Isabel Guerrero: Good morning everybody. We have a pretty full house. Thank you very much for coming in spite of a pretty dreary day. I hope we’re all going to lift our spirits with the panel today. I would like to especially welcome our distinguished panellists: Hafeez Shaikh, Ambassador Sherry Rehman, Robin Raphel, Nancy Birsdall, Mohsin Khan and Anatol Lieven. To those of you who know Pakistan – many of you know Pakistan very well – this is a very powerful panel. So I hope that this is going to be a very interesting conversation. We’re being taped and live so there’s many other people connecting today to our conversation.
What we’re trying to do today is shift a little bit our sights about Pakistan. All that we hear in the news is very negative; the journalists just go for the violence, for all the negative stories and there’s very little about the huge potential that Pakistan has. So this is the spirit in which we have done the panel today. We have done several other initiatives and, in that spirit, before we start our conversation, I would like to share with you the video of ‘Pakistan of My Dreams’ which is a five-minute clip – it’s very short – about the art competition organized by the World Bank Office in Pakistan. More than five hundred school children from around the country participated and we will start with that and then go to the panel. I will ask the panellists – unfortunately they will have to look behind for the clip because we didn’t, we couldn’t get it...
Video ‘Pakistan of My Dreams’
Isabel Guerrero: So we’ll start with the panellists. We will ask a question and then each one will have around five minutes, and the first question I will start with Minister Hafeez Shaikh is, ‘What inspires you about Pakistan?’
Dr Abdul Hafeez Shaikh: Bismillah-e-Rehman-i-Rahim. Let me start by thanking you, Isabel, and the World Bank for organizing this event. My friend Mohsin Khan is here. He is clearly a better economist than I am. He got to a very high place in the Bretton Woods institution while I quit and worked for a salary maybe one-twentieth of what he did. And he wants to speak on the economic good news, and he just informed me. So that means whatever I had prepared is now redundant.
Pakistan was an idea in the mind of a poet in 1930 in Allahabad. By 1940 people gathered in Lahore and thought they will create a country. By 1947 that country was improbably born. So from day one Pakistanis know that they face overwhelming odds, that tenacity, single-mindedness, and a willingness to sacrifice can make their dreams come true. The man who led that was Muhammed Ali Jinnah and he inspires me: his integrity, his incorruptibility, his dedication, his idealism and his love for the rule of law. He is a source of guidance for all those who wish to be in public service and who wish to work in situations where the odds are stacked against you.
Many people over the course of Pakistani history inspire me. And we have produced people who have been world beaters, who have done and excelled in areas nobody thought they could. The science of Dr Salam, our Nobel Prize physicist, inspires me. The poetry of Faiz inspires me. The painting of Sadequain inspires me. The judge who said ‘No’ to the general inspires me. The human rights activism of Asma Jehangir inspires me. The selfless dedication of Abdul Sattar Edhi inspires me. Above all the seductive attachment of the people of Pakistan to the rule of law inspires me. And they come out on the streets, they pay a price and they ensure that the Constitution, created in a magical moment when everyone in the country came together in ’73, is restored. The leadership, the Parliament that restored the Constitution, inspires me. The constant questioning and scrutiny of our free media of our work inspires me.
The love of Pakistanis for their homeland inspires me, no matter where they are, from Houston to New York, or Washington, or from Toronto to Oslo, or Birmingham, to Barcelona, Abu Dhabi, to Riyadh – their heart beats as one, and they constantly probe, they have an unquenchable curiosity, and they wish to contribute. They always ask us, ‘What are you doing? Why are you failing?’ And above all, ‘What can we do for our country?’ – that inspires me.
What also inspires me is the heroism of ordinary people: the truck drivers, the nurses, the vaccinators, the school teachers, people who know what heroism means, which is to do the best you can, to not be overwhelmed by the odds, and to know that you, yourself, can make a difference. The problems of Pakistan inspire me, and those who are trying to do something about solving these problems inspire me.
I’ll share with you some episodes as a public service person that inspire me. When the great earthquake took place in Pakistan the city of Balakot was threatened; there was not a single roof there, and when I went there, there was a school that was completely shattered. The entire sixth grade had been wiped out. The lone survivor was brought to meet me. I hugged her and I knew that she had lost all her friends, and the only thing she asked me was, ‘When can we have our school back?’ And so this grace in the midst of adversity of Pakistan inspired me. That girl from Balakot always inspires me.
Later, this past 6th September, which is our national Defence Day, we had an event. There was a Baloch from our town, Marri town, who had travelled all the way to come to Islamabad. His son was the brightest kid in town, nobody from that town ever got to the military. He was bright, he had the best grades, his people had aspirations for him. He went and joined the military academy, he was commissioned. He went back to his home and there was a big party for him. Everybody from the region came. A few weeks later he was called and in the battle against militancy he had to pay a price. He fought bravely, he had too many people to deal with. In the end he fulfilled his oath to his country. The older father had come to collect his star and he said, ‘I wish I had more sons.’ His spine was erect although I could see there was a sadness in his eyes, and this grace in the midst of adversity of Pakistanis inspires me.
I once travelled in a helicopter from the airport of Sukkur to the High School in Shikarpur, which was a fifteen minute drive, or a flight. The sun was out and as I was flying I could see down below colour, shades of colour, sparks of colour of all sorts: blue and green and orange and purple, yellow, and I thought they were flowers. Then it occurred to me they were the women of Pakistan, they were there in the blazing open sun, their backs were bent and they were working, and it occurred to me that many of them would walk miles to bring water and that that same water would probably give them diseases that would kill them. It occurred to me that many of them would be the target of abuse, some would get sold into marriages not of their choice. It occurred to me that some of them may even get killed in the name of ancient custom. Those women inspire me because they were there, exposed but strong, working, working, working, and trying to do their best for their families and their country. So that ride, the helicopter ride from Sukkur to Shikarpur – it’s an image burnt in my mind, and when I get tired and appear to be overwhelmed by the odds, that image comes to my mind and it inspires me.
