The best-known sound bites from the George W. Bush presidency ranged from “mission accomplished” to “you are either with us or against us.” For the moment and given the financial crises, the equivalent slogan from President Barack Obama’s young administration is “too big to fail.”
And his widely acclaimed acceptance address for this year’s Nobel Peace Prize – more a major academic lecture than a speech – suggested that this phrase should be relevant to Pakistan.
Is Pakistan too big to fail?
At West Point, Obama declared Afghanistan to be a vital American national interest. Many question that proposition. Moreover, if defanging al-Qaida is job one, why are 40,000 additional NATO and U.S. troops needed to hunt down possibly as few as 100 al-Qaida terrorists? Furthermore, why should the United States expend its treasure to underwrite an Afghan government that is corrupt, incompetent and no doubt suspect in how it won the past presidential election? And since Afghanistan is incapable of paying for the security forces it needs to defeat the Taliban insurgency, is the United States prepared to fork up some $10 billion a year for that purpose?
The risks and dangers are huge. U.S. credibility and influence along with NATO’s future are on the line. Al-Qaida and extremism will hail anything less than outright U.S. success as a great psychological and political victory. And if, as the administration states, Pakistan is the “strategic center of gravity” in the region, “winning” in Afghanistan is crucial to assure stability for its neighbor.
But if Pakistan is this important, why not concentrate on it? The doomsday scenario here is that the insurgency in Pakistan could within months overthrow the government, replace it with a radical regime and then get its hands on some 50-100 nuclear weapons. That fear is overstated for many reasons including the Pakistani army’s role as the force of last resort that will not permit this nightmare to take place.
Yet there is a longer-term reality that should inform our thinking.
Over the next decade some 90 million to 100 million Pakistanis will be 18 and younger. Ill or not educated or graduates of 12,000 madrassas with extremist and anti-American curricula; forced into the cities that will become even more overcrowded and violent-prone; facing poor job prospects; and adrift amidst a society rife with increasingly radical movements, the makings of a perfect storm are being put in place. What can be done to prevent this volatile mixture from blowing up?
The Obama administration argued that General Motors, AIG, Freddie Mac and Fannie Mae and the biggest banks excluding Lehman Brothers were too big to fail. Hundreds of billions of dollars were spent to keep these institutions afloat. Now, if Pakistan is this important to stability and to American interests, placing it in a similar category to these institutions is something to be seriously considered.
Actions must be both preventive and creative in exploiting opportunity.
Demographics point toward a looming crisis. The good news is that any explosion can be prevented because there is time to put solutions in place. But, more importantly, unlike Afghanistan, which lacks the infrastructure for real investment, Pakistan offers a great opportunity for economic growth. At the kickoff of the American-Pakistan Foundation in New York last week, Secretary of State Hillary Clinton made reference to these opportunities.
The theme for action is Pakistani President Asif Zardari’s plea for “trade not aid.” Pakistan needs an additional $8 billion to $10 billion a year in trade and investment to put its economy in order. That would include building or rebuilding the educational and other institutional infrastructure to develop the human capital of the country.
Given the $60 billion invested in GM and more in AIG, and the amounts put into TARP and other programs, the U.S. government ought to consider creating an investment fund for Pakistan. This government fund would rally private investment as a partner perhaps offering insurance as an incentive. The expectation would be that these investments would indeed return profits to the treasury.
Pakistan would have to do its part. It is in the process of writing new laws for bankruptcy and other business-friendly incentives.
Corruption remains endemic, and all investments would have to be fully transparent and made directly into companies and business and not third parties. As Clinton noted in her address to the American-Pakistan Foundation, agriculture, water, power and natural resources offer great commercial opportunities for investment.
Pakistan is too big to fail. It and not Afghanistan is the more vital U.S. interest. If we are prepared to spend $10 billion a year for an indefinite period to fund Afghan security forces, an equivalent amount of investment in Pakistan that could actually turn a profit is surely a very sensible use of our resources.