PAKISTAN’S economic performance during the 1960s was spectacular and many countries at the same level of development used Pakistan as a role model to develop their institutions — and got ahead.

We continued on this growth path, although at a slower pace, in the years that followed. Even during the 1980s, Pakistan was still a prosperous country, with an annual average rate of growth of 6.4 per cent.

But the performance of the economy during the 1990s was in marked contrast to the growth performance of the earlier decades, when the rate of growth plummeted to 4.1 per cent. In addition we had a serious development crisis, which was of a structural and long-term nature. The socio-economic problems manifested themselves through an increase in armed robberies, murders, suicides, kidnapping for ransom, etc.

During the decade of the 1990s four democratically elected governments were removed unceremoniously from office. Although different reasons were cited for removing these governments, by 1998 the easiest and most effective pretext used was the allegation that the government was about to default on its loan repayments.

What were the reasons for the dismal performance of the economy during the 1990s? How did the 1990s differ from earlier decades? First, due to the adoption of a market-based monetary policy the government started borrowing from international financial institutions due to which the size of its foreign debt increased tremendously. It was the debt crisis which was the mother of all crises and gave rise to development and growth crises which in turn led to a distributional crisis.

The bulk of our revenues during this period was not available for development, as revenues were being used to service debts. The latter gave rise to a social crisis, which along with the debt crisis directly affected the political crisis.

Second, the decade of the 1990s was also the time when the country adopted the World Bank (WB) and International Monetary Fund’s (IMF) Stabilisation and Structural Adjustment policies. The focus of these was on liberalisation, privatisation and reduction in government expenditure. This meant slashing the expenditure on health, education, infrastructure and human resource development, etc.

Since the bulk of these expenditures is consumed by the poor, slashing them increased the poverty level like never before. Poverty also increased as a result of reduction in the rate of investment, GDP growth and the employment level. This is corroborated by a recent study that shows there is a negative correlation between foreign debt and the Sindh GDP. Since increased credits come with conditions it is the latter that negatively impacted output growth in Sindh.

Some technocrats, with political ambitions, attribute the dismal performance of the 1990s to mismanagement of the economy by democratic governments. For the 1990s also happened to be the first decade when we had democratic governments in the country.

If the government borrows from the International Financial Institutions (IFIs) for budgetary support all three factors prevailing during the 1990s will prevail again i.e. neo liberal policies, increase in debt and the installation of a democratic government. Even if the economy starts to witness a meltdown as a result of an increase in the debt-GDP ratio, which is already very high, or the adoption of structural adjustment and stabilisation policies, which will come with foreign debt, anti-democratic forces will attribute the meltdown to the induction once again of a democratic government in Pakistan.

And meltdown it will. During the 1990s when we experienced economic miseries emanating from the adoption of neo-liberal policies and increase in the size of debt, the threshold level from which we started descending was quite high. The level from which we will begin our descent at present will be much lower than it was in the 1990s. So the descent will be to a much greater depth and the decline far more steep. It will be a horrendous situation.

The country will be faced with a total meltdown on the economic front with serious socio-political ramifications — and this at a time when the Frontier and Balochistan are already in flames as a result of the so-called war on terror. Embarking upon neo-liberal policies in the present scenario will be a perfect recipe for disaster.

According to Naomi Klein, in her recent book The Shock Doctrine: The Rise of Disaster Capitalism, the IMF does not have a programme in any country except Turkey at present. So the IMF would naturally be looking for clients. It will even offer its credits at very favourable rates in the beginning to lure us into borrowing. But once we start borrowing and become dependent, the rates will be raised.

Intelligent and shrewd policymakers are able to see through this game and refrain from borrowing from IFIs for budgetary support. When India needed budgetary support, it decided to borrow from non-resident Indians rather than the IMF. Likewise, Pakistan can borrow from non-resident Pakistanis, friendly governments, etc.

Pakistan has faced with multifarious crises — General Pervez Musharraf’s impeachment, the call for the restoration of the judiciary, military operations in Wana, Waziristan, Swat, Balochistan and a serious economic crisis brewing for the last so many years. Countries that have faced such crises have experienced the thwarting of democratic processes and the installation of technocrats who have ruthlessly implemented structural adjustment and stabilisation policies.

Stephen Haggard has acknowledged that “Some of the widest ranging reform efforts in the developing world were undertaken following military coups.” The same is brought out very convincingly by the experience of several Asian, Latin American and African countries by Klein in her book cited earlier.

