Pakistan’s Economic Problems: Some Non-Conventional Therapies

By

Anwar Kemal*

Abstract

By coincidence, Pakistan’s Economic Survey 2008 – 09 was released on 11 June 2009 just as this article was going to the publisher. The survey indicated that Pakistani’s real GDP growth for the first 10 months of the financial year was estimated at a dismal 2 percent as compared to the 5.5 percent target and the annual inflation rate was 22.3 percent as compared to the target of 12 percent. In addition, it was announced that 62 million people lived under the poverty line; 45 million faced severe food insecurity; and 20 percent could not afford any medical care.1

This paper suggests non-conventional ways of enhancing the welfare of the people by focussing on certain strategic areas where major gains in GDP growth and higher employment levels might be achieved in a short time. The five “silver bullets” are: Information Technology, Agriculture, Tourism, Environment and Energy.  They have been selected precisely because they were so badly neglected in the past.  For reasons that are explained in some detail in the paper, it may be possible to effect major advances in all of these sectors, which could have a salutary impact on the national economy. Author)

Background:

Legend has it that Pandit Jawaharlal Nehru and Sardar Vallabhbhai Patel reluctantly acquiesced to the creation of Pakistan in 1947, partly because they believed that the new country, with hardly any industry and separated by 1,200 miles of Indian territory, would prove to be unviable. They hoped that sooner or later Pakistanis would face up to reality and rejoin India. Since that time, Pakistan has struggled long and hard to overcome the many problems that it has been facing since the time of its birth.

It is arguable that coping with the challenge of India on several fronts – strategic, economic, cultural, psychological and more recently technological – has been Pakistan’s principal concern since independence in 1947. Evidence that India is becoming the ascendant power in South Asia, that the gap between the two neighbours is widening, does not alter the fact India remains for us a vital pace-setter and comparator country.

The diversion of Pakistan’s surplus energy towards what is referred to as the “small jihad”2  coincided with low growth rates during the 1990s just when India’s growth rate began to accelerate. In recent years, Pakistan’s growth rate has picked up averaging around 6 percent as compared to India’s 9 percent per annum.3  India has weathered the current global economic crisis better than most countries, with a reduced though still impressive growth rate of 5.8 percent. Pakistan’s growth rate, on the other hand, has shrunk to 2 percent in 2008-9 owing to reduced external demand for its manufactures, chronic inflation, power shortages and growing insecurity.

After the Mumbai attacks in November 2008, relations between India and Pakistan plummeted, leading to a short-lived war scare. Along its western border and in the North-West Frontier Province, Pakistan has been grappling with a growing insurgency, which has led to the displacement of over a million people. The war on terror has spilled over into the rest of Pakistan with a spate of suicide bombings that have taken a heavy toll of life.

The purpose of this paper is to suggest a strategy to wage the big jihad, the peaceful jihad, by mobilising Pakistan’s surplus energy towards pursuits that promote nation-building.  The main goal would be to banish poverty, disease and ignorance by focusing on some of the traditionally neglected sectors that could play a vital role in transforming the national economy.  The purpose is not, however, to present a comprehensive economic analysis by covering the major sectors of Pakistan’s economy.4

History has shown that Pakistan’s quest for parity with India has generated beneficial as well as detrimental outcomes. The downside of the Pakistan-India rivalry has been that for many decades Pakistan’s economy has borne a chronic burden while the body politic has endured unending stress.

All along, Pakistan has been spending a far greater percentage of its GDP on defence than India. This is hardly surprising as Pakistan had to fight three major wars and several smaller wars with its neighbour. We know that in the late sixties the strain of heavy expenditures on defence proved too great for the body politic and the country was split in two.

True to the classical theory of challenge and response, the post-1971 phase of the India-Pakistan drama saw Pakistan recouping its military strength and international standing after the debacle in East Pakistan, which had become independent Bangladesh. Dr. A. Q. Khan’s return to Pakistan at Prime Minister Bhutto’s behest opened the door to de facto membership of the nuclear club within a decade. Nuclear capability partly offset India’s conventional military superiority, freeing Pakistan to pursue a more forward policy in Kashmir during the 1990s. That, however, has proved to be a mixed blessing for Pakistan and the Kashmiri people.

Five  decades  after  independence,  the  notional  parity  between India and Pakistan finally unravelled. Jawaharlal Nehru’s far-sighted commitment to higher education began to pay dividends when, after the fall of the Berlin Wall, India distanced itself from his socialistic legacy and became part of the globalization process. India’s growth rate averaged around 6 percent per annum over 15 years and increased to 7-9 percent recently.  Backed by an army of engineers and software programmers, Indian entrepreneurs have made their country a work- engine for the American economy.

India’s brisk entry into the hi-tech arena has strengthened its credentials as a great power in the making. President Bush’s visit to South Asia in 2004, followed a few years later by the coming into force of the Indo-US nuclear agreement put a stamp to the new power equation in which India has been  placed in a  completely different league from Pakistan.

The new democratically elected government of Pakistan now needs to determine quickly what is so special about India that the United States is keen to boost its status to that of a world power in the 21st  century. Why are leading EU members and Russia so keen to woo India in their bid to cement ties with that country? What lessons can we learn for the growing success and popularity of our neighbour among countries that count; and what has made the international community so wary and suspicious of us?5

Apart from sheer size, India’s growing eligibility for great power status owes in part to its success in practicing parliamentary democracy for over 60 years, in contrast to Pakistan’s lack-lustre performance. Over decades, the Indian judiciary served as a bulwark against autocracy while in Pakistan the so-called doctrine of necessity superceded democratic norms.  Pakistan’s image in the west and its self-esteem has suffered as a result.

Unlike India, Pakistan could not break the shackles of feudalism. Subjected repeatedly to military rule from the 1980s onwards Pakistan drifted to jihadi culture. For much of our history, not the ability to impart knowledge but the potential to inflict harm has determined a citizen’s status in society. As during the Mughal period, the person held in highest esteem has been the soldier, the gendarme and the tax collector. Such a scale of values is at variance with current global trends.

Under these adverse circumstances it is necessary to select a few areas that have been neglected through much of Pakistan’s history and which offer the possibility of making major economic gains – in some cases in the short and medium-term – and in others in the long-term. These areas should preferably not only boost the national income but also provide employment to the millions of underemployed people as well as fresh entrants to the working force.  Our goal is not to compete with India per se, but to learn from their achievements and their mistakes, as well as our own.

Information Technology: The First Silver Bullet

Across the Wagah border the same feudal, authoritarian values prevailed that have bedevilled Pakistan’s political and economic development since 1947, but the Indian government intervened to dismantle its feudal system. India’s more solid educational system, the outcome of far-sighted policies, produced hundreds of thousands of scientists, engineers and technical people, apart from captains of industry.

The Indian economic revolution has been powered by knowledge, a  self-renewing  resource  more  precious  than  the  proverbial  hoards of rubies and diamonds, and by the resourcefulness of its business community. As India’s growing army of qualified technical graduates flocked to the wealth-generating professions at home and abroad, India became a mainstay of the global economy.

According to Thomas Friedman, author of “The Earth is Flat,” leading Western hi-tech companies with new ideas rely increasingly on India’s technology companies for research and development (R & D). Far more frequently than in the past, Indian companies are developing products as equal partners while US firms handle the sales and marketing.

In  2004-5  Infosys,  a  leading  Indian  company,  received  almost 10,000 applications from abroad, including some from China, Germany and France, for 100 internships. What Thomas Friedman finds even more interesting is that Indian firms are using their skills to develop ultra-cheap products for the lower wage Indian market: for example a medical insurance plan for the poor for Indian Rs 500, a Rs. 100,000 car, a Rs. 10,000 laptop, and a low-fare airline that sells tickets from Internet kiosks and gas stations.6

The computer giant IBM announced plans to invest nearly $ 6 billion in India over three years. In line with the firm’s policy to cut jobs in the US and shift them to India, IBM’s work force in India is its largest outside the United States, comprising 70,000 employees all over India.7

Google Finance, which was conceived and developed entirely by the Google team in India, was launched a couple of years ago. Some Indian companies like Satyam are sub-outsourcing work received from America to villages in India, which shows that sufficient bandwidth is available  and more remarkably, that qualified people reside in Indian villages.8

In 2005-2006, India’s software exports totalled US $ 23 billion, exceeding Pakistan’s total exports.  In 2008, India’s exports increased to around US dollars 48 billion.  Even if Pakistan’s current IT exports estimated at  US $ 1.4 billion reflect under-reporting, the ratio between the two countries is at least 1: 20.

