Ayub Khan’s Capitalist Economy during The Cold War

Period and 1965 War

Ayub Khan’s Period (1958-1969): Golden Era
of Pakistan’s Economy during Cold War Period

Topics to be covered:
Cold War Period
Personal Profile
Economic Conditions of Pakistan
Economic strategy
Monetary policy
Economic performance in agriculture and Industrial sectors
Economic Performance
1965 War and Tashkent Declaration
Assessment of Ayub Era
Fall of Ayub’s regime
The Cold War Period
 The Cold War was an ongoing political rivalry between the United
States and the Soviet Union and their respective allies that developed
after World War II. 
 The Cold War began after the surrender of Nazi Germany in 1945, when the
uneasy alliance between the United States and Great Britain on the one hand
and the Soviet Union on the other started to fall apart.
 The Soviet Union began to establish left-wing governments in the countries
of eastern Europe, determined to safeguard against a possible renewed threat
from Germany.
 The Americans and the British worried that Soviet domination in eastern
Europe might be permanent. The Cold War was solidified by 1947–48, when
U.S. aid had brought certain Western countries under American influence
and the Soviets had established openly communist regimes. Nevertheless,
there was very little use of weapons on battlefields during the Cold War.
 It was waged mainly on political, economic, and propaganda fronts and
lasted until 1991.
Personal profile:
• Born, May 14, 1907 in Haripur Hazara Division
• studied at Aligarh Muslim University
• Joined British Army in 1926
• Fought in WWII as commissioned officer
• Commander in Chief in 1950
• Chief Martial Law administrator in 1958-!962
• Soon after became second President of Pakistan
Economic conditions of Pakistan
• Political Instability
• Low economic growth
• Unemployment and inflation
• Foreign debts
• Trade imbalance
Economic Strategy:
• How he responded to Economic crisis?

• Rapid Industrialization
• Upliftment of poor segment of society
• Land and agricultural reforms
Industrial Policies:
• Pakistan Industrial Development Corporation (PIDC)
• Industrial trading estates
• Investment Promotion Bureau
Continued..
a) Pak Industrial development Corporations(PIDC):
PIDC was put in charge to promote the following industries:
Jute, Fertilizers, Textiles, Heavy Engineering, sugar, cement etc.
b) Industrial Trading Estates:
 Four new estates for small industries were established in Bahawalpur, Gujrat,
Larkana and Peshawar
c) Investment Promotion Bureau:
 Established in April 1959
 Main functions were :
 To sanction proposal for establishment of new industries
 To provide guidance to industrialists
 To sort out problems of investors such procurement of land, building
materials, etc
Agricultural Policies:
• Revived agricultural sector
• Rural infrastructure was improved
• Irrigation system (tube wells) was improved i.e.
• High yielding crops such as wheat and rice were introduced
• Modern agricultural Machinery was used
• Improved seeds were used
Land Reforms:
• Ayub Khan set up a Land Reform Commission on October 31, 1958, to
suggest a thorough shake-up of the agricultural setup of the country. The
reforms known as “Ayub Land Reforms” were carried out under the West
Pakistan Land Reforms Regulation 1959. Its salient features included:

a) No one to hold more than 500 acres of irrigated land.

(b) The ownership of the un-irrigated land was fixed at 1000 acres.

(c) Jagirdarss to be abolished without any compensation.

Economic Performance:
 GDP growth in Pakistan of nearly 7% per annum during the 1960’s
exceeded Korea, Thailand and Mexico
 During 1960-1965 investment grew very rapidly, reaching a peak of 21.5%
 Agricultural growth rate in Pakistan rose to a peak of 6.3% annual rate
during 1965-1970 as record increases were registered in the production of
wheat and rice.
Continued…
 The agriculture revolution was already underway in the first half of 60’s and
during the second half of 60’s dramatic increase in output were achieved.
 During the period from 1965-1970, wheat and rice output in West Pakistan
increased by nearly 75%, fertilizer increased nearly five folds, number of
private tube wells doubled, new seeds covered nearly 75% of the irrigated
areas under wheat and rice.