Pakistan now is so much wiser. With hindsight, we can state that increase in the foreign debt-GDP ratio has led to an interruption in the democratic process and the installation of technocratic governments. For the IFIs subscribe to the ‘new political economy’ approach, which labels politicians and statesmen and women as corrupt, insincere and therefore ineligible to govern.

As the stakes of the IFIs in a country rise, they feel comfortable when the country is governed by its own officials and consultants. The newly installed democratic government in Pakistan must bear in mind that any increase in the foreign debt-GDP ratio is bound to derail the democratic process. Turmoil, as a result of the economic, social and political fallout, will engulf the entire country like never before.

The writer is an independent economist and works for the Applied Economics Research Centre, University of Karachi.

wizarat@cyber.net.pk

MY charity’s website brings me some fascinating emails. A month or so ago, there was one from a couple of American journalists. They wanted to come and visit the Kalash valleys. They wished to do a story on the Kalash, preferably about their being in a Muslim-dominated land.

The questions they asked left little doubt that they were going to make the Kalash out to be vulnerable in a Muslim world. They came with preconceived ideas that I did not endorse. After a number of emails, they suddenly disappeared. Perhaps visiting the Kalash valleys had lost their magic.

The other day I received an email from the chairman of my trustees. A journalist friend from the Daily Telegraph had contacted him, wanting to do an article on the Kalash. As we are always looking for funds to stock our dispensaries, our chairman had immediately given him my contact numbers.

I immediately called the journalist. The English accent was full of enthusiasm. Within seconds he was saying: “Now what about this conversion problem?”

When I said there was no wholesale conversion, only a few cases a year, his crestfallen voice petered out. I told him there were some good stories up there, and I could facilitate his visit. He said his editor would not be interested.

The first thing I heard about religion came from my grandfather. Maybe I was five or 10, I do not recall. But I remember vividly his words: all wars, one way or another, are fought in the name of religion. During the First World War, being a conscientious objector, he had joined up as a medical worker and spent the war in the trenches as a stretcher bearer.

His words were uttered some 60 years ago. Nothing has changed in our civilised world. So much misunderstanding exists in the world today, much of it due to propaganda and the corporate media of the West. On the other hand, thanks to the Internet, civil society is becoming more aware and alert to the nefarious actions and policies of corrupt and aggressive governments.

All of us are born into a certain culture which promotes a certain way of life and thought. None has the right to say that one way of life is better than another. In 1964, I hitchhiked through the Middle East. The spirit with which my entry into Muslim villages and homes was met at that time has had a lasting effect on me.

Universality is the only path to enlightenment. We are all citizens of the world. We need to work together to ease the difficulties of climate change, which is not a myth; it is very real as anyone can see if they ven-

ture into the rural areas of the mountains. In the Kalash valleys, springs are drying up, floods are becoming more common and the winter season is becoming more severe and beginning earlier.

The Kalash valleys lie close to the Durand Line in the north. Religious scholars, adventurers, traders (in Bumburet, the path over the Shawal Pass is part of the old Silk Route) have travelled across rugged mountains since time immemorial. So may have Osama, as he once stayed in a house in Bumburet. I did also in 1998 and 1999.

My travels across Nuristan reminded me of my journey of 1964. I was given the same warnings by good God-fearing Christians about being murdered, raped and so on. As in 1964, I was met with kindness, hospitality and respect.

Being a medical person, I did give some medical aid, but with few drugs, due to limited financial resources; it was nothing compared to what I received.

In Chaga Serai, I met up with a group of Pakistani religious scholars fresh from Saudi Arabia. Although their views were extreme, they extended every courtesy to me. They were bright, charming young men.

On my return from Shiwi, near the front at that time (this was the time of Najibullah), I accidentally landed up in Wahabi hands, the most feared name for westerners in Afghanistan at that time. The Syrian in charge, and the Egyptian I spoke to who headed the centre and was a quiet unassuming, polite man but not overly friendly ( and bore a remarkable resemblance to a well known figure), were just as courteous and hospitable.

Although travellers do come from Taliban areas, I have never seen them try and convert the local Kalash population. I have spent much time in the Nuristani village of Shaikonondai in Rumbur. The people there mind their own business.

In Birir, Muslims outnumber the Kalash; every year, a couple of women marry Muslims; or youngsters are converted by the thought of bettering themselves. In the 28 years I have been there, I have never seen any attempt at wholesale conversion

Madressahs have opened in the area and time alone will tell if that poses a danger to Kalash culture. Hostility and suspicion of another’s religion smack of insult. To seek to find something objectionable in one’s religion is to court enmity and aggression.

