By: NDCP; National Democratic Consultative Process

A framework of shared geography, language, culture and history along with common

interests in life, make the building blocks of a distinct community. Such a group, besides

cooperation, is always in competition with other human groups for the control of resources.

Therefore, to speak for one’s own community and to defend its cultural, economic and

political interests is very natural.

INTRODUCTION

The history of Pakhtuns [1] is full of stories of valor and resilience. The complex mosaic of

tribal structure of Pakhtun society has proved to be an asset as well as a liability in the history

of Pakhtuns. This pattern of tribes emerged and was strengthened in view of the unique

circumstances faced by our people through different epochs of time. The difficult terrain and

dictates of mountainous geography placed each tribe in separate compartments and

obstructed increased interactions among different tribes. In political terms, this hindered the

process of nation building.

The process of nation building among Pakhtuns has been mostly triggered by external

challenges. Pakhtun national movement has seen different epochs of its existence. The rise of

Shaikh Malli, Pir Rokhan, Khushal Khan Khattak, Mirwais Nika, Ahmad Shah Abdali, Bacha

Khan, Faqir Api and Samad Khan Achakzai were not individual events, which were limited

to the persons of these great Pakhtun personalities alone. Rather, each one of them represents

a unique historical phenomenon in the history of Pakhtuns. In fact, the national aspirations of

Pakhtuns culminated in the persons of these leaders to give a response to the prevailing

historical challenges of their times.

Although the history of Pakhtun National Movement – stretching over a period of more than

five centuries – is full of countless stories of sacrifices but even today, sadly enough, this

Movement has not been able to achieve the desired goals i.e. full and effective control over

the natural and human resources of Pakhtuns for the welfare of the entire people of

Pashtunkhwa.

Several reasons may be counted for this failure but the foremost is the lack of a scientific

understanding of the social processes. Sentimental slogans and emotional catchwords might

prove effective tools in the overall strategy of rallying support for a national cause but, alone,

it cannot actualize national goals.

Today, Pakhtun nation is faced with momentous challenges. As ever before Pakhtun land is a

theater of rivalries among foreign powers and no one seems willing to take our nation

seriously because we have not been able, so far, to present our national cause in a scientific

and convincing way. End of the Cold War in general and the post September 11th world in

particular has confronted Pakhtuns with formidable challenges. The world media and think

tanks are depicting various scenarios for our region. Unfortunately, Pakhtun leadership has

not been able to grasp or express the vision that encompasses Pakhtun national rights. What

should be the response of Pashtun nation to these vital aspects of geopolitical changes that

may sweep this region and how best can they articulate the complexity of the situation for

their national interests? These are questions of momentous importance, which will determine

Pakhtun destiny for a very long time.

Pakhtuns occupy a mass of land, which has been of great geo strategic importance in the past

and will remain so in the future as well. Pakhtuns are living at the crossroads of Chinese,

Indian, Russian and Persian civilizations. ‘The Great Game’ [2] rivalry of the world powers

has not ended and has resurfaced with renewed ferocity.

In the past, Pakhtuns have responded with ferocious vengeance to any encroachment on their

land but all such gallant endeavors were individualistic and limited in scope and effects.

Except the Khudai Khidmatgar Movement of the early 20th century, none of the opposition

movements against the foreign aggressors were organized political movements in the

technical sense. Hence, they could not capitalize on the unprecedented sacrifices rendered in

those movements by all segments of Pakhtun society.

The new circumstances have put our region into a fluid situation that may unfold in a number

of scenarios. Probably, Pakhtun land will be the center stage of many events with radical

implications for its people. This has made the assessment of the present state of affairs, a

matter of great exigency. It is, therefore, imperative that the probable developments must be

rationally conceived and a proactive response be formulated and presented before the

Pakhtun masses.

This region is in the grip of momentous changes. Pakhtuns – left unaware – will once again

be the fuel for foreign rivalries. Therefore, Pakhtun National Movement must be resurrected

and redefined along scientific and modern democratic lines so that Pakhtun national interests

could be actualized in the best possible way.

In order to create democratic structures and systems along scientific lines, which will carry

Pakhtun national aspirations towards the desired goals, it is imperative to make an analytical

study of the prevailing sociopolitical and economic conditions of Pakhtun society. This

analysis will help in creating a framework to build a national movement of all Pakhtuns along

scientific lines. The grand aim of this Pashtun National Movement (See Annexure A for

details) is to bring to an end the colonial division of Pashtuns and unite them in a single

administrative unit of Pashtunkhwa. It is only by exercising their democratic rights and

control over their resources that Pakhtun men and women can achieve full empowerment.

The southern Pashtunkhwa or Pashtun belt of Balochistan is a vital part of the efforts for

national unity. The National Democratic Consultative Process (NDCP) intends to conduct

thorough research on the problems and prospects of Southern Pashtunkhwa that will be

subsequently added to this document. Before that, however, a cursory look at the history of

Pashtun National Movement seems desirable.

PAKHTUN NATIONAL MOVEMENT IN HISTORICAL PERSPECTIVE

Long before the efforts of Pir Roshan to unite Pakhtuns on his revolutionary mysticism and

long before Khushal Khan Khattak’s call for defending the honour of Afghans [3] (Pakhtuns),

Ghories and Lodhies had formed vast empires. But these empires were centered and based in

foreign lands far away from the high mountain peaks and stormy rivers of Pakhtunkhwa.

Rising high in their pride of Pakhtun nature, silent and magnificent, the mountain ranges of

Hindu Kosh, Solayman, Toba, Khyber, Maban, Malakand, and Lawaghar have been gravely

pondering over the tragedy of Pakhtuns. Representing the typical Central Asian nature, these

mountains present a very poignant symbolism of the culture and history of Pakhtunkhwa.

Their defiant looks symbolize the determination of Pakhtuns to continue their struggle against

all odds.

ې و خوا ک کو څوک و هس ګو غرون د دن

يدے شي ک ه تار ن و رف سرون يټ ه ټ پ"Living beside the towering peaks of high mountains, Subjugation is simply unacceptable."

Pakhtuns are basically a Central Asian stock. In fact they are one of the largest nation of

Central Asia. Pakhtunkhwa, thanks to its peculiar geography, could absorb the ancient

cultural traditions of both Avesta and Sanskrit. Nawroz (or New Year’s day falling on March

21) keeps the memory of Zoroastrian times alive and the contents of some Vedas point

towards this land as origin of their composition. But successive invasions and immigrations

brought many more cultural trends. Geography has played such an enormous role in shaping

the history of Pakhtunkhwa that it is very difficult to find any parallel to it in world history.

Pakhtunkhwa is lying on the south eastern edge of Central Asia bordering at South Asia.

Practically forming a gateway to Indian subcontinent, Pakhtunkhwa had been continuously

trampled by waves of invaders and conquerors who were leading towards the "treasures" of

India. For centuries this factor has proved to be of decisive importance in charting the course

of life in Pakhtunkhwa and it has left an indelible imprint on the national character of

Pakhtuns.

The birth of two very important phenomena in our society can also be attributed to our unique

geographical situation. Firstly, the devastating and destructive wars brought about by wild

hordes of invaders created deep ruptures and gaps between different stages of our historical

development and civilization. This peculiarity in Pakhtun history deprived the people of

Pakhtunkhwa of an historical memory of their own existence, rendering them vulnerable to

colonialist manipulations. Like an individual, a nation without memory of the past has

problems of orientations in the present and future.

This is how Pakhtunkhwa lost many of its rituals and books that could have provided her with

an anchorage in the stormy seas of history. This historical discontinuity has created a vacuum

in knowledge about the origin and development of Pakhtun society that is filled very often by

concoctions prepared by colonialists. This historical deformation has turned Pakhtunkhwa

into a society deprived of full-fledged hinges of its own, thus opening it to foreign cultural

and political dominations. The catastrophe brought about by the invasion of Pakhtunkhwa by

White Huns or Ephthalites in the 5 th century A.D. is a case in point that has resulted in the

rupture of the subsequent history of Pakhtunkhwa from the golden age of the great Gandhara

civilization.

Secondly, as Pakhtuns were living at the fringes of different empires for most of the times, so

tribal formation among them has persisted for a very long span of time. Long and old tribal

traditions have engraved particular traits on Pakhtun national culture and psyche. Resistance

against foreign invasions only reinforced tribal and clan relations as they provided Pakhtuns

with the best form of social organizations for mustering their military strength, apart from

maintaining their identity and defending their ancient traditions.

BARRIERS TO STATE FORMATION

Difficult geographical barriers, tribal and patriarchal fragmentations and the persistence of a

primitive type of natural economy had made the emergence of a strong, united and

centralized Pakhtun State awfully difficult. The primitive type of subsistence economy

coupled with very strong unruly traditions were important factors against the emergence of a

strong centralized state as it minimized the prospects for extracting the necessary amount of

taxes for running a strong and elaborate state machine. Apart from colonialist. machinations

and outright aggressions, these factors also provide some insight into the decline of Durrani

Pakhtun State in 19 th century that had emerged in the previous century on the ruins of

Moghul[4] and Safavid[5] empires. As soon as the resources from the external conquests ended,

the Afghan State became weaker and fell victim to colonialist interference and aggressions.

But the most severe blow to the unity of Pakhtunkhwa in the 19 th century came from the

northwest ward expansions of the British colonialists in the Indian subcontinent. British

invasion of Afghanistan in 1838 was a first step to conquer Central Asia and to put an end to

the southward march of Russia. The tough resistance put by Afghans, coupled with European

pressures stopped the onward British march into Central Asia (or the socalled Forward

Policy), but the British did not give up this ambition altogether. To get themselves entrenched

into the borders of Central Asia, the British colonialists occupied and divided the lands of

Pakhtuns by imposing, through an unequal treaty, "The Durand Line" on Afghanistan, a

division that remains as unnatural today as it was at the end of the 19 th century when it was

first imposed.

The colonial administrative division of the lands of Afghans (Pakhtuns) and the decline of the

traditional international land trade through Pakhtunkhwa led to socioeconomic and cultural

stagnation and decline. The clamping of Stalinist Iron Curtain over Central Asia contributed

to the sociocultural alienation of Pakhtuns from their Central Asian roots, pushing them

towards Indian subcontinent where they naturally faced the crisis of identity. This crisis of

identity and historical roots persist to this day. The colonialists utilized this opportunity to

perpetuate their oppression and exploitation of Pakhtunkhwa. But the Pakhtun masses did not

put up with this situation even for a single day. The passes and valleys of Pakhtunkhwa

echoed the gunfire of freedom fighters as generations after generations of Pakhtuns kept the

flame of resistance alive. Pashto literature, particularly Pashto poetry provides a very

powerful depiction of the heroic struggles of Pakhtuns.

THE RISE OF MODERN PAKHTUN NATIONAL MOVEMENT

The rise of modern Pakhtun national movement was also handi-capped and fragmented by

the uneven socioeconomic and cultural development within Pakhtunkhwa. At the beginning

of the 20th century, when a separate province of North West Frontier was established leaving

out the tribal areas, princely states as well as Pakhtun areas of the then British Balochistan, it

was a socioeconomic mosaic of varying colours. Mercantile relations had strengthened their

grip over cities and towns. Stagnant and self-sufficient communal life of the rural areas was

giving way to comparatively advanced agriculture on the basis of colonial land settlement.

This was particularly in Peshawar valley where subsequently a modern irrigation system was

introduced by building canals to utilize the river Swat’s water. These developments turned

the Peshawar valley, which had been the main center of the Gandhara civilization, into a

socio-cultural center of Pakhtunkhwa. The

British were able to create a class of collaborators in the shape of big landowners, Nawabs,

and Khan Bahaders, whose positions consolidated due to colonial patronage in social and

political areas of life.

The southern districts of Pashtunkhwa remained dormant in terms of socioeconomic

development for most of the 20th century. In the meantime, tribal set up was fully intact in

the "no man’s land" or tribal areas as well as among Pakhtuns living in Brit ish Balochistan

who were ruled through Political Agents. This division of Pakhtunkhwa in the spheres of

influence of different Khanates under the umbrella of colonial administration presented yet

another obstacle in the way of ethnic and national consolidation of Pakhtuns.

But the growth of different markets, the expansion of money commodity relations and the

steady penetration of modern economic influences from abroad created the necessary

socioeconomic basis for the growth of the embryo of modern Pakhtun national movement.

The exposure of Pakhtun soldiers to modern influences in British Colonial Armed Forces

during the First World War; the Russian Revolution of 1917, the reforms of Amanullah Khan

in Afghanistan of the early 1920s, and the rise of ant colonial movement in India also

provided a positive impetus to the birth of modern Pakhtun national current.

This was the sociopolitical environment in which the reformist movement of ‘Anjumane

Eslah-e-Afaghina’ was born in the second decade of the 20th century that later on developed

into "Khudai Khidmatgar", (literally meaning Servants of God), the political platform of the

National Liberation Movement. Birth pangs of the National Movement in Pakhtunkhwa were

punctuated by armed tribal uprisings in the mountains where heroes like Faqir of Eppi,

Mullah Powindah, Mullah Saheb of Hadda, and Haji Sahib of Turangzai etc. challenged and

at times even humiliated the forces of the powerful British empire. The tiny Pakhtun

intelligentsia, hailing mainly from religious schools as well as from the few modern schools,

started formulating the cause of modern Pakhtun nationhood and independence.

Maulana Fazl-e-Mahmud Makhfi, a very fine oracle of modern Pakhtun national

consciousness in the early 20th century wrote very passionate poetry under whose influence a

full new generation of Pakhtun poets, writers and political activists grew up. The

requirements of the modern nationhood were very clear in the poetry of Makhfi. For example,

he puts across his views very powerfully in these lines in the very early part of the 20th

century.

خدايه داسې وخت به راشي

چې زمىږ جهاز به هم وي لکه باز په هىا چې

په ترخى اوبى به سم وي

ريل به هم زمىږ پيدا شي تار به هم په هر قدم وي

زه به خپل جرنيل پسې ووم

په دښمن به دوؤ کىل وي

"Oh God! Will there be a time when we shall have an aeroplane of our own?

Soaring high into the skies like an eagle, it will fly over oceans.

We shall have a railway of our own as well as telegraph.

I shall be following my own General to overtake the enemy."

The reformist organization of Anjuman-e-Eslah-e-Afaghina and later the Khudai Khidmatgar

Movement, both in terms of programme and organization, corresponded to the embryonic

national consciousness of Pakhtuns that was gradually developing under the influence of a set

of internal and external factors. The movement, representing general national aspirations,

always consisted of conservative, reformist, and radical elements with the social and political

platforms of their own. These differences were dramatically highlighted during the Ghala

Dher [6] peasant uprising in 1937.

Islam, after its advent in this region through 8 th and 9 th centuries, had gradually integrated

in the traditional tribal code of Pakhtuns—Pakhtunwali. Pakhtuns have been mainly gripped

by the externalities of the religion that became a part and parcel of their lives. The

coexistence and interaction of ancient tribal code with religious traits is a very interesting

phenomenon that is indispensable for understanding the Pakhtun national culture. It also

explains the inevitable and ritualistic religiosity of a Pakhtun on the one hand, and on the

other hand it explains the futility of efforts in injecting religious fundamentalism in Pakhtun

social and political culture as it stands in contradictions with Pakhtunwali. This ambivalence

of Pakhtun character remained as such despite the fact that the religious schools were the

main source for the birth of Pakhtun intelligentsia. They were later to be joined by a handful

of intellectuals educated in modern schools and a few of independent schools run by national

reformers. This small intelligentsia was very soon radicalized and politicized as it found itself

in the midst of a mass upsurge that very quickly spread in all districts of Pakhtunkhwa.

Whatever social or political successes or failures the Bacha Khan led Khudai Khidmatger

Movement might have, the most outstanding contribution of this movement had been in the

area of consolidation of cultural and national consciousness. While opposing the British

colonial authority and successive dictatorial regimes of Pakistan, this national political

platform was of paramount significance for awakening Pakhtuns as a nation and also

reminding the world to take notice of the existence of this nation.

Khudai Khidmatgar Movement was mainly based in rural areas where it built a very effective

mass support base. Influenced by international trends of the 1920s and 30s, Khudai

Khidmatgar Movement was organized along military lines, although it was an army of

nonviolence. Its social composition included peasantry, small landholders, artisans, petty

traders, a sprinkling of intelligentsia, and some of the liberal landowners. It was a

heterogeneous movement in social terms and thus not without internal social conflicts.

Nevertheless, its simple but revolutionary slogans were able to galvanize the masses,

particularly in rural areas. Moreover, unlike the modernist reformist current led by Sir

Sahebzada Abdul Qayyum Khan that stood for collaboration with colonial authorities, the

Khudai Khidmatgar movement opted for straight confrontation with the British Raj. The

tradition of Khudai Khidmatgar movement was continued by National Awami Party in the

1950s and 60s, but it later dispersed in different political groupings due to growing social

tensions as well as polarization in the global politics.

Unfortunately, the Pakhtun National Movement could not effectively penetrate the tribal belt

that played the contradictory role of serving as an ethnic and physical bridge between

Western and Eastern Pakhtuns and also as a political "nonconductor" or buffer zone

separating the two Pakhtun areas. This situation has prevailed for quite some time, although

the tribal belt has also witnessed tremendous social and cultural changes in recent years and

many urban values can be noticed in these areas now.

Taking part in international trade via Afghanistan and utilizing the boom of the parallel

economy in Pakistan, a class of neorich has emerged in this area. In fact it has influenced the

process of capital accumulation in the entire Pakhtunkhwa. The emerging new elite originally

dubbed as "smugglers" by the establishment is gradually gaining social recognition and is out

to challenge the monopoly of traditional Maliks in social and political life. However, the

Pakhtun masses living in the seven political agencies of Federally Administered Tribal Areas

(FATA) are groaning under the repression of colonial laws such as the Frontier Crimes

Regulations (FCR) and they have yet to get a proper constitutional system and access to

justice. Despite the "special" administrative structure in tribal areas from the colonial period,

around seven million Pakhtuns of FATA are joining the mainstream of Pakhtun nation by

growing socioeconomic, political, and cultural interaction with the Pakhtuns of settled areas.

The recent events in Afghanistan have been of great significance for eastern Pakhtuns. As

such, they need a separate and a detailed study. Here we shall briefly refer to them over the

risk of oversimplification, in terms of their impact on the national development. Introducing

the Cold War international polarization to Afghan society, these events have led to great

destruction and tragedies in Afghanistan. Fighting against foreign interference and against

political fragmentation, Afghanistan is bound to become introvert, at least in the near future.

But that is not all. The mass migration of Afghans to the east in the wake of the induction of

Soviet armed forces and the ensuing bloody conflict can prove to be the single most

outstanding factor for the future ethnic and national development of Pakhtuns.

Socioeconomic, cultural, and political intercourse of the Eastern and Western Pakhtuns on

such a massive scale can have far-reaching implications. It has practically done away with the

"Durand Line" [7] and hundreds of thousands of Pakhtuns have become "Dwa Koreez"—

(people having two homes). The presence of such a huge body of Western Pakhtuns, despite

initial complications and political confusion, will ultimately reinforce Pakhtun National

Movement in Pakhtunkhwa.

There has been considerable development in different spheres of life in Pakhtunkhwa during

the last five decades after the emergence of Pakistan. Policies of different oppressive regimes

in Pakistan, based on the negation of nations on cultural and geographical basis, have tended

to hamper free and healthy national development.

Pakhtunkhwa saw severe cultural repression and politico economic deprivation particularly

during the initial post partition years. But in recent decades, a wave of semi urbanization,

made possible through Gulf money, and the development of a parallel economy has brought

considerable socioeconomic and cultural transformation. There has been initial formation and

accumulation of capital, but this capital is going to transport, trade, and real estate business.

Because of the lack of sympathetic attitude of the federal government to improve conditions

for industry in different parts of Pakistan, there is very little industrialization due to the lack

of necessary infrastructure and long distance from the seaport of Karachi.

A middle stratum is rapidly expanding in urban centers of Pakhtunkhwa, strengthening

national intelligentsia. National consolidation on modern lines is also influenced by the

growing role of markets, business centers, electronic media, press, and educational

institutions (including religious schools). Apart from the radio stations in Afghanistan and

Pakistan, there are about a dozen radio stations in different countries of the global North and

South that are broadcasting programs in Pashto language. Those broadcasts, apart from

increasing general awareness, also have an important contribution in bridging the gap

between the standard Pashto of Eastern and Western Pakhtuns. Although television programs

of the state controlled stations of Peshawar and Quetta have yet to give Pashto programs their

due place in terms of time and resources, Pashto drama has made important strides ahead.

The nascent Pashto theatre in Peshawar, notwithstanding certain limitations and restrictions,

is making good progress. There are more than eighty literary associations of Pakhtun poets

and writers in different parts of Pakhtunkhwa in spite of the fact that Pashto is not the

medium of instructions in the schools and is not the official language. Pashto music has made

good use of modern electronic gadgets. Audio and videocassettes containing the poetry of

classic as well as modern poets sung by popular singers have flooded the market. Although

some Pashtuns are making good use of the Internet, they lack an independent satellite TV

channel.*

In recent years, Pakistani establishment has been able to bring into its fold the major part of

the Pakhtun ruling elite through a series of adjustments and accommodations. According to

some evaluations, Pakhtuns ruling elite has been partially elevated to the position of a "junior

partner" of Punjabi-Mohajir ruling classes in Pakistan. In recent years Pakhtun elite has

tended to adopt political conformism that is a reflection of expanding parallel economy as

well as growing dependence. But the basis of these adjustments is still narrow and

contradictory. The renaming of NWFP (including tribal belt and Pakhtun areas of

Balochistan) as Pakhtunkhwa, the adoption of Pashto as official language, Afghan policy,

Kalabagh dam, and provincial control over the natural resources remain to be the areas of

dissent. The failure of the federal government to pay royalty on hydel power generation to

Pashtunkhwa has made even the most conformist elements to protest. The hostile attitude of

the Chambers of Commerce of Karachi and Lahore against Gadoon Amazai Industrial Estate

speaks volume about the fragile nature of the adjustments among the elites of different ethnic

groups in Pakistan.

