An equal Pakistan

by Muhammad Saleem who tweets at @memzarma

[originally published in Pakistan Today on 7th September, 2017 and is reproduced here with permission]

Pakistan is a constitutional federation with a three-tier system of government; federal government in the center, provincial governments in the provinces and local governments at the districts and lower levels. All these three tiers of government are managed through a fiscal federalist framework where functions are assigned to different levels of government with appropriate fiscal instruments. The federal government has the basic responsibility of macroeconomic stabilization & income redistribution through taxes and expenditures while provincial/local governments are entrusted with decentralized provision of socio-economic services to maximize welfare.

Revenue generation is highly centralized in the federal government while expenditure has been decentralized, largely, to the provincial governments. For example, during the last fiscal year which ended in June 2017, consolidate fiscal account of federal and provincial governments shows that 92% of total resources were collected by federal government while provincial governments spent around 38% of these resources. The increased spending space of provincial governments, well above their own resources, is provided by federal transfers through National Finance Commission (NFC) Awards.

The purpose of NFC Award is, thus, to achieve fiscal equalization to fill the gap between revenues and expenditures in the provinces. In case of Pakistan, the true spirit of fiscal federalism was first introduced in 1973 constitution. That spirit was then further strengthened in 2009-10 through 7th NFC Award where provinces share in total divisible pool taxes were considerably increased to 57.5% from 45%, which help all provinces. A special clause was inserted in constitution through 18th amendment that the share of provinces in each NFC award shall not be less than the share given to the provinces in the previous award. Further, a multi-indicator formula was devised in the 7th NFC award to horizontally distribute these increased resources among provinces. Population as a sole criteria of resource distribution among provinces was discarded and other indicators such as poverty, inverse population density and revenue generation capacity were introduced. This revised horizontal distribution formulae thus increased the fiscal space in Balochistan province where its share rose from a mere 5.11% to 9.09%. Research on the impact of 7th NFC award show that the award did improve fiscal equalization matrix among federating units as compared to previous awards. This, in turn, helped in improving budgetary allocation by provinces to vital social services such as education, health, rural and urban infrastructure.

7th NFC Award is truly historic for the four provinces but it misses out three ‘special status’ regions namely Gilgit Baltistan (GB), Azad Jammu & Kashmir (AJK) and Federally Administered Tribal Areas (FATA). These three regions of Pakistan receive only a one-liner block allocation in the federal budget, which is an arbitrary number not based on some rule or formula. The dream of fiscal equalization is thus unfulfilled for the Pakistanis inhabiting these regions. Out of these regions, FATA is integral part of the federation while GB and AJK are ‘autonomous’ regions as per our constitution. The true spirit of fiscal equalization in Pakistan can only be achieved by including these regions in the NFC award.

Moreover, 7th NFC Award given for fiscal year 2010-11 onwards, used poverty figures which were as old as 1998-99. Specifically, the award used an average of three poverty figures derived in 1998-99, 2003 and 2008. Using old poverty figures has serious implications for the fiscal equalization efforts in the 7th NFC award. Luckily, we now have two latest poverty figures calculated by UNDP & World Bank, which were owned by the federal government. Poverty figures of the UNDP capture the multi-dimensionality of poverty while the ones by World Bank captures the monetary side of poverty. These new poverty figures coupled with new population numbers of the recently concluded 2017 census should be used which will ensure fiscal equalization across different regions.

What will be the fiscal equalization impact of a new NFC award if FATA, GB and AJK are included as constituent parts of the next NFC Award? While provisional figures of 2017 census are out for the four provinces, Islamabad and FATA regions, we have to wait for the regional governments in AJK and GB for the population figures for these two regions. However, by plugging in new census & poverty figures in the old 7th NFC Award formula, we can derive an estimated NFC share for FATA. As per calculations of the author, FATA’s share in NFC award comes to around 5.2% of the total divisible pool taxes using the new population census with UNDP poverty figures. This is higher than the demand of an arbitrary figure of 3% NFC share for FATA as approved by Federal Cabinet on the recommendations of the Committee on FATA Reforms & is well above the current amount FATA receive as a one-liner block grant. FATA & FR regions were allocated a total of Rs 55.5 billion in 2017-18 federal budget. In contrast, a 5.2% share in NFC for FATA will translate to Rs 118 billion, even if we do not include FATA in other state transfers. Besides due share in NFC awards, FATA, GB & AJK also deserve Royalty from various dams like the other four provinces.

