A new emerging market

IN the aftermath of the 2008 financial crisis in the US and, later, in Europe, global economic growth was generated mainly by the so called ‘emerging markets’, especially China, Brazil, Russia, India and South Africa. Today, growth in the emerging markets is either negative, stagnant or slower. Some fear this may halt the weak recovery in the US and Europe and even lead to another global recession.

Such fears are overdrawn. China’s reduced annual growth rate of 7pc is still the highest in the world. India too is growing, although its claim of a 7pc growth rate is a bit of a fudge.

Another reason for optimism is that several of the so-called ‘frontier markets’ — such as Vietnam and Pakistan — are growing or could grow at rates of 6pc and over. Pakistan, in particular, after several years of stagnation, has the potential for rapid growth due to the confluence of several factors.

First, relative political stability. Despite its mishaps, there is a general consensus now that the current government is likely to be able to serve out its term, unless it makes serious political mistakes.

To make Pakistan a prime investment destination, the government must address two critical challenges.
Second, improved security. Although the job is not yet fully done, Pakistan’s fight against terrorism has succeeded in reducing violence. The Zarb-i-Azb operation has cleared most frontier areas and big cities of terrorist groups and political gangs. And, despite the ongoing ceasefire violations along the LoC, most analysts discount the danger of a war between nuclear-armed Pakistan and India.

Third, macro-economic balance. Lower oil prices, large remittances, monetary discipline, an IMF programme, bond sales and domestic borrowing have enabled the government to balance the external account and limit the budget deficit and inflation. The IMF has certified Pakistan’s economic health and rating agencies have upgraded it to investment grade.

Fourth, manageable private debt. When they were the ‘flavour of the month’, emerging market companies received generous and almost indiscriminate credit. Now, much of this debt is ‘toxic’. Pakistani companies do not carry this baggage because they have not had easy access to international or domestic credit. Although the KSE fell in recent weeks along with other bourses, this was due to global ‘market sentiment’, rather than problems with the fundamentals of Pakistan’s economy or the traded companies, most of which are credit-worthy.

Fifth, the China-Pakistan Economic Corridor. If the projects envisaged under the $46 billion Chinese commitment are implemented, it will provide a solid foundation of infrastructure and economic activity to jumpstart growth in several segments of Pakistan’s economy, and add up 2pc to annual GDP growth. Under the CPEC umbrella, Chinese companies are actively looking for investment opportunities in addition to already identified projects. Also, China’s commitment has had a positive impact on investor sentiment in the Gulf, Europe and America.

Sixth, Pakistan’s demography. With almost 200 million people, Pakistan has the fifth largest population in the world. The median age of 22 implies a vast source of both workers and demand. Pakistan’s level of urbanisation (36pc) is among the lowest in the world but rising rapidly. This will propel high consumption led growth. So too will Pakistan’s middle class, which constitutes 40pc of the population, a higher proportion than in India or Bangladesh.

Seventh, ability to grow autonomously. Eighty-four per cent of Pakistan’s GDP is created by domestic demand, a larger share than any other Asian economy, including China (34pc), Indonesia (57pc) and India (59pc). Thus, unlike most older emerging markets, Pakistan’s growth is not dependent on finding export markets; it can be generated largely within Pakistan itself.

Eighth, vast investment opportunities. Due to the paucity of past investment, there is a huge pent-up demand for goods and services in almost every sector: energy, transport, agriculture, housing, health, education, IT, consumer and durable goods. The negligible ratio of private equity penetration in Pakistan — with a private equity investment to GDP ratio of less than 0.01pc — is indicative of the sizable investment opportunities in Pakistan.

Pakistan must avail of the window of opportunity created by the confluence of the listed circumstances to accelerate growth and development. The government, in partnership with the private sector, should launch a campaign to project the attractions of Pakistan as an investment and business destination. It can also take some steps to reassure potential investors, such as on the creation of an investment insurance facility.

To successfully make Pakistan a prime investment destination, the government needs to urgently address two critical problem areas. One, revenue generation. National savings should be available for development and growth-oriented investment, not for current consumption by governments. The government should refrain from borrowing from the national savings by generating sufficient revenues. To this end, it is essential to: expand significantly the country’s very narrow tax base; ensure the full collection of taxes (by using new technologies and appropriate penalties for evasion); accelerate the privatisation or ‘turnaround’ of the score of loss-making government corporations and end wasteful subsidies. Such revenue rationalisation would also inter alia solve the ‘“circular debt’ problem in the energy sector, a major impediment to investment and growth in the entire economy.

Two, economic and investment oversight. Like many other countries, especially developing countries, Pakistan is plagued by the phenomena of ‘crony capitalism’ and accompanying corruption, inefficiencies and inequalities leading eventually to social and political challenges. To put an end to this, and create a ‘level playing field’, it would be wise to create a high-level and independent economic and investment commission, composed of qualified, reputable and experienced Pakistanis from private and public life. The Commission could be responsible for: introducing clarity in economic regulations and jurisdictional responsibilities in each sector of the economy; ensuring the functional competence of persons leading major economic- and investment-related institutions; ensuring transparency in every major investment or economic transaction; providing speedy resolution of disputes or complaints relating to major economic or investment issues.

All Pakistan’s national goals rest on the realisation of rapid economic and social development. Pakistan has a unique opportunity today to emerge as one of the world’s dynamic growth stories. It cannot afford to lose this opportunity (again).

The writer is a former Pakistan ambassador to the UN.

Source: A new emerging market
Published in Dawn, October 4th, 2015

Asia’s parallel paradigms

IT is now almost a truism that Asia will be the focal point of geopolitics in the 21st century as Europe was in the last 200 years. The reasons are evident: two-thirds of the world’s people inhabit Asia and it produces more than half of world output. Despite the current economic slowdown, Asia will remain the engine of global growth in the coming decades.

At the centre of this tectonic shift is China. Its pace of economic growth and scale of poverty reduction is unprecedented in history. China’s rise has already changed the security and development dynamics in Asia; it is now poised to change the Western-dominated global economic and political order.

Thucydides posited that conflict is inevitable when rising powers emerge to challenge ruling ones. Most pundits thus predict conflict and confrontation between China and the United States, today’s dominant power. However, such conflict and confrontation is not inevitable.

Today, global affairs operate under two parallel paradigms: one, the traditional paradigm of power and rivalry; two, the emerging paradigm of interdependence and common interest. At the present stage of history, both paradigms coexist uneasily.

Obviously, old habits die hard. The power paradigm remains dominant in the policy establishments of the US, China and other states. But the new paradigm is becoming more compelling, for more people, in more places.

Under the old power paradigm, the US, China and other powers have continued to pursue their national interests in a zero sum game.

The US is building a string of alliances around China’s periphery (Japan, Australia, South Korea, the Philippines, Vietnam and, putatively, India). The Chinese pushback is visible in the new relationships with Russia, Central Asia, Iran, and as far away as Latin America (close to the US ‘periphery’) and the consolidation of old relationships, such as with Pakistan.

