FOR three weeks I have, in this space, skirted around the issue of the needed structural economic and social change in Pakistan. Before dealing with the question of introducing deep structural reforms I thought I should first explore the strengths and weaknesses of the economy, and indicate that once again — as so many times before in its history of nearly six years — the time has come in Pakistan to bring about real change.

I undertook that exercise over the past several weeks. I should now begin to offer some suggestions for setting the economy on the right course. But making suggestions is the easy part of the effort. Making real progress in this area would require engaging Islamabad in a serious dialogue. Policymakers should reach out to those who have given some serious thought to these matters and the latter should be prepared to grant that Islamabad has compulsions and imperatives of its own which constrain action.

There are a number of prior conditions before a serious dialogue can start between Islamabad and the people — the “self-styled experts and know-alls” as one senior official put it during a TV discussion — the capital city views as its detractors. Policymakers must demonstrate that they really understand the current structure of the economy, its many strengths and many more weaknesses; show the willingness to discuss and debate openly, honestly and calmly; be prepared to learn from the history of not only Pakistan but also of other countries that have dealt with problems similar to those Pakistan confronts; and muster the political will to bring about the much needed change. Would Islamabad be prepared and able to do all this?

There is reluctance to address the problems the country faces but willingness to talk about and discuss the good things that have happened to the economy. But the fault lines that exist just below the surface cannot be wished away; they must be located and the structures that are built on top of them must be secured against the tremors that the weaknesses will produce from time to time. There is still some time left before the situation turns really sour.

Islamabad could take action provided it does two other things first. It has first to shed the notion that all is well with the economy and, two, it must be willing to move in a totally different direction from the one it has taken. Senior policymakers have spent too much time applauding some of the achievements of the past couple of years that they must know are not indicators of sustainable growth. The high rate of increase in GDP during 2003-05 cannot be treated as the start of a new trend. Why that is not the case was explored by me in my article of March 28, titled ‘Pakistan’s growth story’. That a course correction is required quickly was the theme of the two articles that followed the “growth story” column.

The sharp built-in foreign exchange reserves — another development to which Islamabad attaches great significance and which is mentioned repeatedly by the senior leaders in their speeches — is a good development but it will prove to be ephemeral if the rate of increase in exports does not keep pace with the increase in imports, if the quantum of foreign capital flows is not enough to cover the trade deficit, if foreigners’ confidence is jolted and the flows are reduced as has happened in the country’s history so many times before.

The main thrust of the columns I wrote for this space in the last few weeks was to point to some of the weaknesses in the economy and also in the way society was structured while recognising that much good was indeed achieved in the last few years. I questioned Islamabad’s belief that it has finally propelled the country towards sustainable rates of economic growth, matching those of other rapidly growing economies of Asia, including India.

I also pointed to the hidden dangers that lie not too far below the surface largely because of the way the economy has been handled. There are dangers not only to the economy itself — not only to the continuation in the rate of economic growth at the pace of the last two years. There is also the possibility that the political and social systems — such as they are — might be weakened further if structural reforms are not undertaken urgently. I am also concerned that economic woes could spill over into other areas, certainly into politics.

What has been gained could be easily lost if the people — under the weight of inflation, or resentful at not being able to find productive jobs, or deeply disturbed by the growing inequalities in income and wealth, or apprehensive that political uncertainty is once again appearing on the horizon — become restless and begin to turn to the streets to vent their anger. These and other fears and apprehensions could lead important segments in society to become restive; so restive that they could begin to crave for a new political order. This, as I have already indicated, has happened before and there is no reason why history will not repeat itself especially when we show so little interest in studying it or drawing lessons from it.

Finally, in the previous articles I suggested that there is still time left to change the course, steady the economy and create an environment which could allow much of the delayed social, political and economic change to occur. But there is not much time left given the political calendar that stretches before Islamabad. To tinker with it, as some influential voices are now suggesting, would only bring forward the day of reckoning.

I would like to offer one further thought about the current situation before offering a recipe for change. For the moment the only manifestation of extreme discontent is to be found in the country’s remote areas. The heartland remains untouched for the time being. There are, however, active insurgencies in Balochistan and Waziristan. Compared to the country’s size and the size of its population these could be brushed aside as minor irritations that could be taken care of by a resolute authority willing not only to display the enormous might at its disposal but, if need be, to use it. States do this all the time and there is no reason why Pakistan should act any differently.