The strategic implications of this widening gap are enormous. India’s galloping hi-tech IT capability could enhance its offensive military capability exponentially, by enabling it to build anti-missile batteries, new generation jetfighters, space rockets, thermonuclear weapons, advanced ECM capability, AWACs and nuclear submarines.

Pakistan’s decision makers, therefore, need to take prompt and effective measures to bridge the hi-tech gap with India, by revamping the entire educational system. This has become imperative not just to safeguard national security, but also to provide a decent life for the Pakistani people. 9

Pakistan requires its leadership to show the combined vision of a defence strategist, the president of a cutting-edge university, a captain of industry and a progressive farmer all rolled into one.

The Obama administration is committed to tripling economic assistance to Pakistan to $1.5 billion a year as well to maintaining military assistance as part of the US-led global war on terror. But under

the nuclear deal with India, the United States will be transferring to that country nuclear technology, equipment and nuclear fuel that could have adverse strategic consequences for Pakistan. Justifiably, Pakistan has protested against the discriminatory treatment, although the chances of a favourable American response to Pakistan’s request for equitable treatment appear to be slim.

In the field of IT, the Pakistan Software Export Board (PSEB) is promoting appropriate strategies to enable our decision makers and entrepreneurs to make up for lost time. PSEB is addressing eight strategic requirements to ensure the rapid development of the IT industry including marketing and PR, human resource development, provision of office space and venture capital funds.   Unfortunately, since the end of the previous MD’s contract, almost 18 months have elapsed and no successor has been appointed. In addition the government needs to take appropriate measures in the field of public policy, finance, certifications and facilitation.

According to the PSEB, Pakistan’s IT industry will require a quality work force of around 250,000 by 2010-11. At present, only 100,000 IT personnel are working in the country with around 20,000 being added annually.  The key challenge is to address the quality deficit, not just the quantity deficit. This is because the number of engineers, computer scientists and information technology specialists graduating from recognised institutions who are fit for jobs in the global outsourcing arena is a mere 3,000 annually, but in India, according to a Duke University study, the number is estimated at 30-35,000, out of a graduating class of around 112,000 in 2004.10  The number has probably gone up since then, and could be 40,000 or more.11

PSEB has referred to marketing and public relations as one of the core requirements of a successful IT industry. But marketing and public relations work only if conditions within the country are conducive to attracting foreign direct investment.   Domestic and foreign investors will remain shy of investing in Pakistan without adequate infrastructure, good governance, law and order, security, and most important, political stability.

Agriculture: The Second Silver Bullet

The previous section has focused on the advantages of learning from India’s success by developing Pakistan’s IT industry. The Indian experience suggests, however, that the rapid development of high-tech industries by itself does not suffice to bring widespread prosperity. To do that it would be necessary to promote people-friendly agricultural and industrial revolutions that could generate mass employment and curb under-employment.12

Like India and China, Pakistan could benefit greatly from the removal of trade barriers between nations.  But globalization could promote extreme inequality, destroy traditional agriculture and spread rural and urban poverty unless timely steps are taken in advance to safeguard the livelihood of the people.  Access to adequate supplies of food, clothing and other essentials at affordable prices are important for political stability.  Building on our traditional strengths in agriculture, horticulture, livestock breeding, food processing, textiles, and light industry must be made an integral part of globalisation.

Pakistan needs to consider to what extent it ought to be following India’s  example  of  relying  on  its  domestic  market  rather  than  the export market for the growth of its consumer industries. India’s focus has been on consumption rather than investment, services rather than industry and high-tech rather than low-skill manufacturing, according to the entrepreneur Gurcharan Das. Relying on the domestic market has insulated India from global fluctuations; at the same time, the emphasis on consumption is deemed more people-friendly. Consequently, India’s Gini index, a measure of income inequality from zero to 100, is 33 as compared to 41 for Pakistan and 45 for China.13

One shortcoming of India is its failure to provide employment to the people in the rural areas. Unlike China and the Asian tigers a generation back, it has failed to get into large scale, labour-intensive manufacturing in a big way. Services account for 50 percent of India’s GDP while tens of millions of Indian villagers are mired in poverty. Pakistan needs to avoid India’s mistake by paying greater attention to the chronic problem of rural poverty.

Encouraging businessmen from the cities to invest in the countryside, specifically in agribusiness, is a non-traditional way of combating rural poverty. Unfortunately, many city dwellers are afraid to invest their savings in the countryside because they are uncertain that they would be able to hold on to their land. In the Potohar districts, for example, they may find that their legal title to the property is eventually challenged by locals. Under the complexities of ‘shamilaat,’ the ownership of any property can be claimed by a small shareholder and the ensuing litigation may last for years. This system discourages much-needed investment in agriculture. The government ought to enact legislation to make it easier for fragmented shamilaat land to be consolidated.

How many of us have considered that Pakistan has a comparative advantage in agriculture vis-a-vis its neighbours including India, China, Iran and Afghanistan, in terms of people to arable land ratio and water per capita?

An overwhelming majority of Pakistan’s farmers practice subsistence agriculture on small, inefficiently run farms. But in spite of their low productivity, the farms provide employment and social stability in the rural areas. Thanks to the Green Revolution in the 1960s, Pakistan feeds

170 million people – not to mention several million Afghans on both sides of the Durand Line – as compared to 35 million people in 1947. This is no mean feat considering that over six decades successive governments in Pakistan have neglected agriculture.

Pakistani farmers may not be as skilled as their Indian and Chinese counterparts, but they still produce the choicest rice, meat products and fruit. It is a well kept secret that Pakistan has some of the most wholesome agricultural produce in the world. Wealthy Arabs frequently carry home gift hampers of our organic mutton. Indian traders market our long grain basmati rice under their brand names. Our kino tangerines, malta navel oranges, honey melons, mangoes, persimmons, grapes, raisins and apricots have a special flavour owing to abundant sunshine at the right time.

The United States may be averse to helping Pakistan’s civilian nuclear program, but it would be glad to help Pakistan’s agriculture on account of the favourable impact this would have in curbing militancy and religious extremism. US help with tissue culture technology, disease & pest control, scientific grading, modern packing & refrigeration technology, and in forging linkages with the world’s supermarket chains could be most rewarding.

Pakistan’s aromatic basmati rice sells at a premium in international markets while its cotton is in great demand abroad and forms the basis of the domestic textile industry. Unfortunately, Pakistan’s agriculture is handicapped by its feudal culture, inefficient cropping patterns and lack of know-how. Use of scarce snowmelt to irrigate vast fields of water- intensive sugarcane or Irri-rice, for example, violates the principle of comparative advantage.

Owing to the rapid growth of population and the vagaries of weather, Pakistan’s per capita availability of water has been declining in recent years.  Inordinate delay in reaching a consensus on the construction of new dams has resulted in chronic water and electric power shortages. We should get used to the idea of computing crop yields in terms of cubic metres or cubic feet of water consumed rather than simple acreage.

The time is now ripe to launch a second Green Revolution in order to achieve a better balance in our agriculture. The state should assist farmers in raising the yield per acre of traditional crops such as wheat, cotton and pulses. Our rural population should be assured a fair price for its produce. We also need to emulate selected developing countries like South Africa and Egypt by going in for larger corporate farms to produce high-value cash crops, such as mangoes, citrus fruits, strawberries, grapes, melons, as well as organic vegetables in order to increase exports.

The emphasis should be on organic farming and strictly regulated use of pesticides in order to penetrate overseas markets. Packing facilities have to be good enough to comply with international standards. In order to attract domestic and foreign investors, the government has to provide a proper legal framework to encourage consolidation of land without which large-scale scientific farming may not be feasible.

Corporate farming can be extremely profitable. The owners of the 6,500 acre Maghrabi corporate farm that this writer studied in Egypt invested US $ 80 million over a period of 15 years. In 2002, the farm produced fruit and vegetables worth over $ 80 million, with a net profit of over $ 20 million.

About 75 percent of the earnings of this model corporate farm were derived from exports to the European Union and the Middle East. Yet the manager of this model farm conceded that his California-origin oranges had a difficult time competing with Pakistan’s kino tangerines in the Gulf markets. In Europe and the United States, however, the supermarket chains are more interested in seedless oranges and place a premium on consistency and looks rather than flavour.

