“There have also been colossal damages to social and physical infrastructure and huge consequential financial losses and adverse effects on our economy”.


In the backdrop of All Parties Conference (APC) convened by the Government of Pakistan held on 9th September, 2013, it is appropriate to revisit the question of costs and benefits of the war on terror for Pakistan. For policy makers, there is dearth of quantitative material to consider; they usually have differing qualitative narratives emanating from official and unofficial sources. On the quantitative side, they only have access to statistics related to registered and reported terrorism cases, number of dead and injured civilians. The only official publication on the subject is a special report in Economic Survey of Pakistan 2010-11(ESP 2010-11), which showed the total cost of war on terror from 2001-02 to 2010-11to be US $ 67.926 billion. The participants of APC 2013, however, chose not to express themselves quantitatively. Instead their preferred mode of expression was qualitative vis-à-vis ‘costs’ of war on terror. Accordingly, the Resolution of APC 2013 recorded:
“There have also been colossal damages to social and physical infrastructure and huge consequential financial losses and adverse effects on our economy”.
Conversely, no ‘benefits’ of the war on terror were alluded to in the Resolution. The preference of qualitative expression of ‘costs’ may be because of political and diplomatic reasons; however, it is a fact that there is little or no research by independent sources on the issue and this might well be one of the reasons for not expressing the costs in quantitative terms. For instance, at the official level, the two-page special section of the ESP 2010-11 is the official version on the cost of war on terror. It may also be noted that after 2010-11, the subsequent issues of the annual ESP have omitted the special section on costs of war on terror for Pakistan economy. There is no dedicated portion in the ESP 2010-11 on the methodology of assessing costs of war on terror for Pakistan. Two things are stated in the ESP 2010-11 about the assessment of costs. First, the assessment of ‘direct and indirect costs’ was done by an inter-ministerial committee constituted by Ministry of Foreign Affairs (MFA) and having representatives from Finance, Interior, Commerce and ‘some other ministries’ including representatives of two provinces that border Afghanistan. Secondly, four assumptions that were basis of estimation of costs for the first year of war on terror i.e., 2001 were mentioned as: (i) end of war by December, 2001, (ii) resumption of normalcy by January, 2002, (iii) ouster of Taliban in Afghanistan (regime change) resulting in normalcy in Pakistan and (iv) removal of additional increase in freight cargo and war risk premium. There is no detailed description on the methodological aspects of the estimation. The want of independent research of the issue warrants serious attention. The instant article, however, is not designed to fathom and quantify the ‘costs’ on war on terror for Pakistan; it only proposes to explore and preface, to the extent possible, the methodology and framework for any such research in future; the effort may serve as a point of departure for any future research. Systematic presentation of the material is centred on the following points:
The Resolution of the APC in 2013 on terrorism has chosen to use the word ‘war’ while referring to the fight against terrorism. The usage may be politically correct, but legally it is problematic. The problem emanates from assuming that the discussion on the terminology of ‘war’ on terror belongs to semantics and has no relevance in pragmatic and real world. This assumption is flawed as legal consequences flow from the terminology employed to describe a concept. In case of ‘war’ on terror, the usage of the term, imports in all the legal effects. For example, in the international law, there are two different sets of laws whose application is invoked by using the word ‘war’ in diplomatic and political statements. The set of laws that deals with ‘the right to war’ is called jus ad bellum and the set of laws that deals with ‘the conduct of war’ is called jus in bello; the former belongs primarily to the UN Charter provisions while the latter is called international humanitarian law. An analysis of the legal provisions contained in both the sets of laws reveals that the terminology of ‘war’ is certainly not universal. There is considerable difference of opinion in usage of the term. The UK, one of the most closely allied allies of the US, has deliberately not used the term ‘war’ as it has legal consequences. Likewise, in case of Pakistani law as embodied in the Constitution of Pakistan, a separate scheme of legal rules for war has been pronounced according to which the President is authorized to proclaim emergency in case of ‘war’. This implies that, at least in Pakistan’s context, the policy makers and the officials don’t have the luxury to label the ‘fight’ against terrorism with the terminology of their choice as such statements have the potential of offering empowering circumstances to President of Pakistan to exercise such provisions. The upshot of the discussion then is to urge the officialdom of Pakistan to carefully choose the terminology and to watch for unintended legal consequences of these words.
It is believed that it is easier to estimate costs of war as compared to estimate its benefits. In case of Pakistan, the stated goals of the war are not clear, therefore, any attempt at quantifying the benefits may not yield.  The latest APC in 2013 has once again given a ‘chance to peace’, which means that, if any, the methodology to estimate benefits will be quintessentially qualitative and not quantitative.
a.    Concept of ‘Costs’ and Taxonomy Of Costs
The concept of costs is relative and defies definition. In the context of estimating costs in fight against terrorism, the cost has clearly to be defined to precisely elucidate inclusions and exclusions. There is no universal taxonomy of costs related to terrorism. American author Stiglitz in his research paper on methodological issues of estimating cost of war on terror has used two types of costs: (i) budgetary costs (inclusive of resources spent to date, resources expected to be spent in the future and budgetary costs to the government) and (ii) economic costs (which include micro-economic and macro-economic). Two other factors that have found emphatic elaboration by him vis-à-vis the US costs on Iraq and Afghanistan war are the mode of financing the war and the role of private sector (through contracting out). In Pakistan’s context, mode of financing is instrumental and must be included at least in the explanatory notes on costs estimation.

