November 16, 2002	Saturday	Ramazan 10, 1423

KARACHI, Nov 15: The national economy now stands at crossroads. It is poised for a take-off on the back of a turnaround in the external sector but needs a political umbrella to improve the enabling environment.

Business says that a high growth rate with low inflation appears to be round the corner. The growth rate has been increasing by one per cent per annum and the inflation rate ranges between 3 and 4 per cent.

The target is to raise the growth rate to its full potential of six per cent per annum from the current level of 3.6 per cent.

But, if politics turns sour, it could throw spanner in the works and the improving economic trends could be reversed. It is political stability and consistency in policies that sustain business confidence and investment. And in emerging markets, private investment serves as the engine of growth.

The key political issue is whether the current dialogue among political leaders and the government results in reconciliation in parliamentary politics and a stable coalition set-up or it will eventually lead to a political breakdown.

Given the numbers in the parliament, no single party can form a stable government, without a coalition with one of the three major political groups — PML(Q), MMA and PPPP.

It is national reconciliation, on the basis of give and take, that can kick-start the democratic process. The alternative is a confrontation that breeds instability. Confrontation is a trait of feudal politics and reconciliation a need for modern economy.

If historical record can serve some purpose, there are lessons to be learnt from the past political pitfalls. Ayub’s development decade turned Pakistan from an agricultural economy to a semi-industrialized state. Yet, it was followed by the collapse of his political system and the tragic loss of East Pakistan. The economic gains could not be consolidated through a corresponding sound political and democratic system. An over-centralized system was responsible for the collapse of the political dispensation.

The lack of an exit strategy of the military rulers from politics has also been a source of political breakdowns that bring about economic downturn.

Like civilians, none of the military rulers have been able to complete their mandated electoral or constitutional term after the elections they have organized themselves. Ayub’s term of office was cut short by massive countrywide agitations. He handed power to General Yahya who held free and fair elections but had to quit before he could summon the assemblies.

General Zia had a firm grip on power as long as long he ruled through Martial Law. Once he held the elections, that too on non-party basis, power began to slip from his hands. He dismissed prime minister Junejo but fate did not allow him to complete his constitutionally mandated term.

Could General Musharraf be an exception and last for the mandated term of his referendum? He has stuck to his commitment to hold elections in October after the three years military rule and as per decision of the Supreme Court. He was not pressurized by agitational politics.

The government has kept the door of negotiations with the elected representatives open and is willing to discuss their demands. Yet, whether he would compromise on LFO and NSC to the satisfaction of the major political players to enlist their support for his presidency, is not yet clear.

Parliamentary politics needs reconciliation and economic reforms require a consensus for not only a smooth transfer of power but also to run a stable government.

This is the task facing President Musharraf. If he delivers, he will ensure much needed political stability for the economy to take off.

Pakistan’s political environment has changed over the years with agitational politics taking a back seat. It is now the beginning of the phase of political reforms and institutional building that can resolve economic social and political problems. This is what is required by the emerging domestic market to mature fast and catch up with the rest of the world.