
The war against terror has left Pakistan’s economy in an unenviable position. The dire state of affairs implies that our government may not have a choice but to request more international assistance at a time when our value in the eyes of the US and other Western powers keeps diminishing.
The extent to which international lending agencies will provide loans to bail out Pakistan depends on the US, which yields immense influence over the IMF and the World Bank, as well as on other major bilateral donors. To deny this fact is to be oblivious to the underlying realpolitik compulsions, which drive the international development aid industry.
Besides the continuing lacklustre attitude of the other ‘Friends of Pakistan’, the US is very displeased with us at present. The US seems to grudge Pakistan for not letting go of its ‘strategic depth’ doctrine in Afghanistan, which it blames for the failure of its own nation-building project in Afghanistan. Instead of having made more diligent efforts to achieve a durable strategic alliance across the region, the US has opted for a more myopic and corrosive approach.
Seemingly fed up with Pakistan’s reluctance to do more, US incursions into Pakistani territory remain undeterred. We are currently facing a diplomatic stalemate as our uneasy alliance with the US has become strained to the limit. In a rare conciliatory gesture, the US Senate majority leader has stalled a move to completely cut off aid to Pakistan, which Republicans had been pushing for to secure the release of the Pakistani doctor who helped the CIA find Osama bin Laden. However, the US seems to be in no mood to pay for the extra transit costs being demanded by Pakistan to resume Nato supplies. Why our government took a decade to demand these payments and chose to make this demand when relations with the US are at their lowest ebb, and when Nato is set to pull out of Afghanistan is another issue, rather indicative of the astuteness of our own policymakers.
One wonders if the US will make the same mistake of abandoning Pakistan as it did after the proxy war with the Soviets had ended. It is hard to predict how the US withdrawal will affect Pakistan and its relationship with the struggling Afghan government or the insurgents. Despite rhetorical admission to the fact that poverty and state failure provides the ideal incubators for terrorism and instability, the US has not done enough to instill good governance and sustainable economic development in Afghanistan or Pakistan. Uneasy relations and mistrust have also hindered the possibility of Pakistan playing a more positive role in Afghanistan, subsequent to the US withdrawal. The US has, instead, tried to prop up Indian influence in the region, hoping to keep Pakistan in check as well as to have more leverage vis-à-vis China. It has done so without facilitating a rapprochement between Pakistan and India and the lopsided US attitude has done no more than fan Pakistani fears. In fact, instead of playing a facilitative role, the US has been actively preventing regional cooperation due to its own foreign policy preferences. Despite the potential for alleviating mutual mistrust through energy cooperation, the US continues to apply pressure on Pakistan and India not to enter into a mutual agreement to receive gas supplies from Iran.
As things stand, the chances of continuing regional destabilisation and violence remain high. But unlike the Americans, Pakistan does not have the luxury of packing up and departing from the area. Instead of blaming world powers, which will continue to pursue their own strategic interests, one wonders if Pakistan and its regional neighbours have the foresight to transcend lingering suspicions and devise an inclusive approach to building consensus about — and within — Afghanistan in the post-Nato withdrawal scenario.
Published in The Express Tribune, June 18th, 2012.
COMMENTS (52)
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@ayesha_khan: if so then why India giving $ 10 Billion to IMF? Please ponder.
I feel soooooo humiliated that after 65 years of independence that we have to ask for aid. But it all our fault. I despise my country above all others
Also, the mistake USA did is not in abandoning Pakistan after USSR collapse. It is in aligning with a nation that has no commanality in interests. It repeated the mistake in 2001, when it aligned with Paksitan to get OBL. it is only correcting that error now.
The right way for USA to treat Pakistan would be to read the signals rightly and to designate it to be an antagonistic state. Perhaps even an enemy state.
Pakistan will either come around, or it'll break up, if such a realistic policy is followed.
hmm... India just contributed US$10billion to IMF towards stabilizing Eurozone.
And Pakistan has rubbed most of the big contributors to IMF in the wrong way. Why would they want to help Pakistan?
The bogey of 'after me the deluge' doesn't work anymore.
@Hunter Punter: we are intresting for POK.Waiting for this for long
Pakistan can try Islamic bonds ( backed by tracts of land). these can be sold to Brother muslim countries from Turkey to KSA. These Bonds can have low interest and say 99 year tenure to be co-terminus with 99 year land leases. Raise about USD 100 billion and pay off all loans. For USD 100 billion, you may need just about a few hundred sq miles of land in the mountain regions. They will be sought after for wonderful weather/skying, and also for building dubai like entertainment centres for the rich and famous Arabs! Besides, same can be done and sold to "all weather" friend China. These bonds can de zero interest and suitably structured.
@Moise: "@3rdRockfromtheSun: Just name one country which fared well to IMF policies in long run?"
