Order and Anarchy

The G8 countries have pledged their commitment for development and poverty alleviation in Africa by committing to write off $40 billion of bilateral debt. The initiative is commendable, but far more needs to be done as the promised amount to be written off amounts to just about one – sixth of the amount of debt that Africa owes. Further, this relief is only targeted for 18 such nations which lack much economic potential and which cannot be called engines of economic growth in Africa. Another aspect that causes this action to become dubious is the lack of foresight and will on the part of the leadership of the developed world, which remains mired in more rhetoric than action.

Tony Blair and Gordon Brown may have worked real hard to get their concerns, regarding Africa, across to the rest of the leadership of the developed world, but chances are that the G8 summit next month at Gleneagles may well again prove to be a rhetoric and useless with respect to solid action. There are already signs that this might happen as the G8 leaders find themselves already preoccupied with issues which may distract them from the real issue of poverty alleviation and development.

US President George W. Bush has had a shaky start with his second term and his nation’s restlessness with the Iraq War is increasing day by day; the atrocious war in Chechnya and the imprisonment of Yukos boss have cast dark clouds over Russian President Vladimir Putin’s tailored suit of democracy; French President Jacques Chirac’s domestic standing is falling since the resounding ‘no’ to the EU constitution by his nation; political problems are being faced by the German Chancellor too; Japanese Prime Minister Junichiro Koizumi is seeing his claim of being the representative of Asia, thwarted by China whose rising power has bore a fruit in the shape of an invitation to President Hu Jintao for attending the Gleneagles summit. Moreover, the G8 summit is expected to remain bogged down in talks relating to the Iraq War and Iran’s nuclear ambitions thus, putting issues like reassessing the CAP to the backstage.

There is talk of increasing aid to the poor nations specially those, which belong to Africa. However, there are many negative externalities (borne by the recipient nations) that are related to aid. Therefore, instead of increasing the quantum of aid to the underdeveloped and poor countries, it would be more desirable if the developed world acted to provide greater market access to the underdeveloped and poor countries by reducing barriers to trade. This measure would certainly go a long way towards the goal of poverty alleviation and will be a much stronger manifestation of the seriousness of the leadership of the developed world towards realizing this goal. Further, if the rich countries do really want to help the poor countries, they should work upon projects that enhance the quality of governance in these countries and which seek to empower the local population. These would be the measures that would in reality, help poor countries to come out of the poverty trap.

There are both political and economic motivations that drive the need for giving and receiving aid. While some amount of development assistance may have moral and humanitarian motivation to help people in emergency and distress, it is a fact that historically, aid and assistance spanning over a longer period of time is not devoid of some kind of consideration, whether it may be economic, political or military.

The United States, a major donor country, has looked at aid since the very beginning as an effective tool in projecting its power and hegemony. The Marshall Plan is a classic example of this, through which the US successfully kept Western Europe from falling into the hands of Communism. And when the center of interests got transferred during the height of the Cold War from Europe to the Third World, the American policy of containment called for a shift in focus of the American aid policy to the Third World countries especially to those, which were perceived to be geographically strategic. Thus, history tells us that most of the aid to the Third World was targeted towards their security considerations instead of being targeted towards long term socio – economic development. The continuous shifts in of the assistance policy amongst different geographical regions show changes in US geo – political interests rather than changes in economic needs.

By and large, western donor countries have used aid and assistance as a tool to further their vested interests. Even Soviet Socialist aid also grew out from the same political and strategic motivations. To this day, foreign aid and assistance comes in the backdrop of vested interests.

Within this broad context of political priorities and motivations, international aid and assistance have had economic underpinnings too. Or while it may have been that aid may have had political strings attached to it, but economic motivations were put forward as reasons for it.

Most countries which are regarded as potential candidates for receiving aid are those who have excessive productive resources a their disposal, but don’t have enough money or foreign exchange to organize these resources for production. Thus, the existence of such domestic resources that enable these countries to organize their other resources in production would permit them to undertake new investments and acquire associated technical assistance. Foreign aid can, therefore, play a critical role in overcoming domestic constraints and raising the rate of real economic growth. Foreign assistance is also assumed to facilitate development by helping to generate additional domestic savings as a result of higher growth rates thus, reducing the need for aid as resources become sufficient to give the development process a self – sustaining character. This atleast, ought to be the nature and function of foreign aid and assistance.

