Pakistan at ASEM & G-8

PAKISTAN is finally on board two important global dialogue processes, namely ASEM (Asia-Europe Meeting) and G-8 ministerial meetings (not G-8 summit) but with what credentials. We have been trying for a berth on both these processes for years, and have now been accepted aboard perhaps only in the context of our new identity as the “ground zero” of terrorism and our crucial outreach in the context of the ongoing Afghan turmoil.India’s involvement with both processes, on the other hand, is with impeccable, globally acknowledged credentials and clout as a stabilising factor and as world’s largest democracy and a major emerging economic power.

Foreign Minister Khurshid Kasuri has been in Germany for the ASEM foreign ministers meeting in Hamburg on May 28-29 and after that for a joint hearing in Potsdam on May 30 where he and his Afghan counterpart, Dadfar Rangeen Spanta, were subjected to cordial but intrusive scrutiny and questioning by their G-8 colleagues on their failed strategies to rein in the elusive Taliban.

G-8 is not an international organisation. It does not rest on any international agreement, nor does it have formal admission criteria, a charter or a permanent secretariat. Its decisions are formulated only as the political commitments of the member states. It is an unofficial dialogue forum of the heads of the leading industrialised democracies (Russia, the US., Britain, France, Japan, Germany, Canada and Italy).

G-8 has developed a stable procedure of annual summits taking place regularly by rotation in the partner states. This year’s summit is being held on June 6 to 8 at Germany’s seaside sleepy resort Heiligendamm on the Baltic coast amid agitations by tens of thousands of anti-globalists from all over the world.

For us it was the first-ever opportunity to be called to a G-8 meeting. But in what context and in whose company? Although a plethora of issues was on the agenda of the G-8 ministerial meeting, the foreign ministers of Pakistan and Afghanistan were there only to make their presentations and answer questions from G-8 ministers on the efforts their countries were making towards the restoration of peace and stability in Afghanistan.

One can only sympathise with Foreign Minister Kasuri for being on an indefensible mission. He perhaps did not know that he was boarding two new trains with an unknown destination. The nature of his dilemma could be gauged from his being hinged with his Afghan counterpart, Rangeen Spanta, in their joint appearance at the pre-G-8 summit ministerial meeting at Potsdam, Germany.

Ironically, both found themselves to be at the receiving end with their G-8 counterparts giving them a “pep talk” on the need for their joining together in fighting terrorism and bringing peace to Afghanistan. At the end of their meeting, the G-8 members and Afghanistan and Pakistan (better call them 8+2) joined together in expressing a reinforced commitment to the fight against "all dimensions of terrorism" and stressing the vital importance of security for long-term reconstruction and development in the region and in Afghanistan in particular.

In their joint statement, the G-8 foreign ministers and those of Afghanistan and Pakistan agreed on the need “to act together in joint operations to stamp out terrorist bases.” They also committed to continue supporting moderation, fighting all forms of extremism and terrorism. The statement said the G-8 pledged to assist ongoing efforts to repatriate Afghan refugees in Pakistan and to ease the conditions of refugees in Afghanistan.

Kasuri and Spanta faced the music together receiving a “trumpet call” from their G-8 peers for a more vigorous joint campaign against terrorism in Afghanistan. There was no acknowledgement of the sacrifices the Afghans are making in terms of huge collateral damage in the ongoing war in their country, and we in Pakistan have been making by waging a war within our own territory and against our own people.

As for ASEM, not many people in Pakistan are familiar with this forum. Like G-8, it is also an informal dialogue process instituted in 1996 for developing new perspectives of inter-regional cooperation and harmonisation between Asia and Europe in pursuit of their common goals in “political, economic, social and cultural” areas. Like G-8, ASEM has no formal organisational structure or secretariat and conducts itself only through a regular dialogue process in the form of summit and ministerial meetings.

ASEM, which now groups together a total of 43 countries, – 27 from European Union and 16 from Asia (China, Japan, Korea, India, Mongolia Pakistan and the ten Asean countries) has been exploring synergies in Asia-Europe relations and seeking to complement other levels of relations between the two regions. Foreign Minister Kasuri’s presence at the ASEM ministerial meeting in Hamburg was of symbolic importance. It only marked the long-awaited beginning of Pakistan’s association with this major inter-regional dialogue process.

For me personally, it was gratifying to see the efforts I had initiated during my tenure as foreign secretary in the late ’90s for Pakistan’s membership of this grouping finally coming to fruition. ASEM Summit 6 at Helsinki last September decided to admit Pakistan along with India and Mongolia to the ASEM process.

Kasuri’s task at both these meetings was not easy. Though he ostensibly seemed excited on being given the opportunity of meeting G-8 foreign ministers and for this, he thanked his German counterpart for arranging this session, one could not envy him while trying to sell a non-existent commodity and struggling against all odds to convince his audience in both meetings of Pakistan’s “unstinted loyalty” to the global war on terror.

