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Profile of Shaukat Aziz, Pakistan's new prime minister

Published by The Straits Times, Singapore on 2004-06-30

NEW DELHI - When the power brokers of India and Pakistan talk of "the other side," they're referring to each other, mostly with pessimism. The conflicts and tensions between the two nuclear countries have riven South Asia since they gained independence 57 years ago. But this week, the high priests of foreign and economic policymaking on both sides began talking with high hopes about "Shaukat sahib," a man who, in their view, offers fresh prospects for a better relationship between the longtime antagonists.

"Shaukat sahib" is Mr Shaukat Aziz, currently Pakistan's Finance Minister, and soon to be its Prime Minister. At 56, he's what economists and bankers call a seasoned financial player - which augurs well for a country riddled by disputatious Islamic politics and domestic terrorism, both of which have dismayed potential foreign investors. Pakistan, which gets a paltry US$800 million annually in foreign direct investment - India gets US$3 billion, and China, also a neighbour, gets US$53 billion - is in sore need of a technocrat to supervise the polity, these investors say. Mr Aziz will replace Mr Zafrullah Jamali, a political veteran who resigned after a dispute with President Pervez Musharraf, a military man.

Virtually all Mr Aziz's adult life was spent at Citibank, where he rose to the upper echelons of management, including a stint in Singapore as manager of the Asia region, where he was known as much for his colourful personal life as for his record in expanding the bank's business. A canny bureaucrat, once he saw that his chances for becoming Citibank's top boss had evaporated because of internal politics at New York headquarters, Mr Aziz accepted an invitation to head home to become Finance Minister. In four years, he reformed Pakistan's stagnant economy by reducing price controls, opening its markets, improving agriculture production, and trimming subsidies. The deficit was kept to below four percent of the US$75 billion gross domestic product.

"We have brought reforms under a very planned scheme," Mr Aziz says. "We have brought cheers to the economy. In the coming three years we will take the country to eight percent growth rate - and an eight percent growth rate for any economy is very good. Good governance, good political environment and consistency in policies coupled with their implementation and sense of mission would auger well for the country."

That may sound somewhat self-serving, but Mr Aziz has every right to boast a bit. Although a third of Pakistan's population of 150 million is categorized by the United Nations as being poor, the country is about to voluntarily leave the poverty reduction and growth programme of the International Monetary Fund, having satisfied the I.M.F.'s stringent requirements concerning fiscal reforms - and having repaid a standby loan of US$1 billion it received in 2000.

Drawing on his vast network of international contacts, Mr Aziz was also able to help Pakistan gain entry into foreign capital markets. A US$500 million Eurobond issue provided much needed funds for domestic development efforts. A gas pipeline from Iran via Pakistan to India will be completed in a couple of years; it "will be a stamp assurance of revival of bilateral ties between the two countries," Mr Aziz says.

In his conversations with visitors, India almost always figures prominently. "We must address all issues, approach with an open mind and move forward," Mr Aziz told a leading Indian businessman just the other day. "But we need to reduce and remove the trust deficit first."

He must surely have been encouraged by the meeting earlier this week between Foreign Secretaries Riaz Khokhar of Pakistan and Shashank of India (he uses only one name). They agreed on pre-notification of missile tests; opening new consulates-general in Karachi and Mumbai, and raising the strength of their respective high commissions in New Delhi and Islamabad to 110 each; and to a "sustained and serious dialogue on Kashmir."

If bilateral relations improve through such confidence-building measures, both countries can almost certainly expect their current two-way trade of US$2 billion to double or even triple within a year or two. That's because the smuggling of consumer goods through their porous border of more than 1,000 kilometres is estimated at between US$2 billion and US$3 billion; conventional trade would transform this "underground economy" into sounder bilateral business. Mr Aziz has a precedent concerning such trade: the annual trade between Pakistan and neighboring Afghanistan used to be about US$500 million annually. Once trade relations were regularized through a pact, the official figure rose to US$1 billion a year.

But however well-intentioned the bilateral discussions between India and Pakistan, it's going to take a while before economic - let alone political - relations improve. In the meantime, Mr Aziz will need to pay enhanced attention to domestic governance, including issues such as poverty reduction, ending Muslim militancy and job creation for the millions of college-educated Pakistani youths whose frustration leads them toward Islamic stridency.

"You have to have steel nerves and rise above everything else," Mr Aziz says.

In addition to his own acumen, he has several models. One is the late Dr Mahbub ul Haq, who served as Finance Minister in the cabinet of the assassinated President Zia ul Huq. Dr Haq, who created the World Bank's annual World Development Report and later the annual Human Development Report of the United Nations Development Programme, always emphasized not just market economics but sustainable development as well. That meant paying keen attention to issues such as gender parity, health-care, welfare of peasants, and universal education. That also means cutting back on defence expenditures, which eat up seven percent of the GDP.

Mr Aziz has also acknowledged that Pakistan will be looking more towards the East - specifically, Singapore. In his conversations with Prime Minister Goh Chok Tong - who visited Pakistan last week - Mr Aziz discussed the incipient Free Trade Agreement between the two countries, and the resumption of flights to Pakistan by Singapore Airlines. "Singapore is a model of free trade," Mr Aziz says, "and its clean governance is a model for all of us."

Now that he will become Pakistan's Prime Minister, Mr Shaukat Aziz has an opportunity to emulate the models of free market economies and good governance. It's not going to be easy, especially given the volatile nature of Pakistan's domestic politics, the deep-rooted corruption in the bureaucracy, the ever-present threat of a military coup, and the growing influence of an Islamic umaa whose resistance to modernization and change is relentless.

But Mr Aziz is a tough-minded man who's traveled a long way from the exclusive boardrooms of Citibank to the raucous political courtyards of Islamabad. His newest job shouldn't faze him.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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