The Budget in perspective

THE tests of a good budget are: a) the extent to which it balances the books; b) its success in achieving fiscal consolidation; c) the quality of the expenditure reforms that it promotes; d) The degree to which it meets the needs of the economy to counter depressed growth symptoms; e) Its effect on the environment for growth. The basic point to argue here is that whereas the budget for 2003-04 scores reasonably on (a) and (b), it does not fare that well on the remaining tests.

I propose to discuss (a) and (d) together since the government remains a dutiful, if not overzealous, student and client of the IMF, choosing a religious-like faith in macroeconomic stability, irrespective of the cost to the economy of such a strategy.

The finance minister rightly decided not to impose new taxes or raise rates of the existing taxes. He has opted for fiscal consolidation through rationalization of taxes, which will cause an overall revenue loss of Rs. 9.8 billion to the exchequer. However, he has balked at expanding the base of GST on services to cover professionals like lawyers, because it would have brought into the net a vocal community, revenues from which would accrue essentially to the provinces, with the federal government left to face the political flak.

Although the tax-to-GDP ratio is expected to remain constant at 11.4 per cent, tax revenues are expected to grow by 10.7 per cent (an increase of 7 per cent in real terms), which may turn out to be ambitious if growth remains below expectations.

The concessions to traders, the raising of the threshold turnover from Rs. five million rupees to Rs. 20 million for registration under the GST regime and amnesty to those registering before September 2003 go against the grain of documentation of the economy, although it is well known that not many have registered even when the exemption limit was Rs. five million rupees.

Whereas the import duty on larger-sized vehicles has been lowered car manufacturers should still be laughing since the decision was prompted by demands from the European Union for market access and not by the desire to threaten the privileges of local assemblers through exposure to enhanced competition.

The major thrust of the budget is the support to the construction industry in general and the housing sector in particular, through downward revisions in excise duties and income tax breaks. With their strong forward and backward linkages, growth in these sectors should stimulate economic activity all round, which, along with reductions in corporate income tax by two to three percentage points, depreciation allowances on second hand equipment, withdrawal of GST on machinery for use by exportable agro-based products, reductions in duties of 259 items (essentially raw materials) and government spending on infrastructure projects should stimulate fresh investment and thereby create more sustainable job opportunities.

To this extent, the direction and the push being given in the public sector development programme, through its 30 per cent upward revision, is laudable, although the formidable constraint on the rapid growth of the housing sector will be the risk of default owing to the difficulty of enforcing foreclosure laws, essentially because social and cultural values would come into play; society and the courts would find the sight of a ‘defenceless’ poor family surrendering its shelter to a bank repulsive.

Moving to tests (a) and (d), a common refrain of government officials throughout the year was the need to bring down the budget deficit to levels permitted under the IMF programme. The preoccupation with the size of the deficit (its reduction to four per cent of GDP), irrespective of the state of the economy and regardless of reasons, is precisely the tragedy of the budgetary exercise in Pakistan today. This obsession with the IMF-imposed budget deficit target has resulted in book-keeping functions taking precedence over the much more critical and urgent requirement to simultaneously reorient and redirect the economy in a way that the process of growth can be accelerated. The single-minded pursuit of the objective of fiscal austerity has stifled economic growth.

The expenditure compression effort just to meet a budget deficit target is beginning to look like a mindless exercise. With poor governance and inability to right-size government, the complementary inputs required to make government productive have, inevitably, given way to the IMF’s desire to adjust the deficit. Resultantly, Wapda’s distribution losses are 27 per cent and that of the KESC 42 per cent, as against 18 per cent in India, 15 per cent in Bangladesh and 8 per cent in Malaysia, while the annual loss to the economy of a poor transport system is Rs. 200 billion (five per cent of GDP). For instance, expenditure on the maintenance of roads is barely 20 per cent of the required amount; according to the World Bank in 2001, although Rs. 21 billion was spent on roads, assets of around Rs. 16 billion were lost because of deferred maintenance.

Moreover, since the current strategy insists that the defence policy and its effectiveness cannot be compromised whatever the costs, it is difficult to have a meaningful debate when confronted with such a hypothesis. The financial solvency of government cannot be an objective per se. Poverty alleviation has to be an integral part of an overall strategy for economic development. Similarly, poverty reduction cannot be achieved if provinces, responsible for improving the efficiency of social services, continue to be starved of funds through a patently unjust NFC Award and the harsh budget deficit ceilings imposed by the IMF. The provinces are seemingly bearing almost the entire cost of structural adjustment.

