Export Credit

World Bank’s renewed interest in Kalabagh Dam

June 18, 1998

ISLAMABAD, Pakistan, –Pakistan’s plan for economic recovery has run into trouble following a dispute over a controversial dam the government intends to build in central Punjab province. Last week, Prime Minister Nawaz Sharif (“nuh-VAHZ shuh-REEF”) launched a plan to counter international sanctions imposed after Pakistan tested six nuclear weapons last month. Construction of the Kalabagh (“KAHL-uh-bahg”) Dam is one of the pillars of this plan. By building the dam, the government hopes to cultivate thousands of acres of barren land in Punjab. “This will help save two billion dollars that Pakistan spends on importing food every year,” says Agriculture Minister Abida Hussain (“AH-bid-uh hus-SAYN”). She says the project will enable the country to produce surplus food, generate additional electricity and create new employment. Pakistan also wants to build the dam now because the World Bank has offered to finance the project. But after last month’s nuclear tests by India and Pakistan, the World Bank has told the two South Asian nations it may cut off assistance for new projects, though projects already approved will continue to be funded. Pakistani planners fear the funds for Kalabagh Dam may lapse and never be replaced. The dam, proposed for the Indus River, is politically controversial, with two of Pakistan’s four provinces objecting. Residents of the Northwest Frontier Province are unwilling to surrender hundreds of acres of fertile land under the dam, while residents of Sindh fear being deprived of irrigation water. Strikes have been observed or are planned in both provinces. Sharif has vowed to build the dam nonetheless.

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