The US is shifting most of its naval power from the Atlantic to the Pacific (as part of the ‘pivot’ to Asia). In response, China has declared the intention to build and deploy a blue water navy.

The rivalry now extends to trade and development, including: access to natural resources; mutually exclusive trade blocs; rival development models and institutions, and the struggle for control of global economic and financial institutions.

There are a number of global issues where cooperation is essential between the two leading powers.
There are several security challenges that have been exacerbated by this great power rivalry. It has prevented them from taking effective and coordinated action to control the maverick regime in North Korea. Contrary to the interests of all, the Korean peninsula is now nuclearised.

Similarly, no stable security structure has been evolved to manage the complex rivalries between China, the US, Japan, South Korea and Russia in North East Asia. The Sino-Japanese dispute over two small islands could spark a confrontation involving the US and its other allies.

The most immediate threat of direct confrontation between China and the US today arises from the multifaceted disputes over the Spratly islands in the South China Sea. China’s ‘string of pearls’ position is being challenged by the US ‘string of alliances’ around China, accompanied by assertive overflights and naval patrols.

The South Asian subcontinent is a neglected powder keg. Another confrontation between India and Pakistan is an ever-present possibility because of Kashmir, Balochistan, terrorism, a border incident, a conventional and nuclear arms build-up. The US encouragement of India’s ambitions as a means of containing China, adds an ominous strategic dimension to the India-Pakistan rivalry. This extension of great power competition now extends to other South Asian states — Sri Lanka, Bangladesh and Nepal, as well as Afghanistan.

Fortunately, the power paradigm is not the only driving force in world affairs today. The parallel paradigm of interdependence and convergence is also in play.

The US and China are highly dependent on each other to maintain economic growth and prosperity. China’s growth is fuelled considerably by its exports to the US. Conversely, living standards in the US would decline sharply in the absence of cheap imports from China.

China holds a considerable part of the debt issued by the US. A collapse of the US currency or contraction of the US economy is against China’s interests.

China has benefited greatly from US and other foreign investment and associated technology transfers and continues to do so. Now, China itself has emerged as a significant source of investment, not only in resource-extraction, but also industrial and infrastructure development in the developing and developed countries, including the US and Europe. China’s ‘One Belt, One Road’ initiative, involving land and sea trade corridors, will constitute a major contribution to the further integration of the global economy and rising prosperity across Asia as well as Europe and Africa. While this will consolidate and enlarge China’s influence and power, its impact will be highly positive for all participants, including the US.

There are a number of global issues where cooperation is essential between the two leading powers as well as other countries. Climate change threatens the entire planet. The US, China and other major carbon emitters — Europe and India — are required to take joint action to reduce emissions and build a world economy based on green energy.

Global growth can be sustained, and poverty elimination achieved within decades, but only if mutually reinforcing and collaborative policies are adopted by the leading economies on trade, finance and investment. Such close collaboration is increasingly indispensable on a growing number of other issues: disease control; cyber security; outer space; non-proliferation and terrorism.

Finally, despite their strategic competition, all major powers have a common interest in containing and resolving the growing plethora of inter-state and intra-state conflicts that rage across Asia and the Middle East. The interdependence paradigm is gaining grass-roots support in most major powers — within civil society, business, the media, academia and in international organisations. Given the growing evidence and urgency of multiple global challenges, and the compulsion to cooperate for survival and stability, it is probable that the 21st century may witness a historic shift from strategic competition to comprehensive cooperation. The challenge is how to manage the current dangerous transition from the power paradigm to the paradigm of interdependence.

The writer is a former Pakistan ambassador to the UN.

Source: Asia’s parallel paradigms
Published in Dawn, June 21st, 2015

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Europe’s triple trouble

DESPITE two disastrous world wars, and a debilitating Cold War, Europe rose like a phoenix to become the world’s most prosperous, stable and humane region. Its success was due, initially, to America’s generosity (the Marshall Plan) and military protection (under Nato); and, more importantly, to visionary European leaders who created an increasingly integrated and dynamic trade and economic union among Europe’s largest states.

As the authoritarian regimes in Greece, Spain and Portugal fell, their successors embraced the European Community as the avenue to prosperity and Nato as the guarantor of their security. The end of the Cold War, and the collapse of the Soviet Union, reunited Germany and brought former Soviet satellites — Poland, Hungary, Czechoslovakia — as well as former Soviet republics — Latvia, Lithuania and Estonia — into the European ‘home’. The fragmenting Yugoslav states followed. Turkey stood patiently in line to join the European Union. Even a beleaguered Russia sought economic and security cooperation.

Today, however, European complacency has been replaced by doubt and discord, as the ‘Old Continent’ confronts a triple crisis: economic, social and strategic.

Europe is the victim of its own success. European prosperity was fostered over the past several decades by the Single Market, enabling the lower-wage countries to grow through trade and investment flows. However, with the launch of the single currency, the advantage of the ‘poorer’, peripheral members of the Union was significantly neutralised. The more efficient ‘northern’ countries, especially Germany, became the dominant producers and exporters, within and from the EU. Growth in the periphery was maintained by the extension of credits (sovereign bond issues, bank loans etc). With basic necessities met, the money flowed mostly into non-productive sectors, like real estate and stock markets, creating ‘bubbles’ which burst once the contagion of the US sub-prime bubble collapse spread to Europe in 2008-9.

Today, European complacency has been replaced by doubt and discord.
Unable to service their debts, the peripheral economies were rescued by a series of huge bailouts constructed by the IMF, the European Central Bank and the European Union. They imposed the traditional ‘medicine’ of budget cuts and austerity on the debtors, drastically contracting their economies, escalating unemployment and lowering living standards. Most of them — Ireland, Spain, Portugal — have restored modest growth and maintained the hope (or fiction) that they will be able to pay back their debts eventually.

Greece was a special case. It had spent with profligacy. Its debts were enormous in relation to GDP. The initial bailouts were not well utilised. The economy, largely dependent on government spending, shrunk almost 40pc. Unemployment rose to 50pc. Pensions were slashed. Social services suspended. The Greek population revolted; electing the far left-wing Syriza party on an anti-austerity platform. Yet, Greece’s creditors did not relent in demanding further austerity to provide yet another bailout.

The collapse of the prolonged negotiations was unsurprising. Greece is now in default; its banks closed, and capital controls in place. A compromise appears more difficult than ever. A Greek exit (Grexit) from the euro is a real possibility. It will throw Greece into turmoil, severely damage the currency’s credibility and further impede European recovery. Europe’s economically induced social crisis has been exacerbated by three accompanying phenomenon.

First, the failure to fully integrate immigrant populations. They fester in alienation in European ghettoes and slums. Racial and religious tensions have percolated into mainstream politics.

Second, suspicion of and discrimination against Muslim communities appears endemic in the aftermath of 9/11, random terrorist incidents in Europe and the new fear of home-grown terrorism inspired by the Islamic State. This is compromising ‘democratic freedoms’ and the revival of fascist forces.