The unfair revenue-sharing arrangement between the centre and the provincial governments has meant that the latter will receive Rs. 520 billion less than what would have come their way under the 1990 NFC Award. Moreover, none of the debt relief obtained by the federal government and the sharp decline in domestic interest rates on government debt is being shared with the provinces. As a result, a large chunk of the development programme pertaining to irrigation channels, roads, etc., that should have formed part of the provincial, and in some cases, even local government, portfolio of development schemes is being championed and executed by the federal government.

It is also instructive that the province of Balochistan has a development programme that has the same size as the allocation for MNAs and Senators.

With a large amount of slack or underutilized industrial capacity and a low rate of inflation, a moderate increase in the deficit by another Rs. 40 billion to finance public sector investments should be affordable as it is not likely to unduly disturb the inflation rate and macroeconomic stability. Nor will it unduly enhance the debt servicing costs of the government, considering that the interest rate on its bank borrowings has fallen to below two per cent. This stimulus is urgently required.

However, it is not fiscal recklessness that is being advocated, since any large injections, in the medium to long term, will have to come from expenditure reprioritization and a major shift of scarce resources from defence that has been crowding out productive investments.

In my view there have not been significant reforms in government spending and a huge problem lies unaddressed on the expenditure side. It is a big black hole and a great deal of adjustment needs to be made in this area, particularly with respect to defence-related expenditures characterized by a complete lack of transparency (it being reflected as a single live item in the budget).

The poor efficiency of utilization of government expenditures continues to be a neglected area. For the private sector competition forces improvements in cost efficiency. Governments, however, have a monopoly over expenditure, with little external or internal pressure to reduce costs. If the efficiency of public expenditures can be improved, higher growth rates can be achieved from the same savings.

Thus, the decision to raise salaries of government servants and payouts to pensioners by 15 per cent, without a simultaneous restructuring and downsizing of the public sector and the upward revision of the provincial shares in the NFC Award (now a meager 37.5 per cent), will have a crippling effect on the finances of provincial and the recently established local governments. They will be forced to cut back on developmental activities, urgently needed repairs and maintenance of infrastructure, provision of adequate medicines to hospitals and essential supplies and consumables to educational institutions.

The writer is a former finance minister of Punjab

Will Pakistan sign tobacco treaty?

HOW much is a human life worth? Why is it held to be invaluable in the developed democracies of the West but dirt cheap in a Third World country like Pakistan? This contradiction emerged clearly last month when the annual World Health Assembly of the WHO adopted the Framework Convention on Tobacco Control (FCTC) on May 21 in Geneva after four years of protracted negotiations interspersed with hot bargaining.

This landmark event, which received widespread publicity in the western press, was more or less ignored by our media. Few newspapers reported it, probably because we have more important things than the adverse health effects of tobacco to worry about.

The significance of the Framework Convention lies in the fact that it is the first step towards setting up a legal instrument to provide cover to tobacco control measures. When it comes into force — on the ninetieth day following the date of deposit of the fortieth instrument of ratification, to quote the treaty — it will provide for restrictions on tobacco advertising and sponsorships, tougher health warnings and ban on smoking in public places. The WHO sees this as an important move towards protecting “present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke”.

It is appalling that in a country where a high birth rate downgrades human life and where people die in large numbers on account of avoidable causes — preventable lifestyle diseases, crime, accidents, etc. — smoking is not perceived as a serious health hazard. As for the rights of the non-smokers, it is pointed out that the air we breathe is already so polluted that a little cigarette smoke could hardly make it any worse. This cynical and fatalistic attitude, especially of the smokers, does not however absolve the policymakers and the leaders of opinion of their responsibility in the matter.

According to the Human Development Report 2002, on an average the annual cigarette consumption per adult in Pakistan is 620 (it is 119 in India and 232 in Bangladesh). What is actually more worrying is that in spite of the awareness created by anti-smoking campaigns, the trend is growing (cigarette consumption was shown to be 532 in UNDP’s 2001 report) and more so among children and adolescents.

Not surprisingly, the incidence of tobacco-related deaths in Pakistan is also on the rise and nearly 99,000 people die every year because of diseases caused by smoking, such as cancer, cardiovascular diseases, respiratory disorders, etc.

Not surprisingly, the thrust of the anti-tobacco campaign in Pakistan has been towards the consumers. It is the smoker who is expected to know better and show greater responsibility in the matter. That would explain the apathy towards the FCTC which focuses on the policymakers and manufacturers.

