Despite IMF Deal, Pakistan Is Still On The Knife-Edge: What Next? – OpEd

After eight months of delays, Pakistan and The International Monetary Fund (IMF) finally reached a staff-level pact on a $3 billion stand-by arrangement subject to approval by the IMF board in July this year.

The decision, long awaited by Pakistan, now offers some respite to the country’s ailing economy, which was teetering on the brink of default, battling an acute balance of payments crisis, falling foreign exchange reserves and the highest inflation in recent history.

No doubt it will “reduce risks and uncertainties and serve as a source of comfort to investors and lenders” including the public, but the leadership needs to look into the broader spectrum of governance issues particularly political, economic and judicial crisis that have pushed the country to the brink of collapse.

In fact, Pakistan’s economic crises since beginning have all been rooted in governance crises, this IMF deal gives the country’s leadership yet another chance to learn from the past mistakes and make drastic fundamental/structural reforms in the system. Unless we undertake these reforms, Pakistan will remain on a knife-edge and at the mercy of multilateral lenders and its citizens will continue to pay for the structural and governance failures of their governments— both civilian and military.

While analysing Pakistan’s deeply rooted governance issues, it is relevant the comments made by Sri Lankan former president Chandrika Kumaratunga marking the 75 years of her country’s independence on April 16, in which she admitted that Sri Lanka was “a failed state”.

The reasons, according to Kumaratunga, for her assessment were: 1) power juggled between five dynasties, 2) sectarian intolerance, 3) corruption at every level, 4) the sham of periodical elections without the transfer of power, 5) the bankruptcy that has forced it to approach the IMF. Diplomatic courtesy prevented her from mentioning the Chinese-funded Hambantota port. In 2017, the port had to be leased to China for 99 years when Sri Lanka was unable to repay the money borrowed to build it. 

Now if we compare the above mentioned five reasons that pushed Sri Lanka to the status of a failed state, can Kumaratunga’s bitter self-analysis be not equally, and cruelly, applicable to Pakistan and Gwadar? No doubt there is a great lesson for our leadership to learn from the Sri Lanka experience — but we are in the habit of not learning from the past history.

We need robust leadership

Since the ouster of Imran khan, the present leadership both civil and military with untiring efforts have shown some success on both economic and political fronts after the IMF deal and preparation for elections, but these efforts are short term and will only provide temporary respite to the public.

Instead of repeating the past blunders, now it is high time for the leadership to review and revisit the whole outdated system. According to the prominent American diplomat Henry Kissinger, leadership has “the capacity for analysis, strategy, courage and character”. Kissinger believes that leadership is “most essential” during periods of transition but recognises that, contrary to our expectations, “most leaders are not visionary, but managerial”. 

Contrary to Kissinger’s definition, our leadership both military and civilian in the past have badly failed to meet that criterion. Pakistan is in dire need of such leadership—both current and forthcoming because the country’s polity is fractured. Politicians are not willing to unlock horns; the economy is slipping down a steep slope; and terrorist forces have re-surged.

The country is unceasingly grappling with issues of governance, financial corruption, poor infrastructure, and a struggling economy. Unfortunately, chaos and poor governance have become the hallmarks of politics fuelled by a narrow vision of Pakistan’s national identity are threatening the country’s prospects for social cohesion and stability.
Can the leading lights of our political, economic, military and judicial minds muster enough courage and will to sit at the table and resolve the challenges facing the nation?

Glimpse of Recent Political,economic and judicial crisis

In 2023, PTI Supremo Imran Khan refused to come to terms with his constitutional ouster as Prime Minister of Pakistan in April 2022 arising from a verdict of the Supreme Court to face a “No Confidence Motion.” In the months leading up to May 9, 2023, a rubicon might seem to have been crossed when ousted PM Imran Khan resorted to attack incessantly every constitutional organ of the Pakistani State.

The old political structure is being dismantled and a new one is being born out of its debris in a very artificial manner. And this is not the first time that this has happened. Making and breaking political parties is a favorite pastime of those who rule the country — and they are at it once again. What is happening now is not unfamiliar to Pakistan’s treacherous power politics.

In the ongoing political crisis, another phase of political engineering is in the offing. Apparently, the establishment seems fully intent on cutting those challenging its supremacy down to size. In fact, the country and its people will be the ultimate losers in the power politics being played by powerful circles in the country. Pakistan is in the midst of a ‘polycrisis’, with political unrest, an economic downturn, unprecedented divid in superior judiciary, constitutional breakdown and security threats are pushing the country towards chaos.

Why Economic crisis?

Our 75 years journey as an independent nation shows that Pakistan’s economic crises have all been rooted in governance crises, with anti-reform ruling elites almost always seeking pain-free (geopolitical rent), ways to deal with deep-seated economic problems facing the country.

The predominance of a strong elite, which leads to corruption and rent-seeking, is another fundamental problem that is wreaking havoc on Pakistan’s economy. The governing elite typically extracts rents; it either collects geopolitical rents or extracts domestic rents. It is not interested in creating a viable industrial base or in export-led economic initiatives, rather they prefer to invest abroad.

The elite dominates politics and the economy at the cost of the people’s welfare and national growth, and it maintains its position by maintaining inequality in the country. In all, the wealthiest 20 percent of Pakistanis hold 49.6 percent of the country’s income, while the poorest 20 percent own just 7.0 percent.

