Pakistan is losing ground

DURING his recent visit to Washington, Prime Minister Shaukat Aziz spoke repeatedly about the openness of the economy he and his economic team manage. “We are perhaps the developing world’s most open economy,” he told his audiences. “You can come and invest whatever you wish and wherever you wish. You can take 100 per cent or 0 per cent share in the company in which you wish to invest. It is your choice, not the government’s.” In that respect, Pakistan is South Asia’s most open economy, certainly more than that of India. But India is on the move.

A day after Aziz’s final public appearance in the United States’ capital, the cabinet in India took the decision to open that country’s large retail sector to foreign participation. “Consent to permit 51 per cent foreign investment in single brand retail operations was the most striking among a package of measures aimed at signalling the Indian government’s determination to kick start a stalled programme of economic reforms,” wrote the Financial Times about the new Indian initiative.

This was a modest level of opening and it came with several restraints. In announcing the decision by his government, Kamal Nath, the Indian commerce minister said that “companies will be allowed to sell goods sold internationally under a single brand. Retailers of multiple brands, even if they are made by the same company, will not be allowed.”

Constraints notwithstanding, foreign retailers including Wal-Mart, the world’s largest, are lining up to move into India. The new Indian policy, considerably more restricted than the one followed across the country’s northern border — in Pakistan — will still lead to large foreign investment in the sector. Foreign companies, while not totally delighted by the small Indian gesture, are likely to move into the country with billions of dollars of investment. Why are foreigners so eager to go to India but reluctant to come to Pakistan?

One answer is the larger size of the Indian market. In 2005 the size of the Indian retail market was estimated at $258 billion and, according to Technopak, a consulting firm, it is set to grow to $411 billion within five years. The sector is currently dominated by nine million “mom and pop corner stores.” India is admittedly large and becoming larger, but Pakistan is small only by comparison to its neighbour. Otherwise it offers a large and rapidly expanding market. It should also attract foreign interest and investment.

One of the points the prime minister repeatedly underscored in his speeches was the size of the Pakistani middle class. He didn’t offer any numbers but those are not hard to estimate. If by the “middle class” is meant the segment of the population that has the disposable income to spend on the products large retailers would like to sell, then a third of Pakistan’s population of 156 million falls into that category. That means 52 million people with combined incomes of $78 billion and a per capita income of $1,500. If these people spend 20 per cent of their income on goods that large retail shops would be interested in putting on their shelves, this means a market of $16 billion. This is probably increasing at the rate of 10 per cent a year and will, by 2010, amount to $23 billion.

Given the size and openness of the Pakistani economy, why are foreigners not attracted to the country? Why has India become such a flavour of the day and why does Pakistan continue to be shunned by foreign investors? Why aren’t foreign investors attracted by the attributes Prime Minister Aziz kept referring to in his many speeches. I have attempted to answer this question in previous articles. I will go over some new ground today.

A commentator in a letter written to this newspaper in response to some of my earlier writings about India said that I was taken in by Indian propaganda and was ignoring the Indian reality. He couldn’t have been more off-base in his reaction. Let me briefly recount as to what is really happening with respect to foreign investors’ interest in our neighbour by offering some concrete examples.

In the space of a few days in December 2005, three of the biggest companies in the United States — JP Morgan Chase, Intel, and Microsoft — announced plans to create a total of more than 7,500 jobs in high value areas such as research and development and processing complex derivative trades. As a newspaper commentator wrote: “But for those worried about sluggish job creation by the US economy there was a snag. The jobs would all be in India. Worse, they would be jobs that in the past would have been in the US.”

What is even more important and impressive from the Indian perspective is the fact that some of these companies have decided to bet their future on India. Under JP Morgan’s plan, 20 per cent of the global workforce of its investment bank will be in India by the end of 2007. HSBC, one of the world’s largest banks operating out of London, has similar plans with regard to its requirement for financial skills. In an entirely different field — computer sciences and IT services — companies such as Microsoft, IBM, Intel, AMD, plan to locate significant parts of their research operations in India. What attracts them most to India is the quality of human resource available in that country. For foreign companies the attractions of India are not just costs — which industry analysts estimate at about 40 per cent below US levels — but also the quality of staff being produced by Indian universities.

