticipated presence of the leaders of India and Pakistan in Almaty, Kazakhstan, for the international summit on cooperation and confidence-building, that will be held from June 3 to 5. Pakistan has already welcomed this initiative.

The rising global concern over tensions in South Asia had already resulted in the stepping up of efforts by major powers. Several important emissaries are scheduled to visit the subcontinent in moves to defuse the tensions that have been building up owing to New Delhi’s arrogant and aggressive behaviour. Now the Putin initiative places the ball squarely in India’s court. The attitude being adopted by India that Mr Vajpayee would go to Almaty, but would not have a meeting with President Musharraf is going to look highly negative. Mr Putin can be expected to bring personal pressure to bear upon both leaders to ensure that dialogue replaces confrontation. He is one interlocutor New Delhi cannot afford to displease.

It is high time India realizes the need to resume the Agra process. British Prime Minister Tony Blair has also stressed the need to resolve all issues including Kashmir between India and Pakistan by a peaceful dialogues. Now the Putin initiative has come, with the unmistakable support of the US president.

There is talk of India waiting for two months before deciding whether it should de-escalate along the border with Pakistan and the LoC. It is necessary that the tendency by India to put itself on a moral pedestal on account of its democratic credentials is tempered by a realization that the world is not oblivious of its genocidal repression in Kashmir, or of the blood-letting of its oppressed Muslim minority in Gujarat. Indeed, the paradox of our times is that Hindu religious extremism in India is occupying the seat of power, and practising state terrorism, while justifying resort to coercion to counter a movement for rights guaranteed in UN resolutions.

Mr Vajpayee claims credit for initiatives he took for the Lahore summit in January 1999, and the Agra Summit in July 2001. He was set to resume the dialogue till his hawkish colleagues saw the opportunity for exploiting the fight against terrorism to suppress the Kashmiris in the name of anti-terrorism.

He can still earn his niche in history, by resuming the dialogue, and pulling back the forces he sent to the border last winter, which are still there under scorching temperatures. More than a million men in uniform as well as their families will applaud such a gesture, which has been urged by statesmen of many nations. The transformation resulting from the resumed dialogue would restart the processes of economic development and regional cooperation.

Record of continuity

CONTINUITY demands consensus. Forced initiatives cannot be sustained over time. The tenure for purposes of continuity demands close scrutiny of record.

General and later Field Marshal Ayub Khan, the first military dictator of Pakistan, had a continuous reign of ten years and five months. His decade in power laid the foundation of the dismemberment of the country. General Ziaul Haq, the third military ruler of Pakistan, ruled for eleven years and two months and destroyed what was left of the country after the tyrannical rule of the first dictator.

The track record of the Khakis’ enforced continuity is extremely dismal. The quest for continuity by the fourth ‘khaki ruler’ of Pakistan needs to be scrutinized to save the country from the pitfalls of forced extended rules.

Continuity can be both a blessing and disaster for a nation. The misguided continuity of the Ayub and Zia era destroyed Pakistan. Can Musharraf’s continuity deliver? Will Pakistan be served or severed by another extended khaki rule? What lessons can be learnt from the tyrannical Ayub and Zia regimes? Why have the ‘khaki rulers’ failed despite unchecked authority and power to deliver? Can the nation sustain another ‘khaki’ adventure and experimentation? What is in Pakistan’s best interest considering the track record of the continuity? Is Pakistan really the top priority of the general or is it confined to rhetoric only?

Ayub Khan’s EBDO of 1958 forced out seasoned political leadership. Upstarts, novices and establishment politicians emerged to fill the vacuum. Sheikh Mujib-ur-Rehman was an ordinary worker of Mr. H.S. Suhrawardy. Zulfikar Ali Bhutto (ZAB) was a cabinet member of Ayub regime. Chaudhry Zahoor Elahi was an ex-police employee who was gifted with PPL (Progressive Papers Limited). Nawaz Sharif was a creation of Gen Zia. After 1958, politics has never been the same. Corruption and plunder of national assets was not even an issue.

Lessons must be learnt from the misadventures of Ayub and Zia in producing degenerated political leadership. The contrasts were stark. In the seventies Hafiz Kardar was education minister of Punjab. Kardar was a scholar and national hero. In the nineties Riaz Fatiana occupied the same position. Fatiana was not even a matriculate and proved to be a disaster for the department.

General Musharraf seeks continuity of his reforms. No doubt the present regime has taken some bold decisions in halting the decline. Some financial discipline has also been restored. The loot and plunder at the top has been stopped. But the ground realities continue to be grim for the common man. The forex reserves have crossed $5 billion. There is a huge difference in generating wealth and converting rupees into dollars. Economic activity has spin-offs which generates opportunities for more and more people. Despite tall claims by the finance minister, the economic activity has not picked up. This policy of data manipulation and currency exchange should not be allowed to continue.