b.    Economic Survey of Pakistan 2010-11 Costs
The ESP has not elaborated the exact methodology for calculating the costs. It has used the words ‘direct and indirect costs’. Besides, it has mentioned four assumptions (stated above) that were used as basis of calculations. Table 1 of ESP 2010-11 has considered the following as costs without elaborating much on the methodology:

The ‘joint costs’ shown in the Table 1 clearly are problematic. No explanatory notes have been provided on the methodology. Besides, the categories of costs used are not clear. For example, the category of ‘compensation to affectees’ shows zero expenditure for the year 2001-02, while same has grown to US$ 0.80 Billion in 2010-11; this is not verifiable as there is no definition of ‘affectees’ and there is no elucidation on the formula of compensation. Likewise, without showing the allocated costs, the ESP has chosen to reflect the ‘expenditure over run’, which is not only ambiguous, but also ambivalent.

c.    Methodology for Calculating Costs
The new government in Pakistan is planning to come up with a new and more reliable figure on the costs of ‘war’ on terror: this was reported by Mr. Mehtab Haider of the News International in the June this year. If it is true, there is a strong case to urge the government to spell out methodological issues before embarking upon the actual exercise of estimating the costs of war on terrorism. With the view of recommending some concrete points for finalizing methodology to be adopted for estimating costs of war on terrorism, following points may be considered:

1. A detailed note on the methodology of estimation of costs and should adumbrate the inclusions and exclusions of the costs.

2. Explanatory notes should accompany the estimation regarding key terms and special features of Pakistan’s cost estimation. For example, in case of Pakistan, the influx and influence of refugees (1.6 million) and Internally Displaced Persons (0.75 million people) cannot be ignored in estimating the cost; hence, these should be underlined as a special feature of Pakistan for cost estimation.

3. The budgetary allocations in Pakistan’s case are not very well categorized and in the places where it is so characterized, the expenditure on terrorism and related costs is not shown properly. For example, under the Punjab Police Rules 1934 the protection guard for Judges of High Court is authorized as one head constable and three constables during tour. While the Rules provide for authorization of fixed number of guards, the judicial officers are invariably provided many more guards for protection. Likewise, jail breaks are on rise and convicted and under-trial terrorists escaped from the process of law. The added expenditure on the security arrangements of prisoners, jails, prosecutors, witnesses, court complexes and judges usually don’t figure in the budgetary allocations; therefore, the possibility of having right estimate of costs is always there, but extra efforts would be needed to collect expenditure details from the field units besides reference to budget documents. Another point worth mentioning is that in case of police, the primary function of investigation of criminal cases has been virtually upstaged by security considerations and accordingly much of police resources are now geared towards security-function instead of investigation-function of police.

4. All reimbursements, aid packages and special grants related to fighting war on terrorism must also be excluded from the cost estimation to make it rational.

5. Finally, it may be noted that the latest National Finance Commission Award (as promulgated in Section 3(2) of the Distribution of Revenue and Grant-in-Aid Order, 2010) clearly provides that ‘one percent of the net proceeds of divisible taxes shall be assigned to the Government of Khyber Pakhtunkhwa to meet the expenses on war on terror’. Therefore, the one percent of divisible taxes must also be included in the final cost estimation.

6. Opportunity cost of the resources utilized on fighting terrorism must also be included in the final count to make it more reliable.

It is axiomatic to state that what cannot be measured, cannot be managed. There is no gainsaying in overemphasizing this point qua fight against terrorism. The problem of attributing value to all costs will persist, but following a clearly spelt methodology for estimating the costs of ‘war’ on terrorism by Pakistan will provide its policy makers with an invaluable tool to maximize the viability of their decisions and to carve out future independent foreign and security policies.

The author is a Police Officer and has graduated from the University of  Oxford.

By: Kamran Adil

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