GLOBAL AGENDA You have just narrowly escaped an assassination attempt, which many are speculating is the work of either al-Qaeda or domestic radicals. You have said that this has only strengthened your resolve to crack down on radical groups and terrorists. How do you intend to do that, while preventing the further radicalization of your population?

PERVEZ MUSHARRAF There is no short-cut solution. There are some radical elements in Pakistan who I believe are angered by what is happening in our region – the Kashmir issue, and also what is going on in Afghanistan. The core of the issue is the resolution of these political disputes. That is the core solution for controlling radicalism and extremism everywhere.

But other than this, while we are trying our best to resolve these disputes, we need to take certain internal actions, and that is what we are doing. We need to address the issue of sectarian and religious extremism within our country.

We look for where this sectarian and religious extremism lies. Some of the country’s religious groups are fanning religious extremism and hatred against each other – they need to be curbed. Action needs to be taken when anybody misuses our mosques and madrassas to fan religious hatred against different sects.

As I keep saying, the vast majority of the population is moderate. So most of all we need to make this moderate majority stand up and be counted. They should be speaking out against extremism, and I know the vast majority in this country think like I think. We want to make them aware that they ought to get up there and speak against it. The vast majority needs to be mobilized to stand up and suppress this extremist minority.

GA Pakistan has recently witnessed the most profound twist in its political history: the empowerment of radical Islamists, previously at the political fringes. They have been propelled into the centre and are now governing two provinces, while having won more seats in the national parliament than ever before. How do you account for their unprecedented political gains?

PM Let me say that those gains are gradually sliding down. They may be thinking that they are going upwards, but I know that they are sliding downwards, because of their poor performance. Their gain was a result of certain events around the world and in our region. Their sudden surge in popularity was because of what was happening in Afghanistan and then Iraq – the hostile statements and actions against Iraq – and also the issue of Palestine. All these facts led to an anti-western, anti-US sentiment. This was one of the major reasons for the sudden popularity of the religious radicals.

GA Might another reason have been that you had sidelined most mainstream political parties, that you did not allow them a platform during the elections, so that the only alternative was the radical Islamists, whose popularity you had miscalculated?

PM That’s what many people say, but they are just equating political parties with two personalities. I wouldn’t do that. There was no problem in either of those [mainstream] political parties as such. They had all the rights to go around and do their election campaigning, which they did. Our reservation was about two ex-prime ministers who had looted and plundered this country, not against their parties at all.

But unfortunately people try to give this wrong perception that there was something happening against their parties as such. Not at all. It was these two individuals only. Now if their parties do not have the capability to have alternative leadership – they suffer from a vacuum of leadership, they don’t have anybody other than those two – then it’s very poor party organization, I would say.

GA Pakistan is playing a central role in the US-led war on terrorism. Does growing internal radicalism actually complicate this effort?

PM Yes it does. Certainly it does complicate matters, but we are trying to play a very active role in this. This strategy of enlightened moderation that I have been proposing exactly targets this issue.

When you’re talking of radicalization, extremism, terrorism, militancy and so on, you have to get to the core of it. And the core of it is not killing or arresting al-Qaeda or Taliban members. You can call them the leaves of a tree. They will grow. But the root to that tree is political dispute, or rather the resolution of political disputes.

So therefore the strategy of enlightened moderation that I’ve proposed is a two-pronged strategy where one prong is to be delivered by the Muslims of the world – rejecting extremism, joining the path of socio-economic development.

The other prong is to be delivered by the west, by the United Nations, and by the United States: the resolution of political disputes. Now if both are in sync, that is the way forward.

As far as the prong of the Muslim world is concerned, we have already taken the first step. At the OIC (Organization of the Islamic Conference) summit in Kuala Lumpur, I proposed this.

I said that the OIC in its present form is not structured to meet this challenge and therefore we need to restructure it for the strategy of enlightened moderation, for the socio-economic emancipation of the Muslim world. We are going to form a commission now that is going to propose a special OIC summit that will take place in 2004, so that we continue on this path.

If we can do this, we have taken a big leap towards rejecting extremism, and towards socio-economic emancipation. Now we are looking for the world to take a step forward on the other prong – the resolution of political disputes.

The starting point is the Palestinian dispute. That must be resolved. Failure is not an answer. I’ve said this to everyone, including president Bush, and all the EU leaders. Failure is not an answer; we do not have a choice. That’s the only way forward.

GA Ever since its creation, Pakistan has grappled with the question of what role Islam should play in the state. What is your view?

PM Well, basically we are an Islamic republic. Pakistan is a state that has been created on the two-nation theory, on the basis of a separate identity and homeland for Muslims, so our basis, our core, is Islam. So therefore constitutionally no law repugnant to Islam can be enacted. This is our basis. I wonder what your question is getting at.

GA Well, Pakistan’s founding father Jinnah had a vision of the country as a modern, tolerant and democratic Islamic state – as opposed to the ideologically, or even dogmatically, Islamic state that one might argue it seems to have become.