However, aid comes with certain conditionalities that make it less worthwhile. For example, when aid is tied to donor country exports, which is more often the case in bilateral aid cases, the recipient country finds itself in a dilemma that it is now bound to procure from the donor country. This way, apart from forcing a deviation from the economic decision of going to the least cost source, the aid eventually assists the donor country by helping its firms. In some instances, aid is seen by the parties involved as a means of providing political leverage in the donor country and also as a tool at the disposal of corrupt regimes seeking to suppress the opposition and the general political discourse in the country. Therefore, in such instances, aid takes the shape of military assistance and internal security reinforcement. The dilemma here, for the recipient country, is that once aid is sought and accepted, the recipient regimes find themselves unable to free themselves of the political – economic obligations to the donors. This also reduces the ability of the recipient governments to prevent the donors from interfering in their internal affairs.

Aid may help to promote growth and structural transformation in underdeveloped countries but does not always does so. It may even retard growth by substituting for, rater than supplementing, domestic savings and investment and by deteriorating the recipient country’s balance of payments as a result of rising debt repayment obligations and the linking of aid to donor country exports.

From the viewpoint of the recipient countries, the more economic rationale that foreign carries, the better it is. Aid that is less tied to conditionalities such as donor country exports, the more autonomy is permitted in its allocation and the more it is supplemented by reductions in donor country tariffs and non – trade barriers, the greater will be the developmental impact of the aid. As a matter of fact, free and fair trade that provides better and profitable opportunities to the developing and underdeveloped countries is more vital and beneficial for these countries than quantitative increases in development aid and assistance. An assertion that follows from this is that in order to realize the goal of poverty alleviation and economic development in the underdeveloped countries, the developed world should look more towards providing easy market access to the products of these countries and in moving to withdraw, or atleast, reduce the heavy subsidies that they provide to their producers. Such a gesture would go a long way towards easing the plight that the underdeveloped countries find themselves in.

In a society where corruption is simply accepted as a way of life, one should not be too much surprised in seeing that even institutions which are supposed to safeguard the social and ideological fabric of the society and which are seen as the ultimate saviors, are involved neck deep in the sea of graft.

Since Pakistan got independence from British colonial rule, the Pakistan armed forces and specially the Pakistan Army has played a pivotal role in keeping the state coherent, promoting a sense of unity and belonging and providing a place to Pakistanis for putting trust and selfless service. However, all too frequently, this sacred trust of the people has been breached by the top army brass that has always viewed political discourse in an skeptical fashion. Thus, the army high – ups, through most of the period since the birth of Pakistan, have felt the need to interfere in the running of civilian governments and have taken over the reigns of the country forcefully to purge the system of its perceived inherent corruption. But contrary to the expected results, army rule has led to a corrupt regime that has collapsed under its own weight. The Army took over once again in October 1999 when Gen. Musharraf seized power.

With increased political leverage, the Army is bent upon claiming its share and implementing its writ over the civil society and its resources. The most absolute evidence of this fact can be found in the fact that almost all important civilian posts in the government machinery are occupied by some army man, either retired or serving. These responsibilities were handed over to army personnel by arguing that the army can ensure discipline and eradicate corruption. Many able and qualified civil servants and administrators were left in the lurch and superceded by the army personnel. And these so – called military administrators started playing foul with the human resources that remained subjugated to them. Pakistan Steel is a very good case in point. This has created resentment and ill – will amongst civilians towards the army as an institution.

Following from this, the armed forces of Pakistan have started extending their muscle in the business arena too. There is the Baharia Foundation, the Shaheen Foundation and the infamous Fauji Foundation, which is the most active of them all. But, there wasn’t any issue if commercial dealings of the armed forces came out to be clean. Au contraire, the Defence Housing Authority and the Fauji Foundation continue to remain mired in controversies.