Another farm on the outskirts of Cairo, comprising a mere 27 acres, grossed $ 1,000,000 annually by exporting expensive tropical plants to overseas markets and also by supplying to domestic consumers, like upscale hotels, restaurants, hospitals, museums, offices, etc.

This small farm employed about 80 agricultural graduates and about 70 clerical-cum-sales assistants, the latter being mostly women. The company calculated revenue on the basis of per cubic metre of water consumed and per square metre of space utilised. In Pakistan, a normal farm of this size would provide employment to no more than five to six labourers but in the Egyptian model farm, thanks to intensive scientific farming, under the leadership of a Ph.D. in agriculture, 30 times as many people have found gainful employment.

A major problem in setting up a big corporate farm in Pakistan is the fact that suitable land in big chunks is simply not available. Land holdings have been fragmented over countless generations. President Hosni Mubarak of Egypt bypassed this hurdle by allotting large tracts of virgin desert land to reputable investors, and by making available abundant Nile water through canals. The Egyptian government has also constructed roads and provided electric power at affordable rates. Entrepreneurs were expected to mobilise investment capital from domestic and foreign sources.

This may not be easy in Pakistan owing to water scarcity and a thicket of other daunting hurdles, including land fragmentation, law and order problems, power shortages, limited air-cargo space for perishables and the reputation of an unfriendly bureaucracy.

Pakistanis, proud of the superior taste of their fruit, will be astonished to learn that our mangoes were sold at half the average price of Indian mangoes in international markets during 2004 ($ 290 per ton vs. $ 594), while our kino oranges sold at one-third the average price of South African tangerines ($ 203 vs. $ 604).

One way to overcome this disparity would be to invite reputable foreign agricultural corporations with access to international markets to invest in fruit processing and packing facilities in Pakistan for a start. The corporations would enter into agreements with the owners of medium and large orchards of citrus fruits, mangoes, strawberries, melons and grapes.

The  foreign  investor  or  corporation  would  require  our  farmers to supply produce that meets the stringent quarantine and pesticide regulations of the European Union, Japan or the United States as the case may be. The produce would be packed and marketed under the corporation’s brand name. The advantage for the growers would be that they would not have to sell their entire crop to local middlemen who normally pay them a fraction of the wholesale price.

In the light of the challenge that Pakistan is facing on all fronts, it is depressing to learn that we treat our agricultural scientists quite shabbily. Apart from low salaries and irksome bureaucratic restrictions, funds for research at the National Agricultural Research Centre, which comes  under  PARC  (Pakistan  Agricultural  Research  Council),  are woefully inadequate. For example, about three years back 15 scientists at the centre were doing research on pulses and nine of them had Ph.D. degrees. It is pathetic that the regular budget for research on key staples varies from Rs. 150,000 to Rs. 400,000. This contrasts with the annual subsidy of Rs. 2.5 billion for pulses which the government is providing in order to avoid social unrest. Would it not make sense to spend a few extra millions on research?

In contrast to the rapid promotions in the armed forces and the civil services, agricultural scientists have been routinely denied promotion for 20 years and even more. A Ph.D. from the UK with more than 20 years service had a basic salary of Rs. 20,000 per month and a take home package of Rs. 30,000. He had to pay for his own transport and accommodation, apart from other living expenses.

Owing to the state of low morale, during the past 12 years, over 80 PARC scientists, including 25 Ph.D. and 49 M.Phil. degree-holders emigrated to Canada and the EU countries. In addition, a hundred agricultural scientists from PARC, one-third being Ph.D. degree-holders, have left for other organisations within Pakistan, presumably as a first step to emigration.

Reportedly, the previous government was aware of the situation and had promised remedial action, but little progress has been made. One can only hope that the present government will make a comprehensive and decisive move signifying a change in official attitudes towards research, financial incentives, research linkages and autonomy for the agricultural research organisations. Otherwise, the agriculture sector will continue to stagnate as many more of our scientists inevitably leave the country for destinations where their skills are likely to be appreciated and rewarded.

Tourism, the third silver bullet

Recognising the potential of tourism as a means of boosting national income in a relatively short time, the government had declared 2007 as “Visit Pakistan Year.” It had also set in motion a number of useful changes, including a liberal visa policy for visitors from “tourist friendly countries” and a generous depreciation allowance of 50 percent for new investment in tourism.

Pakistan has an attractive coastline, three of the highest and most scenic mountain ranges in the world, cities that offer a variety of interesting products for sale, river plains, colourful deserts and many interesting historical and cultural sites.  Our people are traditionally friendly and hospitable to strangers. So why is Pakistan one of the least frequented and most under-appreciated tourist destinations in the world?

The reported presence in Pakistan of some of the world’s diehard terrorists may have something to do with the dearth of tourists. In 2009 Swat, potentially one of the most attractive and scenic destinations, has become a battleground. Terrorism and extremist violence is a major hurdle to profitable tourism. Another crucial deficiency is that Pakistan lacks the infrastructure that a modern tourism industry demands. Power failures are common, speeding buses on crowded highways are a menace to passengers, pedestrians and smaller vehicles, the railway system is old, decent accommodation is scarce and costly, and the natural environment is becoming degraded.

Not surprisingly, in 2004 only 648,000 foreigners visited Pakistan, generating revenues of $ 186 million, as compared to India’s 3.5 million visitors who generated receipts of $6.1 billion. In 2006 the number of visitors to Pakistan increased to 798,000 but earnings surprisingly remained the same. The reason for the small volume of receipts is that a large proportion of the visitors are overseas Pakistanis, not genuine tourists.

Pakistanis who frequently travel abroad may wonder why countries with similar cultural and religious backgrounds are able to attract so many more tourists.  For example, Egypt hosted 8.6 million tourists in

2005 who spent $ 6.5 billion, in spite of deadly bombing attacks in the Sinai, while over 17 million tourists are expected to visit Turkey and generate $ 16.5 billion in 2006.

To promote tourism in Pakistan requires a multi-pronged approach. As a first step, we should encourage Pakistanis to become tourists in their own land, instead of having the dubious distinction of ranking among the most lavish spenders in Britain. The government has to provide better security, good roads and railways, and the private sector has to provide many more clean hotels and motels without degrading the natural environment.

Tourism is not, however, just a five-star hotel or Nanga Parbat’s Fairy Meadows, an air-conditioned luxury coach or a beautiful beach. When tourists buy a holiday package in Pakistan, hopefully on Pakistan International Airlines, in a sense they buy the whole of Pakistan from the moment they walk to the PIA counter at Heathrow or JFK or Narita airport, until they reach Karachi, Lahore, Peshawar or Islamabad airport. If the personnel manning the PIA counter appear aloof and the toilets get clogged during the flight the tourists are bound to feel cheated even before setting foot in Pakistan.

In the earlier decades, Pakistan’s position vis a vis it’s Middle East neighbours was qualitatively different from what it is today. Over the years, misguided policies, bad planning, overpopulation and poverty have led to institutional decay and environmental degradation. Karachi from the 1950s to the 1970s was an attractive tourist destination for the Gulf Arabs, and many European airlines landed there. No more.

Exiting the rustic Islamabad airport terminal building and encountering hustling taxi-drivers and thousands of people milling about is enough to alarm visitors from more orderly societies.  Tourists will feel comfortable in Pakistan only if we constantly improve our facilities, administration and security.

Provision of adequate security in the form of escorts and partial segregation as in Egypt could mitigate the problem of security.  An extreme example of successful segregation is the reservation of island resorts  in  the  Maldives  exclusively  for  tourists.  Consequently,  the tiny SAARC country with a miniscule population of 300,000 largely traditional Sunni Muslims is able to host as many outside visitors as Pakistan and collect four times the revenue, although Pakistan is five hundred times more populous!

Pakistan has many outstanding destinations that could be considered for development, such as the Kalash Valley at Bumboret and the Hot Springs in Chitral; Fairy Meadows and the Diamir Base Camp at Nanga Parbat; Hunza and the rest of the Karakoram highway; Upper Kaghan Valley, including Lalazar Plateau and Lake Saiful Mulk, and the upper Swat Valley beyond Kalam. Resorts along the lines of Shangri-La in Skardu, the Bhurban Inter-Continental, or the Heavenly Lake near Urumuchi in Xinjiang, China may be developed at these sites.

