This article is the first part of a special three part series. Part 2 can be read here. Part 3 can be accessed here.
The key lesson from the success stories in Asia is sobering and simple. It is the people, stupid! We must invest in people and empower them, especially women.
Pakistan cannot move forward without a major course correction. Pakistan's citizens, especially the young and women, must take charge of their destiny. The people must learn and reflect on the reasons behind Pakistan's failures since its independence. They must force the ruling elites to strike a development bargain that makes economic development the number one national priority and the achievement of a ninety percent literacy rate within 10 years as the most important goal, through the use of technological innovations and knowledge transfer from countries in Asia.
This goal will be next to impossible to achieve without removing distortions in the taxation of the real estate sector, restricting the government’s authority to allot state land, and devolving greater responsibility and authority to local governments. People must shun conspiracy theories, dogma and must stop waiting for a messiah to emerge. Until and unless a movement emerges that represents the people's aspirations to create an open society, as well as a genuinely democratic state that works for the people and not just for the ruling elites, Pakistan will not be able to evolve as a tenable state, let alone a self-respecting nation that can compete internationally. A country that is not internationally competitive is doomed to fail in our times.
Pakistan has regressed to 1985 when General Zia-ul-Haq conducted elections on a non-party basis, and installed a puppet government. It was only Zia’s death that paved the way for democracy to make a feeble return in 1988. For now, the democratic process is all but dead, regardless of the outcome of the February 8 elections. In their vengeful pursuit to eliminate former prime minister Imran Khan from politics, Pakistan’s establishment and big political parties have done greater damage to the political process and public confidence than even perhaps Zia did. Pakistan’s governance has turned from rot to a gangrenous mess. The manifestos of the political parties betray a woefully poor understanding of the gravity of Pakistan’s crises and offer no more than a few unrealistic promises to win votes.
This rather long piece on Pakistan’s multiple crises is necessary to trace their roots, which go back to the early years after Independence, to review the subsequent developments which led to the emergence of Pakistan as an authoritarian security state – a cursed identity which stands at the heart of our current problems. We did not arrive in 2024 as a fractured society and a fragmented nation simply as a result of recent political events, flawed macroeconomic policies or the all-consuming global energy crisis. The root cause of the great troubles brewing in our homeland runs much deeper in our history. Hence, it is essential to go back in time, introspect and learn from the failures.
It may sound cynical but it seems that Pakistan’s top military and civilian leaders and wealthy would rather see the country go bankrupt than pay taxes on their real estate!
After a discussion of some critical events from 1947 into the 1980s, this 3-part special reviews the political and economic decline since the 1990s, as well as the consequences of the policies whose seeds were sown during the early years of independence. What then follows is a discussion of the experiences of some other developing countries, Pakistan’s immediate policy challenges, and thoughts about the way forward.
Current Situation
Pakistan, the world's fifth-most populous country and a nuclear-armed nation, is currently facing a multitude of political, economic, security, and societal crises. With a median age of 23 and one of the fastest urbanization rates, Pakistan is experiencing a slow-motion implosion that threatens its future stability and growth prospects.
It may sound cynical but it seems that Pakistan’s top military and civilian leaders and wealthy would rather see the country go bankrupt than pay taxes on their real estate! No wonder the International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, had been compelled to say: “Pakistan needs to protect the poor and tax the wealthy while ensuring that subsidies are targeting those who really need them.”
These concerns have fallen on deaf ears. Pakistan’s misconceived energy policies have compounded its debt and fiscal issues, exacerbating the effects of the global energy crisis and climate change-related disasters, as seen in the floods of 2022. To avert a potential catastrophe, Pakistan needs to mobilize significant resources both internally and externally. However, an acute leadership crisis and public apathy provide little reason for optimism.
Amid such an untenable situation, how have people managed? Pakistan’s poorest 20% struggle to survive. According to a United Nations Development Program report, the “poorest 20% of Pakistanis fall in the low human development category, with a Human Development Index (HDI) value of just 0.419. This is below Ethiopia’s HDI value and comparable to that of Chad, which ranks 186th of 189 countries in the global HDI ranking.”.
Pakistan's foreign and security policy mistakes have added another layer to the country's ongoing crises. Trade with India would be beneficial for Pakistan but the issue is a political hot potato.
