Impact of political upheaval

WHAT could be the impact of a lasting political upheaval in Pakistan on its economy? This is a question asked by many players in the economic sector, including foreigners, as the political crisis deepens. The answer depends on how long the political turmoil lasts and what new forms it may take.

To begin with, will President Musharraf himself be re-elected in uniform or out of it early? Will the life of the present National Assembly be extended after the expiry of its term in November or will fresh elections take place in time? And what kind of a caretaker government will be set up and that what kind of a coalition government will come up after the polls? And will there be a disruption in the movement of transport and freight which is vital to the economy, particularly to exports sector, during these days?

There are two kinds of economic activities. One is production by the existing manufacturing units and the other is related to increase in exports. When it comes to foreign investment, which has been increasing in recent years, setting a record last year, there is a serious credit crunch in the western world with its impact on Asia. It is a deep crunch emanating from the US. New credit for investment in uncertain industries is hard to come by and interest rates are rising. All that can reduce western interest in developing countries, except in areas where there are high profits.

As far as Pakistani capital for new investment is concerned, it is being invested more in luxury real estate in Dubai than in the country. And the money is borrowed from the banks in Pakistan. Dubai follows a liberal policy for investors. And it has become fashionable for Pakistani investors to invest part of their capital in Dubai which is flourishing abundantly.

Now the government has promulgated an anti-money laundering bill after labouring on it for four years. What impact it will have on investment remains to be seen. If Pakistani investors are going to Dubai, as are doing our political leaders, Dubai’s investors are also coming here to invest in real estate on large luxury projects to cash in on the money afloat. Dubai capital is not much interested in investing in manufacturing or long gestation projects. It prefers banks and real estate which give quick, large returns.

When it comes to the European Union’s investment in Pakistan, it is already critical of Pakistan’s political policies and its scant regard for the judicial system and the Constitution. It has already imposed a ban on Pakistani fish from May last for hygienic reasons. It has declined to sign a free trade area treaty with Pakistan. EU’s political and trade policies are bound to affect its economic relations with Pakistan.

A World Bank report says the economic freedoms for business in Pakistan increased last year, but it still lags behind India. So when the EU notes that economic freedom is increasing but political freedom is diminishing, its attitude towards Pakistan is bound to be prejudiced. Meanwhile, Pakistan’s foreign exchange reserves have touched new heights and crossed 16 billion dollars in the wake of increased inflow of foreign exchange from the foreign direct investment and the remittances of overseas Pakistanis.

On the day former prime minister Nawaz Sharif was sent back to Saudi Arabia despite the Supreme Court ruling permitting him to enter the country, The KSE-100 rose by 139.24 points and the KSE-30 rose by 251.51 points. And the Securities and Exchange Commission raised the ceiling for the continuous flow system (CFS) to Rs55 billion from Rs40 billion. What it shows is that what matters in the stock exchange is the operation of the bulls in the stock exchange and not the political climate or the public sentiment. The Karachi stock exchange is impervious to such basic factors.

But as far as economic aid to Pakistan is concerned, political alienation of Pakistan from the West is bound to reduce or slow down it. The American aid may not be reduced because of our partnership in the fight against terror and the Chinese aid will also not be affected because of our strategic partnership with the neighbouring country which has been long lasting.

With too many political parties in the field and some of them very militant and quick to call for a general strike, the transport system is likely to be paralysed too often. That will raise domestic prices and affect the movement of domestic goods. The export goods in particular are highly sensitive to such interruptions.

Too many transport strikes can affect the movement of goods to the western countries, particularly textiles on the eve of Christmas. Pakistan cannot afford to lose the Christmas market by not supplying the Christmas goods well ahead of time. Transport is essential for the workers to reach factories. Some of them travel 20 kilometres or more to reach their places of work.

If it is the Christmas goods in the West that can be affected, here the disruption in transport can slow down the supply of Ramazan goods. The prices of many essential goods have already risen in advance, particularly food prices. And the price rise is likely to continue in the name of non-availability of transport. A report presented to the Economic Coordination Committee of the Cabinet says that food prices are higher in Pakistan than in India or Bangladesh but we are told by the government that food items are the cheapest in Pakistan in South Asia.

