Hiccups for private sector

I WROTE last week that there was a good reason for saving for last the discussion of the role of the private sector in Pakistan’s economic history and its future prospects. This series of articles was concerned with the positives in the Pakistani economy.

It is the role of the private sector that is most subject to public policy. It is also the area in which various governments have viewed differently the contribution that private entrepreneurship can make to economic advance. There were those who looked at the private sector with favour and those who viewed it with great suspicion. And, there were those who treated it as a source of personal gain rather than one for the growth and the development of the economy.

It may be useful at this stage to go back into the country’s history and reflect a little on the motivations of the people who governed the it over the last 60 years. What motivates political leaders? To be in power and remain in power is one obvious answer. But why seek power? There are several reasons ranging for altruism to extreme selfishness.

To help the community of Indian Muslims out of the deep malaise afflicting them was the overriding concern of Mohammad Ali Jinnah, Pakistan’s founding father. To give Pakistan a new political system so that it moved along a sustainable path of economic development was Ayub Khan’s principal interest at least at the start of his long tenure.

To save the military from being eclipsed by unruly politicians seems to have motivated General Yahya Khan to usurp power. To create a broad new political constituency so that he could govern without constraints on the use of power seems to be the main reason for many of the things that Zulfikar Ali Bhutto did during his time in office.

General Ziaul Haq’s motives are hard to discern even with 20/20 hindsight. He was a leader by accident, propelled into power not by personal ambition but by a set of circumstances initially beyond his control. Once, in power he thought on his feet, having decided to keep himself in power for as long as possible. Islamisation became one element in the quest for political longevity.

Of the two leaders who dominated the political scene in the post-Zia period, one came with a programme for bringing about change based on the well-honed businessman’s instincts and experience. That was, of course, Nawaz Sharif. The other, Benazir Bhutto, had two motives for seeking and keeping power. The first was to avenge her father’s fall and to punish those who had sent him to the gallows. The way she was encircled once she gained power by those she described as the “Islamabad establishment” made it virtually impossible to achieve the first objective.

The second was to build a solid economic base for herself, and that led to extreme corruption and mismanagement. These were the charges that appeared prominently in the two dismissal orders served on her by two different presidents, one from her own political party.

With this as the preamble let me return to the story of the development of the private sector in the 1990s. I covered the 1990-93 period in this space last week, a period during which there was much reform but which ended in the dismissal of the prime minister. The elections of October 1993 brought Benazir Bhutto back to power. The big question was whether her return would bring political stability to the country and whether she would be prepared to govern differently compared to the first time she was in office.

In that context the main questions were, one, how she would define the roles of the state and the private sector and, two, whether she would continue with the approach initiated by the government headed by Prime Minister Nawaz Sharif. In other words, would she return stability to policymaking in the country?

Bringing political stability to the country is recognised as an important part of public policy directed at economic growth and development: without it, it is unlikely that the private sector would have the confidence to invest in the economy. Benazir Bhutto’s return to power in 1993 was, after all, the eighth time in eight years that the country had a new prime minister.

Muhammad Khan Junejo had governed from 1985 to 1988, Benazir Bhutto from 1988 to 1990, Ghulam Mustafa Jatoi for three months as an interim prime minister in 1990, Nawaz Sharif from 1990 to 1993, Balakh Sher Mazari as interim prime minister in April 1993, followed by the restored Nawaz Sharif for a few days, and succeeded for three months by Moeen Qureshi. The latter was the third interim prime minister to govern during a period of three years.

I was a member of the new regime. As Qureshi and I discussed the contours of the programme of structural reforms we wished to launch during our brief time in office, one thing was clear. We wanted to give the signal that there would be continuity in public policy. If changes were to be made they would be only in those areas in which the previous administration had gone off the track.

One example of the correction that needed to be made was to rein in public expenditure. Sharif had initiated a number of mega projects — among them the Lahore-Islamabad Motorway — that had put an unbearable burden on public finance. These projects had either to be put on hold or altogether cancelled. In addition to cancelling some expensive projects, the interim government went on to develop its own programme of structural reform.

