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Musharraf's hands full, pockete half-empty

Musharraf's hands full, pockete half-empty

Author: Najam Aziz Sethi
Publication: The Indian Express
Date: May 21, 2002

Introduction: Which foreigner wants to come to Pakistan let alone invest in it? With Musharraf embarking on a political route that lacks credibility, which investor has confidence in the longevity of his economic policies?

Mr Shaukat Aziz, the finance minister, is perennially optimistic about the country's economic prospects. Indeed, Mr Aziz has so mastered the art of "positive" thinking demanded by the good general that not a frown marks his burrow even at the most testing of times.

This is a technique inherited from his, halcyon days as Citibank's roving "personal fund manager", when he rubbed shoulders with the high and mighty, including Nawaz Sharif and Benazir Bhutto. Indeed, if Mr Aziz appears to be even more sanguine than usual these days, we must not grudge him his moment in the sun. General Pervez Musharraf needs all hands on deck. And none more so than the great helmsman in charge of the bread and butter issues of the day.

The general was well briefed for his mass rallies during the referendum campaign. Forex reserves are up to US$5 billion, he proclaimed. Debtrescheduling of up to US$12.5 bn has been accomplished, he thundered, without explaining why higher domestic oil and electricity prices had laid the public low despite falling oil prices in the international market.

The trade balance has improved by nearly US$1 billion, he added, leaving importers and manufacturers gasping (If exports had risen by more than imports, the trade balance would have improved but that hasn't happened. Instead, imports have fallen and exports haven't risen). International donors are lining up to give us more foreign loans, he boasted, making nonsense of his earlier promises to reduce the national debt.

Privatisation is gearing up, he pointed out, ignoring the number of times the sale of ' major projects has been postponed. Remittances have more than doubled, he bragged, as if he and his minister hid anything to do with channeling them into the formal banking sector in the wake of an American crackdown on Informal money transfers since September 11.

Until September, the Musharraf government was stubbornly ploughing ahead with "regional and national security policies" designed to keep Pakistan in splendid international isolation. The dividend from peace and trade with India was spurned in favour of sponsoring jehad in Kashmir. The dividend from oil and gas pipelines from Iran and central Asia was wrecked on the altar of the Taliban in Afghanistan. Then September 11 happened. The prospect of standing against the mighty US was too much to stomach, even for commando types. But a great justification was at hand. Our cherished nuclear "assets" were threatening, to become "liabilities."

So allies like the Taliban were thrown overboard before they could say Jack Daniels, back-thumping friends and coup-making colleagues who disagreed were sacked, and barely disguised noises were made for soliciting economic "rewards" for enforcing the about-turn. However, it didn't occur to the high and mighty that these very benefits that they are so eager to notch up as their achievements today could have been had a decade ago if misplaced notions of national grandeur in the guise of national security hadn't taken centrestage with the brass.

An about-turn on Afghanistan and a freeze on Kashmir can hardly provide the basis for a grand economic recovery. The optimism in Islamabad's finance ministry is not reflected in the industrial hubs of Karachi, Lahore, Faisalabad, etc. Agricultural growth is down to 1%. Industrial growth is down to 2%, despite a resurgence in the textile sector, thanks to a relaxation in international tariffs and quotas after September 11. Private sector borrowing for industrial development is down by 40% compared to last year. The fiscal deficit could hit 6% in June instead of falling to the 4.5% targeted two years ago!

With anti-West terrorism rampant, which foreigner wants to come to Pakistan, let alone invest in it? With General Musharraf embarking on a political route that lacks credibility and therefore sustainability, which domestic investor has confidence in the longevity of his economic policies?

With India breathing down Pakistan's neck and itching to have a go, which businessman wants to sink money in industry when a devastating war could disrupt all his calculations? With America insistent on tracking down Al Qaeda terrorists in every nook and corner of the country and bent on provoking the religious fanatics to suicidal lengths, who can predict the future of the Musharraf regime with any degree of accuracy?

No, General Musharraf and Pakistan would be much better served by Mr Aziz would apprise his benefactor of the limits of "positive thinking" and steer him away from the dangerous edge of national and international politics.

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