Third, with rising joblessness, the outcry against immigration has become strident. At the same time, refugees fleeing conflicts in the Middle East and Africa — conflicts largely created by the Western-aided overthrow of authoritarian regimes — are now landing on European shores and crossing its borders by the thousands. The majority of them are Muslims.

Europe’s economic and social challenges are now compounded by the new confrontation with a resurgent Russia. The confrontation was the consequence of the American strategic push to extend Western influence ever closer to the borders of Russia. Europe played a willing but supporting role. Ukraine was a known red line for Russia’s President Putin. Russia’s takeover of Crimea is irreversible. Ukraine is likely to remain divided and turbulent for the foreseeable future.

Europe is bearing the brunt of the economic fallout from the reciprocal sanctions, interruptions of Russian gas supplies, and lost contracts. Some European companies are unwilling to pay the price and are openly circumventing sanctions. Several EU members — including Italy, Greece and Hungary — retain close relations with Moscow.

Europe’s old security fears have been revived by Russian air and naval patrols along Nato’s edge. The Baltic states are near panic. Unlike the past, Europe and Nato are ill prepared to confront a newly muscular Russia. Most European Nato members are unwilling or unable to increase defence spending up to the Nato norm of 2pc of GDP. Some, such as Turkey and Greece, have no desire to confront Russia. The US, preoccupied with the Middle East and a rapidly rising China, is unlikely to deploy the large numbers of troops it had in Europe during the Cold War.

Europe is in the midst of major and multiple transitions. Internally, political opinion is swinging to the left and right extremes. There are differences within the EU and Nato on economic, social and security policies. Questions are increasingly raised, including in the UK, about the advantages of the European Union. There is also a growing distance with the US on security policies, especially relations with a resurgent Russia and a rising China.

How Europe addresses its triple crises will shape its future and the nature of world politics in the coming decades.

The writer is a former Pakistan ambassador to the UN.

Source: Europe’s triple trouble
Published in Dawn, July 5th, 2015

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The Washington challenge

PRIME Minister Nawaz Sharif will be in Washington next week for a ‘working visit’. Normally, this would be a good opportunity for him to secure official and private-sector American cooperation to accelerate Pakistan’s economic development. With improved security and a relatively stable macro-economic environment, Pakistan is well placed today to promote rapid, investment-led growth.

Unfortunately, after recovering from the crisis created by America’s ‘kinetic’ actions in 2011 (Raymond Davis, the Abbottabad incursion and the Salala attack), the Pakistan-US relationship appears to be headed for another showdown.

The first ominous signs emerged during US National Security Adviser, Susan Rice’s visit to Islamabad several weeks ago, during which threats of halting reimbursements for Pakistani counterterrorism operations were held out unless Islamabad acted more forcefully against the Haqqani network. Simultaneously, proposals were advanced to halt Pakistan’s long- and short-range missile programmes and fissile material production. Pakistan was also pressed to act decisively against the Lashkar-e-Taiba.

The Pakistan-US relationship appears to be headed for another showdown.
In a meeting with the prime minister in New York during the UN General Assembly last month, the normally polite and patrician US secretary of state was ‘emphatic’ in his demarche (reportedly thumping the table with his fist while addressing the Pakistan prime minister by his first name). President Obama’s special assistant was evidently even more offensive in a meeting with Pakistan’s foreign secretary.

The American press has reported that the US is exploring a ‘deal’ with Pakistan to limit the scope of its nuclear programme. An American arms control expert, George Perkovich, is quoted as saying: “If Pakistan would take the actions requested by the United States, it would essentially amount to recognition of rehabilitation and essentially amount to parole [!]”. But Pakistan is not in any ‘jail’ and the proposed ‘deal’ is no bargain at all. It amounts to asking Pakistan to compromise its national security in exchange for a good chit from Washington.

Pakistan’s long-range missiles are designed to neutralise the Indian missiles deployed as far away as the Andaman Islands which, if immune, would provide India a secure second-strike capability and a pre-emptive attack option against Pakistan. Asking Pakistan to accept such limits while aiding the build-up of India’s long-range and intercontinental missile capabilities amounts to collaborating with India to erode Pakistan’s strategic deterrence.

Similarly, Pakistan’s plan to deploy dual-capable short-range missiles is specifically designed to break up Indian strike formations in the event of a surprise attack in accordance with its ‘Cold Start’ doctrine. India will shortly hold a large military exercise along Pakistan’s borders to confirm the validity of this doctrine. Rather than discourage such Indian military provocations, Washington again demands that Pakistan disavow its defensive response.

The US has also resuscitated the call to halt Pakistan’s fissile material production. Islamabad has amply explained that its expanded production is in response to India’s ability to exponentially enlarge its nuclear arsenal because the US-sponsored exemption for India has enabled it to import nuclear fuel for its civilian programme and use its indigenous stocks for weapons purposes.

The only deal that can work is one that puts balanced restraints on both India and Pakistan. This is what was called for in Security Council Resolution 1172 (1998). Reciprocal restraint is what Pakistan proposed under the South Asia Mutual Restraint Regime. It was the basis of the parallel dialogue conducted by undersecretary of state Strobe Talbott with India and Pakistan.

American demands regarding the Haqqani network evoke a sense of déjà-vu. For several years, Washington pressed the Pakistan Army to march into North Waziristan and cleanse it of the several militant groups holed up there. The Zarb-i-Azb operation has achieved this. However, to escape the Pakistan Army’s offensive, the TTP and affiliated terrorist groups and the Afghan Taliban, including the Haqqanis, have crossed over into Afghanistan, intensifying the militant operations in and from Afghanistan.

When President Ashraf Ghani asked Pakistan to promote talks between Kabul and the Afghan Taliban, Islamabad was obliged to re-establish contacts with them, including the Haqqanis. After a good start, these talks were scuttled by the revelation from the Afghan National Directorate of Security that Mullah Omar had died sometime ago.

The consequences were predicable. Without the presumed authorisation of Mullah Omar to talk, the Afghan Taliban broke off the dialogue and reverted to the default option of fighting. Ghani chose to blame Pakistan for the fresh uptick in violence, castigating Pakistan’s contacts with the Afghan Taliban which he had himself encouraged. In the US, the India lobby went into overdrive, as illustrated by the vituperative article from journalist Fareed Zakaria in the Washington Post placing the entire blame for America’s failure in Afghanistan on Pakistan.

With its Afghan campaign — like its Syrian, Iraq and Middle East endeavours — in confusion and collapse, President Obama has given in to his military and decided to keep a large contingent of troops in Afghanistan indefinitely. Doing the same thing over and over and expecting different results is often cited as a form of madness.

Pakistan has rightly reaffirmed the general consensus that there is no military solution to the conflict within Afghanistan. The prime minister has offered to continue efforts to bring the Taliban back to the negotiating table. But, as Pakistan’s UN ambassador stated in the Security Council: “What Pakistan will be unable to do is bring the Afghan Taliban to the table while it is being asked simultaneously to kill them.”

