It’s still the economy, stupid, in Pakistan

October 13, 2009

A few weeks ago I asked a Pakistani diplomat what was, among the multiple threats facing the country, the single biggest challenge?

It wasn’t al Qaeda or the Taliban, it wasn’t the United States as many Pakistanis believe. And it wasn’t even India, for long the existential threat the military and succeeding generations of politicians have invested blood and treasure to checkmate.

It was the economy which has virtually ground to a halt as the global recession erodes exports and investment, the diplomat said. Fix the power shortages, win investors back and get the economy moving, the tide of militancy could begin to be pushed back.

You could of course argue that the miitancy itself has sapped the economy and if it weren’t for the militants, Pakistan would have done far better . So tackle them first, and the economy would take care of itself. In the light of the attacks of last week and this, that certainly would seem to be an overiding immediate objective.

But the diplomat’s point was that the opportunities created by an expanding economy would, in the longer term,  make it a bit less likely for young men to gravitate to a hate-filled career of violence in the name of religion.

The suicide bomber who struck in Shangla near the Swat valley on Monday was apparently in his early teens, one report put his age at 13.  Was he from the impoverished masses that the Taliban have increasingly turned to, to carry out the attacks ?

Pakistani Foreign Minister Shah Mehmood Quereshi told National Public Radio that the Taliban had been “extracting out of poverty and the misery of people.” If the people were educated and enlightened they wouldn’t join them, he said. And it doesn’t stop at Waziristan or other parts of the northwest where the Taliban and al Qaeda are operating out of. It may well be also Punjab in the very heart of Pakistan; its poverty stricken, feudal dominated southern part with a  large illiiterate population a huge pool to tap. 

The Kerry-Lugar bill that has so riled many in Pakistan for what are seen as humiliating benchmarks is aimed at boosting Pakistan’s social and economic development which its planners hope will ultimately drain the swamp in which terrorism breeds. The assistance is intended to fund a range of projects, including Pakistani schools and roads, agricultural development, energy generation, water resource management and the judicial system.

Pakistan’s Finance Minister  Shaukat Tarin has warned that if the U.S. aid didn’t come through because of objections at home the deficit would widen further forcing the cash-strapped government  to borrow further.

 Last month, the Asian Development Bank cut its forecast for Pakistan’s economic growth to 3 percent in the year to 2010. Some others are predicting even lower growth, as little as 0.3 percent which must be the weakest pace in five decades.

It wasn’t like this before.  If you just wanted to do a basic comparison Pakistan grew at 5.2 percent between 1965 and 1980, while much larger India plodded at a slow 3.6 percent. The lead continued during the 1980s as Pakistan grew at 6.3 percent and India followed at  5.5 percent . It was only in the sixth decade after partition in 1947 that India really began to power ahead with growth rates of 9 percent. With a population aroiund seven times  that of Pakistan, its absolute GDP dwarfs that of the neighbour and makes India look like a heavyweight in the global arena.

Is that reason enough for Pakistan to pull up its anaemic economy by the bootstraps?

[Picture outside the army headquarters in Rawalpindi and a woman walks past a coal dump in Karachi]


Those who live by the sword, die by the sword. Poor Pakistan is suffering from self-inflicted wounds. It was Benazir Bhutto’s democratic government of Pakistan that chose of its own free will to facilitate relocation of Osama bin Laden from Sudan to Afghanistan in 1990s. Sandy Berger, Clinton’s national security advisor had told 9/11 Commission in March 2004 : “Pakistani Army was the ‘midwife’ of Taliban“. Ex-CIA official Bruce Riedel said in an interview on 1/29/2009 that ”In Pakistan, the jihadist Frankenstein monster that was created by the Pakistani army and the Pakistani intelligence service, is now increasingly turning on its creators. It’s trying to take over the laboratory.” Pakistani Army and Intelligence chose to create this ‘jihadist Frankenstein monster’ with full blessings and financing by Pakistan’s democratic governments in 1990s.

Declassified U.S. Department of State, Cable “Pakistan Support for Taliban” from Islamabad dated Sept. 26, 2000 states that “while Pakistani support for the Taliban has been long-standing, the magnitude of recent support is unprecedented.” In response Washington orders the U.S. Embassy in Islamabad to immediately confront Pakistani officials on the issue and to advise Islamabad that the U.S. has “seen reports that Pakistan is providing the Taliban with materiel, fuel, funding, technical assistance and military advisors. [The Department] also understand[s] that large numbers of Pakistani nationals have recently moved into Afghanistan to fight for the Taliban, apparently with the tacit acquiescence of the Pakistani government.” Additional reports indicate that direct Pakistani involvement in Taliban military operations has increased.

