This action might not be possible to undo. Are you sure you want to continue?
interests in life, make the building blocks of a distinct community. Such a group, besides cooperation, is always in competition with other human groups for the control of resources. Therefore, to speak for one’s own community and to defend its cultural, economic and political interests is very natural. INTRODUCTION The history of Pakhtuns  is full of stories of valor and resilience. The complex mosaic of tribal structure of Pakhtun society has proved to be an asset as well as a liability in the history of Pakhtuns. This pattern of tribes emerged and was strengthened in view of the unique circumstances faced by our people through different epochs of time. The difficult terrain and dictates of mountainous geography placed each tribe in separate compartments and obstructed increased interactions among different tribes. In political terms, this hindered the process of nation building. The process of nation building among Pakhtuns has been mostly triggered by external challenges. Pakhtun national movement has seen different epochs of its existence. The rise of Shaikh Malli, Pir Rokhan, Khushal Khan Khattak, Mirwais Nika, Ahmad Shah Abdali, Bacha Khan, Faqir Api and Samad Khan Achakzai were not individual events, which were limited to the persons of these great Pakhtun personalities alone. Rather, each one of them represents a unique historical phenomenon in the history of Pakhtuns. In fact, the national aspirations of Pakhtuns culminated in the persons of these leaders to give a response to the prevailing historical challenges of their times. Although the history of Pakhtun National Movement – stretching over a period of more than five centuries – is full of countless stories of sacrifices but even today, sadly enough, this Movement has not been able to achieve the desired goals i.e. full and effective control over the natural and human resources of Pakhtuns for the welfare of the entire people of Pashtunkhwa. Several reasons may be counted for this failure but the foremost is the lack of a scientific understanding of the social processes. Sentimental slogans and emotional catchwords might prove effective tools in the overall strategy of rallying support for a national cause but, alone, it cannot actualize national goals. Today, Pakhtun nation is faced with momentous challenges. As ever before Pakhtun land is a theater of rivalries among foreign powers and no one seems willing to take our nation seriously because we have not been able, so far, to present our national cause in a scientific and convincing way. End of the Cold War in general and the post September 11th world in particular has confronted Pakhtuns with formidable challenges. The world media and think tanks are depicting various scenarios for our region. Unfortunately, Pakhtun leadership has not been able to grasp or express the vision that encompasses Pakhtun national rights. What should be the response of Pashtun nation to these vital aspects of geopolitical changes that may sweep this region and how best can they articulate the complexity of the situation for their national interests? These are questions of momentous importance, which will determine Pakhtun destiny for a very long time. Pakhtuns occupy a mass of land, which has been of great geo strategic importance in the past and will remain so in the future as well. Pakhtuns are living at the crossroads of Chinese, Indian, Russian and Persian civilizations. ‘The Great Game’  rivalry of the world powers has not ended and has resurfaced with renewed ferocity. In the past, Pakhtuns have responded with ferocious vengeance to any encroachment on their
land but all such gallant endeavors were individualistic and limited in scope and effects. Except the Khudai Khidmatgar Movement of the early 20th century, none of the opposition movements against the foreign aggressors were organized political movements in the technical sense. Hence, they could not capitalize on the unprecedented sacrifices rendered in those movements by all segments of Pakhtun society. The new circumstances have put our region into a fluid situation that may unfold in a number of scenarios. Probably, Pakhtun land will be the center stage of many events with radical implications for its people. This has made the assessment of the present state of affairs, a matter of great exigency. It is, therefore, imperative that the probable developments must be rationally conceived and a proactive response be formulated and presented before the Pakhtun masses. This region is in the grip of momentous changes. Pakhtuns – left unaware – will once again be the fuel for foreign rivalries. Therefore, Pakhtun National Movement must be resurrected and redefined along scientific and modern democratic lines so that Pakhtun national interests could be actualized in the best possible way. In order to create democratic structures and systems along scientific lines, which will carry Pakhtun national aspirations towards the desired goals, it is imperative to make an analytical study of the prevailing sociopolitical and economic conditions of Pakhtun society. This analysis will help in creating a framework to build a national movement of all Pakhtuns along scientific lines. The grand aim of this Pashtun National Movement (See Annexure A for details) is to bring to an end the colonial division of Pashtuns and unite them in a single administrative unit of Pashtunkhwa. It is only by exercising their democratic rights and control over their resources that Pakhtun men and women can achieve full empowerment. The southern Pashtunkhwa or Pashtun belt of Balochistan is a vital part of the efforts for national unity. The National Democratic Consultative Process (NDCP) intends to conduct thorough research on the problems and prospects of Southern Pashtunkhwa that will be subsequently added to this document. Before that, however, a cursory look at the history of Pashtun National Movement seems desirable. PAKHTUN NATIONAL MOVEMENT IN HISTORICAL PERSPECTIVE Long before the efforts of Pir Roshan to unite Pakhtuns on his revolutionary mysticism and long before Khushal Khan Khattak’s call for defending the honour of Afghans  (Pakhtuns), Ghories and Lodhies had formed vast empires. But these empires were centered and based in foreign lands far away from the high mountain peaks and stormy rivers of Pakhtunkhwa. Rising high in their pride of Pakhtun nature, silent and magnificent, the mountain ranges of Hindu Kosh, Solayman, Toba, Khyber, Maban, Malakand, and Lawaghar have been gravely pondering over the tragedy of Pakhtuns. Representing the typical Central Asian nature, these mountains present a very poignant symbolism of the culture and history of Pakhtunkhwa. Their defiant looks symbolize the determination of Pakhtuns to continue their struggle against all odds. د دن ګو غرون و هس کو څوک و خوا ک ې پ ه ټ يټ سرون و رف تار ن ه شي ک يدے "Living beside the towering peaks of high mountains, Subjugation is simply unacceptable." Pakhtuns are basically a Central Asian stock. In fact they are one of the largest nation of Central Asia. Pakhtunkhwa, thanks to its peculiar geography, could absorb the ancient cultural traditions of both Avesta and Sanskrit. Nawroz (or New Year’s day falling on March 21) keeps the memory of Zoroastrian times alive and the contents of some Vedas point
towards this land as origin of their composition. But successive invasions and immigrations brought many more cultural trends. Geography has played such an enormous role in shaping the history of Pakhtunkhwa that it is very difficult to find any parallel to it in world history. Pakhtunkhwa is lying on the south eastern edge of Central Asia bordering at South Asia. Practically forming a gateway to Indian subcontinent, Pakhtunkhwa had been continuously trampled by waves of invaders and conquerors who were leading towards the "treasures" of India. For centuries this factor has proved to be of decisive importance in charting the course of life in Pakhtunkhwa and it has left an indelible imprint on the national character of Pakhtuns. The birth of two very important phenomena in our society can also be attributed to our unique geographical situation. Firstly, the devastating and destructive wars brought about by wild hordes of invaders created deep ruptures and gaps between different stages of our historical development and civilization. This peculiarity in Pakhtun history deprived the people of Pakhtunkhwa of an historical memory of their own existence, rendering them vulnerable to colonialist manipulations. Like an individual, a nation without memory of the past has problems of orientations in the present and future. This is how Pakhtunkhwa lost many of its rituals and books that could have provided her with an anchorage in the stormy seas of history. This historical discontinuity has created a vacuum in knowledge about the origin and development of Pakhtun society that is filled very often by concoctions prepared by colonialists. This historical deformation has turned Pakhtunkhwa into a society deprived of full-fledged hinges of its own, thus opening it to foreign cultural and political dominations. The catastrophe brought about by the invasion of Pakhtunkhwa by White Huns or Ephthalites in the 5 th century A.D. is a case in point that has resulted in the rupture of the subsequent history of Pakhtunkhwa from the golden age of the great Gandhara civilization. Secondly, as Pakhtuns were living at the fringes of different empires for most of the times, so tribal formation among them has persisted for a very long span of time. Long and old tribal traditions have engraved particular traits on Pakhtun national culture and psyche. Resistance against foreign invasions only reinforced tribal and clan relations as they provided Pakhtuns with the best form of social organizations for mustering their military strength, apart from maintaining their identity and defending their ancient traditions. BARRIERS TO STATE FORMATION Difficult geographical barriers, tribal and patriarchal fragmentations and the persistence of a primitive type of natural economy had made the emergence of a strong, united and centralized Pakhtun State awfully difficult. The primitive type of subsistence economy coupled with very strong unruly traditions were important factors against the emergence of a strong centralized state as it minimized the prospects for extracting the necessary amount of taxes for running a strong and elaborate state machine. Apart from colonialist. machinations and outright aggressions, these factors also provide some insight into the decline of Durrani Pakhtun State in 19 th century that had emerged in the previous century on the ruins of Moghul and Safavid empires. As soon as the resources from the external conquests ended, the Afghan State became weaker and fell victim to colonialist interference and aggressions. But the most severe blow to the unity of Pakhtunkhwa in the 19 th century came from the northwest ward expansions of the British colonialists in the Indian subcontinent. British invasion of Afghanistan in 1838 was a first step to conquer Central Asia and to put an end to the southward march of Russia. The tough resistance put by Afghans, coupled with European pressures stopped the onward British march into Central Asia (or the socalled Forward Policy), but the British did not give up this ambition altogether. To get themselves entrenched
into the borders of Central Asia, the British colonialists occupied and divided the lands of Pakhtuns by imposing, through an unequal treaty, "The Durand Line" on Afghanistan, a division that remains as unnatural today as it was at the end of the 19 th century when it was first imposed. The colonial administrative division of the lands of Afghans (Pakhtuns) and the decline of the traditional international land trade through Pakhtunkhwa led to socioeconomic and cultural stagnation and decline. The clamping of Stalinist Iron Curtain over Central Asia contributed to the sociocultural alienation of Pakhtuns from their Central Asian roots, pushing them towards Indian subcontinent where they naturally faced the crisis of identity. This crisis of identity and historical roots persist to this day. The colonialists utilized this opportunity to perpetuate their oppression and exploitation of Pakhtunkhwa. But the Pakhtun masses did not put up with this situation even for a single day. The passes and valleys of Pakhtunkhwa echoed the gunfire of freedom fighters as generations after generations of Pakhtuns kept the flame of resistance alive. Pashto literature, particularly Pashto poetry provides a very powerful depiction of the heroic struggles of Pakhtuns. THE RISE OF MODERN PAKHTUN NATIONAL MOVEMENT The rise of modern Pakhtun national movement was also handi-capped and fragmented by the uneven socioeconomic and cultural development within Pakhtunkhwa. At the beginning of the 20th century, when a separate province of North West Frontier was established leaving out the tribal areas, princely states as well as Pakhtun areas of the then British Balochistan, it was a socioeconomic mosaic of varying colours. Mercantile relations had strengthened their grip over cities and towns. Stagnant and self-sufficient communal life of the rural areas was giving way to comparatively advanced agriculture on the basis of colonial land settlement. This was particularly in Peshawar valley where subsequently a modern irrigation system was introduced by building canals to utilize the river Swat’s water. These developments turned the Peshawar valley, which had been the main center of the Gandhara civilization, into a socio-cultural center of Pakhtunkhwa. The British were able to create a class of collaborators in the shape of big landowners, Nawabs, and Khan Bahaders, whose positions consolidated due to colonial patronage in social and political areas of life. The southern districts of Pashtunkhwa remained dormant in terms of socioeconomic development for most of the 20th century. In the meantime, tribal set up was fully intact in the "no man’s land" or tribal areas as well as among Pakhtuns living in British Balochistan who were ruled through Political Agents. This division of Pakhtunkhwa in the spheres of influence of different Khanates under the umbrella of colonial administration presented yet another obstacle in the way of ethnic and national consolidation of Pakhtuns. But the growth of different markets, the expansion of money commodity relations and the steady penetration of modern economic influences from abroad created the necessary socioeconomic basis for the growth of the embryo of modern Pakhtun national movement. The exposure of Pakhtun soldiers to modern influences in British Colonial Armed Forces during the First World War; the Russian Revolution of 1917, the reforms of Amanullah Khan in Afghanistan of the early 1920s, and the rise of ant colonial movement in India also provided a positive impetus to the birth of modern Pakhtun national current. This was the sociopolitical environment in which the reformist movement of ‘Anjumane Eslah-e-Afaghina’ was born in the second decade of the 20th century that later on developed into "Khudai Khidmatgar", (literally meaning Servants of God), the political platform of the National Liberation Movement. Birth pangs of the National Movement in Pakhtunkhwa were punctuated by armed tribal uprisings in the mountains where heroes like Faqir of Eppi,
Mullah Powindah, Mullah Saheb of Hadda, and Haji Sahib of Turangzai etc. challenged and at times even humiliated the forces of the powerful British empire. The tiny Pakhtun intelligentsia, hailing mainly from religious schools as well as from the few modern schools, started formulating the cause of modern Pakhtun nationhood and independence. Maulana Fazl-e-Mahmud Makhfi, a very fine oracle of modern Pakhtun national consciousness in the early 20th century wrote very passionate poetry under whose influence a full new generation of Pakhtun poets, writers and political activists grew up. The requirements of the modern nationhood were very clear in the poetry of Makhfi. For example, he puts across his views very powerfully in these lines in the very early part of the 20th century. خدايه داسې وخت به راشي چې زمىږ جهاز به هم وي لکه باز په هىا چې په ترخى اوبى به سم وي ريل به هم زمىږ پيدا شي تار به هم په هر قدم وي زه به خپل جرنيل پسې ووم په دښمن به دوؤ کىل وي "Oh God! Will there be a time when we shall have an aeroplane of our own? Soaring high into the skies like an eagle, it will fly over oceans. We shall have a railway of our own as well as telegraph. I shall be following my own General to overtake the enemy." The reformist organization of Anjuman-e-Eslah-e-Afaghina and later the Khudai Khidmatgar Movement, both in terms of programme and organization, corresponded to the embryonic national consciousness of Pakhtuns that was gradually developing under the influence of a set of internal and external factors. The movement, representing general national aspirations, always consisted of conservative, reformist, and radical elements with the social and political platforms of their own. These differences were dramatically highlighted during the Ghala Dher  peasant uprising in 1937. Islam, after its advent in this region through 8 th and 9 th centuries, had gradually integrated in the traditional tribal code of Pakhtuns—Pakhtunwali. Pakhtuns have been mainly gripped by the externalities of the religion that became a part and parcel of their lives. The coexistence and interaction of ancient tribal code with religious traits is a very interesting phenomenon that is indispensable for understanding the Pakhtun national culture. It also explains the inevitable and ritualistic religiosity of a Pakhtun on the one hand, and on the other hand it explains the futility of efforts in injecting religious fundamentalism in Pakhtun social and political culture as it stands in contradictions with Pakhtunwali. This ambivalence of Pakhtun character remained as such despite the fact that the religious schools were the main source for the birth of Pakhtun intelligentsia. They were later to be joined by a handful of intellectuals educated in modern schools and a few of independent schools run by national reformers. This small intelligentsia was very soon radicalized and politicized as it found itself in the midst of a mass upsurge that very quickly spread in all districts of Pakhtunkhwa. Whatever social or political successes or failures the Bacha Khan led Khudai Khidmatger Movement might have, the most outstanding contribution of this movement had been in the area of consolidation of cultural and national consciousness. While opposing the British colonial authority and successive dictatorial regimes of Pakistan, this national political platform was of paramount significance for awakening Pakhtuns as a nation and also
reminding the world to take notice of the existence of this nation. Khudai Khidmatgar Movement was mainly based in rural areas where it built a very effective mass support base. Influenced by international trends of the 1920s and 30s, Khudai Khidmatgar Movement was organized along military lines, although it was an army of nonviolence. Its social composition included peasantry, small landholders, artisans, petty traders, a sprinkling of intelligentsia, and some of the liberal landowners. It was a heterogeneous movement in social terms and thus not without internal social conflicts. Nevertheless, its simple but revolutionary slogans were able to galvanize the masses, particularly in rural areas. Moreover, unlike the modernist reformist current led by Sir Sahebzada Abdul Qayyum Khan that stood for collaboration with colonial authorities, the Khudai Khidmatgar movement opted for straight confrontation with the British Raj. The tradition of Khudai Khidmatgar movement was continued by National Awami Party in the 1950s and 60s, but it later dispersed in different political groupings due to growing social tensions as well as polarization in the global politics. Unfortunately, the Pakhtun National Movement could not effectively penetrate the tribal belt that played the contradictory role of serving as an ethnic and physical bridge between Western and Eastern Pakhtuns and also as a political "nonconductor" or buffer zone separating the two Pakhtun areas. This situation has prevailed for quite some time, although the tribal belt has also witnessed tremendous social and cultural changes in recent years and many urban values can be noticed in these areas now. Taking part in international trade via Afghanistan and utilizing the boom of the parallel economy in Pakistan, a class of neorich has emerged in this area. In fact it has influenced the process of capital accumulation in the entire Pakhtunkhwa. The emerging new elite originally dubbed as "smugglers" by the establishment is gradually gaining social recognition and is out to challenge the monopoly of traditional Maliks in social and political life. However, the Pakhtun masses living in the seven political agencies of Federally Administered Tribal Areas (FATA) are groaning under the repression of colonial laws such as the Frontier Crimes Regulations (FCR) and they have yet to get a proper constitutional system and access to justice. Despite the "special" administrative structure in tribal areas from the colonial period, around seven million Pakhtuns of FATA are joining the mainstream of Pakhtun nation by growing socioeconomic, political, and cultural interaction with the Pakhtuns of settled areas. The recent events in Afghanistan have been of great significance for eastern Pakhtuns. As such, they need a separate and a detailed study. Here we shall briefly refer to them over the risk of oversimplification, in terms of their impact on the national development. Introducing the Cold War international polarization to Afghan society, these events have led to great destruction and tragedies in Afghanistan. Fighting against foreign interference and against political fragmentation, Afghanistan is bound to become introvert, at least in the near future. But that is not all. The mass migration of Afghans to the east in the wake of the induction of Soviet armed forces and the ensuing bloody conflict can prove to be the single most outstanding factor for the future ethnic and national development of Pakhtuns. Socioeconomic, cultural, and political intercourse of the Eastern and Western Pakhtuns on such a massive scale can have far-reaching implications. It has practically done away with the "Durand Line"  and hundreds of thousands of Pakhtuns have become "Dwa Koreez"— (people having two homes). The presence of such a huge body of Western Pakhtuns, despite initial complications and political confusion, will ultimately reinforce Pakhtun National Movement in Pakhtunkhwa. There has been considerable development in different spheres of life in Pakhtunkhwa during the last five decades after the emergence of Pakistan. Policies of different oppressive regimes in Pakistan, based on the negation of nations on cultural and geographical basis, have tended to hamper free and healthy national development.
