ISLAMABAD, 1 October — Pakistan is famous — or notorious — for throwing away big economic opportunities, and when the crunch comes, repenting it — fruitlessly.
But, now the question is: Does Pakistan expect more aid and investment as the region smells of gun-powder?
Getting Westerna aid resumed when Afghanistan is in deep, deep trouble, or, to encash the misfortunes of a small land-locked country, however, errant its rulers may be, may sound something in bad taste. I wish the cause of aid resumption to Pakistan was something other than Afghanistan.
But, the situation has provided Islamabad to mend its fences with aid donors, soured since it exploded its nuclear devises on May 28, 1998 and then the military, doing away with democracy, took over in the autumn of 1999. The nuclear-related economic sanctions were expanded and reinforced with the loss of democracy. But, now the West, particularly the United States, has warmed up to Pakistan following the Sept. 11 carnage in New York and Washington. Pakistan has not maneuvered to cash on it.
But, Washington, Brussels, and Tokyo have now realized the futility of those two sets of economic and military sanctions, and decided, largely to do away with them. Pakistani history of messing up opportunities is long and hurtful.
It failed to productively utilize $6 billion at the peak year, since early 1970s as home remittances from Saudi Arabia, Gulf and the Middle East. It all went into private consumption.
Now three weeks of warming up has seen several sanctions revoked, old debts rescheduled, and fresh inflows and larger access to exports from Pakistan promised. It came in the wake of President Pervez Musharraf’s Sept. 19 address to the nation, pledging support to US and the international community in its fight against terrorism.
President Bush positively responded by revoking sanctions, although democracy-related amendments under Section 508 stay for the time being, but even their removal is imminent. Removal of the sanctions will cover economic and development assistance, cover for private investment, agricultural credits, commercial bank loans, Ex-im Bank credits, and loans by international financial institutions, besides other categories, including cooperation and assistance in military, education, and narcotics control.
Two days after revocation of sanctions by President Bush, US Ambassador in Islamabad Wendy Chamberlin signed a $379 million debt rescheduling agreement. It covers the debts repayable during Dec. 1, 2000-Sept. 30, 2001. The rescheduling is for 20 years, including a 10-year grace period that starts Nov. 1, 2001. It follows Jan. 23, 2001 decision of the Paris Club to reschedule debts, but Washington waited nearly eight months to do that. In fact Sept. 11 terrorist attacks prompted it only now to do it. “The US is looking into a broad range of ways to assist Pakistan to recover from economic difficulties, “ Ms. Chamberlin said after the signing.
Out of a total of $1.8 billion debt rescheduling agreed by Paris Club in January this year, US has signed the agreement. Japan this week announced rescheduling of $550 million debts. The remaining 16 countries will do so shortly, according to Ministry of Finance and Economic Affairs.
Pakistani industry and trade have already started raising their sights to do more business with US. Foreign Minister Abdul Sattar, in an interview, voiced several concerns. Sattar said: “Pakistani economy has received the hardest beating since Sept. 11 carnage at New York and Washington.
Insurance tariffs have gone up, freight rates are increasing and Pakistani import-export trade is under severe strain.” The economy may receive many more blows in the days to come. One has, as a result, to weigh gains versus losses.
The traders and businessmen are asking US to ensure safe and secure sea lanes for Pakistani foreign trade and shipments.