Towards growth & jobs

FEDERAL COMMERCE Minister Humayun Akhtar has indicated that the elected government now in place intends to make a subtle change in policy direction. It wants, in an evolutionary manner and with the full consent of international donors, to shift the emphasis from revenue generation and narrowing of fiscal deficits, which was the hallmark of the economic policies of the military regime during the past three years, to higher growth and more jobs. The minister made this disclosure while talking to business leaders the other day in Karachi. There is, indeed, no alternative to growth - and of a kind that also generates employment in a significant way, and that is oriented towards equitable distribution of the profits thus made. This route of high growth has been followed in the past with great success by many countries caught in the web of macroeconomic instability and high budgetary deficits. On the other hand, no country has so far been able to get out of its economic predicaments by following the prescription of the IMF and the World Bank. A tight leash on budgetary spending in order to bring down fiscal deficits, wherever it has been attempted, has only resulted in low growth and poor revenue and employment generation. This in turn forces a debt-ridden country to cut down further on essential budgetary spending on socio-economic development.

This naturally leads the country concerned into the perpetual bondage of multilateral donors which take their orders from the rich countries, which of course dictate the policies of these donors to promote their own collective and individual global political and economic interests. Certainly, there is the example of China, which for nearly 50 years followed the policy of looking after its population from the cradle to the grave, giving every individual the barest minimum in food, shelter and clothing while the nation at large went through the grind of a strictly controlled collective existence under a system of centralism. The massive socio-economic assets created through these collective sacrifices over five decades are now being put to work by China for achieving growth rates unmatched in recent history. But this is not the kind of nation-wide hardship that the IMF conditionalities impose.

The IMF prescription increases the hardship for the poor while it protects the prosperity of the rich. In fact, while the poor become poorer, the rich become richer by following the IMF route which invariably leads to what is universally described as IMF riots. Many Latin American countries and some of the Middle Eastern nations have experienced such riots in the near and distant past. Pakistan should consider itself lucky to have been spared this trauma because of the developments since 9/11. The expansive fiscal space that was provided by the generous bouts of debt relief which the Paris Club members accorded to Pakistan in December 2001 and the subsequent accelerated inflow of remittances from overseas Pakistanis who, fearing a freeze of their life’s savings in foreign banks because of the persecution of Muslims in America and Europe started sending these resources home, have saved Pakistan from going the Argentinian way. It is, therefore, time for Pakistan’s policymakers to start using this fiscal space by taking in hand immediately, without the fear of violating IMF conditionalities, policies that accelerate growth and generate employment as prime objectives.

The Russian warning

THERE can be points of disagreement with and criticism of aspects of Russian foreign policy. Moscow’s offensive in Chechnya and its muddled thinking on South Asia can be cited as examples. But at least on Iraq, it has maintained a certain consistency of outlook that should be respected by all those spoiling for a military adventure against Saddam Hussein. Russian Deputy Foreign Minister Yury Fedotov has again warned of the risks inherent in a war on Iraq, saying it would distract attention away from the on-going campaign against terrorism and increase the threat of international terrorism “which is coming from Afghan territories that are not under Kabul’s control”. This is a danger that has not received enough attention in Washington and London, and it would not remain confined to Afghanistan-related terrorism. An attack on Iraq could ignite the Gulf and the entire Middle East region, and aggravate the already acute security problems of countries like Pakistan. It would come when Muslim public opinion is greatly agitated by what is perceived as a US-led drive against Islamic countries and their citizens. Normal avenues for the expression of dissent are not freely available in many states in the Middle East and the sheikdoms, which heightens the risk of popular anger erupting in unpredictable ways. That is part of the reason why regional leaders, although hardly enamoured of President Saddam Hussein, have been advising against military action.

Apart from the morality of the US unilaterally branding countries left and right as forming an “axis of evil” and therefore fit for invasions and leadership change by force, there are very practical considerations that should be taken into account by the Bush administration and its strategists as they muster their forces and hold desert exercises. The fallout from a war on Iraq will be felt both near and far, and add to the militancy and fanaticism that have made the world such a violent place. It will lead to the death of countless innocent civilians, by bombs and battlefield pollution. Russia and other major powers should impress on the US with a greater sense of urgency that a political approach still offers the most rational way of tackling the Iraq problem - talks based on what the UN weapons inspectors report coupled with promises to lift sanctions if Baghdad cooperates.

Metro example

SO Delhi now has one of the world’s most modern metro systems. Completed in four years, one section of what is to be a 60-kilometre underground-elevated mass transit system became operational last Tuesday. Here in Pakistan we have been discussing mass transit systems for Karachi and Lahore for nearly three decades, and the result is zero. For Karachi, an underground system was first proposed in 1973; later, a similar project was visualized for Lahore. In the case of Karachi, the underground project was abandoned and replaced by a light elevated rail system in the eighties. The project was approved, agreements signed with foreign parties and funds pledged. Nothing came of it, and suddenly we were told that, in its place, the Karachi Circular Railway would be “revitalized.” After going back and forth for years and countless meetings, “reviews” and “approvals” the project was finally abandoned earlier this year. The same holds good for Lahore, where the only progress that was made on an urban transportation system was on paper. For mega-cities, fast and comfortable modes of transport are as essential as water, power, sewerage and gas. Yet no government in Pakistan has shown any interest in giving the big cities modern rapid transit systems. We compete with India in matters of nuclear weapons and missiles. Would it ever occur to any government here to also compete with our eastern neighbour in giving our cities the kind of modern and comfortable transport systems Bombay, Calcutta and Delhi have?