AN extraordinary exchange has just occurred between the army chief and the finance minister. It is worth going through their words carefully to determine what exactly they have said to each other, since most commentaries on the matter have missed the central point.
First consider what the general said in his remarks on Karachi on Oct 11. He began with the premise that in our time, with the rising regional hostilities and the changing face of conflict, “security has once again become the foremost business and task of the state”. Pakistan cannot afford to have a “gun vs butter” debate he said, because “we live in one of the most volatile regions of the world, dealing with multiple crises since inception, but increasingly so during the last four decades”.
Even though his words called for “a balance between economy and security”, his intention through the talk was to emphasise the primacy of security over economy. In other words, when deciding on the scarce allocation of the state’s material resources — revenues and foreign exchange reserves — the “balance” must place security ahead of all other priorities.
Dar is emphasising the point that finite resources must be shared between security and development priorities.
The finance minister responded in his news conference on Oct 16 that the army has performed admirably in bringing down the level of terrorist violence in Pakistan, especially since the decision in June 2014 to take the operations into North Waziristan. “There are costs to these operations,” he said, “and we have been paying these costs,” he emphasised, regardless of the difficulties involved, such as the drying up of the Coalition Support Funds payments.
But he added another dimension. Levels of terrorist attacks have indeed been brought down, but so has load-shedding, he said, underlining the fact that security and development are shared priorities and as such, have equal rights to the material resources of the state. Since those material resources, fiscal and foreign exchange primarily, are finite, parties invested in both priorities need to understand that their requirements will not be met one hundred per cent. Powerful trade-offs are involved when contemplating the “foremost business and task of the state”, and everybody must learn to play together to make things work.
The general showed some understanding of this argument in his remarks, since quite obviously this exchange did not begin on Oct 11 but has been taking place in more private settings for years now. The army has been seeing its requirements for resources increasing ever since it launched its myriad operations at home, launched a drive to upgrade its hardware, and began the task of building the CPEC security force, which is turning out to be a more expensive exercise than originally envisioned.
What was new on Oct 11 was that the dialogue broke into public for the first time. Recall, for example, that Finance Minister Dar was talking about an “extraordinary security-related expenditure” that needed to be met and required a relaxation of the fiscal deficit ceiling set in the IMF programme. In one news conference at the conclusion of a round of talks with the Fund, he gave the figure of Rs140 billion as the requirement for this “one-off” expenditure.
But the expenditure item turned out to not be a one-off, but became a regular feature. It is not reflected in the defence budget, so those analysts who are pointing to the defence budget to argue that the amount of resources devoted to security-related expenditures has not changed over the years, are misleading us all. Many of these expenditures are commissioned through supplementary grants and other off budget operations.
Gen Bajwa showed that he is sensitive to the argument that the resources of the state are finite. “If I were a statesman or an economist, I would say that this is high time for us to place economic growth and sustainability at the highest priority,” he declared, before telling everyone that the economy is the top item on the agenda in discussions at the National Security Council.
He listed the expanding the tax base and bringing in “fiscal discipline” as important economic priorities. “Pakistan is capable of creating sufficient fiscal space to address underlying structural problems through tax reforms, documenting economy, diversifying the export base, and encouraging savings to finance a level of investment that could sustain growth rate higher than the rise of population” he went on.
Translation: if the resources of the state are finite, then growing the size of the pie is the responsibility of the rulers, and that is something they must do. Particularly because, as he put it, “in today’s world, security does not come cheap”.
Repeatedly he emphasised the primacy of security, saying that the future of CPEC “hinges on one word, ‘security’” and “in order to maintain sustainable growth and progress, we must ensure law and order in the entire country”.
The finance minister tried to point out that much work has indeed been done in growing the pie. He gave figures on the growth of revenues since 2013, the growth rate of the economy since then, and the numerous projects launched in the power sector and highways as examples of the efforts his government was taking to grow the size of the pie.
Dar is currently under immense pressure to accommodate the demands for additional fiscal and foreign exchange resources emanating from the security establishment, and he is being browbeaten into agreeing to them. He is on the back foot, with calls for his resignation mounting and the public discourse turning hostile towards him. But he is standing his ground on the point that the finite resources of the state must be shared between security- and development-related priorities.
Those heckling him for his difficulties, and his cabinet colleagues eager to distance themselves from him due to his almost radioactive persona now, should bear in mind that his successor will step into this conversation, which is, in fact, decades old, and lies at the heart of our civil-military fault line.
The writer is a member of staff.
Published in Dawn, October 19th, 2017
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