The anti-smoking campaigners and the health professionals have sought to mobilize the citizens against cigarettes. But the fact is that it is the tobacco lobby that needs to be curbed. This has so far proved to be a losing battle. That is because an approach which seeks to persuade a person who has already joined the smokers’ club to kick the habit is infinitely more difficult than preventing him from becoming a smoker in the first place.

The cigarette companies know this. That is why their campaigns are directed at the youth who are susceptible to the glamourizing effect of cigarette advertising and the linking of tobacco to sports, as though the two go together.

Normally it is the government that should be protecting the interests of the public. But given the massive revenues the national exchequer collects from this sector — Rs18 billion in 2003-04 — would it try to kill the goose that lays the golden eggs? The pact seeks a total ban on advertising and promotion of tobacco in five years and this would obviously lead to a decline in the number of smokers and a fall in revenues.

The Framework Convention adopted last month amounts to a declaration of intent. But things can go wrong. Even when it comes into force, the parties will have to adopt domestic legislation to implement its provisions. That could take decades as our experience with the WHO code for baby food marketing has shown.

True, the government of Pakistan was quick to issue two ordinances, namely, the Prohibition of Smoking and Protection of Non-Smokers’ Health Ordinance 2003, and the Cigarette Printing of Warning Ordinance 2003 which became effective on May 31. The ordinances succeed similar ordinances promulgated in October 2002 which supposedly made government offices, airports, railway stations, restaurants and other public places smoke-free zones and prescribed a fine for violators.

Although the ordinances have ostensibly been in force since last year, they have made precious little impact on the incidence of smoking in the country. Sports sponsorship by tobacco companies, advertising of cigarettes in the media and other promotional activities have continued unchecked.

What is basically needed is an official policy which is not tobacco friendly. True the duties imposed are heavy — 38 per cent of the federal excise duties will come from the cigarette and tobacco in 2003-04 — but that does not affect sales as the figures show. According to the Pakistan Economic Survey 2002-03, nearly 36 billion cigarette sticks are produced in Pakistan and they obviously have a market.

The turnover of the tobacco companies exceeds the health budget of the government. The Pakistan Tobacco Company alone, which is the largest cigarette manufacturer in the country, recorded a gross turnover of Rs20.5 billion in 2002 and made a profit of Rs 420 million after tax deductions.

By virtue of the massive fiscal interest of the government in the tobacco sector, the cigarette companies feel encouraged to resort to aggressive marketing. How can one expect the consumers to resist the onslaught. A survey found that most of the juvenile smokers are aware of the hazards of smoking but have failed to quit it in spite of their best efforts. This is not strange. Tobacco consumption is addictive. The body gets used to it very fast, and attempts at giving it up cause severe withdrawal symptoms.

The Framework Convention points out that cigarettes and other products containing tobacco are engineered so as to create and maintain dependence. The compounds they contain and the smoke they produce are pharmacologically active, toxic, mutagenic and carcinogenic and that tobacco dependence is separately classified as a disorder in major international classifications of diseases.

Given the chemical elements of tobacco products, a practical approach would be to ensure that a young person who does not have an informed understanding of the serious implications of smoking is not exposed to cigarettes at all. Thus he will be denied the opportunity and temptation to get addicted to them. Cigarettes are highly addictive because the nicotine in them floods the nerve cell receptors and causes chemical changes in the brain which account for the withdrawal symptoms.

This phenomenon is something the cigarette manufacturers are fully aware of but choose to withhold this information from the public. They also know that the addictive process begins immediately when the first puff is taken.

With our legislators and policymakers locked in their struggle for political power, and the media cheering them on, one only wonders if the Pakistan government will have the time and willingness to sign and ratify the Convention when it is opened for signatures in Geneva on June 16.

A dog by any other name

DOES the Arabic word “Laila” which actually means night, but is widely used as a name among Muslim women all over the world, have a religious connotation? None, that I’ve been able to ascertain. So if somebody names an animal as Laila, even if the animal is a dog, there should be no harm.

A few days ago when the pet poodle of a top Italian actress was run over by a car in Milan and got killed, and the lady was disconsolate, nobody in Pakistan protested why the poor beast had been named Laila.

They say that the famous Laila of the blighted Laila-Majnu romance was an Arab of the pre-Islamic period and not a Muslim. I am always surprised why Muslims of Pakistan get indignant whenever an Arabic name, or even an Arabic word, is not given the respect they think it deserves. A couple of years ago, a lawyer of Lahore sought an injunction from the Senior Civil Judge that Shameem Ara, the former top film star and now film director, be restrained from naming her little dog Laila “because it implies contempt of the human race”.

