Focus on Pakistan

8/8/2019 Focus on Pakistan

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A S I A N P E R S P E C T I V E S S E M I N A R

Focus on Pakistan

1 Introduction

3 Economic and Political UpdateShahrukh Rafi KhanSustainable Development Policy Institute

11 Legal and Judicial Reform in PakistanErik Jensen

The Asia Foundation; Transnational Business Law Program,Stanford Law School

15 Democracy and Pakistan’s Role in the International CommunityAhmed RashidFar Eastern Economic Review; The Daily Telegraph

19 Questions and Comments

30 Seminar Participants



1


Asian Perspectives: Focus on Pakistan is part of an

ongoing series of seminars sponsored by The Asia

Foundation. Convened on February 3, 2000, at the Carnegie

Endowment for International Peace Building in Washington,

D.C., the seminar focused on the current political situation

in Pakistan and its ramifications on civil society

development, economic and security issues, as well as

Pakistan’s role in the international community and the

future of its democracy.

Seminar speakers included Dr. Shahrukh Rafi Khan,

Executive Director for the Sustainable Development Policy

Institute; Mr. Erik Jensen, The Asia Foundation’s Senior Law

Advisor and former Asia Foundation Representative to

Pakistan; and Mr. Ahmed Rashid, Correspondent for the Far

Eastern Economic Review.

Introduction



3


My focus will be the economic and structural

problems facing Pakistan. First, I will give a brief

historical prospective, followed by a discussion of the state

of the economy and the December 16, 1999, economic

revival plan put forward by the government of General

Pervez Musharraf.

I will talk about what has been achieved to date and

then offer my prognosis regarding the military government’s

chances for success.

The Coup: Legitimacy versus Right Action

My view on the military government in power since the

October 1999 coup reflects my personal ideology on the

subject of military rule, the importance of the rule of law,

and the sanctity of the political process. At the same time,

my position takes into account the fact that I believe the

country regressed under the regime of Nawaz Sharif. I also

have concluded that at this point in time, most Pakistani

people are not as concerned about the way the current

government came to power as they are about the future of

Pakistan.

Consequently, my take on the Musharraf government is

a measured one. I believe in people having choices and once

they have that ability, they can be counted on to eventually

create the conditions that are necessary for stability. It may

take time, but stability will be the outcome.

I also draw on historical circumstances where power was

diminished once it was assumed. Clearly, history will be the

judge of those who do or do not abuse the power they seize,

and more times than not, usurped power is badly used. But

legitimacy here is not the result of a right action. Instead, it

is based on the law and the political process. This is my

personal view.

Still, the right action is always welcomed. And as a

member of the Sustainable Development Policy Institute in

Islamabad, I welcome the opportunity to engage in policy

that the current government affords me. I am a pragmatist.

At the Institute, we decided to engage with the government

provided the work was deemed to be in the national interest.

So far, it has been the Institute’s decision to engage the

government because its leaders have been quite open and

welcoming. In fact, we see our work with this government as

a policy opportunity.

The Economy: Foreign Exchange Reserves andFiscal Deficit

In his economic revival plan of December 16, General

Musharraf put his finger on the major problems that are

confronting the country. The first, he said, is a low foreign

exchange reserve — totaling $1.6 billion. On both an

absolute and relative level, $1.6 billion is very low. On the

absolute level, this amount of reserve will not buy very much

time if the country suddenly is pressed to cover the cost of

imports to sustain life and livelihood. On the relative level,

India sits just the other side of the border, holding foreign

exchange reserves of over $30 billion (as of six months ago).

Pakistan is a country in a fairly desperate situation. It

has a fiscal deficit — and a chronic inability to raise enough

taxes relative to its necessary expenditures. The tax effort is

about 10.4 percent of Gross National Product (GNP), which

is one of the lowest in the world.

The second major problem concerns the savings rate,

Economic and Political Updateby Shahrukh Rafi Khan



4

which is very low at 11.1 percent of GNP. It also is one of

the lowest in the world. The country also has a chronic

balance-of-trade deficit — and as you know, deficits and

savings rates are interrelated.

Interest and Exchange Rate Liberalization

A historical perspective on how these problems started can

be instructive. For starters, the government has taken some

bad advice over a period of time. Clearly, each government

in the world’s economy is responsible for the bad advice

they take, but there was one bit of particularly bad advice,

namely that we engage the country in something called a

financial depression. This was clearly a mistake.

The solution was to liberalize, in particular, the interest

rate and the capital markets. It was decided that the interest

rate in Pakistan was too low — at 4 to 6 percent.

Liberalization of the interest rate would peg rates at 18 to

20 percent, it was argued. That was thought to be about the

right level. But when the government moved to liberalizeinterest rates and capital markets, suddenly they were faced

with a huge domestic debt problem.

When the government was asked to borrow from capital

markets instead of from banks, they found their domestic

deficit increasing. The government also started looking

abroad to borrow money. And it began to print money,

which meant that foreign debt and inflation both began to

mushroom. Through it all, no research was conducted.

Instead, only some very feeble evidence based on cross-

country analyses was gathered.

Another piece of bad advice that the government took

was to let the market determine the exchange rate. At the

time, the economy was operating on a fixed exchange rate.

The advice was to devalue the rupee, presumably because

inflation was causing our exports to be non-competitive.

The real problem, however, was little or no ability to

solve our economic structural problems on the supply side

and a lack of quality. Nonetheless, Pakistan was asked to

engage in competitive devaluations that ended up buying

little in terms of improving the balance of trade.

Where the advice did succeed was to sink Pakistan

deeper into a rather vicious cycle of inflation and

devaluation which had been going on for a while.

Fortunately, that cycle now has been arrested.

The devaluation’s impact on the debt was clear. During

the 1970-1971 devaluation, the value of the rupee to the

dollar was 4.2. This changed to 9.9 rupees to the dollar.

And debt as a percentage of GNP jumped from 1.3 to 3

percent — not including short-term interest rates — from

one year to the next.

Current State of the Economy

Now, consider the state of the economy today, but keeping

in mind that the debt problem remains one of Pakistan’s

major problems. Pakistan’s economy is small, amounting to

about $56 billion. But because the economy is small, theproblems are large. To provide a little more perspective, the

trade deficit alone in the United States is expected to be

$267 billion in fiscal 2000.

Tracking the economy forces one to rely on news reports

to some extent. And often, it can happen that a government

source reports statistics that are quite opposite from what

reporters say. Still, it can be the only recourse since there

frequently is quite a lag in reporting official statistics.

Another factor is that the administration currently in power

can be considered only partially responsible for the current

state of the economy. As of right now, General Musharraf’s

regime is only four months old.

That said, the debt as a percentage of Gross Domestic

Product (GDP) was estimated to be 3.9 percent in 1998-

1999 compared to 1.3 percent in 1971-1982 and about 3

percent in the mid-1980s. The related interest rate burden in

fiscal year 1999 was about 32 percent of total expenditures



— for both local and foreign debt. Military expenditures

amounted to 22 percent of GDP, compared to 25 percent in

1991. Combined, today’s interest burden and military

expenditures total 54 percent of GDP.

Interest payments have mushroomed. In 1991, they were

19 percent. Today, they are 32 percent. The expected growth

rate is roughly 3 to 4 percent, whereas in the 1980s, the

growth rate was roughly 6 percent. So Pakistan continues to

be in a slowdown when today’s

economy is compared with the

economy of the 1980s.

Some fiscal discipline has been

exercised, however, largely

because of structural adjustment

loans issued to the country. The

discipline shows up in the low

inflation rate, which has been 3.4

percent — the lowest ever —

during the first six months of thecurrent fiscal year. This is the

result of the economy slowing

down, which, in turn, is caused by International Monetary

Fund (IMF)-imposed monetary and fiscal restraints.

At the same time, the cotton harvest is expected to be

decent this year. That is good news for a mono-economy. In

fact, the cotton crop can make quite a big difference when it

comes to how well the economy in Pakistan does. Sugar

cane and rice also are expected to do well. There are

indications, too, that the manufacturing sector will pick up.

Quantities are increasing and unit prices actually are falling.

Still, imports have risen by 11.7 percent, and exports have

declined by 7.4 percent. The trade deficit during the first six

months of fiscal 1999-2000 increased by an estimated 39

percent. But because of the expected rice and cotton crops,

the Minister of Commerce continues to expect that Pakistan

will meet the target of $9 billion for exports this year.

The decision to freeze foreign currency accounts after the

nuclear tests in 1998 also put a lot of pressure on

remittances and the in-flow of currency into Pakistan. Most

of that money has disappeared, and it is suspected that a lot

is going through informal channels — or what we call the

Hundi system. For example, there are payoffs in the Middle

East and corresponding payoffs in Pakistan. Because money

wasn’t coming through official channels, foreign exchange

also was not available through

the official banking system.

However, that has changed a bit.

In the current fiscal year, foreign

exchange reserves total $402

million — compared to $375

million during the first six

months of fiscal year 1998-1999.