Unfortunately, our recognition in the comity of nations today is only as a “breeding ground” for religious extremism and militancy and as a country afflicted with a culture of violence and sectarianism. The US, in particular, sees Pakistan as the “ground zero” and a pivotal lynchpin in its fight against terrorism, and for all purposes, now brackets Pakistan with Afghanistan. This is an unenviable distinction which circumscribes our role both within and beyond our region.

The world watches us with anxiety and concern as we seek to correct our image. Our crucial role in this campaign complicates our tasks, both at home and at regional and global levels. Our sovereignty is being violated with impunity. Our freedom of action in our own interest is being questioned and undermined. We are at times obliged to accept the responsibility for crimes that we have not committed. This shows the extreme constraints on our options as an independent and sovereign state.

Pakistan’s image problems have been aggravated by our domestic chaos and instability as a result of recurring political crises, constitutional violations, institutional encroachments, growing corruption and general aversion to the rule of law. Pakistan is the only country in the world which has remained under protracted military rule and which is today listed among the world’s top ten “dictatorships,” top sixteen “most corrupt” countries and top seven “most unsafe and violent” countries. Terrorism is our sole identity now. We are seen both as the problem and as a key to its solution.

Our foreign minister’s eloquence and oratorical skills notwithstanding, there is no magic wand available nor any diplomatic ingenuity developed yet that could erase these scars from Pakistan’s tarnished image. India, on the other hand, has the advantage of being globally recognised as a “thriving democracy, a growing economy and a responsible nuclear power.” It has managed to secure a berth in the exclusive club of G-8’s “Outreach Five” consisting of the world’s major emerging economies – Brazil, China, India, Mexico and South Africa – as partners in “structured cooperation” in addressing global political and economic issues.

Our presence in Potsdam was certainly not a big deal in terms of our political stature or diplomatic clout. The only thing in the joint statement issued after their hearing on Afghanistan that pleased our foreign minister was the reference to the Afghan refugee issue. But on his return to Islamabad, he might like to look at some of the Afghan archives in his ministry. He would find that there is a long history of unfulfilled G-8 commitments on sharing Pakistan’s burden for hosting millions of Afghan refugees for nearly three decades.

We are familiar with “donor” conferences organised in the 1980s to help us look after the millions of Afghan refugees who ultimately became our own responsibility. In recent years, the pledges made for reconstruction of the war-devastated Afghanistan, especially those made with the launching of the Bonn process that parachuted Karzai on the people of Afghanistan, have yet to show any signs of change in the landscape or skyline of a war-ravaged country which has become the perennial battleground of global proxy wars.

Against this backdrop, there was hardly any political or economic dividend that accrued to us for being at G-8 Potsdam meeting.

In fact, being equated with Afghanistan in terms of our role and relevance was a big slide down for a country that once hoped to be a major regional and global player. Our presence at the ASEM meeting was just the beginning of a new relationship with no concrete goalposts in sight yet.

A nation’s strength lies in its people and institutions. No country is respected or has ever succeeded externally if it is weak and crippled domestically. The future of our relationship with the world’s major dialogue processes will remain uncertain as long as Pakistan does not overcome its domestic weaknesses and re-establishes its own global relevance as a partner not in wars and military campaigns but in peace and prosperity. It must restore its global image and standing as a democratic country and a responsible nuclear state.

This would require civilianization of our body politic with our armed forces returning to their constitutional and professional role. Pakistan under a democratically elected civilian government and with stable institutions strictly adhering to their constitutional roles will be a more responsible, more reliable, more effective and more appropriate partner of the free world in pursuit of common goals and in defence of shared values,

The writer is a former foreign secretary.

Why private sector lags behind

IN a previous article, I had described how military, feudal and political elements had caused the corporate sector to lag behind. That article could have created the erroneous impression that our businessmen are blameless. It is true that the three elite corporate types take up three-fourths of the business pie. What ails the remaining slice? I will try to explain this.

Nationalisation created state monopolies in airline, shipping, railways, utilities, commodity trading, television and radio and many other industries. Monopolistic or at best oligopolistic industrial structures emerged in banking, insurance, energy exploration, oil and gas distribution, oil marketing, mutual funds, financial services, etc.

At the same time, private business groups, notably the textile industry, extracted undue protection from the government. The result was a mindset of control, protection and fear of competition. Business was stable, jobs well protected but the poor consumer was without rights, recourse or choice.

This led to a “take it easy” organisational behaviour. Neither the public nor private business was immune to it. The malady became chronic. The search for new markets, the hunger for profits, the drive for a greater market share and the urge for productivity became pursuits as meaningless as compensation and incentives for employees and managers in these outfits.