Being constituent parts of NFC, the four provinces receive regular annual fiscal transfers from the federal divisible pool taxes. In contrast, FATA, GB & AJK receive ‘gifts’ from the federal government in terms of block allocations which need to be converted to a due right of these regions. To achieve fiscal equalization among all regions of the federation of Pakistan, the next NFC award need to remove these anomalies. The new award should also correct the historical neglect of these regions by allocating a specific percentage of resources to regions over & above their due share. Regional inequalities has serious implications for the future of our federation and a higher economic growth can only be achieved by a balanced and equal growth across Pakistan.

Are we deliberately excluding FATA?

by Muhammad Saleem, who tweets at @memzarma

[the article originally published at Pakistan Today on August 29, 2017 and is reproduce here with permission]

If not, let’s not encourage the notion

Availability of reliable and timely data is the prerequisite for any solid research and policy interventions by different tiers of governments. Last week, I attend a conference on ‘Marginalization and Social Exclusion in the Perspective of Market Economy” organized by Department of Economics, University of Peshawar with collaboration from Quaid-e-Azam University and Higher Education Commission of Pakistan. Around 30 research papers were presented in the conference by researchers in the field of economics from across Pakistan. A majority of these research papers used rich socio-economic datasets of Pakistan Bureau of Statistics (PBS). The findings of these papers offered some concrete policy recommendations for the policy makers. However, in an unfortunate reflection of government data, the scope of all these research papers were limited to the four provinces of Pakistan and excluded FATA, GB & AJK from the analysis due to unavailability of data on these regions. The irony is that a conference on marginalization and exclusion cannot study the regions because, of the fact, that federal data collecting organization do not collect socio-economic data on these regions.

PBS is the single most important organization at the federal level which conduct nation-wide representative surveys on different socio-economic indicators on yearly basis. While some surveys do include GB and AJK, it completely ignores FATA as a region. With its head office in Islamabad, PBS has 18 Regional and 16 Field Offices across Pakistan but there is not a single office in FATA. With lesser population then that of FATA, PBS has one regional office in AJK and one field office in GB. FATA is probably the only region in the world where Millennium Development Goals (MDGs) were not monitored and, if the neglect continues, Sustainable Development Goals (SDGs) too will be not monitored in FATA.

Almost all the socio-economic surveys conducted by PBS clearly states that the sample designs of these surveys excludes the whole FATA region. As discussed earlier, this exclusion not only limits serious research on the region but also excludes FATA from important policy documents. Everything from the Economic Survey of Pakistan, Annual and Quarterly Reports of State Bank of Pakistan, Pakistan’s Vision 2025, Annual Plans of Planning Commission of Pakistan, CPEC Short and Long Term Plans, Public Sector Development Programs, Poverty calculations and many other government policy documents mention only the four provinces and exclude FATA and other regions of special status. FATA gets a mention only when the reference is made to War on Terror or security concerns in the country.

FATA is also excluded from important national economic and social policy forums such as National Economic Council (NEC), Council of Common Interest (CCI), National Finance Commission (NFC) Awards and other such policy forums.

This marginalization is not driven by economics or a lack of interest by researchers, instead analysts and legal experts are in consensus that these FATA exclusions stems from article 246 and 247 of the constitution. This marginalization and exclusion of FATA has serious consequences on the wellbeing of the people living in FATA. Pick any socio-economic indicator on FATA and a comparison with the national average will reveal that FATA lags behind the rest of Pakistan by a big margin. For example, the first ever official national multidimensional poverty index (MPI) developed by UNDP, revealed that poverty incidence in FATA is 73.7% as compared to national average of 38.8% during 2014-15.  It should be noted here that the MPI figures for FATA were derived from a data source, which is less rigorous than the one conducted, by PBS.

