Pakistan Is Undergoing A Reality Check
Pakistan Is Undergoing A Reality Check
SANJAYA BARU
The difference is clear, says S Akbar Zaidi, a Karachi-based economist of repute, “India’s economic growth has by far overtaken Pakistan’s, a trend which is unlikely to be reversed for some time to come.” Dr Zaidi is not the only Pakistani economist to come to that conclusion, but he has done so in a paper written for the New Delhi-based Observer Research Foundation.
This candid admission of recent economic retrogression is based on a systematic analysis of facts and figures in a paper, “Pakistan’s Economic and Social Development: Domestic, Regional and Global Perspectives”, that should be widely disseminated in both countries because of the many useful lessons it holds for people and governments in both countries.
Dr Zaidi neither understates Pakistan’s many achievements nor over-states the problem it is presently facing. He holds a mirror to the fact that while as recently as in 1990, Pakistan’s per capita income (in purchasing power parity terms) was US $1,360, compared to India’s $1,380, by 2001 it was a mere $1,860 compared to India’s $2,820.
If 9/11 had not happened, its fiscal and external economic profile would have been in crisis zone. Fortunately, and Dr Zaidi is not sure if it has been all that fortunate, Pakistan’s re-emergence as a “frontline” state in the West’s war against its detractors, has helped it improve its external economic profile. This, Dr Zaidi believes, is a transient breather and he would like to see comprehensive economic reform and increased investment and domestic savings drive a much needed economic recovery at home.
In that home-driven economic recovery, Dr Zaidi sees a relevant role for trade with India and the rest of South Asia. First, Dr Zaidi draws attention to the fact that despite the terrible diplomatic and political relations between India and Pakistan, India remains a more important bilateral economic partner for Pakistan than Iran and is fairly close to China in this regard. “Despite hostilities, wars and diplomatic breakdown” says Dr Zaidi, “Pakistan imports more from India than it does from France, Canada, Switzerland, the Netherlands, Turkey, Iran, or even Thailand!”
Second, he reminds us that whenever either country has had a domestic economic shortage, be it onions, wheat, sugar or power, both have come to each other’s rescue: “both countries, despite extremely poor political and diplomatic relations, do turn to each other in times of need”. He uses words like “significant” and “tremendous” in referring to the gains from bilateral trade.
Is Dr Zaidi’s a voice in a jehadi wilderness? Not true. Public opinion in Pakistan is beginning to change. Participants in a range of “track II” dialogues cutting across various professions report that the old “arrogance” of the Islamabad and Karachi elite, born partly out of Pakistan’s superior economic performance in the 1960s to 1980s, and partly reflecting cultural attitudes towards Indians, has gone. There is a greater degree of realism in understanding the real strengths and weaknesses of each other.
My own interactions with Pakistanis in the past had convinced me that what Pakistan’s elite and middle classes needed most was a “reality check”, on where exactly they stood vis-a-vis India and the world. Admittedly, many Indians also need a reality check because many among us have a mistaken view of Pakistan as a “failed” State in the grip of Islamic extremism. The dialogue enabled by Prime Minister Atal Bihari Vajpayee and President Pervez Musharraf has, for the first time in years, encouraged a reality check on both sides.
The numbers, of course, are stark and driving this process forward. Consider, for example, the statistics put together by researchers Ilmas Futehally, Semu Bhatt and Sumedha Vaidya in a recent publication brought out by Sandeep Waslekar of the Strategic Foresight Group entitled, “Cost of Conflict Between India and Pakistan”, with a foreword by Niaz Naik. As Dr Waslekar correctly sums up, both countries have paid a price in economic and political terms. The difference now is, Pakistanis are beginning to get more realistic in estimating the costs and benefits of tension with India.
If Dr Zaidi lists out the “benefits” of peace and normality, the SFG document estimates the “costs” of conflict. While it is difficult to put a number to either the benefits or the costs, one thing is clear. Both countries have paid a developmental price. As long as India was paying the greater price and the cost of “low intensity” conflict with India was not very high for Pakistan, the latter could afford to ignore the economic costs of its confrontation with India.
Moreover, the economic lifeline made available to it by the United States and Saudi Arabia and the military support line extended by both the US and China, and the developmental support extended by all three and the European Union and Japan made sure that Pakistan did not pay such a heavy price for its domestic politics and external policies with respect to India.
The 1990s have changed all that. India’s economic acceleration and its ability to improve its bilateral relations not just with the US but also with China, south-east Asia and the Islamic world has forced Pakistan, itself embroiled in internal political crises and under increased external pressure, to take a reality check on where it stands vis-a-vis India, vis-a-vis South Asia, vis-a-vis China and vis-a-vis the rest of the world.
If there is greater hope in the current peace process in the region, it is not just because India has a forward looking Prime Minister like Mr Vajpayee, or because the US and China are worried about jehadi terrorism, or because Pakistan feels militarily insecure (which it is not since it does have a good military force), but because ordinary Pakistanis may finally be coming to terms with the fact that they have paid a huge price in developmental terms.
Forget the good numbers from the Karachi stock exchange, forget the textile exports data, forget the food output, forget the burgeoning forex reserves. The bottomline is that while India is “accelerating”, Pakistan is “decelerating”. Time to get the balance right.