December issue 2004

“Reconciliation will clearly help improve the country’s political atmosphere”

– Prime Minister Shaukat Aziz

There are no Pajeros lining the driveway of the Sindh Governor’s House in Karachi. Neither does one see a stream of visitors with parchis lurking in the corridors. Notably absent are gun-toting guards who formed part of the erstwhile Prime Minister Zafrullah Jamali’s entourage whenever he was visiting Karachi.

That’s not the style of the latest entrant to the Prime Minister’s office. Banker turned finance minister turned prime minister, Shaukat Aziz is clearly uncomfortable with the trappings of power. Put it down to his middle class background (“I’m proud to have risen from the ranks of this class”).

Is he equally uneasy in the murky world of politics infested by some of the deadliest sharks around? Not so, by his account: “I think if you have values and integrity and a high sense of achieving results, you can look anybody in the eye.”

“You have been very negative in your style of questioning,” the PM ticks me off at the end of the interview. Maybe, but they are questions people want answers to… “A lot of the rumours are so much drawing-room chatter… Why can’t we focus on the positives,” he says.

Is he part of the “positive” initiative of reconciliation? Has he met his old friend, Asif Zardari? “Yes, I know him, but I haven’t had the time.”

His three days in Karachi are spent in other prime ministerial pursuits…

Q:Asif Zardari is released after an eight-year prison term, General Musharraf condoles with the Sharif Brothers and there is talk of a caretaker government headed by Mushahid Hussain. What is your take on all these developments. What’s the deal and where does it leave you?

A: This is all part of the political process. In a government, everybody involved in politics and governance keeps in touch through various channels. I certainly do that. Others do it and this is part of a healthy political process. So that’s what you see happening.

I think, this will clearly help improve the atmosphere and [bring down the] temperature in the country’s political process.

Q: Then why all this talk of foreign pressure and domestic compulsions on General Musharraf to release Zardari?

A: I don’t think that’s the case. I think you maybe reading too much into it. If I were to tell you of all the people I’ve talked to and met in the last one month, I think it would start plenty of stories. Eventually, this happens and this is part of the political process. This is not something new.

Q: This process of reconciliation that you talk about, where does it leave your present coalition partners. Will they support it? The MMA is already on the warpath on the uniform issue.

A: No, all parties have to support this, including the MMA. I think we are in the period of a democratic process which allows any party to come and express their views, hold meetings. So long as they do it within the realm of the law, there’s nothing wrong in that. I think Pakistan’s political scene is maturing, evolving, and all this dialogue between the various stakeholders is an important part of the process. This does not mean that we agree on everything, but at least we get a chance to exchange views, so the political process goes on.

Q: When you talk about reconciliation, who exactly do you have in mind — only BB, or Nawaz Sharif as well?

A: The government is committed to engaging with all political forces and improving contacts and dialogue between various parties.

I think this is healthy, I think this helps strengthen democracy in Pakistan. Just before I left on my trip to India, I went to the office of the Leader of the Opposition, and we had a 90-minute dicussion on various issues. Since then, I’ve met other leaders. So have various people in the government. This is all part of the process of understanding each other’s position. That doesn’t mean we agree on everything, but at least we appreciate each other’s position.

Q: Why the rumours of elections being held next year…

A:I think the rumours are designed in drawing-rooms and end there. The truth is that next year we will have local bodies elections. The general elections will be held on schedule in the year 2007.

Q: Today’s newspapers carry stories of the poor attendance of ministers at Senate sessions, despite your repeated requests. For instance, yesterday only seven ministers out of 28 attended. Why appoint ministers who can’t even be bothered to attend sessions?

A: Actually we have a rotation system where the ministers are required to be there if they have to answer questions. In this particular case that the paper reported, Babar Ghauri, minister of ports and shipping, happened to be in Karachi because we were opening a project yesterday at Port Qasim. He had applied for leave but I think it came in late. The practice is that whenever ministers have to attend a function elsewhere, they send in a leave application.

Q: So you are saying that the business of legislation hasn’t suffered due to a lack of quorum in the two houses?

A: No, the business of government has proceeded on track. No legislation has been delayed, all legislation has been passed in the National Assembly. For a few days, we did have a problem. This was right after the announcement of the new government. Also, a lot of people were away for the UN General Assembly session. That has since been corrected. We organised ourselves, we got the whips working and I think we have had a quorum all the way through.