The tenure of the Qureshi interim administration ended with the elections of October 1993 and victory by the Pakistan Peoples Party led by Benazir Bhutto. She took office immediately after the elections, for the second time in five years. There was some expectation that she would have learned some lessons from that experience and would govern more responsibly, focusing more on getting the economy to grow and develop, while suspending her own interest in gaining from the position she once again held.

Unfortunately, she did not change her principal economic objective which was to enrich herself, her associates and her followers by using the power that still remained with the state and, therefore, with those who managed it.

I was given some insights into the way Prime Minister Bhutto governed when I returned to Pakistan in early November 1996 to take charge of the ministries of finance, planning and economic development in yet another interim government. This government took office after Bhutto’s dismissal by President Farooq Ahmad Khan Leghari.

Ms Bhutto could not have imagined that the man she had placed herself in that exalted position would turn against her and dismiss her from office.

She returned some of the power back to the public sector, particularly in the banking industry. Presidents of commercial banks were appointed to ensure that they provided large amounts of funds to the regime’s friends and followers. From the position I now occupied, I was able to view the damage the Bhutto government had done to the economy.

The chief executive of one of the largest commercial banks told me that after he was appointed to his office he was summoned to the prime minister’s residence and was informed quite explicitly that he was to follow the instructions he would receive from her husband.

“When I sat down to talk to her and asked her what her directions were to me, she pointed at an individual sitting at the other end of the large room in the prime minister’s residence. He was reading a newspaper. That was her husband. ‘He will tell you what to do she said’,” he recalled.

In other words, political signals were to replace due diligence in the banking sector. This inevitably led to great corruption in the industry and the near destruction and bankruptcy of the banking industry.

There was one positive step taken by the Bhutto administration in the development of the private sector. She worked with the World Bank, in particular with the International Finance Corporation, the private sector arm of that agency, to formulate a policy that would attract private capital into the power sector.

Generous incentives were given to “independent power producers” to build new power plants. The incentives included the promise to purchase power at a price fixed in advance, an explicit guarantee that if the power produced was not used by Wapda the producer would be adequately compensated, and the promise to provide natural gas and other fuels in which the government had a monopoly.

The response to this policy was quick and copious. Within a few months enough new capacity was created by the private sector to turn Pakistan briefly into a power surplus country.

One other important consequence of this policy was to bring Pakistan to the attention of foreign investors. As a result of the policy large amounts of foreign capital came into the country. Had this continued, there is no doubt that foreigners would have begun to take an interest in other sectors of the economy. At that time, the country was ahead of India in terms of foreign direct investment as a proportion of gross domestic product. Unfortunately, as had happened so many times before, discontinuity in public policy was to cost the country dearly.

Benazir Bhutto was replaced by Nawaz Sharif in 1997 as prime minister. As I discussed last week, the Sharif government abandoned its reformist approach of the 1990-93 period when it had initiated a number of far-reaching reforms. This time around it was much more political in defining its priorities. It was for this reason that it pursued the independent power producers who had invested heavily in the sector. The new government accused them of having bribed the officials in the Bhutto administration for obtaining favourable terms for their investments. Some of these charges may have been true but a great deal of economic damage was done by pursuing them relentlessly.

The political change in October 1999, brought a private-sector-friendly government back to power. It went about restoring the confidence of the private sector in the economy. Under professional management inducted by General Pervez Musharraf, Pakistan once again began to open itself to the outside world. One of the first actions taken by the new administration was to settle with the independent power producers and thus give the signal to the outside world that the country was ready to do business again.

This might have produced a revival of foreign interest in the country but for the terrorist attacks on the United States on September 11, 2001. In retrospect, 9/11 did more harm to Pakistan than good. It brought some short-term relief to the economy in terms of a fresh wave of official development assistance. But it also put Pakistan in the dark shadows of international terrorism inspired by the followers of a philosophy that now goes by many names, among them Islamo-fascism.

