Friday, March 28, 2014

Pakistan Belongs in Nuclear Suppliers Group

"The Pakistani establishment, as we saw in 1998 with the nuclear test, does not view assistance -- even sizable assistance to their own entities -- as a trade-off for national security vis-a-vis India". US Ambassador Anne Patterson, September 23, 2009
Pakistan has the world's fastest growing nuclear arsenal today in the midst of a fierce insurgency waged against the Pakistani state by Al Qaeda and the Taliban. How should the world respond? Should the response be to further isolate and sanction Pakistan as argued by some Indian and western scholars? Or, should the US and its Western allies engage with Pakistan by accepting it as a legitimate nuclear state and admitting it as a full member of the Nuclear Suppliers Group?

The first response, as advocated by the likes of TV Paul, a scholar of Indian origin at McGill University, has clearly not worked nor likely to work as explained well by former US Ambassador to Pakistan Anne W. Patterson. The alternative, as advocated in a new book "Overcoming Pakistan's Nuclear Dangers" by former US diplomat Mark Fitzpatrick, is to recognize Pakistan's legitimacy as a nuclear-armed state and work with it to limit the risks of nuclear proliferation in future.

Ambassador Fitzpatrick began by exploring why the West  has been so obsessed with stopping Iran's nuclear program and not Pakistan's. In the end, he came to the conclusion that  Pakistan must be provided "a path to normalizing its nuclear program" in the same way that India was with the US-India nuclear deal. Here's how he describes it on the website of London-based Institute of International Strategic Studies (IISS):

The book was inspired by fellow Londoner Gideon Rachman of the Financial Times, who asked in a June 2012 column why the West was so obsessed with stopping Iran getting nuclear weapons when, ‘by any sensible measure, Pakistani nukes are much more worrying’. I suppose I was one of those who seemed obsessed with Iran, so Rachman’s words hit home. Let’s take a look at Pakistan, I decided.

Successive chapters of my book examine in detail the dangers Rachman ticked off, plus a few more. I concluded that some of the concerns about Pakistan are exaggerated. While the prospect for nuclear terrorism cannot be dismissed, the government’s efforts to ensure the security of its nuclear programme garner too little attention, and compare favourably with India’s nuclear security management. In the ten years since the leakage of the nation’s nuclear secrets masterminded by A.Q. Khan, lessons have been learnt and reforms adopted.

Other concerns get too little attention. As a nuclear wonk, I cannot help but fixate on Pakistan’s veto over negotiations to ban fissile material production and the nation’s move away from signing the Comprehensive Test Ban Treaty. The most worrisome danger, though, is the prospect for nuclear war in the subcontinent.

One cannot write about Pakistan’s nuclear programme without examining the ways that it is motivated by India’s actions, and perceptions thereof. Therefore, the manuscript is about more than Pakistan. One key chapter assesses the South Asian arms race. Although it pales in comparison with the nuclear excesses of the Cold War, the strategic competition in South Asia is potentially destabilising.

In the conclusions, I offer a policy suggestion for the West that will be controversial. Pakistan, I argue, should be offered a path to normalising its nuclear programme. This recommendation did not sit well with one of the statesmen who, before reading it, had agreed to write a back-cover blurb commending my book. Having vehemently opposed making an exception for India, allowing it to benefit from nuclear cooperation while outside the confines of the Nuclear Non-Proliferation Treaty, he had to back out because he objected to the idea of creating a second such hole in the NPT for Pakistan.

His is a respectable opinion. It had also been my view when I started the book project. If there is one tenet I have taken to heart at the IISS, however, it is that analysis should guide one’s research direction. I reached my conclusion with more surprise than enthusiasm.

I am looking forward to explaining more about my analysis in upcoming book launches in Washington, London, Geneva, Vienna and Islamabad.

In spite of the West's nuclear sanctions, Pakistan has managed to develop and build nuclear weapons using both uranium and plutonium since the 1990s. The country also has built solid-fueled and liquid-fueled missiles of various ranges from tactical to strategic. It has built multiple reactors at Khushab to produce large amounts of plutonium for its growing nuclear arsenal.

On the civilian nuclear side, Pakistan has acquired four 300 MW nuclear plants at Chashma. Two of these are currently operating and two are under construction. Three 1200 MW newer plants are being supplied by China for installation at Karachi as it ramps up its nuclear power plant manufacturing business. The West has essentially given away this civil nuclear business to China on a silver platter.

