Thursday, September 21st, 2017
Home »Articles and Letters » Articles » Time to prepare a plan ‘B’
Let us not take the latest aid cut threat emanating from the US lightly by dismissing it as having been motivated by "baseless concerns" of President Trump. Indeed, we would be on our own if the threat of aid cut is actually carried out. Therefore, let us have a plan 'B' in hand and not be caught unawares as we did in the 1990s.

Yes, of course, it is always good to be your own master, especially in the matter of economy. One is able to safeguard one's political sovereignty more effectively only when one's economy is not dependent on any outsider, especially on a superpower which does not believe in offering 'free lunches' to even its closest friends.

For decades now, Pakistan's economy has been driven by foreign dole. Since it comes carrying global or regional political/economic designs of the donor, most of the dole that we have received has only ended up adding to our socioeconomic woes. And the annual budgets, prepared with the help of such dole, more often than not end up further increasing our dependence on more dole.

One recalls the annual ritual of the Paris Club meetings (that lasted until the Musharraf era) where the donors would simply discard all those projects which we thought would help us stand on our own two feet in due course of time and instead would burden us with loans for those projects which would promote the economic interests of the lenders besides their global and regional interests.

Our experience of the first Afghan war related five-year $3.06 billion of US assistance between 1983 and 1988 was decidedly harrowing. The donor took back almost the entire dole by selling us only costly US-made items, procured on the advice of expensive US consultants and ferried to Pakistan through costly US shipping.

Indeed, every year since at least the early 1950s we have been using a hefty component of foreign aid which in fact was loan on concessional terms to fill the gap between domestic income and expenditure to balance the annual budgets.

Eminent economists the world over believe since foreign assistance has not done what it was supposed to do for the economies of poor recipient countries it should stopped forthwith or reformed in a way that the resources transferred from the donor to the recipients actually help the latter to gradually reduce their dependence on dole.

These eminent world-renowned economists put forward three main reasons why the world should eliminate foreign aid. First, most foreign aid is not intended to reduce poverty. There are a welter of motivations - many of them frankly militaristic or self-serving - that underlie foreign "aid". As a result, the countries that receive the most support are not the poorest, but ones the donors are looking to protect or win over, or have security interests in: places like Israel, Afghanistan, Egypt and Pakistan. Most of the money the US provides to these countries does not go to vaccinate kids or shelter refugees, etc.

The US food aid, moreover, is often more helpful to American farmers and shippers than to the long-term food security of poor countries. That's because American food aid programs require buying from US farmers and shipping on US ships, and they generally do not allow local purchases or support of local farmers.

Secondly, foreign aid makes recipient governments less accountable to their citizens. Governments that receive most of their revenues in the shape of concessional loans from abroad are relieved of the need to raise taxes at home and so do not need to justify their activities to their own populations. A good government requires a contract between the state and the people, and aid undermines such contracts.

In poor, aid-reliant countries, government leaders' loyalties are split. Their duty is ostensibly to serve their citizens. But when the US, the World Bank, the IMF and other powerful institutions control the purse strings, leaders are effectively accountable to them, too. Often, their interests conflict or compete with those of the populace. When things go wrong - projects are delayed or the literacy rate stagnates at 50 per cent for decades - it's hard for the average citizen to tell who is at fault. Is it their broke government, or the wealthy institutions that technically owe nothing to their country?

And thirdly, foreign aid is essentially undemocratic. In aid-dependent countries, foreigners often have a weighty say in policy matters mundane and monstrous, but no one elects them. Many development workers don't even speak the local language. Most aid agencies have nothing like a complaint hotline. There is no requirement to hold town hall meetings to hear what people actually want or need. Few feedback loops exist between those who control aid and those who are supposed to benefit from it. And the state which is supposed to represent its citizens' interests against the foreign aid apparatus, is often either too weak to do so effectively.

Those who argue in support of foreign assistance will maintain that instead of rejecting aid, we should reform it. In principle, one would agree with this notion and would like to save some things, like humanitarian aid, and some organizations that try to make aid more democratic, participatory and justice-oriented. But one suspects that the system is too far gone and so riddled with hypocrisy, mixed motivations and entrenched interests that it's beyond reform.

So, if at all the threat emanating from the US is actually carried out, we should all thank our stars for it and move on instead of wasting our time, behaving like jilted lovers.

Chief of Army Staff General Bajwa did set the right tone when while delivering his address on the 52nd Defence Day celebration the other day; he said: "We don't want aid, we want your respect and confidence". This was the COAS' response to US claims that it had given "billions and billions of dollars" in aid to Pakistan. The COAS added: "Our actions and sacrifices should be appreciated."

But we can refuse foreign aid, especially the US dole only if we have in hand a plan 'B' well in time. And since the aid cut would immediately result in a more acute resource constraint, the main focus of this plan should be to accelerate our revenue collection ability and then using these resources to speed up economic growth aimed at generating enough resources to meet our essential development and non-development needs without the crutches of foreign assistance. This is easier said than done.

It is an increasingly interdependent world in which we live today. Therefore, the plan 'B' should also focus on creating an enabling social and physical environment within the country to attract foreign investment. The right courses should be introduced in our schools and colleges to develop a critical mass of technically well versed high-tech savvy graduates as well as skilled and semi-skilled handymen.

At the same time, we need to ensure that our expanding economy receives adequate supplies of electricity, gas and water. To accomplish all this within a reasonable span of time would require genuine willingness on the part of the ruling elite to give up their wasteful lifestyles and focus on eliminating corruption from among their ilk.

Next, the sanctity of rule of law should be restored immediately so that courts are enabled to dispose of their cases within a reasonable timeframe, especially those cases in which taxpayers are contesting tax collectors' claims.

If we could only succeed in whitening at least half of our black economy that is said to be almost three times the white economy, we could perhaps be able to sustain our economy on our own without foreign dole and also be able to accelerate its growth at a rate needed to make the trickle-down effect actually knock a significant dent in the incidence of poverty in the country. Currently as much as Rs 7 trillion of black money is said to be stashed in just one sector of the economy - the real estate - which is more than one-fourth of the actual GDP!

the author