The situation has been exacerbated due to the economic downturn. “People have stopped buying clothes, reduced their food intake and cut down on medical expenses,” says Dr. Ali Cheema, a professor of economics at the Lahore University of Management Sciences, quoting a study of a lower-middle-class neighborhood in Lahore. “But they are still protecting, as best as they can, their children’s education.”
Large numbers of lower-income and middle-class Pakistanis are still able to make ends meet due to the generosity of their relatives abroad. In 2021, remittances from overseas Pakistanis accounted for 12.6% of the GDP, compared to 6.5% in Bangladesh and just 3% in India. It is not surprising, therefore, that 90% of Pakistan’s economy is driven by consumption and suffers from chronically low savings and investment levels.
Pakistan's foreign and security policy mistakes have added another layer to the country's ongoing crises. Trade with India would be beneficial for Pakistan but the issue is a political hot potato. Imran Khan's attempts to play a leading role in the Muslim world antagonized Saudi Arabia, which was traditionally one of the largest sources of bilateral aid. Pakistan's former army chief Javed Qamar Bajwa reportedly made secret overtures to the United States to reduce dependence on China, causing tension between the two nations.
On March 13, 2022, I tweeted:
An economic tsunami will hit Pakistan in the coming months and no government will be able to face it as the neither the establishment or the political parties have the capacity or plan to manage it. I shudder to think of the consensus.
— Yousuf Nazar (@YousufNazar) March 13, 2022
The worst economic crisis in Pakistan’s history is now a topic of discussion everywhere in the country. Topics such as elite capture and the military’s domination have become part of mainstream debates. Media often turns to economists to seek answers and solutions as if it is just an economic crisis. It is very clearly not the case.
Pakistan’s current economic meltdown is a crisis of competence if judged in light of the recent past. But in the context of history, it represents a colossal failure of the army establishment’s long-term political, economic, and foreign policies.
Historical Context
Present-day Pakistan is an ahistorical society and an intellectual wasteland, as Ayesha Jalal – one of Pakistan’s top historians – described it. Most of today’s widely held views on Pakistani history are greatly distorted and starkly contrast with the realities of the past. Generations have grown up believing false narratives so much so that even many of Pakistan’s best-educated doctors, engineers, teachers, bankers, economists, generals, and politicians demonstrate little understanding of the historical context of Pakistan’s existential crises.
It stands as pertinent, thus, to evaluate the decisions made in Pakistani history that led us to this position. That our state was birthed as an authoritarian security state, that we continued to persist in confusion about the role of religion in our nation, and that the military has continued to siphon rents for the last seventy-five years all stand as parts of our history we must deeply scrutinize.
Pakistan is the only country in the world’s history that broke up after just twenty-four years of its creation because the majority of the population – around 55% in 1971 – decided to form an independent country. The creation of Bangladesh based on ethnic nationalism signified that religion alone was not enough to keep a country united.
Pakistan’s average GDP growth rate was 6.66% during the five years from 1963 to 1968. The GDP growth rate was 9.79% in the fiscal year 1969-70, the highest ever in the last 75 years. Within the next two and half years, neither the ‘record GDP growth’ nor the military or the famous tilt of President Richard Nixon towards Pakistan could save the country from dismemberment and a complete collapse. Why?
After independence, Pakistan’s rulers ignored or forgot what was among the critical reasons for Muhammad Ali Jinnah’s demand for Pakistan. Jinnah declared in 1938, even before the demand for the partition of India was made, that:
“Muslims have made it clear more than once that besides the question of religion, culture, language, and personal laws, there is another question of life and death for them and that their future destiny and fate are dependent upon their securing definitely their political rights, their due share in the national life, the Government and the administration of the country.”
Even as all of India attained its independence, its Muslims feared that the majority Hindu populace would dominate the state – and a result of this would be their exclusion from governance and a future paved with suffering.
Indeed, Shah Waliullah (1703-81), a Sufi scholar, wrote to the Afghan King, Ahmad Shah Abdali, imploring him to help Indian Muslims. The Sufi wrote: “The Muslim community is in a pitiable condition. All control of the machinery of the government is in the hands of Hindus because they are the only people who are capable and industrious. Wealth and prosperity are concentrated in their hands, while the share of Muslims is nothing but poverty and misery.”
