Reviving the Economy

For 4 consecutive years until 2007, Pakistan recorded encouraging but uneven economic growth.

The political turmoil of the following 2 years, mounting terrorist attacks, erosion of business confidence and the impact of the concurrent global economic crisis pushed the Pakistan economy into a severe and fundamental crisis.

This crisis cannot be overcome without significant external financial support. Unfortunately, despite promises of a ‘democracy dividend’, Western assistance has been extended in dribs and drabs and often with unacceptable conditions e.g. those reflected in the Kerry Lugar Bill.

Simultaneously, Pakistan’s traditional friends—China, Saudi Arabia, and UAE—have been halting in their commitments due to doubts about the political leadership in Pakistan. Yet, perhaps what has been most lacking is a clear and comprehensive Pakistani plan to address the economic challenge.

With the improved prospects for a period of political equilibrium, if not stability, in Pakistan, the new national determination to confront anti-state terrorism and the growing international consensus that Pakistan needs to be rescued economically for the sake of regional stability, there is now scope for reviving Pakistan’s economic fortunes.

The rescue plan will need to encompass: fiscal stabilisation, with generous international support, improved revenue generation and budget discipline; major investments, especially in physical infrastructure, including energy, and social development, particularly health and education; and rapid growth and job creation through a stimulus package to support expansion in manufacturing, agriculture, services and exports.

There is no reason why Pakistan cannot achieve fairly high growth rates within the next few years. The primary need is for honesty, clarity and coherence in Islamabad, and readiness to utilise all available diplomatic leverage with the international community.

Balochistan

A credible effort is required to heal the festering sore in Balochistan. Ending the violent attacks and disaffection in the province is vital for national cohesion, political stability and economic growth.

Balochistan’s untapped natural resources and its strategic location will be essential elements of Pakistan’s future economic growth and political importance. Prospects for ending violence in Balochistan will greatly improve once India is stopped from aiding the Balochistan Liberation Army (BLA) insurgents through Afghanistan. Targeted action against recalcitrant elements will need to be accompanied by effort at political accommodation with the major tribal and political groups and a fair resolution of legitimate Baloch grievances.

The pressing challenges of today should not deflect attention from the more enduring and fundamental strategic challenges that confront Pakistan.

The Pervasive Challenge from India

As ever, the most enduring and formidable of these challenges emanate from India. The hostility between Pakistan and India has deep historical and popular roots in both countries. Despite cultural, linguistic and ethnic affinities, the mutual hostility between the Muslims and Hindus of the sub- continent is real and endemic. It was the raison d’etre for the creation of Pakistan. The history of the last sixty years has, if anything, further intensified this hostility and given it structural expression in the relationship between the two states. The Kashmir dispute, in essence, is but one expression of this divide and hostility. (Bangladesh’s relationship with India displays the same dynamic.) Thus, even if outstanding issues, like Kashmiri are resolved, and some semblance of civility restored between Pakistan and India, their relationship will remain competitive for the foreseeable future. Those who argue that, with goodwill and conflict resolution, peace and harmony can descend on the sub-continent are either ignorant or self-serving. 301Today, unlike the early years, India’s objective is no longer to undo Partition and absorb the territories of Pakistan. The cost would far outweigh the benefit (of course, many Indians—and their friends, including some in Pakistan—endorse the vision of the Bharatiya Janata Party’s L.K. Advani of a South Asian Confederation led by India). Today, India’s ambition, propelled by its self-perception and Western encouragement, is to emerge as the supreme regional power and eventually a global power to rival China. Pakistan stands in the way of this ambition. It resists India’s presumption of South Asian dominion. It blocks India’s geographical access to Central and West Asia. It reminds the world of Indian oppression of Muslim-majority Kashmir and exposes the fallacy of Indian secularism. It neutralises a large part of India’s military power. It gnaws at India’s Achilles’ heel—Kashmir. It diminishes India’s nuclear weapons status by demanding nuclear parity.

To realise its regional and global ambitions, New Delhi believes that Pakistan’s capacity and will to resist Indian domination must be broken.

To achieve this, India is pursuing a well thought out strategy on multiple fronts.

The Indian strategy encompasses: the defamation and denigration of Pakistan and especially its Armed Forces—through its diplomacy and the media—as the ’epicentre of terrorism’; the political, economic and strategic encirclement of Pakistan by building India’s strategic and economic links with Iran, Oman, the Central Asian States and, more recently, even with Pakistan’s closest friends, Saudi Arabia and Turkey; the promotion of subversion and insurgency in Balochistan; infiltration of the TTP to support attacks against Pakistan’s security forces and civilian centres; the build-up of India’s Armed Forces to overwhelm Pakistan in a conventional conflict; efforts to delegitimise Pakistan’s nuclear weapons capability through propaganda about nuclear proliferation from Pakistan, including to terrorist organisations; acquisition of the option to economically strangle Pakistan, for example, through constraints on Indus water flows. It is visible to any perceptive Pakistani that this Indian strategy has already made several gains and is progressively eroding Pakistan’s vital national interests and objectives.

This Indian success is mainly due to its expanding economy and large market which offers opportunities for profit to other nations and their companies.