Earned the Title Green Revolution
Ayub Khan’s regime: Political Reforms
• Basic Democracy
• Constitution Of 1962
• Presidential Elections
• Islamabad as New Capital
• Political Unrest
Basic Democracy system
• On 8th October, 1958 army imposed Martial Law in Pakistan and the
Constitution of 1956 was abrogated.
• The experience during the Martial Law period in 1958 convinced the
military leaders that if the power of politicians were reduce to minimum, a
stable military government could be established in the Pakistan.
• For this purpose, he introduced Basic Democracy Order in 1959
Features:
a). Indirect democratic system
b). Electoral college would be elected by mass of people .
c). 80,000 Basic Democrats
d). Non-party based elections
e). These Basic Democrats would elect the parliament and the head of
the government
f). Democratic system consists of elected and non-elected
representatives with the local administration to enable the government
to maintain sufficient control over politicians
Structure of the System
Ayub Khan elected as President:
• Ayub Khan was indirectly elected by 80,000 basic democrats on 17
February, 1960.
• Almost 95% shown confidence in him.
Constitution of 1962
1 march, 1962
Features:
1) Written constitution
The constitution of 1962 was in the written form just like the
1956 constitution. This constitution consisted of 5 schedules
and 25 articles.

2) Presidential form of system

Parliamentary system was replaced with the presidential form
of government. The whole system revolved around the
president who had the ultimate authority. He was the one who
would appoint federal ministers, governors, judges, and other
high officials.
Cont..
3. Indirect method of election
An indirect method of the electorate was introduced called basic democracies. The
basic democracies consisted of 80,000 basic democrats with equal representation
from both East and West Pakistan. These basic democracies were responsible for
the election of members of the national assembly and president.
4. Unicameral Legislature
Just like the previous constitution of 1956, this constitution also proposed that the
parliament would consist of only one house called the national assembly
5. Duality of national languages
Urdu and Bengali were adopted as the national languages of Pakistan.
6. Federal form of government
Federal form of government was proposed in the constitution but with a
strong center. Governors appointed by the president were independent
in the matters pertaining to the provincial domain but their actions could
be overruled by the president
Presidential Elections:1965
• Presidential elections were held in Pakistan on January 2, 1965.
• It was a memorable occasion as the it was year of first indirect elections.
• The vote was held amongst the 80,000 “basic democrats.”
• These basic democrats were members of the urban and regional councils.
• Elections were significant as a woman was contesting the highest political
office of the country.
• The orthodox religious political parties, including the Jamaat-i-Islami led
by Maulana Maududi, modified their stance and supported the candidature
of Miss Fatima Jinnah.
• There were two major parties contesting the election: the Convention
Muslim League and the Combined Opposition Parties.
• The Combined Opposition Parties consisted of five major opposition
parties. It had a nine-point program, which included restoration of direct
elections, adult franchise and democratization of the 1962 Constitution
Cont..
•  Ayub Khan was nominated by the Convention Muslim League party while
Combined Opposition Parties (COP) nominated Miss Fatima Jinnah.
• She did not take part in any political activity after independence. She accepted the
candidature as she was strongly in favor of democratic ideals. She sympathized
with the opposition party and contested the elections.
• There were four candidates; Ayub Khan, Miss Fatima Jinnah and two persons with
no party affiliation in the 1965 elections. There was a short campaigning period of
one month.
• The election results came in favor of the incumbent President Ayub Khan, who had
won 62.43% of the Electoral vote, while Fatima Jinnah was at 35.86%.
•  Ms. Jinnah was however extremely successful in some areas of the country. She
had swept across major urban centers such as Karachi and Dhaka.
• Ayub Khan also faced disappointing results in East Pakistan. However, Ayub had
decisively triumphed in rural Pakistan. As majority of the Electoral College
consisted of representatives from the rural setup, Ayub was able to win a clear
majority.
Islamabad as New Capital
• Since partition, capital was Karachi.
• Ayub Khan decided to built new capital. Islamabad was chosen as new
venue
• Construction started Oct, 1961
• City was built on 26 Oct, 1966
• Officially became capital in 1967.
1965 War and Tashkent Declaration
Conti..
• Second military Confrontation over Kashmir b/w Pakistan
and India
• In September 1965, India attacked Pakistan owing to the
latter’s provocation by undertaking the operation Gibraltar
in Indian held Kashmir.
• As a result, Pakistan put all its resources and potentials to
counter the attack of a far more powerful enemy.
Causes:
• Kashmir Dispute:
• Historical Dispute between the two states
• Also fought over it in 1948..
• In 1964, India claimed that Kashmir was never part of
Pakistan
• India infiltrated into the Kashmir valley in Aug 1965
• To protect the Valley, Pak Army Launched Operation
Gibralter. Gibraltar is a British Overseas Territory and city
located at the southern tip of the Iberian Peninsula. The
name was chosen to draw a parallel to Muslims conquest
of Spain from the port of Gibraltar.
Conti..
• India launched counter offensive at Lahore and Sialkot
sectors
Conti..
• Cold war Period:
• Pakistan was member of SEATO and CENTO which were led by USA
• India was part of Non-Aligned movement but tilted towards USSR
• Relations were strained between India and Pakistan

