It’s the economy, stupid!

It’s the economy, stupid!
In the last year or so, Prime Minister Imran Khan has spent a lot of time to-ing and fro-ing to China and Saudi Arabia. Now he has added the US and Iran to his itinerary. What is the purpose of these trips? Shouldn’t he spend more time focusing on the economy and political developments at home?

China is the largest foreign investor and trading partner of the country and it is the sole defense and strategic geo-political ally of Pakistan. Of late, however, the Chinese have expressed concerns about the fate of various CPEC projects launched during the PMLN regime that are languishing since the arrival of the PTI government. Four broad reasons are attributed to this slowdown: the PTI government’s investigations into the alleged “corruption” of the PMLN government in awarding contracts to Chinese companies; the PTI government’s inability to cough up countervailing funds for Chinese projects from its severely constrained budget; the IMF’s insistence on inspection of such contracts that have hitherto remained confidential and its advice to curtail further Chinese debt because of Pakistan’s inability to service it without dollops from Western aid agencies; and the lack of a modus operandi to accommodate the military establishment’s insistence on decision making regarding CPEC in equal measure with the civilian bureaucracy. Clearly, a lot of ironing needs to be done, both internally and with the Chinese government and companies so that misunderstandings are avoided and commitments are fulfilled with an all-weather friend and ally.

Saudi Arabia also occupies a unique position in Pakistan’s firmament. Put simply, Pakistan cannot “afford” to antagonize or alienate it under any circumstance. There are over 2.6 million Pakistani workers in the Kingdom; they remit over US$5 billion every year to Pakistan (about 25% of its total receipt of foreign remittances); the Saudis provide several billion dollars of deferred oil payment facilities to Pakistan; and have recently lent $ 3 billion to prop up Pakistan’s forex reserves. Additionally, over 70,000 Pakistani servicemen are employed in the Saudi military and defense infrastructure. Recently, Saudi Crown Prince Mohammad bin Salman was personally instrumental in facilitating the Pakistani Establishment’s “reset” in relations with the US which led to Pakistan’s renewed engagement with the Taliban to facilitate a favourable US exit from Afghanistan. In return, President Trump is leaning on India’s prime minister, Narendra Modi, to tone down his aggressive rhetoric against Pakistan, to lift the lockdown in Kashmir and avoid precipitating military conflict with its neighbor. His support is also critical to continued international financial assistance to Pakistan, especially from the IMF, no less than to stop Pakistan from sliding into the FATF blacklist which would put paid to its efforts to keep its economy afloat in a sea of indebtedness.

In recent years, however, tensions were reported between Pakistan and Saudi Arabia after the former refused to sanction military troops in aid of Saudi forces in the war in Yemen or take its side in its conflict with Iran. Indeed, the Saudis were so irritated when Imran Khan recently said in New York that he had been asked by Prince Mohammad bin Salman to mediate on his behalf with Iran that they promptly issued a statement denying any such request. Now Imran Khan has scurried to Riyadh to smooth over its ruffled feathers rather than report on any unwanted mediation with Iran.

After he became Prime Minister last year, Imran Khan announced he would not take foreign junkets and concentrate instead on arresting corruption, bringing back hundreds of billions in “looted” money in safe havens abroad, incentivizing expatriates to invest generously in Naya Pakistan, catch tax thieves and spurn foreign loans and debts. Under the circumstances, one year down the line, he has not succeeded in any of his objectives. International debt has piled up. Tax amnesty schemes have been launched. Only the tip of corruption has been tackled by NAB and that too at a huge cost – the civil bureaucracy has been rendered impotent and businessmen are scared of investing in Pakistan. Expatriates are not confident about the future of Naya Pakistan. Consequently, the economy is racked by crippling inflation, shutdowns, layoffs and rising popular discontent. A recent survey shows the PMLN’s popularity on the upswing and the PTI’s plummeting downhill. The disenchantment of Pakistanis with the Miltablishment for bringing in and then propping up Imran Khan is palpable.

Imran Khan has wasted a lot of time and energy making and unmaking economic and foreign policy. Someone should remind him that “it’s the economy, stupid!” It can’t be run by fiat or pious hope. It certainly cannot be revived amidst the gathering storm of political confrontation between the government and the opposition. Good governance is as much about political stability as it is about economic certainty. The recent announcement by the IMF that economic growth will fall to about 2.4 percent next year is ominous. Minister Fawad Chaudhry’s statement that people shouldn’t look to the government for jobs is another nail in the PTI’s coffin.

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.