With the elections only about a fortnight away, voters at large are still totally oblivious of the socio-economic policies that the contesting parties would like to pursue once elected to govern for the next five years.

So, when a voter would go to the polling booth on October 10 to vote he would have no clue about his candidate’s economic policy preferences. He would not even be sure if he is voting for continuity because so far no contesting party has come out clearly in support of continuing with the economic policies being pursued by the military regime.

The PML(Q) which supports the military regime lock, stock and barrel, too has not so far made any specific references to this issue, nor has it explained in specific issue terms why it supports the military regime.

The party’s reluctance to associate itself publicly with the regime’s economic policies and extend its political support to these all the way is perhaps based on the perceived unpopularity of these policies. Perhaps it believes that the voters would be put off if it went to them promising to give them over the next five years more of what they had suffered in the last three years. The Tehrik-i-Insaf of Imran Khan which is making some direct sounds against the IMF has, however, avoided making any focused mention of the regime’s economic policies and its specific objections to them. The MMA and the two mainstream political parties—the PPP and the PML(N)— have chosen to remain rather vague on the socio-economic issues. They are neither criticising the current economic policies with any purposeful enthusiasm nor are they presenting any alternative. They do, however, make some general and sweeping remarks about high prices, unemployment and the growing problems of the poor.

The multilateral aid agencies, like the World Bank, the IMF and the Asian Development Bank have, however, spoken. Each one of them separately as well as collectively has made it clear that any attempt by the future elected government to tinker with the so-called on going reforms prescribed by them would meet their wrath. And they have even threatened to discontinue the aid flows if such a thing happened. This is not the first time that they have done this. Even earlier, prior to the 1988 elections, the IMF went about ensuring the ‘continuity’ of its prescribed reforms by making the PPP Chairperson, Benazir Bhutto, who was certain to win those elections to promise that she would after coming to power sign on the dotted lines of an Standby Arrangement (SBA) that the interim government of Ghulam Ishaq Khan had finalized with the Fund.

So, those very institutions which are supposed to uphold the principles of democracy in the world and aid and abet the democratic forces the world over have chosen for the second time, in the case of Pakistan to curtail the right of the nation to openly debate its economic future and choose through collective wisdom those whom it believes to possess the right credentials to lead the country on the path of recovery, development and prosperity. The remarks of the IMF Senior Resident Representative in Pakistan, Henri Ghesquiere, which he made while speaking at the SAARC Chamber Lecture Series on July 31, 2002 amply demonstrates the attitude of the staffers of multilateral aid agencies towards democracy and its principles. Here is what he had said at one point during his lecture :Anyone in front of a crowd of voters who asks whether the government should enhance budgetary outlays, and cut taxes, and bring down the deficit, is assured a thunderous yes. Never mind the impossibility of achieving all three simultaneously.”

This is just one example of the contempt in which the bureaucracy of the multilateral aid agencies holds Pakistan’s civilian political leadership. Pakistanis perhaps have not forgotten what the Fund did to the second Benazir government when it tried in its first budget to introduce GST and withdraw as well some of the unnecessary and uneconomic tax exemptions allowed to the rich businessmen by Zia’s military regime? The Fund clearly sided with the private sector when it pulled down its shutters for five long days, a record in itself of strikes by Pakistani businessmen, in protest.

The Aid to Pakistan Consortium when it met in Paris before the finalization of the next budget, accorded full respectability to these protesting businessmen by holding a separate meeting with them on the side lines and pampered them by asking the government to work for cooperation rather than confrontation with the irresponsible businessmen. The result was that all the so-called reform-related budgetary measures of the first budget were withdrawn and in the second budget an attempt was made to play to the businessmen’s gallery. Also, Mr. Ghesquiere has conveniently forgotten that despite the fact that Nawaz Sharif made a number of highly popular promises during the 1990 elections, he had the courage, nevertheless to introduce a number of reforms which were masses-unfriendly in the short term. And these two elected governments, had also grappled seriously with the problem of setting up regulatory mechanisms to keep in check a profit motive-driven private sector from hurting the social fabric of society in liberalizing environment.Instead of recalling these bold steps taken by elected governments of the 1990s this gentleman has gone and described the decade of 1990s as “ a bleak economic decade.’

According to Mr. Ghesquiere, courage and leadership are needed to form a “consensus on how to apportion the adjustment burden in a manner that strengthens the over all sense of belonging in a nation still being constructed.” But then he and his ilk perhaps believe that such leadership in Pakistan is found only in the Army which cobbles up such a consensus with the gun as opposed to a national consensus developed through the ballot box. That is why perhaps the multilateral aid agencies had had very good relations with every military regime in Pakistan starting from Ayub, but they had highly disturbed partnership with all the democratic governments.

