CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 725-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

International Development Committee

Pakistan

Tuesday 18 December 2012

Professor Anatol Lieven and Omar Waraich

James Fennell MBE and Michael Green

Evidence heard in Public Questions 1 - 58

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the International Development Committee

on Tuesday 18 December 2012

Members present:

Rt Hon Sir Malcolm Bruce (Chair)

Hugh Bayley

Pauline Latham

Jeremy Lefroy

Mr Michael McCann

Fiona O’Donnell

Chris White

________________

Examination of Witnesses

Witnesses: Professor Anatol Lieven, War Studies Department, King’s College London, and Omar Waraich, journalist, gave evidence.

Q1 Chair: Good morning. Thank you very much for coming in to help us with our inquiry into Pakistan, a country that obviously both of you know extremely well. We are looking forward to you sharing your understanding with us. I wonder, just for the record, if you could formally introduce yourselves?

Professor Lieven: I am Professor Anatol Lieven. I am in the War Studies Department of King’s College London, and I suppose my reason for being here is that I was a journalist for The Times in Pakistan and Afghanistan back in the ’80s. In recent years, I have been out there a lot to do research for a book on Pakistan that came out last year, called Pakistan: A Hard Country.

Chair: Which I am two thirds of the way through.

Omar Waraich: My name is Omar Waraich, and I suppose the reason I am here is because I am a journalist. I have covered Pakistan as a foreign correspondent for The Independent of London and Time magazine since 2007, and have also written on it for the Economist Intelligence Unit and The Guardian.

Q2 Chair: Thank you both very much. Having read your book, or being in the process of reading it, you describe Pakistan as having "tough creepers holding the rotten tree of the Pakistani system together", but you also say that some of those creepers are "parasites on the tree". What do you mean by that? You say in the book that it is all very complicated and there are lots of interconnections, but can you just briefly draw out what that means for our understanding of Pakistan?

Professor Lieven: I see Pakistan as a place where an interlocking set of elites-sometimes described as feudal, although that is not really very accurate-have tremendous power over the system and society. That power is, on the one hand, a very considerable obstacle to revolution from below-Islamist revolution, of course, in this context. At the same time, the system that these people operate, control and depend upon runs above all on patronage, and to some extent also on kinship, although that differs greatly from area to area. Patronage, of course, consists of individuals extracting resources from the state and redistributing them not just to themselves but more importantly to their followers, in order to keep their support.

This distribution of patronage extends quite far down into Pakistani society. The number of people who benefit from this, if only to a limited extent, is really quite large in some areas. That, too, is a considerable deterrent to revolution or upheaval from below and destruction of the system, but it is, of course, absolutely terrible from the point of view of development.

Q3 Chair: That was my next question; what does it mean for foreign aid donors to work with that? We did hear about things like people getting into positions of power and influence, and their first priority being to make sure that all of their friends and relations got jobs, whether or not they were suitable. When anybody was accused of any wrongdoing, then protection from prosecution was the overriding need. Is that the sort of thing that creates the problem?

Professor Lieven: Very much so. Of course, foreign aid can easily become part of the patronage that is distributed, if it is given unwisely. We often see corruption simply as an evil, a negative force or as a pathology. It is important to understand, as well, that the people who do this feel that they also have a moral obligation to help their families and their followers.

The other thing that this is really terrible for is revenue collection. Pakistan has the lowest rates of revenue collection, as you know, relative to GDP in south Asia. The last I saw, it was less than 10%. India’s rate is 17%, and India has the lowest rates of collection among the BRICs. This, plus the military budget-although I would put the military budget second-means that the state, even before things are stolen, does not have enough revenue to conduct essential tasks. Once again, these elites have played the critical role in obstructing the state, both by refusing to pass new laws and by corrupting the state from within when it comes to blocking the raising of additional revenue.

Chair: I wonder whether Omar would like to comment on that.

Omar Waraich: I agree with much of what was said. I was intrigued by an analogy that I first came across when Professor Lieven wrote an essay in the London Review of Books in 2004, the theme of which was the military. He compared it to the Hindu god Shiva, who was both a preserver and destroyer, and at the same time mentioned this creeper rising up across this tree.

I agree on the points he has made about the way in which the elites operate. However, it is important to mention that these elites have different degrees of power, as well, and different modes of operation. Over the course of Pakistan’s history, not least Pakistan’s recent history and in particular General Musharraf’s period, it has been the military that has had most of the power and has been the creeper around the tree. This has had an enervating effect on the tree itself, diverting resources and so on, to the neglect of civilian institutions and institution building. The reason why you have not been able to see democratic institutions develop in Pakistan is mainly because the military has chosen to privilege its own institutions. This has also resulted in interrupted periods of democracy and so on. So these kinship systems that Professor Lieven has mentioned are fall-backs. They are substitutes for what would traditionally be very effective civilian institutions in ideal circumstances. Obviously, Pakistan has a long, long way to go before it achieves that.

I also agree with the point about corruption: it has other social values that, perhaps, are not appreciated, in the sense that people do not necessarily salt away resources for their own personal benefit. In many cases, it can mean jobs for people they know, but often it can also mean jobs for their constituents. In fact, in many cases, after elections, there is immediate pressure on the elected MNAs for patronage to be distributed among people to whom it was not distributed the previous time. This can mean party workers, or people who were rivals or enemies. In a case where you may have a division-let’s say, in a part of southern Punjab where the principal division in terms of politics might be between the Arains and the Jats-then the families and networks associated with one political candidate would want it other ways.

In other cases, however, it is the case that the state has deprived a particular group of certain resources and they are now demanding them. For example, it is very much the case that in the minority provinces-Sindh, Khyber Pakhtunkhwa and Balochistan-they feel that they have been neglected under periods of military rule, or under periods in which Punjabi politicians have been in control. To assuage those grievances, they distribute this patronage.

Q4 Pauline Latham: I wanted to come in on that, because both of you seem to think that patronage is a very good thing. It cannot be, surely?

Omar Waraich: No, what we are saying is that it is a prosaic reality. It is just what happens. It is my view that it happens in the absence of strong civilian democratic institutions. To stay with the creeper analogy, the reason why those have not been able to develop is that the military plays a role as a preserver of itself and a destroyer of other institutions and rival power centres. That is why, when the military retreats marginally from that space, what you are left with in that place is a series of atrophied institutions. Then, when civilians make an effort to bolster these civilian institutions-and they often do not-you have democratic interruptions that make this very, very difficult.

Professor Lieven: May I also clarify? I certainly did not say that it was a very good thing. I pointed out that it is a Janus-faced thing, which is, after all, also true of our interests in Pakistan. On the one hand, we obviously have an interest in long-term development; on the other hand, we have a very strong interest that the system does not fall to pieces quickly in the face of revolution. This patronage network, as I have said, is on the one hand very bad for long-term development, but it does help to keep the existing system in place. The problem is that the existing system is corrupt.

Pauline Latham: But it is not a good thing that it keeps it in place.

Professor Lieven: Well, it depends what you want to replace it with.

Chair: Yes, it depends what the alternative is.

Q5 Mr McCann: Good morning, gentlemen. Pakistan has clearly got many highly capable people, and it has made significant progress in areas like WMDs and its recent dengue fever campaign. I just wondered why, then, it has historically been so unsuccessful in tackling this, and is flatlining on social indicators.

Professor Lieven: Very much for the reasons I have described. It is still, in certain respects, an effective state. It is a bit like Russia, or the Soviet Union, in the past. It has a lot of talented people. If it really concentrates on a given issue, mostly in the military field-weapons of mass destruction in the case of Pakistan, as you have said, but sometimes other areas as well-it can get things done. Another example is the motorways of northern Pakistan and how they are regulated. However, it can only do this in a limited number of areas, with the absolute concentration of parts of the state, and ring-fenced to some extent against the politics of patronage and corruption. So it can get things done.

Of course, if one is talking about extending economic reform and real social development to the whole system in a country that has almost 200 million people by now, that is beyond the capacity of the existing Pakistani state, and it constantly breaks down in the face of these local interests and their demands on the state system and the fact that the state simply does not have the revenue to do that.

Omar Waraich: It is interesting that you raise those two examples. I think they reflect the nature of the state. Pakistan, for most of its history, has taken on the structure of a national security state internally, and to the rest of the world has been in some ways a classic rentier or garrison state. What that has meant is that, when it comes to national security concerns, they are very much privileged. That is why you see the marshalling of Pakistan’s most efficient resources in the nuclear programme. That is true of a number of things to do with national security. Many people in Pakistan have an alternative vision of Pakistan playing a role as a state that looks at human development. However, that would require the state to take on a very different structure where the national security establishment does not play as big a role and power is devolved, and social welfare and other pursuits are taken more seriously.

The dengue example is very interesting as well. The background to this is that there was a very large dengue breakout in Lahore and in Punjab. It got to the stage where I did not know of a single family in Lahore that was not, in some way, affected by it. This led to a very loud outcry in that part of the country. Now, you are talking about the wealthiest part of the country, of course. You are also talking about a middle class that is able to assert itself in ways that people in other parts of the country cannot: they can assert themselves through the media, through the power and wealth that they enjoy otherwise, or even through their representatives.

This also happens to be the political base for Nawaz Sharif and Shahbaz Sharif’s Government. They dominate Lahore. Without Lahore, they cannot have a strong presence, even in Punjab. They are very much a north and central Punjabi party at the moment, politically. If they did not do anything about dengue, then they would feel real electoral consequences the next time around. This was a case where they had the resources and could marshal them, and it was also a case of political survival, because the fallout would have cost them very, very greatly.

Now, when you go to other parts of Pakistan, you can see issues such as the selective response to the floods and how that differed from place to place. For example, if something like this were to take place in a remote part of Balochistan, you would not see the state respond in that way, because the people affected by it do not have the means to make their grievances known, the politicians do not face the pressure to respond and the state does not have the resources there.

