PROSPECTS AND CHALLENGES: The program of economic, political, and social reforms initiated by President Pervez Musharraf under the title of “enlightened modernization” is faced with a number of challenges Its ability to overcome these hurdles will have a profound impact on Pakistan’s economic, political, and social future There are at least five challenges that the government must face The most important of these is the strength of religious parties and Islamic fundamentalism They gained strength after 1978-the start of the war against the Soviet Union’s occupation of Afghanistanand now have a significant presence in the political system Not only does the Muttahida Majlis-e-Amal (MMA), a coalition of six religious parties, have a large presence in the national assembly, it also controls two of the four provincial governments The provinces of Balochistan and Northwest Frontier, which have MMA-led or dominated governments, border Afghanistan and have been reluctant to pursue the drive against Islamic extremism that the government of President Musharraf launched in late 2001The second challenge is posed by the underdeveloped political system which still does not allow full participation to the people The military under President Musharraf has been reluctant to loosen its grip on politics fearing that this would bring the discredited politicians back to power or increase the strength of the Islamic extremists A new set of elections is scheduled for 2007 when new assemblies will be elected at the national and provincial level President Musharraf has already declared his intention to seek another term as president once the new assemblies are in position

Yet, there is growing opposition to the continuing involvement by the military in politics If President Musharraf refuses to yield space to political forces, this political instability will return The third challenge Pakistan must address is the continuing underdevelopment of its human resource There is still significant illiteracy in the country and there is a need to improve the levels of skill among the young The government of President Musharraf has launched a massive drive to increase enrollments at all levels of the educational system There is also an effort to have the private sector participate actively in promoting human resource development If these efforts succeed, Pakistan may be able to turn its large population into an economic asset If they fail, the country will face political, economic, and social instabilityIn spite of the sharp increase in the rate of economic growth in the 2004-05 financial year, and despite the government’s belief that it has set the economy on a trajectory of high growth rates for several yearsif not for decades-it is by no means certain that Pakistan has joined the ranks of rapidly expanding Asian economies The country continues to face a number of serious structural obstacles to achieving sustained growth These include a low rate of domestic savings which increases the country’s dependence on external capital flows

The availability of foreign capital on a sustained basis is not ensured, especially when much of it depends on Pakistan’s ability to stem the rise of Islamic extremism Also on the external side, the country has not been able to develop an export sector that can benefit from rapidly expanding international trade Pakistan continues to rely heavily on textiles, an industry whose products face protection and sharp competition in the world’s major markets And, as already indicated, the woeful neglect of human development has turned the country’s large but young population into a burden rather than an economic asset This is the fourth set of challenges the country facesThe fifth challenge is presented by the continuation of the conflict over Kashmir, a state that has been the main cause of prolonged hostility between India and Pakistan Since 2003 India and Pakistan have taken small steps to ease the tension between them There appears to be a genuine desire on the part of both Delhi and Islamabad to bring about greater cooperation between the two countries and greater contacts between the two people Kashmir, however, continues to be the main stumbling blockThus Pakistan stands at a crossroads It is possible that the country may be able to successfully deal with the many problems it faces and become an active participant in the global economic and political system

However, if that does not happen, then Pakistan could become the epicenter of instability in the entire Muslim world The global community therefore has a great stake in the country’s future

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