Washington Report on Middle East Affairs, December 1997, Pages 29, 90-91

The Subcontinent

Pakistan and India Observe 50 Years of Independence

By M.M. Ali

The golden jubilee celebrations of 50 years of independence in both Pakistan and India were less than jubilant. There were more expressions of regret than of euphoria. It is recognized in Pakistan that almost 40 years since independence in 1947 were lost in political upheavals characterized by repeated military interventions. Democracy per se was reinstated only in 1989.

It is likewise acknowledged in India that the early post-independence years were drowned in socialistic experimentation and that economic recovery in the real sense started only after 1990.

Human resource development has suffered equally in the two countries. Moreover, both are nuclear-capable today and the disputes that have caused them to go to war repeatedly remain unresolved.

In Pakistan, "Unprecedented Mandate"

Speaking to an elite gathering of Pakistanis at the Roosevelt Hotel in New York, Prime Minister Mian Nawaz Sharif said: "People of Pakistan have given us [the Muslim League Party] an unprecedented mandate [two-thirds majority in the National Assembly] to put our house [the nation] in order, for which we are sincerely grateful. The task, especially in the economic field, however, is stupendous, as we have inherited almost a bankrupt economy from the previous government. We are doing all we can and insh'Allah we should be able to restore the economic health of the country in the next four to five years...We have already taken steps to rectify certain political anomalies like the Eighth Amendment that had allowed for disruptions...We are working on improving the law-and-order situation in the country...And we have embarked on a program of strengthening our external ties with our friends and entered into bilateral negotiations to usher in peace and goodwill with India and we are trying to find a just resolution of the Kashmir dispute."

Prime Minister Sharif said he had "frank" and "fruitful" discussions with President Bill Clinton on all issues of "mutual interest" and he sought to assure his audience "the U.S. president understands our position on the nuclear question."

Leadership in Pakistan, particularly since the early 1950s, has been rather shortsighted. Changes were brought about by each succeeding regime not to suit the nation in the long run but to meet the immediate political needs of the person in power. Consequently there has been little or no institutional growth in the country.

"Basic Democracy" died with the departure of its creator, then-President Ayub Khan. It was also evident that the infamous Eighth Amendment, that had given almost arbitrary authority to an appointed president to dismiss an elected prime minister, had to go now that the author of it, Gen. Zia ul-Haq, was no more.

However, Prime Minister Nawaz Sharif appears to be using his "mandate" to take away the independence of the judiciary, which has been asserting itself over the executive in recent years. The Supreme Court of Pakistan, consisting of 17 judges, was asked to downsize itself to 12. The chief justice of the Supreme Court, Sajjad Ali Shah, suspended the order of the president seeking the reduction in the size of the court. At this point serious negotiations are underway to find a way out.

In fact the size of the Supreme Court in itself does not change its authority, but it does interfere with the principle of checks and balances that is crucial to the running of a constitutional democracy. If Mian Nawaz Sharif prevails, the balance that is maintained between the executive and the judiciary is likely to be tilted in favor of the former. The dispute could also result in a constitutional amendment brought about by a vote of the National Assembly, where Sharif's Muslim League enjoys a clear majority.

Political housekeeping chores are important, but perhaps less so than issues relating to the diverse economic challenges faced by Pakistan. The good news is that foreign exchange holdings rose from $300 million in February to $1.3 billion in October of this year. But the bad news is that the government's Economic Survey Report shows GDP growth down from 4.6 percent last year to 3.1 percent this year; agricultural yield grew only by 0.7 percent, and industry has dropped by 1.8 percent. The budget deficit remained over 6.2 percent, while the trade gap climbed to $3.3 billion.

The prime minister now has revised his targets and is shooting for a fiscal deficit of 5 percent in 1997-98. The big worry remains the poor recovery of taxes. In spite of the best efforts, this year's direct tax collections fell short by Rs. 7 billion. In order to reach a target of Rs. 317.8 billion in 1998, he plans to reorganize the tax-collection machinery and has charged Dr. Hafeez Pasha, chairman of the Planning Commission, with that task.

Whichever way one looks, the economic picture is not too rosy. In the words of Finance Minister Sartaj Aziz, the new philosophy is "a gamble" and the new strategy "a calculated risk."

Indian Worries

"If there is one phenomenon that both disturbs and incenses Indians, it is corruption. No other issue has contributed as much to sapping India's faith in itself," observed India Today, New Delhi's largest circulation biweekly magazine, on Aug. 18. But this is only one Indian worry.

Other significant troubles include: continued stratification of the society on the basis of castes, the powerful inroads that Hindu extremism has been making in the political arena, and the continuing tug-of-war between the unyielding forces of socialism and the developing trend toward privatization and the open-market system.

