By Shahid Javed Burki
current approach towards the devastation caused
by the recent earthquake is to provide expeditiously
and efficiently relief to the affected population.
This is understandable given the weather in the
region and the vulnerability of the survivors. As
winter tightens its grip, families living without
shelter will have to be provided cover or else their
suffering will increase enormously.
Some aid agencies have begun to predict that the
cold weather will take a heavy toll on the population
that is still reeling from the blows they received
on October 8.
That notwithstanding, the government will need to
turn its attention to rebuilding the economy of
Azad Kashmir. According to a recent news item, Dr
Salman Shah has requested the large aid agencies
— the World Bank, the Asian Development Bank,
USAID, and Britain’s Department for International
Development — to send experts to Pakistan
to help the country plan the future of the areas
affected by the earthquake. This is a good step
but before the experts arrive, it would be useful
if the government spells out the approach it would
like to follow. Islamabad should think out of the
box and be bold in developing a strategy that the
experts should be asked to flesh out.
My suggestion is that the central element in this
strategy should be to build an urban economy in
the region while encouraging the development of
the area’s natural resources. As a result
of the earthquake, there will be a quantum jump
in the number of absolute poor in Azad Kashmir,
from about a third of the population to as much
as three-fourths in 2005-06.
With so many schools destroyed, the proportion of
enrolled students will decline precipitously. With
the destruction of so many clinics and hospitals,
the incidence of disease and the rate of mortality
— in particular maternal and infant mortality
— will increase and life expectancy will decline.
These are not conjectures; all of this will happen
during the course of this year. Over the short-term,
no matter how much assistance is provided, the area’s
economy will go through a wrenching restructuring.
It will also be seriously impoverished. The share
of agriculture in the economy will be reduced by
one-half, to only 20 per cent, that of industry
will decline by a third to less than seven per cent.
The economy, in other words, will not have the capacity
to absorb the four million people that remain in
the area after the earthquake. It is my estimate
that the size of the economy will be reduced by
one-half; that traditional agriculture will take
a long time to recover; that the young will suffer
a great deal in the future if urgent steps are not
taken to educate and train them.
In sum, there is a danger that an economy that resembles
some of the dysfunctional areas of Africa could
emerge in Azad Kashmir. Steps must, therefore, be
taken to revive the economy in a way that promises
a better future for the people who have suffered
That is where thinking out of the box becomes the
right approach to take. The need of the hour is
to develop an ambitious program for the economic
and social development of Azad Kashmir, a kind of
Marshall Plan implemented by the United States to
help Europe recover from the ravages of the Second
What should be the focus of this program? It should
have three elements. It should bring new economic
and social activities to the region; it should develop
activities that would use the region’s natural
resources; and it should integrate the region into
the global economy. I will develop below each of
these three ideas.
The plan should take cognizance of the fact that
the only way to accommodate the large number people
displaced by the economy is to urbanize the economy.
The plan should focus on building the area’s
human resource; it should, in particular, provide
higher education to the region’s young. Upgrading
the skill levels of the affected population will
keep the young from being recruited by the Islamic
groups that have become active providers of relief
in the area. Failing to accommodate the young in
the productive parts of the economy could have very
serious political consequences not only for Azad
Kashmir but for all of Pakistan.
In this context the highest priority should be given
to rebuilding old and new cities. Muzaffarabad,
the largest city in the area and also the capital
of Azad Kashmir, should be the focus of attention
in this context. It could become a symbol of the
effort Pakistan will make to improve living conditions
in the part of Kashmir it administers. It is here
that the government should think big and imaginatively.
One way of doing this would be to turn the city
into the center of higher education and research.
The city has the right climate to attract students
and researchers from other parts of Pakistan and
also from outside the country if new universities
and research institutions are built in and around
it. The government should seek the participation
of the private sector in developing these facilities.
This is where the Pakistani diaspora could be mobilized
to provide help. Muzaffarabad should also be developed
into a health center that would provide care to
those who need to be attended to immediately. Improved
health services — in particular those directed
at women and the very young — are urgently
required. The earthquake has left many orphaned
children who must be cared for or else they will
fall into the hands of those who will exploit them.
