ISLAMABAD – Pakistan’s beleaguered leaders are hoping for up to US$6 billion in international support as they attempt to steer the Islamic world’s only nuclear-armed country through a rising storm of extremist violence and economic woes.
But there are doubts the expected pledges at a donor conference in Japan on Friday will do more than keep the country afloat for the next few years, or make its huge but ineffective army more inclined to crack down harder on the Taliban and al-Qaida.
“If money is given, it must be given for very specific projects that actually create economic assets for the country and create a flow of income,” said Kaiser Bengali, a prominent Pakistani economist and adviser to the government. “Funding for budget support is putting money down the drain.”
The donor conference will be the first of its kind for Pakistan, reflecting the depth of concern about the country’s ability to weather problems fuelled by the global economic slowdown as well as the faltering U.S. war effort in Afghanistan.
Foreign Ministry spokesman Abdul Basit said Wednesday the country expects some 25 foreign backers, including the United States, China and Saudi Arabia, to pledge between $4 billion and $6 billion in emergency economic aid.
President Asif Ali Zardari will chair a separate ministerial-level session of the same countries, dubbed the “Friends of Democratic Pakistan,” which has promised to provide longer-term development and security assistance including help to build dams, power stations, schools and clinics.
Both tracks are separate from Washington’s plans to afford Pakistan $1.5 billion in aid for the next five years, and a $7.6 billion bailout granted by the International Monetary Fund in November to avert the country’s most recent balance-of-payments crisis.
But critics also say the government knows only too well that the international community is terrified of the prospect of a breakdown of the Pakistani state, and hence lacks real leverage over its course.
Foreign Minister Shah Mehmood Qureshi said the message of political support from the “Friends” of Pakistan was even more important than the sums they pledge.
“Without Pakistan, there is no hope,” of defeating extremism in the region, he said Wednesday in a TV interview. “Pakistan is a key player. Pakistan is the country that will make the difference.”
Pakistan’s one year-old pro-western government has emphasized the need for development to bring hope and jobs, especially to impoverished regions along the Afghan border where al-Qaida and its allies appear to be tightening their grip.
But it faces major economic problems, exacerbated by the global economic slowdown but rooted in structural problems that successive governments – which were also often bailed out by foreign sponsors – have failed to address.
The central bank forecast this month that economic growth for the year through June will slump to between 2.5 per cent and 3.5 per cent, far below the 5.5 per cent the government has projected – and too slow to create enough jobs for its fast-growing population of about 170 million people.
Efforts to boost the growth rate and ease the impact on Pakistan’s myriad poor are hamstrung by the need to fight double-digit inflation fed by unsustainable government borrowing.
The government has had to slash its own development budget because of a huge overspend and is resisting calls to tax the narrow landowning elite that dominates its politics.
Industry, including Pakistan key textiles sector, is also hampered by severe power shortages that are not expected to ease until next year at the earliest.
Basit said funds pledged Friday would be used to top up the government’s empty coffers and shore up the country’s foreign currency reserves in the short term.
Looking further ahead, Pakistani officials are preparing to pitch projects before the “Friends” group in five key areas: development, energy, institution-building, security, and trade and finance.
Zardari has announced that Pakistan is seeking help to set up specially trained and equipped police counterterrorism units across the country, but few other details have been made public.
Pakistan is concerned about U.S. President Barack Obama’s recent declaration that there will be “no blank cheque” from the United States – a reflection of doubts in Washington about Islamabad’s commitment to eliminating al-Qaida and battling the Taliban.
Officials here argue the world is morally obliged to bail it out because of the losses it is suffering as a front-line state against international terrorism.
“We want help,” Qureshi said. “What we do not want is intrusion or micromanagement.”