Apart from targeting Europe, North America and Japan, we need to make special efforts to attract tourists from China, Malaysia and the Arab world.  The Tourism Ministry has drawn up comprehensive plans to take advantage of Pakistan’s assets by converting potential demand into actual visits. Even India is being targeted as a source of tourists. This is a mature and healthy way to improve relations with our long estranged neighbour, and to generate revenue, without compromising our core interests and ideals.

The Gulf Arabs have shown their liking for Pakistan at the highest levels by building palaces in the desert and by spending their winter holidays indulging in falconry. An effort should be made to induce upper middle class Arabs to visit Pakistan for their holidays. The government should intensify its efforts to promote special tours to religious shrines and festivals.

Our people are justly proud of the mountains of Pakistan. In the West, however, people like to escape the frosty winters and head south to enjoy the sea, sand, and sun. That is where the real money is to be made. The Red Sea resorts of Egypt, for example, receive many European tourists who spend hundreds of millions of dollars indulging in water sports such as snorkeling, swimming, diving and fishing in addition to para-gliding, horseback riding, tennis, and golf.

Investment from the Arab Gulf states has played an important role.

For example, the ruling family of Abu Dhabi helped to finance the super deluxe Sofitel Hotel at Sharm el Sheikh in the Sinai Peninsula. Many other three, four and five-star hotels cater to hundreds of thousands of Egyptians and Europeans. A fleet of modern boats is available to take tourists for snorkeling, fishing and sightseeing.

From November to March, the climate along our coast is usually quite sunny and mild.  Pakistan’s Arabian Sea coast is known for its varied and prolific marine life; angling and aquatic sports could become a lucrative source of foreign exchange.  The government should select a few beaches between Karachi and Gwadar that have clear water. Responsible investors associated with the best hotel chains may be invited to set up a flagship project each with the target tourists to be from the investor’s own country or region. Investment will be forthcoming from China, Saudi Arabia, Egypt, Turkey, Malaysia, UAE, Qatar and Oman if attractive sites are offered.

In the interest of security, some of the areas selected for tourism may be segregated, with provision for guided shopping tours and sightseeing. At the same time the interests of the locals must be protected by giving them preferential treatment for employment in the tourism projects.

The government has to think big and set a target of two million tourists as soon as peace is restored in the country.  In order to absorb so many additional tourists, adequate budgetary allocations for the improvement  in  the  infrastructure  must  be  made.  The  government and the private sector have to act in concert to remove the obstacles to lucrative tourism in Pakistan. In any event major investments in roads, hotels, airports, railways, airline facilities and other related sectors are long overdue in order to promote the people’s welfare.  This will also help to bring more tourists to Pakistan. Above all, the security situation has to be brought under control. Also, the natural environment must be protected and restored.

Based on the experiences and friendly advice of the most successful businessmen in Islamic countries who have made their fortune in tourism, the following practical measures are recommended in order to

establish a viable tourism industry in Pakistan:

Firstly, Pakistan has to encourage local people to travel within the country instead of going overseas for rest and recreation.  The government and the private sector have to team up in order to provide better security, better roads, public transport and more comfortable accommodations at affordable prices.  While the private sector has to play the lead role in this process, the government’s role is indispensable in creating the necessary preconditions.

Secondly, in order to attract foreign tourists Pakistan needs to develop close relations with the tour operators, as almost 80 percent of world tourism is through package tours.  Tour operators have to be persuaded to visit Pakistan and select sites for development. We should also try to attract investments in specific locations from tour operators, which will ensure a guaranteed clientele. It is desirable that local investors should team up with foreign investors on a 50-50 basis.

Thirdly, in tourism projects at least 80 percent of the investment should be the equity and only 20 percent should be bank loans. This will ensure financial stability of the project in case tourists do not turn up in any particular year. The rate of return on the investment should be at least 6 percent over the compound interest rate. In case compound interest rate in Pakistan is 18 percent, minimum profits should be 24 percent. In fact the aim should be to try for an even higher safety margin.

Fourthly, as Pakistan has a poor security image and is reputed to offer nothing to tourists looking for hedonistic pleasures that are commonly available elsewhere, very few visitors bother to come to Pakistan and investors consequently lack the incentive to risk their capital in Pakistan. To overcome their reservations incentives in the form of tax breaks in addition to the 50 percent depreciation offered by government may be necessary.

Fifthly, appropriate tourism and conservation policies are necessary in order to attract tourists in sufficient numbers to have a major impact on the national economy. The tourism ministry has compiled a useful list of measures to encourage tourists to visit Pakistan.

Eco-tourism should be a part of the marketing campaign. Facilities should be provided to tourists to observe tropical fishes, large marine turtles and other marine wildlife.  Close proximity to coral reefs and other structures affording protection to fish would be desirable. Marine life sanctuaries will have to be created.  For example, the area adjacent to Churna island near Karachi, which is a naval testing area, may be declared a national aquatic sanctuary.  Coral reefs and other structures that attract marine life must be protected against pollution, vandalism and commercial fishing.

Lastly, the traditional hospitality of our people needs to be reinforced through education. People have to be convinced of the need to welcome tourists and to make them feel at home. The biggest stake that they can have is the profit motive.  If we play our cards right the income from tourism could reach a couple of billion dollars within three years of restoration of peace. That would be a major boost to the economy.

Reversing environmental degradation: the fourth silver bullet

Those who grew up in the early years of Pakistan may remember that the northern parts of the country used to be heavily forested. As youngsters on school trips to Nathia Gali, Dadar, the Kaghan and Swat valleys, and other scenic destinations, it was possible to roam far and wide amidst craggy highlands clothed with pine. Around the hamlet of Mahandri, 13 miles short of the village of Kaghan, young nostrils, yet un-jaded by the toxic fumes of modern cities, were benumbed with the scent of turpentine stored in the millions of pine and fir trees.

As far as the human eye could see, the forests plunged and climbed endlessly, until overcome by the sheer height of the jagged peaks mantled in snow and ice.

Azure streams roared over rocks and stones through sheer canyons, snaking around boulders, pausing occasionally in whispering pools replete with brown trout – frisky, feisty, full of fight, darting everywhere

– providing hours of pleasure to the angler.

Now as older men we may still roam among those peaks of yesteryear, searching in vain for the crystal-clear streams  and the never-ending forests, but what we find mostly are torrents of silty-grey or brown, polluted with human and animal wastes; further downstream their precious life-sustaining waters are tainted with toxic chemicals. The once lush slopes are threadbare with scrubby bushes, the surviving trees besieged by axe-wielders greedier than the hungriest locusts, determined to complete the task of desolating what was once an earthly paradise. Nostrils choke with clouds of dust, not the scent of natural turpentine.

Walks along the river banks, once solitary and deeply satisfying, are rudely jarred by Pajeros and Land Cruisers more costly than the wretched hamlets they pass. Overloaded open vans roar by emitting blue fumes, heaping scorn on the pedestrian, bouncing in rhythm with the vulgar beat of the CD player.

A few years back, the Pakistan Environment Protection Council (PEPC) under the chairmanship of Mr. Asif Ali Zardari achieved a measure of success in projecting environment as a national issue.  The writer recalls an inter-provincial, inter-ministerial meeting the PEPC chairman convened in 1997 to prepare for a Habitat summit meeting in Germany, and it was probably one of the grandest conclaves of bureaucrats, businessman and NGOs ever to take place in Islamabad. In recent years, however, the level of interest at the highest levels in government and among the public on environmental issues appears to have cooled almost to vanishing point.

Now  that  Mr.  Zardari  has  been  elected  President  of  Pakistan, one hopes that he will find the time to renew his earlier mission of safeguarding  and  restoring  the  environment,  which  is  perhaps  the most neglected and under-appreciated of all sectors in Pakistan.  The environment, including the threat of climate change and the related water scarcity deserve priority because it is perhaps one of the two or three most important issues that face Pakistan.  By ignoring the impact of any project or activity on the natural environment on the people, one is ignoring its true cost.  By engaging in non-sustainable activity today one merely postpones the day of reckoning, with the result that sooner or later the society and the country as a whole is forced to bear unacceptable costs. Already the country is paying a heavy price for past sins of commission and omission.

As a consequence, the air we breathe, the water we drink, and the earth we grow our food on has suffered grievous damage during the past 60 years. In the homes of the poor people, the use of wood fires for cooking food is the cause of excessive indoor pollution jeopardizing the health of millions of mothers.  The next section on energy will address this problem by suggesting healthier and less costly alternatives to the reckless use of carbon fuels.

