Mr. Tarin advises the Pakistani government on Finance, Revenue, Economic Affairs and Statistics. Ambassador Holbrooke, on January 22, 2009, was appointed as a special adviser on Pakistan and Afghanistan, working directly under President Barack Obama and United States Secretary of State Hillary Clinton.

As per a Pakistani blog – “Ambassador Holbrooke calls on Shaukat Tarin | Ministry of Finance”
Jun 14, 2009 … Ambassador Holbrooke showed keen interest in the developmental … and US Ambassador to Pakistan,  Ms. Anne W. Patterson were also present during the meeting.

Further – Mr. Richard Holbrooke, US Special Representative for Pakistan and Afghanistan called on Mr. Shaukat Tarin, Adviser to Prime Minister on Finance and Economic Affairs here, that is in Pakistan, today.

Mr. Shaukat Tarin, Adviser to PM on Finance gave a detailed briefing about the state of Pakistan’s economy and the government’s plans for economic development of the country. Ambassador Holbrooke showed keen interest in the developmental initiatives taken by the government.

Minister of State for Finance and Economic Affairs, Ms. Hina Rabbani Khar and US Ambassador to Pakistan, Ms. Anne W. Patterson were also present during the meeting.

We assume that this visit catalized a joint, USAID – Ministry of Finance of the Government of Pakistan, CSF (Competitiveness Support Fund) – “The State of Pakistan’s Competitiveness Report 2009″ – a very nice 134 pages volume intended to explain how Pakistan will go about “CREATING SUSTAINABLE GROWTH.”

The July 2009 trip to Washington DC is thus a very fast reaction to the Holbrooke effort, and the stop in New York was sort of a “dry run with business” of the presentation to be made in Washington.

Mr. Shaukat Tarin had a similar report for the 2008-2009 fiscal year, so it was not difficult to come up with the present report. Mr Tarin said  that average inflation target has been set as 9.5 percent for the current fiscal year. The inflation would be brought down to 7 and 6 percent during the fiscal year 2010-11 and 2011-12 respectively. He said that the inflation started to rise steeply and peaked at 25 percent in October 2008 however through the government efforts, it declined to 14.4 percent in May, 2009. According to material distributed at the Asia Society – this is actually the Third such report – so they started in 2007.

Mr. Tarin worked with Citibank Pakistan in 1975-1995. He was in charge of the consumer business in the Gulf region and also Pakistan 1985 – 1991, then became country manager for Pakistan and eventually in 1996 for Thailand. In 1997, when Pakistan had banking reforms, he was appointed Chairman and President of the largest nationalized bank – Habib Bank, then in 2000 moved to Union Bank; In May 2007 he became Chairman of the Karachi Stock Exchange Ltd. and the National Commodity Exchange Ltd. and in April 2008 he took over as President and CEO of Saudi Pak Commercial Bank Ltd. He knows well that part of the world and the US and is being called in the last year to try to stabilize a sliding Pakistan. Will he inspire credibility with business audiences? This is yet to be seen.

Mr. Tarin pointed out that Pakistan is developing significant transportation and energy infrastructure linking Central Asia, the Middle East and South Asia. and he expects that this will be generating significant economic growth along new economic corridors. The problem in our eyes are with the lack of stability in that region – so could we indeed expect that such hopes will materialize? In the abstract we indeed agree that the potential is there, but are the politics such that this potential can be realized in a foreseeable future? What about the Taliban and the rest of the centrifugal  forces in Pakistan?

The Asia Society meeting was opened by Mr. Jamie Metzel, Exec. VP of the Society and Arthur Bayhan, the CEO of Competitiveness Support Fund, Pakistan. The US part was represented by Kevin X. Murphy, CEO and President of J.E. Austin Associates, Inc. who with UNDP and USAID has advised governments in – Spain, France, Cyprus, Turkey, Jordan, Egypt, Libya, Morocco, Dubai, and Saudi Arabia. We assume that Pakistan will now be added to his resume. He is an active member of the Board of Directors of the Competitiveness Institute (TCI) based in Barcelona, Spain.

