As Violence Hurts Commerce, Pakistanis Doubt Value of U.S. Textile Bill

A Pakistani soldier stands amid the rubble after a hotel bombing last month in Peshawar, a border city where violence and kidnappings remain a constant threat.
A Pakistani soldier stands amid the rubble after a hotel bombing last month in Peshawar, a border city where violence and kidnappings remain a constant threat. (By Emilio Morenatti -- Associated Press)
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By Joshua Partlow and Haq Nawaz Khan
Washington Post Foreign Service
Tuesday, July 28, 2009

PESHAWAR, Pakistan -- A concrete wall already encircles Mohsin Aziz's office, but workers are making it higher brick by brick. Kalashnikov-wielding guards shadow the industrialist everywhere he goes. A chase car tracks his black sedan through thick city traffic.

Even with such precautions, Aziz said, his family considers him a "madman" for keeping his business in Peshawar, the violent capital of Pakistan's North-West Frontier Province. Military-imposed curfews keep laborers from his factories, and he sometimes has to beg his managers to come to work.

"I tell them, 'I am here with you. I will not leave you behind, dead or alive,' " said Aziz, who manufactures matches, textiles, laminates and particleboard. "We will die together."

Bombings and kidnappings by the Taliban and criminal gangs are strangling the economic life of this metropolis adjacent to the tribal territory along the Afghan border. Businessmen have fled south to safer provinces or left the country, slashed production, laid off employees, and closed down offices.

Government statistics show that large-scale manufacturing has contracted 7.6 percent across Pakistan in the past year, while a survey by the Industrialists Association of Peshawar found a 37 percent plunge in the industrial sector here. Business associations estimate that the number of industrial jobs, the main economic lifeline, has already fallen from more than 100,000 to about 25,000. Factories that ran round-the-clock now scrape by with a single shift.

"This is a recipe for disaster," said Nauman Wazir, former president of the Industrialists Association. "This is going to have a spiraling effect into more unemployment and into more radicalism."

The Obama administration has pledged to bring economic relief to these border regions dominated by Taliban and al-Qaeda fighters. In March, the president called on Congress to pass a bill that would create what are known as "reconstruction opportunity zones" to "develop the economy and bring hope to places plagued with violence."

That bill passed the House last month. It is intended to allow businesses in areas such as North-West Frontier Province, the tribal areas and a 100-mile border swath of Baluchistan in southern Pakistan to export textiles and apparel to the United States duty-free.

But Pakistani businessmen said limits on what textiles are covered -- sought by U.S. business lobbyists -- render the bill, and its pending Senate version, largely worthless.

Many products eligible for duty-free status are not items that Pakistan produces in large quantity, according to an analysis by the Citizens Voice, a Peshawar-based think tank of business and civic leaders.

"This is ridiculous, this is not going to work, this is a non-starter," said Aleema Khan, chairman of Cotton Connection, a Lahore-based firm that buys textiles for large American companies. "Everybody's rejecting it. Major industry is rejecting it. Buyers are rejecting it. This bill should not go through. The fact that they haven't done their homework is what's so scary."

Rep. Chris Van Hollen (D-Md.), one of the sponsors, said that he would support expanding the scope of products eligible for duty-free status, "so long as that does not doom the prospects of the bill."

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