Declassified DIA Washington D.C., “IIR (intelligence Information Report) Pakistan Involvement in Afghanistan,” dated November 7, 1996 states how “Pakistan’s ISI is heavily involved in Afghanistan,” and also details different roles various ISI officers play in Afghanistan. Stating that Pakistan uses sizable numbers of its Pashtun-based Frontier Corps in Taliban-run operations in Afghanistan, the document clarifies that, “these Frontier Corps elements are utilized in command and control; training; and when necessary combat“.  /15/video-and-reaction-from-pakistan-on -another-day-of-attacks/

Posted by From Simple Simon #11 -- NYT | Report as abusive

This may be politically incorrect to say… but perhaps Pakistanis need to experience some serious and grave economic turmoil before it grabs their attention. Perhaps when their survival is at stake, they’ll finally stop obsessing about competing with India and ensuring ‘their interests’ in Afghanistan.

And if the security situation gets any worse, they may well end up with exactly such a dire scenario. I doubt there are too many foreign investors today who would want spend their riches creating jobs in such an unstable society that spends their moments of stability obsessing over how to knock down their larger neighbour next door.

Posted by Keith | Report as abusive

@It was the economy which has virtually ground to a halt as the global recession erodes exports and investment, the diplomat said. Fix the power shortages, win investors back and get the economy moving, the tide of militancy could begin to be pushed back.”
–says Pakistan diplomat

@I will go with the argument that if there are more economic opportunities, that will stem the tide of millitancy.”
-says Umair

–I find ‘economy” an attractive but useless argument in Pakistan’s case. Why? Pakistan is not sincere in wiping out the terrorism and many Pakistanis do not still have the courage to say a terrorist a terrorist. How many Pakistanis are ready to say that terrorism of all kinds—whether against India, Pakistan or Afghanistan— must be wiped out? Same goes for the diplomat who threw some words for the press.

Pakistani have been repeatedly asked a simple question whether they consider LeT, JeM and their leaders terroists or not? They do not answer because they support these terrorists and they have been supporting them irrespective of whether they eat grass or not. It does not take a lot of money to get a guy to turn into a terrorist, it just takes one lecture in name of Islam and that’s it. This is a cost-effective method as far as personnel are concerned. The free money has always been available to Pakistan. A better economy of Pakistan means more terrorism, not less unless there is a willingness.

It is not economy stupid, it is the ‘SINCERE INTENTION’ to wipe out the terrorism.

Posted by rajeev | Report as abusive

In 1991 India was facing a somewhat similar situation. The Tamil Tigers had literally taken over the southern state of Tamil Nadu. The locals were terribly irritated about it, but could do nothing as the Tigers had political support. But the assassination of Rajiv Gandhi ended all that. In an overwheming support, the people of Tamil Nadu and the rest of India stood behind the nation.

This was the time Kashmir, Khalistan and Northern Sri Lanka were burning. Suicide attacks were confined only to Sri Lanka and had not spread into the Indian mainland.
Many of us wondered if India would survive or not. The last national level leader had been dead. Everyone had question marks?

But in 1991, the Indian government took to economic reforms and the rest is history. However, there is one more factor that helped the reforms grow. It is the infrastructure. Despite all the corruption and calamities, India had built a very good foundation in higher education and industrial growth. There was an overall development in all direction which had matured enough to respond to the economic liberalization.

When comparing Pakistan, economic growth simply does not seem possible without the proper infrastructure. The only advanced establishment there is their military. It is comparable to many modern militaries in the world in terms of training and sophistication. But everything else is way far behind – education, health, agriculture, industries etc. It will take at least two decades of sustained growth in these areas for Pakistan’s economic growth to take off. They have wasted all the six decades of their existence by engaging in global conflicts and local conflicts.

An economically strong Pakistan could have had more clout in having a say regional issues. Unfortunately, Pakistani leaders botched everything.

I feel that it is too late to revive their economy. They have to settle all their militants first and rehabilitate them. Without an infrastructure and the ability to recover economically, the system will only degenerate more. Religious isolationalism is going to be a tall barrier to their progress. It is unfortunate.

