Shaukat Aziz Interviewed By Forbes Asia

Pakistan's Aziz: "I Have No Doubt."
Robyn Meredith 02.11.08 Forbes Asia

Musharraf's premier left quietly amid the tumult. Here he says his economic reforms, and nation, will abide.

Fresh from the trauma of opposition leader Benazir Bhutto's assassination, Pakistan is scheduled to hold parliamentary elections Feb. 18. Predictions of the outcome range from not good to worse. Some Asia experts worry that if unpopular President Pervez Musharraf were to engage in transparent vote-rigging efforts, riots would result. In the event of chaos, the army might take charge and remove Musharraf from power. The politics are complex on the surface and even more complex behind the scenes.

If elections go off on schedule, look for a divided parliament, with a coalition government likely led by Bhutto's Pakistan People's Party, which would then name the prime minister. "I see a prolonged difficult future in a country that is quite messy," said South Asia expert Richard Haass, president of the Council on Foreign Relations, on the CFR Web site.

Pakistani media have been buzzing about the departure of Prime Minister Shaukat Aziz, the career Citibank executive to whom Musharraf turned for a series of economic reforms.

But Kamran Bokhari, director of Middle East analysis for, a private U.S. intelligence firm, says the explanation is simple: "Shaukat Aziz is not a politician, he's a technocrat." What Musharraf's party desperately needs now are votes and seats in the parliament, and politicians with more local support are likely to win them. That situation left no more room for Aziz, who left the government when his term expired in November.

As finance minister after Musharraf seized power in a 1999 coup, Aziz confronted an economy in shambles and led the reforms. He became prime minister in 2004. He lives in Karachi, but FORBES ASIA caught up with him while he visited his daughters and grandchildren in London, en route to the Davos economic summit.

FORBES: Is the average Pakistani better off than when Musharraf took charge, and if so, what was the biggest factor behind that?

Shaukat Aziz: Eight years ago per capita income was close to $400. It has more than doubled, and this year we will cross $1,000 per capita. Levels of poverty, which were as high as the 36% area, are down substantially. Still, we have one out of four people living below the poverty line, so we have more work to do. The whole idea was to get economic sovereignty and build a reform agenda. And we have done that.

The challenge in the immediate term is that we want the elections to be held. We are facing the challenge of high oil prices in the international market, and we are seeing a slowdown in the global economy. But Pakistan will stand out as a good model for countries which were in dire straits. Our philosophy was deregulation, liberalization and privatization, coupled with comprehensive reforms.

Forbes: Which reforms did you find most effective, and could those lessons be applied elsewhere in the developing economies of the world?

Aziz: It's not a question of two of those or four of those--our approach was very holistic. For any country to reform it takes a long time. For example, we had a very comprehensive reform of our telecom industry. We went from a subscriber base of 4% to 34%. That sector attracted $5 billion in foreign investment.

Forbes: Should multinationals and investors be worried about doing business in Pakistan now?

Aziz: Whenever any country goes through a democratic election, there is uncertainty about who will win and what the policy will be after that. Long-term investors have learned to live with this, whether it is the U.S. or a developing country. Pakistan has a population of 160 million, with 100 million people below age 25. That makes Pakistan very attractive because these 100 million young people will enter the job market.

Forbes: Let me ask you about the nightmare scenario: Pakistan has nuclear weapons. How safe is the rest of the world if Pakistan's government falls apart?

Aziz: Pakistan is not a banana republic. Its nuclear assets are well secured. We have a strong military which protects these. Discussions about the country falling apart are as ridiculous as they sound. Pakistan's nuclear weapons are a source of strength and assure peace in the region. Both India and Pakistan have nuclear weapons.

Forbes: I suppose it is because the Taliban is in Pakistan.

Aziz: Pakistan has paid a huge price for being a neighbor with Afghanistan and supporting the global coalition.

Forbes: Who do you think killed Benazir Bhutto?

Aziz: The investigations are still going on, and we will have to wait and see.

Forbes: You were Musharraf's right-hand man. Why aren't you running for office in the parliamentary elections in Pakistan, and why have you left the government?

Aziz: I ran in the last elections, as you know. This time we--my wife and I--have decided to take a break. After eight years of 24/7, of not one day off, no holiday for eight years, we thought we'd take a break. We'll see how things develop in the future. These elections, I gave a pass.

Forbes: Do you plan to return to the private sector, perhaps to banking?

Aziz: We've said we'll take three months and then decide.

Forbes: If American companies and investors pull out, would you expect Chinese and Gulf investors to replace them as big investors in Pakistan, much in the way Chinese investors have been active in Africa, where Americans are cautious?

Aziz: No investor has pulled out. Our stock market has come back nicely.

Forbes: How much interest does Pakistan see from Chinese investors?

Aziz: Chinese investment interest is growing. There are special industrial zones, and China is a major source of capital, potentially, for Pakistan. Pakistan is attracting investment from the Far East and Japan. A U.K. consortium has invested in Pakistan.

Forbes: Many Pakistan experts seem to have good things to say about the newly appointed army chief, General Ashfaq Kayani. Is the military likely to remain stable in Pakistan, even as the politics remain unpredictable? And could Kayani someday be Musharraf's successor?

Aziz: Kayani is a professional soldier, and he is very well regarded.

Forbes: Is there anything you'd like to add?

Aziz: Pakistan is a country with a lot of potential. Like any country in the world, it has its challenges. Where it was eight years ago and where it is today is a major change, but we have to persevere and follow a road map that will keep Pakistan improving. It is a country with tremendous human capital. Its location is second to none, and it can play a major part in creating peace in the region. I have no doubt that Pakistan is on the road to peace, progress and prosperity.


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