And of course the breathtaking beauty of Pakistan inspires me: the mountains and the emerald lakes, and the jacaranda trees, and the smile of our children, the young for whom the generation of ours has to do the best we can so that they can live in a Pakistan which Jinnah and the founding fathers dreamt of. And we have to think of their generation’s future, and that inspires me. Thank you.
Isabel Guerrero: That was really beautiful and inspiring. Let’s go now to Nancy. What inspires you about Pakistan?
Nancy Birdsall: Well thank you very much Isabel, and thank you to all of you. I do feel a bit like the, perhaps, naive interloper here amongst experts who know Pakistan so much better. But I wrote down a few things that inspire me, not quite as inspiring as Minister Shaikh’s wonderful presentation. Well, the first thing is I’m a policy wonk in a way, and I’m very concerned with education and I find it absolutely exciting, despite some of the problems associated with this fact, that so many children in Karachi – one factoid is that up to 40 percent of children in Karachi – are attending private schools now. Why is that inspiring? It’s inspiring to me because who are – who is running those schools? Who are the teachers in those schools? For the most part they are women who were lucky enough ten, twenty and thirty years ago to benefit from secondary education. And they are now taking that kind of leadership focus, entrepreneurs, and as people committed to improving the lives of children in their community. So that’s one thing.
The second thing is in Pakistan there is a culture of philanthropy which is unlike anything that I ever encountered in Latin America, for example - Isabel knows Latin America very well - unlike anything in Europe. It is a culture of philanthropy that is very similar in many ways to the culture in the United States, which people often say is unique to the United States. But there it is in Pakistan: you have hundreds and hundreds of middle class, upper middle class people who are putting their own resources and their own energy and time into finding ways at the grassroots level to provide services, to work together for the collective good in their communities.
Minister Shaikh referred to the seductive attachment of the people to democracy. That also is really inspiring, despite so many ups and downs in Pakistan, and so many difficulties, particularly on the economic front that.... Even the lawyers’ movement some years ago which, in some ways, I think there’s a concern now that the lawyers have gone too far. But the fact is that there’s that sense of checks and balances and attachment to the rule of law that again is similar to what happens, to what used to happen, to a large extent in the US.
And two other things quickly: one is the very beautiful and very smart women at the top in Pakistan. We got the sense in looking at the pictures that the children did, that there’s really been a change in Pakistan in the last, I don’t know, decade or more. More and more Pakistanis, both men and women, recognize how important it is from the bottom up, that girls have equal opportunities. And I think that’s happening all over the world. It’s wonderful to see in Pakistan, but there’s a sense in which – what inspires me – is those women at the top. I mean, beginning with Benazir Bhutto, if there had been more done along the lines that Benazir Bhutto called for in terms of education and finding ways to make the lives of the poor better off, starting a long time ago, we would have an even better Pakistan today. But we have Ambassador Rehman, we have the Foreign Minister now. It’s really fun as a woman to go to Pakistan and have the chance to interact with people like that.
And finally I wanted to refer to what I would call the culture of moderation in Pakistan. You know, again, as a citizen of the US you, if you think about it, the US, it’s a very secular culture. But there is still a rootedness in the Judeo-Christian heritage. I think it’s very interesting in Pakistan for Americans to see it’s not a secular culture; of course, its deeply rooted in Islam, but it is a moderate sort of Islam and, here in the US, it worries me to see the loss of moderation in some parts of our population and in some parts of our religious and faith-based communities. In Pakistan there is that culture of moderation, more like Indonesia than the oil economies, for example, than some of the oil economies. It does continue to inspire, more so as, from outside, we see the risks there as well as here, to that way of life and that way of thinking. Thank you.
Isabel Guerrero: Thank you Nancy. Mohsin.
Mohsin Khan: Thank you Isabel. Mr Shaikh has put me into a very narrow economist’s box. I think that the Minister and Nancy have said many of the things that, as a Pakistani, I feel are very inspirational about Pakistan. But, just on, there are things in the economy also that are inspirational or at least one can say some bright spots among, amidst all the doom and gloom about the economic situation in Pakistan. And there is undoubtedly – you know the numbers are there – you have growth rates hovering, averaging around 3 percent and inflation in double digits, I wish it was the other way around, but so be it. Fiscal deficits are high end but I tell you one thing; there are three things that I want to highlight in terms of bright spots.
First of all the good news – and the Minister will be happy to hear this – the good news is that the Government has a strong economic team that has diagnosed the problems and identified the right solutions to a large extent. You see you have a lot of visitors casually who go to Pakistan and are ready to proffer their advice. I keep telling them, the people who do go, that ‘Look, they know this. They know these are the problems and they know the answers. The fact is that life is what it is and in a democracy, and there are many things that the economic team would like to do, that I would like them to do, but we live in a democratic world where the political factors play a very important role in whether you can or cannot do. Now the thing is that, you know, for the short run, Pakistan’s foreign friends and partners can, of course, help them through the short-term crises. They can provide the financial resources to prevent, say, a balance of payments or a currency crisis. But, you know, you can’t import political will, and I think that is something that is unfortunate. But my main point is that the team is there, the economic team is there, and it’s a very good team.