Professor Lieven: If I may, I would just like to say that I entirely agree with that. The key is organised and focused demands from below. Unfortunately, as Omar has said-not just in Pakistan, but historically in a great many places-that has been above all a middle class thing, or at least a thing that can be done by classes or groups that have a capacity for organisation and an ability to bring pressure to bear. Unfortunately, that is not true of most ordinary people in most parts of Pakistan today.

Q6 Mr McCann: Is there pressure from civil society to improve social indicators such as education and health? Also, touching upon a point that you made a few moments ago, if progress can only be made in Pakistan amongst the elites and the middle classes, are foreign aid donors ever going to make a significant impact on the lives of the poorest people in the country?

Professor Lieven: Historically, in this country, a great deal of positive change was driven by middle classes that were demanding things for themselves, but also demanding things for others. The improvement of the London sewage system in the mid-19th century was a classic example of that. Obviously, a central part of the key over time will be a reciprocal relationship between the growth of middle classes with the ability to organise and demand these things, and a greater responsiveness of the state and the political system to them. However, this is a long historical process. Long-term processes are made up of a lot of short-term processes, but it is not something that can be changed in a revolutionary fashion very quickly.

One thing that I should perhaps throw in there is that, as far as this country is concerned, we can afford to think long-term. I have been very struck by the endless short­term thinking in Washington when it comes to aid, and the demand for very quick results by a given short-term benchmark. This country is going to be connected to Pakistan by the huge Pakistani diaspora in this country for all foreseeable time. That means that we have time to think about programmes that will only yield really major results a decade or a generation from now. In my view, that is the way that we ought to be thinking.

Omar Waraich: I agree with that long-term perspective, because I think it would be a big mistake to look for quick fixes and overnight results. Pakistan is in need of reform, and that reform will be long-term and incremental. Things will not change suddenly as a result.

The points that you raised all relate to the nature of a national security state. When the military is in power, the only thing it has to be concerned about is the potential threat from the elites. They are the only ones who can affect their hold on power. That either means dealing with them as a threat-i.e. taking them on politically or otherwise, sometimes by military force, as we see in parts of Balochistan-or by accommodating their needs. They have this trade-off: if you are able to satisfy the elites, or make sure that they are not a threat to your power in any serious way, then you can get on with the rest of your business. That process means that the poor of the country are not a priority for you, because your focus lies elsewhere.

You only start to see changes when you get democracy. We have been seeing some of these changes-although I must stress that these are slow, incremental changes-with the smaller provinces enjoying greater autonomy. There are projects like the Benazir Income Support Programme that are suddenly providing a safety net for some of the most vulnerable households, and there is the support to small farmers that we have seen in certain cases. There is also the fact that, because of institutions like the judiciary and the media being more assertive, politicians have to be more responsive.

We are seeing things change. I would like to argue against the perception that comes across sometimes in western coverage of Pakistan being a completely elite-dominated state. The reality is that the biggest social change in Pakistan over the last ten years has been the rise of an assertive middle class. By some estimates, it has doubled in the last 10 years, although of course this varies. What that has meant is that you have seen considerable amounts of wealth come into the most affluent parts of Pakistan, by which I mean Karachi and northern and central Punjab.

This is a class that has been able to assert itself, not just through the media, but also through direct participation in politics. If you look at the composition of Parliament, there are far more middle-class people there than there were before. If you look at the other significant institutions, such as the judiciary, the bureaucracy or the military, these are now entirely dominated by the middle class, so their concerns can be asserted in a way that rivals the privileges of the elite. Eventually, one would hope that the process of reform would incrementally deepen and be more sustained, so that people who are more vulnerable and in more difficult conditions are heard as well.

Q7 Mr McCann: That brings me to my final question. You have partially answered it already. Is there a real political will in Pakistan to help the poor people, or is it only when the interests of the elite and the middle class are served that they will do anything about it? The BISP is a good example. Is that something that genuinely is trying to help the poor, or is it something where they think there is a political interest, in terms of creating another section of the electorate that will vote for them?

Omar Waraich: It does not need to be a trade-off. Politicians try and achieve both things, as I am sure you all would know, perhaps far better than I. It just happens that the BISP is championed by the Peoples Party, because the Peoples Party is a party that is strongest amongst the rural poor of Pakistan.

Q8 Mr McCann: I put this question, about the connection between the politics and the programme, directly to the Minister at the time. With the greatest respect, the concept of linking a good initiative and successfully helping the poorest people seemed to be lost.

Omar Waraich: Well, it is no mistake that it is called the Benazir Income Support Programme: it is so that the voters remember. That is part of the reason why it is done. It is also introduced by this particular political party because that is their constituency, and that is something that they look towards. If you look at parties like Nawaz Sharif’s, for example, there are not many constituents to whom 1,000 rupees per month would make much of a difference. That is also the reason why, for example, parts of the middle class actually deride the project itself, because they think that it is ineffective and these are paltry sums.

To go back to your original point, this has very much to do with the structure of the state. The reason why such derisory sums-in terms of the budget-are devoted to health and education is because those things are not a priority in a national security state. The hope is to have sustained democracy and civilians who are in a strong enough position to actually recalibrate these things. We are, of course, talking about a weak Parliament at the moment, and a Parliament that is in the middle of a very delicate and fragile transition from a dictatorship towards civilian rule. No party has a majority there, and whatever constitutional amendments, for example, we have seen are entirely contingent on the Opposition co-operating. It is only when the civilians are in a strong position to form a consensus on these things and win public support that they can actually turn around and say "We need to think less about taking our nuclear project beyond its deterrent capacity and towards other ambitions, and more towards these things."

Professor Lieven: My perspective on that would be somewhat different, I must say. Yes, the Benazir Income Support Programme is a classic case of something that is intended to do both: it does help a lot of ordinary poor people, and at the same time it is meant to generate votes for the PPP. That is the way that it will go. There will be certain pressures from below, and there will be attempts by politicians to gain support by buying them off. However, that is a very different matter from a coherent programme of national development in a whole set of areas.

The national security state is not an obstacle to a rational electricity policy, for example. It is the fact that the Pakistani system cannot seem to pull itself together behind a reasonable and intelligent programme of reform. That is to do with many deeply rooted problems, including, of course, political divisions in the elite and between the different provinces. As Omar has said, in so many areas it is critical that an agreement is reached between the Government in Punjab and the Government in Islamabad. If they are bitterly at loggerheads-as, alas, they so often are-then that makes the drawing up of national plans extremely difficult.

Chair: We have only asked a couple of questions, and we have about 12, so we will move along.

Q9 Pauline Latham: This is a question to Professor Lieven. I cannot claim to have read your book, but I am told that at the end of the book, you call for the West to adopt a new approach to Pakistan, a much deeper stake and a much more generous attitude. What do you believe the main elements of the programme of support should be?

Professor Lieven: For one thing, as I say, it has to be long term. Expecting short-term fixes and deliverables in two years or so, with training programmes that last three months and have no follow-up, and pursuing particular projects and then abandoning them when they appear to be partially on their feet, is in my view a profoundly mistaken way to proceed. Anything that you want to achieve has to be much longer term than that.

Of course, one has to be realistic about this. I was writing a book in which I was trying to inspire people to be more generous. One does have to recognise that there is a good deal we can do in limited ways, especially, I would say, in the area of education, and I strongly support DFID’s focus on that. Education is a force multiplier: you educate people, especially women, and it has profound effects. This has been documented in so many cases and so many ways. However, if we are going to stop at that, then we have to recognise that it will be very limited in a country with, once again, almost 200 million people. If we want to achieve something much more substantial, that will require a great deal more money. That then, of course, raises not just the question of the moral needs of Pakistan, but also Britain’s security interests in the country.

Q10 Pauline Latham: But also Pakistan should be helping themselves, to a certain extent.

Professor Lieven: Oh, of course. That is very much part of it. It is sticks and carrots.

Q11 Pauline Latham: If you feel it is time to do these things in Pakistan, what needs to be done and who needs to do it, in order to create a conducive environment for foreign donor support?

Professor Lieven: Who on the Pakistani side needs to do this? Well, in the end, this has to be led by the national Government, which of course has to then gain the agreement of provincial governments as well. Leaving aside, for a second, the question of corruption, in the energy field, for example, it is critically important to have an integrated national ministry and an integrated national plan into which international aid can then feed, in order to overcome the absolute anarchy of institutions at the moment in that area.

This, you see, is also an area that demonstrates the fact that even a very powerful but inchoate and disorganised anger among ordinary people has not yet had any great effect. Anger at electricity shortages is profound. But when it relates to something beyond tackling a specific issue like dengue fever, which requires a fairly straightforward medical approach, anything that requires institutional change and co-ordination has proven very difficult so far. The Pakistanis need to be encouraged and helped as far as we can.

That leads to another point, which is that progress against corruption will be very slow. As I have said, it is deeply entwined with patronage, which in turn is at the heart of the political system. On the other hand, part of the problem with corruption in Pakistan is not the level, although that is a problem: it is the anarchy thereof. If you talk to Chinese officials or Chinese businessmen, they are used enough to corruption. What infuriates them is competitive corruption: one institution or group competing with the others and constantly coming back for more money, rather than-as I have been told is the case in China-making one big payment and it’s through. That is not, of course, something that we can formally advocate as a difference, but it is once again key to this question of actually integrating.

Q12 Pauline Latham: A minute ago, you said "Put aside corruption." That is fine in a theoretical book that you can write, and in which you can say "Well, if we put this aside, this, this and this can happen." However, when you are actually there and you see and hear about the terrible corruption, you cannot put it on one side, because it is there. It is our taxpayers’ money that is being spent on corrupt practices, which is completely unacceptable to people here. Then you said "It starts at the top and then it goes down to regional", but we were told that the regional governments were actually better at spending the money, because it never gets right down.

