By Ahmad Faruqui
Fellow, American Institute of International Studies
Pakistan accepted all US demands in the aftermath of the September 11 tragedy. It provided air bases, logistical support, intelligence about the terrorist camps in Afghanistan, and airspace for carrier-based strike fighters and cruise missiles. Without this support, the US would not have been able to launch its war against the Taliban and Al-Qaeda network on October 7. On the urging of the US, Pakistan made a U-turn in its policy toward the Taliban; carried out a major shuffle in its military high command by retiring several pro-Taliban generals; and decided to live with the fact that many Pakistanis would view the Anglo-American war next door as a war against a fellow Muslim country.
Not surprisingly, the war proved to be very unpopular in Pakistan, and served to polarize an already fragile society. Pakistan’s economy has taken a major hit from the war.
Foreign companies are no longer investing in Pakistan, as it is now in a war zone. Pakistani exports have fallen by a third. Experts estimate that the economy will contract by $2 billion in the near future. The textile sector, which accounts for more than 50% of Pakistan’s $10 billion annual exports and for 60% of the industrial workforce, has been especially hard hit. What has the West given Pakistan in return for taking such risks? Until recently, the only concrete action that had occurred was the rescheduling - not forgiveness - of $379 million of bilateral debt that Pakistan owes the US. On November 10, 2001, President George W. Bush offered a billion dollar in US aid to Pakistan. While this may seem like a large sum of money to some, it pales in comparison to the costs that have been imposed on this impoverished nation of 140 million where the average person lives on an annual income of $500.
Measured in real purchasing power, the Bush aid package belongs in the same league as Jimmy Carter’s offer of $ 400 million to Pakistan in 1980, to help cope with the Soviet invasion of Afghanistan. Not surprisingly, Pakistan rejected that offer as “peanuts.” Carter’s package would be worth $800 million in today’s dollars. In 1981, President Reagan upgraded Carter’s offer, and provided Pakistan $3.2 billion in economic and military aid. Reagan’s package would be worth $5.7 billion today.
In 1990, President George Herbert Bush stopped all US aid to Pakistan abruptly, because of concerns about Pakistan’s nuclear program. The fact that this program was occasioned by India’s nuclear test in 1974, and by India’s dismemberment of Pakistan in 1971, was ignored. Economic growth in Pakistan came to a standstill, in part due to domestic failures at governance but in part due to the stoppage of aid. Pakistani society continued to suffer from the influx of three million refugees who fled the war in Afghanistan, and brought a culture of narcotics trafficking and gun running to Pakistan’s cities.
This was not the first time that the US had abruptly dumped Pakistan. During the fifties and sixties, Pakistan had served proudly as America’s “most allied ally.” It was the only country that belonged to both the CENTO and SEATO military alliances, set up by the West to contain the Soviet Union and the People’s Republic of China respectively. Nevertheless, when India attacked Pakistan on September 6, 1965, the US cut off all arms supply to the Pakistani military, gravelly imperiling Pakistan’s national security.
To pull Pakistan’s economy out of its current slump will take a package twice as large as the one that Reagan gave Pakistan. Such a figure is in line with the amount of assistance the US provided to several Arab allies during the Gulf War.
The Pakistani economy grew at 2.6% in fiscal 2000/01,less than the rate of population growth. An independent foreign bank has forecast economic growth in fiscal 2001/02 at 2.5%. This does not bode well for a country where more than a third of the population lives below the poverty line. External debts add up to $38 billion, and servicing the external and internal debt consumes more than half of the national budget. The West cannot let Pakistan become a safe haven for terrorists that thrive on economic deprivation and social discord. It needs to reward Pakistan - a moderate Islamic nation - fairly. A $10 billion package would represent a fair deal for this country that has been a loyal US ally since the 1950s, but has not always been treated fairly.