‘If Pakistan wants to prosper and compete with other countries of the world, it has to improve its literacy rate, and the largest provinceof the country, Punjab, will have to be more benevolent to the smaller provinces,’ says Nobuakai Tanaka, the Japanese ambassador to Pakistan

KEEPING in view Pakistan’s satisfactory handling of the nuclear issue, Japan has decided to resume its annual assistance to Pakistan, says Nobuakai Tanaka, the Japanese ambassador to Pakistan.

The ambassador believes that Pakistan has fulfilled aid criteria and despite the fact that a lot more needs to be done regarding the nuclear issue, Japan is happy with the way the matter has been handled by the Pakistan government.

In recent times, non-proliferation has been the most sensitive issue, which Pakistan has significantly marginalized. Pakistan’s decision to introduce the export control regime also seems to be doing quite well, he adds.

The better handling of the nuclear issue by President Pervez Musharraf has given Japan a lot of assurance and it is a major feat that Pakistan has achieved. The war against terrorism is the second important issue on the political agenda, and here too Pakistan is doing a good job. Japan acknowledges the causalities suffered by the Pakistan Army in the war against terrorism, opines Mr Tanaka.

Apart from non-proliferation, the Japanese ambassador discussed a wide range of issues in a recent interview with Dawn Magazine. The following are excerpts from his interview.

Q. What’s your opinion on the kind of democracy that is functioning in Pakistan?

A. Despite not being quite satisfactory, democracy is doing reasonably well in Pakistan. You have the freedom of expression and a working parliament. However, there is still a long way to go in achieving goals such as the rule of law should be firmly established; all human rights issues should be institutionalized; and gender issues should be addressed. If the rule of law is established, it will bring more investments into Pakistan.

In the last several years, Pervez Musharraf has managed many crises — such as the liquidity crisis, budgetary matters, the issues of terrorism and non-proliferation — quite well. In the age of globalization, it is very difficult to manage such issues with success. Musharraf has broken the back of Al Qaeda and has termed it an enemy. The Taliban phenomenon has also been understood very well. President Musharraf has put a wedge between Al Qaeda and the Taliban, and the rest of the nation.

In the issue of nuclear proliferation too he drew a line between Dr A.Q. Khan and the rest of the country. It was a very fine line. Had he mismanaged it, he would have antagonized the whole population, because Dr A.Q. Khan is a national hero. By drawing that line he made sure that a non-proliferation policy was firmly established. It’s an important assurance to the international community.

On the economic front, President Musharraf worked hard at achieving good economic growth. He made sure that the pre-1998 economic crisis came to an end, and succeeded in achieving the rescheduling of debts that gave a lot of breathing space to Pakistan. Out of $12 billion, Japan rescheduled $4.5 billion, which is a sizable amount of money. Softening of the terms of commercial loans encouraged investment and consumption in the country. By increasing domestic GDP and demands, consumption and investments are both on the rise. This is a win-win situation for Pakistan as external assistance and foreign remittances have all of a sudden improved because of a rigid control over money laundering. It is good to see that Pakistan has been able to introduce many reforms into the banking sector and private sector companies.

Q. How do you view the new system of devolution of power?

A. The one thing that Pakistan has not been able to achieve and has failed to address is devolution of power. Gen Musharraf’s creation of Nazims and all such devolution plans were designed to address this issue.

I think they have to recognize the fact that there is one majority ethnic group in Pakistan, the Punjabis, with a small class of minorities surrounding it. And the minorities haven’t had good feedback from the federal government. It is essential that the central government give more power and money to the area alongside the Afghan border, the NWFP, Balochistan and, to some extent, Northern territories. Sindh and Punjab are okay, as basically they have always been in majority and have been more successful.

I hope that in the future the people of Punjab, who are more broad-minded and are leaders of this country, would think beyond their province and think about the entire Pakistan. If this can be achieved, the future of Pakistan is very bright.