Let me talk about two other things. I mean, the thing that one should keep in mind is the incredible resiliency of the economy. I mean, you go to Pakistan and you keep thinking that this is a complete disaster, as you come out of the airport, that is a country that is, you know, a failed state as many put it. It is a hard country, Anatol, definitely, but there are, the resiliency of the economy is pretty amazing. I’ll give you a couple of things that are surprising: the rise of the middle class; the informal economy, which we never quite estimate, is booming in Pakistan. The rise of the middle class has now – even the ADB is estimating that there are something like 70 million, out of a population of 175 million or so, that are part of the middle class. Which is really an amazing number if you think about it, because this is a poor country and middle-classism is rising. Total consumer spending running about US$ 75 billion, 40 percent of GDP - consumer spending.
And you look at other examples. I mean, those of you who’ve been to Pakistan, look at other examples: I’ll give you some. This is, on the one hand, a good thing; on the other hand, probably not: look at the number of motor cycles in the streets in Pakistan, a menace as far as traffic is concerned, but one and a half million motor cycles are registered every year in the last three years; half a million cars are registered every year. To give you an example of half a million cars, for example, in Washington you drive around and you see people driving a Toyota Camry and that’s a nice car, but it is an average car. It’s, you know, basically you can buy a Toyota Camry for US$ 35,000 in the United States. In Pakistan a Toyota Camry costs US$ 100,000. You see so many US$ 100,000 cars driving around, it’s really impressive that, there’s inequality undoubtedly, but I’m saying it’s coupled with an increase in the middle class.
Now why is that? Well there you can see rapid urbanization that has taken place. Younger population, 100 million people of the population less than thirty years old. Global connectivity, I mean internet access, kids are really internet savvy in that country, they’re using technology. Cable TV, of course, the Minister mentioned the media and, absolutely true. But I’ll tell you what, one of the other things, the growth of the rural economy. I mean you are actually finding that the rural economy is doing pretty well in Pakistan. So when manufacturing is operating at 50 percent capacity because of energy shortages, the rural economy is still doing well.
One of the reasons the rural economy is doing well is the second really bright spot that I would point out: remittances from Pakistanis abroad. Whatever, I mean, remittances in Pakistan have, have sort of been growing at a phenomenal rate. This year the estimate is that they will top US$ 12 billion. Remember, exports in Pakistan are only US$ 25 billion, so relative to exports this is about 50 percent is coming in, in the form of remittances. If you add other private transfers, which we economists do, into this thing, that’s another US$ 4 billion. So you’re having US$ 16 billion coming into the economy on a regular basis from Pakistanis abroad. That is very impressive to me. And in fact, you would think that in a country that is supposedly going down the drain from an economic standpoint, that Pakistanis abroad would be more reluctant to pump money into the economy, and yet, they’re doing so. And they’re doing so for various reasons. I mean, we have many reasons why, why remittances would be so high.
You know there are an increased number of migrants, people going abroad. But the skill level of migrants is changing, there are more skilled migrants going abroad now. And that’s in one sense a loss to Pakistan, but they are returning money back to the country. It’s geopolitical factors that people point out: people would rather keep their money, after 9/11, people would rather keep their money in Pakistan rather than abroad. Relative rates of return are very important. I mean, you can basically see, if, as long as you can predict roughly that currency will remain stable, interest rates in Pakistan are phenomenal in terms of savings, and so people are returning; and rates of return in the economy are pretty high. And, of course, the thing that impresses me most and, this is something that comes out in all, interestingly enough, in all the econometric studies I’ve seen of remittances is altruism. People are sending money: if things are going bad in your home country, people from abroad, people who are nationals who live abroad, will send more money to the country. And they are doing so.
So right now I think those are the sort of areas, the bright spots in the economy that, I think, keep the economy resilient, keep the economy booming. The informal economy is growing. There are many in the country who argue that somehow – or not just in the country, but from outside the country as well – that somehow we should bring the informal economy, we should formalize the economy. My view is that, be careful about that because, you know, it might be better to move some parts of the official economy into the informal economy and get it more deregulated and more market-oriented. Thank you.
Isabel Guerrero: Thank you. Robin.
Ambassador Robin Raphel: Thank you very much Isabel. So I’m following the eloquent patriot, and Minister of course, the very experienced policy wonk, and the very experienced economist. So I will speak mostly for myself but also as a diplomat who’s been involved with Pakistan over the last three decades or so. And, in a word, what inspires me about Pakistan is that Pakistan is defying the sceptics. Let me give three quick examples in that regard.
First of all, Pakistan’s democracy is working; it’s maturing, it’s evolving, you look at it now you see the various institutions beginning to – continuing, I won’t say beginning – seriously grappling with their roles and responsibilities. You’re going to have an election. It will occur after the government has finished its term. It will be widely observed, so I’m assuming it will be mostly free and fair. There’s no drama about coups or any such thing. In short, you’re looking at a constitutional transition after a civilian government completes its term. You have a parliament that’s now grappling with many serious issues: the devolution in the 18th Amendment, legislation on women’s rights, and of course the most recent, rather long debate, consideration of Pakistan-US relations. These are serious matters and the parliament has dealt with these in a serious way. You have a Supreme Court that’s very active – some will say it’s too active and some will say it’s not active enough – but again, it’s dealing with all kinds of issues. Not just the cases against the previous government, but all sorts of issues. And it has dealt with sensitive issues, such as the disappearance of people in Balochistan, and called the military to account in that regard.
You have the provincial governments now adjusting to the new authority and funding that they have and taking on their new responsibilities – much more so than they were just after the legislation was passed. So this is really working. The independent media is really holding all of these institutions to account on a regular basis. So you see all of these parts of democratic society, these institutions trying to find their place. And I should also mention that the civil servants – I’m reminded of this by the words of the Minister here – are also grappling, again, defying the odds, defying the sceptics, in trying to piece together serious policies for this democratic government and I must say, I respect them hugely and I see many of them in this room that I have worked with. We Americans get frustrated with our bureaucracy or our constraints. But I must say, we don’t face anything compared to what our Pakistani colleagues have faced; I appreciate that.
