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Islam and the West ( 30 Oct 2008, NewAgeIslam.Com)

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Wounded Sovereignty: Uncertain future as Pakistan goes broke

Uncertain future as Pakistan goes broke


By G Parthasarathy


Think-tanks and bipartisan groups in the US have worked feverishly in recent months on how the new US President should deal with the "single greatest challenge the world faces" -- Pakistan -- as it confronts "its greatest crisis since partition in 1947". A bipartisan report, endorsed by Democratic Party Congressman and former co-chairman of the 9/11 Commission Lee Hamilton and the Bush Administration's former Deputy Secretary of State Richard Armitage, has been prepared by a 'Pakistan Policy Working Group' comprising experts from both sides of the political divide. The report notes: "The US cannot afford to see Pakistan fail, nor can it ignore the extremists operating in Pakistan's tribal areas," as American efforts in Afghanistan "cannot succeed without success in Pakistan and vice-versa".


The report defines US objectives and interests as requiring a "stable and responsive Government" in Pakistan enjoying public support. It advocates the need to transform Pakistan into a "state that lives at peace with its neighbours -- most notably India and Afghanistan". The report is critical of the ISI for being "engaged with groups that support the Taliban and are killing American, NATO and Afghan Government troops in Afghanistan". It also alludes to "well sourced reports" on the ISI's role in the bombing of the Indian Embassy in Kabul, while noting that Taliban leader Mullah Omar is believed to be living in Quetta. It realistically asserts: "Pakistan's ambiguous policy on support for militancy is unlikely to change as long as the military -- currently the only national institution -- remains beyond the scrutiny of elected representatives."


But, amid belated realism on the ISI-jihadi nexus, the international community -- including Pakistan's 'all-weather friends' China and Saudi Arabia -- is still groping for a strategy to prevent Pakistan from collapsing economically. With its foreign exchange reserves rapidly declining to a level which would enable it to meet its needs for six weeks of imports, Pakistan could well face a situation of defaulting on a sovereign debt, when a $ 500 million Euro bond matures in February 2008. Prime Minister Yousuf Raza Gilani's finance adviser Shaukat Tareen acknowledged on October 22 that his country immediately needs $ 4.5 billion to stay afloat economically. While the US has put together a new consortium, including China and Saudi Arabia, named 'Friends of Pakistan', to bail out Islamabad, Washington is not going to pour money into Pakistan if the country remains a bottomless pit economically. Aid is largely going to be withheld till Pakistan agrees to painful economic restructuring.


Unable to pay for its oil imports, Pakistan approached Saudi Arabia for a $ 5.9-billion bailout for supply of oil on deferred payment terms. The Saudis have yet to decide how to respond. President Asif Ali Zardari went to China hoping that Pakistan's most trusted friend and ally with $ 1.9 trillion of foreign exchange reserves would immediately open its wallet. When Pakistan sought a relatively small bailout of $ 500 million in 1996 from China, its then Finance Minister Shahid Javed Burki received a sermon from Prime Minister Zhu Ronji on why Pakistan cannot recover economically unless it raises its abysmally low rate of savings. After much hesitation, the Chinese gave Pakistan $ 500 million. China, it appears, will not encourage Pakistani economic profligacy and will possibly join other 'Friends of Pakistan' when aid is coupled with economic restructuring.


In these circumstances, the 'Friends of Pakistan' will use their economic leverage to see that Pakistan moves in the direction of ending support for terrorist groups and dealing with pro-Taliban groups operating across the Pakistan-Afghanistan border. It is in this background that one has to assess the rather shady role being played by America's British allies, who are preaching virtual defeatism and surrender in Afghanistan through both their military commander and Ambassador. The British quite evidently have no stomach for further casualties. Over the past two years they have played a duplicitous role in establishing secret contacts with the Taliban behind the back of President Hamid Karzai, who has reacted with rage, expelling a British national who was involved in clandestinely transferring money to the Taliban and by pre-empting a British ploy to get Lord Paddy Ashdown, who had earned notoriety in Bosnia and is said to have had MI 6 links in his short career as a diplomat, as a UN High Representative to Afghanistan.


There can obviously be no military solution to the conflict in Afghanistan. But this does not mean that the Taliban and its ISI mentors should be led to believe that the Taliban could return to power. Mr Karzai does have members of the Hizb-e-Islami led by ISI-backed Gulbuddin Hekmatyar holding high positions in the Afghan Government. But they have to function within the framework of Afghanistan's democratic Constitution. But a return of the exclusively Pashtun Taliban would be a recipe for not only an ethnic division of a country where 56 per cent of the population is not Pashtun, but also return to an era where the terrorist groups across the world found haven in Afghanistan.


The talks that Mr Karzai has initiated with Taliban representatives with Saudi Arabian facilitation are evidently an effort to set out the terms under which the Taliban could be accommodated in the political mainstream in Afghanistan. The Afghan Foreign Minister clarified in Islamabad on October 21: "Talks will be held with only those who are willing to lay down arms and those willing to function within the Constitution" -- akin to terms that Pakistan's National Assembly has set down for talks with those who have taken to arms in that country.


Pakistan is evidently seeking to link progress on Afghanistan with the international community 'facilitating' dialogue on Jammu & Kashmir with India and a reduction in Indian influence and profile in Afghanistan. The Pakistanis, using noted scholars like Ahmed Rashid, are also attempting to peddle the view that Taliban sincerity should be accepted if the Taliban merely 'disavows' ties with Al Qaeda. There is also an effort to tell the Americans that "Islamist movements with local or national objectives" (read Lashkar-e-Tayyeba and Jaish-e-Mohammed) are quite different from an international terrorist group like Al Qaeda and should be dealt with differently. India will have to evolve a comprehensive diplomatic strategy, including consultations with Russia, Iran and with the incoming US Administration to counter such moves designed to perpetuate terrorism from Pakistani and Afghan soil.





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: