HOW is the recent appreciation of the rupee linked, if at all, to the Tehreek-i-Taliban Pakistan (TTP) suing for ‘peace’ talks? Or, what possible connection, for that matter, could the TTP have with Pakistan’s English-speaking elite? And, why do many commentators have a sinking feeling even about the economic underpinnings of the rupee rise?

Like in the concept of ‘six degrees of separation’, which postulates that virtually everyone is linked to anyone else on the globe in six steps or connections or less, the strands emerging from the unexpected recent strength of the rupee appear to link seemingly unconnected events and places: far-off Syria to badlands closer to home, such as North Waziristan; the reshaping of regional power blocs in the Middle East and a deepening confrontation within the Islamic world, to the suing for peace talks by TTP militants. In perhaps a less obvious manner, the management of the rupee can offer an insight into how the Pakistani elite views fundamental reform — and how the English-speaking power elite have managed, or mismanaged, the economy, state and society.

But, first things first. Let me dispel the impression that I do not credit Finance Minister Ishaq Dar’s efforts at stabilising the economy and the rupee at a difficult time. As I have said in some TV interviews, since the rupee wrong-footed speculators and appreciated rapidly, it takes leadership, commitment and skill to manage the exchange rate on low — and declining — foreign exchange reserves, and the credit for this goes not just to the finance minister and his team at the ministry of finance, but also those at the State Bank of Pakistan who worked tirelessly behind the scenes.

Secret deposits, loans or grants from friendly countries, with or without strings attached, are only part of the explanation for averting a nasty situation where the rupee would have been in freefall. However, without in any way detracting from the government’s achievement at stabilising the economic situation, it is a fact that Pakistan has been here many times before — stabilising the economy for a short period on the back of an IMF programme or other bilateral and/or multilateral largesse. What it has failed to do is move beyond stabilisation based on ‘financing’ to meaningful and credible ‘adjustment’.

In fact, some commentators (including myself) have argued that Pakistan needs ‘tough love’ for a few years, where external financing runs out and the country’s power elites are forced to manage the way other responsible nations have — by undertaking the structural reforms that have eluded us far too long.

The way Pakistan has been managed since virtually its birth raises other disturbing questions. The Taliban or their ilk have not ruled Pakistan for even a single day in the past 67 years (thank God for that!). So who has brought Pakistan to this sorry state of affairs?

The embarrassing answer: a foreign-educated, English-speaking elite, for the most part. While many would be quick to lay the blame for the mess we are in to policies pursued during Gen Ziaul Haq’s period in power, there is little to show for the periods before and after as well, notwithstanding the dominance of an Oxbridge elite at the helm.

If Pakistan’s predicament and its secular decline as a state can be summed up in one development, it is the decay of its institutions. The atrophying of institutions in Pakistan has served the interests of successive generations of the country’s power elites very well — but it has also created the space, with or without active collusion, for the rise of powerful non-state actors. In that sense, today’s challenge from the TTP and other militant groups can be viewed through the prism of a challenge for power and privilege by one set of elites against another (assuming, of course, that groups like the TTP are entirely home-grown — which we know is not the case.)

This line of reasoning also raises another disturbing question: even if a durable ‘peace’ were to be reached with the TTP, what will change in the larger scheme of things? Would Pakistan be governed any differently by its power elites? Would lessons be learnt, and governance improve, and ‘rule of law’ established by the creation of strong and credible institutions? Or, would continued mis-governance create another powerful contender down the road to challenge today’s ruling elites?

We move on to some of the other questions raised at the beginning. On the external front, a flurry of developments have coincided to produce a few remarkable outcomes. High-level visits from, and to, Saudi Arabia (and now Bahrain) have coincided with an about-turn in Pakistan’s foreign policy position viz Syria. In addition, without any apparent military pressure on it, the TTP suddenly showed willingness to negotiate over the past few months. And then, a mystery ‘gift’ of $1.5bn appears, strengthening the rupee. We are told more ‘gifts’ are to come our way — but under what conditions we do not know.

In the backdrop to all this, is the emergence of three contending regional power blocs in the Middle East: Saudi Arabia, the UAE and Bahrain in one corner; Qatar and Turkey in another; Iran, Iraq, Syria and Hezbollah in the third. Pakistan would do well to avoid being sucked into any of these. A loss of neutrality in an increasingly ugly conflagration in the region is not in its interest — economic or otherwise.

The writer is a former economic adviser to government, and currently heads a macroeconomic consultancy based in Islamabad.