Second example, and I won’t go on about this, is the resilience. We’ve heard other panellists speak about that. But it really is inspiring to Americans when you see how many challenges Pakistan has faced: the Afghanistan war, really three decades of war in Afghanistan next door, the 2005 earthquake, the insurgency which has resulted in many many displaced people, and then you have floods in 2010 in Sindh and then 2011, and then the overall global economic recession. Pakistan has coped with all of these things. It’s probably most poignant and inspiring when you look at things like the earthquake which the Minister spoke of, or the floods where vast numbers of people were displaced – many of them were taken in by neighbours and friends in nearby communities. People looked after one another, philanthropy kicked in, and now of course there’s a bumper crop and people are recovering, building their homes and so on. So I think that is very very striking to anyone who’s been involved with Pakistan.
Finally, I would join Nancy in saying that it’s very inspiring to look at the achievements of Pakistani women. But it’s not just the women at the top, and that is what is the most inspiring to me. We do all know Benazir Bhutto and the very talented women who are now in positions of great responsibility, including Ambassador Rehman and the Foreign Minister. But there are many many others. In fact, I’m sure most of you have seen this ‘Hundred Women’ article in Newsweek magazine which refers to women across the sectors. But, as I say, not just the elites; you have the village women speaking out against crimes like rape and acid throwing and that sort of thing. I recently met a very very impressive woman Shaad Begum who was given the Woman of Courage Award; feisty, smart, very very self-made, and she now sits at tables quite comfortably engaging with all kinds of people. And so that, I think, is very inspiring to see, that the Pakistani ability to let women rise, not only from the upper classes, but from all of the others. So that I think is, all of these things are a very good measure of Pakistan’s future, which I think is very very positive. Thank you.
Isabel Guerrero: Thank you. Anatol, what inspires you?
Anatol Lieven: Well, thank you very much for inviting me. I’m delighted to be here and honoured to be in such company. It really only remains for me to echo some of what’s been said before, because I was going to talk about resilience, which has already been mentioned: the toughness and resilience of ordinary Pakistanis, and of Pakistani society in the face of hardship, crisis, floods, ecological disasters, terrorism, and that is reflected in, yes, in two things. One is the fact that, while obviously the Pakistani economy is not doing nearly as well as we would hope, it’s also doing not doing nearly as badly as some of the Western, and I have to say, Pakistani reporting as well, would suggest. It does have a remarkable capacity to come through crises and remain afloat. And that is also in part due to the fact that there is some informal economy, largely unregistered and unrecorded, but of critical importance in maintaining the living standards of many ordinary people.
When it comes to – and this reflects in turn, religious culture in part, this resilience in the face of adversity. It also reflects the strength of Pakistani social structures and especially the family in Pakistan - of critical importance. And I think both of these things are well worth remembering because, of course, in the West so much of the reporting of religious culture in Pakistan has focused on extremism and negative factors. It’s very important to remember also the tremendously positive role of religion in Pakistan. And similarly, you know, many hard things have been said about the effect of kinship loyalty in Pakistan – I’ve said many of them myself. But one must also recognise the tremendous – but both of the deep moral value of this in itself, but also the stability and resilience it gives to Pakistani society.
And in the face of terrorism, I have to say, I mean, I’ve heard, as we all have no doubt in private, about all the terrible things that the United States might do - including do to Pakistan - if there were a terrorist attack within the United States in some way, you know, linked to groups in Pakistan, which produced some dozens of deaths. Not anything like on the scale of 9/11 but something, say, on the scale of the London bombings. Of course, one must remember that Pakistan absorbs such attacks on a weekly basis, sometimes even on a daily basis, without this leading to national hysteria, a complete collapse of confidence, and so forth and so on. So, admirable in many ways, and certainly very important.
Secondly, hospitality and generosity; the hospitality which we have all benefitted from in Pakistan, for which I am deeply grateful. And the generosity that’s been mentioned already; the very very high levels of philanthropy, giving in Pakistan. Admittedly that does reflect in part, of course, a lack of confidence in the state and its ability to provide certain things. But generosity on the part of ordinary people in giving is very important; reflects once again, in part, religious culture and influences in Pakistan and plays a tremendous part in softening some of the harder edges of life in Pakistan and diminishing the inequalities of Pakistani society. And I would point to the existence in Pakistan of some very successful and very efficient non-governmental institutions. Since education has been – education in general and girls’ education has been a major theme this morning – I would point for example to The Citizens Foundation, which has done a magnificent job in spreading education in many parts of Pakistan. So that’s the second thing.
And yes, the growing maturity of Pakistani democracy and the capacity – the increasing capacity – for compromise that this produces, I think. Something which was certainly by no means always evident in Pakistan in the past, but is I think, very important today, was reflected in a couple of successes in particular which would have been very very difficult, it must be emphasised, for many democracies that are viewed as much more successful and stable. I’m thinking about the Finance Commission Award and, of course, the 18th Amendment. This kind of rebalancing of revenue and power between the centre and provinces, between the provinces themselves, that would be very difficult for many Western countries. This is sensitive stuff in political terms. And those, I think, were very major achievements, even if the implementation of them will continue to be a challenge.
And this is something, I think, which makes Pakistan very different indeed from the Arab autocracies, which were partly overthrown in the ‘Arab spring’ and in some cases, are still under attack. Pakistan is not like that. Pakistani democracy is flawed but it does build in this capacity for compromise, and for a certain reflection of the public will when it comes to discontent with government. So all of those are, I think, very positive things, things that inspire me about Pakistan. Many of them, unfortunately, also have negative sides, but this morning we have to be optimistic. Thank you.