The US demands reveal the deeper American alliance with India to contain the rise of China. They may be driven by the desire to score a few more diplomatic successes for Obama’s meagre legacy. They may also reflect an assumption that Pakistan’s civilian leadership is more amenable to American pressure than its military.

Under the circumstances, it would have been wiser to postpone the prime minister’s Washington trip. During the visit, he will be obliged to give a firm response to the unacceptable US demands. He cannot afford another Ufa.

The writer is a former Pakistan ambassador to the UN.

Source: The Washington challenge
Published in Dawn, October 18th, 2015

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Investing in Pakistan

PERHAPS the most important message conveyed by the prime minister in his speech to the United States Institute of Peace was that today Pakistan is well placed to achieve rapid investment-led economic growth. This is a message the government and all its relevant organisations should be propagating in all the world’s major economic and financial centres.

The case for investing in Pakistan is clear.

With 200 million people and 60 million middle-class consumers, Pakistan is a rapidly growing emerging market. A large trainable workforce, coupled with favourable demographics and rising domestic consumption, provide a range of compelling infrastructure and corporate opportunities in Pakistan. But the growth and return potential in Pakistan has yet to be unlocked by domestic and international investors.

Pakistan has considerable need for capital investment, given its tremendous infrastructure requirements and unexploited potential in virtually every major sector. Provided political stability, insulation from external turbulence and the right macro-economic environment, Pakistan can register a prolonged period of domestically driven growth.

Capital investing in Pakistan can enter a sustained and rewarding phase.
Pakistan’s regulatory environment is among the most investor-friendly in the world. There are no restrictions on foreign ownership (unlike India and most other emerging markets); foreign exchange conversion, repatriation of profits or hiring of expatriates. Pakistan offers low corporate tax rates and tax incentives for strategic investments. Historically, foreign investment returns in Pakistan have been high.

Today, in Pakistan, there are substantial opportunities in undervalued assets and companies, an active privatisation initiative, large infrastructure-related investment projects (especially under the China-Pakistan Economic Corridor), growth in local consumption and a largely untapped export potential. With a massive diaspora of highly qualified Pakistani executives and a large reserve of domestic talent, capital investing in Pakistan can enter a sustained and rewarding phase.

It is not difficult to identify some of the major opportunities as well as the impediments to investment. Among these, the most visible opportunities are the major road and rail and pipeline projects under CPEC. These will be implemented at the government-to-government level. However, these projects will yield ancillary economic activity and additional investment opportunities for the private sector.

The 10 power projects included under the CPEC umbrella are essential and urgent to meet the country’s power needs. There are some questions, however, whether these projects have been well prepared and planned by the private parties who have won their development rights. Some may face financing and implementation difficulties as a result. There should be mechanism to review and replace deficient parties where needed.

Given the slow exploitation of Thar coal, possible difficulties in financing coal-based power plants, and the time-lag in laying the Iran-Pakistan gas pipeline, the decision to allow the private sector to establish LNG import terminals is sensible. It is concerning, however, that the very first terminal has become the subject of controversy. Such controversies are a major discouragement to investment. It seems essential to create an impartial mechanism to address and resolve complaints quickly, transparently and fairly.

With the decline in oil and gas prices, wind and solar energy may require larger subsidies at present. However, over the longer term, the cost of solar power is likely to decline further, especially for household use. Solar power must become a growing part of the national energy matrix.

Consumer goods production is also a potentially large-growth sector that is being held back due to the paucity of local financing for the small and medium enterprises which are the main investors in this space. A financing facility and some form of investment insurance may provide a solution. A review of tariff protection and control of smuggling are other essential components of a solution.

Food processing is another underutilised investment sector. A large percentage of fruit, vegetables and fish production is wasted in Pakistan due to inadequate storage and processing facilities. Here too, access to financing and latest technologies is the major obstacle.

With appropriate management and financing, Pakistan’s agricultural production can expand exponentially. Large, industrial-size farming may make sense in some sparsely populated areas. But the highest growth can come from providing adequate credit, technologies and insurance coverage to small- and medium-sized farming and elimination of exploitative middlemen from the market.

Housing needs are huge and growing rapidly due to population growth and urbanisation. Real estate developments have so far focused on the high end of the market. The middle- and low-income housing market is potentially much larger and can yield attractive returns if the government creates a widely available mortgage finance system.

Investment in education is already proved lucrative for schools and colleges for higher income groups. There is still space to enlarge such investment. It can be extended, with innovations, to the lower-income groups, especially in partnership with the government and not-for-profit sources of capital. Health has also proved profitable for perceptive investors and operators. But to provide health coverage to the masses, a partnership will be required between the government and private investors, including health insurance coverage at affordable rates.

The IT sector in Pakistan has developed virtually without official support. There is vast, untapped talent in Pakistan which requires financial, organisational and marketing support which can be provided by venture capital from within and outside the country. Growth in textiles has been stunted by the monopoly of spinners and yarn makers who have impeded value addition. This challenge requires a bold political solution.

Pakistan’s entire manufacturing sector has been impaired because, under external pressure, Pakistan has virtually dismantled the tariff and non-tariff protections which are essential to enabling nascent national industries to achieve competitive status. The government must review and restore such trade protections to encourage investment and expansion in manufacturing for the domestic and export market.

There are, of course, several other major policy issues which the government must address in order to unlock Pakistan’s economic and investment potential. First to finance development programmes, tax revenues need to be doubled from the present 9pc of GDP. Second, the endemic corruption in officialdom must be ruthlessly eliminated. Ending crony capitalism has to be part of this campaign. Last, Pakistan needs to create a much larger capital market, through such measures as the ‘financilisation’ of mortgages and insurance and creation of debt instruments, to generate adequate and broad-based investment and wealth creation.

The writer is a former Pakistan ambassador to the UN.

Source: Investing in Pakistan
Published in Dawn, November 1st, 2015

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Pakistan’s stability agenda

PAKISTAN today has achieved a measure of political, security and economic stability — due largely to the strategic clarity imposed by the ‘security establishment’ — and happenstance. Domestic and externally sponsored terrorism has been reduced though not eliminated. Pakistan has not succumbed to India’s belligerence and bullying.

The spreading turmoil in Afghanistan has, so far, had a limited fallout on Pakistan. Relations with the US appear to be on an even keel. The strategic relationship with China is being consolidated including under the rubric of the China-Pakistan Economic Corridor. New prospects of cooperation have been opened with Russia and Iran, although the ties with traditional friends in the Gulf have deteriorated significantly. The economy has stabilised and shows promise of growth. There are no dark clouds on the domestic political horizon.

Yet, this stability is fragile and incomplete. With the ‘correlation of forces’ in perpetual motion, equilibriums cannot always be preserved by inaction. There are present and impending threats to Pakistan’s stability which require a dynamic response.