India 1991. Thailand 1997. Indonesia 1997. Argentina 2001
So in summary, US has clearly not done enough to save Pakistan from itself?
@Moise Leaving aside the recent global economic downturn, it was implementation of fiscal reforms suggested by IMF that has helped your eastern neighbour turn itself around. So also with Brazil and Argentina - who had almost reached the bottom in the mid nineties. The crux of the IMF reform is - reduce your expenses and increase your revenues.
Muslims brag a lot about Islamic banking and interest free laons and zakat. Why don't Arabs give zakat and Interest free loans to Pakistan? Why Pakistanis living abroad don't give interest free loans or zakat to Pakistan government/Pakistani poor people?
The logic seems great and very calculated in the realm of visible policy domain, however in retrospect, it would be highly disrespectful to cast negative aspersions on the touches of finesse ever delivered by Pakistani foreign policy hierarchy. They have played their hand very well and it seems forgotten that the trump cards are still close to their chest to be utilized when deemed essential. The assumption is based on the level of confidence of Pakistan in defying US and unfolding drama wherein US is loosing its leverage as a sole power. Pakistan holding out on supplies is pushing NATO allies out of ISAF earlier, in all its gravity, this in itself will make it evident that US would stand alone after 2014 in any case with a scenario where Power brokers or stake holders would reign free. A non committal Pakistan or unfriendly sanctioned Pakistan will prove to be a biggest block in US Aspirations to control this region and Iran?China?Russia?etc. India is wise enough to understand this and so is Pakistan. Its really complex but clear, Pakistan is at a High stand point.
@ayesha_khan:" Despite rhetorical admission to the fact that poverty and state failure provides the ideal incubators for terrorism and instability, the US has not done enough to instill good governance and sustainable economic development in Afghanistan or Pakistan”
It is not US’s job to install good governance in Pakistan. It is Pakistan’s job.
When they hatch from their poverty driven incubators of madrassah's,US finds it her job to drone them as brutally as it takes for as long as is needed,but it never occurs to them to stop the recruitment by improving the socioecnomic conditions of these hapless kids: true it's not their job. Keep mopping the floor while the tap is still on!!
@Ejaaz: Low average age of Pakistan is a huge opportunity for the country. All it needs is a political will to setup a stable environment which is conducive for business. This would allow thousands of foreign countries to invest Pakistan and give it the much needed economic push.
Due to bad policies of the government in india, labour cost in India has gone through the roof. I am sure lots of big indian companies would be willing to set up units in Pakistan as cheap labour is available in abundance.
The US has become old as the average age of polulation has crossed 40 years.. China is also getting old now due to its one child policy and will lose steam very soon. India is still young but will start ageing in 2030. So, a prolific young population in pakistan can provide much needed boost to the world economy.
But this can happen IF AND ONLY, there is political will to cleanup the mess which has been created over the years in pakistan and create a favourable investment climate.
@Babloo: That looks too optimistic. China are no better. They are opportunist and would help as long as their own interests are met. FYI, China has never offerred more than a billion dollor of Soft loan (yes, its soft loan.. not the free aid as you get from US) to Pakistan. These are also paid against infrastructure projects in Pakistan which are in turn executed by the Chinese companies.. So, it may not be practical to expect too much from China.
A better option would be look towards middle east where the rich arab countries have billion of surplus cash to share with their needy islamic brother.
For IMF supporters:
These monetarist and neoliberal ideas have been imposed on the world economy especially in the form of the Washington Consensus -- the dismal litany of deregulation, privatization, unhindered flight capital and hot money flows, the primacy of speculation over production and of finance over economics, the abolition of the state sector, measures against labor, and the general race to the bottom. Worldwide, about 1 billion people live in hunger and under the threat of starvation perhaps the most eloquent proof that 20 years of economic globalization have been a failure.
@3rdRockfromtheSun: Just name one country which fared well to IMF policies in long run?
Installing a good govt can not be the job of the US! I am surprised by the statement of the author. How can you blame others for a lot of things that happen because of your own making? It is high time Pakistan learned to focus on itself instead of harboring the thought of dominating Afghanistan once the western forces leave.
Sooner we will get rid of beggar mentality not only on leadership level but also on intellectual levels sooner we will get ways to get independent.
Why sell our sovereignty to IMFs and Washington consensus based banksters and institutes?
Why is it that the trade mark approach of Pakistan towards every problem is to blame others for all their woes. Why do we not understand that to look for and insist for a strategic depth in any other neighboring sovereign country is a most unlawful theory. This amounts to force the other sovereign country in subjugation to your needs. To perpetuate this theory and look towards America or China or any one else for support is internationally an untenable theory. It is this arrogant view that is causing all the problems with America. The writer has also said "The US seems to grudge Pakistan for not letting go of its ‘strategic depth’ doctrine in Afghanistan," I sincerely feel that having said this then to say " Instead of having made more diligent efforts to achieve a durable strategic alliance across the region, the US has opted for a more myopic and corrosive approach." is not very justufied. And why drag India or blame India for the failing relationship.