Isabel Guerrero: Thank you. Ambassador Sherry Rehman, what inspires you about Pakistan?
Ambassador Sherry Rehman: Thank you very much Ms Guerrero, and thank you to the World Bank for giving us this important opportunity to tell many of the untold stories, I think, that need to be told and... I think I’ve struck a deal with you on this table without quite saying so, that since I’m the lowest riparian on the speakers’ table, that everybody’s pretty much said what they needed to I get to speak just a little longer? – There we go.
Very quickly, I just want to say that, while echoing what the distinguished panel has said and, you know, the Minister waxed eloquent about Jinnah, which is still one of the most unifying symbols of Pakistan. It is often said, and I encounter this internationally, even in my other life before this when I was running Jinnah Institute, which I had set up principally to empower the spaces and voices that embody moderation and tolerance, and the values that Jinnah stood for. But I find that whenever I’m at an international forum, as Mr Lieven quite rightly points out, I’m asked questions about the contest between Zia’s Pakistan and Jinnah’s Pakistan, and I want to say very equivocally that there is none. There may be a serious struggle going on in Pakistan right now, but I think that that struggle is not over the spirit of Jinnah or the spirit of General Zia. And General Zia embodies all the dark side of what we consider wrong with Pakistan in an existential sense, in a sense that he used religion to legitimize a dictatorship - two things that have gone very often wrong in Pakistan. And it’s important to state, and I welcome this opportunity to say that, while the remnants of what Zia left behind, that legacy has filtered into so many parts of Pakistan, it was a top-down revolution that he sought to bring.
But the spirit of what Jinnah embodied in the first, most important speech he made – and he made many important speeches – and, like every other great leader, or a constitution or even a religious book, his words are used to often negate each other. I mean, you can extract what you want and interpret what you want and it is often said that, you know, Pakistan was an entirely confessional state made on the basis of religion, and how can it go wrong, go right? – its identity is contested. Its identity is not contested, ladies and gentlemen, simply because there is great clarity amongst – I hate to use the word – but silent, but not so silent majority now in Pakistan. They are not the exceptions, they are the rule. This rule is what has struggled for democracy over the last sixty years as the default template for Pakistan.
Very often people would come, you know, election observers, etc, and I am a proud member of the Pakistan People’s Party and a protégé of Mohtarma Benazir Bhutto who really embodied that struggle. And thank you, Ms Birdsall for mentioning her, because she was and is a true inspiration in today’s modern Pakistan in how to deal with many contests and challenges that confront us in daily life, and not just those that are privileged to rise to the top and important places. But her life has embodied that struggle very explicitly in the sense that whatever odds that an ordinary, or a Pakistani in a leadership position faced, the expectation always was that great South Asian impulse to democracy, how can we go back? This is what we were promised, this is our constitutional template and this is where we need to go.
And recently, it may be arcane here mention the 1973 Constitution, but this is what with great enterprise, with great democratic enterprise this government has, and I have to also credit the entire parliament for this, by consensus, which is all political parties really, recrafted a new kind of identity, and also the architecture of accountability and democracy in Pakistan. There is – which again, Mr Lieven pointed to – a historic and strategic shift happening in Pakistan. A very clear choice has been made and what are those choices? Those choices are, and I’m not talking from my notes because I thought I’d speak about different things, but they have been covered: those choices are that we wish to live not just as a democratic country, but as responsible global citizens, which means that Pakistan is renegotiating its own social contract with its people. Very important, in terms of the culture and structures and architecture of accountability it’s building, which is the heart of a democratic culture, the accountability. And it’s from our civil society to our media to our courts to our parliament, that accountability is rigorously enforced, to the point that our democracy is called a fairly noisy cacophonous one. But so be it. Every fortieth person in the world is a Pakistani and they have learnt how to speak and seek what they need, including, I hope, our children who, as they are educated by initiatives that our civil society empowers them to, as well as our own government, that Pakistan is not just renegotiating its internal social contract, but it is giving to itself what it always understood to be, its right, which is a democratic accountable structure of government. And it’s very important how, you know, the public finances have been structured to reflect that. This is a very crucial and actually very difficult shift to make and it will pose challenges. And it takes us right into the next question.
But among the many untold stories is, now this may be boring, but in the last four and a half years, yes, this is the first government that will complete its constitutional term in a peaceful transfer of power. Zulfiqar Ali Bhutto Shaheed did that too, but it wasn’t, not entirely a peaceful transition. So this is a government that, with all the noise and song and dance of drama and sturm und drang of democracy will complete – it’s already on its way, it’s finished a Senate election. And we have just completed something, actually come out of a very difficult and challenging process of empowering parliament by consensus to even redefine our foreign policy. Because there was a gap between public consent and public policy in many, in many areas and that gap was reflected in an unhappy dissonance. For instance in our ties with the United States there was a different public expectation and a different public policy, and I think that by grounding public policy in public consent and its legitimacy, giving it that power of legitimacy, whatever decisions our government makes to rebuild ties with the United States, to re-engage and seek more transparency and predictability, it is being done with the power of consensus in parliament.
This is very hard to craft. I mean, as you see when budgets in the United States become contested, that sometimes government doesn’t know where to pay. Just imagine, Minister Shaikh, if you had that kind of budget to pass. But he will face an equal contest in May, June, when we pass our budget, but I’m sure that he will manage to get the votes done. By first of July he will be able to pay his salaries and so I think there are ups and downs in every democracy. We are doing – I hope you can, right? – he’s looking a little uneasy, so I’m just kind of, now, not going to look at him.