Mr. Bayhan gave one practical real example when he spoke of a successful motorcycle industry that has grown from 900.000 sales to 2.5 million sales in one year. Obviously, there was no comment here of the way these motorcycles are fueled.

Mr. Murphy said that when he was in Pakistan he found at the University of Lahore better models of higher level private enterprise then what he saw in China, Ireland, and Vietnam but nevertheless they made progress despite the fact that in Ireland there is a messy democracy and in China and Vietnam there were modes of communism. What can we learn from those three examples of real productive investments compared to real estate speculations as drivers of markets?

When Mr. Tarin started his presentation he mentioned that “the price of the oil commodities did not help us.” This gave me an immediate idea for a question that I raised later.

The stabilization program started from a point when inflation reached 25% he said. Aid from outside created “cycles of boom and bust” – further – agriculture, brokers, stock exchange – all pay ZERO TAX.

We saw now 7% growth rate based on services and industries fed by consumer demand, but there is no real farm or agriculture or manufacture going on. Pakistan has a lot of milk – but it is wasted – there is no industry to absorb that milk.

Water, agricultural base, fertilizers, should be our attention he said – then the majority of people of Pakistan would benefit. There could be scale here thanks to internal market – you cannot base the economy just on textiles, drugs, and commodities for export he said – and these sounded very good. So, hopefully Washington of 2009 will have a second look at the internal make-up of countries of interest?

On electricity, energy, we must look at hydro, solar, wind he said. Also, we need infrastructure by bringing in the private sector – the others do it – he said.

We have good banking and because {luckily} they were not aggressive they escaped the meltdown. We have destroyed institutions, a planning commission in the sixties had good people – we destroyed the central bank and other institutions of bureaucracy – he said. He added that an ex-governor of the central Bank, a former Minister, now with the private sector, will be brought in to handle new plans.

The most important asset is the youg population that is 50% bellow 25 years of age and the multi party democracy that we bot now.

It sounds good and Mr. Holbrooke will have his hands full if he tries to help manage change. We just thought about our question to the panel – it was based on personal experience of 30 years ago – actually the time that Mr. Tarin also mentioned as better days.

I was involved in two US missions that went to Pakistan in order to help Pakistan find alternate forms of energy. it was obviously an attempt to provide Pakistan with help for its needs so it does not chase after the budding nuclear program. Those missions were run by the University of Miami in Coral Gables and funded by the National Science Foundation (NSF) of the US. The faculty at Coral Gables included two Professors of Turkish extract Veziroglu an Kursunoglu. We had seemingly some success. (a) Pakistan was helped in establishing a SERI in Baluchistan – that is a Pakistani solar energy institute. Also, personally, having worked with an agronomist from the University of Puerto Rico at Mayaguez, P{rofessor Geotge Samuels, we presented to Pakistan the idea of Energy Cane that produces more bagasse and more fermentable sugars then the regular sugar cane that was developed with the goal of maximizing crystallizable sugars. I said that I saw in Pakistan some gratification for our effort as they did in effect publish the energy cane idea before it was possible to overcome sugar industry opposition in the US and Brazil. But nevertheless, all above came to nought when Pakistan’s energy czar – the famous A.Q. Khan just liked the financial support but had no interest in any of the issues.

My question was thus if Pakistan is ready to get off the nuclear cloud and concentrate now on the energy sources that could actually help the economy.

I was told that Pakistan found oil and that nuclear power is cheap, but biofuels are good for agriculture, so all of these are of interest – and solar and wind. I am waiting to see now how Mr. Tarin will incorporate these ideas in what he can work out with Mr. Holbrooke who we know is a sharp person and  a person not easily pushed around.

The facts are that Washington is worried about Pakistan for two reasons – (a) because of the centrifugal forces that tend to explode the country’s structure, and (b) because of the security issue posed by the presence of the nuclear stockpile.

With above problems in mind, working for a stable economy in Pakistan is important and possible, but we think that part of the bargain will have to do with a denuclearization of the Pakistani military arsenal.