Pakistan's Floods Threaten Economy and President

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Pakistani President Asif Ali Zardari presents a check to a flood survivor during a visit to a relief camp in Sukkur

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The floodwater took Ehsan Ali and his family by surprise. "At first we thought that the water wasn't so serious," says the farmer, 44, who worked on the rice fields that stretch across Shikarpur district. "Then they suddenly made an announcement in the mosques, telling us to run for our lives. A lot of water was coming." As the water crept across the farms of Pakistan's province of Sindh, drowning thousands of acres of crops, tens of thousands gathered whatever possessions they had and fled.

The evacuees now languish in makeshift shelters. Many have settled on the side of dirt roads, shading themselves from the blazing sun by propping a bed over their heads or sheltering beneath a wagon. Others are clustered under a tin awning by a derelict railway station or in similarly run-down school buildings. Doctors say they are already seeing outbreaks of scabies and diarrhea among the displaced. Women have had to go into labor in public places, giving birth in classrooms they share with other families, for example. When relief goods arrive, always from a private donation, there is a panicked scramble to gather whatever little food each person can grab within the seconds available. With each passing day, the fury at the government's neglect mounts.

It was in an attempt to stanch that anger that President Asif Ali Zardari paid a brief visit to Sindh, his native province, last week. Setting down via helicopter in Sukkur and under heavy guard, the leader glimpsed at the devastation, handed out checks to suffering children, stroking their heads to comfort them, and then returned to Islamabad. On Sunday, Zardari accompanied U.N. Secretary-General Ban Ki-moon to southern Punjab, where Ban said, "This has been a heart-wrenching day for me ... In the past, I have witnessed many natural disasters around the world, but nothing like this." Before the floods, Zardari's popularity stood at just 20%. Now it must be at rock bottom. Over the coming weeks, if he wishes to recover his government's standing, he will have to set Pakistan on a course in which it can begin to rebuild its economy, draw billions of dollars from the international community and help the millions affected by the waters return to their lives. Many doubt whether their President is up to the task.

Last week, World Bank president Robert Zoellick said the floods had destroyed crops worth around $1 billion. By conservative Pakistani estimates, the figure is at least double that. Some 17 million acres of agricultural land have been submerged, and more than 100,000 animals have perished. On the road to Rahimabad, the carcasses of buffalo lie on the side of the road, scavenged by wild dogs under clouds of flies. About a quarter of Pakistan's economy and nearly a half of its workforce depend on agriculture.

Pakistan's economy was already fragile, dependent on a $11.3 billion support package from the International Monetary Fund (IMF). Before the floods, the country was struggling to meet the fiscal-discipline requirements of the package. Pakistan has a bloated public sector, a narrow tax base and a chronic balance-of-payments problem. "Now, it alters all the calculations, all the projections, all the scenarios," Abdul Hafeez Sheikh, Pakistan's Finance Minister, tells TIME. "It is still too early to assess the full impact of the disaster, but the damage is colossal, it's still unfolding. It will run into billions and billions of dollars." So far, some 40 countries have contributed $222 million, according to figures collected by the government of Pakistan — a fraction of what's needed. The Pakistani Foreign Ministry is still mulling whether to accept India's offer of $5 million. The U.N. is hoping to raise a further $460 million for Pakistan.

(Update: On Tuesday, Pakistan took out a $900 million loan from the World Bank, adding to its already huge debt burden of $55.5 billion.That figure will rise in the next few years as debt rescheduled after 9/11 returns. Economists see the loan as expensive borrowing that the country can Ill-afford, but given that donors aren't coming forward with the aid the country needs, Islamabad has little choice.)

The difficult economic conditions have provided the political opposition an opportunity. Striking a nationalist pose, former Prime Minister Nawaz Sharif declared that Pakistan has no need for foreign aid. Among a broad swath of Pakistani public opinion, holding out a hand for help constitutes a loss of dignity and therefore face. Zardari is already weighed down by the impression that he is too reliant on the West and so his political foes believe that his asking the world for help will damage the President even more. "It's a nutty approach," says a Zardari aide about the political opposition to aid. "If people are there to help you, and they want to help you, why do you want to make them uncomfortable?"

There is little prospect of a change in government. The opposition has to avoid being seen as exploiting a national tragedy, and the army is too overstretched to resort to a coup. But while Zardari is likely to remain in power, he may be left too weak to exercise it usefully.

The economic consequences of the floods will be felt for months ahead. Not only are current incomes lost, but people will also have to endure heightened prices until the economic infrastructure is rebuilt. "There is a massive loss of infrastructure," says Sheikh. "Dams will have to be repaired; in the northwest, not a single bridge has survived along the Indus River; roads have to be rebuilt; and schools in the countryside need repair." The damage to the agricultural economy means that food prices are set to soar. "We had plans to export surplus wheat," adds Sheikh. "It was an economic opportunity since Russia has stopped exporting wheat, raising its price. We cannot export wheat now because we have to feed our own people." Gloomier observers have raised the prospect of food shortages and ensuing civil unrest.

Sheikh insists that the tragedy could offer a silver lining. "It could be an opportunity to make tough decisions," he says. "For example, we could push through a sales tax, introduce a flood surcharge on well-to-do people and get some leeway from the IMF and support from the international community." The reconstruction effort, says Sheikh, could lead to "a spur of economic activity," boosting sectors tied to construction. For agriculture, the prospects could include the potential for wells to yield more water, and the silt left behind by the floods will make the land in certain areas more cultivable.

But for now, there's only devastation and damage. "That's where my land used to be," says Hamir Soomro, gesturing toward the expanse of water that surrounds him. For as far as the eye travels in either direction, his family's 1,200 acres of rice- and wheat-growing land have been submerged. Only the tips of rice stalks can be seen. In the distance, there are trees and the crumbling remains of brick houses. The village itself has an eerie, haunted feel of abandonment. Even the police have deserted the area. "All that's left is a nice sunset," says Soomro, raising his hand to his forehead to get a clearer view of the full, orange sun dipping down in the distance, causing small waves in the water to shimmer gently.

There was nothing that could be done to tame nature's fury, but Soomro says that Zardari's government has deepened the disaster through mismanagement. An embankment was allegedly cut in the wrong direction and instead of the water spilling out toward the desert and snaking its way down to the sea, it has spread across Shikarpur and other populated areas. Now, with a second wave of flooding, the historic town of Jacobabad has been evacuated. In other areas, says Soomro, petty rivalries have seen landowners divert water to each other's land in attempts at self-preservation. The government and bureaucracy have failed at coordinating a water-diversion effort.

Soomro and other farmers across the country like him won't be able to harvest their crops for up to a year now. "Some 90% of the land is underwater," he says. "The rice crop is gone. I don't have any wheat seed left, because that's underwater." Usually, he would grow wheat during the winter. "Then there's also equipment damage." The Soomro lands employ some 3,000 people and the village of Rahimabad is home to a further 7,000 people who indirectly depend on the land. In previous years, the crops would suffer because of Pakistan's chronic water shortages. The heat would cause much of the water to evaporate before it reached the roots. Other crops like sugar cane couldn't be attempted because they drain too much water. The irony is that it may now take months for that very same land to dry.