• China India border War-1962

• China defeated India in border War in 1962. Indian army was
demoralized. It had lost support. So to regain glory, it started
offensive against Pakistan in1965
Events:
India attacked across the international border at Lahore
Sector on September 6 and a full-scale war broke out
between the two states
On September 8, India launched its main attack at Sialkot
Sector using its armored division and other strike
formations. Analysts consider this to be the largest tank
battle since World War II
The Pakistan Air Force (PAF) also played a significant role
in this war, which was the first time that the air forces of
both states were facing each other. PAF pilots displayed
remarkable skills despite its smaller size and its best
example was that of Squadron Leader M.M. Alam, who
shot down five Indian fighter planes.
How Pakistan Defended itself Against Indian
Aggression?
Role of Armed Forces especially Air Force and Navy
Role of Paratroopers. Paratroops were dropped on
Patiala, Pathankot and Ambala areas of Indian Punjab.
Role of UNO
Role of China, USA and Great Britain
Role of Muslim Countries
Tashkent Declaration, 10 January 1966
• On 10 January 1966, the Prime Minister,
• of India and the President of Pakistan signed a Declaration at
Tashkent Uzbekistan. They Declared:
• "their firm resolve to restore normal and peaceful relations
between their countries and to promote understanding and
friendly relations between their peoples"
Features:
Good neighborly Ties
Withdrawal of armed forces to their respective borders
Non-Interference
Both should discourage Propaganda against them
Repatriation of Prisoners of War
Restoration of Economic Ties etc.
Fall of Ayub Khan
• Concentration of political power in his own hands.
• Dictatorial powers of President: people wanted parliamentary form of
democracy
• Right of adult franchise curtailed by the system of basic democracy
• Hold of military hierarchy, civil bureaucracy and rural elite in policy
making.
• Disqualification of politicians and political parties under Elective Bodies
Disqualification Order (EBDO).
• Control of Press and Media under Press and Publication (Amendment)
Ordinance: Pakistan Times, Imroz, Mashriq were placed under National
Press Trust.
• Restrictions on Individuals fundamental rights. State of emergency.
• Land and Muslim family laws Reforms were revolutionary in words than in
deeds.
• Urbanization but not facilities in the cities.
Continued..
• Withdrawal of military support: Reduction on Armed Forces’ in budget of
1967-68
• 1965 war
• No Foreign Aid after 1965
• issue of Provincial Autonomy In East Pakistan
• Exploitation of Tashkent by Bhutto
• He resigned on 25 March, 1969
The End……