According to Veronique Weill, head of operations at JP Morgan’s investment bank, “the quality of people we hire (in India) is extraordinary and their level of loyalty to the company unbeatable.” One of the many areas in which public policy continues to fail in Pakistan — a subject to which I will return momentarily — is the inability of the educational system to produce in significant numbers the same quality of people graduating from India’s science and technology institutions.

What is most troubling for Pakistan is that it is losing ground not only to India, a country that also has a large and young population. It does not even figure in the “back-up” plans drawn up by foreign corporations for addressing growing shortage of skills in their home countries. According to one knowledgeable analyst, “to avoid being too concentrated in one country, JP Morgan is already looking at other potential off-shoring locations mainly in Eastern Europe, but also China and the Philippines.” How can Pakistan get on the corporate maps of America and Europe? Why has public policy failed in that respect?

The most difficult problem Pakistan faces is the perception about it being the epicentre of Islamic extremism on the verge of an explosion in both political and social areas. Not only that, many influential voices in the United States in particular, are not convinced that Islamabad is doing all that is needed to put down Islamic extremists.

In an editorial the day after Prime Minister Aziz left town, The Washington Post not only advocated unilateral US action against extremists if Islamabad failed to act on its own. It resorted to name calling. Calling President Pervez Musharraf, “a meretricious military ruler,” it advised the administration of President George W. Bush that “if targets can be located, they should be attacked — with or without General Musharraf’s cooperation.”

The newspaper had a long list of complaints against the Pakistani leader. “Gen Musharraf has never directed his forces against the Pushtun militants who use Pakistan as a base to wage war against American and Afghan forces across the border. He has never dismantled the Islamic extremist groups that carry out terrorist attacks against India. He has never cleaned up the Islamic madressahs that serve as breeding grounds for suicide bombers. He has pardoned and protected the greatest criminal proliferators of nuclear weapons technology in history, A.Q. Khan, who aided Libya, North Korea and Iran. And he has broken promises to give up his military office or return Pakistan to democracy.”

If the visit by the prime minister was meant to change some influential minds about the way they view his country, it cannot be counted as a great success. The Post’s editorial could not be seen as a ringing endorsement of a country in which American corporations could do business. This segment of opinion-makers in Washington was not prepared to recognize that by following mindlessly the American dictat, President Musharraf’s regime — in fact any regime in Pakistan — could not expect to stay in power by totally alienating its own people. It was also ironical that even after the occupation of Iraq and the use of lethal force against the insurgency in that country, the US was not able to capture or kill Zarqawi, the Jordanian militant. It expected Pakistan to do that with respect to Osama bin Laden and Ayman al Zawahiri with considerably smaller resources and in much more difficult terrain.

While improving Pakistan’s image with respect to its participation in the struggle against Islamic extremism is not fully in Islamabad’s control, what it could do is to measurably improve the quality of its human resource. Here the public policy continues to fail in spite of the large amounts of new money committed to investment in higher education and skill development. Much of the effort under President Musharraf has been directed towards the use of public funds to open new avenues for advance education for Pakistani students.

Only time will tell whether this initiative will bear fruit. What the government could have done but didn’t do was to establish new institutions or significantly improve those that are already operating in a few areas where Pakistan could carve out a place for itself. An approach that was built on public-private partnership would have been very helpful in this area of human resource development.

Some specific initiatives could still be taken. The government could invite the private sector to establish some institutions of excellence — for instance a health sciences institute in Lahore, an advance engineering and technology institute in Karachi, an urban planning institute at Hyderabad, a small scale engineering institute at Muzaffarabad, a transport institute at Peshawar, a banking and finance institute at Islamabad, and an agricultural sciences institute at Faisalabad.

