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February 28, 2018

Paris and beyond


February 28, 2018

As it often happens in our country, the disturbing news from Paris about the plans to include Pakistan on the watch list on terror-financing set off a blame game that sought to apportion responsibility for this setback.

Not many seem to acknowledge that we have been on the list before when former US president Obama was in the White House and all hell had broke loose in Pak-US ties for the better part of 2011. Come 2018 and we have found ourselves on the wrong side of US President Trump, who has been exerting pressure on Europe, Russia, China, Iran, North Korea and, of course, Pakistan, to make America great again.

What needs to be understood is that since the US had limited success with the other countries listed above, Pakistan has the misfortune of being targeted more ferociously. A propaganda war against Pakistan coupled with the decision to cut-off security assistance and the recent move to have Pakistan placed on the watch list of Financial Action Task Force (FATF) are part of America’s plan to look good in Afghanistan.

Some critics have rushed to assert that the decision in Paris was a result of Pakistan’s failure to take strong action in clamping down militant groups or their reborn versions. This is unfair. If we consider how the enemies have been funding anti-Pakistan terror networks, the Paris action seems completely one-sided. It is a coercive measure against Pakistan that fails to acknowledge how the country is a major victim of terrorism in the region.

The US has proved – if proof was even needed – that it is, under Trump’s worldview, determined to punish Pakistan. It no longer matters if Pakistan has steadily curbed militancy and reduced the ability of militant networks to raise funds and carry out activities under the garb of charitable organisations. This is not to say that Pakistan cannot do more. However, when someone like Trump wants our skin, the margin of debate is next to zero.

Adviser to the PM on Finance Miftah Ismail, who had led Pakistan’s team to the Paris moot, has been candid in admitting that: “if the Americans had been interested in working with us and improving our counter-terrorist financing, they would have taken the offer I was making them…but their idea was to embarrass Pakistan”. The story of how the US delegates employed arm-twisting tactics to win over votes against Pakistan is also known.

Michael Kugelman, a noted South Asia expert in Washington, has described the FATF motion to put Pakistan on the grey list as “good and bad”. While Kugelman considers Pakistan’s being on the grey list to be bad, he believes that it is not as bad as being on the black list. But being on the grey list carries risks as “key economic players – potential foreign investors [and] banks operating in Pakistan – may think twice about engaging with a nation [that is] deemed not to be doing enough to crack down on terrorist financing”.

Kugelman strikes an optimistic note by adding that if “Pakistan convinces the FATF that it [is] effectively addressing the task force’s concerns, it could conceivably come off the list in relatively short order”.

The gloom over the setback in Paris has eclipsed the good news on the economic front from Brussels about the EU’s decision to extend its GSP-Plus facility for Pakistan. This has brought some relief to the export sector – especially the textiles sector, which constitutes the bulk of our exports. In the absence of this zero-rated tariff, Pakistan cannot compete with countries that are benefiting from an uninterrupted GSP-Plus status. The EU’s decision can save hundreds of thousands in jobs if our authorities and the private sector join hands to improve the competitiveness of the relevant exporting units.

Unlike the holdup in Paris, the positive outcome in Brussels was the result of sustained efforts over the years in establishing Pakistan’s conformity with the EU’s standards. However, it is a constant struggle as the EU plans to monitor the observance of relevant human and labour rights by the country to justify its presence on the GSP-Plus list.

Amid these mixed developments, the CPEC framework continues to provide opportunities for considerable economic growth in the infrastructural and power sectors. But questions over the priorities in CPEC investments and its eventual impact on the country’s foreign debt are generating heated debates.

In a nutshell, the EU’s requirements to improve human rights so as to extend the GSP-Plus status beyond 2019; meeting FATF standards to avoid Pakistan’s inclusion in the terrorist-financing watch list; and the optimal utilisation of investments under CPEC are the key priority areas on the economic front.

These challenges partly explain why Pakistan remains a perennial underachiever in the economic progress. The sixth most populous nation in the world and the tenth military power, Pakistan is only the 40th largest economy in terms of GDP. Government spokesmen are of the view that with sustained growth, particularly the CPEC-generated economic boom, the country will become 25th largest economy in terms of GDP by 2025.

This calls for a good deal of humility rather than celebration. If the population crosses the 250 million-mark by 2025, the 25th largest economy will be in no better position than it is today to take care of basic needs like education and health.

This is a major flaw in the existing mode of statecraft that keeps Pakistan at the lower rung of social development as compared with the rest of the world. The state simply cannot abdicate its responsibility to provide free primary education for all children across the country.

As in the field of education, the state has largely left people at the mercy of private practitioners and hospitals. Improving social services is not as lucrative as building infrastructural facilities with a rapid stream of windfall gains and kickbacks. While modern infrastructural facilities reflects a step in the right direction, the provision of basic needs should not be left to profiteers.

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