Leadership in a Disturbed Region: The Case of India and Pakistan
Address by Ambassador Jehangir Karamat at Dickinson College, Pennsylvania

(April 26,2005 )

It is a great pleasure to be here this evening. Thank you for inviting me and I look forward to our discussion. I will start by giving you my perceptions and thoughts on the evolving scenario in the South Asian region.

South Asia has to be seen in relation to its neighboring regions as well as in the perspective of its recent history. India and Pakistan—the two biggest countries have also to be considered in relation to their neighbors and the other South Asian countries. This is the only way you can get a complete picture of the region.

From the violent trauma of partition in 1947, through wars in 1948, 1965 and 1971 and a protracted conflict in the disputed Kashmir area, India and Pakistan have moved to the process of an institutionalized dialogue to resolve their issues. There is a cease fire along the Line of Control that divides Kashmir, a bus and truck service has been started and there is discussion on trade, travel and economic issues. These events have changed the regional dynamics. South Asia is no longer the disturbed region that it once was. Problems and unresolved issues remain but strategies have changed.

To the West, Afghanistan has transited through its invasion by the former Soviet Union, the long US-Pakistan supported war of resistance against the Soviets, a violent civil-war, the oppressive Taliban regime, the Al Qaeda take over of the country to the present elected government and ongoing stabilization. Pakistan and Afghanistan as US allies in the war on terror are focusing on cooperation and trade. There may be divisions just beneath the surface but the US presence has a significant influence that extends much beyond Afghanistan.

So when we look around us at our neighboring regions we find that they are far more disturbed. The Central Asian States and Afghanistan, the Middle East and Iran and, within our region, you have to consider the situation in Nepal, Sri Lanka and even Bangla desh.

It is in this broader context that we have to look at India and Pakistan and we have to be careful not to base our conclusions on just the past. We must take into consideration the changes that have taken place most recently and the trends that are influencing those changes. We may conclude that the region was disturbed but India and Pakistan, are now actually transforming the environment and that the region is not disturbed or, if you want to look at it differently, is as disturbed as any other region.

You want me to discuss leadership in the region. I think it is important to understand the decisions by the leadership that brought about this regional transformation. Pakistan has been a key player. My focus therefore will be on Pakistan and how its leadership acted in difficult environments.

The legacy of the 1990’s gave Pakistan a democratic institution that was in decline, a dominant military institution because of imbalanced institutional development, difficult civil-military relations, a stagnant economy with very serious fault lines and a growing culture of extremism, intolerance, violence, with millions of Afghan refugees, drugs and weapons—the harvest from the joint US-Pakistan supported war of resistance against the Soviet invasion of Afghanistan and the long years of the conflict in Kashmir--- the inevitable blowback from two decades of protracted conflict.

In 1999 the government evaluated Pakistan’s predicament and concluded that the highest priority had to go to economic recovery. Everything depended on economic viability. This was a strategic decision taken at the highest level and it was to have far reaching consequences. So far military centric security had dominated the environment. The new focus on the economy indicated a shift in national strategy----recognition of the trend in the globalized world.

A team of experts was brought in and modest goals were set for the period 1999-2001—avoid a default because of the international implications, manage external debt, build up reserves, concentrate on governance and on institutional and human resource development. Begin the process of macroeconomic restructuring and control over the internal situation.

Just as these objectives were being achieved there came the disastrous 911 event and the environment changed. Pakistan had to take another strategic decision---a decision that meant a complete strategic reorientation. I think the basic soundness of the first decision that shifted focus to the economy, helped in this second decision, because these supported each other. Pakistan became a US ally in the war on terror— it was actually a revival of the long standing US-Pakistan alliance that had been interrupted by the US pullout after the defeat of the Soviet Union. Like all strategic re-orientations, this decision was to have enormous consequences and implications.

There was a sudden influx of capital into Pakistan through an increase in remittances, relocation of funds and new investments. US aid was resumed. The macroeconomic restructured environment proved to be a timely step. Urban and border area counter terrorist operations undertaken at great cost paid off as the terrorist leadership and networks were destroyed. The transformation of the economy gained momentum as the internal environment stabilized and the financial sector became robust. This enabled Pakistan to seize the opportunity offered by the calamity of 911 even as it battled the terrorist backlash within its borders. The decision to improve the economy was reinforced by the decision to co-operate in the war on terror. The relationship with the US and the war on terror became extremely important for Pakistan.