What Pakistan needs to do is to adopt policies and implement existing laws to put an immediate stop to air, water and land pollution. Indiscriminate cutting of trees and destruction of Pakistan’s flora and fauna must be halted. Brick kilns, cement plants and thermal electric plants using coal should not be permitted near heavily populated areas. Emissions of motor vehicles must be strictly controlled and a switch made to cleaner fuels like CNG gas. Tanneries must never be permitted to drain their toxic wastes into streams.  Pursuant to these policies, the government needs to launch programs that can capture the imagination of the public and the international community, programs that can make their mark in a relatively short period of time.  Conservation, like development and defence, has to be made sustainable in the shortest possible time, and for that public involvement and government support is needed.

One way of going about this would be to start nationwide environmental projects or schemes to fight poverty in the mountains, forests and semiarid ecosystems of Pakistan, including the tribal territories of the NWFP and Balochistan.  The target population would be the poor residents of these disadvantaged regions who engage in subsistence farming and herding.

Such a  scheme  would  be  in  conformity  with  the  Biodiversity

Convention to which Pakistan is a party. It will be recalled that in the 1992 Earth Summit in Rio de Janeiro, world leaders agreed on a comprehensive strategy for “sustainable development.” This pact aimed at protecting the ecological balance while pursuing economic development. The Convention established three main goals: the conservation of biological diversity, the sustainable use of its components, and the fair and equitable sharing of the benefits from the use of genetic resources.

In the meantime Climate Change has become a real issue in Pakistan because in recent years, people have noticed that the summers have been getting hotter. Glaciers are retreating throughout the Northern Areas, the NWFP and Kashmir. During the last decade, droughts have become more common, especially in the arid areas of Pakistan. Even if ample rain falls in the desert areas of Sind and Balochistan one year, the next year could bring drought with a vengeance.

The sad fact is that more than 95 percent of Pakistan is devoid of trees. Perhaps as much as 50 percent of Pakistan’s forest cover has been lost since independence.

In the north, the inhabitants of the mountain hamlets own an occasional cow and cultivate maize or potatoes on terraced fields. Gujars and Kohistanis tend goats and sheep. The desert and rangeland folk tend camels, goats and an occasional buffalo.  The mountain and tropical forest dwellers are steadily encroaching into the dwindling wilderness and causing a steady depletion of the natural habitat. This not only increases soil erosion but also tends to make the summers hotter, a phenomenon that has been noted in Chitral and other parts of the frontier.

A majority of people in these marginal, though environmentally significant lands, live below the absolute poverty level, and suffer from malnutrition. They lack basic health and educational facilities. Isolated hamlets, comprising a few mud or stone huts nestle the steep slopes on narrow valley floors in the Kaghan valley, Swat, Dir and Azad Kashmir. Such habitations are also common in the arid zones of the four provinces, as well as the mangrove forests of Sind.  As cultivable land is severely limited, these people will continue to eke out a precarious subsistence unless the government or some other outside agency intervenes to help them.

Bringing these neglected folk into the mainstream of national life is the duty of the state. To an extent this has happened in the aftermath of the recent earthquake in Azad Jammu & Kashmir and parts of Hazara. It is also necessary to upgrade the quality of the habitat the poor people occupy, so that a precious national asset is restored to an acceptable level if not its original condition. The target population would be required to undertake environment-friendly and financially profitable activities such as forest protection, fruit farming and even wildlife breeding.

In compensation for switching to horticulture from traditional subsistence agriculture, which causes environmental degradation, and is non-sustainable, selected families may be allotted a bare subsistence food ration, or cash.  Each family would receive a stipend in cash or kind (wheat flour, edible oil, kerosene, sugar, tea and milk powder). The family would also receive fruit saplings and technical assistance and know-how in horticulture and animal husbandry.

Recipients would be obligated to make their labour available for biodiversity preservation. The aim would be to propagate and safeguard valuable plants and wild animals native to these areas.  In the interim period, an assured ration of food for the families would encourage a switch from subsistence farming to lucrative cash crops, forest protection and wildlife breeding.

In return for a monthly food ration, the recipients would be assigned specific environment duties, which would include plantation of new saplings, looking after existing trees in the vicinity, and keeping a watch on the wildlife.

The tree planting targets would comprise a careful mix of fruit trees and trees suitable for timber.  The emphasis would be on the highest possible value, though not necessarily in the shortest possible time. Rare plants (shiitake mushrooms which are being cultivated profitably in Bhutan, and flowers in Nepal) could be cultivated on a suitable scale for medicinal, commercial and environmental purposes.

Employment of the poor in defence of biodiversity: A modest start may be made by adding 50,000 locals to the environment workforce at an annual cost of Rs. 1.5 billion. This figure is based on a subsidy of Rs. 3000 per month per family.  The money would be used to supply basic staples to the target stakeholders. If two or three family members are counted in the workforce, the number could be correspondingly greater. This represents a substantial boost to the labour force available for specific environment protection duties.

The question arises how the national programme is to be organised, financed and managed?   To supplement the resources of the state, external financial assistance may be needed.  Past experience suggests that existing government departments may not be the most suitable agencies for managing such projects.  What is needed most from the government is leadership and direction.

The responsibility for implementation should be placed on five types of organisations:

(a) a new organisation would be set up to look after this programme on the model of the Earthquake Reconstruction and Rehabilitation Authority (ERRA), whose mission has been to plan, coordinate, monitor and regulate activities in earthquake affected areas; (b) non-governmental organisations, foreign and domestic, would be encouraged to mobilise resources and undertake specific projects; (c) major private sector corporations may also be invited to assume financial and managerial responsibility for specific projects. It is possible that entrepreneurs with an interest in tourism and environmental protection may be persuaded to volunteer to look after specific projects; (d) cooperative grassroots organisations, like tanzeemat (groups) and jirgas (tribal councils) that have helped to protect valuable wildlife and forests would be included in the loop; (e) the armed forces, with their  trained and disciplined manpower  situated as they are throughout Pakistan, can be involved in operations in environmentally sensitive areas and thereby play an important role in protecting the natural habitat and wildlife.

The administration would naturally have to ensure that the subsidy goes to the deserving persons. An effective monitoring mechanism will have to ensure that the recipients (who may be called tree-cum-wildlife shepherds) meet their tree planting targets and, more important, look after the saplings and the existing forests.

Key wildlife projects: Endangered animal species like the Marco Polo sheep, Himalayan ibex, markhor, snow leopards, may be reared in captivity and released. Trout farming in the NWFP, crocodile farming in Sind, and wild sheep and goat ranching countrywide could be undertaken for profit.  Certain endangered animals like the Asiatic lion, cheetah, Arabian oryx, gazelles, and Asiatic rhinoceros, which have become extinct in Pakistan, could be imported and reintroduced.

The biblical Asiatic lion, for example, has become extinct over 99 percent of its former range, including Pakistan.  The exception is a small pocket in the Gir forest of the former princely state of Junagadh, whose nawabs jealously protected the species during the 19th and 20th centuries.

As the Asiatic lion was found in Pakistan over 150-200 years ago, there is no reason why it cannot be reintroduced in its former habitat in the riverine forest or scrubland zones of Sind that are secure from flooding. To launch the programme, a few pairs of Asiatic lions may be imported from India for breeding purposes under the umbrella of SAARC.  It may be explained that once its population is established in Pakistan, it would be possible to have a viable breeding programme and animals could be interchanged between the two neighbours and foreign zoos that have stocks of purebred Asiatic lions.

Trophy shooting of a limited number of wild goats and sheep may be permitted as is the case at present. The bulk of the revenues may be handed over to the tanzeemat responsible for guarding the wild animals from poachers.  Promoting activities that are likely to bring financial benefits is an excellent way of instilling the concept of sustainable development among the rural poor. Activities that are beneficial to the community as a whole and to the land will more than pay their way in the years to come. Protecting the environment also conforms to age-old traditions and practices that satisfy the requirements of conservation and sustainable development.  For example, in parts of South Asia it was a tradition for the father to plant a mahogany tree at the time of the birth of a daughter in anticipation of the wedding expenses.  Foresight at the personal level was not unknown in South Asia. Indeed, Pakistan has been able to rescue certain wildlife species such as the green turtle, the desert ibex and the Himalayan ibex from the threat of extinction. This goes to show that people are not oblivious of the benefits of conservation.

