Economy in Pakistan

It’s still the economy, in Pakistan

A few weeks ago I asked a Pakistani diplomat what was, among the multiple threats facing the country, the single biggest challenge?

It wasn’t al Qaeda or the Taliban, it wasn’t the United States as many Pakistanis believe. And it wasn’t even India, for long the existential threat the military and succeeding generations of politicians have invested blood and treasure to checkmate.

It was the economy which has virtually ground to a halt as the global recession erodes exports and investment, the diplomat said. Fix the power shortages, win investors back and get the economy moving, the tide of militancy could begin to be pushed back.

You could of course argue that the miitancy itself has sapped the economy and if it weren’t for the militants, Pakistan would have done far better . So tackle them first, and the economy would take care of itself. In the light of the attacks of last week and this, that certainly would seem to be an overiding immediate objective.

But the diplomat’s point was that the opportunities created by an expanding economy would, in the longer term, make it a bit less likely for young men to gravitate to a hate-filled career of violence in the name of religion.

The suicide bomber who struck in Shangla near the Swat valley on Monday was apparently in his early teens, one report put his age at 13. Was he from the impoverished masses that the Taliban have increasingly turned to, to carry out the attacks ?

Pakistani Foreign Minister Shah Mehmood Quereshi told National Public Radio that the Taliban had been “extracting out of poverty and the misery of people.” If the people were educated and enlightened they wouldn’t join them, he said. And it doesn’t stop at Waziristan or other parts of the northwest where the Taliban and al Qaeda are operating out of. It may well be also Punjab in the very heart of Pakistan; its poverty stricken, feudal dominated southern part with a large illiiterate population a huge pool to tap.

The Kerry-Lugar bill that has so riled many in Pakistan for what are seen as humiliating benchmarks is aimed at boosting Pakistan’s social and economic development which its planners hope will ultimately drain the swamp in which terrorism breeds. The assistance is intended to fund a range of projects, including Pakistani schools and roads, agricultural development, energy generation, water resource management and the judicial system.

Pakistan’s Finance Minister Shaukat Tarin has warned that if the U.S. aid didn’t come through because of objections at home the deficit would widen further forcing the cash-strapped government to borrow further.

Last month, the Asian Development Bank cut its forecast for Pakistan’s economic growth to 3 percent in the year to 2010. Some others are predicting even lower growth, as little as 0.3 percent which must be the weakest pace in five decades.

It wasn’t like this before. If you just wanted to do a basic comparison Pakistan grew at 5.2 percent between 1965 and 1980, while much larger India plodded at a slow 3.6 percent. The lead continued during the 1980s as Pakistan grew at 6.3 percent and India followed at 5.5 percent . It was only in the sixth decade after partition in 1947 that India really began to power ahead with growth rates of 9 percent. With a population aroiund seven times that of Pakistan, its absolute GDP dwarfs that of the neighbour and makes India look like a heavyweight in the global arena.