YOU must be pretty desperate to claim that a major oil discovery was around the corner when the experts all said such an announcement was premature.
Old cynics like me have heard such claims many times: past leaders have proclaimed such a breakthrough, only to backtrack soon afterwards. But never did anybody before Imran Khan pin our economic recovery on the success of an oil strike.
So when Kekra-1 — as the offshore oil well was dubbed — failed to find anything, there was a deathly silence from the government. Around $100 million had been sunk into the venture and it is doubtful whether by foreign oil companies will drill there anytime soon.
We have waited for manna from heaven in the form of an oil bonanza.
For decades, Pakistanis have dreamt of a major oil strike that would transform their country into a kind of subcontinental Dubai. While we do have a few productive oil pockets, these are modest compared to those found in other parts of the region. And we have been fortunate in our large gas fields that have saved us billions of dollars in energy imports. However, our profligate use of this precious resource has resulted in turning us into net importers.
The point here is that, instead of getting on with fixing the economy through increased productivity and revenue collection, we have waited for manna from heaven in the form of an oil bonanza. And to fix our rotten system of governance, we wait for a messiah to rescue us from the hole earlier leaders had dug.
Imran Khan is only the latest Saladin Ayyubi, the legendary Kurd general who defeated the Crusaders nearly 1,000 years ago. His promises to cleanse the land of corruption and usher in a new Pakistan ring hollow as the economy continues on its death spiral.
It is not so much that he has failed to deliver, as the fact that he has handed most of the important portfolios to individuals with dubious credentials. The price of power has been high for the once-idealistic Khan, but one he was glad to pay to satisfy his ambitions. Sadly, he has turned out to be unprepared for the responsibilities of high office.
But spare a thought for those who put him in power. In their calculus, Khan, with his international image of socialite and ageing playboy, would be able to deflect criticism of our alleged support for jihadist groups. But when FATF, the terrorism financing watchdog, threatened to place us on its crippling black list, it became clear that our prime minister’s reputation didn’t cut any ice with Washington’s power brokers.
The worsening economic scenario, and the delayed appeal to the IMF for yet another bailout, also exposed Khan’s ignorance of fiscal realities. All these factors have, according to reports circulating in Islamabad, driven a wedge between the military and political leadership.
I can understand the cause of Khan’s frustration: having made numerous promises to attract voters over his long campaign to become prime minister, he now finds that he has no money to do very much. After interest on billions in past loans has been paid, and our huge defence budget is allocated, all that’s left is the money to pay administrative costs.
Khan discovered early on that selling the buffaloes and official cars in the prime minister’s residence wasn’t enough to finance the foundations of naya Pakistan. So there’s less talk now of converting state buildings into universities, museums, hotels and galleries.
Meanwhile, retailers, real estate agents, stockbrokers and car salesmen all report a sharp drop in business activity. Not that I have much sympathy for them, but we do need an active market to sustain employment and keep money flowing. Lower profitability means a drop in tax collection which is already very low.
Egypt’s middle class and the poor are still reeling from the effects of the $12 billion loan taken from the IMF to support its collapsing economy in 2016. As subsidies on a wide range of food and consumer goods were slashed or withdrawn, poverty levels have increased. One of the Fund’s conditions was that the budget deficit had to be brought down.
As Akbar Zaidi argued so persuasively here in a recent column, you can’t blame the IMF for tough conditions. Like all banks, it wants to ensure that it gets its money back, and in most cases, this means restructuring the economy of the borrowing country. After all, the IMF hasn’t put a gun to our head and demanded that we approach it for a loan.
Thus far, the rich have ducked paying their due taxes, and the well-connected have run all kinds of scams to milk the exchequer. Whether Khan’s team will be able to muster up the resolve and the motivation to upset their own class remains to be seen. But I’m not putting any money on such a transformation.
Published in Dawn, May 25th, 2019