CIAO DATE: 01/03

High Stakes for the United States and Pakistan

Teresita C. Schaffer and Richa Gulati

The South Asia Monitor
Number 43
March 1, 2002

The Center for Strategic and International Studies

 

The United States became deeply involved in trying to reverse India’s and Pakistan’s escalatory moves, and pushed Pakistan hard to clamp down on violent militant groups. As a result, the anti-terrorism campaign has broadened its character and the United States is likely to continue a major diplomatic role in South Asia. It should now try to turn this crisis into an opportunity to put India-Pakistan relations on a path toward a settlement.

Pakistan’s goal: long-term friendship, security: Musharraf came to Washington to showcase the new Pakistan that he is trying to build. In each of his public appearances, he stressed his key theme: “Pakistan is a moderate Muslim country.” His message was well received by his U.S. hosts. He spoke movingly of the “greater jihad against illiteracy, poverty, and hunger,” and enthusiastically detailed his hopes for reshaping his country’s crumbling educational system and reforming its controversial religious schools. He denounced terrorism “in all its forms,” although his references to the “freedom struggle in Kashmir” in his meeting with the Pakistani community raised familiar concerns about how far his condemnation of terrorism went.

Musharraf was also looking for substantial help with Pakistan’s multiple problems, and for a lasting relationship with the United States. He sought economic aid, debt relief, and easier market access for Pakistan’s textile exports. He also wanted greater U.S. involvement with Pakistan’s military and, if possible, resumed military supply. And with the armies of Pakistan and India mobilized on the borders, he pronounced that “bilateralism had failed” to produce a settlement between the two traditional antagonists, and sought U.S. mediation.

For the U.S., implementation is key: The White House described Musharraf’s visit as the “opening of a new chapter” in U.S.-Pakistani relations, and President George W. Bush acknowledged Musharraf’s courage in supporting the United States’ campaign against terrorism. The breadth of Washington’s desire to engage with Pakistan was clearly on display, with military cooperation, commercial engagement, and foreign assistance in the spotlight. Of most immediate importance to Washington is the continued military and strategic support of Pakistan for its operations in Afghanistan. The United States also has a strong interest in Pakistan’s future stability. Musharraf’s vision of a model Islamic democratic state that promotes peace within the region was very appealing.

More discreetly, however, the U.S. government also emphasized that the new relationship with Washington depended on Musharraf’s following through on his domestic agenda. Two months of high India-Pakistan tensions following the attack on the Indian parliament put the status of the militants on everyone’s mind. So too did the kidnapping of Wall Street Journal reporter Daniel Pearl, a considerable embarrassment to Musharraf. Musharraf’s decision to convey an upbeat-and, as it later turned out, incorrect-message that Pearl was still alive was disingenuous and probably unwise.

The “scorecard”: Musharraf did relatively well in the quest for aid resources. The World Bank estimates Pakistan’s poverty level at nearly 40 percent of the population, one of the highest in Asia. The U.S. budget proposal for fiscal year 2003, released not long before Musharraf reached the United States, made clear that the United States plans a major aid relationship with Pakistan, although U.S. funds represent only a small percentage of the economic losses Pakistan estimates that it suffered after September 11.

The United States provided $600 million in emergency assistance – in cash, a format hitherto available only to Israel – in the current fiscal year. The $200 million in Economic Support Funds requested in the Bush administration’s FY 2003 budget would make Pakistan the fourth-largest recipient of U.S. economic aid in the world-close to the status it had before the 1990 aid cutoff. Both the United States’ funds and the much larger amounts provided by the World Bank are intended to bolster the badly underfunded social sectors. Bush has pledged an initial $34 million, and will work toward an annual $100 million for education reform.

The United States also agreed to forgive $1 billion in debt, about one-third of Pakistan’s aid-related debt to the U.S. government. To accomplish this, the U.S. Congress must appropriate $200 million, the estimated discounted present value of the amount to be forgiven. Pakistan’s debt burden is indeed severe. Standard & Poors assesses Pakistan’s net indebtedness at 120 percent of GDP, making Pakistan “the most externally over-leveraged sovereign rated by S&P.” Pakistan would like to increase exports to the United States, particularly in textiles, and had urged the U.S. government to increase its quota. The modest increases agreed to were a disappointment, although the current recession in the United States probably would limit the utility of further quota expansions.

