Magazine article Washington Report on Middle East Affairs

Pakistan's Economic Crunch Has International Political Ramifications

Magazine article Washington Report on Middle East Affairs

Pakistan's Economic Crunch Has International Political Ramifications

Article excerpt

The multitude of problems gnawing at the Third World emanate primarily from three fundamental factors: the fast depletion of finite resources, the astronomical growth of already bulging populations, and obscenely high expenditures on defense arsenals.

All other ailments are mere extensions of these. The issues are not exclusive. Each telescopes into another. One part is largely an inheritance from the colonial past. Another has become a disastrous pattern of national behavior that blunts every effort to progress. The third stems from perceived and real hopes and fears and only adds to the growing quota of deepening poverty.

Pakistan is no exception. It is part of that befuddled Third World groping for answers, and looking to the examples of post-war Germany, Japan and perhaps South Korea of what human dexterity is capable of achieving if it is freed of artificial compulsions and counter-productive expenditures.

The Economic Crunch

It is universally understood that the biggest villain in town is the money lender. More US embassies and information services abroad have been targets of local ire than those of anyone else. This, in spite of the fact that the foreign aid and assistance from the United States has been the largest provided by any single country since World War II. Pakistan has been America's close ally since 1947. Its share of US economic and military assistance is exceeded only by those of Israel and Egypt.

All that is history, however. US economic and military aid to Pakistan remains suspended since October 1990. Several reasons are advanced for the US decision, the principal one being the reported military nuclear program of Pakistan. Pakistan disputes the allegation, and claims its program is for peaceful purposes.

During the last decade, Pakistan accumulated a debt of more than $16 billion. Today, debt servicing alone calls for millions in foreign exchange. Dollar remittances from Pakistani expatriates working particularly in the Middle East have dwindled in recent years. The Gulf war reduced these remittances further. Saudi Arabia, which has subsidized Pakistan in many ways, may no longer be so forthcoming.

Japan, the other major provider of aid, is reportedly under pressure to review its commitment to Pakistan. The World Bank and the International Monetary Fund also have enlarged their list of conditions. The privatization process that has been introduced has not gone beyond a couple of small banks and some utility services. Internal investors are shy and external investors are hard to find. In the midst of this economic scenario, the government has launched its Eighth Five-Year Plan with not-too-bright prospects of meeting all its targets.

The civil sector of the country may tough it out for a fair period of time. Whether the military will go along is questionable. When replacement parts do not come and the air force and armored units are immobilized, pressure is bound to build in the rank and file.

The strongest advocate of democracy, the United States, will find that its decision to stop aid unleashes anti-democratic forces in once-friendly countries now busy reestablishing democracy. Added to this, growing unrest inside Kashmir has the potential to destabilize democracy throughout the subcontinent. Political ramifications of the economic crunch are endless.

Corruption in Pakistan did not disappear with the arrest of former Prime Minister Benazir Bhutto's husband. Nor did crime disappear with the adoption of shari'a (Islamic) law. Kidnappings, car thefts, and outright murders are now reported from all over the country. …

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