And so there’s a remarkable foundational shift taking place and institutions are being built. This is the second big thing happening in Pakistan. The untold story is, not so quietly, institutions being built and, you know, the process of democratic inclusion is being created. For instance, Gilgit-Baltistan becomes integrated into the entire mainstream and you have the difficult, the restive volatile areas of the FATA, the tribal areas, where FCR, you know, very ancient, difficult and I would say even, and I wouldn’t even call them colonial; their medieval laws of governance changing. They’re in transition. So Pakistan is not just an economy in transition; it’s a democracy and a public in transition. The only thing is that the public is in a big hurry because it’s always had these expectations of its government, whether it’s democratic or not.
So these important shifts taking place, and the strategic choice is reflected in the institutions being created which are, for instance, we have now an Election Commission which we have been, say, Benazir Bhutto has been fighting for all her life, the simple search for a level playing field. Now, this is something that has bedevilled Pakistan and contested, conflicted many elections – we hope this time it won’t, with the usual noise around, say the chads in Florida - but there will be noise, there is in every democracy, in every election. But there’s now an Election Commission where appointments are made by a bipartisan Commission, hearings are conducted, the opposition has an equal voice in this and so, whoever, and the Election Commissioner, as soon as he came in, threw out one of, I think, disempowered one of the ruling party contestants for a by-election for some volatility at a polling station. And so be it. These institutions are being funded, created by consensus.
Then we see a National Commission on the Status of Women. This has existed since Benazir Bhutto’s first government. But it is now autonomous of government; it is funded by government, but it is autonomous of government. And it has teeth, it has the powers of a local court, or more than a local court, to call into account, say, victims of domestic violence. There are even now Ombudsmen for women; this is one of the laws we’ve created. And landmark laws being created through parliament, enacted through parliament, for the empowerment of women, for the protection of women. And you’ve heard about, you know, anecdotes are very important, but I’m being the boring person who strings it altogether in a structure. And you know the anecdote that is important is Sharmeen Obaid-Chinoy winning that Oscar and saying that, I’m making this, I dedicate this to all those women of Pakistan who suffer the kind of acid attacks and other egregious violence that women face all over the world, particularly in South Asia. Per square mile and per capita, I don’t want to go into this, but I think there is less violence in Pakistan than anywhere else in South Asia for women.
But, you know, we are working towards a very clear change, and for instance the Sexual Harassment Law in the Workplace – very difficult to put through, but we drove it through. Again mostly by consensus - one or two religious parties decided to stay out of it. It is now being emulated everywhere, it is being implemented so fast. I mean, there will always be a pyramid that remains unaddressed. This is a great deal of public grievance going into one window and bottleneck. But the first, I sat on the board of one of the largest public universities in Pakistan which is the Quaid-e-Azam University. Just before I was leaving I had to step down from parliament and perfectly good jobs to do this one, which a friend of mine in another think tank, says is the toughest job in the world. And what did we do? We brought that Sexual Harassment Law into our board, because we had two complainants from, against the faculty. It took us two months; that faculty was removed and we realized, according to the new law brought in. After that the Higher Education Commission said, the representative at the board, said ‘I want to make sure this is implemented in all the public universities and educational institutions.’ Private bodies have been asked to enforce it along a code of ethics that civil society has been a stakeholder on.
So there’s great stakeholder input, there’s a great deal of, you know, still, still in Pakistan defying the conventional wisdom of doom and gloom. There’s a great deal of, more than resilience I would say, there’s a great deal of hope and interest and input. Participation was largely missing in democracy. The state was always seen as, was becoming increasingly remote from any kind of delivery at the doorstep. And this is going to be the next big challenge for, I would say, the next incoming government for Pakistan, which is how to work the capacity creation and deficits in the provinces, which, on public finances, you know, the reworking of devolution have done to Pakistan. It’s a very important shift, but it’s bringing governance closer to the doorstep, which I think the next phase would need probably, a local government template that is not as contested as the last one, to come in to complete, to square that circle.
But very quickly, I can see the Chair wanting me to wind up, very quickly I want to say the one, the third strategic shift that has really taking root, and I’m glad that’s been noticed here, is the choice Pakistan has made to become, to invest in trade and economic opportunity in the region. This is a very important choice and it’s not, it’s a proactive choice being made, being pursued every day as we speak. It’s not just with India, it’s with Afghanistan as well, with all the Central Asian states around us. Our, you know, the concentric circle of outreach that we are making, and then of course, it includes our entire relationship with all multilaterals and global citizenship. But with India the story is very inspiring. The check-post at Wagah itself, we’ll see instead of 100 trucks, or 120-150 trucks, 600 trucks passing through every day. India’s opening its doors to our firms, to FDI, and then we have granted MFN status – they are, we just finished a trade fair in India, that Pakistan sent, you know, our textile and fashion industry has really made a market over there, to the point that I was quite jealous of the High Commission there. You know, I said, when are we getting it over here? And I hope that that’s how we can broaden these concentric circles of convergence.
And really, I see this all as a fascinating period of Pakistan’s transition, it’s a great democratic opportunity and I think people are making themselves heard through the hundred channels that are – there are literally a hundred channels that are, I was Information Minister and I was, like, why are there a hundred channels? – but they are. They offer choices from entertainment to public discourse, to a daily lampoon of all political leadership, among many other things. And this is where more than a thousand flowers are blooming. So I’m going to, you know, take a break here because I see the Chair getting correctly restive, and let’s move to the next question. Thank you.
Isabel Guerrero: Sherry, that was really brilliant, grounding and inspiring at the same time. Thank you. So the next round of questions that Sherry already started to answer, this I’m going to give three minutes to each panel member. What is the one shift required in Pakistan – just one – one shift required to have a peaceful and prosperous Pakistan? Anatol, we’ll begin with you.
