The “Third World” War
General Sir John Hackett’s imaginative book of fiction projected World War III being fought by military means across Europe, actually it has been fought worldwide on the economic battlefield, the principal antagonists followed the premises of Paul Kennedy’s “The Rise and Fall of World Powers”, shooting themselves (rather than each other) in their respective economic feet, overburdening their economies by vast military budgets, the bystanders (and erstwhile losers of the Second World War), Germany and Japan, emerging as the victors. The momentous changes affecting the world have not as yet made an impact on an apprehensive Third World but the spectre of economic aid, already scarce, being transferred from them to a downtrodden Eastern Europe looms as a potential Sword of Damocles. Robert J. Samuelson, columnist for NEWSWEEK, thinks the term “THIRD WORLD” meaningless, for the many hundreds of millions of the Third World lying in abject poverty and prone to creeping anarchy, many rungs below the present misery of Eastern Europeans, it makes good sense. The reliance on western economic aid has been so total that its stoppage (or slowing down thereof) will be equivalent to “The Day After” a nuclear holocaust, with the debt ridden countries at an economic Ground Zero.
Paul Kennedy argues that through history the prime reason for the rise of world powers has been military strength enforcing economic domination, the prime reason for the decline of world powers has been that the military expenditures ultimately went past the fail-safe point of their already over-stretched economies, nations with lighter military burdens overtaking them. Germany and Japan have not really overtaken USA but the other Super Power, Soviet Union, is in economic shambles, Adam Smith’s free enterprise system being much more appreciated in COMECON countries now 200 years after his death. Third World countries following the Soviet economic role model of a centralized economy are (besides being bankrupt) aghast at the sudden and complete decline of the COMECON. The ending of the Cold War has ended the costly arms race not a moment too soon, the USA scaling back considerably on military spending, can sustain their world power status by avoiding economic decline. By drawing the two economic giants, Germany and Japan, into the mainstream of world policies, the responsibility of world order is likely to be shared more evenly in the future.
Unified Germany is likely to have its hands full with a massive resuscitation effort for East Germany (and the USSR to a great extent), the absorption of East German currency on a one-on-one basis was an awesome display of economic strength. According to the recent Kohl-Gorbachev Pact, the price to be paid for German re-unification and continued membership of NATO is the economic rescue of the Soviet Union. The situation in the USSR must have been much more appalling than meets the eye, given that Gorbachev was ready to buck the Soviet military hierarchy by agreeing to such heresy he has gambled that he can contain their visible disgruntlement in contrast to that of an aroused, irate and denied populace.
The western countries will be hard put giving economic sustenance (a latter-day Marshall Plan) to other countries of Eastern Europe, drastically curtailing the normal flow of their once-generous aids and grants to Third World countries. This may not happen all of a sudden, in the next few years the aid in the pipeline will slowly dry up. This is not to say that donor nations will not pursue their independent nationalistic policies targeted to their own favourite nations (and leaders thereof), some even out of a self-serving need of selling their own products by tied economic and military credits. The post Second World War generosity, lasting till the 80s, is not likely to be repeated, Third World countries addicted to annual doses of external loans and credits are in big trouble (addiction of any kind usually is).
Japan’s historical penchant may have been the establishment of an Economic Co-Prosperity Sphere in Asia but having felt the heady effects of world economic power, psychologically it will tend to compete with USA and Germany (among the G-7 countries) in providing economic aid to Europe and the USSR (given that the Kurile Islands problem is solved soon). While there may not be a cut in Japanese economic aid to the Asian Third World, Africa and Latin American countries may feel the effect of cutting back. The Four Tigers of the Asian economic miracle, South Korea, Taiwan, Hong Kong and Singapore, are not in a position to distribute economic largesse as yet, moreover Japan has a commitment to its great neighbour, China, to keep aid at optimum levels.
