It's rare to catch Shaukat Aziz sitting at his desk in Islamabad these days. Since September 11, Pakistan's Finance Minister has crisscrossed the globe to drum up billions of dollars' worth of aid and debt relief for Pakistan. The $2.5 billion pledged so far will help defray the costs of Pakistan's role in the war in Afghanistan.
More important, it could lay the foundations for the "progressive Islamic welfare state" that Pakistan's leader, General Pervez Musharraf, says he wants to build. "The feeling of deprivation leads to extreme behavior," says Aziz, sipping from his Starbucks mug. "With improved economic management and an increase of aid for health, gender programs, and poverty reduction, people will get basic necessities and give a more stable, moderate Pakistan."
Tall and patrician, the 52-year-old Aziz is equally at home in New York, Athens, or Riyadh -- just a few of the cities he worked in during a 30-year career with Citibank. He quit the bank in 1999 to take the job of Finance Minister, which he carries out for free.
AN ATTRACTIVE JOB. In the past two years, he has spearheaded the country's privatization drive and brought some order to Pakistan's parlous government finances. He has done so by increasing tax revenues by 10%, keeping a lid on spending growth, and building up foreign reserves. Under his stewardship, Pakistan for the first time completed an International Monetary Fund reform program.
With the Afghan war winding down and border tensions between India and Pakistan over Kashmir showing signs of easing, Aziz' main challenge now is to attract foreign investors, who have shunned Pakistan because of its history of political instability and an overwhelmingly poor population.
He has been wooing them by pointing out that all economic sanctions against the country have been lifted, reserves are up, the currency has stabilized, and that Pakistan has an inexpensive labor force, making it an attractive manufacturing base (potential instability on the Kashmir border notwithstanding).
POVERTY AND EXTREMISM. Aziz, who holds an MBA from the University of Karachi, is an avid collector of Asian art and a golfer, as well as a devotee of ghazals, the classical Pakistani poems that are sung. Widely regarded as a squeaky-clean professional in a country notorious for corruption, Aziz considers himself a technocrat despite his obvious diplomatic flair. Since Pakistan was drafted into the U.S.-led coalition against terrorism, he has played a major role in helping to portray the predominantly Muslim nation of 140 million people as a moderate and reasonable place.
He understands well the link between poverty and religious extremism, and he hopes the country's windfall of economic aid will help break that cycle. Indeed, Pakistan may prove to be a test case of whether foreign aid can turn around a failed state. A key question is whether Pakistan will squander the aid money -- as it has in the past, with disastrous results. Aziz says he's determined to prevent that.
He says government finances have become much more transparent at all levels, particularly at the grass-roots, where local elections allow for checks and balances. Money will be allocated to projects on the basis of performance. "There's total transparency in all expenditure. The machinery is outcome-oriented, particularly in health, gender, and poverty reduction," he says. "If we use the money properly it can have a very big impact on the economy." His difficult task is to make the impact a positive one.
By Frederik Balfour in Islamabad
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