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Last Updated: Wednesday, 29 November 2006, 00:02 GMT
Pakistan growth creates wealth gap
By Paul Moss
BBC News, The World Tonight

Karachi stock exchange
Many return to work in lucrative professions
Salman has a way with words. He also has a snappy dress sense, and a keen knowledge of the communications industry. He should be going places.

In fact, Salman was going places, a rising success at the firm where he's been working in Karachi for the past two years.

That was until they brought the new guy in.

"He didn't know anything about the industry," Salman explains.

"But he comes from an important Pakistani family, one with land, power. Our aristocracy.

"The family made a call to my firm, told them to hire this guy, and that was that."

Salman says that since the new arrival was put in charge of his department, morale and output have both plummeted.

And he has particular reason to be bitter.

He is one of a growing number of Pakistanis who have lived abroad, but decided to come back to work in their homeland, and try to make their mark on its newly-growing economy.

"With this kind of practice going on," he says, "I don't think this country will ever progress."

Big spenders

That is a damning verdict on what, statistically at least, seems to be an extraordinary boom in Pakistan.

It doesn't matter if you are complying with every regulation, they are after bribes

The world may have focused on the political ups and downs of the country's President, Pervez Musharraf.

But since the General took power in a coup seven years ago, his most radical actions have been on the economic front.

The country has swallowed the usual World Bank-recommended diet of privatisation, liberalisation and opening up of markets.

But what makes Pakistan stand out is the speed it has done this, and the extent of the change.

Growth has soared, foreign debt has been cut, and the nation's consumers have gone on one of history's greatest shopping sprees, splashing out in record numbers on anything from fridges and flats, to luxury cars.

Bribes are rife

The World Bank has given the programme a big thumb's up, and foreign investors show signs of renewed interest.

Poor children in Pakistan
Poverty often sparks angry responses

But as any economist in the country will tell you, this kind of growth can only continue if people are convinced that the old Pakistan ways of doing business - with corruption, bureaucracy, and an alarming level of regulation - is on the way out for good.

Factory worker Zobair is not convinced.

He acknowledges that things are improving.

Operations at his textile factory, he says, have recently been freer than ever from government interference.

Yet still it comes.

"Eighteen official inspectors visit every year," he says.

"It doesn't matter if you are complying with every regulation, they are after bribes.

"Things are getting better, but the pace of change needs to be increased."

Remaining poverty

Kaiser Bengali is concerned. A Professor of economics at Szabist University, he took me to a village just 10 miles from Karachi City Centre, to show me the people who he says have gained nothing from all the reforms.

The village stank.

Filthy rubbish was piled up everywhere, there was no proper sewerage system, and, as locals explained, health care was grossly inadequate.

Many have no source of employment.

Pakistan's Government insists the poor have also gained under the new economic regime, but Professor Bengali does not buy it.

Instead, he says, there has been an alarming growth in inequality.

"Try to imagine," he says, "a man who sees the expensive cars in the street, but comes home unable to feed his children, because he can't find work. He is angry.

"Or an educated man who cannot support his own parents. He becomes ashamed of himself."

Angry responses

And Professor Bengali has a warning.

"Anger may lead people into crime, or self harm. Suicide rates are going up," he says.

"But people also turn to religious radicalism. We see this in Pakistan every day."

Even the World Bank acknowledges that the perception of rising inequality may become a problem in Pakistan, and it is launching various programmes to mitigate the worst aspects of social deprivation.

But there is a special urgency to this task.

Pakistan is the venue for an escalating conflict between the State, and local militants with ties to Al Qaeda and the Taliban.

Only this month, a suicide bomber killed more than 40 soldiers at an army base, retaliation for the bombing of a madrassah, which left more than 80 dead.

It is possible that the World Bank and other development programmes will alleviate the poverty and desperation that make people easy recruiting targets for militants.

But it takes far longer to build a new water supply system, or a new village health centre, than it does to spread an angry message, or the tools to make a bomb.

The World Tonight is running a series of reports by Paul Moss on Pakistan - from Wednesday, 29 November, at 2200 UK time.

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