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System of spoils

February 09, 2012

“Chaste to her husband, frank to all beside / A teeming mistress, but a barren bride ...”

‘SAVE the system’ has become a rallying call of Pakistan’s elected kleptocrats over the past few weeks. A chorus of the country’s finest democrats, from the president and prime minister to the likes of Maulana Fazlur Rehman, have issued dire warnings about the arrival of barbarians at the gate of the beloved ‘system’.

What is this ‘system’ that is so precious to the choicest specimens of Pakistan’s rapacious elite? In the Pakistani context — as in Nigeria, Zimbabwe, the Philippines of Ferdinand and Imelda Marcos, and Egypt under Hosni Mubarak, among other inglorious examples — the epithet of ‘the system’ refers euphemistically to the ecosystem of pelf, power and patronage that throws up around Rs1,500bn a year in ill-gotten gains for a handful of corrupt politicians, generals, judges and bureaucrats and an assortment of connected insiders.

How does this glorious system work? What are its broad contours? At its most basic level, the system involves accumulation of rents and privileges, while avoiding all dues and obligations to state and society. Hence, evading taxes, avoiding payment for utilities, stealing gas, electricity, water, land grabbing, wilful default of bank loans are all essentials of partaking the benefits of ‘the system’.

Other privileges that are accorded to insiders: the ability to make non-meritorious appointments (especially for former jail-mates), grant of licences for any commercial activity in violation of rules and rigging the public procurement system for personal benefit, among other ‘benefits’.

It should be obvious that such widespread and pervasive rent-seeking can only thrive in the absence of strong institutions (and the presence of a large public sector).

It is not surprising therefore that the ecosystem of weak and atrophying institutions serves the interests of Pakistan’s elites very well.

Much like the bride in Alexander Pope’s lines, the Pakistani version of ‘democracy’ has proven to be barren for its people, but a teeming mistress for the defenders of the status quo.

Hence, while per capita income for the average Pakistani at the bottom of the heap has declined in real terms over the past four years, the disclosed assets of Pakistan’s parliamentarians (a fraction of the actual) have more than trebled in the same period. (Since a change in assets is a residual after deduction of declared expenditures, a trebling of assets means that incomes have increased much more than three-fold for this cohort).

If it could not deliver wealth and prosperity, food or shelter, power or gas, surely ‘the system’ must have delivered on the essential building blocks of a truly democratic system — rule of law and accountability?

It is hardly any coincidence that Pakistan’s ranking in global measures of the strength of the institutional framework is an abysmal 20th percentile in rule of law and accountability, and 13th percentile in control of corruption, with civilian governments scoring poorly on the last measure. On average, the number and magnitude of irregularities pointed out in the annual auditor general’s reports is sharply higher under ‘democratic’ governments than non-civilian ones.

Compounding the sense of pessimism on this front, it is unclear what incentive corrupt ‘insiders’ have to change the status quo when they benefit so directly and so profusely from it.

While there are incipient signs of hope in the appearance of a developing ‘middle-class consensus’, and the emergence of an assertive and activist superior judiciary, these successes can prove transient. The party that purports to represent the middle classes (MQM) is already co-opted by the ‘system’ and is perceived to be enjoying its forbidden fruits for a decade. Little injuns aside, it is said big ‘chiefs’ are compromised to the hilt too.

Larger, unsettled questions have to be settled before Pakistan can achieve broader economic as well as political stability: how to organise the state, how to guarantee rights and enforce obligations pertaining to all groups, segments, regions and individuals.

Examples of such ‘unsettled’ (or wrongly settled, in most cases) questions abound: should it be the ‘privilege’ of holders of some public offices to be beyond the reach of accountability laws? Should it be the ‘privilege’ of certain incomes, such as agriculture, to be exempt from taxation? Should it be the ‘privilege’ of a venal few to stash their ill-gotten wealth in offshore accounts, and not give a full account in their election filings — and still not be debarred as a result?

Or perhaps the most egregious example of the privileges of the few trumping over the rights of the majority: is it the ‘privilege’ of a corrupt few to be granted pardon for loot and plunder of the public exchequer and bank deposits of countless depositors under a self-serving ordinance (the infamous NRO) meant to prop an individual (Musharraf) in power?

If Pakistan is to survive, then we have to graduate from establishing privileges for the elite, to enforcing their responsibilities — and securing the rights of the larger populace. Without resolving the most basic of all questions, Pakistan’s prospects remain uncertain, at best.

At worst, its future remains deeply imperilled.

(A subsequent follow-up piece will explore the narrative woven to explain the abysmal failure of Pakistan’s democrats to deliver meaningful betterment to the lives of millions of Pakistanis. The most pervasive include the myths about the defence budget not leaving any space for constructive work by civilians.)

‘O Oysters,’ said the Carpenter, / You’ve had a pleasant run! / Shall we be trotting home again?’ / But answer came there none / And this was scarcely odd, because / They’d eaten every one.

The writer is a former economic adviser to government, and currently heads a macroeconomic consultancy based in Islamabad.