Pakistan feels economic cost of struggle with India

Jack Redden

Anaemic economic growth and a dearth of foreign investment is forcing Pakistan to look at the heavy cost imposed by a foreign policy mired in its conflict with India.

Pakistan government spokesman Major General Rashid Qureshi noted a shared need for ‘‘economic progress’’ in welcoming Wednesday’s long-sought Indian offer of talks with military ruler General Pervez Musharraf.
While many Pakistanis dismiss the image of a dangerous region as a distortion, few investors will venture into a country where the struggle over Kashmir has ensured nearly 54 years of hostility with India — especially when both have nuclear weapons. Even Pakistan’s involvement in the civil war in neighbouring Afghanistan is entwined with the conflict with India.

‘‘A lot of political and geo-political issues impact on economics,’’ Finance Minister Shaukat Aziz conceded at a May 20 economic conference. ‘‘A peaceful environment will help the economy to grow. The issue is an important one; we are very conscious the issues cannot be divorced.’’
Aziz was responding after Canadian High Commissioner Ferryde Kerckhove had bluntly attacked a ‘‘parochial’’ foreign policy and a wide range of other concerns regarding the future of Pakistan.

Foreign investment is frightened off. Pakistan had a meagre foreign direct investment of $143 million during the last six months of 2000, about a dollar per capita, and down $164 million from the same period a year earlier.
But the country is also diverting its own resources that are desperately needed to fight 60 per cent illiteracy and counter economic decay. It has seen the number below the poverty line rise from 18 per cent to 34 per cent of the population since 1987.

But there has been little serious public debate on Pakistan’s key foreign issues — Afghanistan, Kashmir and relations with India. These are policy areas dominated more by intelligence departments and the military than diplomats — and they are all interwoven.

While Pakistan denies any military backing for the Taliban militia that controls most of Afghanistan, UN officials say most of an estimated 15,000 foreigners with the hardline Islamic organisation are from Pakistan.

Islamabad, however, denies it is helping the militants fighting in Kashmir but finds few believers, when the organisations have offices in Pakistan.

‘‘Pakistan is stuck with the policy of wearing down India,’’ said a senior diplomat. ‘‘On the Pakistan side there is a game plan that is not realistic and won’t work. The Indian side has no game plan.’’

Economics dictates that Pakistan is the weaker side in this struggle. In a war of attrition, the country with the higher growth and greater ability to afford new weapons will prevail.

Pakistan’s growth rate this year will be under four per cent — not much above the estimated 2.4 per cent population growth that adds more than three million mouths to feed a year — and no substantial improvement is expected for several years. The country needs an annual growth rate above six per cent to reduce poverty.

‘‘Pakistan finds itself in a situation where the adversary has far greater capability to fund its military modernisation,’’ security analyst Ayesha Siddiqa-Agha wrote in a paper for the economic conference, arguing for a total military rethink.

She likened spending on the 630,000-man armed force and other parts of the military establishment that exceeds that on all health, education and other development needs to a time-bomb ticking rapidly toward detonation.

And despite acknowledging the economic burden imposed on a country slipping further behind its large neighbour, Aziz has felt compelled to defend the military spending: ‘‘We can’t allow our defence and sovereignty to be compromised.’’ (Reuters)