Pakistan’s wounded sovereignty, an Economist editorial
Pakistan needs outside help to pay its bills and quell an insurgency. But will it thank or resent its benefactors?
Oct 29th 2008, From The Economist print edition
THE earthquake that struck the province of Baluchistan on October 29th, killing over 150 people, is only the latest calamity to befall Pakistan. The country's economy is threatened with bankruptcy, even as its internal security is haunted by growing militancy.
Without foreign help, Pakistan won't be able to afford its imports, repay its debts, or quell the insurgents encamped within its borders. Thanks to protracted power cuts, it cannot even keep the lights on in its towns and villages. It is not, in other words, a state in full command of itself. And yet despite these dispiriting facts, or perhaps because of them, Pakistan is acutely sensitive to any infringement of its sovereignty. Those outside powers in a position to help it, from the International Monetary Fund to the American military, are as likely to offend its pride as to earn its gratitude.
Pakistan is running out of hard currency. It spent $3.6 billion on imports in September, including a $1.5 billion petrol bill that was 180% higher than a year earlier but earned only $1.9 billion from its exports. The central bank’s foreign-exchange reserves, which stood at a smidgeon over $4 billion on October 17th, are falling by over $1.3 billion a month.
Pakistan’s last best hope is a big loan from the International Monetary Fund (IMF). This expedient is hardly unprecedented. On the contrary, it is almost traditional. Most of this government’s immediate predecessors have turned to the IMF at some point, receiving substantial sums in six of the 14 years between 1989 and 2002. The IMF appears ready to help. And yet Pakistan’s government is dragging its feet, making a great show of reluctance, even as it extends its hand in supplication.
Shaukat Tarin, economic advisor to Pakistan’s prime minister, insists the government has not yet formally made a request for the fund’s money. An IMF bail-out, he says, is Plan C, to which it will resort only after Plan A (raise funds from the World Bank, the Asian Development Bank, the Islamic Development Bank and Britain’s aid agency) and Plan B (hit up friendly governments for money) have been exhausted.
The government no doubt fears and resents the strings the IMF may attach to the loan. It is humiliating to hand over economic policy to Washington-based interlopers. They will most likely want to see Pakistan slash its budget deficit, which was over 8% of GDP in the last fiscal year, stop borrowing freely from the central bank, and remove power subsidies. None of this will be popular. But nor will these prescriptions represent any great imposition on Pakistan’s sovereignty. They instead represent the imposition of harsh economic reality.
The government knows this. In September, when it still hoped to escape an IMF loan, it had already reconciled itself to a similar set of steps. It has raised fuel prices more than once and even tried to raise electricity prices by 31%, until it was forced to back down after outraged customers burnt their electricity bills outside the utility’s offices. Turning to the fund will give the government an extra push to do what’s necessary. It will also give it a spoonful of dollars to help the medicine go down.
Pakistan’s border with Afghanistan is as porous as its balance of payments. On at least 19 occasions since the start of August, unmanned American aircraft, called Predator drones, have fired missiles at targets on Pakistan’s side of its long border with Afghanistan. The latest attack, on October 26th, killed 20 people in South Waziristan, reportedly including a Taliban commander. Insofar as Pakistan tolerates these strikes at all, it is only because the alternative is worse: in September, for example, American commandos stole across the border killing a score of people.
Pakistan complains that such incursions across the Afghan border are “a gross violation” of its sovereignty, as indeed they are. But Americans can’t help pointing out that Pakistan does not in fact exercise much sovereignty over the parts of the country where their forces trespass. South Waziristan is one of seven tribal agencies, containing about 3.5m people, officially designated as the Federally Administered Tribal Areas (FATA). These impoverished, largely illiterate areas exist in a constitutional limbo, governed at arm’s length by the Frontier Crimes Regulation, a colonial relic. Pakistani legislation does not apply in the FATA and its political parties cannot operate there.
Pakistan may object to America’s intrusions into this border region. But it has already allowed a foreign power to pitch its flag there. Al Qaeda and other carpetbagging militants have been encamped in FATA since their flight from Afghanistan in December 2001. In his book “Descent into Chaos”, the Pakistani journalist Ahmed Rashid describes them as the icing on a “multilayered terrorist cake”, beneath which lies a layer of Afghan Taliban who fled with them, and a base of indigenous Pushtun tribesmen, some of whom also now count themselves as members of the Taliban.
Pakistanis deeply resent having to fight these militants and terrorists on America’s behalf. But they also resent letting America fight them itself. Some Pakistanis were perhaps willing to tolerate the presence of Al Qaeda and the Taliban for as long as they attacked only American and Afghan forces, leaving the rest of Pakistan alone. But that fragile truce no longer holds, as the assassination of Benazir Bhutto in December and the bombing of the Marriott Hotel in Islamabad in September have made bloodily clear. Until these terrorists are driven from Pakistan’s territory, they will remain the biggest affront and threat to the sovereignty it holds dear. Source: http://www.economist.com/daily/columns/asiaview/displaystory.cfm?story_id=12501110