OUR former Pakistani-American finance minister, Professor Shahid Javed Burki, was passing through Karachi and dropped in for breakfast. He very seriously wanted to know what he already knew, and asked, "Where are we heading?" I equally seriously answered, "Down."
Base: A population of 140 million, of which 139 million are uneducated (in the profound and other sense of the word) and remain intolerant and bigoted. Population growth rate, 8 births per minute, 480 births per hour, 11,520 per day, 4,204,800 per year.
"Jobless deposed political leaders, now self-employed agitators and disruptionists: 99.9 per cent corrupt, endowed with unsatiable greed.National till: Empty. Friends: Few." "Do you agree with Stiglitz ?" I asked Shahid. "Yes," he said, himself a former World Bank man.
Two years ago the World Bank fired its chief economist, Joseph Stiglitz, merely because he had expressed mild dissent from World Bank-style globalization. He was recently interviewed in Washington for The Observer and News night about the inside workings of the IMF, the World Bank, and the Bank's 51 per cent owner, the US Treasury.
The World Bank, Stiglitz tells us, claims that it has an assistance strategy for every poorer nation, which is designed for each after careful in-country investigation. Not so, says Stiglitz, once a true insider, a member of Bill Clinton's cabinet, and chairman of the President's council of economic advisers. The so-called 'investigation' involves little more than a close inspection of five-star hotels and concludes with a meeting with a begging finance minister, who is handed a 'restructuring agreement' pre-drafted for 'voluntary' signature. Then, after an analysis of each nation's economy, the Bank hands to every finance minister the same four-step programme: Privatization; capital market liberalisation; market-based pricing; free trade.
Step one: Rather than objecting to the sell-offs of state industries, most politicians of poor countries use the World Bank's demands to silence local critics and their governments and then happily flog their electricity, water companies, and so forth. They leap, with eyes gleaming, at the possibility of commissions for shaving a few billion off the sale price. The US government knows exactly what is going on - as it did in the case of the biggest privatization of all, the 1995 Russian sell-off. Stiglitz maintains that the US Treasury wanted Yeltsin re-elected and was totally unconcerned as to whether the election was corrupt or not. The result: US-backed oligarchs stripped Russia's industrial assets, with the effect that national output was cut almost by half.
Step two: In theory this allows investment money to flow in and out but in practice, usually, the money simply flows out. MacDonald's Kentucky Fried? Stiglitz calls this the 'hot money' cycle whereby cash flows in for speculation in real estate and currency and flows out at the first signs of trouble. Stiglitz says that a nation's reserves can drain literally in days, and when it does the IMF steps in and demands that interest rates be raised, thus demolishing property values, savaging industrial production and draining the national exchequer.
Step three: With a nation down on its knees, the IMF propels it towards raising prices on food, water and utilities. As one illustration of the results of what the Bank fancily terms market-based pricing, Stiglitz cites Indonesia in 1998. When the IMF put a stop to food and fuel subsidies the country exploded into riots what Stiglitz calls Step three-and-a-half, 'the IMF riot'.
News night had obtained several World Bank documents one of which was a 2000 Interim Country Assistance Strategy for Ecuador in which it was clearly stated that the Bank expected its plans for that unhappy country to spark 'social unrest', which is exactly what they did.
These 'IMF riots' cause new flights of capital and ensuing government bankruptcies. Who profits?: foreigners who rush in to pick up at bargain prices whatever assets remain. In this game, says Stiglitz, the clear winners seem to be the western banks and the US Treasury.
Step four: Free trade is conducted by the rules of the World Trade Organization and the World Bank. Europe and America demolish all barriers to sales in Asia, Africa and Latin America whilst barricading their own markets to purchases from these areas.
World Bank and IMF plans are devised in secrecy, they are never open to dissent or even discourse, and according to Stiglitz, are 'driven by an absolutist ideology'. Not only do they actually undermine the demanded democracy but they just do not work. Take Africa, for instance. Under the IMF structural assistance programmes, Africa's income dropped by 23 per cent and the only nation that escaped was Botswana which gave the IMF the boot.
Stiglitz's recommendations: Forget the Bank and the IMF. Go in for radical land reforms and thus completely change the power of the elites. But changing the power of the elites is not high on the Bank's or the IMF's agenda, and neither is changing their own four-step course in the face of failures and suffering. "We must get out of the World Bank-IMF trap," said Burki, "we must produce more, our industries must grow. We desperately need foreign investment." I groaned, he groaned
Foreign investment in Pakistan has declined by some 73 per cent over the last year. And the few who have embarked on the investment misadventure face numerous difficulties or home-made hurdles created by the self-appointed guardians of the nation's moral frontiers.
Take the case of the unfortunate foreign investors whose multinational corporation produces consumer goods. The corporation pays Rs 1 billion per annum in direct taxes to the Pakistan exchequer. It has recently pledged to commit a further US $ 10 million to install a new soap manufacturing plant near Karachi and has invested another $3 million in local packing of disposable diapers and sanitary towels both widely used items of necessity. It launched the sales of its sanitary towels with a massive advertising campaign in the print as well as the electronic media Pakistan Television. Similar ads are projected over the television channels of most countries, including those of Egypt, Saudi Arabia, the UAE, Morocco, Malaysia and Indonesia all members of the Muslim ummah. But those of our Islamic Republic inflicted with religiosity found the ads objectionable.
Meetings were held with the representatives of the organized Islamic groups. "Is the product un-Islamic?" they were asked. "Is anything vulgar or obscene being shown". "No", said the objectors, "but there should be no mention on TV of the phrase 'sanitary towels'. That is taboo".
PTV had no objection to what the advertiser wanted to show and the account would have augmented their earnings, our national earnings, by Rs 50 million. But 'No,' said the Lord High Executioner sitting in the Chief Executive's Secretariat (no less !). On April 10, Musaddeq Asad Shah, deputy secretary A-3, fired his missive, No 1(1) SO-I(A-3)/CES,2001/428, aimed at the additional secretary incharge of the ministry of information and broadcasting, conveying the 'desire' of 'The competent authority' (surely not his Lord and Master, General Pervez Musharraf?). The Managing Director of PTV was duly copied. The lethal message.
Subject : Importance of female education through media. The competent authority has desired to stop the playing of the advertisement 'sanitary towel' forthwith on PTV. However, the same may be re-recorded and played if required after clearance from the ministry of religious affairs. Implementation of the above instructions may be confirmed. The sanitary towel advertisements remain suspended, awaiting clearance from the religious affairs ministry. This ministry's functions as defined by the government's rules of business have nothing to do with reviewing advertisements, or delivering a judgement on the use of the product advertised.
Should the CE's secretariat have involved itself at all in this matter ? And must the government involve the men of religion in issues as to whether citizens of this country should or should not buy and use a consumer item? How is investment to be attracted and protected when highly incompetent 'competent authorities' interfere in mundane matters such as the advertising of sanitary towels on television?
We will soon end up making, playing, but not even exporting, Gilli-Dundas. Poor Musharraf. He has to carry with him the fanatics in his camp. He says the right things : "There is no room for religious extremism..." But then he finds it necessary to cover his rear, and adds, "and there is no room for western liberalism." He and his privatization minister, Altaf Saleem, are doing their best to privatize, and at the same time his men in Karachi are doing their best to nationalize a well-run completely privately funded hospital, The Kidney Centre. The trained mind, wherever it may live, is not boggled. It is not drained by whatever is incessantly dinned into it about Kashmir and our sole ally, the Taliban. It must keep on and on waging the losing war.