Pakhtunkhwa saw severe cultural repression and politico economic deprivation particularly during the initial post partition years. But in recent decades, a wave of semi urbanization, made possible through Gulf money, and the development of a parallel economy has brought considerable socioeconomic and cultural transformation. There has been initial formation and accumulation of capital, but this capital is going to transport, trade, and real estate business. Because of the lack of sympathetic attitude of the federal government to improve conditions for industry in different parts of Pakistan, there is very little industrialization due to the lack of necessary infrastructure and long distance from the seaport of Karachi. A middle stratum is rapidly expanding in urban centers of Pakhtunkhwa, strengthening national intelligentsia. National consolidation on modern lines is also influenced by the growing role of markets, business centers, electronic media, press, and educational institutions (including religious schools). Apart from the radio stations in Afghanistan and Pakistan, there are about a dozen radio stations in different countries of the global North and South that are broadcasting programs in Pashto language. Those broadcasts, apart from increasing general awareness, also have an important contribution in bridging the gap between the standard Pashto of Eastern and Western Pakhtuns. Although television programs of the state controlled stations of Peshawar and Quetta have yet to give Pashto programs their due place in terms of time and resources, Pashto drama has made important strides ahead. The nascent Pashto theatre in Peshawar, notwithstanding certain limitations and restrictions, is making good progress. There are more than eighty literary associations of Pakhtun poets and writers in different parts of Pakhtunkhwa in spite of the fact that Pashto is not the medium of instructions in the schools and is not the official language. Pashto music has made good use of modern electronic gadgets. Audio and videocassettes containing the poetry of classic as well as modern poets sung by popular singers have flooded the market. Although some Pashtuns are making good use of the Internet, they lack an independent satellite TV channel.* In recent years, Pakistani establishment has been able to bring into its fold the major part of the Pakhtun ruling elite through a series of adjustments and accommodations. According to some evaluations, Pakhtuns ruling elite has been partially elevated to the position of a "junior partner" of Punjabi-Mohajir ruling classes in Pakistan. In recent years Pakhtun elite has tended to adopt political conformism that is a reflection of expanding parallel economy as well as growing dependence. But the basis of these adjustments is still narrow and contradictory. The renaming of NWFP (including tribal belt and Pakhtun areas of Balochistan) as Pakhtunkhwa, the adoption of Pashto as official language, Afghan policy, Kalabagh dam, and provincial control over the natural resources remain to be the areas of dissent. The failure of the federal government to pay royalty on hydel power generation to Pashtunkhwa has made even the most conformist elements to protest. The hostile attitude of the Chambers of Commerce of Karachi and Lahore against Gadoon Amazai Industrial Estate speaks volume about the fragile nature of the adjustments among the elites of different ethnic groups in Pakistan. Ethnic violence in Sindh in recent past has shattered the myth that claimed Karachi to be the "biggest city of Pakhtuns". Sending shock waves into Pakhtunkhwa, these developments have underlined the significance of industrial progress of Pakhtun areas for creating job opportunities. Besides, the lack of economic opportunities; urban sophistication and the absence of the rule of law have pushed work force, urban elite and investors to migrate to the urban centers of Punjab and Sindh. Although urbanization has started taking roots in Pakhtunkhwa, it has by no means created a homogeneous social scenario. Traditional communal life and large family system is rapidly eroding in rural areas and chivalric traditions are disappearing in the tribal belt. The
mushrooming of entrepreneurs, growing competitions in the market and services has given birth to new types of social interests and cultural consciousness. Despite the growing disintegration of traditional social structures and modernization, the traditional and patriarchal value system has proved hard to die. Women rights remain to be a contentious issue. The mass influx of rural population into cities and urban centers is, on the one hand, strengthening the grip of rural Pakhtuns on these centers, on the other hand, for the time being at least, this influx is also having "ruralising" effect on our towns. Apart from creating political fragmentations, these complex and contradictory features represent the complex nature of Pakhtun national consciousness. The said complex social development is one of the reasons for the rise of the religious right in Pashtun politics. But there are some other factors behind the rise of the said phenomenon. Pashtun society is undergoing social and political transition. It was the landed gentry that mainly provided the political leadership to Pashtuns throughout the 20th century. But towards the end of the 20th century the socioeconomic dominance of the landed gentry faced formidable challenges and along with that its political dominance saw a decline. The urban middle classes remain to be under an economic squeeze. They are also marginalized in politics. The new political elite has yet to muster enough political strength to gain political leadership. Religious parties filled the political vacuum created by this development. We should also not forget that during the twodecades long Afghan conflict, religious parties in Pakhtunkhwa and Baloachistan received fabulous amounts of Petro-dollars. The mushrooming of madrasas provided these parties with hundred and thousands of motivated activists along with a growing network of mosques used as a political platform of the religious parties. Moreover, the "political engineering" of the ruling Pakistani establishment is also partially responsible for the astonishing electoral victory of MMA. After losing control over Afghanistan, extremist elements in the Pakistani State manipulated political and electoral processes to manage a political comeback by pro-Taliban political forces in Pakhtunkhwa and Baloachistan. It will serve more than one purpose. Islamabad’s phobia of a threat from its western borders can be overcomed only with the enforcement of a policy of containment. It is also expected to boost the morale of the remnants of Taliban who are resisting the new setup in Afghanistan. An added advantage would be the use of religious right by the ruling establishment as a lever for putting pressure on US and other Western countries to have a better bargain. Be that as it may, the religious parties in MMA are finding it very difficult to grapple with the problem of modern governance. In the absence of a concrete program for socio-economic development, they have failed, so far, to deliver in terms of either providing relief to common man or standing up for the rights of the province. Their policies will be spreading orthodoxy and would create new problems and complications. But the Pashtun national movement is expected to bounce back once it adopts a clear program and credible leadership. Development and maturing of urbanization and modern education will enable Pashtunkhwa in the long term to leave this infantile disorder behind it. Explanations * This survey was conducted by the commencement of AVT Khyber and other Pashto channels. KhyberWatch. 1-The name Pakhtun or Pashtun is used synonymously with varying dialects of the Pashto language. The people of Northern Pakhtunkhwa, mainly of the Peshawar valley and the adjacent Malakand Division, use the hard variant, while the people of Southern Pashtunkhwa and Pashtuns of Balochistan use the soft variant. The same is true about Pashtuns living in Afghanistan.
2-The Great Game’ * rivalry: A term used by Rudyard Kipling in his famous classic, ‘Kim’, which signified the struggle of the Tsarist Russia and the British Empire for the control of Central Asia in the 19 th and early 20 th centuries. 3-(Pakhtuns)-* Several names are in use for the Pashto speaking people. The Pashtuns of Afghanistan prefer to call themselves Afghans instead of Pashtuns so as to strengthen the concept of ‘Afghan Millat’ within the present boundaries of Afghanistan. The Pashtuns of Pakistan, too, are Afghans but not citizens of Afghanistan. The writers have tried to be careful in the use of these words because of legal complications and frequent use of any one name does not prove any preference for that name. 4-An Indian ruling dynasty 5-An Iranian ruling dynasty. 6-The uprising was named after the village Ghaladher in Nowshera district in which it took place. 7-The approximately 1700 miles long official border between Afghanistan and Pakistan, which was drawn by Sir Mortimer Durand, a British Indian official, in 1893. Next: ETHNIC, CULTURAL AND LINGUISTIC DENOMINATIONS IN PAKHTUNKHWA ETHNIC, CULTURAL AND LINGUISTIC DENOMINATIONS IN PAKHTUNKHWA The question of ethnic, cultural, and linguistic minorities living in Pakhtunkhwa is not new. But with the growing ethnic, cultural, and linguistic consciousness, unlike the past practice, this question cannot be simply brushed aside by calling all people living in the area as Pakhtuns. Hindkwans, Gujars, Chitralis, and Kohistanis have ethnic identities of their own. The only democratic and viable solution of this problem will be to accept the ethnic diversity as it exits in Pakhtunkhwa. Speaking in broad political terms, one can call the people of all ethnic and linguistic groups Pakhtuns, as they are the equal inhabitants of this ancient land. But they definitely have a right to develop their own cultural and ethnic identity within the framework of Pakhtunkhwa. A democratic approach to this problem is crucial for a broader unity among the people of Pakhtunkhwa. However, one can say with confidence that with centuries of common history and common interests in the future prosperity, has laid a solid foundation for fraternal relations among the people of Pakhtunkhwa, who are not without justification, famous for tolerance and mutual respect. Politically speaking, Pakhtun National Movement is not a political sect any more confined to the belief of a certain political grouping. On the contrary it has turned into a general political trend affecting all political currents in varying degrees. Modern Pakhtun National Movement requires a modern political vehicle, and a modern political institution. No sectarian political group or clique can be a substitute to a modernist and democratic political organization that has to be very broad based to be able to represent national aspirations of all interest groups in Pakhtunkhwa. It is in this way that different challenges of historical dimensions can be coped with successfully. The national unity of Pakhtuns living in Pakistan and exploring the possibilities of rapid economic and social development in regional and global economy are some of the pressing challenges before our people. The Pashtun intelligentsia is in touch with all these realities of the Pashtun society and the world in the 21st century. Pakhtun diaspora has the potential for valuable cause by rendering intellectual and material assistance. A
considerable portion of this intelligentsia, working institutionally under the National Democratic Consultative Process, have gathered their intelligence to understand the complexities of Pashtun society in the light of emerging trends. PASHTUN SOCIETY IN THE 21ST CENTURY IDENTITY Pashtun, Pakhtun, Afghan, Pathan, Rohilas and Sulaimanis are some of the historical and contemporary synonymous names of some 50 million predominantly Pashto speaking people of Afghanistan and Pakistan’s adjacent southern, central and northern Pashtunkhwa or Afghania. Unfortunately, the colonial nomenclature of NWFP and FATA continues to describe these areas on maps. It is important to note that the term Afghan denotes all the citizens of Afghanistan but it continues to be another name for all Pashtuns both in Afghanistan and elsewhere. Pashtun identity today is embedded in a common language, Pashto, a common social structure, which is mostly tribal with considerable regional variations. This identity is reinforced by common historical memories and distinct social code, sometimes also referred to as the code of life, Pashtunwali. The group’s particular geographic location and ethnicity, which is the manifestation of many underlying political, economic and social factors, contribute to such an identity. PASHTUN SOCIETY Before attempting any description of Pashtun society, as mentioned earlier, one needs to understand that historically there had been many breaks in the civilizational continuity of Pashtuns. Such disruptions were mostly caused by invasions or long periods of colonial occupation. As Pashtuns straddle the strategically vital cross-roads of South Central Asia, they had been targets of imperial designs with often being victims of colonial militaries. In addition, most of the literature on Pashtuns had been shaped with certain subjective political interests. From Manstuart Elphinstone’s "An Account of the Kingdom of Kabul", who visited Afghan king Shah Shuja’s winter court at Peshawar in 1808 to Olaf Caroe’s "The Pathans" in mid-twentieth century, the image of Pashtuns changed invariably as imperial policies and boundaries altered. Pashtuns make the largest tribal society in the world today. Such a society has a hierarchical tree like structure known as segmentary lineage in anthropology and other sciences of the society. Pushtun society has an endless division of tribes, sub tribes and lineages, which makes such a hierarchical division. Pashtuns cover a wide range of ecological niches, geographic zones and had developed a number of social structures ranging from urban centers to semi feudal agrarian formations of Peshawar valley. There are still semianarchic tribal democracies of remote regions in the Tribal Areas. The underlying system operating in Pashtun society can only be understood from within its unique framework. Segmentary lineage is a system that defines descent groups in terms of identification with successively more distant apical ancestors. The structure of such a society is thus conceived of a hierarchical or treelike in
which there are different levels of unity and opposition; segments or tribes, which are divided at the lowest level, are grouped together into larger units at a higher level. The Pashtun society is organized on the basis of patrilineal kinship or descent which is traced through the male line. Cooperation takes place only against external threats. Enmity focuses on close patrilineal relations. Tarboor or a patrilineal first cousin is a literal synonym for enemy in Pashto. The principle of the enemy of my enemy is my friend is invoked to develop a chequerboard pattern of alliances dividing Pashtun groups into ‘Dallas’ or ‘Janbas’, which in most cases are two opposing parties. THE PASHTUN CODE OR PASHTUNWALI The social organization of Pashtun society as described above has given rise to a distinct social code, Pashtunwali, which varies with geography and might be interpreted differently by different tribes but its basic principles remain the same. Pashtunwali is an adjective added to the name of Pashtuns, both as a group and an individual. Pashtunwali is the sum total of all those ideals, meanings and qualities required from a Pashtun or binding upon them. The word Pashto itself designates not only the language but also the behavior defined by the code. Almost every Pashtun is familiar with the proverb "you don’t speak; you do Pashto". Pashto is equivalent to both honor and modesty in a complex system of morality, which has been formally coded in a dictionary format in Afghanistan. Those who have written about Pashtunwali agree on several major points that institute the code. One is "Melmastya" or hospitality, which calls for lavish entertainment, often beyond the means of its provider having a guest reflect one’s own status and influence as well as creating a relationship of dependence. Hospitality must be offered to anyone who steps onto one’s property, and it can even be imposed upon those who don’t ask for it. The concept of ‘Panah’ refuge given to an outlaw is an extended form of ‘Mailmastya’. As hospitality is a crucial constituent of Pashtunwali, Pashtun people compete heavily for the reputation of being hospitable. Hospitality approaches it peak at certain rites of passage and must be performed in massive banquets called "Kherat" open to the entire community. It is because of the heavy costs of such hospitality that weddings, circumcisions and death are recognized as the most draining pull on a family’s economy. Along with hospitality is unusually mentioned "Nanawatey" or the right of refuge, which, like hospitality, must be granted to anyone who asked for it. It is an institution that generally supports the favored patronclient [Hamsaya] relationship among Pushtuns especially in the Tribal Areas, where many criminals go who escape from non-tribal areas. They cannot simply settle, but must become dependents on a landlord or Khan, requesting Nanawatey. Formerly, these dependents were called the landlord’s strength or even army, as they owed him unconditional loyalty and support in return for his protection. The third point central to Pushtunwali is "Badal", normally referred to as revenge as per street wisdom interpretation but as a sublime concept ‘Badal’ means a retributive system of justice on the pattern of Mosaic Law. The meaning of ‘Badal’ cannot be restricted to revenge homicide alone as is common and sometimes even regarded us honorable. ‘Badal’ does not only means a tit-for-tat in enmity but the obligation to return goodness for goodness in social transactions. To some observers ‘Badal’ is the major cause of violence among Pushtuns compared to other areas where crime and violence arise out of other factors. Badal is a crucial notion behind most action and interaction in Pashto.
PASHTUNWALI AND MODERNITY It is interesting to note that Pushtunwali as a code of life consist of considerable uniformity in fundamental principles although there are certain variations in details from tribe to tribe. Principles and values such as " Jirga", "Nang", "Siali", "Teega", Badraga", Turburwali", "Nanwatey" and "Mailmastya’ etc are universally accepted by all Pashtun tribes although some of the tribes had their own "Narkh" (Customary Law for implementing the principles of Pashtunwali). Originally, the customary law was implemented on the basis of tribal affiliation irrespective of territorial location. A Pashto proverb sums it up very aptly when it says, "you can get out of the village but you cannot leave the customary law". Pashtunwali, as a tribal code had some common features with other tribal systems such as egalitarianism, xenophobia and consideration for lineage although it also has some specific features that were produced by the particular historical and geographical conditions of Pashtun society. Many factors including a transition from a subsistence economic formation of agriculture and pastoral nomadism to a monitized commercial economy and growing urbanization has accelerated the pace of social and cultural changes in Pashtun society, It goes to the credit of reformers like Khan Abdul Ghaffar Khan, Abdul Samad Khan Achakzai and many others who worked to reform Pashtunwali and develop it to conform to modern democratic principles. They tried to teach Pashtuns to overcome traditional tribal feuds, get modern education and gain political consciousness. The problem is that Pakhtunwali remains an unwritten code based on oral traditions and tribal practices. Although some western authors had tried to put it in black and white, for obvious reasons they had not been able to do justice to the theme. This has left Pashtunwali to be interpreted by street wisdom individually as it lacks empowered political structures to be enforced uniformly. Pashto  as an ideal of behavior was an identity maker, later supplemented by Pashto language after the creation of modern Pashtun states in Afghanistan and Swat in the twentieth century. Pashtunwali still remains a major identity maker, with recent political changes enhancing its role further. However, Pashtunwali remains a major hindrance to the assimilation of Pashtuns into other political and economic systems. THE STATUS OF WOMEN IN PASHTUN SOCIETY Jirgah,  which was initially representative of the whole tribe, gradually went through a process of purge with the appearance of social and class differences over the centuries. Weaker sections of the tribe had to accept the domination of tribal elite Maliks, Sardars and Khans in Jirgah. Patriarchal values were strengthened by throwing women out of the decision making process in Jirgah. The rigid segregation on gender basis closed the door of Hujra (Communal Guest House) for women, which is mostly the venue for the proceedings of Jirgah. The rigid social structure was further strengthened by official patronage when Political Agents nominated Jirgahs as courts. In tribal areas women have greater social mobility in and around the village in terms of participating in economic activities, but her labour remains basically unpaid. In settled areas where private ownership of land replaced communal ownership, women became part of men’s property, although they do play certain role in the affairs of the house within the four walls. It is interesting to note that Loya Jirgah developed
as state institution in Afghanistan in the twentieth century by giving participation to Afghan women. Why can’t Jirgah be democratized in lower Pashtunkhwa by including women in decision-making? It is easier now as all the elected local bodies and assemblies have some women representation. But Pashtunwali definitely needs a new interpretation on gender issue. It is crucial for the future of democracy in Pashtunkhwa. THE SCIENTIFIC BASIS OF PAKHTUN NATIONAL MOVEMENT In order to create structures and systems along scientific and democratic lines, which will carry Pakhtun national aspirations towards the desired goals, it is imperative to make an analytical study of the prevailing socio-political and economic conditions of Pakhtun society. This analysis will help in creating a framework to build a National Movement of all Pakhtuns along scientific and democratic lines. Below is an attempt at a cursory understanding of the socio-economic and politico-cultural landscape of Pakhtunkhwa with reference to its geostrategic importance. A GLIMPSE AT WORLD CURRENTS AND PAKHTUN SOCIETY Technology has changed the world into a global village. Geography has shrinked in the cyberspace. Twentieth century political jargon has changed meaning. The world is in a swift flux of change and even modern societies are finding it hard to adjust to the post modern paradigms. Globalization is threatening conventional state structures. Economic activities have transcended political ideologies, state philosophies and geographical boundaries. Increased interactions and interdependence in economic activities have compelled societies to re-align themselves in the form of new entities to respond to the challenges of globalization. Different countries of the world have united into regional economic unions to elevate themselves to a better bargaining position in a world characterized by global trade, commerce and industry. Our region, too, is witnessing the most critical phase of its history. Defense imperatives, debt servicing and the poor state of the Pakistani economy have resulted in the continued negligence of the social sector with the result that millions of Pakistanis have been thrown below the poverty line during the past two decades. Coupled with this poor economic performance are increased militancy, sectarianism, and provincial disharmony, which are threatening the very existence of the social and state structures. Pakhtuns, therefore, have great stakes in any eventuality i.e. whether globalization or anarchy sweeps the region; they have to face the major brunt. The un-exploited markets and oil reserves of Central Asia and the Caucasian region and the booming economies of China and India will significantly affect the Pakhtun inhabited region as regional and global trade in this region gets expanding. Pakhtuns are once again at the crossroads of history. Their freedom, prosperity or subjugation would depend on their ability to make the right choices. Before analyzing the condition of Pakhtun society, let us have a look at a few vital questions that cannot be ignored by Pakhtuns. These questions are: I. What are the options available to the Pakhtun nation for socio-economic development?
II. How to chalk out an efficient and effective strategy for rapid development of Pashtun society? III. How much important is Pakhtun integration in regional and global economy and what are the mutual benefits for Pakhtuns and the rest of the world from such happening? IV. How to curb the ever-growing poverty in Pakhtun society? V. How best to deal with the prevailing geo-strategic conditions which will ensure that Pakhtun national interests reigns supreme in the ‘New World Order’? VI. How to reconcile the interests of global powers with Pakhtun national interests? Let us then survey the socio-economic and political conditions of Pakhtun society at present. Explanations 1- There exist territorial and tribal variations in the pronunciation of Pashto words. One of the reasons is lack of social interaction among different Pashtun tribes due to poor road structures. The process of standardization is at an advance stage in Afghanistan than Pakistan. A Pashto Language Authority is needed to standardized the script and dialect of the Pashto language. 2- Assembly of male elders that functions as quasi-judicial-legislative institution inmatters related to an individual, family or the community. Next: PRESENT CONDITIONS OF PAKHTUN SOCIETY PRESENT CONDITIONS OF PAKHTUN SOCIETY Political Self-analysis is the first requisite for self-improvement. The analysis of the present Pakhtun national parties in Pakistan is not intended to undermine the sacrifices of its leaders or workers but some of the shortcomings of these parties are given below for an objective analysis. 1. Initially, the Pakhtun National Movement had the support of even the so-called menial classes of Pakhtun society. Until the 70s, the Pakhtun National Movement attracted even the Balochs but, unfortunately, in a process of continuous marginalization of other nationalities and groups, the composition of Pakhtun national parties remained restricted to smaller interest groups. In a process of historical continuity, political parties survive only if they represent the interests of wider groups of the society. But Pakhtun national parties have not been unable to evolve a broad base and the representation of various segments of the society is limited both vertically and horizontally in the party hierarchies of the national parties. 2. There is a need of a clear agenda and a scientific methodology for the achievement of Pakhtun national goals, which is missing in the Pashtun national parties. Opponents of the national forces allege that the general Pakhtun public has become disenchanted with Pashtun national parties for their inability to improve the social, economic and cultural conditions of Pakhtuns.