Wheat and flour prices have been recording higher and higher prices in spite of the fact that the last wheat harvest provided a bumper crop of 22.5 million tones of wheat. .

The administration’s efforts and the centre’s numerous directives to bring down the prices have not been affective. Wheat now sells at a record Rs1,465 for a hundred kilos. The hoarders and the profiteers have their day and dictate their price. If the government cannot manage a surplus after a bumper crop, how will it manage the outcome of a shortage? This is not a free market but a fouled up market. If the government cannot bring down prices in an election year, and before Ramadan when plentiful supplies of wheat are available in the country, when can it manage a wheat crop better?

To add to the wheat stockists, the flour millers are making their extra profits and the consumer is being grilled by all such forces while the government looks on helplessly and holds out promises and assurances. Meanwhile, the export of onion to India has been banned following the ban on wheat exports.

In such circumstances, it is not surprising that 50,000 people die each year because of pollution and adulteration as reported by the World Bank. That is the price the people pay for the mismanagement or neglect by the government in a country where one third of the people live below the poverty line of a dollar a day.

Sheikh Mohammed, ruler of Dubai and prime minister of the UAE, called for a war on poverty for elimination of terrorism and fundamentalism at Dalin, China, at the World Economic Forum. He said tinkering with poverty would not do but a basic frontal fight against poverty was essential to banish it otherwise the UN millinnium goal of reducing poverty in the world by a half by 2015 will not be realised.

It is for the government to realise the consequences of following a wild policy of its own, heedless of the reactions of the world to it and yet depending on such a world helplessly. It may do what it likes politically but the people will have to pay a heavy price for it not only politically but also economically.

Deported, not gone...

NAWAZ Sharif’s deceitful “deportation” in open defiance of the Supreme Court order allowing him the right to return, and the repression unleashed on his party workers by the Musharraf regime was a reprehensibly audacious display of authoritarian contempt for the law. That much is evident.

The military appears to be flexing its muscles, itching for a showdown with all possible challengers to its illegitimate chokehold on Pakistan. We have been there before. Every time, popular leaders threaten military domination, the generals do what they do best: use force and coercion to silence them. The next step is to browbeat the courts into submission, mutilate the Constitution to legalise “treason” (as defined under Article 6) and eliminate the political opposition.

The cost of repeated direct or indirect military interventions is perpetual instability, weakened political institutions and ethno-regional rebellion. Long after the military exits from power formally, authoritarian legacies linger on to restrain democratic development.

The good news is that the army has failed to lastingly repress the democratic aspirations of the people of Pakistan. No matter how hard the military tries, popular leaders do not vanish from the public imagination. Still more good news is the Supreme Court’s defiant assertion of its autonomy, be it the Chief Justice reference, the missing persons’ cases or Sharif’s petition to return, which has sent the military into a tailspin.

Sharif’s forced exile shows that General Musharraf is desperately digging in his heels. But he has stepped on a slippery slope when he tried to sack the Chief Justice on March 9. Not much has gone in his favour since then. The PPP could still come to his rescue. The avowed pragmatist in Benazir Bhutto sees a negotiated transition with the military as the best way out of the current impasse, one that would avoid a potential martial law. It is hard to say with any certainty if and when the closed door ‘deal’ between Ms Bhutto and Musharraf will be concluded. Or what exactly it might look like. But Ms Bhutto should know better.

The army was the driving force behind three presidential dismissals of elected governments in 1990, 1993 and 1996, including two of her own. That experience shows that post-military states have entrenched structures of militarism that are not easily eroded with the formal transfer of political power from the military, especially if the generals, or their appointees, retain any non-democratic veto powers over elected civilians. If Ms Bhutto were to succeed, and it looks unlikely at this stage, in extracting a pact that effectively demilitarised the political system, well and good.