AFTER a fortnight of conflict on the ground and a flurry of propaganda and debate in European capitals the South Ossetian crisis is winding down. One of the abiding images — a Russian masterstroke — will be the moving concert given by world-renowned Valery Gergiev, a South Ossetian, and the Mariinsky orchestra in the ruins of Tskhinvali, the town the Georgians destroyed.

Another unforgettable memory will be Georgia’s flak-jacketed president cowering on the ground as a Russian plane flies over the town of Gori. Bravado turning into humiliation is a metaphor for the whole foolish adventure. Georgian men are hospitable and engaging, but fond of bombast and empty macho gestures. Unlike the Chechens, who have fought Russians for centuries, Georgians prefer poetry and vineyards to the challenge of war.

President Mikheil Saakashvili epitomises the style, made worse in his case by the lies he served up to deceive foreign opinion. He boasted of defeat. Georgia was being swallowed up, Tbilisi was on the verge of occupation, Russia was using weapons of mass destruction.

The biggest lie was his attempt to airbrush the fact that he created the crisis by launching an artillery barrage on the South Ossetian capital, which killed scores of civilians and 15 Russian peacekeepers. It was absurd to think Russia would not retaliate. So the next lie was to claim Russia’s leaders had prepared a trap. In fact, they were taken by surprise as much as the Ossetians. Russia’s initial response had the hallmarks of hasty improvisation — though, as the crisis unfolded, President Dmitry Medvedev and Prime Minister Vladimir Putin showed increasing determination to exploit Saakashvili’s folly by preventing South Ossetia and Abkhazia from ever being forced back under Georgian rule.

Saakashvili and many of his western backers used ludicrous analogies to hype the crisis — from Poland in 1939 to Hungary in 1956, even though it is clear South Ossetians welcomed Russian aid and now want to break from Georgia once and for all. The more accurate comparison was Kosovo. Suppose Serbia’s leaders were suddenly to kill US peacekeepers, fire rockets at civilian houses in Pristina and storm the town, wouldn’t the Americans be expected to expel the invaders, even if the UN still recognises Kosovo as legally part of Serbia?

Russia’s destruction of Georgia’s radar stations, its military and naval bases, and several bridges in order to degrade the country’s military capability looks similar to Nato’s attacks on Serbian infrastructure in 1999. Instead of confining itself to Kosovo in seeking to protect Albanian civilians from ethnic cleansing, Nato bombed deep into Serbia proper. What Russia did to Georgia was disproportionate, but less so than Nato on Serbia a decade ago.

Nevertheless, Russia should pull back completely now. It should also have restrained South Ossetian militias from running amok against Georgian villages. Nato troops made little effort to stop revenge-seeking Albanians from looting and torching houses in the Serbian enclaves in Kosovo after Yugoslav forces were driven out. Russia’s forces should have done better in Ossetia. They had the moral high ground but quickly forfeited it by not changing the patterns of military indiscipline and cruelty shown in Afghanistan and Chechnya as well as towards conscripts in their own ranks.

How and why Saakashvili acted remains unclear. Did he tell the Americans of his plans? If not, he emerges as even more of a hothead than many in Nato feared. If yes, did the Americans approve? Giving him the green light would have been incredibly irresponsible. If the US warned Saakashvili off and he went ahead anyway, he should be condemned as an ally from hell.

One of the grimmest aspects of this crisis was the degree to which John McCain emerged as an undiplomatic hawk. Before the crisis he was on record as calling Putin “a totalitarian dictator” and saying Russia should be expelled from the G8. As Russia came in to defend South Ossetia, he demanded it pay a “serious negative” price.

In Britain senior politicians showed similar wildness, including the prime minister and foreign secretary. The ruling Labour party followed the White House line.

The mantra is that Russia cannot have a veto on Nato membership. True, but by the same token no country has a right to join Nato, or the EU. Look at Turkey, which has been a loyal Nato ally for four decades but was not allowed to start EU membership proceedings until 2005 and still has no guarantee they will succeed.

Nato and Russia are boycotting each other for the moment. But business will soon resume as western leaders see this was a manufactured crisis rather than the start of a new cold war or some cataclysmic shift in international relations. When Nato’s foreign ministers met last week, France and Germany made that point. The alliance promised reconstruction aid to Georgia but no support for rushing it into Nato.

— The Guardian, London