Primacy of private sector

I WILL continue the discussion I started in this column last week about economies in transition. This is an important subject since Pakistan has made such a transition in recent years and has done it reasonably successfully. In doing so, it has breathed new life into the private sector. This is one of the positive features in the landscape.

The three regions that are in the process of making the transition from some sort of socialism to some sort of market-capitalism had different reasons for undertaking their respective journeys. Russia and Eastern Europe travelled along this route because of the palpable failure of socialism to achieve the promised results. But the pressure for change came from the political side; from Russia, in particular, as a consequence of the cost of the war in Afghanistan.

For China and communist Asia, the change was the result of the growing realisation that market incentives could produce a higher rate of growth than could be done by state direction. This resulted in the memorable statement by Deng Xiaoping. He said: “It didn’t matter what was the colour of the cat as long as it caches the mice.” The cat’s colour, of course, referred to the ideology being followed and mice were such economic indicators as the rates of growth, economic progress and economic modernisation.

For South Asia the move towards finding a greater role for the forces of the market was inspired by a combination of serious economic crisis (in the case of India) and the change of political leadership (in the case of Pakistan). It was a severe balance of payments imbalance that motivated India to begin to wind down the licence raj in 1991. The men who led that move were professional economists with a great deal of exposure to what was happening in the world outside. The team included Manmohan Singh who was then finance minister, Montek Ahluwalia and Bimal Jalan. The last two were the senior-most officials in the ministry of finance and had spent their formative years at the World Bank.

Change in Pakistan happened also in 1991 but not because of an economic crisis. A new prime minister took office with a background dissimilar from those of any of his predecessors. Nawaz Sharif was the first businessman to hold that office in the country’s history. His instincts were very different from those who had occupied that position before him. He was prepared to do things very differently: to think outside the box, to rely less on the state and the bureaucracy to guide the economy, to depend more on private initiative, to take risks and move into the areas in which the bureaucracy would have been too fearful to tread. In this way of managing the economy, he was assisted by Sartaj Aziz, his finance minister. Aziz, like the team in India, had spent several years in multilateral development organisations and had a better understanding of the working of the global economy and how Pakistan should begin to change the structure of its own economy.

The businessman-turned-politician took office in Pakistan at the right moment in the evolution of thinking on development. The predominant role assigned to the state for over four decades had brought little benefit to most of the developing world. In many developing countries the state’s profligacy had brought economic chaos and near-bankruptcy.

In Latin America, country after country had suffered under the tight control of the state on the economy. There was a growing sentiment that the entrepreneurial class had to be given an opportunity. “The people we should thank are innovators and entrepreneurs, the individuals who see new opportunities and risk exploring them — the people who fund new markets, create new products, think out new ways to handle commodities commercially, organise work in new ways, design new technology or transfer capital to more productive uses,” wrote Johan Norberg in an article contributed recently to The Wall Street Journal.

Norberg is the author of an influential book, In Defence of Global Capitalism, published in 2003 in which he had explored the advantages inherent in economic systems that allowed leadership roles to private entrepreneurship rather than to state control. “The entrepreneur is an explorer who, ventures into unchartered territory and opens up the new routes along which we will be travelling soon enough. Simply to look around is to understand that entrepreneurs have filled our lives with everyday miracles.”

Before detailing the economic model adopted by the Nawaz-Aziz team for giving the private sector a new lease of life, I will touch upon one important question about the role of entrepreneurs in the economic life of a society, developed or developing. Is there a need to constrain and check this role to ensure that private initiative does not come at the expense of social good? One way of answering the question is to draw a parallel between the award of freedom to actors in the field of politics. What works for politics should also work for economics.

Good markets are like good governments, the two don’t develop suddenly. That the development of viable and sustainable democracy needs more than recurrent elections is a lesson Pakistan should have learnt from its experience with them in the 14-year period between 1985 and 1999. In 1985, elections were held by the military regime headed by General Ziaul-Haq. It was held under constraints; political parties were not allowed to participate. There was a fear that Pakistan People’s Party, the organisation founded and once headed by the executed Zulfikar Ali Bhutto, would sweep the polls and wreck vengeance on General Zia and his military associates.