But politics is the art of timing. As time goes by, Ms Bhutto’s credibility as an opposition leader sinks further. Her party appears more and more as the ‘semi-loyal’ opposition. The direct beneficiary is Sharif and his party whose unrelenting opposition to military authoritarianism has boosted their democratic credentials. Even while he was in exile, his party leaders and workers have shown commendable resilience in the struggle for democracy in the face of open state hostility for almost eight years.

Sharif himself may not be the mythical true democrat. To many, his past may not inspire much confidence. He is also aligned with the unsavoury clerics of the MMA that shamelessly plays footsie with the PML-Q in Balochistan while claiming to be in the opposition. And it is worth recalling that Sharif’s success in appropriating the right of centre vote had reduced the Islamic parties to electoral non-entities by 1997.

The point is this: there are no angels in politics. Nor does democracy require born democrats. It requires an interrupted political process, ideally backed by the rule of law and press freedoms to limit the abuse of power by public officials. It requires competitive political parties which mediate and channel social conflict into the institutional arenas of the state. Most of all, it is a system in which all significant political actors are subject to the uncertain outcomes of the democratic process. Not uncertain, arbitrary rules of governance are set by those who are not accountable to the people.

If recent opinion polls are any yardstick, the people of Pakistan do not support military authoritarianism. In fact, an overwhelming majority disapprove of Musharraf’s re-election. The movement for the restoration of the Chief Justice is further proof that there is strong support for the rule of law and the restoration of democratic rule. As long as Musharraf is at the helm, however, free and fair elections will remain a distant illusion.

Musharraf must go if Pakistan is to re-democratise. So must all the post-1999 constitutional amendments. The army would do well not to bare its teeth at the judiciary. Any pressure or attack on the higher courts, directly or through its political allies, is unlikely to be tolerated by civil society, especially the lawyers’ associations.

Any other violent reactions, such as the imposition of martial law, too, are unlikely to be welcomed. Military professionalism, if by that phrase one implies the readiness to defend the people of Pakistan against internal and external threats under the control of lawful civilian authority, was never the forte of our generals.

But given the rapidly growing public disenchantment with the army’s involvement in politics, even the corporate interests of the institution demand an exit strategy, one that involves more exit than strategy, of course. The most feasible one would be for the military to cut its losses by withdrawing its support for Musharraf and allowing the constitution of a neutral caretaker government for holding timely elections.

For that to happen, the PPP must desist from providing Musharraf a safe passage. Musharraf is not indispensable for tackling the threat of extremism. States do not stand on the shoulders of individuals, especially those whose credits include mangling the Constitution, coercing the judiciary and violently suppressing demands for democracy and provincial autonomy. The damage his authoritarian rule has inflicted on the polity, and is likely to inflict in the future, far outweighs any risks associated with regime change.

We don’t need the Failed States Index to remind us of the catastrophic governance failure of his rule. Today, the state of Pakistan does not govern. Instead, it floats balloon-like over the territory under its juridical control, always ready to pounce on any political opposition to the authoritarian status quo.

Diluting and delaying democracy under this or that pretext is not an option. It is far more dangerous for Pakistan’s stability than getting rid of a military dictator hell-bent on conserving his authoritarian powers.

A foreign policy of self-reliance

“The best that a statesman can do is to listen to the footsteps of God, get hold of the hem of His cloak, and walk with Him a few steps on the way.” –– Otto von Bismarck

THE end of the Cold War brought about a paradigm shift in international politics requiring an equally profound change in Pakistan’s foreign policy. Unfortunately, that has not happened. Our leadership and policymakers, used to the old ways, have, instead, been playing the same old tune as was their custom during the days of the Cold War.

Little wonder that more often than not they have found themselves on the wrong side of the currents of international politics during the past decade and a half e.g. our pro-Taliban policy of the 1990s.

In many ways, the conduct of foreign policy for countries like Pakistan was easier during the days of the Cold War because of the certainties of the rivalry between the Nato and Warsaw Pact blocs led by the US and the Soviet Union respectively.

Once a country joined an alliance with one of the two sides, it was assured of a degree of support and protection for its security unless it chose to incur self-inflicted damage as we did in the case of the East Pakistan crisis in 1971.

