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Monday 21 Aug 2017 | 16:54 | SYDNEY
Monday 21 Aug 2017 | 16:54 | SYDNEY

Pakistan: Don't forget the economy

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9 November 2007 09:59

This handy Council on Foreign Relations backgrounder reminds us that Pakistan has made solid economic progress under Musharraf. Yes, some of that has been as a result of increased foreign aid, but Musharraf has liberalised the economy in important respects too. And that appears to be a factor in Musharraf's favour: although political unrest is threatening foreign aid (The Netherlands has already turned off the tap and others might follow) and Pakistan's credit rating, Forbes says the private sector is on Musharraf's side and that businesses are functioning normally. The worry for Musharraf is that even if this is true now, the economy can't be insulated from political turmoil indefinitely.

A number of authoritarian states have struck implicit bargains with their people: if we give you economic prosperity, you will accept restricted political freedom. Having been sunk in poverty for so long, Pakistanis may be prepared to settle for the same deal. So far in this political crisis, the Pakistani public has not come out in force (although Benazir Bhutto has called on them to do so today, in Rawalpindi). If Musharraf can maintain a sense of economic normalcy, they might stay off the streets for good.

FOOTNOTE: If you've ever wondered how American foreign aid is actually distributed to Pakistan, this account alleges it is largely by way of cash transfers, with which the Pakistani Government can do anything it likes.

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