MANY enthusiasts in the country would like to have a Marshall Plan, kind of an effort for Afghanistan’s post-war reconstruction and development.
Many overly-optimistic minds might view the USA’s current supportive economic disposition towards Pakistan as a harbinger of a kind of a Marshall Plan for Pakistan too. Marshall Plans for third world countries remain a big question mark even after the turn of the century.
While these plans failed to develop the third world countries after the end of the Second World War, many third world countries slid into a fourth world kind of a status in the half century following the end of World War II. Their absorptive capacity for a Marshall Plan kind of development effort decreased over time instead of increasing. Afghanistan is an example. Such countries are, therefore, more ill-equipped to turn such plans over into the attainment of development goals. As for those that may not have regressed as much but which continue to remain handicapped; the sudden release of grants, concessional assistance, and other facilities may be driven by the politico-economic interests of the donors more than those of the recipient country.
As Pakistan stretches its hand out to receive the hitherto suspended financial assistance, it needs to continue to ponder upon the continuously evolving reasons behind the same. It will be only then that probabilities of assistance in the future will be possible to work out. For, external financial assistance remains as tied as ever to military and political strategies of the USA in particular and of the developed democracies in general. Despite the tied nature of external financial assistance, it continues to be a key element in this government’s economic policy as has always been the case in the past.
Pakistan’s future economic growth is, therefore, even more contingent on world events and Pakistan’s response to them than was the case in the past. Possibility and feasibility of a Marshall Plan kind of a development effort is discussed herein.
Notwithstanding the need for a rehabilitation and a reconstruction effort in Afghanistan that may, however, fall short of being a kind of a Marshall Plan, a Marshall Plan kind of a project for Afghanistan would require decades of social, attitudinal, institutional, structural, and political development to prepare a base on which a competitive economic superstructure can be possibly erected. Why Marshall Plan showed results in the war-torn Western Europe is primarily because of the presence of the above factors which facilitated the conversion of funds into rapid economic development.
Western Europe would soon emerge on the world economic map not just as a major economic player but as a competitor of the power that had been injecting funds into it. This was no problem for the USA as, interalia, the front-line defence against the former Soviet Union had been fortified further through the economic strength of Western Europe. The tensions between the USA and Europe were handled deftly as Western Europe kept reorganizing itself to collectively have a say in world affairs. While Marshall aid was initially dominated by goals of a military-security strategy, the aid was well-utilized by Western Europe to eventually re-emerge as a key player in the world. However, this would not be the case in the developing countries that too were provided liberal financial aid for development purposes. Financial assistance, therefore, turned out to be a necessary but not a sufficient condition for growth and development.
The development research has adequately demonstrated that the absence of underlying factors of attitudes, institutions, structures, values, and supportive political system contributed significantly to the failure of Marshall Plan in many third world countries. These factors remain conspicuous by their absence in Afghanistan. So, if Afghanistan fails to attract the Marshall Plan kind of donor funds, it will not be because of their religious preference. Rather, it will be because enough knowledge has been accumulated by now on the sources of the Plan’s success in Western Europe and its failure in the post-World War II third world.
A whole body of knowledge developed around these reasons which steer clear of the factor of religion. Most rapid developers in the third world chalked out their own development paths and attained success. Pakistan remained unsuccessful as it borrowed development models too along with financial assistance from the lenders. The economic prescriptions to which lenders’ assistance remained tied strongly tended to promote the economic goals of the lenders more than our own economic ends. Rather, even our economic objectives have been determined by the lenders with the desired economic goals mentioned either in passing or as rhetoric to keep the naysayers appeased. In the last twelve years, this tendency aggravated and was at its worst.
Post-September 11’s is a major new development. Financial assistance now is going to be tied again to the military and political strategies of the lending countries like it was during the initial years of the Cold War period. The degree of its permanence and whether it will turn into a Marshall Plan kind of an aid influx is, therefore, going to hinge more on our military and political disposition than on our economic goals and performance.
As sanctions were waived or suspended in the aftermath of September 11, the degree of the permanence of this gesture could be inferred for the American sanctions as we ought to be experienced enough in our relationship with the USA. Japanese were candid in their expression. They categorically said that the sanctions were suspended and not lifted as they would like to continue watching our nuclear non-proliferation behaviour and might clamp the sanctions back on if we did not fall in line. The Finance Minister of Pakistan is pushing a five-point agenda including permanent debt relief from the Paris Club, concessional assistance, compensation for expenditure on Afghan refugees, loans for social sectors and poverty reduction, and greater market access into the USA and the KU.
That debt write-off is not on the Finance Minister’s agenda would provoke a question about its possibility at all even in the future. Is the possibility of a debt write-off ruled out which is why it is not on the agenda of the Finance Minister? While debt relief would provide fiscal space, one would like to know how it will be utilized and what visible progress was made with the help of debt-rescheduling negotiated twice in the recent past? As for concessional assistance, our economic history is replete with it and our inability to utilize it for the nation’s collective gain. Assistance for social sectors has not even proved to be of cosmetic value in the past.
And, greater market access is something that the USA and the EU will have difficulty forcing it down the throats of their business interests and their dissenting members such as Spain and Portugal. So, while there will be progress to show on paper, the real gains will remain as elusive as they have been in the past because we too lack the attitudes, the institutions, the structures, and the political dispensation required to turn financial assistance over into visible development gains. And, to believe that the coffers of the wealthy nations have now opened irreversibly is as naive a belief as isolated faith in the magic of the Marshall Plan is.
For, the release of funds, however permanent or temporary, is being calibrated according to the developments in Afghanistan and the requirement of Pakistan’s political support. Having entered into an alliance with Pakistan with the OIC configuration in place in support of the counter-terrorism coalition, Pakistan’s cooperation is to be retained. However, there are disagreements which, if not managed, would either harm the fragile coalition or would necessitate a change in the overall strategy that the moderates amongst the coalition leaders would not prefer. The disagreements are about the duration of the military operation in Afghanistan, the military strategy to dislodge the Taliban, and the composition of the new Afghan government. While Pakistan would want a short operation based on the elimination of the Afghan leader, the coalition leaders would much rather have all the Afghan fighters eliminated while they remain organized behind the leader. And, while the coalition leaders would not like the inclusion of Taliban in the new government, Pakistan would prefer to have moderate Talibans in the new government. Even though, the US Secretary of State concurs with the Pakistani position, it appears to be an agreement on the surface due to expediency. For, the other regional players including Iran, Russia, and India are encouraged to voice their opposition to Pakistan’s proposal regarding the composition of the new government.
As the military strategy and the political strategy have not moved in step in Afghanistan, the task of keeping the coalition intact will require an even more deft touch. Inducements will, therefore, be offered to retain the coalition partners. It is in the above context that the suspension of sanctions, concessional aid, refugee expense compensation, and market access should be viewed. The degree of each one of the above economic measures will remain contingent on the pace and direction of the movements in the politico-military strategy in Afghanistan. The fine prints will need to be read continuously by the recipient country which too will need to coordinate its economic policy with its own political outlook towards the crisis. For, wrong and/or ambitious moves might dilute whatever economic inducements are being offered. Or, a lack of flexibility on some political aspects might even provoke a substitution of economic inducements with coercive political measures.
Space for the hawks amongst the coalition leaders would thus be created who would redefine friends and foes and appropriate strategies for each. Pakistan should try to steer clear from this latter worst case scenario. However, aid today is no guarantor of aid tomorrow or in the future. Pakistan’s political response to the continuously evolving counter-terrorism scenario will keep determining the nature and quantum of external financial assistance which will remain a moving target for the recipient coalition partners aiming at it.