The above-mentioned topic and the issue of education are two important factors in achieving success in every sphere of life. Education, of course, is one of the most important factors. It is a shame that Pakistan is among those countries who have the lowest literacy rates in the world. In the subcontinent, only Nepal and Bangladesh fall behind Pakistan. African countries are worse than Pakistan. If Pakistan wants to progress and prosper and compete with other countries, particularly India, the whole nation will have to participate in nation-building; and this cannot be accomplished without educating the masses. The attitude of Pakistani leadership appears to be lukewarm towards educating the people. According to an estimate, Pakistan would be the fourth most populous country in the world by 2050, only next to India, China and Indonesia. For some people this is considered a blessing; but I don’t really think so. It will create impediments in maintaining resources, and affect the country’s stability. It may be a good thing for the leadership because it can count on the availability of cheap labour.

If uneducated people acquire education in Madressahs and harbour extremist views, what will happen to the 200 million people of this country? Two hundred million Al Qaeda extremists would be hanging around everywhere in Pakistan and that would be devastating for the country. So, education is the key, particularly primary education, to the success of any society. The lack of education is the reason why extremist views are widespread in Pakistan. Ignorant teachers are teaching at the Madressahs and the government just ignores it. Resource allocation of 2.2 per cent of the GDP is simply not enough in order to address the question of illiteracy; and once you are able to raise the education level, and it takes time, then Pakistan will be able to project its true positive image and the country’s future will be a bright one.

The issues of Balochistan and the NWFP are not self-inflicted. They are the result of Punjab’s domination, and they have to be looked at from that angle. I think if the Punjabi people show more magnanimity or leniency, it will prove to be a goodwill gesture to the rest of the provinces. After all, the strongest has to be magnanimous, and the majority should always be benevolent. This kind of mentality should be the basis of economic development, be it in Japan, China or anywhere else in the world.

Q. You mean Punjab needs to offer more sacrifices, particularly keeping in mind the new resource distribution system coming in the wake of the 6th National Finance Commission (NFC).

A. I am not quite familiar with the formula, but definitely the current resource allocation is not very conducive to achieving national goals. Even if I take a look at the request for economic assistance by the government of Pakistan, it is heavily biased in favour of Punjab. And, of course, almost all the politicians and bureaucrats come from Punjab.

We try our best to give out resources to the Northern Areas, the NWFP and Balochistan, which are not always in response to the request of the government of Pakistan. We don’t have to necessarily go through the government of Pakistan. We have different aid mechanisms in place that directly aid the people, NGOs, and the grass root assistance (GRA). We would try our best to focus more on the less fortunate people.

Q. Does that mean that in the next yen loan package expected to be announced in April, Japan will put in more resources for Balochistan and the NWFP?

A. We will try, but our yen loan is based on Pakistan government’s request, and your government naturally focuses on Punjab. Obviously, a lot of projects from Punjab will be materialized and developed.

Punjab has the capacity to carry out big loans, whereas Balochistan and the NWFP don’t have the capacity to disburse and implement different projects. The second element is, as I said before, that the Pakistan government makes a request mainly for Punjab. So we will start our loan with Punjab as our main focus. But we have other means of GRA assistance and it does not necessarily mean that we don’t give anything to Punjab. While continuing to provide aid to the bigger province, we would very much like to focus more on the NWFP, Balochistan and the Northern Areas, because the key issues are education and Punjab’s ability to think beyond its border.

Q. Pakistan receives $500 million annually from Japan. With the resumption of yen loan, will the amount be increased?

A. No, the first part of the loan would not be so big. I may clarify here the figure of $500 million has been erroneously reported. We would certainly try to achieve that level at a later stage; but we will start moderately.

Q. What does that mean?

A. That means a couple of hundred million dollars. I don’t know yet, because this is a project-based assistance and if the project has good feasibility, we will certainly be able to take it at an earlier stage. If the feasibility is not completed by April, we have to start with a very small amount of money. We will begin in several phases. This is more in line with the Japanese character. We go bit by bit, step by step. It is not politically appealing to go for one-jump assistance.

Pakistan’s economic policy is doing well. I think even the IMF appears to be happy with the country and that should be considered as an honour to Pakistan. We appreciate this, as we have also played our part in rescheduling of the debt. Now, it is important that the recipient should take full advantage of this support.

Q. Will Japanese investment in Pakistan also increase in the future?

A. Japanese loan would generate a lot of interest in the Japanese business community. A number of business leaders have already visited the country. We have seen an increased number of visitors from business headquarters in Japan over the recent months, and I hope to see a further improvement on that front.