The goal should be to motivate and organise the local people to protect their environment.  The government agencies, regrettably, have failed on many fronts.  The forestry departments have been unable to stem the menace of deforestation. As the timber mafia plunders forests, once lush mountain slopes have become bare causing landslides, floods, erosion and the silting of major reservoirs like Tarbela and Mangla. The cost of the long-term damage exceeds by far the temporary gains of a few dishonest people.

Past experience  suggests  that  sophisticated  methods  of  control will have to be devised for the biodiversity and wildlife projects. A hit and miss approach will not be advisable. The aim will be to promote sustainable development, by bringing a marginalised population into the mainstream of the national economy, at the same time giving a powerful thrust to environmental protection. Technical cooperation with the major donor agencies (UNEP, UNDP, World Bank) and countries as well as NGOs like the IUCN, WWF, Aga Khan Foundation may form part of the plan.

Energy – the fifth silver bullet or the key to everything

During the past three or four years, tens of millions of Pakistanis have been enduring sleepless nights and disrupted working days owing to rolling blackouts on the national electric grid. Paradoxically the load-shedding, which contributed significantly to the unpopularity of the previous regime, was partly an outcome of growing prosperity, as consumers were able to buy a large number of electrical appliances on credit. The single greatest failing of the previous government was its failure to anticipate the consequent boost in the demand for electricity. Field Marshal Ayub Khan is remembered for building the Tarbela and Mangla dams; Musharraf will be remembered for not building a single big dam during his eight years of untrammeled power.

Pakistan’s total installed generation capacity from hydroelectric, thermal, Independent Power Producers (IPPs), and nuclear power plants stood at around 19,566 MW. The existing capacity of thermal power generation is 12,630 MW, which is almost two-thirds (64.6 percent) of the country’s total generation capacity. Although thermal power plants are quicker to set up, they became the most expensive of all to operate owing to sky-rocketing oil prices in 2007-08. Since then the price of oil has dropped sharply. Hydel energy is the second largest source of electricity and accounts for 33.1 percent of total power generation. Pakistan’s total identified hydel generation potential is estimated at 46,000 MW.14

Apart from poor planning, the gap between the demand for electricity and supply is owing to inefficient management. Existing plants are being under-utilised. Some of the Independent Power Producers curtailed power generation in their units because they had not been paid for the power that they had supplied to the Water And Power Development Authority (WAPDA), while the latter claimed that it had not been paid by some of its biggest customers. Owing to the sub-standard transmission infrastructure, 30 percent of the electricity generated is either wasted or stolen.

Electrical Energy Sector Overview:15

Total Installed Capacity: 19,460 MW

Thermal (fossil-fuels)	12,478 MW	64.12%
Hydel	6,480 MW	33.30%
Nuclear	462 MW	2.37%
Renewables	40 MW	0.21%

Pakistan’s per capita consumption of electricity in 2005 was a dismal

456.2 kwh, as compared to 480.5 kwh for India, 1,897.6 for Turkey, and

17,321 kwh for Canada, to cite a few examples.

According to Mukhtar Ahmed, energy adviser to the previous government, Pakistan’s “total energy supplies were 56 MTOE (million tons oil equivalent) in fiscal year 2005. With an annual production o 3,685 MMscfd16  (28 MTOE), gas accounts for 51 percent of energy supply, followed by oil at 29 percent, hydel at 11 percent, and coal at 8 percent. Pakistan currently meets only 19.9 percent of its oil demand from indigenous resources.”

He adds: “The power sector accounts for 23 MTOE or 41 percent of energy supply, of which 55 percent is gas, 27 percent hydel, and 15 percent is oil. Nuclear energy accounts for only 3 percent of power generation. Current installed capacity in the country is 19,160 MW of which 34 percent is hydel, and the bulk of the remaining is thermal.”17

Mukhtar Ahmed also pointed out that 40 percent of Pakistani households were not connected to the electrical grid and only 18 percent of the households had access to piped natural gas.18  It is estimated that over the next 20 years, the country’s demand for energy will increase by 350 percent.19

Low per capita consumption of energy is an indicator as well as a cause of poverty in India, Pakistan, Bangladesh, Afghanistan and Nepal. While South Asia is home to more than 20 percent of the world’s population – about 1.4 billion people – its energy consumption is barely 7 percent. Satellite pictures reveal a disturbing column of haze and smoke extending from Bangladesh all the way to Pakistan. This is believed to be caused by smoke from cooking and heating fires and to a certain extent from coal-burning in India. Almost 90 percent of the people in the three countries use traditional biomass fuels for their cooking and heating needs.

During the winter months, indoor pollution from wood fires is a major  source  of  respiratory  diseases  among  mothers  and  children in the mountainous areas of northern India and Pakistan. The severe deforestation and soil erosion in the mountains of South Asia contributes to silting of reservoirs. Removal of the forest cover and excessive air pollution is also believed to have made South Asian summers and winters drier and hotter.

Coal

Among the SAARC countries, India and Pakistan have significant reserves of hydrocarbon fuels, mainly in the form of pollution-causing coal, but Pakistan has yet to exploit this resource, and derives only 5-7 percent of its energy requirements from coal. Pakistan’s domestic production of petroleum meets only 15-20 percent of its requirements: the rest has to be imported from the Middle East. Pakistan’s oil imports average a modest 800-900,000 tonnes per month but they consume the largest share of Pakistan’s export earnings.

India’s annual coal consumption is expected to grow from around 400 million metric tons in 2008 to 758 million m.t. by 2030. Should India and Pakistan exploit their coal reserves to the extent the United States has done, it could add significantly to the problem of global warming.

According to the New York Times, US power companies are planning to build about 150 coal plants  in the near future, and “almost none…will be built to capture the thousands of tons of carbon dioxide that burning coal spews into the atmosphere.”

A persuasive case for Pakistan’s switching over to coal in a big way has been made by Syed Mohibullah Shah, a former Federal Secretary. He has written that Pakistan’s vast coal reserves, among the world’s largest, are almost completely unexploited, and advocates that owing to its lower cost, “coal must generate 50 percent or more of Pakistan’s electric power. This would reduce the overall cost of energy and make Pakistan’s  economy  competitive  in  world  markets.”20    In  the  light of economic realities, and the energy policies being followed by the United States, India and China, Pakistan cannot afford to disregard the importance of coal as the cost-effective energy fuel, at least in the short and medium term.

Some environmentalists dispute the need for new coal plants, but unless there is very rapid progress  soon in realizing energy efficiencies or developing the ability to extract and store huge amounts of wind and solar power at reasonable cost, more coal plants seem certain. Compared with cleaner fossil fuels, like natural gas and oil, coal is cheaper and more widely available. So finding a way to capture the greenhouse gases from these coal plants is critical for the health of our planet.

The previous government had intended to increase the share of coal in the overall energy mix from 7 to 18 percent by 2018, as cited by Robert Hathaway of the Woodrow Wilson Center.21   This target appears to be quite feasible, provided Pakistan is able to attract FDI.

The Iran-Pakistan Gas Pipeline Agreement

After long-drawn out, though sporadic, negotiations on the Iran– Pakistan–India (IPI) natural gas pipeline that were spread over 14 years, the presidents of Iran and Pakistan finally signed the initial accord on the Iran-Pakistan pipeline in Tehran on 24 May 2009, followed by a detailed formal gas sale-purchase agreement in Istanbul, Turkey on 6 June 2009. This project, if implemented, will greatly ease Pakistan’s energy crunch, hopefully by 2013 or 2014 if everything goes according to plan. It will carry 750 million cubic feet of gas per day, at 80 percent of the price of equivalent quantity of oil, sufficient to generate 4000 MW of electricity.22

The imported gas from Iran’s South Pars field would be more costly than domestic gas, but being cheaper than the equivalent in oil by 20 percent, it could save Pakistan $750 million in furnace oil imports to generate about 4,000 megawatts of electricity, if the crude oil prices remained at $50 per barrel.

The estimated cost of the project is $1.2 billion from the border with Iran to Nawabshah, the hub of the country’s gas pipeline system.

Nuclear Energy

Nuclear energy is expected to play an increasingly important role in the global energy sector because unlike power plants that use fossil fuels, nuclear plants do not emit the gases that cause global warming once they are completed. In a recent article, the NYT reported that 21

American companies say they intend to obtain permission to build 34 nuclear power plants in the United States.