3. The class composition of Pakhtun society has changed considerably. The emergence of an educated middle class and a commercial trading class is putting pressure on the old agrariantribal structures of Pakhtun society. A large number of Pakhtun expatriates have accumulated wealth but lack the social legitimacy for a high status in the social hierarchy. The existing political parties have to come out of the agrarian and tribal paradigm and win these new groups into the party structures. Perhaps, one reason of the success of other political parties in Pakhtunkhwa can be attributed to the inability of the Pashtun national parties to win newly emerging middle class and the down-trodden sections of the society. 4. The reason is that the Pashtun national parties base their identity on ethnicity rather than defining it within the cultural and geographical parameters. Ethnicity is further restricted by blood and land-ownership than history. Thus a large segment of the Pakhtun society is excluded from the Pakhtun identification. Various ethnic and linguistic denominations like Chitralis, the Kohistanis etc have to be reassured of an equitable representation in leadership structures because they are united with Pakhtuns and Pakhtunkhwa by a common interest, history and culture. Similarly, professional groups have formed unions to protect their interests but they act as appendages of political parties and lack representation in the policymaking bodies of parties. 5. And last but not the least, the national parties of Pakistani Pakhtuns have not done enough to create institutionalized ties between Pakhtuns living in Afghanistan and Pakistan. Social Pakhtun society can be described as one of the most backward in the world. With its tribal reminiscences still functional, Pakhtun society has witnessed catastrophic blows during the last two de-cades. Whereas the Afghan war economy marginally improved the living standard of some people of Pakhtunkhwa, it also profoundly affected the social outlook of Pakhtuns in many ways. The efforts of certain vested interest groups to strengthen religious fundamentalism have significantly eroded the tolerant and secular contours of Pakhtun society. This has resulted in increased religious intolerance, violence and militancy in the Pakhtun society. The easily accessible and cheap weaponry of the Afghan war has further complicated the process of creating a civilized society. Similarly, the cheap availability of drugs, increased unemployment and lack of initiatives and resources of the government has turned our towns into dens of heroin addicts. The sponsorship and support of the orthodoxy by the vested interest has further checked the growth of society in areas like female education, women empowerment and human rights. The continued marginalization of the weaker sex in socio-economic and political activities has resulted in social stagnation. It has denied the opportunities of inculcating healthy attitude toward the opposite gender and has deprived them of useful participation in various walks of life. The Pakhtun expatriates living abroad still rely on muscular power to earn their livelihood because of the prolong negligence of the human development sector. The process of transition from physical culture to thought culture has not taken place in the Pakhtun society and due to this reason Pakhtuns are finding it difficult to transact successfully with other nations of the world. Economic
Due to the narrow agricultural and industrial base of the Pakhtun economy, it mainly relies on the Afghan transit trade, earnings from Pakhtuns living in Karachi and the Middle East besides the black money earned through the smuggling of drugs and weapons. The law and order situation in Karachi has badly affected economic and commercial activities and thus Pakhtuns are the worst affectees of the law and order situation in Karachi. Non-taxed border trade with Afghanistan will witness further decline as soon as state structure in Afghanistan is resurrected and this trade comes under effective government control. The Middle Eastern countries will have to witness further economic slump due to the volatile situation in the region and import of workers from abroad will further slow down. The ongoing process of rightsizing or downsizing and privatization of the public sector in Pakistan will also adversely affect the Pakhtuns employed in the public sector organizations un-like the workers of Punjab and Sindh, who will be absorbed in the private sector in those provinces. The thin agricultural and industrial base of Pakhtunkhwa would be unable to accommodate these fired workers. In these circumstances, various militant organizations would find it least difficult to recruit the unemployed Pakhtun youth as willing mercenaries, and drug and weapon carriers. Deprived of every opportunity of a decent living, the unemployed Pakhtun youth may resort to unlawful activities for survival. Culture Pakhtuns have a tolerant and secular culture, which is expressed in their norms and traditions. Pakhtun national movements, during its various phases of history, have been progressive movements in nature. Starting with Pir Rokhan’s Roshnai Movement in the 15th century and continuing with Khushal Khan Khattak anti-Mughal resistance in seventeenth century and Ahmad Shah Abdali’s nation building endeavors in the eighteenth century and the antiimperialist Khudai Khidmatgars in 20th century – all these Pakhtun national movements have been progressive and secular in nature. But time and again, the progressive march of Pakhtun society has been blocked by foreign powers for certain strategic objectives in the land of Pakhtuns. This struggle of the indigenous secular and the exotic regressive forces in Pakhtun society has brought catastrophic consequences for the social integration of Pakhtun society. Afghanistan is in the process of reconstruction. Afghans are suffering from the physical and emotional effects of a long war. So at present little can be expected of Afghanistan for the cultural revival of Pakhtuns. The Pakhtuns in Pakistan are facing a lot of challenges and threats to their survival as a distinct socio-cultural group. Pashto language and culture has been made a target of systematic assault and is faced with possible extinction. Pakhtuns, as a nation, right now, does not have any newspaper, a radio or television channel which should play a leading role in preserving, promoting and trans-forming Pakhtun culture. (This situation is getting better in private sector-admin) Despite all these odds, fortunately Pakhtuns have a strong cultural identity codified in Pakhtunwali, which should be rediscovered in the light of modernity. Every culture has its intrinsic value but it is not a static phenomenon. It is a dynamic process that unfolds in a continuum of transformations to accommodate the requirements of a changing age. Cultural values are not a creed with a celestial sanctity and a divinely binding obligation but rather the result of experiences of a people that struggle to survive through the twist and turn of a complex world and try to understand the dilemma of existence. And in doing so they bring a
vision of life into being that embraces not only the reality of life-as it stands at a nook of space and time- but also extends into its abstraction. Today, change has come to Pakhtunkhwa like a hurricane. Pakhtuns must be resilient enough to adopt themselves to this pace of change or else, again, there would be catastrophic consequence for remaining stagnant. Fortunately, the interests of the indigenous progressive and secular forces seem to be in tandem with world currents and Pakhtuns must be enabled to capitalize on this opportunity and realize the dreams of our forefathers for a modern and progressive society. It is imperative to understand the social, cultural, economic and political conditions of our society for evolving a scientific and democratic basis of the Pashtun national movement. The Pashtun national movement can be built along scientific lines if emotions are set aside and the vital forces of societal dynamics are studied rationally and objectively so as to construct necessary structures and systems, supplemented by a programmatic concept and a scientific methodology, for the actualization of our national goals. Apart from efforts to work for the socio-economic development of Pashtunkhwa on non-political basis, the main focus of the ‘National Democratic Consultative Process, remain to work for building a political organization representing national interests of all Pashtuns and other people of Pashtunkhwa, because the question of ‘rights’ is a political one, which could only be addressed properly by taking control of the policy-making institutions of the government. POLITICAL ORGANIZATION In a world marked by cut-throat competition, a group or community must have the requisite political organization to have effective control on its resources. A society, which lacks sophistication of organizing itself, would fall prey to the ideas of another group or community. In layman’s jargon, a society lacking in organizing itself for useful societal functions would become slave to another group. Pakhtuns have a brilliant record of social organization. The ingenuity of Pakhtuns can be gauged from the fact that despite the hindrances in its way of growth posed by international politics of the twentieth century, Pakhtuns have been able to establish a social order without the authority of a state. Even in the tribal areas where exist a loose state machinery, Pakhtuns have been able to maintain law and order through their customary laws encoded in Pakhtunwali. Pakhtuns have shown their political maturity and wisdom in establishing a socio-political organization – the Khudai Khidmatgar Movement – in the early part of the 20th century, which sincerely struggled for the achievement of the political and economic rights of Pakhtuns but the dynamics of international politics obstructed the path of obtaining political and cultural rights of Pakhtuns. The Khudai Khidmatgar Movement was based on principles of non-violence and service of the people irrespective of their faith, race or language. The Khudai Khidmatgar Movement’s chief aim was transformation of an older social structure and a re-definition of Pakhtunwali – the traditional code of honour of Pakhtuns. The Movement became part of the Indian Freedom Movement and joined hands with the Indian National Congress to struggle against British imperialism. Later on, with the establishment of Pakistan, the movement diluted and a residue of the organization became actively involved in conventional power politics of
Pakistan. The legacy of the Khudai Khidmatgar Movement to work for the socio-economic uplift, transformation of older social structures and re-definition of the traditional code of honour in the light of new realities became dormant. The Khudai Khidmatgar Movement is a great heritage of all the people inhabiting this region. Unfortunately, this heritage, like many other historical assets of our nation, seems to bury under the debris of power politics. Today, our nation is faced with no less challenging circumstances than when the Khudai Khidmatgar Movement was initiated by a rural Pakhtun intelligentsia. To revive the spirit of the Khudai Khidmatgar Movement and prepare the Pakhtun people for the pressing times ahead, it is imperative to create new organizational structures, which can best protect Pakhtun rights. But before elaborating these concepts, the present political system of Pakistan and the requisite strategy for change is discussed. PAKISTAN’S POLITICAL STRUCTURE AND PAKHTUN NATIONAL INTERESTS Pakhtunkhwa has 35 seats in the national assembly and Tribal Pakhtunkhwa has a representation of 12 seats in the national assembly of Pakistan. Besides, 6-7 seats from Balochistan also belong to Pashtuns of Balochistan. Apart from 2-3 seats from Pakhtunkhwa, the remaining seats in the above-mentioned Pakhtun inhabited land in Pakistan makes the total strength of Pakhtuns in the national assembly of Pakistan. There are 272 seats in the National Assembly of Pakistan out of which 19.85 per cent belong to Pakhtun vote. Similarly, Pakhtuns have a representation of around 40 members in the senate of Pakistan, making it a sizeable group in the senate. From the above discussion, it is clear that even if the people of Pakhtunkhwa vote for the national parties, their representatives in the National Assembly of Pakistan cannot form a government thus denying them every opportunity of affecting policies of the federation. This brings into focus the federal structure of Pakistan. Therefore, the establishment of a genuine and equitable federal democratic system in the country is the only way to replace the sense of alienation with a sense of participation. The state system, which Pakistan inherited from the British in 1947, was unitary. It was very centralized and was basically designed for colonial type of governance. Even after independence this system was not changed in a fundamental way to enable it for the requirements of an independent, democratic and developing country with a lot of social, cultural and ethnic diversity. Unfortunately, the socially narrow-based and politically undemocratic ruling elite consisting of the big feudals and the top echelons of the civil and military bureaucracy moved in the wrong direction. The said elite raised the slogan of the strong centre (instead of a strong country) and imposed One Unit Scheme on the smaller provinces, which left behind it a bitter trail of hatred, division and mistrust. The oppressive and bankrupt policies of the above mentioned ruling elite paved the way for the disintegration of the country in 1971. It was after these bitter and shattering experiences that the 1973 constitution adopted the principal of federalism as the basis for the state system, although it has not been implemented in letter and spirit in the subsequent years. The concept of federalism is not new, but in its present developed form, it is one of the three most important inventions of modern democratic governance, the other two being the protection of individual rights and the idea of a civil society. Federalism is something more than simple linking of the federating units into a larger whole to maintain both self-rule and shared rule. The political theory of federal democracy provides for a real alternative to simple majoritarian, pyramid like hierarchical state with permanent majorities and permanent minorities. Federalism creates a matrix of institutions for power sharing on both vertical as
well as horizontal level. It is based on constitutionalism, pluralism, and power sharing. Experience in different parts of the world has proved it beyond any doubt that federalism is the most successful political strategy for promoting the processes of nation-building and state building in countries having social and cultural diversity. Civil Society Civil Society stands in total contrast to authoritarianism. Expanding and strengthening of civil society is at the core of the process of democratization in countries like Pakistan. The idea is that every socio-political order has both governmental and private spheres and the government does not have the authority to intervene in every aspect of the social order. The linkage between the two spheres is provided by a public non-governmental sphere to ensure the democratic and civilized functioning of the socio-political order. One can also put it in another way. The state is to rest on three legs – private, public non-governmental and governmental. The first two constitute the civil society. The stronger the civil society, the more democratic the social order and vice versa. In our conditions the civil society can assert itself by a more systematic, meaningful and effective role of the university campuses, bar associations, professional organizations, NGOs, trade unions, and political parties. Unfortunately, the role of the above mentioned public organizations was made extremely limited and ineffective by the long spells of authoritarian regimes. Similarly, the traditional political parties have also failed to evolve a clear and tangible strategy to revive, expand and strengthen civil society. Working in close contact with all the elements of civil society and movements for ensuring human rights and for promoting participatory processes seems the utmost priority of any political strategy. It is interesting to note that Pakhtuns had a rudimentary form of a traditional civil society prior to the establishment of the oppressive colonial state system. The modern idea of civil society can be applied to Pakhtun society developing and bringing out the Pakhtun traditional community based institutions up-to-date in full conformity with modern democratic norms. Recent years have also witnessed the mushrooming of community based non-governmental organizations for development and for achieving human rights. This is a positive development, a process of social regeneration and is intended to work together with all progressive and concerned citizens and organizations for the cause of the under privileged people. Our society seems to burst under the burden of a protracted and ever deepening series of crises. The sever crises of governance is its real epitome. The origin of these crises can be traced back to the eleven years long arbitrary despotic dictatorship of General Zia-ul-Haq. The divisive policies of successive governments in Pakistan have led to the fragmentation of the civil society on ethnic, communal and sectarian lines. The prolonged unconstitutional rule of the usurpers; the rise of a powerful black economy; the trapping of the country in rivalries of international politics during the Cold War; the curse of an increasing foreign debt and entanglement in regional hostilities are some of the main factors responsible for depriving the country of civilized constitutional governance. The massive erosion of state authority, kalashnikov culture, drug trafficking, obscurantism, extremism and large scale corrupt practices in state and society are the baggage of the past. The robber barons, rising mostly from amongst the collaborationists, amassed fabulous wealth while the standard of life of teeming millions took a straight nosedive, creating a dangerous social divide. The ruthless thrust of centralizing political and administrative power, which was, as a colonial legacy, already considerably centralized, not only took inefficiency to the border of complete collapse, but it also struck an almost fatal blow at the federal structure of the state
system. The old regional, political and economic imbalances were further intensified. The mess of Zia-ul-Haq’s legacy is so great that it does not allow the country to put back on the track towards socio-economic development and democratic change. It will require structural reforms to ensure fundamental changes in the over all system. It is particularly important in view of the monumental and historical changes in the world after the end of the Cold War and the new political settlements. The stubborn and hectic efforts on the part of the forces of status quo to save the present over-centralized and decadent system is creating the threat of anarchy and chaos. Historical experience has decisively proved that every attempt at moderating the all around crises of state and society by using tactic of the change of forces at governmental level, has not only miserably failed in achieving the purpose, but it has also further aggravated the problem by creating serious mistrust and even cynicism in the minds of the people about the existing political parties and their practices. The fact of the matter is that the masses of people have lost confidence in the present sociopolitical system and they have no faith in political parties representing it. These political parties are increasingly viewed by the people as cliques of the corrupt ruling elite, which are hell-bent on squeezing the dying system for their personal benefit instead of bringing any meaningful and positive change. Under these circumstances it is incumbent on all progressive, democratic, patriotic and pro people forces to unite for building a new and effective political platform with the aim of finding a way out of the present deep crises by bringing about the historically necessary socio-political, economic and administrative changes leading to the complete overhaul of the system. They are duty bound to struggle for galvanizing, organizing and preparing the masses for shaping a society capable of maintaining its identity, religious beliefs and healthy traditions along with joining the mainstream socio-economic development, democratization and scientific technological revolution in the era of globalization. The main political challenge in Pakhtunkhwa that necessitates the emergence of a new political platform is to unite and strengthen all democratic political forces, particularly those in smaller federating units, to struggle for the establishment of a genuine and equitable federal democratic system to ensure complete administrative, financial and judicial autonomy of the federating units and to achieve comprehensive decentralization of power up to the grass-roots level. On social front, the new platform is required for radically changing priorities in the area of resource allocation, shifting the emphasis on non-productive sectors to social sector – particularly education, health, housing and productive employment. The myth of two party system, which was created by very artificial and opportunistic sociopolitical alignment, mainly aimed at grabbing power at every cost, is shattered by the political developments of the last one decade in the country. The particular demographic balance among federating units, the ruthless use of the ‘Punjab Card’ and the hegemonistic stance of the IJI and its successor, Pakistan Muslim League paved the way for a new political alignment, mainly on regional basis. Almost all the mainstream political parties, despite having a token presence in different parts of the country, have come to be identified with a particular region or province. For example, Pakistan Muslim League is for all practical purposes a Punjab-based party. Pakistan People’s Party has been pursed into the limits of Sindh. Balochistan is already dominated by regional parties and the same trend is being reinforced in the NWFP (Pakhtunkhwa).
The movement for achieving a full fledged provincial autonomy for NWFP (Pakhtunkhwa) in the federation of Pakistan was given a negative image from day one. It was historically handicapped due to the affiliation of the traditional Pakhtun National Movement with the All India National Congress before independence. After independence, the ruling establishment of the new country perpetrated ruthless discrimination against Pakhtuns. After the dismemberment of One Unit and the adoption of 1973 constitution in Pakistan, many people expected that the provinces will get their due constitutional rights. But such expectations were belied by the subsequent experience. The concurrent list of powers in the constitution which was supposed to be transferred to the residual powers of the provinces within 10 years in the original scheme, still remains as it was in 1973. Without powers to debate the Annual National Budget and resource allocation, Senate or Upper House is practically just a showpiece. The Council of Common Interests (CCI) has not functioned as an effective forum to redress the grievances of the provinces. The federal government has continuously violated its promises to pay the arrears of the royalty in the net profits from the hydel generation to our province as per provision of the constitution. The failure of the Federal government to equalize conditions for industry in different parts of the country has resulted in little industrial development of Pakhtunkhwa due to the lack of necessary infrastructure and long distance from the seaport of Karachi. The federal government has been blind to the fact that due to its strategic location, as a gateway to Central Asia, this area requires special attention in terms of building the necessary infrastructure and industrial base. The Gadoon-Amazai Industrial Zone was forced to shut down soon after policies changed and successive governments withdrew all concessions. Kalabagh Dam remains to be a Damocles’ sword for the province for the last many years. The federal government has gone back on its promise to carry out a rehabilitation work in the province for compensating the damage done to the infrastructure as a fall out of Afghan war and the province is practically left on its own to cope with the problem of Afghan refugees. The province is deprived of its due share in services in the federal ministries, divisions, departments and corporations. The refusal of the central government to honour the resolution in favor of renaming the province as Pakhtunkhwa speak volumes of the attitude of the federal government about provincial autonomy. Even inside Pakhtunkhwa (NWFP), the socio-economic development has not been even, leading to a sense of deprivation in certain areas. Apart from differences in the level of socio-economic development, the province has an ethnic and cultural diversity and the only democratic approach to this problem is to accept this diversity. Struggle for establishing a genuine and equitable federal structure and for overcoming regional imbalances is the only way to strengthen the federation of Pakistan. In the changing international situation, states and countries can survive only by achieving inner viability and confidence and support of the population. Voluntary and strong support of the people is the only dependable guarantee to the solidarity and integrity of Pakistan. Only a strong political party, with competent political leader-ship, popular support and proper homework done by professionals and think tanks can overcome the above mentioned problem. The ‘National Democratic Consultative Process’ is an attempt to redefine national
priorities and recreate genuinely democratic political organization in the light of modern requirements and realities of the age. Although majority of members from Pashtunkhwa in the National Assembly would not address Pashtun issues holistically, nevertheless, a maximum number of Pakhtun representatives in the National Assembly can greatly increase the chances of provincial autonomy for Pakhtunkhwa. The members of the National Assembly would even further become effective if the FATA MNAs and the people’s representatives from the Pakhtun belt of Balochistan also join as representatives of the whole province. This would happen only when the old colonial politico-administrative structure in FATA is replaced by a democratic and representative system of governance. The following chapter deals with reforms in the Federally Administered Tribal Areas. Next: TRIBAL PAKHTUNKHWA TRIBAL PAKHTUNKHWA Despite its negative impacts for the people of the Tribal Areas, one must appreciate the British ingenuity for evolving an administrative structure, which enabled the colonial British to rule these areas through their proxies. The British colonialists exaggerated the myth of autonomy of the tribes for their own colonial interests and made a common tribesman hostage to powerful interest groups for quite a long time. The people of the Tribal Areas played a significant role in shaping and reshaping the history of the region. The names of legendary freedom fighters like Mullah Mastan, Umara Khan of Jandul, Faqir of Ippi, Mullah Pawanda, Hadday Mullah, Haji Sahib Turangzai, Fazal Mahmood Makhfi etc are the symbols of tribal Pashtun chivalry and spirit of independence. Unfortunately, the tribal people could not capitalize on the unprecedented sacrifices of their heroes because of lack of a grand vision. The sacrifices of the tribal people for the independence struggle facilitated the departure of the British from the Indian sub-continent but even after the creation of Pakistan, the benefits of freedom could not penetrate to the common strata of the tribal society. The old colonial structure in tribal areas was kept intact on one pretext or another. The people of the Tribal Areas remain deprived of the benefits of the political developments during the past half-century. Because of their exclusion from the political process, they couldn’t struggle aggressively for many of the economic and social advantages that come as a result of active political participation. The tribesmen are being negatively portrayed by a section of the society in Pakistan for being involved in illegal trade like smuggling and narcotics. No one cares to know about the underlying causes. When it comes to the defense of the motherland, the Kashmir Jihad etc. the martial spirit of the tribal people has been used quite excessively, but when the question of giving a genuine share in resource distribution and socio-political rights, the tribesmen had never been counted as equal partners with other Pakistanis. The Cold War rivalry between the former Soviet Union and the West also added to keep the tribesmen hostage to a colonial political and administrative system because of the strategic location of the tribal areas. But now the Cold War has ended. The world is being swept by waves of globalization and regional integration. These changes would definitely affect the
prevailing status quo in tribal areas. The real challenge is that the tribal people have not been able, as in the past, to articulate the currents of the modern changes and formulate a systematic political response that could end in the socio-political and economic betterment of the people of Tribal Pakhtunkhwa. As Tribal Pakhtunkhwa was kept aloof from the mainstream political current, no political party of Pakistan thought it necessary to make the Tribal Pakhtunkhwa’s issues a part of their party manifestoes. Although a considerable educated class aspired for a political change in the tribal system, their voices remained unheard. In the changed prevailing circumstances; the extension of the devolution plan and representation of Tribal Pakhtunkhwa in the provincial legislature have necessitated the urgency of a robust political response. While the efforts of the federal government to bring certain legal and political changes in the Tribal Pakhtunkhwa are commendable steps, yet these efforts would be fruitless unless the voices of the tribal people are heard in the formulation of policies that are intended for bringing changes in Tribal Pakhtunkhwa. Policies made in the cool chambers of bureaucratic mansions often meet a doomed fate because such policies don’t represent the aspirations of the common people. In order to bring genuine political, social, cultural, and economic improvements in the lives of the people of Tribal Pakhtunkhwa, the following policy issues are of extreme importance for the success of the Tribal Pakhtunkhwa development program. CONSTITUTIONAL REFORMS Constitutionally, Tribal Pakhtunkhwa is a non-regulation area, which means that legislation for Tribal Pakhtunkhwa is the responsibility of the president of Pakistan. The governor Pakhtunkhwa, being agent of the president and representative of the federation, issues ordinances in respect of Tribal Pakhtunkhwa, if and whenever necessary. Since, Tribal Pakhtunkhwa will be given representation in the provincial legislature that would make it a regulation area at par with other settled areas of the province, it would, therefore, require that Tribal Pakhtunkhwa is declared a regulation area through a constitutional amendment. This would help in the legal and constitutional integration of Tribal Pakhtunkhwa with the rest of the country. The tribal areas, while remaining within the constitutional and administrative framework of the federation, shall have the right to retain its cultural identity intact. LEGAL REFORMS On the legal side, Tribal Pakhtunkhwa is notorious for ex-colonial inhuman laws in the shape of the Frontier Crimes Regulations. Its existence in an independent country is a great stigma on the conscience of our policy-makers, which needs to be replaced with civil and criminal laws that fits the socio-cultural traditions of the Tribal Pakhtunkhwa and the sooner this is done the better. A Law Commission should be constituted for the formulation of a legal and judicial system that suits the genius, culture, traditions and values of the tribal people. ADMINISTRATIVE REFORMS Administratively, Tribal Pakhtunkhwa has developed a peculiar culture of its own. Administration there is said to be cost effective because of the collective and territorial responsibilities of tribes and elders to maintain law and order in their respective areas of influence. This sort of administrative setup is ‘dictatorship of the few’ and cannot be justified on any ground whatsoever. In fact, this administrative arrangement only serves the financial interests of a clique of bureaucrats at the expense of the people. The unrestrained powers of
the Political Officers in the Tribal Areas; the lack of civil society groups and education coupled with a lack of interest and sensitivity of the federal government to improve the existing conditions further fortifies an obsolete colonial structure in the Tribal Areas. Public administration there, like all other public service institutions in Pakistan, has undergone institutional decay worthy of being labeled as an ‘extortionist gang’. Constitutionally, Tribal Pakhtunkhwa is a ‘nonregulation area’, which is ruled by the president of Pakistan through the governor Pakhtunkhwa as his agent. Practically, however, a parallel machinery of the central and provincial governments administers Tribal Pakhtunkhwa. The political officers at the top have to reach the governor’s area of influence for postings in the tribal areas. The lower tiers of administration and the Agencies Works and other Line Departments are the domains of the provincial government. This administrative mayhem in the Tribal Pakhtunkhwa results in administrative deadlock between the provincial and central governments at times when a fugitive of law from the Provincial authority takes refuge in the Tribal Pakhtunkhwa and the Political Officers, feeling themselves responsible to the governor rather than the provincial government, refuse to co-operate with the provincial home department in delivering the outlaw. The poor law and order situation in the settled districts of Tribal Pakhtunkhwa and the resultant hesitation of investors to undertake economic and business activities in Pakhtunkhwa can be largely attributed to this administrative black-hole, the so called FATA, which makes a less secure environment for investors in our region. There should be a modern security force in Tribal Pakhtunkhwa subject to the condition that Tribal Pakhtunkhwa should have its own exclusive control over its security forces. The officer cadre should be recruited from the graduates of the Tribal Pakhtunkhwa through fair and transparent recruitment procedures giving due regard to educational backwardness and comparative disadvantage of different agencies in terms of poor human resource development. The Tribal Pakhtunkhwa administration, however, can hire officers on deputation from the provincial or federal government if so required by it. The colonial legacy of recruiting soldiers from different tribes in the Frontier Corps and appointing its officer cadre from outside should be done away with and the tribal people must be given responsibility to lead their own forces. The tribal make-up should also be replaced by a broader identity rather than retaining the water-tight compartments of different tribes in the semi-military forces of the Frontier Corps. POLITICAL REFORMS Any plan for the development of Tribal Pakhtunkhwa must take into consideration, the genuine, true, fair and transparent representation of the aspirations of the common tribesmen. This is possible only if the political process in Tribal Pakhtunkhwa is based on adult franchise, political pluralism and the freedom of expression and association of the tribal people without fear or favor. The egalitarian spirit and traditions of the tribal people should be transformed into a modern system of democratic governance. The tribal people must be empowered to participate in the decision-making processes and structures that vitally affect their lives. The political rights of the people of the tribal areas of Pakistan must be constitutionally protected, while keeping their distinct identity intact. In this regard, each tribal agency must have its own Agency Assembly, which should be fully empowered to legislate on issues affecting the lives of people in accordance with the customs, traditions and values of the tribal people except those which are violative of universal human rights.