On several occasions President Pervez Musharraf has said that the writ of the state will be made to run no matter how remote the area and how powerful those that resist it, that he will not countenance those who are advancing their own petty interests by threatening the state, that he is not reluctant to use force to restore law and order. He is right on all these counts but threats must accompany action that will bring about change for the masses.

However, there is one catch in this argument. The problem is that both situations have seeds in them that could sprout elsewhere in the country. These two problems have different origins: the rise of Islamic extremism, particularly in the areas on Pakistan’s border with Afghanistan but not entirely confined to them, and the resentment at the growing inequality in wealth and income among different regions and groups in the country. The first problem affects Waziristan, the second Balochistan. But there is no reason why these problems will — or should — remain confined to these areas. Their seeds could be carried by the strong winds of resentment that have begun to blow in the country produced by events some of which are under Islamabad’s control and some that are coming from the areas near as well as distant from the country’s borders.

The biggest threat the country faces today is that these two sources of discontent — radical Islam’s unhappiness with the policies adopted by the Musharraf regime and growing inter-regional and inter-personal inequalities — could begin to feed on one another, thus gaining strength and threatening those who would rather not follow their social and political programmes.

Economics is at the bottom of almost all the unhappiness that now prevails, in spite of Islamabad’s belief that it has set the country on the trajectory of growth on which it will stay over a long period of time. As I argued in the article published on March 28, the growth rate will only become sustainable if it rests on domestic investment and not on consumption, if it is the product of domestic fundamentals and not external capital flows whose quantum and timing will remain uncertain, if the widening trade deficit is closed not by gaining access into the saturated western markets for products that add not a great deal of value to the economy but by developing new products and services for which there is a good external demand, if the large and young population can be educated and trained and if the country can offer attractive opportunities for investment to the people with capital not just in the Arab world but also in the West and Japan.

I will begin to address the important subject of bringing about structural economic and social change by focusing on the areas that must be reached by public policy. There are at least eight of these that need to be addressed urgently, but the attention that is given must come out of deep and thoughtful analysis of the problems that are to be addressed. The areas that require policymakers’ attention include land policy, water policy, low agricultural productivity, industrial policy, further development of the financial sector, trade policy, human resource development, and the role of the state for providing basic services to all segments of the population.

The first matter concerns land policy not only directed at the countryside but also at the rapidly expanding towns and cities. Land is by far the most important and valuable resource in any economy. How it is owned, how much of it can be owned by one unit of production (an individual or a family), who is responsible for issuing the title of ownership, how can it be transferred, how it can be used are all issues that need to be addressed. Much that is wrong with the Pakistani economy, its political system and the structure of society can be traced to the way we treat land in the countryside as well as in towns and cities. What are the problems with the present approach and what solutions can by adopted are the issues I will deal with next week.

“OUTRAGE is dead” wrote William Bennett, Reagan’s education minister, amidst the Clinton-Monica Lewinsky sex saga, while mourning civil society’s acquiescence in an appallingly immoral act. At the present juncture in our history, we are, perhaps, even worse off, having sunk into collective apathy, indifference and inertia.

Nothing seems to stir or excite a collective response. Even the most atrocious conduct of our public figures fails to evoke mass outrage. Examples abound.

Take, for instance, the brazen way in which people sold and purchased votes in the Senate elections in the NWFP, Balochistan and Sindh. The practice was earlier rehearsed on a more massive scale during the district nazim polls in October 2005. It evoked muted public reaction which too was swamped by the colossal tragedy of the October 8 earthquake two days later.

The horse-trading in the Senate elections manifested itself more blatantly in the NWFP involving more than two dozen MPAs belonging to almost all political parties. The going rate was quoted at Rs 10 million. A JUI member, who was expelled from the party, accused the party of receiving Rs. 100 million each from some candidates. He unabashedly admitted in a TV programme that he had asked the chief minister to share at least Rs 10 million out of this bounty instead of offering him only a measly one million.

The PML-Q and its coalition partner the PPP-S chose only those candidates who could spend money, except for a lady who luckily won against a reserved seat. The JUI did not lag behind and named three extremely rich candidates. The brother of one PML candidate confided to friends that the election cost the family Rs 80 million. Another scion of a rich family joined his father and brother to be the third member of the upper house, creating a record worth mentioning. Incidentally, no member of the family had ever returned to an elected house through direct popular vote.

The PML-Q candidates were also accused of buying two MMA voters in Fata that would have brought it all the four seats in contention. But the MMA voters wilted at the last moment under serious threat from an MMA diehard that he would kill anybody who broke party discipline and the oath on the Holy Quran they had taken before polling. Both now face traditional tribal retribution for their betrayal.