It is built on the perception, assiduously propagated by New Delhi, that given its growing economic and military prowess, India is destined to emerge as the regional super-power and can serve as a strong force for stability in South Asia and the Indian Ocean. Simultaneously, India 302promotes the converse perception of Pakistan as a violent and turbulent state afflicted with the twin evils—terrorism and nuclear proliferation— that are the West’s current phobias. In Washington, and other Western capitals, the consensus emerged during the Bush Administration that India is their ’natural partner’ to confront ‘Islamic terrorism’ and to ‘balance’ the rising power of China. Thus, India’s ‘great power’ status was proclaimed even before it has been realised. The faucets of arms, advanced technology, investment, and trade, have been opened for India, even as they have become mostly closed for Pakistan. Without this Western endorsement and support, India’s ambition of regional domination and great power status would be most difficult to realise.

The Cost of Counter-Terrorism

It is ironic that Pakistan’s strategic decline took place during the period of the post 9/11 ‘alliance’ with the US. Pakistan-US relations have witnessed several such periods of tactical convergence: for example, during the early years of the Cold War and in the anti-Soviet Afghan war of the 1980s.

Unfortunately, each time, as US strategic priorities shifted, these alliances of convenience turned into estrangement and even hostility. While the Pakistani governments and leaders of the time benefited from US support, any objective cost-benefit analysis would reveal the fundamental damage done to Pakistan—political, economic, and strategic—as a consequence of these periodic alliances with and dependence on the US. Thus, the Cold War alliance with the US evoked Soviet hostility, its veto against Kashmir and its support for India’s break up of Pakistan in 1971. Pakistan’s participation in the anti-Soviet Afghan war contributed directly to the rise of religious extremism, sectarianism, violence and terrorism in Pakistan.

The past nine years of Pakistani cooperation with the US against al Qaeda and the Taliban in Afghanistan have no doubt provided Pakistan important US political and economic support, although the benefits of US patronage have been grossly under-utilised by the previous and present Pakistani governments. But this period of the counter-terrorism alliance has also witnessed some of the most serious strategic reversals for Pakistan. These include:

• The replacement of the ‘friendly’—though internationally unacceptable—Taliban regime in Kabul by a hostile Panjsheri—Tajik-dominated government.
• The migration of Afghan Taliban and al Qaeda leaders into Pakistan and progressive escalation of Pakistan’s military involvement against them, shifting the locus of the war from Afghanistan to Pakistan.
• The neutralisation of the Kashmiri freedom struggle, as Pakistan was obliged, under US pressure, to halt cross-border support to them.
• The emergence of a coalition between radical Pakistani groups under the umbrella of the TTP, the spread of their influence, even control in parts of FATA and adjacent areas and bold attacks against Pakistan’s security forces and civilian centres.
• India’s growing role and influence in Afghanistan, and its utilisation of Afghan territory and intelligence services to support subversion in Balochistan and the north western regions.
• The unjust depiction of Pakistan as the ‘safe haven’ for al Qaeda and global terrorists, accompanied by mounting US pressure on Pakistan to ‘do more’ in its fight against them, leading to the deployment of 150,000 Pakistani troops on the Western border, inevitably iminishing Pakistan’s defence capabilities against India, and provoking attacks against Pakistan’s security forces, leaders and civilian population.

• The Western campaign, actively supported by India, to de-legitimise Pakistan’s nuclear programme, including US pressure for sensitive information and access after the A.Q. Khan proliferation scandal; questions raised regarding the safety and security of Pakistan’s nuclear weapons and their possible takeover by ‘Islamic’ radicals; and the ‘de-hyphenation’ of the nuclear relationship between Pakistan and India.

Even as Pakistan’s strategic interests, and its internal stability and cohesion, were eroded as a consequence of the US ‘alliance’, India’s strategic position progressively improved. Apart from the closure of the Kashmiri militancy and opening of the Afghan avenue for subversion against Pakistan, this period saw the crystallisation of the Indo-US ‘strategic partnership’, manifested in the Indo-US civilian nuclear agreement; US and Western offers of the most advanced military equipment and technologies to India, including 304fighter aircraft, anti-ballistic missile systems, early warning, satellite and space capabilities, are all barred to Pakistan. This was done, under the banner of ‘de-hyphenating’ US relations with Pakistan and India, without regard for the strategic consequences for Pakistan. Indeed, to rub salt in Pakistan’s wounds, open declarations were made by US officials that Pakistan was not eligible, deserving or capable of receiving the materials or access offered to India. US ‘officials’ and the Western media joined with the Indians to portray Pakistan as the ’epicentre’ of terrorism and nuclear proliferation.

Obviously, the domestic vulnerability and weakness of Pakistani leaders, and their almost complete dependence on the US for survival, made it possible for Washington and its allies to act so blatantly against Pakistan’s vital national interests. This did not end with the change of government in 2008. On the contrary, US efforts to control Pakistan’s security and domestic affairs visibly intensified, as evident from the conditionalities incorporated in the Kerry-Lugar Bill and the demand that Pakistan shift its military focus from deterring India to fighting the Taliban. Washington fully expected Pakistan’s leadership to do its bidding.