These are some examples of the kinds of initiatives the state should take to avail itself of the advantage of a large and young population that could bring immense economic benefits to the country. In not developing such a strategy Pakistan is rapidly losing ground to other populous countries. It is still not too late to plan for the future and make a real attempt to move forward.

Too much of hip-hopping

ANYBODY who has been a habitue of the newspaper habit would have noticed a number of important people have done a fair amount of calling during the last week. Mr Bush called for a renewed effort to destroy the enemies of the American people in Afghanistan, Iraq and everywhere else in the world, and one feels a little sorry for the American people who have to listen to him day after day saying the same thing over and over again.

President Musharraf once again went off on one of his regular jaunts and called for greater cooperation between Norway and Pakistan, leaving the sceptic wondering if there had ever been any trouble between the two countries. And Prime Minister Shaukat Aziz delivered the sort of speech that one is expected to deliver in New York, which would have prompted the late 1930s actress Tallulah Bankhead to say... “There’s less in this than meets the eye.”

He called for a solution to the Kashmir problem, urging flexibility, magnanimity and courage. He said Pakistan wants to live in peace and added that peace has to be achieved through strength and not weakness. His delivery had all the sonorous, credible, confident, cosy believability of a bedside consultation with a hundred pounds-per-hour plastic surgeon. Eventually he got to his favourite theme. ‘There are cynics in the government, who oppose reform and progress, but because of our conviction and determination to work in the national interest, we will overcome them.’ This left the reader wondering which reforms he was talking about and when his government intended introducing them.

On a different level an irate citizen of the Islamic republic indulged in a little calling of his own. In a letter to the editor, he expressed his indignation at the treatment given to members of the prime minister’s entourage by US immigration and customs. “Despite the fact that hundreds of our military and paramilitary jawans and civilians have laid down their lives fighting the US war against terror, US immigration authorities always give a cold shoulder to Pakistani nationals whenever (they) land on US soil. This means that US officials cannot differentiate between friend and foe.” He wondered if the Pakistani authorities would take retaliatory action against the United States when a parliamentary delegation arrives in Islamabad in March, by subjecting the members to an embarrassing physical search.

One can’t fault the miffed citizen for letting off steam, even though he knows his country is in the grip of a neo-colonialist mindset, and that nothing of the sort will happen to members of the US parliamentary delegation when they arrive, unless the chaps handling the group in Islamabad happen to be related to that Brazilian judge who insisted that if Brazilians were being finger printed in the United States, the same rule should apply to Americans entering his country.

A British writer, in a lighter vein, suggested that anybody looking for a historical explanation why Americans become so restive and edgy when things start to go wrong should read de Tocqueville. In his masterful filleting of the fledgling American state de Tocqueville pointed out that the Yanks could never be contented with their lot because they had rashly discarded the class system. In America everybody believes they could be president — or a millionaire, and anybody who didn’t achieve either felt cheated and had to take out their wrath on somebody. First it was the commies. Now it’s the Muslims.

One wonders, however, why the gentleman who had vented his spleen on the US immigration officers who were just following orders didn’t ask why the Pakistani prime minister feels the need to always carry such a large number of freeloaders whenever he travels abroad. Fourteen is a considerable improvement on 72, which appeared to be the target in the earlier heady, euphoric days. But even this figure is too large. But in spite of all this globe trotting by the president and the prime minister the image the westerner has of Pakistan hasn’t radically changed.

Critics have often wondered why the president and the military brass have not taken a more active role in eradicating some of the social ills which continue to destroy the moral fabric of society. In spite of his waning popularity, caused no doubt by going back on the promise he made on national television over the issue of the two hats, his recent statement on how Pakistani women inveigle and wheedle visas and political asylum out of foreign embassies, the news of various types of audacious spending in military hardware at a time of national crisis and the mishandling of the Kalabagh Dam episode, the president still has some support, especially among the commercial classes.

Military dictators don’t as a rule care a fig whether or not they are popular because they are not catapulted to power on a popular vote. There is evidence to suggest, however, that President Musharraf is concerned about his public image and is supposed to have once asked a confidant why people don’t like him any more. If this is true and he is interested in expanding his popularity, he should be seen as a man of the people and not as a patron of an iniquitous system where everybody is hell bent on maintaining the status quo.

