Thirty pieces of silver

It’ll take a lot more than that to fix Pakistan’s economy

Sunil Jain

Hats off to General Pervez Musharraf, is a common enough statement nowadays. He always manages to convert a crisis into an opportunity. We saw it in Agra, and we saw it again when he got the United States to grant all manner of concessions for its support in hunting down Osama bin Laden. Economic sanctions were lifted, some debts were rescheduled, a payment moratorium of upto ten years granted, and President Bush is desperately wooing Congress to allow him to lift the coup-related sanctions that will pave the way for a big economic package for Pakistan.

All this, and any future assistance, will help Pakistan’s crisis-ridden economy a great deal. And, to be fair to Pakistan, a lot more should be forthcoming. After all, betraying someone you helped create can’t be easy on the conscience, and should get you more than just thirty pieces of silver.

That said, it will take more than just rescheduling of debt to fix Pakistan’s economy. Indeed, apart from its other problems (many of which, like the crippling bureaucracy, are similar to India’s), Pakistan has paid a very heavy price for its pro-Taliban stance over the years. Read Ahmed Rashid’s Taliban for more details.

Apart from generous doses of money and military equipment, Rashid tells us, the Pakistan government ordered Pakistan Telecommunications to set up a telephone network for the Taliban which was linked to the Pakistan grid. Kandahar could be dialled from anywhere in Pakistan as a local call using the prefix 081. Pakistani government department engineers carried out road repairs and provided electricity to Kandahar! Pakistani government technicians repaired Kandahar airport, fighter jets and helicopters of the Taliban.
And, during the last days of June 1998, soon after Pakistan tested its nuclear devices, a cash-strapped Pakistani finance ministry authorised the payment of $6 million in salaries for the Taliban regime. This had to be hidden in the budgets of other ministries, so that it could be kept from donors like the International Monetary Fund who wanted savage cuts in Pakistan’s budget.

By the way, it wasn’t just for anti-India terrorism that the Pakistani Inter-services Intelligence supported the Taliban. It was thought that a Taliban government in Kabul would recognise the Durand Line boundary between Afghanistan and Pakistan, and would also put a halt to the traditional Kabul-sponsored line of a greater Pashtunistan which would involve Pakistan’s Pashtun belt going autonomous.

Sadly, for Pakistan, Rashid tells us, the Taliban didn’t recognise the Durand Line, and nor did it help curb the Pashtunistan movement. The drug trafficking from Afghanistan has become so serious that a large number of Pakistanis are in the grip of the drug menace. Equally important is the fillip to smuggling the support for the Taliban gave, which sucked blood out of Pakistan government coffers. Thanks to rampant smuggling in what is called the Afghan Transit Trade, Pakistan could suffer as much as a 30 per cent revenue shortfall this year, says Rashid, as Pakistan’s own transport mafia has got linked with the Taliban. It was, in fact, the Quetta transport mafia that first began financing the Taliban to get rid of the problem of various Afghan tribal warlords demanding separate ‘taxes’ from convoys transporting goods across their territory.


Once this link got cemented, the mafia began taking advantage of agreements made during the 1950s to give land-locked Afghanistan permission to import goods duty-free through the Karachi port. What happens now is that trucks bearing, say, Japanese electronic gadgets cross to Afghanistan, sell some goods in Kabul, and then resell the rest in Pakistani markets. Smuggling of airconditioners rose so dramatically that the local Pakistani industry was crippled. Against legal imports of Rs three crore in 1994, illegal imports touched a whopping Rs 100 crore. Gradually, the smuggling net spread to Iran, Turkmenistan and other neighbours.

The Pakistan Central Board of Revenue estimated that Pakistan lost (Pakistani) Rs 350 crore in 1992-93 to the ATT, Rs 1,100 crore the next year, and a staggering Rs 3,000 crore by 1997-98, or 1.4 per cent of Pakistan’s GDP in that year. Crime jumped manifold in Pakistan once the mafia extended its Taliban links. 65,000 vehicles were stolen in Karachi alone between 1992 and 1998, and these were resold in Pakistan after having their number plates changed in Afghanistan.

A study by the Pakistan Institute of Development Studies indicated that the ATT fuelled the black economy in Pakistan, which snowballed from Rs 1,500 crore in 1973 to Rs 1,11,500 crore in 1996.
Its share in Pakistan’s GDP thus rose from 20 per cent to over 51 per cent. The smuggling trade that contributed Rs 10,000 crore to the underground economy in 1993 escalated to Rs 30,000 crore by 1998, equal to 30 per cent of Pakistan’s imports and revenue collection that year. There are other problems. Like the 80,000 militants trained by the Taliban, who are now ready to start an Islamic revolution in Pakistan. Thirty pieces of silver aren’t going to fix any of this.