Brexit and Pakistan

Published June 30, 2016
The writer is a member of staff.
The writer is a member of staff.

There is more than one way to look at Brexit from Pakistan. The less interesting one is to search for ways in which the fallout can have an immediate impact on Pakistan’s economy. Sartaj Aziz may be right in ruling out any immediate impact, but it is worth bearing in mind that the event has consequences far beyond the immediate.

To me there are two principal insights to draw as a Pakistani. But before we can get to that, it is important to be clear about how we understand the event in the first place.

What just happened in Britain? There are three two large narratives that I can identify.

It would be a colossal mistake to believe that Pakistan will be immune to the large-scale changes that have just been activated in Britain.

One says that there is a rising tide of xenophobia engulfing the democracies of the advanced industrial West, brought on by deindustrialisation, immigration and wages growing at a slower pace than corporate profits. The resentments borne by growing inequities are driving growing numbers of people to vote for disruptive outcomes in their elections, whether nationalist or populist or some combination of the two.

The other narrative says that with the advance of globalisation, states have become increasingly tuned to the dictates of capital and transnational regimes — whether global (like the WTO) or regional (like the EU). This has made them less and less responsive to the voice of their own electorate, and since in advanced industrial democracies the electorate is accustomed to receiving high levels of social services and social protection from their governments, there is a growing chasm between what people expect from their governments and what their governments can do for them.

In countries where there are political parties that can reliably become the carriers of their electorate’s grievances, these parties are capturing the imagination of a growing number of voters. Syriza in Greece and Podemos in Spain are two examples, and more recently the Five Star Movement in Italy has scored large victories against the incumbent centre-left Democratic Party. In France and Germany, the far-right wing is gearing to fill the political vacuum.

And in those countries where none of the mainstream parties can credibly become the carriers of the electorate’s grievances, we are seeing a leadership crisis as they struggle to adapt to the demands from below while keeping their commitments to big capital and transnational regimes. The US and the UK are prime examples, where the electorate is throwing up increasingly disruptive outcomes that seek to push the self-destruct button rather than continue with business as usual.

In the UK the line has actually been crossed with the referendum, while in the US they have come close to that line, as exemplified by the recent refusal of the Tea Party faction of the Republican party to raise the borrowing limit for the government in 2013, forcing a government shutdown and almost precipitating a near catastrophic sovereign default by the world’s largest economic entity and sovereign borrower — the US federal government.

The kinds of changes that globalisation has wrought are the subject of much writing these days. For now, it’s enough to acknowledge that Pakistan has been swept by this wave of change too. We are not key members of any transnational regime as such, whether global or regional, but the state in our country is tied into global regimes through multilateral organisations like the IMF and the World Bank, on whose doorstep we have been permanent fixtures since 1988.

Over the past decade and a half, policymaking in Pakistan has been more responsive to the requirements laid down by these multilateral bodies, and the larger apparatus of donor agencies, than it has been to its own citizens. Evidence of this can be seen in the massive amount of government attention given to matters such as reforms in customs tariffs and taxes rather than social protection and reform of education and health service delivery. Our economic policy is animated almost entirely by the search for reserves and revenues, to keep the economy afloat and maintain our debt-servicing capacity, more than anything else.

One development that has the potential to rectify this is the 18th Amendment and the NFC award. With large-scale devolution of power and resources to the provinces, a door has been opened to possibly freeing up governance from the shackles of its creditors and benefactors. But thus far the provinces have not stepped up to the plate. They have preferred to pour the additional resources of the NFC award into large and visible infrastructure projects instead of working towards any serious reform of education and health service delivery.

Even though our citizenry has been similarly conditioned by the changes that have swept across the economy, there is one key difference: there is no burgeoning groundswell of disaffection that is throwing up disruptive outcomes in successive elections. Despite the best efforts of the PTI to be a driver of disruptive change, it has not managed to establish a link with the disaffected voter in the way that the new parties in the advanced industrial democracies have done.

One reason could be that citizens in Pakistan have different expectations from their government. They do not expect social protection or service delivery as much as access to power when needed for the settlement of disputes, or government jobs; objectives for which they have developed enduring alternative routes. Despite deep-rooted changes in our economy, and the structure of opportunities it presents to the population, coupled with dismal outcomes in social protection and service delivery, the population has not turned its ire towards the state in the way the electorate in advanced industrial democracies has done. It seems despair does not fuel revolutions the way disappointment does.

But it would be a colossal mistake to believe that Pakistan will be immune to the large-scale changes that have just been activated in Britain. Historically, our economy has been deeply vulnerable to convulsions taking place in the global economy. Last year, a near run on Chinese capital markets sparked a massive stampede out of other stock markets too.

In the year to come, the convulsions that are gathering steam will be far larger than the Asian financial crisis of 1997 or perhaps even the global financial crisis of 2008, both of which pushed our economy into crisis. There may be no immediate impact, but complacency at the top and despair below is no way to run things.

The writer is a member of staff.

Twitter: @khurramhusain

Published in Dawn, June 30th, 2016


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