Ethnic violence in Sindh in recent past has shattered the myth that claimed Karachi to be the

"biggest city of Pakhtuns". Sending shock waves into Pakhtunkhwa, these developments have

underlined the significance of industrial progress of Pakhtun areas for creating job

opportunities. Besides, the lack of economic opportunities; urban sophistication and the

absence of the rule of law have pushed work force, urban elite and investors to migrate to the

urban centers of Punjab and Sindh.

Although urbanization has started taking roots in Pakhtunkhwa, it has by no means created a

homogeneous social scenario. Traditional communal life and large family system is rapidly

eroding in rural areas and chivalric traditions are disappearing in the tribal belt. The

mushrooming of entrepreneurs, growing competitions in the market and services has given

birth to new types of social interests and cultural consciousness. Despite the growing

disintegration of traditional social structures and modernization, the traditional and

patriarchal value system has proved hard to die. Women rights remain to be a contentious

issue. The mass influx of rural population into cities and urban centers is, on the one hand,

strengthening the grip of rural Pakhtuns on these centers, on the other hand, for the time

being at least, this influx is also having "ruralising" effect on our towns. Apart from creating

political fragmentations, these complex and contradictory features represent the complex

nature of Pakhtun national consciousness. The said complex social development is one of the

reasons for the rise of the religious right in Pashtun politics.

But there are some other factors behind the rise of the said phenomenon. Pashtun society is

undergoing social and political transition. It was the landed gentry that mainly provided the

political leadership to Pashtuns throughout the 20th century. But towards the end of the 20th

century the socioeconomic dominance of the landed gentry faced formidable challenges and

along with that its political dominance saw a decline. The urban middle classes remain to be

under an economic squeeze. They are also marginalized in politics.

The new political elite has yet to muster enough political strength to gain political leadership.

Religious parties filled the political vacuum created by this development. We should also not

forget that during the twodecades long Afghan conflict, religious parties in Pakhtunkhwa and

Baloachistan received fabulous amounts of Petro-dollars. The mushrooming of madrasas

provided these parties with hundred and thousands of motivated activists along with a

growing network of mosques used as a political platform of the religious parties.

Moreover, the "political engineering" of the ruling Pakistani establishment is also partially

responsible for the astonishing electoral victory of MMA. After losing control over

Afghanistan, extremist elements in the Pakistani State manipulated political and electoral

processes to manage a political comeback by pro-Taliban political forces in Pakhtunkhwa and

Baloachistan. It will serve more than one purpose. Islamabad’s phobia of a threat from its

western borders can be overcomed only with the enforcement of a policy of containment. It is

also expected to boost the morale of the remnants of Taliban who are resisting the new setup

in Afghanistan.

An added advantage would be the use of religious right by the ruling establishment as a lever

for putting pressure on US and other Western countries to have a better bargain.

Be that as it may, the religious parties in MMA are finding it very difficult to grapple with the

problem of modern governance. In the absence of a concrete program for socio-economic

development, they have failed, so far, to deliver in terms of either providing relief to common

man or standing up for the rights of the province.

Their policies will be spreading orthodoxy and would create new problems and

complications. But the Pashtun national movement is expected to bounce back once it adopts

a clear program and credible leadership. Development and maturing of urbanization and

modern education will enable

Pashtunkhwa in the long term to leave this infantile disorder behind it.

Explanations

* This survey was conducted by the commencement of AVT Khyber and other Pashto

channels. KhyberWatch.

1-The name Pakhtun or Pashtun is used synonymously with varying dialects of the Pashto

language. The people of Northern Pakhtunkhwa, mainly of the Peshawar valley and the

adjacent Malakand Division, use the hard variant, while the people of Southern Pashtunkhwa

and Pashtuns of Balochistan use the soft variant. The same is true about Pashtuns living in

Afghanistan.

2-The Great Game’ * rivalry: A term used by Rudyard Kipling in his famous classic, ‘Kim’,

which signified the struggle of the Tsarist Russia and the British Empire for the control of

Central Asia in the 19 th and early 20 th centuries.

3-(Pakhtuns)-* Several names are in use for the Pashto speaking people. The Pashtuns of

Afghanistan prefer to call themselves Afghans instead of Pashtuns so as to strengthen the

concept of ‘Afghan Millat’ within the present boundaries of Afghanistan. The Pashtuns of

Pakistan, too, are Afghans but not citizens of Afghanistan. The writers have tried to be

careful in the use of these words because of legal complications and frequent use of any one

name does not prove any preference for that name.

4-An Indian ruling dynasty

5-An Iranian ruling dynasty.

6-The uprising was named after the village Ghaladher in Nowshera district in which it took

place.

7-The approximately 1700 miles long official border between Afghanistan and Pakistan,

which was drawn by Sir Mortimer Durand, a British Indian official, in 1893.

Next: ETHNIC, CULTURAL AND LINGUISTIC DENOMINATIONS IN

PAKHTUNKHWA

ETHNIC, CULTURAL AND LINGUISTIC DENOMINATIONS IN

PAKHTUNKHWA

The question of ethnic, cultural, and linguistic minorities living in Pakhtunkhwa is not new.

But with the growing ethnic, cultural, and linguistic consciousness, unlike the past practice,

this question cannot be simply brushed aside by calling all people living in the area as

Pakhtuns. Hindkwans, Gujars, Chitralis, and Kohistanis have ethnic identities of their own.

The only democratic and viable solution of this problem will be to accept the ethnic diversity

as it exits in Pakhtunkhwa. Speaking in broad political terms, one can call the people of all

ethnic and linguistic groups Pakhtuns, as they are the equal inhabitants of this ancient land.

But they definitely have a right to develop their own cultural and ethnic identity within the

framework of Pakhtunkhwa.

A democratic approach to this problem is crucial for a broader unity among the people of

Pakhtunkhwa. However, one can say with confidence that with centuries of common history

and common interests in the future prosperity, has laid a solid foundation for fraternal

relations among the people of Pakhtunkhwa, who are not without justification, famous for

tolerance and mutual respect.

Politically speaking, Pakhtun National Movement is not a political sect any more confined to

the belief of a certain political grouping. On the contrary it has turned into a general political

trend affecting all political currents in varying degrees. Modern Pakhtun National Movement

requires a modern political vehicle, and a modern political institution. No sectarian political

group or clique can be a substitute to a modernist and democratic political organization that

has to be very broad based to be able to represent national aspirations of all interest groups in

Pakhtunkhwa. It is in this way that different challenges of historical dimensions can be coped

with successfully. The national unity of Pakhtuns living in Pakistan and exploring the

possibilities of rapid economic and social development in regional and global economy are

some of the pressing challenges before our people. The Pashtun intelligentsia is in touch with

all these realities of the Pashtun society and the world in the 21st century. Pakhtun diaspora

has the potential for valuable cause by rendering intellectual and material assistance. A

considerable portion of this intelligentsia, working institutionally under the National

Democratic Consultative Process, have gathered their intelligence to understand the

complexities of Pashtun society in the light of emerging trends.

PASHTUN SOCIETY IN THE 21ST CENTURY

IDENTITY

Pashtun, Pakhtun, Afghan, Pathan, Rohilas and Sulaimanis are some of the historical and

contemporary synonymous names of some 50 million predominantly Pashto speaking people

of Afghanistan and Pakistan’s adjacent southern, central and northern Pashtunkhwa or

Afghania. Unfortunately, the colonial nomenclature of NWFP and FATA continues to

describe these areas on maps.

It is important to note that the term Afghan denotes all the citizens of Afghanistan but it

continues to be another name for all Pashtuns both in Afghanistan and elsewhere. Pashtun

identity today is embedded in a common language, Pashto, a common social structure, which

is mostly tribal with considerable regional variations. This identity is reinforced by common

historical memories and distinct social code, sometimes also referred to as the code of life,

Pashtunwali. The group’s particular geographic location and ethnicity, which is the

manifestation of many underlying political, economic and social factors, contribute to such an

identity.

PASHTUN SOCIETY

Before attempting any description of Pashtun society, as mentioned earlier, one needs to

understand that historically there had been many breaks in the civilizational continuity of

Pashtuns. Such disruptions were mostly caused by invasions or long periods of colonial

occupation. As Pashtuns straddle the strategically vital cross-roads of South Central Asia,

they had been targets of imperial designs with often being victims of colonial militaries.

In addition, most of the literature on Pashtuns had been shaped with certain subjective

political interests. From Manstuart Elphinstone’s "An Account of the Kingdom of Kabul",

who visited Afghan king Shah Shuja’s winter court at Peshawar in 1808 to Olaf Caroe’s "The

Pathans" in mid-twentieth century, the image of Pashtuns changed invariably as imperial

policies and boundaries altered.

Pashtuns make the largest tribal society in the world today. Such a society has a hierarchical

tree like structure known as segmentary lineage in anthropology and other sciences of the

society.

Pushtun society has an endless division of tribes, sub tribes and lineages, which makes such a

hierarchical division. Pashtuns cover a wide range of ecological niches, geographic zones and

had developed a number of social structures ranging from urban centers to semi feudal

agrarian formations of Peshawar valley. There are still semianarchic tribal democracies of

remote regions in the Tribal Areas. The underlying system operating in Pashtun society can

only be understood from within its unique framework. Segmentary lineage is a system that

defines descent groups in terms of identification with successively more distant apical

ancestors. The structure of such a society is thus conceived of a hierarchical or treelike in

which there are different levels of unity and opposition; segments or tribes, which are divided

at the lowest level, are grouped together into larger units at a higher level.

The Pashtun society is organized on the basis of patrilineal kinship or descent which is traced

through the male line. Cooperation takes place only against external threats. Enmity focuses

on close patrilineal relations. Tarboor or a patrilineal first cousin is a literal synonym for

enemy in Pashto. The principle of the enemy of my enemy is my friend is invoked to develop

a chequerboard pattern of alliances dividing Pashtun groups into ‘Dallas’ or ‘Janbas’, which

in most cases are two opposing parties.

THE PASHTUN CODE OR PASHTUNWALI

The social organization of Pashtun society as described above has given rise to a distinct

social code, Pashtunwali, which varies with geography and might be interpreted differently

by different tribes but its basic principles remain the same. Pashtunwali is an adjective added

to the name of Pashtuns, both as a group and an individual. Pashtunwali is the sum total of all

those ideals, meanings and qualities required from a Pashtun or binding upon them.

The word Pashto itself designates not only the language but also the behavior defined by the

code. Almost every Pashtun is familiar with the proverb "you don’t speak; you do Pashto".

Pashto is equivalent to both honor and modesty in a complex system of morality, which has

been formally coded in a dictionary format in Afghanistan. Those who have written about

Pashtunwali agree on several major points that institute the code. One is "Melmastya" or

hospitality, which calls for lavish entertainment, often beyond the means of its provider

having a guest reflect one’s own status and influence as well as creating a relationship of

dependence. Hospitality must be offered to anyone who steps onto one’s property, and it can

even be imposed upon those who don’t ask for it. The concept of ‘Panah’ refuge given to an

outlaw is an extended form of ‘Mailmastya’. As hospitality is a crucial constituent of

Pashtunwali, Pashtun people compete heavily for the reputation of being hospitable.

Hospitality approaches it peak at certain rites of passage and must be performed in massive

banquets called "Kherat" open to the entire community. It is because of the heavy costs of

such hospitality that weddings, circumcisions and death are recognized as the most draining

pull on a family’s economy.

Along with hospitality is unusually mentioned "Nanawatey" or the right of refuge, which,

like hospitality, must be granted to anyone who asked for it. It is an institution that generally

supports the favored patronclient [Hamsaya] relationship among Pushtuns especially in the

Tribal Areas, where many criminals go who escape from non-tribal areas. They cannot

simply settle, but must become dependents on a landlord or Khan, requesting Nanawatey.

Formerly, these dependents were called the landlord’s strength or even army, as they owed

him unconditional loyalty and support in return for his protection.

The third point central to Pushtunwali is "Badal", normally referred to as revenge as per street

wisdom interpretation but as a sublime concept ‘Badal’ means a retributive system of justice

on the pattern of Mosaic Law. The meaning of ‘Badal’ cannot be restricted to revenge

homicide alone as is common and sometimes even regarded us honorable. ‘Badal’ does not

only means a tit-for-tat in enmity but the obligation to return goodness for goodness in social

transactions. To some observers ‘Badal’ is the major cause of violence among Pushtuns

compared to other areas where crime and violence arise out of other factors. Badal is a crucial

notion behind most action and interaction in Pashto.

PASHTUNWALI AND MODERNITY

It is interesting to note that Pushtunwali as a code of life consist of considerable uniformity in

fundamental principles although there are certain variations in details from tribe to tribe.

Principles and values such as " Jirga", "Nang", "Siali", "Teega", Badraga", Turburwali",

"Nanwatey" and "Mailmastya’ etc are universally accepted by all Pashtun tribes although

some of the tribes had their own "Narkh" (Customary Law for implementing the principles of

Pashtunwali). Originally, the customary law was implemented on the basis of tribal affiliation

irrespective of territorial location. A Pashto proverb sums it up very aptly when it says,

"you can get out of the village but you cannot leave the customary law".

Pashtunwali, as a tribal code had some common features with other tribal systems such as

egalitarianism, xenophobia and consideration for lineage although it also has some specific

features that were produced by the particular historical and geographical conditions of

Pashtun society. Many factors including a transition from a subsistence economic formation

of agriculture and pastoral nomadism to a monitized commercial economy and growing

urbanization has accelerated the pace of social and cultural changes in Pashtun society,

It goes to the credit of reformers like Khan Abdul Ghaffar Khan, Abdul Samad Khan

Achakzai and many others who worked to reform Pashtunwali and develop it to conform to

modern democratic principles. They tried to teach Pashtuns to overcome traditional tribal

feuds, get modern education and gain political consciousness. The problem is that

Pakhtunwali remains an unwritten code based on oral traditions and tribal practices. Although

some western authors had tried to put it in black and white, for obvious reasons they had not

been able to do justice to the theme. This has left Pashtunwali to be interpreted by street

wisdom individually as it lacks empowered political structures to be enforced uniformly.

Pashto [1] as an ideal of behavior was an identity maker, later supplemented by Pashto

language after the creation of modern Pashtun states in Afghanistan and Swat in the twentieth

century. Pashtunwali still remains a major identity maker, with recent political changes

enhancing its role further. However, Pashtunwali remains a major hindrance to the

assimilation of Pashtuns into other political and economic systems.

THE STATUS OF WOMEN IN PASHTUN SOCIETY

Jirgah, [2] which was initially representative of the whole tribe, gradually went through a

process of purge with the appearance of social and class differences over the centuries.

Weaker sections of the tribe had to accept the domination of tribal elite Maliks, Sardars and

Khans in Jirgah. Patriarchal values were strengthened by throwing women out of the decision

making process in Jirgah. The rigid segregation on gender basis closed the door of Hujra

(Communal Guest House) for women, which is mostly the venue for the proceedings of

Jirgah.

The rigid social structure was further strengthened by official patronage when Political

Agents nominated Jirgahs as courts. In tribal areas women have greater social mobility in and

around the village in terms of participating in economic activities, but her labour remains

basically unpaid. In settled areas where private ownership of land replaced communal

ownership, women became part of men’s property, although they do play certain role in the

affairs of the house within the four walls. It is interesting to note that Loya Jirgah developed

as state institution in Afghanistan in the twentieth century by giving participation to Afghan

women. Why can’t Jirgah be democratized in lower Pashtunkhwa by including women in

decision-making? It is easier now as all the elected local bodies and assemblies have some

women representation. But Pashtunwali definitely needs a new interpretation on gender issue.

It is crucial for the future of democracy in Pashtunkhwa.

THE SCIENTIFIC BASIS OF PAKHTUN NATIONAL MOVEMENT

In order to create structures and systems along scientific and democratic lines, which will

carry Pakhtun national aspirations towards the desired goals, it is imperative to make an

analytical study of the prevailing socio-political and economic conditions of Pakhtun society.

This analysis will help in creating a framework to build a National Movement of all Pakhtuns

along scientific and democratic lines. Below is an attempt at a cursory understanding of the

socio-economic and politico-cultural landscape of Pakhtunkhwa with reference to its geo-

strategic importance.

A GLIMPSE AT WORLD CURRENTS AND PAKHTUN SOCIETY

Technology has changed the world into a global village. Geography has shrinked in the

cyberspace. Twentieth century political jargon has changed meaning. The world is in a swift

flux of change and even modern societies are finding it hard to adjust to the post modern

paradigms. Globalization is threatening conventional state structures. Economic activities

have transcended political ideologies, state philosophies and geographical boundaries.

Increased interactions and interdependence in economic activities have compelled societies to

re-align themselves in the form of new entities to respond to the challenges of globalization.

Different countries of the world have united into regional economic unions to elevate

themselves to a better bargaining position in a world characterized by global trade, commerce

and industry.

Our region, too, is witnessing the most critical phase of its history. Defense imperatives, debt

servicing and the poor state of the Pakistani economy have resulted in the continued

negligence of the social sector with the result that millions of Pakistanis have been thrown

below the poverty line during the past two decades. Coupled with this poor economic

performance are increased militancy, sectarianism, and provincial disharmony, which are

threatening the very existence of the social and state structures.

Pakhtuns, therefore, have great stakes in any eventuality i.e. whether globalization or anarchy

sweeps the region; they have to face the major brunt. The un-exploited markets and oil

reserves of Central Asia and the Caucasian region and the booming economies of China and

India will significantly affect the Pakhtun inhabited region as regional and global trade in this

region gets expanding.

Pakhtuns are once again at the crossroads of history. Their freedom, prosperity or subjugation

would depend on their ability to make the right choices. Before analyzing the condition of

Pakhtun society, let us have a look at a few vital questions that cannot be ignored by

Pakhtuns.

These questions are:

I. What are the options available to the Pakhtun nation for socio-economic development?

II. How to chalk out an efficient and effective strategy for rapid development of Pashtun

society?

III. How much important is Pakhtun integration in regional and global economy and what are

the mutual benefits for Pakhtuns and the rest of the world from such happening?

IV. How to curb the ever-growing poverty in Pakhtun society?

V. How best to deal with the prevailing geo-strategic conditions which will ensure that

Pakhtun national interests reigns supreme in the ‘New World Order’?

VI. How to reconcile the interests of global powers with Pakhtun national interests?

Let us then survey the socio-economic and political conditions of Pakhtun society at present.

Explanations

1- There exist territorial and tribal variations in the pronunciation of Pashto words. One of the

reasons is lack of social interaction among different Pashtun tribes due to poor road

structures. The process of standardization is at an advance stage in Afghanistan than Pakistan.

A Pashto Language Authority is needed to standardized the script and dialect of the Pashto

language.

2- Assembly of male elders that functions as quasi-judicial-legislative institution inmatters

related to an individual, family or the community.

Next: PRESENT CONDITIONS OF PAKHTUN SOCIETY

PRESENT CONDITIONS OF PAKHTUN SOCIETY

Political

Self-analysis is the first requisite for self-improvement. The analysis of the present Pakhtun

national parties in Pakistan is not intended to undermine the sacrifices of its leaders or

workers but some of the shortcomings of these parties are given below for an objective

analysis.

1. Initially, the Pakhtun National Movement had the support of even the so-called menial

classes of Pakhtun society. Until the 70s, the Pakhtun National Movement attracted even the

Balochs but, unfortunately, in a process of continuous marginalization of other nationalities

and groups, the composition of Pakhtun national parties remained restricted to smaller

interest groups. In a process of historical continuity, political parties survive only if they

represent the interests of wider groups of the society. But Pakhtun national parties have not

been unable to evolve a broad base and the representation of various segments of the society

is limited both vertically and horizontally in the party hierarchies of the national parties.

2. There is a need of a clear agenda and a scientific methodology for the achievement of

Pakhtun national goals, which is missing in the Pashtun national parties. Opponents of the

national forces allege that the general Pakhtun public has become disenchanted with Pashtun

national parties for their inability to improve the social, economic and cultural conditions of

Pakhtuns.

3. The class composition of Pakhtun society has changed considerably. The emergence of an

educated middle class and a commercial trading class is putting pressure on the old agrarian-

tribal structures of Pakhtun society. A large number of Pakhtun expatriates have accumulated

wealth but lack the social legitimacy for a high status in the social hierarchy. The existing

political parties have to come out of the agrarian and tribal paradigm and win these new

groups into the party structures. Perhaps, one reason of the success of other political parties in

Pakhtunkhwa can be attributed to the inability of the Pashtun national parties to win newly

emerging middle class and the down-trodden sections of the society.

4. The reason is that the Pashtun national parties base their identity on ethnicity rather than

defining it within the cultural and geographical parameters. Ethnicity is further restricted by

blood and land-ownership than history. Thus a large segment of the Pakhtun society is

excluded from the Pakhtun identification. Various ethnic and linguistic denominations like

Chitralis, the Kohistanis etc have to be reassured of an equitable representation in leadership

structures because they are united with Pakhtuns and Pakhtunkhwa by a common interest,

history and culture. Similarly, professional groups have formed unions to protect their

interests but they act as appendages of political parties and lack representation in the policy-

making bodies of parties.

5. And last but not the least, the national parties of Pakistani Pakhtuns have not done enough

to create institutionalized ties between Pakhtuns living in Afghanistan and Pakistan.