The West's decades-long nuclear sanctions on Pakistan have clearly not worked to stop the country. It's time to try a different approach along the lines of what Fitzpatrick advocates If the West follows Fitzpatrick's advice and admits Pakistan to the exclusive international nuclear club called "Nuclear Suppliers Group" (NSG), the US and Europe will have a better chance of persuading Pakistan to agree to signing Fissile Materials Cutoff Treaty (FMCT) and Comprehensive Test Ban Treaty (CTBT) when India also agrees to these international treaties. These two treaties are the cornerstone of the West's efforts to limit development, proliferation and growth of nuclear weapons stockpiles. In return, Pakistan will have access to the West's advanced civil nuclear technology and materials which it needs to deal with the nation's deepening energy crisis. It will be a win-win deal for both sides.

Related Links:

Haq's Musings

Is Pakistan a Warrior State? 

Nuclear Power Plants in Pakistan

"Eating Grass" Book Launch in Silicon Valley

India's "Indigenous" Nukes and Missiles

US-India Nuclear Deal

China Signs Power Plant Deal with Pakistan

Pakistan's Defense Industry

Energy Crisis in Pakistan

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Saturday, March 22, 2014

Is Pakistan a Warrior State? Or a Failed State?

The Warrior State: Pakistan in the Contemporary World by Canada's McGill University Professor Thazha Varkey Paul, a graduate of India's Jawaharlal Nehru University, describes Pakistan as a "warrior state" and a "conspicuous failure". It is among a slew of recently published anti-Pakistan books by mainly Indian and western authors which paint Pakistan as a rogue state which deserves to be condemned, isolated and sanctioned by the international community.

As Pakistanis celebrate 74th anniversary of the 1940 Lahore Resolution calling for the partition of India, it is important to examine TV Paul's narrative about Pakistan and fact-check the assertions underlying his narrative.

Here's a point-by-point response to Paul's narrative:

1. Paul argues: Seemingly from its birth, Pakistan has teetered on the brink of becoming a failed state.

In 1947 at the time of independence, Pakistan was described as a "Nissen hut or a tent" by British Viceroy of India Lord Mountbatten in a conversation with Jawarhar Lal Nehru. However, Pakistan defied this expectation that it would not survive as an independent nation and the partition of India would be quickly reversed. Pakistan not only survived but thrived with its economic growth rate easily exceeding the "Hindu growth rate" in India for most of its history.

Agriculture Value Added Per Capita in 2000 US $. Source: World Bank


Even now when the economic growth rate has considerably slowed, Pakistan has lower levels of poverty and hunger than its neighbor India, according UNDP and IFPRI. The key reason for lower poverty in Pakistan is its per capita value added in agriculture which is twice that of India. Agriculture employs 40% of Pakistanis and 60% of Indians. The poor state of rural India can be gauged by the fact that an Indian farmer commits suicide every 30 minutes.



2. Paul: Its economy is as dysfunctional as its political system is corrupt; both rely heavily on international aid for their existence.



The fact is that foreign to aid to Pakistan has been declining as a percentage of its GDP since 1960s when it reached a peak of 11% of GDP in 1963. Today, foreign aid makes up less than 2% of its GDP of $240 billion.

Foreign Aid as Percentage of Pakistan GDP. Source: World Bank


3. Paul: Taliban forces occupy 30 percent of the country.

 The Taliban "occupy" a small part of FATA called North Waziristan which is about 4,700 sq kilometers, about 0.5% of its 796,000 sq kilometers area. Talking about insurgents "occupying" territory, about 40% of Indian territory is held by Maoist insurgents in the "red corridor" in Central India, according to Indian security analyst Bharat Verma.

4. Paul: It possesses over a hundred nuclear weapons that could easily fall into terrorists' hands.

A recent assessment by Nuclear Threat Initiative ranked Pakistan above India on "Nuclear Materials Security Index".

5. Paul: Why, in an era when countries across the developing world are experiencing impressive economic growth and building democratic institutions, has Pakistan been such a conspicuous failure?

Pakistan's nominal GDP has quadrupled from $60 billion in 2000 to $240 billion now. Along with total GDP, Pakistan's GDP per capita has also grown significantly over the years, from about $500 in Year 2000 to $1000 per person in 2007 on President Musharraf's watch, elevating it from a low-income to a middle-income country in the last decade.I wouldn't call that a failure.


Pakistan Per Capita GDP 1960-2012. Source: World Bank 


Goldman Sachs' Jim O'Neill, the economist who coined BRIC, has put Pakistan among the Next 11 group in terms of growth in the next several decades.

6. Paul argues that the "geostrategic curse"--akin to the "resource curse" that plagues oil-rich autocracies--is at the root of Pakistan's unique inability to progress. Since its founding in 1947, Pakistan has been at the center of major geopolitical struggles: the US-Soviet rivalry, the conflict with India, and most recently the post 9/11 wars.