Professor Lieven: It depends which regional government, and in which circumstances.

Q13 Pauline Latham: I am sure that is the case, but sometimes it is not getting there because bits are being taken off at this level and that level. Last week, we were given the example of a road that was going to be built, and all that was put down was a thin layer of tar. There was the money for it, but somebody had their slice at every level, so when it came down to it all they could do was put down a thin layer of tar. They have got a road in theory, but not in practice. We have got to cut through that. We cannot say that it will happen slowly, because we cannot afford to. It is our taxpayers’ money that is being spent on this. You know what the Daily Mail readers think of money going to any country, never mind Pakistan, where we know there are huge levels of corruption. We cannot say, "Well, it will take a long time for this to change." We have got to try and change it now.

Professor Lieven: Forgive me, but this is not our country. We are not the Government of Pakistan. We cannot go in there and take over Pakistan.

Q14 Pauline Latham: Should we not then be sending any money until they get their act together, if it is so corrupt?

Professor Lieven: As I expect most of you agree, Britain as a country has a strong interest in Pakistan. Frankly, we are not giving that much money anyway. Compare the amount of money we gave to Pakistan to the amount money we gave to bail out the banks. It is paltry. It is almost insignificant by comparison.

Pauline Latham: With respect, that is not what the taxpayers of this country think.

Professor Lieven: Forgive me, but there is also a degree to which one has to educate the taxpayers in realities.

Pauline Latham: It is all very well saying that.

Professor Lieven: If I may add, we have actually been ruling Afghanistan to a great extent for the past 11 years. We have had an army there, and have had huge numbers of officials actually in the country, and yet Afghanistan is full of roads that are just as you described. If anything, the degree of corruption there greatly exceeds that in Pakistan, and that is despite the fact that we have been sitting there on the spot. So the idea that one can go in and somehow produce miraculous, quick results by shouting at people is simply not going to work.

Q15 Pauline Latham: I was not suggesting that we go in and shout. Maybe Omar could answer this question: if success depends, fundamentally, on what Pakistanis want for Pakistan, what do they want? If the Pakistanis want for their country what we think they should want, where do you feel that foreign donors can have an impact on getting there?

Omar Waraich: Pakistanis want for their country what ordinary people in most countries want, which is better living standards; access to education; access to health; sanitation; and for their children to perhaps enjoy more comfortable and safer futures than themselves. Their security, of course, is a major concern.

Just to tie into your earlier question about what the West can do, one of the problems is that these are relationships that are perceived in Pakistan to be principally about security and what the West can do in terms of the war on terror. To make more of an impact, there needs to be a broader perception that Britain cares about much more than that. For example, Britain is in a very good position in some ways. The fact that we were able to give Pakistan access to the EU markets put us in very good standing, and as a result they have been asked to abide by a series of metrics measuring democracy and human rights. In return, of course, Britain would have to support democracy and human rights itself. We would have to move away from the Tony Blair days of standing up and praising Pervez Musharraf as symbolising the future for Muslims the world over. We have seen over the last two or three years what that model of dictatorship means for Muslims the world over.

Again, this is a very, very slow and long process. As Professor Lieven has mentioned, corruption is not unique to Pakistan. Leaving aside Afghanistan, there are constant scandals about corruption in India: the 2G telecoms scam, the Commonwealth Games scam, and other bits of scandal that are causing the current Government all sorts of problems. There are many development experts who take the view that this is actually a phase of development, in which there will be corruption until you reach a point where there is better governance, established democracy and transparent institutions. However, for us, the point is that when it comes to British aid one should insist on transparency, rather than take an approach that means that the poor will have to pay the price of the decisions of their elites. This also creates problems in Pakistan in terms of the way the West is perceived.

Q16 Chris White: Good morning. To take this a bit further, 2013 is obviously going to be a big year for Pakistan with the elections. I am just wondering what your predictions for 2013 are at this time of year.

Professor Lieven: I am not going to predict an exact result. Something that I think is certain is that you will have a coalition Government. No-one will win an absolute majority. Imran Khan’s party, the Tehreek-e-Insaf, will not win the elections, and may not even increase their representation by very much. However, it is possible that they will play a pivotal role in Parliament and will have to form a part of the next national coalition. It is also quite possible that they will win a majority in Khyber Pakhtunkhwa, because the existing government there has become extremely discredited and unpopular, and the Islamist parties that failed rather miserably when they were in power previously are also discredited. He has a real chance there that I do not think he necessarily has elsewhere. However, the important thing to note is that it will be a coalition Government.

I am playing through scenarios-I am not saying who will win-but it would be a fairly substantial change if the main Opposition, the Pakistan Muslim League under the Sharifs, were in a position to lead the next coalition. That would have a number of effects. It would make for much better co-ordination between Punjab, which has almost 60% of the population and a very, very disproportionate share of industry as well, and the centre. On the other hand, whenever the PMLN is in power, it tends to create greater trouble in Sindh and in Karachi, because they have much less of a grip on the situation there. One might expect the ethnic problems of Karachi to get even worse there.

Frankly, even if Imran were to win an absolute majority in some parallel universe, the idea of him carrying out a revolution in 90 days is populism for electoral purposes. There could be some positive changes, at least in Khyber Pakhtunkhwa, but, once again, they would be limited. One has already seen how he has had to make a whole set of compromises to gain local support. Of course, coalition Governments are notoriously about compromises. That is the picture.

Perhaps I could briefly add one more thing: I do not suppose that there is a single country in which DFID operates that is not highly corrupt. The second thing is just to repeat what Omar said. India is a deeply rooted democracy, which has been-with the exception of one, thank God, very brief period-a democracy since independence. However, as we can see from headlines in India every day, let alone every week, India remains in many ways a deeply corrupt system in which patronage is also highly ingrained, although one where the pattern differs greatly from Indian state to Indian state. It is not a uniform picture, but it is worth keeping that in mind.

Q17 Chris White: Yes, but bearing that in mind, I do not think that we should be accepting corruption in any way, shape or form.

Omar Waraich: No, no one is suggesting that we accept corruption. It is just about placing it in its proper perspective.

2013 is a very important year for Pakistan. It will be the first time in Pakistan’s history that a democratically elected civilian Government transfer power to another democratically elected civilian Government. In the past, we have had interruptions in the form of military coups, or palace coups engineered by a proxy of the establishment in the form of the sitting President. This is the very first time that you see that transfer of power happening, and so this is a very important moment in Pakistan’s history. We have seen very, very impressive things happen in the preparations for this. There has been a series of constitutional amendments; the establishment of an independent election commission; and a review of electoral rolls, which will mean that the next election will perhaps be the fairest in Pakistan’s history. I stress the fact that this is a relative quality, rather than an absolute one.

We have a consensus on an election commissioner, and we are hopefully looking forward to a point where there will actually be a consensus on a caretaker Prime Minister, with the Opposition and the Government agreeing to this. This is, again, a unique moment. In the past, caretaker Governments were run by either a proxy of the establishment or whoever would subsequently benefit from that situation.

At the same time, it is also a year in which the Chief Justice-Iftikhar Chaudhry, who has become a very powerful figure in Pakistan-will be stepping down. We will see how that institution transitions away from the shadow of a particular individual. The same will also happen with the Pakistani army, as General Kayani will be stepping down towards the end of the year as well. In both cases, you are talking about very powerful figures: in General Kayani’s case, the most powerful man in the country, and in Iftikhar Chaudhry’s case, someone who has steadily become more powerful over time. They have been there for the past six years and have actually outlasted this civilian Government, and are now stepping away. It will be a transition for the three main power centres in Pakistan, with the military, of course, being the most substantial one.

My prediction is that a coalition Government will be a certainty, partly because of the regionalisation of Pakistani politics. For example, even the national parties have been retreating to particular geographic areas, so Nawaz Sharif does not have much of a presence in Sindh or Balochistan, or even vast stretches of Khyber Pakhtunkhwa. Similarly, the Peoples Party has been retreating away from northern and central Punjab, which was once its strongest base.

My worry is that the next Government will be even weaker than the present, because of the composition of a future coalition. It would be very vulnerable to pressures, either those applied from behind a thin veil by the military or those applied by an aggressive Opposition backed by, perhaps, the Supreme Court and the media. In either case, that next Government will have a harder time staying together and maintaining the fissiparous coalition than the current one does.

Although this may not come across in a lot of the coverage we see of Pakistan, the tendency in Pakistan is towards anti-incumbency. From the high 60s to 70% of all Members of Parliament are voted out at the next election. For example, Sir Malcolm, your very impressive achievement of winning seven straight elections from the same seat is only matched by one person in Pakistan. That is the Leader of the Opposition, Chaudhry Nisan Ali Khan, who is not a feudal but is from Rawalpindi. We also see this with Khyber Pakhtunkhwa, where over the last four elections, you have had four different parties lead the provincial government there. I think what we will see is a big turnover in the Members of Parliament. It is similar in India, by the way, where two thirds of all Members of Parliament are also voted out at the subsequent election.

That means that this next election is actually Nawaz Sharif’s to lose, but he would have to find the necessary allies if he were successful. Would Imran Khan join him in a coalition Government? Imran insists that he would not. Imran insists that he wants to fight this election on his own and achieve a majority on his own, which is difficult to see, simply because the party is a product very much of this new assertive middle class, found principally in urban areas, and its influence has been amplified by it. Therefore, his presence in rural southern Punjab, Sindh and Balochistan is not terribly great.

This may actually lead to a weaker coalition Government, and that may have serious consequences for the federation as a whole. As Professor Lieven mentioned, there would need to be a delicate balance maintained between the federal Government and the provincial governments. What that means is that Britain can play a role of bolstering democracy and the democratic transition taking place, because it has the institutions from which many Pakistanis can pick up-

Q18 Chris White: Just briefly, you both mentioned Imran Khan a couple of times. Do you think he, personally, is going to change the dynamic between the Government and the people, and make the Government more responsive to the people?