You people read one headline in a newspaper and you start looking for an issue which may or may not exist. This one doesn’t exist.

Q: Ministers absenting themselves from Q & A sessions in Parliament or the Senate is an issue given the size of your cabinet. You promised to review the performance of your ministers…

A: We have about, I think, 28 ministers… and we then have ministers of state. It’s a large cabinet, but compared to many other countries, it is very similar. Any time you have a political process, you have to bring in people. We are particularly proud to bring in new people, first-time ministers, so that they get exposure and training. Ministers of state work under the minister and they are given specific responsibilities. They learn the ropes and are part of the future political process.

What we have also done, which is new to Pakistan, is that every minister, along with his minister of state, and the federal secretary, were asked to give us their goals by divisions. It was a bottoms-up process.

Then intensive discussions were held and now the ministers have a clear idea of what they have to deliver in the next 12 months. Every three months, we will review where they are on each target. I was in Sri Lanka just recently talking to President Kumaratunga, and she said “I believe you’ve started this (review process), let me tell you I started it five years ago. It’s a very good exercise because it puts a clear sense of accomplishment and result-orientation in the role of a federal minister and a federal secretary.”

Pakistan is traditionally activity-driven, but not necessarily result-driven. But we think this process will help. Every three months we will review the performance, starting from January, and we will share the results with the press and the people so they know what’s happening.

Q: For a poor country like Pakistan, such a large cabinet does not necessarily mean a more efficient government…

A: We can manage this [set-up] very efficiently. We need to build, to train the people. Twenty-eight ministers or so is a very healthy number, and they have deputies as well. I think cost is not the issue. The more appropriate issue is, can they function effectively. So far, I think, they are functioning very well.

Q: Coming to the economy, the macro-economic indicators are sound, but economic prosperity has not filtered down to the masses…

A: The economy of Pakistan has gone through a major transition in the last five years. Five years ago, we were in a near bankrupt situation. Progress was stalled, investment was low and we were living from one IMF tranche to the next. So we decided to undertake a programme where we would permanently get out of this mould and become self-reliant. What we have achieved in five years is quite remarkable in the history of Pakistan. We have achieved self-reliance. We are in a new era of economic management which will require different skills, both within and outside the government. We will be more market-based, we will be accessing more capital markets, we are retooling within the government, to get people with the right expertise. In the past, many bureaucrats made careers by learning to deal with the IMF, and now obviously those skills are not needed. So what we have done is migrated from the IMF to international capital markets.

Pakistan is experiencing high growth today. Last year it was 6.4 per cent, this year it’s 6.6. It’s good for everybody. Any growth at this level has to impact on both poverty and income levels. Our per capita income last year was up to 650 dollars, higher than most of our neighbouring countries, except Sri Lanka. People ask whether this is trickling down to the people. Poverty in Pakistan is largely in the rural areas. We are working very hard to increase agricultural income so that poverty in the rural areas is alleviated.

We also believe that now Pakistan has seen the emergence of a middle class. This year we will produce and sell 500,000 motorbikes. Three years ago, it was close to a 100,000. We will sell 100,000 cars this year; three years ago, it was 30,000. That creates the trickle-down effect. If I buy a new shirt it’s the tailor who makes it, so what I pay trickles down to him. And what the government does in a high-growth situation is, open the doors to people to benefit from it. If you go to an average retailer anywhere in Pakistan, he’ll tell you that this Eid, compared to the last Eid, his sales were 15 to 25 per cent better. There’s more liquidity in the market, people are spending more, they are earning more. The challenge we face is in equity of income, and that is why this emergence of the middle class is very important. The more people earn, and capital formation and wealth formation takes place, the more people spend. When they spend, money trickles down.

Q: What about generating employment?

A:Our other challenge is unemployment, we are working very hard to create jobs today. Pakistan is in a unique situation because where we have jobs, we don’t have the people, where we have people, we don’t have the jobs. This is a reflection of our education system, the reflection of lack of skills training. There are many industries today where if you talk to the enterpreneurs, they’ll say we need technical people but we can’t find the right expertise.

