National Security
by Mohtarma Benazir Bhutto
Former Prime Minister of Pakistan and Leader of the Opposition
At All Pakistan Representatives Meeting of the Pak
Lahore - June 29, 1997

Ladies and Gentlemen:

In the old days national security depended as much as it does today on the economic well being of a state. Civilizations sprung up on river beds. However, when the river turned direction, the old settlements often collapsed.

The economic security of a state is defended by its sons and daughters through adequate military strength to defend it from aggression.

The Cold War with its emphasis on ideology and the defence of the ideological frontiers of the Capitalist versus Communist World blinded many to the intricacies of the economic factors so important in shaping the destiny of Nations.

With the collapse of the Cold War, we have returned to the era that prevailed prior to it. What was the era which confronted the world before the strategic compulsions of the Cold War became a factor?

When industrialized Europe began needing raw materials, it set off for the shores of the America, Africa and Asia. They came first as traders, for mutual benefit. But then as their investment increased, they began to worry about the composition of the ruling monarchies and whether they were suitable or not for their trading interests.  If they found themselves at a perceived disadvantage, they began to think of changing the rulers. Then, like Caesar’s Praetorian Guard they began to wonder why they could not become rulers themselves. If they could pick the rulers, they might as well become the rulers.

Thus dawned the age of colonialism.

Now that the Cold War is over, the world of the Trade Wars has begun. While most of the countries of East Europe, Asia, Latin America were delighted with the return of freedom and the end of tyranny, new ground rules were being laid for a trade world weighted against the developing Nations.

Most countries were only too happy to sign the World Trade Organization which pledged to reduce tariffs or taxes to make trade competitive. Most of the developing countries thought that this meant that the West was opening its markets to the developing countries. That revenues lost through tariff reduction would be made up through Sales Tax. This has proved to be incorrect. Developing countries do not have the educational threshold or the documentation necessary or the technology available to make this possible.

What tariff reduction actually does is make  foreign goods cheaper and our own goods less attractive.

It is no secret that a sleeping Asia is about to emerge from its slumber to take its place in the twenty first century. The large markets of Asia, the large population of Asia is a great temptation for the West.

The markets of the West are saturated. Their economies are largely facing recession. Their factories produce goods which do not sell in their markets. Hence they need our markets. Hence the demand to lower tariffs. But once tariffs are reduced we find ourselves in double trouble.

Firstly, we suffer huge losses in revenue which forces us to borrow. Borrowing means we have to pay more in interest repayments. And whom do we borrow from? Naturally largely from the West which has available capital to lend. Next, western goods become attractive. A writer once wrote that the age of globalisation has spawned a global culture. To attain a status or respect in this global culture it is necessary to acquire the status symbols of the global culture. The status symbol of the upper middle classes is the same: Designer clothes, Rolex watches, Ray Ban  eye glasses, Gucci bags, Versace jeans, Walls Ice cream, coca cola and Mac Donald’s alongwith Kentucky fried chicken. Thus the more foreign goods our people demand the more of the global currency, namely the dollar is needed by us. Either we need dollars to buy Western imported goods or else Westerners invest here and repatriate in dollars the profits that they make. This adds to a squeeze on our dollar reserves. After all a country can only have as many dollars as its exports permit. From the export earnings we have to make our debt repayments, our essential imports such as wheat, edible oil and POL, buy our defence equipment and still have enough for the industrialized elite to import their favourite brand of perfume, cigarette or pen. The result is that massive tariff reductions mean we need more dollars than we earn and to boost our dollar reserves we end up devaluating to make our exports more attractive. The devaluation immediately adds enormous amounts to our debt repayment bill, our import bill and our defence bill. Imagine a dollar borrowed at twenty rupees has to be repaid at Rs. 40/. How can we doubly tax our people to repay a dollar that we borrowed at half the price and still make progress?

When Samuel Huntington spoke at Davos in 1994 about the clash of cultures between the Christian and the Muslim world, he was not really talking about a cultural clash but about a market clash. He was boldly stating that the Christian Judaic Hindu civilization had to make a pact to dominate the Asian markets which were made up of the Muslim and Confucian people and races. Thus the Muslim-Confucian arc is seen as the formidable and fertile market for which the West and the East will be competing. But the West cannot maintain its standards of living unless it captures the markets of Asia.

Thus while we may speak of a world of free trade, a world of competition, a world of lowered tariffs we are already discovering that invisible tariffs are being set up. Sometimes in the name of human rights, sometimes in the name of child labour, sometimes in the name of the environment. In one form or another an invisible tariff barrier is set up to ensure that there is no even playing field.

