Time for donors to assist
By Shahid Javed Burki
GIVEN the way the situation is evolving in and around Pakistan, this may be a good moment for the community of international donors to step in vigorously with the aim of guiding the country and its citizenry towards a better and a more certain economic and political future.
The donor response should be well developed, based on a strategy of economic reform and political development along with the promise of a large infusion of funds. I would propose a two-step strategy the donor community may wish to follow.
The first step should be directed towards devising a stabilisation and development strategy that would address the structural fault lines that exist in the economy, and have existed ever since the country’s birth. This strategy should focus on a number of structural problems that have prevented the country from achieving its potential, which is substantial. The problems include a low domestic savings rate which perpetuates the economy’s dependence on external flows.
The country should focus a significant proportion of government’s finances and gross domestic product on human development, in particular on education, health and skill development. There is a need to build the capacity to produce exportable surpluses that have a growing demand in international markets. In that context the state needs to focus a great deal of its attention on agriculture and development of small and medium enterprises that can produce for both international and domestic markets.
In this way Pakistan may be able to take advantage of the opportunities that still exist in the global market place. These are some of the structural problems that have figured in a number of donor-assisted programmes in the past. These programmes did not have much lasting impact since the donors did not persevere with them once the immediate crisis they were addressing had dissipated.
In addition, a comprehensive development programme needs to focus on some additional issues that don’t normally find their way into traditional economic thinking. They include giving greater autonomy to the provinces and empowering them to raise and spend their own resources. Fiscal decentralisation will not only bring governance closer to the people but will also contribute to raising the domestic savings rate.
Another area that needs to be added to a comprehensive programme concerns political development. The country needs to develop the institutions that support democratic progress in politically backward societies. Pakistan needs to develop both the legislative and judicial branches of government. Some international financial institutions — in particular the World Bank and the Asian Development Bank — have included these aspects of development in their programmes. The ADB has a large project in place in Pakistan to reform the legal and judicial systems.
Similar efforts need to be made on the legislative side. Some donors, both bilateral and multilateral, are supporting an NGO — the Pakistan Institute of Legislative Development and Transparency (Pildat) — to provide training and expertise to legislators. It is interesting to note that Pildat’s initial support came from overseas Pakistanis who were conscious of the need to build the capacity of the legislative branch to improve the quality of governance.
These efforts need to expand and be brought within a broad framework aimed at the country’s overall development. Efforts aimed at increasing the capacity of the legislative branch should include providing training and staff support to parliamentarians.
My suggestion that the first move in the two-step programme of donor support should involve the formulation of a development strategy to be supported by the government raises the obvious question: why shouldn’t this exercise be undertaken by the government in Pakistan. The answer is that Pakistan, at this critical time in its history, does not have the capacity to do this kind of work. The country has always been weak in public policy analysis; it became even weaker during the period of President Pervez Musharraf.
During that time economic policymaking got concentrated in the Ministry of Finance. This resulted in the weakening of the Planning Commission in Islamabad. It will take time to rebuild the commission’s capacity to undertake the kind of strategic work proposed here. Reactivating the commission can be a part of the donor-assisted programme.
The second step in the exercise suggested here is to determine the extent of the donor support Pakistan should be provided. I suggest a programme of structural reform to cost $40bn over a period of five years, half of which should come from Pakistan. The Pakistani government should spell out in detail how this amount would be mobilised from within the country.
It would take additional taxation which should be aimed at segments of the population which contribute a smaller proportion to government revenues than their share in national income. Provided the government develops an acceptable plan for resource mobilisation, the donors should be prepared to front-load their assistance, giving the bulk of their $20bn contribution during the first three years, leaving the Pakistani effort for the tail end of the programme.
A $40bn effort spread over five years means an expenditure of $8bn a year. This is equivalent to five per cent of Pakistan’s gross domestic product. Deployed efficiently, it should lead to an increase of 1.25 to 1.75 per cent a year in GDP, bringing the rate of growth back to that achieved in 2002-08 but with a greater balance in its impact. Structured on the lines indicated above, it should have a significant impact on the alleviation of poverty and reducing income disparities.
The programme proposed here may not be an easy sell in Pakistan. There may be objections that the country is allowing itself to be dictated to from abroad; that only it can define the priorities it should follow to develop its economy, to reform its society and improve its political system; and that accepting the approach spelled out here would mean some loss of sovereignty. These are valid objections but history is not in Pakistan’s favour. The country has been rescued time and again by its friends but the funding that was provided was not used to repair the fault lines on which the economic structure rests.
There is now too much at stake in Pakistan’s development not only for its people but also for the international community to take another chance and rescue the country from its economic difficulties without ensuring that long-term results would be obtained for the help that is provided. There may be other ways of ensuring the objectives presented in this article but at least a dialogue can begin.


Unbelievable denials
By Tracy McVeigh
BRITAIN can no longer believe what Americans tell us about torture, a report by British members of parliament claims. They also call for an immediate investigation into allegations that the UK government has itself ‘outsourced’ the torture of its own nationals to Pakistan.
In a damning criticism of US integrity, the House of Commons Foreign Affairs Committee said ministers should no longer take at face value statements from senior politicians, including George Bush, that America does not resort to torture in the light of the CIA admitting it used ‘waterboarding’. The interrogation technique was unreservedly condemned by Foreign Secretary David Miliband, who said it amounted to torture.
A change in approach would have implications for extradition of prisoners to the US, especially in terror or security cases, as the UK has signed the UN convention which bars sending individuals to nations where they are at risk of being tortured. During waterboarding, a person is tied to a board with their feet raised and cellophane wrapped around the head. Water is then poured on to the face, causing the victim to start to drown.
Sunday’s committee report said there were ‘serious implications’ of the striking inconsistencies between British ministers continuing to believe the Bush administration when it denies using torture. ‘The UK can no longer rely on US assurances that it does not use torture, and we recommend that the government does not rely on such assurances in the future,’ said the committee.
The MPs also urged the Foreign Office to investigate a Guardian report that six British nationals claimed to have been detained and tortured by the ISI, Pakistan’s intelligence agency, where they were also interrogated by British intelligence officers. Foreign Minister Lord Malloch-Brown told the committee: ‘We absolutely deny the charge that we have in any way outsourced torture to Inter-Services Intelligence [ISI] as a way of extracting information, either for court use or for use in counter-terrorism.’
The report also called on the Foreign Office to seek consular access to all British citizens, including those of dual nationality, detained in Pakistan and asked for an explanation from ministers why one of those detained was apparently denied consular access but was visited by a British official, who may have been an intelligence officer.
—The Guardian, London

