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Crippling sanctions dampen N-bomb euphoria in Pakistan

Riding on a huge wave of public support for its decision to match India's recent nuclear tests, the Pakistan government now appears to be in no mood to retract from the dangerous path of nuclear confrontation with neighbour India.

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

On May 28, two weeks after India detonated a series of five nuclear devices -- triggering a likely nuclear arms race in the Indian subcontinent -- Islamabad flexed its nuclear muscles.

Prime Minister Nawaz Sharief, in a televised address to the nation, urged his people to prepare to pay the price for defying the international will, and called on them to help the government tide over the fallout of sanctions and freeze on foreign aid.

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

However, as expected, public opinion has swung firmly behind the government, even as Pakistan's biggest donors, led by the United States, have imposed the same crippling sanctions as they did on India.

However, Pakistan's much weaker economy, which is completely dependent on foreign aid is likely to be more affected, especially since India opened its doors to foreign investment only five years ago.

Meanwhile, foreign transactions have already stopped in Pakistan. As the realisation that multilateral lenders and governments would pull out of the country under the mandatory sanctions dawned, all business halted on the Karachi Stock Exchange.

Independent experts have warned that the economic and social cost of sanctions will be much higher for Pakistan than it will be 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,'' said leading economist Dr Akmal Hussain.

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

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 of one billion dollars, Pakistan is faced with the 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 has frozen all 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 that 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 foreign aid which is already cleared and in the pipeline. But the fresh aid of $ 1.3 billion dollars expected by Pakistan may be affected.

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

However, Imtiaz Alam, foreign affairs editor of The News, warned that the ''Sharief 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?''

UNI

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