He should also do something about the rural kulaks armed to the teeth, which move about in numberless four-wheelers with tinted glasses, have their own rules of etiquette, social behaviour and justice and intimidate an inefficient, ill equipped and corrupt civil administration that turns a blind eye to stories of excesses committed on village folk.

Perhaps somebody should pass on to the president an article Justice delayed is justice denied which appeared a few months ago in a section of this newspaper. It showed a hari, Manu Bheel, who had been on a prolonged hunger strike and was threatening to commit suicide. His family which included two sons, daughters, a wife, a mother and a male relative had been pounced upon by a landlord’s goons and imprisoned.

Manu Bheel hadn’t seen them for seven years. He had made countless appeals which had fallen on deaf ears. Since the governor and the chief minister were apparently not interested and the SHO of the area probably doesn’t read English, the Manu Bheel episode was soon forgotten. A judge did, however, take suo motu notice of the article and ordered the police to do the needful. The police must have looked in all the wrong places because they said they couldn’t locate the family, and so the Manu Bheel episode entered that gray area known as the unsolved crimes ledger which is becoming fatter by the week, now that a large number of policemen appear to be engaged in providing armed escorts to a wide variety of elected and unelected officials.

Perhaps somebody should also pass on to the president a letter written by a Pakistani which was published in this newspaper a few months ago. Writing from Las Vegas, the gentleman gave a knee-jerk leftist response when he wrote: “President Musharraf has been globe-trotting endlessly, and not a single month goes by when he does not visit new countries — in some countries he has been ‘the first Pakistani head of state to visit.’

“One does not understand what these countless visits can accomplish. In our constitutional framework the president is head of state and the prime minister is head of government. If these tours are conducted for foreign policy reasons our foreign minister has enough laurels to his credit for travelling to so many countries. Further, the goals — which we don’t know what they are — can be equally accomplished by our well-placed ambassadors in foreign countries. Does President Musharraf know that each time he visits a foreign country he undermines his own handpicked prime minister?

“When are we going to learn to control spending? We already have an army of cabinet ministers and advisers doing multiple and overlapping jobs... We have to catch up with 21st century demands for better health, education and environment as well as elect a government which is responsive to the requirements of the people of Pakistan — not people who enter the highest offices through force, coupled with never-ending conspiracies by all those fossilized, feudal politicians who never disappear from the country. And if they disappear or die, their equally incompetent daughters and sons come and share their power. Is this the destiny of the poor people of Pakistan?”

So far, it certainly appears that it is.

Goodbye Paris, hello Chad

ABOUT 100 seasoned US state department officials recently got perhaps the nastiest shock of their professional lives. Headed for long-awaited cushy assignments in the fleshpots of Europe, they were suddenly reassigned to such developing countries as Kenya and Pakistan. The word is that another 500 officials scheduled for moves later this year will get the same news.

However frustrating these orders are for Foreign Service veterans looking forward to restful years in Paris and Rome, the transfers signify an important and long-needed transformation of US foreign policy.

As Secretary of State Condoleezza Rice made clear in a speech this month at Georgetown University, the world has changed, and the state department needs to change with it. The United States, Rice pointed out, has as many diplomats in Germany — population 80 million — as it does in India — population 1 billion-plus. In China, Pakistan, India, Indonesia and Brazil, there are cities with millions of inhabitants — and few US diplomats have set foot in them or even gone near them. Across Africa, Asia and the Muslim Middle East, there are failed and failing states in which terror organizations are springing up, global pandemics are brewing and from which, increasingly, the United States’ new immigrants are coming.

Yet until recently, US foreign policy was mostly about Europe. The confrontation between Washington and Moscow over the future of Europe was the main preoccupation of US foreign policy during the Cold War.