To protect their skins, the Generals go so far as even to defy and disregard the parliament. They seem to be ready and willing all the time to belittle and ridicule every institution for protecting their political, personal and corporate interests. Lt. Gen. (retd.) Mohummed Amjad, the ex – chief of the National Accountability Bureau, a creation of Gen. Musharraf seemingly having an agenda of victimization, and later, the boss at Fauji Foundation, provides sufficient evidence of the Pakistan Army Associates (Pvt.) Ltd. disregarding and mocking the parliament. The case against Gen. Amjad is that he sold a sugar mill of the Fauji Foundation, by strictly adhering to the principles of favouritism, at much lower than the highest bid price. The Ministry of Defence, on the floor of the Lower House, confirmed this transaction thus providing it an official tinge. The said sugar mill has been reported to have been sold for Rs.300 million as against the highest bid of Rs.387 million. When the Senate’s Defence Committee summoned the Fauji Foundation management, the Generals at the GHQ decided to challenge the wit of the Parliament and raised questions on its jurisdiction to probe Army’s corporate interests. The matter was brought to a close in haste without any outcome, with the help of the Chairman of the Committee, Nisar Memon, who is an ardent Musharraf loyalist. This is, but just one of the many dimensions of the ugly face of military corruption.

Another incidence of blatantly fraudulent dealings of the army lies in defence procurement. In 1996, the Army bought 1,047 GS-90s jeeps, at a cost of $20,889 per unit. The market value of a jeep then was only $13,000. According to the National Accountability Bureau, some senior Army officers made Rs. 510 million in the deal. In the purchase of 3,000 Land Rover jeeps in 1995, Army officials allegedly received around Rs. 2 billion as kickbacks. WAPDA, under the good and able management of the Army, raised electricity tariffs 13 times during the period from 2000 – 2004; and during this period, procured electric meters at Rs. 1,050 per unit as against the market price of Rs. 456 per unit. This deal alone culminated in a loss of Rs. 1.56 billion to the national kitty.

This is not all. The present administration’s anti – corruption arm – the National Accountability Bureau – has allegedly stuck deals with many politicians to purge their names of corruption charges. The most high profile example is of former Prime Minister Nawaz Sharif. Although he may not have been given a clean bill, he was nevertheless allowed to go in exile alongwith his family to Saudi Arabia where he reportedly lives like just another Saudi prince. Similar allegations of a ‘deal’ have been raised in the case of Asif Ali Zardari. It’s not a secret anymore that how NAB cleared names of many other polticians and dropped charges against them when they re – aligned themselves with Gen. Musharraf to form what was called the King’s Party (PML – Q) that was declared victorious in elections which were supposed to bring democracy back to Pakistan. The Chaudhrys of Gujrat (who rule the roost in the province of Punjab), Faisal Saleh Hayat, Rao Sikander Iqbal and Nilofer Bakhtiar are a few examples of NAB’s loyalty for. Musharraf’s ‘cause’.

Yes, the building of 90 acres of a welfare settlement called the Creek City, where the cheapest unit commands a price tag of around Rs. 6 million, is an epitome of the military’s service to the nation. Similar signs of service to the nation are the various Defence housing Authorities, the kickbacks and commissions in defence procurement and the unhindered corporate activities that are true obstacles to development, poverty alleviation and democracy.

The military has lost its virtue as a savior and as an impeccable and forthright institution the day it decided to convert itself into Pakistan Army Associates (Pvt.) Ltd. And indulging in unfair practices.

Every administration that has ruled the roost here in Pakistan has promised to the citizens of the country of conserving thier dignity alongwith their freedom. However, such promises have more or less remained mere promises and never materialised. Recently, the name of Mukhtaran Mai, the victim of the June 2002 Mirwala gang rape incident, was put on the Exit Control List by the Ministry of Interior. Mukhtaran was supposed to travel to London in a couple of days upon invitation by Amnesty International. Coincidentally, a review board of the Lahore High Court set free the dozen or so culprits who were charged with the crime of gang rape. They were released when their detention period expired. Moreover, it has been widely reported in the national press that she has been kept under a virtual house arrest since the last many days.

