THAT the winners of the Cold War abandoned Afghanistan soon after the end of the war against the Soviets is a mistake they have now admitted honestly after incurring a heavy cost of some of the worst terrorist attacks in recent history.

Having learned this lesson at a cost, the likelihood is that the developed countries would now choose to keep the Afghans engaged gainfully and meaningfully. In order to reduce space for for alternative forms of engagement, the engagement plan would need to encompass the region. Pakistan has been and continues to be a key playerin the region. Also, as mentioned by the British Prime Minister, Tony Blair, as well; Pakistan’s is going to have a key role in Afghanistan’s reconstruction and rehabilitation which the current anti-terrorist coalition will undertake in continuation of their strategy.

Since Pakistan is to remain in the front-line of the reconstruction effort, to bridge the gulf between the traditional Afghans and the modern West, it is being offered economic pledges and inducements by the key coalition partners. Pakistan needs to assess whether these additional loan offerings and reschedulings will provide it the required economic relief or whether these will merely help it get by until a future date when the West will need it no more. At this point, deeper thought is required at the levels of both the leading coalition partners and Pakistan. For, in this struggle against terrorism in this region, the coalition partners require not merely short-mid-term partners but permanent ones.

A major source that leads to the expansion of informal armies is economic deprivation. This is notwithstanding the core cause that may be traced to the Israeli-Palestinian, Kashmir, and other conflicts. However, if the backwash effect of unresolved conflicts is to be minimized in other regions, grievances need to be addressed wherever they emanate. It is in this stage of the cause-effect chain that the world is at the moment in this region. Since the world chose to address the symptoms first and while the cause may be addressed in parallel, let the symptoms be tackled more thoroughly by choosing to address economic deprivation next.

This would, however, require a more lasting partnership amongst the current coalition members. And, the coalition leaders will need to redefine their outlook towards, and relationship with, the developing countries. The gap between the two worlds will need to be closed as all and sundry in the world have now seen what none other than the Western development scholars have been advocating for decades. That there will not be two futures for the world. Either there will be one future or none at all. To work towards that “one future,” a relationship more well-intentioned is needed than the one that has existed thus far.

Since the future is one, the goals should be common. However, to achieve common goals, strategies have to suit the terrain and ground realities. A strategy that worked in the past may not work again. Or, a strategy that works in one place may not work in another one. For example, in Afghanistan and ala Colin Powell, it has been a combination of first world air power and third world ground force that made the military strategy effective. Similarly, in the economic arena, it has to be a combination of resources from the first and the third worlds that would together make a regional economic turnaround strategy effective. That is, an economic strategy that does not exist for the sake of it but to definitely achieve the economic development goals.

In the case of Pakistan, financial assistance has been provided by international lending agencies for a long time but to achieve the economic goals of the developed countries more than those of the recipient’s. While Pakistan opened up for imported finished goods as directed by the financiers, the remaining economic indicators remained lacklustre. As the economy failed to rev up significantly, unemployment increased and so did poverty with development banking giving way to poverty alleviating micro-financing. Problems of taxation, fiscal deficits, and governance compounded as more and more efforts were made to address them. Reliance on external financing increased. It is little wonder that Pakistan ended up being more indebted than it was in the past. According to the SBP’s annual report (2000-01), Pakistan’s total debt liability reached 115 per cent of the GDP in 2001 with external debt being 55.5 per cent of the total debt. Per capita debt had exceeded per capita income in 1999 as disclosed by the above report of the SBP. Even though foreign debt has been rescheduled twice,

Pakistan has not developed a capability to service it as Pakistan’s debt is not sustainable. In 1997-98, Pakistan’s ratio of external debt to exports of goods and services had exceeded that of LDCs and also that of South Asia. Even though Pakistan’s external debt to foreign earnings ratio has been comparable to that of the Heavily Indebted Poor Countries (HIPC), Pakistan prefers not to seek debt write-off under this category. The finance managers of the country continuously seek recourse to various sources of external funding which the above route to writeoff might inhibit. What then is the solution to Pakistan’s predicament, especially if it has to be integrated with the world?

As for Pakistan’s coalition partners, they believe that by waiving or suspending sanctions and by providing more of the same kind of assistance that was given in the past, Pakistan’s economic problems would be addressed. More of the same includes more loans and debt rescheduling. Some increase in market access is proposed which is already resisted by their business interests (as in the USA) and member countries (as of EU). While market access should help after the dust settles and if allowed by their business interests, more loans and temporary debt relief are not likely to help Pakistan emerge from the quagmire it currently finds itself in. If a long-term or permanent relationship is sought after new realizations, there will be a need for a paradigm shift in the approach to Pakistan’s economic growth and development. This paradigm shift will need to take off from a radical move of debt write-off without which more loans or rescheduling are likely to make the already unsustainable debt burden even more unsustainable. With the present and the future of a nation mortgaged as above, the probability of its integration with the world, sought by some of the key US officials, will remain a fantasy.

Integration is not mere more market access for exports. The exporters and a select segment of the society would get integrated but the bulk of the population will remain bypassed. This bulk will require more than humanitarian assistance for integration. Through debt write-offs, there is a need to set the country free from onerous debt-servicing or binding debt-rescheduling so that resources are made available for investment in the social sectors. To guard against future indebtedness and to achieve the goals of write-offs, it should be coupled with a well-thought out development strategy that would crank the wheel of economic development into a self-sustaining motion carrying all and sundry along to achieve intra-country integration. The country would then be poised to integrate with the world with dignity.

The development effort would, however, require that the recipient country is set free from the yoke of tough growth-inhibiting conditionalities that have been the norm for over a decade. Since their upshot has been greater indebtedness, a clear break from the old recipe is required by combining first world’s financial resources with third world’s knowledge about ground realities.

Since there is no dearth of expertise in the country, a development model built thus would have a higher probability of achieving the goals as compared to the one conceived abroad in a different environment. Its repeated failure should generate signals for a change. However, to make a start, the recipient country’s burden should be reduced through a debt write-off. This coupled with a fresh development strategy will be the first meaningful step towards true integration of the region with the world.

Since integration is being contemplated by the leading coalition partners already to weed out the symptoms of terrorism, a permanent relationship is required between this region and the West as also mentioned by the US ambassador to Pakistan. However, the nature of financial help they have in mind is no different from what it was even when the relationship was strained. While its lack of effectiveness has been discussed above, the old recipe keeps the country’s financial management consumed in either lining up new sources of financing or sorting out ways to seek relief from repayment of the same. There is no time and energy left for creative economic development pursuits. This resource needs to be set free too for developing alternative strategies to achieve economic goals. Also, the old recipe tends to focus only on the cores in the country and their integration with the world.

The marginalized and the terrified periphery when too disappointed with unfulfilled promises tends to communicate with destabilizing acts that the privileged call “terror.” If this reverse terrorism is to be guarded against, then true integration would require the integration of the periphery with the world that calls for a totally different approach to the problems of under-development as discussed herein. A crucial reason has been the flawed economic recipe that came tied with foreign assistance and fed into the country’s indebtedness. If the same recipe comes tied again with fresh assistance, the country’s economy will sink deeper and the periphery will be provoked further. A fresh beginning in a long-term relationship, therefore, requires not only amends for past mistakes but much more than the traditional kind of help that Pakistan received but to little or no avail. Debt write-off would enable the country to make a fresh start on the road to all-encompassing development. This would then also root out the reasons for terrorist activity that attracts the deprived in the region. Since imbalance is destabilizing, the first world ought to now see that a balanced development of the world is needed in the interest of world stability.