DEVELOPMENT BULLETIN-PAKISTAN: Crippling Sanctions Dampens ‘N- Bomb’ Euphoria

By IPS Correspondents Reprint | | Print |

Amir Mir

LAHORE, May 30 1998 (IPS) - Riding on a huge wave of public support for its decision to match India’s recent nuclear tests, the Pakistan government appears to be in no mood now to back-off fro the dangerous path of nuclear confrontation with arch-rival India.

Despite predictable international condemnation and imposition of sanctions, Foreign Minister Gohar Ayub Khan said Friday in Islamabad that Pakistan would continue with its nuclear weaponisation programme, indicating that Pakistan was likely to conduct further tests.

On Thursday, two weeks after India detonated a series of five nuclear devices — triggering a likely nuclear arms race in the Indian subcontinent with Pakistan — Islamabad showed off its own nuclear prowess.

Five nuclear devices with an average recorded intensity of 40 to 50 kilotonnes were exploded in the Chagai Hills, a remote region of Balochistan, the northwestern province that borders Afghanistan and Iran.

Prime Minister Nawaz Sharif, in a televised address to the nation, said that his government was forced to join the nuclear club because of concerns of the threat to national security and integrity posed by India.

He urged his people to prepare to pay the price for defying international pressure to not to tet and called on them to help the government tide over the fallout of sanctions and the freeze on foreign aid.

Hours after his broadcast delivered in Urdu, Pakistan President Raffique Tarrar declared a state of emergency in the country.

However, as expected public opinion has swung firmly behind the Pakistan government, even as Pakistan’s biggest aid givers led by the United States have imposed crippling sanctions like they did with India.

Pakistan’s much weaker economy which is completely dependent on foreign aid is, however, likely to be affected much more than India which has only over the last five years opened its door to foreign investments.

Already foreign transactions have stopped, and all business halted on the Karachi Stock Exchange with the realisation that multilateral lenders and governments would pull out of the country under the mandatory sanctions.

Independent experts warned the economic and social cost of sanctions for Pakistan will be much greater than it is for India.

The consequences of conducting nuclear tests, and that too by a developing country like Pakistan, will be much more devastating for the national economy and the region as well, commented Dr. Akmal Hussain, a leading economist.

Both the United States and Japan have frozen funds. The World Bank, which has to seek the approval of all its members, will stop aid to Pakistan, that will jeopardise a number of development projects that the Sharif government has launched.

New foreign investments will be hard to come by and some of the foreign investors might actually pull out as they have done in India, Dr Hussain warned.

With foreign exchange reserves sinking to a low one billion dollars, Pakistan is faced with a real danger of defaulting on payments — the reason for President Tarrar’s surprise decision to impose a state of emergency in Pakistan.

In fact the declaration of emergency rule under special powers given to the president, has raised little comment in the Pakistani media, which has concentrated more on reporting on the successful nuclear tests.

In a related development, the government as frozen al foreign currency accounts to avoid flight of capital. According to the country’s Finance Minister, Sartaj Aziz, the foreign currency accounts will remain frozen till further orders and there will be no withdrawal of foreign currency.

However, the minister added the withdrawals could be made in Pakistani rupees. He told reporters that there will be no cut in the defence budget, instead it will be increased to meet the additional needs of the armed forces.

According to him, sanctions will not affect the 1.7 billion dollars foreign aid which is already cleared and in the pipeline. But the fresh aid of 1.3 billion dollars that the government had been expecting may be affected, the finance minister said.

The government will not face any major problem in the remaining period of the current fiscal year as it has enough resources to live without new multilateral and bilateral loans, the ministers claimed.

However, Imtiaz Alam, editor foreign affairs of ‘The News’ newspaper warned that the “Sharif government will be faced with the most difficult economic times. By taking the nuclear arms race to its next stage, the government has actually eroded the very purpose of its mandate — economic revival.”

The streets, he said, are now full of flag-waving government supporters. But “will the euphoria last when people are confronted with real hardships?” he asked.