That perceptive and irrepressible Urdu columnist Munnoo Bhai wrote a column about it, but instead of finding fun in the matter, he got angry at the lawyer. I am sure be must have felt sorry later for losing his temper. Columnists should never act like indignant reformers. Their caustic comments are enough to highlight social issues. There was no further news about the lawyer’s plea to the Senior Civil Judge, but I hoped he was laughed out of court, as was expected.

The affair set me thinking. Suppose, I said to myself, the lawyer has his way and the court orders Shameem Ara not to call her dog by a name allegedly sacred to humanity, what will prevent her from continuing to do so in private? Also, would the lawyer take it upon himself to go and inform the dog that it was no longer Laila, and if his mistress or anyone else ever calls it by that name, it should report the matter to the nearest police station?

That’s the trouble with incomplete newspaper reports. Was the lawyer demanding that no dog should be given a human name? Was he only anxious to prevent Shameem Ara from insulting the human race? Was he worried about the sanctity of the Arabic language? Would it have been OK with him if instead of the Arabic Laila the dog’s name was the Persian Shireen or the Punjabi Heer? Surely there was more than cultural indignation that took him to court. Without apologies to the lawyer, is he sure he was not seeking cheap publicity? We shall never know that. Before I tell you of the grim purpose for which Munnoo Bhai wrote about Laila and the lawyer, let me take you back some 58 years ago. As a student in Aligarh I was travelling by train to Delhi. A passenger on the opposite seat had with him some volumes of Alif Laila, “A Thousand & One Nights,” in the original Arabic. Without knowing the language I began to look into one of them. As the bulky volume slipped from my knee and fell on the carriage floor, another passenger, obviously a Muslim, picked it up, saw that it was in Arabic, kissed it, touched his eyes with it and handed it back to me. The owner and I exchanged amused glances. How could we tell him that alf Laila was even more pornographic than “Lady Chatterly’s Lover?”

In his column Munnoo Bhai was grossly annoyed. Here was a lawyer (he wrote) worried about violation of respect of the human race because a film star had decided to call her dog Laila, but he hadn’t read the report of Pakistan’s Human Rights Commission published the same day which stated that, during last year, five women were murdered every day in Punjab, two were abducted, and the tally of rapes came to one every two hours. Did the lawyer think that Shameem Ara’s act was more heinous than these three crimes against humanity?

There was one aspect of Munnoo Bhai’s view of the matter that had never occurred to me as a writer, and would certainly never occur to that lawyer, and I was deeply moved by it. He wrote: “Countless robbers, drug smugglers, murderers and rapists go about bearing names including a name of Allah and that of His messenger. Were they not guilty of insulting Islam, the Muslim Ummah and mankind itself? And what about the monster who had killed 100 children in Lahore and was flaunting the name Javed Iqbal? What was the lawyer doing about all these names?”

This kind of hypocrisy is not confined to rare individuals like that lawyer, it prevails all over the country among thoughtless intellectuals also, that is, if an intellectual can be thoughtless. Our religious leaders pray day and night about the need for piety and the need to observe the rituals of Islam, but I have yet to see any one of them condemning gang rape and so-called honour killing of young brides. They never quote the Islamic tenet which allows an adult Muslim woman to marry the man of her choice or her right to refuse a man thrust on her by her elders.

This indifference towards the plight of helpless women reminds me of what an Inspector General of Punjab Police said a few years ago about he increasing number of cases of rape in the province and thereby invited the wrath of the Women’s Action Forum and other organisations. If the human rights people did not have so much regard for the dignity of human life they would have demanded that he be strung from the nearest lamp-post, and I would have agreed with them. Instead of condemning the bestial crime this IGP had said, in a masterpiece of insensitivity and callousness, that most women themselves invite rape and then make a lot of noise about it which they shouldn’t if they were really self-respecting. In any decent and civilised country that IGP would have been instantly dismissed from service, but I can imagine him gloating over his dirty remark in his retirement.

Lawyers have always been in the forefront of the struggle for human rights and civil liberties, and this is the most creditable feature of their profession. Obviously this gentleman obsessed by Laila was left behind. Even now if he were to join a human rights organisation he would at least come to know what is meant by disgracing humankind.

The Iraqis must have jobs

ANGRY demonstrations by thousands of suddenly unemployed Iraqi soldiers outside the Baghdad headquarters of US occupation forces last week should not have surprised anyone. Left without pay, scrambling to feed families, the troops are demanding one of life’s basics: a job.

