What shocks foreign observers and foreign journalists visiting Pakistan is — on how economic activity of a common man gets back to the normalcy within hours after frequent bombs blasts and suicide attacks in the markets and bazaars.
In Pakistan, the common man’s economic survival is driven by a strong belief system in divinity which may not be fully understandable phenomena for many economists. Generally people link losses to their life and properties to the will of Allah and continue their economic activities amid all kind of threats and fear in a country where virtually “every day is a 9/11” given the frequency of occurrences of terrorist attacks since Pakistan joined US’s war on terror in late 2001. It is hard to imagine that people in economically developed world, could demonstrate this level of resilience had there been even one10th of violence of this scale in their countries.
Over 13,000 people were killed and more than 49000 other were injured. The US drone attacks in Pakistan’s tribal region caused over 3700 deaths of mostly civilians and thousands other were left maimed with life long disabilities. Their business ruined. Nonetheless, none of victim family was ever compensated either by the US or government of Pakistan. Similarly more than three million people were displaced and their settled business was destroyed because of frequent military operations against the Taliban in the tribal region. The economic needs of an overwhelming majority among them were taken care by their families, friends and philanthropists while the role of government and international donors was largely restricted to play to the galleries.
9/11 & Black Economy in Pakistan
The 9/11 has precipitated to expand, strengthen and camouflage Pakistan’s black or informal economy. The economy of Jihadi net work flourished with the rise in the incidents of kidnapping for ransom by the militants. The money supply to Jihadi network through informal channels from the Middle East and elsewhere in the world to northwest of Pakistan expanded. Many a time, the weapons and other high tech stuff in NATO trucks destined for Afghanistan via Pakistan, ended up in the markets and bazaars in this part of the world.
Unwittingly or wittingly , the US has turned out to be biggest player in mushroom growth of economy of Jihadis. The contractors of NATO trucks paid hundred of millions of dollars to the Taliban to ensure the safe passage of their supplies from the areas controlled by the Taliban both in northwest of Pakistan and east and south of Afghanistan.
The two mega natural catastrophes— 2005’s earthquake which killed over 73, 000 and 2010’s flood that brought one fourth of Pakistan under water— turned out to be a war of philanthropy and rescue operations between the US led international community and religious and Jihad network to win over sympathies of victim families. A roughly estimated 80 percent funding to the victims came from common Pakistanis. And the religious and Jihad groups maneuvered to play a significant role in collection of funding from people inside the country and from elsewhere in the world to carry out rescue operations.
By 1999, Pakistanis in their individual capacity ranked as the sixth biggest donation giving nation in the world. However, 9/11 together with two mega national catastrophes probably has left Pakistani nation second to none in the world in philanthropy notwithstanding that the government in Islamabad remains one of the biggest recipient of international aid.
Pakistan’s informal/black economy is believed to be in the neighbourhood of 9.3 trillion rupees (9.5 trillion US dollars) which is around 91.4 percent of the total size of both official and unofficial GDP growth. Pakistan’s official economy’s size is around 3.5 trillion rupees ($3.6 trillion)— hardly one third to the size of informal economy.
CIA black Budget & Pakistan’s Black Economy
Thanks to the intelligence leaker, the fugitive Edward Snowden, now we certainly know that Washington has $52.6 billion black budget of which half goes on espionage operations in Pakistan to gather information about militants and country’s nuclear arsenals. The US has undoubtedly one of the largest espionage network in Pakistan. An estimated $26 billion dollar being spent lavishly to alleged CIA agents among serving, retired military officials, politicians and other influential elites to keep a an eye on movements of country’s nuclear arsenal now believed to be the fourth biggest in the world. Secretly made payments to spies, might have raised remittances for the time being. However, much of this money is ending up in form of flight of capital from Pakistan as it is hard to imagine that any Pakistani spying against his own country, would have interest to stay and invest here in the long run. The money channeled through informal links to spies have further widened gap between rich and poor. The US black budget for Pakistan certainly has caused numerous difficulties for country’s tax collecting machinery to formalize and contain the size of an ever growing black economy.
9/11 shatters Pakistan’s official economy
With Islamabad’s decision to join US war on terror after 9/11, the economic sanctions were lifted on Pakistan which were imposed when the country carried out nuclear tests in May 1998. Since then, almost to the equal size of US black budget, Washington has officially provided military and economic assistance of $25.91 billion to Islamabad under different categories. About two third of this money was given to Pakistan army for military operations against the Taliban, purchase of weapons and meet other such miscellaneous needs while one third was spent on development projects, e.t.c by the governments one after the other. With the pumping of aid and loan and loan concessions from the West and international donor agencies, the growth rate averaged 7 percent during the regime of military dictator General Pervez Musahrraf by 2007. But it turned out to be an economic bubble. The bubble from artificially propped up economy started bursting during last years of General Musharraf regime. By the then the US geo-strategic game plans were undergoing dramatic changes with growing suspicions on Pakistan military of discreetly supporting Afghan Taliban fighting a fierce insurgency against the US led NATO forces in Afghanistan. Therefore, Pentagon began gradually reducing and changing the scope of military and economic aid to Islamabad. The CIA instead channeled huge amount of money on espionage network to carry out surveillance on militants seeking shelter in Pakistan and also to keep an on country’s nukes fearing that nuclear arsenals may fall into the hands of terrorists. The net result now is that the GDP growth rate has gradually come down to alarming 2.86 percent. The budget deficit is close to 8 percent of GDP or Rs 1.835 trillion against the total income of Rs 2.982 trillion ($02 trillion).
Islamabad, as per official figure has suffered $68 billion economic losses since 9/11. The foreign direct investment has taken the nose dive given the surge in terrorist attacks. Similarly tourism industry has almost ceased to exist. The north and northwest of country once famous for tourists, is now notoriously epicenter of Taliban insurgency. The economic growth in formal sector has slowed down with reduced demands for export and frequent travel advisory by the Western countries to its businessmen to stay away visiting an insurgency hit country. With Pakistan coming under effective US pressure after 9/11, the government one after other unnecessarily delayed the project to import gas from Iran that exacerbated the economic conditions with the worst ever energy crises prevalent in the country
The writer is a senior print and TV journalist based in Islamabad. Email javedjournalist@gmail.com
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