Seven Times Twenty is Hundred

A few weeks ago the Pakistani Finance government was bragging about having broken free of the shackles of the World Bank and the International Monetary Fund (IMF) and now they are jubilant over the $6.5 billion promised by the World Bank under its Country Assistance Strategy (CAS).

The Punjabi idiom, “tagrian da sateen weeh sau hunda ey” (the hundred of the powerful is seven times twenty [instead of five times twenty]) comes to mind when I think of Shaukat Aziz & Co. A few weeks ago they were bragging about having broken free of the shackles of the World Bank and the International Monetary Fund (IMF) and now they are jubilant over the $6.5 billion promised by the World Bank under its Country Assistance Strategy (CAS). But this self-contradiction is normal for those whose hundred equals seven times twenty.

There is nothing wrong with seeking soft loans (which come with low interest and long amortisation period) as long as the proceeds are used wisely and constructively. However, if Pakistan’s history is any guide, the promised funds are only going to benefit the ruling classes that have always prospered under military regimes. Thirty-three billion dollars of foreign loans on Pakistan’s books did not do much to improve Pakistan’s economy, its infrastructure, or reduce poverty.

Other than Ayub Khan’s era, when a few big dams were built, no major project, except for Nawaz Sharif’s motorway, has been undertaken. No new railway lines or major highways have been added, for example, to the transportation infrastructure. So, where did those 33 billions dollars — which started accumulating during Zia ul Haq’s period — go?

Most economists, including Dr Ishrat Hussain, agree in private that the bulk of the loans were used for military build-up. Most of the time foreign funds financed the projects that could have been financed domestically but were not because domestic revenues were mostly used for defence-related projects. The new funds will again be used to compensate for military expenditures that, according to the government, are occurring due to the fight against terrorism and Al Qaeda in the tribal belt under US pressure.

The military has probably been told that these soft loans, given on very low interest rates and amortised over a long period of time, are in lieu of the US aid that the anti-Pakistan US Congress is not in a hurry to approve. It is correct that these loans are relatively easy to acquire and can be used to rebuild the country. The problem is how they will be used.

Other than military expenditure, some funds will also be used for “crony politics”. They will be disbursed among Pakistani legislators who support the government. In turn, these legislators will spend the funds on their pet projects via their own operators. In the process, they will make money and strengthen their constituencies, consolidating the army-managed political system.

Furthermore, Shaukat Aziz’s claim that the World Bank’s promised loans/assistance for the next four years is a vote of confidence in Pakistan’s economy is a half-truth. Of course the macro-economic figures show some progress though poverty in the country has gone up. But the reason for the World Bank’s decision has more to do with the geopolitics of the area than Mr Aziz’s shabby management of the economy.

The Pakistani loans were supported by the new president of the World Bank, Paul Wolfowitz. Everyone knows that he is the mastermind of the neo-cons’ interventionist US policy in the Middle East. He was the main supporter of the Iraq invasion, and, I am sure, that he is also the main architect of the US Iran policy, which promises to be another misadventure.

After leading the Pentagon cheerleaders for the silly Iraqi invasion, he was dispatched to the World Bank to recompense US allies and punish the detractors. Therefore, his announcement of assistance to Pakistan should not be a surprise; it only reveals that Pakistan still holds an important place in the neo-con world strategy.

The announcement can be viewed in the context of a recent development vis-à-vis Iran. While the US puts together another coalition-of-the-willing against Iran and needs to silence potential critics, World Bank funds will be used recklessly for these ends. Pakistan has to be satisfied with some money. Therefore, Mr Wolfowitz’s move should not come as a surprise.

In addition, these loans are being offered to compensate Pakistan for turning its back on the Iran gas pipeline project. Now, the US is pushing a gas pipeline from Turkmenistan to India via Pakistan; both India and Pakistan welcome the project. The Communist Party of India-M, a coalition partner of the Manmohan Singh government has already protested the move. CPI-M’s condemnation indicates that the planning of Turkmanistan-Pakistan-India pipeline is already at an advanced stage.

Against this backdrop, the news about the World Bank CAS (Country Assistance Strategy) is no more than a political ploy to encircle Iran and promote the rest of the neo-con agenda. And, that’s how the powerful count: seven-times twenty is equal to a hundred.

The writer can be reached at manzurejazATyahooDOTcom. This article was first published on his blog (www.wichardhara.com)

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Posted by collective at July 03, 2006 07:37 PM