Everything changed on 9/11. Danger and opportunity now lie outside Europe. Short term, US foreign policy is centred on the Middle East. Longer term, East and South Asia will probably shape the new century’s agenda. When Rice calls on the state department to move its personnel out of Europe and into the new frontiers of world politics, it is one part of a larger and more historic shift — US foreign policy is now non-Eurocentric. But there’s more to it than geography. Rice wants the state department to practise a new type of diplomacy.

In the old days, striped-pants cookie pushers — as US diplomats were sometimes derisively known — focused on governments and elites. There was no need to learn such languages as Urdu, Farsi and Arabic because English was the language of high places. Why bother speaking to common people?

Yet the old style of diplomacy no longer works. Television and the Internet are creating new and sophisticated channels of communication around the world. Democracy is shifting power from the suites to the streets. Accordingly, US diplomats must learn how to engage the large majorities in most countries who don’t speak English, who have never attended a foreign university and who get their information about the United States from Hollywood movies and their local media.

I noticed this on a recent trip to India. English is one of India’s official languages, and an estimated 150 million Indians speak it. But the more important number is the estimated 900 million who don’t. These people vote, and unless US diplomats connect with them and give interviews in the proliferating native-language electronic media — a 24-hour all-news, all Bengali channel is starting up this year in the communist-ruled state of West Bengal — our ability to work with the Indian government will be limited.

At an Islamic high school I visited, students wanted to know if Americans lived like the characters they see in movies. They were surprised to hear that Hollywood movies and American life are no closer than Bollywood movies and Indian life. Indians don’t break into singing and dancing every time they have an emotional moment, and Americans don’t fire guns whenever we disagree. The students didn’t know that opinion polls consistently show that an overwhelming majority of Americans believe that God exists and will judge our souls, that religion is important or very important to most Americans and that 67% of us pray every day.

Part of the problem is that US diplomats spend so much time locked in embassies and consulates that are blocked off and guarded. Sad experience shows they need protection. More than 200 people were killed in 1998 when terrorists attacked US embassies in Nairobi, Kenya, and Dar-es-Salaam, Tanzania. But that can’t be the end of the story. Especially in developing countries, the United States needs a bigger diplomatic presence outside embassies. When Rice calls for a greater emphasis on public diplomacy and on outreach, this is part of what she is talking about.

Much of President Bush’s foreign policy is controversial. But even in a time of polarization and partisanship, Rice’s effort to make the state department less Eurocentric, and her advocacy of broader public diplomacy in a democratizing world, should not be seen as either conservative or liberal, Republican or Democratic. Those who disagree with everything else in the Bush foreign policy can and should support this piece of it. —Dawn/Los Angeles Times

The writer is a senior fellow at the Council on Foreign Relations

Space exploration

HUMAN exploration of space is such an epic notion, conjuring images of both a science-fiction future and a real-life history of giant steps for mankind, that it’s hard not to be swept up in the romance.

President Bush certainly seemed to have been having “Star Trek” fantasies when he delivered his vision for returning astronauts to the moon, and eventually sending them to Mars, during the run-up to the 2004 presidential election.

Afterward, Bush dropped his proposal like a sizzling meteorite, having scarcely mentioned it since. Unfortunately, though, it still seems to be guiding the thinking of NASA Administrator Michael D. Griffin. About two-thirds of NASA’s 2006 budget will be spent on manned spaceflight programmes. That money will come at the expense of more scientifically worthy (not to mention cheaper and safer) unmanned space exploration and astronomy, and the under-funding of these programmes promises to get worse.

The president’s 2007 budget, slated to reach Congress on Feb. 6, is expected to reduce funding for several government programmes — NASA included. It’s almost certain NASA will get less than the $17.9 billion that Congress said last month it should get in the space agency’s reauthorization bill. That will leave Griffin with tough choices over whether NASA should pursue more worthy projects — science-rich unmanned exploration — or keep its focus on returning the aging space shuttle to flight to finish building the International Space Station. Given his previous comments that the agency’s long-term focus will be on manned spaceflight, the outlook isn’t good.

—Los Angeles Times