The strategy worked but only for a while. Even Muhammad Junejo, the military’s hand-picked prime minister, proved to be too independent to be trusted in office. He was fired by the president in May 1988 using the powers he had arrogated to himself under the amended constitution. Another election was ordered but was held after General Zia died in an air crash in August 1988.

Pakistan’s new political masters — acting President Ghulam Ishaq Khan supported by General Aslam Beg, the new chief of army staff, allowed the parties to contest and PPP, under the leadership of Benazir Bhutto, won easily. Did the return of PPP bring back democracy? Democracy as it is known in the West — not even as it is known across the border in India — did not take hold for the simple reason that the politicians who had gained power were not prepared to yield space to the institutions that could constraint the use of that power. Mature democracies have many such institutions.

Four of these are particularly important: parties in opposition, the judicial system, the bureaucracy, and the press. The first two have critical roles to perform but the second two also play very important roles. None of these four constraining influences were allowed to operate with enough freedom so that the people in power could be kept within checks and bounds. Political chaos ensued.

Institutions that check the use of power by various political actors also help to prevent the assumption of power by those who should not possess it. Had politicians allowed political parties to function; had they encouraged the development of the judiciary and the judicial system into an autonomous arm of government; had they not intimidated the press; and had they not cowed the bureaucracy into submission, it is more than possible that the military in Pakistan would not have had the political nerve to intervene so frequently in politics. This leads me to conclude that the use of power — whether actual (as in the case of those entrusted with its use at a particular point in time) or potential (as in the case of the military waiting in the wings) — needs to be institutionally constrained. This is as important in politics as it is in economics.

The purists among those who promote market-capitalism as the only viable system for ordering economic life in any country, developed or developing, take their inspiration from Adam Smith, who laid the foundation of modern economics. He put forward the idea which was to have a profound influence on economic thinking. According to this, individuals by working for their own good end up also working for the good of the entire citizenry.

An individual “neither intends to promote the public interest, nor knows how much he is promoting it .. He intends only his own gain, and he is in this led by an invisible hand to promote an end which was no part of his intention. . . By pushing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” Notwithstanding the enthusiastic support of many economists for unconstrained capitalism even for institutionally weak economies, Adam Smith’s invisible hand does not always deliver.

As William Easterly writes in his new book on the factors that work to produce development and growth, “while the theory of the invisible hand celebrates self-interest as socially beneficial, this is true only if there are norms that make possible mutually beneficial transactions between parties. Lack of checks and balances on greed can prevent economic development just as a lack of markets can.”

In economics, constraints can come from both economic institutions (as they should) or from those that populate the political area (as they should only under carefully presented situations). If they don’t, chaos can reign as happened in much of Eastern Europe during the transition from socialism to market-capitalism.

Two types of constraints on the use of economic power are of great significance for the development of market capitalism. They are respectively legal and regulatory systems. Neither is well developed in Pakistan and neither is the focus of government attention. There is not even a vague hint in President Pervez Musharraf’s recently published memoir as to how the strategy he claims he has put in place for modernising the economy and ensuring that it moves along a trajectory of reasonable rate of growth will accommodate the strengthening of legal and regulatory systems.

I have a great fear. As I see the economy move forward at a reasonable pace led by the private sector there is no assurance that it would produce social and political tranquillity. While the GDP grows and the economy expands, inter-personal and inter-regional income disparities also increase. Poverty may decline but it will not happen fast enough to ease social and economic pain. Employment may increase but only in terms of numbers and not as a proportion of the total work force. All this undoubtedly will result in unhappiness which will be expressed not through the use of political processes. They are too weak to accommodate resentment. Discontent will get vented rough political agitation and crime. Neither is good for politics and economics.