Pakistan is no more a warrior state that many others in the world. It spends no more than 3% of its GDP on defense, lower than most of the nations of the world.

7. Paul says: No matter how ineffective the regime is, massive foreign aid keeps pouring in from major powers and their allies with a stake in the region.The reliability of such aid defuses any pressure on political elites to launch the far-reaching domestic reforms necessary to promote sustained growth, higher standards of living, and more stable democratic institutions.

"Massive foreign aid" adds up to less than 1% of Pakistan's GDP. Pakistan's diaspora sends it over 5% of Pakistan's GDP in remittances.

8. Paul: Excessive war-making efforts have drained Pakistan's limited economic resources without making the country safer or more stable. Indeed, despite the regime's emphasis on security, the country continues to be beset by widespread violence and terrorism.

Pakistan Defense Spending as % of GDP Source: World Indicators


 In spite of spending just 3.5% of its GDP which is average for its size, Pakistan has achieved strategic parity with India by developing nuclear weapons. It has since prevented India from invading Pakistan as it did in 1971 to break up the country. Pakistani military has shown in Swat in 2009 that it is quite capable of dealing with insurgents when ordered to do so by the civilian govt.

Growth in Asia's Middle Class. Source: Asian Development Bank


While it is true that Pakistan has not lived up to its potential when compared with other US Cold War allies in East and Southeast Asia, it is wrong to describe it as "conspicuous failure". A possible explanation for it could be the fact that Pakistan did not have the US security guarantees that South Korea, Japan and Taiwan enjoyed. Pakistan should be compared with other countries in South Asia region, not East Asia or Southeast Asia. Comparison with its South Asian neighbors India and Bangladesh shows that an average Pakistani is less poor, less hungry and more upwardly mobile, according to credible data from multiple independent sources.

Pakistan is neither a "warrior state" nor a "conspicuous failure" as argued by Professor TV Paul. To the contrary, it has been the victim of the invading Indian Army in 1971 which cut off  its eastern wing. Pakistan has built a minimum nuclear deterrent in response to India's development of a nuclear arsenal. Pakistan has responded to the 1971 trauma by ensuring that such a tragedy does not happen again, particularly through a foreign invasion.

Today, Pakistan faces some of the toughest challenges of its existence. It has to deal with the Taliban insurgency and a weak economy. It has to solve its deepening energy crisis. It has to address growing water scarcity. While I believe Pakistanis are a very resilient and determined people, the difficult challenges they face will test them, particularly their leaders who have been falling short of their expectations in recent years.

Related Links:

Haq's Musings

Looking Back at 1940 Lahore Resolution

Pakistan's Economic History

History of Literacy in Pakistan

Upwardly Mobile Pakistan

Asian Tigers Brought Prosperity

Value Added Agriculture in Pakistan

Are India and Pakistan Failed States?

Musharraf Accelerated Growth of Pakistan's Financial and Human Capital

Pakistan's Nuclear Program

Pakistan on Goldman Sachs' BRIC+N11 Growth Map

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Thursday, March 6, 2014

Ashar Aziz is Silicon Valley's First Pakistani-American Billionaire

Silicon Valley has minted the first Pakistani-American billionaire with an incredible 377% surge in the price of Fireeye (NASDAQ: FEYE) shares since its IPO last year.

The advanced computer security software company , founded by Ashar Aziz, priced its initial public offering of 15.2 million shares at $20 per share in September, raising about $304 million after increasing its expected price range to $15 to $17 per share.

Aziz owns about 10.91 million shares in the Milipitas, Calif.-based security company; that 9.3% stake on the close of the first day of trading in September was worth more than $392 million.

Here are some of the reasons for the huge spike as described by Business Insider:

1. The company's flagship product solves a really hard computer security problem. It is able to stop hack attacks that were previously almost impossible to stop.

2. FireEye bought another security firm, Mandiant, for $1 billion. Mandiant was famous for uncovering links between Chinese hackers and attacks on U.S. companies.

3. With Mandiant, FireEye launched a cloud computing security service that competes with SourceFire. SourceFire is the company Cisco bought last summer for $2.7 billion.

4. The company beat expectations on its fourth quarter with revenue of $57.3 million, a beat by $1.26 million, and EPS of $-0.35, a beat by $0.03.

5. Some Wall Street analysts have been really gung ho on the company. Wells Fargo started tracking it a month ago, saying it was "a once in a decade opportunity to invest in a truly disruptive technology."

The world has dramatically changed since the 1990s when Wintel ruled the roost. PC is no longer the dominant device. Smartphones and tablets have brought the era of mobile cloud computing where neither Intel nor Microsoft enjoy leadership position. Even developing countries like Pakistan are deploying cloud computing applications. A Google sponsored survey in Pakistan found that mobile computing is expected to overtake desktop computing this year. Several new and more innovative and powerful players have emerged to in this market.