On military cooperation, the United States had already resumed an active military education and training program, which should help rebuild the military-to-military ties that had atrophied during the decade since the aid cutoff. It is moving more cautiously on major military supply. Musharraf raised the purchase of the F-16 fighter jets that were denied to Pakistan a decade ago. For the United States, the F-16 chapter is closed. It reimbursed Pakistan in 1998 and is unlikely to revisit the issue. In any event, any move toward major military supply is unlikely while current tensions with India last.

Kashmir: U.S. policy on the India-Pakistan dispute is driven chiefly by its goal of bringing the risk of a war between India and Pakistan to as close to zero as possible, and eliminating the risk of a nuclear confrontation. For this to happen, India and Pakistan need to settle their differences, including most importantly starting a process to talk about Kashmir and ending Pakistan’s role in supporting organizations that commit violence in India. The United States did not accept Musharraf’s appeal for mediation, but Bush’s statement that the United States wanted to help both sides to talk directly suggested a more active diplomatic posture than the United States has taken in the past. This decision reflected in part a judgment that India is ready to accept a discreet U.S. role, given the vast improvement in its relations with the United States.

Looking ahead to elections: Musharraf reiterated his intention to hold elections before October. This pledge was well received in Washington, although restoring elected government has a lower priority for the Bush administration than it had for the Clinton administration. Musharraf himself, and all arms of his government, are deeply involved in making arrangements for the elections. He has announced an increase in the size of parliament, and plans to institutionalize the role of the army in national decisionmaking by setting up a national security council. The Pakistani press has reported that he is considering changing the constitution-apparently by decree-to give the president greater discretionary powers in selecting the next prime minister. Musharraf has also said that he plans to stay on as president. (The constitution provides for the president to be elected by both houses of parliament together with the provincial assemblies.)

It is universally believed in Pakistan that the intelligence services are busy ensuring that candidates acceptable to Musharraf’s government band together in one party. No one expects that Benazir Bhutto or Nawaz Sharif, the two prime ministers of the 1990s, will be allowed to run. The depth of military involvement in political life after the elections remains to be seen, but it will undoubtedly continue. Under these circumstances, elections may open up a bit of space for political life, and will demonstrate that Musharraf can keep his pledge. However, they will revive only a stunted political process, and the chronic weakness of Pakistan’s political institutions will continue to be a problem.

The Pearl murder, and continuing militancy: Since Musharraf’s return to Pakistan, the news of Daniel Pearl’s murder has shown the difficulty of bringing the militant organizations under control. Musharraf himself speculated that the kidnapping was intended to embarrass him after his decision to crack down on the militant organizations. But Pakistani officials involved in the case seem to be pulling in different directions in dealing with the United States. Sheikh Omar Saeed, one of Pearl’s kidnappers, had turned himself in a full week before Musharraf reached Washington, but this information was not shared with the United States until Musharraf’s arrival. This raises disturbing questions, especially because the United States had requested a year ago that Saeed be handed over in conjunction with the 1994 kidnapping of an American. The natural instinct of Pakistan’s intelligence authorities to protect their one-time assets is colliding with Musharraf’s interest in building relations with the United States, and with insistent demands from the United States. Musharraf has publicly confronted the militants, and therefore has no real choice but to prevail in his determination to bring them under control. This is a risky process, but there is no risk-free alternative.

The other minefields: Two other issues can potentially set back the U.S.-Pakistani relationship: Kashmir and Afghanistan. Massive Indian and Pakistani troop deployments mean that the situation can escalate very fast. Ending Pakistan-based support for the armed militancy in Kashmir is ultimately key to reducing this danger. This will be a more painful process for Musharraf than confronting the militants domestically, but in practice delinking these two theaters of operation may have become impossible. The limits of Pakistan’s new policy toward the militants and toward Kashmir will not be clear until winter ends and the passes into Kashmir open.

In Afghanistan, continuing instability could lead Pakistan to conclude that it must take matters into its own hands in dealing with renewed chaos in the large failed state with which it shares a very porous border. It may not be easy to keep U.S. and Pakistani policies in harmony.

Encouragement and pressure: Musharraf has a chance to succeed in his effort to reshape Pakistan, but imagining many ways in which his efforts could come apart is all too easy. He has a bumpy road ahead, and so too, in many ways, has the United States. The United States will need to find the right balance between encouraging his best instincts and pressing firmly for full implementation of the antiterrorist agenda. Both countries must proceed with determination, with hope, but without illusions.