Governing FATA through an opaque and unaccountable system like the FCR has serious repercussions on service delivery. The political marginalization of FATA in Pakistan’s constitution led to its economic and social exclusion from different national policy forums, policy documents and data collections. This marginalization is not because of the people of FATA but in spite of their desire. In a recent statement released by Ministry of SAFRON, around 31,000 messages were received by the ministry from people of FATA in support of FATA’s mainstreaming. Similarly, the recently held 6th population census peacefully concluded in FATA by PBS with not a single incidence of obstruction in FATA. There were huge rallies from Lawyers, students, and political parties in FATA demanding constitutional reforms in FATA to mainstream the region.

Pakistan’s constitution may have codified marginalizing FATA and to some extent AJK and GB but despite this, its writers aspired for a better world in the future. This is best reflected in Article 37a ‘Principles of Policy’, which states “..State shall promote the educational & economic interests of backward classes or areas”. If we want to create a more inclusive Pakistan, reflecting those principles, mainstreaming FATA should be a top priority, and a small step in that direction would be to immediately include FATA in PBS surveys.

Challenges Facing Development in Pakistan’s FATA

By Dr. Ijaz Khan

This essay finds that the Pakistani government’s policies cannot bring the fundamental changes required for meaningful development of the region. First, Pakistan’s ambivalent posture toward the fight against terrorism—seeking to contain rather than eliminate militancy—has gradually undermined the country’s ability to pursue successful developmental projects. In addition, the government’s failure to understand and respond to the FATA’s evolving socio-economic landscape and power structure has seriously compromised Islamabad’s ability to implement suitable developmental changes.

Policy Implications:

• The most successful changes in the FATA have only favored a small minority of the population. Efforts must be made to ensure that the benefits of development reach the FATA’s predominantly illiterate, isolated, and impoverished population.
• Development strategy must be formulated in such a manner as to transform not just a few tribesmen—who after transformation become isolated from their tribal society, leaving that society unchanged—but rather the entire FATA society.
• Development of the FATA without fundamental changes to its outdated administrative system and isolated constitutional status cannot yield positive results. All efforts must be made to fully integrate the FATA into Pakistan with policies reflecting the FATA’s evolving socio-economic landscape and power structure.
• Pakistan’s government must ensure that various non-governmental developmental agents have secure access to the FATA.
• Political reform is needed that ensures the FATA’s population is involved in developmental decisionmaking institutions.
• Pakistan’s political parties should be allowed to operate within the tribal areas, thus encouraging popular participation in strengthening the FATA’s stake in the federation.
• The writ of the higher judiciary must also be extended to the FATA.

This essay addresses the challenges facing development in Pakistan’s Federally Administered Tribal Areas (FATA), a special administrative region enjoying vast internal autonomy with minimal state oversight. Due to the area’s special constitutional status, isolation, and proximity to and shared ethnicity with Afghanistan, the FATA has become a safe haven for extremists and terrorists following the overthrow of the Taliban government in Afghanistan in 2001. As a result, the region is now the focus of international concern and the center of the war on terrorism.

With U.S. support and prodding, the Pakistani government has initiated a comprehensive three-pronged political, military, and developmental strategy to break the FATA’s isolation and rid the area of militancy. Focusing on the developmental element of that strategy, this study finds that the government’s policies are not geared to achieve any of the fundamental changes required for meaningful development of the region. Furthermore, Pakistan’s ambivalent posture toward the war on terrorism has gradually undermined Islamabad’s ability even to pursue successful development projects.

This essay begins with a brief summary of the current political-administrative structure of the FATA. It then identifies Pakistan’s strategy for developing the FATA—noting earlier government attempts to develop the area, especially those made during Zulfikar Ali Bhutto’s government (December 1971–April 1977). The next section discusses the FATA’s evolving socio-economic landscape and power structure and points to the futility of the Pakistani government’s reliance on outdated political-administrative structures in light of these changes. Focusing on the deleterious impact of militancy on development initiatives, the essay then examines the rise of militancy in the FATA. The essay concludes by discussing the Pakistani government’s current inability to bring effective change to the region.