It is believed that the government put her name on the ECL so that, as the government thinks, her visit abroad will malign Pakistan and tarnish the ‘soft’ image that is being so painstakingly painted.

It is not for the first time that the administration has done such things to restrain citizens’ basic rights guaranteed by the Constitution of the Islamic Republic of Pakistan. And since Gen. Musharraf siezed power, the military has moved more vigorously to impose its writ over civil society and its resources, with official patronage. The media is awash with stories relating to political intimadation, illegal detention, media harassment and shortcomings in following due processes in conducting the war against terrorism.

Since October 1999, the influence of the military over the Pakistani society has kept on increasing. The Okara military farms incident can be quoted as an absolute example of this fact. Similarly, freedom of speech has been repeatedly suppressed by the rulers. The case of two French journalists, Marc Epstein and Jean-Paul Guilloteau, and thier Pakistani assistant, Khawar Mehdi Rizvi has been well documented by the press. Makhdoom Jeved Hashmi of the Alliance for Restoration of Democracy was sentneced to twenty – three years in prison on sedition charges for reading a letter (allegedly containing anti – military matter) to journalists.

Musharraf has been successful in convincing the United States and other Western powers that he is the indispensable man of Pakistan by claiming that he is and will be the saviour of democracy in Pakistan. Thus, world powers remain convinced that pushing Musharraf too much on the issue of human rights will inevitably push Pakistan in the hands of fanatics. Following this, the military feels itself unhindered and free to violate basic human rights at its will.

The world wants stability in Pakistan. Citizens of Pakistan also want stability in the country. By trying to paint a ‘soft’ image of the country to the outside world, the government may have been successful in portraying a stable Pakistan to the international community, but the fact of the matter is that political instability is as much there and the military is the sole beneficiary of this pseudo – democracy that is being experimented in the country by Gen. Musharraf and his GHQ.

The current financial year is near its closing and the government has already announced the annual budget. The budget, as is being told, is focussed on enhancing the national infrastructure and provides for unprecedented sustainable growth in the national economy. Economic managers of the country are aiming at maintaining the GDP growth at 7 – 8% during the next five year period and are quite optimistic towards achieving this goal.

Government functionaries are right, to an extent, for advertising their ‘success’ in giving a clear direction to the national economy and in bringing it out of the turmoil which it was in prior to the military coup. No doubt, the economy has surged back and is growing. This year only, the economy has grown by a record 8.4%. During the outgoing year and the previous, nearly all major sectors of the economy have grown. There is now talk of bumper cotton and wheat crops this year and huge expansion of the services and the large scale manufacturing sector. All this is expected to continue in the coming financial year as well. And all this is music to the government’s ears which is leaving no stone unturned in praising itself upon this ‘impressive’ performance.

Such a turnaround for an economy which, not too long ago, was on the verge of default is surely commendable.

All of it is good news…..but, it’s good news only for a relatively small segment of the population. The segment that has benefited from this growth. Almost one – third of the population of about 150 million souls lives below the poverty line of a dollar a day. However, life for most of the remaining two – thirds is also no better; most live near the margin and it is only a very small number of individuals who are well – off and whom economic growth provides dividends. Growth seems to come to stop at this elite level only and does not trickles down to the masses.

The federal budget always seeks to paint such a rosy picture of the whole situation that at times, one becomes sick of it. Keeping all the statistical inferences aside, the fact is that the poor have been getting poorer and the rich getting richer. The State Bank of Pakistan itself concedes that inflation has climbed to double digits instead of being kept in check at single digit levels. The Central Bank further says that it is the result of growth oriented loose monetary policy. Such a policy has provided fuel to the fire of inflation and the State Bank finds itself unable to contain it inspite of vigorously raising interest rates.

Taxes are yet another source of agony for the common man in Pakistan. The government collects more revenues by way of indirect taxation than by way of direct taxation. A highly aggressive indirect taxation regime, alongwith inflation, they really break the backs. And thumbs up to the officials for regarding Sales Tax as the tax of the future.

What is required of the government is that it now stop bragging about its so – called achievemnets and give a sympathetic consideration to the common man.