Foreign direct investment of

$306 million represents an

increase of 25 percent during thefirst six months of the current

fiscal year, relative to $255

million last fiscal year. The tax effort also has gone up to

some extent — 27 percent relative to the first six months of

last fiscal year — because of the generalized sales tax.

The stock market is not that reliable of an economic

indicator because it represents a narrow and highly

speculative market. Nonetheless, it does reflect something

about the state of confidence in the economy. The stock

market actually has gone up relative to a decline to 800

following the freezing of foreign currency accounts. It now

has gone beyond 1800, which represents a big jump. Much

of this happened after the military government came into

power.

Economic Revival Plan

Economic revival plans are not new in Pakistan. In fact,

5


Pakistan’s economy is

small, amounting to

about $56 billion. But

because the economy

is small, the problems

are large.



6

revival plans get announced again and again. So, there was

no novelty to the plan General Musharraf introduced last

December. Indeed, he addressed many of the same problems

that have been highlighted in the past. The key difference,

however, is how his military government proposes to

implement the plan. Already, some change is taking place

but we will have to wait and see on most issues.

General Musharraf’s revival plan has five aspects,

starting with poverty alleviation. Here, the initial intention

was to set aside money from a fund that has been used by

members of parliament to pay for patronage projects and to

earmark it for development projects, etc. Some $15 to $20

billion was set aside for district development advisory

boards, which were to be organized to allocate the funds.

Once the project was announced, local politicians were up in

arms, and there was widespread speculation that the project

was a thinly veiled attempt on the part of the army to build

a constituency for its government. So, the plan has been

shelved for the moment, and there is a search underway foralternative ways to distribute money for poverty alleviation.

Another approach involves streamlining the use of the

zakat , which are Islamic compulsory taxes applied on

savings. We still are waiting to see how this will be

accomplished, but there also has been a lot of talk about

corruption in this regard.

Another consideration is to set up a large micro-credit

bank along the lines of the Grameen Bank in Bangladesh.

We also are awaiting progress on proposals to allot state

land to individuals who are not landholders. And finally,

there is a food stamp scheme that now is being finalized.

These then, are the key elements of the government’s

poverty alleviation strategy. The intention also is to work

with nongovernment organizations (NGOs), especially those

that have demonstrated success in the area of development.

In fact, NGOs are expected to figure very prominently in the

strategy’s implementation.

General Musharraf’s revival plan involves ways to

encourage agriculture. There is interest in an import

substitution strategy, particularly with regard to edible oils.

The government hopes to raise the support price for wheat

and thereby encourage production and reduce imports.

There is also a plan to extend credit to small farmers. Better

water management is another component, with the military

already engaged in massive de-silting of canals.

Here, the intention is to find ways of ensuring the fair

distribution of water to small farmers and to curtail the

practice of high water capture on the part of large farmers.

With the increase in the support price for wheat, there is

also a greater urgency for direct subsidies, such as food

stamps.

Meanwhile, the economic revival plan promotes three

steps for exiting Pakistan’s debt trap. For short-term debt

relief, the government is engaged in talks to buy time and

reduce interest rates. The intention is to rectify the problem

of interest rate liberalization and its effect on ballooningdomestic and foreign debt. Already, interest rates have

declined by 2 percent.

The hope is that the lower interest rates will boost the

manufacturing sector also. Expenditures are to be financed

entirely by the tax effort. The privatization drive also will

continue, with all monies collected designated for debt

retirement under a plan that was drafted but never executed

under Sharif.

The Musharraf government also intends to put in place a

very active debt management system and to cancel the large

public sector projects that were announced by the Sharif

government. This is similar to the course of action followed

when Moeen Quereshi came to power in 1993. The

government also says it will encourage remittances, but here

it seems a bit confused. Remittances are a liability and not a

government asset. The government has to generate more

taxes than expenditures if it is going to buy and convert



liabilities into assets.

Indeed, the last government froze foreign currency

accounts — considering them to be an asset rather than a

liability. This caused a great deal of damage to investor

confidence at the time, from which the economy still has not

recovered.

Tax reform is another goal. The new government intends

to continue reforms that were outlined by the Sharif

government but again never implemented. Measures include

an agricultural income tax, provisions to document the

economy, a generalized sales tax, a plan for broadening the

tax base, and procedures for improving government

administration. However, a key difference between this

government’s plan and that of the last is that this time, the

government has, as of yet, not announced a money-

laundering scheme — to whiten black money. There will be

no amnesty regarding this money — and this reflects a

welcome change.

In terms of a growth strategy, the Musharraf governmentis moving, as was indicated earlier, toward substitution for

agricultural imports; encouraging agriculture through a

market strategy that involves raising support prices and

credit; and shifting livelihood dependencies from large-

sector manufacturing to small and medium-size sector

manufacturing.

There is also a focus on the oil and gas sector. The

government is trying to resolve the conflict with independent

power producers (IPPs), which as some of you may know

has caused a lot of problems. The last government broke a

sovereign contract with the IPPs. Sharif used this issue to

derive political capital because the original contract was

concluded under his predecessor, Benazir Bhutto. It was

argued that kickbacks were involved and that the electricity

purchase rates that were contracted were too high relative to

those in countries like Bangladesh and Indonesia. In fact, the

breaking of this sovereign contract caused a number of

problems, starting with the disappearance of foreign direct

investment amid a serious crisis of domestic business

confidence.

Another point being advanced is that Pakistan could

have a comparative advantage in the information technology

sector. The country has the necessary human capital and at a

level that approaches India in this field.

So far, about 10 billion rupees in defaulted loans have

been recovered, and 20 billion rupees worth of debt has

been rescheduled. This has bought the government a little

time. The recovery of dodged taxes, on the other hand, is

much harder. Little has been said as to how much has been

recovered. There also have been re-negotiations with smaller

IPPs, which provides the government with something like

750 million rupees per year. This is a fairly significant

outlay.

Defense spending has been cut by about 7 million

rupees, and the money has been earmarked for poverty

alleviation. Also, the military’s work on de-silting the canalscosts half of what it cost the last time it was done and is

being accomplished in half the time.

There is hectic and feverish planning for decentralization

and the devolution of powers to the grassroots level. There

has been an increase in sales tax on the energy sector. In

addition, a 10-percent rise in the price of oil is explained in

terms of prices on the international market. The public

sector development program has been cut from 108 billion

rupees to 100 billion rupees, which is a problem when

economic growth has slowed.

Still, a lot of these measures, including an extension of

the generalized sales tax, raising oil prices and negotiating

with independent power producers are part of an overall

effort to meet the conditions that were set down by the IMF

for balance of payment support. About $4 billion in debt

has been rescheduled.

In summary, the Musharraf government seems to be

7




going in the right direction. As I said earlier, the issue is

implementation. To that end, this government has focused

on the tax effort. They realize that they must ensure that

taxes exceed expenditures, particularly if they are going to

buy foreign exchange that comes as exports or remittances.

Overall, the strategy also is to help create sustainable

livelihoods for people, particularly in small and medium-size

industries and to build up the capital of the poor through

credit, land distribution, water,

education and improved health.

On the subject of education and

health, the government’s

intention is to devolve power to

the grassroots level to make

people more responsible for the

services that are delivered to

them. The idea here is that

responsibility at the grassroots

level will improve quality.Finally, a just peace is

essential. In my view, this could

mean bringing in the Kashmiri stakeholders if and when

talks resume. The Kashmiris have their own sense about the

right to self-determination, and they have to be major

players if there is ever going to be peace.

A Prognosis

Here, it makes sense to compare General Musharraf with

General Ayub Khan, who came to power in 1958. On the

surface, both are (or were) very well meaning. However, it is

fair to say that problems today are much more complex than

they were in the latter part of the 1950s. For one, there is a

much more bloated and corrupt bureaucracy in place. When

it comes to accountability and public sector reform, the

bureaucracy in Pakistan clearly is part of the problem. The

country needs a bureaucracy to implement solutions, but it

should be streamlined and made accountable.

Today’s politicians are much more serious players than

in the past, particularly the Jamaat-i-Islami. At the same

time, the judiciary is more of an unknown than before.

Despite the new oaths that judges were required to take

under the Provisional Constitution Order, many still claim

that they retain the right to entertain cases against the

October 12 coup. This is a looming problem.

In short, the scale of problems

today versus 1958 is much greater.

There is also the budget deficit, the

balance of trade deficit, and a huge

debt. Privatization also is an issue

that was not in the picture in 1958.

The problem back then had to do

with regulation and the lack of

competition. In fact, Pakistan

missed the bus on that one, which

is compounding the problems weface today.

People today also feel a greater

sense of urgency about the country changing than they did

under General Ayub Khan. There is less willingness to be

patient than there was 40 years ago. At the same time, this

government may be able to buy some time because they are

perceived as honest. It is this perception of corruption that

generates so much social disaffection.

The Musharraf government also seems serious about

devolving powers to the grassroots level and about building

participatory democracy. Similarly, they want to project the

practice of participatory democracy to the district and

provincial levels as well as at the national level. Still, at

present, there are few realistic approaches for making this

happen.