FATA’s Political-Administrative Structure

According to the system established by the British, the FATA consists of seven administrative units, which are known as political agencies, and six frontier regions.¹ There is also one Provincially Administered Tribal Area (PATA)—Malakand Agency. The FATA is directly administered by the federal government through the governor of the North-West Frontier Province (NWFP), while each agency is administered by a political agent (PA). The PA is also the judicial officer, against whose decision there is no right of appeal.

The colonial system was characterized by minimum state penetration and aimed only at ensuring security for roads and government posts. The jirga, which is the traditional Pashtun council of elders, was adapted to work as an intermediary between the state and the predominantly Pashtun tribal population. Because the legal code—known as the Frontier Crimes Regulations (FCR)—only dealt with crimes against the state, the PA possessed absolute power. Although this administrative system still exists, most of the socio-economic realities, along with the geostrategic environment, have fundamentally changed, thus severely limiting the system’s effectiveness.

The Government of Pakistan’s Development Policies

The Pakistani government’s development policies in the FATA from 1948 until 1971 were negligible. In the 1970s the government of Zulfikar Ali Bhutto initiated policies aiming at the development of the FATA. Bhutto’s administrative reforms, however, did not effectively alter the existing administrative and legislative system. Bhutto brought the FATA administration under the new federal Ministry of States and Frontier Regions (SA FRON) and established the FATA Development Corporation (FATADC). These organizational changes and initiatives streamlined federal government control of the FATA.

In addition, the Bhutto administration gave constitutional sanction to quotas for FATA inhabitants in educational institutions throughout Pakistan as well as in federal jobs, including the coveted Central Superior Services. Degree colleges for men were also established in all agencies and a number of high schools were established. Some industries were constructed in the state sector, while various incentives were offered to the private sector. The Bhutto administration initiated new schemes for agricultural development and paid greater attention to roads and communications in the FATA in an attempt to transform the economy and gradually integrate the FATA with the rest of the country.

Facilitating the acquisition of passports and thus travel abroad for FATA residents constituted another very important step in the development of the FATA. This policy paved the way for tribesmen to travel to the Gulf region, East Asia, Europe, and the United States—with far reaching socio-economic and political implications.

Post-2001 development policies: With the exception of the introduction of adult franchise in 1997, no major initiative was undertaken in the 1980s or 1990s in the FATA.² The introduction of adult franchise, however, was not accompanied by the government’s permission for political parties to operate in the FATA. In the wake of September 11 the FATA suddenly became the center of global attention. With international prodding and support, the Pakistani government has initiated a number of developmental schemes and policies.

In 2002 a FATA secretariat was set up. Four years later this secretariat was expanded to the civil secretariat of the FATA, which was established to take over decisionmaking functions. Project implementation is now carried out by the departments of the FATA’s civil secretariat. The NWFP governor’s secretariat plays a coordinating role between the federal and provincial governments and the FATA’s civil secretariat. The Pakistani government has abolished the FATADC.

Since 2004 the Pakistani government has introduced agency councils to serve as local representative bodies in the FATA. These councils are composed of both elected members—only government-recognized maliks—and PA-nominated members. Not only do agency councils have almost no authority, but there is still no clear delimitation of their functions and powers. The thrust of the government’s development policies post-2001 thus seems to be on reviving and strengthening—rather than changing—the existing FATA system.

With that said, a number of development schemes relying mainly on international assistance, especially from the United States, have been announced. In addition, the construction of roads has begun, and some health units are emerging in the FATA. The most important project completed after 2002 is the road connecting the Khyber and Kurram agencies. Though school buildings have been constructed in most of the agencies, most of these schools have yet to start functioning. Even the older existing schools are closed in North and South Waziristan as well as in Bajaur Agency and most of Malakand Division.