ECONOMIC REFORMS Tribal Pakhtunkhwa is one of the most backward areas of the country where per capita GDP is 50% less as compared to the rest of the country. During the last fifty years, very little effort has been done to develop infrastructure and increase employment opportunities in Tribal Pakhtunkhwa. The strategic location of the Tribal Pakhtunkhwa and the efforts of the government to address the root causes of terrorism make it even more important to increase developmental outlays for the socio-economic development of the tribal areas. The following measures need to be taken for the economic development of the tribal areas: a) Inclusion of Tribal Pakhtunkhwa in NFC Awards In order to seriously consider the socio-economic development of Tribal Pakhtunkhwa, developmental funds must be allocated to it at par with other provinces of Pakistan. The Federal Budget, 2002-03 allocated 193.5 billion to provinces. This allocation is made under the NFC Award, which is based on the population of each province. Tribal Pakhtunkhwa is not included in the NFC award, which means leaving a population equal to the size of Balochistan’s population (according to 1971 Census) without any direct allocation from Federal Tax Revenues. Tribal Pakhtunkhwa’s exemption from the tax net can not be made an argument in favor of denial of its share in the Federal Tax Revenues as it do contribute to the tax revenues in the form of indirect taxation. A comprehensive development plan of Tribal Pakhtunkhwa would require allocating funds to it on the basis of population as is done in the case of provinces. Presently, Tribal Pakhtunkhwa is clubbed with other Special Areas like AJK, Federal Capital Areas, and Northern Areas. All these Special Areas have been allocated Rs. 7.7 billion for development expenditure in the Federal Budget 2002-03. Besides the low budgetary allocation to the Special Areas, it is also not clear as to how much of this amount would go to Tribal Pakhtunkhwa amongst the Special Areas. In view of the drive of the federal government to bring Tribal Pakhtunkhwa into the national mainstream, it is imperative that either it should be included in the NFC Awards separately or the aggregate population of Tribal Pakhtunkhwa and Pakhtunkhwa should be worked out for allocation of funds to both in the NFC Award. b) Accounting and Financial Information System for Tribal Pakhtunkhwa In order to ensure the correct utilization of the funds allocated for the development of Tribal Pakhtunkhwa, a transparent financial and accounting management system needs to be worked out. In this regard, a separate annual budgetary statement for Tribal Pakhtunkhwa under the supervision of the federal or provincial government has to go a long way in the right direction. This would also strengthen the resolve of the present government to ensure transparency and accountability in the utilization of public funds. As Tribal Pakhtunkhwa would be given representation in the provincial assembly of Pashtunkhwa, the supervision of the recently established FATA secretariat and preparation of budget for Tribal Pakhtunkhwa seems more appropriate for the integration process of NWFP and FATA. There must be an Annual Development Program for Tribal Pakhtunkhwa and the correct utilization of funds must be ensured through the establishment of a separate Auditor General Office. The ‘secret funds’ at the disposal of the political agents must be abolished forthwith
and the ‘Moajib/Lungi System’ in tribal areas must be finished as it encourages political bribery of the influential elders at the cost of the common tribesmen. c) Land Settlement The communal land ownership in the tribal areas is a great hindrance in the way of economic growth. In order to make Tribal Pakhtunkhwa favorable for economic activities, it is essential that the communal land ownership should be replaced by modern land settlement. Individual ownership of land would enable the people of Tribal Pakhtunkhwa to acquire loans for businesses giving their lands as collaterals. Besides, settlement of land on individual ownership basis would also lessen opportunities of blocking improvement of physical infrastructure, which is compromised in political and tribal disputes in Tribal Pakhtunkhwa. The tribal leaders should be taken into confidence and they should be made aware of the benefits of the modern land settlement system. d) Establishment of Free Trade Zone The reconstruction exercise in Afghanistan and the opening of Central Asia provides a golden opportunity for Pakistan. The establishment of a Free Trade Zone in Pashtunkhwa/Tribal Pakhtunkhwa would greatly help in facilitating trade with the landlocked Central Asia. The establishment of a Free Trade Zone would decrease the dependence of the tribesmen on illegal trade and would compensate the tribal people for the neglect of the socio-economic sector during the past 55 years of Pakistan’s independence. This subsidy by the federal government can greatly change the economic conditions of the tribal people. Since the formation of the new government in Afghanistan, the informal trade between the two countries has reduced but the formal trade did not pick up significantly. Tribal Pakhtunkhwa can play a significant role in maintaining and increasing trade ties between the two countries provided that the informal trade links are replaced by formal trade between the two countries. Tribal Pakhtunkhwa can play a major role in an atmosphere of mutual trust between the governments and people of Pakistan and Afghanistan. The creation of a Free Trade Zone in Pakhtunkhwa can be of great strategic advantage to the government of Pakistan in the long run. e) Establishment of Tribal Chamber of Commerce The tribal people are involved in trans-border trades for centuries; however, their trade transactions could not be modernized and institutionalized due to lack of leadership, vision and information of the tribal traders. The establishment of a Tribal Chamber of Commerce would enable the tribal traders to have better exposure to and transaction with national and international markets. This chamber can be of great help in advocating and representing the genuine trade interests of the tribal people with government and private sector organizations. It will also be able to protect the legal interests of the tribal traders and they cannot be coerced or pressurized for illegal gratification by government officials and agencies. There is a need of a thorough spade-work to establish a Tribal Chamber of Commerce. f) Development of Manufacturing Sector Great potential exists for the development of the manufacturing sector in mining, precious
stones, food processing and labor and energy intensive units. The government must develop necessary infrastructure and provide electricity on subsidized rates to investors for the development of the manufacturing sector in Tribal Pakhtunkhwa. SOCIAL SECTOR DEVELOPMENT 1. Construction of Tribal Highway Poor physical infrastructure in Tribal Pakhtunkhwa has added to the backwardness of the tribal areas. Most of the valleys in the tribal areas remain inaccessible, which makes the lives of the tribal people miserable in many ways. They have poor access to health and education facilities and the lack of effective means of communication and transportation is responsible for retaining the backwardness of the tribal areas. The construction of a tribal highway starting from Bajaur to Mohmand, Khyber, Orakzai, Waziristan and linking it to Balochistan should be a top priority for the socio-economic development of Tribal Pashtunkhwa. This will greatly help in alleviating poverty, improving life standards of tribes by access to better transportation and communication. 2. Health The poor health care system in Tribal Pakhtunkhwa is responsible for many untimely and avoidable casualties. Child and maternal mortality rate is higher in Tribal Pakhtunkhwa than the rest of the country because of poor health infrastructure. Development outlays for the health sector in the national and provincial allocation for Tribal Pakhtunkhwa must be a priority to improve health services. The central government should allocate additional funds for this purpose. 3. Education Education in Tribal Pakhtunkhwa, like all other social sectors, is far behind than the rest of the country. It is mainly because the students from Tribal Pakhtunkhwa face a lot of difficulties in getting seats in professional colleges and higher educational institutes. Middle and higher standard education cannot improve unless at least one university for both genders are established exclusively for Tribal Pakhtunkhwa. There should be two sub-campuses of these universities in the Tribal Areas. The establishment of a university would put greater demand on lower schools and colleges to produce the necessary manpower for higher education. This would also provide equitable educational opportunities to the students from Tribal Pakhtunkhwa at par with the students of other areas of Pakistan. 4. Travel Concessions Geographical contiguity, historical, cultural and ethnic ties of the tribal people with Afghanistan and the imperative of frequent cross-border travel to and from Afghanistan makes it a vital question for the tribal people that they should be given visa-free cross-border travel facilities between Pakistan and Afghanistan. The rights of the tribal people must be strongly supported to retain their historical links with the government and people of Afghanistan subject to the condition that such contacts do not hamper good neighborly relations between the governments of Afghanistan and Pakistan.
5. De-Weaponization The people of Tribal Pashtunkhwa should be educated and persuaded to give up destructive weapons acquired during recent years, which have become a tool of self-destruction. Abundance of the above mentioned weapons in the private possessions have resulted not only in human and material losses on large scale but it has led to gross violations of tribal traditions in terms of killing women and children. As a first step Tribal Pashtunkhwa should be cleansed from heavy weapons with the cooperation of the people. The process of deweaponization should gradually include small weapons also. As far as weapon industry and markets are concerned the government, with the cooperation of the local people, should prepare a comprehensive plan to integrate weapon manufacturing and selling in the national arms markets and industry. The weapon markets in the tribal areas should be brought under proper state control. 6. Eradication of Narcotics Drug trafficking brought a bad name to the people of Tribal Pakhtunkhwa and the region. In order to eliminate cultivation of narcotic crops, a proper plan should be devised, which should include alternative employment and earning opportunities for the people involved in this trade. The geo-strategic location; socio-economic under-development; the political deprivations of the people for almost a half century and the prevailing situation in the region make increasing demands on the government of Pakistan to give the people of Tribal Pakhtunkhwa their due rights. 7. Constitutional Status of PATA The Provincially Administered Tribal Areas (PATA) of Pakistan, comprising of the former Malakand Division has been defined under section 246 of the Constitution of Pakistan, whereas section 247 deals with administration of the Tribal Areas of Pakistan. It is interesting to note that the people of PATA elect their public representatives in the general elections like the rest of Pakistanis and their national and provincial assembly members do take part in legislation in both legislatures but ironically any such legislation is not implemented in PATA unless it is extended by an executive order of the president of Pakistan or the governor NWFP (Pashtunkhwa). This constitutional incongruity has resulted in many legal complications both for the general public and the government machinery as well. For example, the Malakand Agency prison is, legally speaking, a private prison as it has no ‘Jail Manual’. The youth from Malakand Agency cannot be selected in the Pakistan national sports teams because they belong to the Agency. But the agency is in name only as there are regular law courts working in Malakand Agency and the rest of PATA. But again, PATA has special laws called ‘The Sharia Regulations’, which coexist with regular laws of Pakistan. The only impression one gets of all these injustices is that the federal government of Pakistan wants to continue the legal, geographic and administrative division of Pakhtuns as was pre-partition British policy in the sub-continent. It would be in the best interest of the country to apply uniform standards to all areas and remove the sense of frustration of the people of Pashtunkhwa. Next: A GLANCE AT POVERTY IN PAKHTUNKHWA
Pashtunkhwa: A Developmental Framework-5
A GLANCE AT POVERTY IN PAKHTUNKHWA The entire Pakhtun nation, on the average, lies below the poverty line. If poverty line is equal to the earning of one US dollar per person per day then the average per person GDP of Pakhtuns is far below this amount. Pakhtuns are too poor compared to their human and natural resources. The per capita GDP in Pakistan is 472 dollars while the per capita GDP of NWFP is less than half of the national average. Per capita GDP of Pakhtunkhwa (NWFP & FATA)  can range from $180 to $235 depending on the variables used in the simulation analysis. The effects of such a vast difference between the GDP of this area and the rest of the country are numerous. Over the past few decades millions of workers have left Pakhtunkhwa (NWFP & FATA) for others parts of the country and abroad. In order to enhance national unity and reduce the appeal of religious fundamentalism (due to sense of deprivation) in Pakhtunkhwa/NWFP, such a vast gap among the per capita income of individuals in different provinces must be reduced. In almost all sectors including agriculture, manufacturing, services and trade, Pakhtunkhwa needs immense investment to come up at par with the rest of the country. The following case study illustrates how per capita GDP of Pakhtunkhwa was calculated.
ESTIMATION OF THE GDP OF NWFP AND FATA Pakistan is a low-income country, with a per capita gross domestic product (GDP) of around 470 dollars. The per capita income varies across the country and is considerably lower in NWFP, FATA and Balochistan. GDP or GNP is usually calculated for countries thus ignoring the differences between the per capita incomes across different provinces with in a country. This article will calculate the combined GDP of NWFP & FATA and compare it with the rest of Pakistan. GDP OR GNP Gross Domestic Product (GDP) is the value of new goods and services produced with in a country during the course of the year. GDP is calculated without regard to ownership of productive resources. Thus, the value of output of a foreign owned factory in NWFP is included in the GDP of the province. On the other hand, Gross National Product (GNP) is the value of new goods and services produced by domestic factors of production. Thus, the value of output of a foreign owned factory in NWFP is excluded from GNP calculation but remittances from workers of this province working abroad is included in GNP. Like many developing countries the GNP of NWFP & FATA is higher than the GDP of the province. The main reason for the higher GNP of the province is the remittances of workers from abroad and other provinces of the country. GDP can be calculated by two different approaches. These are Income Approach and Expenditure Approach. Income Approach calculates the wages, interest, rents, proprietors’
income, etc in NWFP & FATA in a given year. On the other hand the Expenditure Approach is the sum of consumption, investment, government expenditures and net exports of NWFP & FATA. (Detail of these approaches is beyond the scope of this report). The economic survey of Pakistan uses Income approach to calculate the GDP of Pakistan and the same approach is used to calculate the GDP of NWFP & FATA in this report. Current US dollars are used in the estimation of the GDP. Purchasing power parity is not used in determining wages, rents etc. POPULATION AND LABOUR FORCE To determine the per capita GDP of the province, real population of the province needs to be estimated. Table 1 below shows the total area and population of Pakistan, NWFP and FATA. According to the 1998 census NWFP & FATA constitutes 16% of the population of Pakistan. According to this census the population density of NWFP is more than twice as high as FATA. Many individuals and organizations dispute these findings and argue that the population density is almost the same in NWFP & FATA. As a result they claim that the population of FATA is underestimated by 2-3 million. However in this report figures from 1998 Census is used to determine the GDP of NWFP & FATA. TABLE 1 Pakistan NWFP FATA NWFP & FATA
Area in sq 796,095 74,521 27,220 101,741 km Area as a percentage 9.36% 3.42% 12.78% of total Population 130,579,000 17,735,000 3,138,000 20,873,000 Population 13.58% 2.40% 15.98% percentage Population 238 115 205 Density
Source: Economic Survey of Pakistan.
The size of the total labor force in Pakistan is around 40.4 million, which is about 31 % of the total population. Labor force includes those individuals who are currently employed or are searching for employment. Those who are unemployed and are not searching for employment are excluded from these calculations. More than 2 million people are currently unemployed in Pakistan. TABLE 2
Population Labor Force Labor
130,579,000 40,400,000 30.94%
Force as Percentage of Population Table 2 & 3 shows the total strength of the labor force in Pakistan, and the actual and percentage breakup of individuals employed in different sectors of the economy. TABLE 3
Pakistan Percentage of Labor Distribution Force in Each of Labor Sector Force Total Labor 40,400,000 Force Agriculture 19,089,000 Mining & 4,100,600 Manufacturing Construction 2,529,040 Transport, Storage & 2,213,920 Communication Trade 5,603,960 Services & 6,863,960 Others
47.25% 10.15% 6.26% 5.48% 13.87% 16.99%
Source Table 2 & 3: Economic Survey of Pakistan Assuming that labor force as percentage of population is the same for Pakistan and NWFP (almost 31%) the size of labor force in NWFP & FATA can be estimated to be around 6.5 million people. Table 4 shows the total strength of the labor force in NWFP & FATA, and the actual and percentage breakup of individuals employed in different sectors of the economy according to the government figures. TABLE 4
NWFP & FATA Percentage of Distribution Labor Force in of Labor Each Sector Force Total Labor Force Agriculture 6,457,924 3,117,885 48.28%
Mining & Manufacturing Construction Transport, Storage & Communication Trade Services & Others
415,244 528,258 421,057 826,614 1,148,865
6.43% 8.18% 6.52% 12.80% 17.79%
Source: Economic Survey of Pakistan GDP OF PAKISTAN The GDP of Pakistan is estimated to be 61.7 billion dollars (Source: World Bank). Agriculture is the biggest contributor to the GDP of Pakistan followed by manufacturing and Trade. Table 5 shows the contribution of different sectors towards the GDP of Pakistan. TABLE 5
Contributions of Different Sectors to PERCENTAGE GDP of Pakistan in Dollars Total GDP 61.7 Billion Agriculture 15.24 Billion 24.70% 10.735 Manufacturing 17.40% Billion Construction 2.10 Billion 3.40% Transport, Storage & 6.41 Billion 10.40% Communications Trade 9.4 Billion 15.20% Services & 17.815 28.90% Others Billion Source: Economic Survey of Paksitan. CALCULATING GDP OF NWFP AND FATA NWFP & FATA constitutes around 16% of the population of the country and as a result roughly 16% of the GDP of the country should be generated in this area. Unfortunately the GDP contribution from this area is much lower. Each sector of the economy of NWFP & FATA is discussed below.