The Indian public sector continues to stall forward movement whenever it can, and it has very much slowed development of the private sector in recent years. This slowdown is augmented by reluctance of the right-wing Bharatiya Janata Party (BJP) to welcome foreign investors into the country. Some of the speeches delivered on the floor of the Indian parliament raise alarm signals on the inroads that foreign (read American) capital is making.

There has been a spate of legislation restricting the level of foreign investments. No less a personage than Chandra Shekar, a former prime minister of India, said: "Slowly, you are giving everything away to multinational companies...The country is compromising its sovereignty."

What goes on in the industrial sector does not receive public attention, and therefore passes with little criticism. However, high- profile investments in the media and in the transportation sector catch the public eye.

For instance, satellite TV networks have saturated the Indian screen and the broadcasting market. Where the middle class has rushed to patronize foreign TV channels, hard-core conservatives see them as a threat to the indigenous culture. Similarly, commercial airlines sporting foreign insignias and landing at Indian airports are seen as a national disgrace.

Former Indian Finance Minister Manmohan Singh, who ushered in the open- market system in India, said of the opponents of foreign investment: "Partly, they are rooted in the experience of India—how the East India Company came here [in 1609] as a trader [from England] and ended up as a ruler."

Whatever may be the reasoning behind resistance to foreign investment in India, it requires strong central government action to break through the barricades that are erected at each stage. Unfortunately, the coalition government of Inder Kumar Gujral may be risking too much even if it tries to open doors wider at present.

Nevertheless, it is evident that economic growth in India depends on it attracting more outside capital. India is a huge market, and foreign investors will jump in if a conducive climate is created for them. The past five years have demonstrated that even a small window has drawn large investors.

Among many obstacles raised, one that causes outside investors to shy away is the overvalued and artificially controlled Indian rupee. There is much demand that the Indian rupee be allowed to seek its real value in an open financial market, but the Reserve Bank of India has kept it way above its real worth. These are remnants from the period of the command economy that existed for over 40 years before 1990. But if things are to improve they have to change.

External Affairs and Kashmir

The United States, which has almost equal stakes in India and Pakistan, has shown renewed interest in the region in recent months. The new U.S. assistant secretary of state for South Asia, Karl Inderfurth, visited both countries in September and welcomed current bilateral talks between them, saying he hoped the two nations will put "past conflicts" behind them.

Mother Teresa's funeral prompted a visit to India by first lady Hillary Clinton, who talked with Prime Minister Gujral there. U.S. Secretary of State Madeleine Albright is scheduled to visit the subcontinent in November, and President Clinton has said he, too, plans to visit South Asia early next year.

President Bill Clinton met Pakistan's Sharif and India's Gujral separately when they were visiting New York in connection with the opening of the 52nd U.N. General Assembly session in late September. Coincidentally, this was also the time when the foreign secretaries of India and Pakistan met back home for the third time to "iron out" issues between the two countries, including the crucially important Kashmir question.

Does this apparent flurry of activity mean that the world is anywhere near ushering in real peace in the subcontinent, or the Kashmir dispute any closer to being finally resolved? Far from it. Unless the U.S. is willing to play a forceful role like the one it played in the Israel-Palestine dispute during the final year of the Bush administration, or the one it is playing now in Bosnia, India-Pakistan bilateral talks will be confined to lesser issues and will duck the real problem—Kashmir.

America has maintained that it will not mediate or intervene between India and Pakistan unless both the countries invite her to do so. India has opposed any "third party" mediation, while Pakistan welcomes the idea. The one sign of change is that the Kashmir issue, which annually was placed on the U.N. agenda, to no avail, has been dropped this year—hopefully in acknowledgment that it must be taken up more seriously by the feuding countries, and not remain just a pro forma agenda item. However, New Delhi interprets it as a decision on the part of the world body to push the issue into cold storage.

India knows that it cannot afford to block all reasonable proposals that come from Washington, especially when it is in dire need of U.S. investors to bolster its sagging economy. In fact it seeks IMF and World Bank activities to promote development in the country, and it is vigorously seeking the Clinton administration's support for its candidacy for a permanent seat in the proposed expanded U.N. Security Council. The United States has endorsed the expansion of the Security Council and has also indicated its willingness to back Germany and Japan for permanent seats with veto power. However, it has made no commitments for the suggested three additional seats that would come without the veto power.

India's 1996 experience, when it lost out to Japan for a non-permanent seat, should be a reminder for Delhi that its ambitions do not enjoy the support of a majority of U.N. members. With such issues and interests at stake, New Delhi may be compelled to show good faith in its talks with Islamabad.

The recent serious military clashes on the Kashmir borders have underlined the gravity of the situation. A slight mishandling or error of judgment could spark a war in the subcontinent that could have disastrous results now that both countries are nuclear capable.