Siz­ing up the gift horse

The Pak Banker - - 4EDITORIAL - Khur­ram Hu­sain

IS the in­vest­ment com­ing in un­der the China-Pak­istan Eco­nomic Cor­ri­dor re­ally a 'gift horse'? And are all those voic­ing ap­pre­hen­sions about the man­ner in which the projects are be­ing im­ple­mented nec­es­sar­ily just play­ing pol­i­tics with the coun­try's des­tiny?

There is a long his­tory in Pak­istan of view­ing as­sis­tance from abroad as some sort of gift that must not be ques­tioned, and the ben­e­fits and the shar­ing of which must not be ques­tioned. In the ear­li­est years of the coun­try's his­tory, we re­ceived a large pack­age of as­sis­tance from the World Bank in re­turn for agree­ing to re­lin­quish con­trol over the wa­ters of the three east­ern rivers of the In­dus river sys­tem to In­dia.

It was a heroic mo­ment, and I've al­ways be­lieved that the In­dus Wa­ters Treaty, which en­shrined that agree­ment, is com­pa­ra­ble to the Rad­cliffe Com­mis­sion in terms of its his­tor­i­cal im­por­tance. Of course, the haste in which the lat­ter com­pleted its task was not there in the IWT. The for­mer was com­pleted in a mat­ter of days, the lat­ter took a decade. The pack­age of sup­port that Pak­istan was promised in re­turn for its en­try into the treaty in­cluded three mega dams, a mas­sive tube well pro­gramme, in ad­di­tion to a power trans­mis­sion sys­tem and sup­port in draw­ing up the growth pro­grammes un­der the Five-Year Plans of those days.

The pack­age was un­doubt­edly huge and its suc­cess­ful im­ple­men­ta­tion made Pak­istan food self-suf­fi­cient by 1970 and also laid the foun­da­tions of our power trans­mis­sion and dis­tri­bu­tion sys­tem. Pak­istan did not have an in­te­grated grid in those days, and only a small spat­ter­ing of power plants, with one trans­mis­sion line run­ning from Warsak Dam in Pe­shawar to­wards Rawalpindi, was the sole trans­mis­sion link in the coun­try.

That was in­deed a large boost and its legacy has held the coun­try up ever since. We re­main food self-suf­fi­cient to this day, and our agri­cul­ture is the foun­tain­head of our much re­marked upon re­silience, even as our pop­u­la­tion has quadru­pled in the decades since that pro­ject be­gan to be im­ple­mented.

But there was an ugly un­der­belly to that heroic era. Large-scale dis­con­tent­ment had be­gun to grow within the coun­try that the fruit of the for­eigner's largesse were be­ing con­sumed in only one wing of the coun­try. Pol­i­tics be­gan to stir in East Pak­istan very early when the lan­guage is­sue came up, but the eco­nomic ques­tion ag­gra­vated things to un­sus­tain­able lev­els.

In ev­ery fo­rum, whether the NFC award or eval­u­at­ing the Five-Year Plans on their com­ple­tion, econ­o­mists from the east­ern wing kept point­ing out the in­equitable dis­tri­bu­tion inherent in the growth mod­els be­ing fol­lowed, as well as the larger shares of all ex­ter­nal re­sources be­ing spent in the western wing.

All of th­ese com­plaints were re­ceived with the same re­frain: this is just pol­i­tics. In fact, re­fer­ring to th­ese griev­ances as 'just pol­i­tics' was a key rhetor­i­cal tool through which they were dis­missed from con­sid­er­a­tion, and at one point the deputy chair­man of the Plan­ning Com­mis­sion even went on Ra­dio Pak­istan and re­ferred to the econ­o­mists who were rais­ing such con­cerns as 'en­emy agents'.

This is not the only ex­am­ple. Time and again when in­vest­ment or as­sis­tance has poured in from abroad, the ten­dency within the coun­try has been to rake it in with starry-eyed glee and show­ing ob­se­quious grat­i­tude of the take-what­ever-you-wish-in-re­turn va­ri­ety, while ig­nor­ing the voices within the coun­try rais­ing con­cerns of their own.

Those voices warned about the in­equitable shar­ing of re­sources show­ered upon the coun­try in the 1960s. Oth­ers warned about the blow­back from the funds com­ing in dur­ing the early 1980s as a dic­ta­tor al­lied the coun­try in a su­per­power's war, as well as build­ing a strong con­nec­tion with Saudi Ara­bia. Those voices were there again when an­other dic­ta­tor al­lied the coun­try with an­other su­per­power's war a decade later, to ex­tri­cate us from the con­se­quences of the first al­liance.

None of this is to sug­gest that the ma­te­rial re­sources that flowed in the wake of the IWT should not have been taken. Or that Pak­istan had any choice other than an al­liance with Amer­ica in the wake of 9/11. The point is sim­ply that when­ever we are of­fered ma­te­rial sup­port from a pow­er­ful and wealthy coun­try, it is a good idea to eval­u­ate the fine print and think hard about the con­se­quences.

The in­vest­ments be­ing of­fered by China do in­deed have a game-chang­ing po­ten­tial for Pak­istan and they should be pur­sued with vigour. But while do­ing so, it would be a good idea to not be dis­mis­sive of those rais­ing con­cerns about the eq­ui­table shar­ing of the ben­e­fits as ' mere pol­i­tics', and it would also be a good idea to read the fine print of the agree­ments. Th­ese are com­mer­cial agree­ments first and ev­ery­thing else se­cond, and in that sense dif­fer from the var­i­ous types of bi­lat­eral sup­port through which Pak­istan has ben­e­fited in the past.

While we are busy talk­ing about 'gift horses', our Chi­nese coun­ter­parts in th­ese agree­ments are pric­ing in risk and eval­u­at­ing their re­turns on equity over the short­est pos­si­ble time hori­zon. That's fine, it's what any­body with a good head on their shoul­ders would do in such a sit­u­a­tion. I won­der how much of that sort of work is be­ing done at our end, but all we can do is won­der be­cause pre­cious lit­tle is be­ing shared about the de­tails of th­ese projects.

It is cru­cially im­por­tant to avoid the mis­takes of the past when ap­proach­ing the propo­si­tion that China is hold­ing out for us. It is in­deed a game-chang­ing of­fer­ing, with the po­ten­tial to im­pact the coun­try's des­tiny. Whether or not it is ben­e­fi­cial, how­ever, de­pends crit­i­cally upon man­ag­ing the fine print, the pol­i­tics, and the de­mands for trans­parency that are swirling around the pro­ject.

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