Rising In the Ruins

MY YEARS-LONG WRITING on Pakistan shifts from one spectrum to another with the resolve to focus on the positive while never avoiding the undesirable. My current state of mind is despondency, mostly. The last eleven months are a grave reminder of the unalterableness of Pakistan’s principal reality despite the change of faces in its power structure. Today, Pakistan teeters on the edge of a political and economic abyss. Or is that mere hyperbole?

Imran Khan’s ouster from power on April 10, 2022 was a shock to the apathetic sensibilities of those who had lulled themselves to believe that Pakistan was a democracy, albeit a precarious one. Another prime minister was removed from their position on flimsy pretexts, business-as-usual in Pakistan. What was unexpected was the massive public reaction to Khan’s ouster, which many look at as a coup. Khan, in less than a year, has become the sole national leader whom millions of Pakistanis support as the last hope for strengthening of the supremacy of the vote and the constitution of Pakistan.

Today, the economy is in dire straits; the incumbent government is refusing to hold elections in Punjab and Khyber Pakhtunkhwa, in direct negation of the constitution of Pakistan; inflation is at a 49-year high; political polarisation is toxic; and Imran Khan’s popularity is on a record high.

As I continue to laud the good in my beloved homeland, the eternal optimist in me is a tad wary, a tad tired of continuing to take a comprehensive look at where Pakistan stands today. When I started to write a couple of days ago, I had second thoughts about repeating my concerns, and ergo I decided to take the opinions of those whose appraisal of Pakistan is multifaceted. A renowned intellectual, a top talk show host, an astute financial consultant, and a brilliant former minister. What they have to say is a microcosm of the diversity of views that encapsulate the current reality of Pakistan.

Rashed Rehman (Veteran journalist who has held senior editorial positions in several national newspapers): There are currently four major crises gripping Pakistan: political, economic, social, terrorism.

The political crisis is the breakdown of even the flawed parliamentary democracy we have, or at least aspire to, as a result of Imran Khan’s ouster through a no-confidence motion, backed by the military, and his response: my way or the highway. In other words, the minimum consensual basis of parliamentary democracy and political rivalry does not exist, and even elections are unlikely to restore it. Post-elections, the polarisation is likely to continue and the military establishment, despite playing its card close to the chest after the Bajwa-Khan “experiment”, is currently tilted against Imran Khan. Politics, therefore, is likely to play out in confrontational style, with the prospect of violence just below the surface.

The unsustainable economic development model being pursued post-Bhutto (Zulfiqar Ali), that is, a neoliberal free market economy based on privatisation and entrepreneurship, has been exposed as dependent critically on loans and/or aid from international bilateral and multilateral lenders and friendly countries. The US has wreaked its revenge for Pakistan’s role in its defeat and chaotic retreat from Afghanistan by squeezing Pakistan through the International Monetary Fund’s (IMF) stringent and ever-shifting conditions. The IMF programme is critical for Pakistan to be able to access loans from other international lenders, such as the Asian
Development Bank and friendly countries such as China, Saudi Arabia, and UAE. Depleting foreign exchange reserves have forced the PDM (Pakistan Democratic Movement) government to clamp down on imports, 80-90 per cent of which are plant, machinery, and raw materials for industry. Their non-availability has led to industry closing down, affecting exports and our current account deficit.

Pakistan stands at one of its history’s most challenging moments, in particular on the economic front. The last eleven months have been a challenge—politically, with democracy under threat, and economically because it is very difficult to engineer an economic turnaround when there is political turbulence. That political turbulence will not end without elections

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The privatisation mantra since Bhutto’s overthrow in 1977 resulted in de-industrialisation because many of the privatised industries sold their plant and machinery as scrap and converted the land to real estate. Heavy industry set up by the state under Bhutto lies shut because the private sector is not interested in inherently long-gestation, relatively low-return heavy industry. Some examples of shut heavy industry are Pakistan Steel Mills, Heavy Mechanical Complex, Heavy Electrical Complex, Pakistan Machine Tool Factory, and Risalpur Locomotive factory. Not one big industry has been set up in the last fifty years. Existing industry such as textiles is basically a rentier sector, constantly seeking concessions from the state and unable to compete internationally. Agriculture has been ruined in the absence, or rather reversal, of land reforms. Inefficient large landowners cannot match the three times yield of East Punjab, India, after land reforms, intensive cultivation, and state support.

The economic frustrations of the poor are giving rise to crime, only a step away from a universal assault by the poor on the rich. Anger is rising, violence at the drop of a hat is prevalent. Anarchy and bloodshed are threatened.

Imran Khan’s “invitation” to the TTP (Tehreek-e-Taliban-e-Pakistan) to return has wasted—apart from the neglect of rooting out sleeping cells and facilitators left behind—the success of the military operations after APS Peshawar against the TTP. In any case, the snake was not scotched, the problem “exported”. Now the Afghan Taliban, after coming to power in 2021, are supporting the TTP and equipping it with the sophisticated arsenal left behind by the US.