Pakistan has a pivotal role to play in the game of Trade Wars. Pakistan is the only Muslim country with an ability to defend its markets with nuclear or missile deterrence should the situation arise. More worrisome for those who see a clash of civilizations is the alliance that could build between China, Pakistan, East Asia and Japan. This bloc would be a formidable one in bargaining with the developed countries in relation to equal access to markets and thereby equal opportunity for prosperity.

We have seen that Nations were carved up at the Yalta Conference by the Big Three: Churchill, Roosevelt and Stalin. These states we know of today came about as they ran their pens through maps. Some today wonder whether it would not be more convenient to deal with small compact states? If there was a world with one big power and lots of small ethnic states it would be so much easier to govern from some peoples perspectives.

And if, God forbid, Pakistan were to collapse through internal economic collapse as the Soviet Union did, would that not be a convenient solution to its persistent and insistent proliferation efforts. Imagine if Kahuta was in one state, the stocks of fissile material in another, the missiles in a third, the testing ground in a fourth there would be no need to have a roll back at all.

Ladies and Gentlemen, I believe Pakistan today faces a grave crisis.

The Sartaj strangulation Budget has placed Pakistan in greater debt. Revenue shortfalls are going to be greater because tax evasion has been made easier. Corruption has been legalized with money whitening incentives. The deficit is going to be wider. Sartaj is bringing this Nation to its knees, just as he did in 1993 when Moeen Quereshi declared the country bankrupt.

That our vulnerability has grown is evident from several factors namely:

Our Prime Minister says of his Indian counterpart coincidentally brought to power at the same time as him, "I really like that man". And what does that man do? He gets our airspace violated and places  Indian short-range missiles capable of carrying nuclear warheads a stones throw from us in Jullunder.

The manner in which Aimal Kansi was reportedly kidnapped is again a matter of concern.

We hear talk that our own politicians are "corrupt" and that we need good Pakistani expatriates to come and save us. This reminds me of the beginning of colonialism. Our rulers should be replaced by the new Brown Sahibs, those with dual nationalities, dual loyalties, dual homes and dual jobs. I do not believe they would come to save us. I believe they would come to hasten our demise.

The Islamic parties have no positive economic programme either. They are bent upon making the system unworkable so that they can seize power. Armies do not march on empty stomachs nor do nations survive on starvation diets.  We need an economic programme of revival. We need to stop borrowing but we cannot. Our macho sense gets the better of us and we borrow at commercial rates to increase our debt rather than pay back our debt first. Witness the huge amount we are borrowing at the commercial rates to build the Islamabad-Peshawar Motorway. We need to attract investment. Instead we drive away investors. Witness the Keti Bandar Power Project.

I believe that the Pakistan Peoples Party has the vision, the experience and the knowledge to come up with innovative plans for economic revival. During our term in office we tripled the growth rate, narrowed the trade gap, brought down the budget deficit by 3 points, repaid one billion dollars of debt, made Pakistan self sufficient in energy, reduced the population growth rate, increased exports, tax revenues and expenditure on education. We won a gold medal from the World Health Organization for our anti polio campaign and lady health workers programme. We did this while saving Pakistan from the threat of being declared a terrorist State, preventing a unilateral roll back of our a peaceful nuclear programme, getting the Brown amendment passed, which resulted in receiving one billion dollars in cash aside from sophisticated military equipment and brought peace to Karachi. However, we were unable to save the country from palace intrigues and therefore Pakistan suffered yet another set back in political stability. The nation had to pay a heavy economic price for the President’s decision to sack the government.

The President made such an economic mess of the country that we are sinking in the abyss. The supply side economics practiced by the regime has worsened the situation. The country needs to immediately reduce debt and enhance agricultural production while making the transition to a software state. We are a textile state but no longer competitive in the international market with countries like Bangladesh having cheaper labour costs. Therefore incentives for the textile spinning sector is simply putting a sand bag in front of raging flood waters.

Therefore we need a national plan of survival. But no single political party can do it on its own. We, the political parties, the armed forces, the bureaucracy the judiciary and the intelligence services must together pool our experiences and our ideas to take Pakistan  out of the coming catastrophe. No one can do it on their own. The PML cannot do it with supply side economics. Qazi Hussain Ahmad cannot do it by hanging 2000 people. The military cannot do it advised by  "technocrats"(witness the latest foolish Farooq adventure when Shahid Javed Burki came, wrecked and went away).

We need, in this Golden Jubilee Year of ours, to unite under one banner, one platform and one agenda to save Pakistan by saving it from economic collapse.

And that is why we need a National Government of Survival.

The people of Pakistan deserve a better tomorrow. Let us admit, for one reason or another all of us have failed in giving this to our people. We should do something about it before it is too late. 

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