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Pakistan told to shape up in exchange for aid

by Staff Writers
Brussels (AFP) Oct 15, 2010
World powers told Pakistan that post-flood aid was part of a "two-way" deal on reform Friday, as Islamabad also offered to lend a hand to regional peace by facilitating Afghan-Taliban talks.

After US Secretary of State Hillary Clinton demanded Pakistan's "affluent and elite" be made to pay through tax changes, ministers attending a major aid meeting on Pakistan insisted there would be no gain without some pain.

For Pakistan to "become more stable," German Foreign Minister Guido Westerwelle said "you can harvest as much money as you want, it won't be enough at the end of the day if there is no reform."

He said "an adjustment in the equilibrium between rich and poor in Pakistan" was fundamental.

The meeting of the Friends of Democratic Pakistan came as the World Bank and Asian Development Bank estimated damages for Pakistan's devastating floods since July at 9.7 billion dollars -- almost twice the amount of its 2005 earthquake.

The body gathers China, Japan and the United States alongside big European nations and other influential voices including Australia, Canada or Egypt, but not India.

British Foreign Secretary William Hague, who said London had already ploughed some 134 million pounds (215 million dollars) of aid into its former colonial territory, also underlined that "there are necessary reforms in Pakistan and they should include a widening of the tax base."

But he said Pakistan Foreign Minister Shah Mahmood Qureshi had "stressed in the meeting that the government of Pakistan is fully cognisant of what they need to do."

Stepping into the Brussels talks, gathering 26 countries and international groups, Qureshi vowed "more reforms in the pipeline."

He told a press conference afterwards that Pakistan's tax system had to be "more equitable."

Qureshi also offered Islamabad's services for "reconciliation" in Afghanistan, saying a peaceful neighbour was in his country's interests.

Reconciliation was "an Afghan initiative," he said. "They have to own it, they have to lead it. We are there to help, we are there to facilitate."

Participants "noted the need for continued efforts" in a statement and said a European Union offer of a major trade boost, proposing to lift duties on 75 imports as part of an aid-linked package, "should be supported."

The three-year suspension of duties requires a waiver from the World Trade Organisation.

Italy's Foreign Minister Franco Frattini warned beforehand of reservations, hinting that Rome's backing would be conditional on India failing to obtain similar concessions in the WTO.

"Under certain limitations we can go ahead," Frattini said. "I am ready but on condition."

Qureshi insisted afterwards that Frattini was "fully supportive" of the EU bid.

The floods affected 21 million people -- with 12 million in need of emergency help by UN estimates.

To date the United States and the EU have provided around 450 million dollars each in aid to Pakistan.

Qureshi on Thursday told the European parliament that Islamabad's fledgling democracy was on the march after ending a decade of military rule in 2008.

"Obviously it takes time. Old habits die hard," he said. "You have to be patient."

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