Today Pakistan is also seeing investment rise. Last year, we were up 18 per cent, this year we’ve moved even higher. Many industries are expanding, textile has done a fabulous job in expanding its capacity and modernising.

In cement, we will double the entire production capacity of the country in three or four years. Major expansion is taking place in several areas. The new areas of investment are telecommunication, housing and construction, information technology, manufacturing in general and agro-based industry, and in oil and gas. These are the areas where we are seeing more and more interest coming from inside and outside Pakistan which will give us the growth-rate we are hoping for.

Now a major part of the poverty alleviation programme has to do with the role of women in Pakistan. We have started an aggressive program of micro-finance. Ninety per cent of the borrowers are women. Women can be good entrepreneurs while living at home. If they get a loan of 20,000 rupees from an institution, they can change their whole lifestyle. There are many women in rural Pakistan, who are borrowing from micro-finance and buying a few sheep and goats or poultry, which means additional income for the family.

Q:You paint a very optimistic picture, but the ground reality is different. The poverty levels have risen, and there have been many instances of suicide due to unemployment.

A: But then you are painting a very pessimistic picture. I think we need to put good things in perspective. There are many people with not much opportunity to get jobs. We are hiring them in government, we are encouraging private sector investment, we are spending on infrastructure. All this creates opportunity. Our view is that we have to create a culture of self-employment, of self-generated income by giving people credit. We are launching a six-billion rupee program for small and needy enterprises which will allow people to generate income on their own.

There are two other areas I’d like to talk about which really affect the poor more than anybody. One is the police, and the second is the judicial system. We have proposed amendments in the police corps, which will allow people to seek legal remedy.

I’ve talked with several groups of people, while I was contesting my by-election in Thar and Attock. They said that more than jobs and prices, please help us with police and judicial reform. And we are now coming up with amendments in the next National Assembly session, which will allow people to breathe comfortably.

Another thing we are focussing on is basic needs like clean drinking water, basic health, basic education. The development expenditure is the highest we’ve had in a long long time. Even in Karachi you can see that the roads are becoming better.

Q: How about security? Foreign investors are still shy of investing because of security concerns.

A: Security is an issue in most countries. Pakistan is no exception. For a couple of years, we’ve had several incidents which created a negative image for the country. I myself was a victim, as you know. Today, the situation is much better, even in a city like Karachi. Our law enforcement agencies are better equipped and better trained to handle such situations. We have also invested a lot in this.

On this trip to Karachi, I met a cross-section of people, who feel things are getting better. Of course, in any large city of 15 million people, things can happen, but, by and large, people are feeling more comfortable. However, we are not complacent. We feel we need to do much more in security. Travel into Pakistan has increased a lot. Today, if you’re overseas and you want to come in, you may have difficulty finding a seat. Recently we did a random check and hotels in Karachi, Lahore and Islamabad were all full. A lot of these are convention travellers. In Islamabad alone, we had the parliamentarians meeting and the AIDS conference, which brought in a lot of delegates from overseas. There are many events taking place in Lahore and Karachi as well. Besides there are so many new expansion programs going on in the private and public sector, more and more people are travelling here, looking for business. This is a good sign. But we can never be complacent on security. We are determined to keep improving so that we can ensure safety to our people and to people who want to visit Pakistan.

Q: Yesterday you talked about floating the Islamic bond at a function of the Karachi Stock Exchange. The Islamic bomb caused a furore in the west. How will people react to the ‘Islamic’ bond, given the present world scenario?

A: It’s a very standard thing in the world — Malaysia, Bahrain, the UA.E. It’s called ‘Sukuk’ but I used the term Islamic bond so that people could understand. It’s a shariah-based instrument. It’s not something that was created yesterday, it’s been around for while. Many Islamic countries have raised money through this, we’re catering to groups of Islamic investors. It’s a very standard product.

Q: People see you as Mr. Clean. How have you managed to survive in the murky world of politics.

A:Thank you for acknowledging that my hands are clean. I’m very proud of that. I can look anybody in the eye, and say that whatever decisions I’ve taken in the past and since I’ve become prime minister, they’ve been in the national interest, and it was never due to a personal agenda. Nobody has asked me to take decisions which compromise that.

