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Jewish World Review Jan. 8, 2002 / 24 Teves, 5762

Doug Bandow

Doug Bandow
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Trade, not aid -- THE United States has assembled a dubious collection of allies over the years. Washington long has had to emphasize the vices of its adversaries rather than the virtues of its friends.

Instead of tying itself to morally putrefying regimes through aid programs and military alliances, the United States should promote both short-term stability and long-term reform through private trade and investment.

Pakistan, now teetering on the brink of war with India, is a particularly questionable friend. A military dictatorship arising from an ineffective and unpopular democracy, Islamabad was a U.S. ally during the Cold War.

After Moscow's invasion of Afghanistan, Pakistan became the conduit for American aid to the resistance movement, funneling money to the most radical elements of the Mujahideen, including Osama bin Laden. Years of civil war followed the Soviet retreat, until the Taliban's triumph in 1996. Islamabad was one of only three governments to recognize the new regime.

So tight were the connections between Pakistan and Kabul that Gen. Pervez Musharraf had to purge his own Inter-Services Intelligence agency when he decided to support the United States. Even now it is not always clear on which side his government leans: during the conflict Islamabad apparently airlifted out of Afghanistan Pakistani nationals serving with the Taliban. Still, there's reason to treat Pakistan as if it was an ally. It has been helpful -- cutting its ties to the Taliban and allowing the U.S. military to operate out of its territory. More important, the price of an internal collapse would be high. Radical Islam flourishes in the Saudi-funded madrassas, or religious schools, and were it up to "the street" Musharraf would be gone and Pakistan would be fighting on the other side.

Most fearsome is the possibility of Pakistan's nuclear weapons ending up in the hands of a fundamentalist regime. That prospect alone might prompt India to preempt. Certainly the United States should ensure that no atomic bombs are ever available for transfer to members of al-Qaeda or any other terrorists. Almost as dangerous is the possibility of nuclear know-how slipping out. Islamabad has detained and questioned two retired Pakistani nuclear scientists who frequently traveled to Afghanistan and met at least twice with bin Laden. They claimed to be working with a charity organization.

A radical government, even if divested of its weapons, might help terrorists build new ones. And curbing the flow of information from such a regime would be virtually impossible. In short, Washington should wish Gen. Musharraf well. It has correctly lifted sanctions, imposed in a forlorn attempt to block Islamabad's acquisition of nuclear weapons.

The United States has also offered upward of $1 billion in financial assistance. The International Monetary Fund has agreed to a new loan of $1.3 billion.

With an international debt of $38 billion and a moribund economy, Islamabad is in desperate shape. Aid transfers are but a short-run palliative, however, since they will not promote long-term economic growth. Indeed, over the last two decades Pakistan has received some $30 billion in foreign assistance, to no obvious effect.

Relieving the debt burden is a more promising approach: Washington has already rescheduled nearly $400 million in official debt. At least this step does not put new money into the hands of a government that has proved to be corrupt, incompetent and spendthrift.

Better still would be to open U.S. markets to Pakistani goods. Six of 10 industrial workers in Pakistan currently labors in the textile industry.

Yet 18,000 people lost their jobs within weeks of Sept. 11 because U.S. firms did not renew their orders with Pakistani companies. By November Islamabad figured that U.S. textile orders had dropped 40 percent.

Companies like American Eagle Outfitters worry about the stability of supply, rising insurance costs and employee safety.

Those risks are compounded by U.S. tariffs, which average 17.5 percent.

Desperate Pakistanis are pressing the Bush administration to follow the European Union's example and cut the rate. "Pakistan desperately needs tariff relief for our industry to survive," says Aleema Khan, a spokesman for the Pakistan Textile and Apparel Group. The administration has proposed legislation allowing it to slash tariffs. But the American textile industry is seeking to hang onto its special interest privileges; it almost scuttled approval of fast-track negotiating authority for the president in the House.

Yet trade relief would be win-win. Tariffs harm American consumers, driving up prices while saving few jobs. And tariffs undercut the stability of Pakistan, a nuclear-armed state threatened by Islamic unrest.

There are times when Washington has to support the bad to forestall the awful, as in Pakistan. The best way to strengthen moderates in the regime while promoting the forces of reform is to emphasize trade over aid. Which would also boost the U.S. economy.

JWR contributor Doug Bandow is a senior fellow at the Cato Institute. Comment by clicking here.


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09/25/01: The wrong solution to the wrong problem
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08/08/01: The Clinton administration in drag
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06/15/01: Tell Beijing to mind its own business
06/06/01: Ukraine's boiling cauldron
05/31/01: Protecting privacy from Uncle Sam
05/22/01: America's Balkan quagmire
05/09/01: The Taiwanese flash point
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04/10/01: The NCAA scam
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02/27/01: Bombing without end
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02/06/01: Bridging the unbridgeable gap
01/23/01: Left-wing demagoguery
01/16/01: The drug war problem
01/10/01: Politics and trade
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05/25/00: The silence of the international community
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05/11/00: Freer trade with China will advance human rights

05/04/00: How not to save the Constitution

04/28/00: American tripwire in Korea long ago disappeared: Why are we still involved?

04/18/00: Clinton administration believes the IRS is too gentle, wants more auditors

© 2002, Copley News Service