We have a problem in that power is concentrated in the

hands of landlords and district administrations. While the

8

The Musharraf

government seems

serious about devolving

powers to the grassroots

level and about building

participatorydemocracy.



devolution of power to the grassroots level is an issue that

must be addressed, it is not clear to me that this government

really sees that need. In the meantime, however, land reform

is not off the agenda entirely. It is being talked about, but

there are no signs that warrant optimism.

Finally, the fact that the army increasingly is playing a

productive role buys the government some goodwill. A case

in point that was mentioned earlier is the military’s work on

de-silting the canals. So, this government may have more

time than was thought originally.

On the subject of a referendum, the holding of such a

poll is questionable. A referendum would determine whether

this government should continue with its reform programs

or not. It also would buy this government a certain amount

of time. However, a referendum instituted by a government

without legitimacy may not be viewed as legitimate, and

perhaps the military government knows that.

9




10



It has been nearly a year since several of us at The Asia

Foundation first discussed a forum on Pakistan. At the

time, I thought my assignment would be relatively

straightforward and that I could build on a 900-page study I

had completed on legal and judicial reform in Pakistan. But

because circumstances have changed substantially in the

interim, I will focus my remarks on constitutional issues.

Let me add that my remarks reflect my five and one-half

years of experience in Pakistan and are my responsibility in

the event they do not represent a shared viewpoint with The

Asia Foundation. Three sets of issues form the basis for my

remarks:

What role governance, politics, and U.S. foreign policy

play in Pakistan;

What role the judiciary plays when it comes to political

change in Pakistan;

The current attitude in Washington as expressed in

published commentary, about prospects for returning

Pakistan to democracy and civilian rule.

Before beginning, I would like to provide some context

by way of offering a personal anecdote. It was spring of

1998, and I had just finished a rather long study on

governance issues in Pakistan. I worked very hard on this

study and then watched it land on a shelf somewhere in the

Planning Commission, collecting dust. I was tired. Indeed, I

was ready to leave Pakistan. At the time, I thought that I

had tried quite enough.

Then, I met a prominent human rights lawyer in

Pakistan. Over a three-hour lunch, she convinced me that

we should work together on a legal and judicial reform

project. When I said, ‘I am tired. I am ready to go,’ her

response was stunning. ‘That’s easy for you to say!’ she

retorted. It reminded me at the time and many times since,

of the words of Ashish Nandi, a wonderful Indian

philosopher. Nandi said and I quote, ‘Our inability to

imagine alternatives is the surest guarantee of oppression.’

And so I wish to stress at the outset that there are many

in Pakistan who are working tirelessly to ‘imagine

alternatives.’

Governance and Politics Today

As recently as last June, I was convinced there was not much

hope for the country. Indeed, the subject of a talk I gave in

July, focused on Pakistan as a frail, if not a failed state. Then

and now, five indicators of a failed state were becomingincreasingly apparent.

The first concerns a sovereign state’s responsibility to

protect its citizenry. In Pakistan, this responsibility is hardly

robust. Second, public goods are not being delivered. In fact,

Pakistan ranks about 145th on the human development

index of the United Nations Development Program. The

third indicator is the apparent failure to design and more

importantly, to implement policies for economic growth.

Fourth, there is a failure to uphold the law, which is a point

I would like to return to later. Finally — and this may be an

arguable point — there seems to be a failure on Pakistan’s

part to act responsibly when it comes to international

relations. As I said, the fifth indicator is a contested issue.

Another issue that could become an indicator of future

problems is the possibility of fractures within the Pakistani

military, as has been suggested in various newspaper

commentaries. If true, this is a very serious and strategic

11


Legal and Judicial Reformby Erik Jensen



issue. Indeed, it could very well be the most serious threat of

all to stability, if not to the country’s very survival.

Again, if this analysis is on point, it raises the immediate

question of implications for U.S. foreign policy, in particular.

Here, I would suggest that support for the forces of

moderation, deliberation, and tolerance in Pakistan should

be an important U.S. objective. The dynamics in Pakistan are

very fluid, and one cannot just superimpose a vision of what

democracy is or should be divorced from those dynamics.

At this point, I would like to return to what it might

mean for Pakistan to return to democracy. I would contend

that we have to take democracy off its so-called theological

shelf and put it into practice. I will explain what I mean as I

go along.

The Judiciary’s Role in Political Transitions

The situation currently is that the High Court and Supreme

Court judges have been asked to take an oath. A total of six

justices have refused and left the court. Meanwhile, fivejustices have been appointed based on seniority for the most

part. There were no surprises with these appointments — or

with the resignations, for that matter. Indeed, it seems

legitimate to ask how any justices could continue to serve

following a military coup. The principled response has to be

that either they declare the coup unconstitutional or they call

for a constitutional convention.

The military government’s decision to ask the justices to

take the oath was a blow. But then, there have been many

blows over the course of Pakistan’s constitutional history. In

fact, it is fair to say that constitutional history in Pakistan is

peppered with accommodations. Just to put current

circumstances in perspective, there was the storming of the

Supreme Court in 1997 by party members and politicians

who were loyal to the then-prime minister. At the time,

political loyalists pressured the court to make certain

decisions and the court’s chief justice to step down. It was an

incredible moment of transition itself.

To date, the court has acted to validate the military

coups of 1958 and 1977. No constitution was in place

during most of the 1950s, and martial law prevailed in the

1960s. In the 1970s, the elected prime minister frequently

resorted to wielding emergency powers. And then there was

Dorab Patel, a former Supreme Court justice now deceased,

who characterized the court’s action regarding a military

coup. He asked, and I quote, ‘How do you expect five men

alone, unsupported by anyone, to declare martial law

illegal?’

Indeed, I think it would have been too much to ask this

Supreme Court to declare martial law illegal, in part because

that would have been contrary to Pakistan’s actual

constitutional history. And today’s situation appears similar

to the past. Also, it would be very difficult to find many in

Pakistan with whom the military coup of October 1999 was

unpopular. If you take into account the so-called doctrine of

necessity, public order can take precedence over political rule— and that is the point of view that has reared its head

again.

After the Supreme Court was stormed in 1997, I recall

remarking to a prominent Pakistani politician that the

country’s constitutional history seems to be based on this

doctrine of necessity — more so than any other country in

the world. The politician agreed, adding, and I quote, ‘There

has been too much necessity and not enough doctrine.’ I

found that a fairly telling response.

So, where are we today? Makdoom Ali Khan, a very

fine constitutional and commercial lawyer in Karachi, has

written, along with others, that it now may be time to

review the 1973 Constitution. He is saying essentially — but

not in these words — that the 1973 Constitution is a piece

of Swiss cheese. It is replete with internal conflicts. There is

a failure to connect what is in the Constitution with what

gets practiced on the ground. Indeed, this could be a very

12



good time for Pakistan to consider calling a constitutional

convention to rework this document.

What we are seeing is, in effect, constitutionalism as

practiced under the doctrine of necessity by a judiciary that

is engaged in political transition. That is why there could be

a parallel activity to a constitutional convention —

something akin to a truth and reconciliation commission.

This is what I suggested in the governance study that I did

for the previous government in

Islamabad.

At the time, I suggested it

would make sense to drop

actions against the previous

regime and get on with the life of

the nation instead of patterning

themselves after the

accountability investigations or

ehtesab that raged under Benazir

Bhutto. It made sense to advocatethat the sitting government stop

flogging its predecessors. Political

persecution of the preceding

regime has been and continues to

be a very major part of Pakistan’s

political story. It also becomes an

excuse for government not to

deliver the goods.

In fact, when one democratically elected ruler comes to

power, there is every expectation that the opposition will

have to fight lawsuits throughout the entire time that the

other group is in power. That is exactly what has been

happening ever since 1988. There have been perpetual

lawsuits filed with the courts, which by extension, enhance

the judiciary’s role in a political transition.

So, when one tries to imagine alternatives to the present

day situation, one thinks fairly seriously about something

like a truth and reconciliation panel. It would seem this

would be a way to satisfy the need to strike a balance

between prosecution and punishment, on the one hand, and

forgiveness and forgetting, on the other. It would alleviate

any effort designed to victimize those who held power under

a previous regime.

Another model is to forgive but do not forget, which is

the South African model. The Chilean model and the

International Truth Commission

in El Salvador worked to lesser

extent. Still another model is

straight criminal prosecution,

which is the Ethiopian model of

filing lawsuits against 5,000

previous office holders. At any

rate, the alternative should not be

bringing criminal prosecution

across the board. If there is the

intention of prosecuting, it shouldbe done in a targeted way and

then every effort made to get on

with the life of the nation.

One more thought about the

state of the judiciary in Pakistan.

There is a lot that should be done

when it comes to institution

building, particularly among the subordinate judiciary. On a

historical note, it was no less than Alexis de Tocqueville who

argued that the local courts were the most important in any

judiciary. In Pakistan, local courts are in a woeful state of

disrepair.