Omar Waraich: Again, as Professor Lieven has said, there are real inertial issues here. This is a state in which a lot of the problems are chronic, and have been there for a long time. If you look at tax collection, it is not as if the paltry 8% GDP to tax ratio has suddenly become the case overnight. This has been the case throughout history, and that has to do with the nature of the state and the way in which certain parts of the state have been privileged at the cost of others.

Imran’s rhetoric may suggest that he is very keen to deliver these changes, and I have no reason to doubt his intentions. He has been ahead of the curve on a number of things. He made corruption a central plank of his platform as far back as 1996, for example, and other issues he supports do resonate. However, what it means is that-short of miraculously having a two-thirds majority and somehow having the political will and the clout to take on various institutions, stakeholders and series of elites-you are not going to magically see a dramatic change overnight. That is just the realistic view.

Chair: We are going to have to move faster, I think, because we will never get to the end of our agenda.

Q19 Hugh Bayley: It seems to me that if there was the will from the Government, energy subsidies could be cut, and education and health spending, and the effectiveness of health spending, could be improved. That does not happen, so we have health and education programmes as the core of our DFID gift to Pakistan. You might make the argument that we are plugging gaps, rather than helping Pakistan strategically to move to a better place.

Of the people I spoke to, political and military as well as from NGOs and international agencies, some seemed to me to be modernisers. They look at India, and they are afraid of being left behind economically. They look at Afghanistan, and they see the security risks. They want a different approach, and, above all, want macroeconomic success. You also get some people who are locked in the old ways: the West is an enemy, India is an enemy, and Afghanistan is a pawn. It seems that if our development effort is to achieve anything, it ought to be directed at trying to strengthen the position of modernisers and the reformers, and marginalising the old guard, particularly the military old guard.

Does it make sense, if that is our goal, to make health and education our priorities? Shouldn’t we be putting much more money into macroeconomic reform, security sector reform and democratic oversight of the armed forces, or programmes of that nature? Given that 1.5% of GNP comes from aid altogether-I do not know what proportion of that is UK aid, perhaps 0.25% or 0.5%-surely that is not going to make the big difference to education, but that amount of money might make a difference to the battle going on in Pakistan between reformers and modernisers and the old guard who are stuck in the old ways.

Professor Lieven: First of all, we have been notoriously bad in many countries around the world at getting involved in politics in this detailed way, and picking goodies and baddies. We have made terrible mistakes in Afghanistan in identifying allies who turned out not to be allies at all. What you are talking about is, in effect, interference in Pakistan’s political system. You are talking about backing certain forces against others.

Hugh Bayley: I am talking about politics and economics, but yes.

Professor Lieven: That is highly, highly controversial, especially if it becomes tied up with the whole question of attitudes to the West and to America. From that point of view, Imran Khan is perhaps a progressive in domestic terms and is certainly a very strong populist, but he has been extremely anti-western in geopolitical terms. The Sharifs have, in part, an economic reformist agenda, as they have in the past.

Omar Waraich: It is skewed in favour of the middle classes.

Professor Lieven: Yes, it is skewed in favour of the middle classes, and of course the Sharifs also come from what, at least rhetorically, is a moderate Islamist party. I must say that I would say no, on that score. I would say that education, especially women’s education, is critical to the long-term development of the country. Education, especially women’s education, is critical to building up a middle class that is not only capable of articulating its interests, but also has some feeling of responsibility to the masses.

Q20 Hugh Bayley: Can I put my question a different way, then? You are arguing that it is important to use what leverage we have through aid to strengthen the education system. How can the current budget decisions made by the Government to spend a lot of money on energy subsidies and little on education be turned around?

Professor Lieven: The problem about pressure from below, and energy subsidies-whether in Pakistan, in Nigeria or in many other countries-is that pressure from the masses is not always a good thing in objective terms. In a dysfunctional system, you get a situation where you are trying to give people cheap energy to compensate for all the other things that you are not giving them.

Hugh Bayley: But you have to make choices.

Professor Lieven: The first thing is to raise more money in the first place, and then, in the second place, to spend less of it on guns.

Omar Waraich: There is a very good reason why money is being spent on energy, and that is because in some of the most productive parts of Pakistan they have energy outages of up to 20 hours a day. That is an intolerable situation, because it leads to things like shaving up to 4% off growth. If you are able to plug that gap, Pakistan could operate with full energy. There is no shortage of capacity: it is just the circular debt problem, where people are not paying each other down the line.

Q21 Hugh Bayley: Should that come at the expense of education?

Omar Waraich: No. Ideally, one would be able to do both things. Given that the amount of money DFID is giving to Pakistan is not a vast amount, as we have acknowledged, but is very significant, plugging the gaps can sometimes be the best thing to do across a number of different things. This means that you are investing in projects that Pakistanis have created and have ownership of. The point of a donor is not to stay there for ever and ever, sustaining projects by themselves, but rather to get things going so you can actually pull away afterwards and move on to more pressing issues. Plugging the gaps is not necessarily a bad approach.

In terms of your other question, it is highly controversial to pick certain allies, particularly in Pakistan. The Americans, for example, adopted the Kerry­Lugar Bill, which was a tripling of non-military aid to Pakistan. However, because it included certain conditions that had some bearing on the military, it triggered a very ferocious reaction from the military. This was behind some of the many interventions the military has made throughout this democratic period of the last five years, which actually ended up hurting the civilians more. These things have to be approached very sensitively, and it is not always advisable to do so.

However, Britain can make a commitment to civilian democracy and the democratic process, which is something that Britain has not historically done. In fact, we have not found, in the past, a military dictator that we did not like. Therefore, when we talk about saying to Pakistan, "You can have access to EU markets in return for progress on democracy and human rights," that means that Britain has to do those things as well. I can tell you that the point at which Britain’s standing in Pakistan was at its absolute nadir in recent history was when there was a popular movement to overthrow the dictatorship of Pervez Musharraf and in support of the rule of law, backed by the political parties, civil society and the media. This was a point at which Britain was interfering in a way intended to prop up Pervez Musharraf.

This leads to a lot of damage, and, similarly, we have seen this where the attitude of the West towards aid to Pakistan has been to shower military regimes with great sums, and subsequently choke that flow when civilian Governments have come in. This was most dramatically the case when the Ayub Government was given $1 billion by the Americans back in 1955 for signing up to the Baghdad Pact. Subsequently, there has been the Pressler Amendment that says "We shall monitor progress in terms of Pakistan’s nuclear programme", which was ignored during Zia’s time but, when it came to the civilians, that aid was then choked off. This creates a lot of bitter resentment in Pakistan, when the West is seen to favour the military elites at the cost of the people.

Q22 Jeremy Lefroy: Professor Lieven, you referred to the need to collect more taxes. Currently it is about 10%, compared to an average of 15% to 16% in many developing countries, including, I think, India. The UK has had considerable success in working together with Governments in a number of countries and raising tax take, most recently a country like Burundi. Do you see that there is a place for the UK to help in this in Pakistan? Or is it, as you have tended to indicate in some of your earlier responses, pretty much impossible unless there is wholesale reform? In which case, what chance do you see of that political reform being implemented and resulting in an increase in that tax take, which is so vital?

Professor Lieven: Britain is only one player here. The international financial institutions have, year upon year, brought pressure on Pakistani Governments to do more about this, and there have been certain small improvements, such as those in last year’s budget, although that did have to be passed by presidential decree. He could not get it through Parliament, because of the obstruction, once again, of the elites. All we can do is bring our influence to bear, together with that of the other international institutions working in this field. We can help the Pakistanis, or, at least, improve the institutions concerned with revenue collection, just as we can advise the Pakistanis on how to improve the institutions concerned with energy strategy.

Q23 Jeremy Lefroy: Given that Pakistan is facing its own fiscal cliff this coming year, do you think the IMF should play hardball and get these kinds of reforms?

Anatol Lieven: Yes. I am a very strong believer in two things. One is, whenever possible, encouraging trade, not aid. If we want to strengthen middle classes of a modern kind in Pakistan, by far the best thing we can do-this was the best aspect of American help to parts of Asia during the Cold War-is not financial aid; it is opening markets to their products. Unfortunately of course, in present circumstances that is not easy, and in the US it seems to be impossible. That is actually the most important thing the West can do to help Pakistan. Secondly, our aid should be targeted. I am not a believer in giving money just to prop up and for budgetary support. That is precisely a chance for Pakistan not to change. We have to recognise, again, that both the money we are giving and our influence are limited. We cannot force Pakistan to change. The forces on the other side in Pakistan are very powerful indeed. This will, I fear, change slowly once again.

Q24 Chair: I have a couple of quick questions on the military which you already mentioned. How do the military feel about aid being given to civilian Governments? You indicated they did rather well at getting it when it was military Governments. Are they comfortable with it going to civilian Governments? Given the huge proneness to disaster that Pakistan seems perpetually to be in, isn’t it sensible for the military to be the main respondent to that? They seem to be better at it than anybody else.

Omar Waraich: They seem to be better at it in certain cases because they husband the bulk of resources in terms of these things, and in some ways it is their job. For example, when we saw the floods, the reason why the army was able to respond quickly-but only in certain parts of the country, and in particular the north-west province of Khyber Pakhtunkhwa-is because it had the helicopters and because it had taken control of things like the National Disaster Management Authority. That was already being run by the military, so it was their job to do that.

How does the military respond to civilian aid? They do not have a problem with it, as long as it does not interfere within their sphere. There is no danger of the military siphoning off any of this aid if it is targeted at particular civilian projects. It would be concerned if this aid were conditional on anything that interferes with, particularly, military promotions or the nuclear programme. All these things have a very neuralgic resonance with the military and they are capable of reacting very fiercely to this.

