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"Pakistan, first of all, has to appease America to prove that it really deserved that money," Salahuddin told IOL. |
ISLAMABAD — With more than five billion dollars pledged by donors to stabilize Pakistan's tottering economy, analysts believe that the sum is not a "free lunch" but a gesture that Islamabad has to pay for.
"Of course, this is not a blank cheque," Ghazi Salahuddin, a Karachi-based senior political analyst, told IslamOnline.net on Friday, April 17.
"Pakistan has to prove in accordance with the US and its allies' satisfaction, that it is going all out in war on terror."
The United States and Japan pledged Friday one billion dollars each for Pakistan over two years.
The European Union promised $640 million over four years, while oil-rich Saudi Arabia had committed $700 million.
The one-day donor conference, attended by 40 countries and groups, also reaffirmed commitment to existing programs worth more than $ 15 billion for ongoing and medium-term development initiatives.
"Pakistan, first of all, has to appease America to prove that it really deserved that money," said Salahuddin.
"Pakistan has to address the reservations of the West vis-à-vis Swat peace deal, because it believes that the fall out of such deals will be horrendous."
Dr Shahid Hassan Siddiqui, a veteran economist, agrees.
"There is no free lunch in America," he told IOL.
"Therefore, if the Pakistani government dubs this aid-cum-loan as a major success, it will not be more than a wishful thinking.
"This is the toughest-ever loan or grant, which is not clear so far, on various political and economic conditions."
Economic Backlash
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| "It will change the country's economy into external resources driven economy," Hassan said. |
Economic analysts believe that the pledges would have a more adverse impact on Pakistan's economy.
"This is still unclear whether it will be a grant or loan. But my understanding is that part of this money will be loan and part of it will be grant," Hassan said.
"But whatever the case is, it will change the country's economy into external resources driven economy."
He said that the Pakistani economy is growing dependent on foreign resources.
"This is a very dangerous situation for an independent country because such types of grants do give a temporary relief," he said.
"But in long run, the local economy appears to be totally dependent on external resources rather than internal resources."
Hassan sees the $5.28 billion as peanuts to cope with the losses the Pakistani economy has incurred since October 2001.
"Pakistan, in 2008, has incurred a loss of 8 billion dollars due to so-called war on terror," he said.
"And this loss will be 16 billion dollars by the end of 2009, whereas we are receiving approximately 9 billion dollars (5.28 billion dollars by international donors and over 3 billion dollars announced by the Obama administration). So the net loss in two years will be 7 billion dollars.
He said since 2001, Pakistan has conceded a loss of $34 billion, while it only received merely $12 billion dollars.
"If Pakistan continues to get such kind of aid, it will not make any serious efforts to reduce its unproductive and non-developmental expenditure, which will further slow down the economy."
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