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Delinking from global economy

July 05, 2014


The writer is dean and director of the Institute of Business Administration, Karachi.
The writer is dean and director of the Institute of Business Administration, Karachi.

PAKISTANIS may not be aware but the nefarious designs of extremists who wish to isolate Pakistan from the rest of the world seem to be working. Unknown to us, the creeping delinking of Pakistan from the global economy has intensified in the last few years. Evidence corroborating this finding is quite strong and is discussed below.

Pakistan is widely perceived and projected in the Western world as “the most dangerous country in the world” or as “the epicentre of global terrorism”. More recently, Karachi has been described as the “world’s most violent megacity” where the state seems to have “ceded its authority to thuggish politicians, ethnic and religious bigots and exceptionally brutal criminals”. This negative perception has nurtured a feeling of hostility against the country.

It is becoming increasingly difficult for Pakistanis to obtain visas to visit other countries of the world. Security clearances have made it difficult for businessmen to travel and explore opportunities. The resurgence of polio has further added to the existing problems. Even Sri Lanka has removed Pakistan from the list of ‘on arrival visa’ countries.

It is pertinent to probe the reasons that have led to our isolation.

The international Financial Action Task Force has placed Pakistan among a handful of countries in the high-risk category for its lack of action against money laundering and terrorism financing. Capital inflows and outflows from Pakistan are now subjected to more serious scrutiny. Even legitimate philanthropic donations for noble causes have to bear the brunt.

International retail banks are either completely withdrawing or substantially curtailing their operations particularly at the retail level. Pakistani banks are facing difficulties in maintaining international correspondent banking ties. Pakistan is being edged out of international financial integration.

The country’s market share in world exports has declined significantly. The recent energy crisis can be blamed for short-term production difficulties but the withdrawal of the buying houses’ physical presence from the country has contributed significantly to this decline. New and emerging companies avoid Pakistan as they can source their supplies at competitive prices and quality from Bangladesh, Cambodia, Vietnam etc. where they can easily undertake reconnaissance and exploratory trips.

Karachi used to be once an international hub for air travel. Almost all reputed airlines used to route their operations through Karachi. Western airlines suspended their services in the 2000s and after the recent attack on the Karachi and Peshawar airports some airlines have cancelled flights or discontinued their services altogether. Pakistanis are now left with fewer choices for travelling abroad.

Insurance premia on shipping cargo and passengers escalated soon after September 2001 but slowly came down. In recent years, premia are becoming heftier, reinsurance getting difficult to obtain and several Western companies are unwilling to issue insurance policies to foreigners intending to visit Pakistan. The landed cost of goods at Pakistani ports is likely to rise due to this escalation in insurance premia. Alternatively, big shipping companies will simply skip our ports.

The northern areas of Pakistan that can be compared to the mountainous regions of Switzerland used to attract thousands of tourists from abroad every year for hiking, trekking, mountain climbing, skiing and other sports. The local economy of this area depends on the tourist trade. Since the murderous attacks on the tourists at the Nanga Parbat base camp tourist traffic has almost disappeared.

In the knowledge-based economy that is going to characterise the 21st century, Pakistani students, researchers and faculty suffer from a serious handicap as they do not get to meet any of their international counterparts at home and have great difficulty in getting opportunities to visit abroad. Collaborative research and exchange in natural and social sciences in which Pakistan used to feature prominently is waning rapidly.

Pakistani professionals used to dominate international organisations in both the public and private sectors. They had disproportionately high representation in senior decision-making positions. It is now difficult to find Pakistanis in top positions in any noteworthy public international organisation, or private multinational company. Pakistanis in higher positions were conduits for promoting business with the country of their origin as they understood the situation much better.

It is pertinent to probe the reasons that have led to this isolation.

The growing insular attitude and narrow-mindedness of our opinion-makers, who consistently see a conspiracy theory and a nexus of foreign powers acting against the national interests of Pakistan lies at the root of our isolationist tendency. This popular narrative has been amplified and widely disseminated by our electronic media to the extent that it has become ingrained as the main thought process of our nation.

Our reflexes and reactions have now become attuned to this way of thinking. Accompanying this tendency is the rapid erosion of social capital, growing mistrust and widespread worship of negativity. Any government in power has to be criticised sweepingly, without any discernment of what has been done right or wrong. For example, the government data that shows high inflation rates or low manufacturing output is accepted at face value and used to beat the government of the day with a stick. But if the same government data shows a positive movement in GDP growth or reduction in poverty there is a hue and cry that the data has been fudged and that the government wishes to present itself in a favourable light.

How can such asymmetric discourse, where everything is painted black be the only acceptable norm? How can it give us the confidence to play an active part in a vibrant global economy? The mindset of victimhood, anger and perpetual grievance has to give way to a more positive, constructive and ‘can do’ attitude. Social capital is the glue for societies to prosper economically. Failing this, we will keep on waiting in vain for a messiah to descend upon us and simply keep on drifting on the path of North Korea.

The writer is dean and director of the Institute of Business Administration, Karachi.

Published in Dawn, July 5th, 2014