Needless to say, the price for this protection was paid in the form of some well-understood limitations in the conduct of foreign policy and alienation from the opposing bloc.

The end of the Cold War has changed the rules of the game. The stability of bloc politics has been replaced by a global scenario of shifting alliances and changing alignments. In such a scenario, heavy dependence on a single country, which may, suddenly or over a period of time, change the strategic directions of its foreign policy can be an invitation for a national security disaster.

The current global scenario, therefore, calls for the pursuit of a policy of self-reliance and diversification of external relations by Pakistan if we wish to safeguard on a long-term basis our national security, prosperity and dignity. It cannot be over-emphasised that the key to success in diplomacy is freedom of action whereas stagnation of thought and action is a recipe for disaster.

Unfortunately, however, we have been extremely reluctant to let go of the US apron strings in the conduct of our foreign policy. There is inadequate realisation among our policymakers of the narrow and fragile basis of the current strategic relationship with the US. We need to recognise that following the end of the Cold War and the disintegration of the Soviet Union, Washington perceives a long-term threat to its security from China and radical Islam.

It should be obvious even to the uninitiated that we cannot be a party to US plans to encircle China with which we maintain an extremely valuable strategic partnership. This is a role for which the US is preparing Japan, India and Australia as the recent pronouncements of the Japanese prime minister in New Delhi clearly indicate.

Even on the issue of radical Islam, our views on its definition and on the strategies to promote moderation may not always coincide with those of the US. The same is true about the so-called war against terror as the recent experience in our tribal areas shows. It is also well-known that Washington continues to entertain serious misgivings about our nuclear non-proliferation credentials thanks partly to the activities of Dr Qadeer Khan’s network. Because of our poor record in the field of democracy, the feeling of close affinity with Washington, which India and the US have developed, is lacking.

Our leaders and senior officials also need to recognise that the moment of US global hegemony is fast passing and that the phenomenon of global unipolarity is being replaced by multipolarity. It is, therefore, not in our long-term interest to put all our eggs in the American basket.

The situation has not changed for the better under Musharraf. If anything, our inclination to comply with America’s wishes has increased in consonance with the increased economic and military assistance amounting to about $10 billion that we have received since the U-turn in our Afghanistan policy in the aftermath of 9/11.

That this assistance carries a price tag was made clear by the recent statements of the US leaders and politicians stressing that the US reserved the right to take unilateral military action against Al Qaeda targets inside Pakistan if we were found wanting.

It is not my purpose to minimise the importance of friendly relations with the US. That would be as unwise as our current policy of putting all our eggs in the American basket. The US remains and is likely to remain in the foreseeable future the most powerful nation in the world economically and militarily. It is, therefore, a strategic imperative for us to maintain friendly relations with the US.

However, this needs to be done keeping in view the implications of the changing global scenario, our long-term interests and the limitations of the Pakistan-US friendship.

The weakness of this friendship in the current scenario necessitates that Pakistan should widen its foreign policy options while continuing to defuse tensions and normalising relations with India. In this context, the further strengthening of our friendly relations and strategic cooperation with China assumes special significance. But it is also important to build up friendly relations with Russia, Iran, the EU, Japan, Asean, South Korea and the OIC countries.

As for Russia, we should come out of the Cold War syndrome which continues to paralyse our policymakers. Iran’s importance for Pakistan’s security and well-being cannot be exaggerated. We should make serious efforts to overcome the bitterness of the 1990s when the two countries were aligned with the opposing sides in Afghanistan.

A dignified foreign policy of self-reliance does not mean a policy of isolation from the rest of the world. In this era of globalisation, an isolationist policy is simply not an option for any country. Pakistan, therefore, must remain positively engaged with the international community to safeguard its national interests.

To ensure that this engagement serves Pakistan’s long-term interests, the country will have to change the way it is governed, its economy is managed, its resources are allocated to developmental and non-developmental tasks, and its foreign, economic and security policies are formulated as part of a grand national strategy.

