Angela Merkel would not have been the first woman chancellor of Germany if she were not tough in decision-making and frank in expression; something the Pakistani leadership learnt firsthand during Prime Minister Gilani's recent visit. Addressing a joint press conference with the Pakistani leader after signing the upgraded version of an economic co-operation agreement, she advised Pakistan to improve its governance in order to restore the strength of its economy.
"We will continue our support to Pakistan, but it is on the part of Pakistan to ensure the complete implementation (of the agreement)", she said. Obviously, during her one-on-one talks with Prime Minister Gilani, the German chancellor must have been more explicit in conveying her mind, especially on the mushrooming growth of the political and bureaucratic corruption, which places Pakistan in the company of the world's most corrupt regimes, and the trend is worsening by the day. A reflection of her advice is clearly visible in the text of the said agreement, which is expected to provide "a basic framework for the reciprocal protection of investment, including non-discriminatory disputes".
Having said that one cannot overlook the historical significance of the event and its portents for the two countries given that Germany is one of Pakistan's most important economic partners. Originally named Bilateral Investment Treaty (BIT), the agreement was the first after the Second World War that Germany signed with any other country.
Having served half a century of bilateral co-operative relationships, it has been now renamed the 'Agreement of Encouragement and Reciprocal Protection of Investments', as it envisages a wider field of co-operation including investment, energy, education and infrastructure. Closer examination, however, reveals the German desire to lend a pronounced nuance of winning hearts and minds of the people of Pakistan, rather than the erstwhile business-oriented relationship with Pakistan.
No wonder then the German government declined to give any assurance to the visiting delegation regarding the sale of military equipment. Though the German chancellor was reportedly sympathetic to the Pakistani request, viewed as it was in the backdrop of its fight against terrorism, but she expressed her inability to meet it, given that 'there is a whole regime of restrictions imposed by successive administrations'.
Germany can also open the door of the European Union on Pakistan, said Chancellor Merkel. She said at the news conference: "Germany will facilitate the Free Trade Agreements (FTAs) of Pakistan with EU member-states, besides large-scale market access to Pakistani products in European markets". Already, under the framework of Friends of Democratic Pakistan (FoDP), Germany continues to support Pakistan in a number of socio-economic fields.
But the bottom line remains that Pakistan must provide a level playing field to foreign investors, a precondition clearly manifest in the new agreement. Not only the two countries would accord fair and equitable treatment to investors of the other contracting state and provide full protection and security in accordance with customary international law, but "while returns on investment and re-investment will also be given the same protection as investment", that is an important stipulation of the bilateral agreement.
It is a huge challenge for our government. It's not that presently the security situation remains uncertain and foreign investors are afraid to invest here. But much more inhibitory factor is the multi-layered corruption, at all levels of the government, which comes into play as soon as a foreign investor lands. It's here that Chancellor Merkel wants Pakistan to improve governance.