No nation can sustain economic hardships for extended periods. Three years of insulated policy making is enough, five more years of the same could be disastrous. There are no jobs. The public sector is in a bad shape. There have been no major investments in the private sector. With the WTO and globalization the future of our industry is bleak and there seems to be no game plan to face the challenge.

After ignoring literacy and health care for over two years finally a President’s Task Force on Human Development has been formed. It is an ambitious initiative for which resources have been allocated. Unfortunately there is no framework to deliver. In 1996 the Prime Minister’s Literacy Commission (PMLC) developed a framework to establish non-formal education centres. Over 8000 schools were established using this mechanism. The government of Nawaz Sharif continued with the programme but the present regime shut down the commission under the influence of the bureaucracy.

Over the years the civil administration has collapsed and mafias have taken over. The ‘khakis’ being a bigger force can effectively crush these mafias but organization building is not their expertise. Take the example of Wapda. The khaki leadership has cleansed the authority but has failed to move towards corporatization and consumer friendly organization. Now professionals, not soldiers can do the job. Continuity is seriously damaging Wapda and is a major disruption in its re- structuring and reforms. Wapda should now be under professional leadership selected on merit after following a specified search process.

Islamabad thrives on deceit, mystery and misinformation. The “baboos” have enjoyed continuity for over five decades and delivered nothing. Three ‘khaki surgeries’ have not been reconstructive. Surgery has to be combined with good nursing and physician care which the ‘khakis’ cannot provide and fall into the ‘trap’ of continuity. Three years of surgery is enough for healing to start which is a slow, painful process.

There are no shortcuts to nation-building. The process has to be established for which ‘khaki protection’ not intervention is needed. Modern management calls for rotation. No individual should be allowed to continue on a position for extended periods. Even the army follows a strict policy of postings and transfer every three years. Continuity is strictly disallowed. Even the tenure of the COAS is three years. The processes should have the continuity and review, not the individuals.

Even in the US most presidents run into serious trouble in their second term as they become manipulative and start to violate the processes. Richard Nixon had to resign after six years in office. Ronald Reagan was almost impeached for Iran Contra affair. Most recently Bill Clinton faced serious reprimand for his unbecoming activities in the oval office. Continuity of mortals can be fatal for a nation. Yes, there should be continuity of programmes and policies that have been built on solid foundations of consensus.

History is not on the side of the general. He must save himself from the jugglers of Islamabad and follow a logical course by building and institutionalizing the processes, not the individuals.

Breaking out of low-income trap

FOR twenty years now Pakistan has been trying to get out of the lowest income trap where apart from our neighbours such as India, Bangladesh, Sri Lanka and Nepal other fifty-six countries also happen to be there.

Ghulam Ishaq Khan, when he was finance minister in the early 1980s, had said we would soon be in the middle income countries but since then our per capita income has been slipping from 480 dollars and along with that the steady devaluation of the rupee brought the real per capita income steadily down — from 9.90 to a dollar in 1982 to 65 rupees a dollar in August last.

So the World Bank Annual World Development Indicators for 2002 says that Pakistan’s gross per capita income for the year 2000 was 440 dollars in the same period, India’s per capita income, which was earlier around 25% below Pakistan’s per capita income has risen to 450 dollars — A modest but steady climb, which it has kept up over the years due to agricultural growth as well as rapid progress of the IT industry.

Having failed to get out of the low-income trap, we have now got entangled in the debt trap and at a time when external aid is coming to our help we have moved into the poverty trap. As we move from one trap to another we are asking for external assistance to get rid of each but are being provided only partial assistance.

Of course external assistance and the relief that it brings is better than no assistance and no relief. But that alone is not going to solve the problem as what is needed is adequate, comprehensive and sustained domestic effort with the government and the private sector working in concert continuously. Even when they have minor policy differences.

But if only 28% of the people are working and the work force of the women is less than 15% and a part of that is seasonal work, production is bound to be slow and to add that the country has a population growth of 2.5 to 3% and it is the population where the better income group believes in conspicuous high consumption.

A great deal of what is produced is wasted instead of a substantial part of that being reinvested. As a result of such factors the GDP growth in the year 2000 was 4.4%. The per capita income following the rise in population was only 1.9%, according to the World Bank report. Compared to this the population growth in India was lower and the rate of devaluation of the Indian rupee was less and hence its per capita income in 2000 was at 450 dollars, higher than Pakistan.