America/Army/Allah
Why, even after 65 years of independence, discusses "AID"? Unless Pakistan decides not to accept any dole, it can never make any progress. Pakistan has got addicted to easy money and should get out of this mindset. Pakistan can take loans that must be repaid, but no doles!
What a waste of Phd seat! How did you get in?
All of Pakistan’s problem can be summed by the statement below:
A nation' s strength ultimately consists in what it can do on its own, and not in what it can borrow from others.
Indira Gandhi
“Despite rhetorical admission to the fact that poverty and state failure provides the ideal incub ators for terrorism and instability, the US has not done enough to instill good governance and sustainable economic development in Afghanistan or Pakistan”. Gosh I thought Afghanistan & Pakistan were sovereign nations. Didn't know they were part of .the US.
Strategic depth is turning out to be strategic defeat!
Some estimates suggest, the power crisis in Pakistan knocked off around 2% of national GDP. Since, Pakistan already had installed capacity to generate power to create this GDP, what all that required was to pump oil to the generators. That was not done for lack of funds, that too was available withing Pakistan, what all required was to collect the dues from the consumers. That means, the people who owed money to power producers pulled the economy by 2%. Even handful of people including the army could have easily pooled the money for the oil, but they never did. Instead they expect tax payers of Western countries to rescue them from their own mess.
@numbersnumbers: Babloo was being sarcastic. It is clear from many other posts that I have seen of his that he is a patriotic Indian.
Who will come to our aid now?
India of course - if you ask nicely.
Isn't "Strategic Depth" an imperialistic policy?
@curious: They didn't get that way from a tendency to spread the wealth around.
“The Power sector collects around Rs1 billion a day in bills, whereas it needs Rs3 billion for fuel,” a Pepco official said. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ And how does the WOT disable Pakistan to close that gap?
"The war against terror has left Pakistan’s economy in an unenviable position." +++++++++++++++++++++++++++++++++++++++++++++++++++++++++ What a convenient excuse! The WOT got Pakistan 20 Bn USD...what does it have to show for that?Did the WOT deprive Pakistan of electricity? Nonsensical statement.
@Babloo: And how much (if not most) of that "100 biullion" dollars would be siphoned off to personal foreign bank accounts controlled by the usual suspect Pakistanis? For a sanity check about your China "friend" please check on how much China gave to Pakistan for Flood Relief versus how much the hated Americans provided!
Author "As things stand, the chances of continuing regional destabilisation and violence remain high."
I hope Afghanis will unite and hit back hard if Pakistan tries to play talibans game again.
.
There you go again blaming the world for the ills of Pakistan so typical, by the way isn't US of A going bust,belly up, why doesn't your friend china help in installing good governance, why don't you borrow money from Saudi Arab.......as for India we are your enemies at least in Pakistani minds so why expect any cooperation from india
Can't Zardari, Nawaz Sharif and other influential leaders who control business bail out the country as they don't pay any tax and not much zakaat?
China will give Pakistan all the money it needs because a friend in need is a friend indeed.
KSA ..
The population of Pakistan is given as 190 million (2012) but likely is already over 200 million. The median age of 21 years at present (one of the lowest in the world) is expected to decline to 18 years. We have no way of educating even a respectable fraction of these young, and our economy is not going to grow to accommodate this growth. All these young, poor, malnourished and without any prospect of a job will turn to deep religiosity to deal with the harsh and brutal environment they are going to find themselves in. Most countries will restrict and limit our travel to their countries because we will export our violence to them. So welcome to the cauldron that we have created for ourselves and we will stew in it as zealot talibs.
Aid for what ? For building more nuclear bombs ???
Two nation theory and regional cooperation don't go together. Regional non-cooperation i built into Pakistani genes.
Instead of perpetuating dependence on the US, this is the moment for Pakistan to break free, to throw away the yoke of slavery.
in a nutshell Pakistan must stop making strategic alliances ,we can not afford them rather we should become keen exploring the opportunities we have in this great and rich land ,all it needs a nation full of awareness
Don't blame the War On Terror for our economic woes. Decades of nepotism and corruption are the real reasons for the fiscal crisis we face. Had we not supported and attempted to use terrorists to our advantage, we wouldn't have had thousands dead and counting!
Higher than the himalayas, deeper than Indian Ocean. If they can buy trillion dollar of US trasuries, they can easily give us 100 biullion dollars for being such great friends. We have just not asked.
China?