AGRICULTURE According to the ministry of food, agriculture and livestock, around 22 million hectares are cultivated in Pakistan. Out of this around 1.5-1.7 million hectares are estimated to be cultivated in NWFP & FATA. Thus, 6-8 % of the total cultivated area in Pakistan is cultivated in NWFP & FATA. Irrigation system in the province is very poor and a significant portion of the cultivable land in the province is not cultivated due to lack of an effective irrigation system in the province. Furthermore, even most of the cultivated land in the province is non-irrigated. On the average irrigated area produces twice as much out put as the non-irrigated area. This means per acre output is considerably lower in NWFP& FATA compared to the betterirrigated lands in Punjab and Sindh. Based on the above-mentioned facts it is fair to estimate that the agriculture production of NWFP and FATA does not constitute more than 6-7% of the total agriculture output of the country. Table 5 shows that agriculture accounts for 15.24 billion dollars in the total GDP of the country. 6% of 15.24 billion dollars is about 914 million dollars. Thus 914 million dollars is a generous estimation of the agricultural output of the province. The Economic Survey of Pakistan estimates that almost half of the population of NWFP is employed in the agriculture sector as shown in Table 4. These figures clearly show that agricultural labor force is over estimated. The validity of these facts needs to be questioned for two reasons. Firstly there is not enough cultivated and irrigated area in the province to employ such a large number of people. Secondly such a large number of people cannot be gainfully employed in this sector as the per-person income for agricultural workers comes to less than 100 dollars per person per year if we assume that half the labor force of the province is employed in agriculture sector. This situation can be termed as disguised unemployment. MANUFACTURING Manufacturing constitutes for 17.4 % of the GDP of Pakistan. Out of this figure 12.2% is large-scale manufacturing and 5.2% is small-scale manufacturing. As shown in Table 5, manufacturing contribute 10.735 billion dollars to the GDP of the country. Large scale manufacturing is about 7.53 billion dollars of this amount while small-scale manufacturing contributes around $ 3.21 billion. Large-scale manufacturing is very limited in NWFP and is non-existent in FATA. According to Sarhad Development Authority there are 2086 industrial units in the province employing 77900 people. However most of these industrial units are closed. On the other hand Economic Survey of Pakistan estimates that 6.43% of the population of NWFP is employed in manufacturing and mining. If we assume the same ratio for FATA, the total number of people employed in this sector is around 415,244 in NWFP & FATA. Economic Survey of Pakistan uses a broader definition of manufacturing than SDA but again, employment in this sector is overestimated by Economic Survey of Pakistan as there are not enough operational manufacturing units to employ such a large number of people. There are 12-15 units in NWFP with initial investment of 500 million rupees. These can be classified as large-scale manufacturers and there are about 50 units with initial investment in excess of 50 million rupees. A great number of these units are closed but a few cement
manufacturing units, a tobacco unit in Akora and polyester units in Hattar are notable exceptions. The contribution of NWFP to large scale manufacturing in Pakistan is almost negligible. Small-scale manufacturing is also limited because of lack of any competitive advantage to manufacturers in the province. NWFP & FATA got an insignificant share in the export of manufactured goods from Pakistan. In all manufacturing in NWFP does not contribute more than 3-4 percent to the total manufacturing sector in the country. This adds around 300-350 million dollars to the GDP of Pakistan. CONSTRUCTION More than 20% of the construction workers in Pakistan come from NWFP & FATA. The contribution of the construction industry of Pakistan to the GDP of Pakistan is 2.10 billion dollars. Out of the 528,258 construction workers in NWFP & FATA most are daily wagers. Both public sector and private sector construction work is limited in NWFP & FATA compared to Punjab and Sindh. As a result many construction workers from NWFP & FATA work in Punjab and Sindh. Income earned by construction workers outside NWFP & FATA cannot be technically included in the GDP calculation of NWFP & FATA. Even if this amount is included the income earned by construction workers in NWFP & FATA can be estimated to be around a maximum of 12% of the total 2.10 billion dollars. This comes to about 252 million dollars. TRANSPORT, STORAGE AND COMMUNICATION People from NWFP and FATA have significant representation in the road transport sector of the country. Unlike construction industry there is significant ownership of transport vehicles in the province. However income of NWFP & FATA owned vehicles operating exclusively in other provinces cannot be counted in the GDP of the province. The share of NWFP & FATA is very limited in air transportation and railways. In addition communication infrastructure is relatively weak in NWFP & FATA compared to Sindh and Punjab.
Transport, Storage and Communication contribute 6.41 billion dollars to the GDP of the country. A benevolent estimate will put NWFP & FATA share in this sector around 8-9% of the total. This comes to 500-550 million dollars. The employment generated in this sector is over four hundred thousands in NWFP & FATA. TRADE Due to weak agriculture and manufacturing sectors the purchasing power of the people of NWFP is limited. This is however compensated by remittances from other parts of the country and abroad. The presence of Bara markets also attracts buyers from other parts of the country, as non-taxed goods in these markets are considerably cheaper. In addition, the presence of around 1.5 million refugees also stimulates the wholesale and retail sector. In excess of 800,000 people are employed in this sector.
The contribution of trade to the GDP of Pakistan is around 9.4 billion dollars. About 16% of the total trade (wholesale and retail) can be attributed to NWFP & FATA. This comes to around 1.5 billion dollars. It is possible that the actual size of this sector in NWFP & FATA is even bigger than this amount but it cannot be confirmed, as a big portion of this trade is undocumented. SERVICES AND OTHERS Services sector in NWFP & FATA is very weak. This includes Finance & Insurance, Ownership of Dwellings, Public Administration & Defense and other services. 17.185 Billion dollars of the GDP of Pakistan is attributed to this sector. Out of the roughly seven million workers employed in this sector in the country about 1.1 million are employed in NWFP & FATA. The author estimates that NWFP & FATA share in this sector is around 8-9 percent of the total. This comes to about 1.3-1.5 billion dollars. GDP OF NWFP AND FATA Simulation analysis is used to determine an estimate of the GDP of NWFP & FATA. As the thesis of this report is that the GDP of NWFP and FATA is considerably lower than the national average, an effort has been made to avoid underestimating NWFP & FATA contribution to the GDP of Pakistan. (The detail methodology of this analysis is beyond the scope of this report). On the contrary NWFP & FATA contribution to national GDP is overestimated in the above analysis. Table 6 estimates the GDP of NWFP and FATA using Income Approach method. TABLE 6
Contributions of Different Sectors to Contribution GDP of in NWFP & Percentage FATA IN Dollars 914million – Agriculture 18.97% 1100 million 300million – Manufacturing 6.22% 400 million Construction 252 million 5.23% Transport, Storage & 500 Million 10.30 Communication Trade 1500 Million 31.25% Services & 1350 Million 28.03% Others
4.816 Billion – 5.116 Billion
Per capita GDP can be estimated from the above-mentioned table. As Afghan refugees contribute to almost all sectors of the GDP of the province their numbers must also be included in the Per capita GDP of the province. According to 1998 Census the population of NWFP & FATA is around 20.8 million. If we add the 1.5-1.6 million refugees residing in the province the combined total comes to 22.4 million. Dividing the total GDP of 4.816 Billion by 22.4 million people, per capita GDP for NWFP & FATA comes to $215. Even if we estimate the agriculture output for NWFP & FATA as 1.1 billion dollars, and manufacturing output as 400 million dollars the GDP per person is still less than 230 dollars per person. References: 1- The acronyms, NWFP and FATA, used by the government of Pakistan to designate Pakhtunkhwa and Tribal Pakhtunkhwa respectively, have been retained in this part of the document as this section is based on reference material of the government of Pakistan. Next: STATE OF ECONOMY OF PAKHTUNKHWA STATE OF ECONOMY OF PAKHTUNKHWA Successive governments in Pakhtunkhwa have failed to develop infrastructure necessary for industrialization in the province. Various myths have been created about the economic potential of Pakhtunkhwa such as it has no potential for economic growth; its people cannot survive without Punjab’s wheat etc. These myths are totally unfounded and unfair. In fact, Pakhtunkhwa is so much rich in natural and human resources that, if properly managed, its economy can be one of the most thriving in terms of per capita income in the whole region. But at present we will survey the present state of industrialization and the reasons for the poor state of industrialization in the province. According to the Directory of Industrial Establishments NWFP there were 1704 industrial units in NWFP by the end of 1996 and a further 136 were under construction (122-155). This information is highly misguiding, as 1704 is the total number of industrial units that were established from 1947 onward. Many of these units are either obsolete or bankrupt that is why the total number of running units are much smaller than that. Many among these socalled industrial units cannot be counted even as industrial units because 131 icemanufacturing units and cold storages are also considered as industrial units. Similarly out of the 313 silk mills, more than half are established in private homes with investment as low as Rs. 93000 (Less then $1700). This is a clear sign that the industrial department and the government have exaggerated the number of industrial units and industrial employment. It is important to divide these industries on the basis of total amount of investment made in them. Investment-wise Distribution of Industrial Units
Amount Number Percentage of Total Invisted of Units Less Than Rs. 343 20.23 500,000
500.000 – 1,000,000 1 Million to 5 Million 5- 10 Million 10- 50 Million 50- 100 Million 100- 500 Million Above 500 Million Total
283 477 227 262 39 50 12 1695
16.70 28.14 13.39 15.46 2.30 3.07 0.71 100
Source: (Directory of Industrial Establishment, NWFP 1996 1-122) It is evident from this table that majority of the so-called industries have a very small capital base. Taking the free market rate of dollar at Rs. 56 to a dollar, it can be determined that 20.23% industrial units have investment of less than $10,000 per unit. Similarly, 36.93% of the companies have investments less than $18,000 per unit and 65% of the units have less than an equivalent of $100,000 invested per unit. Only 592 units have an investment that exceeds Rs. 5 million. Bulk of these units is located in three industrial estates established by the government. These industrial estates are 1. Industrial Estate Peshawar. 2. Hatter Industrial Estate, Haripur. 3. Gadoon Industrial Estate, Swabi. INDUSTRIAL ESTATE PESHAWAR Industrial estate Peshawar is spread over 868 acres, out of which 181.771 acres are for infrastructural facilities and 686.229 acres have been allocated to industrial plots (Industrial Estate Peshawar 1-4). This industrial estate has 354 medium size plots under the supervision of Sarhad Development Authority (SDA). According to Sarhad Development Authority Annual Report 1996-97, 189 units have been established, 53 of these units are already closed and another 68 are under construction. The industries in this industrial estate are dominated by match factory, vegetable oil, marble tiles, and pharmaceuticals. HATTAR INDUSTRIAL ESTATE, HARIPUR The industrial estate Hattar was established in 1985-86 at Hattar district Haripur. The total acquired area of the estate is 1032 acres out of which 861.50 acres have been allocated for 365 plots. The total number of operating units is 143. Seventeen units among them are closed and 86 units are under construction (Industrial Estate Hattar 1-12). The dominant industries in this estate are textiles, engineering industries, marble tiles and chemicals. GADOON INDUSTRIAL ESTATE, SWABI The total number of plots in Gadoon Amazai area is 623. Out of this, 219 industrial units have been developed of which only 80 are operational and the rest are closed. There are 64 new units under construction. The dominant forms of industries in Gadoon are textiles,
vegetable oil, steel furnaces, chemicals and electronic goods (Gadoon Industrial Estate 1-6). As Gadoon was a backward area the government gave special incentives to this industrial estate through SRO 517. The withdrawal of this incentive, however, caused the collapse of most of the industries in this estate. Apart from these large industrial estates, small industrial estates are established on Kohat road (Peshawar), Jamrud road (Peshawar), Mardan, Khalbat town ship (Haripur), Abbottababd, Mansehra, Kohat, Bannu and Nowshera (Directory of Industrial Establishment V-XV). REASONS FOR LACK OF ECONOMIC DEVELOPMENT Some of the key reasons for the lack of industrialization of NWFP and FATA include the following: 1. Lack of financing. 2. Lack of infrastructure. 3. Lack of managerial and entrepreneurial skills. 4. Locational advantage-turned-into-disadvantage. 5. Lack of local representation. 6. The Afghan war effects. 7. Denying hydro power royalty and fair share in water of Indus River System 1. Lack of Financing By June 1995, 22 Pakistani scheduled banks, operating in Pakhtunkhwa, were having a total of 1147 branches in the province. In addition three foreign banks were also operating in the province (Bank of Khyber, Information Memorandum 5). Apart from Khyber Bank, none of these banks have their headquarters in Pakhtunkhwa. This arrangement is especially troublesome for industrialists who want to take a loan in excess of Rs. 5 million ($100,000) because for medium and big size loans the banks refer the applicants to its headquarters. Most of the headquarters of the big banks of Pakistan are located in the port city of Karachi, thus making it difficult for a local borrower to utilize the services of these major banks. In Pakistan commercial bank borrowing is very personalized and unless the borrower have extensive political or social contacts it is difficult to secure a loan. Most of the applicants from Pakhtunkhwa have limited or no social contacts with the banking professionals in Karachi. This makes it further difficult for them to obtain a loan. Only those who are politically connected can secure large-scale loans from these banks. As these politically connected people are not always the most qualified or the most eligible for these loans, their projects usually fail because of lack of vision or simply because they misuse the loan amount. Pakhtunkhwa has a share of 35% in the remittances that workers send from abroad. In addition, it gets 23% of inter-provincial net flows due to large number of Pakhtun workers in other provinces (Zaidi 300-310). Large sum of these remittances is deposited in local banks. The percentage of money deposited by people of Pakhtunkhwa in the banking system is much higher than the relative size of their population. On the other hand total borrowing by the people of Pakhtunkhwa is very low compared to their deposits. To overcome this problem, The Bank of Khyber was established in 1991 to provide a commercial bank with its headquarters in Pakhtunkhwa. According to the ‘Information Memorandum’ of Bank of Khyber, "historically there has been a net outflow of funds from the province as deposits raised in Pakhtunkhwa have to be invested outside the province due to lack of investment avenues within the province and absence of a locally headquartered commercial bank. Bank of Khyber has filled this gap successfully". This claim by Bank of
Khyber can be rejected for several reasons. Firstly, the Bank of Khyber does not take rural property as collateral thus eliminating 85% of Pakhtunkhwa population (which live in rural areas) from the list of eligible borrowers. Secondly, industry in Pakhtunkhwa is in embryonic stage, thus, more funds are required for establishing new industries. On the contrary Bank of Khyber emphasizes on providing financing facilities to existing businesses through working capital and trade financing loans. Unfortunately, most of these existing businesses are not even located in Pakhtunkhwa. Bank of Khyber has 29 branches in Pakistan out of which 23 are located in Pakhtunkhwa. Till December 1997, the total deposits of the bank were Rs. 6195.81 million. Out of this, Rs. 4727.78 million was deposited by the people of Pakhtunkhwa that accounts for 76.31 % of the total deposits of the bank. On the other hand the total advances (loans) given out amounted to Rs. 3008.866 million. Out of this, Rs. 1670.95 million was loaned out through only three branches outside Pakhtunkhwa (Advances and Deposits 1997 1-2). Thus 55.53% of the total advances of the bank were loaned out in Karachi, Islamabad and Lahore. This comparison can clearly tell us that the Bank of Khyber was unable to achieve its goal of making the banking system more accessible for the people of Pakhtunkhwa. Due to the above mentioned difficulties the genuine entrepreneurs and industrialists of Pakhtunkhwa have been shunned out to take advantage of the banking sector. 2. Lack of Infrastructure Government investment in education, energy, traffic, research, health, administration, justice system, police, and communication is important for the development of basic infrastructure. In Pakhtunkhwa lack of development in the above mentioned sectors has hindered the progress of industrialization. An efficient transport service is of vital importance for the development of an area. Pakhtunkhwa is land locked, therefore, is accessible by rail, roads or by air only. The total rail road length in the province is 686.14km which is 5.5% of the total 12593.18km in Pakistan. Out of this 319.93km is broad gauge, the rest is out dated narrow gauge (Memorandum for National Finance Commission 27 ). Because of this problem the reliance on railway system is very limited. This has increased the dependence of transportation on roads. The existing roads in Pakhtunkhwa are in very poor condition. The total roads in Pakhtunkhwa measure 9753 kilometer, which is 4.9% of total road length in the country (Important District-Wise Socio-Economic Indicators NWFP 1995-1996 114). The proposed Islamabad – Peshawar Motorway will somewhat improve the excessive burden on our roads but much more road construction is needed to connect the southern districts and tribal areas with central Pakhtunkhwa and in the long run connect Pakhtunkhwa with the port city of Gawadar, Balochistan. The air transportation is also very limited in Pakhtunkhwa. The Peshawar Airport is under the joint use of the Pakistan Air Force and Civil Aviation Authority. Until recently foreign airlines were not allowed to operate from this airport. Recently the government has allowed the Qatar Airways, Saudia and Emirates to operate from Peshawar airport. The airport however, requires extensive expansion especially if all the travelers from Pakhtunkhwa traveling abroad take a direct flight from Peshawar. Similarly, the export of fruit and other perishable items requires cargo arrangements that need to be constructed at Peshawar airport. Just like transportation, the telecommunication network of Pakhtunkhwa is also very poor. Pakhtunkhwa has only 7% of the total telephone connections in Pakistan (Memorandum for National Finance Commission 27 ). Apart from the fact that more than 30% of electricity produced in Pakistan is produced in Pakhtunkhwa and it is a net exporter of electricity to other provinces. In 1992-1993 the per capita consumption by Pakhtunkhwa was 217(KWH)
compared to 307(KWH) for Pakistan (NWFP Development Statistics 95 &96 255). Till 1987 there were no 500KV transmission lines in the province and 5% of the 220KV transmission lines of the country were in Pakhtunkhwa (Memorandum for National Finance Com-mission 35 ). Similarly the gas consumption per year in Pakhtunkhwa is 1.64% of the total gas consumed in Pakistan (NWFP Development Statistics 95 & 96 262). Key towns in Pakhtunkhwa are not provided with gas that has an adverse affect on industrialization. Gadoon Amazai Industrial Estate that is one of the three big industrial estates has not been provided gas connection. The main reason for this poor development of infrastructure was the lack of investment by the federal government. From 1947 to 1975, 3.64% and 1975-1985, 4.18% of the total federal investment was allocated to Pakhtunkhwa (Memorandum for National Finance Commission 35 ). It is evident from the above discussion that Pakhtunkhwa is not intrinsically poor in resources but the above mentioned factors are responsible for the backwardness of Pakhtunkhwa, which has a large scope for industrial development. 3. Lack of Managerial and Entrepreneurial Skills The literacy rate in Pakhtunkhwa is at 16.7% (Development Statistics 95&96 381). Out of this a very small number of people have education beyond high school. Until recently there was no special emphasis on business education. In Peshawar University there is an economics department plus an MBA department. There is also an economics department in Agriculture University, Peshawar and another one in Gomal University, D.I Khan. Although the MBA department of Peshawar University has shown some improvements in the past few years but the overall standard of education of these institutions is very low. These institutions are unable to provide the much needed managerial and entrepreneur skills to their students. There are some new management schools in operation in the city of Peshawar but their standard is by no mean superior to institutions mentioned above. The expertise of business professionals is not utilized properly in the economic structure of Pakhtunkhwa. The federal or provincial government owns almost all the major institutions in Pakhtunkhwa. These include Pakistan Railways, Pakistan International Airlines, Pakistan Telecommunication Corporation, Oil and Gas Development Corporation, Water and Power Development Authority, Provincial Development Authority, FATA Development Corporation, Sarhad Development Authority, all the major educational institutions and almost all the major banks. These organizations attract most of the qualified graduates. Almost all of these corporations mentioned above are running in losses because of their inefficiency, corruption and mismanagement. The newly recruited graduates find it difficult to contribute anything positive to these organizations because these organizations do not encourage any feed back from the newly recruited staff. Over the course of their employment individuals are either forced to adopt the corporate culture of these organizations, or pressurized to resign or keep a passive role. That is why generations of new managers were unable to bring any changes in these organizations. As most of the professionals opt for public sector jobs, therefore, the private sector is left with less of the competent individuals. The business community of Pakhtunkhwa consists of small traders instead of big business entities. It is difficult for them to hire competent professionals. After being unable to hire professional guidance, most of the businessmen (who are either uneducated or less educated) rely on their own entrepreneur skills. Due to the lack of professional expertise, businessmen lack long-term vision. Most of the businesses operate on a day to day basis rather than having a long-term plan. In addition, because of lack of direction, the businessmen cannot invest in an innovative project. Not many businessmen would invest capital unless a foreign multinational invests in that sector first. And then when the local investors and businessmen see that the foreign multi national is making a profit they jump into the same industry and start
