It's the Economy,Stupid

The economy needs attention,too.During Musharraf's eight-year tenure,first as General,then as President,foreign direct investment rose,the Karachi stock exchange outperformed regional neighbors and GDP grew on average 7% a year.The lifting of international economic sanctions,imposed in 1998 when Pakistan tested its first nuclear bomb,was partially responsible for the boost,but Musharraf also privatized key industries and opened up the banking sector.The rapid growth,however,exposed cracks in infrastructure that was failing to keep up.The economy has been good for big bussiness,good for the per capita averages and good for GDP,say Tasneem Noorani,who served as Secretary of the Interior under Musharraf.But it has not been good for the common man.We are all waiting for the trickle-down effect.




While Musharraf's government brought electricity to remote villages-a popular vote earner-it failed to increase energy production.Sure,we saw incredible growth over the past five years.says industrialist Mirza Ikhtiar Baig,but the pervious government failed to generate a single additional megawatt.If you have that kind of growth but do not generate the power to go with it then the system will collapse.Load-shedding- as much as 18 hours a day in some area-has brought production ines in key employment sectors such as textile-manufacturing to a standstill.Rising oil prices had been mitigated by government subsides during much of Musharraf's tenure.But such subsides can no longer be sustained.Thr cost of fuel-used for both transportation and energy production-jumped 17.7% in March.Echoed by 20.6% leap in food price inflation.The price of bread has nearly doubled.So has the cost of haircut and a shave on the streets of Karachi.What can we do?Says barber Shoaid Ahmed,a bachelor who eats all of his meals at a nearby hostel.If the hotel raises the cost of a roti(a small,flat,bread)there is no way then but to raise the haircut prices.




The new government point out that it is not responsible for the country's current difficuities.How many of Pakistan's problem have been created soley during the past 100 days(that the coalition government has been in power) and how much is the cumulative effect of constitutional deviations and patchwork policies over serveral years?says Farahnaz Ispahano,a ppp parlimentarian and spokesperson.Food-price inflation and high oil-prices are now a global phenomenon.Bring prices down may be beyond the capacity of any Pakistan government. But Gilani's adminstration cannot just wring its hands.It could start by encouraging foreign investment and privatization-moves that have been anathema to his socialist-leaning ppp.The pro-business Muslim League may prove useful.At this point in time,given the start of the economic crisis,it actually makes sense to have a coalition between there two parties,says Samina Ahmed,South Asia project director of the International Crisis Group.The workers have voice in government as much as the industrialists,treaders and the business community.If they can work together,she says,they may be able to form a compromise that pushes the economy forward.




Most urgently the government will have to address Pakistan's pressing energy needs.It has already installed barge-based power generators that run on diesel,but that is a temporary,and expensive,solution.The building of dams and coal-based generators is stymied by political disputes.The Indus River,a potential source of hydropower,run throgh two provinces whose govenments cannot agree on sharing-water rights.Development in Baluchistan,which has rich reserves of coal,has been held hostage to a local insurgency rooted in long-simmering resentment over what it considers to be the central government's exploitative approach to the province.Baluchistan is central to Pakistan's economy,says the Crisis Group's Ahmed.It is incredibly rich in not just the resources that are being exploited,but in the resources that are yet to be exploited.Bringing the alienated Baluch back into the fold by stopping military operations and by releasing political prisoners means that the riches of Baluchistan will work to benefit not just the federation but also the Baluch people.





Riots over power shortages,usually a stardard summer feature when demand is at its highest,are rocking Pakistan's major cities.In the industrial town of Multan,a recent protest over power outage saw 58 gravely injured and hundred of thousands of dollars in damage to government buildings,factories,utilities and vehicles.If the problem continue it could lead to political instability.The economy is more urgent than extremism,says an American diplomat in Islamabad.




A terrorist Sanctuary
The federally administered tribal areas,which include Mehsud's South Waziristan base but not Swat,have always been Pakistan's Wild West,a lawless frontier land notorious for smugglers,thieves,guns and drugs.The Fata,as the area is called.is a legacy of a 19th century agreement between the British rulers of undivided India and the Pashtun tribes inhabiting the mountainous fringes of the Empire.In exchange for autonomy and the freedom to run their affairs in accordance with their Islamic faith and customs,the tribal leader promised to guard the border with Afghanistan and keep peace in the region.At independence in 1947,Pakistan kept the agreement.The army stayed out.In place of government,Pakistan adopted a set of adminstrative and legal measures called the frontier crime regulations that forces the tribes to take collective responsibility for the actions of their members.Justice follows the tribal code and is meted out by clan elders who consult in public gatherings called jirags.It was an imperfect solution to a difficult problem.But when Al-Qaeda leaders fled at Afghanistan in the wake of the 2001 war on their Taliban hosts and took refuge in the tribal areas,it became downright dangerous.





In May CIA Director Michael Hayden called the FATA an al-Qaeda safe haven that presents a clear and present danger to Afghanistan,to Pakistan and to the West in generalmand to the United States in particular.Admiral Michael Mullen.Chairman of the U.S joint Chiefs of Staff,says,If I were going to pick the next attack to hit the United Stated,it would come out of Fata.Intelligence officals in the reigon,and abroad,say that al-Qaeda operatives,taking advertage of the limited reach of government,have been able to set up sophisticated communications systems,financial networks and training facilities.Al-qaeda has hunders of training camps scattered throughout the Fata,says a western offical in Pakistan with access to intelligence reports.Most are less than an acre in size,so they are difficult to detect.






To Khalid Aziz,a onetime political agent appointed by IsIamabad to administer to the tribal areas,the militancy is an obvious outcome of the antiquated agreement.Development that brought schools,jobs,roads,health care and electricity to the rest of Pakistan largely bypassed the tribal areas.Unployment among the population of 3.5 million hover around 70%.Two-thirds live below the porverty line.Only 6% of inhabitants can read.For women it's less than 1%.Given that kind of environment,it's not likely that you will see a Leonardo da Vinci come up,says Aziz,who now heads the regoional institute of policy research and Training in Peshawar.You'll get an Osama or one of his clones instead.Aziz welcomes the U.S. Administration's promise of $750 million to provide economic development in the area but says it is not enough.What we need are jobs.





Most fata people want development,but not at the expanse of their traditional way.Shari'a law is the foundation of their justice system and few will willingly give it up.Rather than a wholesale elimination of the FCR,there should be a gradual transition,says Haider Mullick,a former Brooking analyst.It's not rocket science.It's sitting down and saying,Ok.Here are 100 things that are different from how we operate in Islambad.We will conced on some of there issues.But there are going to be some no-nos on our side,and some on yours.For example,no public stoning of women-that's out of question.In turn we will ensure that no solider can walk in and search your house and strip you naked and beat you up.There needs to be a give and take on each side.




Democrats in the U.S. senate have proposed a $7 billion aid package to Pakistan,including a democracy dividend of $1 billion,over the next four years to help the civilian government with education reform,health care and infrastructre.It's a welcome move,but opening up the U.S. market to Pakistani products such as textiles would provide a longer-term-and taint-free-solution.The chorus among businessmen and analyst across the country is trade,not aid.