Social

Pakhtun society can be described as one of the most backward in the world. With its tribal

reminiscences still functional, Pakhtun society has witnessed catastrophic blows during the

last two de-cades. Whereas the Afghan war economy marginally improved the living

standard of some people of Pakhtunkhwa, it also profoundly affected the social outlook of

Pakhtuns in many ways. The efforts of certain vested interest groups to strengthen religious

fundamentalism have significantly eroded the tolerant and secular contours of Pakhtun

society. This has resulted in increased religious intolerance, violence and militancy in the

Pakhtun society. The easily accessible and cheap weaponry of the Afghan war has further

complicated the process of creating a civilized society. Similarly, the cheap availability of

drugs, increased unemployment and lack of initiatives and resources of the government has

turned our towns into dens of heroin addicts.

The sponsorship and support of the orthodoxy by the vested interest has further checked the

growth of society in areas like female education, women empowerment and human rights.

The continued marginalization of the weaker sex in socio-economic and political activities

has resulted in social stagnation. It has denied the opportunities of inculcating healthy attitude

toward the opposite gender and has deprived them of useful participation in various walks of

life.

The Pakhtun expatriates living abroad still rely on muscular power to earn their livelihood

because of the prolong negligence of the human development sector. The process of

transition from physical culture to thought culture has not taken place in the Pakhtun society

and due to this reason Pakhtuns are finding it difficult to transact successfully with other

nations of the world.

Economic

Due to the narrow agricultural and industrial base of the Pakhtun economy, it mainly relies on

the Afghan transit trade, earnings from Pakhtuns living in Karachi and the Middle East

besides the black money earned through the smuggling of drugs and weapons. The law and

order situation in Karachi has badly affected economic and commercial activities and thus

Pakhtuns are the worst affectees of the law and order situation in Karachi. Non-taxed border

trade with Afghanistan will witness further decline as soon as state structure in Afghanistan is

resurrected and this trade comes under effective government control. The Middle Eastern

countries will have to witness further economic slump due to the volatile situation in the

region and import of workers from abroad will further slow down.

The ongoing process of rightsizing or downsizing and privatization of the public sector in

Pakistan will also adversely affect the Pakhtuns employed in the public sector organizations

un-like the workers of Punjab and Sindh, who will be absorbed in the private sector in those

provinces. The thin agricultural and industrial base of Pakhtunkhwa would be unable to

accommodate these fired workers.

In these circumstances, various militant organizations would find it least difficult to recruit

the unemployed Pakhtun youth as willing mercenaries, and drug and weapon carriers.

Deprived of every opportunity of a decent living, the unemployed Pakhtun youth may resort

to unlawful activities for survival.

Culture

Pakhtuns have a tolerant and secular culture, which is expressed in their norms and traditions.

Pakhtun national movements, during its various phases of history, have been progressive

movements in nature. Starting with Pir Rokhan’s Roshnai Movement in the 15th century and

continuing with Khushal Khan Khattak anti-Mughal resistance in seventeenth century and

Ahmad Shah Abdali’s nation building endeavors in the eighteenth century and the anti-

imperialist Khudai Khidmatgars in 20th century – all these Pakhtun national movements have

been progressive and secular in nature. But time and again, the progressive march of Pakhtun

society has been blocked by foreign powers for certain strategic objectives in the land of

Pakhtuns. This struggle of the indigenous secular and the exotic regressive forces in Pakhtun

society has brought catastrophic consequences for the social integration of Pakhtun society.

Afghanistan is in the process of reconstruction. Afghans are suffering from the physical and

emotional effects of a long war. So at present little can be expected of Afghanistan for the

cultural revival of Pakhtuns. The Pakhtuns in Pakistan are facing a lot of challenges and

threats to their survival as a distinct socio-cultural group. Pashto language and culture has

been made a target of systematic assault and is faced with possible extinction. Pakhtuns, as a

nation, right now, does not have any newspaper, a radio or television channel which should

play a leading role in preserving, promoting and trans-forming Pakhtun culture. (This

situation is getting better in private sector-admin)

Despite all these odds, fortunately Pakhtuns have a strong cultural identity codified in

Pakhtunwali, which should be rediscovered in the light of modernity. Every culture has its

intrinsic value but it is not a static phenomenon. It is a dynamic process that unfolds in a

continuum of transformations to accommodate the requirements of a changing age. Cultural

values are not a creed with a celestial sanctity and a divinely binding obligation but rather the

result of experiences of a people that struggle to survive through the twist and turn of a

complex world and try to understand the dilemma of existence. And in doing so they bring a

vision of life into being that embraces not only the reality of life-as it stands at a nook of

space and time- but also extends into its abstraction.

Today, change has come to Pakhtunkhwa like a hurricane. Pakhtuns must be resilient enough

to adopt themselves to this pace of change or else, again, there would be catastrophic

consequence for remaining stagnant. Fortunately, the interests of the indigenous progressive

and secular forces seem to be in tandem with world currents and Pakhtuns must be enabled to

capitalize on this opportunity and realize the dreams of our forefathers for a modern and

progressive society.

It is imperative to understand the social, cultural, economic and political conditions of our

society for evolving a scientific and democratic basis of the Pashtun national movement. The

Pashtun national movement can be built along scientific lines if emotions are set aside and

the vital forces of societal dynamics are studied rationally and objectively so as to construct

necessary structures and systems, supplemented by a programmatic concept and a scientific

methodology, for the actualization of our national goals. Apart from efforts to work for the

socio-economic development of Pashtunkhwa on non-political basis, the main focus of the

‘National Democratic Consultative Process, remain to work for building a political

organization representing national interests of all Pashtuns and other people of Pashtunkhwa,

because the question of ‘rights’ is a political one, which could only be addressed properly by

taking control of the policy-making institutions of the government.

POLITICAL ORGANIZATION

In a world marked by cut-throat competition, a group or community must have the requisite

political organization to have effective control on its resources. A society, which lacks

sophistication of organizing itself, would fall prey to the ideas of another group or

community. In layman’s jargon, a society lacking in organizing itself for useful societal

functions would become slave to another group.

Pakhtuns have a brilliant record of social organization. The ingenuity of Pakhtuns can be

gauged from the fact that despite the hindrances in its way of growth posed by international

politics of the twentieth century, Pakhtuns have been able to establish a social order without

the authority of a state. Even in the tribal areas where exist a loose state machinery, Pakhtuns

have been able to maintain law and order through their customary laws encoded in

Pakhtunwali.

Pakhtuns have shown their political maturity and wisdom in establishing a socio-political

organization – the Khudai Khidmatgar Movement – in the early part of the 20th century,

which sincerely struggled for the achievement of the political and economic rights of

Pakhtuns but the dynamics of international politics obstructed the path of obtaining political

and cultural rights of Pakhtuns.

The Khudai Khidmatgar Movement was based on principles of non-violence and service of

the people irrespective of their faith, race or language. The Khudai Khidmatgar Movement’s

chief aim was transformation of an older social structure and a re-definition of Pakhtunwali –

the traditional code of honour of Pakhtuns. The Movement became part of the Indian

Freedom Movement and joined hands with the Indian National Congress to struggle against

British imperialism. Later on, with the establishment of Pakistan, the movement diluted and a

residue of the organization became actively involved in conventional power politics of

Pakistan. The legacy of the Khudai Khidmatgar Movement to work for the socio-economic

uplift, transformation of older social structures and re-definition of the traditional code of

honour in the light of new realities became dormant.

The Khudai Khidmatgar Movement is a great heritage of all the people inhabiting this region.

Unfortunately, this heritage, like many other historical assets of our nation, seems to bury

under the debris of power politics. Today, our nation is faced with no less challenging

circumstances than when the Khudai Khidmatgar Movement was initiated by a rural Pakhtun

intelligentsia. To revive the spirit of the Khudai Khidmatgar Movement and prepare the

Pakhtun people for the pressing times ahead, it is imperative to create new organizational

structures, which can best protect Pakhtun rights. But before elaborating these concepts, the

present political system of Pakistan and the requisite strategy for change is discussed.

PAKISTAN’S POLITICAL STRUCTURE AND PAKHTUN NATIONAL INTERESTS

Pakhtunkhwa has 35 seats in the national assembly and Tribal Pakhtunkhwa has a

representation of 12 seats in the national assembly of Pakistan. Besides, 6-7 seats from

Balochistan also belong to Pashtuns of Balochistan. Apart from 2-3 seats from Pakhtunkhwa,

the remaining seats in the above-mentioned Pakhtun inhabited land in Pakistan makes the

total strength of Pakhtuns in the national assembly of Pakistan. There are 272 seats in the

National Assembly of Pakistan out of which 19.85 per cent belong to Pakhtun vote.

Similarly, Pakhtuns have a representation of around 40 members in the senate of Pakistan,

making it a sizeable group in the senate.

From the above discussion, it is clear that even if the people of Pakhtunkhwa vote for the

national parties, their representatives in the National Assembly of Pakistan cannot form a

government thus denying them every opportunity of affecting policies of the federation. This

brings into focus the federal structure of Pakistan. Therefore, the establishment of a genuine

and equitable federal democratic system in the country is the only way to replace the sense of

alienation with a sense of participation. The state system, which Pakistan inherited from the

British in 1947, was unitary. It was very centralized and was basically designed for colonial

type of governance. Even after independence this system was not changed in a fundamental

way to enable it for the requirements of an independent, democratic and developing country

with a lot of social, cultural and ethnic diversity. Unfortunately, the socially narrow-based

and politically undemocratic ruling elite consisting of the big feudals and the top echelons of

the civil and military bureaucracy moved in the wrong direction. The said elite raised the

slogan of the strong centre (instead of a strong country) and imposed One Unit Scheme on the

smaller provinces, which left behind it a bitter trail of hatred, division and mistrust. The

oppressive and bankrupt policies of the above mentioned ruling elite paved the way for the

disintegration of the country in 1971. It was after these bitter and shattering experiences that

the 1973 constitution adopted the principal of federalism as the basis for the state system,

although it has not been implemented in letter and spirit in the subsequent years.

The concept of federalism is not new, but in its present developed form, it is one of the three

most important inventions of modern democratic governance, the other two being the

protection of individual rights and the idea of a civil society. Federalism is something more

than simple linking of the federating units into a larger whole to maintain both self-rule and

shared rule. The political theory of federal democracy provides for a real alternative to simple

majoritarian, pyramid like hierarchical state with permanent majorities and permanent

minorities. Federalism creates a matrix of institutions for power sharing on both vertical as

well as horizontal level. It is based on constitutionalism, pluralism, and power sharing.

Experience in different parts of the world has proved it beyond any doubt that federalism is

the most successful political strategy for promoting the processes of nation-building and state

building in countries having social and cultural diversity.

Civil Society

Civil Society stands in total contrast to authoritarianism. Expanding and strengthening of

civil society is at the core of the process of democratization in countries like Pakistan. The

idea is that every socio-political order has both governmental and private spheres and the

government does not have the authority to intervene in every aspect of the social order. The

linkage between the two spheres is provided by a public non-governmental sphere to ensure

the democratic and civilized functioning of the socio-political order. One can also put it in

another way. The state is to rest on three legs – private, public non-governmental and

governmental. The first two constitute the civil society. The stronger the civil society, the

more democratic the social order and vice versa.

In our conditions the civil society can assert itself by a more systematic, meaningful and

effective role of the university campuses, bar associations, professional organizations, NGOs,

trade unions, and political parties. Unfortunately, the role of the above mentioned public

organizations was made extremely limited and ineffective by the long spells of authoritarian

regimes. Similarly, the traditional political parties have also failed to evolve a clear and

tangible strategy to revive, expand and strengthen civil society. Working in close contact with

all the elements of civil society and movements for ensuring human rights and for promoting

participatory processes seems the utmost priority of any political strategy. It is interesting to

note that Pakhtuns had a rudimentary form of a traditional civil society prior to the

establishment of the oppressive colonial state system. The modern idea of civil society can be

applied to Pakhtun society developing and bringing out the Pakhtun traditional community

based institutions up-to-date in full conformity with modern democratic norms. Recent years

have also witnessed the mushrooming of community based non-governmental organizations

for development and for achieving human rights.

This is a positive development, a process of social regeneration and is intended to work

together with all progressive and concerned citizens and organizations for the cause of the

under privileged people. Our society seems to burst under the burden of a protracted and ever

deepening series of crises. The sever crises of governance is its real epitome. The origin of

these crises can be traced back to the eleven years long arbitrary despotic dictatorship of

General Zia-ul-Haq. The divisive policies of successive governments in Pakistan have led to

the fragmentation of the civil society on ethnic, communal and sectarian lines. The prolonged

unconstitutional rule of the usurpers; the rise of a powerful black economy; the trapping of

the country in rivalries of international politics during the Cold War; the curse of an

increasing foreign debt and entanglement in regional hostilities are some of the main factors

responsible for depriving the country of civilized constitutional governance. The massive

erosion of state authority, kalashnikov culture, drug trafficking, obscurantism, extremism and

large scale corrupt practices in state and society are the baggage of the past. The robber

barons, rising mostly from amongst the collaborationists, amassed fabulous wealth while the

standard of life of teeming millions took a straight nosedive, creating a dangerous social

divide. The ruthless thrust of centralizing political and administrative power, which was, as a

colonial legacy, already considerably centralized, not only took inefficiency to the border of

complete collapse, but it also struck an almost fatal blow at the federal structure of the state

system. The old regional, political and economic imbalances were further intensified. The

mess of Zia-ul-Haq’s legacy is so great that it does not allow the country to put back on the

track towards socio-economic development and democratic change. It will require structural

reforms to ensure fundamental changes in the over all system. It is particularly important in

view of the monumental and historical changes in the world after the end of the Cold War

and the new political settlements.

The stubborn and hectic efforts on the part of the forces of status quo to save the present

over-centralized and decadent system is creating the threat of anarchy and chaos. Historical

experience has decisively proved that every attempt at moderating the all around crises of

state and society by using tactic of the change of forces at governmental level, has not only

miserably failed in achieving the purpose, but it has also further aggravated the problem by

creating serious mistrust and even cynicism in the minds of the people about the existing

political parties and their practices.

The fact of the matter is that the masses of people have lost confidence in the present socio-

political system and they have no faith in political parties representing it. These political

parties are increasingly viewed by the people as cliques of the corrupt ruling elite, which are

hell-bent on squeezing the dying system for their personal benefit instead of bringing any

meaningful and positive change.

Under these circumstances it is incumbent on all progressive, democratic, patriotic and pro

people forces to unite for building a new and effective political platform with the aim of

finding a way out of the present deep crises by bringing about the historically necessary

socio-political, economic and administrative changes leading to the complete overhaul of the

system. They are duty bound to struggle for galvanizing, organizing and preparing the masses

for shaping a society capable of maintaining its identity, religious beliefs and healthy

traditions along with joining the mainstream socio-economic development, democratization

and scientific technological revolution in the era of globalization.

The main political challenge in Pakhtunkhwa that necessitates the emergence of a new

political platform is to unite and strengthen all democratic political forces, particularly those

in smaller federating units, to struggle for the establishment of a genuine and equitable

federal democratic system to ensure complete administrative, financial and judicial autonomy

of the federating units and to achieve comprehensive decentralization of power up to the

grass-roots level. On social front, the new platform is required for radically changing

priorities in the area of resource allocation, shifting the emphasis on non-productive sectors to

social sector – particularly education, health, housing and productive employment.

The myth of two party system, which was created by very artificial and opportunistic socio-

political alignment, mainly aimed at grabbing power at every cost, is shattered by the political

developments of the last one decade in the country. The particular demographic balance

among federating units, the ruthless use of the ‘Punjab Card’ and the hegemonistic stance of

the IJI and its successor, Pakistan Muslim League paved the way for a new political

alignment, mainly on regional basis. Almost all the mainstream political parties, despite

having a token presence in different parts of the country, have come to be identified with a

particular region or province. For example, Pakistan Muslim League is for all practical

purposes a Punjab-based party. Pakistan People’s Party has been pursed into the limits of

Sindh. Balochistan is already dominated by regional parties and the same trend is being

reinforced in the NWFP (Pakhtunkhwa).

The movement for achieving a full fledged provincial autonomy for NWFP (Pakhtunkhwa) in

the federation of Pakistan was given a negative image from day one. It was historically

handicapped due to the affiliation of the traditional Pakhtun National Movement with the All

India National Congress before independence. After independence, the ruling establishment

of the new country perpetrated ruthless discrimination against Pakhtuns. After the

dismemberment of One Unit and the adoption of 1973 constitution in Pakistan, many people

expected that the provinces will get their due constitutional rights. But such expectations

were belied by the subsequent experience. The concurrent list of powers in the constitution

which was supposed to be transferred to the residual powers of the provinces within 10 years

in the original scheme, still remains as it was in 1973. Without powers to debate the Annual

National Budget and resource allocation, Senate or Upper House is practically just a show-

piece.

The Council of Common Interests (CCI) has not functioned as an effective forum to redress

the grievances of the provinces. The federal government has continuously violated its

promises to pay the arrears of the royalty in the net profits from the hydel generation to our

province as per provision of the constitution.

The failure of the Federal government to equalize conditions for industry in different parts of

the country has resulted in little industrial development of Pakhtunkhwa due to the lack of

necessary infrastructure and long distance from the seaport of Karachi.

The federal government has been blind to the fact that due to its strategic location, as a

gateway to Central Asia, this area requires special attention in terms of building the necessary

infrastructure and industrial base. The Gadoon-Amazai Industrial Zone was forced to shut

down soon after policies changed and successive governments withdrew all concessions.

Kalabagh Dam remains to be a Damocles’ sword for the province for the last many years.

The federal government has gone back on its promise to carry out a rehabilitation work in the

province for compensating the damage done to the infrastructure as a fall out of Afghan war

and the province is practically left on its own to cope with the problem of Afghan refugees.

The province is deprived of its due share in services in the federal ministries, divisions,

departments and corporations.

The refusal of the central government to honour the resolution in favor of renaming the

province as Pakhtunkhwa speak volumes of the attitude of the federal government about

provincial autonomy. Even inside Pakhtunkhwa (NWFP), the socio-economic development

has not been even, leading to a sense of deprivation in certain areas. Apart from differences in

the level of socio-economic development, the province has an ethnic and cultural diversity

and the only democratic approach to this problem is to accept this diversity.

Struggle for establishing a genuine and equitable federal structure and for overcoming

regional imbalances is the only way to strengthen the federation of Pakistan. In the changing

international situation, states and countries can survive only by achieving inner viability and

confidence and support of the population. Voluntary and strong support of the people is the

only dependable guarantee to the solidarity and integrity of Pakistan.

Only a strong political party, with competent political leader-ship, popular support and proper

homework done by professionals and think tanks can overcome the above mentioned

problem. The ‘National Democratic Consultative Process’ is an attempt to redefine national

priorities and recreate genuinely democratic political organization in the light of modern

requirements and realities of the age.

Although majority of members from Pashtunkhwa in the National Assembly would not

address Pashtun issues holistically, nevertheless, a maximum number of Pakhtun

representatives in the National Assembly can greatly increase the chances of provincial

autonomy for Pakhtunkhwa. The members of the National Assembly would even further

become effective if the FATA MNAs and the people’s representatives from the Pakhtun belt

of Balochistan also join as representatives of the whole province. This would happen only

when the old colonial politico-administrative structure in FATA is replaced by a democratic

and representative system of governance. The following chapter deals with reforms in the

Federally Administered Tribal Areas.

Next: TRIBAL PAKHTUNKHWA

TRIBAL PAKHTUNKHWA

Despite its negative impacts for the people of the Tribal Areas, one must appreciate the

British ingenuity for evolving an administrative structure, which enabled the colonial British

to rule these areas through their proxies. The British colonialists exaggerated the myth of

autonomy of the tribes for their own colonial interests and made a common tribesman hostage

to powerful interest groups for quite a long time.

The people of the Tribal Areas played a significant role in shaping and reshaping the history

of the region. The names of legendary freedom fighters like Mullah Mastan, Umara Khan of

Jandul, Faqir of Ippi, Mullah Pawanda, Hadday Mullah, Haji Sahib Turangzai, Fazal

Mahmood Makhfi etc are the symbols of tribal Pashtun chivalry and spirit of independence.

Unfortunately, the tribal people could not capitalize on the unprecedented sacrifices of their

heroes because of lack of a grand vision. The sacrifices of the tribal people for the

independence struggle facilitated the departure of the British from the Indian sub-continent

but even after the creation of Pakistan, the benefits of freedom could not penetrate to the

common strata of the tribal society.

The old colonial structure in tribal areas was kept intact on one pretext or another. The people

of the Tribal Areas remain deprived of the benefits of the political developments during the

past half-century. Because of their exclusion from the political process, they couldn’t struggle

aggressively for many of the economic and social advantages that come as a result of active

political participation.

The tribesmen are being negatively portrayed by a section of the society in Pakistan for being

involved in illegal trade like smuggling and narcotics. No one cares to know about the

underlying causes. When it comes to the defense of the motherland, the Kashmir Jihad etc.

the martial spirit of the tribal people has been used quite excessively, but when the question

of giving a genuine share in resource distribution and socio-political rights, the tribesmen had

never been counted as equal partners with other Pakistanis.

The Cold War rivalry between the former Soviet Union and the West also added to keep the

tribesmen hostage to a colonial political and administrative system because of the strategic

location of the tribal areas. But now the Cold War has ended. The world is being swept by

waves of globalization and regional integration. These changes would definitely affect the

prevailing status quo in tribal areas. The real challenge is that the tribal people have not been

able, as in the past, to articulate the currents of the modern changes and formulate a

systematic political response that could end in the socio-political and economic betterment of

the people of Tribal Pakhtunkhwa.