The Return to Democracy or Civilian Rule

So, how does one get beyond authoritarian democracy in

Pakistan? Another way to ask the same question but from

this side of the Atlantic, is to ask how Pakistan gets beyond

13


... a truth and

reconciliation panel

would be a way to

satisfy the need to

strike a balance

between prosecution

and punishment, on the

one hand, and

forgiveness and

forgetting, on the other.



the Washington policy discourse described as democratic

formalism?

Indeed, if killing or severely punishing your political

enemies is unacceptable in a democracy, then Pakistan fits

the description of a very weak democracy. On the other

hand, if power is dispersed and groups are permitted to

compete with one another, then conditions for the rule of

law are allowed to again emerge. These conditions have been

rather weak during the modern era in Pakistan. In fact, if

you look at how political parties have functioned and

consider how they would function if a national election were

called now, there is every reason to delay the election for a

period of time.

At this point, I would like to go back in history and read

a portion of a 1959 administrative order. It provides some

perspective on what democracy can mean in Pakistan:

‘Democracy is not merely concerned with the location of the

source of power — and not the form of organization for the

channelization of power. The concept of basic democracy isbased on the hypothesis that democracy is not an end in

itself, it is only a means to an end, the end being the welfare

of the people.’

Clearly, this is not a comprehensive definition, but it is

an instrumental definition. Likewise, the administrative

order is helpful when seeking historical grounding for

making recommendations, in this case for the Pakistani

government. It was issued when Ayub Khan was in power

and is quite a famous, yet basic program for democracy. In

fact, it seems to me that if you are capturing something from

the past, then this is something that is not all that bad,

especially when trying to move forward. However, even the

Basic Democracy program faces cynicism regarding its

implementation these days.

Four benchmarks and/or recommendations come to

mind when considering a move beyond authoritarian

democracy and away from democratic formalism. The first

is to hold local elections, which would be in step with the

interests of the Musharraf government. In fact, the regime

has considered doing just that this year.

There are some rather extraordinary Pakistanis who

have associated themselves with this regime in order to help

brace the country for survival and hopefully its future

revival. In this sense, local elections would be an opportunity

to begin the democratic experience anew. Clearly, there are

some who will look at this cynically and say, well, Ayub

Khan did something similar, and no democratic rule resulted

from it. But I believe there is a serious opportunity now and

genuine interest in holding local elections.

A second recommendation would be to develop a bona

fide truth and reconciliation process that moves beyond the

past and into the future. By definition, this process becomes

a device for achieving accommodation. For those of us who

have experienced the discourse in Pakistan over a number of years, victimizing the previous regime does nothing more

than deflect accountability within the current government.

A third and somewhat more difficult goal would be to

hold a constitutional convention. The 1973 Constitution

needs revision. Pakistan also needs a common understanding

of the nation’s legal and constitutional life. I have no

substitute recommendations on how that might be

structured. It’s a very difficult thing to do.

A fourth recommendation involves increasing social

sector spending and decreasing military spending. It seems

this is already being done to a certain extent. Pakistan needs

to start to seriously examine resource distribution as a very

important input into the democratic experience.

14



My remarks will focus on the coup itself and less on

the last 10 years. Most of you already have some

idea of the kinds of problems Pakistan faced under Benazir

Bhutto and then Nawaz Sharif. By the same token, most of

you will recall that Pakistan has had three military coups in

its brief history. In fact, it can be said that Pakistanis are

great experts when it comes to military coups and are able

to execute them with considerable precision.

That said, the coup of October 1999 can be viewed in

light of four elements.

The Coup’s Distinguishing Factors

First of all, the October 1999 coup was not promoted by

the military, even though the military had been deeply

provoked. The army certainly was prepared to move against

Prime Minister Sharif and had gone so far as to warn the

prime minister that if he attempted to sack Army Chief of

Staff General Pervez Musharraf, that General Musharraf

would not go as quietly as had his predecessor. In October

1998, Sharif sacked then Army Chief of Staff General

Jehangir Karamat and appointed Lt. General Musharraf to

take his place. So, this was not an army-provoked coup.

Secondly, Musharraf did not assume power with any

intention of installing perpetual military rule as was the case

with Ayub Khan in 1958 and Mohammad Zia ul-Haq in

1977. Thirdly, the military took over essentially without a

clear-cut agenda. In fact, the wide-ranging speech delivered

by Musharraf after the coup was over-focused on the ills

that were felt by most Pakistanis in the country.

It was only after the fact of the coup that the army

realized the very deep crisis that faced all sectors of the

country. As a result, they are faced today with making very

serious decisions about structural reform, and that could

prolong their stay for a number of years. On the other hand,

they could do a patch-up job in important sectors, including

law and order and in the economy, and then go for

elections. On this score, my sense is the jury is still out and

will remain out. The army could make up its collective mind

three to four months down the road, but we will see.

The fourth element that describes this coup is the fact

that the Army Chief of Staff did not initiate it — unlike

previous coups in Pakistan. In Zia’s case, he never even

informed his fellow generals that he intended to stage a

coup. You will recall that General Musharraf was in the air,

flying back from Sri Lanka, when the army called the coup.

The decision was made by generals on the ground, largely as

a result of their fears that Sharif intended to sack the Army

Chief and several generals. They reasoned that if that

happened, it would divide the army irreparably. (Editor’s

note: General Musharraf was fired just hours before Sharif

ordered air controllers to refuse landing permission to

Musharraf’s Karachi-bound airliner, an order he

subsequently rescinded. The coup already was underway at

the time, according to the New York Times.)

This fear that the army would be divided irreparably

was very real. In fact, if those generals had hesitated in the

slightest, a very serious division in the army would have

occurred. Musharraf’s sacking amounted to the second

15


Democracy and Pakistan’s Rolein the International Communityby Ahmed Rashid



sacking of an Army Chief of Staff in one year’s time and that

was considered totally unacceptable, particularly in light of

Pakistan’s history.

To sum up, the coup was undertaken to keep the army

united. Also, the circumstances of this coup were such that

they created a very ambiguous situation for General

Musharraf. There was then (and is now) a group of generals

who are beholden to the chief, and he to them. The Army

Chief is not necessarily a solitary, authoritarian figure with

authority to push through whatever agenda he likes. In

short, there is a junta in power in Pakistan today — and not

a single authoritarian chief and administrator of martial law

— as was the case in the past.

These factors not only demonstrate how different this

coup is from previous coups in Pakistan’s history, they also

illustrate why a different kind of analysis must be brought to

bear. Also, a kind of patience is necessary on the part of the

Pakistani public as well as the international community.

There is no doubt that the majority of Pakistanis supportedthis coup — overwhelmingly.

The international community, on the other hand, was

stunned by the lack of objection or outrage inside Pakistan.

But once they saw that not a single Pakistani stepped

forward to condemn Musharraf or the military, many began

to roll back their condemnations. The international

community realized that Pakistanis were fed up with the

regime of Nawaz Sharif.

Economic and Social Reform Agenda

In the aftermath of the coup, the Musharraf government has

made every effort to select a very imaginative cabinet. For

example, its entire economic team has been drawn from the

private sector and, so far, has been readily accepted as quite

good.

And for the first time, the military is not being described

as the enemy in Pakistan. This, in turn, is instilling a lot of

hope within the secular, liberal intelligentsia, the non-

governmental organization (NGO) community, the media,

and the business community. It is a sharp contrast to

previous times when a very conservative military

establishment worked hard to try to crush civil society, and

it is against this backdrop that the formation of the

government’s cabinet appears to be a very open sign.

Musharraf’s agenda also reflects the demands of the

public in three key areas. The first concerns the overall issue

of economic reform, which is a subject that Musharraf dealt

with immediately. The entire Pakistani population insisted

he deal with this subject as did the IMF and the World

Bank. In fact, an ad hoc consensus emerged throughout the

country on this very issue.

Reform, as it has been laid out so far, represents an

effort to deal largely with vested interests. At the same time,

it is quite apparent just how difficult it will be to implement

these kinds of reforms. There are two essential issues here.

There is the imposition of a fair and broad-based sales tax,which currently is levied for industry but not for the trading

community. And there is the agricultural income tax. As you

may know, a few landlords do not pay any income tax.

Resolution of these two issues will be indicators of just

how well this government deals with reform. My reason for

saying that is because the army retains huge vested interests

in both issues. Just how the government deals with them will

show whether it has the guts to push ahead with necessary

reforms. If it does push ahead, that should convince the

international community as well as the International

Monetary Fund (IMF) to come back on board with a

package to help Pakistan.

Indeed, these two issues, the general sales tax and the

agricultural income tax, will be crucial in determining

whether Pakistan gets a bigger package from the IMF in

January 2001. That is when the rescheduling of short-term

loans valued at $225 billion will take place. Without any

16



further restructuring or absent a larger IMF package, the

regime faces paying $5 to $6 billion in repayments at the

time. The government is in no position to make these

repayments — and that makes implementation of these two

economic measures that much

more crucial.

