IT is now more than a month that bombing on Afghanistan started. A large section of educated and not-so-liberal segment of Pakistani population welcomed this adventure mainly for two selfish reasons; to be part of the fight against terrorism, and to break the isolation in the committee of nations where Pakistan was considered a rogue or a failed state.

Pakistan and the Muslim world as a whole, have been victims of terrorism. When terror struck the USA on September 11th, 2001, we got the opportunity to be a part of the coalition to combat this menace.

It is this second point, i.e. breaking the isolation which is the subject of this article.

There is no doubt that most Pakistanis would like the objectives of the war to be achieved as early as possible. These objectives are the arrest of Osama bin Laden and Mulla Omar, destruction of al Queda network, and the formation of a broad-based government in Afghanistan representing, and acceptable to, all sections of the Afghan population under the umbrella of the UN. This a very ticklish problem. The UN peace-keeping force and political administration will have to remain in place in Afghanistan, so long it is necessary,—say 5 to 10 years or even more.

It is becoming increasingly obvious that there is no short-term solution of problem. Even a brief and short-term war against terrorism would leave Pakistan facing serious consequences for a long time. The US and the western allies and their financial institutions, such as the World Bank, the IMF, the ADB and others would happily withdraw into their own priority-ridden fields once the short-term objectives are achieved on one plea or other as they did following the 1979-89 Afghanistan war. We have to design our own strategy, if not already done, to ensure that we come out of the low-level economic equilibrium trap within the next two to three years.

The annual report 2000-2001 prepared by the State Bank of Pakistan does not make a happy reading. The economy is reported to be struggling to bring macro fundamentals back on track. There are reports that Pakistan may lose $2 to $2.5 billion in export earnings this year as a result of cancellation of export orders. The poor agriculture crop leading to sluggish growth, private sector investment being stagnant in spite of the liberal incentives and the world-wide recession present a bleak picture.

The desired level of economic activity and employment has not been achieved. Aggregate growth was only 2.6 per cent this year (2000-2001) during the last fiscal year against a target of 5.0 per cent. The country immediately needs a real big dose of external assistance in terms of grant, debts write-off, rescheduling of foreign loans and assistance if they can not be written off. Longer term commitments of official development would be welcomed and negotiated but cannot depended upon. To meet the on-going crisis the government should take the following steps:

1) An exercise should be conducted to know how much assistance under various heads with different terms and conditions with its time frame and from which source has been committed. A transparent exercise containing detailed information is necessary. So far it appears that there is commitment of $1 billion from the USA and $600 million from the Asian Development Bank. This would hardly compensate the loss of $2 to $2.5 billion in export earnings due to cancelling/postponement of export orders this year.

2) Long-term maturity projects with high financial contents should be strictly monitored and avoided. The expertise, which is available in the country, should be fully utilised. Projects in the field of primary education; middle school and high school project, drainage, irrigation, on-farm management, etc can be easily handled, implemented and monitored by local experts. The fact that they entail less repayment burden of loans, or grants is a flimsy argument.

3) Technology-based projects in the fields of communications, transport and infrastructure development, information technology, computerization, oil and gas, mining and electricity generation and other sectors such as export processing zones needing foreign expertise and flow of capital should be eligible and encouraged for external assistance.

4) In view of our nuclear capacity, expenditure on defence should be curtailed significantly. We must undertake an exercise to have a modern hard-hitting computer-based armed forces establishment with 50 per cent of the present manpower. The surplus manpower which is highly disciplined should be utilised in the not so sophisticated nation-building activities particularly in the fields of agriculture, irrigation, drainage, health care, population, education, electricity, telephones, income tax, customs Central Board of Revenue, etc.

This programme should continue, at least for five years, until the traditions and culture of Pakistan is ingrained in our politicians and bureaucrats. Future recruitment should only be on the basis of merit alone, with no quota in federal services. Law and order should be firmly enforced without any exception.

In my view, we should not depend on the foreign assistance and flow of direct foreign investment for more than two to three years. We must get out of the debt trap as soon as possible particularly during this period when we are the favourite of the west. The sure recipe of getting out of this low-level equilibrium has been briefly outlined above. Let our present and coming generations not say that we had mortgaged their future.