POREG VIEW: Meeting in Brussels this past week, the Friends of Democratic Pakistan have openly attached stings to the flood relief aid and hence the headline in the daily The News International.
US Secretary of State Hillary Clinton was blunt in telling affluent and elite Pakistanis to pay tax and bear the pain of $ 9.7 billion loss suffered by the country’s economy. The honourable list of tax defaulters includes dapper Yusuf Gilani, the prime minister himself.
His garrulous Foreign Minister Shah Mahmood Qureshi tried to muscle his way through the meeting by putting focus on how Pakistan can help in facilitating Afghan-Taliban peace talks on which the West has pinned its hopes of early NATO exit from Kabul. The offer was noted with relief but as the News said quoting EU sources, the Pakistani backers were ‘not signing any blank cheques’.
In other words, the Western donors, whose heart bleeds for Pakistan are for the first time signaling that there is no free lunch and aid cannot be expected without profound changes in the way Pakistan runs its economy.
One of the changes the West should look for is an end to the practice of talking up economy – a practice introduced by businessman turned politician Nawaz Sharif as prime minister and perfected by the strong man of the past decade General Pervez Musharraf. While window dressing is common, and understandable, manufacturing GDP data in the finance ministry stable is a Pakistani novelty.
What the donors want besides transparency and efficiency in the use of foreign flood aid tax reform is rationalization in non-flood related expenditure to keep the budget deficit from exploding; power sector reforms; and laws to strengthen the independence of apex bank, State Bank of Pakistan, which is currently being forced to make highly inflationary loans to the government.
This is a tall-order for a donor and remittance sustained economy. And it will take time to make Islamabad to fall in-line. How much patience Washington and its allies will show depends very much on the turn around in Kabul’s fortunes.