The limited role of NGOs: There is a real need for NGO activity in the FATA. Although Pakistani law does not permit the establishment of NGOs in the tribal areas, NGOs from other parts of the country—as well as international NGOs—operate in the tribal areas. The ability of these organizations to act freely and securely is hampered, however, by religious militant forces who regard NGOs as anti-Islamic or as foreign agents promoting Western and U.S. agendas. Nor does the Pakistani state adopt aparticularly friendly view of these NGOs, which Islamabad sees mainly as unwelcome intruders with no sense of the reality on the ground.

In the end the real impact of international aid organizations does not match the level of funds and support given. Owing to the current insurgency and ineffective state authorities, these international organizations are indirect players with extremely limited access at the ground level.³ Addressing this issue of the limited reach of NGOs into the FATA is at least as significant as, if not more significant than, addressing concerns over increasing the amount of foreign aid in the FATA.⁴

The FATA’s Evolving Socio-Economic Landscape and Power Structure

Bhutto’s policies accelerated a process of socio-economic change with political implications that required corresponding administrative and constitutional adjustments. Yet these adjustments, including the extension of political parties into the FATA, did not accompany important Bhutto reforms. The absence of effective political-administrative changes resulted in a vacuum, which has currently been filled by the extremist forces operating in the FATA.

Educational policies and job quotas in the FATA facilitated the emergence of a new class—an educated middle class—integrated into Pakistan’s socio-political structure and administration. Yet the benefits of the FATA’s development are not dispersed evenly to all tribesmen. The beneficiaries of reforms are increasingly the second generation of the earlier beneficiaries who are mostly settled in Pakistani cities outside of the FATA. Therefore, these beneficiaries do not greatly advance the development of the FATA’s society. This new class, however, has altered the malik’s traditional authority on which the whole edifice of the existing FATA system was based. The 1997 introduction of adult franchise served to further erode and transform traditional authority.

The FATA’s illegal trade has also provided income to a large population and created a new economically powerful class with political ambitions while bringing FATA tribesmen into contact with the outside world. Many tribesmen now send their children to schools and universities in Pakistani cities—and some even to schools in Dubai and the United Kingdom. The tribal diaspora is spread throughout Pakistan and most significantly has reached the Middle East, Far East, Europe, and the United States.

The Rise of Militancy in the FATA and Its Spread into the NWFP

The tribal system suffered a serious blow when the FATA was used as a base from which to wage the mujahideen war against the Soviet Union in Afghanistan.⁵ The 1980s witnessed the mushrooming of militant madrassas (religious schools), funded mostly by Arab money and local philanthropists.

Militants arriving in the FATA following the 2001 NATO intervention in Afghanistan found an administrative and political vacuum that they have since filled in a span of just six years. If the purpose of various development strategies has been to integrate tribesmen into Pakistani society, then this goal has not been achieved; rather, the current situation is marked by a strong disintegrative trend spearheaded by religious militants.

Some FATA residents working in Saudi Arabia—mainly residents from North and South Waziristan—have developed a special connection with Arab jihadis. The relatives of FATA tribesmen in Saudi Arabia are provided secure jobs and support in Saudi Arabia by the relatives of Arabs taking refuge in the FATA.⁶

All agreements reached between the insurgents and the Pakistani government have ultimately failed, resulting in the expansion of the militants’ territorial control.⁷ There has thus emerged a continuous pattern of state erosion and growing militant influence spreading out of the FATA into the settled districts of the NWFP. The militants now have serious influence in most of the southern settled districts of the NWFP, including Bannu, Dera Ismail Khan, and Kohat, as well as Swat, and now have the capability to deliver threats and edicts—rather than just hide bombs—in the central NWFP districts of Peshawar, Mardan, Nowshera, Swabi, and Charsadda.

Pakistan’s Inability to Implement Effective Changes in the FATA

The Pakistani government’s military, political, and economic strategies in the FATA aim to revive state authority through the discredited and outdated PA-jirga system, which consists of the exchange of local autonomy in return for the promised protection of roads and government installations. The government is apparently not pursuing any fundamental changes in the FATA that reflect an understanding of the FATA’s evolving socio-economic landscape and power structure.