This has happened in other parts of the world where
orphaned children were not provided adequate protection.
In addition to the provision of immediate care,
Muzaffarabad should be developed into a center of
health education, research and advanced care. The
place has the climate and a pleasant physical environment
which students, researchers and those seeking assistance,
would find attractive.
The second element of the strategy is to exploit
the natural resources of the area. Three of these
— energy, forestry and tourism potential —
should have a high priority. In the sector of energy
the plan should focus on the exploitation of the
sites on the many rivers in the area that can be
used for generating power. Surplus power could be
sold to Pakistan and if possible to India. For that
to happen, a transmission system will need to be
built to carry surplus electricity to the grids
in Pakistan and India.
Forestry is another resource of Azad Kashmir that
has potential if properly developed and exploited.
But it was greatly affected by the earthquake. What
is required is a massive reforestation project.
In this context, it might be useful to borrow from
the program implemented by China in the Heilongjiang
province in which the forest cover was destroyed
by a massive fire. The Chinese established tree
nurseries that provided saplings of the varieties
that were suited for the environment and also had
commercial uses for the population of the area.
As a result of this effort, Heilongjiang province
is now a major furniture exporter.
Once the forestry resource has been reestablished
in Azad Kashmir, the government should encourage
the development of industries based on forestry
and animal products.
In spite of the damage caused by the earthquake,
Azad Kashmir and the Northern Areas have many attractive
sites that could draw a large number of tourists
if proper facilities are provided. The plan should
aim to bring in high-income tourists who will be
attracted to the region by its mountains and rivers.
Skiing and water sports could be developed to attract
high-end tourism. To bring tourists to the area,
the government will need to invest heavily in developing
physical infrastructure such as roads and airports
that can bring in a large number of people not only
from Pakistan but also from Japan, East Asia, Europe
and the United States. Muzaffarabad should be provided
with a new international airport and also linked
with Islamabad/Rawalpindi with an all weather highway.
For the type of program outlined above to succeed,
Azad Kashmir will need to be linked with the outside
world with the help of modern communication facilities.
Once these are in place and once India and Pakistan
have made progress in creating an open border between
the two parts of Kashmir, the state of Kashmir will
necessarily reorient itself towards Pakistan. President
Pervez Musharraf has spoken about the need to soften
the current hard border. This will be one way of
achieving that goal.
The economic rehabilitation program spelled out
above will achieve three objectives: it will help
the economy to grow from the low point it would
reach in 2005-06 by 12-14 per cent a year for the
first five years, and by eight per cent a year in
the next five years; it will have 75 per cent of
the population relocated in urban areas and employed
in the urban sector of the economy; and it will
thoroughly modernize the economy. At these rates
of growth, the economy will go back to its 2004-05
size in six years and then increase further thereafter.
The plan should come with a scheme for financing
it not just from the flow of aid on which Islamabad
has hitherto depended. It should seek financing
through the use of new financial instruments for
mobilizing required resources. The plan discussed
above will cost from $10 to $12 billion over a ten-year
period, beyond the rescue and relief effort that
is currently underway. How can it be financed? This
question should also be the focus of attention of
Here the Pakistani diaspora in the United States
can play a role. It is important for Islamabad to
develop new financial instruments — they could
be called “earthquake bonds” or “Muzaffarabad
bonds” — for raising funds from the
rich Pakistani communities in the Middle East, Britain
and North America. Two types of bonds could be structured,
one that would be attractive for those who wish
to follow Islamic principles of finance. A market
has already developed for “sakuk bonds”
that could be tapped. It would target not only well-to-do
Pakistanis living abroad but also Muslims all over
the world. The other type of bond would target other
potential investors who are also interested in not
only aiding the victims of a natural disaster but
would also want good returns for their investments.
The earthquake that struck on October 8, 2005 inflicted
a heavy loss both in terms of the number of people
killed, the number that were injured, and the number
that were displaced. It is the last category of
the people affected that could have very serious
and potentially disastrous consequences for Pakistan
if steps are not taken immediately to help them
deal with the situation they face. The best way
of doing this is to launch an earthquake rehabilitation
program aimed at fundamentally restructuring the
economy of the area. (Courtesy Dawn)