PM I have a different view of this. Some people think that there is a dichotomy between Islam and modernism, and between Islam and democracy. There is no dichotomy. My belief is that this is a misperception.

Islam doesn’t mean the extremism that you see – that these billboards ought to be removed and we ought to have some extremist Islamic thoughts like the Taliban of Afghanistan. Not at all. I don’t think those are the real values of the teachings of Islam.

Islam is very forward thinking, Islam is modern, Islam is progressive. So whatever policies that the state makes that I’m trying to follow are by no means anti-Islamic. They are Islamic. Islam is for all times to come. And it believes in formulating views through consensus, based on the environment, based on the time. That is how it is forward looking.

So anyone who tries to anchor Islam in the history of a particular place, and tries to impose that on all countries of the world, is not actually understanding the meaning of Islam. So I don’t think at all that there is a conflict between Islam and modernism, and between Islam and modern, progressive, dynamic government.

GA So would you argue that those who claim that there is a clash of civilizations between Islam and the west are in fact just manufacturing this notion?

PM Yes. Yes indeed. Because I think they are taking Islam to be what some clerics are talking about, preaching extremism and militancy. That is not what Islam is about. So if one thinks there is a clash of civilizations, certainly there is not. If you take the true Islamic values, the right teachings of Islam, then there is no clash whatsoever.

Every religion teaches good, preaches love and affection. There is no religion possible which would teach hatred and killing others. The only aspect that could be different is the methodology of running governments. Certainly Islam has specific tenets that are to be adhered to, but they are not in conflict with any modern system.

GA Clearly for any country to function well it has to maintain a workable relationship with its neighbours. The recent thaw in relations with India has been encouraging, but what is the next move? How do you envisage a solution to the continuing stand-off with India?

PM I think quite clearly the next move is the initiation of a dialogue. That is the next move. We must meet and talk. And having initiated this process of dialogue, having addressed all these issues, including the core issues of Kashmir, unfortunately that is where the dichotomy comes in.

When we say we need to discuss all issues, we certainly include Kashmir. When India says we should discuss all issues, they are being insincere. At the back of their minds is to avoid talking about Kashmir.

Now they have to face reality – that all issues include Kashmir. Then having realized that and having accepted this reality, we can move forward towards a realistic resolution of this dispute.

As a win-win for all. That is the way forward.

GA But how does one actually address the Kashmir issue? What sort of agreement do you think is most workable in practice?

PM I generally avoid discussing the resolution, or what kind of solution is possible, because I feel that if we start to jump to that end, we will slide back. There are people with extremist views in both India and Pakistan who would like to keep sticking to their states’ position of 50 years back.

What I had proposed was a four-step solution. Step one, start talking. Step two, accept the reality, or centrality, of Kashmir. Step three is a process of elimination: eliminate whatever is unacceptable to India and Pakistan, and to the people of Kashmir. And then finally come to step four: there are a number of solutions acceptable to these people, so select or modify any one of them, as a win-win for all.

All that I would like to say is that India is allergic to any violation of their secular moorings. I know how secular they are. It is only in writing. They are more fundamentalist than Pakistan. Certainly they have projected themselves to be secular around the world.

But a solution needs to found which is geographical in nature. I can’t get into the details now.

GA Your government has made significant inroads in macroeconomic reform – streamlining the economy, increasing transparency and speeding up privatization, while improving the country’s standing with international creditors by increasing revenue collection and restraining the fiscal deficit. Yet a growing concern of many potential investors is what sort of mechanisms you have put in place to ensure the sustainability of these structural reforms. How have you actually guarded against slippage?

PM Well basically you have to strategize. A strategy has to be formulated which everyone follows. A strategy has to be clear. Also the team which is implementing the strategy should be competent and committed to that strategy. In our case both are ensured. We have strategized. We know exactly what has turned our economy around. All the macroeconomic indicators are positive. And now we have to continue on this path, and the team has to do that.

GA But weren’t the boost from the United States in terms of financial support for Pakistan – as a key ally in the war on terrorism – and massive capital repatriation pivotal in turning these figures around?

PM I won’t call it pivotal. I would certainly give credit to my own team, who tightened the belt and reduced the debt. Nobody paid us money to reduce the debt. I’d also like to give credit to the United States and all the Paris Club members who have rescheduled about $12.5 billion of our debt. This includes Japan, the US, France, Canada and a number of other countries. The US role was that they wrote off $1 billion and reprofiled the rest. And I believe we are trying to write off some more at present.

GA A key concern is that, despite what are seemingly impressive reforms, there simply hasn’t been the boom in investment that Pakistan desperately needs, especially in major export industries. Foreigners continue to shun both portfolio and direct investment. Why do you think this is the case and how will you combat this?

PM I would first of all say that there has been a very substantial increase in investment. Last year the investment was about $800 million. This is up from about $470 million. So there’s an increase of about 80%, which is important to note.

GA But the bulk of that was in the oil and energy sectors, not in key sectors that need the investment.

PM Yes, the investment has also come to oil. But the base was so low initially that even if there were a 100% increase it would not be substantial. I would say it’s actually about a 500% increase.