It is too late to discuss about Pakistan’s economic revival. At least if they had oil like Iran does, they could have survived. With nothing to rely on, it is going to be even harder for them.


Pakistan’s ISI still supporting the Taliban, say Afghans

Pakistan’s intelligence agency is directing Taliban attacks on Western targets in Afghanistan, Davood Moradian, a senior government official has claimed. s/asia/pakistan/6338349/Pakistans-ISI-st ill-supporting-the-Taliban-say-Afghans.h tml

Posted by Ramin | Report as abusive

Mauryan said:

“When comparing Pakistan, economic growth simply does not seem possible without the proper infrastructure. The only advanced establishment there is their military. It is comparable to many modern militaries in the world in terms of training and sophistication. But everything else is way far behind – education, health, agriculture, industries etc. It will take at least two decades of sustained growth in these areas for Pakistan’s economic growth to take off. They have wasted all the six decades of their existence by engaging in global conflicts and local conflicts.”

–>In other words, Pakistani Punjabi Army Mafia Junta has robbed Pakistani potential and pakistani treasury dry to sustain its own selfish corrupt business model…that being keeping India an enemy, to artificially elevate its profile to justify the overbloated and unjustified budgets. The punjabi’s must be brought to account and pay.

When will Pakistani’s point their finger at their true enemy, the Pak Army?

Posted by GW | Report as abusive


Mauryan, as long as Punjabi Mafia runs Pakistan, you have no economy and only terrorism.

Posted by GW | Report as abusive

Pakistan is the only country in the world who’s economy is ‘terrorism-based’. The only industry currently growing & thriving in Pakistan is terrorism. It is in the interests of the Pakistani leaders (especially the generals) to expand this industry so that they can hijack the world & extract more $$$ form the global community. They know too well that the moment their terror industry subsides or shuts down, the world will cease giving them billions in aid.

Why care about agriculture, manufacturing or services when Pakistan can barely compete on the global level in any of those fields while they pretty much have a global monopoly over ‘terrorism’?

Posted by Mortal | Report as abusive

Besides Terrorism Based Economy, TBE, There is also terrorism biased governance, TBG led by US… Good Terrorist Bad Terrorists theory, all under umbrella of UN

Posted by Rohit | Report as abusive

Adding woe to more woe:

Foreign Direct Investment falls by 58% in first quarter.
(DAWN, 16/10/2009)
Even China and Saudi Arabia decided to keep their money in safe instead of sending to Pakistan. China withdrew its investment while Saudi Arabia made a meagre investment of $1.4 million.

Posted by bulletfish | Report as abusive

@Sanjeev, Mortal,

Pakistan will always be creating terrorism and will never have an economy, as long as the Punjabi Army Mafia own the economy and own all the prestige and affluence in Pakistan.

The Punjabi nation in Pakistan has bled Pakistani potential and Pakistani economy dry. There must be a wealth transfer from the Punjabi’s to the other ethnicities at some point.

As long as punjabi’s hold all the wealth, they will continue to use their influence and money to use the poor in Pakistan to fuel internation terrorism against India and the world, their best business model.

I don’t see much changing. Any aid packages should not only be out of the hands of the Punjabi Army, but it should also be out of Punjabi Civilian hands as well. The Aid should be given to under privileged ethnicities in Pakistan, who have little or no political power, but have the desire and ability to have a seat in the Pakistani Parliament.

There is gross inequity in Pakistan, which is fueling terrorism. Therefore Obama, with is economic aid package is potentially making another mistake, giving it to the lying corrupt Punjabi’s(civilian or army, no difference), they are going to pocket the cash and as usual, they will squander it, eat it up and there will be nothing to show for it again.

Aid packages with greater condition on ethnic distribution to other ethnicities in Pakistan should be stipulated on further aid, otherwise Obama is blowing cash into the wind, giving it to the Punjabi’s.

Posted by GW | Report as abusive

@Sanjeev, Mortal,

Also, I have spoken with Pakistani diaspora, who told me that the Pakistani Army people have the best and most expensive land and the Pak Army owns entire industries, such as textile, minerals, but hire the poor as slaves, while they get rich and line their pocket$.

Pakistan is little more than an army colony, where everybody is feeding the Army, while they get nothing in return, but Allah and Madrasas.