In the agricultural sector a good deal of what is produced is wasted during harvesting, transportation from the farm to the storage places and then to the market and in the places of storage itself. The amount lost is substantial while the government stores its procured wheat or rice.

The struggle to obtain world prices for our cotton instead of 6 to 8 cents less because of impurities and admixtures highlights one of the facets of the problem. The commerce minister Razzak Dawood who has launched a clean cotton policy to get the best out of our cotton exports highlights how intractable is the problem. It is hoped that the new ordinance produces the best results.

In the Industrial sector many of the manufacturers are prime producers making cotton yarn with very low value added. It is doubtful whether the country gains more foreign exchange through the export of such value added yarn or spends more foreign exchange on producing that including the energy produced by using imported oil.

The manufacturers have not been investing enough to upgrade their investment units and instead setting up parallel low value adding units. And the factories are largely manned by uneducated semi-skilled workers whose productivity is low.

Undercutting the production further is the frequent failure of power supply and chronic shortage of water in major cities which keeps the factories closed for many days. Additional investment is needed in a country where money is costly for a company to produce its own power and the producer has to pay a higher price for water through tankers which are not always dependable.

All these factors push up the cost of production, increase inflation and raise the export prices and make our exports less competitive. Adding to the difficulties of the investors is the high cost of money due to high interest rates which for the ordinary investors are still around 13-14%. The State Bank Governor Dr Ishrat Hussain says the clients of the banks are able to get their loans at 8-9% but they are a few in number and such clients have large deposits, which are their reserves. What matters is the rate at which the new investors are able to get their investment loans or working capital. The high cost of energy both in terms of power rates and POL prices also add to the cost of production, export and local sale.

This is not the kind of environment in which people rush in to invest whether they be foreigners or locals and this is the situation apart from the uncertainties caused by political instability, frequency of military rules and changes in the constitution and laws and their application.

What matters is not the 140 million people we have but how many of them are consumers above the bare essentials. For the new foreign investor the consumers may not be more than 20 million in a country in which about 40% of the people live below the poverty line and according to the World Bank report 84.7% people live below two dollars a day.

In India when the economic reforms were initiated in 1991 foreign investors talked of a market of one billion consumers. But soon they realized in a country where almost 50% were living below the poverty line, the number of their consumers could not exceed 200 million.

As a result the 5-10 billion dollar export annually gave way to an expectation of 2 billion dollars a year and what has been achieved in reality is just a fraction of that after India began quibbling with foreign investors. But India has the advantage of far higher savings than Pakistan - almost double of Pakistan’s national savings rate of 12.6% as mentioned by the World Bank. As a result India is able to have a far higher investment than Pakistan’s and hence its economic growth has been higher than Pakistan’s and steadier.

In Pakistan the Industrial Investment has been very small since 1965 and that holds good of foreign investment as well except in oil and gas sector which is almost instantly profitable.

A striking weakness of the economy is the large number of people employed in the government. At around 3.5 million employees in the federal, provincial and local governments. They constitute the single largest labour force group. The fact is that less number of people are engaged in producing than in trading. When too many employees in the government depend on the numerous taxes from industry and far too many are trying to sell what lesser number of people are producing, the shape of the economy is bound to be twisted or distorted.

We need a smaller, more efficient and less red tape bound government and less number of people setting up too many small shops and trying to earn large profits out of their small turnover. All these changes cannot take place overnight when millions are involved both in the government and outside but the changes have to come quick with far less corruption and far better governance. The remedies have been identified, what is needed is enforcement, uniform and sustained.

As the war goes on

THE ambush by suspected Al Qaeda and Taliban forces that killed Green Beret Sgt. Gene Arden Vance Jr. last week was a reminder that the fighting in Afghanistan, while not as intense as in the war’s early days, is far from over.

The Bush administration gets this. What it seems not to get is the need for peacekeepers outside Kabul; only hunting down terrorists won’t keep this Central Asian nation from slipping back into the chaos that allowed Al Qaeda to thrive.

Vance’s death came a month after U.S. bombs accidentally killed four Canadian soldiers. Continued assaults on patrols and mortar attacks on bases of allied troops also demonstrate that a British general was wrong to declare the campaign to drive out the terrorists “all but won.”

No one in the Bush administration or U.S. military ever predicted that battling in the mountains of Afghanistan would be quick or easy. Now U.S. officials need to recognize the need for stability.

The House of Representatives voted last week to give $1.3billion in aid, including $300million to develop and arm the Afghan military. Several members demanded that the Bush administration spell out its strategy for providing security for Afghanistan, especially when warlords continue to clash and common criminals prey on travelers in areas outside Kabul.

The UN Security Council wasn’t helpful when it followed Washington’s wish that the peacekeeping force not be expanded.

—Los Angeles Times