Political Economy Woes

Political Economy Woes
A cursory glance at front page news tells a worrying tale of economic and political woes.

The Economic Coordination Committee of the federal cabinet has deferred a decision to increase the support price of wheat for the next crop because it will definitely fuel food inflation at a time when curbing inflation is possibly the biggest item on its agenda. It’s so worrying that Imran Khan is desperately exhorting his rag tag Tiger Force to lend a hand in monitoring and controlling prices. One manifestation of this is the occupation of D Chowk in Islamabad by thousands of lower grade government employees agitating for salary increases and by health workers protesting price hikes of essential commodities. It’s only a matter of time when other sectors and groups erupt on the streets across the country. Unfortunately, however, the problem is going to get worse in the coming months.

The IMF has not given a penny this year to the government because its conditions for a third tranche of the three year $6b structural adjustment program remain unfulfilled. Come January 2021, if the government hasn’t significantly raised gas, petrol and electricity prices, if it hasn’t significantly increased tax collection, if it hasn’t managed significantly to reduce the circular debt, it may simply walk out of Pakistan, as it has done on all except one occasion in the last twenty years. But if the IMF exits, the World Bank, the Asian Development Bank and other international finance institutions will follows suit. Indeed, the government’s bid to float Euro/Sukuk bonds to raise forex from the international market would have to be shelved, putting pressure on its depleting forex reserves and effectively devaluing the rupee further. With GDP growth forecast at below 1%, unemployment will exceed 30m, joining hands with inflation to besiege the government like never before.

As if the internal situation wasn’t bad enough, we have unprecedented external pressures. NSA Moeed Yusuf has revealed a dastardly Indian hand behind increasing acts of TTP terrorism, Baloch insurgency, Sunni-Shia sectarian conflict, hybrid warfare and border clashes in which Pakistani soldiers are martyred every day. Relations with Saudi Arabia, an old friend with cash and oil handouts, and OIC countries are at rock bottom. And America and the Western world with whom Pakistan’s trade and aid is predominantly tied are at odds with Pakistan’s increasing ties with China against whom they are formidably arrayed.

To take advantage of this rapidly developing crisis-situation, the combined opposition parties have finally banded together to try and oust the PTI governments in Islamabad, Punjab and Khyber-Pakhtunkhwa. The Pakistan Democratic Movement is led by anti-Miltablishment hawks Nawaz Sharif and Maulana Fazal ur Rahman, who have their fingers on the pulse of the enraged public, after the failure of the pro-Miltablishment doves led by Asif Zardari and Shahbaz Sharif to effect change. The PDM has chalked out a four month plan to progressively up the ante until the Miltablishment is compelled to stop propping up the PTI government and abandon it to its fate. The strategy is to start with big “jalsas” across the length and breadth of the country for the next two months, gearing up to rallies and street protests by December, climaxing with a long march to D-Chowk to lay siege to parliament, possibly with mass resignations from federal and provincial parliaments to trigger constitutional lockdown. Ominously, the PDM’s leadership is in the hands of Maulana Fazal who can field tens of thousands of fearless, religiously motivated warriors who, if push comes to shove, will not be cowed down by the organs of the state.

Despite outward bravado, the government is, pardon the cliché, excreting bricks. It intends to use a demoralized civilian bureaucracy and police to stop the PDM by a variety of methods – containers to block traffic, arrests of key leaders, water cannons and tear gas to disperse agitating crowds. But the probability of state repression triggering violence with unintended consequences is very high, a factor that will feed into the anti-government rage on the street. At some stage, the Miltablishment will be compelled to step in to bail out the government or throw it overboard. If it does the former, it will be further discredited and abused; if the latter it will have to compromise with erstwhile “hostile” political leaders by opening up political space and stepping back into the shadows.

Imran Khan’s strategy of exerting all his government’s energies into hounding the opposition to the wall has backfired on several fronts. First, it has distracted from the main job of government to deliver sound and stable economic policies to the people. Second, it has divided the nation for internal and external reasons precisely at a time when it should be most united. Third, it has alienated the Miltablishment from a majority of voters and eroded its “sanctity” whence it derives its ubiquitous power. By association-default, the judiciary, NAB, government-controlled or managed media and other state organs and agencies are unable to check the gathering storm.

The sooner wiser heads prevail in charting the political economy of Pakistan, the better.

Najam Aziz Sethi is a Pakistani journalist, businessman who is also the founder of The Friday Times and Vanguard Books. Previously, as an administrator, he served as Chairman of Pakistan Cricket Board, caretaker Federal Minister of Pakistan and Chief Minister of Punjab, Pakistan.