Alms for the Rich


London -- For Pakistan, America's front-line state in rolling back Soviet imperialism in Asia, the Afghan war is over. What justification remains for Pakistan's massive military machine lies solely in its security needs vis-a-vis India. But will Pakistan's generals still find reasons for continuing one of the world's most lopsided military-social spending imbalances?

This is the question posed by Mahbub ul Haq, who served in Pakistan as President Zia ul Haq's (no relation) minister of finance and who has now returned to his former profession as an economic gadfly, deflating the pretensions and gobbledygook in the stalled and stale debate on poverty, misery and war in the Third World.

As Zia's finance minister, Mr. ul Haq tried with some success to push government spending program away from large city hospitals toward rural health clinics, and its attention away from new airports to land reform. But as the military dictator's money man, he also had to write whatever checks the army asked for.

He doesn't deny his compromises, but he did do one very brave thing that, in the charged atmosphere of Pakistan's proxy war with the Soviet Union, could easily have cost him his life.

When Michael Camdessus, the managing director of the International Monetary Fund, came to talk about Pakistan's chronic debt problem, Mr. ul Haq gave him some advice: "Why don't you concentrate your fire less on our civilian debt and demand we control our military debt? After all, debt is debt."

Mr. Camdessus, the world's top financial trouble-shooter, was taken aback. In those days, the IMF used to tread exceedingly warily on this touchy subject, although it had less compunction about telling a country to remove its bread subsidies. "What would your president say if I started poking my nose into your sovereign affairs?" asked the man from Washington.

"I tell you what," said the mischievous finance minister. "Just say we have to give you our military debt figures. Then when you see how awful they are, you can point out that they are unsustainable. I'll do the rest."

These days the IMF is less averse to criticizing military expenditure, but five years ago, especially if it meant stepping on America's Cold War interests, it regarded the subject as taboo.

Western hypocrisy complains that Third World countries waste scarce resources on arms, yet it has refused to use the levers at its disposal to enforce restraint. Not only did it use every lure, including government subsidies, to peddle armaments to these countries, it has rewarded the big military spenders with twice as much economic aid as the more modest ones.

The more one listens to Mr. ul Haq's analysis, the more one realizes that military spending is only half of it. We have been bathing in eyewash the last 30 years. Third World development has tended to favor the well-to-do, not the poor, and while the West said it was doing all it could to end Third World poverty, it was hindering those Third World countries that wanted to push their economic development.

The U.N. Development Program estimates that the way the global markets of the industrialized world are protected from the free movement of goods and people, combined with the higher interest rates charged on Third World debt, means that the poor nations are losing $500 billion worth of market opportunities every year. On top of this is the $50 billion a year more that the commercial banks and international financial institutions collect in debt repayments than they give in new loans. So much for the free economy.

No one doubts that the Third World countries themselves must do most of the work of their development. "If they can cut their military budgets," argues Mr. ul Haq, "privatize their inefficient public sectors and correct their distorted development priorities, they could save $50 billion a year for the things that matter: basic education, primary health care, family planning, safe drinking water and nutritional programs."

The consequence of 30 years of bad governance on the part of rich and poor nations alike is this: The income disparity between the richest billion people and the poorest billion on our planet of 5 billion has doubled. In Sweden the richest 20 percent earn five times as much as the poorest 20 percent, and in the U.S. nine times as much. But in the world at large the difference is 150 times!

The fall of Kabul completes the Cold War's unfinished business. Let us now get down to the business of a new human order undistorted by superpower confrontation and narrow-minded nationalism. I think that Mahbub ul Haq could help us with that.

Jonathan Power writes a column on the Third World.

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