Hoping for better days

Federal Finance Minister Shaukat Aziz has announced a number of tax incentives for investors and exporters which he proposes to introduce in the next budget. One has no quarrel with these incentives. They have been the hallmark of successive budgets. The hope has always been that the people profiting from them would gear up their activities which would result in more overall growth, more exports, more revenues, more foreign exchange earnings and less poverty. One can hardly disagree with this methodology to achieve sustainable economic growth.

However, it has been the experience of this country that despite high growths recorded during the decades of the 1960s and 1980s, the rich have only become richer and the poor, poorer, and at the end of these cycles of induced prosperity, Pakistan had to face imminent debt default problems.

In the first place, our private sector exporters and investors have remained no more than a class of rent seekers and have never graduated into true and genuine entrepreneurs by using these incentives. Even today when the stock exchanges are booming, new listings are few and far between and those that are already there on the screen for decades are completely and fully family owned.

This government has been claiming that it has introduced a number of structural reforms in the last four years which it further claims has enabled the economy to pick up and achieve a record growth rate of 5.3 per cent in the current fiscal year. The government believes that this is sustainable growth and that it would be able to maintain the momentum at least in the immediate future as well.

There is already the good news about our intentions to graduate from next year onwards from the IMF and go on our own. One does not like to argue against these claims and hopes. One hopes that what the official economic managers are saying is the real truth and that it would lead us to a situation where, with growth rates holding at around six per cent per annum, the rate of unemployment would come down to around five per cent and the poverty line would fall below 20 per cent over the next 20 years.

Pakistan's savings rates have hovered around 13 per cent and the investment rate at around 16-17 per cent per annum all these years. With this kind of savings and investment rates, we can hardly reach five per cent growth; moreover, a rate of growth like this would take centuries for our people at large to achieve a decent living. We, therefore, need very urgently massive foreign investments which do not make profits at our expense but contribute meaningfully to our prosperity.

Official economic managers have said that they expect the foreign investment rate to jump in the coming years. One hopes that they are right. But, then, during the 1960s and 1980s when we were growing at around six per cent per annum, then too our record on foreign investment had remained poor. Then too like today foreign investors by and large believed that governments led by military generals turned out to be unstable in the final analysis and therefore refrained from meaningful investments here.

They feel that in countries where there is no rule of law and where the judiciary is subservient to a bureaucratic institution, their investments will not be safe. And foreign investors do not come to countries where bureaucratic red tape puts all kinds of hurdles in the way. So, we have a long way to go before we can correct our image and make our country attractive for real foreign investment.

US aid: strings attached

President George W. Bush has cleared the way for Pakistan to receive $700 million in military and economic aid during the next fiscal year by certifying to Congress that Pakistan is cooperating with the US in its global 'war on terror'. The presidential certification is required every year for releasing in instalments the promised American aid worth three billion dollars, which Mr Bush pledged for this country when he met President Musharraf at Camp David two years ago.

The restriction was put in place at the behest of the Indian lobby in Washington, which was angered by prospects of improving US-Pakistan relations in the aftermath of 9/11. President Bush and Secretary of State Colin Powell have consistently praised Islamabad for its extended cooperation in the war against terror, acknowledging time and again that the successes met in Afghanistan would not have been possible without Pakistan's active and willing support.

After the 9/11 tragedy, Islamabad's policy shift vis-a-vis the Taliban, its lending of airbases to facilitate the ousting of the Taliban regime, intelligence sharing that led to the arrest of many wanted Al Qaeda and Taliban militia men and the Pakistan Army's on-going operations in the tribal belt along the Durand Line to cleanse the area of Al Qaeda and Taliban remnants are ample proof that this country remains essential for the US-led campaign.

Pakistan-US relations have warmed up after a long, cold spell that froze bilateral relations during the Clinton presidency as Washington set out to improve ties with India, an old Soviet ally. The American disengagement in Afghanistan following the Soviet forces' withdrawal from that country in 1988, Washington's virtual abandoning of Pakistan, leaving it to deal with the aftermath of the post-Soviet civil war in Afghanistan, and the slapping of sanctions on Pakistan were the main reasons for the freeze in bilateral relations.

That era of political miscalculations may now be behind us, and one can only hope that the lesson has been learnt in Washington that abandoning a close ally can only hurt America's own interests over the longer term. But there is no need for us to feel totally sanguine about the existing situation. Washington's interests wax and wane, and then there is the US presidential election coming up in November. Pakistan's search for an independent foreign policy, based on its own interests, must continue, however unproductive it has proved so far.

Moenjodaro: dying again?

Recent reports about Moenjodaro suggest that this pre-historic site of the Indus Valley Civilization is again under threat. A rising underground water table and subterranean salt levels are said to be the reasons for the crumbling away of the excavated structures. In recent months, following monsoon rains, a number of excavated walls have fallen without much as having raised an eyebrow among officials.

The apathy shown to Moenjodaro can be judged by the fact that the scientific laboratory at the site has been without an archaeological chemist since September last. If this is the state of affairs at the country's prime pre-historic site, one can well imagine the apathy shown by the officials concerned to other less prestigious archaeological remains. It is also incomprehensible as to why so little has been done to conserve Moenjodaro ever since the site was added to Unesco's World Heritage List.

Is it because the officials concerned have failed to do their homework with regard to periodically assessing the damage Moenjodaro is accruing year after year and thus have been unable to seek Unesco's help for containing such damage? The matter should be raised in parliament so that the government is forced to account for its neglect of this national heritage site.