In the 2001-2003 period elections were held and an elected government came in thus starting the return to democracy. Pakistan achieved economic sovereignty, brought external debt under control, built up reserves further, reduced fiscal deficit and inflation and stabilized the exchange rate. The financial sector was reformed and deregulation was introduced. Bilateral policies governing relations with the neighbors to the east and west now focused on harmony and cooperation, instead of hostility and confrontation. US policy in the region facilitated progress. Pakistan cooperated closely with the US and the relationship developed breadth and depth.

A crisis situation with India with potentially disastrous consequences was resolved demonstrating that non-state actors could not derail the events set in motion with the strategic decisions. This led to the realization that protracted conflict provided cover to terrorists. The decision to scale down and end conflict through reciprocal actions was taken and this process started to produce results.

In the 2003-2005 period, economic reforms gathered further momentum. The terrorist threat was effectively sidelined. An institutionalized process of dialogue with India became established leading to milestones like the cease fire in Kashmir, the agreement on cross border travel and now, after the recent summit meeting, a very clear sense of direction in India- Pakistan relations with the emphasis on trade and economic ventures. With Afghanistan the relations improved after Pakistan’s combing operations in the border areas in support of Afghan elections. More recently, after President Karzai’s recent visit to Pakistan, there has been great progress in cooperation, trade and coordination in policies. Regional harmony is now a reality as there is talk of trade and energy hubs and transit corridors. A new sophistication is evident in the interaction between leaders that enables them to rise above bureaucratic obstacles in pursuit of larger interests.

In Pakistan development expenditure was significantly increased, water and infrastructure development projects got underway, enormous emphasis was laid on the neglected social sector—health, education, higher education, vocational training and science and technology. Privatization was successfully started and has moved fast. Exports have risen and investment has grown. Local government was given teeth and began a process of establishing itself. The elected government focused on governance and started resolving political issues – a process that is continuing.

The relationship with the US deepened as the proliferation issue that surfaced was tackled jointly with total cooperation. It was Pakistan’s immediate and total cooperation that led to the unraveling and disruption of the international network. This again was a strategic leadership decision that was in concert with the earlier major decisions. Pakistan acted fast. The first priority was to provide immediate and full disclosure. The next step was to tackle the domestic situation through organizational, command and control arrangements to plug all loopholes. This also involved securing of assets through upgraded means and personnel reliability programs. There was US assistance throughout this process that continues just as Pakistan continues to cooperate in the destruction of the international network.

US assistance strengthened the border security forces as well as the internal security environment. The relationship with the US helped with international financial arrangements and access to credit and support. US policy for South Asia became clearer and linkages with the Greater Middle East and the Greater Central Asia regions emerged. There was a deeper understanding of US policy in the region and the significance of the US-Pakistan relationship for Pakistan. There was a convergence of interests and mutual concerns were addressed. The co-operation against terror continues and prepares for future terror threats—maritime, WMD or information technology.

We must now consider what all this has done for Pakistan? Pakistan’s real GDP growth has a marked upward trend, foreign investment has started as credit ratings improve, the budgetary position is better, tax collection is growing, there is a decline in public debt, debt ratios are declining, average lending rates are moving up, inflation has intensified, strong external liquidity is being maintained with reserves built up to good levels, international access has been established, social sector reforms, public-private sector cooperation, human resource development and infrastructure projects are all progressing extremely well. This economic transformation is now being used to reduce poverty through sustained high growth, development projects and social safety nets. Pakistan today is an attractive destination for investors and they are coming. All sectors are open for investment and there is no distinction between domestic and foreign investors. Massive infrastructure projects and human resource development projects are preparing the country for the future. The US and international financial institutions including the World Bank are helping. The EU, Japan, UK and China are also assisting and investing.

We must also ask what Pakistan has done for the region and the world. This tends to get lost in the constant replay of past events.

By shifting focus to economic viability Pakistan indicated that it was going rely on economic security rather than military security. This implied that it was no longer in any arms race but would only ensure a capability for defense and deterrence. The emphasis shifted to threat reduction strategies and conflict resolution through dialogue. This was a strong factor for the change in the regional environment.