In the last decade of the 20th century, the era of deregulation dawned. The credit goes to Nawaz Sharif. Privatisation set in and almost all industries were deregulated and the “magic of competition” began to cast its charm. Consumer choices increased. The pressure to shape up or ship out started to exert itself on public enterprises.

At the same time, public “family silver” changed hands and came under the control of a rapacious private sector. Private industrial concentration increased manifold. In some cases, cartelisation took place. The public faced soaring prices in cement, ghee, sugar and bank service charges.

The equivalent of the US Justice Department in Pakistan is the Monopoly Control Authority (MCA), which has always been a toothless regulator. The MCA looked the other way when the cement cartel pushed prices out of consumers’ reach. Efficiency was not the MCA’s policy objective or the business people’s strategic goal.

Consumer power is another source of making businesses perform in a fair manner. Unfortunately, consumer protection laws and the consumer rights movement have not gained enough strength to be effective. By and large, we have a seller’s market where the consumer’s economic power is insignificant as compared to that of the producer. International consumers are much more sophisticated and demanding. Our smug local producers find it daunting to cater to international demand and thus shy away from the global arena. On closer look, we find the firms’ ownership structures and their management practices to be the main culprit responsible for the corporate sector’s stunted growth.

Human resource development has remained abysmally low in all sectors of the economy. The private sector’s record is even worse than that of the public sector. Barring MNCs, local business organisations have an archaic attitude towards training and skill development and have skewed spending priorities. There are industrialists who won’t mind spending over a million rupees to have themselves photographed with a minister. Yet, they are prepared to spend less than a few thousand rupees on workers’ skill development.

We hear a lot about balancing, modernising and restructuring investment as evidence of the growth of industrial assets, but not so much about human capital. The absence of a meaningful link between industry and academia has resulted in the irrelevance of education. Accusing the government of providing poor quality education, the private sector has, nevertheless, not opened itself up for research. It also did not do anything meaningful to fill the void of training and education. In the end, its own growth is hamstrung by the unavailability of quality human resources.

The labour movement though strengthened after nationalisation paradoxically also suffered from its ill effects. Nationalisation and Bhutto’s socialist spiel gave undue protection to workers’ unions across various industries. A rent-seeking mentality crept in. Pampered protection caused labour productivity to decline. One of the concessions that the unions negotiated was of lineal hiring: in case of a worker’s death, his son or next of kin would be put on the job. Compassionate recruitment became rampant and killed merit.

All politics is about jobs; none is about skill development. Labour unions fought for a share in existing jobs; none negotiated for better training or skill enhancement for their members. Over time, both the employees and the employers suffered as the capacity to grow beyond local markets did not emerge.

The ownership structure of local firms also reveals another hidden source of inefficiency and growth constraint. Almost all business groups are family controlled. We have the Shirazis, Dawoods, Manshas, Habibs, Lakhanis, Dhedis, Tabbas, Dewans etc. If there is no scion or offspring to look after business expansion there is no growth in the family empire. The next generation may not be able enough or available because of lack of interest, incompetence, etc. This natural attrition puts limits on the growth and expansion of our business empires.

Unfortunately, few have attempted to become employers of choice. They fail to attract the best managerial talents which flock towards the MNCs that have served as nurseries to provide the country with this asset. Sadly, few of our respected corporate managers and leaders have been groomed in family-run empires of Pakistan; the majority come from the MNCs.

One crucial ramification of having family members control the top is that the organisation acquires an ethnic persona. Knowingly or otherwise, the practice of ethnic recruitment sets in. It is commonly believed that one has to belong to a certain sect or community to reach the top in many organisations. There is an invisible quota system that operates behind recruitment and promotion decisions in our businesses. When the merit lies in ethnicity, performance is the casualty.Our corporate sector never learned to manage diversity considered crucial for global operations. Organisations need to learn to operate in different countries, different environments and different cultures. If they can’t rise above petty ethnicity, they can’t hope to catch up.

Where does the hope lie? I think new entrepreneurs who start with a genuine business idea and focus on business performance without any crutches will emerge as Pakistan’s stalwarts in the globalised world. Next, the second or third generation of the “empire founders” who have had the best education in the US and Europe will have several ideas to rejuvenate their family businesses. Only time will tell which one races ahead.

Local businesses are limited by their vision pertaining not only to their business but to society and their roles. True, there are few who have the requisite vision but they are limited by personal inhibitions and process capabilities at the organisational level to execute the vision.

One of them is the deliberate loosening of control. Growth and control do not coexist for long. In the final battle, growth should win. If “control” does not accept the fact, it loses with disastrous outcomes. Excessive control, as is the case currently, means pulling back the reins of the organisation while others race ahead.

The writer is a management consultant and researcher.
sfuddin@gmail.com