As Tribal Pakhtunkhwa was kept aloof from the mainstream political current, no political

party of Pakistan thought it necessary to make the Tribal Pakhtunkhwa’s issues a part of their

party manifestoes. Although a considerable educated class aspired for a political change in

the tribal system, their voices remained unheard. In the changed prevailing circumstances; the

extension of the devolution plan and representation of Tribal Pakhtunkhwa in the provincial

legislature have necessitated the urgency of a robust political response. While the efforts of

the federal government to bring certain legal and political changes in the Tribal Pakhtunkhwa

are commendable steps, yet these efforts would be fruitless unless the voices of the tribal

people are heard in the formulation of policies that are intended for bringing changes in

Tribal Pakhtunkhwa. Policies made in the cool chambers of bureaucratic mansions often meet

a doomed fate because such policies don’t represent the aspirations of the common people. In

order to bring genuine political, social, cultural, and economic improvements in the lives of

the people of Tribal Pakhtunkhwa, the following policy issues are of extreme importance for

the success of the Tribal Pakhtunkhwa development program.

CONSTITUTIONAL REFORMS

Constitutionally, Tribal Pakhtunkhwa is a non-regulation area, which means that legislation

for Tribal Pakhtunkhwa is the responsibility of the president of Pakistan. The governor

Pakhtunkhwa, being agent of the president and representative of the federation, issues

ordinances in respect of Tribal Pakhtunkhwa, if and whenever necessary. Since, Tribal

Pakhtunkhwa will be given representation in the provincial legislature that would make it a

regulation area at par with other settled areas of the province, it would, therefore, require that

Tribal Pakhtunkhwa is declared a regulation area through a constitutional amendment. This

would help in the legal and constitutional integration of Tribal Pakhtunkhwa with the rest of

the country. The tribal areas, while remaining within the constitutional and administrative

framework of the federation, shall have the right to retain its cultural identity intact.

LEGAL REFORMS

On the legal side, Tribal Pakhtunkhwa is notorious for ex-colonial inhuman laws in the shape

of the Frontier Crimes Regulations. Its existence in an independent country is a great stigma

on the conscience of our policy-makers, which needs to be replaced with civil and criminal

laws that fits the socio-cultural traditions of the Tribal Pakhtunkhwa and the sooner this is

done the better. A Law Commission should be constituted for the formulation of a legal and

judicial system that suits the genius, culture, traditions and values of the tribal people.

ADMINISTRATIVE REFORMS

Administratively, Tribal Pakhtunkhwa has developed a peculiar culture of its own.

Administration there is said to be cost effective because of the collective and territorial

responsibilities of tribes and elders to maintain law and order in their respective areas of

influence. This sort of administrative setup is ‘dictatorship of the few’ and cannot be justified

on any ground whatsoever. In fact, this administrative arrangement only serves the financial

interests of a clique of bureaucrats at the expense of the people. The unrestrained powers of

the Political Officers in the Tribal Areas; the lack of civil society groups and education

coupled with a lack of interest and sensitivity of the federal government to improve the

existing conditions further fortifies an obsolete colonial structure in the Tribal Areas. Public

administration there, like all other public service institutions in Pakistan, has undergone

institutional decay worthy of being labeled as an ‘extortionist gang’. Constitutionally, Tribal

Pakhtunkhwa is a ‘nonregulation area’, which is ruled by the president of Pakistan through

the governor Pakhtunkhwa as his agent. Practically, however, a parallel machinery of the

central and provincial governments administers Tribal Pakhtunkhwa. The political officers at

the top have to reach the governor’s area of influence for postings in the tribal areas. The

lower tiers of administration and the Agencies Works and other Line Departments are the

domains of the provincial government. This administrative mayhem in the Tribal

Pakhtunkhwa results in administrative deadlock between the provincial and central

governments at times when a fugitive of law from the Provincial authority takes refuge in the

Tribal Pakhtunkhwa and the Political Officers, feeling themselves responsible to the governor

rather than the provincial government, refuse to co-operate with the provincial home

department in delivering the outlaw. The poor law and order situation in the settled districts

of Tribal Pakhtunkhwa and the resultant hesitation of investors to undertake economic and

business activities in Pakhtunkhwa can be largely attributed to this administrative black-hole,

the so called FATA, which makes a less secure environment for investors in our region.

There should be a modern security force in Tribal Pakhtunkhwa subject to the condition that

Tribal Pakhtunkhwa should have its own exclusive control over its security forces. The

officer cadre should be recruited from the graduates of the Tribal Pakhtunkhwa through fair

and transparent recruitment procedures giving due regard to educational backwardness and

comparative disadvantage of different agencies in terms of poor human resource

development. The Tribal Pakhtunkhwa administration, however, can hire officers on

deputation from the provincial or federal government if so required by it.

The colonial legacy of recruiting soldiers from different tribes in the Frontier Corps and

appointing its officer cadre from outside should be done away with and the tribal people must

be given responsibility to lead their own forces. The tribal make-up should also be replaced

by a broader identity rather than retaining the water-tight compartments of different tribes in

the semi-military forces of the Frontier Corps.

POLITICAL REFORMS

Any plan for the development of Tribal Pakhtunkhwa must take into consideration, the

genuine, true, fair and transparent representation of the aspirations of the common tribesmen.

This is possible only if the political process in Tribal Pakhtunkhwa is based on adult

franchise, political pluralism and the freedom of expression and association of the tribal

people without fear or favor. The egalitarian spirit and traditions of the tribal people should

be transformed into a modern system of democratic governance. The tribal people must be

empowered to participate in the decision-making processes and structures that vitally affect

their lives. The political rights of the people of the tribal areas of Pakistan must be

constitutionally protected, while keeping their distinct identity intact.

In this regard, each tribal agency must have its own Agency Assembly, which should be fully

empowered to legislate on issues affecting the lives of people in accordance with the

customs, traditions and values of the tribal people except those which are violative of

universal human rights.

ECONOMIC REFORMS

Tribal Pakhtunkhwa is one of the most backward areas of the country where per capita GDP

is 50% less as compared to the rest of the country. During the last fifty years, very little effort

has been done to develop infrastructure and increase employment opportunities in Tribal

Pakhtunkhwa. The strategic location of the Tribal Pakhtunkhwa and the efforts of the

government to address the root causes of terrorism make it even more important to increase

developmental outlays for the socio-economic development of the tribal areas. The following

measures need to be taken for the economic development of the tribal areas:

a) Inclusion of Tribal Pakhtunkhwa in NFC Awards

In order to seriously consider the socio-economic development of Tribal Pakhtunkhwa,

developmental funds must be allocated to it at par with other provinces of Pakistan. The

Federal Budget, 2002-03 allocated 193.5 billion to provinces. This allocation is made under

the NFC Award, which is based on the population of each province. Tribal Pakhtunkhwa is

not included in the NFC award, which means leaving a population equal to the size of

Balochistan’s population (according to 1971 Census) without any direct allocation from

Federal Tax Revenues. Tribal Pakhtunkhwa’s exemption from the tax net can not be made an

argument in favor of denial of its share in the Federal Tax Revenues as it do contribute to the

tax revenues in the form of indirect taxation.

A comprehensive development plan of Tribal Pakhtunkhwa would require allocating funds to

it on the basis of population as is done in the case of provinces. Presently, Tribal

Pakhtunkhwa is clubbed with other Special Areas like AJK, Federal Capital Areas, and

Northern Areas. All these Special Areas have been allocated Rs. 7.7 billion for development

expenditure in the Federal Budget 2002-03. Besides the low budgetary allocation to the

Special Areas, it is also not clear as to how much of this amount would go to Tribal

Pakhtunkhwa amongst the Special Areas.

In view of the drive of the federal government to bring Tribal Pakhtunkhwa into the national

mainstream, it is imperative that either it should be included in the NFC Awards separately or

the aggregate population of Tribal Pakhtunkhwa and Pakhtunkhwa should be worked out for

allocation of funds to both in the NFC Award.

b) Accounting and Financial Information System for Tribal Pakhtunkhwa

In order to ensure the correct utilization of the funds allocated for the development of Tribal

Pakhtunkhwa, a transparent financial and accounting management system needs to be worked

out. In this regard, a separate annual budgetary statement for Tribal Pakhtunkhwa under the

supervision of the federal or provincial government has to go a long way in the right

direction. This would also strengthen the resolve of the present government to ensure

transparency and accountability in the utilization of public funds. As Tribal Pakhtunkhwa

would be given representation in the provincial assembly of Pashtunkhwa, the supervision of

the recently established FATA secretariat and preparation of budget for Tribal Pakhtunkhwa

seems more appropriate for the integration process of NWFP and FATA.

There must be an Annual Development Program for Tribal Pakhtunkhwa and the correct

utilization of funds must be ensured through the establishment of a separate Auditor General

Office. The ‘secret funds’ at the disposal of the political agents must be abolished forthwith

and the ‘Moajib/Lungi System’ in tribal areas must be finished as it encourages political

bribery of the influential elders at the cost of the common tribesmen.

c) Land Settlement

The communal land ownership in the tribal areas is a great hindrance in the way of economic

growth. In order to make Tribal Pakhtunkhwa favorable for economic activities, it is essential

that the communal land ownership should be replaced by modern land settlement. Individual

ownership of land would enable the people of Tribal Pakhtunkhwa to acquire loans for

businesses giving their lands as collaterals. Besides, settlement of land on individual

ownership basis would also lessen opportunities of blocking improvement of physical

infrastructure, which is compromised in political and tribal disputes in Tribal Pakhtunkhwa.

The tribal leaders should be taken into confidence and they should be made aware of the

benefits of the modern land settlement system.

d) Establishment of Free Trade Zone

The reconstruction exercise in Afghanistan and the opening of Central Asia provides a golden

opportunity for Pakistan. The establishment of a Free Trade Zone in Pashtunkhwa/Tribal

Pakhtunkhwa would greatly help in facilitating trade with the landlocked Central Asia.

The establishment of a Free Trade Zone would decrease the dependence of the tribesmen on

illegal trade and would compensate the tribal people for the neglect of the socio-economic

sector during the past 55 years of Pakistan’s independence. This subsidy by the federal

government can greatly change the economic conditions of the tribal people. Since the

formation of the new government in Afghanistan, the informal trade between the two

countries has reduced but the formal trade did not pick up significantly. Tribal Pakhtunkhwa

can play a significant role in maintaining and increasing trade ties between the two countries

provided that the informal trade links are replaced by formal trade between the two countries.

Tribal Pakhtunkhwa can play a major role in an atmosphere of mutual trust between the

governments and people of Pakistan and Afghanistan. The creation of a Free Trade Zone in

Pakhtunkhwa can be of great strategic advantage to the government of Pakistan in the long

run.

e) Establishment of Tribal Chamber of Commerce

The tribal people are involved in trans-border trades for centuries; however, their trade

transactions could not be modernized and institutionalized due to lack of leadership, vision

and information of the tribal traders. The establishment of a Tribal Chamber of Commerce

would enable the tribal traders to have better exposure to and transaction with national and

international markets. This chamber can be of great help in advocating and representing the

genuine trade interests of the tribal people with government and private sector organizations.

It will also be able to protect the legal interests of the tribal traders and they cannot be

coerced or pressurized for illegal gratification by government officials and agencies. There is

a need of a thorough spade-work to establish a Tribal Chamber of Commerce.

f) Development of Manufacturing Sector

Great potential exists for the development of the manufacturing sector in mining, precious

stones, food processing and labor and energy intensive units. The government must develop

necessary infrastructure and provide electricity on subsidized rates to investors for the

development of the manufacturing sector in Tribal Pakhtunkhwa.

SOCIAL SECTOR DEVELOPMENT

1. Construction of Tribal Highway

Poor physical infrastructure in Tribal Pakhtunkhwa has added to the backwardness of the

tribal areas. Most of the valleys in the tribal areas remain inaccessible, which makes the lives

of the tribal people miserable in many ways. They have poor access to health and education

facilities and the lack of effective means of communication and transportation is responsible

for retaining the backwardness of the tribal areas.

The construction of a tribal highway starting from Bajaur to Mohmand, Khyber, Orakzai,

Waziristan and linking it to Balochistan should be a top priority for the socio-economic

development of Tribal Pashtunkhwa. This will greatly help in alleviating poverty, improving

life standards of tribes by access to better transportation and communication.

2. Health

The poor health care system in Tribal Pakhtunkhwa is responsible for many untimely and

avoidable casualties. Child and maternal mortality rate is higher in Tribal Pakhtunkhwa than

the rest of the country because of poor health infrastructure. Development outlays for the

health sector in the national and provincial allocation for Tribal Pakhtunkhwa must be a

priority to improve health services. The central government should allocate additional funds

for this purpose.

3. Education

Education in Tribal Pakhtunkhwa, like all other social sectors, is far behind than the rest of

the country. It is mainly because the students from Tribal Pakhtunkhwa face a lot of

difficulties in getting seats in professional colleges and higher educational institutes. Middle

and higher standard education cannot improve unless at least one university for both genders

are established exclusively for Tribal Pakhtunkhwa. There should be two sub-campuses of

these universities in the Tribal Areas. The establishment of a university would put greater

demand on lower schools and colleges to produce the necessary manpower for higher

education. This would also provide equitable educational opportunities to the students from

Tribal Pakhtunkhwa at par with the students of other areas of Pakistan.

4. Travel Concessions

Geographical contiguity, historical, cultural and ethnic ties of the tribal people with

Afghanistan and the imperative of frequent cross-border travel to and from Afghanistan

makes it a vital question for the tribal people that they should be given visa-free cross-border

travel facilities between Pakistan and Afghanistan. The rights of the tribal people must be

strongly supported to retain their historical links with the government and people of

Afghanistan subject to the condition that such contacts do not hamper good neighborly

relations between the governments of Afghanistan and Pakistan.

5. De-Weaponization

The people of Tribal Pashtunkhwa should be educated and persuaded to give up destructive

weapons acquired during recent years, which have become a tool of self-destruction.

Abundance of the above mentioned weapons in the private possessions have resulted not only

in human and material losses on large scale but it has led to gross violations of tribal

traditions in terms of killing women and children. As a first step Tribal Pashtunkhwa should

be cleansed from heavy weapons with the cooperation of the people. The process of de-

weaponization should gradually include small weapons also.

As far as weapon industry and markets are concerned the government, with the cooperation

of the local people, should prepare a comprehensive plan to integrate weapon manufacturing

and selling in the national arms markets and industry. The weapon markets in the tribal areas

should be brought under proper state control.

6. Eradication of Narcotics

Drug trafficking brought a bad name to the people of Tribal Pakhtunkhwa and the region. In

order to eliminate cultivation of narcotic crops, a proper plan should be devised, which

should include alternative employment and earning opportunities for the people involved in

this trade. The geo-strategic location; socio-economic under-development; the political

deprivations of the people for almost a half century and the prevailing situation in the region

make increasing demands on the government of Pakistan to give the people of Tribal

Pakhtunkhwa their due rights.

7. Constitutional Status of PATA

The Provincially Administered Tribal Areas (PATA) of Pakistan, comprising of the former

Malakand Division has been defined under section 246 of the Constitution of Pakistan,

whereas section 247 deals with administration of the Tribal Areas of Pakistan.

It is interesting to note that the people of PATA elect their public representatives in the

general elections like the rest of Pakistanis and their national and provincial assembly

members do take part in legislation in both legislatures but ironically any such legislation is

not implemented in PATA unless it is extended by an executive order of the president of

Pakistan or the governor NWFP (Pashtunkhwa).

This constitutional incongruity has resulted in many legal complications both for the general

public and the government machinery as well. For example, the Malakand Agency prison is,

legally speaking, a private prison as it has no ‘Jail Manual’. The youth from Malakand

Agency cannot be selected in the Pakistan national sports teams because they belong to the

Agency. But the agency is in name only as there are regular law courts working in Malakand

Agency and the rest of PATA. But again, PATA has special laws called ‘The Sharia

Regulations’, which coexist with regular laws of Pakistan. The only impression one gets of

all these injustices is that the federal government of Pakistan wants to continue the legal,

geographic and administrative division of Pakhtuns as was pre-partition British policy in the

sub-continent. It would be in the best interest of the country to apply uniform standards to all

areas and remove the sense of frustration of the people of Pashtunkhwa.

Next: A GLANCE AT POVERTY IN PAKHTUNKHWA

Pashtunkhwa: A Developmental Framework-5

A GLANCE AT POVERTY IN PAKHTUNKHWA The entire Pakhtun nation, on the average, lies below the poverty line. If poverty line is equal

to the earning of one US dollar per person per day then the average per person GDP of

Pakhtuns is far below this amount. Pakhtuns are too poor compared to their human and

natural resources. The per capita GDP in Pakistan is 472 dollars while the per capita GDP of

NWFP is less than half of the national average. Per capita GDP of Pakhtunkhwa (NWFP &

FATA) [1] can range from $180 to $235 depending on the variables used in the simulation

analysis.

The effects of such a vast difference between the GDP of this area and the rest of the country

are numerous. Over the past few decades millions of workers have left Pakhtunkhwa (NWFP

& FATA) for others parts of the country and abroad.

In order to enhance national unity and reduce the appeal of religious fundamentalism (due to

sense of deprivation) in Pakhtunkhwa/NWFP, such a vast gap among the per capita income

of individuals in different provinces must be reduced. In almost all sectors including

agriculture, manufacturing, services and trade, Pakhtunkhwa needs immense investment to

come up at par with the rest of the country.

The following case study illustrates how per capita GDP of Pakhtunkhwa was calculated.

ESTIMATION OF THE GDP OF NWFP AND FATA

Pakistan is a low-income country, with a per capita gross domestic product (GDP) of around

470 dollars. The per capita income varies across the country and is considerably lower in

NWFP, FATA and Balochistan. GDP or GNP is usually calculated for countries thus

ignoring the differences between the per capita incomes across different provinces with in a

country. This article will calculate the combined GDP of NWFP & FATA and compare it

with the rest of Pakistan.

GDP OR GNP

Gross Domestic Product (GDP) is the value of new goods and services produced with in a

country during the course of the year. GDP is calculated without regard to ownership of

productive resources. Thus, the value of output of a foreign owned factory in NWFP is

included in the GDP of the province. On the other hand, Gross National Product (GNP) is the

value of new goods and services produced by domestic factors of production. Thus, the value

of output of a foreign owned factory in NWFP is excluded from GNP calculation but

remittances from workers of this province working abroad is included in GNP. Like many

developing countries the GNP of NWFP & FATA is higher than the GDP of the province.

The main reason for the higher GNP of the province is the remittances of workers from

abroad and other provinces of the country.

GDP can be calculated by two different approaches. These are Income Approach and

Expenditure Approach. Income Approach calculates the wages, interest, rents, proprietors’

income, etc in NWFP & FATA in a given year. On the other hand the Expenditure Approach

is the sum of consumption, investment, government expenditures and net exports of NWFP &

FATA. (Detail of these approaches is beyond the scope of this report). The economic survey

of Pakistan uses Income approach to calculate the GDP of Pakistan and the same approach is

used to calculate the GDP of NWFP & FATA in this report. Current US dollars are used in

the estimation of the GDP. Purchasing power parity is not used in determining wages, rents

etc.

POPULATION AND LABOUR FORCE

To determine the per capita GDP of the province, real population of the province needs to be

estimated. Table 1 below shows the total area and population of Pakistan, NWFP and FATA.

According to the 1998 census NWFP & FATA constitutes 16% of the population of Pakistan.

According to this census the population density of NWFP is more than twice as high as

FATA. Many individuals and organizations dispute these findings and argue that the

population density is almost the same in NWFP & FATA. As a result they claim that the

population of FATA is underestimated by 2-3 million. However in this report figures from

1998 Census is used to determine the GDP of NWFP & FATA.

TABLE 1

Pakistan NWFP FATA NWFP &

FATA

Area in sq

km 796,095 74,521 27,220 101,741

Area as a

percentage

of total

9.36% 3.42% 12.78%

Population 130,579,000 17,735,000 3,138,000 20,873,000

Population

percentage 13.58% 2.40% 15.98%

Population

Density 238 115 205

Source: Economic Survey of Pakistan.

The size of the total labor force in Pakistan is around 40.4 million, which is about 31 % of the

total population. Labor force includes those individuals who are currently employed or are

searching for employment. Those who are unemployed and are not searching for employment

are excluded from these calculations. More than 2 million people are currently unemployed in

Pakistan.

TABLE 2

Population 130,579,000

Labor

Force 40,400,000

Labor 30.94%

Force as

Percentage

of

Population

Table 2 & 3 shows the total strength of the labor force in Pakistan, and the actual and

percentage breakup of individuals employed in different sectors of the economy.

TABLE 3

Pakistan

Distribution

of Labor

Force

Percentage of Labor

Force in Each

Sector

Total Labor

Force 40,400,000

Agriculture 19,089,000 47.25%

Mining &

Manufacturing 4,100,600 10.15%

Construction 2,529,040 6.26%

Transport,

Storage &

Communication

2,213,920 5.48%

Trade 5,603,960 13.87%

Services &

Others 6,863,960 16.99%

Source Table 2 & 3: Economic Survey of Pakistan

Assuming that labor force as percentage of population is the same for Pakistan and NWFP

(almost 31%) the size of labor force in NWFP & FATA can be estimated to be around 6.5

million people. Table 4 shows the total strength of the labor force in NWFP & FATA, and the

actual and percentage breakup of individuals employed in different sectors of the economy

according to the government figures.

