AN AID PROBLEM WEST PAKISTAN FEELING STRAIN OF BANGLA DESH

Press, Volume CXI, Issue 32639, 22 June 1971, Page 16

AN AID PROBLEM WEST PAKISTAN FEELING STRAIN OF BANGLA DESH

(By REHMAN SOBHAN in the "Guardian." Manchester) (Reprinted by arrangement)

West Pakistan is at last feeling the strains of President Yahya Khan’s military adventure in Bangla Desh. The war has led to a complete dislocation of the East wing economy and this has begun to have its inevitable impact on the West wing.

A fall of 50 per cent which is Bangla Desh’s share —in Pakistan’s foreign exchange earnings has been mainly felt in the West wing. About 80 per cent of the East’s foreign exchange was diverted to finance West Pakistan’s chronic import deficit, which runs on average at SUS4O million a month. The balance is financed by appropriating about 70 per cent of the foreign aid loans which come to Pakistan.

The pinch has led to a “de facto” devaluation. Industry, faced with a loss of the 50 per cent of their exports which traditionally went to Bangla Desh, and exchange shortage, is operating at between 30 and 40 per cent of capacity. Domestic prices in the West wing threaten to rise by between 80 and 100 per cent. Pakistan Foreign Service officials have been asked to accept a 20 per cent cut in their overseas eamings, and other gestures of desperation are manifest Large budget deficit The war, which is costing around SUS2 million a day, is likely to lead to an estimated SUS32S million budget deficit. This is about 50 per cent of the budget cost and will have to be financed by creating paper which must inevitably add to the inflationary pressure. With West Pakistan’s import deficit running at SUS4O million a month, Pakistan's foreign exchange reserve will have reached vanishing point Iby the end of June. A i unilateral moratorium on ■ foreign debt repayments fall--1 ing due by this time merely I publicises Pakistan’s banki ruptcy. i This has generated an imI mediate problem of financing • arms purchases on the open i market More sophisticated • hardware comes from the , French and the open market and has to be paid for in hard cash. Bankruptcy is making it difficult for Pakistan to honour its arms bills : or make down payments on ■ further orders. [ In West Pakistan the 1 econo - civic pinch merely ■ accentuates the bitterness : felt as a result of the frus- . tration of democratic pro- , cesses. Draconian laws have ' led to imprisonments of , potential critics, the closure : of papers, and the inauguration of a reign of terror against any form of dissent. Hysteria against India has been invoked to contain an eruption. In this Mr Bhutto is being used to keep his own followers in the streets in check.

But the promise of sharing the spoils of office are still denied him and he is becoming daily more desperate in his demand for specific action from President Yahya Khan. As his rank and file go to gaol for protesting about the economic crisis, his own charisma is fast disintegrating as people associate him not just with a failure to make good his electoral promises but also for his role in perpetuating military rule. Aid will buy time It is no wonder, then, that the Pakistanis have had, in desperation, to turn to the aid donors to rescue them from the price of their own actions. They see that only a heavy influx of aid from without will alleviate the economic crisis and contain the potential political crisis in the West wing. This will buy Jme for them to pursue their pacification policy in Bangla Desh in the hope that some face-saving political solution will emerge out of the carnage in the East Mr M. M. Ahmed, Yahya Khan’s chief economic adviser, spent two weeks in May in the United States, vigorously lobbying for aid from the chief benefactor as well as the World Bank and the International Monetary Fund. He wanted to take home a SUSIOO million standby credit in foreign exchange, presumably to pay the arms bill, and another SUSBO million as a United States commodity loan to service West Pakistan’s ailing industries. Beyond this another SUS3OO million was needed within the next six months just to keep the economy afloat. A further SUSSOO million was needed for the fiscal year to get some element of development restored. The Pakistan Consortium of Aid Donors had already met in Paris at the end of April and decided to withhold any action. Mr Ahmed’s visit was thus designed to activate the donors. In spite of a good reception from the United States Administration, who traditionally have a soft spot for Pakistan’s military rulers, Ahmed went home emptyhanded. An adverse public opinion plus mounting pressure in Congress, manifest in separate hearings on Pakistan by the Foreign Relations Committees, botn in the Senate and House, inhibited the Nixon Administration from rushing to accommodate an old friend. The aid issue is, however, far from closed and a bankfund mission is visiting Pakistan to re-evaluate the situation. They will report to the consortium members meeting at the end of June on how Jar Mr M. M. Ahmed’s claims of a return to normalcy in Bangla Desh ; are justified. Faced with universal con-

cem at the consequences of I Yahya’s determination to substitute force for political i negotiation, Mr Ahmed had to promise a political settlement of sorts if he was to be even given a hearing. His package now promises an early return to civilian rule, autonomy for Bangla Desh on terms close to the Six Points, and a summoning of Parliament where all “reasonable” Awami Leaguers would be welcome. For those reluctant to surface, by-elections would be held. The tinsel unfortunately fails to conceal the shoddy bill of goods inside the package. Mr Ahmed spoke of 70 or 80 Awami Leaguers ready to seek clemency, but so far they have produced only two out of 457 parliamentarians. The rest are underground and many are now directing the . resistance. Of those politicos . who have made themselves i available, even Nurul Amin . has baulked at playing ' civilian front-man for Yahya.

Outside Dacca the entire civil administration in 16 out of 17 districts defected “en masse” to the cause of Bangla Desh. The military has now imported administrators from the West and sent some Bengalis at gunpoint to fill the vacancies; but the Army must keep troops in all the towns they have captured, with guns trained on Bengali administrators lest they hand over to the Liberation Army. The fact that the Army’s writ only extends within range of their guns makes it virtually impossible for them either to restore economic life in the province or to administer an aid programme. International concern to inject food grains into Bangla Desh to stave off famine will only provide the Army with another political weapon. Without any administrative machinery at their command or control over the countryside, where today 74 out of 75 million Bengalis

live, the Army cannot distribute food where famine is most likely to occur.

Food and politics

They can therefore only use food to try to secure some form of political allegiance from the starving. Famine relief, without direct international administration under safe conduct from both sides, cannot work and donors should realise this much if their motives are humanitarian rather than political.

The world’s aid donors need therefore to take a hard look at President Yahya’s package before they lull themselves with the illusion that they have brought either political peace to Pakistan or refuge from famine in Bangla Desh. Where 99 per cent of the Bengali nation is committed to the cause of Bangla Desh, there can be no tenable “via media" between military pacification and negotiated disengagement Economic pressures and political logic point towards negotiations as the only sane option open to Yahya Khan. But if the aid donors choose to give his ailing economy a blood transfusion, they may encourage him to persist with an adventure which promises nothing but genocide for Bangla Desh, disaster for West Pakistan, and an international crisis in the sub-continent

Financial aid for Pakistan may mean death for the people of Bangla Desh, since apart from bolstering West Pakistan’s failing industry and chronic import deficit it would also provide new supplies for the army. America has already refused a series of massive loans and Mr Heath has been asked to call a special Commonwealth conference. In this article REHMAN SOBHAN who was, until his escape from East Pakistan just after the civil war began, Reader in Economics at Dacca University and an economic adviser to Sheikh Mujibur Rahman, reports on the significance of foreign aid to the continuance of military rule in Pakistan.