The second area concerns

social reform: law and order, de-

weaponization, control over

fundamentalist Islamic schools,

literacy, and health — the usual

things that civil society has been

demanding for a very long time.

Here, there is virtually no

difference in opinion between the

junta and the civilian cabinet.

The only criticism so far is

that the army has been too slow

— that in three months nothinghas happened. Public expectations are very high. The public

expects and wants change. There is also a huge economic

recession that is driving their expectations. The army’s

answer to this is simply, ‘Look here, we’ve come in

unexpectedly. We need expertise. We don’t want to fall into

bad decisions that we will have to retract. We don’t want to

fall into not having taken people onboard or not having

consulted all sectors.’

I am one of those who think that the pace of change is

too slow. Things could be moving much faster in certain

areas, such as human rights. What has been done when it

comes to human rights is quite obvious to anyone on the

civil side. By the same token, issues like de-weaponization

are very critical, and it is my opinion that these issues have

to be worked out in much greater detail. The army should

be given time to do that.

There is also a dynamic between the military and the

civilian cabinet when it comes to both economic reform and

social reform. Here, the hope is that the clout of the

civilian-led cabinet will grow along with its influence over

the military.

By contrast, there are key

differences of opinion as regards

to the third issue, namely foreign

policy. A very conservative

element within the military

believes in the status quo on

Kashmir and as regards to the

Taliban. At the same time, there

are those who realize that

Pakistan’s domestic reform

agenda — or the military’s

reform agenda — cannot be

carried out fully unless there is

some kind of end brought to

Pakistan’s regional isolation.The West now regards Afghanistan and relations with

India as the two very crucial areas of Pakistan’s foreign

policy. For example, there is a huge controversy at the

moment over whether President Clinton should visit

Pakistan at the same time he visits India. One commentator

argues that Clinton should go. Another says, no, he should

not go. This is quite an absurd situation.

For President Clinton not to go suggests the

administration is not willing to engage the military

government that now is in power. Indeed, that would be a

true disaster for U.S. foreign policy. It would be extremely

foolhardy not to engage the government at its highest level

in this current atmosphere — shaped by recent violence in

Kargil, the airline hijacking late last year and the huge

buildup in Indo-Pakistan tensions.

A decision to skip Pakistan would say two things: It

would amount to doing exactly what the Indians want,

17


The only criticism so

far is that the army has

been too slow — that

in three months nothing

has happened. Public

expectations are very

high.The public expects

and wants change.



namely helping isolate Pakistan and keeping the country on

a sort of terrorist periphery. Second, it would fall into the

trap of the Pakistani fundamentalist opposition.

This fundamentalist opposition would very much like to

see the United States declare Pakistan a terrorist state. In

fact, it is quite clear that there are elements in the

fundamentalist lobby as well as in the military, who would

welcome a U.S. decision to declare Pakistan a terrorist state.

They see that as a way to cut the umbilical cord of 50 years

of relations between Pakistan and the West.

Not only would they like Pakistan to become another

Sudan or Somalia, they have the same vision for Pakistan

that they have for the Taliban and the Islamacized

territories. They see Central Asia as the new nexus of power

and as a place where Osama Bin Laden will lead them into a

new kind of salvation.

(Editor’s note: President Clinton did visit Pakistan in

March 2000 during his trip to the Indian subcontinent.)

18



The truth and reconciliation commission model

suggested by Erik Jensen typically is set up in

countries that are trying to pull away from

widespread internal violence, including civil war. Would

Pakistan really respond to such a model? Or could such a

commission end up extending the witch hunt and ultimately

delaying this very difficult task of institutionalizing

accountability?

Erik Jensen: My purpose in suggesting the possibility of a

truth and reconciliation commission was not so much to

focus on the structure as on the intent. In Pakistan’s case,

the mechanism does not have to be a truth and

reconciliation commission. But whatever device is employed,its purpose must be to limit liability and draw the line by

way of a statute of limitations. It must bring a halt to

corrupt practices and a whole range of bad governance that

in fact has occurred over the years and not just recently.

A device such as this is necessary because no matter

what approach is taken, it will end up impinging on the rule

of law that is in place today. Such outcomes can best be

thwarted when a reliable and clearly defined structure is in

place.

Of course, whenever there is an attempt to limit liability,

the inevitable question is where the line gets drawn. But that

is a political question, and my purpose in this instance was

to provide a range of options, with one of those options

being a truth and reconciliation commission.

The liability issue is something that Pakistan has to

come to grips with. The country has to answer the question

of where to cut off liability. There have been so many

misdeeds in past years that the question now is how to get

on with the life of the nation.

My concern is with the relationship between

Pakistan and Iran under the current regime. How

much impact does Iran’s anti-Taliban policy have?

How much impact does its democratization and Islamic

credentials have on thinking inside Pakistan? Also, briefly

describe the country’s support for — or relationship with the

Taliban.

Ahmed Rashid: The main stumbling block is Shiite

Islamicization — where Iran backs one side and Pakistan the

other. In the case of Afghanistan, the conflict is exacerbatingthe huge confrontation between Sunni and Shiite extremism

inside Pakistan. This is something that has been developing

for more than a decade but which has become a major

factor in preventing any improvement in relations between

Iran and Pakistan. That is something that is very new and is

the result, in part, of the kind of extremism that developed

as a result of the war in Afghanistan.

So it is necessary for General Musharraf to tread

carefully. He is not going to jump into Iran’s lap. But he has

made an effort to go to Iran and make very positive

statements in regard to settling outstanding issues with Iran,

including Afghanistan. However, I want to underscore that

he must tread carefully because of this anti-Shiite, anti-Iran

lobby within the Pakistani establishment and in the

population generally.

The bottom line is that the military recognizes that they

cannot even hope to resolve the Afghanistan problem

19


Q

Questions and Commentsby Focus on Pakistan Panel

Q



without there being some kind of reconciliation with Iran.

That means that a strategic dialogue is critical with Iran,

dealing with issues that include: What are the two

countries’ interests in Central Asia? Will Iran and Pakistan

try to knock each other out in Central Asia? Should the two

countries be cooperating, especially regarding the

construction of a pipeline through the region? Regarding

Afghanistan specifically, the issues are: What are Pakistan’s

and Iran’s strategic interests, apart from one another as well

as together? Is it possible to define those interests and then

get on with trying to resolve the conflict between the two?

The same question would apply to the two countries’

relations with the Middle East.

As far as the Taliban and Pakistan’s policy is concerned,

most everyone here knows my position. I have been a long-

standing critic of the military’s policy — both during the Zia

period and today. I won’t go into this except to say that I

remain extremely critical of the policy that the military and

these two governments pursued and are pursuing. That said,I do not place all the blame on the military. I put just as

much blame on Nawaz Sharif and Benazir Bhutto.

For me, the issue is that Pakistan’s support for the

Taliban, including the military’s support, hinged on the

domestic politics that were played by both Sharif and

Benazir. That was the case for the last five years. The

military’s strategy may have been directed at winning the

Taliban’s support, but domestic issues should not drive that.

And now that the military is in power, it should not try

to justify its strategy based on domestic considerations if it is

being honest with itself. If the military is strong, it has both

the authority and the ability to crush any domestic

opposition that arises. And as long as that is the case, it has

the clout to change the policy regarding the Taliban and to

do a deal with Iran.

When it comes to Afghanistan, there are four players —

the Taliban, the anti-Taliban alliance (or the northern

alliance), Iran, and Pakistan. It would be a great service to

Pakistan and to the West, Afghanistan notwithstanding, if

the military government were to successfully promote a four-

way dialogue between these players. But again, the jury is

still out on this. There are foreign policy lobbies both inside

the military and outside. We will have to see how Musharraf

plays this one out.

My students would say that Pakistan should move

as quickly as possible to hold national elections;

that elections would resolve most of the country’s

problems. A decision to hold elections also would be in the

best interests of U.S. policy toward Pakistan. Tell me why

they are wrong or, in other words, why a delayed democracy

is better than an immediate democracy?

Mr. Rashid: It would be a total disaster if a national

election were held in the next three months. Before the

military took over, Pakistan was headed for a kind of Central Asian style of democracy — where a ballot is held

every five years but where a single candidate stands for

election. True, we had two candidates running against each

other, but the process of democratization in Pakistan had

been reduced to zero. Nawaz Sharif won in the balloting but

then basically set out to destroy the judiciary, the economy

and the bureaucracy. The ballot box became his means to

set up a dictatorship.

The public supported last October’s military coup

because they were fed up with this kind of balloting taking

place every five years and resulting in the kind of

government that is totally corrupt and in effect, destroying

institutions and misgoverning. So I have to say, Pakistan

should not be in any hurry to return to democracy or to

hold elections. Clearly, nobody wants a military state

forever. It is not disputed that everybody wants to go back

to some sort of democracy. But democracy as it has been

20

Q



practiced for the last ten years has been an utterly, total

failure.