Anatol Lieven: Revenue – fundamental aspect of any state, fundamental aspect of state weakness since the beginning of time, ability or inability to raise revenue. Pakistan is very very bad at that – and very bad by South Asian standards; it has the lowest rates of revenue collection in South Asia. So much else comes from that: the inability of the state to build vital infrastructure, to provide vital services, to provide education, which in turn as we know, strengthens the role of, in some cases extremists, religion in education. So, yes, the ability of the state to tax. Now unfortunately as we know, not least from this town where we find ourselves, that is the most politically difficult thing to do. And, of course, the elites in Pakistan can be very severely blamed for their resistance to revenue collection. I would say, however, that they’re not the only ones in the world from that point of view. And there are different ways of resisting revenue collection. Nonetheless every government in Pakistan that wishes to develop the country must strengthen its own ability to do so, will have to address that. And I think the government is addressing that. Of course, the obstacles are very great.
If I might just – I was told to say one thing, but extend it slightly to a second. In the long run something that this revenue will need very much to concentrate on, in my view, is the water issue, which I regard as the greatest long-term threat to Pakistan. A long-term threat which, in fact, actually dwarfs terrorism and extremism, and is an existential threat. And if something is to be done about improving the water situation in Pakistan, strengthening the resilience of Pakistan in this regard, something that the World Bank, of course, has done highly important work on in the past. I would urge everyone to read the World Bank report of 2004 and the subsequent documents that have come out of that. It will be necessary to improve, tremendously improve, the efficiency of water use, above all, in Pakistani agriculture. Now, the best way to do that, by far, will be of course, to introduce water pricing and to use revenue as an incentive in that regard. But I wouldn’t underestimate for a single second, the tremendous difficulty in doing that. Nonetheless I do believe that serious action with regard to water in the long run is vital for Pakistan’s long-term survival.
Isabel Guerrero: Thank you. Nancy, what’s the one shift required to make the dreams of these kids come true?
Nancy Birdsall: Well, let me say that it’s hard not to agree completely with Anatol on taxes and pricing of water – and pricing of energy. But I think that all those things, all the difficulty in doing those things, is a function of a weak civilian government. And you have democratic deepening in Pakistan; if you look at the sort of indices that have been developed by World Bank and other economists and political scientists. Without any change at all in these indices on rule of law, government effectiveness, the ‘down and dirty’ part as opposed to the political gains that the Ambassador referred to. And I think that the thing to recognize is the outside world has no idea, no idea, the World Bank has no idea, how to accompany – let alone actively help – on strengthening the civilian government. So it’s a difficult answer to say that the thing that I would like to see most is a strengthening of these institutions that undergird the future of Pakistan, which would ensure that Pakistan can catch up on social indicators.
I’m wrapping in a few other wishes here, at least to Bangladesh, that Pakistan would move as quickly as possible on the trade issue and on the integration with India, because that would be the leading light in terms of overall improvement in relations, and thus, in the ability to spend more on strengthening the civilian government, more on girls education and reducing maternal mortality, than on the fight in Kashmir. So I think it’s, you know, maybe a message more to the outside world to recognize how difficult it is to put together that collective action around strengthening the civilian government. And to be ready to help in ways, and to fail on specific efforts, and then to readjust and come back and help again, rather than always jumping to the conclusion that you can’t be helpful because energy pricing isn’t getting fixed. You can’t be helpful because the elite in the agricultural sector is making it impossible to deal with pricing of water and of energy for irrigation that’s using water. So it’s something about what I’d wish maybe, in summary, is humility from outside. Learn from our own lessons, we can’t raise taxes here either. And try to be more of a partner and accompanying the struggle that Minister Shaikh and the Ambassador referred to. Thank you.
Isabel Guerrero: Thank you Nancy. Mohsin.
Mohsin Khan: What I would say is that.... abstract away from the fiscal and the energy issues. I think something the Ambassador also mentioned just now, to me one of the most important economic policy decisions that has been taken is the MFN granted to India to increase trade with India. When I was writing about this topic several years ago, in Pakistan it was always viewed as sort of a pipe dream, this is sort of semi-academic musings of an economist who lives abroad. Yet the most amazing thing has happened this year, well it started in last year, there have been sort of false starts in the past, in 2005 and earlier. But it really started in 2011 and basically entirely endogenously driven by the government. I mean there was no outside pressure coming, other than the extent that they pay any attention to me, people like me who were saying that this is a good idea. You have to recognize that your long-term development strategy depends on a closer economic relationship with India. I’m just specifically concerned here with India. I argued that India is the engine of growth in the region; you have to hitch your wagon to this locomotive - if you’re not going to hitch your wagon to this locomotive you’re going to get left behind on the station. It’s an argument that finally started to resonate.
I must also give a lot of credit to the Minister of Finance sitting here as well. There was a lot of opposition to this in Pakistan, and this is why people feared bringing this up. Where was this opposition coming from? Well it came from, well, the usual hardline nationalists, yes, there was a perceived opposition, well this is a perception, that the idea of increased trade with India was opposed by the military in Pakistan, which turned out not be true. No one had actually gone straight up and asked them what do you think, you know. They just perceived that they were opposed and therefore never asked. But I’ll tell you what, on the final decision taken this February, on the 29th, there was a cabinet meeting on which the issue of most favoured nation... by the way some of the opposition that came out in the press, etc at that time, earlier, and later last year, is the unfortunate Urdu translation of most favoured nation. I mean the translation is ‘pasandeeda mulk’ and the whole idea was, you know, it sort of goes back to, sort of, marriages, of multiple marriages in the sense of the most favoured wife. How did – and the question was – people would say is, and those of you who are Urdu-speaking: ‘Kal tau dushman thei, aaj pasandeeda kis thara bun gayie?’ ‘You were our enemy yesterday and today you are, now....’