This brings me to the conclusion of the series I began several weeks ago on the “positives” of the Pakistani economy. There are several of those.

I dealt in turn with five: a well developed and developing financial sector, an agricultural sector that is on its way to fulfilling its potential, a large and young population that is becoming increasingly productive, a large diaspora interested in investing in the homeland and a private sector that has begun to bring dynamism to the economy.

Does this mean that Pakistan is on the way to solving its many economic problems and is climbing on to a trajectory of high rate of GDP growth? The answer, unfortunately, is “no”. The reason: Islamabad has failed thus far to turn these positive elements into viable public policy.

One step forward, two back

THE recent attack on a madressah in Bajaur, followed by the suicide bombing episode at an army recruitment centre in Dargai, has left the country badly shaken. The newspapers of November 14 carried the news that the NWFP assembly had passed the Hasba Bill.

The newspapers of November 16, however, carried the welcome news that the Protection of Women Bill had been passed (though with some amendments) by the National Assembly.

This last piece of news makes one feel that good things are still possible in this blighted land. However, does the passage of the bill amount to a change in the power of the clergy (not just the MMA but the religious lobby as a whole) that has so far been the most vociferous supporter of anti-women laws in the name of religion? Or is it merely a flash in the pan that has put General Musharraf in a good light, but without really changing much? To answer this question one has to go back in time to find out what has contributed to the power of the clergy in the first place.

The basic issue here is the way Islam is interpreted and used by powerful individuals and groups. During the sixties, Islamic seminaries were seen as the legacies of the past. Islamic-minded people were called conservatives and their madressahs were dismissed with a contemptuous smile.

The place of the clergy (the mullah, maulana or maulvi) was in the mosque, at marriages, deaths and other such occasions. The world, it was felt, could only be run by people whose sources of information, analytical skills and training derived from the West — whether these people were leftists, centrists or rightists.

The cities of Pakistan, Iran, Afghanistan, Turkey and even some Arab countries followed western fashions. Some girls even wore mini skirts though in Pakistan they did not venture beyond tight ‘teddy’ shirts. Life seemed to be peaceful but the ruling elite was neither liberal nor democratic.

In Pakistan, this elite was bureaucratic and feudal but the military became the most powerful component of it from 1954 onwards. The military spent most of the money on West Pakistan, and in Punjab rather than on any other province, imposing a version of nationalism that ignored diversity. Its major symbols of cohesion were Islam and Urdu.

Using the Islamic slogan meant co-opting some among the ulema and, even more importantly, Islamising the discourse. Thus books, the media and state institutions were Islamised and in the process the ideas and norms of liberal democracy were jettisoned.

Even in the events leading up to 1971, the Yahya regime, by no means Islamic, used the cadres of religious parties to defeat the nationalist Awami League.

Khomeini’s revolution and then the communist takeover of Afghanistan coincided with the rule of General Ziaul Haq in Pakistan. Zia legitimised his dictatorship in the name of Islam. While the Americans hated Khomeini because he challenged their might, they found that they could use Islam to fight Soviet power in Afghanistan. Thus, Zia and the Americans joined hands to create a new kind of political orientation in the name of Islam.

With the Islamic-oriented people already inspired by Khomeini’s victory, Islam turned away from its stagnant, old-fashioned, conservative image to adopt a new revivalist image. The new Islam was modernist, politically engaged, conscious of its identity and role and, of course, supremely confident that it could be as legitimate an ideology of power as any other.

Thus, when Zia created laws which seemed to cater to age-old male prejudices against women in Pakistan (such as aspects of the Hudood ordinances), people thought he was only strengthening the conservatives. However, even more importantly, he was strengthening the political discourse which came to focus on Islam. The difference is that it is easy to oppose individuals, conservative or otherwise, but it is very difficult to oppose that which is presented in the name of the sacred.

