Press Release – Day 2

People expect their leaders to lead them to a life of freedom and dignity

Arshad Zaman, former Chief Economist

Today marked the second day of the three-day Conference being organized by the Pakistan Institute of Development Economics (PIDE), with the support of Ministry of Planning, Development and Reform on “China-Pakistan Economic Corridor and Regional Integration”. The proceedings of the second day included two panel discussions, the A. R. Kemal Memorial Lecture, and parallel technical sessions on different topics related to the theme of the Conference.

The highlight of the day was A. R. Kemal Memorial Lecture by Dr. Arshad Zaman, former Chief Economist, Government of Pakistan. The premise of Dr. Zaman’s talk was, “we must all defend Pakistan, better”, making a strategy of sovereign development that combines defense, diplomacy and economic restructuring. In his lecture, he talked about four major challenges facing Pakistan that need to be responded. These challenges are rebirth of nationalism in West, war of narratives in the war for oil and Israel, emergence of Sino-Russian relationship, in the form of Eurasian Economic Union (EAEU), and militant extremism in India. Brexit and the victory of Trump in the US elections are two examples of increasing nationalism in the West. Dr. Zaman believes that the reality of the US wars has nothing to do with Islam but it is about global oil transport having choke points in Middle-Eastern countries.

In the war of narratives, the selection of Michael Flynn, retired lieutenant general, US Army, as the National Security Advisor in the Trump administration reflects the mindset of the coming US government. Flynn has a stated position of using the term ‘radical Islamism’ in the narrative propagated by the US. Quoting a recent study by McKinsey & Company he stated that the gravity of economic activity is shifting to a region which is in the north of Pakistan. The creation is linked to the One-Belt-One-Road strategy of China and its aim to build a global infrastructure network. The speaker also noted that recent years have shown a rising trend for the extremist BJP and the Modi Doctrine in India. India is stressing on five Ts, which are Trade, Tourism, Talent, Technology, and Tradition. These so-called five Ts are forming the basis of India’s relations with all countries except Pakistan.

In order to form a sovereign development strategy Pakistan needs to take a few important initiatives. The first step should be to reframe the “Muslim national narrative”. This narrative should present an ideology of Muslim tolerance, justice, and charity. Dr. Zaman said that an urgent rebuttal of the organized propaganda by the West is needed that covers both civil and military aspects. This strategy should outline the lies behind the US-led wars and propagate Pakistan’s vision of peace for everyone, everywhere, and not just for Pakistan and Pakistanis.

Dr. Zaman said that the US-India alliance is a game changer and our defense plans should adjust accordingly. Sino-Russian relations have made US anxious although at present US remains preeminent but China is emerging fast as a global leader. Pakistan already has good relations with China but should also work on improving relations with Iran, Russia, and Germany because Iran is an important neighbor, Russia is reemerging, while Germany is the oldest European power. Pakistan, however, should be careful in its relation with China and not fall into a patron-client relationship, replacing the US with China. He further stressed that economy needs to be reimagined as the security-oriented quest for protection and capture of markets. Dr. Zaman argued that grand strategy needs grand strategists and bureaucracy should not be the source of it. What is needed is a body that enjoys the full confidence of both the civil and military establishment. He concluded his lecture by arguing that although the scope for sovereign action by the Government is limited, there is still space for recovery of lost sovereignty. People expect their leaders to claim this space and lead them to a life of freedom and dignity.

The first panel discussion of the day on “Mainstreaming Environment in CPEC” was chaired by Syed Abu Akif, Secretary, Ministry of Climate Change, Government of Pakistan, while the discussion was moderated by Mahmood Akhtar Cheema, Country Representative, IUCN, Pakistan. The panelists talked about different aspects of CPEC, development and their relationship with the environment. Expressing his views the panelist Naseer Memon, Chief Executive, Strengthening Participatory Organization, said that development should not be at the cost of environment but at the same time it also does not mean that we should not grow. He was of the view that development is not only about who will benefit from it but it is also about who will bear the costs. Shafqat Kakakhel, former Assistant Secretary General of the UN, said that the CPEC is skewed towards energy projects and energy projects, in turn, are skewed towards coal. Therefore, both the governments should work together to lessen the adverse impacts. Ashiq Hussain, Advisor Ev-K2-CNR, said that the projects like CPEC should not ignore the biodiversity aspects because biodiversity promotes ecotourism, which is an important industry. He stressed that biodiversity must be maintained as it is the main raw material for ecotourism. Expressing his views on the topic, Syed Mahmood Nasir, Inspector General Forest, Ministry of Climate Change, Pakistan, said that there should also be a biological corridor and there should also be a road-cross strategy for animals. He further said that fresh water conservation should also be assured through parks, lakes and wetlands. Taking the discussion further, Rehana Siddiqui, Head Department of Environmental Economics, PIDE, said that environmental regulations are more stringent in China but in Pakistan the devolution of the Ministry of Climate Change is creating issues in the implementation of these regulations. Generating energy from coal is polluting the environment and the best feasible option is the transfer of clean technology from China. She said there is also a need to tackle the issues of future urbanization along CPEC. Local community will lose their livelihood; therefore the alternative sources of the livelihood should be sought, such as ecotourism.

Earlier, in a technical session, a study on the nexus between globalization and inequality argued that there is no clear cut relationship between globalization and inequality in developing countries. However, effective and average tariff rates affect income inequality negatively. Another paper talked about the potential of international trade. The presenters said that the researchers must take the institutional structures into account. According to another paper on the linkages of Pakistan’s economy with the globe, the Pakistani investors are vulnerable to external financial shocks due to financial integration, whereas manufacturing and production is not affected by external factors. Analysis in the paper on the impact of technical barriers on trade between Pakistan showed that while China, India and Sri Lanka have more non-tariff barriers (NTBs) than Pakistan, China and India’s NTBs are more sophisticated.

Talking about the experience of industrialization in Pakistan, a paper argued that although Pakistan has been promoting industrialization since independence, the progress has been slow due to poor governance and rent-seeking. In a paper on freight transport networks, the presenter said that freight sector inefficiencies in Pakistan prove to be very costly. It is important to integrate road and trade networks to reduce cost and enhance efficiency. Currently, 96 percent of the freight is transported through road and only 4 percent of the freight is carried through the train network. According to a paper on FDI and economic growth, FDI is significant contributor to overall growth in Pakistan but spillover effects of FDI across sectors.