BUILD CASE TO GET $53B DEBTS WRITTEN OFF

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Zahid Malik

Monday, August 30, 2010 – At this crucial point of time and grim situation, one shudders to imagine the emerging economic scenario. In the wake of havoc played by unprecedented floods and the resultant deprivation among the flood affectees, and other people too, Pakistan may further plunge into uncertainties of all sorts. The economy is already in a shambles and to add to the dismal situation, the Ministry of Finance has come out with an assessment that the economy is heading for zero per cent GDP growth rate and a whooping inflation of 25% during the ongoing financial year. It is indeed a horrible scenario.

Over and above, the Government of Pakistan is trying to keep the future generations of Pakistan hostage to foreign debts that have accumulated to a staggering $53 billion. According to experts this debt would rise to $ 73 billion in 2015-16 and one never knows if the present state of affairs may ultimately land us with a $ 100 billion debt in the next ten years.

It is no rocket science to arrive at the conclusion that an individual or a nation that is entangled in the cobweb of debt, which often comes with humiliating conditions, loses self-respect and sovereignty. Those who know the IMF conditions, their impact and the extent of intrusion by its officials in policy formulation, say that Pakistan has been mortgaged to the Fund. After the floods, the IMF team is due to discuss the emerging economic scenario with Pakistani finance and economic managers. In addition, the IMF representatives are already sitting in the economic ministries in the garb of experts and time is not far-off when there would be more such officials sitting in the rooms next to the Federal Secretaries. It is also to be mentioned here that World Bank, IMF and other institutions employ quite a significant number of Indian nationals and their presence in the corridors of power in Islamabad may jeopardize our national security interests because their (Indians) first loyalty would be with their country and then to the employer.

Pakistanis being a conscious and self-respecting nation are against acquiring loans and they think, rightly so, that this nation can stand on its own feet and that is why when former Prime Minister Mr Shaukat Aziz used to say proudly “We have broken the begging bowl”, people felt their heads raised on prospects of the country moving towards self-respecting economically independent State. Those statements were not just political gimmicks because we not only stopped receiving financial facility from the IMF but also the country had emerged as one of the fastest growing economies in Asia, Stock Index touched over 16,000 marks/points and foreign exchange reserves reached at the highest level of $ 18 billion.

Now that it is recognized internationally and by the UN that losses from the unprecedented floods were more than the 2004 tsunami, 2005 Pak earthquake and the 2010 Haiti earthquake, therefore, I think Pakistan needs much more than just assistance for relief and rehabilitation. The losses to infrastructure alone are so high that Pakistan would not be able to recoup in the next five years. Almost the entire Kharif crop of the country has either been washed away or adversely affected by the floods translating into losses worth trillions of rupees to the farmers and the national economy.

In view of the unprecedented devastation to economy, infrastructure, industry and agriculture, I recommend a case should be built to approach the donors for the loans write-off. It will not be the first case of its nature. International laws, the UN Charter, ethics and morality all support Pakistan’s case for getting a write-off. Various countries have invoked these laws and in the recent past Iraq and Afghanistan loans were written off as their case was strongly supported by the United States.

The IMF waived a debt to Haiti and the World Bank also deferred repayment of its debt for five years. At the same time, the international community pledged $ 5.3 billion to fund the initial phase of Haiti’s reconstruction where the Governmentreported to the international community that in addition to the many dead, 300,000 were injured and one million made homeless. A total of 250,000 houses had collapsed or severely damaged.

Comparing to the losses of Haiti, the damage in Pakistan is colossal. Here twenty million people have been affected by floods, over one million houses damaged in addition to destruction of the entire crop on which the country’s rural economy and textile industry depend.

If we look to the response of international community received so far, though we do not want to make any comparison, it is like peanuts to the assistance given to Haiti. We have been pledged just over $ 815 million as against $ 5.3 billion aid to Haiti. The international community went in a big way for Haiti because two former American Presidents Clinton and Bush pursued the case of relief and reconstruction of the tiny Island State.

There are many other justifications. But I think the justifications I have enumerated in the preceding paragraph would be enough if these are presented with a proper documentary proof to the international community and a write-off is sought.

Keeping all this in view, I pleaded to President Asif Ali Zardari on August 16, 2010 when he invited a group of 7 Editors at the Presidency for an informal and frank interaction, that Pakistan should build a case for a write-off of all the foreign debts. I also mentioned how according to my assessment Pakistan, in the perspective of flood-related world sympathy wave, can approach the donor countries and institutions for this one-time substantial relief.

I asked the President as to why Pakistani nation and leadership set aside vital State interests and only cared about self-interests. I also mentioned that former President Pervez Musharraf who did a lot of good things for Pakistan failed, however, to get a substantial support when he decided to respond to the US query/threat by saying, “We are with you” in the aftermath of 9/11 tragedy. Now it is a known fact that the US was ready to give $ 10 billion to Pakistan for cooperation in the fight against terrorism as they gave substantial assistance to Egypt and Turkey at the time of invasion of Iraq. President Musharraf, perhaps, thought it below his dignity to demand for due compensation. But President Zardari did not appear to be interested in my submissions.Therefore, what I am talking about is building a case quantifying the facts by the experts and with input from the Provincial Governments and endorsed by the DNA of WB and ADB about the huge flood losses. Aid for the flood damages should also be accompanied by a demand of $ 60 billion which according to my assessment Pakistan suffered in the war on terror and the resulting losses of human lives, infrastructure and so many other expenses. In fact Pakistan has been suffering continuously since 1979 when we joined the civilised world to oust the Soviet Union from Afghanistan.

On the basis of the two issues i.e. floods and war on terror devastations, Pakistan can field a genuine case to the international community for either writing off of all loans or their swap, to use those loans for development and social welfare of the people of Pakistan affected by floods and war on terror. If need arises, Pakistan can give sovereign guarantees that the swap would be utilized under the monitoring of any international financial institution.

In case it is done, and Pakistan puts across a well-documented right message through the entire machinery available i.e.Government channels, political leadership of the country, media and foreign friends, it may meet success. But it has to be an orchestrated all-out campaign. I am sure, this would receive a positive consideration. Even if you go to the court of world public opinion and managements of the donor organizations, I am sure, that may carry a lot of weight. There is no harm even in engaging an international lobbying firm to build up the Pakistani case. I also propose the Government to show large-heartedness and, in the best national interest, to entrust the task to Mr Shaukat Aziz as he enjoys good rapport with Governments, World Bank and IMF as well as with the world’s leading bankers and knows fully well how they work. I am confident he can charm the donors.

In any case, it is incumbent upon the leadership of the country that instead of going into trivial things like getting the IMF loans restructured or asking for a waiver of certain conditionalities, they should think big and do some loud thinking. Don’t dwarf Pakistan which is a big country in all respects. Our leaders should develop confidence in themselves and at least make an attempt, a serious one, to save our poor future generations from the clutches of the crushing loans. We owe this to our future generations. May I ask our leaders “If you don’t get the debt of US$ 53 billion written off then who will, and how, pay these loans?” Every child of Pakistan is not Balawal, therefore, it is incumbent upon the leadership to think of non-Balawals also.

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