President Musharraf appeared before an audience of 800 Pakistani-Americans at the New York Hilton in early November to outline his vision of Pakistan’s future. He touched on many areas, and gave the audience an understanding of his government’s overall strategy. Except for the fact that he is unelected, it was hard to argue with the wisdom of his plans.
He prefaced his remarks by reviewing the effect of the war on Pakistan. The biggest and most direct effect has been a reduction in exports. Pakistan was looking to build on a strategy of export-led growth, but with the war, there was a wave of order cancellations from foreign purchasers of Pakistani textile manufacturers.
This direct economic hit has been balanced by a surge of economic support. There has been substantial debt rescheduling with payments reduced due to reduced interest rates. Pakistan is also looking to the Paris Club of lenders to hopefully forgive debt when it meets in December. Pakistan has also received immediate fiscal support from the US, EU and Japan to cover the cost of the war, and particularly with the EU there has been a significant boost in market access for Pakistani textile manufacturers with an increase in quotas along with a reduction in tariffs. The EU package alone was worth about 1 billion dollars in increased trade access on an annual basis.
The terrible tragedy of the attack on the church with the massacre of 14 parishioners and a police officer highlighted the need to clamp down on sectarian violence. Musharraf stated that the silent majority in Pakistan is firmly against these killings. He boldly stated that the government would no longer tolerate madrasahs and masajids that preach hate. “Pakistan cannot move forward until this backward view of religion is overcome,” was his remark, and the audience responded with vigorous applause.
Going forward, the reform agenda is focusing on four key areas: economy, poverty, governance, and politics. With the economy, Shaukat Aziz, the Finance Minister has crafted a two-pronged strategy to get out of the debt trap. Pakistan will work with its lenders to create a five-year “breathing space” by getting the debt rescheduled so that low interest rates keep the debt from piling up. Fresh credit will then be obtained through a large “PRGF” loan from the IMF at extremely concessionary rates (Pakistan’s PRGF package is to be at 0.5% interest) and invest the funds in areas that yield very high returns to the economy.
These investments were then specified. Development of hydroelectric and indigenous coal for power generation can ease the burden of oil imports and save precious foreign exchange for more valuable items. Irrigation and agriculture projects are underrway and include a new canal in Punjab to bring enough new cotton crop into cultivation to generate 1 billion dollars in exports of raw cotton. Communication infrastructure development is also a high priority. This includes several new major highways and the Gwadar deep port project. Finally, there is a need to harness information technology investments.
Musharraf cited some positive achievements. Exports hit a record of over 9 billion dollars. Tax revenue growth in the last two fiscal years has been twice as rapid as the previous four years. Fiscal deficit has shrunk by 1% of the GDP, and foreign exchange reserves have hit a record high of over two billion dollars.
In terms of governance, there are three areas of focus. In education, there is a commitment to achieving universal primary school enrollment in this decade as well as expanding adult education. In addition, there will be an upgrading of quality, both through teacher training and curriculum revision. Finally, there are plans to open 450 vocational schools to impart training in useful skills.
In healthcare, the government is going to emphasize primary healthcare over tertiary healthcare. This is an important shift. It means less money to expand the trophy medical centers and more to more mundane things such as prenatal care in the villages. Finally, governance will be improved by reforming the police. A new police act, which is an update of the current one that dates from 1861(!), is to be promulgated. The state corporations are also being reformed and will hopefully be self-supporting rather than a drain on the budget (Steel, WAPDA, Rail, KESC, PIA). These should really be privatized as quickly as possible in my opinion.
For poverty alleviation, there is to be a focus on microcredit. Microcredit lending to the poorest of the poor, who have no collateral to offer for a traditional loan, opens up tremendous opportunity for them. Grameen Bank in Bangladesh pioneered the concept, and its value has been shown the world over, even in Pakistan, by NGO’s. The government is planning to open a microfinance bank and hopes to reach 500,000 people.
Finally, in the political field, Musharraf was proud of the fact that the local body elections have been carried out. He intends to see that system succeed. He also promised that elections will be held on schedule in October 2002. But he also stated that there will be changes before then to ensure the continuity of his reform agenda. He reiterated that national interest will be kept above personal or party interest.
How he precisely intends to accomplish these goals is not clear. Restoration of the President’s power to dismiss the government by itself would not give him the leverage he would need to do what his remarks are implying. He has two options, a de facto or a de jure option.
In the de facto approach, there is little change in the Constitution, but he makes it clear to the civilians that any attempt to derail the reforms would result in a repeat coup. He would be the real power in the government, but the Prime Minister would still be nominally in charge of the country.
In the de jure option, the constitution is rewritten to dramatically expand the President’s power, and shift control of the government from the Prime Minister to the President, along the lines of the French system. To maintain the idea that Pakistan is a democracy, the Presidency would then have to become a directly elected position. Musharraf may gamble that he could win such a direct election, where the need for an organized party is less than in trying to win a parliamentary majority. Pakistan would then have an American system with a separate chief executive and legislative branch. This would require a wholesale rewrite of the constitution, and Musharraf may postpone the first presidential election for several years. Comments can reach the author at Nali@socal.rr.com.