Two PPP women MPAs did not vote for party candidate Farhatullah Babar, who had distinguished himself as a diligent senator. A friendly PML senator had forewarned Mr Babar about the possibility. Intervention by party chairperson Benazir Bhutto failed to impress the two ladies. In pre-election electoral adjustments, six ANP MPAs were also supposed to vote for the PPP candidate but probably one of them slipped as did many MMA voters who were supposed to give their second and third preference votes in return for the PPP’s invaluable contribution in the election of an MMA candidate from Sindh.

Consequently, in the final tally, the JUI lost two seats it should have won on the basis of its numerical strength in the assembly. In contrast, four of the five PML candidates won in the NWFP while the fifth lost only on points. In Fata it could capture only one of the four seats, this too thanks to the draw which was forced when one JUI voter “mistakenly” voted for a party candidate who had already withdrawn from the contest.

Ironically, the drama was enacted in full public view. In the run-up, the media was full of reports about the sleazy auction and the daily escalation in price. The PML, which has only 10 MPA — not sufficient to win even a single seat — named five candidates, obviously relying on their vote-buying capacity. Three JUI candidates had never been members of the party and were ostensibly chosen for some other consideration.

When the results came the losers cried foul. The JUI and JI separately initiated a probe. The JI is still hesitant because it got what it wanted. In a commendable move, the JUI expelled four members suspected of selling their votes while some more are in the firing line. The PPP has not taken even cosmetic action.

The bizarre polls evoked a placid response in the country. The Election Commission did not even consider ordering an investigation into what was clearly stark manipulation of the electoral system. The new chairman stuck to the policy of “masterly inactivity” pursued by his predecessor. While the media gave it secondary importance, the prime minister perfunctorily dismissed any wrong-doing and declared the elections free, fair and transparent.

Shaikh Rashid implicitly acknowledged the fact, but simply taunted the clerics who had sold themselves. Among other ruling party members, Sen. S.M. Zafar said he felt disgusted while Mushahid Hussain denounced the practice, but then characteristically laughed it away by ridiculing the sellers. No wonder the newly elected PML senators were warmly greeted, hugged and cheered by colleagues, including Mr Mushahid Hussain, after they were sworn in.

The fundamental issue is moral and legal. The vote sellers broke a solemn pledge and violated party discipline. They along with the buyers also breached election laws and are liable to disqualification. The selling and buying of votes let moneyed people hijack the popular mandate. It puts the entire election in doubt. The involvement of clerics in the sleaze is most unfortunate. They also did not honour the oath taken on the Holy Quran.

IT has been said that an epoch comes to an end when its underlying illusions are no longer credible. In spite of major disappointments, however, the ideals which inspired the Pakistan movement, including the bonds and aspirations of Pakistani nationhood, remain real for a good majority of the people of Pakistan.

During the chequered history of our homeland, an episode from Italian history flashed occasionally across the screen of the mind. The loss of our early idealism reminded one of Garibaldi’s memorable declaration about the newly-emancipated Italy in the mid-19th century. Said Garibaldi, “This country with its contempt for ideals has killed the soul within me. I dreamt of a new land and have been given a re-arrangement of the old!”

In the modern world, with its populist culture and democratic ethos, the element of popular trust remains the essential confidence-building ingredient of political life. Pakistan’s underlying malaise, however, is the widespread loss of faith generated over several decades. The conviction that self-interest, nepotism and corruption in different forms are a way of life has generated a depressing level of political cynicism and created a chain reaction which threatens to undermine even the well-intentioned efforts of the government to resolve the country’s problems and set it on the road to progress and development.

If a starting point has to be determined in pointing the right direction in domestic matters, the key areas of focus would include a democratic system, involving the primacy of the popular will, an all-out effort to reduce economic disparities between different sections of the population and provision of a more generous dispensation to smaller provinces and ethnic groups. That extremism and terrorism would have to be crushed to give the efforts a chance goes without saying. The spiralling politicisation of religion was evidenced most lately in the recent atrocity on the occasion of Eid Miladun Nabi.

In spite of a fair measure of popular support enjoyed by the regime and notwithstanding the capable leadership demonstrated by the president in facilitating considerable economic progress and broad-based external support, the fact is that the country does suffer from a democracy deficit.

An example has to be set from the top through the accord of clear priority to collective, social, national interests over personal, group or party interests. This has to be the fundamental criteria for decisions on all controversial, national issues, whether relating to the form and extent of democracy, the question of the president’s uniform, the establishment of an independent autonomous mechanism for holding general elections, separation of the accountability process from any taint of political bias or providing a level playing field for all political groups.