Q25 Chair: If it is focused on health or education then they do not have a problem with this.

Omar Waraich: No, they do not. The way they structure the state and the budget means that it has not got much in the first place, so it is probably welcome in terms of these things. They do not want to see health and education suffer; it is just that they privilege certain things over health and education. But, in the long term, this can only change if civilian Governments and civilian institutions are built up, are made transparent, are robust enough, enjoy popular standing and authority and can marshal the resources necessary to be able to deliver in this situation.

Anatol Lieven: And are responsive to the needs of the masses as opposed to the needs of the elites. There are a number of examples-even India in many ways is an example- of countries with the democratic institutions but where the political leadership and the parties do not respond to the needs of the masses because they are concerned only with themselves and the elites they represent.

Intelligent members of the military are becoming more and more worried about India’s steep economic growth compared to Pakistan. That is inclining some of them to think more seriously about what Pakistan needs to do to develop. On disaster relief, I’m afraid, as you have said, they are the guys with the helicopters. Very large-scale disaster relief is the business of the military in most countries around the world, even in the United States as we have seen on occasions. So I do not think that is something which can or should change.

Q26 Hugh Bayley: Given that Pakistan is a middle-income country and our development law requires us to help poor people in poor countries, why are we involved in Pakistan? If it wasn’t for our security concerns, would it be possible for DFID to make a case for a basic human needs, health and education development programme? Is it the truth that we are there because they are a nuclear power in an unstable region, with British troops on the border who are being killed by terrorists who cross and re-cross the border to Pakistan?

Anatol Lieven: There are two things. First of all, irrespective of the comparative position with other countries and our security needs, there are a lot of very poor people in Pakistan who have a desperate need for a whole range of things they are not getting.

Q27 Hugh Bayley: The difference between a middle-income country and a poor country is that, if there was a will, the middle class in Pakistan could find money for health and education for the poor. In Mozambique, there is no middle-income group.

Anatol Lieven: That brings me to the second thing. I worked in Washington for eight years and it is completely accepted in the United States that US aid to various countries will, in part, be influenced by lobbies among American citizens who come from particular countries.

First, we have a very large and steeply growing Pakistani population in this country, which has a legitimate right to ask that we should give help to Pakistan, as to Bangladesh and other places. Secondly, as I tried to stress, we have to face the fact that sections of the population here are a potential security threat to Britain. They have been in recent years, as we have seen, and they will continue to be in future. The attitude of British voters has been mentioned. From that point of view, I do not see that it is inherently immoral, let alone illegal, for British aid to go to countries that are of great importance to the security of our citizens in this country. That seems entirely legitimate to me.

Q28 Hugh Bayley: Could ask I you both what you think the consequence would be if DFID was not in Pakistan?

Anatol Lieven: British influence would go down very sharply. It would be seen as a slap in the face.

Omar Waraich: The British can play more of an influential role than any of the other western countries in Pakistan. The Americans may have most of the power, but given the levels of anti-Americanism that exist in Pakistan that can often be neutralised. A couple of drone strikes that are seen to kill large numbers of innocent civilians can, at a stroke, do away with a lot of good that US aid programmes can do. The security concerns that you mention that are directly relevant to Britain are obviously important. There are other security concerns as well. I think it is in the world’s interest that the sub-continent remains a peaceful place. Any influence that can be brought to bear in bringing Pakistan and India together is for everyone’s good.

Q29 Hugh Bayley: This brings me back to my earlier questions. You are saying DFID ought to be there because otherwise we will lose influence and we will therefore lose leverage over a range of security issues-the Pakistani diaspora, the tiny minority in the UK who provide a security threat, the nuclear question and so on. But if those are our goals, then a humanitarian and education programme is not addressing those concerns. How do you think DFID should define success in Pakistan?

Anatol Lieven: Ask me in 50 years. No, that is something of an exaggeration. But ask me in a reasonable period down the line when programmes have had the chance really to make a difference. One can look at the roots of radicalism in Pakistan, which have a direct impact on this country, remember-you talked about a tiny minority, and it is also a small minority in Pakistan that is actively involved in militancy. But in certain circumstances, they can gain the sympathy of much larger populations, above all when it comes to anti-American and nationalist feeling. Radicalism in Pakistan, therefore, has a direct impact on the situation in this country. From that point of view, improving education, especially for women, can only be a good thing. This is both because it does have a knock-on effect for economic development in general, which will hopefully reduce the economic roots of radicalism, and also because it hopefully develops over time broader middle classes that are concerned with the kind of concrete issues of development that we have been talking about and not with ideas of Islamic resistance and hatred for the West, which unfortunately have dominated a large part of the discourse in Pakistan up to now.

Q30 Chris White: A lot of your answers today, forgive me if I am wrong, have been about how we should be very careful about our influence in Pakistan. Your answer to Mr Bayley’s question was that we would lose our influence in Pakistan. Have I misunderstood you?

Anatol Lieven: It is a question of how you use your influence. Influence must clearly be employed in a smart, effective and discreet way. Charging into a place, telling people what to do and even how to vote and ordering people to change their institutions would not be a good idea, even if we were giving 100 times more money to Pakistan. Of course, we want influence, but for the influence to be effective it has to be intelligently used. Whatever influence we do have would, I think you will agree, diminish radically if we simply pulled the plug on their aid.

Omar Waraich: In Pakistan, there is a series of changes taking place, and one of them is that there is a keen sense that people would not like to be dependent on foreign aid in the long term. Currently, we are passing through a very crucial transition period in terms of things that I outlined earlier, in the transition into democracy. We are seeing social changes take place as well. The status of it being a middle-income country is less relevant right now because the mechanisms are not in place. That middle-income section is not particularly strong, big or wealthy in the first place. The structures and the institutions are not in place for any new wealth to be distributed effectively and address concerns like health and education. Where DFID can play a role is in terms of not just maintaining influence in a positive way in Pakistan, but also taking the vast experience that Britain has in dealing with these issues and guiding Pakistan towards a better and more prosperous future.

Chair: Thank you both very much for that. I am sorry that we have run out of time. We very much appreciate the fact that you are both people who have considerable impact and insight in Pakistan and we thank you very much for coming along and sharing that with us.

Examination of Witnesses

Witnesses: James Fennell MBE, Principal Consultant, theIDLgroup, and Michael Green, economist, author and development commentator, gave evidence.

Q31 Chair: Good morning gentlemen, and thank you for coming in and giving us the benefit of your experience. I think you have both been in for the previous session so you will have something of the flavour for it. Can I ask you for the record to introduce yourselves?

Michael Green: Good morning. My name is Michael Green. I am an economist and author. I worked at DFID for 12 years as an economic advisor, programme manager and head of communications. My last position in government was on secondment to the Home Office thinking about the relationship between development and preventing violent extremism, where I had a particular interest in Pakistan. For the last four years, I have been writing about new actors in the aid business, the emergence of private actors and the way the aid landscape is changing.

James Fennell: I am James Fennell. I work for a consultancy company called theIDLgroup. We were commissioned by DFID to put together the country governance and conflict analysis. I also previously worked for DFID as a conflict advisor in Afghanistan and also in West Africa. Prior to that, I was head of emergencies for a humanitarian charity.

Q32 Chair: You have heard something of the line of questioning we have had with the previous witnesses. Interestingly, they made a number of references to India. We are running down our programme in India but we are expanding it in Pakistan, even though they are both middle-income countries. The point was made to us that the state of Bihar is a much poorer place than Pakistan is. Why do you think the UK Government has taken the decision to cut the aid to India and boost it to Pakistan? Do you think it is the right thing to do?

Michael Green: Let’s look at some numbers. In 2011, total official development assistance to Pakistan was about 1.7% of national income-that’s all official donors. Total aid to India in 2011 was 0.2% of national income. So there is a big disparity there in the amount of aid already being given, and that trend, if aid to Pakistan increases over the coming years and the aid to India declines, is going to widen ever further. India’s national income is about $3,500 per year per capita; Pakistan’s is about $2,500, based on purchasing power parity. So Pakistan is a bit poorer than India but is much more aided. The other way to look at this question is to note that there is quite a big gap between India and Pakistan in terms of human development. In the Human Development Index, Pakistan is a low human development country. Aid makes up 8% to 9% of national income in low human development countries. Relative to those peers, Pakistan is under-aided. You also have to look at prospects for the future. There are some issues for the Indian economy but growth looks like a reasonable prospect over the medium term, whereas Pakistan’s economic future looks very wobbly. Growth has slowed since 2008 and it is pretty hard to see a prospect of more than 3% growth over the next few years. That is going to be a real problem in terms of generating resources. So there is a case to treat Pakistan very differently to India and for saying there are particular needs that Pakistan faces, especially looking forward, that would justify an increase in the aid budget.

The other thing you need to look at, if you are thinking about the increase in the DFID programme, is its relationship to other donors. If you look at aid to Pakistan over the last 10 years, it has been enormously volatile. It has swung around through highs and lows, largely because of US funding. US funding, as Professor Lieven was saying, is very short-term. Even if we are seeing a glut of aid at one moment, we may see a famine of aid the next year. There is a point that UK aid can be more stable and predictable than perhaps other donors can be.

James Fennell: Institutions in India as compared to institutions in Pakistan are much more capable at the moment of delivering development and addressing poverty. Whether they do so or not is another issue. In Pakistan, there is also a confluence of security issues that are not just national security issues for the UK but security issues for the region. Pakistan is the Northern Ireland of south Asia, in the sense that if Pakistan does not succeed politically or in terms of stability as well as in terms of development, then that will handicap both India and the wider region-the belt from Iran to Burma. Pakistan needs help. The structure of how that help is put together and whether it is dependent entirely on financial transfers is debatable. Nevertheless, Pakistan does need help, not just in the context of the poor people inside Pakistan but in the context of poor people across the region.