The most immediate threat continues to be posed by terrorism and extremist violence. The ubiquitous military campaigns undertaken must be followed by comprehensive action — political, economic, social and cultural — to ensure sustained success. In this context, the vocal complaint from the military of civilian laxity in implementing the much heralded National Action Plan is disturbing. Hopefully, all arms of the government will be energised in the wake of the army’s complaint.

Our stability is dependent on achieving equitable economic development and evolving stable governance.
Policy action is also essential to insulate Pakistan from the escalating chaos and conflict in Afghanistan. The collapse of the dysfunctional and frequently hostile Kabul government, the splintering of the Afghan Taliban, the emergence of terrorists of the self-styled Islamic State, and a Hobbesian civil war in Afghanistan, could erode Pakistan’s stability. It must, therefore, contribute to the thankless task of Afghan reconciliation.

But, rather than hosting public dialogues between Kabul and the Afghan Taliban, and making promises which it may not be able to fulfil, Pakistan should undertake quiet efforts to promote reconciliation and reduce the violence in Afghanistan. However, Pakistan’s own interests — to eliminate the Tehreek-i-Taliban Pakistan and its cross-border attacks — must remain central. The Afghan Taliban must be convinced to break all links with the TTP and Kabul (and its patrons) must also be responsive to Pakistan’s concerns regarding the TTP and India’s military and intelligence activities in Afghanistan.

India continues to pose the major threat to Pakistan’s security and stability. Normalisation will remain a chimera while Narendra Modi rules in New Delhi. Pakistan should adopt a policy of ‘dignified distance’ from the Bharatiya Janata Party government.

Unfortunately, the BJP’s domestic decline — as manifested in the Delhi and Bihar elections — may lead Modi to embark on a chauvinist adventure against Pakistan to revive popular support. Thus, Pakistan must maintain ‘full-spectrum deterrence’ against an increasingly militarised India and reject discriminatory restraints. But Pakistan can offer reciprocal restraint to India to prevent the ‘nuclear nightmare’ which can result from a conflict between the two countries.

On terrorism too, Pakistan should insist on reciprocity. Since the previous government agreed to outlaw the pro-Kashmiri Lashkar-e-Taiba, Islamabad has been obliged to swim against the tide of domestic opinion while acting against it. This is all the more reason to expose and outlaw India’s state-sponsored terrorism against Pakistan which Indian officials have proudly admitted.

Nor can Pakistan remain passive on Kashmir. Even if Pakistan does nothing, the Kashmiris will, sooner rather than later, rise in another revolt against India’s heavy-handed occupation. Inevitably, Pakistan will be blamed for the resulting violence and ‘terrorism’. To avert another Pakistan-India crisis, if not to fulfil its political and moral obligation to the Kashmiris, Pakistan must promote an active diplomatic effort to halt India’s oppression and secure the inalienable rights of the Kashmiri people.

Growing great power rivalry may also threaten Pakistan’s stability. Pakistan’s strategic relationship with China is pivotal to its security. The closer American alignment with India to contain China may produce further and more blatant attempts by Washington to extract unilateral strategic concessions from Pakistan. These must be boldly rejected.

To do so, Pakistan needs to reduce its financial dependence on the West. However, promoting cooperation with the US wherever interests are convergent — counterterrorism, Afghanistan, investment, development — can also help to maintain a balanced relationship with the US.

Islamabad has been wise to avoid involvement in the sectarian wars in Syria, Iraq and Yemen. Delicate diplomacy will continue to be required to balance relations between an unshackled Iran and an angry Saudi Arabia as they vie for regional influence. Pakistan’s priority must be to ensure that no Pakistani groups become associated with the self-styled Islamic State or other extremist Sunni or Shia groups engaged in these conflicts.

Ultimately, Pakistan’s stability is dependent on achieving equitable economic development and evolving a stable system of political governance.

Pakistan’s present economic balance has been achieved mainly by exogenous and temporary factors — low oil prices, remittances, bond sales and IMF support. To sustain and accelerate growth, Pakistan needs to expand government revenues, restructure its energy policies, reform its loss-making state corporations and mobilise significant domestic and foreign investment. Without growing prosperity and jobs, socio-economic strife will not be averted for long within the country.

A shaky ‘democracy’ has survived — but only just — for several years. It is an inconvenient fact that the country’s present relative stability would not have been possible without the firm guiding hand of the Pakistan military. Reforms in Pakistan’s political and governance structures — to enhance accountability, efficiency and honesty of elected representatives and the sprawling bureaucracy — are essential and overdue. The present interregnum of relative stability is a good time to embark on these reforms.

The writer is a former Pakistan ambassador to the UN.

Source: Pakistan’s stability agenda
Published in Dawn, November 15th, 2015

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The world is changed by your example, not by your opinion !

Fruits of foreign intervention

THE chaos and carnage that has now spread from Afghanistan through West Asia and the Levant to North Africa and the Sahel is widely ascribed to Al Qaeda, the militant Islamic State group and their franchises or affiliates.

Yet, the origins of the conflicts and terrorism that engulf this arc of Muslim countries, and threaten Europe and beyond, are, fundamentally, the consequence of misguided or malevolent intervention by foreign powers in the affairs of Muslim states.

This history starts with the Soviet Union’s December 1979 military intervention in Afghanistan and the decision of the US, supported by its allies, including Pakistan and several Muslim states, to sponsor the religious Afghan parties — the Mujahideen — and import several thousand extremist fighters as their auxiliaries.

After the Soviet withdrawal, the Mujahideen mutated into the Taliban. The Islamic auxiliaries morphed into Al Qaeda.

Emboldened by their Afghan ‘victory’, Al Qaeda’s ambition was to eject the US from the Islamic world and overthrow Arab regimes allied to it. Many veterans of the anti-Soviet jihad stayed on in Afghanistan and Pakistan to form Al Qaeda ‘central’; others returned to their home countries to build Al Qaeda as a global movement.

Wherever their ‘terrorist’ insurgencies were ruthlessly suppressed, these ‘jihadis’ went underground or ‘migrated’ to more hospitable locations.

The ‘war on terror’, unleashed in response to the 9/11 terrorist attack on the US homeland, forms the next chapter in this history. Disregarding the lessons of the past, the US invaded Afghanistan instead of targeting Al Qaeda only.

Over a decade, America was able to degrade Al Qaeda and eventually kill its leader. But, by extending the fight to the Mullah Omar’s Taliban, it exacerbated Afghanistan’s ethnic fault lines, made national reconciliation difficult and created conditions in which Al Qaeda’s competitor, the IS, could emerge as a prominent force.