TABLE 4

NWFP &

FATA

Distribution

of Labor

Force

Percentage of

Labor Force in

Each Sector

Total Labor

Force 6,457,924

Agriculture 3,117,885 48.28%

Mining &

Manufacturing 415,244 6.43%

Construction 528,258 8.18%

Transport,

Storage &

Communication

421,057 6.52%

Trade 826,614 12.80%

Services &

Others 1,148,865 17.79%

Source: Economic Survey of Pakistan

GDP OF PAKISTAN

The GDP of Pakistan is estimated to be 61.7 billion dollars (Source: World Bank).

Agriculture is the biggest contributor to the GDP of Pakistan followed by manufacturing and

Trade. Table 5 shows the contribution of different sectors towards the GDP of Pakistan.

TABLE 5

Contributions

of Different

Sectors to

GDP of

Pakistan in

Dollars

PERCENTAGE

Total GDP 61.7 Billion

Agriculture 15.24 Billion 24.70%

Manufacturing 10.735

Billion 17.40%

Construction 2.10 Billion 3.40%

Transport,

Storage &

Communications

6.41 Billion 10.40%

Trade 9.4 Billion 15.20%

Services &

Others

17.815

Billion 28.90%

Source: Economic Survey of Paksitan.

CALCULATING GDP OF NWFP AND FATA

NWFP & FATA constitutes around 16% of the population of the country and as a result

roughly 16% of the GDP of the country should be generated in this area. Unfortunately the

GDP contribution from this area is much lower. Each sector of the economy of NWFP &

FATA is discussed below.

AGRICULTURE

According to the ministry of food, agriculture and livestock, around 22 million hectares are

cultivated in Pakistan. Out of this around 1.5-1.7 million hectares are estimated to be

cultivated in NWFP & FATA. Thus, 6-8 % of the total cultivated area in Pakistan is

cultivated in NWFP & FATA. Irrigation system in the province is very poor and a significant

portion of the cultivable land in the province is not cultivated due to lack of an effective

irrigation system in the province. Furthermore, even most of the cultivated land in the

province is non-irrigated.

On the average irrigated area produces twice as much out put as the non-irrigated area. This

means per acre output is considerably lower in NWFP& FATA compared to the better-

irrigated lands in Punjab and Sindh. Based on the above-mentioned facts it is fair to estimate

that the agriculture production of NWFP and FATA does not constitute more than 6-7% of

the total agriculture output of the country.

Table 5 shows that agriculture accounts for 15.24 billion dollars in the total GDP of the

country. 6% of 15.24 billion dollars is about 914 million dollars. Thus 914 million dollars is a

generous estimation of the agricultural output of the province.

The Economic Survey of Pakistan estimates that almost half of the population of NWFP is

employed in the agriculture sector as shown in Table 4. These figures clearly show that

agricultural labor force is over estimated. The validity of these facts needs to be questioned

for two reasons. Firstly there is not enough cultivated and irrigated area in the province to

employ such a large number of people. Secondly such a large number of people cannot be

gainfully employed in this sector as the per-person income for agricultural workers comes to

less than 100 dollars per person per year if we assume that half the labor force of the province

is employed in agriculture sector. This situation can be termed as disguised unemployment.

MANUFACTURING

Manufacturing constitutes for 17.4 % of the GDP of Pakistan. Out of this figure 12.2% is

large-scale manufacturing and 5.2% is small-scale manufacturing. As shown in Table 5,

manufacturing contribute 10.735 billion dollars to the GDP of the country. Large scale

manufacturing is about 7.53 billion dollars of this amount while small-scale manufacturing

contributes around $ 3.21 billion.

Large-scale manufacturing is very limited in NWFP and is non-existent in FATA. According

to Sarhad Development Authority there are 2086 industrial units in the province employing

77900 people. However most of these industrial units are closed. On the other hand

Economic Survey of Pakistan estimates that 6.43% of the population of NWFP is employed

in manufacturing and mining. If we assume the same ratio for FATA, the total number of

people employed in this sector is around 415,244 in NWFP & FATA. Economic Survey of

Pakistan uses a broader definition of manufacturing than SDA but again, employment in this

sector is overestimated by Economic Survey of Pakistan as there are not enough operational

manufacturing units to employ such a large number of people.

There are 12-15 units in NWFP with initial investment of 500 million rupees. These can be

classified as large-scale manufacturers and there are about 50 units with initial investment in

excess of 50 million rupees. A great number of these units are closed but a few cement

manufacturing units, a tobacco unit in Akora and polyester units in Hattar are notable

exceptions. The contribution of NWFP to large scale manufacturing in Pakistan is almost

negligible. Small-scale manufacturing is also limited because of lack of any competitive

advantage to manufacturers in the province.

NWFP & FATA got an insignificant share in the export of manufactured goods from

Pakistan. In all manufacturing in NWFP does not contribute more than 3-4 percent to the total

manufacturing sector in the country. This adds around 300-350 million dollars to the GDP of

Pakistan.

CONSTRUCTION

More than 20% of the construction workers in Pakistan come from NWFP & FATA. The

contribution of the construction industry of Pakistan to the GDP of Pakistan is 2.10 billion

dollars. Out of the 528,258 construction workers in NWFP & FATA most are daily wagers.

Both public sector and private sector construction work is limited in NWFP & FATA

compared to Punjab and Sindh. As a result many construction workers from NWFP & FATA

work in Punjab and Sindh. Income earned by construction workers outside NWFP & FATA

cannot be technically included in the GDP calculation of NWFP & FATA. Even if this

amount is included the income earned by construction workers in NWFP & FATA can be

estimated to be around a maximum of 12% of the total 2.10 billion dollars. This comes to

about 252 million dollars.

TRANSPORT, STORAGE AND COMMUNICATION

People from NWFP and FATA have significant representation in the road transport sector of

the country. Unlike construction industry there is significant ownership of transport vehicles

in the province. However income of NWFP & FATA owned vehicles operating exclusively

in other provinces cannot be counted in the GDP of the province. The share of NWFP &

FATA is very limited in air transportation and railways. In addition communication

infrastructure is relatively weak in NWFP & FATA compared to Sindh and Punjab.

Transport, Storage and Communication contribute 6.41 billion dollars to the GDP of the

country. A benevolent estimate will put NWFP & FATA share in this sector around 8-9% of

the total. This comes to 500-550 million dollars. The employment generated in this sector is

over four hundred thousands in NWFP & FATA.

TRADE

Due to weak agriculture and manufacturing sectors the purchasing power of the people of

NWFP is limited. This is however compensated by remittances from other parts of the

country and abroad. The presence of Bara markets also attracts buyers from other parts of the

country, as non-taxed goods in these markets are considerably cheaper. In addition, the

presence of around 1.5 million refugees also stimulates the wholesale and retail sector. In

excess of 800,000 people are employed in this sector.

The contribution of trade to the GDP of Pakistan is around 9.4 billion dollars. About 16% of

the total trade (wholesale and retail) can be attributed to NWFP & FATA. This comes to

around 1.5 billion dollars. It is possible that the actual size of this sector in NWFP & FATA is

even bigger than this amount but it cannot be confirmed, as a big portion of this trade is

undocumented.

SERVICES AND OTHERS

Services sector in NWFP & FATA is very weak. This includes Finance & Insurance,

Ownership of Dwellings, Public Administration & Defense and other services. 17.185 Billion

dollars of the GDP of Pakistan is attributed to this sector. Out of the roughly seven million

workers employed in this sector in the country about 1.1 million are employed in NWFP &

FATA. The author estimates that NWFP & FATA share in this sector is around 8-9 percent

of the total. This comes to about 1.3-1.5 billion dollars.

GDP OF NWFP AND FATA

Simulation analysis is used to determine an estimate of the GDP of NWFP & FATA. As the

thesis of this report is that the GDP of NWFP and FATA is considerably lower than the

national average, an effort has been made to avoid underestimating NWFP & FATA

contribution to the GDP of Pakistan. (The detail methodology of this analysis is beyond the

scope of this report). On the contrary NWFP & FATA contribution to national GDP is

overestimated in the above analysis. Table 6 estimates the GDP of NWFP and FATA using

Income Approach method.

TABLE 6

Contributions

of Different

Sectors to

GDP of

NWFP &

FATA IN

Dollars

Contribution

in

Percentage

Agriculture 914million –

1100 million 18.97%

Manufacturing 300million –

400 million 6.22%

Construction 252 million 5.23%

Transport,

Storage &

Communication

500 Million 10.30

Trade 1500 Million 31.25%

Services &

Others 1350 Million 28.03%

Total GDP

4.816 Billion

– 5.116

Billion

Per capita GDP can be estimated from the above-mentioned table. As Afghan refugees

contribute to almost all sectors of the GDP of the province their numbers must also be

included in the Per capita GDP of the province. According to 1998 Census the population of

NWFP & FATA is around 20.8 million. If we add the 1.5-1.6 million refugees residing in the

province the combined total comes to 22.4 million. Dividing the total GDP of 4.816 Billion

by 22.4 million people, per capita GDP for NWFP & FATA comes to $215. Even if we

estimate the agriculture output for NWFP & FATA as 1.1 billion dollars, and manufacturing

output as 400 million dollars the GDP per person is still less than 230 dollars per person.

References:

1- The acronyms, NWFP and FATA, used by the government of Pakistan to designate

Pakhtunkhwa and Tribal Pakhtunkhwa respectively, have been retained in this part of the

document as this section is based on reference material of the government of Pakistan.

Next: STATE OF ECONOMY OF PAKHTUNKHWA

STATE OF ECONOMY OF PAKHTUNKHWA

Successive governments in Pakhtunkhwa have failed to develop infrastructure necessary for

industrialization in the province. Various myths have been created about the economic

potential of Pakhtunkhwa such as it has no potential for economic growth; its people cannot

survive without Punjab’s wheat etc. These myths are totally unfounded and unfair. In fact,

Pakhtunkhwa is so much rich in natural and human resources that, if properly managed, its

economy can be one of the most thriving in terms of per capita income in the whole region.

But at present we will survey the present state of industrialization and the reasons for the poor

state of industrialization in the province.

According to the Directory of Industrial Establishments NWFP there were 1704 industrial

units in NWFP by the end of 1996 and a further 136 were under construction (122-155). This

information is highly misguiding, as 1704 is the total number of industrial units that were

established from 1947 onward. Many of these units are either obsolete or bankrupt that is

why the total number of running units are much smaller than that. Many among these so-

called industrial units cannot be counted even as industrial units because 131 ice-

manufacturing units and cold storages are also considered as industrial units. Similarly out of

the 313 silk mills, more than half are established in private homes with investment as low as

Rs. 93000 (Less then $1700). This is a clear sign that the industrial department and the

government have exaggerated the number of industrial units and industrial employment. It is

important to divide these industries on the basis of total amount of investment made in them.

Investment-wise Distribution of Industrial Units

Amount Invisted

Number of Units Percentage of Total

Less Than Rs. 500,000

343 20.23

500.000 – 1,000,000 283 16.70

1 Million

to 5 Million

477 28.14

5- 10 Million 227 13.39

10- 50 Million 262 15.46

50- 100 Million 39 2.30

100- 500 Million 50 3.07

Above

500 Million

12 0.71

Total 1695 100

Source: (Directory of Industrial Establishment, NWFP 1996 1-122)

It is evident from this table that majority of the so-called industries have a very small capital

base. Taking the free market rate of dollar at Rs. 56 to a dollar, it can be determined that

20.23% industrial units have investment of less than $10,000 per unit. Similarly, 36.93% of

the companies have investments less than $18,000 per unit and 65% of the units have less

than an equivalent of $100,000 invested per unit. Only 592 units have an investment that

exceeds Rs. 5 million. Bulk of these units is located in three industrial estates established by

the government. These industrial estates are

1. Industrial Estate Peshawar.

2. Hatter Industrial Estate, Haripur.

3. Gadoon Industrial Estate, Swabi.

INDUSTRIAL ESTATE PESHAWAR

Industrial estate Peshawar is spread over 868 acres, out of which 181.771 acres are for

infrastructural facilities and 686.229 acres have been allocated to industrial plots (Industrial

Estate Peshawar 1-4). This industrial estate has 354 medium size plots under the supervision

of Sarhad Development Authority (SDA). According to Sarhad Development Authority

Annual Report 1996-97, 189 units have been established, 53 of these units are already closed

and another 68 are under construction. The industries in this industrial estate are dominated

by match factory, vegetable oil, marble tiles, and pharmaceuticals.

HATTAR INDUSTRIAL ESTATE, HARIPUR

The industrial estate Hattar was established in 1985-86 at Hattar district Haripur. The total

acquired area of the estate is 1032 acres out of which 861.50 acres have been allocated for

365 plots. The total number of operating units is 143. Seventeen units among them are closed

and 86 units are under construction (Industrial Estate Hattar 1-12). The dominant industries in

this estate are textiles, engineering industries, marble tiles and chemicals.

GADOON INDUSTRIAL ESTATE, SWABI

The total number of plots in Gadoon Amazai area is 623. Out of this, 219 industrial units

have been developed of which only 80 are operational and the rest are closed. There are 64

new units under construction. The dominant forms of industries in Gadoon are textiles,

vegetable oil, steel furnaces, chemicals and electronic goods (Gadoon Industrial Estate 1-6).

As Gadoon was a backward area the government gave special incentives to this industrial

estate through SRO 517. The withdrawal of this incentive, however, caused the collapse of

most of the industries in this estate.

Apart from these large industrial estates, small industrial estates are established on Kohat

road (Peshawar), Jamrud road (Peshawar), Mardan, Khalbat town ship (Haripur),

Abbottababd, Mansehra, Kohat, Bannu and Nowshera (Directory of Industrial Establishment

V-XV).

REASONS FOR LACK OF ECONOMIC DEVELOPMENT

Some of the key reasons for the lack of industrialization of NWFP and FATA include the

following:

1. Lack of financing.

2. Lack of infrastructure.

3. Lack of managerial and entrepreneurial skills.

4. Locational advantage-turned-into-disadvantage.

5. Lack of local representation.

6. The Afghan war effects.

7. Denying hydro power royalty and fair share in water of Indus River System

1. Lack of Financing

By June 1995, 22 Pakistani scheduled banks, operating in Pakhtunkhwa, were having a total

of 1147 branches in the province. In addition three foreign banks were also operating in the

province (Bank of Khyber, Information Memorandum 5). Apart from Khyber Bank, none of

these banks have their headquarters in Pakhtunkhwa. This arrangement is especially

troublesome for industrialists who want to take a loan in excess of Rs. 5 million ($100,000)

because for medium and big size loans the banks refer the applicants to its headquarters. Most

of the headquarters of the big banks of Pakistan are located in the port city of Karachi, thus

making it difficult for a local borrower to utilize the services of these major banks.

In Pakistan commercial bank borrowing is very personalized and unless the borrower have

extensive political or social contacts it is difficult to secure a loan. Most of the applicants

from Pakhtunkhwa have limited or no social contacts with the banking professionals in

Karachi. This makes it further difficult for them to obtain a loan. Only those who are

politically connected can secure large-scale loans from these banks. As these politically

connected people are not always the most qualified or the most eligible for these loans, their

projects usually fail because of lack of vision or simply because they misuse the loan amount.

Pakhtunkhwa has a share of 35% in the remittances that workers send from abroad. In

addition, it gets 23% of inter-provincial net flows due to large number of Pakhtun workers in

other provinces (Zaidi 300-310). Large sum of these remittances is deposited in local banks.

The percentage of money deposited by people of Pakhtunkhwa in the banking system is much

higher than the relative size of their population. On the other hand total borrowing by the

people of Pakhtunkhwa is very low compared to their deposits.

To overcome this problem, The Bank of Khyber was established in 1991 to provide a

commercial bank with its headquarters in Pakhtunkhwa. According to the ‘Information

Memorandum’ of Bank of Khyber, "historically there has been a net outflow of funds from

the province as deposits raised in Pakhtunkhwa have to be invested outside the province due

to lack of investment avenues within the province and absence of a locally headquartered

commercial bank. Bank of Khyber has filled this gap successfully". This claim by Bank of

Khyber can be rejected for several reasons. Firstly, the Bank of Khyber does not take rural

property as collateral thus eliminating 85% of Pakhtunkhwa population (which live in rural

areas) from the list of eligible borrowers. Secondly, industry in Pakhtunkhwa is in embryonic

stage, thus, more funds are required for establishing new industries. On the contrary Bank of

Khyber emphasizes on providing financing facilities to existing businesses through working

capital and trade financing loans. Unfortunately, most of these existing businesses are not

even located in Pakhtunkhwa. Bank of Khyber has 29 branches in Pakistan out of which 23

are located in Pakhtunkhwa. Till December 1997, the total deposits of the bank were Rs.

6195.81 million. Out of this, Rs. 4727.78 million was deposited by the people of

Pakhtunkhwa that accounts for 76.31 % of the total deposits of the bank. On the other hand

the total advances (loans) given out amounted to Rs. 3008.866 million. Out of this, Rs.

1670.95 million was loaned out through only three branches outside Pakhtunkhwa (Advances

and Deposits 1997 1-2). Thus 55.53% of the total advances of the bank were loaned out in

Karachi, Islamabad and Lahore. This comparison can clearly tell us that the Bank of Khyber

was unable to achieve its goal of making the banking system more accessible for the people

of Pakhtunkhwa. Due to the above mentioned difficulties the genuine entrepreneurs and

industrialists of Pakhtunkhwa have been shunned out to take advantage of the banking sector.

2. Lack of Infrastructure

Government investment in education, energy, traffic, research, health, administration, justice

system, police, and communication is important for the development of basic infrastructure.

In Pakhtunkhwa lack of development in the above mentioned sectors has hindered the

progress of industrialization.

An efficient transport service is of vital importance for the development of an area.

Pakhtunkhwa is land locked, therefore, is accessible by rail, roads or by air only. The total

rail road length in the province is 686.14km which is 5.5% of the total 12593.18km in

Pakistan. Out of this 319.93km is broad gauge, the rest is out dated narrow gauge

(Memorandum for National Finance Commission 27 ).

Because of this problem the reliance on railway system is very limited. This has increased the

dependence of transportation on roads.

The existing roads in Pakhtunkhwa are in very poor condition. The total roads in

Pakhtunkhwa measure 9753 kilometer, which is 4.9% of total road length in the country

(Important District-Wise Socio-Economic Indicators NWFP 1995-1996 114). The proposed

Islamabad – Peshawar Motorway will somewhat improve the excessive burden on our roads

but much more road construction is needed to connect the southern districts and tribal areas

with central Pakhtunkhwa and in the long run connect Pakhtunkhwa with the port city of

Gawadar, Balochistan.

The air transportation is also very limited in Pakhtunkhwa. The Peshawar Airport is under the

joint use of the Pakistan Air Force and Civil Aviation Authority. Until recently foreign

airlines were not allowed to operate from this airport. Recently the government has allowed

the Qatar Airways, Saudia and Emirates to operate from Peshawar airport. The airport

however, requires extensive expansion especially if all the travelers from Pakhtunkhwa

traveling abroad take a direct flight from Peshawar. Similarly, the export of fruit and other

perishable items requires cargo arrangements that need to be constructed at Peshawar airport.

Just like transportation, the telecommunication network of Pakhtunkhwa is also very poor.

Pakhtunkhwa has only 7% of the total telephone connections in Pakistan (Memorandum for

National Finance Commission 27 ). Apart from the fact that more than 30% of electricity

produced in Pakistan is produced in Pakhtunkhwa and it is a net exporter of electricity to

other provinces. In 1992-1993 the per capita consumption by Pakhtunkhwa was 217(KWH)

compared to 307(KWH) for Pakistan (NWFP Development Statistics 95 &96 255). Till 1987

there were no 500KV transmission lines in the province and 5% of the 220KV transmission

lines of the country were in Pakhtunkhwa (Memorandum for National Finance Com-mission

35 ).

Similarly the gas consumption per year in Pakhtunkhwa is 1.64% of the total gas consumed

in Pakistan (NWFP Development Statistics 95 & 96 262). Key towns in Pakhtunkhwa are not

provided with gas that has an adverse affect on industrialization. Gadoon Amazai Industrial

Estate that is one of the three big industrial estates has not been provided gas connection.

The main reason for this poor development of infrastructure was the lack of investment by

the federal government. From 1947 to 1975, 3.64% and 1975-1985, 4.18% of the total federal

investment was allocated to Pakhtunkhwa (Memorandum for National Finance Commission

35 ). It is evident from the above discussion that Pakhtunkhwa is not intrinsically poor in

resources but the above mentioned factors are responsible for the backwardness of

Pakhtunkhwa, which has a large scope for industrial development.

3. Lack of Managerial and Entrepreneurial Skills

The literacy rate in Pakhtunkhwa is at 16.7% (Development Statistics 95&96 381). Out of

this a very small number of people have education beyond high school. Until recently there

was no special emphasis on business education. In Peshawar University there is an economics

department plus an MBA department. There is also an economics department in Agriculture

University, Peshawar and another one in Gomal University, D.I Khan. Although the MBA

department of Peshawar University has shown some improvements in the past few years but

the overall standard of education of these institutions is very low. These institutions are

unable to provide the much needed managerial and entrepreneur skills to their students. There

are some new management schools in operation in the city of Peshawar but their standard is

by no mean superior to institutions mentioned above.

The expertise of business professionals is not utilized properly in the economic structure of

Pakhtunkhwa. The federal or provincial government owns almost all the major institutions in

Pakhtunkhwa. These include Pakistan Railways, Pakistan International Airlines, Pakistan

Telecommunication Corporation, Oil and Gas Development Corporation, Water and Power

Development Authority, Provincial Development Authority, FATA Development

Corporation, Sarhad Development Authority, all the major educational institutions and almost

all the major banks. These organizations attract most of the qualified graduates. Almost all of

these corporations mentioned above are running in losses because of their inefficiency,

corruption and mismanagement. The newly recruited graduates find it difficult to contribute

anything positive to these organizations because these organizations do not encourage any

feed back from the newly recruited staff. Over the course of their employment individuals are

either forced to adopt the corporate culture of these organizations, or pressurized to resign or

keep a passive role. That is why generations of new managers were unable to bring any

changes in these organizations. As most of the professionals opt for public sector jobs,

therefore, the private sector is left with less of the competent individuals.

