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PAKISTAN

 

PAKISTAN

SOME COUNTRIES CAN'T SEEM TO GET OUT OF THEIR OWN WAY

Updated 5-30-2001 

A country of anomalies, Pakistan has averaged an increase in gross national product of 6% a year for over fifty years.  This is by far the greatest increase in the region and places Pakistan among the world’s elite in terms of growth.  Pakistan and India both received their independence from England simultaneously, and at the time, Pakistan’s per capita income trailed that of India.  Yet today, the average Pakistani receives 75% more than his India brethren, an increase of more than triple in just the last two decades.[1]  Pakistan has approximately 130 million people, of which 97% are Muslim.  The overall literacy rate in the country is low, with only about 36% of the population being able to read and write, and of those, women are far less educated and literate than men.  Disease is rampant, childhood medical problems permeate the nation and longevity is modest.  

 

Strangely, though, the nation’s economic advances have not discernibly benefited anyone other than that small percentage of the population who do not pay their taxes,  corrupt bureaucrats who skim off tens of billions of the country’s currency every year and the feudal lords who have no obligation to contribute funds to the government at all.  Poverty is increasing at an alarming rate, and the number of truly poverty stricken citizens has risen from 24 million to 42 million in just the last five years, accounting for fully one-third of the population.

 

In order to correct the quagmire of tax collection, the government determined that rates were too high and they were lowered, setting the new rates from a minimum of 10% to a maximum of 35%.  When you have gotten into the habit of not paying anything at all, this change did not inspire anyone who wasn’t paying to contribute to the state coffers, and collections from those who did pay taxes decreased accordingly.  Even more devastating is the fact that the projected government tax collections were less than a third of the forecasted amount.  Taxpayers used a most intriguing reason for not disclosing what they were earning, saying that if they did, they would become "targets of witch-hunts by corrupt tax officials". ([2]) So the government did the unthinkable: it fired the government bureaucrat running the tax department and appointed an apolitical ex-banker to the post of chief tax collector.  

 

One of Pakistan’s largest domestic products is the creation of Garbage.  There are no particularly good rubbish collection frameworks, and if this refuse could be turned into something of value, it would simultaneously cut down on disease, improve sanitation, make the city more attractive and eliminate rodents which out-populate people in the of Karachi. 

 

In this city where rubbish overflows on almost every street corner, it came as a bombshell that a fertilizer factory had to be shut down for lack of garbage.  This  factory had been the focal point of what seemed to be a coherent effort in 1984 to make use of some of the 6,000 tons of garbage produced every day in Karachi.  The brains behind the project, a Briton of Pakistani origin named Farooq Saleem, said at the time that the idea was a “win-win” situation.  On the one hand, garbage would be eliminated from the streets; on the other, demand for compost, which Pakistan was importing, would be met domestically.

 

What the project did not take into account, however, were Pakistan’s legendary bureaucratic hurdles and the need to deal with employees of the state-owned Karachi Municipal Corporation (KMC), who saw the project as a threat to their livelihood. Clearing garbage in Pakistan is a sensitive issue. Not everybody does it.  The work, considered by Muslims to be the “lowest of the low”, thus, it is left to Christian sweepers.  These men and women, mostly illiterate and unable to work in any other job, sweep streets, clean gutters and burn garbage on street corners.  “That’s the way our forefathers have done it and that’s the way we will do it”, said Iqbal Masih.

 

Iqbal heads a gang of five workers who are employed by the municipal authorities to look after a city block comprising about 200 houses.  Instead, however, Iqbal and his team pay their supervisor half of their salary and moonlight for the very houses whose street they are supposed to clean.  The supervisor turns a blind eye and residents have no option but to pay up if they want their refuse removed.

 

With the entry of Farooq Compost and Fertilizer Corporation in 1984, all that was set to change.  Under an agreement with the KMC, the company hired 200 of the city’s sweepers, put them in smart uniforms and gave them second-hand trucks imported from Scotland to collect garbage and transport it to the company’s factory in North Karachi, next to the city dump.  The plan was to slowly expand to all parts of the city.  The fertilizer plant, which has the capacity to process more than 150,000 tons a year, was financed by a local financial institution.