A Balkanisation of Punjab

SUCH has been the extent of our political ineptness since independence in 1947 that we have made all sorts of failed as well as unnecessary attempts at bringing about structural changes in the country. In 1955 we resorted to a scheme under which four historical provinces were merged to form the so-called One Unit which began to be called the province of West Pakistan.

As a consequence, the historical province of East Bengal was renamed East Pakistan. This act of political engineering was basically designed to put in place a federal counterweight to the province of East Bengal on the basis of the contrived principle of parity between the two provinces/wings of Pakistan. Thereafter, it was officially hoped that life would henceforth be smooth and peaceful and trouble-free and Pakistan’s politics would strike a stable equilibrium.

But this was not to be. Despite the new arrangement, the fact remained that even so East Pakistan (in terms of sheer size of the population) continued to outnumber the combined population of all the old provinces of West Pakistan. Also by then the world at large had firmly moved in the direction of the principle of one man, one vote. Therefore, political trouble once again began to loom on the political horizon. East Pakistan was obviously not satisfied with the parity formula. The only bargaining chip that the Bengalis had was that their preponderant population factor had to be the fundamental factor in any viable democratic dispensation.

In 1970 President Yahya Khan bent backwards and accepted the formula of one man, one vote but at the same time, he revived the four old provinces of West Pakistan. In 1970 he held a truly free and fair general election in the country. But all that this stratagem achieved was to heighten the political tensions between East and West Pakistan as was discovered in the post-general elections situation that arose in 1970 and culminated in a separatist movement there and the Indian intervention of 1971 as a result of which East Pakistan became the separate entity of Bangladesh.

Now 35 years later we are witnessing renewed attempts on the part of the present military-led government thinking of renewed ways and means of political engineering ostensibly for bringing about stability and democratic change in Pakistan’s body politic. Only the other day the minister for parliamentary affairs in the federal government, Dr Sher Afgan, hinted in a statement to the press that the government was considering a proposal for dividing the province of Punjab into two or three provinces. But soon thereafter there was yet another statement from the very same minister in which he tried to play down his earlier statement on the subject of dividing Punjab.

What does one then make of the minister’s two contradictory statements on the same subject? Was it put out just to test the political waters of Punjab on the subject? Or was it in the nature of a bluff and bluster with a view to placating the forward bloc of the PML(Q) which mainly hails from southern Punjab and thus take some wind out of the sails of the present strident Chaudhries-led provincial government at Lahore?

The latter is more likely to be the cause for the firing of this shot in the air for all to hear so as to make them understand that Islamabad will have the last word in any such matter. In this connection, it may be pertinent to recall that in most cases (except perhaps for Mian Nawaz Sharif’s two governments at the centre) Punjab has always been the a sort of bete noire for all central governments in Islamabad and the Musharraf government is no exception to this phenomenon.

But there is also a flip side to the story. Ever since the federal government injected its devolution programme in the body politic of the provinces many other things have been happening. With the virtual disappearance of a classical civil bureaucracy, we are now witnessing the continuous rise of the police as an effective, beefed-up alternative lever of local power in the provinces. It is more than willing and easily available to the federal government for imposing its will on the provinces.

The upgrading of the posts of the DIGs Police in Lahore, Rawalpindi and Multan to the levels of Additional IGPs more than a year ago was a clear signal that if the federal government so desires at any time, it may well try and impose a trifurcation of the province of Punjab and bring about the artifice of three provinces in place of the present-day Punjab.

The oft-quoted analogy cited in this respect that is that of the Indian province of East Punjab which consisted of 40 per cent of the territory of the pre-1947 undivided Punjab. During the Nehru period East Punjab was divided into the three provinces of Punjabi Suba consisting of most of the Punjabi-speaking Hindu and Sikh population, Haryana consisting mainly of Hindus speaking the Rangari version of Hindi and Himachal Pradesh consisting of the mountain tribes, mainly Hindus, who speak the Pahari (mountain version) of Hindi.