The Birth of an Authoritarian Security State: Pakistan in 1947
For most of its history, Pakistan has been governed as a centralized authoritarian state although it came into existence as a democratic federal state.
Pakistan was a multi-ethnic, multi-lingual, multi-cultural and multi-faith state when it was born. It still is and will continue to be. Thus, it stands as regrettable that, instead of celebrating this diversity and respecting different cultures, ethnicities, languages, and faiths, Pakistani authorities – starting from its founding members – resorted to undemocratic means and unconstitutional acts to impose a unitary and monolithic system immediately after Pakistan was created.
A national priority of security began to influence the newly independent state, arguably, before even its common citizenry could.
Since 1947, Pakistan’s number one priority has been “security” in the narrowest sense of the term. It has not been economic development. If we understand the full implications of this, it would be easier to understand what went wrong. This is true regardless of who – civilians or generals – was in power. Therefore, there stands a critical question that merits deep discussion: is the political economy model of the security state, as practiced (and indeed, failed) by Pakistan a durable form of governance?
A national priority of security began to influence the newly independent state, arguably, before even its common citizenry could. The first India-Pakistan War of 1947–1948 was fought over Kashmir. Following a Muslim revolt in the Poonch and Mirpur area of Kashmir, on October 22, 1947, a Lashkar of tribals from north-western Pakistan, some five thousand strong, led an incursion into the valley from Abbottabad. Even as the Indian army came to the rescue of Kashmir’s maharaja, the joint incursion of the Lashkars and regular troops enabled Pakistan to acquire roughly two-fifths of Kashmir which it established as Azad Kashmir. On October 30, 1947, Mir Laik Ali, a special emissary of Quaid-e-Azam, met with the US state department officials in Washington and requested American financial assistance.
The two events, the use of tribal Lashkars and the request for US financial assistance, took place within three months of Pakistan’s birth and were to cast a long shadow over Pakistan’s policies.
On September 7, 1947, Quaid-e-Azam told cabinet ministers that, “Pakistan is a democracy and communism does not flourish in the soil of Islam. It is clear therefore that our interests lie more with the two great democratic countries, namely the United Kingdom and the US rather than with Russia.”
Balochistan, the largest Pakistani province by area, was forcibly annexed by Pakistani authorities after the ruler of the state of Kalat declared independence on August 15, 1947. Balochistan has been simmering with discontent and its youth have been seething with anger for decades since the first Baloch insurgency led by Shahbad Abdul Karim in 1948.
Another unconstitutional act took place just days after partition. Jinnah dismissed the North West Frontier Province’s (later renamed Khyber Pakhtunkhwa) duly elected government of Dr. Khan Sahab on August 22, 1947. Pashtun leaders opposed and even clashed with the military-dominated federal government throughout Pakistan’s history. In recent history, many prominent Pashtun leaders have accused the military of supporting the Taliban to suppress Pashtun nationalists.
Sindhi leaders developed differences with the central leaders soon after the independence. The Sindh Assembly unanimously passed on February 2, 1948, a resolution opposing the ‘contemplated move of the Pakistan Government to remove the city of Karachi from the control of Sindh administration and place it under its own immediate jurisdiction as a centrally administered area.’
Ayub Khuhro, the first elected chief minister of Sindh after the independence, was dismissed on April 26, 1948. Much to the chagrin of Sindh’s elected representatives and against their expressed wishes, Karachi was declared the capital of Pakistan by the Governor General’s order issued on July 23, 1948.
During the February 1948 session of the Constituent Assembly, a Bengali member moved an amendment motion to include Bengali as one of the languages of the Assembly, arguing that the majority of the population of Pakistan spoke Bangla. Prime Minister Liaqat Ali Khan vehemently opposed the motion. On reaching Dhaka in March 1948, Quaid-e-Azam Mohammad Al Jinnah declared that only Urdu would be Pakistan’s state language, ‘If anyone tries to mislead you in this regard, he is Pakistan’s enemy.’
That too was hypocritical because it was English that continued to be the official language and that of the ruling elites. This sowed the seeds of the language movement in East Bengal leading to the killings of February 21, 1952. This day was commemorated as Martyrs Day in former East Pakistan and marked the beginning of the politics of Bengali nationalism within Pakistan.
