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IT was evident a long time ago that the hybrid experiment came to us with a manufacturing defect, and this would cause it to be locked in permanent firefighting mode. It was evident to most who are used to taking a dispassionate view of political developments in Pakistan, perhaps not to those who were either invested in the experiment, or otherwise bought into its rhetorical packaging.
The defect is a simple one. Executive powers are vested in one office (that of the prime minister) but discharged from multiple offices. Something very similar was the case in the Junejo government in the mid-1980s, and the inability to reconcile this led to a near record accumulation of public debt at the time. The same thing is happening today. The split between who owns executive powers and who exercises them means there is weak ownership over the outcomes, with all sides telling each other to restrain their expenditures first before any discipline can be brought about. As a result, public debt climbs as the government resorts to borrowing to pay for its indiscipline.
Bridging this divide was originally Hafeez Shaikh’s job. This is the function he had performed in his last stint as finance minister a decade ago, when the split in executive powers was also present, but the PPP government found a crafty way to move a large chunk of the state’s resources permanently into civilian hands via the NFC award. Once this was accomplished, the government was happy to bring in Shaikh and let him run the finance ministry according to the dictates of the IMF, which is what his specialty is.
Much of what is happening today has happened in the past already, in bits and pieces. In some cases even the names are the same (Hafeez Shaikh and Shaukat Tarin have both seen this movie already). Just like Junejo, Imran Khan is now at the moment where he is trying to claw back some space for himself after having ceded far too much ground back in the summer of 2019, when Asad Umar was removed and Shaikh brought in and the country launched onto a vigorous adjustment drive.
It began with the ouster of Hafeez Shaikh, the attempt to replace him with Hammad Azhar, and the eventual compromise on Shaukat Tarin.
A quick look at the budget helps us see how this tug of war is playing itself out. In the medium term outlook (the so-called ‘green book) released last year, for example, defence spending was programmed to rise by almost 18pc, or Rs230 billion between FY21 and FY22. This was to be followed by another 11pc increase in FY23, or Rs182bn.
But by April of this year, when the new green book was released by Hafeez Shaikh, these figures were brought down significantly. Where last year these projections showed the defence budget at Rs1.53 trillion and Rs1.71tr for the next two fiscal years, by April these were brought down to Rs1.44tr and Rs 1.64tr, down by more than Rs100bn in each year. Once Shaikh was out and Hammad Azhar came in, a new green book was released and these allocations were downgraded further to Rs1.33tr and Rs1.5tr respectively, down by Rs200bn from last year’s programmed allocations. And then Azhar was out and Tarin was in, and defence allocations showed a six per cent increase for next year. Compare that to the 18pc that they were seeking in the green book released last year and you’ll get a sense of how far the military authorities have had to scale back their expectations.
Of course, these figures don’t include military pensions, costs of ongoing operations, weapons procurement or salaries of some special divisions like the CPEC force that are funded through supplementary grants. But by themselves they give us a sense of the increases in remuneration that uniformed personnel were expecting, and what they actually got. And what they got is so far below what they were expecting as of last year that the figures alone tell a story of a significant shift taking place.
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Meanwhile, remuneration of civil service officers has risen by more than 10pc, minimum wage by 20pc, and allocations for the prime minister’s special schemes and projects have absorbed around the same amount as has been trimmed from last year’s projected defence allocations. Two years ago, when Hafeez Shaikh was brought in as finance minister, I wrote a column titled ‘The figurehead prime minister’, in which I argued that Khan seems to have been relegated to a figurehead role now that the purse strings have been taken away from him. For two years he chafed in that role, and it was inevitable that a moment would come when he would try to claw back some of the space that he had to cede back then.
It would seem that moment has now arrived. It began with the ouster of Shaikh from the finance ministry, the attempt to replace him with Hammad Azhar, and the eventual compromise on Shaukat Tarin as the candidate all parties in the executive could agree upon. The budget was to be a test of wills to see who will get how much and it seems, from the look of things at least, that the prime minister has carried the day and appropriated for his own priorities the bulk of the incremental resources of the state.
Now he’s asserting himself on the foreign policy stage too. You can see this first in parrying the pressure to normalise ties with Israel, then in denying loudly and repeatedly that his government will grant basing rights to the Americans post Afghanistan withdrawal, and more recently in loudly protesting any pressure to downgrade ties with China as a quid pro quo for moving towards a bilateral relationship with the United States.
The ground ahead is dangerous. But if the defect in this set-up is to be fixed, Khan has no choice but to walk this road. Let’s see where it leads him.
The writer is a business and economy journalist.
Twitter: @khurramhusain
Published in Dawn, July 1st, 2021
