Daily Times

Why did the economy nose-dive to half its size last year? Floods and rising oil prices, rising energy cost and rising food inflation are all factors that have contributed but the factor which we have been mumbling and apologetically been mentioning vaguely as an also ran variable has now become a quantifiable reality of consistently and aggressively weakening our economic roots in the form of the war on terror. The Pakistan Economic Survey has brought out facts to support this correlation between the cost of war and the erosion of the economy.

The total cost of almost 68 billion dollars spent on it since 9/11 is staggering and in many ways unjustified. Musharraf justified it by saying that he had no choice but to accede to the American threat of either you are with us or you will be pushed into the Stone Age. Well, we have been with the Americans and we have been pushed into the Stone Age with electricity, gas and water availability a toss of the coin and security and civility almost extinct species. Everybody who has known this country in the 20th century openly admits that in the 21st century we have been pushed back a couple of hundred years where basic facilities were a struggle for survival rather than standard given amenities. The second justification given by our army and present government is that we have to stop the terrorists and their murderous activities. Once again the facts show a multiplier increase in the number of bombing incidents ever since the beginning of the war on terror. With such blatant facts staring at the president and the prime minister, they have reluctantly started admitting to the futility of this approach in dealing with this problem. However, this admission is not followed by a solution; consequently the situation has become so wild and uncontrollable that even those who had intentions but not the courage to carry out their destructive acts have joined the party under the guise of pinning it on terrorists, Taliban, tribals or whoever claims responsibility.

The economics is simple yet confounding. Under a total aid received of about $ 15 billion for the war on terror after 9/11, we have spent $ 68 billion and if you add the cost of all our assets and infrastructure destroyed, it could easily pile up to a $ 100 billion. Just consider the destruction of the PNS Mehran planes worth millions as one loss we know and can quantify. If you add up the huge loss of almost 35,000 human lives, it is an equation that is totally out of balance. While the economic growth rate has fallen steeply from 4.0 to 2.5 percent, the money spent or lost on this war has shown a sharp increase. According to the Pakistan Economic Survey, while in 2001-02 the amount spent on this war was about three billion dollars, it jumped to seven billion dollars around 2007 and thereafter it has been rising at a frightening rate. In the year 2009, it is almost $ 13 billion and to date it is hitting almost 18 to 20 billion dollars. Compare this expenditure with the paltry US aid that we cringe, crimp and beg for, and the political maze and puzzle becomes almost impossible to solve. Take the Kerry-Lugar-Berman Act debate and drama we all went through and all it amounted to was a billion and a half dollars a year. Our debt servicing meanwhile has ballooned from almost 36 billion dollars in 2001 to almost 60 billion dollars as per the present budget. This is a mathematician’s nightmare and an economist’s nemesis as nothing adds up and no socio-economic model can find one sane reason for continuing on this track and not end up crashing and crumbling.

Somebody must be gaining out of this new line of madonomics. Well we may say the US or we may say the Taliban or our democratic government, which is bent upon blindly doing the insane to protect their position/power status. Unfortunately, it is a lose-lose equation for all. The loss to every single stakeholder in this war is huge and self-defeating. It is just a case of egonomics taking over economics. The Americans have discovered that war is a short term strategy to boost their huge defence industry and scare the world into believing in their superpower might, but with a history replete with failures to sustain that momentum through genuine industrial and social superiority they keep on getting lower and lower in the ranks of nations which are to be looked up to. Thus taking their wrath out on small and weak economies like Pakistan and Afghanistan is not going to give them anything but a passing relief. What they need to correct and resurrect are the fundamentals of the US as a giant of knowledge and services and a return to the basic principles of becoming a society that takes care of its own moral decay rather than being busy trying to reform tyrants in other countries who have been nurtured by them. With the media bursting with leaks of all sorts, it is impossible to hide behind a veneer too long. In this exposed world, either you are credible or if proven otherwise you are perishable. Thus if you say that you are trying to win hearts and minds and then you bomb indiscriminately, your position will be challenged by countries like China that have been busy building their own economic model of out-competing the rest of the world.

As far as the Taliban or any other terrorist organisation is concerned, they are bound to lose out. Any organisation which is abusing young and ignorant minds to teach a lesson to those who have done wrong can never operate successfully for too long. The IRAs of Ireland and many others with mission revenge and destruction could never appeal beyond a small minority and that too for a temporary term.

The government in its desperation of pleasing the wrong stakeholders is in any case instigating a united stand in public, which once again wants to end this socio-economic tyranny by playing an active part to bring a change of face, character and intent in the political foundation of the country. Sponsoring such an exorbitant government is a luxury the public can no longer afford. In the long run, economics will overrule politics.

The writer is a consultant and can be reached at andleeb.abbas1@gmail.com