 

But the plan never worked.  Employees, afraid of losing their cozy arrangements, made sure the garbage never reached the factory.  They burned it or dumped it in deserted areas.  Truck drivers sold the fuel meant for transporting the garbage and put the trucks to other uses.  A sweeper recalled how one driver took his truck to his wedding and used it as the bridal car. “It was a memorable sight for us,” he said.

 

“The facility been closed and things are now continuing as usual.” ([3])

 

“Some consider Karachi to be the most dangerous city in the world. About five to ten people die every day as a result of political violence in Karachi. Karchi is a dirty, bustling port town, with a population of more than 5 million people. Robbery and kidnapping are often carried out with the distinct intention of creating terror and instability among the populace. Bombings have occurred at Pakistan government facilities and public utility sites. Vehicular hijacking and theft by armed individuals are common occurrences. Persons resisting have very often been shot and killed. Overly detailed and gory reports of murders, bombings, robberies and assassinations fill the papers every day. The bustling port of Karachi is a war zone, thanks to the MNM, the name means Refugees National Movement and is led by Altaf Hussain (who conveniently lives in sedate London). The Urdu-speaking Mohajirs feel that they are discriminated against (which they are) by the Sinhis. There is also a lot of banditry, drug feuds and Sunni/Shiite violence that is blamed on the MNM…” ([4])

 

Basically, this story tells you three critically important things about this country: the first is that people are so concerned about their jobs that they will do just about anything to keep them, the second is that people are totally corrupt down to the most menial employee in the garbage industry, and finally that the infrastructure is totally unable to deal with lawlessness at even the most menial level.

 

Pakistan ranks at the bottom of the global barrel in just about every measurement that is available.  According to the recent report on Human Development in South Asia, 43% of the population lacks basic health facilities, 48% live without clean drinking water and nearly 64% do not have basic sanitation.  The only international sweepstakes in which they are not a clear winner is that of bribery, where Transparency International was forced to place them behind Nigeria, a crushing defeat, no doubt.

 

It is a country where conditions for business are so dismal that last year there was virtually no foreign direct investment.  Foreign exchange is almost nonexistent, the populace is on a perennial tax strike and the fiscal deficit is running at the rate of 6% of GDP.  Pakistan’s sacred tax cows include anything within the agriculture sector that comes from a farm.  Currently there are 1,723 corruption inquires at advanced stages involving senior government officials, but each investigation takes up to ten years, and during that period, the suspected party is able to negotiate with his accuser.  At times, the investigator dies of old age, retires or goes on to work elsewhere, bringing the investigation to a halt.  Having so little to fear, the process goes on.

 

Nevertheless, making money and getting rich in this country was not a daunting task if you knew the right people.  “In the know” Pakistanis, follow a proven prescription for economic success by borrowing as much as possible from the bank, never paying it back and retiring to the countryside - or even better, across the border.  Leaving the country is not necessarily a critical option for crimes such as bank fraud and tax evasion, as there is little or no enforcement of any white-collar misadventures.  Banks are theoretically following Islamic thinking, which does not allow the payment of interest, yet plainly, the entire population wants to accept it.  Thus, deposits are made into accounts denominated in foreign currencies and passbook holders are paid their interest in that fiat.  The same type of merry-go-round economics exist when interest is charged by renaming it “mark-up,” which seems to placate the mullahs.

 

“Pakistan is a special place when it comes to crime. There are three levels of crime. The [5]first is the friendly constant pressure to relieve the unwitting of their possessions. Just as the wind and rain can erode granite mountains, the traveler to Pakistan will find his money slowly slipping from him. Perhaps this is not a crime, since the victim is consensual, but it nevertheless is not an honest transfer of funds. The second level is petty crime, the fingers rummaging through your baggage, the wallet that leaves your pocket or the camera that disappears from the chair next to you. Everyone will caution you on petty theft. Here, theft is an art, almost a learned skill. These crimes happen to the unwary and unprepared. "

"Lock your zippers. Do not leave anything of value in your hotel room, and do not tell people your schedule. The luggage of most airline and bus passengers looks like a Houdini act with locks, rope, sewn-up sacks, and even steel boxes used to keep out curious fingers. Mail must be sent in a sewn-up sack to prevent theft. Naturally, thieves love the many zippered, unlocked backpacks of foreign trekkers. …The third level is where Pakistan outshines many other areas: The cold calculated art of kidnapping, extortion and robbery. There is little any traveler can do to prevent this crime in certain areas. People who have regular schedules and who travel to crowded markets, along well-known paths, or do not have good security are at risk…”