If the US, the new ruler of Iraq, goes through with plans to soon add hundreds of thousands of other government workers to the unemployment rolls, the nation’s economic condition will become still more chaotic. Officials should put layoffs on hold until they provide new jobs.

The Bush administration knew before invading Iraq that almost one-third of the nation’s workers held government jobs and nearly two-thirds relied on United Nations food rations. Averting disaster depends on keeping workers paid and fed. Yet nearly eight weeks after US troops took control of much of Baghdad, the nation’s political and economic life is in great disarray.

Washington already has replaced its first overseer of Iraq’s reconstruction. The new civilian administrator, L. Paul Bremer III, said he understood why former soldiers were angry but that he wouldn’t be blackmailed into creating job programs by threats of suicide attacks on US troops. Of course, but Iraqi threats aren’t the reason that the United States should do the right thing.

Until new jobs are created, the occupation forces should keep paying all but the highest-ranking civilians of Saddam Hussein’s former government. A new army may number 100,000, but it will take time to form, and about 400,000 ex-soldiers will be left in need of jobs.

The top task for US forces remains establishing security. Iraqis must be able to get to school and to what jobs still exist without fearing shootings and robberies. After underestimating the lawlessness that has followed Hussein’s ouster, U.S. generals have increased troop strength. As any number of international organizations pointed out before the war, many troops will be required for many months to ensure stability. —Los Ageles Times

New politics of terrorism: When Musharraf meets Bush-II

IN ANY serious conversation, it always helps to have a good measure of the other side, not only the principal interlocutor but the people whose advice he seeks. Much has been said and written about President George W. Bush himself, his style of management, his lack of interest in details and his ability to come to closure on important decisions. Much has also been written about his coterie of advisers. Given all these analyses, how is President Bush viewed midway through in his first term?

Political historians — in particular those who specialize in presidential politics — have begun to re-evaluate Bush, the man, the politician, the way he works, the vision for America he is pursuing. According to Richard Norton Smith, past director of four presidential libraries, “it wasn’t so long ago that George W. Bush was commonly portrayed as an extension of his vice-president. But since nine-eleven, the facile comparison between the nation’s first MBA president and a detached chairman of the board has lost is currency. In fact, he may be on the verge of joining a small group of presidents, all now thought of as great, who pitted their top aides against each other, fashioning an agenda above the fray.”

How has President Bush brought about such a sea change in the way he is now looked at by some serious analysts? How did a person who was seen to have assumed office without a popular mandate and with the help of a compliant Supreme Court, achieve stratospheric approval ratings? These questions have many answers. The first one is the clever way in which the Bush White House has used the fear of terrorism to build domestic support.

What some American political analysts have begun to call the “new politics of terrorism” has immensely strengthened the standing of George W. Bush. According to one of these analysts, the basic facts are well known. Immediately before 9/11, Bush’s approval ratings were falling. His presidency seemed to be fast unravelling. After the terrorists’ attacks and his handling of the crisis, the president’s approval soared. A new dynamic was created by terrorism. “Where voters look for security, especially from foreign enemies, they look to the executive branch of government. Franklin D. Roosevelt understood this in 1940 as war raged across Europe. [But] there is one important difference between Roosevelt’s approach and Bush’s. FDR saw fear as something that could paralyze a nation and prevent action. Bush sees fear as moving the nation to action.

President Bush has also been very astute in making full use of the diverse advice he gets from his close advisers. According to some historians, only those presidents succeeded in the past who were able to accommodate in their cabinets and among their advisers people who held strong but conflicting views. That way they could look at any given situation from many perspectives. But only those presidents became great who were able to use all that advice and dissent to put their own stamp on policies. This President Bush seems to be doing with considerable success.

George Washington, America’s first president, had accommodated, like fire and frost, two quarrelling aides, Thomas Jefferson and Alexander Hamilton, in his cabinet. Similarly, Abraham Lincoln listened to both William Seward, his secretary of state, and Salmon P. Chase, at the treasury. Still later, Franklin D. Roosevelt guaranteed himself competing sources of information while injecting a healthy dose of creative tension. “Few men have so thoroughly detested one another as Cordell Hull and Summer Welles, the secretary and under-secretary of state” in the Roosevelt administration. And yet Roosevelt followed a foreign policy that took America to new heights.