Integrity can only be enforced from the top downwards. In practice this should involve an administrative chain of command in descending order on both the political and bureaucratic level, of people with irreproachable integrity whose record, reputation, known resources and style of life, are above board. Homilies by the leadership, political or bureaucratic, which has already feathered its nests, would never win the level of popular respect and confidence needed to resolve the country’s problems and build up its economic and social strengths.

The economy has registered undeniable positives in the economic field since 2001, including the impressive rate of growth, involving the agricultural sector also and the spurt in the public spending in development-related fields including health, education and infrastructure, urban and rural. Recently released figures indicate a fall in the incidence of poverty from 32 per cent to 25 per cent of the population.

The absence of capital gains tax has deprived the social sector of any significant share of the windfall profits which have accrued to some sections of society in real estate, the stock market and other fields. The current tax to GDP ratio, standing at about 10 per cent, does not effectively contribute to the urgently required redistribution of income in favour of the less privileged.

Effective land reforms and a fair agricultural tax continue to be thwarted by the feudal lobby. Corruption and unproductive government expenditure play their own role in accentuating the travails of the have-nots. While health and education have certainly received in recent years much higher government allocations than ever in the past, these sectors demand even greater subventions, dealing as they do with the less affluent sections of society, the privileged having opted out of the public health and education systems.

It has been said that democracy rests on a shared understanding of limits. In our society, unfortunately, the concept of limits is conspicuous by its absence. Our unfortunate tradition has been that a party (or group), while in power, invariably pleads for national unity and harmony, while that very party, once on the outside, thinks nothing of pulling the rug from under the feet of the people in power, even on issues involving vital national interests. It is most important therefore, to promote a tradition of bipartisanship or multi-partisanship, whether in the realm of foreign policy or with regard to domestic, political and economic issues.

One of the perceptive definitions of what constitutes wisdom has been given by reputed historian, Barbara Tuchman. “Wisdom,” she wrote, is the exercise of judgment based on common sense, experience and available information.” This otherwise perceptive definition omits, however, the essential element of sensitivity i.e. an instinctive ability to sense the feelings and needs of others. In Pakistan, we need to be more sensitive to the fears and concerns, the problems and priorities of our fellow Pakistanis in the smaller provinces, regional and linguistic groups, to counteract any alienation and to ensure greater attention to their needs and priorities.

It would be useful to review from time to time the state of institutions created to strengthen the federation. The Council of Common Interests is one of these. It has not succeeded in arranging a meeting of minds on the National Finance Commission award. With regard to the controversy over the merits of various criteria for division of the federal divisible pool such as population, area, financial contribution and development needs, it would be advisable if the ‘needs’ criteria, espoused by the smaller units, is given increased weight.

This would at the same time mean, in the same spirit of national give-and-take, the withdrawal of the demand for control by smaller provinces of natural resources such as oil and gas within their borders and their opposition to the principle of prior demand (expenditure on defence and debt repayment) in the distribution of the federal divisible pool to the provinces.

Unlike the Indian constitution, which assigns residuary powers to the centre, Pakistan’s 1973 Constitution gives these powers to the provinces. Greater authority should be transferred to the provinces by trimming the concurrent list and transferring some of its subjects to provincial jurisdiction. Unlike Britain’s (unwritten) ‘constitution’, under which parliament is the competent body to interpret the laws and acts of parliament, as well as constitutional legitimacy, Pakistan’s Constitution (1973) provides for judicial competence to interpret constitutional clauses, parliamentary acts and executive decrees, which should, in normal circumstances provide greater assurance to the smaller provinces.

Most of the factors, relevant to the national goals and obstacles, mentioned above, depend on our own political performance or the lack of it. The setting up of a tighter mechanism for ensuring integrity and probity, promoting multi-partisanship on vital national issues, placing national integration on top of our priority list, combating extremism and terrorism, all these are functions of our political or administrative process and depend for their fulfilment on the maturity or otherwise of our political character and temperament.

Somewhat different is the urgent task of economic, technological and educational advancement. These do need extra political inputs in the form of much needed financial investment. But once we make a solid start on the road to political stability and domestic order, the desired level of financial investment, domestic and foreign, would start flowing, putting us on the road to achievement of economic self-reliance.

In order to achieve the desired economic and social progress, while withstanding the security threats, external and domestic, we must put our own house in order. We can fly the flag abroad only as high as we hold it at home.

The writer is a former ambassador.