The ‘Azadi’ effect

November 04, 2019

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JUI-F workers and supporters listen to the speeches of their leaders during the 'Azadi' March. — Reuters/File
JUI-F workers and supporters listen to the speeches of their leaders during the 'Azadi' March. — Reuters/File

On Friday, Maulana Fazlur Rehman, the chief of his faction of the Jamiat Ulema-i-Islam, gave the prime minister until Sunday (yesterday) to step down from his office. If he didn’t quit before the two-day deadline was over, the JUI-F patriarch warned, the voters — whose mandate he alleged had been stolen in the last year’s elections — would be free to choose whichever course of action they thought best to bring down the 14-month old Pakistan Tehrik-i-Insaf government.

During his late evening address to his followers, the JUI-F chief went on to sound Prime Minister Imran Khan a warning that the people could force their entry into the prime minister house and “arrest” him. “We won’t be able to show more patience after that point (that is, the expiry of the deadline),” he thundered amid cheers from his supporters who had descended on the capital a day before, after a five-day journey from Karachi and other cities.

By the time these lines were being written on Saturday morning it wasn’t clear how long the Maulana planned to stay in Islamabad and if, as indicated by him in the speech, his supporters would be willing to use violence to force the premier to resign from his office. Nor was it clear how far the political parties, including Pakistan Muslim League-Nawaz and Pakistan People’s Party, will go in backing the Maulana’s antigovernment push. It also reminded unclear as to how the government intended to deal with the protestors, especially in case they decided to leave their designated protest venue and spread out into the city to force its hand.

‘The long-term cost of the protests is much harder to quantify but the bigger concern is more to do with Pakistan’s image as a stable business environment’

Although the JUI-F has so far decided to confine its protest to Islamabad, the prospects of yet another sit-in that could continue for weeks and even months is already giving the businessmen jitters. Many are expecting the JUI-F gathering to remain peaceful during their stay in the capital, yet some fear that the JUI-F crowd has every ingredient to turn violent if it continues indefinitely.

As it is too early to predict what shape the JUI-F’s anti-government campaign will ultimately take to achieve its goal, it is equally hard to tell how it is going to impact the country’s fragile economy in the medium to long run. But some immediate tangible and intangible consequences of this protest campaign for the economy have already begun emerging.

The government, for example, was forced to backpedal on its drive to document retailers and wholesalers, who pay less than one per cent of the country’s total tax revenues despite being 18pc of the economy, and give some sweeping concessions to the striking traders to keep them from joining the so-called JUI-F Azadi March.

The possibility of the protests continuing for weeks and even months, and the protestors turning violent has created anxiety among the businesspeople.

“This is bad news for the economy and the business. The opposition parties may have planned to confine their protests in the capital for the moment but you never know when they decide to spread out to other cities,” a Lahore-based businessman said on condition of anonymity. He was of the opinion that the protest would have adverse implications for the already slowing economy and the use of violence could wipe out the few economic gains the government has so far made under its stabilisation plan.

“Political volatility always imposes hefty tangible and intangible costs on the economy,” another businessman from Faisalabad argued. Ever since the announcement of the protest march by the Maulana, he added, “the government has impounded hundreds of shipping containers at the expense of exports to block roads in Islamabad and other cities. Our buyers are worried about the possible disruptions in the timely shipment of their orders. There is a kind of uncertainty, which is very bad for the already poor business environment in the country. The long-term cost of the protests is much harder to quantify but my bigger concern is more to do with Pakistan’s image as a stable business environment.”

According to some estimates based on published newspaper reports, the country’s economy has suffered an economic loss of more than Rs3.7 trillion on account of the 126-day dharna by Imran Khan’s PTI in 2014 against vote-rigging, followed by a transporters’ strike in 2017, and Tehrik-e-Labaik’s violent protests in 2017 and 2018. Many believe that these estimates are on the higher side but everyone agrees that the economy and businesses suffer massively because of the political turmoil such protests cause.

“In addition to the quantifiable damage such events cause, the economy suffers huge long-term intangible losses in the form of business uncertainty these always lead to.

Every time such things happen, Pakistan’s image among our foreign buyers as a politically stable country and a reliable supplier suffers, making them turn to other countries for their orders even if they have to pay a higher price for the same product,” a textile exporter from Sialkot emphasised. “The cost of political turbulence has always been very high for companies and often results in the loss of export orders and jobs.”

Ironically, Maulana Fazlur Rehman has made the deteriorating economy one of the main themes of his campaign against the Imran Khan administration. He has repeatedly spoken about increasing cost of living to lure the middle-class people into joining his anti-government protest. “The economy is sinking, factories are being shut and traders are in distress,” he noted at one of the rallies on his way from Karachi to Islamabad at the head of the procession.

“We have to save the country, save the economy of this country,” he said, probably oblivious of the massive toll his anti-government campaign is likely to take on the country’s flagging economy, the businesses and the people who are already struggling to survive the impact of a rapidly slowing economy.

Published in Dawn, The Business and Finance Weekly, November 4th, 2019