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The True Cost of Pakistan's Relationship with America

By Abid Mustafa

Al-Jazeerah, CCUN, December 23, 2013


Lately, several notable Pakistani public figures have expressed their increased optimism about the Pakistani economy and its future. On November 10, 2013 Federal Minister for Finance, Muhammad Ishaq Dar expressed his desire to see Pakistan become the 11th biggest economy in the world. According to the World Bank statistics in 2012, Pakistan presently holds 43rd position with a GDP of $231billion, whilst Canada is in the 11th spot with a GDP of $1,8 trillion.

A few days later, Dar’s confidence was also echoed by Federal Minister for Planning, Development, and Reform, Ahsan Iqbal. On November 12, 2013 at a lecture at Harvard University, in the US, Iqbal said, “The Pakistan 2025 Programme will transform the country into a strong economy of upper middle income countries in ranking.”  He added, “... by making Pakistan a hub of regional integration through regional connectivity projects, we can create three billion new markets in Asia comprising of South Asia, China, and Central Asia with great opportunities for global economy.” It appears that both Dar and Iqbal are basing their economic predictions on a paper entitled: ‘Pakistan in the 21st Century: Vision 2030’, which has been prepared by Pakistan’s planning commission. The paper summarizes the economic vision as:“Growing economically at a rate of around 7-8 percent per annum, Pakistan expects to join the ranks of middle-income countries, with a GDP of around $4,000 billion by2030. This high growth rate would be sustained through developing its human resources, and by developing the necessary physical and technological infrastructure.”

In a separate but  related development, the Pakistani government inaugurated the meeting of a working group on Integrated Energy for Pakistan Vision 2025. On November 14, 2013 the group met under the chairmanship of the  Secretary Planning, Development & Reforms, Hassan Nawaz Tarar and consisted of many leading scholars, experts and scientists. The immediate aim of the working group is to address the crippling energy problems plaguing Pakistan. Farkhand Iqbal, Senior Chief Energy said in his opening remarks that the country has been suffering from serious problems, as our industries are being closed, exports being declined, per capita income decreased. In short, he said that the energy sector of economy is badly suffering due to energy shortages in our country. He also emphasized that the 11th five year plan (2013-18) and vision 2025 would not be a plan like the plans of the past, but they should be a realistic, doable and a must, to achieve the desired growth rate for the next decade  and to make Pakistan an industrialized knowledge base economy.

Like with all previous Pakistani governments, the present government is no different in trying to address Pakistan’s ailing economy and severe energy shortages. No government has succeeded to date, and there is very little evidence to suggest that the current government of Nawaz Sharif will do any better. Without even scrutinising the contents of the vision, it is evident that there is problem in terms of which vision the government is following i.e. the 2025 vision espoused by Farkhand Iqbal, Dar and Ahsan or the 2030 vision advocated by the planning commission. Now one may give the government the benefit of doubt for getting mixed up, but the lack of alignment between ministries and poor communication by ministers amounts to a poor start considering the gravity of the situation, and does not  bode well for the future.

Apart from the vision, the government has also miserably failed to articulate a clear and cogent strategy that will help them deliver the vision for 2030.  For instance, what is the government’s strategy that helps them achieve the vision statement: ‘Pakistan expects to join the ranks of middle-income countries, with a GDP of around $4,000 billion by 2030.’ The vision 2030 document distributed by the  planning commission and public statements by politicians are not only woefully inadequate and but are quite frankly a regurgitation of the same old wine manufactured by Western economic consultants and institutions like the IMF, and then sold to the Pakistan public. For instance, on October 4, 2013 the Nation newspaper reported that the government has decided to privatise 31 public sector entities (PSEs) during the current financial year 2013-14 and this mainly includes banking, petroleum and energy sector companies. In return, Pakistan received a $6.7 billion loan programme under IMF’s extended funds facility (EFF).

The strategy of parting with Pakistan’s treasured silverware to boost economic growth is a recipe for economic chaos  and enslavement to Western institutions. One only has to look at the privatisation under Musharraf and Zardari to see that the real benefactors are foreigners, who are free to set prices as they will, pay minimal or no tax at all, and repatriate profits to their own countries to strengthen  their economies at the expense of Pakistan. This is in addition to the massive corruption that ensues and ensnares Pakistani politicians. Some have estimated 1550 billion Rupees (US$23.84 billion) worth of corruption during the privatisation process under 8 years of Musharraf’s rule alone (“Pakistan: $23.8 billion corruption from privatization under Musharraf”, Asia Pacific Action Online).

Hence it appears that the 11th five-year-plan is headed in the same direction as the previous fifty years of strategy planning— degrading Pakistan’s economic sovereignty and depriving our children of a bright future. Furthermore, such a strategy will not pay off Pakistan’s $58 billion in external debt or grow Pakistan’s economy sufficiently by 2030 to meet the needs of some 230-260 million Pakistanis as forecasted by the planning commission.

Best practice dictates that any economic vision espoused for Pakistan and any economic strategy advocated must be cognizant of the root causes behind the current economic malaise affecting the country. Any solution that does not treat the root causes will only treat the symptoms and will  never return the country to economic self-sufficiency.

The three principal causes behind Pakistan’s economic troubles is America, her colonial institutions like the IMF and WBO, and rampant corruption. Let’s examine these one by one.