What Zia did was to strengthen the discourse which got its legitimacy from references to the sacred. He gave more street power and voice to the people who spoke in the name of Islam. This is an important political voice in Pakistan today. When the Americans strengthened the Pakistani madressahs, especially the Deobandi madressahs, they did not simply increase the number of mullahs. They created conditions which armed, trained and radicalised some of these mullahs.

While the Dars-i-Nizami, the traditional curriculum of the madressahs of Pakistan (and India), gives no special significance to jihad, the radicalised clerics, dropouts and others who fought against the Soviets came back with strong views about ‘infidels’ and a sense of the injustice done to Muslims. The Americans thought the tap could be opened and closed. Alas! It could not be closed.

Years of Zia’s promotion of seeing the world through the lens of religion had their effect as Pakistan turned into a hotbed of sectarianism. This was because the madressahs teach the ‘maslak’ (ideology of the sub-sect) which means that, in principle, one refutes the views of sub-sects and other sects. This is not something new. What is new is that the madressahs are exposed to the rhetoric of power, injustices and, of course, some are armed and trained to fight. Moreover, the militants who indulged in sectarianism were often the same who kept up a low intensity conflict going in Kashmir. As this was blessed by the Pakistan army the militants were given a free hand.

This is where our fortunes are connected with those of the US. We reaped the whirlwind sown by the US and our own ISI during the Afghan war. The United States, however, reaped a tornado. It faced anger against its policies perceived by many Muslims as being anti-Palestinian and anti-Muslim. Instead of examining these policies the US chose to lash out at Afghanistan and Iraq.

This has created a fresh crop of militants, all in the name of Islam and all over the Muslim world. Pakistan is caught between allowing some of them — the local Taliban — to run their own theocratic ‘state’ or fight them. They have shown themselves to be determined fighters and this is a highly unpopular war.

So, Pakistan is caught on the horns of a dilemma. We are damned if we do and damned if we don’t. The scene is dark and the news — what with attacks on seminaries and counterattacks on recruits etc — is depressing.

The women’s protection bill, however, is a small silver lining. The good part of it is that it will probably protect some of the worst injustices of the draconian laws framed by Ziaul Haq in the name of religion. However, it also means that only military rulers can reverse the damage done by other military rulers. In short, we do not have strong institutions and are, therefore, at the mercy of the next military ruler to reverse these short gains.

Moreover, what the clergy may have lost on the national stage it has gained in the NWFP where thousands of cadres patronised by the MMA will gain jobs, perks and power. They will strengthen the rule of the religious parties and make it that much more difficult for women to empower themselves because women will become less visible and less audible thanks to the Hasba Bill. In short, General Musharraf’s policy of sidelining the old political parties has actually increased the overall power of the religious parties and weakened liberal forces.

As long as General Musharraf depends upon the clergy for support he cannot expect their power to be diminished. Even more to the point, as long as the military thinks it is possible to revive the policy of using religious cadres to fight in Kashmir, it will not punish the militant wings of the religious lobby. In such a situation, there are no easy answers.

However, the government could begin by reversing the policies of previous regimes especially that of Ziaul Haq in so far as they used Islam to legitimise their rule. Our school textbooks, PTV programmes and radio have all been used to legitimise the hold of the ruling elite on power. That looked like a good way of playing up India as the “other” and maintaining a garrison state.

But our women, our poor people, our young students have all paid the price for the elite’s policies.

Now that the elite itself is in danger of being besieged by the forces it created, it is time to look for change.

Britain’s silent minority groups

THIRTY years to the month after the Race Relations Act of 1976 was passed, it is time to rethink the approach to race and faith relations in Britain.

The national debate has become so poisonous that space for a saner dialogue is needed. One is told that British society is becoming more and more segregated, and that riots are more imminent with every controversy. But take a look at the statistics and things are not so bad.

This is not to say that there are no problems. But to confront these, one needs to re-examine how discussions around these issues are framed and who gets involved.

When the first generation of African-Caribbean and Asian migrants came to Britain, politicians did not make much effort to engage them or understand their concerns. In recent years, politicians have changed tack. Rather than engaging with these communities locally and constructively, they want so-called community leaders to do the job for them.