Shahrukh Rafi Khan: As I said earlier, this was not a coup

that the military planned but something they were pulled

into. As regards the question, I would say it is important

that the military government undertakes electoral reform

and then lets people sort out the mess. Electoral reform still

should be the priority and, yes, there must be safeguards put

in place so the same kind of clowns as before don’t try to

destroy the country by misgoverning it. Pakistan needs to

undertake electoral reform and then get on with it.

Mr. Jensen: There are those stalwarts in Pakistan who

would urge letting elections go. They would say that

democratic habits will build up over time. However, there

were only a few who argued this position when the coup

occurred. That said, it is entirely speculative to try to equate

repeat elections with developing democratic maturity. In thecase of Pakistan, we may be seeing a case of what one

pundit described as, ‘You don’t need a democrat to build a

democracy!’ I don’t want to press that suggestion too far,

however. It is highly contingent on a number of conditions.

Dr. Khan: The key electoral reform has to do with the

question of constituencies for seats in Parliament. Pakistan

has undertaken a census, and if the allocation of seats is

redone based on that census, urban areas will get at least 20

to 30 percent more seats virtually right away. This would

bring in more representatives from the upper middle class

and reduce the representation of the rural feudal class, which

has dominated every Parliament since 1947. If the army

were to follow through here, it would have a much more

dramatic impact on behalf of sustaining democracy than

anything else.

Mr. Jensen: Another proposal that is out there would break

Pakistan into more than four states or provinces. There may

be some wisdom here. Pakistan needs to change its political

story, and one way could be changing the overall structure

before going through the election charade again.

At least, Pakistan should have a timetable for

returning to civilian democratic and constitutional

government. The timetable could be quite long,

leaving sufficient time for exactly the kind of electoral

reform that has been mentioned. That said, could panelists

focus more on the strength of the Islamic extremist and

fundamentalist groups in Pakistan?

Dr. Khan: The Jamaat-i-Islami party seems to be gaining

credibility. It has shown enormous organizational capacity

and discipline and is sometimes more moderate than other

fringe groups. It also attracts huge gatherings. In 1998, the

party succeeded in bringing close to one million peopletogether in Islamabad without any law and order incident.

My hunch is the party will continue to do better because it is

the only untried party at the moment. It also seems to have

the most credibility. Their leader repeatedly takes principled

positions on national issues.

Still, the situation is one of wait and see. As a liberal, I

am concerned with parts of the party’s mandate. Also, I am

reminded of the fact that it was Qazi Hussain Ahmad and

the Jamaat-i-Islami who rejected the last electoral vote in

favor of Nawaz Sharif. The party is returning to party

politics — and that is a welcome change. The process itself

has been a moderating one.

Mr. Rashid: Pakistan’s foreign policy in the 1990s has been a

jihadi foreign policy. In other words, it is a policy that has

been pursued not just by the military, but also by Benazir

Bhutto and Nawaz Sharif. This has damaged Pakistan’s

21


Q



relations progressively within the region and with the West.

Go back as far as the Zia period and the Afghan War, when

Pakistan and the West were together in their support of a

jihadi policy. Tens of thousands of Arabs came to Pakistan

to fight. But a certain residue was left behind, which then

had to be dealt with during the 1990s.

Still, the real dilemma as I see it, is that in the 1990s,

Pakistan was engaged in a 10-year-long struggle in Kashmir

at the same time the country was

dealing with the chaos in

Afghanistan. It was during this

time that both the civilian and

the military governments worked

hard to make sure that these

jihadi groups focused on the

Kashmir and Afghanistan

struggles and did not interfere

with domestic politics.

Both Benazir and Sharif didthis by agreeing to a tradeoff

with groups within the Jamaat-i-

Islamia. Now, I am not saying

that I see that kind of tradeoff continuing, particularly with

those groups that have been far more militant than the

Jamaat-i-Islami and far more crucial to the notion of a jihadi

foreign policy. These groups are not going to live by this

accord. They will fight in Afghanistan, Chechnya, and in the

former Yugoslavia, and they will not agree to avoid playing

a role in what the military government does at home.

For example, they recently put pressure on the military

to increase Pakistan’s Islamicization. They oppose Pakistan

signing the Comprehensive Test Ban Treaty. They are against

handing over Osama Bin Laden, and they oppose any

change in the policy toward the Taliban or on Kashmir. If

General Musharraf moves forward with a liberal agenda of

reform, you will see these same groups trying to position

themselves in the forefront of the opposition to such

liberalization. That, in turn, will trigger a very crucial test

for the military.

I also would stress that at this point in time, it is critical

for the IMF and anyone else who favors the reform agenda

now in place to support liberalization efforts. This support

will help this regime stand up to the demands of these jihadi

groups who already appear to be playing an increasingly

greater role in Pakistan’s foreign

policy and also in setting the

domestic agenda.

What about Pakistan’s

current relationship with

India? Secondly, mention

was made about the difficulty of

land reform and collecting the

agricultural tax. Most everything

on Musharraf’s agenda is difficult.How exactly will reforms play

out?

Dr. Khan: Regarding reform, there is a division of labor. The

National Reconstruction Bureau, which is a kind of think

tank, has been designated to look at medium- and long-term

reconstruction issues. The Bureau defines long-term as being

very short — and as a result, conveys a sense of urgency. To

illustrate my point, we have a 16-month research program

with The Asia Foundation to study decentralization and the

devolution of powers. The Bureau told us that 16 months is

much too long a period and to get back to them in a month.

The cabinet and the ministries that are fighting the forest

fires, are able to only make small innovations. They can’t

really look at the reconstruction issues in the way that the

National Reconstruction Bureau can. We have had dialogues

with General Naqvi, the head of the Bureau, on local

22

... it is critical for the

IMF and anyone else

who favors the reform

agenda now in place to

support liberalization

efforts.

— Ahmed RashidCorrespondent, Far EasternEconomic Review

Q



government, decentralization, and the devolution of power.

Again and again, we have raised the issue of land reform,

and what we get back are the usual arguments. Why don’t

you nationalize industry again? And how would you feel if

we took over your house?

In some sense, vested interests are reflected in a cross-

section of society as well as within the Bureau itself. Also,

opposition to land reform is longstanding. We see land

reform as an anti-trust act because its implementation would

mean a real diffusion of economic and political powers at

the grassroots level. We’re also convinced that it is very easy

to gather data to prove the need for land reform. All we

need to do is to look at the land distribution data in the

1980-1990 censuses. Actually, if you look at the numbers,

the land concentration has increased during this period.

But you also could look at the distribution as

represented in Parliament and the average size distribution in

the country to see the problem as I’m describing it. That

said, all this is not cutting as much ice as we had hoped, andthat is why we are arguing that to have real devolution, you

are going to have to deal with power at the grassroots level.

The problem is that there are some who are affected

personally by devolution. Agricultural income taxes may be

more durable if they are left up to the provinces. This tax

will be announced in the next budget, as will the generalized

sales tax.

Indeed, there was a news item recently that said seven

military officers were appealing to the court, asking the

court to back up their refusal to pay the agricultural income

tax. There is a degree of inequality here in that the military

has been getting land grants for some time and is now a

vested interests that is refusing land reform as well as the

agricultural income tax.

Regarding India, here I am extremely worried. Ever

since the violence in Kargil and last December’s airline

hijacking, the Indian government has maintained that the

government in Islamabad is illegitimate. They also see now

as an ideal moment to try to bring Pakistan to its knees.

India would like to isolate Pakistan as much as possible and

to prevent any kind of economic bailout for the region. They

want tensions to remain as high as possible at least until the

March visit by President Clinton.

In fact, I would anticipate a major escalation of tension

up until the time President Clinton arrives. To illustrate my

point, the BJP (Bharatiya Janata Party) in Delhi has shown

no inclination to even talk to the Kashmiris or to Pakistan.

The Pakistan point of view is that the government that is in

place in Islamabad was responsible for taking Kargil. From

the Indian point of view, General Musharraf is identified

with the Kargil action and with betraying the Lahore

initiative that was put in place after the historic meeting

between the two countries’ leaders at the Pakistani-Indian

border.

So, there are problems because the BJP is trying to

absolve itself from mishandling the situation of the hijackedIndian airline. The airplane landed in Amritsar, and it was

allowed to leave for Kandahar without negotiations or

action. That said, I do not see the Musharraf government

wanting to take on India — or to escalate the problems with

India. This government already has enough on its hands. It

faces a huge economic crisis at home. The regime has been

isolated because of the past policies of Sharif.

By the way, I simply don’t see any justification for

accusations that the military was somehow involved with the

hijacking. At the time it occurred, the military was barely

emerging from the international isolation that occurred after

the October coup took place. It has tried to build bridges —

and it needs to build bridges. In the army’s view, the most

critical issue of all is getting the IMF’s bailout package as

quickly as possible. That requires appeasing an entire board

and a half dozen or so influential countries. It does not

allow for a military campaign that takes on India.

23




Meanwhile, the Indians also are not showing any sign of

wanting a dialogue with the Pakistani regime. I don’t know

how this will play out but at the moment, the relationship

has hit rock bottom. And that is a very dangerous set of

circumstances.