The Syrian civil war represents the sum of all the sins of foreign interference.
Hubris, generated by its post-Cold War monopoly of global power, led the US to make its most critical strategic mistake in recent years: the 2003 invasion of Iraq, the third episode of interventions, ousting Saddam’s (repressive and minority) Sunni regime, dismantling his army and administration, and enabling the Iran-affiliated Shia parties to gain power in Baghdad through ‘democratic elections’ (held basically to legitimise the US and foreign presence in Iraq) led to splintering the country into its Shia, Sunni and Kurdish components and generating a Sunni insurgency led by Saddam’s soldiers and Al Qaeda in Iraq (AQIP) — which has now morphed into IS.

The removal of the Sunni regimes in Afghanistan and especially in Iraq expanded Iran’s influence and power in the region and eroded that of America’s Saudi and Gulf allies.

The Saudi and Iranian power struggle and support for rival Sunni and Shia groups surged across Iraq, Lebanon, Syria, Bahrain, Yemen, Afghanistan and Pakistan.

Terrorism became entwined with proxy wars. This is the fourth and under-acknowledged part of this history.

Then came the ‘Arab Spring’ uprisings in Tunisia and Egypt which were naively embraced by Western powers as heralding the long-awaited birth of Arab ‘democracy’.

Tunisia has succeeded so far in making a peaceful transition to democracy.

Egypt has experienced a cycle of military rule, an Islamic democracy and military rule again, precipitating an Islamist insurgency centred in the Sinai and now linked to IS.

In Libya, Qadhafi’s ouster was secured through armed support to insurgent groups and a prolonged aerial campaign by European powers, with America “leading from behind”. As in Afghanistan and Iraq, little thought was given to what would come the day after.

Libya is now splintered into rival areas, cities, tribes, groups and governments, some with connections to terrorist organisations including IS — which has a direct presence there.

After Libya, attention turned to Syria. Externally encouraged demonstrations against the minority Alawite regime of Basharul Assad were met by characteristic violence.

Opposition groups from Syria’s Sunni majority secured ready support from the West as well as Turkey, Saudi Arabia and other Gulf states.

As the conflict escalated, the most effective fighters turned out to be those belonging to an Al Qaeda affiliate (Jabhat al Nusra) and IS, led by AQIP’s Al Baghdadi and Iraqi veterans.

The Syrian civil war represents the sum of all the sins of this history of foreign intervention. A repressive minority regime fights on with support from Iran and Russia. An estimated 250,000 people have died in the conflict.

It has created a refugee crisis of epic proportions. The tide of Syrian and other refugees from the region has divided Europe, strained its vaunted commitment to human rights and humanitarianism and revived racism and Islamophobia.

This conflict has created IS, a militant organisation which occupies and rules the Sunni heartland of Syria and Iraq with unparalleled brutality and whose influence and affiliates span a wide swath of the Islamic world.

Its appeal for extremists will grow unless it is defeated. Months of US bombing has failed to dislodge it from its strongholds.

Instead, IS has brought the war to its opponents, carrying out terrorist attacks against Russia, Turkey, Lebanon and France. It is unlikely to be defeated without “boots on the ground”.

No one is prepared to send in an army to eject IS, except Iran and its allies. This is naturally not acceptable to Saudi Arabia, Turkey and the Western powers since it would further enhance Iranian and Russian influence in the region.

A strategy to defeat IS and end the conflicts in Syria and Iraq will need to start with an alignment of the objectives of all the major players involved.

This implies a prior agreement on the future governance of Syria and Iraq before any combined military operations can be contemplated — mainly by Sunni forces.

A confederal structure in which Assad is confined to the Alawite majority regions of Syria and wide autonomy for the Sunnis and Kurds in Iraq are the only feasible political solutions.

Hopefully, political accords on Syria and Iraq and a joint campaign against IS will generate momentum for dismantling IS and Al Qaeda affiliates; create the political space for compromises to end the conflicts in Yemen and elsewhere, and bring to an end the modern history of foreign interventions in the Muslim world.

The writer is a former Pakistan ambassador to the UN.

Source: Fruits of foreign intervention
Published in Dawn, November 29th, 2015

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The world is changed by your example, not by your opinion !

Process is substance

LEON Trotsky once declared: “Process is substance; the end is irrelevant.” In politics and statecraft, the outcome of negotiations is largely determined by the process adopted. Process defines the agenda, modalities, linkages and pace of any negotiation or interaction. The final result is determined by the process and relative power of the parties.

Great power prodding, and discreet diplomacy, produced the Paris prime ministerial encounter between Pakistan and India. This, in turn, resulted in the Bangkok meeting between the national security advisers (who talked of terrorism) and, separately, between the two foreign secretaries (who discussed Kashmir, peace and security and other issues, according to Pakistani reports). This clever diplomatic stratagem to meet the conditions for talks of the two sides has broken the ice and enabled the Indian foreign minister to attend the Heart of Asia conference in Islamabad and for the Indian prime minister to participate in the Saarc summit (unless things go off the rails again.)

However, it is not yet clear if agreement has been reached to resume the Composite Dialogue (renamed the Comprehensive Bilateral Dialogue) whose agenda of two main issues (Kashmir and peace and security) plus six other items was agreed during the last PML-N government. This has vital implications for the outcome of Pakistan-India negotiations.

The agreement on the Composite Dialogue process was itself the result of years of diplomatic struggle between Pakistan and India. New Delhi finally agreed to talk about Kashmir and peace and security when faced with the last Kashmiri insurgency in the 1990s. The agenda of the Composite Dialogue does not include terrorism.

For all intents and purposes, Pakistan has accepted India’s ‘role’ in Afghanistan.
It appears advisable for Pakistan to keep the discussions with India on terrorism separate from this process for several reasons.

One, the agenda of the dialogue acknowledges the primacy of Kashmir and peace and security. This should not be diluted.

Two, including terrorism in the Composite Dialogue agenda risks linking Kashmir with terrorism. Pakistan has always held that Kashmir’s struggle for self-determination cannot be equated with terrorism.

Three, in Pakistan’s view, terrorism is a temporary phenomena arising from the rise of extremism and India’s support for the Tehreek-i-Taliban Pakistan’s attacks against Pakistan and for the Baloch insurgency.

Four, Pakistan cannot expect to achieve its objectives of ending Indian support for anti-Pakistan terrorism through bilateral talks with New Delhi, especially since the Indians, with Western support, have succeeded in portraying Pakistan as a sponsor of ‘Islamist terrorism’ and placing it on the diplomatic defensive on this issue.

In the negotiating process on terrorism, Pakistan’s aim should be to refute the Indian propaganda about Pakistan’s ‘sponsorship’ of terrorism and secure understanding that India’s threat to almost automatically resort to the use of force in response to a future terrorist incident is a recipe for another general Pakistan-India war.

The answer to halting India’s reported terrorist intervention from Afghan territory lies not in persuading New Delhi but in compelling Kabul. Pakistan has much greater leverage with Afghanistan than with India. Unfortunately, so far, Pakistan has been unable to exercise this leverage very effectively.

Pakistan facilitated the first direct talks between Kabul and the Afghan Taliban. These were sabotaged when information about Mullah Omar’s demise was revealed by the Afghan intelligence agency. Pakistan’s prime minister has repeated the offer to make every effort to resume the inter-Afghan dialogue even though President Ghani has not asked Pakistan to do so.