Q33 Mr McCann: Good morning, gentlemen. Can I ask some questions about the hard cash? Do you think that DFID can spend £400 million in Pakistan? Do you think the increase in budget is driven by development needs or by dint of the fact that the budget is increasing by such a huge amount of money?

Michael Green: I was looking at the figures for UK aid to Pakistan, and although they have not been as volatile as US aid, there have been some very big changes. If you look at total UK aid in 2000-this is DFID and other ODA-it is $24 million; these are figures from the OECD, so they are in dollars. It then jumps to $112 million in 2003, slumps to $63 million in 2005 and jumps to $200 million in 2006. So there is a lot of volatility there, even in the UK aid programme. There is a big challenge for DFID in managing this expansion.

In terms of the driver, there is a robust case to say that there is a development need in Pakistan; there is an urgency; there is a window of opportunity; Pakistan does need our assistance now and that does justify this budget increase. There are questions, though, about how that aid programme is being delivered. A lot of heroic assumptions have been made about capacity to deliver through Government. I think there is a significant risk of over-promising and under-delivering if many of the substantial risks come home to roost.

James Fennell: I think DFID is trying to see if it is feasible to create a step change, in one generational shift, in service delivery in Pakistan, partly on the understanding that getting education and health right-education in particular-is the way to expand the middle classes, and is the way to political enfranchisement. It is also because those resources are there; they are available because of the increase in the aid budget to allow them to try that. It is high-risk, and those risks are being taken because there is a confluence between security and development needs. Both are critical. Pakistan is a critical foreign policy issue as well as a critical development issue. I think it is very brave.

Mr McCann: Is that in civil service speak, "very brave"?

James Fennell: They will need to be as politically brave as they are financially brave to get the leverage from this level of investment. They need to be tough with Pakistan in return for this.

Q34 Mr McCann: Do you think, in terms of the number of staff that DFID has and the contractors it employs, that it has in effect set up a parallel system to the Government of Pakistan?

James Fennell: I think inevitably there will be some element of that, although the investment in education in Pakistan is minimal. Within Pakistan, you have states within states. The ruling elite, whether it is the military elite or the bureaucratic elite, do not use the education system. It is sort of run as a colonial project in those outland areas where "we don’t live". In that sense, the education system is pretty moribund anyway, and very underfunded. So, a parallel system? There is not much of a system anyway. If they can use that to help create a system, and more importantly a generation that demands a system, then that would be a success.

Q35 Mr McCann: When we visited, it was quite clear that there is a huge amount of talent in Pakistan. We visited the NDMA and met some people who, in terms of a level of ability and knowledge to plan, were extraordinary, of the highest possible quality. Why do you think, when we have that quality within Pakistan, Pakistan’s federal and provincial governments need consultants paid for by the UK taxpayer to advise them?

James Fennell: I am a consultant; do you want me to answer that honestly?

Mr McCann: Indeed. Make a stab at the honesty part.

James Fennell: Partly, it is to do with making sure that our money is looked after. One would have to use a consultancy, full stop, whether you use one that is Pakistani based or an international organisation. There are two issues. There are extremely well educated and competent people in Pakistan, but there are very few from the classes that are going to be helped. Access to education has been so limited that there aren’t quite so many people as you might imagine who have those skills. Secondly, in order to look after DFID’s money, you probably need an organisation that is at least bound by the law in the United Kingdom to make sure the money is spent correctly. Lastly, it is critical that those consultancy organisations employ largely Pakistanis. If by consultants you mean bring in lots of middle class people from western Europe, then I agree with you that they should not. They should employ as many Pakistanis as possible.

Michael Green: I think the way the education programme is structured in trying to use state systems but also to guarantee results means this parallel state problem is inevitable. There is a real challenge, given the security constraints on DFID’s staff’s ability to travel, in actually making sure results are absolutely genuine. You have got to invest consultant time in trying to find out what is going on and making sure the money is being used widely. That is a cost and it does create some parallel structures.

Q36 Mr McCann: How far is the UK aid programme driven by security? How would you measure it?

James Fennell: Certainly in south Asia it is driven by security, because there has been an energy within Government to work across Government on security issues. DFID, in order to secure its institutional survival-remember DFID is in an uncomfortable position being the only Ministry that has not had to cut budgets-needs to be seen to be playing with broader crossgovernmental agendas. It is both making itself relevant and addressing its core mandate.

Michael Green: Look at the focus of the programme on education. Education has got great benefits in terms of direct human development of the individuals; spin-off benefits in terms of health; economic spin-off benefits; and also on top of that some positive externalities such as perhaps an impact on radicalisation and extremism, as Professor Lieven said. I would not say it is driving the priorities, but you could report back on the investment in education in particular and say that it would be in a sense helping on the prevention side.

Q37 Mr McCann: In terms of the rise to £400 million plus, will that money make any difference whatsoever in programmes in health and education if the government of Pakistan is not serious itself about making some really important reforms?

Michael Green: We have to look at the economic numbers. Tax revenue is about 10% of national income. Last year, the Government ran a deficit of 8.5% of national income. There is talk about cutting that to 4-5% this year. That is not going to happen; there may be a 6% deficit. The IMF wants further cuts. That means slow growth and attempts to cut the deficit through austerity. The amount of money available is going to be very squeezed over the coming years. We are therefore going to have pressure on keeping the Pakistani Government to its commitments on funding things like education. The question then comes: are those political priorities? That is a very difficult conversation we are going to have around making sure domestic resources are being leveraged to the areas that DFID cares about.

James Fennell: Successive Pakistani Governments have been experts at making Faustian bargains, whether with Islamist elements or the United States or ourselves. In this case, they have to make a Faustian bargain with us in collaboration with the other donors to make those reforms in return for this investment. The issue for me is not whether this investment will work or whether the Government is going to have the will to do it; it is how do we use this investment to help create the will for reform? Ultimately, without that reform, the political class-i.e. the elite in Pakistan-are putting themselves at risk, so there is a kind of dialogue around their own survival. The time is perhaps right for that.

Q38 Fiona O'Donnell: I wanted to follow up on that. In your responses, you both frequently refer to risks. You have not, however, spelled out what those risks are. Are they economic? Are they social? Are they security? Are they all three?

Michael Green: They are all three. First, they are economic. There is a very difficult period ahead for the Pakistani economy. There are political risks flowing from the elections and general political commitment. James can speak more about this, but there are general security issues for Pakistan going forward. There is a very complex range of risks.

I was looking at the World Bank’s Country Assistance Strategy, which is produced annually. One of the things it says there is about lessons learned from the past. You must have a programme that is flexible to manage these risks so you can change patterns. It also must be a programme that is realistic and not overambitious. Those are the key recommendations the World Bank had in terms of how to programme in such a risky environment.

Q39 Fiona O'Donnell: Do you think the DFID programme is flexible enough?

Michael Green: I would be concerned that it is not flexible enough and that it is overambitious.

Q40 Pauline Latham: We have heard earlier today, and we know, that corruption at every level in Pakistan is rife. How do you think DFID can ever be sure that UK aid is being spent effectively and getting to the people who really need it? Whilst we were there we went to see a lady health worker’s scheme and we even heard there about corruption in that, and that is deemed to be a success. What on earth can we do about it?

Michael Green: There are two things here. One is that if you are using public systems, you must put in place absolutely robust monitoring mechanisms. Again, that is a key finding from the World Bank’s lessons learned. You have to have timely and effective monitoring and evaluation. That does have resource implications in terms of DFID’s capacity to do that monitoring and not solely rely on Government systems.

The second area, which I think is underdeveloped in DFID’s programmes, is whether you can find ways to do more working outside the state system. Are there other forms of delivery-particularly of education-where the British taxpayer could get better value for money and better confidence in value for money in delivering real outcomes?

James Fennell: We need to look at corruption not as a societal dysfunction, but as being there for a reason. In Pakistan, its reason is to bind people into a political system, which is essentially unequal. There is a very small elite; they need to keep the majority of the population under control and make sure they vote for them.

If you look at where the most corrupt institutions are, one is the police; I think they are second in terms of least transparency. It is the land tax administration, the guys who tax your harvest, and the income tax administration that have shot up to the highest places most recently. These are the interfaces with people. These are the institutions that ordinary people-those not part of the elite-have to deal with. The reason they are allowed to be corrupt is that they need to be biddable in order to make sure that people vote for the right people, for the socalled feudals in southern Punjab and northern Sindh, for example.

Corruption, for me, is part of the political problem in Pakistan itself. We are lucky, in a way, that education is one of the least corrupt institutions. People suggest that the military is corrupt. The military’s corruption is slightly different: it just occupies most of the economy. In that sense, for me, one part of the reform process-the process of, if you like, emancipating people so that they can vote-is educating them so that they are able to make better decisions, but the other part of it is also releasing them from those corrupt institutions. In a sense, because there is corruption, there is a reason why we should be working with those institutions, not avoiding them.

Q41 Pauline Latham: Do you think we should be putting controls on their Government by making the aid that we give conditional on it not being corrupt and it not going missing?

James Fennell: Yes, absolutely.

Q42 Pauline Latham: We were in Derby taking evidence last week and we were told there were doctors being paid in the equivalent of NHS hospitals, state hospitals, but they never go there. They go and earn another salary in a private hospital.

James Fennell: They do, yes.

Pauline Latham: We cannot put money into health and allow that to happen.

James Fennell: No. There is a system in place. The majority of people who have power and influence do not use the social services. They do not use the health service and the education system, which are provided by the state. They do not use the tax administration, since they do not pay any taxes. Those institutions are not part of their lives. Those institutions have value only in bringing people into line to support them.