Contradictions in State-Religion Dynamics and Widening Disparities in Governance – 1947-1988
Pakistanis have long been tormented about the role of religion in their state. Pervasive double standards and bigotry have prevented honest public discourse about the place of religion in society and its relationship with the state. Pakistan has degenerated into a society where intellect is considered a handicap and hypocrisy a pinnacle of wisdom. The roots go back to the 1947-48 period in the context of post-independence history. Jinnah had declared in his address to the Constituent Assembly on August 11, 1947:
“We are starting with this fundamental principle: that we are all citizens, and equal citizens, of one State. The people of England in [the] course of time had to face the realities of the situation, and had to discharge the responsibilities and burdens placed upon them by the government of their country, and they went through that fire step by step. Today, you might say with justice that Roman Catholics and Protestants do not exist; what exists now is that every man is a citizen, an equal citizen of Great Britain, and they are all members of the Nation. Now I think we should keep that in front of us as our ideal, and you will find that in course of time Hindus would cease to be Hindus, and Muslims would cease to be Muslims, not in the religious sense, because that is the personal faith of each individual, but in the political sense as citizens of the State.”
This was how Pakistan came into the world – as a state of contradictions – dependent on Western financial assistance and a centralized security apparatus, while cherishing Islamic ideals and rejecting Western economic systems.
However, in his October 30, 1947 speech at the University Stadium Lahore, Jinnah’s words contradicted not just the words, but the essence of his message to the Constituent Assembly. He told the Lahore crowd:
“Take inspiration and guidance from the Holy Quran, the final victory will be ours [….] You have to develop the spirit of mujahids. All I require of you is that everyone … be prepared to sacrifice all, if necessary, in building Pakistan as a bulwark of Islam.”
From giving an example of Great Britain as a secular country, Jinnah went on to criticize the Western world in his address at the foundation ceremony of the State Bank of Pakistan on July 1, 1948:
“The Western world, in spite of its advantages, of mechanization and industrial efficiency is today in a worse mess than ever before in history. The adoption of Western economic theory and practice will not help us in achieving our goal of creating a happy and contended people. We must work our destiny in our own way and present to the world an economic system based on the true Islamic concept of equality of manhood and social justice. We will thereby be fulfilling our mission as Muslims and giving to humanity the message of peace which alone can save it and secure the welfare, happiness, and prosperity of mankind.”
And this was how Pakistan came into the world – as a state of contradictions – dependent on Western financial assistance and a centralized security apparatus, while cherishing Islamic ideals and rejecting Western economic systems. This state was run by a military and civilian bureaucracy that had little representation from the majority province – East Pakistan. In April 1952, out of the 91 Federal government secretaries, joint and deputy secretaries, none belonged to Baluchistan; 40 were Punjabis, 33 Muhajirs, 5 Bengalis, 3 were Pashtuns and only 1 Sindhi.
In 1949-50, the level of per capita income in West Pakistan was only 10% higher than in East Pakistan. This disparity had risen to nearly 38% by 1969-70. This was despite the fact that the Eastern wing for years, through jute exports, earned more foreign exchange than the West.
Pakistan’s history remained bleak in this period. The Objectives Resolution and the military takeovers of 1958 and 1969 were to define Pakistan’s future course. 1971 is a tragic chapter by itself – over fifty years later, we are still in denial over the departure of a majority of the state. A lot has been written about the period from 1948 to 1971. I will just mention a few blunders.
Post 1971, under Zulfikar Ali Bhutto’s democratic government, ordinary mortals arrogated themselves the right to determine the relationship between God and an individual. They did so through the 2nd Amendment in the constitution and declared Ahmadis as a minority, sowing the seeds of fanaticism and militant extremism that were to rock the country later. The army operation in Balochistan was Bhutto’s second major blunder.
Under General Zia-ul-Haq’s military regime, Pakistan became one of the biggest hubs of narcotics and arms trafficking in the world. The state of Pakistan became a criminal enterprise as the government-supported militant groups brutalized and criminalized politics and, in the process, did severe damage to the future of democracy and development in Pakistan.
