Pakistan Prioritises Long-Term Growth, Rejects Modi Water Plans

[00:00:01][music] >> Many factors that still remain in terms of how the uncertainty progresses and what exactly will be the next likely scenario. But there are of course aspects with regards to potential escalation that are existing today. But there's also hope for a peace deal to happen, which of course is what the larger international community also desires to see.

[00:00:21]We're now going to take a look at our next segment that focuses on the economic impact that Pakistan has been facing for quite some time. Now not just since the beginning of this conflict especially so, but also in particular the ways in which the past fiscal year has been what all that means for Pakistan's economic trajectory. For that we've been joined by Dr. Ali Salman who's an economist and executive director of the policy research institute. I'd like your perspective in terms of helping us understand how the growth trajectory has been for Pakistan in the last fiscal year so far especially in the ways that this was a very important year given the IMF's conditions as well and the number of challenges that Pakistan faced.

[00:01:05]>> Thank you so much Anna for having me on your show. Um You see we have to look at this last fiscal year in essentially two time periods. One was pre-war and the second time period is like you know post-war in which we are still today.

[00:01:23]So if we go back to the pre-war scenario, uh the macroeconomic situation was looking quite encouraging. Uh we we had you know controlled the inflation significantly. It was tamed down to about 5% which is what the State Bank target was.

[00:01:40]Um the economic growth prospects at that point was also quite uh you know optimistic above 4%.

[00:01:48]Um and you know also the industrial activity, the large scale manufacturing growth was picking up.

[00:01:56]However, post-war scenario is is different. Uh Uh the inflation again went into double digit. The growth forecasts were then subdued, were reduced to less than 4% and uh uh Um you know, one of the pillars of Pakistan's account, it has been projected that in the next coming few months I think it is encouraging to to to see some growth in the, you know, auto sector recently. Um also, the last fiscal year was quite important in the sense that we had a new tariff policy after 20 years. The tariff policy was, you know, you know, was designed in a in a direction to encourage uh more competition from the outside world. The import the custom duties, the regulatory duties duties were brought down.

[00:02:53]Although not significantly, but at least in in the 5 years' time, they are on the downward trend. And when that happens, that opens up the competition, that opens up the possibility of integration, valuation integration. Um and also industrial activity. If you look around the world, the countries which have turned around their industrial performance have essentially done so by opening up their markets, by reducing the import barriers. So, I think in that sense, it was a positive step.

[00:03:21]Um and if you look at the you know, On the other hand, if you look at unemployment indicators in last 1 year, survey was done. PBS released labor force survey.

[00:03:34]Um and it showed that unfortunately, the unemployment rate was increased uh to more than 7%. Uh so, that was and that remains certainly a cause of concern that while there is modest growth, that even modest growth growth is certainly not enough to keep our you know young population employed and productively employed for that matter. So I think that is a major concern.

[00:04:02]On the other I think these are the some of the highlights which I thought I'll I'll share.

[00:04:09]>> Right. Doctor Annie, how exactly are you also looking at then the ways in which Pakistan will be facing the challenges that come into equation with the developing regional situation between US and Iran. Of course we're hoping for a peace deal to come soon and for this rate to open in this international economic crisis to subside. But there's of course a long path to recovery and stability as well. That's going to take time and comes with its own challenges.

[00:04:32]Has Pakistan planned for that and what needs to be done to making sure that we are less and less affected?

[00:04:38]>> I think if you look at last three months Pakistani government has dealt with this crisis quite well I would say. And especially on the energy side on the you know petroleum markets and on a lighter note I usually say that by not intervening in the market and by not trying to manage the crisis I think the government and ministry of petroleum has done well because we have not in the past it used to be that the government would take on the fiscal burden and fiscalize these additional cost of the price shocks.

[00:05:13]This time we have seen that the government was quite clear from the day one that we will not do it and although it was painful and it is painful allowing the market forces to work. They they they they sort of problem in many other countries managed well because we power production and and you know increasingly we we saw also I think the last one year that there's a you know this the solar revolution that everyone is talking about. So more and more Pakistanis households, industries, farmers are switching to the solar. And this has become a major challenge also for the government itself. Which has of course made long-term commitments for the grid based electricity electricity supply. And it has created you know a major the the challenge.