It has been suggested that the jihadi policy toward

Kashmir and Afghanistan for both Nawaz and

Benazir was basically

one of expedience. In other

words, groups were allowed to

operate while conservative

elements within the military also

went along. Would it not have

been easier to turn the

government around on these

issues? Does it mean that now it

is much harder to make any

changes?

Mr. Rashid: Yes, even though

Benazir and Nawaz are no

longer around, an effort still

must be made to change the

mindset of the establishment. I would agree that this is an

extremely difficult thing to do. It cannot happen overnight.

However, I must say here that my whole criticism of U.S.

foreign policy is that there has been a kind of focus on a

single-item agenda, whether that concerns Osama bin Laden

or otherwise.

The Americans do not have an overall strategic policy

for the region, including peace in Afghanistan — and that is

a problem that is upsetting the entire region. For the

Pakistanis’ part, what is needed is a change in mindset in the

military, too. The military has to begin to believe that

Pakistan cannot be reconciled with Iran absent a strategic

dialogue between the two countries. This requires changing

the mindset about the entire region. If Pakistan wants

cooperation with Iran and Afghanistan in Central Asia and

the Middle East, then Pakistan has to change its own

mindset.

This is something I don’t see happening overnight. There

is going to be debate and discussion for some time to come.

Consider the situation with Afghanistan, where for the

moment, at least, efforts are being

made to tackle the problem at the

micro-level. For example, the

Finance Ministry is meeting with

the Taliban to try to stop the

smuggling. They also are trying to

stop the drugs. Meanwhile, the

Interior Ministry is trying to tackle

the issue of de-weaponization.

My point is that it is futile to

try to tackle these issues at themicro-level. First, there must be a

macro-policy. There has to be a

macro understanding before any

effort to find solutions can be

effective. So, let’s have a macro-

level discussion about policy and then let’s deal with the

micro-level.

The Taliban is telling the Pakistan government to forget

it, that they are not going to talk about the micro-level

because they think the government only supports them at the

macro level. I would ask for a little more patience because

any kind of macro policy will take time to develop.

Are there trained, experienced, talented, and

reasonably honest civilians who could step in and

do a decent job of running the country if given the

opportunity?

24

Q

If Pakistan wants

cooperation with Iran

and Afghanistan in

Central Asia and the

Middle East, then

Pakistan has to change

its own mindset.— Ahmed RashidCorrespondent, Far EasternEconomic Review

Q



Mr. Jensen: If the circumstances were right, there are any

number of Pakistanis now living abroad who would be

willing to return and serve in some capacity. That said, there

are also some very talented democrats — small d-democrats

in Pakistan today, who are trying to work with this regime,

first to consolidate Pakistan’s chances for survival and then

to begin working toward a revival.

Dr. Khan: This is also a question

of whether one views democracy

in a functional way or whether

democracy is an end in and of

itself. I happen to see it as an

end in and of itself. This is

because democracy is the result

of a series of choices that people

make over the long term. If they

make bad choices, then the

country suffers. People alsosuffer individually. Right now,

I’m prepared to live with the

suffering for as long as it takes

for people to fix the system. If

the political process is allowed

to work, then eventually the

people should be able to reform

the system.

But, I agree, it is a high price

to pay if the right kind of people

are not present right away. One can hope that in due course,

the process will turn up the right people to reform the

system.

Please elaborate on the status of the judiciary. Are

there efforts underway to build the institution,

particularly at the level of the subordinate courts?

Mr. Jensen: It is important to rebuild the judiciary from the

bottom up. And this is consistent with Islamic notions about

justice, by the way. I would say emphatically that the lower

courts are not serving the interests of justice at the present

time. And it would be a good thing if the current regime

were to support institution-building efforts within the

judiciary. It would make sense as a reflection of the regime’s

concern for rebuilding public institutions in the country

generally.

The symbolism here is very

important. To digress for a

moment, there are very few

resources allocated to the courts

and to the extent that funds are

allocated, the money is not

distributed very well. For example,

if you have a commercial case

being heard in Karachi, you can

expect to spend on average, 10years in litigation. If you have a

property case, you can expect to

spend seven years on average.

One consequence is that

structures are being put in place

which are based on an assumption

that the judiciary does not work.

Instead, the effort should be

directed at rebuilding the judiciary

as an institution. That is a difficult

task. There must be performance incentives within the ranks.

They must be willing to engage in appropriate disciplinary

proceedings. They need more resources, and salaries should

be tied to performance. Judges today receive poor salaries.

One consequence is their performance is poor. There is very

little dignity associated with being a justice.

An interim solution would be to make the funds

25


Q

I would say emphatically

that the lower courts

are not serving the

interests of justice at

the present time. And it

would be a good thing

if the current regime

were to support

institution-building

efforts within the

judiciary.— Erik JensenSenior Law Advisor, The AsiaFoundation



available for at least a pilot project that is directed at trying

to stimulate reform process.

The October coup was described as being provoked.

However, during the months preceding the October

coup, rumors were rife that a coup was what was

going to occur. It was reported that Musharraf’s firing was

the last straw. How is provoked defined in this context?

Also, if the military coup was so popular, why is the

government unwilling to face voters in a referendum? And

finally, what is the practical solution to the situation in

Kashmir?

Mr. Rashid: By provoked, I mean Musharraf told the Nawaz

regime, ‘If you sack me, I will not go quietly.’ Nawaz was

taunting the military, and the military was taunting him. But

through it all, it was quite clear that the military intended

not to tolerate another sacking of a chief inside of 12

months. That was the bottom line.So, in one sense, the coup could have been prevented had

Nawaz moved. On the other hand, the military was not

willing to legitimize a coup by moving first. If the army had

moved first, the public would have had a much harder time

accepting the outcome. Public acceptance was possible only

if Nawaz moved first.

Concerning a referendum, I agree. Musharraf has said a

referendum could happen. Indeed, there were some very

strong rumors within weeks after the coup happened, that

the military government intended to go immediately for a

referendum. That still is very much an option, but one of the

problems Musharraf has is the team of loyalists and experts

who surround him. There is no one under the age of 80!

They should start to bring in some younger people with

a little more imagination and creativity. Instead, Musharraf

has advisors who basically advised the leaders of three

previous martial laws and who had totally different aims and

agendas from those of Musharraf. Meanwhile, the legal

advisors who surround him tend to represent a single

mindset. I hope that will change.

The idea of a referendum is very possible. However, one

downside is the disenfranchisement of a number of leading

politicians, which is what happened in the 1960s under

Ayub Khan. Again, there seems to be no public opposition

to such a move. I don’t think anyone would be particularly

upset if Sharif and Benazir were disenfranchised or if Asif

Ali Zardari (Benazir’s husband) were put away for life on

the basis of corruption charges. The public remains very

hostile toward these people at the moment.

Of course this raises the question about Pakistan’s

future. Is it going to be up to the military to create a new

generation of politicians? This could be a very dangerous

outcome and not one that is particularly helpful in a

democracy. This concern needs to be taken up by local

bodies, in local and provincial elections and then in national

elections.Pakistan needs to grow a new generation of politicians.

To do that, electoral reform is essential to first bring in the

urban middle class and to cut the feudal elite out of politics.

This is the main demand being made on the part of the

urban intelligentsia. Electoral reform needs to be followed

by tier elections — at the local and regional levels, and so

forth. Hopefully, this will bring about new political parties

and new politicians. It also would help avoid something I

would not like to see and that is a kind of new generation of

politicians who have been manipulated by the military.

Concerning Kashmir, I have no solutions. The best

course may be to put the issue on the backburner for the

time being. That is what the Chinese have been advising for

the last four years. Let the Indians initiate a dialogue with

the Kashmiris, if not with Pakistan. That is the bottom line

as far as India is concerned and that is arguably the only

solution. It is also a fairly long way off.

26

Q



Dr. Khan: On the subject of Kashmir, it strikes me that

whenever there are talks on issues such as this, they are

always bilateral. Quite naturally, the Kashmiris protest. It

may be time to bring the Kashmiris on board for trilateral

talks. The outcome has to be more than a land grab. To this

end, Pakistan also needs to understand that fundamental

rights of people who struggle for self-determination are

involved here. In fact, that could be the starting point for

breaking the current deadlock.

One analysis of the post-Kargil violence is that the

Americans had to force Pakistan to withdraw from

the heights of Kargil. What if I said that Pakistan is

spoiling its 50-year relationship with America?

Mr. Rashid: I do know that the military itself has democrats

within its ranks. They want to address the fact that the

whole madrassah (religious schools used to teach Taliban

fighting forces) culture is out of control. In fact, the Interiorminister has begun by making some serious commitments,

starting with de-weaponization.

But there has been an accumulation of bad policies over

the last 10 to 20 years, particularly in regards to

Afghanistan. Here the West supported the entire process,

including the distribution of millions of dollars worth of

weapons. The Indians did not confront a similar threat north

of their border. As the Indians tend to do, they put the entire

blame on the ISI, the military, and so forth.