their own units. This behavior of the local businessmen is not because they are risk averse but because they do not have the expertise to determine the future course of action for their businesses. 4. Locational Advantage turned into Disadvantage Pakhtunkhwa lies at the junction of many countries thus promising trade potential for this area. Pakhtunkhwa can serve as a manufacturing and assembling hub for Central Asian and South Asian markets due to its strategic location and other attributes such as cheap hydro power and abundant human resources. However due to geo-political situation in the region this advantage turned into a disadvantage. Locational disadvantage is one of the biggest factors in the lack of industrial development of NWFP. NWFP is in the north west of the country that makes it quite far from the port city of Karachi. Import oriented industries have a disadvantage to establish a unit in NWFP because of extra transportation cost. Locational disadvantage of NWFP causes a 22% increase in the cost of production over Punjab and Sindh. Even when raw material is produced in other parts of the country, it is difficult to utilize it in NWFP. For instance, the most dominant form of industry in Pakistan is the textile industry. Cotton is exclusively produced in Punjab and Sindh. Thus shipping cotton to northern Pakhtunkhwa for use in textile industry and then shipping the end product to Karachi for further export makes it difficult for the local manufacturers to compete with manufacturers from Sindh and Punjab. There are different ways to overcome this problem. Firstly, Pakhtunkhwa can rely on those industries for which the local raw material is required. Although Pakhtunkhwa is rich in mineral resources, production of tobacco and production of a great variety of fruits, the industries based on these raw materials will be limited in number and will still incur a big transportation expense for shipment to the port city of Karachi. Secondly, special incentives can be given to industries in Pakhtunkhwa to overcome this disadvantage. As Pakhtunkhwa has a potential of producing excess of 50,000MW of electricity – cheaper than any other form of electricity production in Pakistan – some of this advantage can be transferred to the local industries by charging them lower electricity price. Lower electricity prices will especially be beneficial for electricity intensive industry. For example, for mini steel mills the reduction in electricity prices will overcome not only the locational disadvantage of the province but also will be the basis of competitive advantage in energy intensive industries. Other industries that are less electricity intensive will not be able to eliminate their locational disadvantages by paying less for the electricity. These industries can be given other incentives like exemption of excise duties and other taxes in order to bring them at par with the rest of the country. 5. Lack of Local Representation Pakistani political structure does not allow the provinces to have a significant say in their own economic policy formulation. Gadoon Amazai Industrial Estate is a classic example of the provincial government’s inability to save the industries in this province. To compensate for the locational disadvantage and to eradicate the poppy cultivation, industries in Gadoon Amazai were given special incentives like exemptions on excise duty and 50% reduction in electricity charges. Two years after the establishment of this industrial estate the federal government withdrew these incentives. This decision forced majority of the units in the estate to close down thus leaving thousands of people unemployed. Former FATA Development Corporation (DC) now FATA Secretariat carries out the development work in FATA. Tribal Pakhtunkhwa is not given any seats in provincial assembly, but FATA DC and other development work in Tribal Pakhtunkhwa is under the
control of the governor of Pakhtunkhwa who is directly hired by the federal government. Thus, the federal government directly controls Tribal Pakhtunkhwa without any democratic representation given to its people at the local or provincial level. The 12 members elected from Tribal Pakhtunkhwa do not have much of a say in policy formation in the National Assembly that houses more than three hundred members. Similarly the representation of Pakhtunkhwa is also limited to a small number of seats in the federal government. With limited representation in the federal, political and bureaucratic structure, laws that are formulated by the federal government are not always in favor of industrialization in Pakhtunkhwa and in some cases-like Gadoon Amazai-have an adverse affect on the economy of Pakhtunkhwa 6. The Afghanistan War’s Effects Tribal Pakhtunkhwa and Balochistan have a long border with Afghanistan that is accessible by the famous Khyber and Bolan Passes. Trade with Afghanistan has played a significant role in the development of socio-economic structure of Pakhtunkhwa and Tribal Pakhtunkhwa (FATA). For future economic development, businesses in Pakhtunkhwa will have to concentrate on links with Afghanistan. Unfortunately due to Soviet invasion of Afghanistan in 1978 and later the civil war in Afghanistan, the economic structure of Afghanistan has collapsed. As Afghanistan is a land-lock country it was dependent on imports through Pakistan and later through USSR. Industries in Pakhtunkhwa that could have developed a comparative advantage by supplying to the markets in Afghanistan were unable to do so due to the war in Afghanistan. The war eroded the buying power of the Afghan people and at the same time displaced millions of the Afghan people into the neighboring countries. Apart from basic necessities like wheat and vegetable oil, the industrialists of Pakhtunkhwa find it difficult to get a buyer for Pakhtunkhwa made products in Afghanistan. The war in Afghanistan has also stopped access to the newly liberated markets of Uzbekistan, Tajikistan and Kazakhstan. If permanent peace can be achieved in Afghanistan, the industrialists in Pakhtunkhwa can play a vital role in rebuilding of Afghanistan and establishing a market for their products in Central Asia. 7. Denying Hydro Power Royalty and Fair Share in Water of Indus River System According to Mr. Hassamuddin Bangash, an expert on Indus River System, Pakhtunkhwa and Tribal Pakhtunkhwa contributes more than 25% of the water in the Indus River System in Pakistan. He also added that about ¼ of the river bank of Indus is in Pakhtunkhwa. This entitles it to about 25% of the water in Indus River System. At present, not even less than ¼ of the proper share of Pakhtunkhwa is being utilized by the province. Similarly, the issue of hydro power dues of Pakhtunkhwa pending against the federal government is also to be addressed. The Water and Power Development Authority (WAPDA) owes billions of rupees to Pakhtunkhwa in debt. PAKHTUNKHWA’S ARREARS AGAINST WAPDA Under article 161(2) of the constitution, NWFP should get the profit from the hydropower projects located in NWFP (Report of The National Finance Commission 1996 23). It means that NWFP should have received its due share in hydropower profits from 1974 onwards. Over these years NWFP consumed less than one third of the total electricity produced in NWFP. Thus NWFP should have received payments from 1974 onwards. According to the White Paper of the Government of NWFP (1998-1999) by the end of 1997
the government of NWFP debt liability to the federal government was 31.2 billion rupees. Along with paying installments on its loan, the government of NWFP on the average pays 15% interest to the federal government on this debt. On the other hand the federal government (WAPDA) does not pay any interest on the unpaid portion of NWFP electricity royalty. In fact the situation is so bad that the federal government does not even recognize any arrears in the form of unpaid royalties to NWFP. The government of NWFP received hydropower royalties in 1991, and since then it is receiving a portion of its due share in hydropower profits. From 1974 to 1990, NWFP has not received any profits from WAPDA. Thus for more than 16 years, successive governments have not only ignored the legitimate share of NWFP in hydro power profits but have also violated the constitution by denying NWFP its due share. WAPDA today should not only pay the government of NWFP its fair royalty on year-to-year basis but should also make arrangements to pay unpaid arrears accumulated from 1974 to 1990. As NWFP pays about 15% interest on the total money borrowed from the federal government the federal government (WAPDA) should also pay 15% interest per annum on these arrears. The following table is an estimation of how much the federal government owes NWFP. In this table NWFP royalty is estimated to be a minimum of 1 billion rupees per annum from 1974-1980, RS 3 billion per annum from 19811986, RS 6 billion per annum from 1987-1990, RS 8 billion per annum from 1991- 1995 and RS 10 billion per annum from 1996-1998. A 15% interest per annum is charged to all the arrears. The table on the following page is an estimation of how much the federal government owes NWFP. NWFP Hydro Amount Present Profits Received Value
NWFP Amount Hydro Received Profits 1974 Rs. 1 Billion 1975 Rs. 1 Billion 1976 Rs. 1 Billion 1977 Rs. 1 Billion 1978 Rs. 1 Billion 1979 Rs. 1 Billion 1980 Rs. 1 Billion 1981 Rs. 3 Billion 1982 Rs. 3 Billion 1983 Rs. 3 Billion 1984 Rs. 3 Billion 1985 Rs. 3 Billion 1986 Rs. 3 Billion 1987 Rs. 6 Billion 1988 Rs. 6 Billion 1989 Rs. 6 Billion 1990 Rs. 6 Billion Rs. 1991 Rs. 8 Billion 5.987 Billion Rs. 6.8 1992 Rs. 8 Billion Billion Rs. 6.5 1993 Rs. 8 Billion Billion Rs. 7.8 1994 Rs. 8 Billion Billion Rs. 6 1995 Rs. 8 Billion Billion Rs. 10 Rs. 6 1996 Billion Billion Rs. 10 Rs. 6 1997 Billion Billion 1998 Rs. 10 Rs. 10 Year Prsent Value Billion Rs. 28.63 24.89 21.65 18.82 16.367 14.232 12.375 32.28 28.07 24.41 21.23 18.46 16.05 13.96 24.28 21.11 15.35 5.35 2.78 3.02 0.35 3.04 5.29 4.60 -
Billion Rs. 379.57
Next: SCOPE OF ECONOMIC DEVELOPMENT OF PAKHTUNKHWA SCOPE OF ECONOMIC DEVELOPMENT OF PAKHTUNKHWA Pakhtunkhwa has a huge potential to develop industries in several sectors. But the first prerequisite of developing industries in Pakhtunkhwa is provincial autonomy to chalk out its own economic policy. Without provincial autonomy, Pakhtuns would remain a marginalized community despite having the richest economic potential. There is severe criticism from some quarters about financial and provincial autonomy. These quarters are of the opinion that provincial autonomy is not feasible because Pakhtunkhwa and Balochistan provinces are economically backward and cannot afford to survive autonomy and economic independence. This argument is not true. Although provincial autonomy alone is not the solution to the economic problems of Pakhtunkhwa but it is a pre- requisite for fair and comprehensive growth of the provincial economy. Although several aspects of provincial autonomy and its effects on the economy can be discussed in detail but the emphasis here is given on the potential of industrialization in Pakhtunkhwa and Tribal Pakhtunkhwa and the role of capital markets in developing this potential. These economic policies can be best applied if NWFP, FATA and Northern Balochistan are merged together to form a single province of Pakhtunkhwa. Although a wide variety of industries can be established but in today’s global environment it is important that investment should be concentrated in those areas where the companies can develop some kind of competitive advantage and, at the same time, is able to compete globally and locally. The availability of raw material, skilled labor and the availability of proper infrastructure should be evaluated before setting up industries. Similarly, local and global demand should also be evaluated. Although many industrial set ups are possible in Pakhtunkhwa but for the moment we will concentrate on industries that have the potential to export and can immediately develop competitive advantage in their respective fields. These industries will include the following: AGRICULTURE-BASED INDUSTRY In Pakhtunkhwa, total land is 7.452 million hectares (Important District-Wise SocioEconomic Indicators NWFP 1995-1996 10). Out of this, 5.62 million hectares is properly classified and surveyed. This 5.62 million hectors is classified as "reported area" of which 22.23% is occupied by forest, 23.90% is cultivated area, while 22.49% area is cultivable but is not utilized mainly because of lack of irrigation. Out of the total cultivable area of 1,343,744 hectares, 70.07% land is cultivated in Rabi (Fall) season while 53.02% of the cultivated area is cultivated in Kharif (Spring) season. Furthermore, 60.95% of the crops in Rabi season and 43.31% of the crop in Kharif season are cultivated in unirrigated area. Thus only 10.21% of the total reported area of Pakhtunkhwa is irrigated in Kharif and only 5.49% of the total reported area of Pakhtunkhwa is irrigated in Rabi (NWFP Development Statistics 95 & 96 87-104). Total area of NWFP and FATA
Area NWFP FATA N-W.F.P. & FATA
Total Area in Hectors 7,452,100 2,722,000 10,174,100.84
1993-94 Land Use in NWFP
Land use Area in hectors % of total area Cultivated area 1,343,744 23.90 Forest Area Cultivable area not utilized Not available for cultivation Total Reported Area 1,255,817 1,264,701 1,758,865 5,623,127 22.33 22.49 31.28
Source: (NWFP Development Statistics 86) On the average, irrigated area produce twice as much as unirrigated area. This means that if all the cultivated area in Pakhtunkhwa is irrigated, the agriculture production of the province will double. Similarly, if the cultivable area, which is presently not utilized, is also irrigated, the agriculture production of the province can increase four times. Even further increase in agricultural production is possible by modernizing farm equipment and farming techniques. Irrigation of the above mentioned area can be made possible by a network of canals that can be extended from many rivers that flow in the province. Swabi SCARP and Pehur High Level Canal are two of such projects. Swabi SCARP project will make 25,500 hectors waterlogged area available for cultivation (Brief on Swabi SCARP 1), while Pehur High Level Canal will irrigate 5500 hectors and reclaim 7,400 hectors of water logged area (Brief on Pehur High Level Canal Project 1-4). Similarly new dams can also be constructed like the Gomal Zam Dam that can irrigate 66,000 hectors in DI Khan (Gomal Zam Dam Project & Status to date 1-3) and Munda Dam that will irrigate about 26,000 hectors (Brief on.85 Munda Dam 1). Thus the notion that Pakhtunkhwa cannot meet its agricultural needs is absolutely unfounded. Presently, wheat and maize are the dominant crops of Pakhtunkhwa. With increase in irrigation, Pakhtunkhwa will be able to grow enough wheat for its population. But it is important that the farmers and the government of Pakhtunkhwa concentrate on the production of those crops for which the climate and the soil is best suitable and for which they can achieve competitive advantage over others. These include vegetables, fruit and tobacco. Along with these agricultural commodities the province is suitable for large-scale dairy production. Yield for irrigated and un-irrigated land in NWFP
Yield per hectare irrigated
Yield per Ratio of irrigated hectare unun- and irrigated irrigated
Rabi (Fall) Wheat Gram Barley
Rape Seed and Mustard
(tons) 1.95 0.5077 1.23 0.62 2.02 13.07
(tons) 0.9952 .4305 0.97 0.53 0 1.49 1.96 1.18 1.27 1.17
Tobacco Vegetables, fruits & pulses
(tons) Maize Rice Jowar Bajra Sugarcane Vegetables, fruits & pulses 1.99 .73 .70 45.27 1.43
(tons) 1.08 1.77 1.99 1.11 1.35 1.60 1.96
.66 .52 28.22 .73
Source: (NWFP Development Statistics 99-109) Crop Acreage in NWFP 1993-1994
Area in hectors
% of un% of irrigated cultivated area area
Wheat Gram Barley Rape Seed and Mustard Tobacco Vegetables, fruits and pulses Total (Rabi)
723,700 96,400 35,200 21,400 35,700 29,100 941,500
60.20 93.26 68.47 90.91 0 4.47 60.95
53.86 7.17 2.62 1.59 2.66 2.17 70.07
Maize Rice Jowar Bajra Sugarcane Vegetable fruit,pulses Others Total (Kharif)
491,300 51,600 9,800 8,900 97,200 52,800 900 712,500
56.91 0.14 69.39 88.76 0.93 24.24 57.78 43.31
36.56 3.84 0.73 0.66 7.23 3.93 0.07 53.02
Source: (NWFP Development Statistics 99-109) DAIRY With increased urbanization and inflow of millions of refugees from Afghanistan, the demand for milk has increased considerably over the last two decades in Pakhtunkhwa. Unfortunately there has been no expansion or modernization in the dairy industry over this period. There is no organized dairy industry in Pakhtunkhwa. Farmers usually own 2 to 20 buffaloes/cows. They produce the milk and sell it to local shopkeepers for further sale. Due to the small sizes of their cattle holdings these farmers are unable to employee professional help. Thus the production of milk can not keep up with the demand and the gap between supply and demand is growing. The province has a high number of qualified professionals in the field of animal husbandry. Most of these professionals who work in the Agricultural University Peshawar have their Masters and Doctorate degrees from reputed universities all around the world. Besides, Pakhtunkhwa has a vast grazing area along with the capacity to produce every kind of feed required by dairy animals. According to an estimate by experts from Animal Agricultural Services (local dairy consultants) there is a shortage of milk in excess of hundred thousand liters a day in Pakhtunkhwa. As people prefer fresh milk, this demand can not be taken care of by importing powder milk or packaged milk from other provinces or abroad. Similarly an additional hundred thousand liters per day can be ex-ported to Afghanistan, as there are no organized dairy farms left in that country. Along with milk, cheese, butter and other milk products can be exported to other countries especially the Middle East. DAIRY BASED INDUSTRY The government of NWFP with collaboration of foreign countries has established several modern dairy farms in the province, of which all have failed. The reason for their failure was that none of these projects were started by any corporate entity instead the projects were started by government organizations with less efficient structure, professionalism and high ratio of corrupt officials. TOBACCO Pakhtunkhwa produce 71.3% of the total tobacco in Pakistan. The total production of tobacco in Pakhtunkhwa for the year 1992- 93 was 72,141 tones (NWFP Development Statistics 95 &
96 87- 98-100). Tobacco produced in the province is almost entirely consumed in Pakistan. Almost all of the multinationals manufacturing cigarettes operate there manufacturing units in other provinces of the country. Their unit cost would have been cheaper if these manufacturing units were established in Pakhtunkhwa because the raw material is produced here. Most of the manufacturing units in Pakhtunkhwa are locally owned. They produce cigarettes for the domestic market, as many of these companies do not have the finances, technology or expertise to develop an international brand, most of these companies either produce their own low quality, low priced brands or they produce counterfeit cigarettes of other major brands. At present the two main cigarette-manufacturing companies of United States, RJR Nabisco and Philip Morris do not have a manufacturing facility in Pakistan. These companies along with other multinationals can be invited to form joint ventures for the manufacturing of cigarette both for domestic consumption and export. Pakhtunkhwa has a tremendous potential to increase its tobacco production. If tobacco farming is modernized along with an increase in demand for tobacco, the farmers can grow at least three times the tobacco they are growing now. Swabi, which is the biggest tobaccoproducing district in Pakistan, has less than 18% of its total cultivated area under tobacco cultivation. The tobacco produced is of very high quality that can rival that of Turkey, Greece or Central United states. The unit cost of production is also cheaper for tobacco in NWFP compared to the above mentioned places. According to Philip Morris, the world cigarette industry unit shipment was approximately 5.6 trillion units in 1996 (Philip Mor-ris Companies Inc. 10 K report 1996 2) of which, the growing demand for cigarettes is in China, India, the Middle East and Central Asia. This gives a great locational advantage to Pakhtunkhwa, which can export cigarettes by land to China, India and Central Asia. Apart from producing tobacco cheaper than other areas, Pakhtunkhwa has an advantage to incur less transportation expenses in shipping their tobacco products to the above-mentioned areas. Tobacco Production and Area under Cultivation
Area Tobacco under Total area as a District tobacco cultivated % of total cultivation area cultivated (hectares) area Charsadda 7749 57257 13.53 Nowshera 774 73433 1.05 Mardan 7159 112775 6.35 Swabi 15422 87032 17.72 Mansehra 2364 80747 2.93 Haripur 65 77836 .08 Malakand 484 45684 1.06 Swat 755 149604 .50 Buner 1932 55153 3.50
Source: (NWFP Development Statistics 95 & 96 98 -143) FRUIT AND VEGETABLES There are 30,000 hectares of orchards in Pakhtunkhwa (Sarhad Provincial Conservation Strategy 2). A wide variety of fruit is produced in Pakhtunkhwa. These include apples, oranges, peaches, guava, apricots, plums, pears, loquats, litchi, strawberries, walnut, almond, etc. This fruit is of extremely high quality and can be considered the finest in the world. Along with local production, high quality fruit from Afghanistan is mostly sold in Peshawar. Swat district is particularly famous for its wide variety of fruits. As fruits are highly perishable items, fast mode of transportation and good storage facilities are required. Unfortunately due to lack of storing and processing facilities and lack of excess to foreign markets the growers sell their products at very nominal prices at the local market. Most of the time, due to lack of buyers, a big quantity is wasted. Individuals own almost all the farms. These farm owners have limited access to efficient marketing and farming technologies. Introduction of corporate entities in medium size farm holdings can be very encouraging, as these corporations can raise enough capital and expertise to vertically integrate the production, processing and marketing process. These companies can export fresh and processed fruit to other countries especially the Middle East countries. The climate and soil of Pakhtunkhwa is also very suitable for a large variety of vegetables. Unfortunately at present there is no systematic plantation of vegetables in Pakhtunkhwa. Vegetable farming is considered more labor and capital intensive by the small farmers. Besides, due to lack of storage facilities, there is significant variation between the prices of these commodities. With the introduction of modern technology many vegetables can be grown year around and also in large quantities. This will reduce the high variation in prices of these commodities and enough vegetables will be available for export. Vegetable plantations produce many times more yield than the traditional crops that the farmers grow. Thus fresh and processed fruits and vegetables can be exported to other countries and other provinces of the country in huge quantities, bringing millions of dollars of foreign reserves. MINERAL BASED INDUSTRY Pakhtunkhwa lies at the junction of three mountain ranges; Himalaya, Karakorum and Hindukush. This varied geology provides enormous mineral wealth in the province. "All types of rocks having sedimentary, igneous and metamorphic origin exist, which provide the basis for availability of various types of metallic, metalliferrous (industrial), valuable and precious minerals and mineral deposits." (Mineral Profile of Hazara division 1) There are more than 55 minerals that are discovered in substantial quantity in Pakhtunkhwa. Although various agencies including Geological Survey of Pakistan, Pakistan Industrial Development Corporation, Pakistan Mineral Development Corporation and Sarhad Development Authority are involved in the exploration and development of mineral and mineral industry but there over all performance can be rated as extremely poor. Compared to the vast potential of mineral resources in the province, the mineral-based industry is very limited.