Why and how did India resort to a three-way division of East Punjab? Was there a political imperative exerting itself internally at that point in time for taking such a step? Yes, of course, the political compulsion that precipitated such a division emanated from the UP (United Province) which was the other province that lay contiguous to the Union capital of Delhi towards its south-east.

It may be pertinent to state here that during the long reign of the Nehrus over India, the UP lobby naturally was not prepared to countenance any parallel or competitive political power in its immediate vicinity. And so the province of East Punjab went through a trifurcation process slowly but surely by means of a constitutional process as enshrined in the Indian constitution. It was indeed a a very well managed unfolding of the division of a province that was less than half the size of the pre-1947 Punjab.

In India many writers from the north refer to this process as the Balkanisation of Punjab. The description is not far wrong because several years down the road it erupted and gave Sikh discontent a violent form in and around the Punjabi Suba. Needless to say, all these changes had been effected through a constitutional process and yet it had culminated in a long period of violence in areas in close proximity to the Indian capital. This indeed was an open insurgency and India paid a heavy price quelling it.

In Pakistan today, it appears that Punjab finds itself very much on the threshold of a trifurcation process. We cannot predict as to whether it will come through an orderly process or whether it will have its own share of jerks and tremors. However, one thing is quite clear and that is if a similar process is initiated in Punjab, it is not going to be greeted as a popular event by the people of Punjab.

For far too long have the people of Punjab been fed on the incessant state propaganda that they happen to be the bulwark of Pakistan. Furthermore since there is no provision in the Constitution that may help reduce or enhance the territorial limits of any of its federating units, the danger is that it may be taken to be an extra-constitutional measure and thus may run into all sorts of problems. Therefore, in all likelihood a coercive process may have to be resorted to.

In that event, in political terms it will mean as if the people of Punjab now have to reap the bitter harvest of yet another One Unit in a new shape altogether — this time manipulated and imposed by Islamabad. But whatever the name that is eventually given to the proposed division, it will go down as the Balkanisation of Punjab. In such a scenario there can indeed be any number of surprises.

Agony of the missing ones

THE sight of women, children and the elderly holding placards demanding the return of loved ones who have been picked up from their homes or workplace, and who are not in a position to communicate their whereabouts, is not an uncommon one in Islamabad these days.

So far, the protests of anguished relatives and friends have evoked no response from the authorities.

In a recent report, Amnesty International has condemned human rights violations, including forced disappearances and illegal detentions, in Pakistan. It has, in fact, indicted the people of Pakistan, especially the parliamentarians and the courts, for not effectively raising their voice against such violations and for not providing relief to the affected people. Amnesty has attributed this indifference of Pakistani civil society to the fact that over a period of time the people have grown used to the abuse of their rights and to violence.

In the past, one used to hear occasionally of a person, usually a political activist, being picked up by Pakistani law enforcement agencies for interrogation. However, as soon as a habeas corpus petition was filed in a court of law, the person was either released or produced in court for a proper remand. Then it was for the court either to grant the remand or refuse it, depending on the strength of the evidence. Thus the requirements of the law were fulfilled. Habeas corpus was, indeed, a very powerful weapon in the hands of the aggrieved for seeking redress against a perceived injustice. The government of the day generally responded positively.

In recent years, however, the situation has changed and the number of missing persons has increased considerably. According to some reports, this figure is in the hundreds. Equally disturbing is that there has been no news of some of the victims for years. The category of such persons is not confined only to political activists but includes political dissidents, journalists, doctors, scientists, trade unionists and generally those opposed to the government of the day.

A recent press report, while commenting on the increasing number of missing persons, specially referred to persons such as Dr Aafia Siddiqui, an MIT graduate, of whom nothing has been heard for the last three years; Attiqur Rehman, a nuclear scientist who was picked up on his wedding day in 2004; Dr Safdar Sarki of Jeay Sindh; and Asif Baladi, president of the Sindh Nationalist Forum.