The corrupt culture of Punjabi ethnic supremacy is the true inner guts and face of Pakistan. They created the terrorism to keep their niche business model and sucker the poor and sucker America and India at the same time.

Let’s see if Obama is sharp enough to create the divide between Punjabistan and the rest of Pakistan, that survives on little or nothing.

Posted by GW | Report as abusive


“Unless Pakistan change their foregn policy and START behaving MORE like a resepectable nation,…”

Posted by rajeev | Report as abusive


Corruption is everywhere———Chinese have that a lot at local province level where govt is missing and local politcians can do whatever, India has that in plenty and is hard to avoid it and so do many many other nations–just the degree of corruption varies. But corruption is not stopping India & China to move forward.

As said earlier and alluded to by other commenters, economy alone is not a factor in pakistan’s case. I will say it is not afactor at all. Single factor is the intent of the state and that is missing not withstanding the anti-terror actions of Pakistan-real or fake–post 9/11 after Bush’s arm twisting.

Even if Pakistan were rich, they would have continued to be in this mess for the simple fact that their foreign policy use highly objectionable tools–terrorism, nuclear proliferation/smuggling (I give [dis]credit to China for nuke prol but mainly to to Pakistan who served as a stupid tool of China). Unless Pakistan change their foregn policy and stop behaving more like a resepectable nation, economy bla blah will remain useless decibels for academic interest but of no practical utility to fix this nation.

Using economic parlance, Pakistan has heavily and only invested in the above mentioned objectionable tools and it is not working and so Pak is in mess. But countries like India, China and US have diverse portfolio and have something positive to speak about and I can see none in pakistan’s case. If history is any proof, Pakistan will not be fixed despite with econmy alone and the Pakistanis will really need to make as sharp and sincere U-turn in their intent not like a fake U-turn that Musharraf made.

Posted by rajeev | Report as abusive

Sanjeev & Myra,

How about doing a story about the corruption of the Pakistani army? A few years ago, I had read a story somewhere (unfortunately, I can’t remember where) which compared 2 senior ranking officers, one from the Pakistani army & one from the Indian army, their finances, net worth etc. Can you guys do something along those lines? Maybe it’ll help wake some Pakistanis up, who are being brain-washed daily by the Pak army propaganda machinery!

Posted by Mortal | Report as abusive

PIA losses up by 204% in 2008.
KSE plunges 426 points in horror session.
Pakistan sugar imports lower than forecast: report.
(from Dawn)

Things are going to get a lot worse before they get any better.

Posted by bulletfish | Report as abusive

The saying, “Beggars cannot be choosers” is seriously being tested by Pakistan. Not only did Foreign Minister Quershi go to Washington DC to ‘complain’ about the language of the KL Bill, but NOW Senator Kerry had to come to Pakistan to explain it AGAIN to ALL Pakistan govt levels including N. Sharif?

He said that this was a difficult time for the US economy and when allocating taxpayers’ money to foreign countries, lawmakers have to be satisfied about its usages. He said this was particularly true in the case of Pakistan where in the past Pakistani governments had allocated American money for purposes for which it was not meant.
He was asked questions to clarify the wording with regard to caveats associated with spending the KLB money on Pakistan’s nuclear programme. Senator Kerry said that those caveats were to make sure that Pakistan did not spend this money on purposes for which it is not intended.
Senator Kerry finished on a light note by saying that he had “never had so much difficulty in trying to give away $7.5 billion”. He said in these difficult times, Americans wanted to know why so much money was being given to Pakistan when “We need it badly in California or Oklahoma or other parts of the US”.
(From THE NEWS (Pakistani newspaper))

Senator Kerry was very clear in his answers over the conditions attached to the KL Bill. Pakistan gets a lot of American taxpayers’ money, then the USA have a right to know (and monitor) how it is going to be spent judging by Pakistan’s past record on US aid.

These are difficult economic times in the USA with 9.8% unemployed. So the Americans WILL want to know how the $1.5 billion a year is spent. Hence: Beggars cannot not be choosers.

Posted by bulletfish | Report as abusive

pakistani peoples are suffered since last 62 year in hands of militry and political parties. we check all leadership, everyone is currept and imbalance pakistan as he could. think about why not we offer china or dubai to handover pakistani goverment for five year as we elect over leader ship in election. and requist them to build pakistan as they build there own country. your comments required.

Posted by saeed khan | Report as abusive

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