Maria Memon (Host of Sawaal Yeh Hai on ARY NEWS): The PDM government is delaying or trying to avoid elections for the fear of impending loss or at least a less-than-expected showing, as evident from the by-elections held so far. It should also be kept in mind that both sides want to have simultaneous national and provincial
elections, but the incumbent government desperately wants to finish its tenure in the Centre. PTI (Pakistan Tehreek-e-Insaf) and Imran Khan, on the other hand, want early elections, not just for two provincial assemblies but the national and other provincial assemblies as well.

Right now, PTI’s hand is stronger, having dissolved the assemblies and having the decision from the Supreme Court to hold elections without further delay. The government is now facing a dilemma: if they go for two provincial elections, they risk losing two provincial governments, which will also have bearing on the next general elections. But at the same time, they don’t have the confidence to go all out in general elections.

Samir Ahmed (Financial markets professional): Trouble started when Shaukat Tarin came in as finance minister (April 2021). Pakistan had come through a very difficult period of IMF conditionalities and Covid devastation, handled quite efficiently by Hafeez Sheikh (federal minister for finance and revenue affairs, December 2020-March 2021). Decent growth was happening, but essentially, we needed to tighten our belt. Tarin’s mantra was growth, growth, growth. What happens in growth is we start spending, and our macroeconomic situation goes out of whack. Imports are hugely increased while exports are not increased proportionately, and consequently, the external account imbalances increase. It was imperative to slow down the economy at that time—put our house in order, put government spending in order.

Unfortunately, later in 2021, the political troubles with PDM worsened, and the vote of no-confidence (VONC) was presented in March 2022. The PTI government, in a populist measure, lowered the fuel prices instead of increasing them, thus worsening the fiscal deficit when belt-tightening was needed.

After the VONC, the new PDM government came in. They were acutely aware, or should have been, of the imperativeness of a strict fiscal discipline and seeking timely help from the IMF and other international financial institutions. The last IMF programme had been derailed because the government had not met the IMF-imposed conditions. The new government lacked legitimacy and didn’t have a mandate, thus rendering them unable to immediately take the necessary difficult steps. The biggest one was increasing the fuel prices. That took months before Miftah Ismail (PDM minister for finance, April-September 2022) was able to do it.

Ishaq Dar (finance minister in the last PML-N government), who replaced Ismail, exacerbated the macroeconomic problems, with his obsession with lowering the PKR-USD exchange rate. An exchange rate is market-determined; it is, basically, the purchasing power of a currency. If inflation is high in Pakistan, the purchasing power is decreased, which means the currency will be depreciated. Dar tried to prevent that.

Administrative measures like curbing imports to stop the currency depreciation were taken. Market had its own momentum, and the government lacked the economic strength and FX reserves to stop the market forces. The currency eventually dropped. When that happens, prices of imported items—the biggest one is fuel—are inflated, resulting in a round of inflation. Globally, inflation, including food inflation, is also on the rise.

Dar’s stubbornness in dealing with the IMF progressively worsened the situation and eventually failed. If the IMF stipulations had been accepted six months ago, things wouldn’t have gone so far.

The current situation is that the debt burden is very high, accumulated over the last few decades. Pakistan cannot repay these debts as it is too much of a squeeze on our growth, our people, on our country. Now the option of debt-restructuring or reprofiling is being discussed. Some kind of debt relief is required.

Taimur Khan Jhagra (Former minister of finance and minister of health, Khyber Pakhtunkhwa): Pakistan stands at one of its history’s most challenging moments, in particular on the economic front. The last eleven months have been a challenge—politically, with democracy under threat, and economically because it is very difficult to engineer an economic turnaround when there is political turbulence. That political turbulence will not end without elections.

Imran Khan’s ‘invitation’ to the TTP to return has wasted—apart from the neglect of rooting out sleeping cells and facilitators left behind— the success of the military operations after APS Peshawar against the TTP. In any case, the snake was not scotched, the problem ‘exported’

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What gives me hope is that the people of Pakistan, in the last eleven months, have actually stood up, like they may never have done before, behind Imran Khan. And they have done so not just for Imran Khan but for the sake of democracy and the constitution of Pakistan.

If our people can do that and stand behind democracy, then I think they can also get behind an economic turnaround. That economic turnaround will require difficult decisions and challenging reform.

But once elections are held, and if Imran Khan comes into power, given that he has now fully obtained the trust of the people, not just as a politician, but as a leader standing up for his country, then this sort of crisis—while it causes a lot of pain to hundreds of millions of people—also provides a burning platform that we need to spur ourselves to do the sort of reform that can turn Pakistan around permanently, and actually help it fulfil its potential as the fifth largest country in the world.

About The Author

Mehr Tarar

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