As more and more enterprises embrace cloud-based computing, cloud security is becoming a hot area for many entrepreneurs. This shift means over $2 billion annual market for cloud security vendors like Fireeye and Elastica. Researchers at Gartner forecast the highest growth to occur in cloud-based tokenisation and encryption, security information and event management (SIEM), vulnerability assessment and web application firewalls.

Recently, a Silicon Valley cloud security start-up Ealstica was launched by Rehan Jalil, a Pakistani-American alumnus of NED University of Engineering, Karachi, Pakistan. Elastica received $6.3 million funding from Mayfield Ventures, a premier Silicon Valley Venture Capital firm.

Several analysts have recently upgraded Fireeye to buy with the target price above $100.

Related Links:

Haq's Musings

Pakistani-American Ashar Aziz's Fireeye Goes Public

Pakistani-American Shahid Khan Richest South Asian in America

Two Pakistani-American Silicon Valley Techs Among Top 5 VC Deals

Pakistani-American's Game-Changing Vision 

Minorities Are Majority in Silicon Valley 

US Promoting Venture Capital & Private Equity in Pakistan

Pakistani-American Population Growth Second Fastest Among Asian-Americans

Edible Arrangements: Pakistani-American's Success Story

Pakistani-American Elected Mayor

Upwardly Mobile Pakistan

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Wednesday, March 5, 2014

Economic History of South Asia Region Since 1 AD

When the British arrived in Mughal India, the country's share of the world GDP was 25%, about the same as the US share of the world GDP today. By 1947, undivided India's share of world GDP ($4 trillion in in 1990 Geary-Khamis dollars) had shrunk to about 6% (India: $216 billion, Pakistan: $24 billion). Since independence, India's contribution to world GDP has shrunk further to about 4%, according to British Economist Angus Maddison who died in 2010.



The colonization of India and many other nations in Asia and Africa began with the advent of the Industrial Revolution in Europe which resulted in a major power shift from East to West over the time-span of just a few decades. Prior to the Industrial Revolution, the world depended mainly on agriculture based on human and animal muscle power. Countries with large populations and farmlands had large share of the world GDP.  The per capita productivity differences among nations and regions were relatively small. The machine age changed it all. Those who used machines became much more productive and significantly richer than the rest.

In 1000 AD, according to British Economist Angus Maddison, China and India together accounted for more than half of the world GDP (calculated in 1990 dollars in terms of purchasing power parity). By 1600, that share was 51.4%, with China accounting for 29% and India 22.4% of world GDP. A hundred years later, China’s GDP had fallen but India’s went up to 24.4% of world output. By 1820, however, India’s share had fallen to 16.1%. By 1870, it went down to 12.2%. International Monetary Fund (IMF) projections indicate that India’s share of world GDP would be 6.1% in 2015.

While it is a fact that India's total GDP was at one point the highest in the world, does it mean that the average Indian was richer than his or her counterparts elsewhere in the world? To answer this question, let's look at Maddison's figures for per capita GDP in various parts of the world.


In 1 AD, India’s GDP per capita was $450, the same as China’s. But Italy under the Roman Empire had a per capita income of $809. In 1000 AD, India’s per capita income was $450 and China’s $466. But the average of the Islamic Caliphate in Baghdad which ruled West Asia (Turkey, Syria, Iran and Iraq) was much higher at $621. An average citizen of the Abbasid Caliphate was richer than an average Indian or Chinese. In fact, the per capita income in the Abbasid Caliphate was the highest in the world in 1000 AD.

As the European Renaissance began, new centers of prosperity emerged. Italy topped the table in 1500 AD, with per capita income of $1,100, the Netherlands following with a per capita income of $761. The UK was not far behind, with a per capita income of $714. All of these nations were richer than India and China which had per capita incomes of $550 and $600 respectively.

India Health-Wealth Indicators Source: Gapminder.com


While India today has the world's largest population of poor, it is still richer than it has ever been in terms of per capita incomes. Indians are also living longer than ever in the country's history; average life expectancy in India has risen from just 23 years in 1800 to 65.5 years now. However, India continues to significantly lag the rest of the world on both economic and social indicators.

Related Links:

Haq's Musings

Power Shift Since Industrial Revolution

Can Superpoor India Become a Superpower?

India: World's Largest Population of Poor, Hungry and Illiterates

Sri Lanka Leads South Asia in Economic and Social Indicators

Upwardly Mobile Pakistan

Brief History of Pakistan Economy

India Ranks Last on PISA, TIMSS



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