Emboldened perhaps by the divisions within the Afghan Taliban and assurances that US-Nato forces will stay on in Afghanistan, Ghani and anti-Pakistan elements in Kabul have denigrated Islamabad’s gestures, while continuing to level accusations against it for sponsoring the Taliban. Ghani has asserted that Pakistan would bring to the table only one faction of the Taliban and Kabul would talk to them if they accepted the Afghan constitution and other conditions. No talks will be possible or successful under such conditions.

The Ghani government has become trenchant on other issues as well. Ghani has demanded better treatment of Afghan refugees — after decades of Pakistan’s generosity in hosting them. He has linked Pakistan’s desire for transit to Central Asia to Islamabad’s agreement to open transit to India; Pakistan should demand transit to Central Asia in exchange for providing Afghanistan’s trade transit across Pakistan.

Pakistan should first define a clear strategy and process for dealing with Afghanistan. Islamabad’s support for promoting reconciliation between Kabul and the Afghan insurgency should be directly linked to action by the unity government, especially its intelligence agency, to eliminate TTP safe havens in Afghanistan and halt its cross-border attacks against Pakistani civilians and soldiers. Unilateral gestures will only lead to additional unilateral demands — as witnessed in Islamabad during the last few days.

In the endeavour to appear reasonable (mainly to the West), Pakistan has ended up enhancing another process which impinges negatively on its own strategic interests: the so-called Heart of Asia conference. This process was initiated by Turkey in 2011 as a means of securing its involvement in the negotiations relating to Afghanistan which, until then, were restricted to Afghanistan’s immediate neighbours Pakistan and Iran and the five permanent members of the Security Council. This initiative was actively supported by the US as a means of bringing its other friends into the Afghan process, especially India.

It is thus ironic that Islamabad, pursuing the ‘if you can’t beat them, join them’ approach, played host to this conference and is so happy that the Indian foreign minister was able to participate. For all intents and purposes, Pakistan has accepted India’s ‘role’ in Afghanistan on its own soil. Surely, the Indian foreign minister must have been ecstatic to come to the conference.

To add insult to injury, the beneficiary of this process, the Afghan president, did not confirm his participation until the last minute. He finally justified going to the conference by asserting “this is not Pakistan’s conference, it is Afghanistan’s conference”.

Clearly, Pakistan’s diplomacy needs to clarify its strategic objectives and agree only to processes where these objectives can be advanced, or at least not negated. Unless, of course, Islamabad believes, like Trotsky, that the end is irrelevant. Trotsky’s end was not pleasant.

The writer is a former Pakistan ambassador to the UN.

Source: Process is substance
Published in Dawn, December 13th, 2015

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The world is changed by your example, not by your opinion !

Defeating IS

THE UN Security Council last week adopted two resolutions; one, outlining a plan for a political solution to the Syrian civil war and the second, declaring the militant Islamic State group and Al Nusra as terrorist organisations to be defeated by the international community. At a joint media conference, the Russian foreign minister said: “I’m not too optimistic about what has been achieved today.”

There are good reasons for scepticism. The plan to resolve the Syrian conflict lacks credibility, especially since it does not frontally address the future of President Assad and his regime. Nor does the second resolution offer a coherent military and political strategy to defeat IS.

The Syrian civil war started when, in the euphoria of the Arab Spring, the latent opposition to the minority Alawite regime was externally encouraged, evoking an unsurprisingly brutal response from the regime. In the ensuing Sunni insurgency, IS — composed of elements from the former Al Qaeda in Iraq and Saddam’s disbanded army — emerged as the most effective fighting force. It held territory; secured revenue sources; established governance and other attributes of a functioning state. Despite financial and material support from neighbouring Sunni powers, IS felt beholden to none and pursued tactics intended to create its own version of ‘shock and awe’.

IS was initially dismissed as a “varsity [amateur] team” by President Obama. Notwithstanding its capture of the vast Sunni heartland across Syria and Iraq, IS did not become America’s enemy number one until it publicised the execution of an American journalist.

The US president announced a hastily formulated ‘strategy’ on Sept 10, 2014 to “degrade and destroy” IS: air strikes; training of secular insurgents; improving counterterrorism capabilities and continued humanitarian assistance to the victims of the Syrian civil war. One year on, it is evident that the strategy has been far from successful.

An aerial campaign will not be sufficient to defeat the militant Islamic State group in the absence of land forces.
Aerial bombardment has damaged IS capabilities and enabled Kurdish and Iraqi forces to push it out of a small part of the territory it occupies in Iraq and Syria. The US programme to train friendly Syrian fighters has been a fiasco. The humanitarian situation has deteriorated, with millions of Syrians in refugee camps or flowing to supposed safe havens in Europe.

Attacking IS may have accelerated the very threat it was meant to avert. IS has conducted terrorist attacks against regional and Western countries; extended its operations into several conflict zones and generated thousands of recruits to its cause from Muslim and Western countries

With its traditional pragmatism, the US appears to be amenable to Russia’s proposal to defer ousting Assad and focus on fighting the terrorists. But Saudi Arabia, its Gulf allies and Turkey remain reluctant to relent in securing the end of the Assad regime. Most of the 48 Syrian insurgent groups are also disinclined to fight IS while Assad remains in power.

Yet, ousting Assad has become much more difficult. Support for the regime from Tehran, Baghdad and Hezbollah has become more overt and substantive. Russia has intervened militarily to support the regime and fight its ‘terrorist’ opponents which include not only IS but some of the groups supported by Turkey, Saudi Arabia, other Sunni powers and the US. To complicate matters, Turkey is unhappy with advances made by the Kurdish forces against IS as its own war with the Kurdish PKK ‘terrorists’ has been renewed and escalated.

The rivalry within the putative anti-IS coalition has become toxic after Turkey’s downing of a Russian military aircraft ostensibly for infraction of Turkish airspace but in reality for bombing ethnic Turkish insurgents fighting the Assad regime. While Russia has entered into military coordination arrangements with Iran, Iraq and the Assad regime, the US, France and the UK are pursuing their separate bombing campaign against IS. Meanwhile, Saudi Arabia has announced a coalition of 34 Arab and Islamic states, including Pakistan, whose aims and strategy are still unclear.

Under the circumstances, the US-led endeavours to form a ‘transitional’ government in Damascus, and, more immediately, a broad coalition to fight IS, are likely to prove extremely challenging.

An aerial campaign, no matter how intense, will not be sufficient to defeat IS in the absence of a land force to oust IS from the vast regions it occupies and to hold such territory once ‘liberated’. Iran could intervene with significant forces; but this would be internationally unacceptable and exacerbate the Shia-Sunni divide. The Kurds are insufficient and would be opposed by Turkey. The other Syrian insurgent groups are incapable or unwilling to fight IS.