Obviously, only a government enjoying the popular support of the people of Pakistan can undertake this onerous task. Failing that, we will remain at the mercy of events as we are now, rather than being in control of our destiny.

javid_husain@yahoo.com

‘Jamais vu’ in Iraq

THE phenomena of ‘déjà vu,’ which means having a strong feeling one has seen something before, is familiar to all of us. But I recently read of a condition psychiatrists call ‘jamais vu.’ That’s where one sees something very familiar, but the brain cannot identify it.

Both the White House and US military seem gripped by ‘jamais vu.’ Many of the same mistakes the United States made in the Vietnam War are being repeated in Iraq and Afghanistan. But neither the White House, Pentagon, nor US field commanders seem to recognise or understand they are repeating errors from the past.

A long-awaited report by Gen. David Petreaus, commander of US forces in Iraq, will report the progress his troops are making in Iraq in the face of serious problems, and hint at some minor future troop reductions. The report will speak of important security successes in Baghdad and restive Anbar Province. Gen. Petreaus is a very smart, highly respected commander, but one suspects his report will unfortunately be the latest example of ‘jamais vu’ syndrome.

US commanders in Iraq and Afghanistan keep proudly reporting how their men have occupied villages or towns, killed scores of ‘suspected terrorists’(usually thanks to air attack), and forced the enemy to flee. They do not seem to understand they are fighting a fluid guerilla war in which territory and body counts mean little.

Mao Zedong perfectly described the principles of such guerilla war: “When the enemy advances, withdraw; when he stops, harass; when he tires, strike; when he retreats, pursue.”

The ‘successes’ being reported from Iraq and Afghanistan are illusory. We heard exactly the same story during the Vietnam War, when US military spokesmen trumpeted glowing daily reports about enemy body counts, strategic hamlets created, Vietcong tunnels blown up, hearts and minds won over, and smiling children waving little American flags. While the US was ‘winning’ all these little daily battles, Communists were winning the war.

Institutional memory rarely exceeds ten years. Most of Vietnam’s bitter lessons, paid for by the blood of 58,000 Americans, have been totally forgotten by the White House and Pentagon. Guerilla wars are fought not for territory but for control of civilian populations.

Once again, US soldiers in Iraq and Afghanistan have been sent into no-win wars by their poorly informed, badly advised civilian masters, and ordered to keep coming up with rosy progress reports. All military men are trained to be optimists.

I have covered numerous guerilla wars in Africa, Central America and Asia in my time and have never seen western powers win a single one. Yet Americans keep forgetting this hard lesson, and the great Gen. Douglas MacArthur’s warning after the bloody Korean War, ‘never fight a land war in Asia.’

The much ballyhooed Petreaus report is far more about US domestic politics than war in Iraq. It is a key weapon in the game of political chicken President George Bush is playing with the Democratic-controlled Congress, which wants to withdraw US forces from Iraq.

But Bush appears determined to keep the war going until his term expires so as to avoid blame for defeat in Iraq. Congress is trying to lay all the blame for the war on Bush, get him to admit defeat, and evade its own shameful role in authorizing the trumped-up Iraq War.

But Congress is in a jam. If US troops do withdraw, Iraq may fall into even worse chaos than it now suffers –– which the next president, who polls suggest will be a Democrat –– will inherit. In an election year, Republicans will blast Democrats as ‘defeatists’ for ‘cutting and running’ and ‘losing Iraq.’ That’s why worried leading Democrats are now backing off calls for total withdrawal and mumbling about partial pullbacks and ‘training Iraqi forces.’

Meanwhile, the administration keeps up the pretense that there is a functioning government in Baghdad. Washington refuses to admit Iraq has no real national government or army, and is an anarchic stew of competing Shia militias, tribal chiefs, death squads, a score of Sunni resistance groups, and Kurdish separatists. Iran is becoming the real power in Iraq.

History does not repeat itself, but men’s mistakes and follies do. The latest somber example is Iraq, where our memory of Vietnam is…’jamais vu.’ —Copyright Eric S. Margolis 2007