At present nuclear power meets only 2.37 percent of Pakistan’s energy consumption. Pakistan has two civilian-use nuclear reactors, the earliest being the Kanupp Reactor in Karachi, which was supplied by Canada and produces only a tiny fraction of the original 135 MW and is approaching the end of its extended life in 2012. The second nuclear plant is the Chasma-I power plant of 300 MW capacity which has been supplied by China and began operating as part of the national electric grid in 2000. Also, construction of Chasma II is currently under way, while contracts for the designs of Chasma III and IV have already been signed.23

The previous government had announced plans for Pakistan to develop a generating capability of 8,800 megawatts (MW) of nuclear energy by 2020, entailing the construction of eight nuclear power plants of 1000 MW capacity each, with the help of the United States and other Western countries.  The reason is very simple: a nuclear power plant of 300 MW capacity costs more than dollars 500 million.  Thus a unit of electricity produced by a nuclear power plant costs 10.5 cents compared to 8.2 cents per unit for thermal energy. Even though the real cost of a fossil fuel thermal plant is probably much higher in real terms on account of the damage it causes the environment, financial constraints appear to pose a formidable barrier to achieving the targets that the Pakistan Atomic Energy Commission (PAEC) has set. The target of an additional 8000 MW by 2020 appears to be problematic in light of the current international situation and the suspicions that the United States in particular harbours in regard to Pakistan’s nuclear programme.

One way to get around this hurdle would be for the Government of Pakistan to persuade an international consortium to build nuclear power plants in Pakistan and sell the power generated to remain with the consortium and International Atomic Energy Agency.

On the surface this plan appears to be reasonable.  In practice, however, one can foresee that the consortium might try to impose extraneous conditions, aimed at curtailing the size of Pakistan’s nuclear arsenal to a level that Pakistan would consider to be below the minimum safety margin necessary to deter an attack by a potential aggressor. The so-called trust deficit on the nuclear issue might prevent the scheme from taking off.

Bearing in mind that nuclear power projects under the present technology are extremely costly, and the fact that the additional 8000 MW would suffice to meet only 5 percent of Pakistan’s energy requirements in 2020, it might be a good idea to consider cost effective alternatives in cooperation with the People’s Republic of China. One possibility is that in the coming decades China might succeed in developing new reactor designs that are much less costly and safer to operate.

Renewable energy

In any event, Pakistan will have to tap renewable sources on energy. That should not preclude the possibility of going all out to develop renewable sources of energy for which cooperation from the United States and EU members could be forthcoming in a big way in accordance with existing bilateral agreements.

South Asian countries would be justified in opting for rapid economic development by using so-called dirty fuels, as other countries have done before them. However, if the industrially advanced countries were willing to provide economic and technical assistance, in particular by subsidizing renewable energy projects in Pakistan in return for carbon offsets, it could be a win-win situation for all concerned.  Our policy makers have to be convinced that renewable technologies are often more expensive in the short run but would pay in the long run in terms of better air quality, lower real operating costs and possibly in slowing down the rate of global warming. It would be a worthwhile investment for both sides. Pakistan should make this point in no uncertain terms at the forthcoming Copenhagen Summit on Climate in December 2009, which is an important follow-up of the Kyoto Summit of 1997.

The long term increase in the price of petroleum over 35 years, recently accompanied by sharp fluctuations in demand and price, has coincided with a growing consciousness regarding the threat of climate change. The need for remedial action is now a priority on the global agenda. As a consequence, much has been written about the possibility of exploiting clean solar energy to meet the growing global energy needs.

An added advantage is that a major switch to solar energy in South Asia could generate a substantial demand for green technology products in Europe and North America, which are experiencing high levels of unemployment owing to the ongoing financial crisis. An abatement of the problem of pollution and its possible impact on global warming would be a bonus for the international community.

The good news is that Pakistan has almost unlimited solar energy and vast reserves of wind energy. It is estimated that 0.25 percent of the land area of Balochistan would supply more energy from sunshine than is being produced in Pakistan at present.

The bad news is that the cost of solar panels and storage batteries is so high that one unit of electricity costs more than three times the energy from fossil fuels. Hence the need for research aimed at reducing the cost of solar panels and storage batteries.

Another method, which avoids photo-voltaic cells and batteries, is to erect vast arrays of mirrors that focus sunlight on miles of pipelines to produce superheated steam to drive turbines that produce electricity. Moreover, the heat produced during the day can be stored for use during the night by melting synthetic salts. The molten salt reaches the temperature of 750° Fahrenheit, which is sufficient to heat steam and run the turbine during the night or on cloudy days.24

Wind energy too has great potential in Pakistan. As stated by Prime Minister Yusuf Raza Gilani at the inauguration of the 50 MW Zorlu wind farm, the 60 by 170 kilometre Gharo-Keti Bandar wind corridor in Sind “has the potential to generate over 50,000 megawatts of electricity.” Apart from the Zorlu Wind Farm, the prime minister mentioned that “24 other wind farm projects, with a cumulative capacity of 1200MW, are under various stages of implementation which are expected to be completed in near future.”  The prime minister mentioned that the government sponsored Alternative Energy Development Board (AEDB)

– in collaboration with public and private stakeholders – had drafted a mid-term renewable energy policy for Pakistan aimed at creating a feasible environment for power generation through renewable energy means in the country. “I hope the policy will be submitted to the cabinet and approved soon,” the prime minister added.25

The other good news is that Pakistan also has vast untapped reserves of hydropower, particularly in the northern areas, estimated at 40,000 to 50,000 MW, as compared to installed capacity of over 6000 MW. One of the biggest failings of the previous regime was its failure to build a single large dam to meet the growing water and energy demand in Pakistan. According to Shahid Javed Burki, an economist, “The Musharraf regime did not develop a cohesive and forward-looking approach, and energy development remained ad hoc and subject to the whims and wishes of those in senior positions.”26

The Kalabagh dam project, which the previous regime had been advocating, appears to have been shelved indefinitely on account of strong opposition in Sind and the NWFP. Attention is now being focused on launching a number of hydropower projects, including the Diamer Dam  project on the Indus (4500 MW), not far from Nanga Parbat, and the Kohala project on the Jhelum (1100 MW).

A down to earth way to harness the sun

Hundreds of millions of villagers in South Asia rely on wood fires to prepare their meals. The wood has to be laboriously gathered by female members of the family and it inevitably causes loss of vegetation and degradation of the soil. Cooking with wood and animal dung also causes severe outdoor and indoor air pollution.

It is time to put South Asia’s “fantastic summer’s heat” to good use.27 Northern Indian and Pakistan have an average of about 275 days or more of sunshine suitable for solar cooking. Balochistan, Southern Punjab and Rajasthan have more than 300 clear days. On sunny days the solar box cooker,  which can cook several dishes simultaneously within three hours, is an elegant and cost-effective alternative to cooking with wood, coal or gas. While the food is under preparation, the family can attend to other work. In order for solar cooking to be acceptable to the people, however, it is important to understand its limitations.28Once these limitations are understood, it is possible to use the cooker effectively to prepare Pakistani and Indian food with relative ease, and make enormous savings in terms of fuel costs as well as time saved in gathering fuel, apart from the abatement of environmental degradation.

A sturdy custom-made flat mirror solar box cooker sufficient to prepare four dishes simultaneously would cost between Rs 4,000 to 5,000, i.e., between $ 50-60.  Mass production could bring costs down. These cookers are reportedly far more common in India than Pakistan.

One of the easiest and quickest ways of reducing the use of wood and fossil fuels for cooking by poor people, especially in the sunny areas of Sind, Balochistan and southern Punjab, would be to popularize the use of solar cookers and distribute them at subsidized rates.  As a start these cookers could be distributed free to the mountain and desert folk as part of the environment rejuvenation programme referred to in the previous section on the environment. This would have to go along with a well-planned publicity campaign to explain the advantages and disadvantages of solar cooking to the general public.  That way people would know what to expect and not harbour unrealistic expectations.

Meanwhile, the ball is in the court of the World Bank, Asian Development Bank and the industrially advanced and high per capita income countries to encourage and assist the countries of South Asia to go for renewable sources of energy by helping to make this option economically viable and feasible. To meet their growing energy needs, South Asian countries must strive to find the right mix of energy derived from solar, wind and wave power, and biogas to supplement energy derived from nuclear fuel, hydropower and oil, gas and coal- fired thermal power plants. Realistically speaking, it will not be possible to do away with carbon fuels in the foreseeable future, but the share of renewable sources and nuclear energy is likely to increase as the real environmental and economic costs or using these non-renewable fueling become more glaring.

