By Mohamed H. Zakaria, published on 28 December 2005
Perhaps because he decided that Pakistan’s fiscal policies needed a new culture, President Musharraf imported a veteran banker supposedly of international repute and expertise and imposed him on the nation to bring the culture of Citibank into the nation. He probably didn’t know that Citibank represents American interests around the globe, in the same way Barclays served the British Empire. The close relationship that Citibank executives cultivate with the heads of Third World governments as a basic policy of the bank puts them in a position of great political power and influence, which also earns them personal benefits.
Soon after taking power, Musharraf made it clear that Shaukat Aziz was his most trusted lieutenant and appointed him finance minister. Obviously his first priority was to lift the economy out of bankruptcy. During Aziz’s tenure as finance minister, the country’s forex reserve rose to $13 billion from $500 million. However, that was in no way exceptional. Most other Third World countries enjoyed a massive inflow of capital from the West, especially from America, after 9/11. Jordan, a very small country compared to Pakistan, has built up forex reserves of $46 billion, not to speak of the massive rise of Indian reserves to $145 billion — from a mere $1.5 billion in 1990 and $32 billion in 1999. Overall, Pakistan received more than $40 billion in FDIs, overseas Pakistanis remittances, grants, aids and debt write-off etc. after Sept. 11, 2001. Most of this money found its way into the stock market and property market and some paid for lavish imports and trade deficits. All these investments are nonproductive. They are not in sectors that will increase factory output or farm produce. It is very unfortunate that Pakistan lost a golden opportunity to utilize the massive inflow of foreign exchange by channeling the funds into industry and agriculture, the two priority areas essential to any national economy. They constitute 95 percent of the manpower and productivity of the country and are the backbone of any nation.
Pakistan in its present situation stands at high risk. While the worsening Baloch situation promises troubles within, the US threat to Iran is a clear sign of more troubles without. It is high time that Musharraf sought help from senior political leaders of the country and convinced them to join his coalition if he intends to stay in power and steer the nation into safety and stability.