Intelligence (and intelligent) analysis by the G-7 countries must conclude that the stoppage (or the slowing down) of economic aid is a sure recipe for future anarchy in the Third World. While it is true that a large portion of economic aid lands up in the pockets of the corrupt (and scum) of this Earth, enough aid does go through to sustain the development of critically needed socio-economic infrastructures. The acquittal of Madam Marcos on corruption-related charges has been a disaster of the first magnitude, it will encourage the many Marcoses of the Third World in the belief that the looting of the public till is perfectly safe, on the other hand it will usher in a new form of Ceaucescu Roulette, once a corrupt Government is overthrown, street justice of the type meted out to the Ceaucescus will come into vogue so that the corrupt do not escape to mingle with the Beautiful People somewhere in the sun (the rich people’s sun, that is). The deterioration of economic infrastructures, the collapse of public sector systems and spiralling double, triple-digit inflation leads to social disorder, never below the surface anyway in the misery of the debt ridden nations. One of our problems is also the predilection of some Third World nations for regional hegemony. India (and now Iraq) have delusions of regional grandeur, export of destabilisation among its neighbours and brow beating and/or blackmailing them by display of their military might. Iraq has just invaded Kuwait for no real reason but to gobble up their oil wealth, an earlier try at oil-rich Iranian Khuzestan Province having failed miserably. Some of their neighbours can well afford to maintain a semblance of military balance, most cannot but have to divert precious resources to maintain their self-respect and independence, in that order.
With aid in precious short supply, the population boom proceeding apace, Third World countries (G-77) must formulate a unified foreign policy to preclude Rajiv and Saddam-like military ambitions in the bud while developing an economic plan to buffer the member nations against impending disaster. While concerted policy would be eminently preferable, experience shows that lip service punctuated by aimless rhetoric will be the modus operandi, therefore, we have to turn to policies dictated out of self-interest, paramount importance being to come to terms with our former economic benefactors. One may think that this route is selfish, when acting out of the supreme national interest all nations must be (and are) selfish.
Since we are concerned with Pakistan’s place under the sun, it is time we started to scramble immediately, asking for a DEBT MORATORIUM. Such suggestions draw from the officialdom of the Ministry of Finance the horrified, pathetic response that this would affect our international financial credibility, this would be laughable except that the bureaucrats are probably more concerned about their own potential job in international finance institutions, what are a few billions of US$ to be paid in interest in the face of that? Negotiations with donor countries and international financial institutions (to be conducted by elected representatives of the people) should request (a) a freeze on all repayments of Principal Debt and interest thereof for an interim period of three years (b) waiving of maximum amount of debt and interest thereof turning it into outright grants (c) re-scheduling of that debt and interest thereof which cannot be waived (d) request for repayment of debt and interest thereof in the form of goods, commodities and services (e) future aid only in the form of grants except for vital socio-economic projects in sectors such as energy, telecommunications, etc and (f) help in identifying all those individuals that may have skimmed off the foreign aid. An important point to remember is not to go the Alan Garcia (of Peru) route, a debt must be honoured if it is so desired by the creditor.
The USA is part of the protest against the established EEC policy of protectionism for its farmers, particularly moderate to huge subsidies, we must ensure free entry of our agricultural products into EEC countries by convincing them that developing countries with agri-based economies like Pakistan will have problems on the international market. Our trade pattern must be restructured in a positive manner towards increased inter-commerce with Third World countries, our present trade imbalance is largely self-created because of unrealistic commercial policies. While broadening the base of our crucial imports to ensure a more even spread, our efforts must go towards increasing exports to those countries with which we have a negative trade balance.
Our security needs take up quite a slice from our foreign exchange requirements. Over the past decade we have been extremely lucky that our policies have coincided with the strong US anti-communist stance of past years, US military aid (easy credits and outright grants) have modernized our defence structure in all the three services. The US threat perception has certainly changed with the phasing out of the cold war, while the natural assumption is reduced military assistance to Pakistan, the emerging threats arising in the region (Iraq, for instance) starkly points out to our continued role as a moderating force, US support cannot really diminish in the present context unless it abandons this region completely.
We are part of the “Third World’s (ECONOMIC) War”. While pursuing nationalistic policies, it is incumbent upon us to work towards an economic consensus in the Third World. The economic amelioration of our masses in the future depends upon on our taking sound economic initiatives with respect to our creditor nations and future trade development.
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