There is serious talk in the American policy circles to change the relationship with Pakistan and to move towards an association that places much greater emphasis on a long-term arrangement.

Such an arrangement would not only provide assistance for strengthening Pakistan’s security forces but also for economic development. It has finally been recognized that there is no military solution to Pakistan’s problems, especially those that emanate from the increasingly disaffected populations of the tribal belt and the North West Frontier Province.

There is a deep and growing resentment among these people that the world, in particular the United States, has not treated them well. This has especially been the case since 9/11 when the United States, supported by Pakistan, launched an intensive military campaign against the Taliban regime in Afghanistan. The impression, widely held for some time in Washington, that the Taliban had been decisively beaten turned out to be wrong. The Taliban are reasserting themselves now and their revived campaign has begun to trouble not only the United States but also its NATO allies who have an active presence in Afghanistan. What went wrong?

A number of things went awry. Taliban’s defeat brought to power in Kabul the ethnic groups who had never been comfortable with the much larger Pakhtun population that had economically and politically dominated Afghanistan for decades. Political power brings economic rewards; the non-Pakhtun groups benefited from the economic revival, albeit slight, that followed the occupation of Afghanistan by the US and NATO.

The Pakhtun were largely marginalised even though Hamid Karzai, the country’s president, is a Pakhtun. In the absence of secure bases of income, the Pakhtun population in the southern and eastern parts of the country turned to the cultivation of poppy and Afghanistan became the world’s largest producer and provider of heroin. There is now a close relationship between the people who run the country’s drug economy and the dissidents who constitute the Taliban.

Since the majority of the Pakhtun population lives on the Pakistani side of the border – Pakistan has an estimated 25 million of the 40 million people who identify themselves as Pakhtun – it should not have come as a surprise that the country’s tribal areas will join in the fight. Their discontent began to seep into the rest of Pakistan and the rest of Pakistan also became restive.

The present economic downturn in the country is providing an added impetus to the groups operating out of the northwestern hills to increase their activities not only in their own areas but also in other parts of Pakistan.

The only way to counter these trends is to ensure that the Pakistani economy does not suffer a severe and long term decline, that economic revival is not concentrated in the areas that benefited from the short-lived prosperity that marked the second part of the period of President Pervez Musharraf, that a broad based programme of economic development is initiated that provides employment and incomes to the country’s young population, and that a special effort is made to bring in the tribal areas and the NWFP into the economic mainstream.

The United States seems to be getting ready to change its course in both Afghanistan and Pakistan. A bill has been prepared by two powerful senators to reflect this change in sentiment. Its authors are Joe Biden, a Democrat, who heads the Senate’s Foreign Relations Committee and Richard Lugar, a Republican, who is the senior most member representing his party on the same committee. The bill will have Washington provide Pakistan $7.5 billion over a five year period and would be directed at the country’s economic and social development.

“Our bill represents a genuine sea-change – one which will set the United States’ Pakistan policy on a safer and more successful course. For too long our policy towards Pakistan has been in desperate need of serious overhaul” said Senator Biden while introducing the bill.

“ While our bill envisions sustained cooperation with Pakistan for the long haul, it is not a blank check”, added Senator Lugar, the bill’s co-sponsor. The two senators believe that the bill has the support of the House of Representatives, the lower house of the Congress and, once passed, will be signed into law by President George W. Bush. This process is planned to be completed by September before the Congress departs for the election period.

In addition to this assistance for economic development and social improvement, the Americans will continue to provide billion dollars a year for military purposes, an amount that includes the logistics support Islamabad gives for Washington’s efforts in Afghanistan.

If the American policy towards Pakistan gets changed in the direction that Senators Biden and Lugar want it to go, it will signify a fundamental change in the relationship between the two countries. The date presented in the accompanying table shows how fickle the US was in the past in aiding Pakistan. It provided large amounts of support when the country was ruled by the military; on average $100 million a year during the first part of the period of Ayub Khan, $217 million a year during the period of Zia ul-Haq and $333 million a year when Pervez Musharraf held the reins of power.

While it is true that the American strategic interests were strong in the area in which Pakistan is located when the latter was governed by the military, it is also the case that Washington felt more comfortable in working with the military than with the civilian leadership. If the initiative taken by Senators Biden and Lugar produces the intended results, it will not only increase five times the flow of capital from the US to Pakistan. It will also be the first time that such an increase would have occurred when the civilians were in charge.

As Pakistan enters into a new and possibly economically more productive relationship with the United States, it is important that the civilian leaders prepare themselves to deliver the expected results. Their actions in the economic arena have not given the confidence that they will be able to do that.

While many economic problems the country faces today are inherited from the Musharraf period, it has to be recognized that the transfer of power took place nearly six months ago. This was a long enough time to display competence, confidence in economic matters, and the willingness to take hard decisions. The evidence of any of these is still not there.

Pakistan has a long tradition of postponing reform when large foreign capital flows become available. There is also the feeling in the Pakistani political and economic establishments that the country will be rescued by its friends when the times are really difficult. This has happened in the past on several occasions. It seems to be happening again.

The world of finance has a phrase for this phenomenon. “Moral hazard” is the term financial people use when managers postpone action and take risks in the belief that their enterprises will not be allowed to sink.

Policymakers in Pakistan have behaved in much the same way. It has been recognized for many years that Pakistan needs deep structural reforms in its economy. In many countries such reforms have been undertaken when there was a crisis. In Pakistan’s case this was not done since crises opened up foreign coffers. It could be different this time around if the new leaders study the country’s history and draw some lessons from it.