List of Discovered Minerals/Rocks in NWFP
Antimony Asbestos Aquamarine Amphibolite Barite Bentonite Basalt Boulengrite China Clay Coal Calcita Copper Chromites Corrundon Dolomite Emerald Feldspar Fluorite
Fullers Earth Fire Clay Gypsum Granite Garnet Graphite Hornbi End Iron Limestone Lead Laterite Marble Mica Magnetite Manganese Molybenite Nephyline Synite Orpiment Zinc
Olivine Phosphate Pyrite Quartz Red Oxide Red Ocher Shale Clay Salt Soap Stone Serpentine Scheelite Silica Sand Slate Stone Sulphur Topaz Tourmaline Tin Vermiculite
Sources: 1. (Sarhad Chamber of Commerce & Industry Peshawar. Annual report 1996, 24). 2. (Sarhad Provincial Conversation Strategy 150-151) The biggest reason for this lack of development in the mining sector is the lack of investment by private entities. Individuals in Pakhtunkhwa do not have the resources to invest in big mining projects or mineral based industries. Similarly, the government of Pakhtunkhwa has got limited funds and can not develop these projects through government funds. The third option is the corporate sector that is almost negligible in the province. Medium size and big mineral based industries can be created in the corporate sector and equity funds can be raised for corporate sector development in the province, provided the ownership of these corporations are limited to investors from Pakhtunkhwa. These corporations will be more successful if some equity in these corporations is also owned by the mine owners as well. Sarhad Development Authority has done extensive research on the industrialization potential of mineral resources in Pakhtunkhwa. They have also invited many foreign joint venture partners to fully explore this potential. SDA have failed, however, to attract any major joint venture partner. The mineral potential of the province can be better utilized if SDA develop independent corporate entities for separate projects and then form joint venture operation between these entities and foreign companies. Equity money for these independent corporate entities can be raised, provided a Stock Exchange is created in the province and initially only the people of Pakhtunkhwa are allowed to keep ownership of all the stocks floated on this exchange. PRECIOUS STONES
Precious stones export holds tremendous potential for growth in Pakhtunkhwa. All Pakistan Commercial Export Association of rough and unpolished precious and semi-precious stones (APCEA) is based in Peshawar. They have about 200 of gem stone exporters as members. According to the figures provided by APCEA, this association has exported $ 4.2 million worth of gem stones in 1994, $ 3.6 million each in 1995 and 1996 and $ 4.2 million in 1997 from the province (APCEA Yearly Exports 1-2). Apart from this association there are also other exporters in the province. The export figures provided by APCEA are much deflated mainly to avoid taxes and currency restrictions. Many of the exporters have inventories that exceed the total amount of exports per year shown by APCEA. The total value of gemstones exported from Pakhtunkhwa is estimated to be 15-35 million dollars per year. Most of these gemstones are exported in raw or unpolished form as the equipment to polish these stones according to international standards is not available in Pakistan. This results in loss of revenue for the exporters as bulk of the profits is made by wholesalers from other countries that buy these stones from Pakistan and polish it in China or Hong Kong. Another big problem with the gem stone industry is that there is no coordination between the minors and the exporters. Many of the exporters sitting in the downtown Peshawar do not even know where mining of these stones take place. Miners also do not have access to modern equipment or modern mining techniques. If corporate entities are created that can bring modern mining and polishing machinery along with technical know-how, then the exports of gemstones can be raised substantially. According to an expert opinion, the export of gemstones can increase to $ 50 million a year if modern technology is utilized. Corporate entities can best utilize the gemstones potential of Pakhtunkhwa and tribal area as they will be motivated by their own profit maximization. Previously Gemstones Corporation of Pakistan (a federal government organization) was created to explore the gemstone potential of the entire country. Until 1985 this corporation had mined 222,918 carat emerald and 182,380 carat of topaz in Pakhtunkhwa (Memorandum for National Finance Commission 40). But due to excessive corruption the corporation did not make any profit and was unable to pay the due royalty to the government of Pakhtunkhwa. Precious Stones
Precious /Semi Precious Minerals Emerald Pink Topaz Topaz Kunzite Aquamarine Garnet Quartz
Location Swat (Mingora, Alpuri, Shamozai) Mardan (Katlang) Mardan Chitral Chitral Chitral, Dir Chitral, Dir
Quality Finest in the world Only deposit in the world Red and golden varieties Clear pink and blue crystals Clear light blue Red pyrope varieties Clear and transparent crystals
Kohistan Fresh green color Swat, Dir Chitral Variety of colors
Selected Minerals of NWFP
Kohat District Karak District D.I Khan,Karak, Mansehra Abbottabad Chitral
Gypsum Sodium Chloride Silica Phosphate
2 billion tons 500 million tons 89 million tons 7.5 million tons
Scheelite 40 million tons (Tungston Ore) Malakand 0.7 million Chromite District tons 25,000Chitral District Gold 150,000 kg. 0.5 million Swat District Lead -Zinc ore tons Nephiline Buner District 6 billion tons Syenite Chitral, Swat, 1014.5 million Iron Bannu, Kohat. tons
Sources: 1. (Sarhad Development Authority. Annual Report 1996-97 47-79). 2. (Sarhad Provincial Conversation Strategy 150-151). 3. (Sarhad Chamber of Commerce & Industry Peshawar. Annual Report, 1996, 21-22). 4. (Sarhad Provincial Conversation Strategy 149-152)
MARBLE There are vast marble deposits in Pakhtunkhwa. These deposits can be found in Bajaur agency, Mohmand agency, Khyber agency, Buner and Swat. These marbles are of various shades that include grey, whitish grey, pure white, green, green zebra and pink. The total deposits of these marbles are in excess of 2 billion tons. Most of extensive deposits can be found in the Mullagori, Sultan Khel, Salarzai, Ghundai Sar and Loe Shalman areas of the Khyber agency. Among these, the Mullagori marble deposits are classified as one of the best in the world and can be ranked with Carrara in Italy and Makrana in India. These deposits are not only of high quality but are also extended over a large area. Just one deposit of Kambela Khwar has 282 million cubic meters (764.2 million tons) of marble deposits (Socio Economic Profile of Khyber Agency 7-10). It is believed that other big deposits also exist which are not even discovered yet.
The mining methods used by minors are primitive due to which up to 65% of the extracted marble is wasted. Similarly, there are not any major marble industries in Pakhtunkhwa that can polish and cut marble according to international standards. Keeping in mind that Italy gets one third of its revenue from the export of decorative stones, Pakhtunkhwa can generate huge revenues if they develop their mines, use scientific methods of mining and modern machinery for polishing. An importer of marble in United States told the writer that in excess of 100,000 tons of marble can be exported from Pakhtunkhwa to North and South America, provided the marble is polished according to international standards and marble companies from Pakhtunkhwa have a network of dealers and representatives throughout the region. Thus exports of marble to North and South America alone can fetch in excess of 100 million dollars a year. Other decorative stones such as dolomite, jade etc are also avail-able and are of export quality. Feasible Mineral Projects Identified by SDA and Others
Project Gypsum Plaster and Plaster Board Soda Ash Complex Ferro-Silicon Production Lead Zinc Concentration Plant Sodium di Chromite Products Magnesite and Chrome Magnesite Bricks Marble Tile and Block Projects Marble Tile and Block Projects Marble Tile and Block Projects Integrated Nephiline Syenite Project Koga Alkali Complex Total
Location Kohat Karak D.I Khan Swat
Cost Rs. 240 mill. Rs. 1000 mill. Rs. 70.14 mill. Rs. 240 mill. Rs. 411.530 mill. Rs. 214.550 mill.
Output/Year 80,000 tons 40,500 tons 10,000 tons 2,215 tons —
Rs. 1197 mill.
Rs. 2394 mill. 100,000 tons
Rs. 1197 mill. Rs. 368.820 mill. $1500 mill. Rs. 91.33 billion
27,000 tons —-
Source: (Investment Opportunities in Mineral and Industrial Sectors of NWFP 71-78).
GYPSUM PLASTER AND PLASTER BOARD
Huge Gypsum reserves (about 2 billion tons) are available in district Kohat at various locations. The gypsum board that is used for table tops, clading and partition etc. has easy application, good for heat insulation and has fire resistant material. It has no practical deformation as well as is of low cost. Because of these characteristics this board is regarded as one of the indispensable materials among the interior finishing substance. Gypsum board is commonly used for construction of the inside walls, the ceiling and the partition. The present demand of gypsum board has been estimated to be 250,000 tons per year. The total production of this unit will be 80,000 tons a year and the cost of the project is estimated to be around Rs. 240 million. SODA ASH COMPLEX PROJECT Soda Ash can be used in the production of Sodium Silicate, Sodium Phosphates and Sodium bicarbonate. Glass industry, pulp and paper industry, detergent industry, soap industry, and leather Industry utilize Soda Ash. The demand for soda is 123,041 tons a year in Pakistan while the demand for Soda Ash is 268,369 tons per year. The major raw material for this industry is rock salt and lime-stone. In Nari Panoos area of district Karak there are 500 million tons of estimated deposits of Rock Salt. A Soda Ash project with a production capacity of 40,500 tons of Soda Ash and Caustic Soda can be established in Karak with an estimated cost of one billion rupees. FERRO-SILICON PRODUCTION PROJECT Ferro-Silicon is utilized for the production of ferromanganese. The total demand of Sodium Silicate in the country is 125,000 tons/year. The basic raw material required for this project is Silica Sand. Extensive deposits of this raw material can be found in Pezu (D.I Khan), Kurd (Kohat) and Munda Kucha (Hazara). A Ferro-Silicon production project can be started in D.I Khan with an estimated output of 10,000 tons/year. The total cost of the project is Rs. 70.14 million per year. LEAD-ZINC CONCENTRATION PLANT There are about half a million tons of Lead-Zinc ore reserve at Pazang and Lahore (District Swat). A chemical production plant can be established at Swat that can process 24,000 tons of Lead-Zinc ore per year. 2,000 tons of Zinc concentrate and 240 tons of Lead concentrate can be processed from the Lead-Zinc ore. These concentrates will be used to produce the following: • 280 tons per year Lead Nitrate • 500 tons per year Zinc Carbonate • 735 tons per year Zinc Oxide • 700 tons per year Zinc Chloride The total cost of this project is estimated to be Rs. 240 million. SODIUM DICHROMITE AND BASIC CHROMIUM SULPHATE CHEMICAL PRODUCTS
There are about 700,000 tons of chromites reserves in Malakand Agency. A proposed project is to be established in Malakand to process 20,000 tons of chromites ore per year. The processed ore will be used to manufacture basic Chromites Sulphate, Sodium Dichromate and Sodium Sulphate. These products are used by leather tanning, paints, and dye manufacturers. The total cost of the project will be Rs. 411.53 million. MAGNESITE AND CHROME MAGNESITE BRICKS Chrome Magetite is used in basic refractories. It is used in the cement kilns, lining of arc furnaces, and open-hearth furnaces. The present demand for Chrome Magnetite in the country is 15,000 tons per year. Three million tons of Magnetite is available in Kumhar area Abbottabad while extensive deposits of Chromites ore are available in Malakand Agency. These raw materials can be utilized in a Magnetite project in Hazara district that will produce 15,000 tons of Magnesia-Chrome refractory. The total cost of the project will be Rs. 214.550 million.
Next: INTEGRATED NEPHELINE SYENITE MINING AND PROCESSING PROJECT FOR USE IN GLASS AND CERAMIC INDUSTRIES
INTEGRATED NEPHELINE SYENITE MINING AND PROCESSING PROJECT FOR USE IN GLASS AND CERAMIC INDUSTRIES In Koga (Buner) there are over six billion tons of Nepheline Syenite deposits. A production facility can be established at Koga that will process 30,000 tons of lumpy Nephaline Syenite. This raw material can be used in the glass and the ceramic industry. The total cost of the project is Rs. 368.82 million.
KOGA NEPHELINE SYENITE FOR USE IN ALKALI COMPLEX PROJECT The Koga deposit can also be used in alkali complex that is, the extraction of Alumina manufacturing of Soda Ash and Portland Cement. The proposed project will be situated in Swat with the following production capacity. • 270,000 tons of Alumina. • 200,000 tons of Soda Ash. • Million tons of Portland Cement. The total cost of the project is estimated to be US$1500 million that is about Rs. 84 billion. FORESTRY BASED INDUSTRY There are different estimates about the total area of forest in Pakhtunkhwa. Some experts put it at 17% of the total area, others put it at 16.6% and 13% of the total area (Forestry: Facts and Fallacies 1-18). It is true that a few decades back the total forest area was in excess of 23% but due to excessive cutting of trees the total area is not more than 13%. Similarly the total forest cover of tribal area has also been reduced from 5% to 1%. Over all, less than 5% of the total area of Pakistan is under forest cover. According to the government of NWFP, 16.9% of the area of the province is under forest cover that accounts to 1,255,800 hectares.
Most of these forests are in Hazara, Dir, Swat, Chitral and Kohistan. It is estimated that there is a minimum of 3.5 billion cubic feet of timber in these areas. At current market rate it accounts for more than Rs. 250 billion (Frontier Post June 27,1996). Pakhtunkhwa has a wide potential to double its forest area provided that the corporate sector is involved in the afforestation effort. The government of NWFP has failed miserably to increase the forest area in the province although billions of rupees were spent on it. Under scientific management corporate entities cannot only increase the forest cover but more timber will be available for sale in the local market. Similarly, many industries can run on the raw material provided by these forests. At present there is severe shortage of timber in Pakistan, which is being compensated by smuggling from Afghanistan or illegal cutting in NWFP, FATA and Azad Kashmir. The FATA has special potential to increase its forest area. It is estimated that businesses in NWFP and FATA can generate Rs. 30-40 billion per year if the timber trade is incorporated and mass investment by the corporate sector takes place in the afforestation in Pakhtunkhwa (NWFP and FATA). FOREST BASED INDUSTRY Several industries can be based on the raw material provided by the NWFP forest. One of such industry is the furniture industry. There are more than 70 furniture factories in NWFP. None of them are involved in assembly line manufacturing of furniture that’s why these factories can not manufacture huge quantities for export. Vast improvement can be made in furniture business if assembly line production is introduced in NWFP. It will increase the quantity of furniture produced in a given amount of time plus the quality will be made uniform. The process of manufacturing will also be made less time consuming and exporters will be able to fulfill big orders in short period of time. Other industries that can benefit from systematic management of NWFP forest are paper industry, chip-board industry and packaging industry. Two projects in this regard have been identified by SDA (Investment Opportunities in Mineral and Industrial Sectors of NWFP 3942). DUPLEX PAPER BOARD A project is identified that can be constructed in D.I. Khan which will use raw material of grass, pulp and other chemicals. This project will produce 35,000 tons of different packaging boards. The total cost of the project will be Rs. 415 million. PULP PROJECT There is a huge demand of pulp in Pakistan. It is used in paper and chip-board industry. Two different projects can be started in Mansehra and Kohistan each with a capacity of 12,000 tons per year while the total cost per each unit will be Rs. 632 million. Apart from marble and precious stones, Sarhad Development Authority has identified several mineral-based projects. These projects include glass and ceramic industry, Gypsum and Plaster Board Production, Soda Ash Complex, Lead Zinc Concentration Plant, Ferro Silicon Production Project, Sodium Dichromite and Chromium Sulphate Chemical Products, Magnesite and Chrome Magnesite Bricks and Nepheline Syenite Alkali Complex. These
projects require a total investment of more than Rs. 85 billion and can generate employment for thousands of people. Apart form these projects there is huge potential for other mineral based industries as only a very tiny fraction of minerals resources of Pakhtunkhwa are properly evaluated. Other massive mineral-based industries include establishment of a large Steel Mill like the one in Karachi (that employs more than 25,000 people) to utilize more than 1 billion tons of iron ore in Pakhtunkhwa. The iron deposits in North and South Waziristan Agencies and Orakzai Agency are not even properly evaluated but these deposits are extensive. Based on the availability of local raw material and cheap cost of electricity, a huge Steel Mill in can be established in Pakhtunkhwa. However, further studies are required to determine the feasibility of this project. Similarly, due to availability of a significant amount of raw material, further projects can be started in the cement, glass, and ceramic industry. HYDRO POWER GENERATION Pakhtunkhwa’s biggest asset is its potential hydro power generation capacity. It generates about 28-32% of total electricity in Pakistan while it consumes only 10% of the total. In 1992 the total electricity produced in Pakistan was 48911 MKWH (Million Kilo-watt Hours). Out of this, 15141 MKWH was produced in Pakhtunkhwa while the total consumption in the province was 3537 (MKWH). All the electricity produced in the province is from hydro generation. (NWFP Development Statistics 95 & 96 255- 257). In the rest of Pakistan, thermal power is produced. Thus about 30% of electricity in Pakistan is produced through hydro generation and 68% through thermal generation while 1% through nuclear generation. The thermal power projects in Pakistan rely on imported oil. This has an adverse effect on the limited foreign exchange available to the country. Hydroelectric projects on the other hand have several advantages. Hydro-electricity is the cheapest form of electricity available in Pakistan. The installation cost of hydroelectric power station is $800,000 to $1.3 million per MW, while the installation cost of thermal power stations is also the same (Qazalbash Dawn 30 Mar. 1998). On the other hand the operating cost of thermal power generation is very high compared to hydroelectric power. The cost per kwh at Tarbela (biggest earth filled dam in the world, built in Pakhtunkhwa) is 8 paisas while the thermal power generation cost on the average Rs. 4 per kwh (Qazalbash Dawn 30Mar. 1998). According to a report published by a Canadian firm, there are more than 40,000 MW electricity generating projects in Pakhtunkhwa on river Indus alone. PESC0 (Peshawar Electricity Supply Corporation) authorities confirmed the report and added that these projects are very viable. According to expert opinion, there is 30,000 MW electricity generating potential on river Indus’s main gorges between Tarbela and Skardu at 9 different sites. Similarly 20,000 MW potential is available on river Swat. Combined together the total potential is more than 50,000 MW (Dawn 30 Mar. 1998). Putting the cost of installation of 1MW at 1 million dollar the required investment will be 50 billion dollars. Although this is a huge investment but if it is spread over a span of 20 years it does not seem unattainable. The demand for electricity is on the increase in Pakistan. According to a newspaper writer, a German evaluation mission estimated that Pakistan would require additional power generation capacity of 54,000 MW in the next 25 years (Frontier Post 7 April 1996). Electricity can also be exported to China, Afghanistan and India. China and India are two huge markets; any one of them can consume the entire excess electricity output of
Pakhtunkhwa. If Pakhtunkhwa is able to produce the additional 50,000 MW of electricity then at least half of it can be exported. This amounts to 4- 6 billion dollars of revenue per year from the export of electricity. The other half can be used in energy intensive industries. The entire railway system of Pakistan can run on electricity thus saving millions of dollars on import of oil. Our cost of production for electricity in Pakhtunkhwa is the cheapest in the world, if we pass this advantage to the industrial sector, definitely they will develop a competitive advantage. To take advantage of these low costs many industries will shift to this region. However, without provincial autonomy that will not be possible. One major advantage of provincial autonomy would be that the provincial government would have the authority to explore its hydropower potential and to form joint venture with foreign firms independent of the federal government. At present the provincial government can not negotiate any agreement with a foreign firm or financial institution with out the approval of the federal government. TOURISM BASED INDUSTRY Tourism is one of the fastest and largest growing industries in the world. It provides employment to more than 240 million people around the world. In 1993 the total receipts from tourism world-wide was more than 300 billion dollars (Zahir Ahmad Frontier Post 14 Jan. 1995). But unfortunately in Pakistan the tourism industry is not properly developed. Tourism in Pakistan is more concentrated on attracting tourists to the scenic sites and to Mughal architecture but Pakhtunkhwa has much more to offer. Explaining this scenario, Afrasiab Khattak well known historian of Pakhtunkhwa says that, "our biggest asset is our culture and our heritage that is thousands of years old. We have to understand that history did not start in the 20th century. We have to explore and develop the ruins of Buddhist, Hindu, Muslim and other civilizations as they were a part of our unique cultural heritage". This area has witnessed the rise and fall of some of the mightiest civilizations such as Buddhism and Hindushahi. It was also one of the destinations on the ancient silk route and many conquerors like Alexander the Great, Tamerlain, Mehmood of Ghazna, Babur and the Britishers crossed the famous Khyber Pass. Pakhtunkhwa possesses a unique cultural heritage. It has a number of historical buildings, archeological monuments and cultural history that is enhanced by natural beauty of the varied landscapes of the province. It also has a strategic location on Pakistan’s map from tourism point of view. It is in driving distance from Iran, India, China and Central Asia. The land of Pakhtunkhwa is rich with archeological and cultural heritage as well as scenic beauty. Along with its own attractions, it can provide access to the entire above mentioned tourist destinations. Thus Pakhtunkhwa can become a major tourist destination in Central Asia as well as a transit facility for other tourist destinations in the area. Tourist sites in Pakhtunkhwa should cater for people from different countries, age groups and gender. At present most of the foreign tourist coming to the province are male and middleaged. In order to make the tourism industry successful, tourists should be provided with ample opportunity to enjoy and relax. If the tourism industry is properly developed it is estimated that Pakhtunkhwa can attract about half a million foreign tourists a year. This accounts to more than 500 million dollars revenue per year. In addition, it can also attract tens of thousands of tourist from southern part of the country especially in summer when the weather is pleasant in the north of the country. Again corporate entities can create hotel
chains, traveling companies and entertainment resorts, as individual entrepreneurs will find it difficult to individually start projects. ESTABLISHMENT OF A FREE TRADE ZONE IN PAKHTUNKHWA The geo-location of Pakhtunkhwa is a great fortune for its people, unfortunately, due to geopolitics of almost two hundred years, Pakhtunkhwa has been on the horn of dilemma in terms of its destiny. As has been mentioned, Pakhtunkhwa lies at a driving distance from 1/3 th of the world population thus making it most suitable for a Free Trade Zone. This Free Trade Zone in Pakhtunkhwa would promote economic activities in the region and would also eliminate the smuggling of goods in the region, which has hindered the growth of economic and industrial development in the region. The illegal Non-Taxed Border Trade between Afghanistan and Pakistan would also decrease by the establishment of a Free Trade Zone in Pakhtunkhwa. This would provide great economic benefits for the people of Pakhtunkhwa ARRANGEMENT OF CAPITAL FOR ECONOMIC DEVELOPMENT Having studied the economic and industrial potential of the province in the previous chapter, it is evident that Pakhtunkhwa cannot be termed as a poor province in terms of resources and economic potential but the big question mark is where to get the capital needed for setting up industries in the province. We will discuss this issue in detail in this chapter. To professionalize and modernize the industrial setup, the business sector of Pakhtunkhwa should be dominated by corporate entities rather than sole proprietorships and partnerships. These corporations can be in the form of foreign multinationals, indigenous companies or a joint venture between foreign and local companies. For this reason Pakistan must understand the present global economic order. Integration in the global/regional economy will make the inflow of capital easier for many lucrative projects in Pakhtunkhwa, which are not started because of the lack of capital investment. Any policy that restrain foreign trade or restrict foreign capital will deprive Pakhtunkhwa from the much-needed capital inflow. There are three different ways that equity financing can be generated for corporation in the province. These are • Foreign Direct Investments (FDI) • Local companies floated in local stock exchange. • Joint ventures between locally incorporated companies and multinationals FOREIGN DIRECT INVESTMENTS (FDI) In Pakhtunkhwa, the local entrepreneurs do not have the equity base to start large-scale projects. The provincial government is looking forward for foreign multi nationals to invest in these large scale projects which include hydro power generation, development of different mineral based industries and tobacco industries. At present, these multi nationals do not consider the socio-economic environment in Pakhtunkhwa to be feasible for such large-scale investments.