Clearly, a political understanding must precede a military campaign against IS. This must first and foremost address the core contest between Iran and Saudi Arabia.

The most feasible approach may be the creation of loose federal structures in both Syria and Iraq which separate the warring factions but maintain the legal existence of the two states; and in Syria, a Sunni administration where they are in majority with the Assad regime restricted to the Alawite majority region, and the Kurds enjoying autonomy. In Iraq, the federal structure would envisage Baghdad ruling the Shia (eastern and southern) regions with autonomous entities controlled by the Sunnis and the Kurds in the east and north. No doubt, Iran would want access to the Alawite region and Lebanon; Turkey would require assurances against a unified Kurdish state.

Only once an understanding is reached on the broad parameters of such a ‘grand bargain’ would joint military action against IS by regional states become possible. Turkey, Iran, Jordan and Saudi Arabia could provide the forces to push back IS, Al Nusra and other terrorist groups and hold the ground from which they are ejected.

A military defeat of IS, however, would not be sufficient to prevent the persistence of its terrorist operations à la Al Qaeda in and outside the region. A more comprehensive effort will be required to defeat the narrative and ideology of IS and other ‘violent extremists’ — a strategy encompassing the just settlement of disputes involving Muslims; rapid economic and social development; an end to the alienation of Muslim youth in Western countries; and the elimination of Islamophobia. This is the ‘long war’ which must be waged to restore stability in the Middle East and avoid a clash of civilisations.

The writer is a former Pakistan ambassador to the UN.

Source: Defeating IS
Published in Dawn, December 27th, 2015

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The world is changed by your example, not by your opinion !

Engaging India

AFTER an initially ‘mature’ response to the attack on the Pathankot air force base, the Indian government has reverted to its familiar stance and made the foreign secretary talks contingent on Pakistan’s ‘action’ against the Kashmiri groups who have claimed responsibility for the attack.

This is a no-win situation for Islamabad. If the dialogue is aborted, India will blame Pakistan for inaction and complicity. If the talks go ahead, the Pakistan leadership will be viewed, domestically, as having given in to Indian bullying. Under the circumstances, it may be best to delay the dialogue until the dust has settled over Pathankot.

Meanwhile, Pakistan’s diplomats and officials should develop a set of principles and clear objectives to be followed whenever the Comprehensive Dialogue is commenced.

Under the circumstances, it may be best to delay the dialogue until the dust has settled over Pathankot.
The first principle in dealing with India is firmness and self-confidence. Adversaries respect strength and consistency. Nice guys finish last. Narendra Modi’s agreement to resume the dialogue came only after the Pakistan prime minister refused to play by the Indian rulebook.

Policy should first seek to advance national interest and only secondly seek to find compromises. The measure of success is not the accolades of the West but the value added to the national interest.

Do not personalise policies. Political leaders change; state interests rarely do. Know the issues. Each item on the agenda has a long, often convoluted, history with which our negotiators must be fully familiar. Do not accept the vocabulary of the adversary. For example, Kashmiri ‘freedom fighters’ cannot be equated with ‘terrorists’.

Refrain from advertising internal differences, for example, between the military and civilians, or between the Foreign Office and politicians. This weakens the national negotiating position. Unfortunately, some Pakistanis — politicians and their spokesmen — have in the past been eager to win Western and Indian approbation by revealing how their ‘reasonable’ policies are being thwarted by ‘hardliners’ in the Foreign Office or the military.

Beware of linguistic traps. Indians (and Pakistanis) are very adept at manipulating the English language to secure gains at the negotiating table. The Ufa communiqué is a painful example. Changing the ‘composite’ dialogue to ‘comprehensive’ dialogue is not without significance. ‘Composite’ was designed to connote the interlinkages between the two plus six agenda. ‘Comprehensive’ loosens the linkages; it also enables the inclusion of terrorism as a new item on the agenda.

Pakistan’s negotiators should also be clear about the objectives which can be realistically promoted at this stage in the Comprehensive Dialogue.

Kashmir: The immediate ‘problem’ to be addressed is the perpetual insurrection which India faces in India-held Kashmir. This can be ameliorated by ending the repression of the Kashmiris and offering them some means of genuine political self-expression until a final settlement of the dispute can be reached. There is no need to open the door to Indian intervention in Azad Kashmir as was the case with the plan negotiated by a novice in ‘backchannel’ diplomacy a decade ago.

Terrorism: Under American pressure, Pakistan gave a commitment not to allow its territory to be used for ‘terrorist’ attacks against other countries. This is a difficult commitment to fulfil if the Kashmiris fighting India’s brutal repression and occupation are described, even by Pakistan, as ‘terrorists’, given that their legitimate aspirations enjoy wide popular support in Pakistan. In the talks on terrorism, Pakistan’s objective should be to persuade India to address the root causes of the Kashmiri attacks against it; and secondly, to secure an Indian commitment to halt its support for anti-Pakistan terrorism from Afghan territory.

Peace and security: While rejecting unequal or unilateral restraints on its deterrent capabilities, Pakistan should continue to press India for reciprocal arms control and disarmament measures. In the short term, two objectives can be achieved: first, reciprocal measures to prevent the outbreak of a conflict through miscalculation or accident; and, second, recognition of reciprocity and linkage between the military capabilities and deployments — conventional as well as nuclear — of India and Pakistan.

Trade and economic cooperation: In the short term, bilateral trade in the manufacturing sector is likely to be detrimental to Pakistan, given India’s more mature industrial enterprises and economies of scale. Trade in certain commodities as well as the gas pipeline projects can be mutually beneficial.

Siachen and Sir Creek: Agreements on both these issues were virtually reached in the past. The Siachen deal was blocked by the Indian army. A Pakistan proposal to implement this agreement would be an early test of New Delhi’s desire for normalisation. Likewise, the arbitral decision on Sir Creek awaits acceptance and implementation by the two countries.

There are some ‘new’ issues which may assume considerable importance in the coming years.

Transit: In the long term, Pakistan’s economy can benefit greatly from serving as a regional transit hub. However, transit is a significant Indian demand; it should be conceded only in exchange for equally significant reciprocal concessions from India.

Water: Both Pakistan and India are water-stressed and likely to become more so due to global warming. To prevent both an ecologic and political crisis, both countries would be prudent to resubmit the issue for international arbitration and secure the earliest possible solution consistent with the Indus Waters Treaty.

Afghanistan: India’s security and intelligence activities in Afghanistan are detrimental to Pakistan’s security. Islamabad must clearly convey its ‘red lines’ regarding the Indian role in Afghanistan to all concerned, including New Delhi.

Even if the Comprehensive Dialogue starts, progress in addressing the agenda will be difficult and uncertain. Despite the yearning of our elites, the animus between the peoples of Pakistan and India is palpable and cannot be overcome by chapati diplomacy or song and dance routines.

The writer is a former Pakistan ambassador to the UN.

Source: Engaging India
Published in Dawn, January 10th, 2016

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The world is changed by your example, not by your opinion !