[ Reproduced from: The News International, Pakistan
August 19, 2001]
Peace dividend in South Asia
by Dr Farrukh Saleem
Fifty-four years of independent existence and we are yet to understand the futility of waiting for war. In half a century we have grown awfully rich in slogans and poor in everything else. We haven't yet decided whether we are to seek genuine peace with India or just try and reap as much of a 'peace dividend' as possible from the West. Was Agra a point-scoring exercise (in which President Musharraf was the sole winner) or a sincere effort towards reconciling with our past mistakes? Real peace shall begin when PTV will move towards making Pakistan's internal political environment conducive to peace.
Americans love to talk and also love people who agree to talk. On May 11, Richard Lee Armitage, the Deputy Secretary of State, met PM Vajpayee. On May 25, India invited President Musharraf for a chitchat. Starting July 14, President Musharraf and PM Vajpayee chatted for two days.
Pakistan's peace dividend arrived on July 25 when the World Bank released the progress report on its Pakistan Country Assistance Strategy. The Bank expressed "satisfaction at the strengthening of the lending programme..." Now we have promises of a $350 million Structural Adjustment Credit, a US$300 million Banking Restructuring and Privatization Loan, a US$30 million Community Infrastructure Project, and a US$10 million HIV/AIDS Project (some of these projects have not yet been approved by the Board of Directors).
Promises made before the talks even began include a $21 million NWFP On-Farm Water Management Project, a $3 million Trade and Transport Project and a $10 million Global Environment Facility-funded Protected Areas Management Project.
The Board of Directors at the Asian Development Bank (ADBP) is reported to have endorsed an interim Country Operational Strategy and a Country Assistance Plan 2001-2003. Under the plan new funding of $1.922 billion would be offered to Pakistan.
To be certain, the Cold War ended on 15 February 1989 the day that the last Russian soldier walked out of Afghanistan. The United States used to spend up to 5% of its GDP on defence. Within ten years of the Russian withdrawal, defence allocation is down by 39%, force structure by 33% and procurements by 63 percent. The Pentagon has shed 700,000 active duty troops. The GDP has, as a consequence, jumped from $6 trillion in 1991 to over $9 trillion; an unprecedented economic expansion of 50% in less than 10 years.
In every other major Nato-member the economic miracle of the peace dividend (in technical terms: macro-economic effects of reductions in military expenditure) has not been much different from the US Between 1991 and 1999, the British economy, for instance, expanded by a handsome 54% growing from Pounds 570 billion to Pounds 880 billion when expenditure on defence went down from 4.2% of GDP to 2.5% of GDP. In Germany, the force structure is down from 653,000 to 283,000. In France, defence cuts amounted to 33% and the economy grew by 50% (from Franc 6 trillion to Franc 9 trillion).
In 1991, Pakistan allocated Rs69 billion for defence. By 1999, the allocation had jumped 100% to Rs143 billion. Not too long ago, one out of every four Pakistanis was living below poverty. The ratio has now deteriorated to one out of every three. While the end of the cold war and the resulting peace dividend further enriched Americans, British, French, Germans, Italians, Dutch and Norwegians the general price level in those countries has budged only a little. In Pakistan, price of everything has skyrocketed while incomes remain depressed.
On 17 September 1978, Muhammed Anwar al-Sadat and Mehachem Begin agreed to live in peace (The Camp David Accords). For the past two decades, the Egyptians haven't stopped counting their peace dividend. Al-Ahram the Egyptian weekly, in an opinion titled "Twenty years of the peace dividend", commented "The peace treaty was a turning point in modern Egyptian history....
Average income has increased, despite population growth. Not only are Egyptians richer than they were 20 years ago, they are also healthier. Life expectancy has increased by 10 years. Had Egypt not signed the peace treaty, it would probably have had to wage a war or two in the past two decades. By signing the agreement, Egypt not only avoided the cost of such wars, it also opened the door to a brighter future."
In Argentina, military budgets used to eat up almost all of that country's resources. The consequence was a rate of annual inflation of 600% and a foreign debt of $149 billion. Military expenditures peaked in 1981-82. On 2 April 1982, Argentine President General Leopoldo Galtieri ordered invasion of the Falklands Islands. On April 10, EEC approved trade sanctions against Argentina. On May 1, Harrier and Vulcan British planes attacked Argentine forces. On June 20, Argentina was thoroughly defeated.
The defeat changed a lot. Argentina's internal political environment turned against defence spending and military's capacity to influence budget making deteriorated. All this resulted in a two-third cut in the defence outlay. Argentines just stopped buying defence equipment. To be sure, Argentine's military rulers had long managed to ignore most external pressures. The two triggers here were the bad economy and the advent of democracy (Raul Alfonsin was elected in 1983). Argentines haven't looked back since.
In China, Deng Xiaoping concluded that China must become an economic power before developing its military muscle. The Chinese objective as per the most recent White Paper on China's National Defence is: "Only after attaining economic strength would China be in a position to begin developing military capability commensurate with its new status as a great power." Between 1997 and 1999, troop reduction amounted to 500,000. Several corps headquarters, divisions and regiments have already been merged into the civilian labour force. Defence spending has been capped at 1.3% of GDP (as opposed to some 6% of GDP in Pakistan). GDP has quadrupled over the past 20 years and China is now the second largest economy on the face of the planet.
Five of the poorest countries in the world - Afghanistan, Cambodia, Congo Democratic Republic, Sierra Leone and Somalia - are all engaged in conflict. Sixteen other absurdly poor-Angola, Burundi, Central African Republic, Chad, Djibouti, Eritrea, Ethiopia, Haiti, Liberia, Mali, Mozambique,Niger, Nigeria, Rwanda, Uganda and Yemen-are all trying to move out of the state of war to peace.
Pakistan's poverty and our living in a continuous state of war are not unrelated. There is a definite cause-and-effect relationship between the two. Seven Hundred Thousand men in uniform each costing the treasury Rs20, 000 a month while an average Pakistani makes that much in a year. We are poor because we are in conflict with an economy, which is 800% larger.
Over the short to medium term, we cannot afford to lay people off because the private sector is not vibrant enough to absorb them. Keeping personnel payroll and pensions intact we can still niche out a good Rs50 billion from our foreign procurement programme. Divert that towards the social sector and let the peace dividend change everything.
Fiscal reality and defence strategy must go hand in hand. An overbearing defence outlay does not increase national security. History is witness that spending more on defence than one can afford to actually makes a country more vulnerable.
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