Pakistan is the second most populous Muslim-majority country in the world and within a few decades it will become the world's fifth largest country. Located at the crossroads of Asia and the Middle East, Pakistan is adjacent to vast oil fields and some of the world's most sensitive sea lanes. Pakistan is an acknowledged nuclear weapons state and, at times, a nuclear proliferator. It is a key player in the global war against terrorism and itself a victim of terrorism. It also has been accused of fomenting terror activities, and providing refuge to remnants of al-Qaeda and the Taliban.

Now, more than ever, it is urgent to develop a greater understanding of the people and culture in countries where Islam exerts influence. Pakistan and the United States have shared a shaky alliance over the past half-century, yet each country knows surprisingly little about the other.

To help foster a better understanding of Pakistan, its economy, and Pakistan-U.S. relations, the Woodrow Wilson Center's Asia Program has expanded its Pakistan programming. In collaboration with the Fellowship Fund for Pakistan (FFFP), a charitable trust based in Karachi, the Center will host a Pakistani scholar each year. To inaugurate this partnership, FFFP and the Asia Program co-hosted an all-day conference in January, exploring efforts to Islamize Pakistan's economy.

"Pakistan is far too large and far too important to be ignored," said Wilson Center President and Director Lee H. Hamilton at a ceremony celebrating the new partnership with FFFP. "By hosting conferences and seminars on Pakistan-related issues, and by bringing Pakistani scholars to Washington for extended periods of reflection and writing, the Wilson Center can help foster a greater understanding of each country in the other."

The Asia Program plans to host conferences and workshops on Pakistan throughout the year. At a February event, the Program hosted former Pakistani Prime Minister Benazir Bhutto, who discussed press reports detailing the leakage of nuclear technology from Pakistan, and outlined her vision for restoring democracy in the country.

Pakistani Scholarship
The first Pakistani scholar selected under this new FFFP-Wilson Center partnership will arrive at the Wilson Center in September 2004, and spend nine months in residence to carry out advanced, policy-oriented research and writing. Each year, the fellowship competition will be open to men and women from Pakistan or individuals of Pakistani origin. Candidates must currently be pursuing research designed to bridge the gap between the academic and policymaking worlds, a premise that lies at the heart of the Wilson Center's mission.

Islamization of the Pakistani Economy
The January 27 conference explored the implications of instituting an Islamic economy in Pakistan, an action being pushed for by important Pakistani political and religious groups. Such efforts nearly date back to the country's founding in 1947. Yet repeated efforts to create an Islamic economy have failed because the country lacks the institutions, legal structures, and other mechanisms needed to sustain such an economic system.

The October 2002 elections reinvigorated the drive to establish an Islamic economy. Six Islamic parties won 60 seats out of 272 contested seats in the National Assembly and the coalition captured control of one of Pakistan's four provincial governments. The Islamists there adopted a bill imposing sharia, Islamic law, throughout the province, sparking concerns in the West of a possible "fundamentalist" interpretation of Islamic law.

In the conference's keynote address, Ishrat Husain, governor of the State Bank of Pakistan, said such fears are unfounded and only underscore the clichés and stereotypes of Pakistan and the Islamic world widely held in the West. Husain said, "Pakistan is and will remain a responsible member of the international community." He described Islamic economics as a vehicle to promote "a balance between market, family, society, and the state." But, he added, Pakistan has a long way to go before it can adopt a full-fledged Islamic economic system.

Husain said the Islamic economic model seeks to harmonize self-interest with the social interest, giving self-interest "a longer-term perspective" by encouraging the individual to fulfill his or her social obligations. If fully implemented, he asserted, Islamization will address those income distribution and poverty alleviation issues where capitalism has fallen short. This, therefore, would "eliminate the sources of instability, violence, and propensity toward terrorism arising from a sense of deprivation."

The Islamic approach—a combination of capitalism and socialism—can demonstrate to the world that efficiency and justice can co-exist, argued Khurshid Ahmad, a member of the Pakistani Senate and a senior leader in the political coalition formed by Pakistan's religious parties. The global economy, he added, must be reformed to accept "a diversity of cultural regimes and market economies as a permanent reality."

Former World Bank officer Shahid Javed Burki, who also served as Pakistan's finance minister for a brief time in the 1990s, asserted past efforts to Islamize the banking system have largely been cosmetic. Rather than replace conventional institutions, Pakistan is likely to move, albeit slowly, toward a system of parallel banking and financial institutions that provides greater choice to the Muslim consumer. Wake Forest University's Charles Kennedy reviewed the "convoluted history" of legal efforts to ban financial interest in Pakistan and concluded that this has been both a political and legal matter.

Challenges to an Islamic Economy
Several panelists at the January 27 conference expressed concerns over the possible Islamization of Pakistan's economy, specifically in the areas of poverty alleviation, gender issues, political wrangling, and potential isolation. Omar Noman, a senior official in the United Nations Development Programme and an adviser to several Pakistani governments, welcomed the establishment of Islamic finance instruments but warned of the danger of isolating Muslims economically from the rest of the world. As Pakistan develops, he said, leaders should take precautions against fostering the idea that the Islamic model offers a direct competition to capitalism which, he said, would cultivate the notion of "Muslim separateness," a danger in the current international climate.

Parvez Hasan, a longtime Pakistani civil servant and World Bank official, highlighted Pakistan's failures in alleviating poverty. Out of a total population of 140 million, some 45 million Pakistanis live in poverty, and inequalities are growing.

Discussions of an Islamized economy have not addressed this glaring failure. For example, he said, the private charitable transfers envisioned under the Islamic system of zakat frequently fail to help the poorest sectors of society. He urged Islamic scholars to uncover feasible solutions to address matters of human development, inequality, and destitution to help the large number of Pakistanis who live amidst poverty.

"For Pakistan to break its cycle of poverty," said panelist Isobel Coleman, "it must focus on improving the status of women in education, health, job opportunities, legal status, and political participation. Islamization does little to encourage these objectives and in some ways, in fact, actively works against them." Coleman, a senior fellow at the Council on Foreign Relations, warned of the economic repercussions if women are not integrated into economic life. Coleman underscored that Islamization itself does not mandate gender discrimination, but that it often coexists with conservative values and traditions that do discriminate against women. To the extent that Islamization reinforces conservative norms, she insisted, it comes at a considerable economic cost.

Politically, Pakistan remains embroiled in an ongoing battle between an increasingly powerful state and the influential religious leadership. Expanded state power has provoked resistance, argued Vali Nasr, a professor of the Naval Postgraduate School in Monterrey, California. Islamization may serve only to intensify these struggles. Columbia University scholar Saeed Shafqat spoke of the need to "reinvent" Pakistan. Promoting democracy, he said, requires strengthening political parties, but the parties need to shift priorities away from power-grabbing and toward reform.

Akbar Ahmed, a professor of Islamic Studies at American University, said Pakistan does not need reinvention but "rediscovery." He recounted that Mohammed Ali Jinnah, Pakistan's founder, stood for democracy, human rights, minority rights, and respect for constitutionalism and the law. True Islam, he asserted, is about compassion and tolerance. He said Pakistanis must return to their roots and only then can the country escape the suspicions under which it presently labors and take its rightful place among the nations of the world.