There exists perpetual financial vulnerability. When your entire life’s struggle is about keeping your head above the water you hemorrhage leverage all the time. So, what do you do? You sell the most valuable assets for peanuts. Use it or lose it. Right? And you market your strengths unimaginatively, not realizing that flaunting your jewellery in a market full of powerful bandits is just asking for robbery. Savvy?

With successive civilian and military governments residing beyond their means – reluctant to mobilize domestic resources and opposed to economic reforms – Pakistan has been engulfed in a perpetual financial crisis, with virtually every government over the last seven decades leaving the economy in far worse shape for its successors to navigate. The 2021 National Human Development Report (NHDR) for Pakistan estimates that economic privileges granted to Pakistan’s elite groups – including the corporate sector, feudal landlords, the political class, and the military – amount to an estimated $17.4 billion, or about 6.0 percent of the country’s economy.

In the past, Pakistan has been able to leverage its geopolitical situation, as a staging post against the Soviet Union and then the Taliban, to avoid the IMF’s prescriptions while still receiving its funds. The benefit from being the transit for western supplies to Afghanistan stopped August 15, 2021, and the cash hole it left has caused financial problems.

The recent steps taken by civilian and military leaders devising an ‘economic revival plan’ to capitalise on “untapped potential of key sectors like defence production, agricultural/livestock, minerals/mining, IT, and energy, through indigenous development” within the country, and attract foreign direct investments is a progressive move toward meeting the country’s economic challenges. However, contrary to the past, it’s continuity and sustainability must be ensured after the election scheduled to be held in the current year.

Failure of Our Judicial system

Aristotle rightly called “justice” the virtue of virtues as judges are expected to do justice without fear or favor, affection or ill will. Unfortunately the portrait emerged from 75 years of our judicial history is an ugly one due to its highly controversial role starting right from Justice Munir the architect of famous doctrine of necessity to the sitting CJP Umer Atta Bandial. The recent judicial crisis, division in the superior judiciary and alignment with political parties is unprecedented in our checkered judicial history.

No doubt, the judicial system is considered the backbone of any state to ensure the rule of law as in the absence thereof, the state cannot exist or function properly. Now the question is, why have we failed to establish such a judicial system that could ensure the Rule of Law equally both for the rich and poor? One fundamental reason seems to be the carrying on with the obsolete colonial justice system that was established to protect the interests of the British Raj. As such, our judiciary instead of protecting the fundamental rights of the people is playing in the hands of political elites and powerful establishment. Corrective measures must be implemented.

What should be the role of Establishment

The military divide and their fighting for power, as well as they controversy over Pakistan as a nation or religious state, are the two fatal diseases that Pakistan by birth has inherited and is still continuing without proper cure. All political, economic, judicial and social problems facing the nation stem from those two diseases. Furthermore it is a bitter reality that the establishment in different shades is calling the shots and running the show, creating a Frankenstein’s monster in the country’s political and social theatre with the collaboration of elite class since beginning.

Consequently little space is left for a flourishing political culture, democracy and democratic governance, constitution and rule of law. Now the nation’s existence is on a knife-edge and it is time to make or break it. Therefore, the powerful military establishment and political elites should review and revisit their past mistakes and sit together with other stakeholders, and put their minds together for devising ways and means to settle all issues facing the nation — including these two basic and inherited diseases.

The best example with regard to political engineering and reverse engineering in the recent past is the role of the military and the judiciary of Pakistan — both of which together curated Pakistani politics during 2011–2018, disqualifying Nawaz Sharif, launching Tehreek-e-Labbaik Pakistan (TLP) to destabilise his government and enabling Imran Khan’s mega-marches on Islamabad — bringing Imran Khan into power in 2018 through an engineered election and dismantling the IK project in 2021, after a short span of a three and half years disaster.

What next?

Pakistan needs a mature, steady, sagacious leadership that can unite, stabilize and pacify its polity, economy and society. The political elites and leadership, across the spectrum, have brought the country to the brink of collapse. The adverse, harsh and unsustainable economic, political and human dimensions of this imbroglio have crushed the common man. Free and fair elections, as per the Constitution, is the only plausible way out of current crisis. Laws, regulations and emotive sloganeering don’t evoke respect and patriotism; respect is earned not commanded. Patriotism flows from a sense of belonging and inclusion. It cannot be drilled into citizens’ minds because they are human beings and are not robots.

We need a long-term strategy for peaceful political management across the country particularly in Baluchistan and Kyber Pashtunkhawa, a just and viable economic system and not intimidatory or exploitative regulations. 

Every unconstitutional and extrajudicial measure must be stopped forthwith and condemned by all those who argue for any sense of democratic processes and procedures. Drastic and sustainable structural reforms in the whole governance system, including the judiciary, with the consensus and full participation of stakeholders of all shades should be initiated after a peaceful transfer of power in the coming months.

The political leadership should also agree on a new social contract and rules of conduct, giving significance to the following: the military establishment should remain apolitical, and it must not be dragged into politics; the independence of the judiciary must be upheld and the decisions of the Supreme Court should be respected by all; the Election Commission must not be made controversial; and social media must not be used with impunity to malign every state institution.

In this charged environment, the political and military leadership must agree on a compromise date for elections. This would certainly will elicit a sigh of relief from the people of Pakistan who are losing faith and confidence in the current system of governance.