Ever since, America’s active involvement in Eurasia, in particularly  during the Soviet invasion of Afghanistan, Pakistan’s economy has undergone sustained deterioration. This is a widely acknowledged fact but it does not feature in official proclamations or economic reports, as Pakistan’s elite wants to continue with its suicidal policy of working with America. No matter how hard Pakistani officials try to conceal this fact they cannot hide the truth, and occasionally reveal information that is locked in the deepest depth of their hearts. Just recently, Minister for States and Frontier Regions Abdul Qadir Baloch said that over a 30 year period, Pakistan has spent approximately $200 billion in looking after Afghan refugees. The Afghan refugee burden is clearly a result of US policy to exploit Pakistan as the epicentre of  America’s war against its arch cold war enemy the Soviet Union.

Despite Pakistan’s best efforts to care for their Afghan brethren as mandated by Islam, Pakistan has received peanuts from America in assistance over the past three decades. Even the latest drive by the so called international community has yielded miniscule amounts. International donors have pledged $600 million for the Afghan Refugees Affected and Hosting Areas Programme, but only $15 million has been delivered. So once again, Pakistan will continue to shoulder the burden of our Afghan brethren, even though the country does not have enough means to meet the needs of its own citizens.

In the beginning of the 21st century America launched a new war against Islam disguised as the war on terror. The central front of this war was Pakistan and its impact on the country was catastrophic, especially on Pakistan’s economy. On October 23, 2013, Geo TV revealed that the war on terror had cost Pakistan a whopping $100 billion. In return, Pakistan received over $25 billion during the period 2002-2012 consisting  of $17 billion in military aid and $8 billion in economic assistance. This aid pales into insignificance when measured over a 66 year period. From 1948 to 2012, Pakistan has received a total of $68 billion in aid. Of which, the economic aid  is $42 billion and the remainder $26 billion is military assistance. In practice, however, this aid has been hampered by American economic sanction, which were first imposed in 1979. Peterson Institute for International economics calculates that from 1979 to 1998 the impact of the sanctions was equivalent to a $1 billion— a relatively small sum compared to the direct fallout that Pakistan has suffered when its foreign policy is aligned to America’s national interests.

The other factor which has wreaked havoc on Pakistan’s economy is the menace of IMF and WB policies implemented under American auspices. The country has borrowed heavily from the IMF for 29 out of the 40 years between 1971 and 2010. Pakistan’s external debt is currently thought to be around $58 billion – about 24% of GDP and 200% of exports. The IMF and World Bank argue that debts for low-income countries usually become impossible to repay when they are between 30-50% of GDP or 100–200% of exports. Yet despite this, IMF continues ignore its own warnings and is eager to lend billions of dollars to Pakistan.

In fact the Pakistani population has become accustomed to the unleashing of economic devastation, whenever  IMF and WB officials visit Pakistan. The common prescription advocated by the IMF is privatisation, increase in the prices of petrol, electricity and gas, devaluation of the rupee, increase in tax revenues through the imposition of sales tax, reduction in import duties and several other notorious measures that always seem to increase the dependency of Pakistan’s economy on foreign creditors and piles up unwarranted debt. Simply put IMF policies have never worked to bridge Pakistan’s fiscal gap or address the balance of payments. All IMF policies do is to ensure the country commits to the ever increasing  interest burden. Over the last five years, Pakistan’s foreign debt payments have averaged $2.3 billion. That’s the equivalent of 10% of exports, and 10% of government revenue, and is half the amount spent on health and education combined (“Unlocking the chains of debt A call for debt relief for Pakistan”, Islamic Relief and Jubilee Debt Campaign, July 2013).

Lastly, under American patronage corruption has flourished in Pakistan. It does not matter whether the government is civil or military, corruption is rife under governments that are directly supported by America. For instance, according to Transparency International, Pakistan lost an unbelievably high amount, more than Rs8.5 trillion (US $94 billion), in corruption, tax evasion and bad governance during the last four years of Prime Minister Yousuf Raza Gillani’s tenure.

In sum, since 1979, Pakistan’s unstinting support for America has cost the Pakistani economy circa $410 billion[1]. Even the die heard neo-liberals and secular fundamentalists in Pakistan, will have to concede that America’s relationship with Pakistan is the sole reason for the rapid erosion of the country’s economic sovereignty.

For Pakistan’s economy to have any chance of growth and self-sufficiency, economic policy makers must sever ties with the US, and devise a 2030 vision and associated strategies that does not feature America and the influence of its colonial tools. But this is only the first step, a more permanent solution necessitates the complete removal of democracy or dictatorship that always places man-made laws above the laws of Allah (SWT). Through these form of ruling, America repeatedly passes legislation through her supporters in both the executive and the parliament to enact capitalist solutions that  only serve to safeguard her interests. This is the real root cause of the misery suffered by the Pakistani people.  It is only through the establishment of the Caliphate that sovereignty will return to Allah, and pro-American capitalist policies will be banished.


[1] This is based on costs to host Afghan refugees ($200b), external debt ($60b), corruption during Musharraf and Gilani’s tenure ($120b) and war on terror ($100b) costs minus the aid ($68b) received from America.

Abid Mustafa is a political commentator who specialises in Muslim affairs and global issues




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