There are many explanations for the inability of the Pakistani government to act decisively against the FATA’s militants. The government’s unwillingness to bring effective change to the FATA is the result of a deeply entrenched bureaucracy that enjoys vast and unchecked powers under the existing system. With the ungoverned space of the FATA having emerged as a base for various types of illegal businesses, including drugs and weapons smuggling, bureaucratic appointments in the region have become extremely lucrative.

Another foremost reason is the Pakistani government’s view of these militant forces as policy tools both in external relations with countries such as India and Afghanistan and internally against various secular nationalist forces, especially among the Pashtuns.⁸ An unconcealed sympathy toward the Taliban and its local variants in the establishment leads the government to restrain, but not eliminate, the FATA’s militants while U.S. and NANATO forces are engaged in Afghanistan.

The Pakistan People’s Party (PPP) and Awami National Party (ANP) coalition governments in Islamabad and the NWFP—formed following the February 2008 elections—are committed to peace-building in the FATA and NWFP through a combination of developmental activities and political and administrative reform. Yet due to the military and bureaucratic control of power and decisionmaking in Pakistan, the extent to which the coalition government will succeed depends on the level of real power the coalition is given. Quite telling in this regard is that the new prime minister backtracked on withdrawing the FCR from the FATA in the same inaugural session of the National Assembly in which he announced this policy.

The Pakistani government’s ability to deny the FATA’s space to domestic militancy and international terrorism by successfully implementing development plans to integrate the FATA into mainstream Pakistan is also seriously limited. The government’s unwillingness to confront militants has further increased the militants’ power and influence, thereby debilitating Islamabad’s capacity to bring effective change to the FATA.

Footnotes and References

¹ For an account of the FATA’s governance and legislative structures, see “Pakistan’s Tribal Areas: Appeasing the Militants,” International Crisis Group, Asia Report, no. 125, December 11, 2006, http://www.crisisgroup.org/home/index.cfm?id=4568&l=1
² Adult franchise—or the right of every adult (age 18 and above) to vote—replaced the earlier voting system, which gave that right only to officially recognized maliks. Malik is the term used for tribal elders similar to, though also distinct from, tribal chieftains. Only maliks who suit the state’s policies are recognized by the PA, and only these recognized maliks are invited to official jirgas and given stipends and other privileges.
³ See “Pashtunkhwa—A Developmental Framework—Part One,” National Democratic Consultative Process (NDCP), March 10, 2007, http://khyberwatch.com/nandara/index.php?option=com_content&task=view&id=300&Itemid=1 37.
⁴ Ibid.
⁵ Mujahideen are religious warriors or those who wage jihad; in an Afghan context the term is used to describe those who fought against the Soviet Union in Afghanistan in the 1980s.
⁶ Massoud Ansari, “Banking on Terror,” Newsline, May 2005, http://www.newsline.com.pk/NewsMay2005/newsbeat3may2005.htm.
⁷ Khalid Aziz, “Return of the Taliban–The North Waziristan Agreement,” http://www.khalidaziz.com/art_detail.php?aid=57. Khalid Aziz is a retired Pakistani bureaucrat who served as PA in some of the FATA agencies and retired in 1991 as the NWFP’s chief secretary.
⁸ Olivier Roy, “The Taliban: A Strategic Tool for Pakistan,” in Pakistan: Nationalism without a Nation? ed. Christophe Jaffrelot (New York: Zed Books, 2002), 149–60. For a detailed treatment, see Ijaz Khan, Pakistan’s Strategic Culture and Foreign Policy Making: A Study of Pakistan’s Post 9/11 Afghan Policy (New York: Nova Science Publishers, 2007).

Ijaz Khan is Assistant Professor at the Department of International Relations, University of Peshawar. Dr. Khan’s research interests include international relations, foreign policy, religious extremism, and terrorism in Pakistan and Pakistan’s Federally Administered Tribal Areas (FATA). His most recent book is Pakistan’s Strategic Culture and Foreign Policy Making (2007). He tweets with @ijazkhan and blogs at http://ijazk.blogspot.com/