General Zia-ul-Haq represented the worst of a fascist and bigoted mindset. The Afghan jihad was a complete fraud. Zia accepted weapons from Mossad, Israel’s intelligence, to send to Afghanistan, allegedly joking with the Israelis, “just don’t put any Stars of David on the boxes.” An American-backed military dictator armed various religious and ethnic groups, as part of divide and rule policy, and, in the process, tore apart the entire fabric of society.
As one of Pakistan’s most prominent political scientists Ishtiaq Ahmed wrote, a feeling that the country is a “fortress of Islam” has been cultivated as part of national identity. Still, a visitor to Pakistan cannot but notice that ‘Islamist rhetoric has profoundly affected society, creating a mindset that is “violence-prone.” The country could never really recover from the wounds inflicted during Zia’s traumatic rule. Some economists analyzing Zia’s period using standard metrics miss this much bigger and crucial point.
By 1987-88, defense spending had overtaken development spending and averaged 6.5% of GDP for the next several years. Development spending during Zia’s regime was curtailed to 3% of GDP resulting in infrastructure bottlenecks and neglect of education and health.
Under General Zia-ul-Haq’s military regime, Pakistan became one of the biggest hubs of narcotics and arms trafficking in the world. The state of Pakistan became a criminal enterprise as the government-supported militant groups brutalized and criminalized politics and, in the process, did severe damage to the future of democracy and development in Pakistan.
The Military-Elites Nexus and Rent Seeking: A Persistent Tradition Birthed in 1977
Another factor that aggravated these problems was opportunistic kleptocracy. Soon after independence, the Muslim League came to be dominated by a feudal aristocracy that had contributed little to the Pakistan movement. It was full of opportunists who jumped on the Muslim League bandwagon and had no vision for Pakistan’s future beyond empty rhetoric and exploitation of religion for political purposes.
The focal point of the security state has been the threat - both real and exaggerated - from India and the stated need for a large standing Army and its need for military hardware and money. Development issues such as land reforms, the need to broaden the tax net, and develop export-oriented industries were put on the back burner.
Ziaul Haq’s military regime, soon after the military coup of July 1977, repealed a law that had introduced agricultural income tax earlier that year. Years later, in 1996, the provincial assemblies reintroduced agricultural income tax but the implementation has been almost non-existent due to influence of the powerful landlords. The Shariat Appellate Bench of the Supreme Court declared land reforms (introduced in 1972 and 1977) in Pakistan as un-Islamic in 1989.
General Zia and his corrupt fortune-making cronies boasted of defeating the Soviets. While the Afghan war, nuclear program, Islamization, non-party elections, ethnic & sectarian conflicts, and other such issues dominated the headlines, the real ‘political economy’ or the game was mostly about protecting the security state apparatus that provided the maximum benefits to key stakeholders, i.e., army, big business & landed elites.
A combination of aid, subsidized loans, protectionist trade policies, and a lax tax regime benefited the civil and military bureaucracy, inefficient industries, and tax-evading business magnets. This bought the military their support at the expense of the vital economic reforms that should have been undertaken to prepare Pakistan for the 21st century.
While China, Korea, Taiwan, and the rest of East Asian countries adopted policies for exports-led growth, the trade regime in 1988 [at the end of Zia ul-Haq’s rule], according to a World Bank report, “still seems to be biased in favor of import-substituting production. Domestic markets are insulated from foreign competition through non-tariff barriers and high tariffs.”
The average expenditure on education as a percentage of GNP was criminally low at 0.8% in the 1980s, while General Zia and his corrupt fortune-making cronies boasted of defeating the Soviets. While the Afghan war, nuclear program, Islamization, non-party elections, ethnic & sectarian conflicts, and other such issues dominated the headlines, the real ‘political economy’ or the game was mostly about protecting the security state apparatus that provided the maximum benefits to key stakeholders, i.e., army, big business & landed elites.
In 1988, Pakistan’s nominal tariff rates (around 66%) for manufacturing industries were among the highest and Pakistan’s tax-to-GDP (13.6%) was among the lowest in the developing countries. These policies were instrumental in promoting the robber baron culture under what was a patronage-driven protectionist economy incapable of standing on its feet. In an increasingly competitive world market, Pakistan’s economy lost out.
This article is the first part of a special three part series. Part 2 can be read here. Part 3 can be accessed here.