My point is that it is necessary to see the situation

historically and as a result of an accumulation of things. Of

some importance here, too, is that it suited the West to

conduct itself one way with regard to Pakistan and then to

walk away after it changed its mind. The fact is that the

precise moment for dealing with the aftermath of the Afghan

conflict was when the conflict was winding down and when

Zia died. It was then that there was a sort of opening up.

But then Kashmir erupted. There is no serious Indian

analyst who believes that Pakistan provoked the Kashmiri

violence or that the Kashmiri uprising occurred because of

the direction of Indian policy on Kashmir. All in all, it threw

Pakistan into a kind of total mess, which was then

manipulated by Benazir and Nawaz to stay in power. That

said, I don’t think instantaneous judgements work. It is

much better to look at the situation historically and consider

the fact that Pakistan’s leaders made some bad political

decisions.

What would be a realistic timetable for electoral

reform and elections? And second, is it reasonable

to expect that President Clinton could jump start

negotiations over Kashmir?

Dr. Khan: Some think two years is the magic number. That

said, Musharraf thinks that he will have a timetable — and

he seems to be playing with this idea — of two years.Perhaps this was because when Moeen Quereshi was the

interim prime minister, he mentioned that the minimum

amount of time for the kind of reforms that had to be put

through then in the form of ordinances — most of which

were then never enacted — was two years. So perhaps that’s

the idea that the military is playing with. Certainly, this

referendum idea is very much a part of their active agenda.

In terms of using President’s Clinton’s visit (in March), I

think all that Pakistan warrants is an acknowledgment that

Kashmir is a very core issue. I think Pakistan simply is

looking for an acknowledgment on the part of India and

then just to get the process rolling, which may not be too

much to ask considering how much people are emotionally

invested in this issue. They really do need to get this out of

the way and get on with achieving prosperity.

Mr. Jensen: The time frame is a difficult issue because of the


Q Q

27



need for fundamental reform. Pakistan needs to hold local

elections and then build up from there. Such a constructive

politicization process means changing a very deep-seated

political culture at this stage. I would give it two and one-

half years to three years. The first six months is spent just

consolidating the chances for survival.

So I don’t think that three years is too much. The

important thing is to start with the benchmark process, then

to get a process going, and finally, to build confidence and

legitimacy. The end game doesn’t become quite as crucial if

there’s credibility throughout.

When Minister for Population and Welfare Begum

Abida Hussain was making a presentation at the

State Department recently, she said the movement of

the then Sharif government was toward allowing the sharia

courts to have far more authority on civil disputes. What has

happened on that?

Mr. Jensen: It has been six months since I was in Pakistan. It

does seem that there was a move prior to now to vest the

sharia courts with more power, but I cannot say what is

happening at this stage. My guess is that there continue to be

very serious jurisdictional issues between the civil courts and

the Islamic courts.

It seems to be assumed widely that both Benazir and

Sharif were not good for democracy in Pakistan. But

the jury presumably is out on General Musharraf.

Could he be someone who is not a democrat but in the

position of making a democracy?

Mr. Rashid: In my opinion, the army did not take over with

a personal agenda as regards to power. At the same time,

they realized they have to have power to accomplish what

they want to accomplish. Still, the question is whether the

army that suppressed civil society for so many decades

actually is able to reconstitute civil society, but there are

indications that this is actually what is happening.

I call attention to the way the cabinet was chosen.

NGOs were brought in and so forth. There are other

indications, too, perhaps not as much to the point as the

latter. But the bottom line is that the Musharraf government

is doing the right thing, even if it means they will not be able

to stay in power themselves.

The army’s self interest also has to be considered in this

light. We have the seventh largest army in the world — some

500,000 people. These guys have to have a salary. The army

has to have a budget. If the economy is going down the

tubes and the country to the dogs, it means that Pakistan is

facing a Soviet Union-styled situation where there is an army

but no country. It is in the army’s best interests not to let

that happen. The only way to prevent that is to bring the

country back to some kind of democratic rule and to insure

that there is an economic revival that turns things around.This is in the best interest of the country and also in the

army’s self-interest.

Dr. Khan: Notwithstanding my views on legitimacy, we

should give the devil his due. One of the things that General

Musharraf said after taking over was, ‘Judge me by my

actions, not by my words.’ For example, he said he would

make sure that he and his cabinet declare their assets both as

they came into power and when they leave. The first part of

that promise has been delivered on.

It is interesting here that what came to the surface is that

the military may have too much property. We now know

that this is something that has to be addressed and that we

need to stop making land grants to the military and other

senior civil servants. Instead, land grants need to be made to

those people who have no land.

28

Q

Q



Mr. Jensen: In one sense, Pakistan is undergoing its own

kind of shock therapy from within. In the past, Pakistanis

have been concerned generally about the survival of their

country. Now, circumstances are different. I can’t say

whether this non-elected person will install democracy, but I

do think that some of the circumstances are right for

introducing democracy.

Mr. Rashid: The dilemma of democracy with a ‘big D’ in

Pakistan is a problem for both Pakistan and the United

States. It comes down to the ballot box every four or five

years versus genuine democratization. Basically, U.S. policy

centers on Central Asia. And what we saw in the early

1990s, is that anything with a ‘democratic’ label was

accepted as such in many countries in the Muslim world and

in Africa.

Today, the whole issue is much more complex and

Pakistan illustrates that complexity. This issue of democracy

in Central Asia will be a major foreign policy issue for the

United States over the next few years, namely what really is

democracy and what really counts as true democratization.

29




Erik Jensen

Erik Jensen is a Senior Advisor for Law Programs to The Asia Foundation

and Director of Research at Stanford Law School’s Program in

Transnational Business Law. As a legal practitioner, he has designed and

written about programs in rule of law, civil society development,

economic reform, international relations, and governance. In addition to

his other responsibilities, Mr. Jensen is currently completing a research

project funded by the Ford Foundation surveying cross-border business

perceptions between Pakistan and India.

Prior to his current position with the Foundation, Mr. Jensen served

as The Asia Foundation’s Representative in Pakistan where he directed

and consulted on legal and judicial reform and governance issues. Before

joining the Foundation, Mr. Jensen was a Fulbright Senior Lecturer in

Law teaching international economic law and international trade in Asia.

He has written numerous articles and studies, including “Pakistan

2010: An Agenda For Effective Governance.” Mr. Jensen also authored

the book, International Law in Sri Lanka (Open University Press: 1989).Mr. Jensen received his undergraduate degree from Augustana

College and law degrees from William Mitchell College of Law and the

London School of Economics.

Shahrukh Rafi Khan

Shahrukh Rafi Khan is the Executive Director of the Sustainable

Development Policy Institute (SDPI). Through government briefs,

newspaper articles, and his work with nongovernmental organizations on

the NGO Bill, Dr. Khan is engaged in policy work and advocacy. Dr.

Khan’s current research addresses collective action in basic education,

rural water supply, sustainable development, and trade issues.

Prior to joining SDPI, Dr. Khan consulted for organizations including

the East-West Center, the World Bank, UNESCO, and

USAID/International Food Policy Research Institute. He served as

Economist and Head of the Public Policy Section at the Pakistan Institute

of Development Economics, and taught economics at Vassar College and

the State University of New York at Oneonta.

Dr. Khan has authored numerous books including Profit and Loss

Sharing (Oxford, 1987), Do IMF and World Bank Policies Work?

(Macmillian, 1999), and Reforming Pakistan’s Political Economy

(Vanguard, 1999). In addition, he has edited or co-edited numerous

books and monographs including Higher Education and Employment

Opportunities in Pakistan (UNESCO, 1988) and Fifty Years of Pakistan’s

Economy (Oxford, 1999).

Dr. Khan holds a doctorate in Economics from the University of

Michigan.

Ahmed Rashid

Ahmed Rashid is the Pakistan, Afghanistan, and Central Asia

correspondent for the Far Eastern Economic Review and London’s The

Daily Telegraph. He also writes for Pakistani newspapers and broadcasts

as well as international radio and TV stations including the BBC and

CNN. He has covered the civil war in Afghanistan and Pakistani politics,

economics, and foreign policy for 20 years.

Mr. Rashid is the author of numerous essays and books. His most

recent essays include “Talibanization” inForeign Affairs (November

1999) and “Pakistan’s Coup: Planting the Seeds of Democracy?” in

Current History (December 1999). He authored The Resurgence of

Central Asia: Islam or Nationalism? (Zed Books, 1994), and co-authored

Fundamentalism Reborn: Afghanistan and the Taliban (Hurst and Co.,

1998) and Contemporary Issues in Pakistan Studies (Gautam Publishers,

1998). His latest book, Taliban: Islam, Oil and the New Great Game in

Central Asia, will be published in April 2000 in the United States by Yale

University Press.

Ahmed Rashid was born in Rawalpindi, Pakistan, and was educated

at Cambridge University.

Seminar Participants

Asian Perspectives publications are produced by The Asia Foundation’s

Office of External Relations. Editing staff: Marsha Vande Berg,

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