By opting to become a US ally in the war on terror Pakistan indicated that it wanted an end to regional conflict and wanted to strengthen itself internally to resist the forces of extremism, terror and intolerance. The US-Pakistan relationship deepened because it was based on converging interests and shared concerns. Pakistan broke the Al Qaeda network by dealing with over 650 mid and high level leaders in its urban areas. Pakistan also carried out operations in the border areas with Afghanistan to deny sanctuaries to terrorists. Pakistan’s goal is to have a moderate, democratic, liberal and economically viable Pakistan capable of defending itself. The emphasis on the social sector is the long term defense against terrorist networks.

By coming out strongly against proliferation Pakistan signaled its intent of conforming to international norms and regimes. Pakistan, however, drew the line at any intrusive arrangements that could compromise its security arrangements. The fact that Pakistan carried out its first missile test only after a neighbor had carried out nineteen tests is sometimes forgotten. Also ignored is the fact that Pakistan started its nuclear program and tested only when its neighbor crossed the threshold towards overwhelming conventional and nuclear superiority.

There were consequences for Pakistan. It had to face terror attacks and internal destabilization. There was domestic political fallout. There was loss of life and property. Pakistan has remained steadfast in its policies.

I have just flagged the main aspects. Many other decisions and subsequent actions flowed from these major decisions.

Let me now link all this to the leadership question. First I want to point out that this region is not the disturbed region that it was. This is a region of vast economic potential and is positively interacting with the globalized world. Negative forces and trends have been sidelined. Pakistan’s policies are proactive and prepare for competition and not confrontation. The strategic thrust lines developed are irreversible. There is talk of trade corridors, energy hubs and trans-border pipelines.

Secondly the most important issue for Pakistan’s leaders has been a correct evaluation of the environment, a stock- taking that enabled them to correctly identify priorities. This evaluation had to be constantly updated because of rapidly changing situations and unforeseen events.

Finally strategic decisions, no matter how drastic, had to be taken boldly and in time. These decisions had to be backed by carefully thought out implementation strategies and policies otherwise reactions and consequences could have taken over very quickly.

In a region that is interactive and at the mercy of non state actors with their own agendas leaders have to develop personal rapport and communications so that crises can be quickly and efficiently managed. The present rapport and understanding among the regional leaders and with the US is therefore significant.

One lesson learnt is that you cannot take hard decisions, implement new policies while trying to establish democracy. This is not to say that you need authoritarian government but simply to point out that while bringing in sustainable representative government it helps to have it backed by strong central authority till the democratic institution matures.

There are no two views on democracy—it is what Pakistan has and what it wants. Democracy has to become sustainable and permanent. This can only happen if the most developed and powerful institution helps to bring it about—right now it has to be the military and political forces joining hands to do this. It also helps if you have the right man at the right time. In a democratic environment, of the sort that you are used to, you must have strong institutions because these are the pillars on which democracy rests. Unless the environment for democracy to exist is created a premature political arrangement can unravel carefully orchestrated policies---the internal and external environment has to be studied to get the timing right.

There are many challenges for leadership in the future. The focus has to shift to 2007 and beyond. The right environment has to be created for the 2007 elections so that truly representative and competent government comes in and democracy becomes fully functional.

The structures have already been created for stable civil-military relations—these have to be strengthened.

The thrust of economic reforms and policies has to be maintained. Local government must become effective. Institutions have to be strengthened with the focus on judicial, law enforcement and civil service reforms. Implementation has to be ensured and this means strong and committed governance. There cannot be any deviation from the policies adopted. There also cannot be any compromise on government committed to the strategic directions adopted.

The private-public partnership has to expand. Human resource development and social sector reforms have to proceed rapidly. The present focus on health care and education reforms has to be maintained by steadily increasing resource allocation. We have to have a robust financial system to ensure an availability of resources and a utilization capacity.

Regional harmony has to become stronger. The relationship with the US should continue to move towards a strategic partnership. Military build ups and arms races are to be avoided and the trend has to shift to defensive capabilities as intentions become predictable. International norms, trends and regimes will become increasingly important—these have to be correctly identified. Trade and economic ventures will have to be given priority.

These are just some of the challenges that the leadership has to tackle in the future.

Good leadership at a crucial time has led to decisions that have been the basis for consistency and continuity in policies over the last six years. It is now apparent to everyone in Pakistan that this momentum and thrust has to be maintained at all costs.

I hope I have managed to give you an insight into the long road that Pakistan has traversed over the past six years and how our leadership has performed in difficult circumstances.

Thank you. This has been an over view. We can now discuss any specific issues that interest you.