In the Senate, Shahid Bugti narrated the story of the disappearance of his nephew, brother and cousin who, according to him, had nothing to do with politics but were picked up to put pressure on him. A similar story was related by Senator Sanaullah Baloch about his missing relatives. The Senate opposition leader, Mian Raza Rabbani, also made a reference to the disappeared people of Sindh and Balochistan and quoted a figure of 60 for such individuals as given out by the Human Rights Commission of Pakistan.

Among the journalists who have been picked up, the most tragic story is that of Hayatullah Khan, an investigative journalist from Waziristan who was taken away in December last year. His bullet-riddled body was discovered six months after he went missing, despite the assurances of the government to his brother that he was well and would soon rejoin his family. There was also the story of journalist Mukesh Rupeta and cameraman Sanjay Kumar who were produced in a court of law three months after their disappearance. All this while, the government professed ignorance about their whereabouts.

As a result of the government’s indifference, the habeas corpus has lost its sting. Government agencies who are named in a certain petition and are called by the court to explain their position show complete ignorance about the whereabouts of a particular missing person. This usually spells the end of the case for all intents and purposes and the petitioner is left high and dry.

The GHQ in a similar case said that it had no operational control over the actions of the intelligence agencies and thus could not help the court.

Similar denials by the relevant government agencies regarding missing persons are bizarre indeed. Some authority should accept responsibility for the safety and security of citizens. In a hopeless situation, the role of civil society, lawyers’ associations, human rights organisations and the courts is crucial. It will be in keeping with the norms of justice and fair play if the courts give priority to such cases and arrange for speedy trials.

Why is all this happening? The government has the right, in fact an obligation, to protect its citizens from the harmful acts of bad elements in society. In civilised societies — and we claim to be one — remedial or constraining measures are taken within the purview of the existing law on the subject. In Pakistan, we have a host of laws that deal with similar situations. In addition, we have the anti-terrorism laws which are even more stringent and severe than ordinary laws. Why are we not applying these to all such cases? I am sure none of these have a provision to allow anyone to hold a person incommunicado for years, without producing him in a court of law.

Equally important is the humanitarian and moral aspects of such cases. The implications of such events for family members are enormous both in social and economic terms. Their agony is of immense proportions. When a person dies, one can come to terms with the tragedy after some time and get on with life. Not in the case of missing persons, where the hope of their return some day fuels agonising thoughts about the present. Those who are charged with the task of detaining such persons themselves have families, and a conscience.

Considering the times we live in, no one is asking the government agencies to be lenient or complacent. What is urged is that the provisions of the relevant rules should be observed and that the due process of the law should be meticulously observed. The government’s silence on the plight of these unfortunate, missing Pakistanis is indeed deplorable.

The writer is a former ambassador.

Changing climate

AFTER the coming election, President Bush is likely to face a Congress more apt than the current one to take strong action on climate change. He will then face a fateful choice: does he want to spend his final two years in office blocking action and pretending that voluntary curbs on greenhouse gases will solve the problem of global warming, or does he want to help shape solutions?

At some point, conservatives will need to reconcile themselves to the problem of climate change. Some leading Republicans — Arizona Sen. John McCain and California Gov. Arnold Schwarzenegger, most notably — have already taken strong stands on the question.

Indeed, it is difficult to imagine that the intransigence of Mr. Bush’s administration on climate change will long survive his tenure, no matter who succeeds him. Will he take a hand in developing America’s response to this global problem, or will he go down as the president who fiddled while Greenland melted?

An engaged president could do much to change the political climate on climate — which is already changing around Mr. Bush. It will take presidential leadership to put in place the sort of regulatory infrastructure necessary, over the long run, to move away from fossil fuels. Federal policy must put a price on emitting carbon into the atmosphere so that companies have an incentive to sequester carbon emissions and to develop energy sources that don’t increase atmospheric greenhouse concentrations.

—The Washington Post