In order to bring people into line, they cannot work perfectly. They have to be biddable. The Pakistani elite are masters at manipulating these institutions for their own benefit. The work that we do with those institutions has to be conditional and it also has to have this political element of "We are doing this; therefore, we would wish for you to do that." In terms of disbursing funds and so on, it would be conditional on meeting those targets.

Michael Green: Could I just sound a warning on conditionality? It can be seen as being this great solution, but a lot of conditionality is meaningless. It is things that do not really matter, or it is not measurable, or-as we have found in some other countries, actually-it is very hard to respond to if a condition is broken. If we are talking about conditionality, we have to be more granular. What form will that conditionality take? Is it measurable, is it implementable and can we act on that basis? If that conditionality is triggered, what is the response? Is it just turning off the tap or is it switching to something else and having a plan B scenario? I think we should unpack the conditionality point a little more.

James Fennell: I am talking more about political conditionality. It is very hard to measure corruption and it is very easy to hide it, even if you know it is there. The political conditionality is around enacting reforms of those key institutions with which we are engaging. That makes sense. Why are we making this investment? We are making this investment, ultimately, not only to improve poverty levels but to create a context in which growth can happen for all people in Pakistan.

We do need to make our investment conditional. One of the key issues that came out of our analysis was that Pakistan is very good at enacting legislation but it is not very good at implementing it. It becomes discretionary, because it falls into the military/bureaucratic power bloc. Some they like; some they do not. Some they implement; some they do not. You can make conditionality around the implementation of legislation.

Q43 Fiona O'Donnell: Pauline already pressed the previous witnesses quite a bit on the Daily Mail headlines about the middle classes not paying their taxes in Pakistan and that working-class people here are. I wonder if I could ask about the politicians. We have seen recent exposure of them not paying their taxes. Do you think there is any prospect of change? That is now in the public domain. Could that change the culture in terms of taxation compliance in Pakistan?

James Fennell: I do not think anybody pays their taxes if they can get away with it. We have seen that with all of these issues with multinationals recently. There was a bargain made when the British occupied that part of northwest India. The bargain was, "We are occupying this part of north-west India for security reasons, not for economic reasons." Unlike the United Provinces-Uttar Pradesh in India now-they said, "We will not raise taxes on you, but we want your loyalty." That bargain has been held as the bargain with the state by the landowners.

During the negotiations over the creation of Pakistan, the north-west, Punjab and Sindh, did not want to join. They were more unionist. The way they were persuaded by the AllIndia Muslim League was that they could keep their privileges of not paying taxes. There is a history. It is kind of a Magna Carta, if you like. They are in a position where they have demanded they do not have to pay a king and they have got away with it. It is like the UK and the EU. Why on earth should we give up our privilege? That was our deal to join this federation. Obviously, they have to because, apart from anything, Pakistan is in a permanent state of default, because it cannot raise enough taxes to pay for even the meagre institutions it provides.

The elephant in the room in all of the negotiations between aid providers, foreign Governments and Pakistan is about how you make these guys pay their taxes. Bhutto had a go. Bhutto senior had a go. It did not really work. In fact, it was all smoke and mirrors, because he gave with one hand and took away with the other.

However, in my view, the survival of the elite is reaching a crucial moment. Economic growth, which has not really been real in Pakistan for many generations, is real. It is flattening out now-partly because of not educating the population. However, there is a kind of 1830 scenario, from a UK perspective. There is an industrialising, rural society. There are large numbers of people moving to cities. There is more education. Those people are becoming more politically aware, but not politically engaged in terms of the existing system, which is built around a rural, oligarchic system where you make your feudals vote for you by throwing the head of the family in jail and paying him off come election day.

What is happening is that those people are not turning to mainstream politics. They cannot vote for other forms of politics right now, because of these systems of patronage. However, what they are doing is supporting things like MQM in Karachi and things like Jamaat-e-Islami. Those parties have been very clever. For example, the education system is pretty much controlled by Jamaat and has been since about 1980. What you are getting is a politicised urban population who have no space to be political within this system. It is not designed to give them any opportunity. That is very dangerous.

You can go the way of Russia in 1905, or you can go the evolutionary path of the UK. So there are some good incentives for the ruling classes to begin to give up some of these privileges in a sort of selfserving way, not because they are altruistic but because they need to survive and not end up like Assad in Syria or wherever. From that point of view, I think this is the time to use that leverage. I think our aid programme gives us an argument to make.

Q44 Fiona O'Donnell: What we heard when we were there was that it is not just about people being able to get away with not paying their taxes, but they did not have the confidence that if they did, the money would reach the people it was intended to. There was a strong culture of private philanthropy. I wondered to what extent that might compensate.

Michael Green: The numbers on private giving in Pakistan are very wobbly. The best international comparison says about 1.5% of national income goes into philanthropy, which is about double the level of the UK. I think it is probably larger than that. In some ways, if you look at human development indicators in Pakistan, especially around hunger, in a sense they are a lot better because of that private charitable provision.

I think there is another piece of the jigsaw here. Private giving is 1.5% of GDP, but remittances are 5.4% of GDP. That includes a whole range of different things; it is not equivalent to aid, but there is a whole opportunity there. How can remittances be harnessed more effectively for development? The kind of work that has happened in Mexico with the hometown development associations can be a way of saying to the diaspora, "Actually, you get more bang for your buck if you work through these structures to help and get some collective action." There is a lot of potential there for DFID to see this as a pool of development financing that is not official aid. It probably comes with some other benefits in terms of engaging the diaspora in Pakistan’s development. It could be used in very important ways.

Q45 Chair: We got a very positive appeal from the representatives of the diaspora we met last week in Derby, many of whom are actively engaged in projects-if you want to call it that-in Pakistan, and who asked why they cannot partner with DFID. They said, "We know who the rogues are and we know who the people you can work with are, probably better than DFID does."

Michael Green: DFID can actually bring something to that in terms of finding the right kind of partners. I would say that Pakistan is unaided by global, big philanthropy. I speak to a lot of American foundations and their normal line is the title of Professor Lieven’s book: it is too hard, a hard country. DFID could play a role as a pioneer in leveraging some of that other private money. Match funding is a great way to leverage more donations.

Q46 Chair: That is an interesting line to explore. Mr Fennell, you were coauthor of the Country Governance Analysis last year. You have articulated some of this already, but you felt that things are changing and there is potential. To what extent do you think DFID has followed your analysis and to what extent have they not? In other words, what would you like them to do that they are not doing?

James Fennell: I think they have taken it seriously, which is good. It took a bit of time for them to take it seriously, partly because of the high level of investment and its implications. The big issues that I raised-around electoral reform, taxation and the relationship with India-will appear to be too big for the aid programme to address. I am concerned when they get interpreted as technical electoral reform-getting involved in the Electoral Commission of Pakistan and so on-because that is really not what I mean.

As I said, it is more about emancipating the vote than it is about improving the technical system of voting. It is more about the institutions: who controls the institutions that have power over people’s lives? Is it the very same people who are going to be elected? Should there be a separation of powers? It is that sort of thing.

I would like them to do more. In defence of DFID in Pakistan, they were pretty set on this course when this analysis was done. They had already agreed to invest large amounts in voice and accountability, through civil society and in education. It is a supertanker, but I hope we will have some influence on which way it points in the future.

Q47 Chair: While we were there, the Foreign Minister met with the Foreign Minister of Afghanistan and they signed some kind of agreement, which I interpreted as Pakistan basically saying, "We will work with whatever Government there is in Afghanistan rather than try to tell Afghanistan what Government it should have." At the same time, they had also signed a most favoured nation agreement with India, which, again, appeared to be saying, "Yes, we have issues with all kinds of things, but we actually need to trade and invest with each other."

It is coincidental that these have happened in the last two or three weeks. How significant do you think they are? If you bring it back to the UK aid programme, what is the role that DFID can play in those kind of developments to make them, if you like, meet the needs of Pakistan?

James Fennell: To begin with Afghanistan, Afghanistan is of critical importance to Pakistan’s foreign policy. Pakistani foreign policy for years has been that you are able to retreat back into Afghanistan, but also its influence over the Taliban and over radical Islam-through ISI and so on-means that certainly within parts of the military establishment there is an understanding, in a sense, that they have a shared future and some leverage over those folks. They are also afraid of Iran, because it is a powerful Shia state nearby.

Pakistan will want to have a friendly state, a state in which it has influence, in Afghanistan. That can be good and it can be bad. That is a very important reason from a nonaid perspective for maintaining our relationship and having influence over Pakistan.

I think you are right about the changing relationship with India. India’s economic success means that there is no longer any idea that Pakistan could confront India conventionally. Even the use of asymmetric warfare, as took place in the 1990s and recently, is going off the boil because of this requirement, particularly amongst the political elite in Pakistan, not to lose all of its friends globally.

It is very interesting, listening to the previous panel, to hear that this will be the very first transition of civilian rule. No civilian Administration has lasted the course; it has either been overthrown internally or by the military. That, for me, is political progress. It may not appear as progress, because the political system is still so marginal to the lives of those people. By the way, that is another reason why philanthropy is so much more important, if you like. Nevertheless, it is progress. It is something to lean on.

Q48 Chair: The real issue is DFID’s role in this. These are things that Pakistan is doing for itself. We have had that indication that we have a better relationship than, say, the Americans do. What can we do that is not interference and is positive? What is the scale of the relationship that can help Pakistan improve its governance, its electoral accountability and its tax base, which is not just telling them what to do but it is actually working with them?

Michael Green: I have maybe one comment. There is a danger. One of the risks that we have is the DFID resource curse. DFID has to spend all of its time managing a very large amount of money, rather than thinking about some of these wider issues around trade relations and diplomatic relations. Understanding the development story in some of these wider policy debates will be crucial. Making sure that DFID is pushing those aspects of development, not just aid delivery, will be crucial. DFID has a very fine balance to strike in terms of being focused on the needs of the poor through things like the education and health programmes, but also driving long-term reforms that are going to increase economic growth and provide the resources for development. There is a balance to strike. There is a danger in the immediate focus on human development needs; there is a distraction from some of these structural issues.