Anyway, be that as it may, the fact of the matter is that in Cabinet, when the issue was came up, there was a view brought by three particular ministries opposed to this, including one senior minister opposed to this. And I think, to the credit of the Minister of Commerce and to the Minister of Finance, they pushed this thing through. By the end of this year, full MFN would be granted, the negative list is gone, there is no positive list under MFN. I think this is a major shift and I think this is going to be a tremendous boost to .... I mean, the Ambassador talked about 600 trucks going through Wagah, yeh, but the infrastructure doesn’t exist yet. My own estimates are that right now trade between India and Pakistan is US$ 2 billion a year; this could - in the next two three years – could be up to US$ 6 – 10 billion, and eventually could be up to US$ 20 billion which would be a phenomenal thing for Pakistan. For India, the benefit is going through Pakistan to Afghanistan and Central Asia; for Pakistan, it is India itself. Thank you.
Isabel Guerrero: Thanks. Robin.
Ambassador Robin Raphel: Thank you. I associate myself very strongly with all of what these other three panellists have said. I would add one more, and that is the need to reform the government education system. There’s been a lot of talk about the private education that has stepped into the breach, which is a very positive thing of course. But I think it’s really important that the government get to grips with basic education in Pakistan, not only for the development of the human capital and equality of opportunity and so on, but also to help mould the identity and cohesiveness of the Pakistani state. A lot of work has been done in this regard, particularly in Punjab, but much more needs to be done. We, of course, we Americans take this from our own example. I’ve told people as we’ve talked about what to do about education from the assistance side, that I look very strongly to my own experience and belief that the public school system really helps meld a community together, where all elements mix and get a common sense of state, civic responsibility and so on. And I think that’s very important for Pakistan. Thank you.
Isabel Guerrero: Thank you Robin. And now, Finance Minister, what’s the one shift that would make the difference?
Dr Abdul Hafeez Shaikh: Thank you. I’d just like to react a bit to the comment on the revenues for the benefit of the audience. A lot of bold decisions were taken in the last year, beginning of our fiscal year, to try and remedy the situation on tax revenue collection, which has been a historic failure of Pakistan. And I want to report that in the nine months between July and March, revenue collections have increased by 25 percent. This is historically unprecedented and, perhaps, if we can sustain it, will begin to transform the tax to GDP ratio in a fundamental way, and provide the kind of funds we need for our needs as well as bringing a degree of self-sufficiency and confidence.
You know economists are taught to say – sorry Mohsin, if I can act like an economist – that in order to develop you have to do many things right. And so it poses a problem when one is asked to say do one thing. That would be because no one thing works unless it’s accompanied by other things. You know that at the time colonialism ended in a big way, many of the countries after the war were roughly in a similar situation. Many countries were devastated; others were just beginning to emerge out of the shadow of colonialism. And yet after twenty, thirty, forty years we find that some have increased their per capita income by ten times more than others. And so the question really is – which is a favourite question of economists – is why is it that some countries move so much faster and others lag behind?
As a student of economics, I think three big factors explain that, and therein may lie the answer to the shift that we might want to incorporate. First is that countries that invested in their people went ahead and those that did not were left behind. In other words, you can’t have under-developed people while having developed countries. So this is the big lesson. Number two, countries that found a way to sell their products to others got ahead, and those that did not find a way to sell their products to others were left behind. So exports openness, generating the degree to compete in open markets. Third is countries that relied excessively upon governments, and in the last century we had seventy to eighty countries that tried to do that, they lost decades, while those that had the right mix between government role and private sector initiative got ahead. So I would like to say that investing in the people, human capital development, generating competitiveness and ability to sell your products, exports, and three, finding the appropriate mix between the role of the government to make policies and regulate, and assigning the role to the private sector for output production and management are the three lessons.
Underlying, this really is the question of the role of institutions and I think I’d like to end this phase of the discussion on a positive note from Pakistan. Because, as pointed out earlier, what’s the most remarkable feature of our transition is that institutions are functioning, they’re beginning to take hold and that is true of the parliament, the greatest institution of our country; of the courts, which are active; of the media, which has taken hold and is free; institutions like the State Bank of Pakistan, the Security Exchange Commission, the Competition Commission, they are free, and other regulatory authorities, they have autonomy, they have unchallenged status, and other institutions like the National Accountability Bureau; the fact that the Leader of the Opposition in the parliament is the head of the Public Accounts Committee, which is the chief accountability body, which is unique in parliamentary history; the fact that we have a Chief Election Commissioner which was just chosen in a particularly transparent way; the fact that our elections are to be conducted by interim caretaker governments chosen jointly in consultation by the Leader of the House, and the Leader of the Parliament and the Leader of the Opposition. I think these are very optimistic developments. What’s important is that these institutions are allowed to develop. And coalition politics has taught us the lesson that democracy requires patience; it requires a ability to check your tendencies for dictatorial dominance; it requires give and take; and, above all, it requires consensus building; and I think with the combination of time, institution-building and securing learning on the lessons of others, and combining them with the aspirations of our people, we can reach the destiny that our people seek. Thank you.
Isabel Guerrero: Great. We won’t have time for questions – we were supposed to end at 10.30. I just hope that everybody was as enriched as I feel I am, and with a much more complex and rich understanding of Pakistan, and both its challenges but a lot of the positive aspects of it as well. Thank you very much to all the panellists. Each and every one of you were terrific, thank you so much. And this will be available by webcast for anybody who was not able to attend. Thank you.