In troubled times, nations look up to a leader to show the way to the faint light at the end of a dark tunnel. Pakistan’s President Asif Ali Zardari is at such a point in the history of his troubled nation. Pakistan’s survival is at stake as it faces imminent economic collapse and severance of its western region by the Tehreek-e-Taliban and Al Qaeda combine.
The domestic economic situation is deteriorating day by day. Apart from inflation, chronic power shortages and rising food prices are affecting the common man. Zardari’s rather simplistic solutions to the twin challenges of economy and terrorism take us back to the bizarre days of Pervez Musharraf harping on “national interest” to justify every decision. Islamabad today needs an out-of-the-box solution, not just good old political perfidy.
After a rebuff from China, which signed 11 agreements during his recent visit, including one on cricket, but gave nothing tangible, Zardari’s hopes for immediate financial solace rest on “Friends of Pakistan”, a group which has met for the first time only recently, and includes the US, major European countries, China, Japan and Islamabad’s patrons in the Gulf—Saudi Arabia and the UAE. Many of them are in deep economic distress themselves.
Thus, their agenda focused more on political and administrative restructuring instead of economic problems, as is evident from the five areas identified—“stability, development, border areas, energy, and institution building”. There also appears to be an informal understanding within this group, as China insisted on structural reforms before giving any cash aid while the Saudis are not inclined towards an oil-based dole. US assistant secretary of state Richard Boucher, during his recent visit to Islamabad, was even more specific when he stated, as reported by the Daily Times, that “there is no money on the table. The goal is to put the money where it belongs. It is not a cash advance”.
The International Monetary Fund in the near term and, ironically, India in the long term, appear to be Pakistan’s main hopes now. There are faint signs of Zardari basing Pakistan’s economic revival on a strong trade relationship with India. This would be sound policy, for it is in the east that large markets are to be found. Perhaps, he has taken a leaf out of the book of other South Asian countries—Sri Lanka and Bangladesh—which have benefited from recasting their trade relations with New Delhi.
India should link such a relationship with a corridor to Central Asia, which the World Bank is willing to fund. Here, resistance from the business lobby and a vicious cartel of criminals, terrorist groups and tribal warlords, who between them have controlled the movement of goods from Karachi to Tashkent for at least two decades, may come in Zardari’s way.
The second challenge to Pakistan is that of terrorism, and that is not likely to go away, for there are huge gaps in what Zardari and the international community want and what is achievable. Terrorist groups, led by the Tehreek-e-Taliban, have attained a momentum of their own. Targets are carefully selected for their political value, be it the Marriott hotel, Awami National Party chief Asfandyar Wali Khan—who is reported to have shifted base to London—or national assembly member Rashid Akbar Niwani. What is worrying is that the police and the military don’t seem to have the capability to deal with such mass terror attacks. Moreover, structural inadequacies of administration and development in the tribal areas will take a long time to overcome.
Historically, this is not the first time Pakistan has been on the brink of an economic collapse. Wikipedia cites at least eight instances of serious economic problems in the past decade or so.
The present situation is, however, complicated by terrorism, which will deter foreign direct investment till there is some semblance of order. A free trade pact with India may be more viable, so Zardari needs to think out of the box and set in motion a look-east policy.
Rahul K. Bhonsle is editor, South Asia Security Trends. Comment at firstname.lastname@example.org