 

Stability is not a long suit of Pakistan.  In its 50-year history, half of which has been spent under military rule (somewhat of an anomaly for a democracy), Pakistan has had 17 Prime Ministers and 8 presidents.  There have been three military insurrections, one successful secession and five dissolutions of Parliament.   The only military victory that the country has ever recorded was the seizing of their own government by its own armed forces.  In celebration of its 50th anniversary, Pakistan’s Lower House passed a bill, which soon became law that allows security agencies to arrest, search and hold suspects without obtaining search warrants.  A wonderful gift for the populous of this proud democracy on this most auspicious occasion.

 

The West utilized facilities in this country as a buffer to communism during the “Cold War,” and for such loyalty to the West, the Pakistani’s were well paid.  These funds, along with repatriated money from citizens working abroad, was neither used for infrastructure development, nor was it saved.  As much as 40% of Pakistan’s budget goes for military arms (justified because of their constant state of war with India) and another 40% is spent on servicing foreign and domestic debt, ([6]) leaving literally nothing with which to reconstruct decaying cities.  The West considered Pakistan expendable after the Berlin Wall toppled and used the country’s continuing pursuit of atomic weapons as a logical excuse to cut off their aid.

 

The United States had used Pakistan as a base for locating drug smugglers over the years.  In that capacity the U.S. government worked closely with the Pakistani government by employment of indigenous people to help in its counterespionage work.  Each person that the United States recruited was evaluated with Pakistani assistance, and both sides were kept apprised of events as they occurred.  Ayyaz Baluch, a chubby, good-natured Pakistani with a gift for languages was one of these employees.  Baluch had worked for the Drug Enforcement Administration (“DEA”) from the United States Embassy in Pakistan for 15 years.  He held the dual jobs of both investigator and interpreter for the princely sum of less than $10,000 per year.  He was loyal, smart and dedicated to his mission.

 

The district of Pakistan in which Mr. Baluch had particular expertise, produced almost 20% of all heroin that found its way into the Untied States, but sadly, he did his job too well.  While working as an indirect representative of America’s Drug Enforcement Agency, he was responsible for the seizure of $160,000 worth of heroin that had been smuggled by two corrupt Pakistani Air Force pilots.  Baluch was overjoyed, he felt that not only had he helped his country, but he had also aided his employer.  Mr. Baluch was justifiably proud of his achievement.

 

For his well-meaning success, Mr. Baluch was taken from his home under the cover of darkness by the Pakistani military intelligence, which then held him incommunicado.  He received the usually interrogatory treatment, no sleep, cattle prods, injections and was beaten almost to death while the line of questioning only seemed to dwell on the fact the United States was out to overthrow the Pakistani Government, and if he would sign a paper to that effect the electricity would be turned off.

 

One of the chief witnesses against Mr. Baluch, who eventually was handed a sentence of 10 years at hard labor for inducing the military men to become involved in heroin smuggling, was his cellmate.  While Baluch was held in chains and was out of his mind from lack of sleep and the effect of drug injections, he was asked to appear at a press conference in which he would state that he was hired by the United States Government to spy on Pakistan nuclear installations.

 

However, Mr. Baluch didn't fit the normal Pakistani mold.  He didn't talk about the sensitive information that had been entrusted to him.  He was unapproachable as far as bribery was concerned, and when it came time to set an example about people that don't play ball with the Pakistan military, he was chosen as a sacrificial lamb.  The Air Force could not bear to have their own personnel caught in the act, and by putting Mr. Baluch away for good, they made a face-saving move, highly typical of the Pakistan Government.

 

The United States has had no luck in negotiating a release for their retainer who had performed so loyally.  As a matter of fact, the trial was held in secret and no witnesses were allowed to testify for the victim.  The United States could have sprung him had they chosen to apply substantial pressure on the Pakistan Government, but that would have just caused an even greater loss of face for them in the region.  Meanwhile, Baluch rots.  The United States, for its part, finds it more convenient to pretend that its agent never existed, instead of risking losing Pakistan's friendship.