But it’s not the macroeconomic indicators alone that attract investment. Any investor first of all looks for security of his investment. That comes through the country’s macroeconomic indicators. So therefore we provide the security to any investor coming here. The other issue is creating an investor-friendly climate.

GA Some would say judicial reform is one area that has lagged.

PM A good investment climate requires a strong judiciary and sound laws and regulations; they must assist and be investor-friendly. We have certainly modified our rules and regulations, making them investor-friendly. Law and order also play a very important role. If there are travel advisories against certain countries, then people don’t want to come to those countries.

Lastly there is the issue of profitability. I think there is tremendous profitability for an investor in Pakistan. What we need to correct is the law and order environment. We need to bring harmony to the society. It should be seen by the outside world. That will attract attention.

GA There is also concern about the stability of your government, given the constitutional stalemate with the elected national assembly which has effectively stalled the government. The opposition has refused to accept that you remain both president and chief of the army. How do you intend to resolve that impasse to allow the government to function effectively, while safeguarding the country’s return to democracy? Will you relinquish being both head of the army and president at the same time?

PM Let me first add another point to your earlier question. An investor also wants to see whether the cost of doing business in a country is high or low. In our country the cost of doing business used to be quite high – interest rates were about 16% to 17%. We have reduced that to about 7% or 8%. In fact a good investor can draw money from our banks at about 2% to 3%, which is excellent.

Also the cost of energy here is a negative. We need to reduce that. We are looking into ways in which the cost of energy can be reduced so that the cost of doing business in Pakistan can be reduced further.

Now coming to your other question, I wonder whether an investor is really interested in democracy. After all, which part of the world really has democracy? There’s a lot of investment going on in Dubai, I wonder whether they think there’s democracy there, or in any one of these places.

As far as we’re concerned in Pakistan, or that anyone else is interested in the political side, yes, they could be interested in this question if they think the political impasse will lead to national instability.

GA That is what I was implying.

PM Would that [impasse] lead to an instability in governance of the country? Would people come out into the streets with violence erupting? Let me assure you that there is nothing of that sort. Whatever you see in the assembly, I am extremely positive, it cannot be translated into any effects in the streets, in the cities and towns of Pakistan.

So one should be totally assured that whatever political friction you see on the television or read about in the news, it cannot be translated into a movement by the people because I do know that people are with me and they do understand that we are trying to do a good job. That doesn’t mean that I wouldn’t like to address this political impasse at all.

GA But how will you do that?

PM Let me say that we are in a process of negotiations, trying to put this issue of the constitutional amendment that I’ve made through the legal framework order behind us. And that’s all I would like to say at this moment. I’m reasonably sure that this will be done soon.

GA Who do you admire on the world stage today?

PM I wouldn’t really like to put one against another. There are many good leaders. I’ll reserve my thoughts on that.

GA Historically, then, what leader do you look to as a role model?

PM Generally I’ve been impressed by the Chinese leadership, by their understanding and their vision. Other than that, I am obviously a great admirer of our own founder, Qaid-i-Azam. I think he was a man of such great character and vision. It’s the misfortune of this nation that it lost him in one year. He was the greatest man.

GA Related to that, what principles have guided you while you’ve been in power?

PM I think one principle – and that is Pakistan. Pakistan comes first. All my actions are guided by Pakistan’s interests, whether it is foreign or local. I engage through what is in national interest, so much so that even in my personal life, I try to rise beyond self.

In the political areas, I could have been self-seeking, or I could have been thinking of myself, and there could have been different actions from my side, if I was trying to get comfort for myself as a person.

But I thought that bigger issues are involved. Comfort for myself is not a big issue. The bigger issue is Pakistan. Therefore the basic principle in all decisions is what is in the interest of this nation.

GA What role do you see for yourself in Pakistan in the future and what are your aims for the next few years?

PM We have achieved certain targets, as you’ve pointed out, in the economic field. We have then initiated certain strategies. Right at the beginning we concentrated on four areas: economic revival, good governance, poverty alleviation and political restructuring.

We have initiated strategies in all four. I would certainly like to see them maturing. They are maturing gradually, but they cannot be implemented in a few months or a year. They take time. I would like to see them maturing myself.

I certainly want to transmit the good economic revival of this nation to the people. I always keep worrying how that will happen. How does it get permeated down to the poor? But I know that the mega-development projects that we have initiated are all for the purpose of poverty alleviation and economic growth for the country.

All the strategies for health and education that we have put in place which are happening – all the political restructuring at the grass roots level of local governments – all these will only start maturing two years from now, and will continue up to five years from now.

I would like to see these maturing, in five years. That’s my ambition, because I know they will bring about a major change in this nation if they mature.

So I will make sure that these mature, and give the benefits to the nation and the people of this country. I don’t know what role I will play – but I will keep playing a role. But my decisions will be based on Pakistan’s interests and I will not shy away from my responsibilities. It’s in Pakistan’s interest. Whatever actions I have to take, I will take. I will keep my options open.