During the past decade, a group of self-appointed representatives has sprung up, including the Hindu Council UK and Hindu Forum of Britain; the Network of Sikh Organisations, the Sikh Federation and Sikh Human Rights Group, and the Muslim Council of Britain and Muslim Association of Britain, all claiming to speak on behalf of all Hindu, Sikh and Muslim citizens.

Of these, the MCB is the oldest, having been set up in 1997. In contrast, most Sikh and Hindu organisations have sprung up in the past two or three years, jealous of the attention showered on the MCB. But this system is getting out of control.

For a start, there are problems specific to the structure of these organisations. They tend to reflect a narrow range of predominantly conservative opinion. They generally ignore non-religious, liberal or progressive opinions and yet claim to represent everyone of their particular faith. Any criticism, from the outside or within, is portrayed as an attack on the religion itself, making it more difficult to hold the groups to account. Worse, they largely consist of first-generation, middle-aged men who are out of touch with second- and third-generation Britons.

We need to ask why we need these self-appointed representatives. Who gave them prominence? Step forward the Labour government — though the Tories had signalled a move in this direction before Blair came to power. Even in 2006 the new generation of Britons is perceived as outsiders who need their interests represented differently. The government does not want to hear mixed messages. It wants to pretend minorities are homogeneous groups. It works with those groups that tell them what they want to hear. This allows politicians to pass the burden of responsibility on to these representatives and treat minorities as outsiders.

Home secretaries from Jack Straw and David Blunkett to John Reid have sought to politicise problems of segregation, criminal behaviour and poverty into issues that are only about race and religion. Whole communities are blamed for keeping themselves separate, without local housing schemes or “white flight” being taken into account. Politicians prefer to hold a debate on the veil rather than sort out public services.

This whole system distorts the national debate. The politicians say something alarmist and absurd; the appointed community leaders react defensively. Speeches, interviews or television debates are then constructed around polarised positions. The media love putting together a shouting match. Not realising this, these representatives are set up as fall guys by politicians and the media who use them for their own objectives.

We need to go back to the basics and take a clear stance against prejudice. The struggle by ethnic minorities who migrated to this country was always for equality - to be accepted, treated according to merit and to see an end to discrimination. As times have changed, so has the nature of racism and prejudice. In setting out a forward-looking agenda we should not accept any inconsistency. It must be rejected in all forms by everyone — majority and minority groups.

Therefore it cannot go unnoticed that the Indian politician Narendra Modi, whose critics dub him “the butcher of Gujarat” and claim he was complicit in the 2002 anti-Muslim riots in India, has been invited to Britain twice. It cannot go unnoticed that British mosques have played host to imams who have previously justified attacks on Hindus, Christians, homosexuals and others; nor that many Sikh organisations are populated with members of previously proscribed terrorist groups such as the International Sikh Youth Federation.

This is why we need to set a different agenda to develop community cohesion. Today, a group from different backgrounds, perspectives and experiences is launching a manifesto on the Guardian’s Comment is Free website for a new approach to community relations and representation. On other issues we disagree, but we are united in our desire to see an end to the political arrangement with self-appointed community leaders because it hurts those it is supposed to protect.

At the same time, we must reject the constant demonisation of British Muslims that has become the new acceptable face of racism. Recent weeks have seen the Sun newspaper blame Muslim youths for acts of vandalism that the police denied were their fault; the reporting of “race riots” in Windsor when what occurred was an attack on a Muslim-owned dairy by white youths; and many more non-stories blown up into front-page headlines purely because they involved Muslims.

All this serves only to drive liberal Muslims into the arms of the community leaders who claim to voice their fears. It is a choice between a rock and a hard place that does not help the silent majority.

There needs to be a new way forward that ignores the rabble-rousers and scare-mongers. We believe a new progressive agenda on citizenship, democracy, public debate and civil liberties is possible, but it needs others to debate and engage with us. — Dawn/The Guardian News Service