Saturday, December 02, 2006

Pakistan as a Rentier state

VIEW: Pakistan and her friends —Ahmad Faruqui
Daily Times December 03, 2006

Pakistan is likely to continue to depend on the largesse of its patron states, even though its special status with these states has been eroded by India. The remarkable thing is that New Delhi has done so without coming under anyone’s tutelage

Conventional wisdom has it that three As sum up Pakistan’s policy matrix: Allah, Army and America. But this is a half-truth. To complete the picture, one has to add a fourth A (Saudi Arabia) and a C (China) to the list. While Pakistan has long standing ties with both patron states, these have become more nuanced since America emerged as a global hyper-power and India emerged as a regional power.

China’s influence on Pakistan stems from its geographical proximity to Kashmir and Pakistan’s northern areas. For decades, it supported Pakistan on its forward Kashmir policy and Pakistan supported it on the One China policy. During the Cold War era, China competed with the Soviet Union for leadership of the communist bloc. Its border skirmish with India in 1962 made it a natural ally for Pakistan. Eventually, Pakistan supported China’s membership in the UN and served as China’s gateway to the Muslim world, earning the epithet of ‘China’s Israel’ from at least one analyst.

However, much has changed. Beijing is a global powerhouse. It has independently established ties with all Muslim capitals. Moscow has become its biggest arms supplier and trade with New Delhi, at $20 billion a year, dwarfs its trade with Pakistan by a factor of four. So where does that leave Sino-Pakistani ties? Some important clues can be assessed by reviewing the agreements that President Hu signed during his recent visit to Pakistan and even more by the ones he did not sign. Hu waxed eloquent, in good Mandarin tradition, saying that “Our relations are higher than the Himalayas, deeper than the Indian Ocean and sweeter than honey.”

Hu’s visit provided a much-needed boost to the embattled regime of General Pervez Musharraf. It was the first in a decade by a Chinese president. There was a lot of razzle-dazzle, parades and garlands. But support on Kashmir was lacking, indeed has been lacking since President Jiang Zemin addressed the Pakistani Senate in 1996 and asked Pakistan to make peace with India, signalling China’s desire to have peace along its southern borders.

Even though Pakistan and China signed 18 economic, social and defence deals during Hu’s visit, topped by a free trade agreement (FTA) and a five-year pact to boost “trade relations, joint ventures and investment opportunities in Pakistan,” the much-awaited agreement to build six additional nuclear power plants was not signed, a salute perhaps to Washington’s hyper-power status. Nor was there any visit to Gwadar, a silent tribute to Akbar Bugti.

It remains to be seen whether the FTA will bring forward a tripling of trade. Governmental agreements make for good rhetoric but cannot force the pace of the marketplace beyond its natural limits. If trade grows, the likely losers will be Pakistani manufacturers, who cannot compete with their Chinese counterparts. The main beneficiaries will be Pakistani consumers and raw material suppliers so this will largely involve a redistribution of income.

The visit confirmed that Beijing is likely to remain Islamabad’s largest arms supplier. Joint production of AWACS is now on the table. The Pakistan army’s arsenal is heavily of Chinese origin, as is PAF’s inventory of combat aircraft. The two countries are on track for co-production of the JF-17 Thunder fighter aircraft and may co-produce the F-22P naval frigate. Chinese hardware, while hardly the best in class, performed poorly in the Iran-Iraq and Gulf wars. But its low cost and plentiful availability make it an attractive choice to the generals in Islamabad who are apparently following Vladimir Lenin when he noted, “Quantity has a quality of its own.”

Pakistan’s relationship with Saudi Arabia continues to grow. After his coup in October 1999, Riyadh was the first foreign capital on the itinerary of General Pervez Musharraf as he ventured abroad in search of legitimacy.

Subsequently, Saudi Arabia accepted the deposed prime minister, Nawaz Sharif, into exile. This eliminated a major embarrassment for the man who, while wearing the same uniform as General Zia, did not wish to be seen as yet another vindictive dictator.

As a follow-up to his 2002 peace plan for the Israelis and Palestinians, King Abdullah of Saudi Arabia gave Pakistan the green light to publicly enter into a diplomatic conversation with the Israelis. Talks were held in Istanbul between the foreign ministers of the two countries but went nowhere, since there was no support in Pakistan for recognition of Israel prior to the creation of a Palestinian state.

When Azad Kashmir and the northern areas of Pakistan were devastated by an earthquake, Saudi Arabia topped the list of donor countries.

Defence cooperation continues to be a priority between the two countries. In the past, Pakistan has provided two divisions of troop ostensibly to protect the two holy mosques but in reality to guard the royal family against an indigenous revolt.

Saudi Arabia is one of the world’s largest arms importers and Pakistan is seeking to wean it from its traditional European and US suppliers. Encouraged by the visit of the Saudi Crown Prince and Defence Minister in April, Islamabad is seeking to sell up to 150 Al Khalid tanks to Riyadh, a deal which may be worth US$600 million. In addition, the intelligence agencies of the two countries are engaged in an intense hunt for the leaders of Al Qaeda, including Saudi-born Osama bin Laden.

A complicating factor on the horizon is the warming up of ties between Saudi Arabia and India. The Kingdom is India’s largest supplier of crude oil and host to more than a million workers. Symbolising a new interest in India, King Abdullah witnessed the Republic Day military parade in 2005 from the Red Fort in Delhi.

Whether and how this new relationship will affect the Kingdom’s long-standing relationship with Pakistan remains to be seen. But apparently, the Kingdom, like China, has begun to push Pakistan toward seeking a peaceful resolution of the Kashmir problem. This was noticeable during the Kargil crisis in 1999 and was visible a year ago when the Saudis offered to mediate the dispute. As expected, the Indians demurred, killing the proposal.

Pakistan is likely to continue to depend on the largesse of its patron states, even though its special status with these states has been eroded by India. The remarkable thing is that New Delhi has done so without coming under anyone’s tutelage. While some of this is undeniably due to India’s larger size, much of the credit goes to India’s democratic dispensation that allows for the formulation of an independent foreign policy.

The writer, an economist based in San Francisco, has authored “Rethinking the national security of Pakistan,” Ashgate Publishing, 2003

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