Here is another gem of economic wisdom from Mr. Ghesquiere’s lecture: “But for many countries, the cost of the inward-looking strategy (protectionism)became excessive. Economic growth rates faltered.Subsidies and loss making public enterprises inflated deficits. Overvalued exchange rates nipped the development of a diversified and international competitive export sector. In smaller countries, the narrow domestic market precluded the cost reductions from economies of scale that would have come with producing for the world market. This led to unsustainable external debts and payments crises. Industries remained dependent upon the pampers of protection until well into adult age. Consumers paid the price in the form of expensive imports or lower- quality local fabricates. Commercial banks grew weak or insolvent as political leaders forced them to finance well-connected but loss-making industrialists. Protection bred privilege and administrative discretion fostered corruption.” What forceful arguments against protection. But perhaps he did not know that it were his bureaucratic predecessors in the Fund and the Bank who had put most of the developing countries including Pakistan on the road to protectionism in the 1960s. They had asked us then to forget about agriculture and food which the developed world was producing in plenty and ‘cheap’ ( thanks to large subsidies) and concentrate on industrialising their countries and subsidies and protection was the prescription of the day for achieving this goal. The military regime of Ayub Khan which is supposed to have done so much for this country and whose decade has been described as the ‘golden decade’ followed this protection policy as religiously as today’s military rulers are following the policy of unhindered globalization and liberalization. We had remained adhered to the protectionist policies even during the so-called second golden decade of Pakistan, that of General Ziaul Haq’s, when once again the multilateral aid agencies had the most cordial relations with the government. And during Zia’s rule these agencies had talked a lot about agriculture tax and reduction in defence expenditure but all through this decade they had kept helping the government with generous assistance without making it fulfil these two conditions. Even today, they do not talk about defence expenditure and seem to have been convinced by the regime’s argument that what is needed more is reduction in debt and not in defence expenditure. But the fact of the matter is, it is because of the burgeoning defence expenditure that the country has come under such debilitating debt burden. One is not arguing here against building sound security defences against external aggression. But every one, even the most misled person knows that there is no defence stronger than knowledge and education. These multilateral aid agencies have looked the other way when the military regimes in Pakistan diverted the precious resources and even high interest bearing loans to buying weapons system which turned into junk within a matter of months leaving nothing for education and health. And it was in the purchases of these systems that one detected much more corruption than in civilian contracts.

President General Pervez Musharraf has been spending much of his time and energy trying to accomplish the impossible task of shaping democracy to suit what he believes to be the peculiar genius of the Pakistani people. On the other hand he has let the economy to be managed by the multilateral aid agencies. Perhaps he should instead concentrate more on the economy and try to reconstruct it to suit the peculiar national circumstances and let democracy take its own natural course without let or hindrance. By following the Fund and the World Bank prescription rather blindly in the last three years the country had only succeeded in deepening its stagnating economy. Investments, both the local and foreign have remained shy. Unemployment has gone up. Demand is growing at a snail’s pace rendering investment unattractive. In fact, if the 9.11 tragedy had not struck and the related ‘bounties’ had not come Pakistan’s way subsequently , perhaps this country too would have gone the Argentinean way by now. But the 9.11 rewards are transitory. They would disappear soon. Then we will be back to square one and would again be facing a default situation. In order to avert this and make the 9.11 advantages available to us today yield longer lasting economic benefits we must get the rich world to offer us more market access and their investors should be made to take more interest in Pakistan.

Mr. Ghesquiere admits that the developing countries ‘ rightly demand greater access for their agricultural products and textiles to the markets of the USA, Japan and Europe. Import protection in the rich countries favours their large farmers and textile workers at the expense of consumers who pay higher prices. Particularly harmful are the agricultural support prices and export subsidies that encourage overproduction of sugar, wheat, cotton and other products. Export of these surplus commodities depresses world market prices to the detriment of products and exporters in developing countries.” But there is no way the Fund can force the developed countries to give up the subsidies they provide to their sunset industries and the agriculture and dismantle the import barriers as Mr. Ghesquiere put it they ( multilateral aid agencies) can only “ urge the rich countries to lower import barriers and provide social safety net protection and reschooling for workers who lose their jobs. We acknowledge the desire in those countries to preserve the rural landscape but stress the need to redesign protection in a manner that does not encourage overproduction in agriculture.”

In this backdrop of world trade and protectionism in the rich countries, Mr. Ghesquiere endorses the natural progression whereby “ developing countries move into higher-value added activities, pay higher wages to their workers because their output grows in value, and become themselves eventually uncompetitive in producing simple goods and services against countries with even lower wages. Thus, over the past fifty years we have seen shipbuilding, electronics, and IT software migrate from Western Europe via Japan, to Korea and Taiwan, and toward South Asia. At issue is not the process or its outcome, but whether reaching the destination is facilitated or hindered by trade protection.” So, on the crucial issue of trade protection, none , neither the Fund, the Bank nor even the WTO is in a position to force the developed countries to give their anti-globalization policies. If that is so then why should the developing countries take the course prescribed by these multilateral agencies on the issues of globalization? Instead why not chalk out a new course based on the comparative advantages which for now appear to be linked in the case of Pakistan to our services to the rich world in its so-called war against terrorism. And this time, unlike on the two occasions in the past when the then military regimes enhanced the country’s dependence on dole, it would be advisable to trade our services for lasting economic benefits. But even this needs to be debated at the national level and a bipartisan national consensus developed which not even the Army for its short term political gains could change at any future date.