Even if these multi nationals invested in Pakhtunkhwa, the profit generated by these industries will have a very limited effect on the economy of the province. These multi nationals will be paying most of their taxes to the federal government and it will be the federal government that will benefit from such an arrangement. Besides, the profits made by the multi nationals will be remitted back to the parent company, thus the people of the province will not directly gain from the profitability of these companies. Al-though, direct foreign investment by foreign multi nationals will create new jobs but the local entrepreneur or investors will not directly get benefits from such a venture. Transfer of technology and managerial skills will be limited in such a case because it will be an inter-company transfer and will not have a significant effect on the over all corporate culture of the province. LOCAL COMPANIES There are few sectors where technology transfer is not required. In such a case, companies can be created with all its capital raised in the local market. There are some advantages and disadvantages of such an arrangement. The biggest advantage is that all the profit will be kept locally. The biggest disadvantage is that the management of these firms will not be able to learn the corporate culture of foreign multinationals. At present, locally managed companies do not have the credibility established by foreign multinationals operating in Pakistan. Pakistani companies are more prone to corruption, evasion of taxes and other irregularities. To avoid this problem it is important to choose management of these companies from existing multinationals, so that they can bring more professional corporate culture with them. Some of the companies that can operate without foreign equity participation include dairy farms, transportation companies, grocery store chains, fruit processing industry, tourism (hotels and motels) and health care industry. JOINT VENTURES In the presence of a local stock market, local companies should be created which will float shares locally. Thus, an indigenous entity will be controlling the resources of the province. In such a case, new joint ventures can be created between the new entity and the multi nationals. These joint ventures will have an advantage of superior technology, superior corporate culture and superior management skills of the multi nationals, along with world wide credibility, reputation and access to financing all over the world. These joint ventures will be helpful in transfer of technology, transfer of efficient corporate culture and transfer of management skills to the local businesses. By having partial ownership of these new joint ventures, the people of Pakhtunkhwa can benefit directly from the success of these ventures. Such joint ventures will also reduce the risk to multi nationals by financing some of the investments locally. Initially, the capital raised in the province can be limited but it will show the seriousness of the government of NWFP and people of Pakhtunkhwa towards the growth of industrialization. Local masses will also be less hostile towards such a corporate structure compared to 100 % ownership by foreign multi nationals. An important point is that joint ventures should be preferred in industries where there is a huge potential for export. Foreign direct investment or joint venture will be less fruitful in industries where there is limed or no scope for export. In case of no income from export, joint venture partners will be reluctant to invest huge amount because they are aware of the limited buying power of Pakistani people in general and Pakhtunkhwa in specific. Besides, remittances by these companies to their parent organizations will have a negative impact on our already adverse balance-of-payment
problem. Thus, it is important that initially joint ventures should be encouraged in export oriented industries and when our trade deficit improves we can start joint ventures in other industries. A local stock exchange is required to raise capital for joint ventures and local corporations. This local stock exchange along with local banks will be able to make financing available for new corporate entities in the province. Before establishing a stock exchange in Pakhtunkhwa it is important to evaluate other stock exchanges in the country and review their performance and on the basis of that make recommendation for the establishment of stock exchange in Pakhtunkhwa. AN OVERVIEW OF PAKISTANI STOCK MARKETS Professor Lawrence White wrote that in the early seventies, before nationalization, 43 families or groups controlled 98% of 197 non-financial companies accounting for 53% of total assets on Karachi Stock Exchange (KSC). According to Professor White, the top ten families controlled one third of the total listed assets while the top 30 owned over half of the listed assets on Karachi Stock Exchange (KSC) in that era. Not much has changed ever since. Professor Shahid-ur-Rehman writes, "On Dec 1, 1995, the top 43 groups owned 212 of the 552 non-financial companies listed on the Karachi Stock Exchange (KSC) accounting for 43% of the total manufacturing assets exclusive of multi nationals and public sector enterprises. Out of 175 listed banking companies, modarabas, leasing and financial companies, 76 belong to these groups". In addition to the assets held in there own groups, several of these groups own equity in multi nationals companies listed on Karachi Stock Exchange (KSC). These include Hoechst Pakistan Ltd., Siemens, Lever Brothers, Burger Paints, SmithKline and Brooke Bond. These groups owned assets worth in excess of 400 billion rupees on KSC (Rehman 66-67). Out of this, the Memons of Karachi control 82 companies on KSC while the Chinoties of Punjab control 124 companies. Apart form the multi nationals the management of the rest of the companies is entirely controlled by the businessmen in Karachi and Punjab. These companies are known for corruption, avoiding taxation, bribing officials and many times not declaring the due dividend. Not declaring dividend or showing lower profits have an adverse effect on the share price. Due to these practices, these companies and their management have not only lost their credibility in the investing community of Pakhtunkhwa but also through out Pakistan. These companies do not satisfy any of their stakeholders, apart from the dominant shareholders. Thus minority shareholders neither have much to say in running the company nor have much to gain from investing in these companies. On Karachi Stock Exchange the heavily traded shares belongs to either foreign multi nationals like ICI, or companies whose management is foreign based like Hubco or companies whose management is some what controlled by the government. Next: ESTABLISHMENT OF STOCK EXCHANGE IN PAKHTUNKHWA ECONOMY OF MISMANAGEMENT It is extremely important to note that over the last two decades the overall culture of business in Pakhtunkhwa was based on resource mismanagement. Evasion of taxes on border trade
(Transit Trade), illegal cutting of forests, drug trafficking, embezzlement and, bribery in government services became the accepted norms of resource accumulation. Over the years a loose mafia of individuals and groups involved in this mismanaged emerged as the leading economic brokers in Pakhtunkhwa. Mismanagement of resources has a limited life span. For example timber mafia cannot continue to operate for decades (unchecked) as sooner or later they will run out of timber to cut. The last two decades with internal insatiability in Afghanistan provided ideal environment for resource mismanagement in every shape and form. However this trend needs to be reversed, as the socio-economic environment of the region is not accommodative for such misadventures any more. Some of these individuals and groups involved in big scale resource mismanagement identify themselves with obscurantist forces in the region. The military aspect of the ‘War on Terror’ in Afghanistan may be over, but how the international community would deprive the terrorists of financial backing by their supporters is the biggest question before every sane person. It is, therefore, prudent to search out the sources of wealth of the forces of obscurantism and find solutions. At the same time a legal cover fis needed for border trade between Afghanistan and Pakistan. TRANSIT TRADE Goods (household, electronic, crockery etc) are imported into Afghanistan through Iran and Pakistan. Some of these goods are sold in Afghanistan but most of these goods are sent back (smuggled) in to Pakistan by avoiding appropriate duties on these goods. Due to evasion of taxes Transit Trade goods are considerably cheaper than goods imported through legal channel. Thus this evasion of duties (taxes) becomes the competitive advantage of wholesale and retail transit traders. IMPORTANCE OF TRANSIT TRADE Unlike Sindh or Punjab, the provinces of Pakhtunkhwa, Tribal Pakhtunkhwa and Balochistan do not have strong agriculture or manufacturing sectors. Transit Trade (although technically illegal) is the biggest wealth generation sector in the above- mentioned areas. Tens of thousands of workers and entrepreneurs are employed in this sector. Wealth generated through transit trade also stimulates other sectors of the economy such as transportation, construction, real estate, banking etc. THREATS TO AFGHANISTAN Due to their wealth and experience in trade between Pakistan and Afghanistan, the fundamentalists, if not checked, will control a significant portion of trade between the two countries. For Pakistani fundamentalists the ‘strategic depth’ of Afghanistan is not relevant in military terms any more. But they are counting on ‘economic strategic depth’. Under this doctrine business links between the two countries can be exploited by the fundamentalist groups to provide integration of goals of fundamentalists on both sides of the border. More importantly, it can also be used to destabilize both Afghanistan and Pakistan economically as well as socially. To counter this threat several steps needs to be taken. First the de-Talibanization of Pakistani economy needs to take place. This will require a commitment by the Pakistani government to
stop the exploitation of religion for resource accumulation. It will also require commitment from Western governments and aid agencies to help government of Pakistan in providing business and employment opportunities to its people especially in the backward areas of Pakhtunkhwa and Balochistan. POLICY RECOMMENDATIONS ON TRANSIT TRADE The time is ripe to define a legal and financially feasible paradigm for transit trade in order to provide legal and gainful employment opportunities to the people presently involved in this trade. Internal consultation between transit traders and policy makers and external consultation between the governments of Pakistan and Afghanistan is needed so that a mutually beneficial policy on this issue is formulated. At the same time alternative business and employment opportunities need to be explored by the government in order to facilitate people of these areas to reduce their reliance on transit trade. EFFECTS OF STABILITY IN AFGHANISTAN Cotton and textiles form the bulk of exports from Pakistan. However most of the exports from Pakhtunkhwa and Balochistan constitute carpets, gemstones, fruits and vegetables. Significant portions of these exports from Pakhtunkhwa and Balochistan have their origin in Afghanistan. It is estimated that a big portion of Afghan carpet and gem stone trade will be relocated to Afghanistan after the completion of initial phase of reconstruction in Afghanistan. After the relocation of these businesses the foreign exchange earned from these exports will also be lost. In addition foreign exchange sent by relatives (settled abroad) of Afghan refugees living in Pakistan will also be diverted directly to Afghanistan after the start of Afghan refugee repatriation. In the past Afghan exports through Pakistan, remittances from Afghans settled abroad, aid for Afghan refugees and even the opium trade of Afghanistan provided liquidity to the unofficial (open) ex- change market in Pakistan. Transit traders and other individuals in need of foreign exchange used these foreign exchange markets for their need of hard currency. In the near future, after the formation of financial institutions in Afghanistan a certain portion of open market currency transactions will be diverted to Afghanistan. In a worst case scenario a significant portion of open market operations from Balochistan and Pakhtunkhwa could shift to Afghanistan and liquidity in the open market in Pakistan could be negatively affected. At present low international oil prices, international aid & loans, and insecurity of Pakistani investors investing abroad helped strengthen the rupee against other currencies. However these developments cannot be considered as fundamental improvements in the economy and can be easily reversed. Unless drastic measures are taken to increase exports from Pakhtunkhwa, the reconstruction of Afghanistan could become a potential foreign exchange outflow from Pakhtunkhwa unlike the widely believed assumption that it would cause foreign exchange inflows into Pakistan. RECONSTRUCTION OF AFGHANISTAN Afghanistan needs immense investment for infrastructure development in education, telecommunication, construction and health sector. These development works provide an opportunity for cement, steel, construction industries and non-government organizations in Pakistan to export their goods and services to Afghanistan. To secure maximum advantage
out of the reconstruction effort in Afghanistan cohesiveness and alignment are required between the objectives of Pakistani businessmen intending to operate in Afghanistan and the developmental polices of the Afghan government. As restructuring will be a phased process it is essential that goodwill is created by Pakistani businessmen in the initial phase in order to gain future contracts. Another important aspect of the reconstruction effort should be to provide financial benefits across the cross section of society in Pakistan (especially Pakhtunkhwa, Tribal Pakhtunkhwa & Balochistan). If reconstruction efforts are only beneficial to a few industrialists in Pakistan then the vast majority of people in the above mentioned areas would be extremely demoralized, as they have attached high expectations with the reconstruction efforts in Afghanistan. The financial benefits of a stable prospering Afghanistan is not limited to the reconstruction effort in Afghanistan or the construction of oil and gas pipe lines connecting oil and gas reserves of Central Asia with the Arabian sea. Afghanistan could provide a shortest route for up to 10 million barrel of Central Asian oil to Asian countries (where the demand is rising quickly). The revenue from oil and gas pipeline will be limited for both Afghan and Pakistani government. The true wealth generation opportunity will rise in trade with Central Asian republics. With millions of barrels of oil exports every day Central Asian republics will gain immense wealth. The demand for durable and non-durable goods in Central Asia will rise sharply with the increase of per capita income (standard of living). Leading companies from the Far East, Europe and North America will compete for the new consumer markets. Pakistan can benefit from this scenario in three ways. In the first case, it can send its own products to Central Asian markets. In this option success can be limited because at present very few Pakistani products can compete internationally. Secondly, Pakistan can act as a transit route and a duty free facility for regional trade especially between Central Asia and the rest of the world. Thirdly, Pakistan in addition to being a transit route for Central Asian trade can became a place where multinational companies can do assembling and manufacturing for Central Asian markets. POLICY RECOMMENDATION ON RECONSTRUCTION OF AFGHANISTAN The emphasis on trade with Afghanistan should not be entirely on the reconstruction efforts in Afghanistan. In fact an investment friendly and more importantly people (especially those who live in close proximity to Afghan border) friendly policy regarding business with Afghanistan is required. Afghanistan and Pakistan both need each other to cherish their policies regarding Central Asia. However at the same time both of these countries will directly compete against each other in attracting multinationals to establish their manufacturing plants and other assets in their respective territories. Pakistan got an edge over Afghanistan at present because it has better infrastructure at the moment but Afghanistan has its advantages because of its better proximity to Central Asian republics. It cannot be over emphasized that mutual understanding and cooperation between PakAfghan governments is vital for Pakistan to take advantage of Central Asian trade. Equally important is the informal business links between the people and business entities of the two countries. Historically (for the last two decades) the trade between the two countries was dominated by resource mismanagement, corruption and illegal business transactions such as transit trade, opium smuggling, timber smuggling, historic artifacts smuggling from Afghanistan. This needs to be changed. Cooperation between the business communities of the
two countries needs to be on resource management and business transaction between the two countries needs to have a comprehensive legal procedure. EPILOGUE Pakhtunkhwa remained a theater of undeclared war for global and regional powers to gain influence in Central Asia. This war has left Afghanistan – a predominately Pakhtun State in shambles. Pakhtuns of Pakistan have not been able to de-colonize their land. In nutshell, Pakhtuns are not in a position of influence and power commensurate with their size, strength and historical significance in the region. This situation cannot remain so for very long. Pakhtuns have an acute sense of asserting their power, particularly if they see turmoil in their neighborhood. Historically Pakhtuns have come under a single banner of a leader to press for their national rights. This characteristic of the Pakhtun society was very much successful in the tribalagrarian social structure but societies have become too complex today. The levers of power have changed from muscular strength to thought processes. As Pakhtuns have historically relied on muscle power and chivalry, therefore, they find themselves on the back seat in a competitive world marked by sophisticated thought and the consequent social organization. Social organization is the distribution of functional responsibilities towards the achievement of a common goal. Therefore, a Pakhtun National Movement, built along scientific and democratic lines, needs to be built at the political and civil society level. This Movement should cater to the needs of the modern day world. It should work like a machine towards the achievement of its established goals. Elaborate structures and systems should be built for institutionalizing the energies and efforts of Pakhtun nation. Such a movement must have an economic and social base in order to succeed in its mission. In addition to the Pakhtun nation, all likely minded communities should be made strategic allies if their national interests coalesce with Pakhtun national interests. ANNEXURE A PROPOSED STRUCTURE OF MOVEMENT SALIENT FEATURES OF THE MOVEMENT • The National Democratic Consultative Process, starting from the grass roots, would take the shape of a genuine democratic national movement. Unlike other political organizations, the professional groups like doctors, engineers, teachers etc. would form the vanguard of the policy making body of the organization. Presently, almost all political parties have their sister organizations in the doctors, lawyers and teachers but they only work as appendages of these political parties instead of a vanguard. • Political movements and organizations die out when they become un-representative of the interests they claim to promote and protect. It happens because the parties lack a selfcorrecting mechanism to adapt themselves to new realities. To avoid stagnation, the proposed movement has a ‘Research and Development Organ’, which will provide vital inputs to the policy-making body of the organization about new circumstances, national, international
issues or organizational matters. Shortly, the ‘Research and Development Organ’ would work as a ‘think tank’ of the movement. • Small contributions from large number of people would ensure that the party belongs to the general public rather than a few wealthy individuals who hijack party policies due to their financial contributions. • Centralized financing for all activities of the party including elections and an Accounts Management System will ensures transparency and accountability in the utilization of funds. REFERENCES 1. Afridi, Latif. Personal interview. Jul.1998. 2. Ahmad, Zahir Siddiqui "Tourism Growth in Asian Countries" Frontier Post 14, Jan. 1995. 3. Aktar, Javed. Personal interview. Jul. 1998 4. Ayub, Yusuf. Personal interview. Jul. 1998. 5. Bank of Khyber. Advances and Deposits 1997. Peshawar. 6. Bank of Khyber. Annual Report 1996. Peshawar. 7. Bank of Khyber. Annual Report 1997. Peshawar. 8. Bank of Khyber. Information Memorandum. Peshawar. May, 1997. 9. Bashir, Adnan. Personal interview. Jun 1998. 10. Chamkani, Hidayatulah Khan. Personal interview Aug. 1998. 11. "Current Status of Forestry in NWFP." Frontier Post 27 June 1996: B 12. Government of Pakistan. Water and Power Development Authority (WAPDA). Gomal Zam Dam Project & Status to date. Peshawar. 13. Government of Pakistan. Water and Power Development Authority (WAPDA). Brief on Pehur High Level Canal Project. Peshawar. Oct. 1996. 14. Government of Pakistan. Water and Power Development Authority (WAPDA). Brief on Munda Dam. Peshawar. 15. Government of Pakistan. Water and Power Development Authority (WAPDA). Brief on Swabi SCARP. Peshawar 1996. 16. Government of Pakistan. National Finance Commission Secretariat. Report of The National Finance Commission 1996. Islamabad. April, 1997.
17. Government of Pakistan. Ministry of States and Frontier Regions. FATA Development Corporation Annual Report 1995-1996. Peshawar. 18. Hasan, Parvez. Pakistan’s Economy at the Crossroads: Past Policies and Present Imperatives. Karachi: Oxford University Press, 1998. 19. Jadoon, Muhammad Mustaq. Forestry Facts and Fallacies. Peshawar. 1997. 20. Khan, Akhtar. Personal interview. Jul 1998. 21. Khan, Dost, Mohammad Personal interview. Jun. 1998. 22. Khattak, Afrasiab. Personal interview Jul 1998. 23. Marwat, Yunus Khan. Personal interview Jul 1998 24. Mehmood, Tariq. Personal interview. Jun 1998. 25. NWFP Government. Bureau of Statistics. Development Statistics 1995 &1996. Peshawar. 26. NWFP Government. Sarhad Hydel Development Organization (SHYDO). Investment Opportunities in Hydropower Projects of NWFP. Peshawar. 1997. 27. NWFP Government. Industries, Commerce, Mineral Development, Labor, Transport Department. Directory of Industrial Establishment, NWFP 1996. Peshawar. 28. NWFP Government. Finance Department. White Paper 1998-99. Peshawar. June 1998. 29. NWFP Government. Bureau of Statistics. Important District-Wise Socio-Economic Indicators NWFP 1995 & 1996. Peshawar. Jan. 1996. 30. NWFP Government. Bureau of Statistics. Important District-Wise Socio-Economic Indicators FATA 1995 & 1996. Peshawar. Nov. 1996. 31. NWFP Government. Memorandum For The National Finance Commission, 1985 (Secret Copy). Peshawar. April, 1987. 32. NWFP Government. Sarhad Development Authority. Mineral Profile of Hazara Division (NWFP). Peshawar. April, 1994. 33. NWFP Government. Sarhad Development Authority. Investment Opportunities in Mineral and Industrial Sectors of NWFP. Peshawar. 1994. 34. NWFP Government. IUCN- The World Conversation Union, Pakistan. Sarhad Provincial Conversation Strategy. Peshawar. 1996. 35. NWFP Government. Sarhad Development Authority. Annual Report 1996-97. Peshawar. 36. NWFP Government. Sarhad Development Authority. Gadoon Industrial State (Report). Peshawar July, 1998.
37. NWFP Government. Sarhad Development Authority. Peshawar Industrial State (Report). Peshawar July, 1998. 38. NWFP Government. Sarhad Development Authority. Hattar Industrial State (Report). Peshawar July, 1998. 39. Philip Morris Companies Inc. 10 K Annual Report. Dec. 1996. 40. Pike, Richard and Bill Neale. Corporate Finance & Investment Decisions and Strategies Herefordshire: Prentice Hall, 1996. 41. Qazalbash, Imtiaz Ali. "WAPDA Neglected Hydro-Power for 23 years" Dawn 30 Mar. 1998. 42. Raza, Rafi. Ed. Pakistan in Perspective 1947-1997. Karachi: Oxford University Press, 1997. 43. Sarhad Chamber of Commerce & Industry Peshawar. Annual Report 1996. Peshawar. 44. Sherpao, Aftab. Personal interview. Jun 1998. 45. Toru, Qasim. Personal interview. Jul 1998. 46. Rehman, Shahid-Ur. Who Owns Pakistan ?. Islamabad: Aelia Communications, 1997. 47. United States Agency for International Development. Socio Economic Profile of Orakzai Agency. Peshawar. July, 1991. 48. United States Agency for International Development. Socio Economic Profile of Mohmand Agency. Peshawar. May, 1993. 49. United States Agency For International Development. Socio Economic Profile of Bajaur Agency. Peshawar. Sep. 1992 50. United States Agency for International Development. Socio Economic Profile of North Waziristan Agency. Peshawar. Oct. 1990. 51. United States Agency for International Development. Socio Economic Profile of South Waziristan Agency. Peshawar. Dec. 1990. 52. United States Agency for International Development. Socio Economic Profile of Kurram Agency. Peshawar. May, 1991. 53. United States Agency for International Development. Socio Economic Profile of Khyber Agency. Peshawar. Dec. 1993. 54. Wazir, Badshah Gul. Futuristics of Tribal Administration. Peshawar: Pakistan Academy for Rural Development, 1995.
55. Zaidi, S. Akbar. "Regional Imbalances and National Question in Pakistan. Some Indications." Economic and Political Weekly Feb. 1989:300-314. 56. Ziauddin M. "Additional Power Generation Capacity Needed: Hydel Planning Fund suggested" Frontier Post 7 April, 1996.