European Union is among the biggest donors that have been engaged in Pakistan. The EU has funded, executed and run many projects in Pakistan. Its focus has been on promotion of education, poverty alleviation and empowerment of the people of Pakistan. The trade activity between EU and Pakistan has also increased. In addition, the Commission has also allocated some additional funds for different projects. To discuss EU-Pakistan trade and economic relations, this correspondent interviewed Mr. Iikka Uusitalo, the Ambassador / Head of Delegation of European Commission in Islamabad.


Here are excerpts from his interview.

How do you view the investment climate of Pakistan and what is the trade volume between EU and Pakistan?
Let me be very frank here that law and order situation has been major concern for the foreign investors. The 9/11 incidents, ongoing tension between Pakistan and India and terrorists attacks have all contributed towards low inflow of foreign investments. The governance is another issue that has direct link to all such investments.

There are quite a lot of things which should be done internally that relate to good governance, introducing more transparent procedures and providing better legal framework also to foreign investors in order to give protection to their businesses.

The balance of trade was in favour of Pakistan. In fact, trade activity between EU and Pakistan has increased over the years. EU has provided extra concessions to Pakistan, which had direct impact on the level of Pakistani exports. Figures show that about 2.9 billion dollars exports are going to the EU countries while Pakistan imports goods worth 2.1 billion dollars from the European Union countries.

Pakistan’s trade is heavily textile driven which is about 60 per cent of the total trade. Pakistan, therefore, should seek diversification in order to enhance its earnings. Then most of Pakistan goods go to traditional countries such as Germany, France etc. Now, when the EU would stand expanded from next year, Pakistani exporters should cash in on this opportunity and divert exports to these countries as well.

Let me avail this opportunity to tell you briefly what we have been doing in Afghanistan. About 200 million US dollars have been allocated in 2003 for the reconstruction of Afghanistan. An additional amount of about 70 million Euros would be spent on the humanitarian side. EU was one of the leading donors in Afghanistan and it would continue to be so, in the larger interest of the people of that country.

Would you like to indicate the key areas, the European Union is more interested in, in Pakistan?
Education, of course, has been our priority in Pakistan. European Union has earmarked a handsome amount of 59 million euros (about four billion rupees) for the promotion of education in Pakistan. This grant would be spent for the upgradation of education standard and knowledge-enhancement of the teachers. The quality of teaching will also be improved.

The Commission has been working in Pakistan for long time. Our focus has been on rural development and education sector. The Commission had allocated additional funding of 71 million euros under the National Indicative Programme, for the period 2003-2005 out of which 59 million euros would be spent for the promotion of education in the country.

The statistics show that there is an imbalance in literacy rate development in the rural areas and the urban areas. The rural areas are badly lagging behind, which does not augur well. This is a serious problem that has to be dealt with on a war-footing.

Would you like to spell out EU plans for poverty alleviation in Pakistan?
European Union wanted to contribute towards government efforts for poverty alleviation. Investment in people and education was the best way to eliminate poverty, therefore, there is need for enhanced focus on the improvement of literacy rate in the country.

EU was also focusing on child labour in Pakistan and an amount of 5 million euros had been allocated in this regard. We have planned to work hand-in-hand with the Government of Pakistan in order to address the child labour issue effectively and immediately.

Do you witness any problems in execution of projects?
I have to admit that there are some problems regarding the implementation and execution of certain plans. There are of course some procedural problems on our side as well, but we will have, in near future, a new system in place whereby the delegation here would be empowered to execute and sign new projects on its own.
The red-tapism is another problem, which often creates inordinate delays in the execution of certain projects. We are trying to work closely with the Government of Pakistan to sort out such issues so that unnecessary delays could be avoided.