The business community of Pakhtunkhwa consists of small traders instead of big business

entities. It is difficult for them to hire competent professionals. After being unable to hire

professional guidance, most of the businessmen (who are either uneducated or less educated)

rely on their own entrepreneur skills. Due to the lack of professional expertise, businessmen

lack long-term vision. Most of the businesses operate on a day to day basis rather than having

a long-term plan. In addition, because of lack of direction, the businessmen cannot invest in

an innovative project. Not many businessmen would invest capital unless a foreign multi-

national invests in that sector first. And then when the local investors and businessmen see

that the foreign multi national is making a profit they jump into the same industry and start

their own units. This behavior of the local businessmen is not because they are risk averse but

because they do not have the expertise to determine the future course of action for their

businesses.

4. Locational Advantage turned into Disadvantage

Pakhtunkhwa lies at the junction of many countries thus promising trade potential for this

area. Pakhtunkhwa can serve as a manufacturing and assembling hub for Central Asian and

South Asian markets due to its strategic location and other attributes such as cheap hydro

power and abundant human resources. However due to geo-political situation in the region

this advantage turned into a disadvantage. Locational disadvantage is one of the biggest

factors in the lack of industrial development of NWFP. NWFP is in the north west of the

country that makes it quite far from the port city of Karachi. Import oriented industries have a

disadvantage to establish a unit in NWFP because of extra transportation cost. Locational

disadvantage of NWFP causes a 22% increase in the cost of production over Punjab and

Sindh. Even when raw material is produced in other parts of the country, it is difficult to

utilize it in NWFP. For instance, the most dominant form of industry in Pakistan is the textile

industry. Cotton is exclusively produced in Punjab and Sindh. Thus shipping cotton to

northern Pakhtunkhwa for use in textile industry and then shipping the end product to

Karachi for further export makes it difficult for the local manufacturers to compete with

manufacturers from Sindh and Punjab.

There are different ways to overcome this problem. Firstly, Pakhtunkhwa can rely on those

industries for which the local raw material is required. Although Pakhtunkhwa is rich in

mineral resources, production of tobacco and production of a great variety of fruits, the

industries based on these raw materials will be limited in number and will still incur a big

transportation expense for shipment to the port city of Karachi. Secondly, special incentives

can be given to industries in Pakhtunkhwa to overcome this disadvantage.

As Pakhtunkhwa has a potential of producing excess of 50,000MW of electricity – cheaper

than any other form of electricity production in Pakistan – some of this advantage can be

transferred to the local industries by charging them lower electricity price. Lower electricity

prices will especially be beneficial for electricity intensive industry. For example, for mini

steel mills the reduction in electricity prices will overcome not only the locational

disadvantage of the province but also will be the basis of competitive advantage in energy

intensive industries. Other industries that are less electricity intensive will not be able to

eliminate their locational disadvantages by paying less for the electricity. These industries

can be given other incentives like exemption of excise duties and other taxes in order to bring

them at par with the rest of the country.

5. Lack of Local Representation

Pakistani political structure does not allow the provinces to have a significant say in their

own economic policy formulation. Gadoon Amazai Industrial Estate is a classic example of

the provincial government’s inability to save the industries in this province. To compensate

for the locational disadvantage and to eradicate the poppy cultivation, industries in Gadoon

Amazai were given special incentives like exemptions on excise duty and 50% reduction in

electricity charges. Two years after the establishment of this industrial estate the federal

government withdrew these incentives. This decision forced majority of the units in the estate

to close down thus leaving thousands of people unemployed.

Former FATA Development Corporation (DC) now FATA Secretariat carries out the

development work in FATA. Tribal Pakhtunkhwa is not given any seats in provincial

assembly, but FATA DC and other development work in Tribal Pakhtunkhwa is under the

control of the governor of Pakhtunkhwa who is directly hired by the federal government.

Thus, the federal government directly controls Tribal Pakhtunkhwa without any democratic

representation given to its people at the local or provincial level. The 12 members elected

from Tribal Pakhtunkhwa do not have much of a say in policy formation in the National

Assembly that houses more than three hundred members. Similarly the representation of

Pakhtunkhwa is also limited to a small number of seats in the federal government. With

limited representation in the federal, political and bureaucratic structure, laws that are

formulated by the federal government are not always in favor of industrialization in

Pakhtunkhwa and in some cases-like Gadoon Amazai-have an adverse affect on the economy

of Pakhtunkhwa

6. The Afghanistan War’s Effects

Tribal Pakhtunkhwa and Balochistan have a long border with Afghanistan that is accessible

by the famous Khyber and Bolan Passes. Trade with Afghanistan has played a significant role

in the development of socio-economic structure of Pakhtunkhwa and Tribal Pakhtunkhwa

(FATA). For future economic development, businesses in Pakhtunkhwa will have to

concentrate on links with Afghanistan. Unfortunately due to Soviet invasion of Afghanistan

in 1978 and later the civil war in Afghanistan, the economic structure of Afghanistan has

collapsed. As Afghanistan is a land-lock country it was dependent on imports through

Pakistan and later through USSR. Industries in Pakhtunkhwa that could have developed a

comparative advantage by supplying to the markets in Afghanistan were unable to do so due

to the war in Afghanistan. The war eroded the buying power of the Afghan people and at the

same time displaced millions of the Afghan people into the neighboring countries. Apart from

basic necessities like wheat and vegetable oil, the industrialists of Pakhtunkhwa find it

difficult to get a buyer for Pakhtunkhwa made products in Afghanistan. The war in

Afghanistan has also stopped access to the newly liberated markets of Uzbekistan, Tajikistan

and Kazakhstan. If permanent peace can be achieved in Afghanistan, the industrialists in

Pakhtunkhwa can play a vital role in rebuilding of Afghanistan and establishing a market for

their products in Central Asia.

7. Denying Hydro Power Royalty and Fair Share in Water of Indus River System

According to Mr. Hassamuddin Bangash, an expert on Indus River System, Pakhtunkhwa and

Tribal Pakhtunkhwa contributes more than 25% of the water in the Indus River System in

Pakistan. He also added that about ¼ of the river bank of Indus is in Pakhtunkhwa. This

entitles it to about 25% of the water in Indus River System. At present, not even less than ¼

of the proper share of Pakhtunkhwa is being utilized by the province. Similarly, the issue of

hydro power dues of Pakhtunkhwa pending against the federal government is also to be

addressed. The Water and Power Development Authority (WAPDA) owes billions of rupees

to Pakhtunkhwa in debt.

PAKHTUNKHWA’S ARREARS AGAINST WAPDA

Under article 161(2) of the constitution, NWFP should get the profit from the hydropower

projects located in NWFP (Report of The National Finance Commission 1996 23). It means

that NWFP should have received its due share in hydropower profits from 1974 onwards.

Over these years NWFP consumed less than one third of the total electricity produced in

NWFP. Thus NWFP should have received payments from 1974 onwards.

According to the White Paper of the Government of NWFP (1998-1999) by the end of 1997

the government of NWFP debt liability to the federal government was 31.2 billion rupees.

Along with paying installments on its loan, the government of NWFP on the average pays

15% interest to the federal government on this debt. On the other hand the federal

government (WAPDA) does not pay any interest on the unpaid portion of NWFP electricity

royalty. In fact the situation is so bad that the federal government does not even recognize

any arrears in the form of unpaid royalties to NWFP. The government of NWFP received

hydropower royalties in 1991, and since then it is receiving a portion of its due share in

hydropower profits. From 1974 to 1990, NWFP has not received any profits from WAPDA.

Thus for more than 16 years, successive governments have not only ignored the legitimate

share of NWFP in hydro power profits but have also violated the constitution by denying

NWFP its due share. WAPDA today should not only pay the government of NWFP its fair

royalty on year-to-year basis but should also make arrangements to pay unpaid arrears

accumulated from 1974 to 1990. As NWFP pays about 15% interest on the total money

borrowed from the federal government the federal government (WAPDA) should also pay

15% interest per annum on these arrears. The following table is an estimation of how much

the federal government owes NWFP. In this table NWFP royalty is estimated to be a

minimum of 1 billion rupees per annum from 1974-1980, RS 3 billion per annum from 1981-

1986, RS 6 billion per annum from 1987-1990, RS 8 billion per annum from 1991- 1995 and

RS 10 billion per annum from 1996-1998. A 15% interest per annum is charged to all the

arrears. The table on the following page is an estimation of how much the federal government

owes NWFP.

NWFP Hydro Amount Present Profits Received Value

Year NWFP Hydro Profits

Amount Received Prsent Value Billion

1974 Rs. 1 Billion - Rs. 28.63 1975 Rs. 1 Billion - 24.89 1976 Rs. 1 Billion - 21.65 1977 Rs. 1 Billion - 18.82 1978 Rs. 1 Billion - 16.367 1979 Rs. 1 Billion - 14.232 1980 Rs. 1 Billion - 12.375 1981 Rs. 3 Billion - 32.28 1982 Rs. 3 Billion - 28.07 1983 Rs. 3 Billion - 24.41 1984 Rs. 3 Billion - 21.23 1985 Rs. 3 Billion - 18.46 1986 Rs. 3 Billion - 16.05 1987 Rs. 6 Billion - 13.96 1988 Rs. 6 Billion - 24.28 1989 Rs. 6 Billion - 21.11 1990 Rs. 6 Billion - 15.35

1991 Rs. 8 Billion Rs.

5.987 Billion

5.35

1992 Rs. 8 Billion Rs. 6.8 Billion 2.78

1993 Rs. 8 Billion Rs. 6.5 Billion 3.02

1994 Rs. 8 Billion Rs. 7.8 Billion 0.35

1995 Rs. 8 Billion Rs. 6 Billion 3.04

1996 Rs. 10 Billion

Rs. 6 Billion 5.29

1997 Rs. 10 Billion

Rs. 6 Billion 4.60

1998 Rs. 10 Rs. 10 -

Billion Billion Total Rs. 379.57

Next: SCOPE OF ECONOMIC DEVELOPMENT OF PAKHTUNKHWA

SCOPE OF ECONOMIC DEVELOPMENT OF PAKHTUNKHWA

Pakhtunkhwa has a huge potential to develop industries in several sectors. But the first

prerequisite of developing industries in Pakhtunkhwa is provincial autonomy to chalk out its

own economic policy. Without provincial autonomy, Pakhtuns would remain a marginalized

community despite having the richest economic potential. There is severe criticism from

some quarters about financial and provincial autonomy. These quarters are of the opinion that

provincial autonomy is not feasible because Pakhtunkhwa and Balochistan provinces are

economically backward and cannot afford to survive autonomy and economic independence.

This argument is not true. Although provincial autonomy alone is not the solution to the

economic problems of Pakhtunkhwa but it is a pre- requisite for fair and comprehensive

growth of the provincial economy. Although several aspects of provincial autonomy and its

effects on the economy can be discussed in detail but the emphasis here is given on the

potential of industrialization in Pakhtunkhwa and Tribal Pakhtunkhwa and the role of capital

markets in developing this potential. These economic policies can be best applied if NWFP,

FATA and Northern Balochistan are merged together to form a single province of

Pakhtunkhwa.

Although a wide variety of industries can be established but in today’s global environment it

is important that investment should be concentrated in those areas where the companies can

develop some kind of competitive advantage and, at the same time, is able to compete

globally and locally. The availability of raw material, skilled labor and the availability of

proper infrastructure should be evaluated before setting up industries. Similarly, local and

global demand should also be evaluated. Although many industrial set ups are possible in

Pakhtunkhwa but for the moment we will concentrate on industries that have the potential to

export and can immediately develop competitive advantage in their respective fields.

These industries will include the following:

AGRICULTURE-BASED INDUSTRY

In Pakhtunkhwa, total land is 7.452 million hectares (Important District-Wise Socio-

Economic Indicators NWFP 1995-1996 10). Out of this, 5.62 million hectares is properly

classified and surveyed. This 5.62 million hectors is classified as "reported area" of which

22.23% is occupied by forest, 23.90% is cultivated area, while 22.49% area is cultivable but

is not utilized mainly because of lack of irrigation. Out of the total cultivable area of

1,343,744 hectares, 70.07% land is cultivated in Rabi (Fall) season while 53.02% of the

cultivated area is cultivated in Kharif (Spring) season. Furthermore, 60.95% of the crops in

Rabi season and 43.31% of the crop in Kharif season are cultivated in unirrigated area. Thus

only 10.21% of the total reported area of Pakhtunkhwa is irrigated in Kharif and only 5.49%

of the total reported area of Pakhtunkhwa is irrigated in Rabi (NWFP Development Statistics

95 & 96 87-104).

Total area of NWFP and FATA

Area Total Area in Hectors NWFP 7,452,100 FATA 2,722,000

N-W.F.P. & FATA 10,174,100.84

1993-94 Land Use in NWFP

Land use Area in hectors % of total area Cultivated area 1,343,744 23.90

Forest Area 1,255,817 22.33 Cultivable area

not utilized 1,264,701 22.49

Not available for cultivation 1,758,865 31.28

Total Reported

Area 5,623,127

Source: (NWFP Development Statistics 86)

On the average, irrigated area produce twice as much as unirrigated area. This means that if

all the cultivated area in Pakhtunkhwa is irrigated, the agriculture production of the province

will double. Similarly, if the cultivable area, which is presently not utilized, is also irrigated,

the agriculture production of the province can increase four times. Even further increase in

agricultural production is possible by modernizing farm equipment and farming techniques.

Irrigation of the above mentioned area can be made possible by a network of canals that can

be extended from many rivers that flow in the province. Swabi SCARP and Pehur High Level

Canal are two of such projects. Swabi SCARP project will make 25,500 hectors waterlogged

area available for cultivation (Brief on Swabi SCARP 1), while Pehur High Level Canal will

irrigate 5500 hectors and reclaim 7,400 hectors of water logged area (Brief on Pehur High

Level Canal Project 1-4). Similarly new dams can also be constructed like the Gomal Zam

Dam that can irrigate 66,000 hectors in DI Khan (Gomal Zam Dam Project & Status to date

1-3) and Munda Dam that will irrigate about 26,000 hectors (Brief on.85 Munda Dam 1).

Thus the notion that Pakhtunkhwa cannot meet its agricultural needs is absolutely unfounded.

Presently, wheat and maize are the dominant crops of Pakhtunkhwa. With increase in

irrigation, Pakhtunkhwa will be able to grow enough wheat for its population. But it is

important that the farmers and the government of Pakhtunkhwa concentrate on the production

of those crops for which the climate and the soil is best suitable and for which they can

achieve competitive advantage over others. These include vegetables, fruit and tobacco.

Along with these agricultural commodities the province is suitable for large-scale dairy

production.

Yield for irrigated and un-irrigated land in NWFP

Crop Yield per hectare

irrigated

Yield per

hectare un-

irrigated

Ratio of irrigated

un- and irrigated

Rabi (Fall) (tons) (tons)

Wheat 1.95 0.9952 1.96

Gram 0.5077 .4305 1.18

Barley 1.23 0.97 1.27

Rape Seed and

Mustard 0.62 0.53 1.17

Tobacco 2.02 0 -

Vegetables, fruits & pulses

13.07 1.49 8.77

Kharif (Spring)

(tons) (tons)

Maize 1.08 1.77

Rice 1.99 1 1.99 Jowar .73 .66 1.11 Bajra .70 .52 1.35

Sugarcane 45.27 28.22 1.60 Vegetables,

fruits & pulses

1.43 .73 1.96

Source: (NWFP Development Statistics 99-109)

Crop Acreage in NWFP 1993-1994

Crops Area in

hectors

% of un-

irrigated

area

% of

cultivated

area

Rabi (Fall)

Wheat 723,700 60.20 53.86 Gram 96,400 93.26 7.17 Barley 35,200 68.47 2.62

Rape Seed and Mustard 21,400 90.91 1.59

Tobacco 35,700 0 2.66 Vegetables, fruits and

pulses 29,100 4.47 2.17

Total (Rabi) 941,500 60.95 70.07

Kharif (Spring)

Maize 491,300 56.91 36.56 Rice 51,600 0.14 3.84

Jowar 9,800 69.39 0.73 Bajra 8,900 88.76 0.66

Sugarcane 97,200 0.93 7.23 Vegetable fruit,pulses 52,800 24.24 3.93

Others 900 57.78 0.07 Total

(Kharif) 712,500 43.31 53.02

Source: (NWFP Development Statistics 99-109)

DAIRY

With increased urbanization and inflow of millions of refugees from Afghanistan, the

demand for milk has increased considerably over the last two decades in Pakhtunkhwa.

Unfortunately there has been no expansion or modernization in the dairy industry over this

period. There is no organized dairy industry in Pakhtunkhwa. Farmers usually own 2 to 20

buffaloes/cows. They produce the milk and sell it to local shopkeepers for further sale. Due to

the small sizes of their cattle holdings these farmers are unable to employee professional

help. Thus the production of milk can not keep up with the demand and the gap between

supply and demand is growing.

The province has a high number of qualified professionals in the field of animal husbandry.

Most of these professionals who work in the Agricultural University Peshawar have their

Masters and Doctorate degrees from reputed universities all around the world. Besides,

Pakhtunkhwa has a vast grazing area along with the capacity to produce every kind of feed

required by dairy animals. According to an estimate by experts from Animal Agricultural

Services (local dairy consultants) there is a shortage of milk in excess of hundred thousand

liters a day in Pakhtunkhwa. As people prefer fresh milk, this demand can not be taken care

of by importing powder milk or packaged milk from other provinces or abroad. Similarly an

additional hundred thousand liters per day can be ex-ported to Afghanistan, as there are no

organized dairy farms left in that country. Along with milk, cheese, butter and other milk

products can be exported to other countries especially the Middle East.

DAIRY BASED INDUSTRY

The government of NWFP with collaboration of foreign countries has established several

modern dairy farms in the province, of which all have failed. The reason for their failure was

that none of these projects were started by any corporate entity instead the projects were

started by government organizations with less efficient structure, professionalism and high

ratio of corrupt officials.

TOBACCO

Pakhtunkhwa produce 71.3% of the total tobacco in Pakistan. The total production of tobacco

in Pakhtunkhwa for the year 1992- 93 was 72,141 tones (NWFP Development Statistics 95 &

96 87- 98-100). Tobacco produced in the province is almost entirely consumed in Pakistan.

Almost all of the multinationals manufacturing cigarettes operate there manufacturing units

in other provinces of the country. Their unit cost would have been cheaper if these

manufacturing units were established in Pakhtunkhwa because the raw material is produced

here. Most of the manufacturing units in Pakhtunkhwa are locally owned. They produce

cigarettes for the domestic market, as many of these companies do not have the finances,

technology or expertise to develop an international brand, most of these companies either

produce their own low quality, low priced brands or they produce counterfeit cigarettes of

other major brands.

At present the two main cigarette-manufacturing companies of United States, RJR Nabisco

and Philip Morris do not have a manufacturing facility in Pakistan. These companies along

with other multinationals can be invited to form joint ventures for the manufacturing of

cigarette both for domestic consumption and export.

Pakhtunkhwa has a tremendous potential to increase its tobacco production. If tobacco

farming is modernized along with an increase in demand for tobacco, the farmers can grow at

least three times the tobacco they are growing now. Swabi, which is the biggest tobacco-

producing district in Pakistan, has less than 18% of its total cultivated area under tobacco

cultivation. The tobacco produced is of very high quality that can rival that of Turkey, Greece

or Central United states. The unit cost of production is also cheaper for tobacco in NWFP

compared to the above mentioned places.

According to Philip Morris, the world cigarette industry unit shipment was approximately 5.6

trillion units in 1996 (Philip Mor-ris Companies Inc. 10 K report 1996 2) of which, the

growing demand for cigarettes is in China, India, the Middle East and Central Asia. This

gives a great locational advantage to Pakhtunkhwa, which can export cigarettes by land to

China, India and Central Asia.

Apart from producing tobacco cheaper than other areas, Pakhtunkhwa has an advantage to

incur less transportation

expenses in shipping their tobacco products to the above-mentioned areas.

Tobacco Production and Area under Cultivation

District

Area

under

tobacco

cultivation

(hectares)

Total

cultivated

area

Tobacco

area as a

% of total

cultivated

area Charsadda 7749 57257 13.53 Nowshera 774 73433 1.05 Mardan 7159 112775 6.35 Swabi 15422 87032 17.72

Mansehra 2364 80747 2.93 Haripur 65 77836 .08

Malakand 484 45684 1.06 Swat 755 149604 .50 Buner 1932 55153 3.50

Dir 652 85885 .76 Total 37,356 825,406 4.53

Source: (NWFP Development Statistics 95 & 96 98 -143)

FRUIT AND VEGETABLES

There are 30,000 hectares of orchards in Pakhtunkhwa (Sarhad Provincial Conservation

Strategy 2). A wide variety of fruit is produced in Pakhtunkhwa. These include apples,

oranges, peaches, guava, apricots, plums, pears, loquats, litchi, strawberries, walnut, almond,

etc. This fruit is of extremely high quality and can be considered the finest in the world.

Along with local production, high quality fruit from Afghanistan is mostly sold in Peshawar.

Swat district is particularly famous for its wide variety of fruits.