In March, we will have a big business delegation, comprising top leaders of the Japanese business community, visiting Pakistan. The delegation will be having meetings with their counterparts here. On March 7 they will be meeting in Karachi, and on March 9 in Islamabad. I hope it will prove to be a good opportunity for future investors to have a good look at Pakistan and receive a good impression of the country.

The image of Pakistan is not as bad as press reports in Japan suggest. Business leaders will be able to have their own views on Pakistan because they will see the country through their own eyes. There is no doubt that investment follows trade. Prior to 1998, the level of investment in Pakistan was not so bad and there were improvements in investment from 1995 and 1998 during which a lot of businessmen came and established their base here. After 1998, many of them went back to Japan and it has not been easy to lure them back. Hopefully, the yen loan will prove to be a good opportunity to regain their presence in Pakistan. For that, trade with Japan will have to be established.

It should also be noted that a number of companies did not go back after 1998 such as those in the automobile sector, including Honda, Toyota and Suzuki. They have been able to expand their base because domestic growth is expanding. Prime Minister Shaukat Aziz believes that it is largely because of Japanese investment. It is one example. Japanese business is not limited to auto-machinery. Even Shaukat Aziz asked them to expand their base for the spare-parts industry. The industry needs more assurances, such as new investment and strength in other manufacturing industries.

The rule of law or the judicial system appears to be working well. But the perception of the sensitive issue of security seems to be difficult to handle. Obviously, it takes time to change. To change a rule is one thing, but effectively implementing it is a different matter altogether. Herein lies the weak point of Pakistan: its judicial system.

I have a list of issues which I would like to discuss with Pakistani ministers. I have discussed some of these issues with the prime minister and the commerce minister. There are still outstanding debts for the Japanese business community relating to the IDB (International Development Bank). For example, there are outstanding yen loans with regard to the grant aid. It may be a small amount, but it affects the business psyche. Then there is the Cess issue in Sindh and the use of military cargo. So we are bound to use the NLC.

Q. Does that mean that the NLC should no more be in business?

A. No, it could be, but on equal footing with other companies. We should not be obligated to use one service solely or exclusively. These small issues would be a point of complaint for some people who are actually operating here. So these have to be addressed.

Q. Is the business climate with regard to foreign investment in Pakistan is good?

A. It is definitely improving. Whether it has completely improved or not that is another matter, depending on the industry and on the level of commitment you have in terms of portfolio investment. The business environment has also improved.

Natural resource development can also improve. This can be achieved in remote areas with a fewer number of people involved, and once government assurance is given, you can smoothly manage it. Japanese business enjoys more advantage in the manufacturing industry, which means that you have to employ a lot of people in the vicinity of a populated centre.

Q. Is good infrastructure in Pakistan key to economic success?

A. Yes. And along with that, good law and order and a better education system. These are three key elements. I know it’s a long list and it takes years to achieve such a goal; but it depends on the areas you invest in. However, you may find a short-cut to accomplishing these goals. For example, if the Pakistan government creates some kind of an industrial base, it will certainly go a long way in the country’s development. But these investors will worry about the future of their investment if some problems rear their heads. The investor will want that the problems should be brought to court, but if the court is arbitrary, then they will run into other kinds of problems.

It would certainly be a good step if the investors are allowed to seek international arbitration in case a dispute reared its head.

Q. Japan, India, Brazil and Germany are looking to get permanent membership of the UN Security Council. The Pakistan government is against it, and wants to do away with this system of permanent seats.

A. I fully understand Pakistan’s point of view and the Japanese government also understands the logic of Pakistan’s position on the issue of the Security Council’s permanent membership. In a way we agree to disagree on this matter, but our friendship will remain unaffected even after the dispute is gone forever. Membership or no membership, our relations should not suffer. Having said that, we believe that we are fully capable of being permanent members of the Security Council. We have demonstrated our capabilities, we have made meaningful contributions to the world not only through monetary aid, but also by sending our troops to various troubled places in the world.

It is important that permanent membership of the Security Council is not be given only to the states that have nuclear weapons. That is why the non-proliferation regime is not working well. I think membership should also be open to non-nuclear states, proving to the world that they are also capable of contributing to peace and stability in the world. It is absolutely understandable to restrict these B5 regimes.