Wednesday, October 15, 2008

Economic crisis on another kind pushing Pakistani's into poverty

Up until the assassination of Benazir Bhutto, we had a lot of links to stories from Pakistan news sources on this blog. But at the time of the killing we had concerns about the state of the free press in that country. So we instead only linked to stories about Pakistan.

This is all to say, that when we see a story about Pakistan in the western press we look at it with great interest, as a kind of catching up.

We haven't changed our policy on Pakistan's press since democracy came back to the country. I will have to look into it. But, it looks like democracy is having a real struggle there. A struggle that could push millions back into poverty in that county.

McClatchy newspapers has an update on the crisis in Pakistan, our snippet's come from the Miami Herald.

A worsening economic crisis in Pakistan is pushing millions more people into poverty, and experts fear that it could help Islamic extremists recruit new converts.

The crisis began early this year, as democracy was restored after more than eight years of military rule. Now Pakistan's hard currency reserves have shrunk to $3.5 billion, and without an international rescue package, America's key ally in the fight against al-Qaida is likely to default on foreign debt repayments in the next two months, economic experts said.

Inflation is running at 25 percent, according to official figures, electricity is in short supply, and Pakistan's currency, the rupee, has been devalued 25 percent against the dollar. Investor confidence has fallen so low that on Monday, police had to surround the Karachi Stock Exchange to protect it from angry investors. The Exchange already had lobbied the government unsuccessfully to be allowed to close for two weeks.

"In Pakistan, there are a huge proportion of people just above the poverty line. A slight shock in their income can push them below the poverty line," said Sadia Malik, director of the Mahbub ul Haq Human Development Center in Islamabad, the capital. "This is the kind of shock that would have pushed a huge number of people into the poverty trap."

The prices of wheat, rice and milk have more than doubled in the last year. The price of flour used to make roti bread, the food staple, has jumped from 12 rupees (15 cents) a kilo last year to 28 rupees (35 cents). Economists warn that prices would spiral even higher if Pakistan defaulted on its foreign debt.

Before the crisis, an estimated 56 million Pakistanis - around a third of the population - already were living below the poverty line, as measured by their daily caloric intake. Millions more are likely to have joined them now.

Of course, poverty breeds more terrorism. People are so angry that they are poor that begin to seek retribution for it. But it is exactly terrorism that is preventing foreign investment in the country. Investments that could help the crisis in Pakistan, and in turn, make the people better off. No ones going to put money in a country where that investment will get blown up.

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