Many years ago, in a conversation with the late Eqbal Ahmad and me, that wonderfully wise and witty lawyer friend of ours, Raza Kazim, claimed that Pakistan's economy was sustained by periodic and fortuitous helpings of halwa.

According to Raza, it was only a series of lucky breaks that kept the economy afloat and our elites comfortably off, and one day our luck would run out and we would have to settle accounts. It is true that year in and year out, our financial managers report a deficit in our budget as well as in our current account. If a business or an individual constantly spent more than they earned, they would soon be declared bankrupt and their assets seized. So how is it that Pakistan's economy has continued to expand?

Raza's explanation of this economic miracle is very simple and does not rely on any known theories. The first bonanza that came the way of our elites was the 'evacuee property' scam. Immediately after partition, the young state was flooded with Muslim refugees who had left everything they had in India. They were allowed to file claims to property abandoned by Hindus who migrated to India on the basis of their declared assets. As many of these refugees had fled without documents and were desperate, they sold their claims to anybody who could buy them. In many cases, false claims were filed. Inevitably, the whole thing became a gigantic scam in which many fortunes were made. Indeed, many well-to-do families can trace their wealth to that early windfall.

The second lucky break came when the Korean war broke out in the early fifties, and there was a sudden and unexpected demand for jute from the erstwhile East Pakistan which pushed its price to unprecedented levels. This material was required to make tens of thousands of sandbags that were needed by the UN forces. Soon after this windfall, Pakistan became a US ally, and a member of anti-Communist pacts like the Baghdad Pact (later renamed CENTO) and SEATO. This brought in substantial dollops of foreign assistance and foreign trips for our bureaucrats and army officers.

Our next helping of halwa came in the shape of a huge increase in foreign exchange remittances when the sudden rise in oil prices in the early seventies permitted desert sheikhdoms to build their infrastructure and recruit tens of thousands of workers from Pakistan. Along with this army of labourers went engineers, doctors, technicians of every kind, businessmen and conmen. They sent home hundreds of millions of dollars to an economy still reeling from the secession of East Pakistan.

When Pakistan was isolated and ostracized because of Zia's coup and his execution of Bhutto, the elected prime minister, on extremely dubious charges, the Soviets came to the Pakistani dictator's rescue and invaded Afghanistan. This set the stage for Pakistan's return to frontline status, and a sharp surge in foreign assistance. Apart from the billions of dollars that flowed in through normal channels, the cultivation of poppies and the manufacture of heroin in the Pakistan-Afghan border areas went through the roof, and this illicit trade caused huge fortunes to be made. Indeed, many of the vast and vulgar houses built in our major cities are testimony to the money made since then. They are often referred to as "one suitcase houses" as many of them were constructed on the profits made by smuggling a suitcase containing a few packets of heroin to the West.

But no matter how well or badly the economy is doing at any given time, the gravy train doesn't stop for those manning the heights of the power structure. Many politicians, bureaucrats, generals and judges have fed at the trough of the national exchequer. Businessmen owe much of their wealth to the porous nature of the system that has allowed them to evade taxes, under-invoice their products while exporting them and over-invoice their imports. Our feudals have helped themselves to loans and subsidies while exploiting their haris ruthlessly. This steady diet of halwa for our elites continues irrespective of how well or how badly the economy is doing.

After a lean period for the economy in the nineties (which didn't prevent the Bhuttos, the Sharifs and their hangers-on from prospering mightily), many thought that the day of reckoning had finally arrived when default stared us in the face when our nuclear tests and then Musharraf's coup caused a number of sanctions to be slapped on Pakistan. There was much talk of doom and gloom and many editorial writers and columnists (including this one) predicted the final demise of the economy.

But the shocking and tragic events of September 11 had a silver lining for Pakistan. As we swiftly joined the anti-terrorist campaign, financial help started flowing in like manna from heaven. Granted that our exports were hit, but loan restructuring and write-offs helped us to the extent of a billion dollars in the first year, and additional grants helped the rupee to rise in value from 67 to the dollar to the current level of 60. More assistance is expected to be announced during President Musharraf's current visit to the United States.

Is there a moral to be drawn from this view of the Pakistani economy? One is that if you are lucky, money does grow on trees: it's just a matter of shaking it from time to time. But on a serious note, geography does play an important part in determining a country's economic wellbeing. Had we been located in the middle of Africa, for instance, who would have bothered if we had fallen into a fiscal black hole? But given the strategic importance of our region, the last thing anybody wants is a fragmenting Pakistan that destabilizes the entire area.

One problem with having a halwa economy is that rulers, planners and businessmen alike have become so dependent on these periodic infusions of external inflows that it is now almost like a belief in divine intervention to bail us out when we are in serious trouble. Now that the events of September 11 and their aftermath have helped push back the day of reckoning, we will revert to sitting back and waiting for the next bit of halwa to be sent our way.