THE FRONTIER POST (Peshawar, Pakistan)
Editorial -- Thursday, March 18, 1999  

U.S. Ambassador On Pakistan Economy

In what comes as a stinging criticism of the government's economic policies, the US ambassador to Pakistan, William B. Milan, observed on Tuesday that Pakistan had lost investors' trust. According to him, the loss of credibility among foreign investors has resulted following government's backtracking from international agreements. He sounded rather grim when he told the Rawalpindi Chamber of Commerce and Industry that it was impossible to think of American investments in Pakistan. He also castigated the Sharif government for incurring greater expenditure beyond its resources, a trend that has added to the burden of foreign debts. And for the first time we heard him express his disapproval of the size of the federal and provincial cabinets. He also took a potshot at the government's inability for improving the law and order situation. This factor, he said, was also responsible for scaring the foreign investors away from Pakistan. The American ambassador's remarks confirm the widespread perceptions about the state of economy in this country. Imagine the futility and hyperbole characterising Mr. Shahbaz Sharif's recent visit to America.

The PML government has been downplaying the impact of its serious dispute with the Independent Power Producers (IPPs). The full extent of the negative fall-out of the government's punitive action against the IPPs is now being felt.The government has been imprudent in its driver against the IPPs. Since the latter entered into an agreement with the previous PPP government, the prime minister and his associates decided to pummel Ms. Bhutto and her spouse for their alleged wrongdoing. The route for this objective meant squeezing the IPPs. The PML government's argument that the IPPs wangled undue concessions from the previous government by bribing their way through the negotiations, has obviously been rejected by the foreign investors. In fact, they have combined their energies to browbeat a government that is utterly dependent on foreign cash for its survival. The observation about the excessive government expenditure is also largely true. Add this burden to the one caused by such unproductive exercise as the prime minister's self-employment scheme, and the picture becomes scarier. This paper has long maintained that improving the law and order situation is imperative for attracting foreign capital. Unfortunately, the government's opposition-bashing and failure to contain sectarian forces, plus the controversial decisions about Karachi, have worsened an already bad law and order situation. The fact is that the PML government is running out of options, both in the political and economic terrain. Its foreign policy is in a mess, especially after Iran's seemingly irreversible alienation. The oil-rich friends, despite the nuclear detonations, have refused to bail out the government. We do not see how the prime minister can contradict ambassador Milan's observations. His views resemble those of the opposition. It remains to be seen whether the government would call his impressions untrue and unfounded.