Conclusion

This paper has attempted to apply unconventional therapies to address the economic problems of Pakistan. It should be emphasised once again that the list of issues examined is by no means comprehensive. For example, no attempt has been made to deal with the problems of Pakistan’s industrial sector, its road and rail transport, health, science and technology, education and population policies, to name but a few select areas of national importance.

The reasons for selecting IT, agriculture, tourism, the environment and energy are fourfold: firstly, Pakistan has a natural advantage in all these sectors; secondly, the sectors are manageable; thirdly,    major progress is possible without incurring too much expenditure; and fourthly, it is possible to adopt specific measures to bring about major changes for the better by enhancing the people’s welfare in a relatively short time-span.

References:

1     The International News, 12 June 2009, Islamabad. Front Page.

2              See A. G. Noorani, Jihad Vs Terrorism (Criterion Quarterly, April-June 2009), pp. 9-40, for a detailed analysis of the difference between Jihad and Terrorism.

3              BBC News  After partition: India, Pakistan, Bangladesh 8 August 2007. (http://news.bbc.co.uk/2/hi/in_depth/629/629/6922293.stm)

4              Readers may find such an analysis in the article titled Pitfalls and Economic Prospects of Pakistan by A. R. Kemal in the Oct-Dec 2006 issue of the Criterion Quarterly.

5     Our citizens, cabinet ministers and other dignitaries not excluded, face inconvenient delays when applying for visas and are sometimes subjected to unduly intrusive procedures at international airports.

6              Thomas L. Friedman, Bangalore: Hot and Hotter (New York Times, June 8, 2005)

7              William M. Bulkeley,  IBM to Cut U.S. Jobs, Expand in India  (Wall Street Journal). http://online.wsj.com/article/SB123799610031239341.html

8              Thomas L. Friedman, Outsourcing, Schmoutsourcing! Out Is Over (New York Times Op Ed, May 19, 2006)

9              Indian outsourcers may be facing a contraction in business because of the global economic crisis. Overseas customers are reconsidering new contracts, and even implementation of current projects. Even Infosys Technologies has seen its revenues decline. That said, India’s IT industry remains basically robust and is expected to rebound once the global economic crisis is over.

10   Duke University School of Engineering, Framing the Engineering Outsourcing Debate: Placing the United States on a Level Playing Field with China and India  (December 2005)

11   India, China produce more graduates, but what of the quality of their degrees?

Cisco Subnet on Fri, 07/20/07 – 8:01pm.  (http://www.networkworld.com/community/node/17719)

12   The 1990s saw the sharpening of regional disparities within India.  The fast-growing states were in the south and west. The large  states of  the  Gangetic  plain– Bihar, Uttar Pradesh, Madhya  Pradesh,  and  Orissa—did not do as well during the  1990s. See John Williamson, The Rise of the Indian Economy (The Foreign Policy Research Institute, Philadelphia, June 8, 2006.)

13   Gurcharan Das, Foreign Affairs, September/October 2006 issue.

14  Economic Survey of Pakistan 2007-8, Energy Section, p. 257  Ministry of Finance Website. http://www.finance.gov.pk/admin/images/survey/chapters/15-Energy08.pdf Please note the minor discrepancy with the figures provided in the PAEDB.

15   Pakistan Alternative Energy Development Board website http://www.aedb.org/re_sector. php

16   Million Standard Cubic Feet per Day of gas, mainly in the United States, where MM means 1000×1000

17  Mukhtar Ahmed, Meeting Pakistan’s Energy Needs, in FUELING THE FUTURE: Meeting Pakistan’s Energy Needs in the 21st Century (Woodrow Wilson Center for Scholars, Washington D.C., March 2007) p. 19. Note the discrepancy between the figure cited by Mukhtar and that cited by Power and Infrastructure Board , Govt. of Pakistan.

18   Mukhtar Ahmed, Ibid, p. 17.

19   Robert Hathaway, Introduction, FUELING THE FUTURE: Meeting Pakistan’s Energy Needs in the 21st Century (WWIC, Washington DC , March 2007) p. 7.

20   Syed Mohibullah Shah, Pakistan Needs Affordable Energy for Development, Op Ed Page DAWN 1 December 2007.

21   Introduction by Robert Hathaway, FUELING THE FUTURE: Meeting Pakistan’s Energy Needs in the 21st Century (Woodrow Wilson Center for Scholars, March 2007)

22   India has apparently opted out of the project for reasons that need not be elaborated here. ‘The agreement has been signed in a third country because it is governed by French law, denying any advantage to Iran or Pakistan in case of any dispute,’ said Pakistan’s Adviser on Petroleum, Dr Asim Hussain. See Gas price accord with Iran signed Dawn.com, 10 June 2009. (http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/

business/09-gas-price-accord-with-iran-signed-szh–05)

23   OnApril 28, 2009, Shanghai Nuclear Engineering Research and Design Institute (SNERDI), a subsidiary company of the State Nuclear Power Technology Corporation (SNPTC) signed a General Engineering Contract in Shanghai with China Zhongyuan Engineering Corporation (CZEC) to provide engineering design and technical services for Pakistan Chashma III and IV units. http://74.125.153.132/search?q=cache:OfIzK_3PZhAJ:www. snptc.com.cn/sites/english/Lists/corporate%2520news/DispForm.aspx%3FID%3D34+c hasma+III+and+IV&cd=1&hl=en&ct=clnk&gl=pk

24   The Yale  Environmental  360  site  has  a  good  article  on  Solar  thermal  power  – A Potential  Breakthrough  In  Harnessing  the  Sun’s  Energy.    “In  the  high  desert  of southern  Spain,  not  far  from  Granada,  the  Mediterranean  sun  bounces  off  large arrays of precisely curved mirriors that cover an area as large as 70 soccer fields…. Now, engineers can use the molten salts to store the heat from solar radiation many hours after the sun goes down and then release it at will to drive turbines. That means solar  thermal  power  can  be  used  to  generate  electricity  nearly  round-the-clock.

The plant in southern Spain, known as Andasol 1, began operating last November and now provides 50 megawatts of power, enough electricity to supply 50,000 to 60,000 homes year-round. Andasol 2 will come online later this summer, with Andasol 3 already under construction. When the entire Andasol complex is completed in 2011, it is expected to generate enough electricity to power 150,000 households — about 600,000 people.”

http://74.125.153.132/search?q=cache:FvVPdluXqnYJ:peakenergy.blogspot. com/2009/05/potential-breakthrough-in-harnessing.html+mirrors+heat+pipes+produce

+electricity&cd=4&hl=en&ct=clnk&gl=pk

25   PR. NO. 263 Prime Minister’s Address at the Inauguration of Zorlu Enerji Wind Power Project on 19.4.2009, Press Information Department, Islamabad; April 19, 2009

26   Essay by Shahid Javed Burki,  FUELING THE FUTURE: Meeting Pakistan’s Energy Needs in the 21st Century (Woodrow Wilson Center for Scholars, March 2007) p.48

27   From May to August every year, temperatures in the Indo-Gangetic plain range from

28   For an overwhelming majority of people with limited incomes, North Indian and Pakistani cuisine comprises two essential elements: the flat bread known as chappati and the curry, or sauce comprising lentils, or vegetables and on rare occasions, meat. The solar box cooker is not suitable for preparing the India- Pakistan flat bread, which has to be made fresh on a skillet with a fire. It is also not suitable for frying the onion base that is a must for many curries. So a hydrocarbon fuel (natural gas, LPG, kerosene, cow-dung or wood) has to be used to cook the flat bread and to sauté the onions with spices. This normally takes about 10 – 15 minutes. To save time and energy, it is possible to dry onions in bulk with a solar dryer which would reduce the cooking time.

The pot or saucepan, preferably with a black cover, containing the curry mixture has to be placed inside the solar cooker for about two or three hours. In the case of rice, it is advisable to use freshly boiled water as a starter and transfer the pot to the solar cooker immediately and let the rice cook for two hours. The solar box has to moved every half hour to face the direction of the Sun. Incidentally, the solar cooker is without equal for baking western style bread, cakes, pilau and roasts.