Learning from India and China
Prime Minister Shaukat Aziz was in India early April attending a SAARC summit; he is now in China. With India he âpostponedâ the expansion of trade relations; with China he has gone to request more economic involvement. India is next door to Pakistan but hostile; China is also next door but Pakistanâs best friend. Both India and China have populations of over a billion people each. The economies of both are growing at record rates. They are expanding trade relations with each other too.
Mr Aziz signed a large number of treaties with China during his visit. But of course, much will depend on how he is able to create the right conditions for Chinese investment and expertise in Pakistan. China is the only country keen enough at the official level to come and invest in Pakistan. It is no surprise, therefore, that they have been targeted by militants or terrorists, twice in Balochistan and once in the Federally Administered Tribal Areas (FATA). The came into the copper project in Balochistan at Saindak but were chased away a long time ago. Now they are back.
Mr Aziz met the Chinese President Hu Jintao and thanked him and the people of China for initiating joint mega projects in Pakistan, such as Gwadar, Chashma Power Plant, Saindak, and Karakoram Highway. Pakistanâs demand list was for ten nuclear power plants after Chashma but the Chinese have so far not acceded to it in deference to their partners in the Nuclear Club. Pakistan in return is home to cheap Chinese goods, a fact of which Mr Aziz boasted in New Delhi while refusing to open up trade with India. Presumably he was suggesting that India too could benefit from Pakistanâs market if it settled its political disputes with Islamabad first.
Pakistan too is growing at a good rate and Mr Aziz should be complimented on it, but there are certain areas that should worry him. The world no longer compares Pakistan with India which is now moving into the league where China finds itself. Mr Aziz knows this and yet he shows no public signs of breaking the mould of Pakistanâs stunted reflex on trade. He said nothing new that could break the monotony of yore when he told the Indian Prime Minister Mr Manmohan Singh that India should first sort out the Kashmir problem.
In China, Mr Aziz seems completely transformed. He says all the right things. He knows China is the fourth largest economy in the world and is growing at 9 percent annually. It is buying up commodities at such speed that a sucking sound is produced in the steel and oil markets at the global level. It has built an infrastructure to astound the world and is going out and buying up oil wells to secure its energy supply for a future where Pakistan and others will look around helplessly. It has disputes with India of a territorial nature but has set them aside to become its important two-way trade and investment partner, India being the investor.
India has democracy tied to its ankle like a steel ball burnished with anachronistic communist parties that hug state-owned enterprises and want everything subsidised. But India, led by a man of economics, has been realistic rather than âhigh-principledâ with China. It has forgotten its revisionism with Beijing over territory it thinks China has grabbed forcibly and has instead plumped for trade.
Indiaâs high growth rate is not coming from a narrow curve restricted to computer electronics. It is on the way of reducing its poverty levels like China where millions have already come out of it. On the other hand, Mr Shaukat Azizâs Pakistan has still not taken off after a measure of stabilisation.
What Pakistan needs badly is foreign investment despite its bad infrastructure that it shares with India; and despite the fact that it has a bad law and order situation, political instability and creeping anarchism known as Talibanisation. Not much foreign investment in the manufacturing sector is coming in, barring some Arab money in the service sector because it canât be parked anywhere else. In fact some Pakistani investment is going out to the UAE where stable conditions of a market economy are available. Mr Aziz knows that Pakistan could lose its newly gained momentum unless he takes some radical steps.
Mr Aziz simply has to learn from India and China if original thinking is banned in Pakistan. Devaluation is staring us in the face because of the yawning trade deficit and overvalued rupee. He knows that if he canât get money injected into Pakistan quickly enough Pakistanâs growth will falter. On top of that Pakistan could become politically dysfunctional if the next year or so is not managed with wisdom. If the idea is to thwart any move forward with India on trade and investment till the elections are here and over, it is a wrong idea.
The judiciary, badly treated by the prime minister, is taking revenge on the economy by blocking privatisation, which is one way of getting someone to bring in some money. Given these circumstances, Mr Aziz should have taken off his various masks, come into his own, and agreed with India to embark on a new trade and investment relationship without asking India to cough up Kashmir first. The people of Pakistan would have loved it. If Bangladesh can receive $2 billion in investment from just one Indian corporation Tata, why canât Pakistan?
At the beginning of the new millennium a new kind of urgency faces the states of South Asia. These states have struggled with democracy since the mid-20th century but canât seem to make out what it is all about. A message from China and the East says if you have your economy running right you can learn democracy at leisure. Becoming politically dysfunctional is not as dangerous as becoming economically dysfunctional. For Mr Aziz there are two models, that of China, which he views with feelings of friendship, and the other of India, which he regards through someone elseâs spectacles. Both models have much to teach Pakistan.