As fruits are highly perishable items, fast mode of transportation and good storage facilities

are required. Unfortunately due to lack of storing and processing facilities and lack of excess

to foreign markets the growers sell their products at very nominal prices at the local market.

Most of the time, due to lack of buyers, a big quantity is wasted. Individuals own almost all

the farms. These farm owners have limited access to efficient marketing and farming

technologies. Introduction of corporate entities in medium size farm holdings can be very

encouraging, as these corporations can raise enough capital and expertise to vertically

integrate the production, processing and marketing process. These companies can export

fresh and processed fruit to other countries especially the Middle East countries.

The climate and soil of Pakhtunkhwa is also very suitable for a large variety of vegetables.

Unfortunately at present there is no systematic plantation of vegetables in Pakhtunkhwa.

Vegetable farming is considered more labor and capital intensive by the small farmers.

Besides, due to lack of storage facilities, there is significant variation between the prices of

these commodities. With the introduction of modern technology many vegetables can be

grown year around and also in large quantities. This will reduce the high variation in prices of

these commodities and enough vegetables will be available for export. Vegetable plantations

produce many times more yield than the traditional crops that the farmers grow. Thus fresh

and processed fruits and vegetables can be exported to other countries and other provinces of

the country in huge quantities, bringing millions of dollars of foreign reserves.

MINERAL BASED INDUSTRY

Pakhtunkhwa lies at the junction of three mountain ranges; Himalaya, Karakorum and

Hindukush. This varied geology provides enormous mineral wealth in the province. "All

types of rocks having sedimentary, igneous and metamorphic origin exist, which provide the

basis for availability of various types of metallic, metalliferrous (industrial), valuable and

precious minerals and mineral deposits." (Mineral Profile of Hazara division 1) There are

more than 55 minerals that are discovered in substantial quantity in Pakhtunkhwa.

Although various agencies including Geological Survey of Pakistan, Pakistan Industrial

Development Corporation, Pakistan Mineral Development Corporation and Sarhad

Development Authority are involved in the exploration and development of mineral and

mineral industry but there over all performance can be rated as extremely poor. Compared to

the vast potential of mineral resources in the province, the mineral-based industry is very

limited.

List of Discovered Minerals/Rocks in NWFP

Antimony Fullers Earth Olivine Asbestos Fire Clay Phosphate

Aquamarine Gypsum Pyrite Amphibolite Granite Quartz

Barite Garnet Red Oxide Bentonite Graphite Red Ocher

Basalt Hornbi End Shale Clay Boulengrite Iron Salt China Clay Limestone Soap Stone

Coal Lead Serpentine Calcita Laterite Scheelite Copper Marble Silica Sand

Chromites Mica Slate Stone Corrundon Magnetite Sulphur Dolomite Manganese Topaz Emerald Molybenite Tourmaline

Feldspar Nephyline Synite Tin

Fluorite Orpiment Vermiculite Zinc

Sources: 1. (Sarhad Chamber of Commerce & Industry Peshawar. Annual report 1996, 24).

2. (Sarhad Provincial Conversation Strategy 150-151)

The biggest reason for this lack of development in the mining sector is the lack of investment

by private entities. Individuals in Pakhtunkhwa do not have the resources to invest in big

mining projects or mineral based industries. Similarly, the government of Pakhtunkhwa has

got limited funds and can not develop these projects through government funds.

The third option is the corporate sector that is almost negligible in the province. Medium size

and big mineral based industries can be created in the corporate sector and equity funds can

be raised for corporate sector development in the province, provided the ownership of these

corporations are limited to investors from Pakhtunkhwa. These corporations will be more

successful if some equity in these corporations is also owned by the mine owners as well.

Sarhad Development Authority has done extensive research on the industrialization potential

of mineral resources in Pakhtunkhwa. They have also invited many foreign joint venture

partners to fully explore this potential. SDA have failed, however, to attract any major joint

venture partner. The mineral potential of the province can be better utilized if SDA develop

independent corporate entities for separate projects and then form joint venture operation

between these entities and foreign companies. Equity money for these independent corporate

entities can be raised, provided a Stock Exchange is created in the province and initially only

the people of Pakhtunkhwa are allowed to keep ownership of all the stocks floated on this

exchange.

PRECIOUS STONES

Precious stones export holds tremendous potential for growth in Pakhtunkhwa. All Pakistan

Commercial Export Association of rough and unpolished precious and semi-precious stones

(APCEA) is based in Peshawar. They have about 200 of gem stone exporters as members.

According to the figures provided by APCEA, this association has exported $ 4.2 million

worth of gem stones in 1994, $ 3.6 million each in 1995 and 1996 and $ 4.2 million in 1997

from the province (APCEA Yearly Exports 1-2). Apart from this association there are also

other exporters in the province. The export figures provided by APCEA are much deflated

mainly to avoid taxes and currency restrictions. Many of the exporters have inventories that

exceed the total amount of exports per year shown by APCEA. The total value of gemstones

exported from Pakhtunkhwa is estimated to be 15-35 million dollars per year. Most of these

gemstones are exported in raw or unpolished form as the equipment to polish these stones

according to international standards is not available in Pakistan. This results in loss of

revenue for the exporters as bulk of the profits is made by wholesalers from other countries

that buy these stones from Pakistan and polish it in China or Hong Kong.

Another big problem with the gem stone industry is that there is no coordination between the

minors and the exporters. Many of the exporters sitting in the downtown Peshawar do not

even know where mining of these stones take place. Miners also do not have access to

modern equipment or modern mining techniques. If corporate entities are created that can

bring modern mining and polishing machinery along with technical know-how, then the

exports of gemstones can be raised substantially. According to an expert opinion, the export

of gemstones can increase to $ 50 million a year if modern technology is utilized. Corporate

entities can best utilize the gemstones potential of Pakhtunkhwa and tribal area as they will

be motivated by their own profit maximization.

Previously Gemstones Corporation of Pakistan (a federal government organization) was

created to explore the gemstone potential of the entire country. Until 1985 this corporation

had mined 222,918 carat emerald and 182,380 carat of topaz in Pakhtunkhwa (Memorandum

for National Finance Commission 40). But due to excessive corruption the corporation did

not make any profit and was unable to pay the due royalty to the government of

Pakhtunkhwa.

Precious Stones

Precious /Semi

Precious

Minerals Location Quality

Emerald Swat (Mingora,

Alpuri, Shamozai)

Finest in the world

Pink Topaz Mardan (Katlang) Only deposit in the world

Topaz Mardan Red and golden

varieties

Kunzite Chitral Clear pink and blue crystals

Aquamarine Chitral Clear light blue

Garnet Chitral, Dir Red pyrope

varieties

Quartz Chitral, Dir Clear and

transparent crystals

Peridot Kohistan Fresh green color Tourmaline Swat, Dir Chitral Variety of colors

Selected Minerals of NWFP

Area Minerals Quality Kohat District Gypsum 2 billion tons

Karak District Sodium Chloride

500 million tons

D.I

Khan,Karak, Mansehra

Silica 89 million tons

Abbottabad Phosphate 7.5 million tons

Chitral Scheelite (Tungston Ore) 40 million tons

Malakand District Chromite 0.7 million

tons

Chitral District Gold 25,000-150,000 kg.

Swat District Lead -Zinc ore 0.5 million tons

Buner District Nephiline Syenite 6 billion tons

Chitral, Swat, Bannu, Kohat. Iron 1014.5 million

tons

Sources: 1. (Sarhad Development Authority. Annual Report 1996-97 47-79).

2. (Sarhad Provincial Conversation Strategy 150-151).

3. (Sarhad Chamber of Commerce & Industry

Peshawar. Annual Report, 1996, 21-22).

4. (Sarhad Provincial Conversation Strategy 149-152)

MARBLE

There are vast marble deposits in Pakhtunkhwa. These deposits can be found in Bajaur

agency, Mohmand agency, Khyber agency, Buner and Swat. These marbles are of various

shades that include grey, whitish grey, pure white, green, green zebra and pink. The total

deposits of these marbles are in excess of 2 billion tons. Most of extensive deposits can be

found in the Mullagori, Sultan Khel, Salarzai, Ghundai Sar and Loe Shalman areas of the

Khyber agency. Among these, the Mullagori marble deposits are classified as one of the best

in the world and can be ranked with Carrara in Italy and Makrana in India. These deposits are

not only of high quality but are also extended over a large area. Just one deposit of Kambela

Khwar has 282 million cubic meters (764.2 million tons) of marble deposits (Socio Economic

Profile of Khyber Agency 7-10). It is believed that other big deposits also exist which are not

even discovered yet.

The mining methods used by minors are primitive due to which up to 65% of the extracted

marble is wasted. Similarly, there are not any major marble industries in Pakhtunkhwa that

can polish and cut marble according to international standards. Keeping in mind that Italy

gets one third of its revenue from the export of decorative stones, Pakhtunkhwa can generate

huge revenues if they develop their mines, use scientific methods of mining and modern

machinery for polishing.

An importer of marble in United States told the writer that in excess of 100,000 tons of

marble can be exported from Pakhtunkhwa to North and South America, provided the marble

is polished according to international standards and marble companies from Pakhtunkhwa

have a network of dealers and representatives throughout the region. Thus exports of marble

to North and South America alone can fetch in excess of 100 million dollars a year. Other

decorative stones such as dolomite, jade etc are also avail-able and are of export quality.

Feasible Mineral Projects Identified by SDA and Others

Project Location Cost Output/Year Gypsum

Plaster and Plaster Board

Kohat Rs. 240 mill. 80,000 tons

Soda Ash Complex Karak Rs. 1000 mill. 40,500 tons

Ferro-Silicon Production D.I Khan Rs. 70.14 mill. 10,000 tons

Lead Zinc Concentration

Plant Swat Rs. 240 mill. 2,215 tons

Sodium di Chromite Products

Malakand Rs. 411.530

mill. —

Magnesite and Chrome

Magnesite Bricks

Hazara Rs. 214.550

mill. 15,000 tons

Marble Tile and Block

Projects Swat Rs. 1197 mill. 50,000 tons

Marble Tile

and Block Projects

Khyber Rs. 2394 mill. 100,000 tons

Marble Tile and Block Projects

Bajaur Rs. 1197 mill. 50,000 tons

Integrated

Nephiline Syenite Project

Buner Rs. 368.820 mill. 27,000 tons

Koga Alkali Complex Buner $1500 mill. —-

Total Rs. 91.33

billion

Source: (Investment Opportunities in Mineral and Industrial Sectors of NWFP 71-78).

GYPSUM PLASTER AND PLASTER BOARD

Huge Gypsum reserves (about 2 billion tons) are available in district Kohat at various

locations. The gypsum board that is used for table tops, clading and partition etc. has easy

application, good for heat insulation and has fire resistant material. It has no practical

deformation as well as is of low cost. Because of these characteristics this board is regarded

as one of the indispensable materials among the interior finishing substance. Gypsum board is

commonly used for construction of the inside walls, the ceiling and the partition. The present

demand of gypsum board has been estimated to be 250,000 tons per year. The total

production of this unit will be 80,000 tons a year and the cost of the project is estimated to be

around Rs. 240 million.

SODA ASH COMPLEX PROJECT

Soda Ash can be used in the production of Sodium Silicate, Sodium Phosphates and Sodium

bicarbonate. Glass industry, pulp and paper industry, detergent industry, soap industry, and

leather Industry utilize Soda Ash. The demand for soda is 123,041 tons a year in Pakistan

while the demand for Soda Ash is 268,369 tons per year. The major raw material for this

industry is rock salt and lime-stone. In Nari Panoos area of district Karak there are 500

million tons of estimated deposits of Rock Salt. A Soda Ash project with a production

capacity of 40,500 tons of Soda Ash and Caustic Soda can be established in Karak with an

estimated cost of one billion rupees.

FERRO-SILICON PRODUCTION PROJECT

Ferro-Silicon is utilized for the production of ferromanganese. The total demand of Sodium

Silicate in the country is 125,000 tons/year. The basic raw material required for this project is

Silica Sand. Extensive deposits of this raw material can be found in Pezu (D.I Khan), Kurd

(Kohat) and Munda Kucha (Hazara). A Ferro-Silicon production project can be started in D.I

Khan with an estimated output of 10,000 tons/year. The total cost of the project is Rs. 70.14

million per year.

LEAD-ZINC CONCENTRATION PLANT

There are about half a million tons of Lead-Zinc ore reserve at Pazang and Lahore (District

Swat). A chemical production plant can be established at Swat that can process 24,000 tons

of Lead-Zinc ore per year. 2,000 tons of Zinc concentrate and 240 tons of Lead concentrate

can be processed from the Lead-Zinc ore. These concentrates will be used to produce the

following:

• 280 tons per year Lead Nitrate

• 500 tons per year Zinc Carbonate

• 735 tons per year Zinc Oxide

• 700 tons per year Zinc Chloride

The total cost of this project is estimated to be Rs. 240 million.

SODIUM DICHROMITE AND BASIC CHROMIUM SULPHATE CHEMICAL

PRODUCTS

There are about 700,000 tons of chromites reserves in Malakand Agency. A proposed project

is to be established in Malakand to process 20,000 tons of chromites ore per year. The

processed ore will be used to manufacture basic Chromites Sulphate, Sodium Dichromate and

Sodium Sulphate. These products are used by leather tanning, paints, and dye manufacturers.

The total cost of the project will be Rs. 411.53 million.

MAGNESITE AND CHROME MAGNESITE BRICKS

Chrome Magetite is used in basic refractories. It is used in the cement kilns, lining of arc

furnaces, and open-hearth furnaces. The present demand for Chrome Magnetite in the country

is 15,000 tons per year. Three million tons of Magnetite is available in Kumhar area

Abbottabad while extensive deposits of Chromites ore are available in Malakand Agency.

These raw materials can be utilized in a Magnetite project in Hazara district that will produce

15,000 tons of Magnesia-Chrome refractory. The total cost of the project will be Rs. 214.550

million.

Next: INTEGRATED NEPHELINE SYENITE MINING AND PROCESSING PROJECT FOR USE IN GLASS AND CERAMIC INDUSTRIES

INTEGRATED NEPHELINE SYENITE MINING AND PROCESSING PROJECT

FOR USE IN GLASS AND CERAMIC INDUSTRIES

In Koga (Buner) there are over six billion tons of Nepheline Syenite deposits. A production

facility can be established at Koga that will process 30,000 tons of lumpy Nephaline Syenite.

This raw material can be used in the glass and the ceramic industry. The total cost of the

project is Rs. 368.82 million.

KOGA NEPHELINE SYENITE FOR USE IN ALKALI COMPLEX PROJECT

The Koga deposit can also be used in alkali complex that is, the extraction of Alumina

manufacturing of Soda Ash and Portland Cement. The proposed project will be situated in

Swat with the following production capacity.

• 270,000 tons of Alumina.

• 200,000 tons of Soda Ash.

• Million tons of Portland Cement.

The total cost of the project is estimated to be US$1500 million that is about Rs. 84 billion.

FORESTRY BASED INDUSTRY

There are different estimates about the total area of forest in Pakhtunkhwa. Some experts put

it at 17% of the total area, others put it at 16.6% and 13% of the total area (Forestry: Facts

and Fallacies 1-18). It is true that a few decades back the total forest area was in excess of

23% but due to excessive cutting of trees the total area is not more than 13%. Similarly the

total forest cover of tribal area has also been reduced from 5% to 1%. Over all, less than 5%

of the total area of Pakistan is under forest cover. According to the government of NWFP,

16.9% of the area of the province is under forest cover that accounts to 1,255,800 hectares.

Most of these forests are in Hazara, Dir, Swat, Chitral and Kohistan. It is estimated that there

is a minimum of 3.5 billion cubic feet of timber in these areas. At current market rate it

accounts for more than Rs. 250 billion (Frontier Post June 27,1996).

Pakhtunkhwa has a wide potential to double its forest area provided that the corporate sector

is involved in the afforestation effort. The government of NWFP has failed miserably to

increase the forest area in the province although billions of rupees were spent on it. Under

scientific management corporate entities cannot only increase the forest cover but more

timber will be available for sale in the local market. Similarly, many industries can run on the

raw material provided by these forests. At present there is severe shortage of timber in

Pakistan, which is being compensated by smuggling from Afghanistan or illegal cutting in

NWFP, FATA and Azad Kashmir. The FATA has special potential to increase its forest area.

It is estimated that businesses in NWFP and FATA can generate Rs. 30-40 billion per year if

the timber trade is incorporated and mass investment by the corporate sector takes place in

the afforestation in Pakhtunkhwa (NWFP and FATA).

FOREST BASED INDUSTRY

Several industries can be based on the raw material provided by the NWFP forest. One of

such industry is the furniture industry. There are more than 70 furniture factories in NWFP.

None of them are involved in assembly line manufacturing of furniture that’s why these

factories can not manufacture huge quantities for export. Vast improvement can be made in

furniture business if assembly line production is introduced in NWFP. It will increase the

quantity of furniture produced in a given amount of time plus the quality will be made

uniform. The process of manufacturing will also be made less time consuming and exporters

will be able to fulfill big orders in short period of time.

Other industries that can benefit from systematic management of NWFP forest are paper

industry, chip-board industry and packaging industry. Two projects in this regard have been

identified by SDA (Investment Opportunities in Mineral and Industrial Sectors of NWFP 39-

42).

DUPLEX PAPER BOARD

A project is identified that can be constructed in D.I. Khan which will use raw material of

grass, pulp and other chemicals. This project will produce 35,000 tons of different packaging

boards. The total cost of the project will be Rs. 415 million.

PULP PROJECT

There is a huge demand of pulp in Pakistan. It is used in paper and chip-board industry. Two

different projects can be started in Mansehra and Kohistan each with a capacity of 12,000

tons per year while the total cost per each unit will be Rs. 632 million.

Apart from marble and precious stones, Sarhad Development Authority has identified several

mineral-based projects. These projects include glass and ceramic industry, Gypsum and

Plaster Board Production, Soda Ash Complex, Lead Zinc Concentration Plant, Ferro Silicon

Production Project, Sodium Dichromite and Chromium Sulphate Chemical Products,

Magnesite and Chrome Magnesite Bricks and Nepheline Syenite Alkali Complex. These

projects require a total investment of more than Rs. 85 billion and can generate employment

for thousands of people.

Apart form these projects there is huge potential for other mineral based industries as only a

very tiny fraction of minerals resources of Pakhtunkhwa are properly evaluated. Other

massive mineral-based industries include establishment of a large Steel Mill like the one in

Karachi (that employs more than 25,000 people) to utilize more than 1 billion tons of iron ore

in Pakhtunkhwa. The iron deposits in North and South Waziristan Agencies and Orakzai

Agency are not even properly evaluated but these deposits are extensive. Based on the

availability of local raw material and cheap cost of electricity, a huge Steel Mill in can be

established in Pakhtunkhwa. However, further studies are required to determine the

feasibility of this project. Similarly, due to availability of a significant amount of raw

material, further projects can be started in the cement, glass, and ceramic industry.

HYDRO POWER GENERATION

Pakhtunkhwa’s biggest asset is its potential hydro power generation capacity. It generates

about 28-32% of total electricity in Pakistan while it consumes only 10% of the total. In 1992

the total electricity produced in Pakistan was 48911 MKWH (Million Kilo-watt Hours). Out

of this, 15141 MKWH was produced in Pakhtunkhwa while the total consumption in the

province was 3537 (MKWH). All the electricity produced in the province is from hydro

generation. (NWFP Development Statistics 95 & 96 255- 257). In the rest of Pakistan,

thermal power is produced. Thus about 30% of electricity in Pakistan is produced through

hydro generation and 68% through thermal generation while 1% through nuclear generation.

The thermal power projects in Pakistan rely on imported oil. This has an adverse effect on the

limited foreign exchange available to the country. Hydroelectric projects on the other hand

have several advantages. Hydro-electricity is the cheapest form of electricity available in

Pakistan. The installation cost of hydroelectric power station is $800,000 to $1.3 million per

MW, while the installation cost of thermal power stations is also the same (Qazalbash Dawn

30 Mar. 1998). On the other hand the operating cost of thermal power generation is very high

compared to hydroelectric power. The cost per kwh at Tarbela (biggest earth filled dam in the

world, built in Pakhtunkhwa) is 8 paisas while the thermal power generation cost on the

average Rs. 4 per kwh (Qazalbash Dawn 30Mar. 1998).

According to a report published by a Canadian firm, there are more than 40,000 MW

electricity generating projects in Pakhtunkhwa on river Indus alone. PESC0 (Peshawar

Electricity Supply Corporation) authorities confirmed the report and added that these projects

are very viable. According to expert opinion, there is 30,000 MW electricity generating

potential on river Indus’s main gorges between Tarbela and Skardu at 9 different sites.

Similarly 20,000 MW potential is available on river Swat. Combined together the total

potential is more than 50,000 MW (Dawn 30 Mar. 1998). Putting the cost of installation of

1MW at 1 million dollar the required investment will be 50 billion dollars. Although this is a

huge investment but if it is spread over a span of 20 years it does not seem unattainable.

The demand for electricity is on the increase in Pakistan. According to a newspaper writer, a

German evaluation mission estimated that Pakistan would require additional power

generation capacity of 54,000 MW in the next 25 years (Frontier Post 7 April 1996).

Electricity can also be exported to China, Afghanistan and India. China and India are two

huge markets; any one of them can consume the entire excess electricity output of

Pakhtunkhwa. If Pakhtunkhwa is able to produce the additional 50,000 MW of electricity

then at least half of it can be exported. This amounts to 4- 6 billion dollars of revenue per

year from the export of electricity. The other half can be used in energy intensive industries.

The entire railway system of Pakistan can run on electricity thus saving millions of dollars on

import of oil.