Could President Bush be achieving a place in history similar to those occupied by these great American presidents? Does he have the vision to achieve greatness? Unlike his father who spoke despairingly of something called “this vision thing,” President George W. Bush takes considerable pride in being able to set in broad outlines the agenda he wishes to pursue, leaving the details to be filled by those who work for him. In giving him advice and counsel some of his associates differ visibly, sometimes even violently.

Continuous sparring between Colin L. Powell and Donald H. Rumsfeld is no longer a secret in Washington. The two represent opposite views of the world. Rumsfeld, actively supported by Dick Cheney, the vice-president, would like to ensure that American military supremacy is never challenged again. As we will see in a later article, he is supportive of creating an American empire overseas in which its power and authority remains supreme.

Colin Powell, on the other hand, continues to advocate an internationalist approach, in which the United States plays as a member of a team. According to his world view, shared unfortunately by only a few in the Bush administration, America has a much better chance of succeeding in implementing its agenda at the head of an international team rather than by going it alone. Acting without keeping the company of a number of other players, would only serve to ignite resentment and, ultimately, thwart the country’s reforming zeal and mission. How have these differences actually played out on policy-making on important issues?

Even in the presence of conflicting advice, President Bush has not wavered in the pursuit of what has now come to be seen as his vision for a new world order in which America reigns supreme. He continues to follow that goal while allowing his associates considerable room to pursue their own thinking. He left, for instance, the conduct of the war in Iraq to the Pentagon and the chief of that agency, Defence Secretary Donald Rumsfeld. He left the management of the diplomatic niceties surrounding the run-up to the war to Secretary of State Colin Powell.

If Rumsfeld and Powell found themselves in disagreement — which they often did — Bush was happy to intervene. He had no problem in letting the buck stop at his desk. The ultimate decision was always his to make and he did that with two objectives always in view: America’s role in the world and the implementation of a conservative social and economic agenda at home.

In pursuing the former, President Bush has allowed himself to be influenced by a group of neo-conservatives, most of whom work closely with Rumsfeld and Cheney. Colin Powell is not a member of this club. Paul Wolfowitz is the most prominent member of this group which has strong links with a number of conservative think tanks. This group has strong beliefs. It believes in America’s manifest destiny to bring to the rest of the world its own values of liberal democracy, almost unchecked capitalism, and a limited role for the government in the lives of all citizens.

But, how does Israel fit into the neo-conservative agenda? Why should America risk the achievement of its larger goals by aligning itself on the side of Israel? That the US’s relations with Israel do not serve its interests in the Islamic world is not a surprise. That some Europeans have begun to question the value to America and to the western alliance of Washington’s deep attachment with Israel should be a cause for worry. In view of this why does President Bush persevere, going to the extent of calling Israel’s controversial prime minister a “man of peace?”

The neo-conservatives have taken on their shoulders the burden of reshaping the Muslim world — to bring that world into the 21st century. They are persuaded that by letting the Muslim countries drift in a state of political and social confusion, even if they continue to serve America’s economic interests, is an extremely short-sighted view to take. A more far-sighted position would be to challenge the people of this part of the world to come closer to America’s values. If that did not happen, the world will surely witness more “nine-elevens.”

It was this view that took America to war with Iraq and to insist on a change in the leadership in Palestine. The neo-conservatives believe that Iraq with its enormous wealth and a well educated population has the capacity to become Israel’s and, therefore, America’s partner in the Middle East. It could do what Egypt, with a much larger population which is also less well educated and prone to be influenced by the exponents of radical Islam, was unable to accomplish. Egypt was not able to completely align its world view with that of America and Israel, its surrogate in the Middle East. A reformed Iraq may be able to do that.

It is this group of neo-conservatives and not Colin Powell — the man President Musharraf knows the best in the US administration — that continues to define the agenda of the Bush presidency. What is the relevance of this finding for Pakistan and for Pakistan’s president’s forthcoming dialogue with the American leader?

The neo-conservatives worry about China’s emerging economic and military strength. Pakistan’s close relations with the Asian giant is viewed from that perspective. They also wish to create in India a counterpoint to China. Pakistan’s long-term rivalry with the other Asian giant is seen from that angle. These are the two negatives the Pakistani president will have to deal with. On the positive side, they should view Pakistan’s cautious move towards democracy and the steady revival of its economy as positive developments to be supported.

Pakistan is the only Muslim country of size and significance that is moving forward politically and economically. The trick for President Musharraf will be to get the Americans to view Pakistan’s relations with its two large neighbours in this context. Washington’s first priority should be to see that General Musharraf’s Pakistan project succeeds.

(Mahir Ali’s column will appear in tomorrow’s issue)