[00:06:09]Also in the power sector last 1 year not in the electricity sector much but in the gas sector. Just 1 year ago the total circular debt in the energy sector both electricity and gas was in the tune of about 3.4 trillion rupees and it has now shot up to 5 trillion rupees. And that is going to be a you know going forward again a major challenge. Because the demand from the grid is decreasing and therefore the there will be more burden on the users who are on the grid. And it doesn't government does not have any easy easy solution there because the customers are leaving you know great in a in a big manner.

[00:06:57]We also have seen I think if you look at back last year and also look at look look ahead.

[00:07:05]The privatization program which was stalled for many years finally took some positive direction.

[00:07:13]Finally we saw an ailing state-run enterprise PIA was privatized successfully.

[00:07:21]And we hope that this can continue in next financial year. Although it will require a lot of I think strong political will on behalf of the government. There are about these three state-run enterprises government spent year ago government spent about 2,000 billion rupees on you know in on these SOEs in the form of subsidies, loans, uh and grants. So, that has to be stopped. And uh you know, that's like you know, gov- ment must not be spending taxpayers' money on sustaining loss-making enterprises in which government has no role in the first place.

[00:08:03]Uh this will be a you know, major challenge how to attract the in- the investment in these sectors, but also broadly define if you look at the investment ratio, uh there there's no progress in the investment to GDP ratios. It has remained static about 14%.

[00:08:21]And um they we have seen the private sector is largely reluctant, mainly because of high tax rates, I think. Uh and in following the private sector, the international the FDI sector is also sort of uh has observed decline uh in in last 1 year. There has been more net outflow than inflows in last 1 year.

[00:08:43]And so, we hope that in the budget government is able to bring policies uh both on the tax side and also on the business regulation side, which can finally convince investors that okay, this is a good time to partake in the economic activity, expand factories, build new factories, um and you know, contribute positively in the economic growth.

[00:09:12]>> Right, absolutely. Thank you very much uh Dr. Salman for joining us and being a part of the discussion today. We'll take a look now at our last segment that focuses on Pakistan and India vis-à-vis the Indus Waters Treaty, and what exactly is the impact of actions and decisions and also statements coming in from within India with regards to stopping Pakistan's water flow, of course, in complete violation of the Indus Waters Treaty. For that, we'll be been by Dr. Hassan Abbas, who's an international water resources expert and hydrologist. Uh Dr. Hassan, I'd like your perspective in terms of understanding when we hear hear statements coming in from Indian state officials talking about how there will be not a drop of water going to Pakistan in the coming years. What does that do towards Indian's posture towards uh Pakistan in terms of the Indus Water Treaty and what is allowed as part of that treaty?

[00:10:01]>> Okay, there are a couple of things about this uh statements made by Indian ministers before such statements were being made by Mr. Modi and even in the minister's statement, he has referred to uh Mr. Modi's directives, accord- according to which this all their designs are taking place in the uh in the rivers which are the lifeline for Pakistan.

[00:10:29]Now, in in our last episode, we discussed about our legal options against Indian aggressions and between now and then there's this statement of the minister. And if we could recall, we discussed a case registered against such uh statements in International Criminal Court, where you can actually name the individuals who are uh who are [clears throat] committing war crimes.

[00:10:58]Now, in this case uh a war has not happened and a crime has not happened and our case could be framed in a way that the intention to commit a war crime has been spelled out by so and so individual, which includes the name of this minister, which includes the name of Mr. Modi, and any other individual who is in some official position in India who has made such a statement, their names can go in the International Criminal Court for an intention to commit war crime. Now, this is something that Pakistan should have done on the day uh Mr. Modi made a statement that not a drop of water would be flowing into Pakistan from India because this is this is clearly a war crime.

[00:11:52]And the minister has made a very idiotic statement from India.

[00:12:01]And it will not be an idiotic statement as long as we do not give a very rational response to it. And our response is not to make another political statement or uh you know, making a press release or something. Our most logical, most prudent, and most effective response would be a case against them in the International Criminal Court for an intention to commit a war crime in future. And that is where we should start now.

[00:12:37]>> Right. And what exactly, Dr. Hassan, um are Pakistan's options in response to these statements and actions that India has been taking? Of course, there is the um uh very important Court of Arbitration that is there. There is of course the World Bank that's involved.

[00:12:51]There are a number of other platforms.

[00:12:52]But in terms of actual action that Pakistan can take, what is the necessary course of action, especially when India's denouncing a lot of these platforms?

[00:13:02]>> Okay, let India denounce uh anything that they that they want to denounce. Uh and and that's the only thing that they can do.

[00:13:12]Because how many international forums they can denounce?