Our cost of production for electricity in Pakhtunkhwa is the cheapest in the world, if we pass

this advantage to the industrial sector, definitely they will develop a competitive advantage.

To take advantage of these low costs many industries will shift to this region. However,

without provincial autonomy that will not be possible. One major advantage of provincial

autonomy would be that the provincial government would have the authority to explore its

hydropower potential and to form joint venture with foreign firms independent of the federal

government. At present the provincial government can not negotiate any agreement with a

foreign firm or financial institution with out the approval of the federal government.

TOURISM BASED INDUSTRY

Tourism is one of the fastest and largest growing industries in the world. It provides

employment to more than 240 million people around the world. In 1993 the total receipts

from tourism world-wide was more than 300 billion dollars (Zahir Ahmad Frontier Post 14

Jan. 1995). But unfortunately in Pakistan the tourism industry is not properly developed.

Tourism in Pakistan is more concentrated on attracting tourists to the scenic sites and to

Mughal architecture but Pakhtunkhwa has much more to offer. Explaining this scenario,

Afrasiab Khattak well known historian of Pakhtunkhwa says that, "our biggest asset is our

culture and our heritage that is thousands of years old. We have to understand that history did

not start in the 20th century. We have to explore and develop the ruins of Buddhist, Hindu,

Muslim and other civilizations as they were a part of our unique cultural heritage". This area

has witnessed the rise and fall of some of the mightiest civilizations such as Buddhism and

Hindushahi. It was also one of the destinations on the ancient silk route and many conquerors

like Alexander the Great, Tamerlain, Mehmood of Ghazna, Babur and the Britishers crossed

the famous Khyber Pass.

Pakhtunkhwa possesses a unique cultural heritage. It has a number of historical buildings,

archeological monuments and cultural history that is enhanced by natural beauty of the varied

landscapes of the province. It also has a strategic location on Pakistan’s map from tourism

point of view. It is in driving distance from Iran, India, China and Central Asia. The land of

Pakhtunkhwa is rich with archeological and cultural heritage as well as scenic beauty. Along

with its own attractions, it can provide access to the entire above mentioned tourist

destinations. Thus Pakhtunkhwa can become a major tourist destination in Central Asia as

well as a transit facility for other tourist destinations in the area.

Tourist sites in Pakhtunkhwa should cater for people from different countries, age groups and

gender. At present most of the foreign tourist coming to the province are male and middle-

aged. In order to make the tourism industry successful, tourists should be provided with

ample opportunity to enjoy and relax. If the tourism industry is properly developed it is

estimated that Pakhtunkhwa can attract about half a million foreign tourists a year. This

accounts to more than 500 million dollars revenue per year. In addition, it can also attract tens

of thousands of tourist from southern part of the country especially in summer when the

weather is pleasant in the north of the country. Again corporate entities can create hotel

chains, traveling companies and entertainment resorts, as individual entrepreneurs will find it

difficult to individually start projects.

ESTABLISHMENT OF A FREE TRADE ZONE IN PAKHTUNKHWA

The geo-location of Pakhtunkhwa is a great fortune for its people, unfortunately, due to geo-

politics of almost two hundred years, Pakhtunkhwa has been on the horn of dilemma in terms

of its destiny. As has been mentioned, Pakhtunkhwa lies at a driving distance from 1/3 th of

the world population thus making it most suitable for a Free Trade Zone. This Free Trade

Zone in Pakhtunkhwa would promote economic activities in the region and would also

eliminate the smuggling of goods in the region, which has hindered the growth of economic

and industrial development in the region. The illegal Non-Taxed Border Trade between

Afghanistan and Pakistan would also decrease by the establishment of a Free Trade Zone in

Pakhtunkhwa. This would provide great economic benefits for the people of Pakhtunkhwa

ARRANGEMENT OF CAPITAL FOR ECONOMIC DEVELOPMENT

Having studied the economic and industrial potential of the province in the previous chapter,

it is evident that Pakhtunkhwa cannot be termed as a poor province in terms of resources and

economic potential but the big question mark is where to get the capital needed for setting up

industries in the province. We will discuss this issue in detail in this chapter.

To professionalize and modernize the industrial setup, the business sector of Pakhtunkhwa

should be dominated by corporate entities rather than sole proprietorships and partnerships.

These corporations can be in the form of foreign multinationals, indigenous companies or a

joint venture between foreign and local companies. For this reason Pakistan must understand

the present global economic order. Integration in the global/regional economy will make the

inflow of capital easier for many lucrative projects in Pakhtunkhwa, which are not started

because of the lack of capital investment. Any policy that restrain foreign trade or restrict

foreign capital will deprive Pakhtunkhwa from the much-needed capital inflow. There are

three different ways that equity financing can be generated for corporation in the province.

These are

• Foreign Direct Investments (FDI)

• Local companies floated in local stock exchange.

• Joint ventures between locally incorporated companies and multinationals

FOREIGN DIRECT INVESTMENTS (FDI)

In Pakhtunkhwa, the local entrepreneurs do not have the equity base to start large-scale

projects. The provincial government is looking forward for foreign multi nationals to invest

in these large scale projects which include hydro power generation, development of different

mineral based industries and tobacco industries. At present, these multi nationals do not

consider the socio-economic environment in Pakhtunkhwa to be feasible for such large-scale

investments.

Even if these multi nationals invested in Pakhtunkhwa, the profit generated by these

industries will have a very limited effect on the economy of the province. These multi

nationals will be paying most of their taxes to the federal government and it will be the

federal government that will benefit from such an arrangement. Besides, the profits made by

the multi nationals will be remitted back to the parent company, thus the people of the

province will not directly gain from the profitability of these companies. Al-though, direct

foreign investment by foreign multi nationals will create new jobs but the local entrepreneur

or investors will not directly get benefits from such a venture. Transfer of technology and

managerial skills will be limited in such a case because it will be an inter-company transfer

and will not have a significant effect on the over all corporate culture of the province.

LOCAL COMPANIES

There are few sectors where technology transfer is not required. In such a case, companies

can be created with all its capital raised in the local market. There are some advantages and

disadvantages of such an arrangement. The biggest advantage is that all the profit will be kept

locally. The biggest disadvantage is that the management of these firms will not be able to

learn the corporate culture of foreign multinationals. At present, locally managed companies

do not have the credibility established by foreign multinationals operating in Pakistan.

Pakistani companies are more prone to corruption, evasion of taxes and other irregularities.

To avoid this problem it is important to choose management of these companies from

existing multinationals, so that they can bring more professional corporate culture with them.

Some of the companies that can operate without foreign equity participation include dairy

farms, transportation companies, grocery store chains, fruit processing industry, tourism

(hotels and motels) and health care industry.

JOINT VENTURES

In the presence of a local stock market, local companies should be created which will float

shares locally. Thus, an indigenous entity will be controlling the resources of the province. In

such a case, new joint ventures can be created between the new entity and the multi nationals.

These joint ventures will have an advantage of superior technology, superior corporate

culture and superior management skills of the multi nationals, along with world wide

credibility, reputation and access to financing all over the world. These joint ventures will be

helpful in transfer of technology, transfer of efficient corporate culture and transfer of

management skills to the local businesses. By having partial ownership of these new joint

ventures, the people of Pakhtunkhwa can benefit directly from the success of these ventures.

Such joint ventures will also reduce the risk to multi nationals by financing some of the

investments locally.

Initially, the capital raised in the province can be limited but it will show the seriousness of

the government of NWFP and people of Pakhtunkhwa towards the growth of

industrialization. Local masses will also be less hostile towards such a corporate structure

compared to 100 % ownership by foreign multi nationals. An important point is that joint

ventures should be preferred in industries where there is a huge potential for export. Foreign

direct investment or joint venture will be less fruitful in industries where there is limed or no

scope for export. In case of no income from export, joint venture partners will be reluctant to

invest huge amount because they are aware of the limited buying power of Pakistani people

in general and Pakhtunkhwa in specific. Besides, remittances by these companies to their

parent organizations will have a negative impact on our already adverse balance-of-payment

problem. Thus, it is important that initially joint ventures should be encouraged in export

oriented industries and when our trade deficit improves we can start joint ventures in other

industries.

A local stock exchange is required to raise capital for joint ventures and local corporations.

This local stock exchange along with local banks will be able to make financing available for

new corporate entities in the province. Before establishing a stock exchange in Pakhtunkhwa

it is important to evaluate other stock exchanges in the country and review their performance

and on the basis of that make recommendation for the establishment of stock exchange in

Pakhtunkhwa.

AN OVERVIEW OF PAKISTANI STOCK MARKETS

Professor Lawrence White wrote that in the early seventies, before nationalization, 43

families or groups controlled 98% of 197 non-financial companies accounting for 53% of

total assets on Karachi Stock Exchange (KSC). According to Professor White, the top ten

families controlled one third of the total listed assets while the top 30 owned over half of the

listed assets on Karachi Stock Exchange (KSC) in that era. Not much has changed ever since.

Professor Shahid-ur-Rehman writes, "On Dec 1, 1995, the top 43 groups owned 212 of the

552 non-financial companies listed on the Karachi Stock Exchange (KSC) accounting for

43% of the total manufacturing assets exclusive of multi nationals and public sector

enterprises. Out of 175 listed banking companies, modarabas, leasing and financial

companies, 76 belong to these groups". In addition to the assets held in there own groups,

several of these groups own equity in multi nationals companies listed on Karachi Stock

Exchange (KSC). These include Hoechst Pakistan Ltd., Siemens, Lever Brothers, Burger

Paints, SmithKline and Brooke Bond. These groups owned assets worth in excess of 400

billion rupees on KSC (Rehman 66-67).

Out of this, the Memons of Karachi control 82 companies on KSC while the Chinoties of

Punjab control 124 companies. Apart form the multi nationals the management of the rest of

the companies is entirely controlled by the businessmen in Karachi and Punjab. These

companies are known for corruption, avoiding taxation, bribing officials and many times not

declaring the due dividend. Not declaring dividend or showing lower profits have an adverse

effect on the share price.

Due to these practices, these companies and their management have not only lost their

credibility in the investing community of Pakhtunkhwa but also through out Pakistan. These

companies do not satisfy any of their stakeholders, apart from the dominant shareholders.

Thus minority shareholders neither have much to say in running the company nor have much

to gain from investing in these companies. On Karachi Stock Exchange the heavily traded

shares belongs to either foreign multi nationals like ICI, or companies whose management is

foreign based like Hubco or companies whose management is some what controlled by the

government.

Next: ESTABLISHMENT OF STOCK EXCHANGE IN PAKHTUNKHWA

ECONOMY OF MISMANAGEMENT

It is extremely important to note that over the last two decades the overall culture of business

in Pakhtunkhwa was based on resource mismanagement. Evasion of taxes on border trade

(Transit Trade), illegal cutting of forests, drug trafficking, embezzlement and, bribery in

government services became the accepted norms of resource accumulation. Over the years a

loose mafia of individuals and groups involved in this mismanaged emerged as the leading

economic brokers in Pakhtunkhwa.

Mismanagement of resources has a limited life span. For example timber mafia cannot

continue to operate for decades (unchecked) as sooner or later they will run out of timber to

cut. The last two decades with internal insatiability in Afghanistan provided ideal

environment for resource mismanagement in every shape and form. However this trend needs

to be reversed, as the socio-economic environment of the region is not accommodative for

such misadventures any more.

Some of these individuals and groups involved in big scale resource mismanagement identify

themselves with obscurantist forces in the region. The military aspect of the ‘War on Terror’

in Afghanistan may be over, but how the international community would deprive the

terrorists of financial backing by their supporters is the biggest question before every sane

person. It is, therefore, prudent to search out the sources of wealth of the forces of

obscurantism and find solutions. At the same time a legal cover fis needed for border trade

between Afghanistan and Pakistan.

TRANSIT TRADE

Goods (household, electronic, crockery etc) are imported into Afghanistan through Iran and

Pakistan. Some of these goods are sold in Afghanistan but most of these goods are sent back

(smuggled) in to Pakistan by avoiding appropriate duties on these goods. Due to evasion of

taxes Transit Trade goods are considerably cheaper than goods imported through legal

channel. Thus this evasion of duties (taxes) becomes the competitive advantage of wholesale

and retail transit traders.

IMPORTANCE OF TRANSIT TRADE

Unlike Sindh or Punjab, the provinces of Pakhtunkhwa, Tribal Pakhtunkhwa and Balochistan

do not have strong agriculture or manufacturing sectors. Transit Trade (although technically

illegal) is the biggest wealth generation sector in the above- mentioned areas. Tens of

thousands of workers and entrepreneurs are employed in this sector. Wealth generated

through transit trade also stimulates other sectors of the economy such as transportation,

construction, real estate, banking etc.

THREATS TO AFGHANISTAN

Due to their wealth and experience in trade between Pakistan and Afghanistan, the

fundamentalists, if not checked, will control a significant portion of trade between the two

countries. For Pakistani fundamentalists the ‘strategic depth’ of Afghanistan is not relevant in

military terms any more. But they are counting on ‘economic strategic depth’. Under this

doctrine business links between the two countries can be exploited by the fundamentalist

groups to provide integration of goals of fundamentalists on both sides of the border. More

importantly, it can also be used to destabilize both Afghanistan and Pakistan economically as

well as socially.

To counter this threat several steps needs to be taken. First the de-Talibanization of Pakistani

economy needs to take place. This will require a commitment by the Pakistani government to

stop the exploitation of religion for resource accumulation. It will also require commitment

from Western governments and aid agencies to help government of Pakistan in providing

business and employment opportunities to its people especially in the backward areas of

Pakhtunkhwa and Balochistan.

POLICY RECOMMENDATIONS ON TRANSIT TRADE

The time is ripe to define a legal and financially feasible paradigm for transit trade in order to

provide legal and gainful employment opportunities to the people presently involved in this

trade. Internal consultation between transit traders and policy makers and external

consultation between the governments of Pakistan and Afghanistan is needed so that a

mutually beneficial policy on this issue is formulated. At the same time alternative business

and employment opportunities need to be explored by the government in order to facilitate

people of these areas to reduce their reliance on transit trade.

EFFECTS OF STABILITY IN AFGHANISTAN

Cotton and textiles form the bulk of exports from Pakistan. However most of the exports

from Pakhtunkhwa and Balochistan constitute carpets, gemstones, fruits and vegetables.

Significant portions of these exports from Pakhtunkhwa and Balochistan have their origin in

Afghanistan. It is estimated that a big portion of Afghan carpet and gem stone trade will be

relocated to Afghanistan after the completion of initial phase of reconstruction in

Afghanistan. After the relocation of these businesses the foreign exchange earned from these

exports will also be lost. In addition foreign exchange sent by relatives (settled abroad) of

Afghan refugees living in Pakistan will also be diverted directly to Afghanistan after the start

of Afghan refugee repatriation. In the past Afghan exports through Pakistan, remittances from

Afghans settled abroad, aid for Afghan refugees and even the opium trade of Afghanistan

provided liquidity to the unofficial (open) ex- change market in Pakistan. Transit traders and

other individuals in need of foreign exchange used these foreign exchange markets for their

need of hard currency. In the near future, after the formation of financial institutions in

Afghanistan a certain portion of open market currency transactions will be diverted to

Afghanistan. In a worst case scenario a significant portion of open market operations from

Balochistan and Pakhtunkhwa could shift to Afghanistan and liquidity in the open market in

Pakistan could be negatively affected.

At present low international oil prices, international aid & loans, and insecurity of Pakistani

investors investing abroad helped strengthen the rupee against other currencies. However

these developments cannot be considered as fundamental improvements in the economy and

can be easily reversed.

Unless drastic measures are taken to increase exports from Pakhtunkhwa, the reconstruction

of Afghanistan could become a potential foreign exchange outflow from Pakhtunkhwa unlike

the widely believed assumption that it would cause foreign exchange inflows into Pakistan.

RECONSTRUCTION OF AFGHANISTAN

Afghanistan needs immense investment for infrastructure development in education,

telecommunication, construction and health sector. These development works provide an

opportunity for cement, steel, construction industries and non-government organizations in

Pakistan to export their goods and services to Afghanistan. To secure maximum advantage

out of the reconstruction effort in Afghanistan cohesiveness and alignment are required

between the objectives of Pakistani businessmen intending to operate in Afghanistan and the

developmental polices of the Afghan government. As restructuring will be a phased process it

is essential that goodwill is created by Pakistani businessmen in the initial phase in order to

gain future contracts.

Another important aspect of the reconstruction effort should be to provide financial benefits

across the cross section of society in Pakistan (especially Pakhtunkhwa, Tribal Pakhtunkhwa

& Balochistan). If reconstruction efforts are only beneficial to a few industrialists in Pakistan

then the vast majority of people in the above mentioned areas would be extremely

demoralized, as they have attached high expectations with the reconstruction efforts in

Afghanistan. The financial benefits of a stable prospering Afghanistan is not limited to the

reconstruction effort in Afghanistan or the construction of oil and gas pipe lines connecting

oil and gas reserves of Central Asia with the Arabian sea. Afghanistan could provide a

shortest route for up to 10 million barrel of Central Asian oil to Asian countries (where the

demand is rising quickly). The revenue from oil and gas pipeline will be limited for both

Afghan and Pakistani government. The true wealth generation opportunity will rise in trade

with Central Asian republics.

With millions of barrels of oil exports every day Central Asian republics will gain immense

wealth. The demand for durable and non-durable goods in Central Asia will rise sharply with

the increase of per capita income (standard of living). Leading companies from the Far East,

Europe and North America will compete for the new consumer markets. Pakistan can benefit

from this scenario in three ways. In the first case, it can send its own products to Central

Asian markets. In this option success can be limited because at present very few Pakistani

products can compete internationally. Secondly, Pakistan can act as a transit route and a duty

free facility for regional trade especially between Central Asia and the rest of the world.

Thirdly, Pakistan in addition to being a transit route for Central Asian trade can became a

place where multinational companies can do assembling and manufacturing for Central Asian

markets.

POLICY RECOMMENDATION ON RECONSTRUCTION OF AFGHANISTAN

The emphasis on trade with Afghanistan should not be entirely on the reconstruction efforts

in Afghanistan. In fact an investment friendly and more importantly people (especially those

who live in close proximity to Afghan border) friendly policy regarding business with

Afghanistan is required. Afghanistan and Pakistan both need each other to cherish their

policies regarding Central Asia. However at the same time both of these countries will

directly compete against each other in attracting multinationals to establish their

manufacturing plants and other assets in their respective territories. Pakistan got an edge over

Afghanistan at present because it has better infrastructure at the moment but Afghanistan has

its advantages because of its better proximity to Central Asian republics.

It cannot be over emphasized that mutual understanding and cooperation between Pak-

Afghan governments is vital for Pakistan to take advantage of Central Asian trade. Equally

important is the informal business links between the people and business entities of the two

countries. Historically (for the last two decades) the trade between the two countries was

dominated by resource mismanagement, corruption and illegal business transactions such as

transit trade, opium smuggling, timber smuggling, historic artifacts smuggling from

Afghanistan. This needs to be changed. Cooperation between the business communities of the

two countries needs to be on resource management and business transaction between the two

countries needs to have a comprehensive legal procedure.

EPILOGUE

Pakhtunkhwa remained a theater of undeclared war for global and regional powers to gain

influence in Central Asia. This war has left Afghanistan – a predominately Pakhtun State in

shambles. Pakhtuns of Pakistan have not been able to de-colonize their land. In nutshell,

Pakhtuns are not in a position of influence and power commensurate with their size, strength

and historical significance in the region. This situation cannot remain so for very long.

Pakhtuns have an acute sense of asserting their power, particularly if they see turmoil in their

neighborhood.

Historically Pakhtuns have come under a single banner of a leader to press for their national

rights. This characteristic of the Pakhtun society was very much successful in the tribal-

agrarian social structure but societies have become too complex today. The levers of power

have changed from muscular strength to thought processes. As Pakhtuns have historically

relied on muscle power and chivalry, therefore, they find themselves on the back seat in a

competitive world marked by sophisticated thought and the consequent social organization.

Social organization is the distribution of functional responsibilities towards the achievement

of a common goal. Therefore, a Pakhtun National Movement, built along scientific and

democratic lines, needs to be built at the political and civil society level. This Movement

should cater to the needs of the modern day world. It should work like a machine towards the

achievement of its established goals. Elaborate structures and systems should be built for

institutionalizing the energies and efforts of Pakhtun nation.

Such a movement must have an economic and social base in order to succeed in its mission.

In addition to the Pakhtun nation, all likely minded communities should be made strategic

allies if their national interests coalesce with Pakhtun national interests.

ANNEXURE A

PROPOSED STRUCTURE OF MOVEMENT

SALIENT FEATURES OF THE MOVEMENT

• The National Democratic Consultative Process, starting from the grass roots, would take the

shape of a genuine democratic national movement. Unlike other political organizations, the

professional groups like doctors, engineers, teachers etc. would form the vanguard of the

policy making body of the organization. Presently, almost all political parties have their sister

organizations in the doctors, lawyers and teachers but they only work as appendages of these

political parties instead of a vanguard.

• Political movements and organizations die out when they become un-representative of the

interests they claim to promote and protect. It happens because the parties lack a self-

correcting mechanism to adapt themselves to new realities. To avoid stagnation, the proposed

movement has a ‘Research and Development Organ’, which will provide vital inputs to the

policy-making body of the organization about new circumstances, national, international

issues or organizational matters. Shortly, the ‘Research and Development Organ’ would work

as a ‘think tank’ of the movement.

• Small contributions from large number of people would ensure that the party belongs to the

general public rather than a few wealthy individuals who hijack party policies due to their

financial contributions.

• Centralized financing for all activities of the party including elections and an Accounts

Management System will ensures transparency and accountability in the utilization of funds.

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