James Fennell: I think that is true. I very much agree with you, Michael. Since 1997 and the founding of DFID, because DFID has had such greater resources, it has become much more of a bank. It has been making investment decisions and providing technical support to ensure those investments pay off, whereas prior to that, it was very much more interested in the broader policy.

For me, these big investments create a space in which you can have a meaningful policy debate. It is not one or the other; it is both. This is particularly the case in Pakistan, because there is this inertia, which is natural. The incentives are simply not there for reform. It is not in the day­to­day interests of individuals to change these structures, yet they are damaging Pakistan and its relationships.

For me, policy engagement has to be a critical part of this investment. As Michael said, DFID have to create the space in their programme and in their office so that they are not just bankers all day long.

Chair: What we did see was that the High Commission’s operation and DFID’s operation were pretty well integrated, which is obviously essential.

Q49 Fiona O'Donnell: Part of the issue there was that those responsibilities might lie with the Department for Business, Innovation and Skills, or the Foreign and Commonwealth Office. Do you think government is joined-up enough in this country when it comes to being strategic about these kinds of issues?

Michael Green: Joined-up government works when the Departments talk to each other. I remember working on trade many years ago. It was about DFID lobbying what was then called DTI and, in the end, DTI coming into line with DFID’s viewpoint. DFID does still need to be an advocate for development within Whitehall on other policies as well. Joined-up government is great, but DFID needs to be the voice.

The worst case I can see for the DFID Pakistan programme is if this growth in the aid programme is like a sugar rush: that suddenly we hit 2015, the risks come home to roost, we do not see success and the programme gets squashed again. What message does that send to Pakistan? That is the question that must be fundamental to the DFID programme: if this is a long-term relationship, what is the message we are sending out to Pakistan? Is it a credible message?

Q50 Chris White: In your view, why does the Pakistani state spend so little on education?

James Fennell: It is because the Pakistani state is a state within a state, as I said. The people who make the decisions about spending money on education do not use the education system and they are not properly accountable to the people who do. They have not really got an incentive to put money into social services, which do not buy them votes, and they do not use them themselves.

Michael Green: To challenge the conventional wisdom a bit, Pakistan spends 2.6% of its national income on education. This is lower than Bangladesh, with 3.4%. This is lower than India, with 4.2%. It is lower than Malawi, a much poorer country, with 6.2%. In a sense, you could say that Malawi maybe spends more on education because it gets so much more aid per capita. Maybe not India and Bangladesh, but other countries may spend more because they are better at collecting taxes. The other way you could look at it is to say that, actually, Bangladesh spends a quarter of its tax revenues on education. It spends about 15% of total public expenditure on education, which is greater than the UK, which is about 10%. It has to be linked to this general point about the lack of revenue as well, not just the lack of investment in education.

Q51 Hugh Bayley: To come back to this point, if this is a problem, why are we not pressing for economic and fiscal reform rather than just plugging a gap in the education system?

Michael Green: This is the absolute centrepiece of World Bank/IMF/Asian Development Bank programme. I guess DFID must be supporting that in some way with some technical assistance, but I presume they would be saying, "You’ve got that covered; we are backing it; and we are picking up some other areas that are more focused on DFID priorities." If you read the World Bank Country Assistance Strategy, its number one message is fiscal reform.

James Fennell: However, that is a political issue, not a technical issue.

Q52 Hugh Bayley: Do you disagree with the previous speakers, who said that to set macroeconomic goals, to encourage Pakistan to modernise and broker deals with India and Afghanistan and strengthen its trade, is the wrong thing to do?

Michael Green: Yes, clearly.

Hugh Bayley: I think you are saying that is the right thing to do. In which case, why does DFID not put its resources behind that, instead of spending what in Pakistani terms is a tiny amount of money on its education system? Why do we not act strategically?

James Fennell: In Pakistani terms it is not a tiny amount in terms of the education system, because so little is spent on it. There is the potential to have influence. Because JamaateIslami in particular has targeted the education system and has political representation on the boards of most universities and many schools, it is a very hard nut to crack in the sense of people getting a quality education that gives them a better ability to have or make a choice. Nevertheless, I do think it is valid. Education has essentially been abandoned by the state, for the reasons I said before, but it has been very strategically targeted by Islamist organisations.

When Jamaat were invited into Government by Zia-ul-Haq in the early 1980s, he offered them a couple of different Ministries, including foreign affairs. They chose information and education. There is no doubt that education provides a more narrow-minded, strictly Sunni and non-inclusive education than it did in the 1970s.

Q53 Hugh Bayley: I have heard you and your colleagues before you saying, "Well, yes, we need to address some of these strategic issues, but education is an important backup." Pakistan spends almost as much on health as it does on education, but not one of you has said a single word in favour of the value of the health organisation.

Michael Green: Quickly, on the impact of the education programme, if you take what DFID will be spending in 20142015, plus what will come from the World Bank and other donors, it is an increase of somewhere between 10% and 20% in the education budget. It is not a tiny amount.

On the health front, one reason is that if you look at where Pakistan is underperforming compared to its peer countries in terms of human development, education is the standout problem. Secondly, the great weakness of the health system is that it is a very, very big problem to get into. It is also one where there is a lot more private provision already working in that area. That is why health has perhaps not had the priority. It is interesting that DFID has chosen maternal health aspects of health in particular, which I presume is a systemstrengthening approach.

James Fennell: I was not part of their decisionmaking process, but I imagine they are also trying to improve the parts of government that people have a direct engagement with, to improve the relationship between the people and the state. I imagine there is a state-building agenda in that, too.

Q54 Hugh Bayley: I have one last point. The way it seems to me is that spending on health and education is a sort of UK philanthropy. It is a nice thing to do. There are clear needs there. Women benefit because of maternal and child health programmes. Children benefit because of schools programmes. It makes us feel good, but everybody is telling us that, strategically, Pakistan has got to challenge military control, challenge elite capture, go for macroeconomic reform and start trading with its neighbours. If it does these things it will modernise and progress and if it does not, we will carry on doing little bits of philanthropy because the Pakistanis do not give a damn about their own people. Shouldn’t we do the big job?

Michael Green: How many of those issues are tractable through aid spending? On balance you can say that education in particular and heath are investments that will improve Pakistan’s growth rates in the long term and therefore do have longerterm benefits. They are not just palliative care. There is a real investment there. However, for those big structural reforms, what is aid’s role in that? That is why I talked about the risk of the resource curse of DFID and getting distracted only by those aid programmes, rather than looking at these big structural issues and thinking about the UK’s wider role in its conversation with Pakistan about how it can influence Pakistan towards addressing those challenges.

James Fennell: I also do not think that investment in health and education is philanthropy, because it is investment in human capital. In particular, education will give people an opportunity to participate politically. The history of pretty much every democratic society is that education transforms the engagement of people in politics. It is risky to think that we can do that with one big whack of cash, but it is the right direction.

Q55 Chris White: Bringing it back to education for a second, what impact do you think the case of Malala will have on the education system, particularly in terms of girls being educated?

James Fennell: There has been a significant improvement in girls’ participation in education anyway. I think it was something like 20% in the past year. When we were there we went to the university in Multan, which is in south Punjab, pretty much beyond the bounds of the elite-dominated areas. They have had an 80% increase in female attendance at the university. There is an ongoing process already.

It is, quite interestingly, not the one that we expect. In some ways, the provision is more modern in Pakistani terms, i.e. more religiosity in thinking means that women are trusted more to go to school and college. Often, wearing the veil and so on is actually a passport to allow you to go and live in a city and attend a university, whereas you would not have been allowed out of the house. There has been some improvement.

I think the Malala case is very good for us. It raises the issue here. I do not think it will have a particularly great impact. One of the dangers with aid programmes is bringing a bunch of what are our norms, which actually appear in Pakistani society-particularly in the parts of society we are trying to influence-as quite radical and perhaps dangerous.

Q56 Chair: That is interesting because the Prime Minister spontaneously raised the Malala case with us, without our mentioning it. Was that because he thought we ought to know about it or was it genuinely because it has had an impact on Government thinking?

James Fennell: You know better than I do. I would imagine, though, that it is a point of engagement. It is common ground.

Chair: We certainly did not raise it; he did.

Q57 Chris White: Is DFID’s education programme in Punjab too reliant on the Chief Minister or relations with the Chief Minister?

James Fennell: I am not as well sighted on this, but if it is reliant on a relationship with Nawaz Sharif, then it will not work. As I said, JamaateIslami are extremely influential in the education system, probably more so than Nawaz Sharif. It has not been a core ministry. It has not been a place where you can be a civil servant and go on to great things. I suspect that if the programme is dependent on that relationship, it will have limited impact.

Michael Green: I think the ICAI report on Pakistan tells a very strong story about how DFID has done risk mitigation around its programme in general and the Punjab programme. I do think, however, it is a good description of best practice in programme design; I do not think it has taken into account the broader strategic risks. There are bigger risks to the programme, particularly the Punjab education programme, than are recognised in the ICAI report.

Q58 Fiona O'Donnell: What are they?

Michael Green: There are these political risks around political leadership and will in the long term. I think what we have are some mitigation measures that are not hitting some of those big strategic issues. Particularly, what is the plan B if this does not work out? The danger is, when you make a very big bet like this, that even if it starts going wrong you carry on betting on it because you cannot admit it is failing. That is a big danger to the DFID programme. A clear plan B, knowing what to do as an alternative-not just turning off the taps-and responding to reality will all be crucial.

James Fennell: Yes.

Chair: That is actually very helpful. Can I thank you both very much indeed? That was a very useful session. Thank you for giving us such direct and sharp answers. It is very much appreciated. Thank you.

Prepared 10th January 2013