A Politico-Economic Quagmire

The key question is whether leaders and institutions are cognizant of the gravity of challenges confronting Pakistan

In recent years, Pakistan’s politico-economic quagmire has not only continued to worsen but in the last few months has reached alarming level. It is an undeniable fact that following the country’s independence in 1947 on the promise that it would be a progressive and welfare-oriented state, the progress of Pakistan’s state in the past 75 years in terms of addressing political, economic and societal fundamentals has been quite wayward. In particular, in the last 30 years since 1992, the governance paralysis has not only become intense and acute, but there has been no serious effort or focus for rectification and course correction.

The current political crisis, while the country has been on the brink of collapse for many years, is only a natural outcome of the policies the country has pursued, or not pursued. In other words, expecting different results despite incoherence and mismanagement in all areas of national activity for such a long time would be naïve and unrealistic. More importantly, there is no shortcut or easy way out from multiple crises being faced by Pakistan today except following the model other successful societies have followed with regard to pursuit of people-centered development and growth.

In the competitive international world, the timing is of extreme significance. The contemporary history is a witness to the fact that those countries and societies which have not undertaken reforms and modernization of their national regulative infrastructure corresponding to the prevailing realities, have been left behind by other competitive players, who responded to the changing times. In other words, missing the train does not only mean that one is left behind but more strikingly that its distance with the competitors increases manifold.

For instance, at the end of the Cold War and by the beginning of early 1990s, Pakistan despite having gone through two prolonged Martial Laws, the country’s socio-economic indicators were reasonable particularly in comparison to the countries in the neighbourhood and the region. India after decades under socialist model and the Soviet influence was struggling to undertake a huge transformation towards the market economy. Bangladesh was reeling under internal pressures of military rule and a clashing situation between the country’s leading political parties. Afghanistan was in a post-jihad civil war and the economies of other South Asian countries were also not vibrant at that time. China, on a path of industrial and commercial growth for over a decade by ensuring non-confrontation with its adversaries and focusing on economic realities, was beginning to take strides in trade, business and investments.

Paradoxically, Pakistan throughout the 1990s was embroiled in an environment marked by political instability and infighting, institutional (civil/military) imbalance, inconsistent economic policies, resistance to economic and civil service reform and widespread corruption. At the turn of the decade and this century, Pakistan had embarked under its third military rule, which practically shunned any meaningful reform or internal change in the governance framework of the country for another decade. During this period China had already transformed into a leading global economic power. It was a pity that by 2010 while many other regional countries like India, Bangladesh, Iran, Turkey and many countries of the Middle East were fast adopting compatibility into global economy, Pakistan was coping with impact of regressive incidents like lawyers’ movement, assassinations, the TTP onslaughts and growing civil-military imbalance.

Both political and economic problems have magnified in the last one-and-a-half decades since the end of the Musharraf era. Instability and chaos in politics has worsened. The economy and budgeting has become dependent on the successive and increasingly intrusive-IMF programmes. The industry is practically closing down under a circular-debt based power generation. The huge lending required for bridging the current account deficits has become unsustainable. Many economists believe that the economic crisis will worsen as the country’s foreign exchange reserves stand at less than $8.0 billion, while requirement for meeting the deficit would be around $34 billion, and no one has an idea as to how it would be met.

This dire state of economy is negatively affecting Pakistan’s foreign relations and strategic relevance as well as international standing. With the global economy in recession firstly due to COVID and then Ukraine issue, the United States and western donors are not in a position to support Pakistan’s dwindling economy. The leverage that Pakistan had for the past two decades due to the presence of US and NATO forces in Afghanistan has also disappeared. Even for China as well as friends in the Middle East, cash injections into Pakistan’s economy in such large amounts seems difficult.

In recent months, many business and economic circles have been expressing apprehensions about the default of the economy. Even a talk about possible default is dangerous as it can lead to inhibition among global players in having any tangible interaction with Pakistan or the cost of business may become too high. More importantly, if the default actually happens, the consequences for a country with a population of over 230 million would be unbearable. These are simple, straight facts. Therefore, it would not be out of place to argue that Pakistan today has no more time and space to further delay comprehensive reform of the country’s politico-economic system. Without this, the country cannot be expected to embark on the path of recovery and the suffering of the people would continue to aggravate.

The first pillar of this reform has to be a political governance framework based on implementation of the Constitution in letter and spirit. The institutional balance particularly the nature of civil-military relations will be of key importance for smooth working of this framework. Already a platform has been provided by finally ensuring appointment of new Chairman Joint Chiefs of Staff Committee and Chief of army Staff through a constitutional and merit-based procedure.  Transparent independent elections will have to be assured in a way that results are accepted by the contesting parties. This is significant as in all the elections held in the past half century under the current Constitution results have been contested by one or more parties. Leaves can be drawn from our neighbourhood, where the electoral system has been made absolutely fool-proof.

The second pillar of the reform is that the geo-economic strategy should be in the driving seat of national policy making. Achieving sustainable economic growth is not possible through mere verbal pronouncements; it requires an investment-friendly environment as well as behaviour and addressing other fundamentals of the economy. Pakistan has to transform from an elite-governed economy to citizens-oriented economy. For this, serious focus is required on reviving domestic industry, exploring the immense natural resources of Pakistan, and most importantly, expanding the direct taxation base of the country. Free lunches for politicians, senior bureaucrats or other influential segments of the society can no longer exist if people of Pakistan have to make progress.

The third pillar is complete overhaul of the civil service. Having been part of the civil service for a long time, my personal assessment is that performance and service delivery of our bureaucracy has significantly deteriorated because the institution has not been able to keep pace with the changed world and it cannot respond to the needs of the contemporary times without a comprehensive reform. It’s also important to underline that a superficial reform merely focusing on the security of tenure and protection of privileges of civil servants will be meaningless and the purpose of the reform should be to transform civil service into mechanisms of implementation and regulation at federal, provincial and local levels. This in itself is a mammoth task. The key question is whether Pakistan’s leaders and institutions are cognizant of the gravity of challenges confronting Pakistan’s political economy and take a course correction through much-needed reforms or they are ready to contend with the ‘as it is approach’ of the past. The coming weeks and months will bring this clarity.

The writer is a former ambassador of Pakistan
to Afghanistan