 

With friends like these, who needs enemies?  As in all things Pakistani, everyone usually loses, but the bad guys.  The U.S. agent rots in jail, everyone know that the Air Force personnel were moving drugs, but no one cares, the U.S. looks like a paper-tiger and Pakistan once again is able to convey the degree of corruption within the boundaries its country to the entire world.

 

Mahbub ul Haq, the president of the Human Development Center in Pakistan and the country’s Finance Minister between 1982 and 1988, in an editorial appearing in the Financial Times, 8/14/1997, had the following harsh comments about Pakistan’s efforts, “But one sobering truth can be stated bluntly.  Pakistan often dreams of becoming an Asian tiger.  But no illiterate, feudal society has ever become a tiger of any stripe or color."  To that, we may add another truth: when the economy prospers, but ordinary people do not, it is only a matter of time before there is a social explosion.

 

Globally, there is a big movement afoot to attempt to locate the money stolen by dictators that have pilfered national treasuries.  It seems that the international community has had enough of watching people starve to death, while their leaders maintain palaces in exotic global locations.  Even the banks, such as those in Switzerland, are becoming more cooperative in looking for assets belonging to the people ripped off by these dictators.  It is self-evident that if the rewards for graft vanish, then graft itself will dry up.  While this may be true in the rest of the world, Pakistan is still a very special place.

 

Benazir Bhutto was the previous Prime Minister and was thrown out of office by the country's current President, who was convinced that substantially more was going into Ms. Bhutto's and her husband's (Asif Ali Zardari) pockets, then was going into the treasury.  They were probably correct; but then again, who ever held that office didn't rob the treasury?  Bhutto and her husband have been indicted for "wrongdoing in awarding a contract to a Gulf-based company for the import ../../of gold and silver._span style_.css"mso-spacerun: yes">  The government says the treasury suffered a loss of 1.8 billion rupees ($39 million) under the contract that granted a company called ARY Gold a monopoly for the import ../../of gold and silver into Pakistan._quot.css;[7]  Her response, after being indicted, was to state that the case was politically motivated and that one of the sitting judges was upset with her because she would not promote him during her reign as Prime Minister.  We would have to agree on all counts.

 

In another case, arrest warrants have been issued for Benazir because she did not appeared to face court charges in this other case.  This is a case where she has been charged with receiving money under the table for letting a consortium illegally bring in Polish Tractors into the country.  Bhutto's husband has recently been indicted in Switzerland for money laundering, and the Swiss have blocked Bhutto's, her mother Nursrat’s and Zardari's Geneva Bank accounts.  Zardari has additionally been charged with corruption under Pakistan's accountability laws and charged with income tax evasion by another court because his holdings exceed the income he reported.  This though is only the bottom of the iceberg.


[1]  "The State Bank of Pakistan in its annual report declared that the year 1996-97 was one of the most difficult and disappointing years in the economic history of the country.  The GDP growth was less than half of the target, actual performance of the budget was disappointing; heavy additional taxes were imposed; total debt increased now constituting 89.5% of the GDP; government borrowing for the budgetary support was far in excess of the credit plan limit; the trade deficit stood at $42 billion, as exports showed decline and imports ../../came down.css; the rupee was devalued twice besides the creeping adjustments and above all the situation came to a point where people started withdrawing their foreign currency deposits because of the instable foreign exchange reserves position." Pakistan Today  Friday, October 24, 1997.

[1] Financial Times, December 22, 1997.

 

[2] Disposal of public sector workers a painful decision for Pakistan, Karachi, Kamal Siddiqi, Asia Times: June 11,1997.

[3]  The News, January 4, 1998, Ashraf Malkham, Lahore.

[4] Robert Young Pelton, The World’s Most Dangerous Places, Fourth Edition HarperResource, 2000.

[5] Ibid

[6] The figure of 80% for military and debt service is unthinkable.  We believe that the anomaly in the numbers occurs in the analysis of military expenditures.  Although not broken out by the military, a large amount must include repayment of loans on military purchases, but we’re only guessing.

 

[7] Reuters, 8/12/98.

 

 

 

 

 

 

 

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