I think people have wrong notions about many things. One is that every time somebody asks you to do something in a political government, it is wrong. For example, I had many requests from people who wanted to be transferred or whose promotions were jeopardised. I investigated them and quite a few were genuine. But in terms of integrity and in terms of doing the right thing, I see no reason why anyone should do otherwise. If you yourself have no skeletons in the cupboard, it can be done.

I think if you have values and integrity, if you have a high sense of achieving results, you don’t have to part with your values as long as you have conviction.

I have not received any unreasonable request, where there is any personal benefit or personal enrichment to anybody. I know you look surprised, but this is true.

Q: You are a Prime Minister without a political base and a constituency.

A: But I’ve been senator for two years, and I was finance minister in a political government. Finance is such a crucial part of the government, you have to take decisions every day — and I take hundreds of decisions a day. Even now. When you visit us in Islamabad, please come and sit with me for an hour or two. See what we do.

Q: People are also disappointed that you have made a lot of compromises. In your choice of ministers, for instance. Did you have a say at all in what is seen as an exercise in patronage?

A: In a political process, anywhere in the world, whether it’s Pakistan or any other country, your members of parliament are the group you look to for your choice of ministers. And in a political process, you look for the best of what is available, and try to match their skills with the responsibilities which you are assigning them. As I mentioned earlier, we chose 28 or so ministers because we think this is a very large, complex country to manage, and so long as there are clear goals it can be done and it is being done.

Q: Provided they’re not corrupt. Can you vouch for these people?

A: Absolutely. I have no evidence of corruption of my ministers at all. It’s a public system now, it’s very transparent and open. In the old days, you could probably influence a bank to give a loan. Now 85 per cent of our banking sector is in private hands, and the ministry of finance doesn’t give loans, doesn’t write off loans, they’re not involved in all this any more. Contracts are all transparent, with open bids. You look at the two telephone licences we just gave for cellular systems. We had open bids. Look at the privatisations: everyone has looked at them top, bottom, sideways, there’s nothing [to hide] it’s all done in the open, live on television.

For aircraft being bought by PIA, the government has put in a clause, that they will disclose all agents, advisors, companies, individuals who were involved in this process and, if later, it’s found that this has not been disclosed then the contract is null and void and fraudulent.

You’ve got to think out of the box. If you go for transparency, if you’ve disclosed everything, you will find that the probability of people misusing authority will be reduced.

Q: The recently introduced dual-office bill perpetuates the status quo and doesn’t do anything for strengthening democratic institutions. Any comments?

A: I think this bill was passed through due process through Parliament. And with the appropriate majority. The bill has now been signed by the acting President. The bill says that this will last till 2007, and it’s a one-time event which will allow the democratic process to take shape.

Q: In what way?

A: You will have a smooth transition from one system to another. It’s really the transition period you’re talking about.

Q: There are two centres of power at this point, and most people see you as a rubber stamp or a lameduck prime minister.

A: I think the constitution of Pakistan clearly defines the role of the president and prime minister of Pakistan and we are following that. We obviously consult each other on major issues. The President has a major role to play because of what he has been doing and his stature in the world. He’s a source of strength for us in foreign policy. When he travels, everybody looks up to him as one of the leaders of the developing world and I think that’s an asset for Pakistan. Not every country in the world has a president who has a profile like that.

My rapport with him is also very good, because for the first three years, he was the chief executive while I was the finance minister. He’s a delegator, he’s not the type who interferes, even when he could. He’s obviously interested in Pakistan’s welfare. If he hears or sees something which he believes is not in the country’s interest, he’ll pick up the phone and ask.

People who know the President know that he is a very good leader, he delegates and he’s not the type who micromanages.

Q: You’ve decided to retain the portfolio of finance minister. However, if you had to make a choice between being finance minister and prime minister, what would you choose?

A: Naturally, if one is given the responsibility of prime minister… that is obviously the chief executive of the country. However, many countries have prime ministers that keep certain portfolios like Malaysia where the prime minister is also the finance minister. I have retained the finance portfolio, but we do have an advisor and two ministers of state in finance.

But if the chief executive of the country is involved in this portfolio, it adds value: quicker decisions, quicker actions have been taken, and we have benefited from this arrangement. We very pleased with the way it’s working.