[00:13:16]They cannot denounce Indus Waters Treaty and Vienna Convention.

[00:13:20]They are signatories of both.

[00:13:23]So, if we take our case to the arbitration council within the framework of Indus Waters Treaty.

[00:13:32]Uh the court has already made decisions a couple of times uh in in in last 1 year and has clearly stated that India is violating the treaty.

[00:13:47]We can again go in the court of arbitration to press upon the same case that they are violating the treaty. The only thing that court of arbitration is supposed to decide is if there is a treaty violation.

[00:14:05]And any decision by the court of arbitration is a binding for those for for for both parties.

[00:14:16]And court of arbitration can put fines on India for these violations, can ask them to recompensate, and they can declare their actions as illegal, not following the treaty.

[00:14:31]That is one thing.

[00:14:33]We can also take up a case in the in in ICJ for India's violation of of an international treaty uh with respect to Vienna Convention, which is a convention on the on the laws of international treaties.

[00:14:49]So, whether they say they accept it or they they they say they don't accept it, they say we accept Vienna Convention, they say we accept court of arbitration, or they say otherwise, it doesn't matter.

[00:15:00]If you have committed a crime, you are a criminal, whether you accept a court or not.

[00:15:05]And in the in the case of international law, the international courts do not have any authority or a mechanism to get their decisions implemented. They are always implemented in good faith.

[00:15:18]And when you clearly demonstrate as a country that you do not respect those institutions and you do not uh accept their decisions or ignore their decisions, you are telling the rest of the world that you are an idiot.

[00:15:34]And the rest of the world would be careful in dealing with you.

[00:15:38]That would impact your trade.

[00:15:40]That would impact your foreign relations. That you That would impact your stance on any global issue at any international forum.

[00:15:51]People will stop inviting you. People will stop collaborating with you.

[00:15:55]And when you go to ICC, whether or not they agree or they accept the ICC the world accepts it.

[00:16:05]And no international company would like to lend their equipment, sell their expertise to India for any project which impacts the water resources of Pakistan because it increases the risk.

[00:16:25]And the risk of ICC is a very very grave risk.

[00:16:30]No international business would like their individuals being named in ICC.

[00:16:38]So, if a project has an ICC risk that company bidding for the a company bidding for that project would add to its insurance costs that risk.

[00:16:53]And the insurance premium against ICC risk would either be not available by any insurer or if at all an insurer gives you a cover against ICC risk that insurance premiums would be skyrocketing and would just uh make the economic costs of the project so expensive that the project becomes even if it is technically feasible, it will become uh financially infeasible.

[00:17:25]So, those are our options.

[00:17:28]We can also file a case in Human Rights Council because Human Rights Council again, UN Human Rights Council, India is a signatory.

[00:17:40]So, whether they like it or not the decisions of the Human Rights Councils would be a binding on them.

[00:17:49]And if they violate, they're not just violating Indus Waters Treaty or something between India and Pakistan.

[00:17:56]They would be violating international norms and traditions. So, politically, they would become weaker and weaker with every step that Pakistan takes on the legal grounds. And this is what is legal encirclement. You can also go to International Court of Justice on customary customary international water law.

[00:18:18]The Berlin Rules, the Helsinki Rules.

[00:18:22]All these uh set of rules which govern international conventions and treaties and uh water distribution between the shared water resources are governed by international laws, international conventions. And there are precedents.

[00:18:40]So, we should file a very good case in the International Court of Justice, in the International Criminal Court, in the Court of Arbitration, and also in the Human Rights Council. And that would provide us a very strong legal encirclement of India. And they would be isolated politically, diplomatically, and in terms of businesses from all over the world.

[00:19:06]And India is not a country which can survive in isolation.

[00:19:09]They are not the technological most advanced country. They do not, for example, manufacture aircrafts.

[00:19:16]So, they have to be dependent for their civil and military aircrafts on the other countries.

[00:19:23]So, our options can completely isolate them, and we should take full advantage of their follies of violating the Indus Water Treaty and now making statements which can straightaway land them in the International Criminal Court. So, those are our options that we should think through, plan accordingly, and with full vigor and full preparation, and full knowledge, and with our best people, we should launch at these multiple fronts and just counter India uh the way no country has ever been countered on the international legal grounds.

[00:20:05]Uh and so, we have the option. Yes.

[00:20:09]>> Absolutely. Thank you very much, Dr. Hassan Abbas, for joining us and being a part of the newsroom today.